<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 4, 1998
REGISTRATION NO. 333-63727
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
INFINITY BROADCASTING CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4832 13-4030071
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) NO.)
</TABLE>
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 314-9200
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------
FARID SULEMAN
INFINITY BROADCASTING CORPORATION
40 WEST 57TH STREET
NEW YORK, NEW YORK 10019
TELEPHONE: (212) 314-9200
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
<TABLE>
<S> <C>
MARC S. ROSENBERG, ESQ. VINCENT J. PISANO, ESQ.
CRAVATH, SWAINE & MOORE SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP
825 EIGHTH AVENUE 919 THIRD AVENUE
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10022
(212) 474-1000 (212) 735-3000
</TABLE>
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act,
check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
- ------------------------
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
EXPLANATORY NOTE
This Registration Statement contains two forms of prospectus: one to be
used in connection with an underwritten offering in the United States and Canada
(the "U.S. Prospectus") and one to be used in a concurrent underwritten offering
outside the United States and Canada (the "International Prospectus"). The U.S.
Prospectus and the International Prospectus are identical except for the front
and back cover pages and the section entitled "Underwriting." The form of U.S.
Prospectus is included herein and is followed by the alternate pages to be used
in the International Prospectus. The alternate pages for the International
Prospectus included herein are each labeled "Alternate Page for International
Prospectus." Final forms of each prospectus will be filed with the Securities
and Exchange Commission under Rule 424(b) under the Securities Act.
<PAGE> 3
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 4, 1998
PROSPECTUS
135,000,000 SHARES
INFINITY LOGO
INFINITY BROADCASTING CORPORATION
CLASS A COMMON STOCK
------------------------
All of the shares of Class A Common Stock, par value $.01 per share, offered
hereby are being sold by Infinity Broadcasting Corporation (the "Company"). Of
the 135,000,000 shares of Class A Common Stock offered hereby, 114,750,000
shares are being offered for sale initially in the United States and Canada (the
"U.S. Offering") by the U.S. Underwriters and 20,250,000 shares are being
offered for sale initially in a concurrent offering outside the United States
and Canada (the "International Offering" and, together with the U.S. Offering,
the "Offerings") by the International Managers (collectively with the U.S.
Underwriters, the "Underwriters"). The initial public offering price and the
underwriting discount per share will be identical for both Offerings. See
"Underwriting."
Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently estimated that the initial public offering price
of the Class A Common Stock offered hereby will be between $19 and $22 per
share. For a discussion of the factors considered in determining the initial
public offering price of the Class A Common Stock, see "Underwriting."
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "INF," subject to official notice of issuance.
(continued on page i)
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN MATERIAL
RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A
COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
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<S> <C> <C> <C>
Per Share................................... $ $ $
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Total(3).................................... $ $ $
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</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the U.S. Underwriters and the International Managers
options to purchase up to an additional 17,212,500 and 3,037,500 shares of
Class A Common Stock, respectively, in each case exercisable within 30 days
after the date hereof, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Class A Common Stock will be made in New York, New
York on or about , 1998.
------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN GOLDMAN, SACHS & CO.
ALLEN & COMPANY INCORPORATED CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC SALOMON SMITH BARNEY
BEAR, STEARNS & CO. INC. DEUTSCHE BANK SECURITIES ING BARING
FURMAN SELZ LLC LAZARD FRERES & CO. LLC
PAINEWEBBER INCORPORATED SANFORD C. BERNSTEIN & CO., INC. SCHRODER &
CO. INC. SG COWEN
ABN AMRO ROTHSCHILD BANCBOSTON ROBERTSON STEPHENS CHASE SECURITIES INC.
A DIVISION OF ABN AMRO INCORPORATED
J.P. MORGAN & CO. WASSERSTEIN PERELLA SECURITIES, INC.
------------------------
The date of this Prospectus is , 1998.
<PAGE> 4
INFINITY LOGO
<PAGE> 5
(continued from front cover)
Following the Offerings, the Company will have two classes of authorized
common stock, the Class A Common Stock and the Class B Common Stock, par value
$.01 per share. The rights of the holders of Class A Common Stock and Class B
Common Stock are substantially identical, except with respect to voting,
conversion and transfer. Each share of Class A Common Stock entitles its holder
to one vote, and each share of Class B Common Stock entitles its holder to five
votes, on all matters submitted to a vote of stockholders. CBS Corporation
beneficially owns all of the Company's outstanding Common Stock and will,
immediately after the Offerings, beneficially own all of the Company's issued
and outstanding Class B Common Stock. Immediately after consummation of the
Offerings (assuming no exercise of the over-allotment options granted to the
U.S. Underwriters and the International Managers), such Class B Common Stock
will represent approximately 96.3% of the combined voting power of the Company.
As a result of such ownership, CBS Corporation will be able to control the vote
on substantially all matters submitted to a vote of stockholders, including the
election of directors and the approval of extraordinary corporate transactions.
The net proceeds from the Offerings will be used to prepay debt owed to CBS. See
"Risk Factors -- Risks Relating to Control by CBS," "Use of Proceeds,"
"Principal Stockholders and Stock Ownership" and "Relationships Between the
Company and CBS."
------------------------
CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK. SUCH TRANSACTIONS MAY INCLUDE STABILIZATION, THE PURCHASE OF THE CLASS A
COMMON STOCK TO COVER SYNDICATE SHORT POSITIONS AND THE IMPOSITION OF PENALTY
BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
------------------------
The Company intends to furnish its stockholders annual reports containing
consolidated financial statements audited by an independent public accounting
firm and quarterly reports for the first three fiscal quarters of each fiscal
year containing interim unaudited financial information.
------------------------
For investors outside the United States: No action has been or will be
taken in any jurisdiction by the Company or by any Underwriter that would permit
a public offering of the Class A Common Stock or possession or distribution of
this Prospectus in any jurisdiction where action for that purpose is required,
other than in the United States. Persons into whose possession this Prospectus
comes are required by the Company and the Underwriters to inform themselves
about and to observe any restrictions as to the offering of the Class A Common
Stock and the distribution of this Prospectus.
------------------------
The "Infinity" name and mark and the Company's associated brand names and
logos are trade and service marks of the Company. The "CBS" name and mark and
the "eye" logo and CBS's associated brand names are trade and service marks of
CBS Corporation and its subsidiaries.
i
<PAGE> 6
FORWARD-LOOKING STATEMENTS; CERTAIN DEFINED TERMS
Certain statements made in this Prospectus under the captions "Prospectus
Summary," "Risk Factors," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Business" and "Relationships Between the
Company and CBS" and elsewhere in this Prospectus are forward-looking statements
that are not historical facts but rather reflect the Company's current
expectations concerning future results and events. The words "believes,"
"expects," "intends," "plans," "anticipates," "likely," "will" and similar
expressions identify such forward-looking statements. These forward-looking
statements are subject to risks, uncertainties and other factors, some of which
are beyond the Company's control, that could cause actual results to differ
materially from those forecast or anticipated in such forward-looking
statements.
Such risks, uncertainties and factors include, but are not limited to:
business conditions and growth in the radio broadcasting and outdoor advertising
industry and the general economy; competitive factors; changes in interest
rates; the failure or inability to renew one or more of the Company's broadcast
licenses; and the factors described in "Risk Factors."
Readers are cautioned not to place undue reliance on these forward-looking
statements which reflect management's view only as of the date of this
Prospectus. The Company undertakes no obligation to update such statements or
publicly release the result of any revisions to these forward-looking statements
which it may make to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
------------------------
As used herein, "Class A Common Stock" means the Class A Common Stock, $.01
par value per share, of the Company; "Class B Common Stock" means the Class B
Common Stock, $.01 par value per share, of the Company; "Common Stock" means the
Class A Common Stock and the Class B Common Stock; "Offerings" means the U.S.
Offering and the International Offering; "FCC" means the Federal Communications
Commission; "LMAs" means local marketing agreements which would be considered
time brokerage agreements ("TBAs") for FCC purposes; "NYSE" means the New York
Stock Exchange, Inc.; "Commission" means the Securities and Exchange Commission;
"Exchange Act" means the Securities Exchange Act of 1934, as amended; and
"Securities Act" means the Securities Act of 1933, as amended.
ii
<PAGE> 7
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus, including information under "Risk Factors." Throughout this
Prospectus, except where the context otherwise requires: (i) the term "CBS"
refers collectively to CBS Corporation and its direct and indirect subsidiaries
(other than the Company), and their respective predecessors; and (ii) the term
"Company" refers collectively to Infinity Broadcasting Corporation and its
direct and indirect subsidiaries and their respective predecessors. Except where
the context otherwise requires, all information in this Prospectus: (i) gives
effect to the amendment of the Company's Certificate of Incorporation to change
its authorized capital stock to Class A Common Stock, Class B Common Stock and
preferred stock, par value $.01 per share (the "Preferred Stock"); (ii) gives
effect to the conversion of each outstanding share of the Company's current
common stock, par value $1.00 per share, into approximately 642,201.8349 shares
of its newly created Class B Common Stock (see "Description of Capital Stock");
(iii) assumes the Underwriters' over-allotment options, as described in
"Underwriting," are not exercised; and (iv) assumes an initial public offering
price of $20.50 per share of Class A Common Stock, which represents the
mid-point of the range set forth on the cover of this Prospectus.
THE COMPANY
The Company is one of the largest radio broadcasting and outdoor
advertising companies in the United States. The Company's 161 radio stations,
which serve 34 markets, collectively accounted for approximately 11% of total
1997 U.S. radio advertising expenditures. The Company's stations collectively
ranked first or second, in terms of 1997 pro forma radio revenues, in 28 out of
the 34 markets in which the Company operates stations. Approximately 70%, 87%
and 99% of the Company's pro forma 1997 net radio revenues were generated in the
10, 25 and 50 largest U.S. radio markets, respectively. The Company's outdoor
advertising business is conducted through its wholly owned subsidiary, TDI
Worldwide, Inc. ("TDI"). TDI is one of the largest outdoor advertising companies
in the United States, and operates predominantly in major metropolitan markets,
14 of which are also served by the Company's radio stations. TDI also operates
internationally with offices in the United Kingdom, the Republic of Ireland and
Northern Ireland.
The Company operates and seeks to opportunistically acquire radio and
outdoor, or "out-of-home," media properties in the largest markets in the United
States. The Company characterizes its business as out-of-home because the
majority of radio listening, and virtually all viewing of outdoor advertising,
takes place in automobiles, transit systems, on the street and other locations
outside the consumer's home. The Company believes that out-of-home media are an
attractive alternative to other advertising media, particularly as "in-home"
media, including broadcast television, cable and the Internet, increasingly
compete for advertising revenue in the home.
The Company's radio stations serve diverse target demographics through a
broad range of programming formats such as rock, oldies, news/talk, adult
contemporary, sports/talk and country, and the Company has established leading
franchises in news, sports and personality programming. The Company believes
that this diversity provides advertisers with "one-stop-shopping" by enabling
advertisers to select stations to reach a targeted demographic group or to
select groups of stations and outdoor advertising properties to reach broad
groups of consumers within and across markets. The Company believes that this
diversity also reduces its dependence on any single station, local economy,
format or advertiser.
CBS beneficially owns all of the Company's outstanding common stock. After
giving effect to the Offerings, CBS will beneficially own approximately 83.8% of
the equity, which will represent approximately 96.3% of the combined voting
power, of the Company. CBS also owns, among other assets, 14 television stations
covering approximately 31% of U.S. television households, several cable
television networks and the CBS television network, as well as equity interests
in certain Internet Web site providers.
The Company was formed to own and operate the out-of-home media business of
CBS Corporation, which prior to December 1, 1997, was known as Westinghouse
Electric Corporation ("Westinghouse"). In
1
<PAGE> 8
November 1995, Westinghouse acquired CBS Inc. In December 1996, Westinghouse
acquired the former Infinity Broadcasting Corporation ("Old Infinity"), which
also owned TDI and had a minority equity interest in and managed Westwood One,
Inc. ("Westwood One"). On June 4, 1998, CBS acquired the radio broadcasting
operations of American Radio Systems Corporation ("American Radio"). Both Old
Infinity and American Radio were publicly traded companies prior to their
acquisition by Westinghouse and CBS, respectively. Prior to the Offerings, CBS
transferred substantially all its radio, outdoor advertising and related assets
to the Company.
Infinity Broadcasting Corporation is a corporation organized under the laws
of Delaware. Its principal executive offices are located at 40 West 57th Street,
New York, New York 10019, and its telephone number is (212) 314-9200.
BUSINESS STRATEGY AND COMPETITIVE STRENGTHS
Growth Potential for Out-of-Home Media. The Company believes that the
radio business has significant growth potential. Radio currently represents
approximately 7% of all advertising spending in the United States. The Company
believes that this market share may not yet fully reflect the operational
benefits which it expects will result from the consolidation that has taken
place in the radio business since the enactment of the Telecommunications Act of
1996 (the "Telecom Act"). The Telecom Act eliminated the national ownership
ceiling previously applicable to radio broadcasters and relaxed restrictions
previously applicable to ownership of radio stations within single markets,
providing an opportunity for increased consolidation within the radio industry.
The Company believes that this consolidation has made radio more competitive
with newspapers, television and other media which can deliver large audiences
across a wide range of demographics. The Company believes that the outdoor
advertising business has also become more competitive due to similar industry
consolidation. In addition, should the number and variety of in-home media
continue to increase (whether as a result of the introduction of new
technologies or otherwise), the Company believes that the smaller number of
media competing in the out-of-home market will provide it with a greater
competitive advantage than it has to date.
Focus on Large Market Assets. Approximately 94% of the Company's radio
stations are located in the 50 largest radio markets in the United States. As of
September 30, 1998, the Company owned 9 of the 16 highest billing radio stations
(measured by 1997 net revenues) in the United States. The Company believes that
this focus on large markets makes it more appealing to advertisers, enables it
to attract more highly skilled management, employees and on-air talent, and also
enables it to more efficiently manage its business and generate higher levels of
cash flow than would be the case if it managed a larger number of smaller
stations.
Strategic Acquisitions. While the Company does not believe that it needs
to make acquisitions to grow its business, it intends to pursue acquisition
opportunities that would enable it to continue to compete more effectively for
advertising revenues and to increase its growth rate of cash flow. As an
experienced operator of out-of-home media properties, the Company believes that
it will have opportunities to acquire additional properties and to improve their
operating performance. In general, the Company intends to pursue acquisitions of
radio stations primarily in the 50 largest radio markets in the United States.
This strategy may include acquiring radio stations in markets where the Company
currently owns stations, as well as in markets in which the Company does not
currently operate. The Company will also seek to acquire additional outdoor
properties both in the United States and internationally.
Diversification of Revenues. The Company seeks to maintain substantial
diversity among its stations in many respects. The geographically wide-ranging
stations serve diverse target demographics through a broad range of programming
formats such as rock, oldies, news/talk, adult contemporary, sports/talk and
country. This diversity reduces the Company's dependence on any particular
station, local economy, format, on-air personality or advertiser. Similarly, the
Company places an emphasis on increasing local and regional
2
<PAGE> 9
advertising revenues to avoid dependence on national advertising. During the
year ended December 31, 1997, the Company generated approximately 72% of its net
radio revenues from local and regional advertising.
Proven Management Team. The Company's four executive officers have more
than 70 years combined experience in the radio and outdoor advertising business,
and Mel Karmazin, the Company's Chairman, President and Chief Executive Officer,
and Farid Suleman, the Company's Executive Vice President, Chief Financial
Officer, Treasurer and Secretary, have worked together at the Company's
predecessors since 1986. The Company believes that this proven management team
is a significant competitive asset for the Company.
Cost Controls. The Company strives to maximize its stations' cash flow by
instituting strict financial reporting requirements and cost controls, directing
promotional activities, developing programming to improve the stations' appeal
to a targeted audience group and enhancing advertising sales efforts. While the
Company's local management is responsible for the day-to-day operations of each
station, corporate management is responsible for long-range planning,
establishing policies and procedures, maximizing cost savings where centralized
activity is appropriate, allocating resources and maintaining overall control of
the stations.
Programming. The overall mix of each station's programming is designed to
fit the station's specific format and serve its local community. The Company's
general programming strategy includes acquiring significant on-air talent,
sports franchises and news for its radio stations. The Company believes that
this strategy, in addition to developing loyal audiences for its radio stations,
creates the opportunity for the Company to obtain additional revenues from
syndicating such programming franchises to other radio stations. Similarly, the
Company's relationship with CBS gives it access to certain CBS programming.
RELATIONSHIPS WITH CBS
CBS beneficially owns all of the Company's outstanding common stock. After
the Offerings, CBS will beneficially own approximately 83.8% of the equity,
which will represent approximately 96.3% of the combined voting power, of the
Company. As a result of such ownership, CBS will be able to control the vote on
substantially all matters submitted to a vote of the Company's stockholders,
including the election of directors and the approval of extraordinary corporate
transactions.
The Company believes that it derives substantial benefits from its
relationships with CBS. CBS owns, among other assets, 14 television stations
covering approximately 31% of U.S. television households, several cable
television networks (including The Nashville Network and Country Music
Television) and the CBS television network, as well as equity interests in
certain Internet Web site providers. Through its affiliation with CBS, the
Company is able to offer its customers "one-stop shopping" in a broader array of
media and markets than that available to the Company's competitors. Because the
Company's Chief Executive Officer will also be the Chief Executive Officer of
CBS, the Company believes it is well positioned to identify and benefit from the
synergies between the Company's businesses and those of CBS.
After the Offerings, the relationship between CBS and the Company will be
governed by an Intercompany Agreement and a Tax Sharing Agreement. The
Intercompany Agreement will require CBS to make available to the Company the
services of Mr. Karmazin, the Company's Chairman, President and Chief Executive
Officer, and Mr. Suleman, the Company's Executive Vice President, Chief
Financial Officer, Treasurer and Secretary. CBS will also make available certain
services, including financial, tax and legal services, to the Company. The
Company will pay CBS its allocated costs for these management and other
services. The Intercompany Agreement also establishes certain principles
governing the allocation of marketing opportunities, costs and revenues, the
provision of promotional time and space, access to programming and other aspects
of the Company's operating relationship with CBS on terms that are generally
consistent with past practices between the parties. As a result of CBS's
controlling interest in the Company and their overlapping managements and boards
of directors, relationships between CBS and the Company will not always be on
arm's-length terms.
3
<PAGE> 10
On September 18, 1998, Old Infinity issued a floating rate promissory note
as a dividend to CBS, in the aggregate principal amount of $2.5 billion (the
"CBS Note"). The dividend was declared and paid in the form of the CBS Note in
order to provide CBS with funds to be used for CBS's general corporate purposes.
The CBS Note is payable on September 18, 2003. The Company intends to use the
net proceeds of the Offerings to prepay the CBS Note. Any proceeds in excess
thereof will be used by the Company to purchase from CBS any notes or debentures
previously issued by American Radio ("American Radio Bonds") that are owned by
CBS on the date of consummation of the Offerings, and thereafter for the
Company's general corporate purposes, including working capital, repayment of
debt and possible acquisitions. See "Use of Proceeds."
Consistent with past practice between CBS and the Company, prior to the
consummation of the Offerings, the Company will have transferred to CBS an
amount not to exceed $42.0 million from the Company's cash-on-hand at September
30, 1998, together with all cash generated from the Company's operations during
the period from October 1, 1998, through the date prior to the consummation of
the Offerings.
For a more detailed discussion of the Company's relationships with CBS, see
"Risk Factors -- Risks Relating to Control by CBS" and "Relationships Between
the Company and CBS."
4
<PAGE> 11
THE OFFERINGS
Of the 135,000,000 shares of Class A Common Stock being offered hereby by
the Company, 114,750,000 shares are being offered initially in the United States
and Canada by the U.S. Underwriters and 20,250,000 shares are being offered
initially outside the United States and Canada by the International Managers.
See "Underwriting."
Class A Common Stock Offered by the
Company(1):
U.S. Offering........................ 114,750,000 shares
International Offering............... 20,250,000 shares
Total(1)..................... 135,000,000 shares
Common Stock to be Outstanding After
the Offerings:
Class A Common Stock(1)(2)........... 135,000,000 shares
Class B Common Stock(3).............. 700,000,000 shares
Total(1)(2).................. 835,000,000 shares
Voting Rights.......................... The Class A Common Stock and Class B
Common Stock vote as a single class
on all matters, except as otherwise
required by law, with each share of
Class A Common Stock entitling its
holder to one vote and each share of
Class B Common Stock entitling its
holder to five votes. All of the
shares of Class B Common Stock are
beneficially owned by CBS. After the
Offerings, CBS will beneficially own
shares of Common Stock having
approximately 96.3% of the combined
voting power of the outstanding
shares of Common Stock
(approximately 95.8% if the over-
allotment options are exercised in
full). See "Principal Stockholder
and Stock Ownership" and
"Description of Capital Stock."
Use of Proceeds........................ The Company intends to use the net
proceeds from the Offerings to
prepay the CBS Note. Any proceeds in
excess thereof will be used by the
Company to purchase from CBS
American Radio Bonds owned by CBS on
the date of consummation of the
Offerings, and thereafter for the
Company's general corporate
purposes, including for working
capital, repayment of debt and
possible acquisitions. See "Use of
Proceeds."
Listing................................ The Class A Common Stock has been
approved for listing on the NYSE
under the symbol "INF," subject to
official notice of issuance.
- ---------------
(1) Does not include up to 17,212,500 and 3,037,500 shares subject to
over-allotment options granted by the Company to the U.S. Underwriters and
the International Managers, respectively.
(2) Excludes 19,750,000 shares of Class A Common Stock reserved for issuance
under the Company's 1998 Plan, Annual Incentive Plan and Savings Plans (each
as defined herein). See "Management -- Long-Term Incentives," "-- Annual
Incentives" and "-- Savings Plans."
(3) All of the Class B Common Stock will be beneficially owned by CBS.
RISK FACTORS
See "Risk Factors" for a description of certain risks to be considered
before making an investment in the Class A Common Stock.
5
<PAGE> 12
SUMMARY COMBINED AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The summary historical combined financial data of the Company presented
below as of December 31, 1996 and 1997, and for the years ended December 31,
1995, 1996 and 1997 have been derived from, and are qualified by reference to,
the audited Combined Financial Statements of the Company included elsewhere in
this Prospectus. The summary historical combined financial data of the Company
presented below as of September 30, 1998 and for the nine-month periods ended
September 30, 1997 and 1998 have been derived from, and are qualified by
reference to, the unaudited combined financial statements of the Company
included elsewhere in this Prospectus. The summary historical combined financial
data of the Company presented below as of December 31, 1993, 1994 and 1995 and
for the years ended December 31, 1993 and 1994 have been derived from unaudited
Combined Financial Statements of the Company not included in this Prospectus.
The summary combined financial data should be read in conjunction with
"Capitalization," "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the Combined Financial Statements and the related
Notes thereto and the other financial information included elsewhere in this
Prospectus. The Company's unaudited financial statements as of September 30,
1998 and for the nine-month periods ended September 30, 1997 and 1998 include,
in the opinion of management, all adjustments, consisting only of normal
recurring adjustments, which the Company considers necessary for a fair
presentation of the financial position and results of operations of the Company
for these periods. Results for the nine-month periods are not necessarily
indicative of the results to be expected for the full year.
The summary pro forma statement of earnings and other operating data give
pro forma effect to the acquisition of American Radio and its acquisitions, and
to the issuance of shares of Class A Common Stock in the Offerings, in each case
as if they had taken place on January 1, 1997. The pro forma statement of
earnings and other operating data do not give pro forma effect to the issuance
of the CBS Note because it is expected to be substantially or entirely repaid
from the proceeds of the Offerings. The pro forma adjustments are based upon
available information and certain assumptions that management of the Company
believes are reasonable. The pro forma financial data do not purport to
represent the results of operations or the financial position of the Company
which actually would have occurred had the American Radio acquisition taken
place on the date indicated, nor are they necessarily indicative of future
operating results. The summary pro forma statement of earnings and other
operating data should be read in conjunction with "Unaudited Combined Pro Forma
Financial Information."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
HISTORICAL PRO
------------------------------------------------------------ FORMA
1993 1994 1995 1996 1997 1997(1)
----------- ----------- -------- -------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................ $180,739 $174,722 $216,288 $554,088 $1,480,091 $1,873,413
Operating expenses excluding
depreciation and
amortization.............. 113,908 103,456 136,419 343,920 888,405 1,147,155
Depreciation and
amortization.............. 14,670 15,591 17,914 57,528 197,135 285,685
Corporate expenses.......... 8,134 8,492 8,736 13,434 22,277 30,484
-------- -------- -------- -------- ---------- ----------
Operating earnings.......... 44,027 47,183 53,219 139,206 372,274 410,089
Interest expense, net....... -- -- -- -- 3,645 50,639
Net earnings................ $28,243 $42,649 $27,673 $71,566 $177,629 $162,076
Net earnings per common
share -- basic and
diluted................... $0.04 $0.06 $0.04 $0.10 $0.25 $0.19
Weighted average shares
outstanding -- basic and
diluted................... 700,000 700,000 700,000 700,000 700,000 835,000
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------------
HISTORICAL PRO
------------------------- FORMA
1997 1998 1998(1)
----------- ----------- -----------
<S> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................ $1,068,289 $1,319,690 $1,487,065
Operating expenses excluding
depreciation and
amortization.............. 654,489 767,507 886,345
Depreciation and
amortization.............. 149,061 177,249 214,356
Corporate expenses.......... 16,881 13,145 18,615
---------- ---------- ----------
Operating earnings.......... 247,858 361,789 367,749
Interest expense, net....... 3,519 22,038 41,843
Net earnings................ $115,967 $165,580 $182,986
Net earnings per common
share -- basic and
diluted................... $0.17 $0.24 $0.22
Weighted average shares
outstanding -- basic and
diluted................... 700,000 700,000 835,000
</TABLE>
(footnotes on following page)
6
<PAGE> 13
<TABLE>
<CAPTION>
AT DECEMBER 31, AT SEPTEMBER 30, 1998
---------------------------------------------------------- -----------------------------
1993 1994 1995 1996 1997 ACTUAL AS ADJUSTED(2)
-------- -------- ---------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets..................... $477,568 $485,747 $1,878,208 $7,261,952 $7,074,103 $10,406,311 $10,404,865
Long-term debt (including current
portion)....................... -- -- -- 150,494 2,092 3,151,274 541,274
Stockholders' equity............. 454,813 511,453 1,659,602 6,418,701 6,397,388 5,831,054 8,441,904
Working capital.................. 29,668 32,238 79,500 273,403 247,206 350,098 350,948
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
HISTORICAL PRO
---------------------------------------------------------------- FORMA
1993 1994 1995 1996 1997 1997(1)
----------- ----------- ----------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA(3)............... $ 61,413 $ 93,095 $ 71,324 $ 197,043 $575,387 $ 706,369
Capital expenditures.... 3,438 7,843 9,368 6,682 15,264 17,311
After-tax Cash
Flow(3)............... 42,913 58,240 45,587 129,094 374,764 447,761
Cash flow from operating
activities............ 40,582 25,287 49,401 103,943 310,264 339,992
Cash flow from investing
activities............ (15,789) 3,976 (1,213,810) (1,000,847) 21,870 (406,697)
Cash flow from financing
activities............ (24,743) (29,131) 1,164,221 916,771 (329,494) 196,648
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------------
HISTORICAL PRO
------------------------- FORMA
1997 1998 1998(1)
----------- ----------- -----------
<S> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA(3)............... $ 397,489 $ 540,825 $ 630,249
Capital expenditures.... 9,818 19,793 23,372
After-tax Cash
Flow(3)............... 265,028 342,829 397,342
Cash flow from operating
activities............ 239,099 316,417 338,241
Cash flow from investing
activities............ 18,944 (1,397,696) (1,437,823)
Cash flow from financing
activities............ (251,003) 1,133,053 1,171,305
</TABLE>
- ---------------
(1) The pro forma statement of earnings and other operating data give effect to:
(i) the Company's acquisition of American Radio; (ii) American Radio's
acquisitions and dispositions in 1997; and (iii) the issuance of shares of
Class A Common Stock in the Offerings (assuming that the Underwriters'
over-allotment options have not been exercised), in each case as if such
transactions occurred at January 1, 1997. See "Unaudited Combined Pro Forma
Financial Information." The pro forma statement of earnings and other
operating data do not give effect to the issuance by Old Infinity of the CBS
Note because it is expected to be substantially or entirely repaid from the
net proceeds of the Offerings. To the extent the net proceeds of the
Offerings are not sufficient to repay the CBS Note, additional interest
expense would be incurred. Based on current interest rates, approximately
$6.0 million in additional annual interest expense would result for every
$100.0 million of unpaid principal of the CBS Note.
(2) As adjusted to give effect to (i) the transfer of cash to CBS in an amount
not to exceed $42.0 million from the Company's cash-on-hand at September 30,
1998, together with all cash generated from the Company's operations during
the period from October 1, 1998, through the date prior to the consummation
of the Offerings, (ii) the Offerings and (iii) the application of the net
proceeds therefrom. See "Use of Proceeds."
(3) EBITDA represents earnings before interest, taxes, depreciation and
amortization. After-tax Cash Flow represents net earnings plus depreciation
and amortization. Although EBITDA and After-tax Cash Flow are not measures
of performance calculated in accordance with generally accepted accounting
principles, management believes that they are useful to an investor in
evaluating the Company because they are measures widely used in the
broadcast industry to evaluate a company's operating performance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Use of EBITDA." Nevertheless, EBITDA and After-tax Cash Flow
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is
calculated in accordance with generally accepted accounting principles. As
EBITDA and After-tax Cash Flow are not measures of performance calculated in
accordance with generally accepted accounting principles, these measures may
not be comparable to similarly titled measures employed by other companies.
Management's discretionary use of funds depicted by EBITDA and After-tax
Cash Flow may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.
7
<PAGE> 14
RISK FACTORS
Prospective purchasers should carefully consider the following factors, in
addition to the other information set forth in this Prospectus, in connection
with an investment in the shares of Class A Common Stock offered hereby.
RISKS RELATING TO CONTROL BY CBS
Immediately following the Offerings, CBS will continue to control the
Company and CBS will beneficially own 100% of the outstanding Class B Common
Stock, which will represent approximately 96.3% of the combined voting power of
all the outstanding Common Stock. As a result of this ownership, CBS generally
will be able to exercise a controlling influence over the business and affairs
of the Company, and to unilaterally determine the outcome of any matter
submitted to a vote of the Company's stockholders. See "-- Possible
Anti-Takeover Effects of Certain Charter Provisions."
Possible Conflicts of Interest. Because CBS and the Company are both
engaged in the sale of advertising time and space, there exist numerous actual
and potential conflicts of interest between them. The Company and CBS will to
some extent be competing with each other when offering their products and
services to potential customers, who often are deciding how much of their
advertising budgets to allocate to television, radio, outdoor or other media.
The Company's Restated Certificate of Incorporation (the "Restated Certificate")
contains certain provisions addressing potential conflicts of interest between
the Company and CBS and the allocation between the Company and CBS of certain
transactions that, absent such allocation, could constitute corporate
opportunities of both the Company and CBS. These provisions effectively create a
presumption that such opportunities need not be made available to the Company
absent a clear indication that they were directed to the Company. See "Certain
Provisions of the Certificate of Incorporation and By-Laws of the
Company -- Corporate Opportunity Policy." In addition, as a major advertiser,
CBS from time to time utilizes the Company's advertising time and space.
Similarly, the Company promotes its programming on stations and networks owned
by CBS.
Prior to the Offerings, CBS and the Company will enter into the
Intercompany Agreement, which will, among other things, govern the terms on
which the parties will jointly market their products and services and provide
promotional advertising time and space to each other. In particular, in certain
circumstances consistent with past practice, the Intercompany Agreement will
permit CBS to continue to utilize radio promotion time without charge. The
Intercompany Agreement generally contemplates that the parties will maintain
their relationships in a manner consistent with their past practice. However,
neither the Intercompany Agreement nor any future agreements between the Company
and CBS resulted or will necessarily result from arm's-length negotiations and
such agreements therefore may be in some respects and in certain instances less
favorable to the Company than those that it could obtain from unaffiliated third
parties. Moreover, many of the transactions between the Company and CBS are of
an informal nature and do not lend themselves to formulaic allocations of costs
and benefits. Thus, there inevitably will be some discretion left to the
parties, who are subject to the potentially conflicting interests described
herein.
In addition, to the extent that the Company derives benefits from its close
relationship with CBS, those benefits could be reduced or eliminated in the
future. CBS is not obligated to engage in any future business transactions or
jointly pursue opportunities, except for those expressly provided for in the
Intercompany Agreement.
Risks Relating to Joint Management and Boards of Directors. Mr. Karmazin,
the Company's Chairman, President and Chief Executive Officer, and Mr. Suleman,
the Company's Executive Vice President, Chief Financial Officer, Treasurer and
Secretary, will continue to hold senior management positions with CBS after the
Offerings (in Mr. Karmazin's case, as Chief Executive Officer of CBS effective
January 1, 1999). These Company officers will be employed by CBS, rather than by
the Company, and will spend a substantial part of their professional time and
effort on behalf of CBS. In many instances, such efforts for CBS will relate to
activities which are unrelated (and in some circumstances may be adverse) to the
interests of the Company. The Company has not established any minimum time
requirements for such officers. In addition, Messrs. Karmazin and Suleman will
continue to participate in CBS stock option and other benefit plans and
8
<PAGE> 15
Mr. Karmazin is one of CBS's largest stockholders. The Company's other executive
officers and a significant number of its employees will continue to hold shares
of and/or options to purchase shares of common stock of CBS acquired or granted
prior to their transfer to the Company, and will not yet have received
comparable interests under the Company's plans. In addition, following the
Offerings, certain employees of the Company will continue to participate in CBS
benefit plans which provide an opportunity to receive additional shares of
common stock of CBS. These substantial interests in CBS's equity may present
these officers and employees with incentives different from those of the
Company's stockholders, and may exacerbate the conflicts described herein.
In addition, immediately following the Offerings, only two of the Company's
eight directors will be individuals who are not currently associated with CBS or
the Company. In addition to Messrs. Karmazin and Suleman, the Company expects
that its Board of Directors will include four non-management directors who will
also be officers or directors of CBS. For so long as CBS maintains voting
control of the Company, CBS will have the ability to change the size or
composition of the Board of Directors.
Mr. Karmazin is a Director of Westwood One and Mr. Suleman is the Chief
Financial Officer and Secretary and a Director of Westwood One, which positions
will continue to impose demands on their time and present potential conflicts of
interest following the Offerings. Westwood One produces and distributes
syndicated and network radio programming to the Company's radio stations as well
as to competitors of the Company. See "Business -- Programming."
Dependence upon CBS for Certain Services. Prior to the Offerings, the
Company has been dependent upon CBS for various real estate, financial, tax,
human resource, legal and other functions that typically are performed by
in-house personnel of public companies. Following the Offerings and for at least
some period of time thereafter, the Company will have to continue to rely on CBS
for these services, which are to be made available pursuant to the Intercompany
Agreement. Except as expressly required by the terms of the Intercompany
Agreement, CBS could choose not to provide these services or to take actions
which could result in increased allocations to the Company.
Proceeds of Offerings to be Used to Pay the CBS Note. The net proceeds
from the Offerings will be used to prepay the CBS Note and the requisite amount
of any net proceeds in excess thereof will be used by the Company to purchase
American Radio Bonds owned by CBS on the date of consummation of the Offerings.
Therefore, it is possible that none of the amounts raised in the Offerings will
be available for use in the Company's business.
CBS Credit Agreement. The Company does not currently have any independent
credit facilities with banks or other institutions. Prior to the Offerings, the
Company expects to become a borrower under CBS's existing $4.0 billion senior
unsecured revolving credit facility (the "CBS Credit Agreement"), pursuant to
which up to $1.0 billion will be available to the Company for revolving loans.
The terms of the CBS Credit Agreement impose restrictions on the ability of
CBS and its material subsidiaries (including the Company) to create liens, grant
negative pledges, sell assets and enter into affiliate transactions. In
addition, the terms of the CBS Credit Agreement significantly restrict the
Company's ability to incur additional debt, other than additional borrowings
under the CBS Credit Agreement (which are limited to $1 billion). The terms of
the CBS Credit Agreement require CBS to maintain specified financial ratios and
meet certain tests, including a maximum consolidated leverage ratio and minimum
interest coverage ratio and net worth. In addition, the occurrence of a change
of control of CBS would be an event of default under the CBS Credit Agreement.
Any event of default or declaration of acceleration under any debt instruments
of CBS in an aggregate amount in excess of $100 million could also result in an
event of default under the CBS Credit Agreement. The ability of CBS to comply
with the terms of the CBS Credit Agreement is beyond the control of the Company
and can be affected by events beyond CBS's control. Any defaults under the CBS
Credit Agreement (whether or not related to the business of the Company) could
preclude the Company from borrowing under the CBS Credit Agreement, and could
entitle the lenders to declare all amounts outstanding thereunder to be due and
payable immediately. See "Description of Indebtedness -- CBS Credit Agreement."
The Company may obtain an independent credit facility in the future.
Risks Relating to Tax Consolidation. For so long as CBS continues to own
80% of the vote and value of the Company's capital stock, the Company will be
included in CBS's consolidated group for federal income
9
<PAGE> 16
tax purposes. Under the Tax Sharing Agreement, the Company will pay to CBS the
amount of federal, state and local income taxes which it would be required to
pay to the relevant taxing authorities if it were a separate taxpayer not
included in CBS's consolidated or combined returns. In addition, by virtue of
its controlling ownership and the Tax Sharing Agreement, CBS will effectively
control all of the Company's tax decisions. Under the Tax Sharing Agreement, CBS
will have sole authority to respond to and conduct all tax proceedings
(including tax audits) relating to the Company, to file all income tax returns
on behalf of the Company and to determine the amount of the Company's liability
to (or entitlement to payment from) CBS under the Tax Sharing Agreement.
Moreover, notwithstanding the Tax Sharing Agreement, federal law provides that
each member of a consolidated group is liable for the group's entire tax
obligation. Thus, to the extent CBS or other members of the group fail to make
any federal income tax payments required of them by law, the Company would be
liable for the shortfall. Similar principles apply for state income tax purposes
in many states.
Contingent Liability for CBS Obligations. For so long as CBS continues to
own at least 80% of the voting power of the Company's capital stock, the Company
will be jointly and severally liable (together with all other members of CBS's
"control group") for certain pension funding, termination and excise taxes and
for other pension-related matters. Because the Class B Common Stock held by CBS
is entitled to five votes per share, the Company expects that CBS will retain
its 80% voting interest for the foreseeable future. As of December 31, 1997, the
present value of the liabilities under certain qualified pension plans,
including the Westinghouse Pension Plan, exceeded the fair market value of the
assets held in trust thereunder by approximately $740 million, based upon the
assumptions used for financial reporting purposes under Statement of Financial
Accounting Standards No. 87 and before any tax effect. CBS's liabilities and the
Company's contingent liabilities would be substantially higher under these plans
if such plans were terminated.
In addition, as of September 30, 1998, CBS had outstanding an aggregate of
approximately $2.6 billion principal amount of public debt issued pursuant to
indentures which under certain circumstances could effectively require a
transferee of assets from CBS (including the Company) to assume such debt. The
Company does not believe that such assumption is now required or likely to be
required in the future. Nevertheless, in the event that a CBS bondholder would
assert a claim requiring the Company to assume such debt, it is likely that such
matter would be the subject of litigation, which by its very nature is
unpredictable.
Although the Intercompany Agreement provides that CBS will indemnify the
Company in respect of any such pension liabilities or debt obligations
(including the costs of defending against any assertion of claims against the
Company by CBS bondholders), there can be no assurance that CBS will be able to
fulfill its obligations under such indemnity.
For a more complete discussion of the Company's relationships with CBS, see
"Relationships Between the Company and CBS."
RISK OF ECONOMIC RECESSION
The Company derives substantially all of its revenues from the sale of
advertising on its radio stations and outdoor displays. Because advertisers
generally reduce their spending during economic downturns, the Company could be
adversely affected by a future national recession. In addition, because a
substantial portion of the Company's revenues are derived from local
advertisers, the Company's ability to generate advertising revenues in specific
markets could be adversely affected by local or regional economic downturns.
RISKS RELATING TO ACQUISITION STRATEGY
The Company intends to pursue growth in part through the opportunistic
acquisition of radio broadcasting companies, radio station groups, individual
radio stations, outdoor advertising companies, individual outdoor advertising
displays or other assets that the Company believes are best suited to the
purpose of assisting its customers in marketing their products and services. The
Company routinely engages in discussions and negotiations with respect to
potential acquisitions. Such acquisitions could be material.
10
<PAGE> 17
Obstacles to Potential Acquisitions. The consummation of radio
broadcasting acquisitions requires prior approval of the FCC with respect to the
transfer of control or assignment of the broadcast licenses of the acquired
stations. The number of radio stations the Company may acquire or operate in any
geographic market, both overall and in each service (i.e., AM or FM) in that
market, is limited by the Communications Act of 1934, as amended (the
"Communications Act"), and FCC rules and policies, and the Company has reached
or is close to reaching the applicable limits in a significant number of the
largest markets. The Company's capacity to acquire stations in a market would be
further limited to the extent CBS now owns or later acquires media properties in
that market, which CBS is free to do if otherwise permissible under FCC multiple
ownership rules and policies. See "-- Government Regulation -- Risks of
Mandatory Dispositions; "One-to-a-Market" Limitation" and
"Business -- Government Regulation."
The FCC staff has recently adopted new procedures relating to local radio
market concentration based upon revenue share, even where proposed acquisitions
would comply with the Communications Act and the FCC's multiple-ownership rules.
In particular, the FCC is inviting comment by the public on certain radio
station transactions that the FCC believes, on initial analysis, present
ownership concentration concerns in the relevant market. FCC approval of a
number of pending radio station acquisitions by various parties has been delayed
as a consequence of this procedure. This uncertainty, and the possibility that
the FCC would take actions to reduce or preclude concentration even if otherwise
allowed by the multiple ownership rules, could adversely affect the Company's
ability to make broadcasting acquisitions that it considers advantageous.
The consummation of certain radio acquisitions is also subject to
applicable waiting periods and possible review by the Department of Justice (the
"DOJ") or the Federal Trade Commission (the "FTC") under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), and acquisitions that are
not required to be reported under the HSR Act may still be investigated by the
DOJ or the FTC under the antitrust laws before or after consummation. The DOJ
has been active in reviewing radio broadcasting acquisitions and has challenged
a number of such transactions, some of which have resulted in consent decrees
requiring divestitures of certain stations, terminations of LMAs and other
relief. In general, the DOJ has more closely scrutinized radio mergers and
acquisitions that result in local market shares in excess of 40% of radio
advertising revenues, depending on format, signal strength and other factors.
Due to the level of concentration in the largest markets in the United States,
these policies could limit the Company's ability to make certain acquisitions,
particularly in these markets.
Other Acquisition-Related Risks. To the extent the Company is able to
complete acquisitions, the Company could be required to effectively manage an
expanding and significantly larger portfolio of radio and outdoor advertising
properties. Acquisitions involve numerous other risks, including difficulties in
the integration of operations and systems, the diversion of management's
attention from other business concerns and the potential loss of key employees
of acquired companies or stations. There can be no assurance that such
acquisitions will benefit the Company.
The Company will face competition from other radio and outdoor advertising
companies for available acquisition opportunities, which could result in higher
prices. There can be no assurances that the Company will find acceptable
acquisition opportunities. In addition, payment of the purchase price of
possible acquisitions could require the Company to incur additional debt or seek
to obtain equity financing. The incurrence of additional debt could increase the
Company's leverage, make the Company more vulnerable to economic downturns and
limit its ability to withstand competitive pressures. Additional equity
financing could result in dilution to the existing holders of the Common Stock.
GOVERNMENT REGULATION
Regulation of Radio Broadcasting. The domestic radio broadcasting industry
is subject to extensive federal regulation which, among other things, requires
approval by the FCC for the issuance, renewal, transfer and assignment of
broadcast station operating licenses and limits the number of broadcast
properties the Company may own in any market. The Company's broadcasting
business will continue to be dependent upon maintaining broadcast licenses
issued by the FCC, which are issued for a maximum term of eight years. There can
be no assurance that the FCC will approve future renewal applications, and it is
possible that any renewals
11
<PAGE> 18
will include conditions or qualifications that could adversely affect the
Company's operations. Moreover, governmental regulations and policies may change
over time and such changes could have a material adverse impact upon the
Company's business, financial condition and results of operations. In addition,
the Telecom Act, which became law on February 8, 1996, created uncertainties as
to how the FCC and the courts will enforce and interpret numerous existing
provisions of the telecommunications laws.
Restriction on Ownership by Aliens. The Communications Act provides that
non-U.S. citizens or their representatives, or foreign governments or
representatives thereof, or any corporation organized under the laws of a
foreign country (collectively, "Aliens") may not own of record or vote more than
20% of the stock of a broadcast licensee, such as the Company, and that Aliens
may not own of record or vote more than 25% of the stock of a corporation
controlling a licensee, absent a finding by the FCC that such ownership by a
controlling corporation would be in the public interest. In order to reduce the
likelihood of such ownership, the Restated Certificate restricts the ownership,
voting and transfer of the Company's capital stock in accordance with the
Communications Act and the rules of the FCC, and prohibits the issuance of more
than 20% of the Company's outstanding capital stock (or more than 20% of the
voting rights it represents) to or for the account of Aliens or corporations
otherwise subject to domination or control by Aliens. The Restated Certificate
authorizes the Company's Board of Directors to enforce these prohibitions. In
addition, the Restated Certificate provides that shares of capital stock of the
Company determined by the Company's Board of Directors to be owned beneficially
by an Alien or an entity directly or indirectly owned by Aliens in whole or in
part shall be subject to redemption by the Company by action of the Board of
Directors to the extent necessary, in the judgment of the Board of Directors, to
comply with these alien ownership restrictions. These provisions could adversely
affect the rights of individual holders and, possibly, liquidity in the market
for Class A Common Stock. See "Description of Capital Stock -- Class A Common
Stock and Class B Common Stock -- Foreign Ownership Restrictions."
Risks of Mandatory Station Dispositions; "One-to-a-Market"
Limitation. Under the FCC's "one-to-a-market" rule, a party may not have
attributable interests in radio stations and a television station in the same
market unless a waiver is granted by the FCC. For this purpose, the Company and
CBS are considered one party. CBS has been granted certain temporary waivers of
the "one-to-a-market" rule in certain markets in which the Company currently
operates radio stations. These temporary waivers are subject to the outcome of
pending rulemaking proceedings dealing with possible revisions to the
"one-to-a-market" rule. There can be no assurance that these temporary waivers
will be made permanent, and if they are not made permanent, the Company could be
required to sell some or all of the relevant radio stations. Moreover, similar
issues could arise in the future in connection with potential acquisitions
either by the Company or by CBS (over which the Company would have no control).
See "Business -- Government Regulation -- Ownership Matters" and "Relationships
Between the Company and CBS -- Intercompany Arrangements -- Free Promotional
Time; Joint Marketing and Corporate Opportunities."
Regulation of Outdoor Advertising. The outdoor advertising industry is
subject to governmental regulation at the federal, state and local level. These
include regulations on the construction, repair, upgrading, height, size and
location of, and, in some instances, content of advertising copy being displayed
on, outdoor advertising structures adjacent to federally-aided highways and to
other thoroughfares. In addition, the Company is unable to predict what
additional regulations may be imposed on outdoor advertising in the future.
Legislation regulating the content of billboard advertisements and additional
billboard restrictions has been introduced from time to time in the past,
particularly with respect to alcohol and tobacco advertising. Changes in laws
and regulations affecting outdoor advertising at any level of government could
have an adverse effect on the Company.
COMPETITION; CHANGES IN AUDIENCE PREFERENCES
The Company operates in a highly competitive industry. The Company's radio
stations and outdoor advertising properties compete for audiences and
advertising revenues directly with other radio stations and outdoor advertising
companies, as well as with other media, such as broadcast television,
newspapers, magazines, cable television, the Internet and direct mail, within
their respective markets. Audience ratings and market shares are subject to
change and any adverse change in a particular market could have a material
12
<PAGE> 19
adverse effect on the Company's revenues in that market and possibly adversely
affect revenues in other markets. In addition, from time to time other stations
may change their format or programming to compete directly with the Company's
stations for audiences and advertisers, or engage in aggressive promotional
campaigns, which could result in lower ratings and advertising revenues or
increased promotion and other expenses and, consequently, lower earnings and
cash flow for the Company. Audience preferences as to format or programming may
also shift due to demographic or other reasons. Any failure by the Company to
respond, or to respond as quickly as its competitors, could have an adverse
effect on the Company. There can be no assurance that the Company will be able
to maintain or increase its current audience ratings and advertising revenues.
SIGNIFICANT SUBSIDIARY DEBT COVENANTS
Certain of the indentures pursuant to which American Radio issued bonds
contain a number of covenants which impose significant restrictions on American
Radio's ability to pay dividends to the Company and to engage in business
transactions with other parts of the Company and CBS. On a pro forma basis,
American Radio would have represented 21% and 18% of the Company's net revenues
and EBITDA, respectively, during the year ended December 31, 1997. The bonds are
not fully redeemable until January 15, 2002, and then only at a substantial
premium. See "Description of Indebtedness."
DEPENDENCE ON KEY PERSONNEL
The Company's business is dependent upon the performance of Mr. Karmazin,
its Chairman, President and Chief Executive Officer. The loss of Mr. Karmazin,
who is an employee of CBS and whose services are made available to the Company
pursuant to the Intercompany Agreement, could have a material adverse effect on
the Company. The Company also employs or independently contracts with several
on-air personalities and hosts of syndicated radio programs with significant
loyal audiences in their respective broadcast areas. There can be no assurance
that all such individuals will remain with the Company or will retain their
audiences.
LOSS OF RIGHTS TO OUTDOOR ADVERTISING MEDIA SPACES
The Company sells advertising space on various outdoor media pursuant to
contracts granting exclusive rights to such media. These contracts are generally
limited to five-year terms, with renewal often being based upon competitive
bids. There can be no assurance that the Company will be successful in retaining
the rights to such media, the loss of which could have a material adverse effect
on the Company.
SUBSTANTIAL LEVEL OF INDEBTEDNESS
The Company has a substantial amount of outstanding indebtedness. As of
September 30, 1998, after giving pro forma effect to the Offerings, the
consolidated indebtedness of the Company would have been approximately $651
million ($648 million of which would have been outstanding indebtedness of
American Radio). Prior to the Offerings, the Company expects to become a
borrower under the CBS Credit Agreement, pursuant to which up to $1.0 billion
will be available to the Company for revolving loans. See "Description of
Indebtedness." The Company's level of indebtedness could have important
consequences to the holders of Class A Common Stock, including the following:
(i) a substantial portion of the Company's cash flow from operations must be
dedicated to the payment of the principal of and interest on its indebtedness
and will not be available for other purposes; (ii) the ability of the Company to
obtain financing in the future for working capital needs, capital expenditures,
acquisitions, investments, general corporate purposes or other purposes may be
materially limited or impaired; and (iii) the Company's level of indebtedness
may reduce the Company's flexibility to respond to changing business and
economic conditions.
RISKS RELATED TO AMERICAN RADIO ACQUISITION; RECENT NET LOSSES
On June 4, 1998, CBS acquired the radio broadcasting operations of American
Radio. This acquisition involves several risks, including increased debt service
requirements, compliance with FCC multiple ownership rules and policies,
difficulties in integrating the operations and systems of American Radio into
the Company's business and the diversion of management's attention from other
business concerns. There can be no assurance that the Company's management will
be able to manage effectively the resulting business or that
13
<PAGE> 20
this acquisition will benefit the Company. See "-- Risks Relating to Acquisition
Strategy" and "-- Government Regulation -- Risks of Mandatory Station
Dispositions; "One-to-a-Market" Limitation."
For the year ended December 31, 1997, American Radio realized a net loss
from continuing operations of $2.5 million. There can be no assurance that the
broadcast business of American Radio will not generate net losses in the future.
RISKS RELATED TO THE YEAR 2000
Many existing computer programs were designed and developed without
considering the upcoming change in the century, which could lead to the failure
of computer applications or create erroneous results by or at the year 2000. The
Year 2000 issue is a broad business issue, whose impact extends beyond
traditional computer hardware and software to possible failure of a wide variety
of automated systems and instrumentation, including equipment used by the
Company and its third party vendors.
The Company believes that it has substantially completed the process of
assessing its systems and equipment and it is now engaged in remediation
efforts. The Company estimates its cost to achieve Year 2000 compliance to be
approximately $5 million, of which $2 million has been incurred to date. CBS is
expected to incur additional costs of approximately $2 million on behalf of the
Company to ensure compliance of the management information systems
infrastructure. Approximately 60% of the total expenditures relate to the
replacement of existing systems. The Company expects to fund these costs through
its cash flows from operations. However, there can be no assurance that the
Company will be able to successfully address all Year 2000 issues, or that the
associated costs will not materially exceed the Company's estimates. If the
Company is unable to resolve its Year 2000 issues in a timely manner, it could
have a material adverse impact on the Company's financial position, results of
operations or cash flows in future periods.
In addition, the Company has begun to contact significant third-party
suppliers and customers to determine whether such third parties are addressing
their own Year 2000 issues. There can be no assurance that such third parties
will successfully ensure that their systems are Year 2000 compliant. If the
Company's suppliers are unable to resolve such issues in a timely manner with
respect to equipment or services upon which the Company is dependent, or if
customers' businesses are significantly disrupted by Year 2000 problems, there
could be material adverse effects on the Company. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Year 2000."
RISKS PRESENTED BY NEW TECHNOLOGIES
The FCC is considering ways to introduce new technologies to the radio
broadcasting industry, including satellite and terrestrial delivery of digital
audio broadcasting and the standardization of available technologies which
significantly enhance the sound quality of AM and FM broadcasts. New media
technologies that are being developed or introduced include the delivery of
audio programming by cable television systems, over the Internet, by digital
audio broadcasting ("DAB") and by satellite digital audio radio service
("SDARS"). DAB and SDARS provide for the delivery by terrestrial and satellite
means, respectively, of multiple new, high-quality audio programming formats to
local and national audiences. DAB technology may be used in the future by radio
stations either on existing or alternate broadcasting frequencies or on new
frequency bands. If the radio industry were to implement any of these or other
new technologies, the Company would likely incur increased expenses to install,
operate and service the technology, or be at a competitive disadvantage for
having failed to do so. CBS owns (and is not transferring to the Company) a
majority equity interest in, and is the managing general partner of, USA Digital
Radio Partners, L.P., which was formed to develop technology to transition AM
and FM radio broadcasting from analog to digital transmission (including In Band
On Channel 8 technology).
ABSENCE OF DIVIDENDS
Following the Offerings, the Company does not anticipate paying any
dividends on shares of its Common Stock. The payment of any future dividends
will be determined by the Board of Directors in light of the conditions then
existing, including the Company's financial condition and requirements, future
prospects, business conditions and other factors deemed relevant by the Board of
Directors. In addition, the Company's
14
<PAGE> 21
future financing documents may contain provisions which restrict the payment of
dividends. See "Dividend Policy," "Description of Capital Stock" and
"Description of Indebtedness."
POSSIBLE ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER PROVISIONS
As the Company's controlling stockholder, CBS will be in a position to
block any acquisition of the Company, even if it would be on terms favorable to
the other stockholders. Because the Class B Common Stock is entitled to five
votes per share on all matters submitted to a vote of the stockholders (as
compared to one vote per share for the Class A Common Stock), CBS will be able
to maintain a control position even if its economic interest is substantially
diluted. See "-- Risks Relating to Control by CBS." Certain other provisions of
the Restated Certificate and the Restated By-Laws of the Company (the "Restated
By-Laws") also may make it more difficult for a third party to acquire control
of the Company. These provisions include: (i) the availability of shares of
Preferred Stock for issuance from time to time at the discretion of the Board of
Directors; (ii) prohibitions against stockholders calling a special meeting of
stockholders or acting by written consent in lieu of a meeting; (iii) the
classification of the Board of Directors into three classes, each of which will
serve for different three-year periods; (iv) a requirement pursuant to Section
141 of the General Corporation Law of the State of Delaware (the "DGCL"), that,
due to the classification of the Board of Directors, directors of the Company
may only be removed for cause; (v) a requirement that certain provisions of the
Restated Certificate may be amended only with the approval of the holders of at
least 80% of the combined voting power of the Common Stock then outstanding;
(vi) requirements for advance notice procedures for raising business or making
nominations at stockholder meetings; and (vii) the ability of the Board of
Directors to increase the size of the Board of Directors and to appoint
directors to fill newly created directorships and vacancies on the Board of
Directors. See "Certain Provisions of the Certificate of Incorporation and
By-Laws of the Company -- Potential Limits on Change of Control."
RISKS RELATING TO POTENTIAL DISTRIBUTION OF CLASS B COMMON STOCK
Each share of the Class B Common Stock will automatically convert into one
share of Class A Common Stock upon its transfer by one CBS Party (as defined in
"Description of Capital Stock") to any person other than another CBS Party.
However, if CBS Parent (as defined in "Description of Capital Stock") were to
distribute its beneficially owned Class B Common Stock to its stockholders in a
Tax-Free Spin-Off (as defined in "Description of Capital Stock"), the Class B
Common Stock would, absent an amendment to the Restated Certificate, continue to
entitle the holders thereof to five votes per share and would not be convertible
into shares of Class A Common Stock. The distribution of shares of Class B
Common Stock in a Tax-Free Spin-Off could have an adverse effect on the market
price of the Class A Common Stock. CBS has agreed that if it distributes the
Class B Common Stock to its stockholders in a Tax-Free Spin-Off, prior to the
Tax-Free Spin-Off it will amend the Restated Certificate to provide for the
automatic conversion of shares of Class B Common Stock into shares of Class A
Common Stock at a specified time following the Tax-Free Spin-Off, if CBS
determines that such conversion would be consistent with qualification of the
transaction as a Tax-Free Spin-Off. No assurance can be given that such
amendment or conversion will occur.
ABSENCE OF PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE
There has not been a public market for the Class A Common Stock. The Class
A Common Stock has been approved for listing on the NYSE under the symbol "INF,"
subject to official notice of issuance. The Company does not know the extent to
which investor interest in the Company will lead to the development of a trading
market or how liquid that market might be. The initial public offering price for
the shares of Class A Common Stock was determined through negotiations between
the Company and representatives of the Underwriters. See "Underwriting."
Investors may not be able to resell their shares at or above the initial public
offering price due to a number of factors, including variations in actual or
anticipated operating results, changes in or failure to meet earnings estimates
of securities analysts, market conditions in the industry, regulatory actions
and general economic conditions.
In addition, in recent years, the stock market has experienced extreme
price fluctuations, sometimes without regard to the performance of particular
companies. Broad market and industry fluctuations may
15
<PAGE> 22
adversely affect the trading price of the Class A Common Stock, regardless of
the actual operating performance of the Company.
SHARES ELIGIBLE FOR FUTURE SALE
The market price of the Class A Common Stock could drop as a result of
sales of a large number of shares of Class A Common Stock in the market after
the Offerings, or the perception that such sales could occur. These factors also
could make it more difficult for the Company to raise funds through future
offerings of Class A Common Stock.
Upon consummation of the Offerings, there will be outstanding 135,000,000
shares of Class A Common Stock and 700,000,000 shares of Class B Common Stock.
The shares of Class A Common Stock sold in the Offerings will be freely tradable
without restriction, except for any shares acquired by an "affiliate" of the
Company (which can be sold under Rule 144, subject to certain volume and other
limitations). All of the shares of Class B Common Stock will be beneficially
owned by CBS. The Class B Common Stock is convertible into Class A Common Stock
at any time at CBS's option. Although it is an affiliate of the Company, CBS
nevertheless could sell substantial amounts of Common Stock pursuant to Rule 144
and it could cause the Company to register some or all of its shares for public
sale. See "Relationships Between the Company and CBS" and "Shares Eligible for
Future Sale."
DILUTION
Purchasers of the Class A Common Stock will experience immediate and
substantial dilution in net tangible book value of $21.64 per share (or $21.15
per share if the Underwriters' over-allotment options are exercised in full) of
Common Stock from the initial public offering price. See "Dilution."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Class A Common Stock
offered hereby, after deducting the underwriting discount and estimated offering
expenses payable by the Company, are estimated to be approximately $2.7 billion
(approximately $3.1 billion if the Underwriters' over-allotment options are
exercised in full), assuming an initial public offering price of $20.50 per
share, which represents the mid-point of the range set forth on the cover of
this Prospectus.
The Company intends to use the net proceeds from the Offerings to prepay
the CBS Note. Any proceeds in excess thereof will be used by the Company to
purchase from CBS American Radio Bonds that are owned by CBS on the date of
consummation of the Offerings for a purchase price in cash equal to the amount
of the purchase price paid by CBS for such American Radio Bonds plus accrued and
unpaid interest, if any, on such purchase price (which interest shall be
calculated in accordance with the terms of the applicable indentures pursuant to
which such American Radio Bonds were issued). Thereafter, any excess net
proceeds will be used for the Company's general corporate purposes, including
for working capital, repayment of debt and possible acquisitions. See
"Description of Indebtedness." The CBS Note bears interest at a rate per annum
equal to the three-month London Interbank Offered Rate ("LIBOR") plus 0.50% and
will mature on September 18, 2003. Unless net proceeds from the Offerings exceed
amounts due in respect of the CBS Note, none of the amounts raised in the
Offerings will be available for use in the Company's business.
DIVIDEND POLICY
Following the Offerings, the Company does not anticipate paying any
dividends on shares of Common Stock. The payment of any future dividends will be
determined by the Board of Directors in light of the conditions then existing,
including the Company's financial condition and requirements, future prospects,
business conditions and other factors deemed relevant by the Board of Directors.
The Company may enter into future loan or other agreements or issue debt
securities or preferred shares which may restrict the payment of dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources" and "Description of
Indebtedness."
16
<PAGE> 23
DILUTION
Dilution is the amount by which the initial public offering price per share
paid by the purchasers of the shares of Class A Common Stock will exceed the net
tangible book value per share of Common Stock after the Offerings. The net
tangible book value per share of Common Stock is determined by subtracting the
total liabilities of the Company from the total book value of the tangible
assets of the Company on a consolidated basis and dividing the difference by the
number of shares of Common Stock deemed to be outstanding on the date on which
such book value is determined. The following tables assume that the
Underwriters' over-allotment options have not been exercised.
As of September 30, 1998, the Company had a deficit in net tangible book
value of $3,566 million. After giving effect to (i) the transfer of cash to CBS
in an amount not to exceed $42.0 million from the Company's cash-on-hand at
September 30, 1998, together with all cash generated from the Company's
operations during the period from October 1, 1998, through the date prior to the
consummation of the Offerings ("the Transfer"), (ii) the Offerings and (iii) the
application of the net proceeds therefrom, the pro forma deficit in net tangible
book value of the Common Stock as of September 30, 1998, would have been
approximately $955 million, or $1.14 per share. This represents an immediate
increase in net tangible book value of $3.95 per share to CBS (the Company's
existing beneficial stockholder) and an immediate dilution in net tangible book
value of $21.64 per share to new investors. The following table illustrates such
per share dilution:
<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $20.50
Deficit in net tangible book value per share as of
September 30, 1998..................................... $5.09
Increase in net tangible book value per share attributable
to the Offerings and the Transfer...................... 3.95
-------
Pro forma deficit in net tangible book value per share as of
September 30, 1998, after giving effect to the
Offerings................................................. 1.14
-------
Immediate dilution per share to new investors in the
Offerings................................................. $21.64
=======
</TABLE>
The following table sets forth, on a pro forma basis, as of September 30,
1998, the number of shares of Class B Common Stock purchased from the Company,
the total consideration paid to the Company and the average price per share paid
to the Company by CBS, as the existing beneficial stockholder, and by the
investors purchasing shares of Class A Common Stock (before deducting
underwriting discounts and commissions and offering expenses) pursuant to the
Offerings.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------------- ------------------------- AVERAGE
NUMBER AMOUNT PRICE
(IN THOUSANDS) PERCENT (IN THOUSANDS) PERCENT PER SHARE
-------------- ------- -------------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1)............ 700,000 83.8% $5,789,054 67.7% $ 8.27
New investors....................... 135,000 16.2 2,767,500 32.3 20.50
-------- ----- ---------- -----
Total..................... 835,000 100.0% $8,556,554 100.0%
======== ===== ========== =====
</TABLE>
- ---------------
(1) After giving effect to the conversion of 1,090 shares of common stock of the
Company into 700,000,000 shares of Class B Common Stock.
The calculations in the above tables exclude 19,750,000 shares of Class A
Common Stock reserved for issuance under the Company's 1998 Plan, Annual
Incentive Plan and Savings Plans. See "Management -- Long-Term Incentives,"
"-- Annual Incentives" and "-- Savings Plans."
17
<PAGE> 24
CAPITALIZATION
The following table sets forth: (i) the actual capitalization of the
Company as of September 30, 1998; and (ii) the capitalization of the Company as
of September 30, 1998, as adjusted to give effect to (a) the transfer of cash to
CBS in an amount not to exceed $42.0 million from the Company's cash-on-hand at
September 30, 1998, together with all cash generated from the Company's
operations during the period from October 1, 1998, through the date prior to the
consummation of the Offerings, (b) to the sale of 135,000,000 shares of Class A
Common Stock in the Offerings and (c) the application of the net proceeds
therefrom, assuming that the Underwriters' over-allotment options have not been
exercised. See "Use of Proceeds." This table should be read in conjunction with
"Selected Combined and Pro Forma Financial Data," "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Combined
Financial Statements of the Company and the related Notes thereto included
elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT SEPTEMBER 30, 1998
---------------------
ACTUAL AS ADJUSTED
------ -----------
(DOLLARS IN MILLIONS)
<S> <C> <C>
Cash and cash equivalents................................... $ 74 $ 73
====== ======
Long-term debt(1)........................................... $ 651 $ 541
CBS Note.................................................... 2,500 --
Stockholders' equity:
Preferred Stock, $.01 par value per share,
50,000,000 shares authorized, zero and zero shares
issued and outstanding................................ -- --
Class A Common Stock, $.01 par value per share,
2,000,000,000 shares authorized, zero and
135,000,000 shares issued and outstanding(2)........... -- 1
Class B Common Stock, $.01 par value per share,
2,000,000,000 shares authorized, zero and
700,000,000 shares issued and outstanding.............. -- 7
Contributed capital in excess of par value................ 5,831 8,434
Accumulated earnings...................................... -- --
------ ------
Total stockholders' equity........................ 5,831 8,442
------ ------
Total capitalization........................................ $8,982 $8,983
====== ======
</TABLE>
- ---------------
(1) Excludes the CBS Note and current portion of long-term debt (aggregating
$0.7 million as of September 30, 1998). For information concerning the
Company's long-term debt, see Note 9 to the Company's Combined Financial
Statements. Prior to the Offerings, the Company expects to become a borrower
under CBS's existing $4.0 billion revolving credit facility, pursuant to
which up to $1.0 billion will be available to the Company for revolving
loans. See "Description of Indebtedness -- CBS Credit Agreement."
(2) Excludes an aggregate of 19,750,000 shares of Class A Common Stock reserved
for issuance under the Company's 1998 Plan, Annual Incentive Plan and
Savings Plans. See "Management -- Long-Term Incentives," "-- Annual
Incentives" and "-- Savings Plans."
18
<PAGE> 25
SELECTED COMBINED AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
The selected historical combined financial data of the Company presented
below as of December 31, 1996 and 1997, and for the years ended December 31,
1995, 1996 and 1997 have been derived from, and are qualified by reference to,
the audited Combined Financial Statements of the Company included elsewhere in
this Prospectus. The selected historical combined financial data of the Company
presented below as of September 30, 1998 and for the nine-month periods ended
September 30, 1997 and 1998 have been derived from, and are qualified by
reference to, the unaudited combined financial statements of the Company
included elsewhere in this Prospectus. The selected historical combined
financial data of the Company presented below as of December 31, 1993, 1994 and
1995 and for the years ended December 31, 1993 and 1994 have been derived from
unaudited Combined Financial Statements of the Company not included in this
Prospectus. The selected combined financial data should be read in conjunction
with "Capitalization," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Combined Financial Statements and
the related Notes thereto and the other financial information included elsewhere
in this Prospectus. The Company's unaudited financial statements as of September
30, 1998 and for the nine-month periods ended September 30, 1997 and 1998
include, in the opinion of management, all adjustments, consisting only of
normal recurring adjustments, which the Company considers necessary for a fair
presentation of the financial position and results of operations of the Company
for these periods. Results for the nine-month periods are not necessarily
indicative of the results to be expected for the full year.
The selected pro forma statement of earnings and other operating data give
pro forma effect to the acquisition of American Radio and its acquisitions, and
to the issuance of shares of Class A Common Stock in the Offerings, in each case
as if they had taken place on January 1, 1997. The pro forma statement of
earnings and other operating data do not give pro forma effect to the issuance
of the CBS Note because it is expected to be substantially or entirely repaid
from the proceeds of the Offerings. The pro forma adjustments are based upon
available information and certain assumptions that management of the Company
believes are reasonable. The pro forma financial data do not purport to
represent the results of operations or the financial position of the Company
which actually would have occurred had the American Radio acquisition taken
place on the date indicated, nor are they necessarily indicative of future
operating results. The selected pro forma statement of earnings and other
operating data should be read in conjunction with "Unaudited Combined Pro Forma
Financial Information."
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
HISTORICAL PRO
------------------------------------------------------ FORMA
1993 1994 1995 1996 1997 1997(1)
-------- -------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................... $180,739 $174,722 $216,288 $554,088 $1,480,091 $1,873,413
Operating expenses excluding
depreciation and
amortization................. 113,908 103,456 136,419 343,920 888,405 1,147,155
Depreciation and
amortization................. 14,670 15,591 17,914 57,528 197,135 285,685
Corporate expenses............. 8,134 8,492 8,736 13,434 22,277 30,484
-------- -------- -------- -------- ---------- ----------
Operating earnings............. 44,027 47,183 53,219 139,206 372,274 410,089
Interest expense, net.......... -- -- -- -- 3,645 50,639
Net earnings................... $28,243 $42,649 $27,673 $71,566 $177,629 $162,076
Net earnings per common
share -- basic and diluted... $0.04 $0.06 $0.04 $0.10 $0.25 $0.19
Weighted average shares
outstanding -- basic and
diluted...................... 700,000 700,000 700,000 700,000 700,000 835,000
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------------------
HISTORICAL PRO
----------------------- FORMA
1997 1998 1998(1)
---------- ---------- ----------
<S> <C> <C> <C>
STATEMENT OF EARNINGS DATA:
Net revenues................... $1,068,289 $1,319,690 $1,487,065
Operating expenses excluding
depreciation and
amortization................. 654,489 767,507 886,345
Depreciation and
amortization................. 149,061 177,249 214,356
Corporate expenses............. 16,881 13,145 18,615
---------- ---------- ----------
Operating earnings............. 247,858 361,789 367,749
Interest expense, net.......... 3,519 22,038 41,843
Net earnings................... $115,967 $165,580 $182,986
Net earnings per common
share -- basic and diluted... $0.17 $0.24 $0.22
Weighted average shares
outstanding -- basic and
diluted...................... 700,000 700,000 835,000
</TABLE>
(footnotes on following page)
19
<PAGE> 26
<TABLE>
<CAPTION>
AT DECEMBER 31, AT SEPTEMBER 30, 1998
---------------------------------------------------------- ----------------------------
1993 1994 1995 1996 1997 ACTUAL AS ADJUSTED(2)
-------- -------- ---------- ---------- ---------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets.......................... $477,568 $485,747 $1,878,208 $7,261,952 $7,074,103 $10,406,311 $10,404,865
Long-term debt (including current
portion)............................ -- -- -- 150,494 2,092 3,151,274 541,274
Stockholders' equity.................. 454,813 511,453 1,659,602 6,418,701 6,397,388 5,831,054 8,441,904
Working capital....................... 29,668 32,238 79,500 273,403 247,206 350,098 350,948
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
HISTORICAL PRO
------------------------------------------------------------ FORMA
1993 1994 1995 1996 1997 1997(1)
-------- -------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA(3).................. $ 61,413 $ 93,095 $ 71,324 $ 197,043 $ 575,387 $ 706,369
Capital expenditures....... 3,438 7,843 9,368 6,682 15,264 17,311
After-tax Cash Flow(3)..... 42,913 58,240 45,587 129,094 374,764 447,761
Cash flow from operating
activities............... 40,582 25,287 49,401 103,943 310,264 339,992
Cash flow from investing
activities............... (15,789) 3,976 (1,213,810) (1,000,847) 21,870 (406,697)
Cash flow from financing
activities............... (24,743) (29,131) 1,164,221 916,771 (329,494) 196,648
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------------
HISTORICAL PRO
---------------------- FORMA
1997 1998 1998(1)
--------- ---------- ----------
<S> <C> <C> <C>
OTHER OPERATING DATA:
EBITDA(3).................. $ 397,489 $ 540,825 $ 630,249
Capital expenditures....... 9,818 19,793 23,372
After-tax Cash Flow(3)..... 265,028 342,829 397,342
Cash flow from operating
activities............... 239,099 316,417 338,241
Cash flow from investing
activities............... 18,944 (1,397,696) (1,437,823)
Cash flow from financing
activities............... (251,003) 1,133,053 1,171,305
</TABLE>
- ---------------
(1) The pro forma statement of earnings and other operating data give effect to:
(i) the Company's acquisition of American Radio; (ii) American Radio's
acquisitions and dispositions in 1997; and (iii) the issuance of shares of
Class A Common Stock in the Offerings (assuming that the Underwriters'
over-allotment options have not been exercised), in each case as if such
transactions occurred at January 1, 1997. See "Unaudited Combined Pro Forma
Financial Information." The pro forma statement of earnings and other
operating data do not give effect to the issuance by Old Infinity of the CBS
Note because it is expected to be substantially or entirely repaid from the
net proceeds of the Offerings. To the extent the net proceeds of the
Offerings are not sufficient to repay the CBS Note, additional interest
expense would be incurred. Based on current interest rates, approximately
$6.0 million in additional annual interest expense would result for every
$100.0 million of unpaid principal of the CBS Note.
(2) As adjusted to give effect to (i) the transfer of cash to CBS in an amount
not to exceed $42.0 million from the Company's cash-on-hand at September 30,
1998, together with all cash generated from the Company's operations during
the period from October 1, 1998, through the date prior to the consummation
of the Offerings, (ii) the Offerings and (iii) the application of the net
proceeds therefrom. See "Use of Proceeds."
(3) EBITDA represents earnings before interest, taxes, depreciation and
amortization. After-tax Cash Flow represents net earnings plus depreciation
and amortization. Although EBITDA and After-tax Cash Flow are not measures
of performance calculated in accordance with generally accepted accounting
principles, management believes that they are useful to an investor in
evaluating the Company because they are measures widely used in the
broadcast industry to evaluate a company's operating performance. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Use of EBITDA." Nevertheless, EBITDA and After-tax Cash Flow
should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is
calculated in accordance with generally accepted accounting principles. As
EBITDA and After-tax Cash Flow are not measures of performance calculated in
accordance with generally accepted accounting principles, these measures may
not be comparable to similarly titled measures employed by other companies.
Management's discretionary use of funds depicted by EBITDA and After-tax
Cash Flow may be limited by working capital, debt service and capital
expenditure requirements and by restrictions related to legal requirements,
commitments and uncertainties.
20
<PAGE> 27
UNAUDITED COMBINED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information is based on the
historical financial statements of the Company and American Radio and has been
prepared to describe the effects of the following: (i) the Company's acquisition
of the radio operations of American Radio; (ii) American Radio's acquisitions
and dispositions of radio stations during the years ended December 31, 1997, and
the nine months ended September 30, 1998; and (iii) related financing
transactions.
The acquisition of American Radio was accounted for using the purchase
method. The acquisition was completed on June 4, 1998 and, accordingly, has been
reflected in the historical combined balance sheet as of September 30, 1998 and
the results of operations have been included subsequent to the acquisition. The
unaudited pro forma combined statements of earnings give effect to the
acquisition of American Radio as if such transaction had been completed on
January 1, 1997.
During 1997 and 1998, American Radio made certain acquisitions and
dispositions of radio stations. The pro forma adjustments give effect to such
transactions as if they had occurred on January 1, 1997.
The Unaudited Combined Pro Forma Financial Information does not purport to
present the actual results of operations of the Company if the acquisition of
American Radio and its acquisitions had occurred on January 1, 1997, nor are
they necessarily indicative of the results of operations that may be achieved in
the future. The Unaudited Combined Pro Forma Financial Information is based on
certain assumptions and adjustments described in the notes hereto and should be
read in conjunction therewith. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Combined Financial
Statements of the Company and Notes thereto and the Consolidated Financial
Statements of American Radio and Notes thereto included elsewhere in this
Prospectus.
21
<PAGE> 28
INFINITY BROADCASTING CORPORATION
UNAUDITED COMBINED PRO FORMA STATEMENT OF EARNINGS
NINE MONTHS ENDED SEPTEMBER 30, 1998
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AMERICAN
RADIO AS
ADJUSTED
JANUARY 1, 1998
THE TO JUNE 4, PRO FORMA COMBINED
COMPANY 1998(1) ADJUSTMENTS PRO FORMA
------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Net revenues............................ $1,319,690 $167,375 -- $1,487,065
---------- -------- ------- ----------
Operating expenses excluding
depreciation and amortization......... 767,507 118,838 -- 886,345
Depreciation and amortization........... 177,249 27,503 $ 9,604(2) 214,356
Corporate expenses...................... 13,145 5,470 -- 18,615
---------- -------- ------- ----------
Total operating expenses................ 957,901 151,811 9,604 1,119,316
---------- -------- ------- ----------
Operating earnings...................... 361,789 15,564 (9,604) 367,749
Interest expense, net................... (22,038) (30,311) 10,506(3) (41,843)
Other income, net....................... 1,787 46,357 -- 48,144
---------- -------- ------- ----------
Earnings before income taxes............ 341,538 31,610 902 374,050
Income tax expense...................... 175,958 9,463 5,643(4) 191,064
---------- -------- ------- ----------
Net earnings............................ $ 165,580 $ 22,147 $(4,741) $ 182,986
========== ======== ======= ==========
Net earnings per common share -- basic
and diluted........................... $ 0.24 $ 0.26
========== ==========
Weighted average shares
outstanding -- basic and diluted...... 700,000 700,000
========== ==========
</TABLE>
See Notes to Unaudited Combined Pro Forma Financial Information
22
<PAGE> 29
INFINITY BROADCASTING CORPORATION
UNAUDITED COMBINED PRO FORMA STATEMENT OF EARNINGS
YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
AMERICAN
THE RADIO AS PRO FORMA COMBINED
COMPANY ADJUSTED (5) ADJUSTMENTS PRO FORMA
---------- ------------ ----------- ----------
<S> <C> <C> <C> <C>
Net revenues................................. $1,480,091 $393,322 -- $1,873,413
---------- -------- ------- ----------
Operating expenses excluding depreciation
and amortization........................... 888,405 258,750 -- 1,147,155
Depreciation and amortization................ 197,135 72,400 $16,150(2) 285,685
Corporate expenses........................... 22,277 8,207 -- 30,484
---------- -------- ------- ----------
Total operating expenses..................... 1,107,817 339,357 16,150 1,463,324
---------- -------- ------- ----------
Operating earnings........................... 372,274 53,965 (16,150) 410,089
Interest expense, net........................ (3,645) (69,686) 22,692(3) (50,639)
Other income, net............................ 5,978 4,617 -- 10,595
---------- -------- ------- ----------
Earnings (loss) before income taxes.......... 374,607 (11,104) 6,542 370,045
Income tax expense (benefit)................. 196,978 (1,922) 12,913(4) 207,969
---------- -------- ------- ----------
Net earnings (loss).......................... $ 177,629 $ (9,182) $(6,371) $ 162,076
========== ======== ======= ==========
Net earnings per common share -- basic
and diluted................................ $ 0.25 $ 0.23
========== ==========
Weighted average shares outstanding -- basic
and diluted................................ 700,000 700,000
========== ==========
</TABLE>
See Notes to Unaudited Combined Pro Forma Financial Information
23
<PAGE> 30
NOTES TO UNAUDITED COMBINED PRO FORMA FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
(1) On June 4, 1998, the Company acquired the radio operations of American
Radio. The acquisition was accounted for as a purchase and, accordingly, the
Company recognized the results of the acquired radio operations subsequent
to that date. The historical American Radio results for the period prior to
the acquisition (January 1, 1998 to June 4, 1998) have been adjusted to give
effect to American Radio's related acquisitions and dispositions as of
January 1, 1997. The historical results of American Radio for the period
prior to the acquisition include a pre-tax gain of $46,108 on the
divestiture of radio stations.
(2) The adjustment reflects the incremental amortization expense resulting from
the increase in the value of FCC licenses and goodwill to their estimated
fair value at the date of acquisition, based on an estimated 40 years.
(3) The adjustment represents a reduction in interest expense to reflect the
following: (i) reduction of American Radio's stated interest rates to their
estimated fair value at the acquisition date; (ii) adjustment to increase
interest expense for amounts previously recorded as preferred stock
dividends; and (iii) elimination of interest on American Radio's bank debt
which was repaid in connection with the acquisition.
(4) The adjustment reflects the tax consequences of higher non-deductible
goodwill and the net tax effect of lower interest cost and higher FCC
license amortization.
(5) The results of American Radio for the year ended December 31, 1997 have been
adjusted to give effect to American Radio's related acquisitions and
dispositions as of January 1, 1997 as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------
AMERICAN
RADIO
AMERICAN PRO FORMA AS
RADIO ADJUSTMENTS ADJUSTED
-------- ----------- --------
<S> <C> <C> <C>
Net revenues................................................ $357,020 $36,302(a) $393,322
-------- ------- --------
Operating expenses excluding depreciation and
amortization.............................................. 234,311 24,439(a) 258,750
Depreciation and amortization............................... 58,417 13,983(a) 72,400
Corporate expenses.......................................... 8,207 8,207
-------- ------- --------
Total operating expenses.................................... 300,935 38,422 339,357
-------- ------- --------
Operating earnings.......................................... 56,085 (2,120) 53,965
Interest expense, net....................................... (54,596) (15,090) (69,686)
Other income (expense), net................................. (2,902) 7,519(a) 4,617
-------- ------- --------
Loss before income taxes.................................... (1,413) (9,691) (11,104)
Income tax expense (benefit)................................ 1,125 (3,047) (1,922)
-------- ------- --------
Loss from continuing operations............................. $(2,538) $(6,644) $ (9,182)
======== ======= ========
</TABLE>
(a) During 1997, American Radio made certain acquisitions and dispositions
of radio stations. The pro forma adjustments give effect to such
transactions as if they occurred on January 1, 1997.
24
<PAGE> 31
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The following discussion and analysis of the Company's financial condition
and results of operations should be read in conjunction with the Combined
Financial Statements and the related Notes thereto included elsewhere in this
Prospectus.
The Company was formed to own and operate the out-of-home media business of
CBS Corporation, which prior to December 1, 1997, was known as Westinghouse
Electric Corporation. Initially, the Company consisted of the Westinghouse radio
stations. In November 1995, Westinghouse acquired CBS Inc. In December 1996,
Westinghouse acquired Old Infinity, which also owned TDI and had a minority
equity interest in and managed Westwood One. On June 4, 1998, CBS acquired the
radio broadcasting operations of American Radio. Prior to the Offerings, CBS
effected a reorganization (the "Reorganization") by contributing to the Company,
at book value, certain subsidiaries (including Old Infinity and American Radio)
and net assets comprising substantially all of CBS's out-of-home media business.
CBS will retain its investment in USA Digital Radio Partners, L.P., which was
formed to develop digital technology.
Although the Company was not actually formed until September 1998, the
combined financial statements present the operations of the out-of-home media
business that will be owned and operated by the Company as if the Company had
been a separate entity for all periods presented. Furthermore, although the
acquisitions described above were actually consummated by Westinghouse or CBS,
for purposes of the Combined Financial Statements and the following discussion
and analysis, the acquisitions have been presented as if they were made by the
Company and as if the consideration needed to effect the acquisitions was
contributed to the Company by Westinghouse or CBS.
Thus, for purposes of the Combined Financial Statements and the following
discussion and analysis, on November 24, 1995, the Company (then consisting of
Westinghouse's radio operations) is treated as having acquired the radio
operations of CBS Inc., using cash contributed by CBS (which was then known as
Westinghouse) of $1.2 billion. Similarly, the Company is treated as having
acquired, on December 31, 1996, Old Infinity for $4.7 billion consisting of $3.8
billion of CBS's common stock and $0.9 billion of debt which was repaid
immediately prior to the acquisition. For financial statement purposes, the CBS
common stock and the cash used to repay the debt of Old Infinity are treated as
having been contributed to the Company by CBS. The Company is treated as having
completed, on June 4, 1998, the acquisition of the radio broadcasting operations
of American Radio for $1.4 billion in cash plus the assumption of debt with a
fair value of approximately $1.3 billion. In connection with the acquisition of
American Radio, the Company is treated as having received a $1.4 billion capital
contribution from CBS and as having recorded an additional $0.6 billion capital
contribution which was used to repay debt assumed in the transaction. These
acquisitions were accounted for under the purchase method of accounting. See
"Business -- The Company."
The combined historical financial information is not necessarily indicative
of the results of operations, financial position and cash flows that would have
resulted if the Reorganization had occurred on January 1, 1993 and if the
Company had actually operated as a separate, stand-alone entity during this
period. The combined historical financial information does not reflect the
changes that will occur in the funding and operations of the Company as a result
of the Reorganization and the Offerings. See "Relationships Between the Company
and CBS."
SOURCES OF REVENUE
The Company derives substantially all of its revenues from sales of
advertising, either on its radio stations or on its outdoor advertising
displays. The Company's revenues are affected primarily by the advertising rates
the Company is able to charge. These rates are in large part based on conditions
in the economy, conditions in each station's market and on a station's ability
to attract audiences in the demographic groups targeted by its advertisers. The
ability to attract radio audiences is measured principally by independent
national rating services. Approximately 80% of the Company's revenues are
derived from the operation of radio stations.
25
<PAGE> 32
COMPONENTS OF EXPENSES
The primary operating expenses involved in owning and operating radio
stations and outdoor advertising facilities are employee costs, programming,
solicitation of advertising and promotion. The Company's net earnings also
reflect substantial amortization of broadcast licenses and goodwill. In
addition, the Company's effective tax rate exceeds the federal statutory rate
primarily because of the non-deductible goodwill acquired in recent business
acquisitions.
USE OF EBITDA
Management believes that EBITDA is an appropriate measure for evaluating
the operating performance of the Company's business. EBITDA eliminates the
effect of depreciation and amortization of tangible and intangible assets, most
of which were acquired in acquisitions accounted for under the purchase method
of accounting, including CBS's radio operations, Old Infinity and American
Radio. The exclusion of amortization expense eliminates variations in results
among stations or other entities caused by the timing of acquisitions. More
recent acquisitions reflect higher amortization expense due to increasing prices
paid for FCC licenses and goodwill. However, EBITDA should be considered in
addition to, not as a substitute for, operating earnings, net earnings, cash
flows and other measures of financial performance reported in accordance with
generally accepted accounting principles. Management's discretionary use of
funds depicted by EBITDA may be limited by working capital, debt service and
capital expenditure requirements and by restrictions related to legal
requirements, commitments and uncertainties.
RESULTS OF OPERATIONS -- THE COMPANY
Nine Months Ended September 30, 1998 Compared to Nine Months Ended September
30, 1997
Net revenues for the nine months ended September 30, 1998 were $1,320
million compared to $1,068 million for the nine months ended September 30, 1997,
an increase of 24%. Driving this increase was the continued strong performance
of the stations, as well as strong growth in outdoor advertising. In addition,
the operations of American Radio subsequent to its June 1998 acquisition
contributed to the increase. On a pro forma basis, assuming the American Radio
acquisition had occurred as of January 1, 1997, net revenues for the nine months
ended September 30, 1998 compared to the nine months ended September 30, 1997
would have increased by approximately 12%.
Operating expenses (excluding depreciation and amortization expense) for
the nine months ended September 30, 1998 were $768 million compared to $654
million for the nine months ended September 30, 1997, an increase of 17%.
Operating expenses did not increase in the same proportion as the increase in
revenues because a substantial portion of the Company's costs are fixed. On a
pro forma basis, assuming the American Radio acquisition had occurred as of
January 1, 1997, operating expenses for the nine months ended September 30, 1998
compared to the nine months ended September 30, 1997 would have increased by
approximately 5%.
Corporate expenses for the nine months ended September 30, 1998 were $13
million compared to $17 million for the nine months ended September 30, 1997.
Depreciation and amortization expense for the nine months ended September
30, 1998 was $177 million compared to $149 million for the nine months ended
September 30, 1997, an increase of approximately 19%. The increase represents
additional depreciation and amortization expense resulting from the June 4, 1998
acquisition of American Radio. On a pro forma basis, assuming the American Radio
acquisition had occurred as of January 1, 1997, depreciation and amortization
expense for the nine months ended September 30, 1998 would have been comparable
to the prior year.
Operating earnings for the nine months ended September 30, 1998 were $362
million compared to $248 million for the nine months ended September 30, 1997,
an increase of 46%. This increase was primarily attributable to the higher
revenues and to the June 1998 acquisition of American Radio. On a pro forma
basis, assuming the American Radio acquisition had occurred as of January 1,
1997, operating earnings for the nine months ended September 30, 1998 compared
to the nine months ended September 30, 1997 would have increased by
approximately 37%.
26
<PAGE> 33
EBITDA for the nine months ended September 30, 1998 was $541 million
compared to $397 million for the nine months ended September 30, 1997, an
increase of 36%. On a pro forma basis, assuming the American Radio acquisition
had occurred as of January 1, 1997, EBITDA for the nine months ended September
30, 1998 compared to the nine months ended September 30, 1997 would have
increased by approximately 30%. This increase is due, in part, to a $46 million
gain on the disposal of a radio station recognized by American Radio before its
acquisition by the Company. Cash flow from operating activities totaled $316
million for the nine months ended September 30, 1998 compared to $239 million
for the same period of 1997. On a pro forma basis, cash flow from operating
activities would have increased 28% for the same periods. Cash flow from
operating activities includes cash paid for interest and taxes as well as the
effects of certain changes in assets and liabilities. See "-- Liquidity and
Capital Resources" for information regarding cash flows from investing and
financing activities.
Interest expense for the nine months ended September 30, 1998 was $22
million compared to $4 million for the nine months ended September 30, 1997. The
interest expense for the 1998 period resulted from debt assumed in the American
Radio acquisition and interest on the CBS Note, while interest for the 1997
period resulted primarily from $149 million of notes issued by Old Infinity,
which were redeemed by the Company in March 1997.
Income taxes for the nine months ended September 30, 1998 were $176 million
compared to $129 million for the nine months ended September 30, 1997. The
effective tax rate was 52% for the nine months ended September 30, 1998 compared
to 53% for the nine months ended September 30, 1997.
Net earnings for the nine months ended September 30, 1998 totaled $166
million compared to $116 million for the nine months ended September 30, 1997,
an increase of $50 million or 43%.
Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Net revenues for the year ended December 31, 1997 were $1,480 million
compared to $554 million for the year ended December 31, 1996. This increase in
revenues was driven primarily by the inclusion of the results of operations for
Old Infinity, which was acquired on December 31, 1996, and the overall strong
performance of the existing radio stations. On a pro forma basis, assuming the
Old Infinity acquisition had occurred as of January 1, 1996, net revenues for
the year ended December 31, 1997 would have increased approximately 20%. These
results reflect strong markets combined with management's continued focus on
improving revenue growth.
Operating expenses (excluding depreciation and amortization expense) for
1997 were $888 million compared to $344 million for 1996. The increase was due
principally to the above acquisition and expenses associated with higher
revenues. On a pro forma basis, assuming the Old Infinity acquisition had
occurred as of January 1, 1996, station operating expenses in 1997 would have
increased approximately 6%.
Corporate expenses for 1997 totaled $22 million compared to $13 million for
1996, an increase of $9 million primarily from the Old Infinity acquisition.
Depreciation and amortization expense for 1997 was $197 million compared to
$58 million for 1996. The increase was due to the amortization expense
associated with the Old Infinity acquisition. On a pro forma basis, assuming the
Old Infinity acquisition had occurred as of January 1, 1996, depreciation and
amortization expense in 1997 would have been comparable to the prior year.
Operating earnings for 1997 were $372 million compared to $139 million for
1996. The increase was due principally to the acquisition of Old Infinity and
improved results at the Company's radio stations. On a pro forma basis,
operating earnings in 1997 increased approximately 26% as a result of the
revenue increase.
EBITDA for 1997 was $575 million compared to $197 million for 1996. On a
pro forma basis, assuming the Old Infinity acquisition had occurred as of
January 1, 1996, EBITDA would have increased approximately 29%. Cash flow from
operating activities totaled $310 million in 1997 compared to $104 million in
1996. On a pro forma basis, cash flow from operating activities would have
increased 58%. Cash flow from operating activities includes cash paid for
interest and taxes as well as the effects of certain changes in assets and
liabilities. See "-- Liquidity and Capital Resources" for information regarding
cash flows from investing and financing activities.
27
<PAGE> 34
Interest expense for 1997 totaled $4 million, while there was no interest
expense for 1996. The interest expense for 1997 resulted from debt originally
issued by Old Infinity which was repaid by the Company in March 1997.
Other income of $6 million for 1997 consists primarily of a gain on the
disposal of a radio station.
Income taxes for 1997 totaled $197 million compared to $68 million for
1996. The effective tax rate was 53% for 1997 compared to 49% for 1996. The
increase resulted primarily from non-deductible goodwill associated with the Old
Infinity acquisition.
Net earnings for 1997 totaled $178 million compared to $72 million for
1996.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Net revenues for the year ended December 31, 1996 were $554 million
compared to $216 million for the year ended December 31, 1995, an increase of
156%. The increase was due principally to the acquisition of the radio
operations of CBS Inc. (the "CBS Radio Acquisition"). On a pro forma basis,
assuming the CBS Radio Acquisition had occurred as of January 1, 1995, net
revenues for the year ended December 31, 1996 would have increased approximately
11%.
Operating expenses (excluding depreciation and amortization expense) for
1996 were $344 million compared to $136 million for 1995. The increase was due
principally to the CBS Radio Acquisition. On a pro forma basis, assuming the CBS
Radio Acquisition had occurred as of January 1, 1995, operating expenses in 1996
would have decreased approximately 2%.
Corporate expenses for 1996 totaled $13 million compared to $9 million for
1995, an increase of $4 million primarily from the CBS Radio Acquisition.
Depreciation and amortization expense for 1996 was $58 million as compared
to $18 million for 1995. The increase was due to the depreciation and
amortization expense associated with the CBS Radio Acquisition. On a pro forma
basis, assuming the acquisition had occurred as of January 1, 1995, depreciation
and amortization expense in 1996 would have increased approximately 3%.
Operating earnings for 1996 were $139 million compared to $53 million for
1995. The increase was primarily due to the CBS Radio Acquisition. On a pro
forma basis, assuming the acquisition had occurred as of January 1, 1995,
operating earnings in 1996 would have increased 95%.
EBITDA for 1996 was $197 million compared to $71 million for 1995. On a pro
forma basis, assuming the CBS Radio Acquisition had occurred as of January 1,
1995, EBITDA in 1996 would have increased approximately 49%. Cash flow from
operating activities totaled $104 million in 1996 compared to $49 million in
1995. On a pro forma basis, cash flow from operating activities would have
decreased 6%. Cash flow from operating activities includes cash paid for
interest and taxes as well as the effects of certain changes in assets and
liabilities. See "-- Liquidity and Capital Resources" for information regarding
cash flows from investing and financing activities.
Income taxes for 1996 were $68 million compared to $26 million for 1995.
The effective tax rate was 49% for 1996 compared to 48% for 1995.
Net earnings for 1996 totaled $72 million compared to $28 million for 1995,
an increase of $44 million.
SEASONALITY
Seasonal revenue fluctuations are common in the out-of-home media industry
and are primarily the result of fluctuations in advertising expenditures by
retailers. The Company's revenue is typically lowest in the first quarter and
highest in the second and fourth quarters.
NEW PRONOUNCEMENTS
In April 1998, Statement of Position (SOP) 98-5 "Reporting on the Costs of
Start-up Activities" was issued. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. The
Company
28
<PAGE> 35
does not anticipate that the adoption of this standard will have a material
impact on the Company's combined financial position or results of operations.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. SFAS 133 standardizes the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring that an entity recognize those items as assets or
liabilities in the statement of financial position and measure them at fair
value. The statement is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. The Company has entered into an insignificant
number of derivative and hedging transactions and does not anticipate that the
adoption of this standard will have a material impact on the Company's combined
financial position, financial results of operations or disclosure.
LIQUIDITY AND CAPITAL RESOURCES
During the Company's historical periods, its liquidity was managed by CBS.
In general, the Company's operations generate cash substantially in excess of
that required for recurring operations and capital expenditures. As a result,
management expects that the Company will have sufficient liquidity to meet
ordinary future business needs. Sources of liquidity generally available to the
Company include cash from operations, cash and cash equivalents, borrowings or
issuances of equity securities. The Company had approximately $3.2 billion of
long-term debt (including the $2.5 billion CBS Note) outstanding at September
30, 1998. Additional debt or equity financing may be required for future
material acquisitions, if any. The Company's ability to incur additional debt is
subject to significant restrictions under the CBS Credit Agreement. See
"-- Financing Activities."
The acquisition of American Radio by the Company in June 1998 resulted in
significant changes in several balance sheet items, including the allowance for
doubtful accounts, from December 31, 1997 to September 30, 1998.
The Company had working capital of $350 million, $247 million and $273
million at September 30, 1998, December 31, 1997 and December 31, 1996,
respectively.
Operating Activities
The Company's operating activities provided $316 million of cash in the
nine months ended September 30, 1998 compared to $239 million in the nine months
ended September 30, 1997. The increase relates primarily to the improved
operating results for the nine months ended September 30, 1998 compared to the
corresponding period of the prior year. The operating activities provided $310
million of cash in 1997 compared to $104 million in 1996. The increase in 1997
was primarily related to the cash provided by the operations of Old Infinity,
acquired on December 31, 1996. In 1995, the operating activities provided $49
million of cash. The increase in operating cash flows from 1995 to 1996 was
driven by the CBS Radio Acquisition in November 1995.
Investing Activities
The Company's investing activities used $1.4 billion of cash in the nine
months ended September 30, 1998, primarily for the acquisition of American
Radio, compared to $19 million of cash provided in the nine months ended
September 30, 1997. Investing activities provided cash of $22 million during
1997. During 1996, investing activities used $1.0 billion, primarily for the
cash portion of the consideration for Old Infinity while during 1995, the
Company used $1.2 billion of cash for the CBS Radio Acquisition.
The Company's capital expenditures totaled $15 million in 1997 compared to
$7 million in 1996 and $9 million in 1995. The Company's business does not
require substantial investment in capital.
Financing Activities
Cash provided by financing activities totaled $1.1 billion in the nine
months ended September 30, 1998 compared to cash used of $251 million in the
nine months ended September 30, 1997. Cash provided during the 1998 period
relates primarily to cash provided by CBS to complete the acquisition of
American Radio. Cash used during the nine months ended September 30, 1997
relates to the repayment of debt assumed in the
29
<PAGE> 36
Old Infinity acquisition. Cash used by financing activities during 1997 totaled
$329 million reflecting the repayment of Old Infinity debt as well as $180
million of net payments to CBS as the Company generated cash earnings. In 1996,
financing activities generated $917 million of cash primarily reflecting the
cash received from CBS for the cash portion of the consideration for the Old
Infinity acquisition. In 1995, financing activities provided cash of $1.2
billion, which primarily represents cash from CBS used for the CBS Radio
Acquisition.
Prior to the Offerings, the Company expects to become a borrower under
CBS's existing $4.0 billion revolving credit facility, pursuant to which up to
$1.0 billion will be available to the Company for revolving loans. The CBS
Credit Agreement terminates on August 29, 2001. CBS unconditionally and
irrevocably guarantees the obligations of each subsidiary borrower under the CBS
Credit Agreement. The terms of the CBS Credit Agreement impose significant
restrictions on the ability of CBS's subsidiaries (including the Company) to
incur debt, which restrictions are subject to certain exceptions, including in
respect of indebtedness of a subsidiary under the CBS Credit Agreement, debt of
a subsidiary at the time it is acquired and other indebtedness not covered by a
specific exception in an aggregate principal amount not to exceed $300 million
at any one time outstanding. The Company currently believes that the CBS Credit
Agreement will provide it with financing at a lower cost than if the Company
were to enter into an independent credit facility at this time. See "Description
of Indebtedness -- CBS Credit Agreement." The Company may obtain an independent
credit facility in the future.
Following the Offerings, the Company does not anticipate paying any
dividends on shares of Common Stock. See "Dividend Policy."
As of September 30, 1998, the Company had $3.2 billion of long-term debt,
consisting of the $2.5 billion CBS Note and $0.6 billion of debt primarily
related to the debt assumed in the acquisition of American Radio. Under the most
restrictive of the indentures relating to the American Radio long-term debt,
approximately $1.95 billion of American Radio's net assets at September 30, 1998
are restricted. This, in turn, restricts the ability of American Radio to pay
dividends to the Company.
Consistent with past practice between CBS and the Company, prior to the
consummation of the Offerings, the Company will have transferred to CBS an
amount not to exceed $42.0 million from the Company's cash-on-hand at September
30, 1998, together with all cash generated from the Company's operations during
the period from October 1, 1998, through the date prior to the consummation of
the Offerings.
YEAR 2000
The Year 2000 issue is the result of the development of computer programs
and computer chips using two digits rather than four digits to define the
applicable year. Computer programs and/or equipment with time-sensitive software
or computer chips may recognize the date using "00" as the year 1900 rather than
the Year 2000. This could result in a system failure or miscalculations causing
disruptions to business operations.
To address the Year 2000 issue, the Company has undertaken efforts to
identify, modify or replace, and test systems that may not be Year 2000
compliant. The Company estimates its cost to achieve Year 2000 compliance to be
approximately $5 million, of which $2 million has been incurred to date. CBS is
expected to incur additional costs of approximately $2 million on behalf of the
Company to ensure compliance of the management information systems
infrastructure. Approximately 60% of the total expenditures relate to
replacement of existing systems. The Company expects to fund these costs through
its cash flows from operations. Such costs are expensed as incurred.
Several CBS centrally managed critical systems for radio are currently Year
2000 compliant or will be replaced by Year 2000 compliant applications by early
1999. A significant portion of the Year 2000 work for radio systems has been
performed or is underway. The Company is currently in the process of developing
Year 2000 procedures and guidelines for individual radio stations. The Company
plans to have all radio systems tested and compliant by the second quarter of
1999.
The Year 2000 effort also includes communication with all significant third
party suppliers and customers to determine the extent to which the Company's
systems are vulnerable to those parties' failure to reach Year
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<PAGE> 37
2000 compliance. There can be no guarantee that the Company's third party
suppliers or customers will be Year 2000 compliant on a timely basis and that
failure to achieve compliance would not have a material adverse impact on the
Company's business operations.
The Company expects to develop a formal contingency plan to ensure
continued business operations in case of non-compliance with the Year 2000 on a
timely basis. Overall, the Company believes that it will complete its Year 2000
effort and will be compliant on time. Although there can be no assurances that
this will occur, the Company will continuously monitor its progress and evaluate
the need for a contingency plan. Based on its current plan, the Company believes
that it will have adequate time to prepare for contingency measures if the need
arises.
The Company believes that it is difficult to fully assess the risks of the
Year 2000 problem due to numerous uncertainties surrounding the issue.
Management believes that primary risks are external to the Company and relate to
the Year 2000 readiness of its third party business partners. The inability of
the Company or its third party business partners to adequately address the Year
2000 issues on a timely basis could result in a material financial risk,
including loss of revenue, substantial unanticipated costs and service
interruptions. Accordingly, the Company plans to devote the resources it
concludes are appropriate to address all significant Year 2000 issues in a
timely manner.
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<PAGE> 38
BUSINESS
THE COMPANY
The Company is one of the largest radio broadcasting and outdoor
advertising companies in the United States. The Company's 161 radio stations,
which serve 34 markets, collectively accounted for approximately 11% of total
1997 U.S. radio advertising expenditures. The Company's stations collectively
ranked first or second, in terms of 1997 pro forma radio revenues, in 28 out of
the 34 markets in which the Company operates stations. Approximately 70%, 87%
and 99% of the Company's pro forma 1997 net radio revenues were generated in the
10, 25 and 50 largest U.S. radio markets, respectively. The Company's outdoor
advertising business is conducted through its wholly owned subsidiary, TDI. TDI
is one of the largest outdoor advertising companies in the United States, and
operates predominantly in major metropolitan markets, 14 of which are also
served by the Company's radio stations. TDI also operates internationally with
offices in the United Kingdom, the Republic of Ireland and Northern Ireland.
The Company operates and seeks to opportunistically acquire radio and
outdoor, or "out-of-home," media properties in the largest markets in the United
States. The Company characterizes its business as out-of-home because a majority
of radio listening, and virtually all viewing of outdoor advertising, takes
place in automobiles, transit systems, on the street and other locations outside
the consumer's home. The Company believes that out-of-home media are an
attractive alternative to other advertising media, particularly as "in-home"
media, including broadcast television, cable and the Internet, increasingly
compete for advertising revenue in the home.
The Company's radio stations serve diverse target demographics through a
broad range of programming formats such as rock, oldies, news/talk, adult
contemporary, sports/talk and country, and the Company has established leading
franchises in news, sports and personality programming. The Company believes
that this diversity provides advertisers with "one-stop-shopping" by enabling
advertisers to select stations to reach a targeted demographic group or to
select groups of stations and outdoor advertising properties to reach broad
groups of consumers within and across markets. The Company believes that this
diversity also reduces its dependence on any single station, local economy,
format or advertiser.
CBS beneficially owns all of the Company's outstanding common stock. After
giving effect to the Offerings, CBS will beneficially own approximately 83.8% of
the equity, which will represent approximately 96.3% of the combined voting
power, of the Company. CBS also owns, among other assets, 14 television stations
covering approximately 31% of U.S. television households, several cable
television networks and the CBS television network, as well as equity interests
in certain Internet Web site providers.
The Company was formed to own and operate the out-of-home media business of
CBS Corporation, which prior to December 1, 1997, was known as Westinghouse
Electric Corporation. In November 1995, Westinghouse acquired CBS Inc. In
December 1996, Westinghouse acquired Old Infinity, which also owned TDI and had
a minority equity interest in and managed Westwood One. On June 4, 1998, CBS
acquired the radio broadcasting operations of American Radio. Both Old Infinity
and American Radio were publicly traded companies prior to their acquisition by
Westinghouse and CBS, respectively. Prior to the Offerings, CBS transferred
substantially all its radio, outdoor advertising and related assets to the
Company.
BUSINESS STRATEGY AND COMPETITIVE STRENGTHS
Growth Potential for Out-of-Home Media. The Company believes that the
radio business has significant growth potential. Radio currently represents
approximately 7% of all advertising spending in the United States. The Company
believes that this market share may not yet fully reflect the operational
benefits which it expects will result from the consolidation that has taken
place in the radio business since the enactment of the Telecom Act. The Telecom
Act eliminated the national ownership ceiling previously applicable to radio
broadcasters and relaxed restrictions previously applicable to ownership of
radio stations within single markets, providing an opportunity for increased
consolidation within the radio industry. The Company believes that this
consolidation has made radio more competitive with newspapers, television and
other media which can deliver
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<PAGE> 39
large audiences across a wide range of demographics. The Company believes that
the outdoor advertising business has also become more competitive due to similar
industry consolidation. In addition, should the number and variety of in-home
media continue to increase (whether as a result of the introduction of new
technologies or otherwise), the Company believes that the smaller number of
media competing in the out-of-home market will provide it with a greater
competitive advantage than it has to date.
Focus on Large Market Assets. Approximately 94% of the Company's radio
stations are located in the 50 largest radio markets in the United States. As of
September 30, 1998, the Company owned 9 of the 16 highest billing radio stations
(measured by 1997 net revenues) in the United States. The Company believes that
this focus on large markets makes it more appealing to advertisers, enables it
to attract more highly skilled management, employees and on-air talent, and also
enables it to more efficiently manage its business and generate higher levels of
cash flow than would be the case if it managed a larger number of smaller
stations.
Strategic Acquisitions. While the Company does not believe that it needs
to make acquisitions to grow its business, it intends to pursue acquisition
opportunities that would enable it to continue to compete more effectively for
advertising revenues and to increase its growth rate of cash flow. As an
experienced operator of out-of-home media properties, the Company believes that
it will have opportunities to acquire additional properties and to improve their
operating performance. In general, the Company intends to pursue acquisitions of
radio stations primarily in the 50 largest radio markets in the United States.
This strategy may include acquiring radio stations in markets where the Company
currently owns stations, as well as in markets in which the Company does not
currently operate. The Company will also seek to acquire additional outdoor
properties both in the United States and internationally.
Diversification of Revenues. The Company seeks to maintain substantial
diversity among its stations in many respects. The geographically wide-ranging
stations serve diverse target demographics through a broad range of programming
formats such as rock, oldies, news/talk, adult contemporary, sports/talk and
country. This diversity reduces the Company's dependence on any particular
station, local economy, format, on-air personality or advertiser. Similarly, the
Company places an emphasis on increasing local and regional advertising revenues
to avoid dependence on national advertising. During the year ended December 31,
1997, the Company generated approximately 72% of its net radio revenues from
local and regional advertising.
Proven Management Team. The Company's four executive officers have more
than 70 years combined experience in the radio and outdoor advertising business,
and Mr. Karmazin, the Company's Chairman, President and Chief Executive Officer,
and Mr. Suleman, the Company's Executive Vice President, Chief Financial
Officer, Treasurer and Secretary, have worked together at the Company's
predecessors since 1986. The Company believes that this proven management team
is a significant competitive asset for the Company.
Cost Controls. The Company strives to maximize its stations' cash flow by
instituting strict financial reporting requirements and cost controls, directing
promotional activities, developing programming to improve the stations' appeal
to a targeted audience group and enhancing advertising sales efforts. While the
Company's local management is responsible for the day-to-day operations of each
station, corporate management is responsible for long-range planning,
establishing policies and procedures, maximizing cost savings where centralized
activity is appropriate, allocating resources and maintaining overall control of
the stations.
Programming. The overall mix of each station's programming is designed to
fit the station's specific format and serve its local community. The Company's
general programming strategy includes acquiring significant on-air talent,
sports franchises and news for its radio stations. The Company believes that
this strategy, in addition to developing loyal audiences for its radio stations,
creates the opportunity for the Company to obtain additional revenues from
syndicating such programming franchises to other radio stations. Similarly, the
Company's relationship with CBS gives it access to certain CBS programming.
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<PAGE> 40
RADIO STATIONS AND OUTDOOR DISPLAYS
The following table sets forth certain selected information with regard to
the Company's radio stations and outdoor displays as of November 8, 1998.
<TABLE>
<CAPTION>
RADIO TDI(1)
MARKET ----------------------------------------- -------------------------------
RANK BY
1997 METRO AREA AM/
MARKET POPULATION STATIONS FM FORMAT DISPLAY TYPE
- ------ --------------- -------- --- ------ ------------
<S> <C> <C> <C> <C> <C>
New York, NY 1 WCBS FM Oldies Bus, Commuter Rail, Phone
WCBS AM News Kiosks, Billboards, Walls,
WFAN AM Sports Trestles, "Spectacular
WINS AM News Signage," In-station Displays
WNEW FM Classic Rock
WXRK FM Rock
Los Angeles, CA 2 KCBS FM Classic Rock Bus, Phone Kiosks, Beach
KFWB AM News Panels, Campus Kiosks
KLSX FM Talk
KNX AM News
KRLA AM Oldies
KROQ FM Alternative Rock
KRTH FM Oldies
KTWV FM Smooth Jazz
Chicago, IL 3 WBBM FM Contemporary Hit Bus, Bus Shelters, Rail, Bridge
Radio/Dance Bulletins
WBBM AM News
WCKG FM Talk
WJMK FM Oldies
WMAQ AM News/Sports
WSCR AM Sports/Talk
WUSN FM Country
WXRT FM Adult Alternative Rock
San Francisco, CA 4 KCBS AM News Bus, Cable Cars, Commuter Rail
KFRC FM Oldies
KFRC AM Oldies
KITS FM Alternative Rock
KLLC FM Modern Rock
KYCY AM Country
KYCY FM Country
Philadelphia, PA 5 KYW AM News Commuter Rail
WIP AM Sports
WOGL FM Oldies
WPHT AM Talk
WYSP FM Active Rock
Dallas -- Fort Worth, 6 KHVN AM Gospel Bus
TX KLUV FM Oldies
KLUV AM Oldies
KOAI FM Smooth Jazz
KRBV FM R&B Oldies
KRLD AM News/Talk
KVIL FM Adult Contemporary
KYNG FM Country
Detroit, MI 7 WKRK FM New Rock --
WOMC FM Oldies
WVMV FM Smooth Jazz
WWJ AM News
WXYT AM Talk/Sports
WYCD FM Country
</TABLE>
34
<PAGE> 41
RADIO STATIONS AND OUTDOOR DISPLAYS (CONT'D)
<TABLE>
<CAPTION>
RADIO TDI(1)
MARKET ----------------------------------------- -------------------------------
RANK BY
1997 METRO AREA AM/
MARKET POPULATION STATIONS FM FORMAT DISPLAY TYPE
- ------ --------------- -------- --- ------ ------------
<S> <C> <C> <C> <C> <C>
Washington, D.C. 8 WARW FM Classic Rock Bus, Commuter Rail
WHFS FM Alternative Rock
WJFK FM Talk
WPGC FM Contemporary Hit Radio/
Rhythmic
WPGC AM Gospel
Houston, TX 9 KIKK FM Country --
KIKK AM Country
KILT FM Country
KILT AM Sports
Boston, MA 10 WBCN FM Modern Rock --
WBMX FM Modern Adult Contemporary
WBZ AM News/Talk/Sports
WODS FM Oldies
WZLX FM Classic Rock
Atlanta, GA 12 WAOK AM Gospel Bus, Commuter Rail, Eight-
WVEE FM Urban Sheet Billboards
WZGC FM Classic Rock
Seattle-Tacoma, WA 13 KBKS FM Modern Adult Contemporary Bus
KMPS FM Country
KRPM AM Modern Adult Contemporary
KYCW FM Country
KZOK FM Classic Rock
Minneapolis, MN 14 WCCO AM Full Service Bus
WLTE FM Soft Adult Contemporary
KMJZ FM Smooth Jazz
KSGS AM Urban
St. Louis, MO 18 KEZK FM Soft Adult Contemporary --
KMOX AM News/Talk/Sports
KYKY FM Adult Contemporary
Baltimore, MD 19 WBGR AM Gospel --
WBMD AM Religion
WJFK AM Talk
WLIF FM Soft Adult Contemporary
WQSR FM Oldies
WWMX FM Hot Adult Contemporary
WXYV FM Contemporary Hit Radio
Pittsburgh, PA 20 KDKA AM News/Talk Bus
WBZZ FM Contemporary Hit Radio
WDSY FM Country
WZPT FM Classic Hits
Tampa, FL 21 WLLD(2) FM Contemporary Hit Radio Bus
WQYK FM Country
WQYK AM Talk
WYUU(2) FM Oldies
Portland, OR 24 KBBT FM Modern Adult Contemporary --
KINK FM Adult Alternative Rock
KKJZ FM Smooth Jazz
KUFO FM Album Oriented Rock
KUPL FM Country
KUPL AM Classic Country
Cincinnati, OH 25 WGRR FM Oldies --
WKRQ FM Contemporary Hit Radio
WYLX FM Classic Hits
</TABLE>
35
<PAGE> 42
RADIO STATIONS AND OUTDOOR DISPLAYS (CONT'D)
<TABLE>
<CAPTION>
RADIO TDI(1)
MARKET ----------------------------------------- -------------------------------
RANK BY
1997 METRO AREA AM/
MARKET POPULATION STATIONS FM FORMAT DISPLAY TYPE
- ------ --------------- -------- --- ------ ------------
<S> <C> <C> <C> <C> <C>
Kansas City, MO 26 KBEQ FM Country --
KFKF FM Country
KMXV FM Contemporary Hit Radio
KOWW AM Country
KOZN FM Modern Adult Contemporary
Sacramento, CA 27 KHTK AM Talk --
KNCI FM Country
KOME AM Oldies
KRAK FM Country
KSFM FM Contemporary Hit Radio
KYMX FM Adult Contemporary
KZZO FM Modern Adult Contemporary
San Jose, CA 28 KBAY FM Soft Rock Bus
KEZR FM Adult Contemporary
Riverside, CA 29 KFRG FM Country --
KXFG FM Country
Columbus, OH 32 WAZU FM Album Oriented Rock --
WHOK FM Country
WLVQ FM Classic Rock
Charlotte, NC 36 WBAV FM Urban Adult Contemporary --
WFNZ AM Sports/Talk
WGIV AM Gospel
WNKS FM Contemporary Hits Radio
WPEG FM Urban
WSOC FM Country
WSSS FM Classic Hits
Buffalo, NY 41 WBLK(3) FM Urban Adult Contemporary Bus, Commuter Rail, Bus
WECK AM Adult Standards Shelters
WJYE FM Soft Adult Contemporary
WLCE FM Modern Adult Contemporary
WYRK FM Country
Hartford, CT 42 WRCH FM Soft Adult Contemporary --
WTIC FM Top 40
WTIC AM News/Talk
WZMX FM Classic Hits
Las Vegas, NV 43 KLUC FM Contemporary Hit Radio --
KMXB FM Modern Adult Contemporary
KMZQ FM Soft Adult Contemporary
KSFN AM Sports
KXNT AM News/Talk/Sports
KXTE FM Alternative
Rochester, NY 47 WCMF FM Album Oriented Rock --
WPXY FM Contemporary Hit Radio
WRMM FM Soft Adult Contemporary
WZNE FM Modern Adult Contemporary
W. Palm Beach, FL 49 WEAT FM Soft Adult Contemporary --
WIRK FM Country
Austin, TX 50 KAMX FM Modern Adult Contemporary --
KJCE AM Urban Adult Contemporary
KKMJ FM Soft Adult Contemporary
KQBT FM Rhythmic Contemporary Hit
Radio
</TABLE>
36
<PAGE> 43
RADIO STATIONS AND OUTDOOR DISPLAYS (CONT'D)
<TABLE>
<CAPTION>
RADIO TDI(1)
MARKET ----------------------------------------- -------------------------------
RANK BY
1997 METRO AREA AM/
MARKET POPULATION STATIONS FM FORMAT DISPLAY TYPE
- ------ --------------- -------- --- ------ ------------
<S> <C> <C> <C> <C> <C>
Fresno, CA 64 KMJ AM News/Talk/Sports --
KNAX FM Jammin' Oldies
KOOR AM Spanish
KOQO FM Spanish
KRNC FM Spanish
KSKS FM Country
KVSR FM Modern Adult Contemporary
Monterey-Salinas, CA 78 KLUE FM Adult Contemporary --
Palm Springs, CA 150 KEZN FM Easy --
</TABLE>
RADIO STATIONS SUBJECT TO DISPOSITION
<TABLE>
<CAPTION>
MARKET
RANK BY
1997 METRO AREA AM/
MARKET POPULATION STATIONS FM FORMAT
- ------ --------------- -------- --- ------
<S> <C> <C> <C> <C> <C>
Boston, MA 10 WAAF(4) FM Album Oriented Rock
WEEI(4) AM Sports
WEGQ(4) FM 70's Oldies
WNFT(5) AM Urban
WRKO(4) AM News/Talk
Worcester, MA 112 WWTM(4) AM Sports
</TABLE>
- ---------------
(1) TDI also has outdoor displays, including bus, rail and billboard displays,
in the following markets: New Jersey; New Orleans, Louisiana; North San
Diego, California; Phoenix, Arizona; San Antonio, Texas; Great Britain; and
Ireland.
(2) Being acquired from Entercom Communications Corp.; contract signed and FCC
approval has been granted. Operated by the Company pursuant to a local
marketing agreement ("LMA"). An LMA is a local marketing agreement which
would be considered a time brokerage agreement for FCC purposes.
(3) Operated by the Company pursuant to an LMA.
(4) Being sold to Entercom Communications Corp. to comply with the terms of a
settlement with the DOJ following the acquisition of American Radio;
contract signed and FCC approval has been granted. Operated by Entercom
Communications Corp. pursuant to an LMA.
(5) Held in trust for purposes of complying with FCC's radio local ownership
rules, with the Company being the sole beneficial owner thereof. Being sold
to Mega Communications of Boston, Inc.; contract signed and application for
FCC approval pending.
ADVERTISING SALES
The substantial majority of the Company's revenues are generated from the
sale of local, regional and national advertising for broadcast on its radio
stations. In 1997, approximately 72% and 28% of the Company's net radio revenues
were generated from the sale of local and regional advertising, and national
advertising, respectively. The major categories of radio advertisers include:
Automotive, Retail, Healthcare, Telecommunications, Fast Food, Beverage, Movies,
Entertainment and Services. Each station's local sales staff solicits
advertising either directly from the local advertiser or indirectly through an
advertising agency. The Company employs a tiered commission structure to focus
its individual sales staffs on new business development. The Company has also,
consistent with its operating strategy of dedicated sales forces for each of its
stations, significantly increased the number of sales persons per station upon
the Company's acquisition of such station. The Company supports its strategy of
building local direct accounts by employing personnel in each of its markets to
produce custom commercials that respond to the needs of, and in turn help sell
product for, its advertisers. In addition, in-house production provides
advertisers greater flexibility in changing their commercial messages with
minimal lead time.
National sales are generally made by firms specializing in radio sales on
the national level in exchange for a commission from the Company that is based
on the Company's net revenues from the advertising obtained. Regional sales are
generally made by the Company's local sales staff. The Company believes that
both
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<PAGE> 44
national and regional sales represent an attractive growth opportunity for the
Company. Whereas the Company seeks to increase its local sales through larger
and more customer-focused sales staffs, it seeks to increase its national and
regional sales by offering clusters within specific markets and regions which
will make the Company's stations more attractive to national and regional
advertisers.
PROGRAMMING
Each of the Company's stations provides programming designed to fit its
specific format and serve its local community. In addition, the Company owns a
16% equity interest in Westwood One and vested warrants to purchase an
additional 9% equity interest. Westwood One is one of the leading producers and
distributors of syndicated and network radio programming in the United States,
and distributes syndicated and network radio programming to the Company's radio
stations as well as to competitors of the Company.
In February 1994, Old Infinity, which was then an independent public
company, entered into a management agreement (the "Management Agreement") with
Westwood One, pursuant to which Old Infinity agreed to provide Westwood One with
the services of a chief executive officer, a chief financial officer, support
and administrative personnel and such other officers and employees of the
Company as may be required to perform management services for Westwood One. Mr.
Karmazin was the President and Chief Executive Officer of Westwood One from
February 1994 until October 1998. Mr. Karmazin was replaced as Chief Executive
Officer by Mr. Joel Hollander, an employee of the Company who currently serves
as Chief Executive Officer of Westwood One pursuant to the Management Agreement.
Mr. Suleman has been the Chief Financial Officer of Westwood One since February
1994. Messrs. Karmazin and Suleman are Directors of Westwood One. The only
compensation Messrs. Karmazin and Suleman have received in respect of duties
performed for Westwood One are options to acquire common stock of Westwood One.
As of October 31, 1998, Mr. Karmazin and Mr. Suleman beneficially owned 630,149
and 240,000 shares, respectively, representing 2.2% and 0.8%, respectively, of
the outstanding common stock of Westwood One. The Management Agreement requires
Westwood One to pay Old Infinity a management fee in the amount of $2.0 million
per annum, subject to increases in accordance with the consumer price index, and
a performance bonus based on Westwood One's operating cash flow. The Management
Agreement is terminable by Westwood One: (i) upon 30 days notice to Old
Infinity; or (ii) in the event that Old Infinity wilfully commits a material act
of fraud or gross misconduct in performing its obligations under the agreement
and such act has a material adverse effect on Westwood One. Although the
Management Agreement expires on March 30, 1999, the parties have agreed to renew
the agreement for an additional five-year period on the same material economic
terms as those of the existing Management Agreement.
Prior to March 31, 1997, CBS operated several radio networks, which
involves selling advertising time for network programming and marketing and
distributing that programming to affiliated and non-affiliated radio stations.
Such sales, distribution and marketing efforts were not a core activity of CBS's
radio operations. Because Westwood One was actively engaged in the business of
distributing programming on a national scale, CBS and Westwood One (which was by
then being managed by Old Infinity) entered into a representation agreement,
dated as of March 31, 1997 (the "Representation Agreement"), following
Westinghouse's acquisition of Old Infinity. Pursuant to the Representation
Agreement, CBS granted Westwood One the right to operate CBS's radio networks
and to retain all revenues in connection with such operations, in exchange for
Westwood One's agreement to be responsible for all network operating expenses
and to pay CBS (and, following the Offerings, to the Company): (i) a
representation rights fee of $22 million over a two-year period; and (ii) a
commitment fee of $10.0 million per annum, subject to certain adjustments. The
Representation Agreement expires on March 30, 1999. The Representation Agreement
is terminable by either party: (i) if the Management Agreement is terminated or
expires without renewal; or (ii) the Representation Agreement becomes illegal or
invalid because of a change in FCC rules or legal procedures.
Pursuant to the Management Agreement and the Representation Agreement, Old
Infinity and Westwood One agreed that Old Infinity, its subsidiaries and their
respective officers would not, without the prior consent of Westwood One,
manage, purchase, establish, participate in, own more than 5% of, or otherwise
lend assistance to, any radio network company other than the CBS radio networks.
The descriptions set forth above of the Management Agreement and the
Representation Agreement are intended to be summaries and, while
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<PAGE> 45
material terms of such agreements are set forth herein, the descriptions are
qualified in their entirety by reference to the relevant agreements, which has
been incorporated by reference into the Registration Statement of which this
Prospectus forms a part.
Prior to the consummation of the Offerings, Old Infinity became a wholly
owned subsidiary of the Company. CBS will assign its rights under the
Representation Agreement to the Company, which will receive all future payments
from Westwood One. See "Relationships Between the Company and CBS -- Westwood
One."
Pursuant to a news programming agreement, CBS also provides Westwood One
with news programming produced by CBS's news division. Westwood One has agreed
to pay CBS $8.0 million per annum for this news programming.
COMPETITION
The Company operates in a highly competitive industry. The Company's radio
stations and outdoor advertising properties compete for audiences and
advertising revenues directly with other radio stations and outdoor advertising
companies, as well as with other media, such as broadcast television,
newspapers, magazines, cable television, the Internet and direct mail, within
their respective markets. The Company's audience ratings and market shares are
subject to change and any adverse change in a particular market could have a
material adverse effect on the Company's revenues in that market and possibly
adversely affect revenues in other markets. There can be no assurance that the
Company will be able to maintain or increase its current audience ratings and
advertising revenues.
The Company's radio stations compete for listeners and advertising revenues
directly with other radio stations within their respective markets. Radio
stations compete for listeners primarily on the basis of program content that
appeals to a particular demographic group. By building a strong listener base
consisting of a specific demographic group in each of its markets, the Company
is able to attract advertisers seeking to reach those listeners. In addition,
from time to time other stations may change their format or programming to
compete directly with the Company's stations for audiences and advertisers, or
engage in aggressive promotional campaigns, which could result in lower ratings
and advertising revenues or increased promotion and other expenses and,
consequently, lower earnings and cash flow for the Company. Audience preferences
as to format or programming may also shift due to demographic or other reasons.
Any failure by the Company to respond, or to respond as quickly as its
competitors, could have a material adverse effect on the Company's position in
that market.
Factors that are material to a radio station's competitive position include
management experience, the station's audience rank in its local market,
transmitter power, assigned frequency, audience characteristics, local program
acceptance and the number and characteristics of other radio stations in the
market area. The Company attempts to improve its competitive position in each
market by extensively researching its stations' programming, by implementing
advertising campaigns aimed at the demographic groups for which its stations
program and by managing its sales efforts to attract a larger share of
advertising dollars. The Company also competes with other radio station groups
to purchase additional stations.
Although the radio broadcasting industry is highly competitive, some
barriers to entry exist (which can be mitigated to some extent by changing
existing radio station formats and upgrading power, among other actions). The
operation of a radio station requires a license or other authorization from the
FCC, and the number of radio stations that can operate in a given market is
limited by the availability of FM and AM radio frequencies allotted by the FCC
to communities in that market. In addition, the FCC's multiple ownership rules
regulate the number of stations that may be owned and controlled by a single
entity in a given market. The FCC's multiple ownership rules have, in recent
years, changed significantly as a result of the Telecom Act. For a discussion of
FCC regulation and the provisions of the Telecom Act resulting in rapid
consolidation in the radio industry, see "-- Government Regulation -- Federal
Regulation of Radio Broadcasting."
The out-of-home media industry is also subject to competition from new
media technologies that are being developed or introduced, such as the delivery
of audio programming by cable television systems, by
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<PAGE> 46
satellite and by terrestrial delivery of digital audio broadcasting. DAB may
deliver to nationwide and regional audiences, multi-channel, multi-format,
digital radio services with sound quality equivalent to compact discs. The FCC
has recently authorized spectrum for the use of a new technology, satellite
digital audio radio services, to deliver audio programming. SDARS may provide a
medium for the delivery by satellite of multiple new audio programming formats
to local and national audiences. It is not known at this time whether digital
technology also may be used in the future by existing radio broadcast stations
either on existing or alternate broadcasting frequencies. There are also
proposals before the FCC to permit a new "low power" radio or
"microbroadcasting" service which could open up opportunities for low cost
neighborhood service on frequencies which would not interfere with existing
stations. No FCC action has been taken on these proposals to date.
The delivery of information through the presently unregulated Internet also
could create a new form of competition. The radio broadcasting industry
historically has grown despite the introduction of new technologies for the
delivery of entertainment and information, such as television broadcasting,
cable television, audio tapes and compact discs. A growing population and
greater availability of radios, particularly car and portable radios, have
contributed to this growth. There can be no assurance, however, that the
development or introduction in the future of any new media technology will not
have an adverse effect on the radio broadcasting industry.
The Company cannot predict what other matters might be considered in the
future by the FCC, nor can it assess in advance what impact, if any, the
implementation of any of these proposals or changes might have on its business.
See "-- Government Regulation -- Federal Regulation of Radio Broadcasting."
TDI
The Company participates in the outdoor advertising business through its
wholly owned subsidiary, TDI. TDI is based in New York with 20 branch offices
throughout the United States and 11 throughout the United Kingdom, the Republic
of Ireland and Northern Ireland. TDI is one of the largest outdoor advertising
companies in the United States, operating approximately 100 franchises, the
majority of which are in large metropolitan areas (including New York, Los
Angeles, Atlanta, Washington, D.C., Philadelphia, Chicago, San Francisco,
Minneapolis and Phoenix). Fourteen of the major metropolitan areas in which TDI
operates are also served by the Company's radio stations. TDI sells advertising
space on various media including buses, trains, train platforms and terminals
throughout commuter rail systems, and on billboards and phone kiosks. TDI also
has the exclusive rights to manage advertising space within the London
Underground and on more than 90% of the buses in London and the United Kingdom,
and has the exclusive rights to transit advertising in the Republic of Ireland
and parts of Northern Ireland.
Through both its bus and rail markets, TDI has the ability to target
specific audiences via the specified routes of buses or trains. TDI has the
resources with which to provide clients with comprehensive packages encompassing
displays from its approximately 67,000 buses worldwide and approximately 1,200
billboards, approximately 4,300 phone kiosks, three commuter rail systems and
three main rail stations in New York. As a result, an advertiser can obtain
overall reach or target specific demographic areas.
SEASONALITY
Seasonal revenue fluctuations are common in the out-of-home media industry
and are primarily the result of fluctuations in advertising expenditures by
retailers. The Company's revenues are typically lowest in the first quarter and
highest in the second and fourth quarters.
EMPLOYEES
As of September 30, 1998, the Company had approximately 5,900 full-time
employees and approximately 2,000 part-time employees. Approximately 960 of the
Company's full-time employees are represented by unions. Collective bargaining
agreements with two unions have expired and the Company is currently negotiating
new collective bargaining agreements with such unions. The Company believes that
its relations with its employees and their unions are satisfactory.
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The Company employs several high-profile on-air personalities with large
loyal audiences in their respective markets. The Company generally enters into
employment agreements with its on-air talent and commissioned sales
representatives to protect its interests in those relationships that it believes
to be valuable. The Company has entered into employment agreements with certain
of its executive officers and certain other executive officers have employment
agreements with CBS. See "Management -- Employment Agreements."
GOVERNMENT REGULATION
Federal Regulation of Radio Broadcasting
The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act. Among other things, the FCC assigns frequency bands for
broadcasting; determines the particular frequencies, locations and operating
power of stations; issues, renews, revokes and modifies station licenses;
determines whether to approve changes in ownership or control of station
licenses; establishes technical requirements for certain transmitting equipment
used by stations; and adopts and implements regulations and policies that
directly or indirectly affect the ownership, operation and employment practices
of stations. The FCC has the power to impose penalties for violation of its
rules or the Communications Act, including the imposition of monetary
forfeitures, the issuance of short-term licenses, the imposition of a condition
on the renewal of a license, and the revocation of operating authority.
The following is a brief summary of certain provisions of the
Communications Act and of specific FCC regulations and policies. Reference
should be made to the Communications Act, FCC rules and the public notices and
rulings of the FCC for further information concerning the nature and extent of
federal regulation of radio stations.
FCC Licenses. Generally, the FCC renews radio broadcast licenses without a
hearing upon finding that: (i) the radio station has served the public interest,
convenience and necessity; (ii) there have been no serious violations by the
licensee of the Communications Act or FCC rules and regulations; and (iii) there
have been no other violations by the licensee of the Communications Act or FCC
rules and regulations that, taken together, indicate a pattern of abuse. After
considering these factors, the FCC may grant the license renewal application
with or without conditions, including renewal for a term lesser than the maximum
otherwise permitted, or hold an evidentiary hearing. In addition, the
Communications Act authorizes the filing of petitions to deny a license renewal
during specific periods of time after a renewal application has been filed.
Interested parties, including members of the public, may use such petitions to
raise issues concerning a renewal applicant's qualifications. If a substantial
and material question of fact concerning a renewal application is raised by the
FCC or other interested parties, or if for any reason the FCC cannot determine
that the grant of the renewal application would serve the public interest,
convenience and necessity, the FCC will hold an evidentiary hearing on the
application. If as a result of an evidentiary hearing the FCC determines that
the licensee has failed to meet the requirements specified above and that no
mitigating factors justify the imposition of a lesser sanction, then the FCC may
deny a license renewal application. Only after a license renewal application is
denied will the FCC accept and consider competing applications for the vacated
frequency. Historically, FCC licenses have generally been renewed. The Company
has no reason to believe that its licenses will not be renewed in the ordinary
course, although there can be no assurance to that effect. The non-renewal of
the Company's licenses could have a material adverse effect on the Company.
Ownership Matters. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast licensee without the
prior approval of the FCC. In determining whether to grant such approval, the
FCC considers a number of factors pertaining to the proposed assignee or
transferee, including compliance with the various rules limiting common
ownership of media properties in a given market, the "character" of the proposed
assignee or transferee and those persons holding "attributable" interests
therein, and compliance with the Communications Act's limitations on alien
ownership as well as compliance with other FCC policies, including FCC equal
employment opportunity requirements. The equal opportunity requirements, as they
relate to outreach efforts for the recruitment of minorities, have been declared
unconstitutional by the U.S. Court of Appeals for the D.C. Circuit, and the
court recently declined to review the decision en banc.
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A transfer of control of a corporation holding a broadcast license may
occur in various ways. For example, a transfer of control occurs if an
individual stockholder gains or loses "affirmative" or "negative" control of
such corporation through issuance, redemption or conversion of stock.
"Affirmative" control would consist of control of more than 50% of such
corporation's outstanding voting power and "negative" control would consist of
control of exactly 50% of such voting power. To obtain the FCC's prior consent
to assign or transfer control of a broadcast license, appropriate applications
must be filed with the FCC. If the application involves a "substantial change"
in ownership or control, in that new individuals approved by the FCC propose to
acquire "affirmative" or "negative" control, the application must be placed on
public notice for a period of not less than 30 days during which petitions to
deny or other objections against the application may be filed by interested
parties, including members of the public. Informal objections may be filed any
time up until the FCC acts upon the application. If the application does not
involve a "substantial change" in ownership or control, it is a "pro forma"
application, which is not subject to the 30-day petition to deny procedure. The
"pro forma" application is nevertheless subject to having informal objections
filed against it. If the FCC grants an assignment or transfer application,
interested parties have not less than 30 days from public notice of the grant to
seek reconsideration of that grant. Generally, parties that do not file initial
petitions to deny or informal objections against the application face a high
hurdle in seeking reconsideration of the grant. The FCC normally has
approximately an additional ten days to set aside on its own motion any grant
made by the FCC staff acting pursuant to delegated authority. When passing on an
assignment or transfer application, the FCC is prohibited from considering
whether the public interest might be served by an assignment or transfer of the
broadcast license to any party other than the assignee or transferee specified
in the application.
As a consequence of passage of the Telecom Act, the FCC amended its
multiple ownership rules to eliminate the national limits on the ownership of AM
and FM stations. Additionally, it established new local ownership rules that use
a sliding scale of permissible ownership, depending on market size. In radio
markets with 45 or more commercial radio stations, a party may own, operate or
control up to eight stations, no more than five of which can be in a single
radio service (i.e., no more than five AM or five FM). In radio markets with 30
to 44 commercial radio stations, a party may own, operate or control up to seven
stations, no more than four of which can be in a single radio service. In radio
markets having 15 to 29 commercial radio stations, a party may own, operate or
control up to six radio stations, no more than four of which can be in a single
radio service. Finally, in radio markets having 14 or fewer commercial radio
stations, a party may own, operate or control up to five radio stations, no more
than three of which can be in the same service; provided that the party may not
own more than one half of the total number of radio stations in the market. FCC
ownership rules continue to permit an entity to own one FM and one AM station in
a local market regardless of market size. In addition to the numerical
limitations on ownership depending on market size, the FCC is currently pursuing
a new policy that involves review of proposed transactions if they would enable
a single owner or two owners to attain a high degree of revenue concentration in
a market.
The FCC's "one-to-a-market" rule prohibits the common ownership, operation
or control of a radio broadcast station and a television broadcast station
serving the same geographic market (subject to a waiver of such prohibition if
certain conditions are satisfied) and the common ownership, operation or control
of a radio broadcast station and a daily newspaper serving the same geographic
market. Under these rules, absent waivers, neither the Company nor CBS would be
permitted to acquire any daily newspaper or television broadcast station (other
than low-power television) in any geographic market in which the Company now
owns radio broadcast properties. CBS has received, in the past, numerous
permanent and temporary waivers to permit ownership of a television station and
numerous radio stations in the same market. The temporary waivers, which affect
39 of the Company's radio stations, are subject to the outcome of pending
rulemaking proceedings focusing upon the possible relaxation of the
"one-to-a-market" rule. If these waivers are not made permanent, divestitures of
certain of the Company's radio stations or of CBS's television stations may be
required within certain time periods specified by the FCC. On October 1, 1996,
the FCC commenced a proceeding to explore possible revisions of its policies
concerning waiver of the newspaper/radio cross-ownership restrictions.
The FCC generally applies its ownership limits to "attributable" interests
held by an individual, corporation, partnership or other association. In the
case of corporations holding, or through subsidiaries
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controlling, broadcast licenses, the interests of officers, directors and those
who, directly or indirectly, have the right to vote 5% or more of the
corporation's voting stock (or 10% or more of such stock in the case of
insurance companies, investment companies and bank trust departments that are
passive investors) are generally attributable. If a single individual or entity
controls more than 50% of a corporation's outstanding voting stock, that
individual or entity is viewed as a single majority stockholder; thus, the FCC
views CBS as a single majority stockholder of the Company. In the case of a
single majority stockholder, the interests of other stockholders are not
attributable unless the stockholders are also officers or directors of the
corporation. To assess whether a voting stock interest in a direct or indirect
parent corporation of a broadcast licensee is attributable, the FCC uses a
"multiplier" analysis in which non-controlling voting stock interests are deemed
proportionally reduced at each non-controlling link in a multi-corporation
ownership chain. The FCC treats all partnership interests as attributable,
except for those limited partnership interests that under FCC policies are
considered "insulated" from "material involvement" in the management or
operation of media-related activities of the partnership. The FCC currently
treats limited liability companies like limited partnerships for purposes of
attribution. Similarly, under the FCC's attribution criteria, the ownership
interests of trustors and beneficiaries are not treated as attributable if these
interests are sufficiently insulated to prevent the exercise of control or
influence over the trustee. The FCC is currently reviewing its attribution rules
to determine whether changes in those rules are appropriate, including whether
to continue the attribution exception in the case of a single majority
stockholder.
In determining whether the Company is in compliance with the local
ownership limits on AM and FM stations, the FCC will consider the Company's AM
and FM holdings, as well as the attributable broadcast interests of the
Company's officers, directors and attributable stockholders, such as CBS.
Accordingly, the attributable broadcast interests of the Company's officers and
directors described in the preceding paragraph, as well as attributable
broadcast interests of CBS, will limit the number of radio stations the Company
may acquire or own in any market in which CBS or such officers or directors hold
or acquire attributable interests. In addition, the Company's officers and
directors or the officers and directors of CBS may from time to time hold
various non-attributable interests in media properties, which, under certain
circumstances, may also limit the number of radio stations the Company may
acquire or own in a given market.
Under its "cross-interest" policy, the FCC considers certain "meaningful"
relationships among competing media outlets that serve "substantially the same
area," even if the ownership rules do not specifically prohibit the
relationship. Under the cross-interest policy, the FCC in certain instances may
prohibit one party from holding an attributable interest in one media outlet and
a substantial non-attributable economic interest in another media outlet in the
same market. Under this policy, the FCC may consider significant equity
interests combined with an attributable interest in a media outlet in the same
market, joint ventures, or common key employees among competitors. The
cross-interest policy does not necessarily prohibit all of these interests, but
requires that the FCC consider whether, in a particular market, the "meaningful"
relationships between competitors could have a significant adverse effect upon
economic competition and program diversity. Heretofore, the FCC has not applied
its cross-interest policy to TBAs and joint sales agreements ("JSAs") between
broadcast stations. In its ongoing rulemaking proceeding concerning the
attribution rules described below, the FCC has sought comment on, among other
things: (i) whether the cross-interest policy should be applied only in smaller
markets; and (ii) whether non-equity financial relationships such as debt, when
combined with multiple business interrelationships such as TBAs and JSAs, raise
concerns under the cross-interest policy.
The Communications Act prohibits the issuance of broadcast licenses to, or
the holding of broadcast licenses by, any corporation of which more than 20% of
the capital stock is owned of record or voted by non-U.S. citizens or their
representatives or by a foreign government or a representative thereof, or by
any corporation organized under the laws of a foreign country. The
Communications Act also authorizes the FCC, if the FCC determines that it would
be in the public interest, to prohibit the issuance of a broadcast license to,
or the holding of a broadcast license by, any corporation directly or indirectly
controlled by any other corporation (such as CBS in the case of the Company) of
which more than 25% of the capital stock is owned of record or voted by Aliens.
The FCC staff has interpreted this provision to require a public interest
finding in favor of such a grant or holding before a broadcast license may be
granted to or held by any such corporation.
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The FCC has issued interpretations of existing law: (i) under which these
restrictions in modified form apply to other forms of business organizations,
including partnerships; and (ii) indicating how alien interests in a company
that are held directly through intermediate entities should be considered in
determining whether that company is in compliance with these alien ownership
restrictions. As a result of these provisions, the licenses granted to the
Company by the FCC could be revoked if more than 20% of the Company's stock were
directly or indirectly voted by Aliens or if more than 25% of CBS's stock were
directly or indirectly held or voted by Aliens. The Company's Restated
Certificate restricts the ownership, voting and transfer of the Company's
capital stock in accordance with the Communications Act and the rules of the
FCC, and prohibits the issuance of more than 20% of the Company's outstanding
capital stock (or more than 20% of the voting rights it represents) to or for
the account of Aliens. The Restated Certificate authorizes the Company's Board
of Directors to enforce these prohibitions. In addition, the Restated
Certificate provides that shares of capital stock of the Company determined by
the Company's Board of Directors to be owned beneficially by an Alien or an
entity directly or indirectly owned by Aliens in whole or in part shall be
subject to redemption by the Company by action of the Board of Directors to the
extent necessary, in the judgment of the Board of Directors, to comply with
these alien ownership restrictions.
Time Brokerage Agreements. Over the past few years, a number of radio
stations have entered into what have commonly been referred to as TBAs. While
these agreements may take varying forms, under a typical TBA, separately owned
and licensed radio stations agree to enter into cooperative arrangements of
varying sorts, subject to compliance with the requirements of antitrust laws and
with the FCC's rules and policies. Under these arrangements, separately owned
stations could agree to function cooperatively in programming, advertising sales
and similar matters, subject to the requirement that the licensee of each
station maintain independent control over the programming and operations of its
own station. One typical type of TBA, commonly referred to as a local marketing
agreement ("LMA"), is a programming agreement between two separately owned radio
stations serving a common service area, whereby the licensee of one station
provides substantial portions of the broadcast programming for airing on the
other licensee's station, subject to ultimate editorial and other controls being
exercised by the latter licensee, and sells advertising time during those
program segments.
The FCC has specifically revised its "cross-interest" policy to make that
policy inapplicable to TBAs. Furthermore, the staff of the FCC's Mass Media
Bureau has held that TBAs are not contrary to the Communications Act provided
that the licensee of the station that is being substantially programmed by
another entity: (i) maintains complete responsibility for, and control over,
programming and operations of its broadcast station; and (ii) assures compliance
with applicable FCC rules and policies.
The FCC's multiple ownership rules specifically permit radio station TBAs
to continue to be entered into and implemented, but provide that a licensee or a
radio station that brokers more than 15% of the weekly broadcast time on another
station serving the same market will be considered to have an attributable
ownership interest in the brokered station for purposes of the FCC's multiple
ownership rules. As a result, in a market where it owns a radio station, the
Company would not be permitted to enter into a TBA with another local radio
station in the same market that it could not own under the local ownership
rules, unless the Company's programing on the brokered station constituted 15%
or less of the other local station's programming time on a weekly basis. The FCC
rules also prohibit a broadcast licensee from simulcasting more than 25% of its
programming on another station in the same broadcast service (i.e., AM-AM or
FM-FM) through a TBA where the brokered and brokering stations which it owns or
programs serve substantially the same area. Such 25% simulcasting limitation
also applies to commonly owned stations in the same broadcast service that serve
substantially the same area.
The Company is party to LMAs in three markets, and all but one of these
LMAs are in connection with the pending acquisition and disposition of stations
from and to Entercom Communications Corp. These LMAs are interim agreements
pending consummation of such acquisitions and dispositions following FCC
approval of such acquisitions and dispositions, which approval has already been
granted. In addition, the Company is party to an LMA with a station in Buffalo,
NY, pursuant to which the Company has acquired virtually all of the programming
time on the station and is entitled to sell all of the advertising inventory
within such acquired
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time. All of the foregoing LMAs involve programming more than 15% of the
broadcast time of the relevant station.
Joint Sales Agreements. Over the past few years, a number of radio
stations have entered into cooperative arrangements commonly knows as JSAs.
While these agreements may take varying forms, under the typical JSA, a station
licensee obtains, for a fee, the right to sell substantially all of the
commercial advertising on a separately-owned and licensed station in the same
market. The typical JSA also customarily involves the provision by the selling
party of certain sales, accounting and "back office" services to the station
whose advertising is being sold. The typical JSA is distinct from a TBA in that
a JSA normally does not involve programming.
The FCC has determined that issues of joint advertising sales should be
left to enforcement by antitrust authorities, and therefore does not generally
regulate joint sales practices between stations. Currently, stations for which
another licensee sells time under a JSA are not deemed by the FCC to be an
attributable interest of that licensee. However, in connection with its ongoing
rulemaking proceeding concerning the attribution rules, the FCC is considering
whether JSAs should be attributable interests or within the scope of the FCC's
cross-interest policy, particularly when JSAs contain provisions for the supply
of programming services and/or other elements typically associated with TBAs. If
JSAs become attributable interests as a result of changes in the FCC rules, the
Company may be required to terminate any JSA it might have with a radio station
which the Company could not own under the FCC's multiple ownership rules. The
Company at present has no JSAs.
Programming and Operations. The Communications Act requires broadcasters
to serve the "public interest." A licensee is required to present programming
that is responsive to issues of the station's community of license and to
maintain certain records demonstrating such responsiveness. Complaints from
listeners concerning a station's programming often will be considered by the FCC
when it evaluates renewal applications of a licensee, although listener
complaints may be filed at any time, are required to be maintained in the
station's public file and generally may be considered by the FCC at any time.
Stations also must pay regulatory and application fees and follow various rules
promulgated under the Communications Act that regulate, among other things,
political advertising, sponsorship identifications, the advertisement of
contests and lotteries, obscene and indecent broadcasts, and technical
operations, including limits on human exposure to radio frequency radiation. In
addition, the FCC rules require that licensees must develop and implement
affirmative action programs designed to promote equal employment opportunities
and must submit reports to the FCC with respect to these matters on an annual
basis and in connection with a renewal application. However, the U.S. Court of
Appeals for the D.C. Circuit has declared these rules unconstitutional and the
Court recently declined to review the decision en banc. In addition, the FCC
recently has proposed to establish a system of random audits to ensure and
verify licensee compliance with various FCC rules and regulations.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short term" (less than the maximum eight-year term) license renewal, the
imposition of a condition on the renewal of a license or, for particularly
egregious violations, the denial of a license renewal application or the
revocation of a license.
Proposed and Recent Changes. The FCC has pending a rulemaking proceeding
that seeks, among other things, comment on whether the FCC should modify its
radio and television broadcast ownership "attribution" rules by: (i) raising the
basic benchmark for attributing ownership in a corporate licensee from 5% to 10%
of the licensee's outstanding voting power; (ii) increasing from 10% to 20% of
the licensee's outstanding voting power the attribution benchmark for
institutional investors in corporate licensees holding interests deemed
"passive" in nature; (iii) attributing certain minority stockholdings in
corporations with a single majority stockholder; and (iv) attributing certain
LMAs, TBAs, JSAs, debt or non-voting stock interests that have heretofore been
non-attributable.
Moreover, Congress and the FCC have under consideration, and in the future
may consider and adopt, new laws, regulations and policies regarding a wide
variety of matters that could affect, directly or indirectly, the operation,
ownership and profitability of the Company's radio stations, result in the loss
of audience share and advertising revenues for the Company's radio stations, and
affect the ability of the Company to acquire additional radio stations or to
finance those acquisitions. Such matters may include spectrum use or other fees
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on FCC licenses; foreign ownership of broadcast licenses; revisions to the FCC's
equal employment opportunity rules and rules relating to political broadcasting;
technical and frequency allocation matters; proposals to restrict or prohibit
the advertising of beer, wine and other alcoholic beverages on radio; changes in
the FCC's cross-interest, multiple ownership and attribution policies; new
technologies such as DARS and microbroadcasting; and the development of rules to
govern auctions for the right to use the radio broadcast spectrum. Finally, as
required by the Telecom Act, the FCC has instituted a proceeding to investigate,
among other things, the effect of the revised ownership rules for radio stations
adopted in accordance with the Telecom Act, and the resulting consolidation in
the radio industry, on the diversity of programming and ownership, and on
programming and advertising competition. The FCC may conclude, as a consequence
of this review, to modify the radio ownership rules.
The Company cannot predict what other matters might be considered in the
future by the FCC or Congress, nor can it judge in advance what impact, if any,
the implementation of any of these proposals or changes might have on its
business.
Outdoor Advertising. The outdoor advertising industry is subject to
governmental regulation at the federal, state and local level. These include
regulations on the construction, repair, upgrading, height, size and location
of, and, in some instances, content of advertising copy being displayed on
outdoor advertising structures adjacent to federally-aided highways and to other
thoroughfares. Regulations affecting outdoor advertising at any level of
government could have a material adverse effect on the Company.
Alcohol and Tobacco Advertising. There are significant legal and
regulatory constraints on the use of out-of-home media to advertise alcohol and
tobacco products. Additional limitations have been proposed from time to time,
particularly in connection with a possible global settlement of tobacco-related
litigation. The Company is not aware of similar proposals to further restrict
alcohol advertising, although any significant reduction in beer and wine
advertising could have a material adverse effect on the Company.
Antitrust. An element of the Company's growth strategy involves the
acquisition of additional radio stations and other outdoor advertising
properties, many of which are likely to require antitrust review by the FTC and
the DOJ prior to such acquisition. Following passage of the Telecom Act, the DOJ
has become more aggressive in reviewing proposed acquisitions of radio stations
and radio station networks, particularly in instances where the proposed
acquirer already owns one or more radio station properties in a particular
market and the acquisition involves another radio station in the same market.
Recently, the DOJ has obtained consent decrees requiring radio station
divestitures in a particular market based on allegations that acquisitions would
lead to unacceptable concentration levels. The DOJ has also been active in
reviewing proposed acquisitions of outdoor advertising properties. There can be
no assurance that the DOJ or the FTC will not seek to bar the Company from
acquiring additional radio stations or other media-related and outdoor
advertising properties in any market where the Company already has a significant
position. In addition, to the extent the Company makes acquisitions of
international broadcasting properties or display faces, the Company will also be
subject to the antitrust laws of foreign jurisdictions.
Environmental. As the owner, lessee or operator of various real properties
and facilities, the Company is subject to various federal, state and local
environmental laws and regulations. Historically, compliance with such laws and
regulations has not had a material adverse effect on the Company's business.
There can be no assurance, however, that compliance with existing or new
environmental laws and regulations will not require the Company to make
significant expenditures in the future.
PROPERTIES
The Company's corporate headquarters are located in midtown Manhattan and
are leased from third parties. The types of properties required to support each
of the Company's radio stations include offices, studios, transmitter sites and
antenna sites. A station's studios are generally housed with its offices in
downtown or business districts. The transmitter sites and antenna sites are
generally located so as to provide maximum market coverage. TDI's transit
displays are owned by the transit system or other franchisor and are managed by
the Company pursuant to three to five year agreements, and its outdoor displays
are generally located on leased properties.
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No one property is material to the Company's overall operations. The
Company believes that its properties are in good condition and suitable for its
operations; however, the Company continually looks for opportunities to upgrade
its properties.
The Company owns substantially all of the equipment used in its radio
broadcasting business.
LEGAL PROCEEDINGS
The Company is party to various legal proceedings arising in the ordinary
course of business. In the opinion of management of the Company, however, there
are no legal proceedings pending against the Company likely to have a material
adverse effect on the Company. For a description of certain matters before the
FCC, see "-- Government Regulation."
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MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth the name, age and position of each of the
directors and executive officers of the Company as of November 1, 1998.
Executive officers are elected by the Board of Directors and hold office until
the earlier of his or her resignation and removal.
<TABLE>
<CAPTION>
NAME AGE POSITIONS
---- --- ---------
<S> <C> <C>
Mel Karmazin...................... 55 Chairman, President and Chief Executive Officer
and Director
Farid Suleman..................... 47 Executive Vice President, Chief Financial Officer,
Treasurer and Secretary and Director
Daniel Mason...................... 47 President, Infinity Radio Group, and Vice
President of the Company
William Apfelbaum................. 51 President and Chief Executive Officer, TDI
</TABLE>
Messrs. Karmazin and Suleman are employees of CBS and will provide services
to the Company pursuant to the terms of the Intercompany Agreement. As employees
of CBS, Messrs. Karmazin and Suleman will continue to render services to CBS.
See "Risk Factors -- Risks Relating to Control by CBS" and "Relationships
Between the Company and CBS."
Mr. Karmazin has been Chairman, President and Chief Executive Officer and a
Director of the Company since September 17, 1998. He joined CBS (then
Westinghouse Electric Corporation) in December 1996 as Chairman and Chief
Executive Officer of CBS Radio. In May 1997, he also assumed responsibility for
CBS's owned television stations and became Chairman and Chief Executive Officer
of the CBS Station Group. In April 1998, Mr. Karmazin became President and Chief
Operating Officer of CBS Corporation, and Mr. Karmazin will become Chief
Executive Officer of CBS Corporation on January 1, 1999. Mr. Karmazin was first
elected to the Board of CBS Corporation in 1997. Prior to joining CBS, from 1981
to 1988, Mr. Karmazin served as Executive Vice President of Old Infinity and,
from 1988 until its acquisition by CBS in December 1996, as its President and
Chief Executive Officer. Mr. Karmazin is a Director of Westwood One and a member
of the Board of Trustees for the Museum of Television and Radio.
Mr. Suleman has been Executive Vice President, Chief Financial Officer,
Treasurer and Secretary and a Director of the Company since September 17, 1998.
He has been Senior Vice President and Chief Financial Officer of the CBS Station
Group since June 1997 and Senior Vice President -- Finance of CBS Corporation
since August 1998. From January 1997 to June 1997, he served as Senior Vice
President and Chief Financial Officer of CBS Radio. Prior to joining CBS, he was
Vice President -- Finance and Chief Financial Officer of Old Infinity from 1986
until 1996. Mr. Suleman has also been the Executive Vice President, Chief
Financial Officer, Secretary and a Director of Westwood One since February 1994.
Mr. Mason has been Vice President of the Company since September 17, 1998.
He has been President of CBS Radio (renamed Infinity Radio) since November 1995.
From 1993 to 1995, Mr. Mason served as President of Group W Radio. Mr. Mason was
President of Cook Inlet Radio Partners, LP from 1988 to 1993. Mr. Mason is
currently a member of the Board of Directors of the National Association of
Broadcasters.
Mr. Apfelbaum has been President and Chief Executive Officer of TDI since
August 1989. Prior to joining TDI, from July 1988 to July 1989, Mr. Apfelbaum
served as President of Gannett Transit, Inc. (formerly New York Subway
Advertising Co., Inc.). From 1971 to 1988, Mr. Apfelbaum served as President of
New York Subway Advertising Co., Inc. Mr. Apfelbaum is a Director of the America
Foundation for Aids Research (AmFAR).
Promptly following the consummation of the Offerings, CBS and the Company
expect to elect two additional directors of the Company who will be independent
directors. The Board of Directors will then consist of eight members, including
six who are directors, officers or executives of CBS. For so long as CBS
maintains voting control of the Company, it will have the ability to change the
size and composition of the Board of Directors. Members of the Board of
Directors will be divided into three classes with staggered three-
48
<PAGE> 55
year terms and each class as equal in number as possible. Each director will
hold office until the end of the term for the respective class to which such
director is assigned and otherwise in accordance with the By-Laws.
EMPLOYMENT AGREEMENTS
In June 1996, Mr. Karmazin entered into an employment agreement with CBS
that became effective on December 31, 1996, the time of the acquisition of Old
Infinity by CBS. The employment agreement will terminate on December 31, 2000.
The employment agreement provides for an initial annual base salary of $925,000
and, thereafter, Mr. Karmazin's annual base salary shall be subject to merit
review and may be increased (but not decreased) at the sole discretion of the
CBS Compensation Committee. The employment agreement provides that Mr. Karmazin
will have the opportunity to receive performance-based annual incentive bonuses
with a target award opportunity of $1,500,000 and to defer payment of any such
bonuses under CBS's deferral program as in effect from time to time. Mr.
Karmazin received a stock option grant pursuant to the employment agreement on
December 31, 1996, for 500,000 CBS shares, with the options generally becoming
exercisable after the first and second anniversaries of the grant date. All
previously granted unvested options shall vest effective: (i) on the date of Mr.
Karmazin's death; (ii) upon the occurrence of a change in control of the
Westinghouse/CBS Radio Group; or (iii) on the date on which Mr. Karmazin's
employment is terminated without cause or for disability. The employment
agreement provides that Mr. Karmazin's employment is terminable for cause upon
the occurrence of any: (i) action involving willful malfeasance or gross
misconduct in connection with such employment having a material adverse effect
on CBS; (ii) substantial and continuing refusal to perform ordinary duties of a
chief executive officer; or (iii) felony conviction. In the event Mr. Karmazin's
employment is terminated without cause or CBS otherwise breaches the employment
agreement, CBS would be obligated to pay to Mr. Karmazin a lump-sum payment
equal to the compensation, including annual incentive compensation, that
otherwise would have been paid to Mr. Karmazin for the remainder of the term of
the employment agreement.
In May 1996, Mr. Mason entered into an employment agreement with CBS
Broadcasting Inc. (formerly CBS Inc.) that became effective as of November 28,
1995. The agreement was amended as of January 29, 1997. The employment
agreement, which will terminate on November 27, 1999, provided for an initial
annual base salary of $575,000, which increased to $815,000 as of January 1,
1997, and, thereafter, Mr. Mason's annual base salary is subject to merit review
and may be increased in accordance with CBS compensation guidelines. The
employment agreement also provides that Mr. Mason will have the opportunity to
receive performance-based annual incentive bonuses with a target award
opportunity of 40% of Mr. Mason's annual base salary. Mr. Mason's employment is
terminable for cause upon the occurrence of any: (i) fraud, misappropriation or
embezzlement; or (ii) the willful failure to perform services under the
employment agreement. In the event that Mr. Mason's employment is terminated
other than for cause, CBS Broadcasting Inc. would be obligated to pay to Mr.
Mason his base salary for the remainder of the term of the agreement, so long as
he is ready, willing and able to render services under the agreement. In the
event that Mr. Mason terminates his employment for good reason (as described in
the agreement), CBS Broadcasting Inc. will be obligated to pay Mr. Mason an
amount equal to his annual base salary.
In December 1989, Mr. Apfelbaum entered into an employment agreement with
TDI that was restated in November 1998 to reflect all amendments made to such
agreement prior thereto. The employment agreement will terminate on March 25,
2001. The employment agreement provides for an annual base salary of $950,000
and that Mr. Apfelbaum will have the opportunity to receive performance-based
annual incentive bonuses with a target award opportunity of $1,000,000. Mr.
Apfelbaum's employment is terminable for cause upon the occurrence of any: (i)
felony or act of bad faith having a material adverse affect on TDI; (ii) breach
of the agreement that is unremedied; or (iii) willful failure or refusal to
follow the reasonable directions of the Board of TDI as are consistent with his
duties as President and Chief Executive of TDI. In the event that Mr.
Apfelbaum's employment is terminated by the Board of TDI, TDI would be obligated
to pay to Mr. Apfelbaum his base salary and benefits for the remainder of the
contract in accordance with the terms of the employment agreement.
49
<PAGE> 56
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors expects to establish an Audit Committee and a
Compensation Committee. The Audit Committee of the Board of Directors will
consist of at least two independent directors. The Audit Committee will review
and report to the Board of Directors with respect to the selection, retention,
termination and terms of engagement of the Company's independent public
accountants, and maintain communications among the Board of Directors, the
independent public accountants and the Company's internal accounting staff with
respect to accounting and audit procedures. The Audit Committee will also
review, with management and the Company's independent auditors, the Company's
annual financial statements, the adequacy of the Company's internal accounting
and control procedures and policies and related matters. The Compensation
Committee will consist of at least two persons who are non-employee directors
within the meaning of Rule 16b-3 under the Exchange Act and outside directors
within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Compensation Committee will be responsible for administering the
Company's stock plans and reviewing and making decisions with respect to the
other compensation of executive officers and key executives of the Company. The
Board may, from time to time, establish other committees of the Board.
COMPENSATION OF DIRECTORS
Directors who are officers or employees of CBS or any of its subsidiaries
(including the Company) will not be compensated for service on the Board of
Directors or any committee thereof. It is anticipated that non-employee
directors will receive an annual fee, payable in cash or in a combination of
cash and securities of the Company and that directors will be reimbursed for
out-of-pocket expenses incurred in connection with such services.
COMPENSATION, BENEFIT AND RETIREMENT PLANS
As described below, prior to the consummation of the Offerings, the Company
is expected to adopt, and the stockholder of the Company is expected to approve,
a long-term incentive plan and an annual incentive plan in which certain key
executives of the Company are expected to participate after the consummation of
the Offerings. Prior to the consummation of the Offerings, the Named Executive
Officers (as defined herein) were eligible to participate in certain executive
benefit plans of CBS, including the CBS 1993 Long-Term Incentive Plan (the "CBS
Stock Plan"), the CBS Annual Performance Plan (the "CBS Annual Bonus Plan") and,
in the case of Mr. Karmazin only, the CBS 1998 Executive Annual Incentive Plan.
After completion of the Offerings, the Named Executive Officers will continue to
hold options to acquire CBS common stock. Further, after completion of the
Offerings, as part of the compensation paid by CBS for services rendered to CBS
and the Company: (i) Mr. Karmazin will continue to be eligible under and
participate in the CBS Stock Plan and the CBS 1998 Executive Annual Incentive
Plan; and (ii) Mr. Suleman will continue to be eligible under and participate in
the CBS Stock Plan and the CBS Annual Bonus Plan. None of the Named Executive
Officers, other than Messrs. Karmazin and Suleman, is expected to be eligible to
participate in the CBS Stock Plan or the CBS Annual Bonus or 1998 Executive
Annual Incentive Plans. The Company will reimburse CBS for any direct costs,
distributions and other expenses associated with post-Offerings payments to
Company employees in respect of the CBS Stock Plan and the other CBS plans
referred to above pursuant to the terms of the Intercompany Agreement. See
"Relationships Between the Company and CBS -- Intercompany
Arrangements -- Intercompany Agreement."
EXECUTIVE COMPENSATION
Compensation Summary. For 1997, the Company's executive officers were
compensated by CBS or subsidiaries thereof for services rendered to CBS and its
subsidiaries (including subsidiaries of the Company), participated in executive
benefit plans sponsored by CBS and did not receive compensation from the
Company. The following table reflects compensation awarded to, earned by or paid
to the Company's Chief Executive Officer and the three most highly compensated
executive officers, other than the Chief Executive Officer of the Company (the
"Named Executive Officers"), for services rendered in all capacities to CBS for
the fiscal year ended December 31, 1997.
50
<PAGE> 57
SUMMARY COMPENSATION TABLE FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------------- ---------------------------------
OTHER RESTRICTED SECURITIES
ANNUAL STOCK UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) COMPENSATION AWARD(S) OPTIONS(3) PAYOUTS COMPENSATION
--------------------------- ---- -------- ---------- ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Mel Karmazin................... 1997 $925,000 $3,000,000(2) N/A 0 500,000 0 $3,749(4)
Chairman, President & Chief
Executive Officer
Farid Suleman.................. 1997 500,000 1,000,000 N/A 0 100,000 0 345(4)
Executive Vice President,
Chief Financial Officer,
Treasurer & Secretary
Daniel Mason................... 1997 815,000 400,000 N/A 0 60,000 0 4,800(5)
President, Infinity Radio
Group, and Vice President of
the Company
William Apfelbaum.............. 1997 950,000 1,000,000 N/A 0 50,000 0 2,289(4)
President & Chief Executive
Officer, TDI
</TABLE>
- ---------------
(1) Represents incentive compensation awarded for 1997. Each of the Named
Executive Officers may elect to defer up to 100% of his annual incentive
award, to be paid either: (i) in one installment in any future year not
later than the year of normal retirement; or (ii) in one installment or
annual installments after termination of service. Amounts deferred by any
such named executive officer are credited with interest based on the
one-year U.S. Treasury Bill rate (or such other rate as determined by the
CBS Compensation Committee), reset every January. In the event of a change
in control of CBS, the value of any unpaid deferred amounts are paid to a
trustee or otherwise on such terms as the CBS Compensation Committee may
prescribe or permit.
(2) The bonus received by Mr. Karmazin for 1997 exceeded his target award
opportunity due to an expansion of Mr. Karmazin's responsibilities, after
his target had been established, to include CBS's owned television stations,
and due to the performance of the businesses under his management.
(3) Represents grants of standard non-qualified stock options to acquire CBS
common stock.
(4) Represents imputed income with respect to executive life insurance.
(5) Represents contributions by CBS to the account of Daniel Mason pursuant to
the provisions of the Westinghouse Savings Program.
Option Grants. The following table provides information on grants of
options in fiscal year 1997 to the Named Executive Officers to purchase shares
of CBS common stock. No options to acquire Common Stock of the Company have been
granted or are outstanding.
OPTION GRANTS OF CBS COMMON STOCK TO COMPANY EXECUTIVES IN YEAR ENDED DECEMBER
31, 1997
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
---------------------------------------------------
% OF TOTAL GRANT DATE
OPTIONS PER PRESENT VALUE(2)
GRANTED TO CBS SHARE ----------------------
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION
NAME GRANTED(1) 1997 PRICE DATE PER SHARE TOTAL
---- ---------- -------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Mel Karmazin.......................... 500,000 3.9% $18.56 1/28/07 $8.57 $4,285,000
Farid Suleman......................... 100,000 0.8% 18.56 1/28/07 8.57 857,000
Daniel Mason.......................... 60,000 0.5% 18.56 1/28/07 8.57 514,200
William Apfelbaum..................... 50,000 0.4% 18.56 1/28/07 8.57 428,500
</TABLE>
- ---------------
(1) All CBS stock options were granted to the Named Executive Officers on
January 29, 1997. All CBS stock options were granted in tandem with limited
rights. CBS options have a term of ten years from the date of grant or such
lesser term as may be determined by the CBS Compensation Committee. The
exercise price under each option may not be less than the fair market value
of CBS's common stock on the option grant date. Except in the event of a
change in control of CBS, generally an option is exercisable in whole or in
part after the commencement of the second year of its term and until the
option terminates. Limited rights are exercisable only in the event of a
change in control of CBS and during the 30 days immediately following such
change and only when the fair market value on the exercise date exceeds the
exercise price. When a limited right is exercised, the employee is entitled
to receive in cash the difference between the exercise price of the related
option and the greater of: (i) the highest closing sales price of the CBS
common stock on the NYSE during the 60 days prior to exercise; and (ii) the
highest price paid for the CBS common stock in the change in control
transaction during such period. Reload options are granted to employees at
the time of an exercise of a stock option through a stock swap (payment of
the exercise price by surrender of previously owned shares of CBS common
stock), unless the CBS Compensation Committee cancels the reload feature
before such exercise. The reload option is granted for the number of CBS
shares the employee tenders to pay the exercise price of the related option.
(2) These values were derived using the following common assumptions: CBS stock
price volatility 0.3023; dividend yield 1.08%; interest rate 6.3785%; reload
premium 10%; and for each option, its full term and exercise price. There
were no adjustments made for non-transferability or risk of forfeiture. The
values and assumptions were based on the Black-Scholes option pricing model.
The actual value, if any, that an executive officer may realize from his or
her CBS stock options (assuming that they are exercised) will depend solely
on the gain in CBS stock price over the exercise price when the shares are
sold.
51
<PAGE> 58
The following table provides information on option exercises in 1997 by the
Named Executive Officers and the value of each such Named Executive Officer's
unexercised options to acquire common stock of CBS at December 31, 1997.
AGGREGATED OPTION EXERCISES IN YEAR ENDED DECEMBER 31, 1997
AND OPTION VALUES AS OF DECEMBER 31, 1997
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT OPTIONS AT
SHARES FISCAL YEAR-END FISCAL YEAR-END(1)
ACQUIRED VALUE ------------------------------ -------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE(2) EXERCISABLE UNEXERCISABLE(2)
---- ----------- -------- ----------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Mel Karmazin........... 0 $0 9,262,519 750,000 $235,138,415 $7,601,600
Farid Suleman.......... 0 0 1,473,271 100,000 34,220,261 1,053,130
Daniel Mason........... 0 0 374,500 60,000 4,964,941 631,878
William Apfelbaum...... 0 0 -- 50,000 -- 526,565
</TABLE>
- ---------------
(1) Based on the closing price of CBS's common stock as reported on the NYSE
composite tape on December 31, 1997 ($29.0938).
(2) These options are unexercisable because they have not vested under their
terms.
LONG-TERM INCENTIVES
Prior to the Offerings, the Company expects to adopt the 1998 Long-Term
Incentive Plan (the "1998 Plan"), which will authorize the grant of the
following types of awards to key executives of the Company: (i) incentive stock
options (within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended) and nonstatutory options (intended not to qualify as incentive stock
options), including reload options; (ii) tandem or stand-alone stock
appreciation rights ("SARs") and tandem limited rights; (iii) performance
awards; and (iv) restricted stock and restricted units (hereinafter collectively
referred to as "Awards"). The provisions of the 1998 Plan relating to tandem
limited rights and reload options will be substantially similar in all material
respects to the provisions relating to such rights and options under the CBS
Stock Plan, which are described in footnote (1) to the table set forth under
"-- Executive Compensation -- Option Grants." The maximum number of shares of
Class A Common Stock that may be made subject to Awards granted pursuant to the
1998 Plan is 15,000,000. The 1998 Plan will be administered by the Company's
Compensation Committee. Unless earlier terminated, the 1998 Plan will terminate
on the tenth anniversary of the effective date thereof.
Stock Options. The Compensation Committee will establish the terms of the
stock options and procedures governing the exercise of options. The exercise
price per share for a stock option must be at least the fair market value per
share of the stock as of the date of grant. Options may be exercised at such
times as the Compensation Committee specifies. The Compensation Committee may
provide that if an option is exercised using already-owned stock, such
participant will receive an additional option (a "Reload Option") to purchase a
number of shares equal to the shares used to pay the exercise price at the fair
market value on the day of exercise of the original option. Reload Options will
expire on the expiration date of the original option and will be subject to
other conditions as determined by the Compensation Committee.
Stock Appreciation Rights and Limited Rights. An SAR is an award entitling
the recipient to receive an amount, in cash or stock or a combination thereof,
determined by reference to the appreciation in fair market value of such stock
and may be granted alone or in tandem with stock options. Limited rights to
purchase stock, exercisable for thirty days following a change in control, may
be granted only in tandem with stock options. Tandem SARs and limited rights
terminate on the termination of the related option. Terms and conditions of SARs
and limited rights will be determined by the Compensation Committee.
Performance Awards. A performance award provides for the recipient to
receive an amount in cash or stock or a combination thereof contingent upon the
attainment of established performance objectives or upon the occurrence of
established trigger events over a period to be determined by the Compensation
Committee.
52
<PAGE> 59
Restricted Stock and Restricted Units. The Compensation Committee may make
awards of restricted stock or restricted units and may determine the length of
the restrictive period, the events which will cause a forfeiture of the award
and any and all other terms and conditions of the award.
Change in Control. In the event of a change in control, a participant
would generally be entitled to the following treatment: (i) each outstanding
option and limited right would be immediately exercisable; (ii) all performance
awards would be deemed earned and paid as prescribed by the Compensation
Committee; (iii) restricted stock and restricted units would become earned and
restrictions would expire; and (iv) any amounts deferred under the 1998 Plan
would be paid to a trustee or otherwise as the Compensation Committee
determines.
Messrs. Karmazin and Suleman will continue to be eligible to receive awards
under the CBS Stock Plan, which authorizes the grant of non-statutory and
incentive stock options (with or without reload options and/or tandem limited
rights), tandem or stand-alone stock appreciation rights, performance awards and
restricted stock and the deferral of award payments.
ANNUAL INCENTIVES
Prior to the Offerings, the Company expects to adopt the Executive Annual
Incentive Plan (the "Annual Incentive Plan"), which would authorize the payment
of annual incentives to key executives of the Company based on the level of
performance achieved against one or more pre-established objective performance
goals for a calendar year (or other specified performance period). The
performance goals will be determined by the Compensation Committee and will be
based on one or more business criteria, such as EBITDA, EBIT, free cash flow,
earnings per share and stock price. Awards to any one participant for a given
performance period will be limited to $6 million (adjusted for increases in the
consumer price index). Awards will be payable in the form determined by the
Compensation Committee, which could include cash, stock options, stock
appreciation rights or other securities of the Company (not including Class B
Common Stock). The Annual Incentive Plan will be administered by the
Compensation Committee, which will have exclusive authority to interpret,
administer, and make determinations under the Annual Incentive Plan, including
the exclusive authority to select participants, establish performance goals and
approve incentive awards.
The maximum number of shares of Class A Common Stock that can be issued
under the Annual Incentive Plan is 1,000,000, and the maximum number of shares
of Class A Common Stock subject to stock options and stock appreciation rights
that may be granted to any one participant under the Annual Incentive Plan in
any one performance period is 600,000. The exercise or reference price of stock
options or stock appreciation rights will not be less than the fair market value
on the grant date.
In the event of a change in control, the Compensation Committee may deem
all or part of any incentive award opportunities to have been earned, and
incentive awards and outstanding derivative securities and deferrals may then be
paid and stock options, stock appreciation rights and other derivative
securities may then be modified as the Compensation Committee prescribes.
Messrs. Karmazin and Suleman will continue to be eligible to receive annual
incentive awards under the CBS 1998 Executive Annual Incentive Plan and the CBS
Annual Bonus Plan, respectively. These plans each provide for the payment of
performance-based annual incentives in the form of cash, stock or other
securities of CBS, or a combination thereof.
RETIREMENT BENEFITS
At the time of the Offerings, it is expected that the Company will: (i)
make available the same tax-qualified defined benefit pension plans for eligible
employees of the Company in which such employees were participating immediately
prior to the Offerings; and (ii) maintain the Old Infinity pension plan, which
is frozen (the "Frozen Infinity Pension Plan").
Mr. Karmazin has a vested benefit under the Frozen Infinity Pension Plan.
Because this plan was frozen effective November 30, 1987, Mr. Karmazin is no
longer accruing any additional benefits under the plan. As of
53
<PAGE> 60
December 31, 1997, the estimated monthly benefit amount payable upon retirement
at normal retirement age to Mr. Karmazin under the Frozen Infinity Pension Plan
is $1,408.
Mr. Mason has a vested benefit under the Group W component of the CBS
Combined Pension Plan (the "Group W Plan"). As of December 31, 1997, the
estimated monthly benefit amount payable upon retirement at normal retirement
age to Mr. Mason under the Group W Plan is $1,284.
Mr. Suleman and Mr. Apfelbaum do not participate in any tax-qualified
defined benefit pension plan sponsored by the Company or CBS.
WESTINGHOUSE PENSION PLAN
During 1997, Mr. Mason participated in the Westinghouse Pension Plan, which
is a defined benefit plan. The Westinghouse Pension Plan is designed to provide
retirement income related to an employee's salary and years of active service.
The cost of the Westinghouse Pension Plan is paid by both CBS and employee
contributions. All CBS contributions are actuarially determined.
In addition to the benefits provided by the Westinghouse Pension Plan, the
Westinghouse Executive Pension Plan (the "Executive Pension Plan") provides for
supplemental pension payments to Mr. Mason. In accordance with the terms of the
Executive Pension Plan, if, upon retirement, Mr. Mason has at least five
continuous years of service as an executive immediately prior to retirement,
meets the retirement eligibility requirements of the Executive Pension Plan and
contributes to the Westinghouse Pension Plan, he will be entitled to receive
supplemental payments under the Executive Pension Plan. Such payments, when
added to his pension under the Westinghouse Pension Plan, result in a total
annual pension equal to 1.47% for each year of executive benefit service
multiplied by his average annual compensation. Average annual compensation is
equal to the sum of the average of the five highest annualized December base
salaries and the average of the five highest annual incentive awards, each in
the last 10 years of employment. In the event of retirement prior to the age 60,
the total annual pension will be reduced by an amount equal to the reduction in
the benefits payable under the Westinghouse Pension Plan. Participants become
vested in the event of a change in control of CBS and benefits under the
Executive Pension Plan may be paid on a present value or other basis.
For purposes of illustration, the following table indicates the approximate
amounts of annual retirement income that would be payable at the present time
under various assumptions as to average annual compensation and years of service
to employees who participate in the Westinghouse Pension Plan and are eligible
for supplemental payments pursuant to the Executive Pension Plan.
WESTINGHOUSE PENSION PLAN AND EXECUTIVE PENSION PLAN TABLE
<TABLE>
<CAPTION>
FIVE-YEAR
AVERAGE
ANNUAL
COMPENSATION
INCLUDING ESTIMATED ANNUAL PENSION FOR SPECIFIED YEARS OF CREDITED SERVICE
INCENTIVE -------------------------------------------------------------------------
AWARD 15 20 25 30 35 40
- --------------- -------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
$ 100,000 $ 22,050 $ 29,400 $ 36,750 $ 44,100 $ 51,450 $ 58,800
300,000 66,150 88,200 110,250 132,300 154,350 176,400
500,000 110,250 147,000 183,750 220,500 257,250 294,000
700,000 154,350 205,800 257,250 308,700 360,150 411,600
900,000 198,450 264,600 330,750 307,900 463,050 529,200
1,100,000 242,550 323,400 404,250 485,100 565,950 646,800
1,500,000 330,750 441,000 551,250 661,500 771,750 882,000
2,000,000 441,000 588,000 735,000 882,000 1,029,000 1,176,000
2,500,000 551,250 735,000 918,750 1,102,500 1,286,250 1,470,000
3,000,000 661,500 882,000 1,102,500 1,323,000 1,543,500 1,764,000
3,500,000 771,750 1,029,000 1,286,250 1,543,500 1,800,750 2,058,000
</TABLE>
54
<PAGE> 61
The amounts presented in the above table are based upon straight life
annuity amounts and are not subject to any reduction for social security
benefits or other offset amounts. As of December 31, 1997, Mr. Mason had 4.586
credited years of service under the Westinghouse Pension Plan.
Effective January 1, 1998, Mr. Mason was transferred from the Westinghouse
Pension Plan to the Group W Plan, which has terms substantially similar to the
Westinghouse Pension Plan. Mr. Mason continues to participate in the Executive
Pension Plan.
SAVINGS PLANS
At the time of the Offerings, the Company will make available the same
savings plans (tax-qualified under Section 401(k) of the Internal Revenue Code)
for eligible employees of the Company and its subsidiaries, including the Named
Executive Officers (the "Savings Plans"), in which such employees were
participating immediately prior to the Offerings. The Savings Plans will permit
matching employer contributions following the Offerings in the form of cash or
common stock of CBS or the Company and such common stock will be available as an
investment alternative with respect to employee contributions made following the
Offerings.
55
<PAGE> 62
PRINCIPAL STOCKHOLDERS AND STOCK OWNERSHIP
STOCK OWNERSHIP OF THE COMPANY
CBS Corporation, 51 West 52nd Street, New York, New York 10019, and CBS
Broadcasting Inc., 51 West 52nd Street, New York, New York 10019, an indirect
wholly owned subsidiary of CBS Corporation, together own all of the outstanding
shares of common stock of the Company. Immediately after consummation of the
Offerings, CBS Corporation and CBS Broadcasting Inc. will own 57,798,165 and
642,201,835 shares of Class B Common Stock, respectively, which will represent
approximately 6.9% and 76.9%, respectively, of the outstanding shares of Common
Stock (approximately 6.8% and 75.1%, respectively, if the Underwriters'
over-allotment options are exercised in full), and approximately 8.0% and 88.3%,
respectively, of the combined voting power of the outstanding shares of Common
Stock (approximately 7.9% and 87.9%, respectively, if the Underwriters'
over-allotment options are exercised in full).
STOCK OWNERSHIP OF CBS CORPORATION
The following table sets forth, as of September 30, 1998, the beneficial
ownership of the outstanding common stock, par value $1.00 per share, of CBS
Corporation (the only class of shares of CBS Corporation entitled to voting
rights at such date) by the Company's directors, the Named Executive Officers
and by all of the directors and executive officers of the Company as a group.
Each person has sole voting and investment power over the shares of CBS common
stock reported, except as otherwise noted.
<TABLE>
<CAPTION>
NAME OF BENEFICIAL OWNER AMOUNT BENEFICIALLY OWNED PERCENT OF CLASS
------------------------ --------------------------- ----------------
<S> <C> <C>
William Apfelbaum................................ 293,495 shares(1) *
Mel Karmazin..................................... 7,816,431 shares(1)(2) 1.1%
Daniel Mason..................................... 454,630 shares(1) *
Farid Suleman.................................... 1,639,218 shares(1)(3) *
All directors and executive officers of the
Company as a group (4 persons)................. 10,203,774 shares(1)(2)(3) 1.4%
</TABLE>
- ---------------
(1) Includes the following CBS shares not owned by the indicated executive
officers on September 30, 1998, but with respect to which they had the right
to acquire beneficial ownership within 60 calendar days through the exercise
of stock options or warrants: Apfelbaum: 50,000; Karmazin 3,583,534; Mason
434,500; and Suleman 1,573,271, respectively.
(2) Includes 2,184,003 CBS shares as to which Mr. Karmazin has voting power but
no investment power.
(3) Includes 17,313 CBS shares held by Mr. Suleman's children.
* Represents less than 1% of the outstanding common stock of CBS Corporation.
56
<PAGE> 63
RELATIONSHIPS BETWEEN THE COMPANY AND CBS
GENERAL
CBS is currently the beneficial owner of all the capital stock of the
Company. Following the completion of the Offerings, CBS will continue to be the
controlling stockholder of the Company and will beneficially own 100% of the
outstanding Class B Common Stock, which will represent approximately 96.3% of
the combined voting power of all the outstanding Common Stock and approximately
83.8% of the economic interest in the Company (or approximately 95.8% and 81.9%,
respectively, if the Underwriters' over-allotment options are exercised in
full). For so long as CBS continues to beneficially own shares of Common Stock
representing more than 50% of the combined voting power of the outstanding
Common Stock, it generally will be able to approve any matter submitted to a
vote of the stockholders, including, among other things, the election of the
entire Board of Directors or the amendment of the Restated Certificate and
By-Laws, without the consent of the other stockholders of the Company. In
addition, through its controlling beneficial ownership of the Company (as well
as certain provisions of the Intercompany Agreement discussed below under
"-- Intercompany Arrangements -- Intercompany Agreement"), CBS will be able to
exercise a controlling influence over the business and affairs of the Company,
including determinations with respect to mergers or other business combinations
involving the Company, the acquisition or disposition of assets by the Company,
the Company's access to the capital markets, the payment of dividends and any
change of control of the Company. In the foregoing situations or otherwise,
various conflicts of interest between the Company and CBS could arise.
Furthermore, ownership interests of directors and officers of the Company in
common stock of CBS or service as a director or officer of both the Company and
CBS could create, or appear to create, potential conflicts of interest when
directors and officers are faced with decisions that could have different
implications for the Company and CBS. No assurance can be given that conflicts
of interest will not arise or will be resolved in a manner favorable to the
Company.
CBS has advised the Company that its current intent is to continue to hold
all the Class B Common Stock beneficially owned by it following the Offerings.
However, CBS has no contractual obligation to retain its shares of Class B
Common Stock. CBS has agreed not to sell or otherwise dispose of any shares of
Class B Common Stock of the Company for a period of 180 days after the date of
this Prospectus without the prior written consent of Merrill Lynch, Pierce,
Fenner & Smith Incorporated. As a result, there can be no assurance concerning
the period of time during which CBS will maintain its beneficial ownership of
Common Stock owned by it following the Offerings. In addition, the Company has
agreed that it will, upon the request of CBS, use its best efforts to effect the
registration under applicable federal and state securities laws of any shares of
Common Stock held by CBS or any of its affiliates. See "-- Intercompany
Arrangements -- Intercompany Agreement."
COMPETITION
Because CBS and the Company are both engaged in the sale of advertising
time and space, there exist numerous actual and potential conflicts of interest
between them. The Company and CBS will to some extent be competing with each
other when offering their products and services to potential customers, who
often are deciding how much of their advertising budgets to allocate to
television, radio, outdoor or other media. In addition, as a major advertiser,
CBS from time to time utilizes the Company's advertising time and space.
Similarly, the Company promotes its programming on stations and networks owned
by CBS.
The Restated Certificate provides that, subject to any contractual
agreements of the Company to the contrary, CBS will have the right to compete
with the Company.
BOARD OF DIRECTORS
Promptly following the consummation of the Offerings, CBS and the Company
expect to elect two additional directors of the Company who will be independent
directors. The Board of Directors will then consist of eight members, including
six who are directors, officers or executives of CBS. See "Management --
Directors and Executive Officers of the Company." Members of the Board of
Directors will be divided into
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three classes and serve staggered three-year terms. CBS will have the ability to
change the size and composition of the Company's Board of Directors.
INTERCOMPANY ARRANGEMENTS
Historically, the Company and CBS have maintained a number of financial and
administrative arrangements and regularly engaged in transactions with each
other and other respective affiliates. The Company's ongoing relationship with
CBS will be governed by, among other things, certain agreements to be entered
into prior to the Offerings and possibly in the future, including the
Intercompany Agreement and the Tax Sharing Agreement, the material terms of
which are summarized below. The agreements entered into in connection with the
Offerings generally will maintain the relationship between the Company and CBS
in a manner consistent in all material respects with past practice. It is the
intention of the Company and CBS that such agreements and the transactions
provided for therein, taken as a whole, should accommodate the parties'
interests in a manner that is fair to both parties. However, neither of these
agreements have resulted, nor will any agreements entered into in the future
between the Company and CBS (for so long as CBS maintains controlling beneficial
ownership in the Company) result, from arm's-length negotiations and, as a
result, certain of the terms of such agreements may be less favorable to the
Company than could be obtained from unaffiliated third parties. Moreover, many
of the transactions between the Company and CBS are of an informal nature and do
not lend themselves to formulaic allocations of costs and benefits. Thus, there
inevitably will be some discretion left to the parties, who are subject to the
potentially conflicting interests described above and under "Risk
Factors -- Risks Relating to Control by CBS."
In addition, to the extent that the Company derives benefits from its close
relationship with CBS, those benefits could be reduced or eliminated in the
future. CBS is not obligated to engage in any future business transactions or
jointly pursue opportunities, except for those expressly provided for in the
Intercompany Agreement. The Restated Certificate contains certain provisions
addressing potential conflicts of interest between the Company and CBS and the
allocation between the Company and the CBS Parties of certain transactions that,
absent such allocation, could constitute corporate opportunities of both the
Company and the CBS Parties. These provisions effectively create a presumption
that such opportunities need not be made available to the Company absent a clear
indication that they were directed to the Company. See "Certain Provisions of
the Certificate of Incorporation and By-Laws of the Company -- Corporate
Opportunity Policy." The Intercompany Agreement will not restrict CBS from
owning or acquiring businesses similar to or which otherwise compete with the
Company.
The descriptions set forth below are intended to be summaries and, while
material terms of the agreements are set forth herein, the descriptions are
qualified in their entirety by reference to the relevant agreement or form
thereof, copies of which have been filed with the Registration Statement of
which this Prospectus forms a part.
Intercompany Agreement
General Services. The Intercompany Agreement requires CBS to continue to
make available to the Company the range of services provided by CBS prior to the
Offerings and requires the Company to utilize such services in the conduct of
its business. These services include, among others, certain investor relations,
executive, legal, finance, real estate, information management, internal audit,
tax and treasury services. The costs of such services will be allocated
according to established methodologies determined on an annual basis by CBS, in
its sole discretion, after consultation with the Company, and will evidence each
such party's fair and reasonable share of such costs. The allocation of costs
for certain of these services provided in prior years is reflected in the
Company's Combined Financial Statements. The costs for certain other services
have not been allocated to the Company in prior years and are not reflected in
the Company's Combined Financial Statements, but will be so allocated following
the Offerings. The Company believes that the costs for services that were not
allocated to the Company in prior years are not material. The Intercompany
Agreement also provides CBS with unlimited access to the corporate books and
records of the Company.
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Executive Officer Services. The Intercompany Agreement provides that,
after the Offerings, CBS will make available to the Company the services of Mr.
Karmazin, the Company's Chairman, President and Chief Executive Officer, and Mr.
Suleman, the Company's Executive Vice President, Chief Financial Officer,
Treasurer and Secretary, as well as such other executive officers and employees
of CBS as the Company and CBS may from time to time agree. CBS will charge the
Company an allocable portion of the compensation and benefits costs of such
persons, determined in the same manner as set forth under "-- General
Administrative Services." Prior to the Offerings, costs for such services were
allocated on a different basis and, accordingly, the Company's Combined
Financial Statements do not reflect the method by which the Company will
allocate such costs in the future. The Company believes that the costs for
services that were not reflected in the Company's Combined Financial Statements
are not material. These Company officers will be employed by CBS, rather than by
the Company, and will spend a substantial part of their professional time and
effort on behalf of CBS. In many instances, such efforts for CBS will relate to
activities that are unrelated (and in some circumstances may be adverse) to the
interests of the Company. The Company has not established any minimum time
requirements for such officers. In addition, Messrs. Karmazin and Suleman will
continue to participate in CBS stock option and other benefit plans and Mr.
Karmazin is one of CBS's largest stockholders. The Company's other executive
officers and a significant number of its employees will continue to hold shares
of and/or options to purchase shares of common stock of CBS granted or acquired
prior to their transfer to the Company, and will not yet have received
comparable interests under the Company's plans. These substantial interests in
CBS's equity may present these officers and employees with incentives different
from those of the Company's stockholders, and may exacerbate the conflicts
described herein.
Mr. Karmazin is a Director of Westwood One and Mr. Suleman is the Chief
Financial Officer and Secretary and a Director of Westwood One, which positions
will continue to impose demands on their time and present potential conflicts of
interest following the Offerings. Westwood One produces and distributes
syndicated and network radio programming to competitors of the Company. See
"Business -- Programming."
Free Promotional Time; Joint Marketing and Corporate Opportunities. The
Intercompany Agreement requires each party to make available at favorable rates
or without charge advertising time and space for promotional purposes in a
manner substantially consistent with past practice. In general, the Company and
CBS have provided each other with promotional time and space without charge in
circumstances where the party providing the time or space concludes that doing
so would not significantly impact its potential revenues. CBS has received, and
is likely to continue to receive, more time under this arrangement than the
Company. Certain of the Company's radio stations also receive (and, following
the Offerings, will continue to receive) certain CBS television programming in
exchange for running promotional spots for CBS during those broadcasts. While it
is not possible to quantify the amounts involved in these arrangements, they
have not had a material impact on the Company's results of operations, and they
are not expected to be material in the future.
The Intercompany Agreement also provides that the parties will use their
best efforts in appropriate situations to cooperate in jointly marketing their
products and services to potential advertisers and to refer advertisers to each
other. Relevant costs and revenues are to be split in a manner which, when
considered in light of their overall relationship, is intended to be fair to
both parties, as determined by CBS, in its sole discretion, after consultation
with the Company. The Intercompany Agreement expressly permits the parties to
compete with each other in selling advertising time and space and in making
acquisitions of media properties. In addition, the Intercompany Agreement
provides that in the event of a dispute between CBS and the Company relating to
the ownership or operation of their respective media assets as a result of a
conflict with or violation of federal law or FCC rules or regulations by reason
of a potential acquisition, change of law or regulation, any regulatory action,
final judicial determination or otherwise, CBS and the Company will attempt to
resolve in good faith such conflict or violation. In the absence of such
resolution, the Intercompany Agreement provides that CBS may, in its sole
discretion, take any actions which it in good faith deems necessary to avoid or
eliminate such conflict or violation, including requiring the Company to dispose
of assets or take other specified actions, provided that the same shall not have
a material adverse effect upon the overall business of the Company. If there is
a dispute between CBS and the Company as to whether or not such
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actions will result in such a material adverse effect, CBS and the Company have
agreed to submit such dispute to arbitration.
The Company does not anticipate that providing discounted or free
promotional time to CBS or participating in joint marketing opportunities with
CBS will constitute or affect a material portion of its net revenues.
Lease Arrangements. Certain of the Company's facilities are located in
premises owned or leased by CBS or entities in which CBS has an interest.
Further, certain facilities of CBS are located in premises owned or leased by
the Company. The Intercompany Agreement provides for the apportionment of costs
related to the use of such facilities.
Employee Matters. The Intercompany Agreement sets forth the understanding
between the parties with respect to current and former employees of CBS and the
Company, including claims arising out of or relating to any employee benefit or
compensation plan, agreement, arrangement or program, as well as collective
bargaining agreements, if any, accrued wages and workers' compensation, holiday,
vacation and sick day benefits. It is expected that following the Offerings, the
Company will assume and be solely responsible for all liabilities and
obligations with respect to current officers and employees of the business owned
and operated by the Company and former officers and employees of such businesses
who, immediately prior to the termination of their employment, were employed in
such businesses.
Trademarks. The Intercompany Agreement provides that the Company will be
entitled to use: (i) on a non-exclusive basis, the "CBS" trademark and the CBS
"eye" trademark logo with respect to day-to-day operations of the CBS Radio
networks in connection with the CBS Radio Network tradename; and (ii) certain
other CBS marks in connection with the Company's radio stations. Uses of the
marks will be subject to CBS's prior written approval. CBS may terminate the
Company's use of the marks in certain circumstances including: (i) a breach by
the Company of a material term or condition of the Intercompany Agreement; and
(ii) at any time CBS ceases to own at least 50% of the voting power of the
Company.
CBS Credit Agreement. The Company does not currently have any independent
credit facilities with banks or other institutions. Prior to the Offerings, the
Company expects to become a borrower under CBS's existing $4.0 billion senior
unsecured revolving credit facility, pursuant to which up to $1.0 billion will
be available to the Company for revolving loans. See "Risk Factors -- Risks
Relating to Control by CBS -- CBS Credit Agreement" and "Description of
Indebtedness -- CBS Credit Agreement."
CBS Note; the Offerings. On September 18, 1998, prior to being transferred
by CBS to the Company, Old Infinity issued the CBS Note as a dividend to CBS, in
the aggregate principal amount of $2.5 billion, bearing interest at the rate per
annum equal to three-month LIBOR plus 0.50%. The dividend was declared and paid
in the form of the CBS Note, in order to provide CBS with funds to be used for
CBS's general corporate purposes. The CBS Note is payable on September 18, 2003.
The Company intends to use the net proceeds of the Offerings to prepay the CBS
Note. Any proceeds in excess thereof will be used by the Company to purchase
from CBS American Radio Bonds that are owned by CBS on the date of consummation
of the Offerings for a purchase price in cash equal to the amount of the
purchase price paid by CBS for such American Radio Bonds plus accrued and unpaid
interest, if any, on such purchase price (which interest shall be calculated in
accordance with the terms of the applicable indentures pursuant to which such
American Radio Bonds were issued). Thereafter, any excess net proceeds will be
used for the Company's general corporate purposes, including working capital,
repayment of debt and possible acquisitions.
Registration Rights. The Intercompany Agreement provides that, upon the
request of CBS or any other rights holder, the Company will use its best efforts
to effect the registration under the applicable federal and state securities
laws of any of the shares of Common Stock (and any other securities issued in
respect of or in exchange therefor) beneficially owned by CBS or any such other
rights holder, as applicable, for sale in accordance with CBS's intended method
of disposition thereof, and will take such other actions as may be necessary to
permit the sale thereof in other jurisdictions, subject to certain limitations
specified in the Intercompany Agreement. CBS and any other rights holder also
will each have the right, subject to certain limitations, to include at any time
and from time to time the shares of Common Stock (and any other
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securities issued in respect of or in exchange therefor) beneficially owned by
it in certain other registrations of such securities initiated by the Company on
its own behalf or on behalf of its other stockholders. Subject to the provisions
of the Intercompany Agreement, the Company generally will be required to pay all
out-of-pocket costs and expenses in connection with each such registration that
CBS or any other rights holder requests or in which CBS or any other rights
holder participates. Subject to certain limitations specified in the
Intercompany Agreement, such registration rights will be assignable by CBS or
any other rights holder and their assigns. The Intercompany Agreement contains
customary terms and provisions with respect to, among other things, registration
procedures and certain rights to indemnification and contribution granted by the
parties thereunder in connection with such a registration.
Indemnification. The Intercompany Agreement provides for the assumption of
liabilities and cross-indemnities allocating liability in respect of the
Company's businesses to the Company and in respect of CBS's businesses to CBS.
The Intercompany Agreement provides that any sales or use tax arising from
or imposed upon the transfer of property or services by the Company or CBS
following the completion of the Offerings will be the liability of the party
receiving such property or services. The Intercompany Agreement also provides
that the Company will be liable for any payroll tax attributable to 1998 that
arises from the employment by the Company after the completion of the Offerings
of individuals who perform services for the Company during 1998.
In addition, provided that CBS continues to beneficially own at least 80%
of the combined voting power or the value of the outstanding capital stock of
the Company, the Company will be included for purposes of the Employee
Retirement Income Security Act of 1974, as amended, in the controlled group of
which CBS is the common parent. Each member of a controlled group is jointly and
severally liable for pension funding and pension termination liabilities of each
other member of the controlled group, as well as certain benefit plan taxes.
Accordingly, the Company could be liable (subject to indemnification by CBS
under the Intercompany Agreement) for pension funding, pension termination
liabilities and certain other pension-related excise taxes as well as other
taxes of another member of the CBS-controlled group in the event any such
liability is incurred, and not discharged, by such other member. The
Intercompany Agreement will provide, however, that CBS will indemnify the
Company to the extent that, as a result of being a member of the controlled
group of which CBS is the common parent, the Company becomes liable for a
pension funding, pension termination liabilities and any other pension-related
excise or other taxes of another member of the CBS-controlled group (other than
any of the Company's subsidiaries). See "Risk Factors -- Risks Relating to
Control by CBS -- Contingent Liability for CBS Obligations."
As of September 30, 1998, CBS had outstanding an aggregate of approximately
$2.6 billion principal amount of public debt issued pursuant to indentures which
under certain circumstances could effectively require a transferee of assets
from CBS (including the Company) to assume such debt. The Company does not
believe that such assumption is now required or likely to be required in the
future. The Intercompany Agreement provides that CBS will indemnify the Company
in respect of any such debt obligations (including the costs of defending any
assertion of claims against the Company by CBS bondholders). See "Risk
Factors -- Risks Relating to Control by CBS -- Contingent Liability for CBS
Obligations."
Term. The Intercompany Agreement generally will terminate on the date on
which CBS ceases to own 50% or more of the combined voting power of the capital
stock of the Company then outstanding. The Intercompany Agreement will not
provide for termination of the provisions in respect of the registration rights
and indemnification discussed above.
Tax Sharing Agreement and Tax Consolidation
Following the Offerings, the Company and certain of its subsidiaries will
continue to be included in the consolidated group of CBS for U.S. federal income
tax purposes and the combined, consolidated or unitary group of CBS for certain
state and local income tax purposes (the "Consolidated Group"). Prior to the
consummation of the Offerings, the Company and CBS will enter into a tax sharing
agreement (the "Tax Sharing Agreement"). Pursuant to the Tax Sharing Agreement,
the Company and CBS will make payments
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between them such that, with respect to income tax returns for any taxable
period in which the Company or any of its subsidiaries is included in the
Consolidated Group, the amount of income taxes to be paid by the Company,
subject to certain adjustments, will be determined as if the Company and each of
its subsidiaries included in the Consolidated Group were to file separate
federal, state and local income tax returns (including, except as provided
below, any amounts determined to be due as a result of a redetermination of the
tax liability of the Consolidated Group arising from an audit or otherwise).
With respect to certain tax items, such as foreign tax credits, alternative
minimum tax credits, net operating losses and net capital losses, the Company
will have a right of reimbursement, which will be determined based on the usage
of such credits or losses by the Consolidated Group. The Company will also pay
CBS the amount of any income taxes with respect to income tax returns that
include only the Company, which returns, as described below, will be filed by
CBS. For purposes of the Tax Sharing Agreement, income taxes include all taxes
imposed on or measured in whole or in part by income, capital or net worth or a
taxable base in the nature of income, capital or net worth (including, in each
case, any additions, interest or penalties imposed with respect thereto).
CBS will continue to have all the rights of a parent of a consolidated
group (and similar rights provided for by applicable state and local law with
respect to a parent of a combined, consolidated or unitary group), will be the
sole and exclusive agent for the Company in any and all matters relating to
income taxes of the Consolidated Group, will have sole and exclusive
responsibility for the preparation and filing of all income tax returns (or
amended returns) with respect to the Consolidated Group and will have the power,
in its sole discretion, to contest or compromise any asserted tax adjustment or
deficiency and to file, litigate or compromise any claim for refund on behalf of
the Consolidated Group.
CBS will control all tax decisions of the Company, as is presently the
case, by virtue of its controlling beneficial ownership of the Company and the
terms of the Tax Sharing Agreement. Under the Tax Sharing Agreement, CBS will
have sole authority to respond to and conduct all tax proceedings (including tax
audits) relating to the Company, file all income tax returns on behalf of the
Company and determine the amount of the Company's liability to (or entitlement
to payment from) CBS under the Tax Sharing Agreement. This arrangement may
result in conflicts of interest between the Company and CBS. For example, under
the Tax Sharing Agreement, CBS will be able to choose to contest, compromise or
settle any adjustment or deficiency proposed by the relevant taxing authority in
a manner that may be beneficial to CBS and detrimental to the Company.
Provided that CBS continues to beneficially own, directly or indirectly, at
least 80% of the combined voting power and the value of the outstanding capital
stock of the Company, the Company will be included for federal income tax
purposes in the consolidated group of which CBS is the common parent. It is the
present intention of CBS and its subsidiaries to continue to file a single
consolidated federal income tax return. In certain circumstances, certain of the
Company's subsidiaries also will be included with certain subsidiaries of CBS
(other than Company subsidiaries) in combined, consolidated or unitary income
tax groups for state and local tax purposes. Each member of a consolidated group
for federal income tax purposes is liable for the federal income tax liability
of each other member of the Consolidated Group. Similar principles apply with
respect to members of a combined group for state law tax purposes. Accordingly,
although the Tax Sharing Agreement will allocate tax liabilities between the
Company and CBS during the period in which the Company is included in the
Consolidated Group, the Company could be liable for the federal income tax
liability of any other member of the Consolidated Group in the event any such
liability is incurred, and not discharged, by such other member. The Tax Sharing
Agreement will provide, however, that CBS will indemnify the Company to the
extent that, as a result of being a member of the Consolidated Group, the
Company becomes liable for the federal income tax liability of any other member
of the Consolidated Group (other than a subsidiary of the Company).
Under Section 482 of the Internal Revenue Code, the Internal Revenue
Service has the authority in certain instances ("482 Authority") to
redistribute, reapportion or reallocate gross income, deductions, credits or
allowances between or among the Company and CBS (each, along with its
subsidiaries, an "Indemnifiable Group"). Other taxing authorities have similar
authority under comparable provisions of state, local or foreign tax law. The
Tax Sharing Agreement provides that each Indemnifiable Group will indemnify the
other Indemnifiable Group to the extent that, as a result of the Internal
Revenue Service exercising its 482
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Authority (or any other taxing authority exercising a similar authority), the
tax liability of one Indemnifiable Group is reduced while the tax liability of
the other Indemnifiable Group is increased.
Historical Relationships Between the Company and CBS
The Company has utilized various services provided by CBS. These services
include, among others, certain investor relations, executive, human resources,
legal, finance, real estate, information management, internal audit, tax and
treasury services. The costs of such services have been allocated according to
established methodologies and are determined on an annual basis by CBS. Such
methodologies used to allocate costs depend on the specific service provided and
include allocating costs that directly relate to the Company or allocating costs
that represent a pro rata portion of the total costs for the services provided.
Management of the Company believes these allocations to be a fair and reasonable
share of such costs. The Company expects that the method of allocating costs in
the future will be consistent with past practices. During 1996, 1997 and the
nine months ended September 30, 1998, such allocated expenses included: legal
services of approximately $1.5 million, $1.9 million and $0.8 million; corporate
rent of approximately $3.4 million, $2.0 million and $1.1 million; management
information services of approximately $4.8 million, $6.8 million and $2.0
million; human resources of approximately $1.5 million, $1.5 million and $0.3
million; and insurance of approximately $1.4 million, $1.2 million and $1.1
million, respectively. In 1995, such allocated expenses included management
information services of $2.4 million, insurance of approximately $1.0 million
and all other services of approximately $4.9 million. During 1995, 1996, 1997
and the nine months ended September 30, 1998, the Company's allocated expense
under certain pension plans and postretirement benefit arrangements sponsored by
CBS was $6.7 million, $7.0 million, $7.0 million and $4.7 million, respectively.
During 1995, 1996, 1997 and the nine months ended September 30, 1998, (i)
CBS paid to the Company approximately $1.4 million, $7.8 million, $6.4 million
and $5.9 million, respectively, in respect of promotional advertising time and
space purchased by CBS from the Company and (ii) the Company paid to CBS
approximately $0.5 million, $0.5 million, $0.6 million and $0.4 million,
respectively, in respect of promotional advertising time and space purchased by
the Company from CBS. See "Relationships between the Company and
CBS -- Intercompany Arrangements."
On September 18, 1998, prior to being transferred by CBS to the Company,
Old Infinity issued the CBS Note as a dividend to CBS, in the aggregate
principal amount of $2.5 billion. The CBS Note is payable on September 18, 2003.
The Company intends to use the net proceeds of the Offerings to prepay the CBS
Note and the requisite amount of any net proceeds in excess thereof will be used
by the Company to purchase American Radio Bonds owned by CBS on the date of
consummation of the Offerings.
WESTWOOD ONE
Pursuant to the Management Agreement, Westwood One has agreed to pay to a
subsidiary of the Company: (i) a management fee in the amount of $2.0 million
per annum, subject to increases in accordance with the consumer price index; and
(ii) a performance bonus based on Westwood One's operating cash flow. Pursuant
to the Representation Agreement, Westwood One has agreed to pay to CBS (and,
following the Offerings, to the Company): (i) a representation rights fee of
$22.0 million over a two-year period; and (ii) a commitment fee of $10.0 million
per annum, subject to certain adjustments. In 1997 and the nine months ended
September 30, 1998, Westwood One paid $17.2 million and $14.2 million,
respectively, pursuant to the Management Agreement and the Representation
Agreement. In addition, Westwood One makes payments to CBS (and, following the
Offerings, to the Company) as compensation for station affiliations and for the
rights to syndicate certain programming. In 1997 and the nine months ended
September 30, 1998, Westwood One paid to CBS approximately $29.5 million and
$22.1 million, respectively, pursuant to such arrangements. Westwood One also
makes payments to CBS in exchange for news programming and technical services
(which payments will continue to be made to CBS, rather than the Company, after
the Offerings). In 1997 and the nine months ended September 30, 1998, Westwood
One paid to CBS approximately $15.0 million and $10.9 million, respectively, for
these services.
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DESCRIPTION OF CAPITAL STOCK
Immediately prior to the closing of the Offerings, the Company will amend
its Certificate of Incorporation to change its authorized capital stock to
2,000,000,000 shares of Class A Common Stock, 2,000,000,000 shares of Class B
Common Stock and 50,000,000 shares of Preferred Stock, and to convert each
outstanding share of its current common stock into approximately 642,201.8349
shares of its newly created Class B Common Stock. The following summary
description of the capital stock of the Company is qualified in its entirety by
reference to the form of Restated Certificate of Incorporation of the Company
(the "Restated Certificate") and form of Restated By-Laws of the Company (the
"By-Laws"), a copy of each of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. As defined in the Restated
Certificate, "CBS Parent" shall mean CBS Corporation, or, if CBS Corporation is
then a wholly owned subsidiary of another entity, "CBS Parent" shall mean such
parent entity, in either case together with any successor by way of merger,
consolidation, division (if permitted by law) or sale of all or substantially
all assets; and "CBS Party" shall mean CBS Parent, any person or entity with a
controlling interest in CBS Parent, and all corporations, partnerships, joint
ventures, associations and other entities (each a "Subsidiary Entity") in which
CBS Parent beneficially owns, directly or indirectly, 50 percent or more of the
outstanding voting stock, voting power or similar voting interests ("Voting
Interest"), but shall not include the Company or any Subsidiary Entity in which
the Company beneficially owns, directly or indirectly, 50 percent or more of the
outstanding Voting Interest.
The Restated Certificate provides for two classes of common stock, Class A
Common Stock and Class B Common Stock, which are substantially identical, except
with respect to voting, conversion and transfer. See "Risk Factors -- Possible
Anti-Takeover Effects of Certain Charter Provisions."
CLASS A COMMON STOCK AND CLASS B COMMON STOCK
Voting Rights
Holders of Class A Common Stock and Class B Common Stock generally have
identical voting rights and vote together as a single class (and not as separate
classes), except that holders of Class A Common Stock are entitled to one vote
per share while holders of Class B Common Stock are entitled to five votes per
share and the shares of Class B Common Stock maintain certain conversion rights
and transfer restrictions as described below. Except as required by law, the
Restated Certificate or the By-Laws, all matters to be voted on by stockholders
must be approved by a majority (or, in the case of the election of directors, by
a plurality) of the votes cast in person or by proxy by holders of the
outstanding shares of Class A Common Stock and Class B Common Stock entitled to
vote on the subject matter, voting together as a single class, subject to any
voting rights granted to holders of any outstanding Preferred Stock. Holders of
shares of Class A Common Stock and Class B Common Stock are not entitled to
cumulate their votes in the election of directors. Except as otherwise provided
by law or in the Restated Certificate, and subject to any voting rights granted
to holders of any outstanding Preferred Stock, amendments to the Restated
Certificate (including any such amendment to increase or decrease the authorized
shares of any class) must be approved by a majority of the combined voting power
of the outstanding shares of Class A Common Stock and Class B Common Stock
entitled to vote thereon, voting together as a single class. However, amendments
to the Restated Certificate that would alter or change the powers, preferences
and relative, participating, optional or other special rights of the shares of
Class A Common Stock or Class B Common Stock so as to affect them adversely also
must be approved by a majority of the combined voting power of the outstanding
shares of such class, voting as a separate class. The superior voting rights of
the holders of the Class B Common Stock described above may discourage
unsolicited tender offers and merger proposals. See "Certain Provisions of the
Certificate of Incorporation and By-Laws of the Company."
Dividends and Other Distributions
Holders of Class A Common Stock and Class B Common Stock will share equally
on a per share basis in any dividends or other distributions declared by the
Board of Directors, subject to the rights of the holders of any series of
Preferred Stock and any other provisions of the Restated Certificate. Dividends
or other
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distributions consisting of shares of Class A Common Stock and Class B Common
Stock may be paid only as follows: (i) shares of Class A Common Stock (or
securities convertible into or exchangeable or exercisable for shares of such
class of stock) may be paid only to holders of Class A Common Stock, and shares
of Class B Common Stock (or securities convertible into or exchangeable or
exercisable for shares of such class of stock) may be paid only to holders of
Class B Common Stock; and (ii) the number of shares (or securities convertible
into or exchangeable or exercisable for shares of such class of stock) so paid
will be equal on a per share basis with respect to each outstanding share of
Class A Common Stock and Class B Common Stock. The Company may not reclassify,
subdivide or combine shares of either class of Common Stock without at the same
time proportionally reclassifying, subdividing or combining shares of the other
class.
In the event of any liquidation, dissolution or winding up of the Company,
the holders of Class A Common Stock and the holders of Class B Common Stock will
be entitled to receive the assets and funds of the Company available for
distribution after payments to creditors and to the holders of any Preferred
Stock of the Company that may at the time be outstanding, in proportion to the
number of shares held by them, respectively, without regard to class.
Issuance of Class B Common Stock, Options, Rights or Warrants
Subject to certain provisions regarding dividends and other distributions
described above, the Company will not be entitled to issue additional shares of
Class B Common Stock, or issue rights, options, warrants or other securities
convertible into or exchangeable or exercisable for additional shares of Class B
Common Stock, except that the Company may make a pro rata offer to all holders
of Common Stock of rights to purchase additional shares of the class of Common
Stock already held by them. The Class A Common Stock and the Class B Common
Stock will be treated equally with respect to any offer by the Company to
holders of Common Stock of rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of any other capital
stock of the Company.
Merger
In the event of a merger, consolidation or other restructuring, the holders
of Class A Common Stock and the holders of Class B Common Stock will be entitled
to receive the same per share consideration, if any, except that, prior to a
Tax-Free Spin-Off (as defined below), if such consideration includes voting
securities (or rights, options, warrants or other securities convertible into or
exchangeable or exercisable for voting securities), the Company will, to the
maximum extent practicable, provide that the voting securities distributed or
distributable to holders of Class B Common Stock entitle such holders to five
times the number of votes per share or other applicable unit as the voting
securities issued or issuable to the holders of the Class A Common Stock.
Conversion of Class B Common Stock
Each share of Class B Common Stock is convertible while held by any CBS
Party at the option of the holder thereof into one share of Class A Common
Stock. Except as provided below, any shares of Class B Common Stock transferred
to a person other than a CBS Party will automatically convert into shares of
Class A Common Stock upon such transfer.
In connection with a Tax-Free Spin-Off, shares of Class B Common Stock will
not convert, and thereafter will not be convertible, into shares of Class A
Common Stock (subject to applicable laws). However, the Intercompany Agreement
requires CBS, prior to a Tax-Free Spin-Off, to amend the Restated Certificate to
provide for the automatic conversion of shares of Class B Common Stock into
shares of Class A Common Stock, at a specified time following the Tax-Free
Spin-Off, if CBS determines that such conversion would be consistent with
qualification of the transaction as a Tax-Free Spin-Off.
A "Tax-Free Spin-Off" means the transfer of the Class B Common Stock
beneficially owned by CBS Parent to the stockholders of CBS Parent in a
transaction intended to be tax-free under Section 355 of the Internal Revenue
Code (or any successor provision).
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Preemptive Rights
No shares of either class of Common Stock have preemptive rights with
respect to any outstanding or newly issued capital stock of the Company.
Foreign Ownership Restrictions
The Restated Certificate includes the following provisions designed to
ensure that control and management of the Company remains with United States
persons or entities, as required by the Communications Act:
(a) If the Company is a direct licensee of a broadcast station, the Company
will not issue to "Aliens" (which term includes: (i) a person who is a citizen
of a country other than the United States; (ii) any entity organized under the
laws of a government other than the government of the United States or any
state, territory, or possession of the United States; (iii) a government other
than the government of the United States or of any state, territory, or
possession of the United States; and (iv) a representative of, or an individual
or entity controlled by, any of the foregoing), either individually or in the
aggregate, in excess of 20% of the total number of shares of capital stock of
the Company outstanding at any time and will seek not to permit the transfer on
the books of the Company of any capital stock to any Alien that would result in
the total number of shares of such capital stock held by Aliens exceeding such
20% limit. If the Company is not a direct licensee of a broadcast station but
directly or indirectly controls such licensee, the foregoing limit will be 25%.
In the event that the FCC amends the foregoing limits, the amended limits will
apply.
(b) If the Company is a direct licensee of a broadcast station, no Alien or
Aliens will be entitled to vote or direct or control the vote of more than 20%
of: (i) the total number of shares of capital stock of the Company outstanding
and entitled to vote at any time and from time to time; or (ii) the total voting
power of all shares of capital stock of the Company outstanding and entitled to
vote at any time and from time to time. If the Company is not a direct licensee
of a broadcast station but directly or indirectly controls such licensee, the
foregoing limit will be 25%. In the event that the FCC amends the foregoing
limits, the amended limits will apply.
(c) Any shares of capital stock of the Company determined by the Board of
Directors to be owned by an Alien or Aliens will always be subject to redemption
by the Company by action of the Board of Directors or any other applicable
provision of law, to the extent necessary in the judgment of the Board of
Directors to comply with the Alien ownership restrictions. The terms, conditions
and procedures of such redemption will be as follows: (i) the redemption price
of the shares to be redeemed will be equal to the fair market value of the
shares to be redeemed, as determined by the Board of Directors in good faith;
(ii) the redemption price of such shares may be paid in cash, securities or any
combination thereof as determined by the Board of Directors; (iii) if the
aggregate redemption price for all of the Alien-owned shares to be redeemed
exceeds $5 million in the aggregate during any one year period consisting of any
12 consecutive calendar months, then the Company may elect to pay the balance of
any redemption price after the Company has paid $5 million in any such period in
installments not to exceed $5 million per year in the aggregate, with interest
payable semi-annually at a rate equal to the six-month LIBOR rate for such
six-month period from time to time as determined by the Board of Directors in
good faith; (iv) if less than all the shares held by Aliens are to be redeemed,
the shares to be redeemed will be selected in any manner determined by the Board
of Directors to be fair and equitable; (v) at least 10 days' prior written
notice of the redemption, which notice will specify the date the redemption is
to be effective (the "Redemption Date"), will be given to the holders of the
shares selected to be redeemed (unless waived in writing by any such holder);
provided that the Redemption Date may be the date on which written notice will
be given to holders if the cash or securities necessary to effect the redemption
will have been deposited in trust for the benefit of such holders and such cash
and securities are subject to immediate withdrawal by them upon surrender of the
stock certificates for their shares to be redeemed duly endorsed in blank or
accompanied by duly executed proper instruments of transfer; (vi) from and after
the Redemption Date, the shares to be redeemed will cease to be regarded as
outstanding and any and all rights of the holders in respect of the shares to be
redeemed or attaching to such shares of whatever nature (including any rights to
vote or participate in dividends declared on capital stock of the same class or
series as such shares, excepting only payment of dividends declared prior to the
Redemption Date for which the record date precedes the Redemption Date) will
cease and terminate, and the holders thereof thereafter
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will be entitled only to receive the cash or securities payable upon redemption;
and (vii) such other terms and conditions as the Board of Directors determine.
PREFERRED STOCK
The Board of Directors has the authority, without further action by the
stockholders, to provide for the issuance of shares of Preferred Stock in one or
more series and to fix the powers, rights, preferences, privileges and
restrictions thereof, any or all of which may be greater than the rights of the
Class A Common Stock or the Class B Common Stock. Depending upon the rights of
such Preferred Stock, the issuance thereof could adversely affect the voting
power of holders of the Class A Common Stock or the Class B Common Stock and
could result in restrictions upon the payment of dividends or other
distributions to the holders of Common Stock and could have the effect of
delaying, deterring or preventing a change in control of the Company. The
Company has no present plans to issue any shares of Preferred Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock will be BankBoston,
N.A. .
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND
BY-LAWS OF THE COMPANY
CERTAIN AMENDMENTS TO THE CERTIFICATE OF INCORPORATION
The Restated Certificate requires the affirmative vote of the holders of at
least 80% of the combined voting power of all the then outstanding shares of
Common Stock entitled to vote thereon, voting together as a single class, to
alter, amend or repeal, or to adopt any provision of the Restated Certificate
(whether directly or indirectly through any merger of the Company with any other
entity) which is inconsistent with, among other things, any provision of the
Restated Certificate relating to the classification of the Board of Directors,
the determination of the size of, and the filling of vacancies on, the Board of
Directors, the provision requiring an 80% stockholder vote to remove directors
for cause, the prohibition on the taking of actions by stockholders by written
consent in lieu of a meeting, upon the CBS Parties ceasing to beneficially own a
majority of the combined voting power of outstanding shares of Common Stock, the
prohibitions against stockholders calling a special meeting of stockholders,
advance notice requirements and procedures for raising business or making
nominations at stockholder meetings, provisions permitting the Board of
Directors to amend the Company's By-Laws, provisions with respect to corporate
opportunity, provisions limiting director liability and providing for
indemnification of directors and officers, the provision requiring an 80% vote
for stockholders to amend the By-Laws in the absence of Board approval and the
provision requiring such an 80% vote to effect such an alteration, amendment,
repeal or adoption.
POTENTIAL LIMITS ON CHANGE OF CONTROL
Certain provisions of the Restated Certificate and By-Laws may delay, defer
or prevent a tender offer, proxy contest or other takeover attempt involving the
Company. These provisions include: (i) the availability of shares of Preferred
Stock for issuance from time to time at the discretion of the Board of
Directors; (ii) prohibitions against stockholders calling a special meeting of
stockholders; (iii) prohibitions against stockholders acting by written consent
in lieu of a meeting upon the CBS Parties ceasing to beneficially own a majority
of the combined voting power of outstanding shares of Common Stock; (iv) the
classification of the Board of Directors into three classes, each of which will
serve for different three-year periods; (v) a requirement pursuant to Section
141 of the DGCL, that, due to the classification of the Board of Directors,
directors of the Company may only be removed for cause; (vi) a requirement that
certain provisions of the Restated Certificate may be amended only with the
approval of the holders of at least 80% of the combined voting power of the
Common Stock then outstanding; (vii) requirements for advance notice procedures
for raising business or making nominations at stockholder meetings; and (viii)
the ability of the Board of Directors to increase the size of the Board of
Directors and to appoint directors to fill newly created directorships and
vacancies on the Board of Directors. CBS, as owner of more than 80% of the
combined voting power of all classes of voting stock, could sell or otherwise
dispose of a substantial portion
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of its holdings and still be able to block any tender offer, proxy contest or
other takeover attempt by any third party and certain other material
transactions and matters.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
As permitted by applicable provisions of the DGCL, the Restated Certificate
contains a provision eliminating, to the fullest extent permitted by the DGCL as
it exists or may in the future be amended, the liability of a director to the
Company and its stockholders for monetary damages for breaches of fiduciary or
other duty as a director. However, the DGCL does not currently allow such
provision to limit the liability of a director for: (i) any breach of the
director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of laws; (iii) payment of dividends, stock purchases or redemptions
that violate the DGCL; or (iv) any transaction from which the director derived
an improper personal benefit. Such limitation of liability also does not affect
the availability of equitable remedies such as injunctive relief or rescission.
The Restated Certificate and the By-Laws also provide that, to the fullest
extent permitted by the DGCL as it exists or may in the future be amended, the
Company will indemnify and hold harmless any officer or director who is or was
made a party or is threatened to be made a party to or is involved in any manner
in any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was an officer or director of the Company, and may indemnify
any employee or agent of the Company and any person serving at the request of
the Company as a officer, director, partner, member, employee or agent of
another corporation, partnership, limited liability company, joint venture,
trust, employee benefit plan or other enterprise; provided, however, that the
Company will indemnify any such person seeking indemnification in connection
with a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors or is a
proceeding to enforce such person's claim to indemnification pursuant to the
rights granted by the By-Laws. In addition, the Company will pay the expenses
incurred by any officers and directors, and may pay the expenses incurred by
other persons that may be indemnified pursuant to the Restated Certificate and
the By-Laws, in defending any such proceeding in advance of its final
disposition upon receipt (unless the Company upon authorization of the Board of
Directors waives such requirement to the extent permitted by applicable law) of
an undertaking by or on behalf of such person to repay such amount if it is
ultimately determined that such person is not entitled to be indemnified by the
Company as authorized in the By-Laws or otherwise. The Restated Certificate and
the By-Laws also state that such indemnification is not exclusive of any other
rights of the indemnified party, including rights under any indemnification
agreements or otherwise.
CBS Corporation currently maintains insurance in the aggregate amount of
$85 million on behalf of officers and directors of CBS Corporation and its
subsidiaries (including the Company) against any liability which may be asserted
against any such officer or director, subject to certain customary exclusions.
CORPORATE OPPORTUNITY POLICY
In order to address certain potential conflicts of interest between the
Company and the CBS Parties, the Restated Certificate contains provisions
concerning the conduct of certain affairs of the Company as they may involve CBS
Parties and their respective officers and directors, and the powers, rights,
duties and liabilities of the Company and its subsidiaries and their respective
officers, directors and stockholders in connection therewith. In general, these
provisions recognize that the Company and the CBS Parties and their respective
subsidiaries may engage in the same or similar business activities and lines of
business and have an interest in the same areas of corporate opportunities and
that the Company and the CBS Parties will continue to have contractual and
business relations with each other (including service of directors and officers
of the CBS Parties as directors and officers of the Company). See
"Management -- Directors and Executive Officers of the Company."
The Restated Certificate provides that any person purchasing or otherwise
acquiring any interest in any shares of capital stock of the Company shall be
deemed to have notice of and to have consented to these provisions.
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The Restated Certificate provides that, except as CBS Parent may otherwise
agree in writing, the CBS Parties will have the right to: (i) engage in the same
or similar business activities or lines of business as the Company; (ii) do
business with any potential or actual customer or supplier of the Company; or
(iii) employ or otherwise engage, or solicit for such purpose, any officer,
director or employee of the Company. Neither a CBS Party nor any officer,
employee or director thereof will be liable to the Company or its stockholders
for breach of any fiduciary or other duty by reason of these activities.
If a CBS Party acquires knowledge of a potential transaction or matter that
may be a corporate opportunity for both a CBS Party and the Company, the CBS
Party will have no duty to communicate that opportunity to the Company.
Furthermore, a CBS Party will not be liable to the Company or its stockholders
because such CBS Party pursues or acquires that corporate opportunity for
itself, directs that corporate opportunity to another person or entity or does
not present that corporate opportunity to the Company.
If a director, officer or employee of the Company who is also a director,
officer or employee of a CBS Party acquires knowledge of a potential transaction
or matter that may be a corporate opportunity for both the Company and a CBS
Party, the Restated Certificate requires that the director, officer or employee
of the Company act in good faith in accordance with the following three-part
policy:
First, a corporate opportunity offered to any person who is a director but
not an officer or employee of the Company and who is also an officer or employee
(whether or not a director) of a CBS Party will belong to the CBS Parties,
unless the opportunity is expressly offered to that person primarily in his or
her capacity as a director of the Company, in which case the opportunity will
belong to the Company.
Second, a corporate opportunity offered to any person who is an officer or
employee (whether or not a director) of the Company and who is also a director
but not an officer or employee of a CBS Party will belong to the Company, unless
the opportunity is expressly offered to that person primarily in his or her
capacity as a director of a CBS Party, in which case the opportunity will belong
to the CBS Parties.
Third, a corporate opportunity offered to any other person who is (i)
either an officer or employee of the Company and either an officer or employee
of a CBS Party or (ii) a director of both the Company and a CBS Party will
belong to the CBS Parties, unless such opportunity is expressly offered to the
person primarily in his or her capacity as an officer, director or employee of
the Company, in which case such opportunity shall belong to the Company.
For purposes of these corporate opportunity provisions, a director of the
Company who is Chairperson or Vice Chairperson of the Board of Directors of the
Company (or a committee thereof) will not be deemed to be an officer of the
Company by reason of holding such position, unless such person is a full-time
employee of the Company.
Under the Restated Certificate, any corporate opportunity that belongs to
the CBS Parties or to the Company pursuant to the foregoing policy will not be
pursued by the other (or directed by the other to another person or entity)
unless and until the CBS Parties or the Company, as the case may be, determines
not to pursue the opportunity. If the party to whom the corporate opportunity
belongs does not, however, within a reasonable period of time, begin to pursue,
or thereafter continue to pursue, such opportunity diligently and in good faith,
the other party may pursue such opportunity (or direct it to another person or
entity).
A director, officer or employee of the Company who acts in accordance with
the foregoing three-part policy: (i) will be deemed fully to have satisfied his
or her fiduciary or other duties to the Company and its stockholders with
respect to such corporate opportunity; (ii) will not be liable to the Company or
its stockholders for any breach of fiduciary duty by reason of the fact that the
CBS Parties pursue or acquire such opportunity for themselves or direct such
corporate opportunity to another person or do not communicate information
regarding such opportunity to the Company; (iii) will be deemed to have acted in
good faith and in a manner he or she reasonably believes to be in the best
interests of the Company; and (iv) will be deemed not to have breached any duty
of loyalty or other duty such person may have to the Company or its stockholders
and not to have derived an improper benefit therefrom.
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Under the Restated Certificate, "corporate opportunities" potentially
allocable to the Company consist of business opportunities which: (i) the
Company is financially able to undertake; (ii) are, by their nature, in the
Company's line or lines of business and are of practical and material advantage
to the Company; and (iii) are ones in which the Company has an interest or
reasonable expectancy. "Corporate opportunities" do not include and neither the
CBS Parties nor any of their directors, officers or employees will be liable to
the Company or its stockholders by reason of, transactions in which the Company
or the CBS Parties are permitted to participate pursuant to any agreement
between the Company and the CBS Parties that is in effect as of the time any
equity security of the Company is first held of record by any person or entity
other than the CBS Parties or subsequently entered into with the approval of the
Disinterested Directors (defined as directors of the Company who are not: (i)
officers or employees of either the Company or the CBS Parties or (ii) directors
of the CBS Parties).
The corporate opportunity provisions in the Restated Certificate will
expire on the date that the CBS Parties cease to beneficially own Common Stock
representing at least 20% of the combined voting power of outstanding shares of
Class A Common Stock and Class B Common Stock and no person who is a director or
officer of the Company is also a director or officer of a CBS Party.
DELAWARE STATUTE
The Company is a Delaware corporation subject to Section 203 of the DGCL.
Section 203 provides that, subject to certain exceptions specified therein, a
corporation may not engage in any business combination, including mergers or
consolidations or acquisitions of assets or additional shares of the
corporation, with any "interested stockholder" for a period of three years
following the time that such stockholder became an interested stockholder
unless: (i) prior to such time, the board of directors of the corporation
approved either the business combination or the transaction which resulted in
the stockholder becoming an interested stockholder; (ii) upon consummation of
the transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owned at least 85% of the voting stock
of the corporation outstanding at the time the transaction commenced (excluding
certain shares); or (iii) at or subsequent to such time, the business
combination is approved by the board of directors of the corporation and
authorized at an annual or special meeting of stockholders, and not by written
consent, by the affirmative vote of at least 66 2/3% of the outstanding voting
stock which is not owned by the interested stockholder. Except as otherwise
specified in Section 203 of the DGCL, an "interested stockholder" is defined to
include: (a) any person that is the owner of 15% or more of the outstanding
voting stock of the corporation or is an affiliate or associate of the
corporation and was the owner of 15% or more of the outstanding voting stock of
the corporation at any time within the three-year period immediately prior to
the relevant date; and (b) the affiliates and associates of any such person.
Under certain circumstances, Section 203 of the DGCL makes it more difficult for
an interested stockholder to effect various business combinations with a
corporation for the above-referenced three-year period, although the
stockholders may elect to exclude a corporation from the restrictions imposed
thereunder. By virtue of its beneficial ownership of the Class B Common Stock,
CBS is in a position to elect to exclude the Company from the restrictions under
Section 203 of the DGCL, although it currently has no intention to do so.
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DESCRIPTION OF INDEBTEDNESS
Each of the following summaries of certain indebtedness of the Company and
American Radio is subject to and qualified in its entirety by reference to the
detailed provisions of the respective agreements and instruments to which each
summary relates. Copies of such agreements and instruments have been filed as
exhibits to the Registration Statement of which this Prospectus forms a part.
Capitalized terms used below and not defined have the meanings set forth in the
respective agreements.
CBS CREDIT AGREEMENT
Prior to the Offerings, the Company expects to become a borrower under
CBS's existing $4.0 billion revolving credit facility, pursuant to which up to
$1.0 billion will be available to the Company for revolving loans. Revolving
loans bear interest at a rate equal to, at the borrower's option, either: (a)
the Alternate Base Rate, defined to mean the greater of: (i) the Prime Rate; and
(ii) the Federal Funds Effective Rate plus 1/2 of 1%; or (b) the Eurodollar Rate
plus a margin based upon the type of loan and CBS's senior unsecured debt rating
and leverage ratio. The cost of the facility includes commitment fees, which are
based on the unutilized facility and vary with CBS's debt ratings. The CBS
Credit Agreement terminates on August 29, 2001.
CBS unconditionally and irrevocably guarantees the obligations of each
subsidiary borrower under the CBS Credit Agreement.
The CBS Credit Agreement contains restrictive covenants which impose
restrictions on the ability of CBS and its material subsidiaries (including the
Company) to: (i) create liens or other encumbrances on its assets or properties,
grant negative pledges or dispose of a substantial part of its assets; (ii)
engage in merger or acquisition transactions; and (iii) enter into transactions
with affiliates (which term does not include subsidiaries of CBS) other than
upon terms at least as favorable to CBS (or an applicable subsidiary) as it
could obtain on an arm's length basis. In addition, the terms of the CBS Credit
Agreement impose restrictions on the ability of CBS's subsidiaries to incur
debt, which restrictions are subject to certain exceptions, including in respect
of indebtedness of a subsidiary borrower under the CBS Credit Agreement, debt of
a subsidiary at the time it is acquired and other indebtedness not covered by a
specific exception in an aggregate principal amount not to exceed $300 million
at any one time outstanding. In addition to the foregoing, the CBS Credit
Agreement requires CBS to maintain specified financial ratios and meet certain
tests, including a maximum consolidated leverage ratio and a minimum interest
coverage ratio and net worth.
Events of default under the CBS Credit Agreement include: (i) a default by
any borrower in the payment when due of any principal of any loan under the CBS
Credit Agreement; (ii) a default by any borrower in the payment when due of any
interest or other amounts payable under the CBS Credit Agreement for five days
after the due date thereof; (iii) the failure by CBS to comply with certain
negative covenants in the CBS Credit Agreement, subject in certain instances to
grace periods; (iv) subject to certain exceptions, the failure by CBS or any of
its subsidiaries to pay at maturity or upon acceleration any indebtedness in an
aggregate amount in excess of $100 million; (v) an admission by CBS or any of
its material subsidiaries of an inability to pay its debts as such debts become
due; (vi) certain events of bankruptcy, insolvency, reorganization, dissolution
or winding-up with respect to CBS or any of its material subsidiaries; (vii)
certain events with regard to multiemployer plans pursuant to which CBS or
certain of its affiliates incur a liability to such plans which would have a
material adverse effect on CBS; (viii) a change of control of CBS; or (ix)
termination of CBS's guarantee of subsidiary borrowings under the CBS Credit
Agreement.
9% NOTES
On February 1, 1996, American Radio issued and sold $175.0 million
principal amount of 9% Senior Subordinated Notes Due 2006 (the "9% Notes"). The
9% Notes have been registered under the Securities Act and applicable state
securities laws. The 9% Notes bear interest at 9% per annum, payable
semiannually on each February 1 and August 1. American Radio's payment
obligations under the 9% Notes are fully and unconditionally guaranteed (the "9%
Subsidiary Guarantees") on a joint and several basis on a senior subordinated
basis by all of its present and any future Restricted Subsidiaries. The 9% Notes
are unsecured
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obligations of American Radio and the 9% Notes and the 9% Subsidiary Guarantees
are subordinated in right of payment to all existing and future Senior Debt. The
9% Notes will mature on February 1, 2006.
The 9% Notes are redeemable at the option of American Radio, in whole or in
part at any time on or after February 1, 2001, and prior to maturity, at a
redemption price of 104.5% of the principal amount thereof plus accrued and
unpaid interest, if any, to but excluding the redemption date. The redemption
price reduces over three years to a redemption price of 100% of the principal
amount in 2004 and thereafter. Notwithstanding the foregoing, at any time prior
to February 1, 1999, American Radio may redeem up to $58.3 million principal
amount of the 9% Notes from the net proceeds of a public equity offering at a
redemption price equal to 109.0% of the principal amount thereof plus accrued
and unpaid interest, if any, to the redemption date, provided that at least
$116.7 million principal amount of the 9% Notes remain outstanding immediately
after the occurrence of any such redemption. Upon a Change of Control, and
subject to certain conditions, American Radio will be required to make an offer
to repurchase all the outstanding 9% Notes at 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase.
The indenture pursuant to which the 9% Notes were issued (the "9% Note
Indenture") contains various restrictive covenants that, among other things,
limit: (i) the incurrence of additional debt and the issuance of redeemable
preferred stock by American Radio; (ii) the incurrence of debt and the issuance
of preferred stock by American Radio's Restricted Subsidiaries; (iii) the
incurrence of liens on the assets of American Radio and its Restricted
Subsidiaries; (iv) the sale of assets of American Radio and the Restricted
Subsidiaries and of equity interests in the Restricted Subsidiaries; and (v)
consolidations, mergers and transfers of all or substantially all American
Radio's assets. The 9% Note Indenture prohibits certain restrictions on
distributions from the Restricted Subsidiaries. In addition, the 9% Note
Indenture contains restrictions on the ability of American Radio and the
Restricted Subsidiaries to: (i) pay dividends or make other distributions in
respect of their capital stock, subject to certain exceptions, including the
satisfaction of certain financial requirements; and (ii) enter into transactions
with any of their affiliates (including CBS, the Company and any of their other
subsidiaries) other than transactions on terms that are no less favorable to
American Radio or the applicable Restricted Subsidiary than those that would
have been obtained in a comparable transaction with an unaffiliated person.
There can be no assurance that such restrictions will not limit the ability of
the Company to conduct and expand its business or to take advantage of business
opportunities or transactions that it otherwise could if such restrictions did
not exist. All of these limitations and prohibitions, however, are subject to a
number of important qualifications.
Events of default under the 9% Note Indenture include, among other things:
(i) a default continuing for 30 days in the payment of interest when due; (ii) a
default in the payment of any principal when due; (iii) the failure to comply
with the covenants in the 9% Note Indenture, subject in certain instances to
grace periods; (iv) a failure to pay other indebtedness of American Radio or any
of its Restricted Subsidiaries in excess of $5 million upon final maturity or as
a result of such indebtedness becoming accelerated and such default continues
for a period of 30 days; (v) certain events of bankruptcy, insolvency or
reorganization of American Radio or any of its Restricted Subsidiaries; and (vi)
the failure to pay any final judgment in excess of $5 million.
9 3/4% NOTES
In connection with the acquisition by American Radio of EZ Communications
Inc. ("EZ"), American Radio assumed all obligations of EZ under the indenture
(the "9 3/4% Note Indenture") pursuant to which the $150.0 million principal
amount of 9 3/4% Senior Subordinated Notes Due 2005 (the "9 3/4% Notes") were
issued. The 9 3/4% Notes bear interest at 9 3/4% per annum, payable semiannually
on each June 1 and December 1. American Radio's payment obligations under the
9 3/4% Notes are fully and unconditionally guaranteed (the "9 3/4% Subsidiary
Guarantees") on a joint and several basis on a senior basis by all of its
present and any future Restricted Subsidiaries. The 9 3/4% Notes are general
unsecured obligations of American Radio and the 9 3/4% Notes and the 9 3/4%
Subsidiary Guarantees rank pari passu in right of payment with all Senior Debt.
The 9 3/4% Notes will mature on December 1, 2005.
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The 9 3/4% Notes are redeemable at the option of American Radio, in whole
or in part at any time on or after December 1, 2000, and prior to maturity, at a
redemption price of 104.875% of the principal amount thereof plus accrued and
unpaid interest, if any, to but excluding the redemption date. The redemption
price reduces over three years to a redemption price of 100% of the principal
amount in 2003 and thereafter. Notwithstanding the foregoing, at any time prior
to December 1, 1998, American Radio may redeem up to $50.0 million principal
amount of the 9 3/4% Notes from the net proceeds of a public equity offering at
a redemption price equal to 109.75% of the principal amount thereof plus accrued
and unpaid interest, if any, to the redemption date, provided that at least
$100.0 million principal amount of the 9 3/4% Notes remain outstanding
immediately after the occurrence of any such redemption. Upon a Change of
Control, and subject to certain conditions, American Radio will be required to
make an offer to repurchase all the outstanding 9 3/4% Notes at 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase.
The 9 3/4% Note Indenture contains various restrictive covenants and events
of default that are substantially similar in all material respects to the terms
of the 9% Note Indenture.
11 3/8% DEBENTURES
On July 15, 1998, American Radio issued $210.6 million principal amount of
11 3/8% Subordinated Exchange Debentures Due 2009 (the "11 3/8% Debentures") in
exchange for American Radio's $210.6 million liquidation preference of 11 3/8%
Series B Cumulative Exchangeable Preferred Stock, par value $.01 per share. The
11 3/8% Debentures bear interest at 11 3/8% per annum, payable semiannually on
each January 15 and July 15. Through and including January 15, 2002, the entire
amount of the interest payment on the 11 3/8% Debentures may be paid in cash or
in additional 11 3/8% Debentures, at the discretion of American Radio. The
11 3/8% Debentures are unsecured obligations of American Radio and are
subordinated in right of payment to all existing and future Senior Debt. The
11 3/8% Debentures will mature on January 15, 2009.
The 11 3/8% Debentures are redeemable at the option of American Radio, in
whole or in part, at any time on or after January 15, 2002, and prior to
maturity, at a redemption price of 105.688% of the principal amount thereof plus
accrued and unpaid interest, if any, to but excluding the redemption date. The
redemption price reduces over four years to a redemption price of 100% of
principal amount in 2007 and thereafter. Notwithstanding the foregoing, at any
time prior to January 15, 2000, American Radio may redeem up to 35% of the
outstanding 11 3/8% Debentures from the net proceeds of a public or Rule 144A
equity offering at a redemption price equal to 111.375% of the principal amount
thereof plus accrued and unpaid interest, if any, to the redemption date,
provided that at least $130.0 million principal amount of the 11 3/8% Debentures
remain outstanding immediately after the occurrence of any such redemption. Upon
a Change of Control and in the event of an Asset Sale, and in each case subject
to certain conditions, American Radio will be required to make an offer to
repurchase all the outstanding 11 3/8% Debentures at 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date of
repurchase.
The indenture pursuant to which the 11 3/8% Debentures were issued contains
various restrictive covenants and events of default that are substantially
similar in all material respects to the terms of the 9% Note Indenture.
7% DEBENTURES
On September 30, 1998, American Radio issued $78.7 million principal amount
of 7% Convertible Subordinated Debentures Due 2011 (the "7% Debentures") in
exchange for the then outstanding shares of its 7% Convertible Exchangeable
Preferred Stock. The 7% Debentures bear interest at 7% per annum, payable
quarterly on each March 31, June 30, September 30 and December 31. The 7%
Debentures are unsecured obligations of American Radio and are subordinated in
right of payment to all existing and future Senior Indebtedness. The 7%
Debentures will mature on June 30, 2011.
The 7% Debentures are redeemable at the option of American Radio, in whole
or in part, at any time on or after July 15, 1999, and prior to maturity, at a
redemption price of 104.9% of the principal amount thereof plus accrued and
unpaid interest, if any, to but excluding the redemption date. The redemption
price reduces
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<PAGE> 80
over six years to a redemption price of 100% of the principal amount in 2006 and
thereafter. Upon a Change of Control, and subject to certain conditions, each
holder of 7% Debentures will have the right to require American Radio to
purchase all or any portion of such holder's outstanding 7% Debentures at a
price in cash equal to the principal amount thereof plus accrued and unpaid
interest, if any, to the date of repurchase.
Holders of $42.50 principal amount of 7% Debentures will be entitled at any
time to convert such 7% Debentures, in whole or in part, into $44.00 in cash and
one share of Class A Common Stock of American Tower Corporation. As of September
30, 1998, the outstanding balance of the 7% Debentures on this basis was $81.5
million.
The indenture pursuant to which the 7% Debentures were issued (the "7%
Debenture Indenture") contains a restrictive covenant that limits
consolidations, mergers and transfers of all or substantially all American
Radio's assets, subject to certain qualifications. Events of default under the
7% Debenture Indenture include, among other things: (i) a default continuing for
30 days in the payment of interest when due; (ii) a default in the payment of
any principal when due; (iii) the failure to comply with the covenants in the 7%
Debenture Indenture, subject to grace periods; and (iv) certain events of
bankruptcy, insolvency or reorganization of American Radio.
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<PAGE> 81
SHARES ELIGIBLE FOR FUTURE SALE
Upon consummation of the Offerings, the Company will have outstanding
135,000,000 shares of Class A Common Stock (155,250,000 shares if the
Underwriters' over-allotment options are exercised in full). In addition, the
Company will have outstanding 700,000,000 shares of Class B Common Stock, all of
which will be beneficially owned by CBS, which shares are convertible into Class
A Common Stock as described under "Description of Capital Stock." All of the
shares of Class A Common Stock offered hereby will generally be freely tradable
without restrictions or further registration under the Securities Act, except
for any such shares held at any time by an "affiliate" of the Company, as such
term is defined under Rule 144 promulgated under the Securities Act ("Rule
144"), described below. All the outstanding shares of Class B Common Stock held
by CBS will continue to be "restricted securities" as defined in Rule 144 and
may not be resold in the absence of registration under the Securities Act or
pursuant to an exemption from such registration, including, among others, the
exemptions provided by Rule 144. The Company has agreed that it will, upon the
request of CBS or any other rights holder, except for a limited period described
in "Underwriting," use its best efforts to effect the registration under the
applicable federal and state securities laws of any shares of Common Stock held
by CBS or any such other rights holder, as applicable, or any of its affiliates
with such rights to be assignable by CBS or any such other rights holder under
certain circumstances. See "Relationships Between the Company and
CBS -- Intercompany Arrangements -- Intercompany Agreement -- Registration
Rights."
In general, under Rule 144, as currently in effect, a person (or persons
whose shares are required to be aggregated) who has beneficially owned
restricted securities within the meaning of Rule 144 ("Restricted Securities")
for at least one year, and including the holding period of any prior owner other
than an "affiliate," as that term is defined in Rule 144, is entitled to sell,
within any three-month period, a number of shares that does not exceed the
greater of: (i) 1% of the then-outstanding shares of Class A Common Stock; and
(ii) the average weekly trading volume of the Class A Common Stock on the NYSE
during the four calendar weeks preceding the filing of a notice on Form 144 with
respect to such sale with the Commission. Sales under Rule 144 are also subject
to certain other requirements regarding the manner of sale, notice requirements
and the availability of current public information about the Company. Rule
144(k) provides that a person (or persons whose shares are aggregated) who is
not deemed an "affiliate" during the three months preceding a sale and who has
beneficially owned shares for at least two years (including any period of
ownership of preceding non-affiliated holders) is entitled to sell such shares
at any time under Rule 144 without regard to the limitations described above.
Sales of Restricted Securities by affiliates, even after a two-year holding
period, must continue to be made in brokers' transactions, subject to the volume
limitations described above. An "affiliate" of an issuer is a person that,
directly or indirectly through one or more intermediaries, controls or is
controlled by or under common control with such issuer.
The Company, CBS and Mr. Karmazin have agreed, subject to certain
exceptions, not to sell, offer or otherwise dispose of any shares of Common
Stock (other than in the Offerings) or securities convertible into or
exchangeable or exercisable for Common Stock for a period of 180 days from the
date of this Prospectus without the prior written consent of Merrill Lynch,
Pierce, Fenner & Smith Incorporated. See "Underwriting."
The Company intends to file one or more registration statements on Form S-8
pursuant to the Securities Act to register the shares of Class A Common Stock
that will be reserved for issuance under certain of its benefit plans, thus
permitting the resale in the public market, without restrictions or further
registration under the Securities Act, of any shares of Class A Common Stock
issued upon exercise of options that will be granted by the Company under such
benefit plans to non-affiliates. Any such registration statements will become
effective immediately upon filing. As of the date of this Prospectus, no options
to purchase shares of Class A Common Stock have been granted by the Company to
any of its employees under its benefit plans.
Prior to the Offerings, there has been no public market for the Class A
Common Stock. The Company can make no predictions as to the number of shares
that may be sold in the future or the effect, if any, that sales of such shares,
or the availability of such shares for future sale, will have on the market
price of the Class A Common Stock prevailing from time to time. Future sales of
substantial amounts of Class A Common Stock or Class B Common Stock in the
public market, or the perception that such sales could occur, could adversely
affect prevailing market prices for the Class A Common Stock and could impair
the Company's future ability to raise capital through public offerings of equity
securities. See "Risk Factors -- Shares Eligible for Future Sale."
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<PAGE> 82
UNITED STATES TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
The following is a general discussion of the material United States federal
income and estate tax consequences of the ownership and disposition of the Class
A Common Stock applicable to Non-United States Holders of such Class A Common
Stock. For the purpose of this discussion, a "Non-United States Holder" is any
holder that for United States federal income tax purposes is not a "United
States person" (as defined below). This discussion does not address all aspects
of United States federal income and estate taxation that may be relevant in
light of such Non-United States Holder's particular facts and circumstances
(such as being a U.S. expatriate) and does not address any tax consequences
arising under the laws of any state, local or non-United States taxing
jurisdiction. Furthermore, the following discussion is based on current
provisions of the Internal Revenue Code of 1986, as amended (the "Code") and
administrative and judicial interpretations thereof, all as in effect on the
date hereof, and all of which are subject to change, possibly with retroactive
effect. The Company has not and will not seek a ruling from the Internal Revenue
Service ("IRS") with respect to the United States Federal income and estate tax
consequences described below, and as a result, there can be no assurance that
the IRS will not disagree with or challenge any of the conclusions set forth in
this discussion. For purposes of this discussion, the term "United States
person" means: (i) a citizen or resident of the United States; (ii) a
corporation, partnership, or other entity created or organized in the United
States or under the laws of the United States or of any political subdivision
thereof; (iii) an estate whose income is included in gross income for United
States federal income tax purposes regardless of its source; or (iv) a trust
whose administration is subject to the primary supervision of a United States
court and which has one or more United States persons who have the authority to
control all substantial decisions of the trust.
DIVIDENDS
If the Company pays a dividend, any dividend paid to a Non-United States
Holder of Class A Common Stock generally will be subject to United States
withholding tax either at a rate of 30% of the gross amount of the dividend or
such lower rate as may be specified by an applicable tax treaty. Dividends
received by a Non-United States Holder that are effectively connected with a
United States trade or business conducted by such Non-United States Holder are
exempt from such withholding tax. However, such effectively connected dividends,
net of certain deductions and credits, are taxed at the same graduated rates
applicable to United States persons.
In addition to the graduated tax described above, dividends received by a
corporate Non-United States Holder that are effectively connected with a United
States trade or business of the corporate Non-United States Holder may also be
subject to a branch profits tax at a rate of 30% or such lower rate as may be
specified by an applicable tax treaty.
A Non-United States Holder of Class A Common Stock that is eligible for a
reduced rate of withholding tax pursuant to a tax treaty may obtain a refund of
any excess amounts currently withheld by filing an appropriate claim for refund
with the IRS.
GAIN ON DISPOSITION OF COMMON STOCK
A Non-United States Holder generally will not be subject to United States
federal income tax on any gain realized upon the sale or other disposition of
his Class A Common Stock unless: (i) such gain is effectively connected with a
United States trade or business of the Non-United States Holder (which gain, in
the case of a corporate Non-United States Holder, must also be taken into
account for branch profits tax purposes); (ii) the Non-United States Holder is
an individual who holds such Class A Common Stock as a capital asset (within the
meaning of Section 1221 of the Code) and who is present in the United States for
a period or periods aggregating 183 days or more during the calendar year in
which such sale or disposition occurs and certain other conditions are met; or
(iii) the Company is or has been a "United States real property holding
corporation" for federal income tax purposes at any time within the shorter of
the five-year period preceding such disposition or such holder's holding period.
The Company has determined that it is not and
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<PAGE> 83
does not believe that it will become a "United States real property holding
corporation" for United States federal income tax purposes.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Generally, the Company must report annually to the IRS the amount of
dividends paid, the name and address of the recipient, and the amount, if any,
of tax withheld. A similar report is sent to the holder. Pursuant to tax
treaties or other agreements, the IRS may make its reports available to tax
authorities in the recipient's country of residence.
Dividends paid to a Non-United States Holder at an address within the
United States may be subject to backup withholding at a rate of 31% if the
Non-United States Holder fails to establish that it is entitled to an exemption
or to provide a correct taxpayer identification number and certain other
information to the payer. Backup withholding will generally not apply to
dividends paid to Non-United States Holders at an address outside the United
States on or prior to December 31, 1999 (unless the payer has knowledge that the
payee is a United States person). Under recently finalized Treasury Regulations
regarding withholding and information reporting (the "Final Regulations"),
payment of dividends to Non-United States Holders at an address outside the
United States after December 31, 1999 may be subject to backup withholding at a
rate of 31% unless such Non-United States Holder satisfies certain certification
requirements.
Under current Treasury Regulations, the payment of the proceeds of the
disposition of Class A Common Stock to or through the United States office of a
broker is subject to information reporting and backup withholding at a rate of
31% unless the holder certifies its non-United States status under penalties of
perjury or otherwise establishes an exemption. Generally, the payment of the
proceeds of the disposition by a Non-United States Holder of Class A Common
Stock outside the United States to or through a foreign office of a broker will
not be subject to backup withholding but will be subject to information
reporting requirements if the broker is: (i) a United States person; (ii) a
"controlled foreign corporation" for United States tax purposes; or (iii) a
foreign person 50% or more of whose gross income for certain periods is from the
conduct of a United States trade or business unless such broker has documentary
evidence in its files of the holder's non-United States status and certain
conditions are met or the holder otherwise establishes an exemption.
In general, the recently promulgated Final Regulations, described above, do
not significantly alter the substantive withholding and information reporting
requirements but would alter the procedures for claiming benefits of an income
tax treaty and change the certification procedures relating to the receipt by
intermediaries of payments on behalf of the beneficial owner of shares of Class
A Common Stock. Non-United States Holders should consult their tax advisors
regarding the effect, if any, of the Final Regulations on an investment in the
Class A Common Stock. The Final Regulations are generally effective for payments
made after December 31, 1999.
Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.
ESTATE TAX
An individual Non-United States Holder who owns Class A Common Stock at the
time of his death or had made certain lifetime transfers of an interest in Class
A Common Stock will be required to include the value of such Class A Common
Stock in such holder's gross estate for United States federal estate tax
purposes, unless an applicable estate tax treaty provides otherwise.
THE FOREGOING DISCUSSION IS A SUMMARY OF THE PRINCIPAL FEDERAL INCOME AND
ESTATE TAX CONSEQUENCES OF THE OWNERSHIP, SALE OR OTHER DISPOSITION OF CLASS A
COMMON STOCK BY NON-UNITED STATES HOLDERS. ACCORDINGLY, INVESTORS ARE URGED TO
CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO THE INCOME TAX CONSEQUENCES OF
THE OWNERSHIP AND DISPOSITION OF CLASS A COMMON STOCK, INCLUDING THE APPLICATION
AND EFFECT OF THE LAWS OF ANY STATE, LOCAL, FOREIGN OR OTHER TAXING
JURISDICTION.
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UNDERWRITING
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch") is
acting as the representative (the "U.S. Representative") of each of the U.S.
Underwriters named below (the "U.S. Underwriters"). Subject to the terms and
conditions set forth in a U.S. purchase agreement (the "U.S. Purchase
Agreement") among the Company and the U.S. Underwriters, and concurrently with
the sale of 20,250,000 shares of Class A Common Stock to the International
Managers (as defined below), the Company has agreed to sell to the U.S.
Underwriters, and each of the U.S. Underwriters severally and not jointly has
agreed to purchase from the Company, the aggregate number of shares of Class A
Common Stock set forth opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
U.S. UNDERWRITERS SHARES
----------------- ------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated......................................
BT Alex. Brown Incorporated....................................
Goldman, Sachs & Co. ..........................................
Allen & Company Incorporated...................................
Credit Suisse First Boston Corporation.........................
Donaldson, Lufkin & Jenrette Securities Corporation............
Lehman Brothers Inc. ..........................................
Morgan Stanley & Co. Incorporated..............................
NationsBanc Montgomery Securities LLC..........................
Salomon Smith Barney Inc. .....................................
Bear, Stearns & Co. Inc. ......................................
Deutsche Bank Securities Inc. .................................
ING Baring Furman Selz LLC.....................................
Lazard Freres & Co. LLC........................................
PaineWebber Incorporated.......................................
Sanford C. Bernstein & Co., Inc. ..............................
Schroder & Co. Inc. ...........................................
SG Cowen Securities Corporation................................
ABN AMRO Incorporated..........................................
BancBoston Robertson Stephens Inc. ............................
Chase Securities Inc. .........................................
J.P. Morgan Securities Inc. ...................................
Wasserstein Perella Securities, Inc. ..........................
------------
Total............................................. 114,750,000
============
</TABLE>
The Company has also entered into an international purchase agreement (the
"International Purchase Agreement" and, together with the U.S. Purchase
Agreement, the "Purchase Agreements") with certain underwriters outside the
United States and Canada (the "International Managers" and, together with the
U.S. Underwriters, the "Underwriters"), for whom Merrill Lynch International is
acting as the lead manager (the "Lead Manager"). Subject to the terms and
conditions set forth in the International Purchase Agreement, and concurrently
with the sale of 114,750,000 shares of Class A Common Stock to the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, the Company has agreed to
sell to the International Managers, and each of the International Managers
severally and not jointly has agreed to purchase from the Company, an aggregate
of 20,250,000 shares of Class A Common Stock. The initial public offering price
per share of Class A Common Stock and the total underwriting discount per share
of Class A Common Stock are identical under the U.S. Purchase Agreement and the
International Purchase Agreement.
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<PAGE> 85
In the U.S. Purchase Agreement and the International Purchase Agreement,
the several U.S. Underwriters and the several International Managers,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of the Class A Common Stock being sold
pursuant to each such Purchase Agreement if any of the shares of Class A Common
Stock being sold pursuant to each such Purchase Agreement are purchased. Under
certain circumstances under the Purchase Agreements, the commitments of
non-defaulting Underwriters may be increased. The closings with respect to the
sale of shares of Class A Common Stock to be purchased by the U.S. Underwriters
and the International Managers are conditioned upon one another.
The U.S. Representative has advised the Company that the U.S. Underwriters
propose initially to offer the shares of Class A Common Stock to the public at
the initial public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share of Class A Common Stock. The U.S. Underwriters may allow, and
such dealers may reallow, a discount not in excess of $ per share of Class A
Common Stock on sales to certain other dealers. After the initial public
offering, the public offering price, concession and discount may be changed.
The Company has granted an option to the U.S. Underwriters, exercisable for
30 days after the date of this Prospectus, to purchase up to an aggregate of
17,212,500 additional shares of Class A Common Stock at the initial public
offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The U.S. Underwriters may exercise this option solely to
cover over-allotments, if any, made on the sale of the Class A Common Stock
offered hereby. To the extent that the U.S. Underwriters exercise this option,
each U.S. Underwriter will be obligated, subject to certain conditions, to
purchase a number of additional shares of the Class A Common Stock proportionate
to such U.S. Underwriter's initial amount reflected in the foregoing table. The
Company has also granted an option to the International Managers, exercisable
for 30 days after the date of this Prospectus, to purchase up to an aggregate of
3,037,500 additional shares of Class A Common Stock to cover over-allotments, if
any, on terms similar to those granted to the U.S. Underwriters.
At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 5% of the aggregate number of shares of
Class A Common Stock offered hereby to be sold to certain directors, officers
and employees of CBS and the Company (including Messrs. Karmazin, Suleman, Mason
and Apfelbaum) and other persons associated with the Company or with any
director, officer or employee of the Company who have expressed an interest in
purchasing such shares. The number of shares of Class A Common Stock available
for sale to the general public will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares which are not orally
confirmed for purchase within one day of the pricing of the Offerings will be
offered by the Underwriters to the general public on the same terms as the other
shares offered by this Prospectus.
The Company, CBS and Mr. Karmazin have agreed, subject to certain
exceptions, with the Underwriters not to: (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of or otherwise dispose
of or transfer any shares of Common Stock (other than in the Offerings, pursuant
to the Company's 1998 Plan, Annual Incentive Plan and Savings Plans or in
connection with any acquisitions to be made by the Company in the future in
consideration for shares of Class A Common Stock) or securities convertible into
or exchangeable or exercisable for Common Stock, whether now owned or thereafter
acquired by the person executing the agreement or with respect to which the
person executing the agreement thereafter acquires the power of disposition, or
file a registration statement under the Securities Act with respect to the
foregoing; or (ii) enter into any swap or other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise, without the prior
written consent of Merrill Lynch on behalf of the Underwriters for a period of
180 days after the date of this Prospectus. See "Shares Eligible for Future
Sale."
The U.S. Underwriters and the International Managers have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
U.S. Underwriters and the International Managers are permitted to sell shares
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<PAGE> 86
of Class A Common Stock to each other for purposes of resale at the initial
public offering price, less an amount not greater than the selling concession.
Under the terms of the Intersyndicate Agreement, the U.S. Underwriters and any
dealer to whom they sell shares of Class A Common Stock will not offer to sell
or sell shares of Class A Common Stock to persons who are non-U.S. or
non-Canadian persons or to persons they believe intend to resell to persons who
are non-U.S. or non-Canadian persons, and the International Managers and any
dealer to whom they sell shares of Class A Common Stock will not offer to sell
or sell shares of Class A Common Stock to U.S. persons or to Canadian persons or
to persons they believe intend to resell to U.S. persons or to Canadian persons,
except in the case of transactions pursuant to the Intersyndicate Agreement.
Prior to the Offerings, there has been no public market for the Class A
Common Stock of the Company. The initial public offering price will be
determined through negotiations among the Company and the U.S. Representative
and the Lead Manager. The factors considered in determining the initial public
offering price, in addition to prevailing market conditions, are price-earnings
ratios of publicly traded companies that the U.S. Representative and the Lead
Manager believe to be comparable to the Company, certain financial information
of the Company, the history of, and the prospects for, the Company and the
industry in which it competes, and an assessment of the Company's management,
its past and present operations, the prospects for, and timing of, future
revenues of the Company, the present state of the Company's development, and the
above factors in relation to market values and various valuation measures of
other companies engaged in activities similar to the Company. There can be no
assurance that an active trading market will develop for the Class A Common
Stock or that the Class A Common Stock will trade in the public market
subsequent to the Offerings at or above the initial public offering price.
The Class A Common Stock has been approved for listing on the NYSE under
the symbol "INF," subject to official notice of issuance. In order to meet the
requirements for listing of the Class A Common Stock on that exchange, the U.S.
Underwriters and the International Managers have undertaken to sell lots of 100
or more shares to a minimum of 2,000 beneficial owners.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments the U.S. Underwriters and International Managers may be
required to make in respect thereof.
Until the distribution of the Class A Common Stock is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the Class A Common Stock. As an exception
to these rules, the U.S. Representative is permitted to engage in certain
transactions that stabilize the price of the Class A Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Class A Common Stock.
If the Underwriters create a short position in the Class A Common Stock in
connection with the Offerings, i.e., if they sell more shares of the Class A
Common Stock than are set forth on the cover pages of this Prospectus, the U.S.
Representative and the Lead Manager, respectively, may reduce that short
position by purchasing Class A Common Stock in the open market. The U.S.
Representative and the Lead Manager, respectively, may also elect to reduce any
short position by exercising all or part of the over-allotment option described
above.
The U.S. Representative and the Lead Manager, respectively, may also impose
a penalty bid on certain Underwriters and selling group members. This means that
if the U.S. Representative or the Lead Manager purchases shares of the Class A
Common Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Class A Common Stock, it may reclaim the amount of
the selling concession from the Underwriters and selling group members who sold
those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Class A Common Stock to the extent
that it were to discourage resales of the Class A Common Stock.
80
<PAGE> 87
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Class A Common Stock. In addition,
neither the Company nor any of the Underwriters makes any representation that
the U.S. Representative or the Lead Manager will engage in such transactions or
that such transactions, once commenced, will not be discontinued without notice.
The U.S. Underwriters and the International Managers have informed the
Company that they do not intend to confirm sales of the shares of the Class A
Common Stock offered hereby to any accounts over which they exercise
discretionary authority.
Certain of the Underwriters or their affiliates from time to time provided
investment banking, financial advisory, general financing and banking services
to the Company, CBS Corporation and their respective affiliates, for which they
have received customary compensation, and may continue to do so in the future.
William H. Gray, III, a director of CBS Corporation, is a director of The Chase
Manhattan Corporation and The Chase Manhattan Bank, which are affiliates of
Chase Securities Inc., one of the U.S. Underwriters.
Certain affiliates of the U.S. Underwriters are lenders to CBS under the
CBS Credit Agreement. In the event that CBS uses amounts paid to it by the
Company in repayment of the CBS Note to repay amounts outstanding under the CBS
Credit Agreement, affiliates of members of the National Association of
Securities Dealers, Inc. ("NASD") participating in the distribution of the Class
A Common Stock in the Offerings may receive an amount greater than 10% of the
net proceeds of the Offerings. In such event, the underwriting arrangements for
the Offerings will be made in compliance with Rule 2710(c)(8) of the Conduct
Rules of the NASD, which requires that the public offering price of an equity
security be no higher than the price recommended by a qualified independent
underwriter which has participated in the preparation of the Registration
Statement and performed its usual standard of due diligence with respect
thereto. Accordingly, Merrill Lynch (in that capacity, the "Independent
Underwriter") is acting as a qualified independent underwriter for purposes of
determining the price of the Class A Common Stock offered hereby and has
conducted due diligence in connection with its responsibilities as a qualified
independent underwriter. The price at which the Class A Common Stock is being
sold to the public is no higher than the price recommended by the Independent
Underwriter. The Company has agreed to indemnify the Independent Underwriter
against certain liabilities, including liabilities under the Securities Act..
LEGAL MATTERS
The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Cravath, Swaine & Moore, New York, New York.
Certain legal matters will be passed upon for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
The combined financial statements of the Company as of December 31, 1996
and 1997, and for each of the years in the three-year period ended December 31,
1997, included in this Prospectus and elsewhere in the Registration Statement
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants. Such financial statements have been included herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of American Radio as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, included in this Prospectus and elsewhere in the Registration
Statement have been audited by KPMG Peat Marwick LLP, independent certified
public accountants. Such financial statements have been included herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
81
<PAGE> 88
The consolidated financial statements of Old Infinity as of December 31,
1995 and 1996, and for each of the years in the two-year period ended December
31, 1996, included in this Prospectus and elsewhere in the Registration
Statement have been audited by KPMG Peat Marwick LLP, independent certified
public accountants. Such financial statements have been included herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
Upon the effectiveness of a Registration Statement on Form S-1, of which
this Prospectus is a part, the Company will become subject to the information
requirements of the Exchange Act and in accordance therewith will file reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
Regional Offices at Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661; and 13th Floor, Seven World Trade Center, New York, New
York 10048. Copies of such material may be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549.
In addition, CBS is subject to the information requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Commission. Such reports and other information may be inspected and copied at
the locations set forth above.
The Company has filed with the Commission a Registration Statement on Form
S-l under the Securities Act with respect to the Class A Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Class A Common Stock offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules filed as a part thereof. Statements contained in this Prospectus as to
the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, if such contract or document is
filed as an exhibit to the Registration Statement, each such statement is
qualified in all respects by such reference to such exhibit. The Registration
Statement, including exhibits and schedules thereto, may be inspected without
charge at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof may be obtained
from such office after payment of fees prescribed by the Commission. The public
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. Electronic filings made by the Company through the
Commission's Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Commission's World Wide Web site
(http://www.sec.gov), which contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission, including the Company. Upon listing on the NYSE (for which
application has been made), reports and other information concerning the Company
can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
82
<PAGE> 89
INDEX TO FINANCIAL STATEMENTS
I INFINITY BROADCASTING CORPORATION (THE COMPANY)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-2
Combined Statements of Earnings for the years ended December
31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (unaudited)................... F-3
Combined Balance Sheets as of December 31, 1996 and 1997 and
September 30, 1998 (unaudited)............................ F-4
Combined Statements of Changes in Stockholders' Equity for
the years ended December 31, 1995, 1996 and 1997 and the
nine months ended September 30, 1998 (unaudited).......... F-5
Combined Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997 and the nine months ended
September 30, 1997 and 1998 (unaudited)................... F-6
Notes to Combined Financial Statements...................... F-7
</TABLE>
II CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
AND SUBSIDIARIES
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-22
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-23
Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997.......................... F-25
Consolidated Statements of Stockholders' Equity (Deficiency)
for the years ended December 31, 1995, 1996 and 1997...... F-26
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997.......................... F-28
Notes to Consolidated Financial Statements.................. F-29
Condensed Consolidated Balance Sheets as of December 31,
1997 and March 31, 1998................................... F-68
Unaudited Condensed Consolidated Statements of Operations
for the three months ended
March 31, 1997 and 1998................................... F-70
Unaudited Condensed Consolidated Statements of Cash Flows
for the three months ended March 31, 1997 and 1998........ F-71
Notes to Consolidated Unaudited Condensed Financial
Statements................................................ F-72
</TABLE>
III INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES (OLD INFINITY)
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report................................ F-85
Consolidated Balance Sheets as of December 31, 1995 and
1996...................................................... F-86
Consolidated Statements of Earnings for the years ended
December 31, 1995 and 1996................................ F-87
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1996................................ F-88
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1995 and 1996............ F-89
Notes to Consolidated Financial Statements.................. F-90
</TABLE>
F-1
<PAGE> 90
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Infinity Broadcasting Corporation
We have audited the accompanying combined balance sheets of Infinity
Broadcasting Corporation as of December 31, 1996 and 1997 and the related
combined statements of earnings, changes in stockholders' equity and cash flows
for each of the years in the three-year period ended December 31, 1997. These
combined financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these combined
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Infinity
Broadcasting Corporation as of December 31, 1996 and 1997, and the results of
its operations and its cash flows for each of the years in the three-year period
ended December 31, 1997, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
New York, New York
September 15, 1998, except for
note 16 which is as of
December 3, 1998.
F-2
<PAGE> 91
INFINITY BROADCASTING CORPORATION
COMBINED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
---------------------------------- ------------------------
1995 1996 1997 1997 1998
-------- -------- ---------- ---------- ----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Total revenues.................. $245,653 $637,883 $1,691,517 $1,220,207 $1,507,011
Less agency commissions......... (29,365) (83,795) (211,426) (151,918) (187,321)
-------- -------- ---------- ---------- ----------
Net revenues.................... 216,288 554,088 1,480,091 1,068,289 1,319,690
-------- -------- ---------- ---------- ----------
Operating expenses excluding
depreciation and
amortization.................. 136,419 343,920 888,405 654,489 767,507
Depreciation and amortization
(notes 6 and 7)............... 17,914 57,528 197,135 149,061 177,249
Corporate expenses.............. 8,736 13,434 22,277 16,881 13,145
-------- -------- ---------- ---------- ----------
Total operating expenses........ 163,069 414,882 1,107,817 820,431 957,901
-------- -------- ---------- ---------- ----------
Operating earnings.............. 53,219 139,206 372,274 247,858 361,789
Interest expense................ -- -- (3,645) (3,519) (22,038)
Other income, net............... 191 309 5,978 570 1,787
-------- -------- ---------- ---------- ----------
Earnings before income taxes.... 53,410 139,515 374,607 244,909 341,538
Income taxes (note 5)........... 25,737 67,949 196,978 128,942 175,958
-------- -------- ---------- ---------- ----------
Net earnings.................... $ 27,673 $ 71,566 $ 177,629 $ 115,967 $ 165,580
======== ======== ========== ========== ==========
Net earnings per common share --
basic and diluted............. $ 0.04 $ 0.10 $ 0.25 $ 0.17 $ 0.24
======== ======== ========== ========== ==========
Weighted average shares
outstanding (in thousands) --
(basic and diluted)(note 2)... 700,000 700,000 700,000 700,000 700,000
======== ======== ========== ========== ==========
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-3
<PAGE> 92
INFINITY BROADCASTING CORPORATION
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1996 1997 1998
---------- ---------- --------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................. $ 19,882 $ 22,522 $ 74,296
Receivables (net of allowance for doubtful accounts of
$11,417, $15,086 and $27,802, respectively)......... 299,532 334,914 435,644
Prepaid and other current assets...................... 31,541 27,255 60,067
Deferred tax assets (note 5).......................... 16,473 14,334 19,641
Assets held for sale.................................. 70,347 -- --
---------- ---------- -----------
Total current assets.................................. 437,775 399,025 589,648
Property and equipment, net (note 6).................. 124,615 118,471 236,972
Intangible assets, net (note 7)....................... 6,588,242 6,433,283 9,397,290
Other assets.......................................... 111,320 123,324 182,401
---------- ---------- -----------
Total assets.......................................... $7,261,952 $7,074,103 $10,406,311
========== ========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses (note 8)........ $ 131,815 $ 120,356 $ 178,484
Accrued compensation.................................. 26,554 30,904 42,486
Accrued interest...................................... 5,440 27 17,910
Other current liabilities............................. 563 532 670
---------- ---------- -----------
Total current liabilities............................. 164,372 151,819 239,550
Note payable to CBS (note 9).......................... -- -- 2,500,000
Long-term debt (note 9)............................... 149,931 1,560 650,604
Deferred taxes (note 5)............................... 479,987 484,364 1,148,031
Other non-current liabilities......................... 48,961 38,972 37,072
---------- ---------- -----------
Total liabilities..................................... 843,251 676,715 4,575,257
---------- ---------- -----------
Contingent liabilities and other commitments (notes 10
and 11).............................................
Stockholders' equity:
Preferred stock, par value $0.01, 50,000,000 shares
authorized, no shares issued and outstanding........ -- -- --
Class A common stock, par value $0.01, 2,000,000,000
shares authorized, no shares issued and
outstanding......................................... -- -- --
Class B common stock, par value $0.01, 2,000,000,000
shares authorized, no shares issued and
outstanding......................................... -- -- --
Contributed capital in excess of par value............ 6,216,175 6,017,233 5,831,054
Accumulated earnings.................................. 202,526 380,155 --
---------- ---------- -----------
Total stockholders' equity............................ 6,418,701 6,397,388 5,831,054
---------- ---------- -----------
Total liabilities and stockholders' equity............ $7,261,952 $7,074,103 $10,406,311
========== ========== ===========
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-4
<PAGE> 93
INFINITY BROADCASTING CORPORATION
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(DOLLARS IN THOUSANDS; SHARES IN MILLIONS)
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B CONTRIBUTED
PREFERRED STOCK STOCK COMMON STOCK CAPITAL TOTAL
---------------- ---------------- --------------- IN EXCESS OF ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS EQUITY
------ ------- ------ ------- ------ ------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1994....................... -- $ -- -- $ -- -- $ -- $ 408,166 $ 103,287 $ 511,453
Net earnings................. 27,673 27,673
Contribution for CBS Inc.
Radio acquisition (note
3)......................... 1,204,442 1,204,442
Cash from operations returned
to CBS..................... (40,221) (40,221)
Other intercompany activity,
net........................ (43,745) (43,745)
-- ------- -- ------- --- ------ ----------- --------- -----------
Balance at December 31,
1995....................... -- -- -- -- -- -- 1,528,642 130,960 1,659,602
Net earnings................. 71,566 71,566
Contribution for Old Infinity
acquisition (note 3)....... 4,706,794 4,706,794
Contribution for other
acquisition................ 58,165 58,165
Cash from operations returned
to CBS..................... (77,426) (77,426)
-- ------- -- ------- --- ------ ----------- --------- -----------
Balance at December 31,
1996....................... -- -- -- -- -- -- 6,216,175 202,526 6,418,701
Net earnings................. 177,629 177,629
Contribution to prepay
long-term debt (note 9).... 149,931 149,931
Cash from operations returned
to CBS..................... (329,493) (329,493)
Other intercompany activity,
net........................ (19,380) (19,380)
-- ------- -- ------- --- ------ ----------- --------- -----------
Balance at December 31,
1997....................... -- -- -- -- -- -- 6,017,233 380,155 6,397,388
Net earnings (unaudited)..... 165,580 165,580
Contribution for American
Radio acquisition (note 3)
(unaudited)................ 1,400,000 1,400,000
Contribution to repay
American Radio assumed debt
(note 3) (unaudited)....... 566,576 566,576
Contribution to repay
American Radio long-term
debt (note 9)
(unaudited)................ 68,455 68,455
Dividend declared -- CBS
(unaudited)................ (1,954,265) (545,735) (2,500,000)
Cash from operations returned
to CBS (unaudited)......... (266,945) (266,945)
-- ------- -- ------- --- ------ ----------- --------- -----------
Balance at September 30, 1998
(note 16) (unaudited)...... -- $ -- -- $ -- -- $ -- $ 5,831,054 $ -- $ 5,831,054
== ======= == ======= === ====== =========== ========= ===========
</TABLE>
See accompanying Notes to Combined Financial Statements.
F-5
<PAGE> 94
INFINITY BROADCASTING CORPORATION
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEARS ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------- -----------------------
1995 1996 1997 1997 1998
----------- ----------- --------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net cash flows from operating
activities:
Net earnings....................... $ 27,673 $ 71,566 $ 177,629 $ 115,967 $ 165,580
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization...... 17,914 57,528 197,135 149,061 177,249
Deferred taxes..................... 2,073 3,012 13,883 8,459 2,920
(Gain) loss on sales of assets,
net.............................. -- -- (3,584) 416 --
Other noncash items................ -- -- -- -- (4,033)
Changes in assets and liabilities,
net of acquisitions and
dispositions:
Increase in accounts receivable.... (4,015) (10,248) (35,382) (4,009) (12,373)
(Increase) decrease in other
assets........................... 1,500 (3,100) (14,924) (21,332) (4,305)
Increase (decrease) in accounts
payable and accrued expenses..... 2,259 4,611 (11,459) 4,888 (5,820)
Increase (decrease) in accrued
interest......................... -- -- (3,858) (5,423) 11,006
Increase (decrease) in other
liabilities...................... 1,997 (19,426) (9,176) (8,928) (13,807)
----------- ----------- --------- --------- -----------
Net cash provided by operating
activities....................... 49,401 103,943 310,264 239,099 316,417
----------- ----------- --------- --------- -----------
Cash flows from investing
activities:
Proceeds from dispositions......... -- -- 87,475 74,526 56,731
Business acquisitions and
investments...................... (1,204,442) (994,165) (50,341) (45,764) (1,399,999)
Deposit in acquisition trust....... -- -- -- -- (34,635)
Capital expenditures............... (9,368) (6,682) (15,264) (9,818) (19,793)
----------- ----------- --------- --------- -----------
Net cash (used for) provided by
investing activities............. (1,213,810) (1,000,847) 21,870 18,944 (1,397,696)
----------- ----------- --------- --------- -----------
Cash flows from financing
activities:
Receipts from (payments to) CBS,
net.............................. 1,164,221 916,771 (179,563) (101,072) 1,768,084
Repayment of debt.................. -- -- (149,931) (149,931) (635,031)
----------- ----------- --------- --------- -----------
Net cash provided by (used for)
financing activities............. 1,164,221 916,771 (329,494) (251,003) 1,133,053
----------- ----------- --------- --------- -----------
Increase (decrease) in cash and
cash equivalents................. (188) 19,867 2,640 7,040 51,774
Cash and cash equivalents at
beginning of period.............. 203 15 19,882 19,882 22,522
----------- ----------- --------- --------- -----------
Cash and cash equivalents at end of
period........................... $ 15 $ 19,882 $ 22,522 $ 26,922 $ 74,296
=========== =========== ========= ========= ===========
Supplemental disclosures of cash
flow information:
Cash paid during the year for:
Interest........................... $ -- $ -- $ 9,058 $ 8,942 $ 16,714
Income taxes....................... 23,664 64,937 163,720 120,483 173,038
</TABLE>
For information related to non-cash transactions, see note 3 to the combined
financial statements.
See accompanying Notes to Combined Financial Statements.
F-6
<PAGE> 95
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS UNAUDITED)
(1) BASIS OF PRESENTATION
Infinity Broadcasting Corporation (the "Company") was incorporated in
September 1998. The Company was formed to own and operate CBS Corporation's
("CBS") out-of-home media business consisting of radio and outdoor advertising.
CBS, prior to December 1, 1997, was known as Westinghouse Electric Corporation
("Westinghouse"). Initially, the Company consisted of the Westinghouse radio
stations.
On November 24, 1995, Westinghouse acquired CBS Inc. On December 31, 1996,
Westinghouse acquired Infinity Broadcasting Corporation and subsidiaries which
included TDI Worldwide, Inc. ("TDI") (collectively referred to as "Old
Infinity"). On June 4, 1998, CBS acquired the radio broadcasting operations of
American Radio Systems Corporation, which was subsequently renamed CBS Radio,
Inc. (herein referred to as "American Radio"). The combined financial statements
have been prepared assuming the consideration to effect these acquisitions was
contributed to the Company and has been recorded by the Company as a capital
contribution. Accordingly, these acquisitions have been presented as the
Company's transactions and have been recorded under the purchase method of
accounting. The Company's Combined Statements of Earnings include the operating
results of the radio stations acquired from CBS Inc., Old Infinity and American
Radio from their respective dates of acquisition. See note 3 to the combined
financial statements.
Subsequent to September 30, 1998, CBS will effect a reorganization (the
"Reorganization") by contributing to the Company at book value substantially all
of its assets and subsidiaries comprising the out-of-home media business.
Included in this contribution will be all of CBS's out-of-home media assets,
including those acquired from CBS Inc., Old Infinity (including TDI) and
American Radio. CBS will retain its investment in USA Digital Radio L.P., which
was formed to develop digital technology. During the period covered by these
combined financial statements, these assets were under common control as an
integral part of CBS's overall operations. These combined financial statements
have been prepared from CBS's historical accounting records and present the
operations of the business that will be owned and operated by the Company as if
the Company had been a separate entity for all periods presented. During these
periods CBS provided various services to the Company (see note 14). Furthermore,
acquisitions consummated by CBS have been presented as if they were made by the
Company and the consideration to effect these acquisitions was contributed by
CBS.
The financial information included herein may not necessarily reflect the
combined results of operations, financial position, changes in stockholders'
equity and cash flows of the Company in the future or what they would have been
had it been a separate, stand-alone entity during the periods presented.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Combination
The combined financial statements include the net assets and entities
described in note 1. All material intercompany accounts and transactions have
been eliminated.
Revenue Recognition
Revenues are primarily derived from the sale of radio advertising spots and
are recognized when the spots are broadcast. The Company also receives
advertising revenues on the sale of outdoor advertising space. Revenues from
outdoor advertising space are recognized proportionately over the contract term.
F-7
<PAGE> 96
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
Stock-Based Compensation
The Company measures compensation cost for stock-based awards, including
awards issued by CBS, using the intrinsic value based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees." The pro forma net earnings and pro forma
earnings per share disclosures using the fair value based method defined in
Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for
Stock-Based Compensation," and other related information are provided in note 13
to the combined financial statements.
Property and Equipment
Property and equipment are recorded at cost and depreciated over their
estimated useful lives. Depreciation is generally computed on the straight-line
method based on useful lives of 27.5 to 40 years for buildings, 20 years for
land improvements, and 3 to 12 years for equipment. Leasehold improvements are
amortized over the shorter of the useful life or the term of the lease.
Expenditures for additions and improvements are capitalized, and costs for
repairs and maintenance are charged to operations as incurred.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and investments in money
market accounts.
Intangible Assets
Intangible assets primarily include goodwill, Federal Communications
Commission ("FCC") licenses, which are limited as to availability and have
historically appreciated in value with the passage of time, and transit
franchise agreements. Goodwill represents the excess of the purchase price of
acquired businesses over the estimated fair value of tangible and identifiable
intangible net assets acquired. FCC licenses and goodwill are amortized using
the straight-line method over 40 years. Transit franchise agreements are
amortized over the anticipated life of the contract. Subsequent to the
acquisition of an intangible or other long-lived asset, the Company evaluates
whether later events and circumstances indicate the remaining estimated useful
life of that asset may warrant revision or that the remaining carrying value of
such asset may not be recoverable. When factors indicate that an intangible or
other long-lived asset should be evaluated for possible impairment, the Company
uses an estimate of the related asset's undiscounted future cash flows over the
remaining life of that asset in measuring recoverability. If such an analysis
indicates that impairment has in fact occurred, the Company writes down the book
value of the intangible or other long-lived asset to its fair value.
Fair Value of Financial Instruments
The estimated fair value of financial instruments is determined by the
Company using the best available market information and appropriate valuation
methodologies. However, considerable judgment is necessary in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
are not necessarily indicative of the amounts that the Company could realize in
a current market exchange or the value that ultimately will be realized by the
Company upon maturity or disposition. The use of different market assumptions or
estimation methodologies may have a material effect on the estimated fair value
amounts.
Most of the Company's financial instruments, including cash, trade
receivables and payables and accruals, are short-term in nature. Accordingly,
the carrying amount of the Company's financial instruments approximates their
fair value. The carrying amount of long-term debt approximates fair value.
F-8
<PAGE> 97
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
Income Taxes
Income taxes are provided using the asset and liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets
and liabilities are recognized based on differences between book and tax bases
of assets and liabilities using presently enacted tax rates. The provision for
income taxes is the sum of the amount of income tax paid or payable for the year
as determined by applying the provisions of enacted tax laws to taxable income
for that year and the net changes during the year in the Company's deferred tax
assets and liabilities other than changes arising from acquisitions and
dispositions.
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year. Cumulative
adjustments to the tax provision are recorded in the interim period in which a
change in the estimated annual effective rate is determined.
During the periods presented, the Company was part of the CBS consolidated
tax return. The Company has provided for income taxes as if it were a
stand-alone tax payer in accordance with SFAS 109.
The Company intends to enter into a tax sharing agreement with CBS (see
note 14). Current taxes payable have been paid immediately through contributed
capital. In the future, the Company will reimburse CBS based upon the terms of
the Tax Sharing Agreement.
Earnings Per Share
The historical earnings per share have been presented assuming that 700
million shares of Class B Common Stock were outstanding for the entire period.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the combined
financial statements, and the reported amounts of revenues and expenses during
the reporting period. Actual results could differ from those estimates. On an
ongoing basis, management reviews its estimates, including those related to
intangible assets, program rights, contracts, allowances for doubtful accounts,
income taxes and litigation based on currently available information. Changes in
facts and circumstances may result in revised estimates.
New Pronouncements
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," and SFAS No.
131, "Disclosure About Segments of an Enterprise and Related Information," were
issued. SFAS 130 requires that an enterprise report by major component and as a
single total the change in its net assets from non-owner sources during the
period. SFAS 131 establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures about its products,
services, geographic areas, and major customers. Both statements are effective
for fiscal years beginning after December 15, 1997 and were adopted during 1998.
Adoption of these statements did not impact the Company's combined financial
position, results of operations, or cash flows.
At December 31, 1997, the Company adopted SFAS No. 128, "Earnings per
Share," which establishes standards for computing and disclosing basic and
diluted earnings per common share. Earnings per common share for all periods
presented reflect the provisions of SFAS 128.
F-9
<PAGE> 98
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
In April 1998, Statement of Position (SOP) 98-5 "Reporting on the Costs of
Start-up Activities" was issued. SOP 98-5 provides guidance on the financial
reporting of start-up costs and organization costs. The SOP is effective for
financial statements for fiscal years beginning after December 15, 1998. The
Company does not anticipate that the adoption of this standard will have a
material impact on the Company's combined financial position or results of
operations.
In June 1998, SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities," was issued. SFAS 133 standardizes the accounting for
derivative instruments, including certain derivative instruments embedded in
other contracts, by requiring that an entity recognize those items as assets or
liabilities in the statement of financial position and measure them at fair
value. The statement is effective for all fiscal quarters of all fiscal years
beginning after June 15, 1999. The Company has entered into an insignificant
number of derivative and hedging transactions and does not anticipate that the
adoption of this standard will have a material impact on the Company's combined
financial position, results of operations or disclosure.
(3) ACQUISITIONS
On November 25, 1995, the Company acquired the radio operations of CBS Inc.
for cash contributed by CBS of approximately $1.2 billion. This acquisition was
accounted for using the purchase method of accounting.
On December 31, 1996, the Company acquired Old Infinity for $4.7 billion
consisting of $3.8 billion of CBS common stock and $.9 billion of debt, which
was repaid immediately prior to the acquisition. The CBS common stock and cash
used to repay the debt were contributed to the Company for purposes of this
acquisition and recorded as contributed capital. In connection with the
acquisition of Old Infinity, the Company was required to divest certain radio
stations to comply with the FCC limitations on the number of broadcasting
properties the Company may own. The assets of the divested stations were
included as assets held for sale as of December 31, 1996, and the divestitures
were completed during the first quarter of 1997.
On June 4, 1998, the Company completed the acquisition of the radio
broadcasting operations of American Radio for approximately $1.4 billion in cash
plus the assumption of debt with a fair value of approximately $1.3 billion. The
Company received a $1.4 billion capital contribution to effect this acquisition.
In conjunction with the acquisition, the Company received an additional capital
contribution of $566.6 million to repay a portion of the debt assumed in the
American Radio acquisition.
F-10
<PAGE> 99
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
The estimated fair values of assets acquired and liabilities assumed (which
for American Radio are based upon preliminary estimates that may be modified at
a later date) are summarized in the following table:
FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED
(IN MILLIONS)
<TABLE>
<CAPTION>
OLD INFINITY AT AMERICAN RADIO AT
DECEMBER 31, JUNE 4,
1996 1998
--------------- -----------------
(UNAUDITED)
<S> <C> <C>
Cash................................................... $ -- $ 18
Receivables............................................ 180 88
Investments, principally equity investment in Westwood
One.................................................. 107 --
Assets held for sale................................... 70 --
Property and equipment................................. 39 121
Identifiable intangible assets:
FCC licenses........................................... 996 2,343
Transit franchise agreements........................... 277 --
Goodwill............................................... 3,630 807
Other assets........................................... 31 53
Debt................................................... (149) (1,291)
Deferred income taxes.................................. (328) (656)
Other liabilities...................................... (146) (83)
------ -------
Total purchase price................................... $4,707 $ 1,400
====== =======
</TABLE>
The following unaudited pro forma information reflects the results of
operations of the Company combined with those of the following acquisitions for
(i) the year ended December 31, 1997 and the nine month period ended September
30, 1998 as if the American Radio acquisition occurred on January 1, 1997, and
(ii) the year ended December 31, 1996 as if the acquisition of Old Infinity
occurred on January 1, 1996. The pro forma results give effect to certain
purchase accounting adjustments, including additional depreciation expense
resulting from a step-up in the basis of fixed assets, additional amortization
expense from goodwill and other identifiable intangible assets, increased
interest expense from acquisition debt and related income tax effects.
PRO FORMA RESULTS
(UNAUDITED, IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS
DECEMBER 31, ENDED
---------------- SEPTEMBER 30,
1996 1997 1998
------ ------ -------------
<S> <C> <C> <C>
Net revenues......................................... $1,305 $1,873 $1,487
Net earnings......................................... 82 162 183
Net earnings per common share -- basic and diluted... 0.12 0.23 0.26
</TABLE>
This pro forma financial information is presented for comparative purposes
only and is not necessarily indicative of the operating results that actually
would have occurred had the Old Infinity and American Radio
F-11
<PAGE> 100
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
acquisitions been consummated on January 1, 1996 and 1997, respectively. In
addition, these results are not intended to be a projection of future results
and do not reflect any synergies that might be achieved from combined
operations.
(4) EMPLOYEE BENEFIT PLANS
Certain of the Company's employees are covered by various pension plans
sponsored by CBS. Most pension plan benefits are based on either years of
service and compensation levels at the time of retirement, a formula based on
career earnings or a final average compensation amount. Pension benefits
generally are paid from trusts funded by contributions from employees and/or
CBS. The pension funding policy is consistent with funding requirements of U.S.
federal and other governmental laws and regulations. Certain employees are also
covered by postretirement benefit arrangements sponsored by CBS consisting of
various retiree medical, dental and life insurance arrangements.
The Company has accounted for these plans as a multi-employer plan. The
Company's allocated expense under benefit plans sponsored by CBS was as follows
for the years ended December 31, 1995, 1996 and 1997:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Pension plan cost........................................ $4,994 $5,393 $5,451
Postretirement benefit plan cost......................... 1,729 1,581 1,524
</TABLE>
SFAS No. 112, "Employers Accounting for Postemployment Benefits," does not
have a significant effect on the Company's combined financial position or
results of operations.
Substantially all of the Company's employees can participate in various
defined contribution savings plans sponsored by the Company or CBS. Such plans
generally allow employees to contribute up to 20% of their income on a pretax
basis. Depending on the particular plan, the Company will match 100% of the
employee's contribution, match 50% of the first 6% of the employees base
earnings, match up to $1,000 or match on a discretionary basis.
(5) INCOME TAXES
Income tax expense included in the combined financial statements is as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal.............................................. $19,476 $53,444 $150,689
State................................................ 4,188 11,493 32,406
------- ------- --------
Total current income tax expense..................... 23,664 64,937 183,095
------- ------- --------
Deferred:
Federal.............................................. 1,706 2,479 11,426
State................................................ 367 533 2,457
------- ------- --------
Total deferred income tax expense.................... 2,073 3,012 13,883
------- ------- --------
Income tax expense................................... $25,737 $67,949 $196,978
======= ======= ========
</TABLE>
F-12
<PAGE> 101
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
During 1997, the Company utilized net operating loss carryforwards of $19.4
million arising from previous acquisition transactions.
Deferred income taxes result from temporary differences in the financial
bases and tax bases of assets and liabilities. The types of differences that
give rise to deferred income tax assets and liabilities are presented in the
table below:
<TABLE>
<CAPTION>
AT DECEMBER 31,
--------------------
1996 1997
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Provision for expenses and losses........................... $ 15,550 $ 5,717
Operating losses and credit carryforwards................... -- 7,367
Other....................................................... 923 1,250
-------- --------
Total deferred tax asset.................................... 16,473 14,334
Deferred tax liabilities:
Property, plant & equipment................................. 13,009 11,463
Intangibles................................................. 466,978 472,901
-------- --------
Total deferred tax liabilities.............................. 479,987 484,364
-------- --------
Deferred income tax liabilities, net........................ $463,514 $470,030
======== ========
</TABLE>
A reconciliation of the U.S. Federal statutory tax rate on earnings to the
Company's effective tax rate on earnings before income taxes is summarized as
follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Federal income tax statutory rate........................... 35% 35% 35%
Increase in rate resulting from:
Amortization of non-deductible goodwill..................... 7 7 11
State income tax expense, net of federal effect............. 6 6 6
Other....................................................... -- 1 1
-- -- --
Income tax effective rate................................... 48% 49% 53%
== == ==
</TABLE>
The Company intends to enter into a tax sharing agreement with CBS (see
notes 2 and 14).
F-13
<PAGE> 102
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
(6) PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1996 1997 1998
-------- -------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land and buildings............................... $ 53,577 $ 70,030 $115,006
Equipment........................................ 101,750 99,142 177,799
Construction in progress......................... 4,593 4,922 15,123
-------- -------- --------
159,920 174,094 307,928
Accumulated depreciation and amortization........ (35,305) (55,623) (70,956)
-------- -------- --------
Property and equipment, net...................... $124,615 $118,471 $236,972
======== ======== ========
</TABLE>
For the years ended December 31, 1995, 1996 and 1997 and for the nine month
periods ended September 30, 1997 and 1998, depreciation expense totaled $4.1
million, $11.7 million, $20.4 million, $14.9 million and $17.9 million,
respectively.
(7) INTANGIBLE ASSETS
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ SEPTEMBER 30,
1996 1997 1998
---------- ---------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Goodwill...................................... $4,966,766 $4,958,090 $5,776,454
FCC licenses.................................. 1,456,525 1,486,797 3,791,692
Transit franchise agreements.................. 276,700 276,801 276,801
---------- ---------- ----------
6,699,991 6,721,688 9,844,947
Accumulated amortization...................... (111,749) (288,405) (447,657)
---------- ---------- ----------
Intangible assets, net........................ $6,588,242 $6,433,283 $9,397,290
========== ========== ==========
</TABLE>
For the years ended December 31, 1995, 1996 and 1997 and for the nine month
periods ended September 30, 1997 and 1998, amortization expense totaled $13.8
million, $45.8 million, $176.7 million, $134.2 million and $159.3 million,
respectively.
Goodwill, FCC licenses and transit franchise agreements are presented on
the balance sheet net of accumulated amortization. As of December 31, 1996 and
1997 and September 30, 1998, accumulated amortization for goodwill was $99.3
million, $224.7 million and $326.2 million, respectively, accumulated
amortization for FCC licenses was $12.5 million, $49.6 million and $96.7
million, respectively, and accumulated amortization for transit franchise
agreements was $0, $14.1 million and $24.8 million, respectively.
F-14
<PAGE> 103
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
(8) ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPT. 30,
1996 1997 1998
-------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Accounts payable................................... $ 23,765 $ 30,931 $ 46,654
Accrued transit franchise payments................. 14,752 20,630 23,875
Accrued programming losses......................... 29,321 12,028 11,751
Other.............................................. 63,977 56,767 96,204
-------- -------- --------
Total accounts payable and accrued expenses........ $131,815 $120,356 $178,484
======== ======== ========
</TABLE>
(9) LONG-TERM DEBT
On September 18, 1998, Old Infinity declared a dividend to CBS in the
amount of $2.5 billion evidenced by a note due September 18, 2003, which bears
interest at a rate of LIBOR plus 0.50% per annum. The Company plans to issue new
shares of Class A Common Stock, with the net proceeds being used to repay
amounts due to CBS under such note.
Other long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ SEPT. 30,
1996 1997 1998
-------- ------ ---------
(IN THOUSANDS)
<S> <C> <C> <C>
9% Senior Subordinated Notes......................... $ -- $ -- $168,485
9 3/4% Senior Subordinated Notes..................... -- -- 148,960
11 3/8% Subordinated Exchange Debentures............. -- -- 210,560
7% Convertible Subordinated Debentures............... -- -- 81,453
10 3/8% Notes........................................ 149,931 -- --
Other................................................ 563 2,092 4,110
Unamortized premium, net............................. -- -- 37,706
-------- ------ --------
Total debt........................................... 150,494 2,092 651,274
Less current portion................................. (563) (532) (670)
-------- ------ --------
Long-term debt, net of current portion............... $149,931 $1,560 $650,604
======== ====== ========
</TABLE>
Of the long-term debt shown in the preceding table, at September 30, 1998,
approximately $25 million was held by CBS. The Company may at any time, at its
option, repurchase the debt from CBS at the price paid by CBS plus accrued
interest.
In conjunction with the acquisition of American Radio on June 4, 1998, the
Company assumed approximately $1.3 billion of American Radio debt, of which
$566.6 million borrowed under their revolving credit agreement was repaid
shortly after the acquisition. The Senior Subordinated Notes and the 11 3/8%
Cumulative Exchangeable Preferred Stock (subsequently exchanged into 11 3/8%
Subordinated Exchange Debentures) were recorded at their fair market value as of
the acquisition date, which resulted in a net premium of approximately $41.7
million.
F-15
<PAGE> 104
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
The indentures for each of these obligations include certain covenants
including, among others, limitations on sales of assets, dividend payments,
future indebtedness and issuance of preferred stock, and require an offer to
purchase within 15 days after the occurrence of a Change of Control (as defined)
the outstanding securities at a price of 101% of the principal amount thereof,
plus any accrued and unpaid interest. As a result of the change of control upon
the acquisition of American Radio by CBS, an offer to purchase was made in June
1998. An offer to purchase will also be made in conjunction with the
Reorganization discussed in note 1.
At the time of the acquisition of American Radio, the American Radio 7%
Convertible Exchangeable Preferred Stock remained outstanding. This preferred
stock was converted into 7% Convertible Subordinated Debentures on September 30,
1998 as discussed below. Prior to conversion, quarterly dividends were paid in
arrears on each March 31, June 30 and September 30 at an annual rate of 7%.
Below are summarized the significant provisions of each of the American
Radio debt obligations.
9% Senior Subordinated Notes (the "9% Notes")
During July 1998, $6.5 million of the outstanding principal was redeemed
pursuant to the offer to purchase described above. Interest on these securities
is payable semi-annually on February 1 and August 1 with the face amount of the
9% Notes due on February 1, 2006. The 9% Notes are redeemable at the option of
American Radio, in whole or in part at any time on or after February 1, 2001 at
a redemption price of 104.5% of principal amount, plus any accrued and unpaid
interest. The redemption price reduces over three years to a redemption price of
100% of the principal amount beginning February 1, 2004.
9 3/4% Senior Subordinated Notes (the "9 3/4% Notes")
During July 1998, $1.0 million of the then outstanding principal was
redeemed pursuant to the offer to purchase described above. Interest on these
securities is payable semi-annually on June 1 and December 1 with the face
amount of the 9 3/4% Notes due on December 1, 2005. The 9 3/4% Notes are
redeemable at the option of American Radio, in whole or in part at any time on
or after December 1, 2000 at a redemption price of 104.875% of the principal
amount, plus any accrued and unpaid interest. The redemption price reduces over
three years to a redemption price of 100% of the principal amount in 2003 and
thereafter.
11 3/8% Subordinated Exchange Debentures
As of July 15, 1998 the 11 3/8% Cumulative Exchangeable Preferred Stock was
converted into 11 3/8% Subordinated Exchange Debentures (the "11 3/8
Debentures") with the then outstanding principal amount of $210.6 million (face
amount) due January 15, 2009. Interest on these securities is payable
semi-annually on January 15 and July 15, with the principal amount due on
January 15, 2009.
The 11 3/8% Debentures are redeemable at the option of American Radio, for
cash at any time on or after January 15, 2002, initially at 105.688% of the
outstanding principal, declining ratably to par immediately after January 15,
2007, plus any accrued and unpaid interest.
7% Convertible Subordinated Debentures
On September 30, 1998 the outstanding shares of 7% Convertible Exchangeable
Preferred Stock were converted into 7% Convertible Subordinated Debentures due
June 30, 2011 (the "7% Debentures").Interest on these securities is payable
quarterly on each March 31, June 30, September 30 and December 31. The 7%
Debentures are unsecured obligations of the Company and are subordinated in
right of payment to all existing
F-16
<PAGE> 105
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
and future senior indebtedness. Prior to the American Radio acquisition, these
securities were convertible at the option of the holder at any time into
American Radio common stock. Subsequent to the American Radio acquisition, these
securities are convertible at the option of the holder into merger consideration
consisting of cash and shares of Tower common stock. During the third quarter of
1998, 58,823 shares (equivalent to $58.8 million principal amount of debentures)
were so redeemed at a cost of $60.9 million.
The 7% Debentures are redeemable, in whole or in part, at the option of
American Radio, for cash at any time on or after July 15, 1999, initially at
104.7% of the outstanding principal, declining ratably to par in 2006, plus any
accrued and unpaid interest. American Radio is required to offer to purchase the
7% Debentures within 15 days after the occurrence of a Change of Control (as
defined) for cash at par, plus any accrued and unpaid interest. An offer to
purchase will be made in conjunction with the Reorganization discussed in note
1.
Other
In March 1997, the Company redeemed for $149.9 million the 10 3/8% Notes,
which were issued by Old Infinity prior to its acquisition by the Company.
The Company has $0.5 million of long-term debt maturing during 1998. There
are no significant scheduled long-term debt repayments from January 1, 1999 to
December 31, 2002.
(10) LEGAL MATTERS
The Company is party to various legal proceedings arising in the ordinary
course of business. In the opinion of management of the Company, however, there
are no legal proceedings pending against the Company likely to have a material
adverse effect on the Company.
(11) CONTINGENT LIABILITIES AND OTHER COMMITMENTS
Leases
The Company has commitments under operating leases for certain facilities
and equipment. Rental expense for the years ended December 31, 1995, 1996, and
1997 was $2.7 million, $7.7 million, and $17.5 million, respectively. These
amounts include immaterial amounts for contingent rentals and sublease income.
Additionally, the Company's outdoor advertising business has franchise
rights entitling it to display advertising on such media as buses, taxis,
trains, bus shelters, terminals, billboards, and phone kiosks. Under most of
these franchise agreements, the franchiser is entitled to receive the greater of
a percentage of the relevant advertising revenues, net of advertising agency
fees, or a specified guaranteed minimum annual payment. Franchise payments
totaled $192.0 million in 1997.
F-17
<PAGE> 106
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
At December 31, 1997, aggregate minimum rental payments due during the next
five years and thereafter are as follows:
MINIMUM RENTAL PAYMENTS
(IN THOUSANDS)
<TABLE>
<CAPTION>
GUARANTEED
MINIMUM
OPERATING FRANCHISE
DECEMBER 31, LEASES PAYMENTS
- ------------ --------- ----------
<S> <C> <C>
1998...................................................... $ 19,599 $152,927
1999...................................................... 16,798 156,719
2000...................................................... 14,965 126,201
2001...................................................... 13,098 86,521
2002...................................................... 13,092 40,702
Thereafter................................................ 40,495 4,377
-------- --------
Minimum rental payments................................... $118,047 $567,447
======== ========
</TABLE>
Other Commitments
The Company routinely enters into commitments to purchase the rights to
broadcast sporting events. Expenses for broadcast rights totaled $4.7 million,
$8.1 million and $34.0 million for the years ended December 31, 1995, 1996 and
1997, respectively. These contracts permit the broadcast of such properties for
various periods. At December 31, 1997, the Company was committed to make
payments under such broadcasting contracts, along with commitments for talent
contracts, of $249.2 million. At December 31, 1997, aggregate payments related
to these commitments during the next five years and thereafter are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
- ------------ (IN THOUSANDS)
<S> <C>
1998...................................................... $ 85,709
1999...................................................... 78,888
2000...................................................... 54,761
2001...................................................... 20,970
2002...................................................... 7,425
Thereafter................................................ 1,425
--------
Total other commitments........................... $249,178
========
</TABLE>
(12) STOCKHOLDERS' EQUITY
Holders of Class A Common Stock and Class B Common Stock generally have
identical voting rights and vote together as a single class (and not as separate
classes), except that holders of Class A Common Stock are entitled to one vote
per share while holders of Class B Common Stock are entitled to five votes per
share and the shares of Class B Common Stock maintain certain conversion rights
and transfer restrictions. Holders of Class A Common Stock and Class B Common
Stock will share equally on a per share basis in any dividends declared by the
Board of Directors. CBS and its subsidiaries own 100% of the outstanding Class B
Common Stock.
F-18
<PAGE> 107
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
(13) STOCK BASED COMPENSATION PLANS
The Company accounts for stock-based compensation plans under Opinion 25.
For stock options granted, the option price is not less than the market value of
shares on the grant date; therefore, no compensation cost has been recognized
for stock options granted.
Certain employees of the Company participate in CBS's stock based
compensation plans. The stock option information in the following tables
reflects options to acquire CBS common stock held by employees of the Company.
These stock options will not be converted into the Company's common stock or
options to acquire the Company's common stock.
STOCK OPTION INFORMATION
<TABLE>
<CAPTION>
1995 1996 1997
-------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1............. 351,614 $14.43 770,114 $15.10 23,723,498 $ 6.04
Options granted.................. 418,500 15.67 898,450 19.36 2,623,653 18.56
Options exercised................ -- -- (46,350) 12.70 (846,829) 6.32
Options forfeited................ -- -- (21,250) 18.80 (43,882) 18.57
Awards assumed................... -- -- 22,122,534 5.21 -- --
------- ------ ---------- ------ ---------- ------
Balance at December 31........... 770,114 $15.10 23,723,498 $ 6.04 25,456,440 $ 7.30
======= ====== ========== ====== ========== ======
Exercisable at December 31....... 351,614 $14.43 17,327,276 $ 3.98 19,426,144 $ 4.96
======= ====== ========== ====== ========== ======
</TABLE>
<TABLE>
<CAPTION>
1995 1996 1997
----------------------- ----------------------- -----------------------
WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED- WEIGHTED-
AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE AVERAGE
FAIR EXERCISE FAIR EXERCISE FAIR EXERCISE
VALUE PRICE VALUE PRICE VALUE PRICE
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Options granted................... $6.23 $15.67 $8.03 $19.36 $7.79 $18.56
----- ------ ----- ------ ----- ------
</TABLE>
STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1997
<TABLE>
<CAPTION>
WEIGHTED-
OPTIONS AVERAGE WEIGHTED-
RANGE OUTSTANDING WEIGHTED- REMAINING EXERCISABLE AVERAGE
OF AT AVERAGE CONTRACTUAL AT EXERCISE
EXERCISE DECEMBER 31, EXERCISE LIFE DECEMBER 31, PRICE OF
PRICES 1997 PRICE IN YEARS 1997 EXERCISABLE
-------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C>
$.0002 - 4.99........................ 11,692,833 $ 0.71 2.0 11,692,833 $ 0.71
5 - 9.99........................ 5,523,029 7.01 6.5 4,167,309 7.03
10 - 14.99........................ 2,380,284 13.79 7.9 961,402 13.75
15 - 19.99........................ 5,842,694 18.02 8.7 2,587,000 17.37
20 - 36.53........................ 17,600 30.67 2.4 17,600 30.67
---------- ----------
Total................................. 25,456,440 19,426,144
========== ==========
</TABLE>
F-19
<PAGE> 108
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
The Company accounts for stock-based compensation plans under Opinion 25.
For stock options granted, the option price is not less than the market value of
shares on the grant date; therefore, no compensation cost has been recognized
for stock options granted. Had compensation cost for these options been
determined under the provisions of SFAS 123, the Company's net earnings and
earnings per common share would have been as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1995 1996 1997
------- ------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Net earnings as reported............................. $27,673 $71,566 $177,629
Pro forma net earnings............................... 26,097 67,205 165,274
Net earnings per common share as reported............ 0.04 0.10 0.25
Pro forma net earnings per common share.............. 0.04 0.10 0.24
</TABLE>
The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average
assumptions used for grants in 1995, 1996, and 1997, respectively: risk-free
interest rates of 7.2%, 6.1%, and 6.4%; expected dividend yields of 1.4%, 1.1%,
and 1.0%; expected volatility of 31%, 30%, and 30%; and expected lives of 7.3
years, 7.4 years, and 7.3 years, respectively.
(14) RELATED PARTY TRANSACTIONS
The Company expects to enter into an Intercompany Agreement with CBS. The
Company has utilized various services provided by CBS or its subsidiaries. These
services included, among others, certain investor relations, executive, human
resources, legal, investment, finance, real estate, information management,
internal audit, tax, transportation and treasury. The costs of such services
have been allocated according to established methodologies and are determined on
an annual basis by CBS. Such methodologies depend on the specific service
provided and include allocating costs that directly relate to the Company or
allocating costs that represent a pro rata portion of the total costs for the
services provided. Management of the Company believes these allocations to be a
fair and reasonable share of such costs. For the years ended 1995, 1996, 1997
and for the nine months ended September 30, 1998 allocated expenses in the
approximate amounts of $8.3 million, $12.6 million, $13.4 million, and $5.4
million, respectively, were included in the combined statements of earnings of
the Company. It is anticipated that after completion of the Reorganization (see
note 1), various arrangements will continue and that additional transactions may
be entered into in the ordinary course of business. It is further anticipated
that the method of allocating costs will be consistent with past practices.
Substantially all costs relating to direct intercompany services have been
reflected in the accompanying combined financial statements. In addition, the
Company and CBS plan to enter into a Tax Sharing Agreement that will require the
Company to pay to CBS the current federal income tax effect of its transactions
as if the Company had been a stand-alone taxpayer (see note 5).
The Company and CBS provide broadcast time to each other. The Company
expects to continue this practice. The revenues or costs associated with these
intercompany transactions were not significant in the periods presented.
The Company and CBS have entered into and expect to continue to enter into
joint advertising arrangements. Revenues are distributed to the parties
providing the services based upon the contract terms. The revenues associated
with such sales were not significant in the periods presented.
Through its acquisition of Old Infinity, the Company acquired an equity
interest in Westwood One, Inc. ("Westwood One"). The Company accounts for this
investment under the equity method of accounting. The
F-20
<PAGE> 109
INFINITY BROADCASTING CORPORATION
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1996 AND 1997 (INFORMATION AS OF SEPTEMBER 30, 1998
AND THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1998 IS
UNAUDITED) -- (CONTINUED)
equity earnings of Westwood One were not significant to the Company. Westwood
One also distributes nationally certain of the Company's network programming. In
connection with these arrangements, the Company receives programming payments.
In addition, certain officers of the Company serve as officers of Westwood One
for which the Company receives a management fee. Revenue and expense
reimbursements from these arrangements recorded by the Company totaled
approximately $62 million in 1997.
(15) QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1996 1997
----------------------------------------- -------------------
1ST 2ND 3RD 4TH 1ST 2ND
QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net revenues............ $120,955 $145,116 $135,988 $152,029 $313,034 $378,357
Operating expenses...... 106,138 103,246 99,964 105,534 271,210 271,006
Operating earnings...... 14,817 41,870 36,024 46,495 41,824 107,351
Net earnings............ 7,650 21,418 18,449 24,049 18,658 50,655
Net earnings per
share.................. 0.01 0.03 0.03 0.03 0.03 0.07
<CAPTION>
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
1997 1998
------------------- ------------------------------
3RD 4TH 1ST 2ND 3RD
QUARTER QUARTER QUARTER QUARTER QUARTER
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net revenues............ $376,898 $411,802 $329,608 $455,764 $534,318
Operating expenses...... 278,215 287,386 265,729 314,856 377,316
Operating earnings...... 98,683 124,416 63,879 140,908 157,002
Net earnings............ 46,654 61,662 31,442 66,877 67,261
Net earnings per
share.................. 0.06 0.09 0.04 0.10 0.10
</TABLE>
(16) SUBSEQUENT EVENT (AS OF DECEMBER 3, 1998)
(a) Reorganization
On December 3, 1998 the Reorganization discussed in note 1 was effected.
(b) Long Term Debt
Subsequent to September 30, 1998, CBS purchased an additional $84.5 million
of the Company's long term debt.
F-21
<PAGE> 110
INDEPENDENT AUDITORS' REPORT
The Board of Directors
CBS Radio, Inc.:
We have audited the accompanying consolidated balance sheets of CBS Radio, Inc.
(formerly known as "American Radio Systems Corporation") and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for each of the
years in the three-year period ended December 31, 1997. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of CBS Radio, Inc.
(formerly known as "American Radio Systems Corporation") and subsidiaries as of
December 31, 1997 and 1996, and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 1997, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
November 2, 1998
F-22
<PAGE> 111
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------
1996 1997
-------------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 8,074 $ 12,048
Accounts receivable (less allowance for doubtful accounts
of $4,513 in 1996 and $7,578 in 1997).................. 51,660 87,229
Prepaid expenses and other assets......................... 3,523 4,363
Current portion of investment notes receivable (less
valuation allowance of $6,750 in 1997)................. 2,250
Deferred income taxes..................................... 3,370 6,365
-------- ----------
Total current assets.............................. 66,627 112,255
-------- ----------
PROPERTY AND EQUIPMENT -- NET............................... 70,538 132,042
-------- ----------
OTHER ASSETS:
Restricted cash........................................... 22,141
Investment note receivable-related party (less valuation
allowance of $500 in 1996)............................. 743
Investment notes receivable............................... 69,177 26,112
Intangible assets--net:
Goodwill............................................... 221,665 353,897
FCC licenses........................................... 233,558 1,113,916
Other intangible assets................................ 23,746 30,460
Deposits and other long-term assets....................... 25,637 10,644
Net assets held under exchange agreement.................. 47,495
Net assets of discontinued operations..................... 29,727 153,207
-------- ----------
Total other assets................................ 651,748 1,710,377
-------- ----------
TOTAL....................................................... $788,913 $1,954,674
======== ==========
</TABLE>
See notes to Consolidated Financial Statements.
F-23
<PAGE> 112
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--(CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------
1996 1997
-------------- --------------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 444 $ 340
Accounts payable.......................................... 6,026 5,949
Accrued compensation...................................... 2,774 1,704
Accrued expenses.......................................... 15,640 16,216
Accrued interest.......................................... 7,303 13,263
-------- -----------
Total current liabilities......................... 32,187 37,472
-------- -----------
DEFERRED INCOME TAXES....................................... 32,926 196,679
-------- -----------
OTHER LONG-TERM LIABILITIES................................. 1,944 8,921
-------- -----------
LONG-TERM DEBT.............................................. 325,693 833,638
-------- -----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Cumulative Exchangeable Preferred Stock, $0.01 par value;
10,000,000 shares authorized; 2,105,602 shares issued
and outstanding; liquidation preference $100 per
share.................................................. 215,550
-------- -----------
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value; 10,000,000 shares
authorized: Convertible Exchangeable Preferred Stock;
137,500 shares issued and outstanding (represented by
2,750,000 depositary shares); liquidation preference
$1,000 per share....................................... 1 1
Class A Common Stock; $.01 par value; 100,000,000 shares
authorized; 15,101,022 and 24,708,096 shares issued and
outstanding, respectively.............................. 151 247
Class B Common Stock; $.01 par value; 15,000,000 shares
authorized; 4,658,096 and 3,508,639 shares issued and
outstanding, respectively.............................. 47 35
Class C Common Stock; $.01 par value; 6,000,000 shares
authorized; 1,295,518 shares issued and outstanding.... 13 13
Additional paid-in capital................................ 390,731 671,211
Unearned compensation..................................... (297) (202)
Retained earnings (accumulated deficit)................... 5,955 (8,433)
-------- -----------
Total............................................. 396,601 662,872
Less:
Treasury stock, at cost, 18,449 and 19,019 shares at
December 31, 1996 and December 31, 1997,
respectively........................................... (438) (458)
-------- -----------
Total stockholders' equity........................ 396,163 662,414
-------- -----------
TOTAL....................................................... $788,913 $ 1,954,674
======== ===========
</TABLE>
See notes to Consolidated Financial Statements.
F-24
<PAGE> 113
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1996 1997
--------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C>
NET REVENUES................................................ $97,609 $175,192 $357,020
------- -------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses.......... 66,158 117,881 231,997
Net local marketing agreement expenses.................... 600 8,128 2,314
Depreciation and amortization............................. 12,307 16,820 58,417
Corporate general and administrative...................... 3,908 5,046 8,207
------- -------- --------
Total expenses....................................... 82,973 147,875 300,935
------- -------- --------
OPERATING INCOME............................................ 14,636 27,317 56,085
------- -------- --------
OTHER INCOME (EXPENSE):
Interest expense.......................................... (12,497) (22,287) (56,710)
Interest income and other, net............................ 2,435 5,489 2,114
Gains (losses) on sale of assets and other, net........... 11,544 (123) (2,902)
------- -------- --------
Total other income (expense)......................... 1,482 (16,921) (57,498)
------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES..................................................... 16,118 10,396 (1,413)
INCOME TAX PROVISION........................................ (6,903) (4,781) (1,125)
------- -------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS.................... 9,215 5,615 (2,538)
LOSS FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES...... (110) (480) (4,256)
EXTRAORDINARY LOSSES ON EXTINGUISHMENT OF DEBT, NET OF
INCOME TAX BENEFIT OF $614 AND $1,013 IN 1995 AND 1997,
RESPECTIVELY.............................................. (817) (1,639)
------- -------- --------
NET INCOME (LOSS)........................................... 8,288 5,135 (8,433)
REDEEMABLE COMMON AND PREFERRED STOCK DIVIDENDS............. (815) (4,973) (31,164)
------- -------- --------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS......... $ 7,473 $ 162 $(39,597)
======= ======== ========
BASIC PER SHARE AMOUNTS:
Continuing operations..................................... $ 0.71 $ 0.03 $ (1.23)
Discontinued operations................................... (0.01) (0.02) (0.16)
Extraordinary items....................................... (0.07) (0.06)
------- -------- --------
Net income (loss)......................................... $ 0.63 $ 0.01 $ (1.45)
======= ======== ========
DILUTED PER SHARE AMOUNTS:
Continuing operations..................................... $ 0.66 $ 0.03 $ (1.23)
Discontinued operations................................... (0.01) (0.02) (0.16)
Extraordinary items....................................... (0.06) (0.06)
------- -------- --------
Net income (loss)......................................... $ 0.59 $ 0.01 $ (1.45)
======= ======== ========
SHARES FOR BASIC............................................ 11,838 19,550 27,290
======= ======== ========
SHARES FOR DILUTED.......................................... 12,585 20,510 27,290
======= ======== ========
</TABLE>
See notes to Consolidated Financial Statements.
F-25
<PAGE> 114
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
<TABLE>
<CAPTION>
CONVERTIBLE
EXCHANGEABLE SERIES A SERIES B SERIES D
PREFERRED STOCK COMMON STOCK COMMON STOCK COMMON STOCK
-------------------- -------------------- -------------------- --------------------
SHARES SHARES SHARES SHARES
OUTSTANDING AMOUNT OUTSTANDING AMOUNT OUTSTANDING AMOUNT OUTSTANDING AMOUNT
----------- ------ ----------- ------ ----------- ------ ----------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995.......... 3,631 $36 374 $4 317 $ 3
Repayment of note receivable......
Stock options granted below fair
market value.....................
Reclassification of Series A, B
and C redeemable stock...........
Two-for-one stock exchange........ 3,631 36 374 4 317 3
Distributions on redeemable
stock............................
Reversal of dividends payable.....
Conversion to Class A Common
Stock............................ (1,275) (13) (539) (5)
Conversion to Class B Common
Stock............................ (5,637) (56) (95) (1)
Conversion to Class C Common
Stock............................ (298) (3) (748) (8)
Shares allocated to treasury...... (52)
Issuance of Class A Common Stock,
net of issuance costs of
$8,303...........................
Exercise of common stock option
and warrant......................
Conversion of Senior Series C
Common Stock to Class B and Class
C Common Stock...................
Acquisition of treasury stock.....
Amortization of unearned
compensation.....................
Conversion of Class B Common Stock
to Class A Common Stock..........
Retirement of treasury stock......
Net income........................
Reclassification of capital
deficiency account...............
--- -- ------ --- ---- -- ---- ---
BALANCE, DECEMBER 31, 1995........ 0 0 0 0 0 0
Dividends payable.................
Distributions paid................
Issuance of Class A Common Stock,
net of issuance cost of $7,034...
Shareholder conversion in
conjunction with issuance of
Class A Common Stock.............
Issuance of Preferred Stock, net
of issuance cost of $4,725....... 138 $1
Issuance of Class A Common Stock
for Skyline, Bridan Tower, and
Henry Mergers....................
Conversion of Class B Common Stock
to Class A Common Stock..........
Exercise of common stock
options..........................
Amortization of unearned
compensation.....................
Net income........................
--- -- ------ --- ---- -- ---- ---
BALANCE, DECEMBER 31, 1996........ 138 1 0 0 0 0 0 0
Dividends payable.................
Distributions paid................
Issuance of Class A Common
Stock............................
Issuance of Preferred Stock, net
of issuance costs of $7,750......
Conversion of Class B Common Stock
to Class A Common Stock..........
Exercise of common stock
options..........................
Tax benefit of stock options......
Acquisition of treasury stock.....
Amortization of unearned
compensation.....................
Net loss..........................
--- -- ------ --- ---- -- ---- ---
BALANCE, DECEMBER 31, 1997........ 138 $1 0 $ 0 0 $0 0 $ 0
=== == ====== === ==== == ==== ===
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK
-------------------- --------------------
SHARES SHARES
OUTSTANDING AMOUNT OUTSTANDING AMOUNT
----------- ------ ----------- ------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995..........
Repayment of note receivable......
Stock options granted below fair
market value.....................
Reclassification of Series A, B
and C redeemable stock...........
Two-for-one stock exchange........
Distributions on redeemable
stock............................
Reversal of dividends payable.....
Conversion to Class A Common
Stock............................ 1,813 $ 18
Conversion to Class B Common
Stock............................ 5,731 $ 57
Conversion to Class C Common
Stock............................
Shares allocated to treasury......
Issuance of Class A Common Stock,
net of issuance costs of
$8,303........................... 4,770 47
Exercise of common stock option
and warrant...................... 1
Conversion of Senior Series C
Common Stock to Class B and Class
C Common Stock................... 268 3
Acquisition of treasury stock..... (18)
Amortization of unearned
compensation.....................
Conversion of Class B Common Stock
to Class A Common Stock.......... 61 1 (61) (1)
Retirement of treasury stock......
Net income........................
Reclassification of capital
deficiency account...............
------ ---- ------- ----
BALANCE, DECEMBER 31, 1995........ 6,645 66 5,920 59
Dividends payable.................
Distributions paid................
Issuance of Class A Common Stock,
net of issuance cost of $7,034... 4,501 45
Shareholder conversion in
conjunction with issuance of
Class A Common Stock............. 838 8 (338) (3)
Issuance of Preferred Stock, net
of issuance cost of $4,725.......
Issuance of Class A Common Stock
for Skyline, Bridan Tower, and
Henry Mergers.................... 2,165 22
Conversion of Class B Common Stock
to Class A Common Stock.......... 952 10 (952) (10)
Exercise of common stock
options.......................... 28 1
Amortization of unearned
compensation.....................
Net income........................
------ ---- ------- ----
BALANCE, DECEMBER 31, 1996........ 15,101 151 4,658 47
Dividends payable.................
Distributions paid................
Issuance of Class A Common
Stock............................ 8,362 83
Issuance of Preferred Stock, net
of issuance costs of $7,750......
Conversion of Class B Common Stock
to Class A Common Stock.......... 1,193 12 (1,193) (12)
Exercise of common stock
options.......................... 53 1 44 0
Tax benefit of stock options......
Acquisition of treasury stock..... (1)
Amortization of unearned
compensation.....................
Net loss..........................
------ ---- ------- ----
BALANCE, DECEMBER 31, 1997........ 24,708 $247 3,509 $ 35
====== ==== ======= ====
</TABLE>
See notes to Consolidated Financial Statements.
F-26
<PAGE> 115
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY) -- (CONTINUED)
<TABLE>
<CAPTION>
CLASS C
COMMON STOCK NOTE
-------------------- RECEIVABLE TREASURY STOCK ADDITIONAL
SHARES FROM --------------- UNEARNED PAID-IN
OUTSTANDING AMOUNT STOCKHOLDER SHARES AMOUNT COMPENSATION CAPITAL
----------- ------ ----------- ------ ------ ------------ ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995............. $(500) (26) $(340) $ 18,357
Repayment of note receivable......... 500
Stock options granted below fair
market value........................ $(473) 473
Reclassification of Series A, B and C
redeemable stock.................... 3,121
Two-for-one stock exchange........... (26) (43)
Distributions on redeemable stock....
Reversal of dividends payable........ 265
Conversion to Class A Common Stock...
Conversion to Class B Common Stock...
Conversion to Class C Common Stock... 1,046 $11
Shares allocated to treasury.........
Issuance of Class A Common Stock, net
of issuance costs of $8,303......... 70,355
Exercise of common stock option and
warrant............................. 79 1 11
Conversion of Senior Series C Common
Stock to Class B and Class C Common
Stock............................... 671 6
Acquisition of treasury stock........ (18) (438) 438
Amortization of unearned
compensation........................ 82
Conversion of Class B Common Stock to
Class A Common Stock................
Retirement of treasury stock......... 52 340 (340)
Net income...........................
Reclassification of capital
deficiency account.................. (21,709)
----- --- ----- --- ----- ----- --------
BALANCE, DECEMBER 31, 1995........... 1,796 18 0 (18) (438) (391) 70,928
Dividends payable....................
Distributions paid...................
Issuance of Class A Common Stock, net
of issuance cost of $7,034.......... 114,457
Shareholder conversion in conjunction
with issuance of Class A Common
Stock............................... (500) (5)
Issuance of Preferred Stock, net of
issuance cost of $4,725............. 132,774
Issuance of Class A Common Stock for
Skyline, Bridan Tower, and Henry
Mergers............................. 72,131
Conversion of Class B Common Stock to
Class A Common Stock................
Exercise of common stock options..... 441
Amortization of unearned
compensation........................ 94
Net income...........................
----- --- ----- --- ----- ----- --------
BALANCE, DECEMBER 31, 1996........... 1,296 13 0 (18) (438) (297) 390,731
Dividends payable.................... (25,210)
Distributions paid...................
Issuance of Class A Common Stock..... 311,213
Issuance of Preferred Stock, net of
issuance costs of $7,750............ (7,750)
Conversion of Class B Common Stock To
Class A Common Stock................
Exercise of common stock options..... 930
Tax benefit of stock options......... 1,297
Acquisition of treasury stock........ (1) (20)
Amortization of unearned
compensation........................ 95
Net loss.............................
----- --- ----- --- ----- ----- --------
BALANCE, DECEMBER 31, 1997........... 1,296 $13 $ 0 (19) $(458) $(202) $671,211
===== === ===== === ===== ===== ========
<CAPTION>
CAPITAL
DEFICIENCY RETAINED
UPON EARNINGS DIVIDENDS
COMBINATION (DEFICIT) PAYABLE TOTAL
----------- --------- --------- -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1995............. $ (21,709) $(1,680) $ 265 $ (5,564)
Repayment of note receivable......... 500
Stock options granted below fair
market value........................
Reclassification of Series A, B and C
redeemable stock.................... 3,121
Two-for-one stock exchange...........
Distributions on redeemable stock.... (815) (815)
Reversal of dividends payable........ (265)
Conversion to Class A Common Stock...
Conversion to Class B Common Stock...
Conversion to Class C Common Stock...
Shares allocated to treasury.........
Issuance of Class A Common Stock, net
of issuance costs of $8,303......... 70,402
Exercise of common stock option and
warrant............................. 12
Conversion of Senior Series C Common
Stock to Class B and Class C Common
Stock............................... 9
Acquisition of treasury stock........
Amortization of unearned
compensation........................ 82
Conversion of Class B Common Stock to
Class A Common Stock................
Retirement of treasury stock.........
Net income........................... 8,288 8,288
Reclassification of capital
deficiency account.................. 21,709
--------- ------- -------- --------
BALANCE, DECEMBER 31, 1995........... 0 5,793 0 76,035
Dividends payable.................... (4,973) 4,973
Distributions paid................... (4,973) (4,973)
Issuance of Class A Common Stock, net
of issuance cost of $7,034.......... 114,502
Shareholder conversion in conjunction
with issuance of Class A Common
Stock...............................
Issuance of Preferred Stock, net of
issuance cost of $4,725............. 132,775
Issuance of Class A Common Stock for
Skyline, Bridan Tower, and Henry
Mergers............................. 72,153
Conversion of Class B Common Stock to
Class A Common Stock................
Exercise of common stock options..... 442
Amortization of unearned
compensation........................ 94
Net income........................... 5,135 5,135
--------- ------- -------- --------
BALANCE, DECEMBER 31, 1996........... 0 5,955 0 396,163
Dividends payable.................... (5,955) 15,613 (15,552)
Distributions paid................... (15,613) (15,613)
Issuance of Class A Common Stock..... 311,296
Issuance of Preferred Stock, net of
issuance costs of $7,750............ (7,750)
Conversion of Class B Common Stock To
Class A Common Stock................
Exercise of common stock options..... 931
Tax benefit of stock options......... 1,297
Acquisition of treasury stock........ (20)
Amortization of unearned
compensation........................ 95
Net loss............................. (8,433) (8,433)
--------- ------- -------- --------
BALANCE, DECEMBER 31, 1997........... $ 0 $(8,433) $ 0 $662,414
========= ======= ======== ========
</TABLE>
See notes to Consolidated Financial Statements.
F-27
<PAGE> 116
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations.................... $ 9,215 $ 5,615 $ (2,538)
ADJUSTMENTS TO RECONCILE NET INCOME (LOSS) TO CASH PROVIDED
BY OPERATING ACTIVITIES:
Barter revenues........................................... (4,678) (7,989) (13,137)
Barter expenses........................................... 4,626 6,973 12,054
Depreciation and amortization............................. 12,307 16,820 58,417
Amortization of deferred financing costs.................. 278 868 1,287
Amortization of debt discount............................. 84 100
Amortization of debt premium.............................. (574)
Provision for losses on accounts receivable............... 1,387 2,930 4,484
Provision for loss on investment note receivable.......... 6,750
Deferred taxes............................................ 3,490 831 (4,265)
Accretion of note discount................................ (53) (42)
Recovery of allowance on investment note receivable....... (500)
(Gain) loss on sale of station and other, net............. (11,544) 248 (3,022)
Loss on broadcasting contract............................. 1,670
Stock compensation........................................ 82 94 95
Change in assets and liabilities, net of effects of
mergers and acquisitions:
Accounts receivable....................................... (5,993) (27,625) (12,277)
Prepaid expenses and other assets......................... (864) (975) (942)
Restricted cash........................................... (703)
Accounts payable and accrued expenses..................... 2,317 8,994 (13,385)
Accrued interest.......................................... (993) 6,789 1,738
--------- --------- ---------
Continuing operations................................... 9,577 13,615 35,252
Discontinued operations................................... 147 2,044 8,056
--------- --------- ---------
Cash provided by operating activities................... 9,724 15,659 43,308
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and
intangible assets....................................... (5,926) (15,782) (22,664)
Proceeds from asset and radio station sales............... 15,302 1,087 86,551
Repayment of investment notes receivable.................. 3,000 1,350 1,243
Payments for purchase of radio stations................... (31,013) (312,591) (500,824)
Payments for investment notes receivable and related
intangible assets....................................... (48,597) (56,522) (410)
Deposits and other long-term assets....................... (6,649) (20,303) 7,537
--------- --------- ---------
Continuing operations................................... (73,883) (402,761) (428,567)
Discontinued operations................................... (7,300) (19,124) (216,506)
--------- --------- ---------
Cash used for investing activities...................... (81,183) (421,885) (645,073)
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under the Credit Agreements.................... 225,000 151,500 639,500
Repayments under the Credit Agreements.................... (202,500) (151,500) (286,000)
Borrowings under other obligations........................ 750
Repayment of other obligations............................ (1,288) (403) (868)
Net proceeds from debt offering--net of discount.......... 173,581
Net proceeds from stock offerings and options............. 69,882 247,474 193,165
Additions to deferred financing costs..................... (3,896) (5,344) (5,642)
Redemption of Series C Senior Common Stock................ (14,580)
Dividends paid............................................ (4,973) (15,613)
Purchase of treasury stock................................ (438)
--------- --------- ---------
Continuing operations................................... 72,180 410,335 525,292
Discontinued operations................................... 0 2,449 82,669
--------- --------- ---------
Cash provided by financing activities................... 72,180 412,784 607,961
--------- --------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS....................... 721 6,558 6,196
CHANGE IN CASH AND CASH EQUIVALENTS INCLUDED IN DISCONTINUED
OPERATIONS................................................ (12) (2,361) (2,222)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR................ 3,168 3,877 8,074
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR...................... $ 3,877 $ 8,074 $ 12,048
========= ========= =========
</TABLE>
See notes to Consolidated Financial Statements.
F-28
<PAGE> 117
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CBS Radio, Inc. (formerly known as American Radio Systems Corporation)
(collectively, "American," "ARS" or the "Company") is a national broadcasting
company formed in 1993 to acquire, develop and operate radio stations and
communications towers throughout the United States. As of December 31, 1997 the
Company owned and/or operated approximately 100 radio stations in 21 markets and
owned and/or operated approximately 760 wireless communication sites.
On June 4, 1998 the merger of ARS and a subsidiary of CBS Corporation (the
CBS Merger) was consummated. In connection with the merger, all of the shares of
American Tower Systems Corporation (Tower) owned by ARS were distributed (the
Distribution) to ARS common stockholders and holders of options to acquire ARS
common stock and have been or will be distributed upon conversion of shares of
ARS 7% Convertible Exchangeable Preferred Stock (or the debentures into which
they were exchanged). As a consequence of the Distribution, Tower ceased to be a
subsidiary of, or to be otherwise affiliated with, ARS and now operates as an
independent publicly traded company. Consequently, the results of operations and
net assets of Tower have been classified as Discontinued Operations in
accordance with Accounting Principles Board Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual, and Infrequently Occurring Events and
Transactions," for all periods presented. Net revenues for discontinued
operations for 1995, 1996 and 1997 totaled $0.2 million, $2.8 million and $17.1
million, respectively. The Distribution was accounted for as a non-reciprocal
(non-cash) transfer to the Company's former shareholders reducing additional
paid in-capital by approximately $150.0 million on the CBS Merger date.
Pursuant to the provisions of the CBS Merger Agreement, Tower entered into
an agreement (the Separation Agreement) with CBS and ARS providing for, among
other things, the orderly separation of ARS and Tower, the allocation of certain
tax liabilities to Tower, certain closing date adjustments relating to ARS, the
lease to ARS by Tower of space on certain towers previously owned by ARS and
transferred to Tower, and certain indemnification obligations (including with
respect to securities law matters) of Tower. As a consequence of the CBS Merger,
the Company or CBS is required to divest certain radio stations in order to
comply with regulatory orders. (See Note 10).
Basis of Presentation and Principles of Consolidation -- The accompanying
consolidated financial statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Investments in affiliates, owned more than 20 percent but not in
excess of 50 percent, are accounted for using the equity method, when less than
a controlling interest is held.
Revenue Recognition -- Revenues are recognized when advertisements are
broadcast.
Corporate General and Administrative Expense -- Corporate general and
administrative expense consists of corporate overhead costs not specifically
allocable to any of the Company's individual business properties.
Barter Transactions -- Revenue from the stations' exchange of advertising
time for goods and services is recorded as the advertising is broadcast at the
fair market value of goods or services received or to be received. The value of
the goods and services is charged to expense when used. Net barter receivables
are included in accounts receivable.
F-29
<PAGE> 118
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Barter transactions were approximately as follows for the years ended
December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
Barter revenues......................................... $4,678 $7,989 $13,137
Barter expenses......................................... 4,626 6,973 12,054
Net barter receivables.................................. 248 811 1,457
Barter fixed asset additions............................ 131 22 202
Net barter asset (liability) assumed in acquisitions.... (431) 42
</TABLE>
Net Local Marketing Agreement Expense -- Net local marketing agreement
("LMA") expenses consist of fees paid by or earned by American under agreements
which permit an entity to program and market stations prior to their
acquisition. The Company enters into such agreements prior to the consummation
of many of its acquisitions or dispositions. LMA expenses for the years ended
December 31, 1996 and 1997 are presented net of approximately $2,333,000 and
$4,138,000, respectively, of revenue earned under such agreements with third
parties.
Concentration of Credit Risk -- The Company extends credit to customers on
an unsecured basis in the normal course of business. No individual industry or
industry segment is significant to the Company's customer base. The Company has
policies governing the extension of credit and collection of amounts due from
customers.
Derivative Financial Instruments -- The Company uses derivative financial
instruments as a means of managing interest-rate risk associated with current
debt or anticipated debt transactions that have a high probability of being
executed. Derivative financial instruments used include interest rate swap
agreements and interest rate cap agreements. These instruments are matched with
either fixed or variable rate debt and, when matched, are recorded on a
settlement basis as an adjustment to interest expense. Premiums paid to purchase
interest rate cap agreements are amortized as an adjustment of interest expense
over the life of the contract. Derivative financial instruments are not held for
trading purposes. (See Notes 3 and 11.)
Impairment of Long-Lived Assets -- Recoverability of long-lived assets is
determined by periodically comparing the forecasted undiscounted net cash flows
of the operations to which the assets relate to the carrying amount, including
associated intangible assets of such operations. Through December 31, 1997, no
impairments requiring adjustment have occurred.
Stock-Based Compensation -- Compensation related to equity grants or awards
to employees is measured using the intrinsic value method prescribed by
Accounting Principles Board Opinion No. 25 (See Note 8.)
Income (Loss) Per Common Share -- In the fourth quarter of 1997, the
Company adopted Statement of Financial Accounting Standards No. 128, (FAS 128)
"Earnings Per Share." Prior to the fourth quarter of 1997, the Company computed
income (loss) per common share using the methods outlined in Accounting
Principles Board Opinion No. 15, "Earnings Per Share," and its interpretations.
Basic income (loss) per common share is computed using the weighted average
number of common shares outstanding during each year. Diluted income (loss) per
common share reflects the effect of the Company's outstanding options (using the
treasury stock method) and assumes conversion of preferred stock except where
such items would be antidilutive.
F-30
<PAGE> 119
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
A reconciliation of the denominator for the basic and diluted per share
calculations is as follows:
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ ------
(IN THOUSANDS)
<S> <C> <C> <C>
Shares for basic computation............................ 11,838 19,550 27,290
Effect of stock options................................. 747 960 --
Assumed conversion of redeemable common and preferred
stock................................................. -- -- --
------ ------ ------
Shares for diluted computation.......................... 12,585 20,510 27,290
====== ====== ======
</TABLE>
Shares of redeemable common and preferred stock convertible into common
stock have been excluded from the diluted computation as they are anti-dilutive.
Had such shares been included, shares for diluted computation would have been
increased by 410,000, 1,662,000 and 3,235,000 in 1995, 1996 and 1997,
respectively. In addition, because such shares are antidilutive, no adjustment
has been made to reconcile from income (loss) for the basic computation to that
for the diluted computation. No effect has been given to stock options in 1997
as they are antidilutive for that year. Had such options been included, shares
for diluted computation would have been increased by 1,388,000.
Property and Equipment and Intangible Assets -- Property and equipment are
recorded at cost, or at estimated fair value in the case of acquired properties.
Cost includes expenditures for radio properties and related assets and the net
amount of interest cost associated with significant capital additions.
Approximately $463,000 of interest was capitalized for the year ended December
31, 1997. Depreciation is provided using the straight-line method over estimated
useful lives ranging from three to fifteen years.
Non-competition and consulting agreements, FCC licenses, goodwill, and
various other intangibles, acquired in connection with the Company's
acquisitions of the various radio stations are being amortized over their
estimated useful lives, ranging from one to forty years, using the straight-line
method. FCC licenses are generally amortized over a twenty-five year period and
goodwill over a forty-year period. Other intangible assets consist principally
of deferred financing costs, broadcast affiliation agreements, favorable studio
and office space leases and costs incurred on pending acquisitions. Accumulated
amortization of goodwill aggregated approximately $6,369,000 and $17,318,000 at
December 31, 1996 and 1997, respectively. Accumulated amortization of FCC
licenses aggregated approximately $7,628,000 and $42,876,000 at December 31,
1996 and 1997, respectively. Accumulated amortization of other intangible assets
aggregated approximately $14,112,000 and $18,698,000 at December 31, 1996 and
1997, respectively.
Property and equipment and intangible assets included approximately $108.6
million and $84.0 million of assets related to radio stations held for sale or
under exchange agreements (excluding the Merger Agreement) as of December 31,
1996 and 1997, respectively. The following summary presents the results of
operations (excluding depreciation and amortization, net local marketing
agreement and corporate general and administrative expenses) relating to these
stations that are included in the accompanying consolidated financial statements
for each respective period.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
------------------
(IN THOUSANDS)
1996 1997
------- -------
<S> <C> <C>
Net operating revenues...................................... $15,795 $22,271
Net operating expenses...................................... 10,663 15,742
</TABLE>
F-31
<PAGE> 120
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Restricted Cash -- Restricted cash represents cash held in escrow pursuant
to certain exchange agreements. Such agreements may be terminated at the
Company's option, in which event such cash held in escrow is required to be
utilized to reduce borrowings under the Company's credit agreement.
Investment Notes Receivable -- In connection with certain transactions
discussed in Notes 9, 10 and 14, the Company has loaned funds at varying rates
of interest to certain entities which own radio stations and tower properties
that the Company is obligated, or has options, to purchase. These notes have
varying interest rates ranging from 6% to 12% and are collateralized by
substantially all of the assets of the related radio stations.
Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. In the process of preparing its consolidated
financial statements, the Company estimates the appropriate carrying value of
certain assets and liabilities which are not readily apparent from other
sources. The primary estimates underlying the Company's financial statements
include allowances for potential bad debts on accounts and notes receivable, the
useful lives of its assets such as property and intangibles, fair values of
financial instruments, the realizable value of its tax assets and accruals for
health insurance and other matters. Management bases its estimates on certain
assumptions, which they believe are reasonable in the circumstances, and while
actual results could differ from those estimates, management does not believe
that any change in those assumptions in the near term would have a material
effect on its financial position, results of operations or liquidity.
Income Taxes -- Deferred taxes are provided to reflect temporary
differences in bases between book and tax assets and liabilities, and net
operating loss carryforwards. Deferred tax assets and liabilities are measured
using currently enacted tax rates. (See Note 6.)
Retirement Plans -- The Company has a 401(k) plan covering substantially
all employees, subject to certain minimum age and length-of-employment
requirements. Under the plan, the Company matches 30% of participants'
contributions up to 5% of compensation. The Company contributed approximately
$225,000, $293,000 and $849,000 to the plan for the years ended December 31,
1995, 1996, and 1997, respectively.
Recent Accounting Pronouncements -- In June 1997, the FASB issued FAS No.
130, "Reporting Comprehensive Income" (FAS 130), and FAS No. 131 "Disclosures
about Segments of an Enterprise and Related Information" (FAS 131). These
pronouncements will be effective in 1998. FAS 130 establishes standards for
reporting and display of comprehensive income items. Financial statement amounts
will not be affected by this adoption. FAS 131 established standards for
reporting information about the operating segments in its annual report and
interim reports. The Company does not anticipate that the adoption of FAS 131
will have a material impact on the Company's financial information.
In February 1998, the FASB issued SFAS No. 132 (FAS 132) "Employers'
Disclosures about Pensions and Other Postretirement Benefits," which the Company
will be required to adopt in 1998. FAS 132 will require additional disclosure
concerning changes in the Company's pension obligations and assets and
eliminates certain other disclosures no longer considered useful. Adoption will
not have any effect on reported results of operations or financial position.
In June 1998, the FASB issued Statement No. 133 (FAS 133), "Accounting for
Derivative Instruments and Hedging Activities," which requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other
F-32
<PAGE> 121
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
comprehensive income, depending on whether a derivative is designated as part of
a hedge transaction and if it is, the type of hedge transaction. For fair-value
hedge transactions in which the Company is hedging changes in an asset's,
liability's or firm commitment's fair value, changes in the fair value of the
derivative instrument will generally be offset in the income statement by
changes in the hedged item's fair value. For cash flow hedge transactions,
changes in the fair value of the derivative instrument will be reported in
comprehensive income. The gains and losses on the derivative instrument that are
reported in other comprehensive income will be reclassified as earnings in the
periods in which earnings are impacted by the variability of the cash flows of
the hedged item. The ineffective portion of all hedges will be recognized in
current period earnings. The Company currently expects to adopt FAS 133 for the
year ending December 31, 1999. Management does not believe that the adoption of
FAS 133 will have a material impact on its results of operations or financial
position.
Cash Flow Information -- For purposes of the statements of cash flows, the
Company considers all highly liquid, short-term investments with remaining
maturities of three months or less when purchased to be cash and cash
equivalents.
Cash payments for interest expense aggregated approximately $9,890,000,
$14,239,000 and $55,465,000 for the years ended December 31, 1995, 1996, and
1997, respectively.
Cash payments for income taxes aggregated approximately $1,808,000,
$3,086,000 and $2,675,000 for the years ended December 31, 1995, 1996, and 1997,
respectively.
Significant non-cash investing and financing transactions, apart from the
barter transactions discussed above, are as follows:
For the year ended December 31, 1995:
Accrued and unpaid Common Deferred Yield Distributions on the Series C
Common Stock aggregated $815,000. (See Note 7.)
In connection with the acquisition of a radio station, the Company issued a
$500,000 note to the previous owner.
Capital lease obligations of approximately $201,000 were incurred for
office furniture and equipment.
In connection with the Company's initial public offering of its Class A
Common Stock (the "Initial Public Offering"), the Company exchanged
approximately 939,000 shares of Senior Series Common Stock for approximately
268,000 shares of Class B Common Stock and approximately 671,000 shares of Class
C Common Stock. (See Note 8).
The Company's obligation to repurchase the shares of the beneficiaries of a
Predecessor Entity's Employee Stock Ownership Plan was canceled as a result of
the Initial Public Offering and pursuant to a vote by the Board of Directors
effective September 30, 1995. (See Note 7).
For the year ended December 31, 1996:
In connection with radio station and tower acquisitions, the Company
assumed approximately $4,437,000 in liabilities and issued shares of Class A
Common Stock with an agreed upon value of approximately $72,153,000. (See Note
9).
F-33
<PAGE> 122
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
Capital lease obligations of approximately $390,000 were incurred for
office furniture and equipment. (See Note 3).
For the year ended December 31, 1997:
In connection with radio station and tower acquisitions, the Company
assumed approximately $227,413,000 in liabilities and issued shares of Class A
Common Stock with a value of approximately $311,300,000. The Company received
approximately $69,277,000 of restricted cash as consideration for disposed radio
stations and approximately $42,848,000 of this restricted cash was used as
consideration for radio station acquisitions. The Company also exchanged
approximately $44,352,000 in investment notes as consideration towards radio
station and tower acquisitions. (See Note 9).
The Company issued 105,602 additional shares of Cumulative Exchangeable
Preferred Stock as dividend payments in kind. (See Note 7).
Capital lease obligations of approximately $40,000 were incurred for office
equipment. (See Note 3).
Reclassifications -- Certain reclassifications have been made to the prior
year financial statements to conform with the 1997 presentation.
2. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31 (in
thousands):
<TABLE>
<CAPTION>
1996 1997
------- --------
<S> <C> <C>
Land and improvements..................................... $10,754 $ 9,374
Buildings and improvements................................ 21,842 42,645
Broadcast equipment....................................... 32,607 73,640
Office equipment, furniture, fixtures and other
equipment.............................................. 8,318 19,537
Assets under capital lease obligations.................... 1,259 1,311
Construction in progress.................................. 4,627 2,430
------- --------
Total............................................. 79,407 148,937
Less accumulated depreciation and amortization............ (8,869) (16,895)
------- --------
Property and equipment--net............................... $70,538 $132,042
======= ========
</TABLE>
Accumulated amortization for the assets under capital leases aggregated
approximately $659,000 and $847,000 at December 31, 1996 and 1997, respectively.
F-34
<PAGE> 123
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LONG-TERM DEBT
Outstanding amounts under the Company's long-term debt arrangements
consisted of the following as of December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1997
-------- --------
<S> <C> <C>
Credit Agreements........................................... $151,500 $505,000
Senior Subordinated Notes................................... 173,665 327,691
Other Obligations........................................... 972 1,287
-------- --------
Total....................................................... 326,137 833,978
Less current maturities..................................... (444) (340)
-------- --------
Long-term debt.............................................. $325,693 $833,638
======== ========
</TABLE>
Credit Agreements -- In January 1997, the Company entered into two new
credit agreements with a syndicate of banks (collectively, the "1997 Credit
Agreement"), which replaced the previously existing credit agreement. All
amounts outstanding under the previous agreement were repaid with proceeds from
the 1997 Credit Agreement; the following discussion, with the exception of
information regarding interest rates, is based upon the terms and conditions of
the 1997 Credit Agreement. Collectively, the previous credit agreement and the
1997 Credit Agreement are referred to as the Credit Agreements.
The 1997 Credit Agreement consists of two separate lending agreements,
providing for facilities consisting of a $550.0 million reducing revolver credit
facility which is available through December 31, 2004, a $200.0 million
revolving credit converting to a term loan facility maturing December 31, 2004,
and a $150.0 million term loan facility, maturing December 31, 2004, available
in connection with certain note obligations of EZ Communications; the $150.0
million facility was not needed, and has expired unused.
Amounts outstanding under the Credit Agreements bear interest based upon a
variable base rate adjusted for a margin which is determined by reference to
certain financial ratios of the Company, generally related to leverage. Until
such time as the Company requests that rates be fixed or capped, rates are
determined, at the option of the Company, by reference to either the Eurodollar
rate plus certain percentages, or an alternate base rate (as defined) plus
certain percentages. The weighted average interest rates under the Credit
Agreements were approximately 8.0% and 7.4% for the years ended December 31,
1996 and 1997, respectively.
There was $74.8 million and $48.0 million available under the Credit
Agreements at December 31, 1996 and 1997, respectively. In connection with the
Credit Agreements, the Company is obligated to pay commitment fees based on a
percentage of the unused portion of the available commitments (the fee varies
depending upon which facility is affected and the Company's leverage ratio).
Commitment fees paid related to the Credit Agreements were approximately
$24,500, $1,113,000 and $1,111,000 in 1995, 1996 and 1997, respectively.
The 1997 Credit Agreement contains certain financial and operational
covenants and other restrictions with which the Company must comply, including,
among others, limitations on certain acquisitions, additional indebtedness,
capital expenditures, and payment of cash dividends and stock repurchases. In
addition, restrictions are placed upon the use of borrowings under the 1997
Credit Agreement and the Company must maintain certain financial ratios,
principally related to leverage. Borrowings under the 1997 Credit Agreement are
collateralized by a first security interest in the capital stock of the
Company's Restricted Subsidiaries (as defined in the 1997 Credit Agreement), all
FCC licenses, and all financial instruments (including the station
F-35
<PAGE> 124
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LONG-TERM DEBT -- (CONTINUED)
investment note receivables) and material agreements. The Company's Restricted
Subsidiaries have guaranteed the obligations of the Company under the 1997
Credit Agreement.
Senior Subordinated Notes -- In February 1996, the Company sold
$175,000,000 of 9% Senior Subordinated Notes due 2006 (the "Subordinated Notes")
at a discount of $1,419,000 to yield 9.125% (the Debt Offering). Proceeds to the
Company, net of underwriters' discount and associated costs, were approximately
$167.5 million.
As of December 31, 1997, the Subordinated Notes aggregated approximately
$173,765,000 net of an unamortized discount of approximately $1,235,000.
Interest is payable semi-annually on February 1 and August 1 with the face
amount of the Subordinated Notes due on February 1, 2006. The Subordinated Notes
are redeemable at the option of the Company, in whole or in part at any time on
or after February 1, 2001 and prior to maturity, at the following redemption
prices (expressed as percentages of principal amount) plus accrued and unpaid
interest, if any, to but excluding the redemption date, if redeemed during the
12-month period beginning February 1 of the years indicated: 2001 -- 104.5%;
2002 -- 103.0%; 2003 -- 101.5%; 2004 and thereafter -- 100.0%. Notwithstanding
the foregoing, at any time prior to February 1, 1999, the Company may redeem up
to $58.3 million principal amount of the Subordinated Notes from the net
proceeds of a public equity offering (as defined in the Subordinated Notes
indenture) at a redemption price equal to 109.0% of the principal amount thereof
plus accrued and unpaid interest, if any, to the Redemption Date, provided that
at least $116.7 million principal amount of the Subordinated Notes remain
outstanding immediately after the occurrence of any such redemption. The
Subordinated Notes are subordinate in right of payment to the prior payment in
full of all obligations under the 1997 Credit Agreement. The Subordinated Notes
contain certain covenants including, but not limited to, limitations on sales of
assets, dividend payments, future indebtedness and issuance of preferred stock,
and require an offer to purchase within 15 days after the occurrence of a Change
of Control (as defined) the outstanding subordinated Notes at a purchase price
equal to 101% of the principal amount thereof, plus accrued and unpaid interest,
if any, to the date of purchase. A Change of Control will occur upon the
consummation of the CBS Merger. Proceeds from the Debt Offering and the equity
offering, discussed in Note 8, were used to repay outstanding borrowings under
the Credit Agreements.
As part of the EZ Merger, the Company assumed EZ's obligations with respect
to $150.0 million principal amount of the EZ 9.75% Senior Subordinated Notes
(the "9.75% Notes") and repaid all borrowings under the EZ credit facility with
borrowings from the 1997 Credit Agreement. As required by the closing of the EZ
Merger, the Company offered to repurchase the 9.75% Notes; such offer commenced
in April 1997 and expired in May 1997, with no such notes being tendered for
purchase. As of December 31, 1997, the 9.75% Notes aggregated approximately
$153,926,000 net of an unamortized premium of approximately $3,926,000. Interest
is payable semi-annually on June 1 and December 1 with the face amount of the
Subordinated Notes due on December 1, 2005. The 9.75% Notes are redeemable at
the option of the Company, in whole or in part at any time on or after December
1, 2000 at a redemption price of 104.875% of the principal amount, plus accrued
and unpaid interest, if any, to the date of redemption. The redemption price
reduces over three years to a redemption price of 100% of the principal amount
in 2003 and thereafter. Notwithstanding the foregoing, at any time prior to
December 1, 1998, the Company may redeem up to $50.0 million of the original
aggregate principal amount of the 9.75% Note with the net proceeds of one public
offering of common stock at 109.75% of the principal amount thereof, together
with accrued and unpaid interest, if any, to the date of redemption, as long as
at least $100.0 million of the original aggregate amount of the 9.75% Notes
remain outstanding. The 9.75% Notes are general unsecured obligations of the
Company and rank pari passu in right of payment to all obligations under the
1997 Credit Agreement. The 9.75% Notes are
F-36
<PAGE> 125
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LONG-TERM DEBT -- (CONTINUED)
guaranteed by the restricted subsidiaries as described in Note 13. The 9.75%
Notes contain certain covenants including, but not limited to, limitations on
sales of assets, dividend payments, future indebtedness and issuance of
preferred stock, and require an offer to purchase within 15 days after the
occurrence of a Change of Control (as defined) the outstanding 9.75% Notes at a
purchase price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of the purchase.
Derivative Positions -- Under the terms of the Credit Agreements, the
Company is required, under certain conditions, to enter into interest rate
protection agreements. At December 31, 1996, ARS maintained two swap agreements
with commercial banks, expiring in September 2000, under which the interest rate
is fixed with respect to $35.5 million of notional principal amount at
approximately 7% and 10%. At December 31, 1997, the Company maintained two swap
agreements with commercial banks, one expiring in March 2000, under which the
interest rate is fixed with respect to $30.8 million of notional principal
amount at approximately 6.3%, and one expiring in March 2002, under which the
interest rate is fixed with respect to $9.0 million of notional principal amount
at approximately 6.8%. The Company maintained swap agreements with commercial
banks, expiring in September 2001, under which the interest rate is fixed with
respect to $35.5 million of notional principal amount at approximately 7.2% and
10.0%. The Company maintained a swap agreement with a commercial bank, expiring
in March 2002, under which the interest rate is fixed with respect to $37.0
million notional principal amount from March 2000 up to September 2001 and $72.6
million notional principal amount thereafter at approximately 6.8%. The Company
also maintained a cap agreement with a commercial bank, expiring in April 2000,
under which the interest rate is fixed with respect to $119.7 million of
notional principal amount at approximately 9.5%. The Company intends to enter
into new agreements, at least to the extent necessary to comply with the
requirements of the 1997 Credit Agreement (50% of the total variable interest
rate indebtedness of the Company must bear fixed interest). The Company's
exposure under these agreements is limited to the impact of variable interest
rate fluctuations and the periodic settlement of amounts due under these
agreements if the other parties fail to perform. However, the Company does not
anticipate nonperformance by the counterparties. (See Note 11.)
Other Obligations -- In connection with various acquisitions, the Company
has assumed certain long-term obligations of the acquired entities.
Substantially all of these obligations were repaid during 1997, with the
remaining unpaid obligation payable in monthly installments through 2014. In
1997, the Company also agreed to borrow $750,000 from a lessor to fund leasehold
improvements. The unsecured note is payable through 2012 and bears interest at
an effective rate of 10.0%.
Future principal payments required under the Company's long-term debt
arrangements at December 31, 1997 are as follows (in thousands):
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31:
- ------------------------------------------------------------
1998........................................................ $ 340
1999........................................................ 152
2000........................................................ 132
2001........................................................ 32
2002........................................................ 35
Thereafter through 2015..................................... 833,287
--------
TOTAL............................................. $833,978
========
</TABLE>
F-37
<PAGE> 126
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
3. LONG-TERM DEBT -- (CONTINUED)
Extraordinary Losses -- In 1995, the Company replaced its then existing
credit facility, and, in connection with repayment of borrowings under that
facility, recognized an extraordinary loss of $817,000, net of a tax benefit of
$614,000, representing the write-off of deferred financing fees for the old
facility. Following the closing of the 1997 Credit Agreement in January 1997 and
repayment of amounts outstanding under the previous agreement, the Company
recognized an extraordinary loss of approximately $1.6 million, net of a tax
benefit of $1.0 million, representing the write-off of deferred financing fees
associated with the previous agreement.
4. COMMITMENTS AND CONTINGENCIES
Broadcast Rights -- At December 31, 1997, the Company was committed to the
purchase of broadcast rights for various sports events, and other programming,
including on-air talent, aggregating approximately $42,120,000. This programming
is not yet available for broadcast. Expenses for broadcast rights totaled
$5,254,000, $7,040,000, and $8,518,000 for the years ended December 31, 1995,
1996, and 1997, respectively. As of December 31, 1997, aggregate payments
related to these commitments are as follows (in thousands):
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31:
- ------------------------------------------------------------
1998........................................................ $13,822
1999........................................................ 12,809
2000........................................................ 10,795
2001........................................................ 4,634
2002........................................................ 60
-------
TOTAL............................................. $42,120
=======
</TABLE>
Leases -- The Company leases various offices, studios, and broadcast and
other equipment under operating leases that expire over various terms. Most
leases contain renewal options with specified increases in lease payments in the
event of renewal by the Company.
Future minimum rental payments required under non-cancelable operating
leases in effect at December 31, 1997 are as follows (in thousands):
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31:
- ------------------------------------------------------------
1998........................................................ $ 6,476
1999........................................................ 6,114
2000........................................................ 5,596
2001........................................................ 4,057
2002........................................................ 3,700
Thereafter through 2041..................................... 17,807
-------
TOTAL............................................. $43,750
=======
</TABLE>
Aggregate rent expense under operating leases for the years ended December
31, 1995, 1996 and 1997 approximated $1,764,000, $3,906,000 and $7,635,000,
respectively.
F-38
<PAGE> 127
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. COMMITMENTS AND CONTINGENCIES -- (CONTINUED)
Audience Rating and Other Service and Employment Contracts -- The Company
has entered into various non-cancelable audience rating and other service and
employment contracts that expire over the next five years. Most of these
audience rating and other service agreements are subject to escalation clauses
and may be renewed for successive periods ranging from one to five years on
terms similar to current agreements, except for specified increases in payments.
Management believes that, in the normal course of business, these contracts will
be renewed or replaced by similar contracts.
Future minimum payments required under these contracts at December 31, 1997
are as follows (in thousands):
<TABLE>
<S> <C>
YEAR ENDING DECEMBER 31:
- ------------------------------------------------------------
1998........................................................ $ 8,086
1999........................................................ 6,971
2000........................................................ 4,527
2001........................................................ 2,298
2002........................................................ 1,289
Thereafter through 2012..................................... 3,808
-------
TOTAL............................................. $26,979
=======
</TABLE>
Total expenses under these contracts for the years ended December 31, 1995,
1996 and 1997 approximated $2,426,000, $4,117,000 and $11,438,000, respectively.
Acquisition Commitments -- See Notes 9, 10 and 14 for information with
respect to station acquisition commitments.
Litigation -- In the normal course of business, the Company is subject to
certain suits and other matters. Management believes that the eventual
resolution of any pending matters, either individually or in the aggregate, will
not have a material effect on the Company's consolidated financial position,
results of operations or liquidity.
5. RELATED-PARTY TRANSACTIONS
An individual, who is a stockholder of the Company and was a limited
partner and creditor of two of the Predecessor Entities, is a partner in a law
firm which represents the Company, and certain associates of this firm serve as
assistant secretaries to the Company. Legal fees and other expenses incurred for
services rendered by this firm to the Company approximated $772,000, $2,038,000
and $1,585,000 for the years ended December 31, 1995, 1996 and 1997,
respectively.
An affiliate of Chase Equity Associates ("CEA"), a stockholder of the
Company, is a co-syndication agent and an approximate 9% participant under prior
credit agreements. A company director is also a general partner of CEA. For the
years ended December 31, 1995, 1996 and 1997, the stockholder affiliate's share
of interest and fees paid by the Company pursuant to the provisions of the
Credit Agreements were $1,688,500, $553,000 and $2,711,000, respectively.
F-39
<PAGE> 128
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES
The income tax provision (benefit) from continuing operations was comprised
of the following for the years ended December 31 (in thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ------ -------
<S> <C> <C> <C>
CURRENT:
Federal.............................................. $1,914 $2,775 $ 3,474
State................................................ 623 809 914
DEFERRED:
Federal.............................................. 4,023 812 (4,027)
State................................................ 343 141 (533)
Benefit from disposition of stock options (recorded to
additional paid-in capital).......................... 244 1,297
------ ------ -------
Income tax provision................................... $6,903 $4,781 $ 1,125
====== ====== =======
</TABLE>
A reconciliation between the U.S. statutory rate and the effective rate
from continuing operations is as follows for the years ended December 31:
<TABLE>
<CAPTION>
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Statutory tax rate.......................................... 34% 34% (34)%
State taxes, net of federal benefit......................... 4 6 (4)
Goodwill amortization....................................... 1 4 146
Amortization of intangibles................................. 1 3
Meals and entertainment..................................... 1 3 40
Valuation allowance......................................... (71)
Other -- net................................................ 3 (2)
-- --- ---
Effective tax rate -- continuing operations................. 43% 46% 80%
== === ===
</TABLE>
Total income taxes (benefit) for the years ended December 31 (in
thousands):
<TABLE>
<CAPTION>
1995 1996 1997
------ ------- -------
<S> <C> <C> <C>
Continuing operations.................................. $6,903 $ 4,781 $ 1,125
Discontinued operations................................ (74) 45 (935)
Extraordinary items.................................... (614) -- (1,013)
------ ------- -------
Total income taxes (benefit)........................... $6,215 $ 4,826 $ (823)
====== ======= =======
</TABLE>
F-40
<PAGE> 129
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
6. INCOME TAXES -- (CONTINUED)
Significant components of the Company's deferred tax assets and
liabilities, computed using currently enacted tax rates, are as follows at
December 31 (in thousands):
<TABLE>
<CAPTION>
1996 1997
-------- ---------
<S> <C> <C>
CURRENT ASSETS:
Allowances and accruals made for financial reporting
purposes which are currently nondeductible............. $ 3,370 $ 4,013
Net operating loss carryforward........................... 75
Net operating loss carryback.............................. 2,277
-------- ---------
TOTAL CURRENT ASSETS.............................. $ 3,370 $ 6,365
======== =========
LONG-TERM ITEMS:
Assets:
Allowances made for financial reporting purposes which
are currently nondeductible.......................... $ 277 $ 2,868
Net operating loss carryforwards....................... 1,010 717
Valuation allowance.................................... (1,010)
LIABILITIES:
Property and equipment and intangible
assets -- principally due to tax amortization methods
for tax purposes..................................... (33,203) (200,264)
-------- ---------
Net long-term deferred tax liabilities.................... $(32,926) $(196,679)
======== =========
</TABLE>
At December 31, 1997, the Company has net operating loss carryforwards
available to reduce future taxable income of $2,260,000 for federal and state
purposes. These loss carryforwards expire through 2009. During 1997, as a result
of increases in taxable income and certain tax planning strategies, certain of
these assets were realized and the entire valuation allowance of $1,010,000 was
removed.
7. REDEEMABLE STOCK
Activity related to the classes of redeemable stock for the year ended
December 31, 1995 is as follows (in thousands):
<TABLE>
<CAPTION>
SERIES C SERIES A
----------------- -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Balance, January 1, 1995........................ 1,714 $13,765 382 $ 3,432
Reclassification against additional paid-in
capital.................................... (382) (3,432)
Distributions accrued in kind................. 815
Distributions paid............................ (2,580)
Conversion to Common Stock.................... (939)
Share redemption.............................. (775) (12,000)
----- ------- ----- -------
Balance, December 31, 1995...................... 0 $ 0 0 $ 0
===== ======= ===== =======
</TABLE>
Senior Common Stock -- Holders of the Senior Series C Common Stock (the
"Senior Common Stock") were entitled to quarterly cash distributions (the
"Common Yield Distributions") equal to 10% of the stock's initial "preferred
distribution amount," compounded on a daily basis.
F-41
<PAGE> 130
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. REDEEMABLE STOCK -- (CONTINUED)
Series A Common Stock -- Repurchase Obligation to ESOP Stockholders -- The
Company was obligated to repurchase shares of Class A Common Stock held by an
employee stock ownership plan ("ESOP") of a Predecessor Entity. During 1995, the
Company repurchased at fair market value approximately 18,000 shares.
As a result of the Initial Public Offering, the Board of Directors of the
Company voted effective September 30, 1995 to amend the ESOP to eliminate the
right of beneficiaries to require the Company to purchase their shares. Pursuant
to this amendment, the Company reclassified the long-term portion of its
obligation of approximately $3.4 million to additional paid-in capital. The
Board of Directors also voted effective December 31, 1995 to terminate the ESOP.
During 1996, the Company applied for a favorable determination letter from the
IRS with respect to termination of the plan, which was received in March 1997.
The Company is in the process of terminating the ESOP. Accordingly, the ESOP has
distributed approximately 315,000 shares of Class A Common Stock to participants
through February 1998. Upon distribution of approximately 13,000 remaining
shares, the ESOP will be terminated.
Cumulative Exchangeable Preferred Stock -- In January 1997, the Company
consummated a private offering of 2,000,000 shares of its 11 3/8% Cumulative
Exchangeable Preferred Stock ("Exchangeable Preferred Stock") to a group of
qualified institutional investors. The Company utilized the net proceeds, which
approximated $192.1 million, to repay amounts outstanding under the 1997 Credit
Agreement and to fund acquisitions. Shares of Exchangeable Preferred Stock are
exchangeable, at the Company's option, in whole but not in part, on any dividend
payment date commencing April 15, 1997 into the Company's 11 3/8% Subordinated
Exchange Debentures due 2009 ("Exchange Debentures"). As discussed below, the
Exchangeable Preferred Stock possesses mandatory redemption features and is
classified as such in the Company's consolidated financial statements.
Dividends on the Exchangeable Preferred Stock are cumulative at an annual
rate of 11 3/8% (equivalent to $11.375 per share), accruing from the date of
original issuance (January 30, 1997) and are payable quarterly in arrears on
April 15, July 15, October 15, and January 15, commencing April 15, 1997. The
Company's ability to pay dividends is restricted under the terms of the
Subordinated Notes and is prohibited during the existence of a default under the
Company's 1997 Credit Agreement or the Subordinated Note Indenture. The Company
has the right, on or prior to January 15, 2002, to pay dividends through the
issuance of additional shares of Exchangeable Preferred Stock. The Company met
all tests and approximately 105,602 additional shares were issued and $5,988,000
of accrued dividends were paid through December 31, 1997.
The Exchangeable Preferred Stock is redeemable at the option of the
Company, for cash at any time after January 15, 2002, initially at 105.688% of
the liquidation preference, declining ratably immediately after January 15,
2007, plus accrued and unpaid dividends at the date of the redemption. In
addition, prior to January 15, 2000, the Company may, at its option, use the net
cash proceeds of an offering to redeem up to 35% of the outstanding Exchangeable
Preferred Stock at 111.375% of the liquidation preference, plus accumulated and
unpaid dividends to the date of redemption; provided that after any such
redemption, there must be at least $130.0 million aggregate liquidation
preference of the Exchangeable Preferred Stock outstanding. The Company is
required, subject to certain conditions, to redeem all Exchangeable Preferred
Stock outstanding on January 15, 2009, at a redemption price to 100% of the
liquidation preference, plus accumulated and unpaid dividends to the date of
redemption. Within 15 days after the occurrence of a Change in Control, the
Company, will be required, subject to certain conditions, to offer to purchase
all of the then outstanding shares at a price equal to 101% of the liquidation
preference, plus accumulated and unpaid
F-42
<PAGE> 131
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. REDEEMABLE STOCK -- (CONTINUED)
dividends to the date of redemption. A Change of Control will occur upon the
consummation of the CBS Merger. During the first quarter of 1998, the Company
paid the holders of the Exchangeable Preferred Stock consent fees aggregating
$2.1 million in connection with certain amendments to the holders' Exchangeable
Preferred Stock agreements.
8. STOCKHOLDERS' EQUITY
Common Stock Classes -- The Class A Common Stock and Class B Common Stock
entitle the holder to one and ten votes, respectively, per share. The Class C
Common Stock is nonvoting.
Convertible Exchangeable Preferred Stock Offering -- The outstanding
Convertible Exchangeable Preferred Stock ("Convertible Preferred Stock")
consists of 137,500 shares (2,750,000 Depositary Shares, each Depositary Share
represents ownership of one-twentieth of a share of Convertible Preferred
Stock). Proceeds to the Company of the sale of these shares in June 1996, net of
underwriters' discount and associated costs, were approximately $132.8 million.
Proceeds from the offering were used to fund acquisitions. Shares of Convertible
Preferred Stock are convertible at the option of the holder at any time, unless
previously redeemed or exchanged, into shares of Class A Common Stock, par value
$.01 per share, of the Company at a conversion price of $42.50 per share of
Class A Common Stock (equivalent to a conversion rate of 1.1765 shares of Class
A Common Stock per Depositary Share), subject to adjustment in certain events.
The Convertible Preferred Stock is redeemable, in whole or in part, at the
option of the Company, for cash at any time after July 15, 1999, initially at
$1,049 per share ($52.45 per Depositary Share), declining ratably immediately
after July 15 of each year thereafter to a redemption price of $1,000 per share
($50 per Depositary Share) after July 15, 2006, plus in each case accrued and
unpaid dividends. The Convertible Preferred Stock will be exchangeable, subject
to certain conditions, at the option of the Company, in whole but not in part,
on any dividend payment date commencing June 30, 1997 for the Company's 7%
Convertible Subordinated Debentures due 2011 (the "Exchange Debentures") at a
rate of $1,000 principal amount of Exchange Debentures for each share of
Convertible Preferred Stock ($50 principal amount for each Depositary Share).
Dividends on the Convertible Preferred Stock are cumulative at an annual
rate of 7% (equivalent to $3.50 per Depositary Share), accruing from the date of
original issuance (June 25, 1996) and are payable quarterly in arrears on March
31, June 30, September 30, and December 31, commencing September 30, 1996. The
Company's ability to pay dividends is restricted under the terms of the
Subordinated Notes (see Note 3) and is prohibited during the existence of a
default under the Company's Credit Agreements or the Subordinated Notes. The
Company met all tests and approximately $9,625,000 of accrued dividends had been
paid through December 31, 1997.
Common Stock Offerings -- In February 1996, the Company consummated an
offering of approximately 5,515,000 shares of Class A Common Stock at an
offering price of $27 per share, consisting of 4,000,000 shares initially sold
by the Company, approximately 1,013,000 shares sold by selling shareholders and
approximately 501,000 shares sold by the Company pursuant to the exercise of the
underwriters' over-allotment option. Proceeds to the Company, net of
underwriters' discount and associated costs, were approximately $114.5 million
and were utilized to repay existing debt and fund acquisitions.
In June 1995, the Company consummated an initial public offering of
5,500,000 shares of the Company's Class A Common Stock ($.01 par value) at a
price of $16.50 per share. The total shares issued pursuant to the
F-43
<PAGE> 132
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY -- (CONTINUED)
Initial Public Offering consisted of 4,270,000 shares initially sold by the
Company, 730,000 shares by selling shareholders and an additional 500,000 shares
sold by the Company pursuant to the underwriters' over-allotment option.
Proceeds to the Company, net of underwriters' discount and associated costs,
were approximately $70.4 million. The Company used the proceeds of a liquidation
preference associated with the Company's Senior Common Stock ($14.6 million) to
reduce indebtedness under the then existing credit agreement ($54.0 million) and
to repay certain stockholder notes ($1.0 million). The remaining proceeds were
used to fund current working capital needs.
Capital Deficiency Upon Combination -- In connection with accounting for
the Combination, the Predecessor Entities' accumulated deficits or retained
earnings at formation in 1993 were carried forward into the Company in the form
of a capital deficiency account. The Company has reclassified the balance of the
capital deficiency upon combination against additional paid-in capital in the
accompanying financial statements.
ARS Stock Option Plan -- ARS has a stock option plan which provides for the
granting of options to employees to acquire up to 3,000,000 shares of Class A
and B Common Stock. Exercise prices in the case of incentive stock options are
not less than the fair value of the underlying Class A Common Stock on the date
of grant. Exercise prices in the case of nonqualified stock options are set at
the discretion of the Board of Directors. Options vest ratably over various
periods, generally five years, commencing one year from the date of grant.
The following table summarizes option activity:
<TABLE>
<CAPTION>
WEIGHTED AVERAGE
EXERCISE PRICES
OPTIONS PER SHARE
--------- ----------------
<S> <C> <C>
Outstanding as of December 31, 1994...................... 892,000 $ 6.88
Granted................................................ 362,000 $12.58
Cancelled.............................................. (4,800) $ 6.38
Exercised.............................................. (1,200) $ 6.38
--------- ------
Outstanding as of December 31, 1995...................... 1,248,000 $ 8.54
Granted/issued(1)...................................... 740,500 $29.40
Cancelled(1)........................................... (260,600) $ 7.11
Exercised.............................................. (28,800) $ 6.84
--------- ------
Outstanding as of December 31, 1996...................... 1,699,100 $14.56
Granted/issued......................................... 593,000 $28.07
Issued in connection with EZ Merger.................... 362,239 $ 2.70
Cancelled.............................................. (5,000) $28.25
Exercised.............................................. (96,261) $ 9.67
--------- ------
Outstanding as of December 31, 1997...................... 2,553,078 $15.55
========= ======
</TABLE>
- ---------------
(1) Includes 253,000 options which were canceled and reissued at the December
31, 1996 fair market value of $27.25.
F-44
<PAGE> 133
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY -- (CONTINUED)
Options exercisable:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
EXERCISE PRICES
PER SHARE
----------------
<S> <C> <C>
December 31, 1995................................. 271,200 shares $6.61
December 31, 1996................................. 520,800 shares $7.58
December 31, 1997................................. 1,155,095 shares $7.91
</TABLE>
In February 1995, the Board granted options to employees to acquire 282,000
shares of Class B Common Stock with exercise prices below the fair market value
at the date of grant ($11.50 per share). In addition, the Board, in June 1995,
granted options to an employee to acquire 10,000 shares of Class B Common Stock
at an exercise price below fair market value. Fair market value at date of grant
was determined based on advice from the Company's investment banker. Unearned
compensation with respect to these options aggregated $473,000 and is being
amortized over the period that the options vest (five years). Amortization
aggregating $82,000, $94,000 and $94,000 was recorded for the years ended
December 31, 1995, 1996 and 1997, respectively.
The following table sets forth information regarding ARS options
outstanding at December 31, 1997:
<TABLE>
<CAPTION>
WEIGHTED-AVERAGE
RANGE OF NUMBER WEIGHTED-AVERAGE EXERCISE PRICE FOR
NUMBER EXERCISE PRICE CURRENTLY EXERCISE PRICE WEIGHTED-AVERAGE CURRENTLY
OF OPTIONS PER SHARE EXERCISABLE PER SHARE REMAINING LIFE EXERCISABLE
---------- -------------- ----------- ----------------- ----------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
504,916 $ 6.38 403,933 $ 6.38 1.0 $ 6.38
315,200 $ 6.38- 9.90 189,120 $ 7.80 1.6 $ 7.80
350,600 $ 9.88-23.75 140,240 $12.66 2.2 $12.66
465,700 $25.00-39.13 93,140 $26.16 3.5 $26.16
916,662 $ 1.39-38.81 328,662 $18.98 4.2 $ 2.73
--------- ------------ --------- ------ --- ------
2,553,078 $ 1.39-39.13 1,155,095 $15.55 2.8 $ 7.91
========= ============ ========= ====== === ======
</TABLE>
Pro Forma Disclosure -- As described in Note 1, the Company uses the
intrinsic value method to measure compensation expense associated with grants of
stock options or awards to employees. Had the Company used the fair value method
to measure compensation for grants under all plans made in 1995, 1996 and 1997,
reported basic income (loss) applicable to common stockholders and income (loss)
per share would have been $7,257,000 or $0.61 per share in 1995, $(858,000) or
$(0.04) per share in 1996, and $(44,272) or $(1.62) per share in 1997. Diluted
income per share for 1995 would have been $.58 per share.
The "fair value" of each option grant is estimated on the date of grant
using the Black/Scholes option pricing model. Key assumptions used to apply this
pricing model are as follows:
<TABLE>
<CAPTION>
1995 AND 1996 1997
------------- -------
<S> <C> <C>
Approximate risk-free interest rate......................... 6.0% 6.0%
Expected life of option grants.............................. 5 years 5 years
Expected volatility of underlying stock..................... 35.0% 40.0%
</TABLE>
F-45
<PAGE> 134
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. STOCKHOLDERS' EQUITY -- (CONTINUED)
The estimated weighted-average fair value of option grants made during
1995, 1996 and 1997 was $5.47, $11.88 and $7.32, respectively, per option.
Reserved Shares -- The Company has reserved 1,400,000 shares of Class A
Common Stock and 1,600,000 shares of Class B Common Stock for issuance under
ARS' stock option plan (the "Plan").
9. ACQUISITIONS AND DISPOSITIONS
General: The following acquisitions have been accounted for by the purchase
method of accounting, and, accordingly, the operating results of the acquired
entities, to the extent that a local marketing agreement ("LMA") did not exist,
have been included in consolidated operating results since the date of
acquisition. The purchase price has been allocated to the assets acquired,
principally intangible assets, and the liabilities assumed based on their
estimated fair values at the dates of acquisition. The excess of purchase price
over the estimated fair value of the net assets acquired has been recorded as
goodwill. The financial statements reflect the preliminary allocation of certain
purchase prices as the appraisals for certain acquisitions have not yet been
finalized. The Company does not expect the final appraisals will have a material
effect on the financial position, results of operations or liquidity of the
Company.
1997 STATION ACQUISITIONS AND DISPOSITIONS:
EZ Merger: On April 4, 1997, the Company consummated the merger of EZ into
the Company (the "EZ Merger"). Pursuant to the EZ Merger, the Company acquired
eighteen FM and six AM stations in eight markets: Seattle, St. Louis,
Pittsburgh, Sacramento, Charlotte, Kansas City, New Orleans and Philadelphia,
assumed approximately $222.4 million of long-term debt (of which approximately
$72.7 was paid at closing), paid approximately $108.9 million in cash and issued
approximately 8,344,000 shares of Class A Common Stock to the EZ stockholders
valued at approximately $310.8 million (excluding approximately 362,000 shares
of common stock reserved for options held by former employees of EZ valued at
approximately $12.5 million). The aggregate purchase price was approximately
$830.0 million, including goodwill, approximately $7.0 million in transaction
costs, and assumed liabilities (including deferred income taxes) of
approximately $428.0 million. The EZ Merger has been accounted for using an
effective closing date of April 1, 1997, as the difference between the actual
and effective closing date on the results of operations, liquidity and financial
position was not material.
As part of the EZ Merger, the Company assumed EZ's obligations with respect
to $150.0 million principal amount of the EZ 9.75% Senior Subordinated Notes
(the 9.75% Notes) and repaid all borrowings under the EZ credit facility with
borrowings from the 1997 Credit Agreement. (See Note 3).
Austin: In March 1997, the Company acquired KAMX-FM, KKMJ-FM, and KJCE-AM
for approximately $28.7 million.
Baltimore: In February 1997, the Company acquired WWMX-FM and WOCT-FM for
approximately $90.0 million.
Boston/Worcester: In January 1997, the Company acquired WAAF-FM and WWTM-AM
for approximately $24.8 million. The Company began programming and marketing the
station pursuant to an LMA in August 1996.
F-46
<PAGE> 135
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
In July 1997, the Company acquired WNFT-AM for approximately $4.5 million.
The Company began programming and marketing the station pursuant to an LMA
agreement in June 1997.
Charlotte and Pittsburgh: In May 1997, the Company, as successor to EZ,
consummated an asset exchange agreement pursuant to which the Company exchanged
WIOQ-FM and WUSL-FM in Philadelphia for WRFX-FM, WPEG-FM, WBAV-FM, WGIV-AM
(formerly WBAV-AM) and WFNZ-AM serving Charlotte, and also consummated an asset
purchase agreement to acquire WNKS-FM serving Charlotte for approximately $10.0
million.
In February 1997, EZ and the seller entered into a consent decree with the
U.S. Justice Department (the "Charlotte Consent Decree"). Pursuant to the
Charlotte Consent Decree, and in compliance with the FCC's multiple ownership
rules, EZ agreed to dispose of WRFX-FM, which was transferred to an independent
and insulated trustee upon consummation of the exchange. In August 1997, the
Company consummated an asset exchange agreement pursuant to which it exchanged
WRFX-FM for WDSY-FM, serving Pittsburgh, and $20.0 million.
Cincinnati: In January 1997, the Company merged with an unaffiliated
corporation pursuant to which it became a party to an agreement to acquire
WGRR-FM, for approximately $30.5 million. Pursuant to such merger, the Company
issued 18,341 shares of Class A Common Stock valued at approximately $0.5
million. In May 1997, the Company consummated the acquisition of WGRR-FM.
Cincinnati and Rochester: In February 1997, the Company acquired WVOR-FM,
WPXY-FM, WHAM-AM and WHTK-AM for approximately $31.5 million including working
capital. In April 1997, the Company exchanged WVOR-FM, WHAM-AM and WHTK-AM
serving Rochester, together with $16.0 million, for WKRQ-FM serving Cincinnati.
Dayton: In February 1997, the Company acquired WXEG-FM for approximately
$3.6 million and acquired WLQT-FM and WBBT-FM (formerly WDOL-FM) for
approximately $12.0 million.
Detroit, Philadelphia, Sacramento: In February 1997, the Company exchanged
WFLN-FM in Philadelphia for KSFM-FM and KMJI-AM serving Sacramento and sold
WQRS-FM in Detroit for approximately $20.0 million. The net assets were
classified as net assets under exchange agreement as of December 31, 1996. See
Sacramento below.
Fresno: In April 1997, the Company acquired KOOR-AM (formerly KOQO-AM) and
KOQO-FM for approximately $6.0 million.
Hartford: In November 1997, the Company acquired for a nominal amount the
New England Weather Service, based in Hartford, Connecticut pursuant to the
exercise of an option which the Company acquired for $1.0 million, in connection
with its acquisition of WTIC-AM and WTIC-FM in May 1996.
Lebanon: In October 1997, the Company acquired WYLX-FM (formerly WMMA-FM)
serving the Lebanon, Ohio market for approximately $3.0 million.
Omaha: In May 1997, the Company sold the assets of KGOR-FM, KFAB-AM and
Business Music Service Inc. for approximately $38.0 million.
Palm Springs: In December 1997, the Company acquired KEZN-FM for
approximately $5.1 million. The Company began programming and marketing the
station pursuant to an LMA agreement in October 1997.
F-47
<PAGE> 136
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
Portsmouth: In September 1997, the Company acquired WQSO-FM (formerly
WSRI-FM), WZNN-AM, WMYF-AM and WEZR-FM for approximately $6.0 million. The
Company began programming and marketing the stations pursuant to an LMA
agreement in July 1997.
Rochester: In April 1997, the Company acquired WZNE-FM (formerly WAQB-FM),
a newly authorized Class A FM station for approximately $3.5 million.
In July 1997, the Company sold the assets of WCMF-AM for approximately $0.7
million.
Sacramento: In March 1997, the Company acquired KXOA-FM, KQPT-AM (formerly
KXOA-AM) and KZZO-FM (formerly KQPT-FM) for approximately $50.0 million. Prior
to the consummation of the acquisition, in October 1996, the Company entered
into an agreement to sell KXOA-FM for approximately $27.5 million. After the
expiration of the HSR Act waiting period, the other party to the agreement began
programming and marketing KXOA-FM pursuant to an LMA in January 1997. As a
condition to consummation of the EZ merger, KXOA-FM was transferred to an
independent and insulated trustee (under a trust for the benefit of the Company)
and was held by the trustee subject to sale pursuant to the foregoing agreement.
In June 1997, the trustee sold KXOA-FM to the ultimate purchaser.
In April 1997, the Company sold KMJI-AM for approximately $1.5 million.
Sacramento and West Palm Beach: In March 1997, the Company consummated an
agreement to exchange KSTE-AM in Sacramento and $33.0 million in cash for
WEAT-FM, WEAT-AM and WOLL-FM serving West Palm Beach.
San Jose: In February 1997, the Company acquired KBRG-FM (formerly KBAY-FM)
and KKSJ-AM for approximately $31.0 million.
In September 1997, the Company sold the assets of KKSJ-AM for approximately
$3.2 million. The acquirer began programming and marketing the stations pursuant
to an LMA agreement in June 1997.
Seattle and New Orleans: In April 1997, the Company exchanged WEZB-FM,
WRNO-FM and WBYU-AM, serving New Orleans, and $7.5 million for KBKS-FM (formerly
KCIN-FM) and KRPM-AM serving Seattle.
In June 1997, the Company sold the assets of KMPS-AM for approximately $1.8
million.
St. Louis: In July 1997, the Company sold the assets of KTRS-AM (formerly
KSD-AM) for approximately $10.0 million.
West Palm Beach: In October 1997, the Company sold the assets of WKGR-FM,
WOLL-FM, and WBZT-AM for approximately $29.0 million in cash and a tower site
which was transferred to the Tower Subsidiary.
1996 STATION ACQUISITIONS AND DISPOSITIONS:
Baltimore: In October 1996, the Company acquired the assets of WBGR-AM for
approximately $2.8 million.
Buffalo: In August 1996, the Company acquired the assets of WSJZ-FM for
approximately $12.5 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in April 1996.
F-48
<PAGE> 137
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
Fresno: In December 1996, the Company acquired the assets of KNAX-FM and
KVSR-FM (formerly KRBT-FM) for approximately $11.0 million. The Company had been
programming and marketing the stations pursuant to an LMA beginning in August
1996.
Fresno, Omaha, Portland and Sacramento: In July 1996, the Company
consummated the merger of Henry Broadcasting Company ("HBC"). Pursuant thereto,
the Company acquired KUFO-FM and KUPL-AM (formerly KBBT-AM) in Portland, Oregon,
KYMX-FM and KCTC-AM in Sacramento, California KGOR-FM and KFAB-AM in Omaha, and
KSKS-FM, KKDJ-FM, and KMJ-AM in Fresno, California, for an aggregate purchase
price of approximately $110.4 million. As part of a related transaction with the
principal stockholder of HBC, the Company acquired certain real estate used in
the business of HBC for approximately $2.0 million in cash and obtained a
five-year option to acquire certain other real estate for a purchase price of
approximately $1.0 million.
Hartford: In May 1996, the Company acquired WTIC-AM and WTIC-FM for
approximately $39.0 million, including approximately $1.1 million of working
capital. The Company also paid $1.0 million for a two-year option to purchase
for $1.00 the New England Weather Service which was purchased in 1997.
In December 1996, the Company sold WNEZ-AM serving New Britain, Connecticut
for approximately $710,000, and a loss of approximately $140,000 was recorded
upon disposition.
Las Vegas: In October 1996, the Company acquired KMZQ-FM and KXTE-FM
(formerly KFBI-FM) for approximately $28.0 million. The Company had been
programming and marketing the stations pursuant to an LMA beginning in May 1996.
As part of such transaction, the Company paid an additional $0.2 million to
acquire the seller's right (and obligation) to purchase KXNT-AM (formerly
KVEG-AM) for approximately $1.9 million which purchase, as noted below, was
consummated in September 1996.
In September 1996, the Company acquired the assets of KXNT-AM for
approximately $1.9 million. The Company had been programming and marketing the
station pursuant to an LMA beginning in May 1996.
In July 1996, the Company acquired the assets of KMXB-FM (formerly KJMZ-FM)
for approximately $8.0 million. The Company had been programming and marketing
the station pursuant to an LMA beginning in May 1996.
In July 1996, the Company acquired the assets of KLUC-FM and KXNO-AM for
approximately $11.0 million.
Philadelphia and Detroit: In May 1996, the Company consummated the
transactions contemplated by a merger agreement with Marlin Broadcasting, Inc.
("Marlin"). The Company acquired WFLN-FM in Philadelphia, Pennsylvania, WQRS-FM
in Detroit, Michigan and WTMI-FM in Miami, Florida for an aggregate purchase
price of approximately $58.5 million, together with the assumption of
approximately $9.0 million of long-term debt which was paid in full at closing.
The principal stockholder of Marlin immediately thereafter acquired WTMI-FM from
the Company for approximately $18.0 million in cash. Proceeds from the sale of
WTMI-FM were held in an escrow account pursuant to a like-kind exchange
agreement and were utilized to partially fund the Portland and San Jose
transaction discussed below. The Company retained certain Philadelphia real
estate and tower assets valued at approximately $1.5 million. In June 1996, the
Company entered into an agreement with an unaffiliated party pursuant to which
it exchanged the assets of the Philadelphia station for two stations in
Sacramento and sold the Detroit station for approximately $20.0 million in cash.
This party began programming the Philadelphia and Detroit stations
F-49
<PAGE> 138
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
9. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
under an LMA beginning in June 1996. The net assets and liabilities of the
Detroit and Philadelphia stations included in this exchange agreement were
carried on the consolidated balance sheet as of December 31, 1996 as net assets
held under exchange agreement.
Portland: In July 1996, the Company acquired the assets of KBBT-FM
(formerly KDBX-FM) for approximately $14.0 million.
Portland and San Jose: In August 1996, the Company acquired the assets of
KUPL-FM and KKJZ-FM in Portland, Oregon and KSJO-FM and KBAY-FM (formerly
KUFX-FM) in San Jose, California for approximately $103.0 million.
Sacramento: In September 1996, the Company acquired the assets of KRRE-FM
(formerly KSSJ-FM) for approximately $14.0 million. The Company had been
programming and marketing the station pursuant to an LMA beginning in July 1996.
In July 1996, the Company acquired the assets of KSTE-AM serving Rancho
Cordova, California for approximately $7.25 million. The Company began
programming and marketing the station pursuant to an LMA beginning in April
1996.
UNAUDITED PRO FORMA INFORMATION:
The following unaudited pro forma summary presents the consolidated results
of operations as if the acquisitions that occurred in 1996 and 1997,
respectively, had occurred as of January 1, 1996 and 1997 after giving effect to
certain adjustments, including depreciation and amortization of assets and
interest expense on any debt incurred to fund the acquisitions. These unaudited
pro forma results have been prepared for comparative purposes only and do not
purport to be indicative of what would have occurred had the acquisitions been
made as of January 1, 1996 and 1997 or of results which may occur in the future.
<TABLE>
<CAPTION>
UNAUDITED
YEARS ENDED DECEMBER 31,
------------------------
1996 1997
---------- ----------
(IN THOUSANDS, EXCEPT
PER SHARE DATA)
<S> <C> <C>
Net revenues................................................ $313,115 $389,184
Loss from continuing operations............................. (18,388) (11,475)
Loss from continuing operations applicable to common
stockholders.............................................. (23,361) (44,278)
Basic loss per common share -- continuing operations........ $ (1.19) $ (1.62)
</TABLE>
10. PENDING TRANSACTIONS
Boston and Tampa: In August 1998, the Company entered into a sales
agreement to sell WEEI-AM, WRKO-AM, WAAF-FM, WWTM-AM and WEGQ-FM for
approximately $140.0 million. Concurrently, the Company entered into an
agreement to purchase WYUU-FM and WLLD-FM in Tampa for approximately $75.0
million. Subject to receipt of regulatory approval, these transactions are
expected to be consummated in late 1998.
F-50
<PAGE> 139
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Boston: In October, 1998 the Company entered into an agreement to sell
WNFT-AM for approximately $5.0 million. Subject to the receipt of FCC approval,
the transaction is expected to be consummated in the first quarter of 1999.
11. FAIR VALUE OF FINANCIAL INSTRUMENTS
The estimated fair value of financial instruments has been determined by
the Company using available market information and appropriate valuation
methodologies. However, considerable judgment is required in interpreting data
to develop the estimates of fair value. Accordingly, the estimates presented
herein are not necessarily indicative of the amounts that the Company could
realize in a current market exchange. The fair value estimates presented herein
are based on pertinent information available to management as of December 31,
1996 and 1997. Although management is not aware of any factors that would
significantly affect the estimated fair value amounts, such amounts have not
been comprehensively revalued for purposes of these financial statements since
that date, and current estimates of fair value may differ significantly from the
amounts presented herein. (See Note 1.)
The following methods and assumptions were used to estimate the fair value
of each class of financial instruments:
Cash, cash equivalents, accounts receivable, accounts payable, accrued
expenses and other short-term obligations -- These carrying amounts approximate
fair value because of the short-term nature of these financial instruments.
Notes receivable -- The fair value of notes receivable is estimated based
on discounted cash flows using current interest rates at which similar loans to
borrowers with similar credit ratings would be made or if the loan is collateral
dependent, management's estimate of the fair value of the collateral. The
carrying amount of these notes aggregated $69,920,000 and $26,112,000 at
December 31, 1996 and 1997, respectively, and approximated their fair value.
Deposits on station purchases -- The fair value is not practicable to
estimate.
Long-term debt -- The fair values of long-term debt are estimated based on
current market rates and instruments with the same risk and maturities. The fair
value of long-term debt approximated the carrying value at December 31, 1996 and
1997.
Interest rate protection agreements -- The fair values of these agreements
are obtained from dealer quotes. These values represent the estimated amount the
Company would receive or pay to terminate the agreements taking into
consideration the current interest rates. The Company would expect to pay the
fair value of these agreements of approximately $1.5 million and $2.6 million as
of December 31, 1996 and 1997, respectively. (See Note 3.)
F-51
<PAGE> 140
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
12. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
QUARTER QUARTER QUARTER QUARTER
------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
1997
Net revenues..................................... $52,952 $ 98,190 $101,759 $104,119
Operating income................................. 2,176 18,391 15,751 19,767
Income (loss) from continuing operations......... (1,118) 2,763 284 (4,467)
Net income (loss) before dividends............... (2,815) 2,421 (324) (7,715)
Basic and diluted loss per share before
extraordinary losses(1)(2)..................... $ (.35) $ (.20) $ (.30) $ (.52)
1996
Net revenues..................................... $23,041 $ 37,231 $ 51,754 $ 63,166
Operating income................................. 1,882 6,862 7,403 11,170
Income (loss) from continuing operations......... (406) 2,274 1,048 2,699
Net income (loss) before dividends............... (456) 2,210 934 2,447
Basic income (loss) per share(1)(2).............. $ (.03) $ .11 $ (.07) $ .00
Diluted income (loss) per share(1)(2)............ $ (.03) $ .10 $ (.07) $ .00
</TABLE>
- ---------------
(1) The sum of the quarter's earnings per share does not equal the year-to-date
earnings per share due to changes in average share calculations. (See Note
1).
(2) Income (loss) per share has been retroactively restated to conform to FAS
No. 128. (See Note 1.)
13. SUBSIDIARY GUARANTEES
The Company's payment obligations under the 9.00% Senior Subordinated Notes
("9.00% Notes") and the 9.75% Notes are fully and unconditionally guaranteed on
a joint and several basis (collectively, the "Subsidiary Guarantees"), on a
senior basis (in the case of the 9.75% Notes) and a senior subordinated basis
(in the case of the 9.00% Notes) by all of its present and any future Restricted
Subsidiaries (collectively, "Restricted Guarantors"). The Restricted
Subsidiaries have also unconditionally guaranteed, and any future Restricted
Subsidiaries will be required to guarantee, on a joint and several basis
(collectively, the "Senior Subsidiary Guarantees"), all obligations of the
Company under the 1997 Credit Agreement. The Tower Subsidiary has not guaranteed
obligations under the Credit Agreements or either series of the Senior
Subordinated Notes.
The 9.00% Notes and the Subsidiary Guarantees are subordinated to all
Senior Debt (as defined) of the Company including indebtedness under the 1997
Credit Agreement and the Senior Subsidiary Guarantees and 9.75% Notes related
guarantees. The indenture governing each series of the Senior Subordinated Notes
contains limitations on the amount of indebtedness (including Senior Debt) which
the Company may incur.
With the intent that the Subsidiary Guarantees not constitute fraudulent
transfers or conveyances under applicable state or federal law, the obligation
of each guarantor under its Subsidiary Guarantee is also limited to the maximum
amount as will, after giving effect to any rights to contribution of such
guarantor pursuant to any agreement providing for an equitable contribution
among such guarantor and other affiliates of the Company of payments made by
guarantees by such parties, result in the obligations of such guarantor in
respect of such maximum amount not constituting a fraudulent conveyance.
F-52
<PAGE> 141
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
The following condensed consolidating financial data illustrates the
composition of the combined guarantors. The Company believes that separate
complete financial statements of the respective guarantors would not provide
additional material information which would be useful in assessing the financial
composition of the guarantors. No single guarantor has any significant legal
restrictions on the ability of investors or creditors to obtain access to its
assets in the event of default on the Subsidiary Guarantee, other than in the
case of the 9.00% Notes or its subordination to Senior Debt described above.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the unaudited supplemental consolidating presentation.
Earnings (losses) of subsidiaries are therefore reflected in the parent's
investment accounts and earnings. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions.
For purposes of FAS No. 14, "Financial Reporting for Segments of a Business
Enterprise," the Company's radio segment consists of the Parent, its Divisions
and the Guarantor Subsidiaries. The Company's tower segment consists of the
Non-Guarantor Subsidiary.
F-53
<PAGE> 142
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents............. $ 10,470 $ 1,578 $ 12,048
Accounts receivable, net... 52,130 35,099 87,229
Prepaid expenses and other
assets.................. 5,615 998 6,613
Deferred income taxes...... 4,006 2,359 6,365
---------- ---------- -------- ----------- ----------
Total current
assets........... 72,221 40,034 112,255
---------- ---------- -------- ----------- ----------
PROPERTY AND EQUIPMENT,
NET........................ 85,525 46,517 132,042
---------- ---------- -------- ----------- ----------
OTHER ASSETS:
Restricted cash............ 22,141 22,141
Investment in and advances
to subsidiaries......... 1,164,380 $(1,164,380)
Investment notes
receivable.............. 25,497 615 26,112
Goodwill -- net............ 333,002 20,895 353,897
FCC licenses -- net........ 1 1,113,915 1,113,916
Other intangible
assets -- net........... 28,301 2,159 30,460
Deposits and other
long-term assets........ 10,644 10,644
Net assets of discontinued
operations.............. $153,207 153,207
---------- ---------- -------- ----------- ----------
Total other
assets........... 1,583,966 1,137,584 153,207 (1,164,380) 1,710,377
---------- ---------- -------- ----------- ----------
TOTAL........................ $1,741,712 $1,224,135 $153,207 $(1,164,380) $1,954,674
========== ========== ======== =========== ==========
</TABLE>
F-54
<PAGE> 143
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt....... $ 340 $ 340
Accounts payable and
accrued expenses..... 11,729 $ 25,403 37,132
------------- ------------ -------- ------------ ----------
Total current
liabilities... 12,069 25,403 37,472
------------- ------------ -------- ------------ ----------
NONCURRENT LIABILITIES:
Deferred income taxes... 10,138 186,541 196,679
Other long-term
liabilities.......... 8,875 46 8,921
Long-term debt.......... 833,638 833,638
------------- ------------ -------- ------------ ----------
Total noncurrent
liabilities... 852,651 186,587 1,039,238
------------- ------------ -------- ------------ ----------
REDEEMABLE PREFERRED
STOCK................... 215,550 215,550
------------- ------------ -------- ------------ ----------
STOCKHOLDERS' EQUITY:
Preferred stock......... 1 1
Common stock............ 295 $ 356 $ (356) 295
Additional paid-in
capital.............. 671,211 1,002,769 155,711 (1,158,480) 671,211
Unearned compensation... (202) (202)
Retained earnings
(accumulated
deficit)............. (9,405) 9,376 (2,860) (5,544) (8,433)
Treasury stock.......... (458) (458)
------------- ------------ -------- ------------ ----------
Total
stockholders'
equity........ 661,442 1,012,145 153,207 (1,164,380) 662,414
------------- ------------ -------- ------------ ----------
TOTAL..................... $ 1,741,712 $ 1,224,135 $153,207 $ (1,164,380) $1,954,674
============= ============ ======== ============ ==========
</TABLE>
F-55
<PAGE> 144
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARENT AND
ITS GUARANTOR NON-GUARANTOR CONSOLIDATED
DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
---------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenues..................... $231,438 $125,582 $357,020
License fees charged to Parent... (17,320) 17,320
-------- -------- ------- ------- --------
TOTAL NET REVENUES..... 214,118 142,902 357,020
OPERATING EXPENSES:
Operating expenses excluding
depreciation and
amortization, net local
marketing agreement and
corporate general and
administrative expenses..... 156,524 75,473 231,997
Net local marketing agreement
expenses.................... 1,590 724 2,314
Depreciation and
amortization................ 17,924 40,493 58,417
Corporate general and
administrative.............. 8,207 8,207
-------- -------- ------- ------- --------
OPERATING INCOME................. 29,873 26,212 56,085
OTHER INCOME (EXPENSE):
Interest expense............... (56,710) (56,710)
Interest income and other,
net......................... 2,114 2,114
Losses on sale of assets and
other, net.................. (4,544) 1,642 (2,902)
Equity in income of
subsidiaries................ 7,796 $(7,796)
-------- -------- ------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES.......................... (21,471) 27,854 (7,796) (1,413)
INCOME TAX (PROVISION) BENEFIT... 17,961 (19,086) (1,125)
-------- -------- ------- ------- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS..................... (3,510) 8,768 (7,796) (2,538)
LOSS FROM DISCONTINUED
OPERATIONS..................... (4,256) $(2,270) 2,270 (4,256)
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT -- NET
OF TAX BENEFIT................. (1,639) (1,639)
-------- -------- ------- ------- --------
NET INCOME (LOSS)................ $ (9,405) $ 8,768 $(2,270) $(5,526) $ (8,433)
======== ======== ======= ======= ========
</TABLE>
F-56
<PAGE> 145
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY TOTALS
------------- ------------ ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY (USED FOR) OPERATING
ACTIVITIES:
Continuing operations......................... $(11,678) $46,930 $ 35,252
Discontinued operations....................... (1,579) $ 9,635 8,056
-------- ------- --------- ---------
Cash flows provided by (used for) operating
activities.................................... (13,257) 46,930 9,635 43,308
-------- ------- --------- ---------
INVESTING ACTIVITIES:
Payments for purchase of property, equipment
and intangible assets....................... (22,664) (22,664)
Proceeds from asset and radio station sales... 86,551 86,551
Repayment of investment note receivables...... 1,243 1,243
Payments for purchase of radio stations....... (500,824) (500,824)
Payments for investment notes receivable and
related intangible assets................... (410) (410)
Deposits and other long-term assets........... 7,537 7,537
-------- ------- --------- ---------
Continuing operations......................... (428,567) (428,567)
Discontinued operations....................... 0 (216,506) (216,506)
-------- ------- --------- ---------
Cash flows used for investing activities...... (428,567) (216,506) (645,073)
-------- ------- --------- ---------
FINANCING ACTIVITIES:
Borrowings under the Credit Agreements........ 639,500 639,500
Repayments under the Credit Agreements........ (286,000) (286,000)
Borrowing under other obligations............. 750 750
Repayments under other obligations............ (868) (868)
Additions to deferred financing costs......... (5,642) (5,642)
Dividends paid................................ (15,613) (15,613)
Net proceeds from equity offerings and
options..................................... 193,165 193,165
Investment in and advances to subsidiaries.... 45,352 (45,352)
-------- ------- --------- ---------
Continuing operations......................... 570,644 (45,352) 525,292
Discontinued operations....................... (126,424) 209,093 82,669
-------- ------- --------- ---------
Cash flows from (used for) financing
activities.................................. 444,220 (45,352) 209,093 607,961
-------- ------- --------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS......... 2,396 1,578 2,222 6,196
CHANGE IN CASH AND CASH EQUIVALENTS INCLUDED
IN DISCONTINUED OPERATIONS.................. (2,222) (2,222)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR........................................ 8,074 8,074
-------- ------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR........ $ 10,470 $ 1,578 $ 0 $ 12,048
======== ======= ========= =========
</TABLE>
F-57
<PAGE> 146
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents............. $ 8,074 $ 8,074
Accounts receivable, net... 49,565 $ 2,095 51,660
Prepaid expenses and other
assets.................. 3,509 14 3,523
Deferred income taxes...... 3,202 168 3,370
-------- -------- ------- --------- --------
Total current
assets........... 64,350 2,277 66,627
-------- -------- ------- --------- --------
PROPERTY AND EQUIPMENT,
NET........................ 67,267 3,271 70,538
-------- -------- ------- --------- --------
OTHER ASSETS:
Investment in and advances
to subsidiaries......... 314,983 $(314,983)
Investment notes
receivable.............. 69,920 69,920
Goodwill -- net............ 201,208 20,457 221,665
FCC licenses -- net........ 233,558 233,558
Other intangible
assets -- net........... 23,419 327 23,746
Deposits and other
long-term assets........ 25,589 48 25,637
Net assets held under
exchange agreement...... 47,495 47,495
Net assets of discontinued
operations.............. $29,727 29,727
-------- -------- ------- --------- --------
Total other
assets........... 635,119 301,885 29,727 (314,983) 651,748
-------- -------- ------- --------- --------
TOTAL........................ $766,736 $307,433 $29,727 $(314,983) $788,913
======== ======== ======= ========= ========
</TABLE>
F-58
<PAGE> 147
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-
term debt............... $ 444 $ $ 444
Accounts payable and
accrued expenses........ 31,087 $ 656 31,743
-------- -------- ------- --------- --------
Total current
liabilities...... 31,531 656 32,187
-------- -------- ------- --------- --------
NONCURRENT LIABILITIES:
Deferred income taxes...... 11,405 21,521 32,926
Other long-term
liabilities............. 1,944 1,944
Long-term debt............. 325,693 325,693
-------- -------- ------- --------- --------
Total noncurrent
liabilities...... 339,042 21,521 360,563
-------- -------- ------- --------- --------
STOCKHOLDERS' EQUITY:
Preferred stock............ 1 1
Common stock............... 211 500 $ (500) 211
Additional paid-in
capital................. 390,731 284,649 29,817 (314,466) 390,731
Unearned compensation...... (297) (297)
Retained earnings.......... 5,955 607 (590) (17) 5,955
Treasury stock............. (438) (438)
-------- -------- ------- --------- --------
Total stockholders'
equity........... 396,163 285,256 29,727 (314,983) 396,163
-------- -------- ------- --------- --------
TOTAL........................ $766,736 $307,433 $29,727 $(314,983) $788,913
======== ======== ======= ========= ========
</TABLE>
F-59
<PAGE> 148
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenues................. $170,940 $4,252 $175,192
License fees charged to
Parent..................... (7,655) 7,655
-------- ------ ------ ----- --------
TOTAL NET REVENUES........... 163,285 11,907 175,192
OPERATING EXPENSES:
Operating expenses
excluding depreciation
and amortization, net
local marketing
agreement and corporate
general and
administrative
expenses................ 115,219 2,662 117,881
Net local marketing
agreement expenses...... 10,461 (2,333) 8,128
Depreciation and
amortization............ 9,873 6,947 16,820
Corporate general and
administrative.......... 5,046 5,046
-------- ------ ------ ----- --------
OPERATING INCOME............. 22,686 4,631 27,317
OTHER INCOME (EXPENSE):
Interest expense........... (22,287) (22,287)
Interest income and other,
net..................... 5,489 5,489
Losses on sale of assets
and other, net.......... (123) (123)
Equity in income of
subsidiaries............ 607 (607)
-------- ------ ------ ----- --------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES...................... 6,372 4,631 (607) 10,396
INCOME TAX PROVISION......... (757) (4,024) (4,781)
-------- ------ ------ ----- --------
INCOME FROM CONTINUING
OPERATIONS................. 5,615 607 (607) 5,615
LOSS FROM DISCONTINUED
OPERATIONS................. (480) (480) 480 (480)
-------- ------ ------ ----- --------
NET INCOME (LOSS)............ $ 5,135 $ 607 $ (480) $(127) $ 5,135
======== ====== ====== ===== ========
</TABLE>
F-60
<PAGE> 149
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY TOTALS
------------- ------------ ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Continuing operations.................. $ 8,323 $5,292 $ 13,615
Discontinued operations................ (185) -- $ 2,229 2,044
--------- ------ -------- ---------
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES............................. 8,138 5,292 2,229 15,659
--------- ------ -------- ---------
INVESTING ACTIVITIES:
Payments for purchase of property,
equipment and intangible assets..... (15,782) (15,782)
Proceeds from asset and radio station
sales............................... 1,087 1,087
Repayment of investment notes
receivable.......................... 1,350 1,350
Payments for purchase of radio
stations............................ (312,591) (312,591)
Payments for investment notes
receivable and related intangible
assets.............................. (56,522) (56,522)
Deposits and other long-term assets.... (20,303) (20,303)
--------- ------ -------- ---------
Continuing operations.................. (402,761) (402,761)
Discontinued operations................ (19,124) (19,124)
--------- ------ -------- ---------
Cash flows used for investing
activities................... (402,761) (19,124) (421,885)
--------- ------ -------- ---------
FINANCING ACTIVITIES:
Borrowings under the Credit
Agreements.......................... 151,500 151,500
Repayments under the Credit
Agreements.......................... (151,500) (151,500)
Repayments under other obligations..... (403) (403)
Net proceeds from debt offering -- net
of discount......................... 173,581 173,581
Additions to deferred financing
costs............................... (5,344) (5,344)
Dividends paid......................... (4,973) (4,973)
Net proceeds from equity offerings and
options............................. 247,474 247,474
Investment in and advances to
subsidiaries........................ 5,292 (5,292)
--------- ------ -------- ---------
Continuing operations.................. 415,627 (5,292) 410,335
Discontinued operations................ (16,807) 19,256 2,449
--------- ------ -------- ---------
Cash flows from (used for)
financing activities......... 398,820 (5,292) 19,256 412,784
--------- ------ -------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS.... 4,197 2,361 6,558
CHANGE IN CASH AND CASH EQUIVALENTS
INCLUDED IN DISCONTINUED OPERATIONS.... (2,361) (2,361)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR................................... 3,877 0 3,877
--------- ------ -------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR... $ 8,074 $ 0 $ 0 $ 8,074
========= ====== ======== =========
</TABLE>
F-61
<PAGE> 150
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
NON-
PARENT AND GUARANTOR GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenues..................... $97,609 $97,609
License fees charged to Parent... (484) $484
------- ---- ----- ---- -------
NET REVENUES..................... 97,125 484 97,609
OPERATING EXPENSES:
Operating expenses excluding
depreciation and
amortization, net local
marketing agreement and
corporate general and
administrative expenses..... 66,148 10 66,158
Net local marketing agreement
expenses.................... 600 600
Depreciation and
amortization................ 11,833 474 12,307
Corporate general and
administrative.............. 3,908 3,908
------- ---- ----- ---- -------
OPERATING INCOME................. 14,636 0 14,636
OTHER INCOME (EXPENSE):
Interest expense............... (12,497) (12,497)
Interest income and other,
net......................... 2,435 2,435
Gains on sale of assets and
other, net.................. 11,544 11,544
------- ---- ----- ---- -------
INCOME FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES............ 16,118 16,118
INCOME TAX PROVISION............. (6,903) (6,903)
------- ---- ----- ---- -------
INCOME FROM CONTINUING
OPERATIONS..................... 9,215 9,215
LOSS FROM DISCONTINUED
OPERATIONS..................... (110) $(110) $110 (110)
EXTRAORDINARY LOSS ON
EXTINGUISHMENT OF DEBT......... (817) (817)
------- ---- ----- ---- -------
NET INCOME (LOSS)................ $ 8,288 $ 0 $(110) $110 $ 8,288
======= ==== ===== ==== =======
</TABLE>
F-62
<PAGE> 151
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
13. SUBSIDIARY GUARANTEES -- (CONTINUED)
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY TOTALS
------------- ------------ ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH FLOWS PROVIDED BY OPERATING
ACTIVITIES:
Continuing operations.................. $ 9,577 $ 9,577
Discontinued operations................ $ 147 147
--------- ---- ------- ---------
Cash flows provided by
operating activities......... 9,577 147 9,724
--------- ---- ------- ---------
INVESTING ACTIVITIES:
Payments for purchase of property,
equipment and intangible assets..... (5,926) (5,926)
Proceeds from asset and radio station
sales............................... 15,302 15,302
Payments for purchase of radio
stations............................ (31,013) (31,013)
Payment for investment notes receivable
and related intangible assets....... (48,597) (48,597)
Repayments of investment notes
receivable.......................... 3,000 3,000
Deposits and other long-term assets.... (6,649) (6,649)
--------- ---- ------- ---------
Continuing operations.................. (73,883) (73,883)
Discontinued operations................ (3,218) (4,082) (7,300)
--------- ---- ------- ---------
Cash flows used for investing
activities................... (77,101) (4,082) (81,183)
--------- ---- ------- ---------
FINANCING ACTIVITIES:
Borrowings under the Credit
Agreements.......................... 225,000 225,000
Repayments under the Credit
Agreements.......................... (202,500) (202,500)
Repayments under other obligations..... (1,288) (1,288)
Additions to deferred financing
costs............................... (3,896) (3,896)
Redemption of Series C Common Stock.... (14,580) (14,580)
Purchase of treasury stock............. (438) (438)
Net proceeds from equity offering and
exercise of options................. 69,882 69,882
--------- ---- ------- ---------
Continuing operations.................. 72,180 72,180
Discontinued operations................ (3,947) 3,947
--------- ---- ------- ---------
Cash flows from financing
activities................... 68,233 3,947 72,180
--------- ---- ------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS.... 709 12 721
CHANGE IN CASH AND CASH EQUIVALENTS
INCLUDED IN DISCONTINUED OPERATIONS.... (12) (12)
CASH AND CASH EQUIVALENTS, BEGINNING OF
YEAR................................... 3,168 3,168
--------- ---- ------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR... $ 3,877 $ 0 $ 0 $ 3,877
========= ==== ======= =========
</TABLE>
F-63
<PAGE> 152
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SUBSEQUENT EVENTS
Radio Transactions
Dayton and Kansas City: In January 1998, the Company consummated an
agreement to exchange WXEG-FM, WBTT-FM, WLQT-FM, WMMX-FM, WTUE-FM and WONE-AM
serving Dayton for WDAF-AM, KOZN-FM (formerly KYYS-FM), KMXV-FM and KUDL-FM
serving Kansas City. The Company began programming and marketing KYYS-FM and
KMXV-FM pursuant to an LMA agreement in September 1997.
Kansas City, Sacramento and St. Louis: In January 1998, the Company
acquired KLOU-FM in St. Louis in exchange for KUDL-FM and WDAF-AM in Kansas City
and approximately $7.0 million. The Company also consummated a related agreement
with the same party, pursuant to which the Company sold KCTC-AM serving
Sacramento for approximately $4.0 million.
Riverside/San Bernardino and Sun City: In March 1998, the Company acquired
KFRG-FM, serving the Riverside/San Bernardino market, and KXFG-FM, serving Sun
City, California, for approximately $60.0 million. The Company began programming
and marketing the stations pursuant to an LMA agreement in August 1997.
Portsmouth: In August 1998, the Company sold the assets of WQSO-FM and
WZNN-AM serving Rochester, New Hampshire and WERZ-FM and WMYF-AM, serving
Exeter, New Hampshire for approximately $6.0 million.
Portland, Sacramento, San Francisco and San Jose: In May 1998, the Company
consummated an asset exchange agreement pursuant to which it will acquire
KINK-FM, serving Portland, Oregon, KUFX-FM (formerly KBRG-FM), serving
Fremont/San Francisco, California, $2.0 million in a promissory note due
September 30, 1998, or at the time of certain earlier events, and 150,000 shares
of common stock of Latin Communications, Inc., in exchange for KBRG-FM (formerly
KBAY-FM), serving San Jose, and KRRE-FM (formerly KSSJ-FM), serving Sacramento.
The Company began programming and marketing KINK-FM and KRRE-FM pursuant to an
LMA agreement in January 1998. Concurrently, the purchase of KBRG-FM began
programming and marketing KBRG-FM pursuant to the LMA.
Sacramento: In September 1998, the Company consummated an asset exchange
agreement pursuant to which the Company's KRAK-FM exchanged FCC frequencies with
another radio station also located in the Sacramento market for approximately
$4.4 million.
San Jose and Monterey: In May 1998, the Company consummated a merger
agreement pursuant to which the Company acquired the assets of KEZR-FM serving
San Jose, California and KLUE-FM serving Monterey, California in exchange for
approximately 723,000 shares of Class A Common Stock valued at approximately
$20.0 million and $4.0 million in cash.
San Jose: In August 1998, the Company consummated the sale of KSJO-FM for
approximately $30.0 million.
St. Louis: In July 1998, the Company sold the assets of KFNS-AM serving the
St. Louis, Missouri market for approximately $3.8 million.
Temple: In June 1998, the Company acquired radio station KKIK-FM, licensed
to Temple, Texas (in the Austin area) for approximately $3.7 million.
F-64
<PAGE> 153
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SUBSEQUENT EVENTS -- (CONTINUED)
West Palm Beach: In July 1997, the Company entered into an agreement to
acquire WTPX-FM for approximately $11.0 million. The Company began programming
and marketing the station pursuant to an LMA in June 1997. In October 1997, the
Company entered into an agreement to terminate these agreements. In May 1998,
the WTPX-FM termination agreement was consummated and a third party acquired
WTPX-FM from the Company pursuant to which the Company received the net proceeds
of certain investment notes.
In July 1998, the Company sold WEAT-AM serving West Palm Beach, Florida for
approximately $1.5 million.
Columbus, St. Louis, Baltimore and San Jose: In August of 1998 the Company
acquired WHOK-FM, WLVQ-FM and WAZU-FM in Columbus in exchange for KSD-FM and
KLOU-FM in St. Louis, WOCT-FM in Baltimore and KUFX-FM in San Jose.
Tower Separation
The Separation Agreement requires Tower to reimburse the Company on a
"make-whole" (after tax) basis for the tax liabilities incurred by the Company
attributable to the Distribution and certain related transactions to the extent
that the aggregate liability exceeds $20.0 million (the "Tower Liability"). The
amount of that tax liability was dependent on the "fair market value" of the
common stock of Tower at the time of the consummation of the CBS merger. Tower
received an appraisal from an independent appraisal firm that the "fair market
value" of Tower's common stock was equal to $17.25 per share. Based on such
appraisal, CBS paid estimated taxes of approximately $212.0 million with respect
to the Tower Liability for which CBS was reimbursed by Tower. As required by the
Separation Agreement, Tower provided CBS with security of $9.8 million in cash
(which may be replaced at Tower's option with a letter of credit reasonably
satisfactory to CBS) in connection with the filing of estimated tax returns
based on such appraisal. Such appraisal is not, of course, binding on the
Internal Revenue Service or other taxing authorities. Tower's reimbursement
obligation with respect to such taxes would change by approximately $21.0
million for each $1.00 change in the "fair market value" of Tower's common stock
from the value reported for tax purposes. The average of the high and low
trading prices of Tower's common stock in the when-issued over-the-counter
market on June 4, 1998 was $20.50.
The $212.0 million payment did not include all the taxes payable with
respect to merger consideration that has or will be paid upon conversion of the
Convertible Exchangeable Preferred Stock; such taxes will be based on the "fair
market value" of Tower common stock at the time of conversion. Conversions have
occurred at various times since June 4, 1998. Tower's reimbursement obligation
associated with such conversions is expected to approximate $22.7 million, of
which Tower has already paid approximately $8.5 million, assuming that the fair
market value of Tower's common stock distributed by CBS on the date of
conversion is $20.375 per share, which was the closing price of Tower's common
stock as traded on the New York Stock Exchange on November 3, 1998. Tower's
reimbursement obligation with respect to such taxes would change by
approximately $1.15 million for each $1.00 change in the fair market value of
Tower's common stock from the assumed value.
The Merger Agreement also provides for closing date balance sheet
adjustments based upon the working capital and specified debt levels (including
the liquidation preference of the ARS Cumulative Preferred Stock) of ARS at the
effective time of the CBS Merger which may result in payments to be made by
either
F-65
<PAGE> 154
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SUBSEQUENT EVENTS -- (CONTINUED)
ARS or ATS to the other party following the closing date of the CBS Merger. ATS
will benefit from or bear the cost of such adjustments.
Debt and Equity Securities.
In connection with the CBS Merger, all classes of American Radio common
stock were retired and 1,000 shares of a new common stock were issued with a par
value of $.01 per share. Below is summarized activity in the Company's debt and
preferred equity securities subsequent to the CBS Merger.
Credit Agreement -- The outstanding balance of this security was repaid
using the proceeds from the Junior Preferred Stock issued in conjunction with
the CBS Merger.
Senior Subordinated Notes -- In July 1998, $7.6 million of the outstanding
principal was redeemed at a price equal to 101% of the principal pursuant to an
offer to purchase in connection with the CBS Merger.
11 3/8 Cumulative Exchangeable Preferred Stock -- On July 15, 1998, the
outstanding shares of 11 3/8 Subordinated Exchange Debentures were exchanged
into 11 3/8% Subordinated Exchange Debentures due January 15, 2009. Interest is
payable semi-annually each January 15 and July 15.
7% Convertible Exchangeable Preferred Stock -- On September 30, 1998 the
outstanding shares of 7% Convertible Exchangeable Preferred Stock were exchanged
into 7% Convertible Subordinated Debentures due June 30, 2011 at the rate of
$1,000 principal amount of 7% Debentures for each share of Convertible Preferred
Stock. Interest is payable quarterly on each March 31, June 30, September 30 and
December 31. These debentures are unsecured obligations of the Company and are
subordinated in right of payment to all existing and future senior indebtedness.
Prior to the CBS Merger these securities were convertible at the option of the
holder at any time into ARS common stock. Subsequent to the CBS Merger these
securities are convertible at the option of the holder into merger consideration
consisting of cash and shares of Tower common stock. During the third quarter of
1998, 58,823 shares were redeemed at a cost of $60.9 million.
The Convertible Preferred Stock is redeemable, in whole or in part, at the
option of American Radio, for cash at any time after July 15, 1999, initially at
$1,049 per share ($52.45 per Depositary Share), declining ratably to $1,000 per
share immediately after July 15, 2006, plus accrued and unpaid dividends. The
Convertible Preferred Stock is exchangeable at the option of ARS for 7%
Convertible Subordinated Debentures due 2011 (the 7% Debentures) at a rate of
$1,000 principal amount of 7% Debentures for each share of Convertible Preferred
Stock ($50 principal amount for each Depositary Share.) On August 31, 1998 the
holders of the Convertible Preferred Stock were given notice that these
securities will be converted into 7% Debentures as of September 30, 1998.
Dividends on the Convertible Preferred Stock are cumulative at an annual
rate of 7% (equivalent to $3.50 per Depositary Share), accruing from the date of
original issuance (June 25, 1995) and are payable quarterly in arrears on March
31, June 30, September 30 and December 31, commencing September 30, 1996. The
ability of ARS to pay dividends is restricted under the terms of the 9% Notes
and the 9 3/4% Notes and is prohibited during the existence of a default under
the indentures.
Junior Preferred Securities -- On June 4, 1998, the Company issued 567,000
shares of Junior Preferred Stock with a par value of $0.01 per share and a
liquidation preference value of $1,000 per share. These shares have voting
rights only in special circumstances and the dividends are payable only if and
when declared by the Board of Directors. These securities are subordinate to the
Company's previously outstanding preferred stock. The proceeds from the issuance
of these securities, which totaled $567.0 million, were used to pay off
F-66
<PAGE> 155
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
14. SUBSEQUENT EVENTS -- (CONTINUED)
the outstanding balance and accrued interest under the Company's Revolving
Credit Agreement. In July 1998, the number of shares authorized was increased to
one million. As of September 30, 1998, 68,828 additional shares were issued. The
proceeds from the issuance of these securities, totaling $68.8 million, were
used to redeem the Senior Subordinated Notes and 7% Convertible Exchangeable
Preferred Stock.
Securities held by CBS -- As of September 30, 1998 CBS had purchased and
continues to hold $6.0 million of Senior Subordinated Notes and $16.9 million of
the 11 3/8% Subordinated Exchange Debentures.
F-67
<PAGE> 156
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 31, 1998
----------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 12,048 $ 6,198
Accounts receivable (less allowance for doubtful accounts
of $7,578 in 1997 and $7,846 in 1998).................. 87,229 73,211
Prepaid expenses and other assets......................... 4,363 7,629
Current portion of investment notes receivable (less
valuation allowance of $6,750 in 1997 and 1998)........ 2,250 2,250
Deferred income taxes..................................... 6,365 6,365
---------- ----------
Total current assets.............................. 112,255 95,653
---------- ----------
PROPERTY AND EQUIPMENT -- NET............................... 132,042 121,360
---------- ----------
OTHER ASSETS:
Restricted cash........................................... 22,141
Investment notes receivable............................... 26,112 26,108
Intangible Assets, net
Goodwill............................................... 353,897 351,634
FCC licenses........................................... 1,113,916 1,216,705
Other intangible assets................................ 30,460 28,577
Deposits and other long-term assets....................... 10,644 6,535
Net assets of discontinued operations..................... 153,207 155,710
---------- ----------
Total other assets................................ 1,710,377 1,785,269
---------- ----------
TOTAL....................................................... $1,954,674 $2,002,282
========== ==========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements
F-68
<PAGE> 157
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, 1997 MARCH 31, 1998
----------------- --------------
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt...................... $ 340 $ 282
Accounts payable.......................................... 5,949 4,759
Accrued compensation...................................... 1,704 3,391
Accrued expenses.......................................... 16,216 17,914
Accrued interest.......................................... 13,263 9,267
Income taxes payable...................................... -- 564
---------- ----------
Total current liabilities......................... 37,472 36,177
---------- ----------
DEFERRED INCOME TAXES....................................... 196,679 206,141
---------- ----------
OTHER LONG-TERM LIABILITIES................................. 8,921 8,546
---------- ----------
LONG-TERM DEBT.............................................. 833,638 863,361
---------- ----------
COMMITMENTS AND CONTINGENCIES
REDEEMABLE PREFERRED STOCK:
Cumulative Exchangeable Preferred Stock, $0.01 par value;
10,000,000 shares authorized; 2,105,602 shares issued
and outstanding; liquidation preference $100 per
share.................................................. 215,550 215,550
---------- ----------
STOCKHOLDERS' EQUITY:
Preferred Stock; $0.01 par value; 10,000,000 shares
authorized:
Convertible Exchangeable Preferred Stock; 137,500
shares issued and outstanding (represented by
2,750,000 depositary shares); liquidation preference
$1,000 per share..................................... 1 1
Class A Common Stock; $.01 par value; 100,000,000 shares
authorized; 24,708,096 and 24,746,510 shares issued and
outstanding, respectively.............................. 247 247
Class B Common Stock; $.01 par value; 15,000,000 shares
authorized; 3,508,639 and 3,494,325 shares issued and
outstanding, respectively.............................. 35 35
Class C Common Stock; $.01 par value; 6,000,000 shares
authorized; 1,295,518 shares issued and outstanding.... 13 13
Additional paid-in capital................................ 671,211 663,036
Unearned compensation..................................... (202) (178)
Retained earnings (deficit)............................... (8,433) 9,811
---------- ----------
Total............................................. 662,872 672,965
Less:
Treasury stock, at cost, 19,019 shares................. (458) (458)
---------- ----------
Total stockholders' equity........................ 662,414 672,507
---------- ----------
TOTAL....................................................... $1,954,674 $2,002,282
========== ==========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements
F-69
<PAGE> 158
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
1997 1998
----------- -----------
(IN THOUSANDS, EXCEPT PER
SHARE DATA)
<S> <C> <C>
NET REVENUES................................................ $ 52,952 $ 88,593
-------- --------
OPERATING EXPENSES:
Operating expenses excluding depreciation and
amortization, net local marketing agreement and
corporate general and administrative expenses.......... 40,147 65,351
Net local marketing agreement expenses.................... 1,932 709
Depreciation and amortization............................. 6,920 18,018
Corporate general and administrative...................... 1,777 1,905
-------- --------
Total expenses.................................... 50,776 85,983
-------- --------
OPERATING INCOME............................................ 2,176 2,610
-------- --------
OTHER INCOME (EXPENSE):
Interest expense.......................................... (7,408) (16,583)
Interest income........................................... 631 330
Gains on sale of assets and other, net.................... 2,916 46,448
-------- --------
Total other income (expense)...................... (3,861) 30,195
-------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME
TAXES..................................................... (1,685) 32,805
INCOME TAX PROVISION (BENEFIT).............................. (567) 9,463
-------- --------
INCOME (LOSS) FROM CONTINUING OPERATIONS.................... (1,118) 23,342
Loss from discontinued operations, net of income taxes...... (58) (5,099)
Extraordinary loss on extinguishment of debt, net of income
tax benefit of $1,013 in 1997............................. (1,639)
-------- --------
NET INCOME (LOSS)........................................... (2,815) 18,243
PREFERRED STOCK DIVIDENDS................................... (6,198) (8,394)
-------- --------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS......... $ (9,013) $ 9,849
======== ========
BASIC AND DILUTED PER COMMON SHARE AMOUNTS:
Continuing operations..................................... $ (.35) $ .50
Discontinued operations................................... (.17)
Extraordinary loss........................................ (.08)
-------- --------
Net income (loss)......................................... $ (.43) $ .33
======== ========
BASIC AND DILUTED WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING........................................ 21,095 29,533
======== ========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements
F-70
<PAGE> 159
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1998
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES:
Continuing operations..................................... $ (1,878) $ 12,689
Discontinued operations................................... 291 (1,738)
--------- ---------
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES............. (1,587) 10,951
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for purchase of property, equipment and
intangible assets...................................... (5,395) (2,994)
Proceeds from radio station sales......................... 20,403 3,952
Payments for radio station acquisitions................... (262,863) (42,153)
Issuance of investment notes receivable................... (375)
Repayment of investment note receivable................... 1,243 4
Deposits and other long-term assets....................... 16,407 (79)
--------- ---------
Continuing operations..................................... (230,580) (41,270)
Discontinued operations................................... (2,697) (91,835)
--------- ---------
Cash used for investing activities................ (233,277) (133,105)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under Credit Agreements and other.............. 276,500 30,000
Repayments under Credit Agreements........................ (230,000)
Repayments of other obligations........................... (245) (208)
Net proceeds from equity offerings and options............ 160 219
Net proceeds from exchangeable preferred stock offering... 192,350
Additions to deferred financing costs..................... (5,526)
Dividends paid............................................ (2,406) (8,394)
--------- ---------
Continuing operations..................................... 230,833 21,617
Discontinued operations................................... (134) 96,891
--------- ---------
Cash provided by financing activities............. 230,699 118,508
--------- ---------
DECREASE IN CASH AND CASH EQUIVALENTS....................... (4,165) (3,646)
Change in cash and cash equivalents included in
discontinued operations................................ 720 (2,204)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............. 8,074 12,048
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................... $ 4,629 $ 6,198
========= =========
</TABLE>
See notes to Unaudited Condensed Consolidated Financial Statements.
F-71
<PAGE> 160
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The financial statements included herein have been prepared by CBS Radio,
Inc. (formerly American Radio Systems Corporation) and subsidiaries
(collectively, "American Radio," "ARS" or the "Company"), without audit,
pursuant to the rules and regulations of the Securities and Exchange Commission
(the Commission). Although certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations, the Company believes that the disclosures are adequate to make the
information presented not misleading and reflect all adjustments (consisting
only of normal recurring adjustments) which are necessary for a fair
presentation of results of operations for such periods. Results of interim
periods may not be indicative of results for the full year. These financial
statements should be read in conjunction with the consolidated financial
statements for the year ended December 31, 1997 and the notes thereto included
in the Company's audited consolidated financial statements included elsewhere in
this Registration Statement.
On June 4, 1998 the merger of ARS and a subsidiary of CBS Corporation (the
CBS Merger) was consummated. In connection with the merger, all of the shares of
American Tower Systems Corporation (Tower) owned by ARS were distributed (the
Distribution) to ARS common stockholders and holders of options to acquire ARS
common stock and have been or will be distributed upon conversion of shares of
ARS 7% Convertible Exchangeable Preferred Stock (or the debentures into which
they are exchangeable). As a consequence of the Distribution, Tower ceased to be
a subsidiary of, or to be otherwise affiliated with, ARS and now operates as an
independent publicly traded company. Consequently, the results of operations and
net assets of Tower have been classified as Discontinued Operations in
accordance with Accounting Principles Board Opinion No. 30, "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business and Extraordinary, Unusual, and Infrequently Occurring Events and
Transactions," for all periods presented. Net revenues for discontinued
operations for the three months ended March 31, 1997 and 1998 totaled $1.3
million and $17.6 million, respectively. The Distribution was accounted for as a
non-reciprocal (non-cash) transfer to the Company's former shareholders reducing
additional paid in-capital by approximately $150.0 million on the CBS Merger
date.
Pursuant to the provisions of the CBS Merger Agreement, Tower entered into
an agreement (the Separation Agreement) with CBS and ARS providing for, among
other things, the orderly separation of ARS and Tower, the allocation of certain
tax liabilities to Tower, certain closing date adjustments relating to ARS, the
lease to ARS by Tower of space on certain towers previously owned by ARS and
transferred to Tower, and certain indemnification obligations (including with
respect to securities law matters) of Tower. As a consequence of the CBS Merger,
the Company or CBS is required to divest certain radio stations in order to
comply with regulatory orders.
Accounting Policies
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("FAS") No. 130, "Reporting Comprehensive
Income," which became effective for the Company for periods beginning after
December 15, 1997. FAS No. 130 establishes standards for reporting and
displaying comprehensive income and its components (revenues, expenses, gains,
and losses) in a full set of general purpose financial statements. FAS No. 130
requires that a company (a) classify items of other comprehensive income by
their nature in a financial statement and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in-capital in the equity section of the balance sheet. Reclassification of
financial statements for earlier periods provided for
F-72
<PAGE> 161
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
1. BASIS OF PRESENTATION -- (CONTINUED)
comparative purposes is required. The Company has adopted this statement in the
first quarter of 1998. Comprehensive income does not differ from net income.
In June 1998, the FASB issued Statement No. 133 (FAS 133), "Accounting for
Derivative Instruments and Hedging Activities," which requires that all
derivative instruments be recorded on the balance sheet at their fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or other comprehensive income, depending on whether a derivative is
designated as part of a hedge transaction and if it is, the type of hedge
transaction. For fair-value hedge transactions in which the Company is hedging
changes in an asset's, liability's or firm commitment's fair value, changes in
the fair value of the derivative instrument will generally be offset in the
income statement by changes in the hedged item's fair value. For cash flow hedge
transactions, changes in the fair value of the derivative instrument will be
reported in comprehensive income. The gains and losses on the derivative
instrument that are reported in other comprehensive income will be reclassified
as earnings in the periods in which earnings are impacted by the variability of
the cash flows of the hedged item. The ineffective portion of all hedges will be
recognized in current period earnings. The Company currently expects to adopt
FAS 133 for the year ending December 31, 1999. Management does not believe that
the adoption of FAS 133 will have a material impact on its results of operations
or financial position.
Reclassifications
Certain reclassifications have been made to the 1997 financial statements
to conform to the 1998 presentation.
2. PER SHARE DATA
In the fourth quarter of 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, "Earnings Per Share" (SFAS 128). Prior to the
fourth quarter of 1997, the Company computed income (loss) per common share
using the methods outlined in Accounting Principles Board Opinion No. 15,
"Earnings Per Share", and its interpretations.
Basic income (loss) per common share is computed using the weighted average
number of common shares outstanding during each year. Diluted income (loss) per
common share reflects the effect of the Company's outstanding options (using the
treasury stock method), except where such items would be anti-dilutive. Shares
of redeemable preferred stock convertible into common stock have been excluded
from the diluted computation as they are anti-dilutive. Had such shares been
included, shares for the diluted computation would have been increased by
approximately 3,235,000 in 1997 and 1998. In addition, because such shares are
anti-dilutive, no adjustment has been made to reconcile from income (loss) for
the basic computation to that for the diluted computation. No effect has been
given to stock options in 1997 and 1998 as they are anti-dilutive for that year.
Had such options been included, shares for the diluted computation would have
been increased by 1,067,000 and 1,870,000 in 1997 and 1998, respectively.
3. INCOME TAXES
The Company provides for income taxes at the end of each interim period
based on the estimated effective tax rate for the full fiscal year for each tax
reporting corporate entity. Cumulative adjustments to the tax benefit
(provision) are recorded in the interim period in which a change in the
estimated annual effective rate is determined.
F-73
<PAGE> 162
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
4. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS
Property and equipment and intangible assets included approximately $84.0
million and $56.9 million of assets related to radio stations held for sale or
under exchange agreements (excluding the CBS Merger Agreement) as of December
31, 1997 and March 31, 1998, respectively. The following summary presents the
results of operations (excluding depreciation and amortization, net local
marketing agreement and corporate general and administrative expenses) relating
to these stations that are included in the accompanying unaudited condensed
consolidated financial statements for each respective period.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------
1997 1998
------- -------
(IN THOUSANDS)
<S> <C> <C>
Net operating revenues...................................... $1,835 $2,195
Net operating expenses...................................... 1,787 2,621
</TABLE>
5. ACQUISITIONS AND DISPOSITIONS
General: The following acquisitions have all been accounted for by the
purchase method of accounting, and, accordingly, the operating results of the
acquired entities, to the extent that a local marketing agreement (LMA) did not
exist, have been included in consolidated operating results since the date of
acquisition. The purchase price has been allocated to the assets acquired,
principally intangible assets, and the liabilities assumed based on their
estimated fair values at the dates of acquisition. The excess of purchase price
over the estimated fair value of the net assets acquired has been recorded as
goodwill. The financial statements reflect the preliminary allocation of certain
purchase prices as the appraisals for certain acquisitions have not yet been
finalized. The Company does not expect the final appraisals will have a material
effect on the financial position, results of operations or liquidity of the
Company.
During the first three months of 1998, the Company consummated the
following station and tower related transactions.
1998 ACQUISITIONS AND DISPOSITIONS:
Dayton and Kansas City: In January 1998, the Company consummated an
agreement to exchange WXEG-FM, WBTT-FM, WLQT-FM, WMMX-FM, WTUE-FM and WONE-AM
serving Dayton in exchange for WDAF-AM, KOZN-FM (formerly KYYS-FM), KMXV-FM and
KUDL-FM serving Kansas City. The Company began programming and marketing KYYS-FM
and KMXV-FM pursuant to an LMA agreement in September 1997. As a result of this
transaction, the Company recognized a pre-tax gain of $46 million.
Kansas City, Sacramento and St. Louis: In January 1998, the Company
acquired KLOU-FM in St. Louis in exchange for KUDL-FM and WDAF-AM in Kansas City
and approximately $7.0 million. The Company also consummated a related agreement
with the same party, pursuant to which the Company sold KCTC-AM serving
Sacramento for approximately $4.0 million.
Riverside/San Bernardino and Sun City: In March 1998, the Company acquired
KFRG-FM, serving the Riverside/San Bernardino market, and KXFG-FM, serving Sun
City, California, for approximately $60.0 million. The Company began programming
and marketing the stations pursuant to an LMA agreement in August 1997.
F-74
<PAGE> 163
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
5. ACQUISITIONS AND DISPOSITIONS -- (CONTINUED)
The following unaudited pro forma summary for the three months ended March
31, 1997 and 1998 presents the consolidated results of operations as if the
acquisitions had occurred as of January 1, 1997 after giving effect to certain
adjustments, including depreciation and amortization of assets and interest
expense on any debt incurred to fund the acquisitions. These unaudited pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of what would have occurred had the acquisitions been made as of
January 1, 1997 or of results which may occur in the future.
<TABLE>
<CAPTION>
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1998
------------------ ------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C>
Net revenues................................... $ 84,144 $ 88,593
Income (loss) from continuing operations....... (7,680) 23,205
Net income (loss).............................. (9,377) 18,106
Income (loss) from continuing operations
applicable to common stockholders............ (15,517) 14,811
Basic and diluted net income (loss) per common
share -- continuing operations............... $ (.74) $ .50
</TABLE>
6. PENDING TRANSACTIONS
Boston and Tampa: In August 1998, the Company entered into a sales
agreement to sell WEEI-AM, WRKO-AM, WAAF-FM, WWTM-AM and WEGQ-FM for
approximately $140.0 million. Concurrently, the Company entered into an
agreement to purchase WYUU-FM and WLLD-FM in Tampa for approximately $75.0
million. Subject to receipt of regulatory approval, these transactions are
expected to be consummated in late 1998.
Boston: In October, 1998 the Company entered into an agreement to sell
WNFT-AM for approximately $5.0 million. Subject to the receipt of FCC approval,
the transaction is expected to be consummated in the first quarter of 1999.
7. SUBSIDIARY GUARANTEES
The Company's payment obligations under the 9.00% Senior Subordinated Notes
("9.00% Notes") and the 9.75% Senior Subordinated Notes ("9.75% Notes") are
fully and unconditionally guaranteed on a joint and several basis (collectively,
the "Subsidiary Guarantees"), on a senior basis (in the case of the 9.75% Notes)
and a senior subordinated basis (in the case of the 9.00% Notes) by all of its
present and any future Restricted Subsidiaries (collectively "Restricted
Guarantors"). The Restricted Subsidiaries have also unconditionally guaranteed,
and any future Restricted Subsidiaries will be required to guarantee, on a joint
and several basis (collectively, the "Senior Subsidiary Guarantees"), all
obligations of the Company under the 1997 Credit Agreement. The Tower Subsidiary
has not guaranteed obligations under the Credit Agreements or either series of
the Senior Subordinated Notes.
The 9.00% Notes and the Subsidiary Guarantees are subordinated to all
Senior Debt (as defined) of the Company including indebtedness under the 1997
Credit Agreement and the Senior Subsidiary Guarantees and 9.75% Notes related
guarantees. The indenture governing each series of the Senior Subordinated Notes
contains limitations on the amount of indebtedness (including Senior Debt) which
the Company may incur.
F-75
<PAGE> 164
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSIDIARY GUARANTEES -- (CONTINUED)
With the intent that the Subsidiary Guarantees not constitute fraudulent
transfers or conveyances under applicable state or federal law, the obligation
of each guarantor under its Subsidiary Guarantee is also limited to the maximum
amount as will, after giving effect to any rights to contribution of such
guarantor pursuant to any agreement providing for an equitable contribution
among such guarantor and other affiliates of the Company of payments made by
guarantees by such parties, result in the obligations of such guarantor in
respect of such maximum amount not constituting a fraudulent conveyance.
The following unaudited condensed consolidating financial data illustrates
the composition of the combined guarantors. The Company believes that separate
complete financial statements of the respective guarantors would not provide
additional material information which would be useful in assessing the financial
composition of the guarantors. No single guarantor has any significant legal
restrictions on the ability of investors or creditors to obtain access to its
assets in event of default on the Subsidiary Guarantee, other than in the case
of the 9.00% Notes its subordination to Senior Debt described above.
Investments in subsidiaries are accounted for by the parent on the equity
method for purposes of the unaudited supplemental consolidating presentation.
Earnings (losses) of subsidiaries are therefore reflected in the parent's
investment accounts and earnings. The principal elimination entries eliminate
investments in subsidiaries and intercompany balances and transactions.
F-76
<PAGE> 165
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSIDIARY GUARANTEES -- (CONTINUED)
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash
equivalents........... $ 4,303 $ 1,895 $ 6,198
Accounts receivable,
net................... 44,460 28,751 73,211
Prepaid expenses and
other assets.......... 8,243 1,636 9,879
Deferred income taxes.... 4,006 2,359 6,365
---------- ---------- -------- ----------- ----------
Total current
assets......... 61,012 34,641 95,653
---------- ---------- -------- ----------- ----------
PROPERTY AND EQUIPMENT,
NET...................... 74,946 46,414 121,360
---------- ---------- -------- ----------- ----------
OTHER ASSETS:
Investment in and
advances to
subsidiaries.......... 1,344,168 $(1,344,168)
Investment notes
receivable............ 25,498 610 26,108
Intangible assets -- net
Goodwill -- net....... 330,875 20,759 351,634
FCC licenses -- net... 1,216,705 1,216,705
Other intangible
assets -- net....... 26,373 2,204 28,577
Deposits and other long-
term assets........... 6,469 66 6,535
Deferred income taxes....
Net assets of
discontinued
operations............ 415 $233,318 (78,023) 155,710
---------- ---------- -------- ----------- ----------
Total other
assets......... 1,733,798 1,240,344 233,318 (1,422,191) 1,785,269
---------- ---------- -------- ----------- ----------
TOTAL...................... $1,869,756 $1,321,399 $233,318 $(1,422,191) $2,002,282
========== ========== ======== =========== ==========
</TABLE>
F-77
<PAGE> 166
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSIDIARY GUARANTEES -- (CONTINUED)
UNAUDITED CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
PARENT AND GUARANTOR NON-GUARANTOR CONSOLIDATED
ITS DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
------------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of
long-term debt........ $ 282 $ 282
Accounts payable and
accrued expenses...... 27,771 $ 7,560 35,331
Income taxes payable..... 107,016 18,758 $ (125,210) 564
---------- ---------- -------- ----------- ----------
Total current
liabilities.... 135,069 26,318 (125,210) 36,177
---------- ---------- -------- ----------- ----------
NONCURRENT LIABILITIES:
Deferred income taxes.... 1,681 204,460 206,141
Other long-term
liabilities........... 8,507 39 8,546
Long-term debt........... 863,361 863,361
---------- ---------- -------- ----------- ----------
Total noncurrent
liabilities.... 873,549 204,499 1,078,048
---------- ---------- -------- ----------- ----------
REDEEMABLE PREFERRED
STOCK.................... 215,550 215,550
---------- ---------- -------- ----------- ----------
STOCKHOLDERS' EQUITY:
Preferred stock.......... 1 1
Common stock............. 295 490 (490) 295
Notes receivable, due
from stockholders..... (49,375) 49,375
Additional paid-in
capital............... 663,036 1,053,602 286,590 (1,340,192) 663,036
Unearned compensation.... (178) (178)
Retained earnings
(deficit)............. (17,108) 36,980 (4,387) (5,674) 9,811
Treasury stock........... (458) (458)
---------- ---------- -------- ----------- ----------
Total
stockholders'
equity......... 645,588 1,090,582 233,318 (1,296,981) 672,507
---------- ---------- -------- ----------- ----------
TOTAL............ $1,869,756 $1,321,399 $233,318 $(1,422,191) $2,002,282
========== ========== ======== =========== ==========
</TABLE>
F-78
<PAGE> 167
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSIDIARY GUARANTEES -- (CONTINUED)
UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PARENT AND
ITS GUARANTOR NON-GUARANTOR CONSOLIDATED
DIVISIONS SUBSIDIARIES SUBSIDIARY ELIMINATIONS TOTALS
---------- ------------ ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Net revenues.................. $53,789 $34,804 $88,593
License fees charged to
Parent...................... (4,283) 4,283
------- ------- ------- ------ -------
Total net revenues............ 49,506 39,087 88,593
OPERATING EXPENSES:
Operating expenses excluding
depreciation and
amortization, net local
marketing agreement and
corporate general and
administrative
expenses............... 39,664 25,687 65,351
Net local marketing
agreement expenses....... 683 26 709
Depreciation and
amortization............. 5,228 12,790 18,018
Corporate general and
administrative........... 1,905 1,905
------- ------- ------- ------ -------
OPERATING INCOME.............. 2,026 584 2,610
OTHER INCOME (EXPENSE):
Interest expense............ (16,583) (16,583)
Interest income............. 330 330
Gain (loss) on sale of
assets and other, net.... 2,636 43,812 46,448
Equity in income of
subsidiaries............. 270 (270)
------- ------- ------- ------ -------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME
TAXES....................... (11,321) 44,396 (270) 32,805
INCOME TAX PROVISION
(BENEFIT)................... (8,716) 18,179 9,463
------- ------- ------- ------ -------
Income (loss) from continuing
operations.................. (2,605) 26,217 (270) 23,342
Loss from discontinued
operations.................. (5,099) (1,527) 1,527 (5,099)
------- ------- ------- ------ -------
Net income (loss)............. $(7,704) $26,217 $(1,527) $1,257 $18,243
======= ======= ======= ====== =======
</TABLE>
F-79
<PAGE> 168
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
7. SUBSIDIARY GUARANTEES -- (CONTINUED)
\UNAUDITED CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PARENT AND
ITS GUARANTOR NON-GUARANTOR CONSOLIDATED
DIVISIONS SUBSIDIARIES SUBSIDIARY TOTALS
---------- ------------ ------------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
CASH PROVIDED BY OPERATING ACTIVITIES:
Continuing operations....................... $ (7,595) $ 20,284 $ 12,689
Discontinued operations..................... $ (1,738) (1,738)
-------- -------- -------- ---------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES... $ (7,595) $ 20,284 $ (1,738) $ 10,951
-------- -------- -------- ---------
INVESTING ACTIVITIES:
Payments for purchase of property equipment
and intangible assets.................... (2,994) (2,994)
Proceeds from asset and radio station
sales.................................... 3,952 3,952
Repayment of investment notes receivable.... 4 4
Payments for purchase of radio stations..... (42,153) (42,153)
Repayments for investment notes
receivable...............................
Deposits and other long-term assets......... (79) (79)
-------- -------- -------- ---------
Continuing operations....................... (41,270) (41,270)
Discontinued operations..................... (91,835) (91,835)
-------- -------- -------- ---------
Cash flows used for investing
activities........................ (41,270) (91,835) (133,105)
-------- -------- -------- ---------
Financing Activities:
Borrowings under the Credit Agreements and
other.................................... 30,000 30,000
Repayments under the Credit Agreements
Repayments under other obligations....... (208) (208)
Dividends paid.............................. (8,394) (8,394)
Net proceeds from equity offerings and
options.................................. 219 219
Investment in and advances to
subsidiaries............................. 19,966 (19,966)
-------- -------- -------- ---------
Continuing operations....................... 41,583 (19,966) 21,617
Discontinued operations..................... 1,114 95,777 96,891
-------- -------- -------- ---------
Cash flows from (used for) financing
activities........................ 42,697 (19,966) 95,777 118,508
-------- -------- -------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS................................. (6,168) 318 2,204 (3,646)
CHANGE IN CASH AND CASH EQUIVALENTS INCLUDED
IN DISCONTINUED OPERATIONS.................. (2,204) (2,204)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD...................................... 10,470 1,578 12,048
-------- -------- -------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD...... $ 4,302 $ 1,896 $ 0 $ 6,198
======== ======== ======== =========
</TABLE>
F-80
<PAGE> 169
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. SUBSEQUENT EVENTS
Radio Transactions
Dayton and Kansas City: In January 1998, the Company consummated an
agreement to exchange WXEG-FM, WBTT-FM, WLQT-FM, WMMX-FM, WTUE-FM and WONE-AM
serving Dayton for WDAF-AM, KOZN-FM (formerly KYYS-FM), KMXV-FM and KUDL-FM
serving Kansas City. The Company began programming and marketing KYYS-FM and
KMXV-FM pursuant to an LMA agreement in September 1997.
Kansas City, Sacramento and St. Louis: In January 1998, the Company
acquired KLOU-FM in St. Louis in exchange for KUDL-FM and WDAF-AM in Kansas City
and approximately $7.0 million. The Company also consummated a related agreement
with the same party, pursuant to which the Company sold KCTC-AM serving
Sacramento for approximately $4.0 million.
Riverside/San Bernardino and Sun City: In March 1998, the Company acquired
KFRG-FM, serving the Riverside/San Bernardino market, and KXFG-FM, serving Sun
City, California, for approximately $60.0 million. The Company began programming
and marketing the stations pursuant to an LMA agreement in August 1997.
Portsmouth: In August 1998, the Company sold the assets of WQSO-FM and
WZNN-AM serving Rochester, New Hampshire and WERZ-FM and WMYF-AM, serving
Exeter, New Hampshire for approximately $6.0 million.
Portland, Sacramento, San Francisco and San Jose: In May 1998, the Company
consummated an asset exchange agreement pursuant to which it will acquire
KINK-FM, serving Portland, Oregon, KUFX-FM (formerly KBRG-FM), serving
Fremont/San Francisco, California, $2.0 million in a promissory note due
September 30, 1998, or at the time of certain earlier events, and 150,000 shares
of common stock of Latin Communications, Inc., in exchange for KBRG-FM (formerly
KBAY-FM), serving San Jose, and KRRE-FM (formerly KSSJ-FM), serving Sacramento.
The Company began programming and marketing KINK-FM and KRRE-FM pursuant to an
LMA agreement in January 1998. Concurrently, the purchase of KBRG-FM began
programming and marketing KBRG-FM pursuant to the LMA.
Sacramento: In September 1998, the Company consummated an asset exchange
agreement pursuant to which the Company's KRAK-FM exchanged FCC frequencies with
another radio station also located in the Sacramento market for approximately
$4.4 million.
San Jose and Monterey: In May 1998, the Company consummated a merger
agreement pursuant to which the Company acquired the assets of KEZR-FM serving
San Jose, California and KLUE-FM serving Monterey, California in exchange for
approximately 723,000 shares of Class A Common Stock valued at approximately
$20.0 million and $4.0 million in cash.
San Jose: In August 1998, the Company consummated the sale of KSJO-FM for
approximately $30.0 million.
St. Louis: In July 1998, the Company sold the assets of KFNS-AM serving the
St. Louis, Missouri market for approximately $3.8 million.
Temple: In June 1998, the Company acquired radio station KKIK-FM, licensed
to Temple, Texas (in the Austin area) for approximately $3.7 million.
F-81
<PAGE> 170
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. SUBSEQUENT EVENTS -- (CONTINUED)
West Palm Beach: In July 1997, the Company entered into an agreement to
acquire WTPX-FM for approximately $11.0 million. The Company began programming
and marketing the station pursuant to an LMA in June 1997. In October 1997, the
Company entered into an agreement to terminate these agreements. In May 1998,
the WTPX-FM termination agreement was consummated and a third party acquired
WTPX-FM from the Company pursuant to which the Company received the net proceeds
of certain investment notes.
In July 1998, the Company sold WEAT-AM serving West Palm Beach, Florida for
approximately $1.5 million.
Columbus, St. Louis, Baltimore and San Jose: In August of 1998 the Company
acquired WHOK-FM, WLVQ-FM and WAZU-FM in Columbus in exchange for KSD-FM and
KLOU-FM in St. Louis, WOCT-FM in Baltimore and KUFX-FM in San Jose.
Tower Separation
The Separation Agreement requires Tower to reimburse the Company on a
"make-whole" (after tax) basis for the tax liabilities incurred by the Company
attributable to the Distribution and certain related transactions to the extent
that the aggregate liability exceeds $20.0 million (the "Tower Liability"). The
amount of that tax liability was dependent on the "fair market value" of the
common stock of Tower at the time of the consummation of the CBS merger. Tower
received an appraisal from an independent appraisal firm that the "fair market
value" of Tower's common stock was equal to $17.25 per share. Based on such
appraisal, CBS paid estimated taxes of approximately $212.0 million with respect
to the Tower Liability for which CBS was reimbursed by Tower. As required by the
Separation Agreement, Tower provided CBS with security of $9.8 million in cash
(which may be replaced at Tower's option with a letter of credit reasonably
satisfactory to CBS) in connection with the filing of estimated tax returns
based on such appraisal. Such appraisal is not, of course, binding on the
Internal Revenue Service or other taxing authorities. Tower's reimbursement
obligation with respect to such taxes would change by approximately $21.0
million for each $1.00 change in the "fair market value" of Tower's common stock
from the value reported for tax purposes. The average of the high and low
trading prices of Tower's common stock in the when-issued over-the-counter
market on June 4, 1998 was $20.50.
The $212.0 million payment did not include all the taxes payable with
respect to merger consideration that has or will be paid upon conversion of the
Convertible Exchangeable Preferred Stock; such taxes will be based on the "fair
market value" of Tower common stock at the time of conversion. Conversions have
occurred at various times since June 4, 1998. Tower's reimbursement obligation
associated with such conversions is expected to approximate $22.7 million, of
which Tower has already paid approximately $8.5 million, assuming that the fair
market value of Tower's common stock distributed by CBS on the date of
conversion is $20.375 per share, which was the closing price of Tower's common
stock as traded on the New York Stock Exchange on November 3, 1998. Tower's
reimbursement obligation with respect to such taxes would change by
approximately $1.15 million for each $1.00 change in the fair market value of
Tower's common stock from the assumed value.
The Merger Agreement also provides for closing date balance sheet
adjustments based upon the working capital and specified debt levels (including
the liquidation preference of the ARS Cumulative Preferred Stock) of ARS at the
effective time of the CBS Merger which may result in payments to be made by
either
F-82
<PAGE> 171
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. SUBSEQUENT EVENTS -- (CONTINUED)
ARS or ATS to the other party following the closing date of the CBS Merger. ATS
will benefit from or bear the cost of such adjustments.
Debt and Equity Securities.
In connection with the CBS Merger, all classes of American Radio common
stock were retired and 1,000 shares of a new common stock were issued with a par
value of $.01 per share. Below is summarized activity in the Company's debt and
preferred equity securities subsequent to the CBS Merger.
Credit Agreement -- The outstanding balance of this security was repaid
using the proceeds from the Junior Preferred Stock issued in conjunction with
the CBS Merger.
Senior Subordinated Notes -- In July 1998, $7.6 million of the outstanding
principal was redeemed at a price equal to 101% of the principal pursuant to an
offer to purchase in connection with the CBS Merger.
11 3/8 Cumulative Exchangeable Preferred Stock -- On July 15, 1998, the
outstanding shares of 11 3/8 Subordinated Exchange Debentures were exchanged
into 11 3/8% Subordinated Exchange Debentures due January 15, 2009. Interest is
payable semi-annually each January 15 and July 15.
7% Convertible Exchangeable Preferred Stock -- On September 30, 1998 the
outstanding shares of 7% Convertible Exchangeable Preferred Stock were exchanged
into 7% Convertible Subordinated Debentures due June 30, 2011 at the rate of
$1,000 principal amount of 7% Debentures for each share of Convertible Preferred
Stock. Interest is payable quarterly on each March 31, June 30, September 30 and
December 31. These debentures are unsecured obligations of the Company and are
subordinated in right of payment to all existing and future senior indebtedness.
Prior to the CBS Merger these securities were convertible at the option of the
holder at any time into ARS common stock. Subsequent to the CBS Merger these
securities are convertible at the option of the holder into merger consideration
consisting of cash and shares of Tower common stock. During the third quarter of
1998, 58,823 shares were redeemed at a cost of $60.9 million.
The Convertible Preferred Stock is redeemable, in whole or in part, at the
option of American Radio, for cash at any time after July 15, 1999, initially at
$1,049 per share ($52.45 per Depositary Share), declining ratably to $1,000 per
share immediately after July 15, 2006, plus accrued and unpaid dividends. The
Convertible Preferred Stock is exchangeable at the option of ARS for 7%
Convertible Subordinated Debentures due 2011 (the 7% Debentures) at a rate of
$1,000 principal amount of 7% Debentures for each share of Convertible Preferred
Stock ($50 principal amount for each Depositary Share.) On August 31, 1998 the
holders of the Convertible Preferred Stock were given notice that these
securities will be converted into 7% Debentures as of September 30, 1998.
Dividends on the Convertible Preferred Stock are cumulative at an annual
rate of 7% (equivalent to $3.50 per Depositary Share), accruing from the date of
original issuance (June 25, 1995) and are payable quarterly in arrears on March
31, June 30, September 30 and December 31, commencing September 30, 1996. The
ability of ARS to pay dividends is restricted under the terms of the 9% Notes
and the 9 3/4% Notes and is prohibited during the existence of a default under
the indentures.
Junior Preferred Securities -- On June 4, 1998, the Company issued 567,000
shares of Junior Preferred Stock with a par value of $0.01 per share and a
liquidation preference value of $1,000 per share. These shares have voting
rights only in special circumstances and the dividends are payable only if and
when declared by the Board of Directors. These securities are subordinate to the
Company's previously outstanding preferred stock. The proceeds from the issuance
of these securities, which totaled $567.0 million, were used to pay off
F-83
<PAGE> 172
CBS RADIO, INC.
(FORMERLY AMERICAN RADIO SYSTEMS CORPORATION)
(A WHOLLY OWNED SUBSIDIARY OF CBS CORPORATION)
AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
8. SUBSEQUENT EVENTS -- (CONTINUED)
the outstanding balance and accrued interest under the Company's Revolving
Credit Agreement. In July 1998, the number of shares authorized was increased to
one million. As of September 30, 1998, 68,828 additional shares were issued. The
proceeds from the issuance of these securities, totaling $68.8 million, were
used to redeem the Senior Subordinated Notes and 7% Convertible Exchangeable
Preferred Stock.
Securities held by CBS -- As of September 30, 1998 CBS had purchased and
continues to hold $6.0 million of Senior Subordinated Notes and $16.9 million of
the 11 3/8% Subordinated Exchange Debentures.
F-84
<PAGE> 173
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Infinity Media Corporation:
We have audited the consolidated balance sheets of Infinity Media
Corporation (formerly known as Infinity Broadcasting Corporation) and
subsidiaries as of December 31, 1995 and 1996 and the related consolidated
statements of earnings, changes in stockholders' equity and cash flows for the
years then ended. These consolidated financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Infinity
Media Corporation (formerly known as Infinity Broadcasting Corporation) and
subsidiaries as of December 31, 1995 and 1996, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
New York, New York
September 15, 1998,
except for Note 14,
which is as of
October 29, 1998
F-85
<PAGE> 174
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
-------- ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 20,340 19,836
Receivables (less allowance of $2,139 in 1995 and $6,688
in 1996)............................................... 86,720 179,366
Prepaid expenses and other current assets................. 1,305 7,777
Assets held for sale...................................... -- 70,347
-------- ---------
108,365 277,326
-------- ---------
Property and equipment at cost (net of accumulated
depreciation of $14,676 in 1995 and $18,141 in 1996)...... 20,561 38,714
Intangible assets (net of accumulated amortization of
$147,158 in 1995 and $235,230 in 1996).................... 451,220 1,435,340
Other assets................................................ 14,310 20,462
-------- ---------
$594,456 1,771,842
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued expenses............... 18,392 38,032
Transit franchise payable................................. -- 14,752
Accrued compensation...................................... 6,799 12,641
Accrued interest.......................................... 7,131 6,430
Income taxes.............................................. 4,866 1,433
Merger related liabilities................................ -- 12,818
Other current liabilities................................. 15,892 41,194
Current portion of long-term debt......................... -- 563
-------- ---------
Total current liabilities......................... 53,080 127,863
-------- ---------
Long-term debt.............................................. 267,384 1,077,976
Deferred income taxes....................................... -- 186,374
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value: 10,000,000 shares
authorized; none issued................................ -- --
Class A Common Stock, $.002 par value: 200,000,000 shares
authorized in 1995 and 300,000,000 shares authorized in
1996; 78,142,278 shares issued in 1995 and 83,011,870
shares issued in 1996..................................... 156 166
Class B Common Stock, $.002 par value: 17,500,000 shares
authorized; issued and outstanding 8,325,047 shares in
1995 and 8,310,465 shares in 1996...................... 17 17
Class C Common Stock, $.002 par value: 30,000,000 shares
authorized; issued and outstanding 1,116,257 in 1995
and -0- in 1996........................................ 2 --
Additional paid-in capital.................................. 529,837 613,302
Foreign currency translation................................ -- 1,096
Retained earnings (deficit)................................. (196,338) (170,449)
-------- ---------
333,674 444,132
Less treasury stock at cost, 4,191,218 shares in 1995 and
4,370,517 shares in 1996.................................. (59,682) (64,503)
-------- ---------
Total stockholders' equity........................ 273,992 379,629
-------- ---------
$594,456 1,771,842
======== =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-86
<PAGE> 175
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
-------------------
1995 1996
-------- -------
<S> <C> <C>
Total revenues.............................................. $372,429 773,187
Less agency commissions..................................... (46,723) (95,184)
-------- -------
Net revenues...................................... 325,706 678,003
-------- -------
Operating expenses excluding depreciation and
amortization.............................................. 167,285 439,610
Depreciation and amortization............................... 50,482 96,056
Corporation general and administration expenses............. 6,135 7,602
-------- -------
223,902 543,268
-------- -------
Operating income.................................. 101,804 134,735
-------- -------
Other (expense) income:
Interest expense.......................................... (44,385) (64,201)
Interest income........................................... 387 1,022
Other income (expense).................................... (1,715) 1,636
Merger costs.............................................. -- (19,800)
-------- -------
Earnings before income taxes...................... 56,091 53,392
Income taxes................................................ 1,588 27,503
-------- -------
Net earnings...................................... $ 54,503 25,889
======== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-87
<PAGE> 176
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1995 1996
---------- ----------
<S> <C> <C>
Net cash flows from operating activities:
Net earnings.............................................. $ 54,503 25,889
Depreciation and amortization............................. 50,482 96,056
Amortization of deferred financing costs.................. 2,056 1,812
Deferred taxes............................................ -- 1,149
Other..................................................... -- (1,077)
--------- ---------
107,041 123,829
Increase in receivables................................... (10,171) (49,212)
Decrease (increase) in other current assets............... (769) 1,080
Decrease in accounts payable and accrued expenses......... (47) (266)
Decrease in accrued interest.............................. (2,474) (701)
Increase in income taxes.................................. -- 11,440
Other, net................................................ (7,442) 5,847
--------- ---------
Net cash flow from operating activities.............. 86,138 92,017
--------- ---------
Investing activities:
Capital expenditures...................................... 2,789 7,387
Acquisitions:
Property and equipment................................. 200 21,750
Intangibles............................................ 52,800 1,150,489
Other assets........................................... -- 56,506
Less liabilities....................................... (2,415) (273,529)
Less: stock issued..................................... -- (67,189)
--------- ---------
Net cash used for investing activities............... 53,374 895,414
--------- ---------
Cash provided (required) before financing
activities.......................................... $ 32,764 (803,397)
========= =========
Financing activities:
Borrowings under debt agreements.......................... 56,000 928,896
Reduction of debt......................................... (320,366) (119,474)
Proceeds from issuance of stock........................... 269,852 1,411
Deferred financing costs.................................. (792) (3,119)
Repurchase of Class A Common Stock........................ (24,838) (4,821)
--------- ---------
Net cash and cash equivalents (used for) provided by
financing activities................................ (20,144) 802,893
Decrease (increase) in cash and cash equivalents.......... (12,620) 504
--------- ---------
Total cash (used for) provided by financing
activities.......................................... $ (32,764) 803,397
========= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-88
<PAGE> 177
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1996
(IN THOUSANDS)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
COMMON STOCK COMMON STOCK COMMON STOCK ADD'L FOREIGN RETAINED
--------------- --------------- --------------- PAID-IN CURRENCY EARNINGS
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL TRANSLATION (DEFICIT)
------ ------ ------ ------ ------ ------ ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994................... 64,729 $129 8,652 $18 1,116 $ 2 260,011 -- (250,841)
Net earnings............. -- -- -- -- -- -- -- -- 54,503
Issuance of Class A
Common Stock........... 13,086 26 -- -- -- -- 269,826 -- --
Conversion of Class B
Common Stock to Class A
Common Stock........... 327 1 (327) (1) -- -- -- -- --
Treasury Stock
acquired............... -- -- -- -- -- -- -- -- --
------ ---- ----- --- ------ --- ------- ----- --------
BALANCE AT DECEMBER 31,
1995................... 78,142 156 8,325 17 1,116 2 529,837 -- (196,338)
Net earnings............. -- -- -- -- -- -- -- -- 25,889
Issuance of Class A
Common Stock related to
acquisition of TDI..... 2,370 5 -- -- -- -- 67,184 -- --
Issuance of Class A
Common Stock upon
exercise of stock
options................ 581 1 -- -- -- -- 1,401 -- --
Issuance of Class B
Common Stock........... -- -- 788 2 -- -- 7 -- --
Conversion of Class B
Common Stock to Class A
Common Stock........... 803 2 (803) (2) -- -- -- -- --
Conversion of Class C
Common Stock to Class A
Common Stock........... 1,116 2 -- -- (1,116) (2) -- -- --
Foreign currency
translation
adjustment............. -- -- -- -- -- -- -- 1,096 --
Income tax benefit from
exercise of stock
options................ -- -- -- -- -- -- 14,873 -- --
Treasury Stock
acquired............... -- -- -- -- -- -- -- -- --
------ ---- ----- --- ------ --- ------- ----- --------
BALANCE AT DECEMBER 31,
1996................... 83,012 $166 8,310 $17 -- $-- 613,302 1,096 (170,449)
====== ==== ===== === ====== === ======= ===== ========
<CAPTION>
TREASURY STOCK
-----------------
SHARES AMOUNT TOTAL
------ -------- -------
<S> <C> <C> <C>
BALANCE AT DECEMBER 31,
1994................... (2,935) $(34,844) (25,525)
Net earnings............. -- -- 54,503
Issuance of Class A
Common Stock........... -- -- 269,852
Conversion of Class B
Common Stock to Class A
Common Stock........... -- -- --
Treasury Stock
acquired............... (1,256) (24,838) (24,838)
------ -------- -------
BALANCE AT DECEMBER 31,
1995................... (4,191) (59,682) 273,992
Net earnings............. -- -- 25,889
Issuance of Class A
Common Stock related to
acquisition of TDI..... -- -- 67,189
Issuance of Class A
Common Stock upon
exercise of stock
options................ -- -- 1,402
Issuance of Class B
Common Stock........... -- -- 9
Conversion of Class B
Common Stock to Class A
Common Stock........... -- -- --
Conversion of Class C
Common Stock to Class A
Common Stock........... -- -- --
Foreign currency
translation
adjustment............. -- -- 1,096
Income tax benefit from
exercise of stock
options................ -- -- 14,873
Treasury Stock
acquired............... (179) (4,821) (4,821)
------ -------- -------
BALANCE AT DECEMBER 31,
1996................... (4,370) $(64,503) 379,629
====== ======== =======
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
F-89
<PAGE> 178
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1996
(1) BUSINESS COMBINATION WITH WESTINGHOUSE ELECTRIC CORPORATION
On June 20, 1996, CBS Corporation, formerly Westinghouse Electric
Corporation, and Infinity Media Corporation, formerly Infinity Broadcasting
Corporation, (the "Company") entered into an Agreement and Plan of Merger (the
"Merger Agreement").
The merger was consummated on December 31, 1996 and pursuant to the Merger
Agreement each share of issued and outstanding share of the Company's common
stock was converted into 1.71 shares of CBS Corporation common stock. The
accompanying consolidated financial statements are presented on the historical
basis of the Company prior to the merger and reflect the results of operations
through December 31, 1996. Costs incurred by the Company related to the merger
are reflected in the accompanying 1996 statement of earnings.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation and Presentation
The consolidated financial statements include the accounts of the Company
and its wholly-owned radio broadcasting and outdoor advertising subsidiaries.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect reported amounts and related disclosures. Actual results could differ
from those estimates.
(b) Revenue Recognition
Revenues derived from the sale of radio advertising spots are recognized
when the spots are broadcast. Revenues from the sale of outdoor advertising
space are recognized proportionately over the contract term.
(c) Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided on a
straight-line basis over estimated useful lives.
(d) Intangible Assets
Intangible assets including goodwill are being amortized over their
estimated useful lives ranging from 5 to 25 years for identifiable intangibles,
and 15 to 25 years for goodwill.
Management continuously monitors and evaluates the realizability of
recorded intangibles to determine whether their carrying values have been
impaired. In evaluating the value and future benefits of intangible assets,
their carrying value is compared to management's best estimate of undiscounted
future cash flows over the remaining amortization period. If such assets are
considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying value of the assets exceeds their fair value. The
Company believes that the carrying value of recorded intangibles is not
impaired.
(e) Impairment of Long-Lived Assets
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," on January 1, 1996. SFAS No. 121
requires that long-lived assets and certain identifiable intangibles be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of assets to
be held and used is measured by a comparison of the
F-90
<PAGE> 179
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
carrying amount of an asset to future net cash flows expected to be generated by
the asset. If such assets are considered to be impaired, the impairment to be
recognized is measured by the amount by which the carrying amount of the assets
exceeds their fair value. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell. Adoption of SFAS No. 121
did not have any impact on the Company's consolidated financial position,
results of operations, or liquidity.
(f) Income Taxes
The Company and its subsidiaries file a consolidated Federal income tax
return.
The Company accounts for income taxes under SFAS No. 109 "Accounting for
Income Taxes," which requires the use of the asset and liability method of
financial accounting and reporting for income taxes. Deferred income taxes
reflect the impact of temporary differences between the amount of assets and
liabilities recognized for financial reporting purposes and the amounts
recognized for tax purposes. In accordance with SFAS No. 109 the deferred taxes
are measured by applying currently enacted tax laws.
(g) Cash Equivalents
Cash equivalents include certificates of deposit and commercial paper with
maturities of one month or less.
(h) Fair Value of Financial Instruments
The estimated fair value of financial instruments is determined by the
Company using the best available market information and appropriate valuation
methodologies. However, considerable judgment is necessary in interpreting
market data to develop the estimates of fair value. Accordingly, the estimates
presented are not neccessarily indicative of the amounts that the Company could
realize in a current market exchange or the value that ultimately will be
realized by the Company upon maturity or disposition. The use of different
market assumptions or estimation methodologies may have a material effect on the
estimated fair value amounts. Most of the Company's financial instruments,
including cash, trade receivables and payables and accruals, are short term in
nature. Accordingly, the carrying amount of such financial instruments
approximates their fair value. The carrying amount of long-term debt other than
subordinated debt approximates fair value. The fair value of subordinated debt
is based on quoted market prices.
(i) Stock Option Plans
On January 1, 1996, the Company adopted SFAS No. 123, "Accounting for
Stock-Based Compensation," which permits entities to recognize as expense over
the vesting period the fair value of all stock-based awards on the date of
grant. Alternatively, SFAS No. 123 allows entities to continue to measure
compensation cost for stock-based awards using the intrinsic value based method
of accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees," and to provide pro forma net income disclosures as if the fair value
based method defined in SFAS No. 123 had been applied. The Company has elected
to continue to apply the provisions of APB Opinion No. 25 and provide the pro
forma disclosure provisions of SFAS No. 123.
(j) Foreign Currency Translation
The statutory accounts of the Company's consolidated foreign subsidiaries
are maintained in accordance with local accounting regulations and are stated in
local currencies. Local statements are translated into U.S.
F-91
<PAGE> 180
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
generally accepted accounting principles and U.S. dollars in accordance with
SFAS No. 52, "Accounting for Foreign Currency Translation."
Under SFAS No. 52, foreign currency assets and liabilities are translated
using the exchange rates in effect at the balance sheet date. Results of
operations are translated using the average exchange rates prevailing throughout
the year. The effects of exchange rate fluctuations on translating foreign
currency assets and liabilities into U.S. dollars are accumulated as part of the
foreign currency translation adjustment in consolidated stockholders' equity.
Gains and losses from foreign currency transactions are included in net earnings
in the period in which they occur.
(k) Advertising Costs
Advertising costs are expensed as incurred.
(l) New Pronouncements
Consolidated Statement of Comprehensive Income
In June 1997, SFAS No. 130, "Reporting Comprehensive Income," and SFAS No.
131, "Disclosure About Segments of an Enterprise and Related Information," were
issued. SFAS No. 130 requires that an enterprise report by major component and
as a single total the change in its net assets from nonowner sources during the
period. SFAS No. 131 establishes annual and interim reporting standards for an
enterprise's operating segments and related disclosures about its products,
services, geographic areas, and major customers. Adoption of these statements
will not impact the Company's consolidated financial position, results of
operations, or cash flows, and any effect will be limited to the form and
content of its disclosures. Both statements are effective for fiscal years
beginning after December 15, 1997.
(3) STOCK OFFERINGS AND STOCK DIVIDENDS
Effective May 12, 1995, the Company declared a three-for-two stock split in
the form of a stock dividend payable on May 19, 1995 to shareholders of record
at the close of business on May 12, 1995.
On October 24, 1995, the Company, through a public offering sold 12,750,000
shares of Class A Common Stock, resulting in proceeds to the Company of
approximately $269 million.
On March 18, 1996, the Company declared a three-for-two stock split in the
form of a stock dividend payable on April 11, 1996 to holders of record on March
28, 1996. The accompanying consolidated financial statements reflect the effect
of all of the above stock dividends.
On July 10, 1996, the Company amended its Restated Certificate of
Incorporation to increase the number of authorized shares of Class A Common
Stock to 300,000,000.
(4) ACQUISITIONS
In April 1995, the Company acquired Dallas/Ft. Worth radio station KLUV-FM
from TK Communications, Inc. for approximately $51 million, plus costs.
On January 16, 1996 the Company completed the acquisition of radio stations
KYNG-FM and KSNN-FM in Dallas, KFRC-FM, KFRC-AM and KYCY-FM in San Francisco,
WYCD-FM in Detroit and KYCW-FM in Seattle from various entities affiliated with
Alliance Broadcasting, Inc. for approximately $275 million, plus costs. On May
22, 1996, the Company completed the sale of its Seattle radio station KYCW-FM to
EZ Communications for $26 million.
F-92
<PAGE> 181
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On March 26, 1996, the Company completed the acquisition of all of the
outstanding stock of TDI Worldwide, Inc. ("TDI"), a seller of advertising space
on buses and transit systems, for approximately $300 million plus costs.
On June 27, 1996, the Company completed the acquisition of twelve radio
stations from Granum Holdings L.P. for approximately $425 million including
working capital, plus costs. The radio stations are KRBV-FM, KHVN-AM and KOAI-FM
in Dallas/Ft. Worth, WBOS-FM and WOAZ-FM in Boston, WCAO-AM and WXYV-FM in
Baltimore, WAOK-AM and WVEE-FM in Atlanta and WHTQ-FM, WMMO-FM and WHOO-AM in
Orlando.
The purchase price of the above acquisitions were funded by borrowings
under the Company's bank credit agreement (the "Credit Agreement") and issuance
of approximately 2.4 million shares of the Company's Class A Common Stock.
The above acquisitions have been accounted for by the purchase method of
accounting. The purchase price has been allocated to the assets acquired,
principally intangible assets, and the liabilities assumed based on their
estimated fair values at the date of acquisition. The excess of purchase price
over the estimated fair values of the net assets acquired has been recorded as
goodwill.
The operating results of these acquisitions are included in the Company's
consolidated results of operations from the date of acquisition. The following
unaudited pro forma summary presents the consolidated results of operations as
if the 1995 and 1996 acquisitions had occurred as of the beginning of 1995,
after giving effect to certain adjustments, including amortization of intangible
assets and interest expense on the acquisition debt. These pro forma results
have been prepared for comparative purposes only and do not purport to be
indicative of what would have occurred had the acquisitions been made as of
those dates or of results which may occur in the future.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1995 1996
---------- ---------
(UNAUDITED)
(IN THOUSANDS)
<S> <C> <C>
Net revenues........................................... $656,752 750,521
Net earnings........................................... 15,361 6,682
</TABLE>
In May 1996, the Company entered into an agreement with Cox Broadcasting,
Inc. ("Cox") to swap its radio stations WHTQ-FM, WMMO-FM and WHOO-AM in Orlando
for Cox's radio stations WCKG-FM and WYSY-FM in Chicago. In addition, the
Company has agreed to pay Cox $20 million. The transaction has been structured
as a tax-free, like-kind exchange. The acquisitions closed in February 1997. In
August 1996, the Company entered into an agreement to sell WYSY-FM to Spanish
Broadcasting System, Inc. for $33 million upon completion of the Company's
acquisition of the station from Cox. This transaction closed in March 1997.
In October 1996, the Company entered into an agreement to sell its Dallas
radio station KEWS-FM for $32 million to Salem Communications Corp. ("Salem")
and as part of the consideration, the Company will receive Salem's Dallas
station KDFX-AM. The Company also entered into an agreement to sell its Dallas
station KDMM-AM for $675,000 to Marcos Rodriguez, Inc. Such transactions closed
February 1997.
The Company has reported the carrying value of the assets held for sale at
the lower of cost or their estimated net realizable value. The Company has
presented the assets held for sale as a separate line item in its consolidated
balance sheets.
F-93
<PAGE> 182
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
On February 3, 1994, the Company, Unistar Communications Group, Inc.
("UCG"), Unistar Radio Networks, Inc. ("Unistar") and Westwood One, Inc.
("Westwood One") consummated the purchase by Westwood One of Unistar for
approximately $101.3 million. In connection with this transaction, an affiliate
of the Company received 5 million newly issued shares of common stock of
Westwood One for $3 per share and a warrant to purchase an additional 3 million
shares of Westwood One's common stock at a purchase price of $3 per share,
subject to certain vesting requirements. The Company manages Westwood One
pursuant to a management agreement which provides for a base management fee plus
a bonus based on achieving cash flow targets and additional warrants to acquire
shares of Westwood One's common stock in the event that Westwood One's common
stock trades above certain target price levels. In September 1994 and August
1995, pursuant to such provision, the Company received a warrant to purchase
500,000 shares of Westwood One's common stock at an exercise price of $3 per
share and 500,000 shares at an exercise price of $4 per share, respectively. In
December 1995 and 1996, the Company received approximately $5,593,750 and
$5,750,000, respectively, as a result of Westwood One's purchase and
cancellation of the Company's warrants exercisable at $3 and $4 per share,
respectively. The Company accounts for its investment in Westwood One on the
equity basis.
(5) PROPERTY AND EQUIPMENT
A summary of property and equipment, at cost, for the years ended December
31, 1995 and 1996 follows:
<TABLE>
<CAPTION>
1995 1996
------- ------
(IN THOUSANDS)
<S> <C> <C>
Machinery, equipment and fixtures......................... $24,845 45,908
Land, building and improvements........................... 10,392 10,947
------- ------
$35,237 56,855
======= ======
</TABLE>
For the years ended December 31, 1995 and 1996, depreciation expense was
$4,714,000 and $7,984,000, respectively.
(6) LONG-TERM DEBT
Long-term debt at December 31, 1995 and 1996 consists of the following:
<TABLE>
<CAPTION>
1995 1996
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
Bank Borrowings(a).................................... $ 84,750 935,401
10 3/8% Subordinated Debentures due 2002(b)........... 182,634 141,734
Other................................................. -- 1,404
-------- ---------
267,384 1,078,539
Less: Current portion................................. -- (563)
-------- ---------
$267,384 1,077,976
======== =========
</TABLE>
- ---------------
(a) On June 13, 1996, the Company and its subsidiaries amended and restated its
existing Credit Agreement to provide for aggregate borrowings of up to
$1,500 million. As of December 31, 1996, the Company had additional
borrowings available under the facility of approximately $565 million.
F-94
<PAGE> 183
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
Under the terms of a Security Agreement among the Company, its subsidiaries
and one of the banks acting as collateral agent, substantially all of the
assets of the Company and its subsidiaries, as well as the stock of the
Company's subsidiaries, are pledged to secure borrowings under the Credit
Agreement.
The Credit Agreement provides for quarterly principal payments beginning
September 1999, and also permits voluntary prepayments in whole or in part
at any time.
Under the Credit Agreement, interest is payable quarterly, based on the (i)
prime rate or (ii) London Interbank Offer Rate.
In the normal course of business, the Company enters into a variety of
interest rate protection agreements, options and swaps in order to limit its
exposure due to adverse fluctuations in interest rates. These instruments
are executed with creditworthy financial institutions. As a matter of policy
the Company does not engage in derivatives trading. Generally, payments and
receipts associated with financial instruments used to manage interest rate
risk are recognized along with the effects of associated transactions. As of
December 31, 1996, the Company has entered into various interest rate
protection agreements under which the Company's interest rate on $55 million
of borrowings under the Credit Agreement is fixed at between 6.85% and 7.0%
per annum, plus applicable margin. These agreements expire on various dates
ranging from April 1997 to July 2000.
(b) At December 31, 1996, the fair value of the Company's 10 3/8% Senior
Subordinated Notes was estimated to be $149,090,000, based on the quoted
market prices for the same issue.
During 1995 and 1996, the Company redeemed a face amount of $17,366,000 and
$40,900,000, respectively, of its 10 3/8 Senior Subordinated Notes.
The scheduled maturities of long-term debt for the next five years and
after are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, AMOUNT
------------------------ --------------
(IN THOUSANDS)
<S> <C>
1997................................................. $ 563
1998................................................. 638
1999................................................. 150,207
2000................................................. 225,068
2001................................................. 300,000
After 2001........................................... 402,063
----------
$1,078,539
==========
</TABLE>
For the years ended 1995 and 1996, the Company paid cash for interest of
$44,802,000 and $63,090,000, respectively.
During 1995, the Company registered with the Securities and Exchange
Commission, pursuant to a shelf registration statement, $500 million in
aggregate principal amount of its debt securities.
(7) EMPLOYEE AND OTHER POSTRETIREMENT BENEFIT PLANS
The Company and its subsidiaries have qualified 401(k) profit sharing plans
covering substantially all of its non-union full-time employees. For the years
ended December 31, 1995 and 1996, contributions to these plans by the Company
were de minimus.
The Company does not provide any postretirement health care and life
insurance benefits to its employees and, accordingly, has no liabilities for
such benefits.
F-95
<PAGE> 184
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(8) INCOME TAXES
The provision for income taxes for the years ended December 31, 1995 and
1996 is as follows:
<TABLE>
<CAPTION>
1995 1996
------ ------
(IN THOUSANDS)
<S> <C> <C>
Current:
Federal.................................................. $ -- 18,894
State and local.......................................... 1,588 2,840
Foreign.................................................. -- 4,620
------ ------
Total current income tax expense................. 1,588 26,354
Deferred income tax expense................................ -- 1,149
------ ------
$1,588 27,503
====== ======
</TABLE>
No federal income taxes were provided in 1995 as a result of available net
loss carryforwards.
The Company had pre-tax income from foreign operations in 1996 of
approximately $12 million. Pre-tax income from domestic operations was
approximately $56 million and $41 million in 1995 and 1996, respectively.
Temporary differences which give rise to the deferred tax liabilities at
December 31, 1996 primarily relate to intangibles acquired as part of the TDI
and Granum stock acquisitions. Additionally, the value of the deferred tax asset
resulting from net operating loss carryforwards is offset by a valuation
allowance of equal amount.
The Company's income tax expense for the year ended December 31, 1996
differs from the expense that would have resulted from applying the federal
statutory rates during that period to income before income tax expense. The
reasons for these differences are explained in the following table:
<TABLE>
<CAPTION>
1996
--------------
(IN THOUSANDS)
<S> <C>
Expense based upon federal statutory rate of 35%............ $18,687
Amortization of goodwill.................................... 5,422
State and local taxes, net of federal benefit............... 1,846
Nondeductible expenses...................................... 5,635
Utilization of net operating loss........................... (4,936)
Other, net.................................................. 849
-------
Income tax expense.......................................... $27,503
=======
</TABLE>
At December 31, 1996, the Company had available net operating loss
carryforwards of approximately $67 million which will expire from 2004 to 2009.
Approximately $34 million and $26 million of the net operating loss
carryforwards relate to benefits arising from exercise of stock options and
acquisitions, respectively. These amounts will be reflected as credits to
additional paid in capital ($12 mil) and goodwill ($9 mil) when they are
ultimately utilized. During 1996, the tax effect of utilizing net operating loss
carryforwards arising from acquisitions was reflected as a credit to goodwill in
the amount of $7,123,000.
For the years ended December 31, 1995 and 1996, the Company paid cash for
income taxes of $3,620,000 and $10,338,000, respectively.
F-96
<PAGE> 185
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(9) EMPLOYEE STOCK PLANS
Employee Stock Option Plan
The Company's 1988 Employee Stock Option Plan as amended provides for a
grant of options to purchase 10,494,788 shares of the Company's Class A Common
Stock and 1,771,875 shares of Class B Common Stock. The options are exercisable
in equal amounts generally over five years from the date of the grant. At
December 31, 1996, options for approximately 9,500,000 shares of Class A Common
Stock had been cumulatively granted and options for 3,838,900 shares were
exercisable.
Employee Deferred Share Plan
The Deferred Share Plan permits the grant of up to 541,443 Class A Deferred
Shares and 1,761,681 Class B Deferred Shares to executives or other key
employees of the Company.
The following is a table summarizing the changes during the years ended
December 31, 1995 and 1996 in options and deferred shares outstanding:
<TABLE>
<CAPTION>
CLASS A COMMON STOCK
---------------------------------------------
DEFERRED EXERCISE WEIGHTED AVERAGE
SHARES AND PRICE PER EXERCISE PRICE
OPTIONS SHARE PER SHARE
---------- ------------ ----------------
<S> <C> <C> <C>
Outstanding as of December 31,
1994............................... 7,237,937 $ .002-12.67 6.63
Granted/Issued....................... -- --
Canceled............................. (65,813) 3.90-11.55 7.73
Exercised............................ (335,528) .06-12.45 2.79
--------- ------------ -----
Total outstanding as of
December 31, 1995........ 6,836,596 6.81
---------
Granted/Issued....................... 1,712,528 23.50-33.63 25.70
Canceled............................. -- --
Exercised............................ (581,053) .002-12.45 3.51
--------- ------------ -----
Total outstanding as of
December 31, 1996........ 7,968,071 11.11
=========
</TABLE>
At December 31, 1996, the range of exercise prices was $.06-$33.63 and the
weighted-average remaining contractual lives of outstanding options was 7 years.
During 1988, the Company issued options with an exercise price of $0.12 per
share to an officer of the Company to purchase 4,742,996 shares of the Company's
Class B Common Stock. Through the year ended December 31, 1995 and during 1996,
options to purchase 379,556 and 750,000 shares, respectively, were exercised.
In addition, the Company issued 265,689 options and 29,705 deferred shares
in 1995 and 770,166 options and 8,282 deferred shares in 1996 to purchase shares
of Class B Common Stock at an exercise price per share of $14.05, $.002, $27.58
and $.002 per share, respectively. As of December 31, 1996, 1,457,370 and 37,987
of such options and deferred shares, respectively, were outstanding.
The per share weighted-average fair value of stock options granted during
1995 and 1996 was $7.72 and $13.86, respectively, on the date of the grant using
the Black Scholes option-pricing model with the following weighted-average
assumptions: expected volatility of 35.14% in 1995 and 38.33% in 1996, expected
dividend
F-97
<PAGE> 186
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
yield of zero percent, risk-free interest rate of 6.24% in 1995 and 6.27% in
1996 and an expected life of 7 years in both 1995 and 1996.
The Company applies APB Opinion No. 25 in recording the value of stock
options granted pursuant to its plans. No compensation cost has been recognized
for stock options granted under the Company's Plans. Had the Company determined
compensation cost based on the fair value at the grant date for its stock
options under SFAS No. 123, the Company's net income would have decreased to the
pro forma amounts indicated below:
<TABLE>
<CAPTION>
1995 1996
------- ------
(IN THOUSANDS)
<S> <C> <C>
Net income:
As reported............................................. $54,503 25,889
Pro forma............................................... 54,207 21,085
</TABLE>
Pro forma net income reflects only options granted under the Company Plans
in 1995 and 1996. Therefore, the full impact of calculating compensation cost
for stock options under SFAS No. 123 is not reflected in the pro forma net
income amounts presented above because compensation cost is reflected over the
options' vesting period of 5 years and compensation cost for options granted
prior to January 1, 1995 is not considered.
(10) STOCKHOLDERS' EQUITY
Each share of Class A Common Stock and each share of Class C Common Stock
is entitled to one vote per share. Each Share of Class B Common Stock is
generally entitled to ten votes per share. Shares of Class B Common Stock and
Class C Common Stock, at the option of the holder, may be converted at any time
into an equal number of shares of Class A Common Stock. Each share of Class B
Common Stock and Class C Common Stock automatically converts into one share of
Class A Common Stock upon the sale, gift or other transfer of such share to any
person other than an associate of the Company (as defined) and upon certain
other events. On October 4, 1996, the Class C Common Stockholders converted all
shares into Class A Common Stock.
The Company has reserved 72,989 shares of Class A Common Stock, with an
exercise price of $.001 and 20,104,934 shares of Class C Common Stock with an
exercise price of $.001 for issuance upon the exercise of certain warrants and
options outstanding as of December 31, 1996.
(11) RELATED PARTY TRANSACTIONS
Several of the Company's radio stations are affiliated with Westwood One's
radio network and the Company sells several programs to Westwood One. During
1995 and 1996, the Company earned revenue related to such transactions
aggregating approximately $14,657,000 and $17,700,000 respectively.
In addition, as of December 31, 1995 and 1996, the Company had accounts
receivable from Westwood One amounting to approximately $6,179,000 and
$7,780,000, respectively.
(12) COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries occupy certain office space and
transmitting facilities under lease agreements expiring at various dates through
2008. Management expects that in the normal course of business, leases that
expire will be renewed or replaced by other leases. Most leases provide for
escalation of rent based on increases in the Consumer Price Index and/or real
estate taxes.
F-98
<PAGE> 187
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The following is a summary of the future minimum rental commitments under
existing leases:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, TOTAL
- ------------------------ --------------
(IN THOUSANDS)
<S> <C>
1997................................................. $15,431
1998................................................. 12,440
1999................................................. 10,698
2000................................................. 8,820
2001................................................. 7,749
After 2001........................................... 12,456
-------
$67,594
=======
</TABLE>
Rent expense applicable to such leases amounted to approximately $4,363,000
and $6,360,348 for the years ended December 31, 1995 and 1996, respectively.
At December 31, 1996, the Company is committed to the purchase of broadcast
rights for various sports events and other programming including on-air talent,
aggregating approximately $155 million. The aggregate payments related to these
commitments are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, TOTAL
- ------------------------ --------------
(IN THOUSANDS)
<S> <C>
1997........................................................ $ 53,560
1998........................................................ 37,500
1999........................................................ 33,616
2000........................................................ 29,243
2001........................................................ 1,021
--------
$154,940
========
</TABLE>
Guaranteed Franchise Payments
The Company's outdoor advertising business has franchise rights entitling
it to display advertising on such media as buses, taxis, trains, bus shelters,
terminals, billboards, and phone kiosks. Under most of these franchise
agreements, the franchiser is entitled to receive the greater of a percentage of
the relevant advertising revenues, net of advertising agency fees, or a
specified guaranteed minimum annual payment. At December 31, 1996, the future
minimum franchise payments are as follows:
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31, TOTAL
------------------------ --------------
(IN THOUSANDS)
<S> <C>
1997................................................. $119,645
1998................................................. 106,401
1999................................................. 96,718
2000................................................. 59,438
2001................................................. 17,435
After 2001........................................... 9,531
--------
Total guaranteed franchise payments............... $409,168
========
</TABLE>
Franchise costs totaled $127 million in 1996.
F-99
<PAGE> 188
INFINITY MEDIA CORPORATION
(FORMERLY INFINITY BROADCASTING CORPORATION)
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(13) INTANGIBLE AND OTHER ASSETS
Intangible assets at cost, as of December 31, 1995 and 1996, include:
<TABLE>
<CAPTION>
1995 1996
-------- ---------
(IN THOUSANDS)
<S> <C> <C>
FCC licenses.......................................... $370,394 727,276
Franchise costs....................................... -- 276,700
Goodwill.............................................. 152,724 591,334
Covenants not to compete.............................. 45,000 45,000
Favorable leasehold interest.......................... 30,260 30,260
-------- ---------
$598,378 1,670,570
======== =========
</TABLE>
For the years ended December 31, 1995 and 1996, amortization expense was
$45,768,000 and $88,072,000, respectively.
Other assets include principally deferred financing costs and are amortized
over the term of the financing.
(14) SUBSEQUENT EVENT
Effective October 29, 1998, the Company changed its name from Infinity
Broadcasting Corporation to Infinity Media Corporation.
F-100
<PAGE> 189
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 8
Use of Proceeds............................ 16
Dividend Policy............................ 16
Dilution................................... 17
Capitalization............................. 18
Selected Combined and Pro Forma Financial
Data..................................... 19
Unaudited Combined Pro Forma Financial
Information.............................. 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 25
Business................................... 32
Management................................. 48
Principal Stockholders and Stock
Ownership................................ 56
Relationships Between the Company and
CBS...................................... 57
Description of Capital Stock............... 64
Certain Provisions of the Certificate of
Incorporation and By-Laws of the
Company.................................. 67
Description of Indebtedness................ 71
Shares Eligible for Future Sale............ 75
United States Tax Consequences to
Non-United States Holders................ 76
Underwriting............................... 78
Legal Matters.............................. 81
Experts.................................... 81
Available Information...................... 82
Index to Financial Statements.............. F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
135,000,000 SHARES
INFINITY LOGO
INFINITY
BROADCASTING
CORPORATION
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH & CO.
BT ALEX. BROWN
GOLDMAN, SACHS & CO.
ALLEN & COMPANY INCORPORATED
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY
BEAR, STEARNS & CO. INC.
DEUTSCHE BANK SECURITIES
ING BARING FURMAN SELZ LLC
LAZARD FRERES & CO. LLC
PAINEWEBBER INCORPORATED
SANFORD C. BERNSTEIN & CO., INC.
SCHRODER & CO. INC.
SG COWEN
ABN AMRO ROTHSCHILD
A DIVISION OF ABN AMRO INCORPORATED
BANCBOSTON ROBERTSON STEPHENS
CHASE SECURITIES INC.
J.P. MORGAN & CO.
WASSERSTEIN PERELLA SECURITIES, INC.
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE> 190
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED DECEMBER 4, 1998
PROSPECTUS
135,000,000 SHARES
INFINITY LOGO
INFINITY BROADCASTING CORPORATION
CLASS A COMMON STOCK
------------------------
All of the shares of Class A Common Stock, par value $.01 per share, offered
hereby are being sold by Infinity Broadcasting Corporation (the "Company"). Of
the 135,000,000 shares of Class A Common Stock offered hereby, 20,250,000 shares
are being offered for sale initially outside the United States and Canada (the
"International Offering") by the International Managers and 114,750,000 shares
are being offered for sale initially in a concurrent offering in the United
States and Canada (the "U.S. Offering" and, together with the International
Offering, the "Offerings") by the U.S. Underwriters (collectively with the
International Managers, the "Underwriters"). The initial public offering price
and the underwriting discount per share will be identical for both Offerings.
See "Underwriting."
Prior to the Offerings, there has been no public market for the Class A
Common Stock. It is currently estimated that the initial public offering price
of the Class A Common Stock offered hereby will be between $19 and $22 per
share. For a discussion of the factors considered in determining the initial
public offering price of the Class A Common Stock, see "Underwriting."
The Class A Common Stock has been approved for listing on the New York Stock
Exchange under the symbol "INF," subject to official notice of issuance.
(continued on page i)
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN MATERIAL
RISK FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE CLASS A
COMMON STOCK OFFERED HEREBY.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNT(1) COMPANY(2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............................. $ $ $
- ------------------------------------------------------------------------------------------------------------------
Total(3)............................... $ $ $
- ------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $ .
(3) The Company has granted the International Managers and the U.S. Underwriters
options to purchase up to an additional 3,037,500 and 17,212,500 shares of
Class A Common Stock, respectively, in each case, exercisable within 30 days
after the date hereof, solely to cover over-allotments, if any. If such
options are exercised in full, the total Price to Public, Underwriting
Discount and Proceeds to Company will be $ , $ and
$ , respectively. See "Underwriting."
------------------------
The shares of Class A Common Stock are offered by the several Underwriters,
subject to prior sale, when, as and if issued to and accepted by them, subject
to approval of certain legal matters by counsel for the Underwriters and certain
other conditions. The Underwriters reserve the right to withdraw, cancel or
modify such offer and to reject orders in whole or in part. It is expected that
delivery of the shares of Class A Common Stock will be made in New York, New
York on or about , 1998.
------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL GOLDMAN SACHS INTERNATIONAL
ALLEN & COMPANY INCORPORATED CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE LEHMAN BROTHERS MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC SALOMON SMITH BARNEY INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED DEUTSCHE BANK ING BARINGS LAZARD CAPITAL
MARKETS
PAINEWEBBER INTERNATIONAL SANFORD C. BERNSTEIN & CO.,
INC. SCHRODERS SG COWEN INTERNATIONAL
ABN AMRO ROTHSCHILD BANCBOSTON ROBERTSON STEPHENS CHASE MANHATTAN
INTERNATIONAL LIMITED
J.P. MORGAN SECURITIES LTD. WASSERSTEIN PERELLA SECURITIES, INC.
------------------------
The date of this Prospectus is , 1998.
<PAGE> 191
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
UNDERWRITING
Merrill Lynch International is acting as the lead manager (the "Lead
Manager") for each of the International Managers named below (the "International
Managers"). Subject to the terms and conditions set forth in an international
purchase agreement (the "International Purchase Agreement") among the Company
and the International Managers, and concurrently with the sale of 114,750,000
shares of Class A Common Stock to the U.S. Underwriters (as defined below), the
Company has agreed to sell to the International Managers, and each of the
International Managers severally and not jointly has agreed to purchase from the
Company, the aggregate number of shares of Class A Common Stock set forth
opposite its name below.
<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL MANAGERS SHARES
---------------------- -----------
<S> <C> <C>
Merrill Lynch International.....................................
BT Alex. Brown International, a division of Bankers Trust
International PLC.............................................
Goldman Sachs International.....................................
Allen & Company Incorporated....................................
Credit Suisse First Boston (Europe) Limited.....................
Donaldson, Lufkin & Jenrette International......................
Lehman Brothers International (Europe)..........................
Morgan Stanley & Co. International Limited......................
NationsBanc Montgomery Securities LLC...........................
Salomon Brothers International Limited..........................
Bear, Stearns International Limited.............................
Deutsche Bank AG London.........................................
ING Barings.....................................................
Lazard Capital Markets..........................................
PaineWebber International (U.K.) Ltd. ..........................
Sanford C. Bernstein & Co., Inc. ...............................
J. Henry Schroder & Co. Limited.................................
SG Cowen International L.P. ....................................
ABN AMRO Rothschild.............................................
BancBoston Robertson Stephens Inc. .............................
Chase Manhattan International Limited...........................
J.P. Morgan Securities Ltd. ....................................
Wasserstein Perella Securities, Inc. ...........................
-----------
Total.............................................. 20,250,000
===========
</TABLE>
The Company has also entered into a U.S. purchase agreement (the "U.S.
Purchase Agreement" and, together with the International Purchase Agreement, the
"Purchase Agreements") with certain underwriters in the United States and Canada
(the "U.S. Underwriters" and, together with the International Managers, the
"Underwriters"), for whom Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") is acting as the representative (the "U.S. Representative").
Subject to the terms and conditions set forth in the U.S. Purchase Agreement,
and concurrently with the sale of 20,250,000 shares of Class A Common Stock to
the International Managers pursuant to the International Purchase Agreement, the
Company has agreed to sell to the U.S. Underwriters, and each of the U.S.
Underwriters severally and not jointly has agreed to purchase from the Company,
an aggregate of 114,750,000 shares of Class A Common Stock. The initial public
offering price per share of Class A Common Stock and the total underwriting
discount per share of Class A Common Stock are identical under the International
Purchase Agreement and the U.S. Purchase Agreement.
In the International Purchase Agreement and the U.S. Purchase Agreement,
the several International Managers and the several U.S. Underwriters,
respectively, have agreed, subject to the terms and conditions set forth
therein, to purchase all of the shares of the Class A Common Stock being sold
pursuant to each such Purchase Agreement if any of the shares of Class A Common
Stock being sold pursuant to each such Purchase Agreement are purchased. Under
certain circumstances under the Purchase Agreements, the commitments of
non-defaulting Underwriters may be increased. The closings with respect to the
sale of shares
ALT-1
<PAGE> 192
[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
of Class A Common Stock to be purchased by the International Managers and the
U.S. Underwriters are conditioned upon one another.
The Lead Manager has advised the Company that the International Managers
propose initially to offer the shares of Class A Common Stock to the public at
the initial public offering price set forth on the cover page of this
Prospectus, and to certain dealers at such price less a concession not in excess
of $ per share of Class A Common Stock. The International Managers may
allow, and such dealers may reallow, a discount not in excess of $ per share
of Class A Common Stock on sales to certain other dealers. After the initial
public offering, the public offering price, concession and discount may be
changed.
The Company has granted an option to the International Managers,
exercisable for 30 days after the date of this Prospectus, to purchase up to an
aggregate of 3,037,500 additional shares of Class A Common Stock at the initial
public offering price set forth on the cover page of this Prospectus, less the
underwriting discount. The International Managers may exercise this option
solely to cover over-allotments, if any, made on the sale of the Class A Common
Stock offered hereby. To the extent that the International Managers exercise
this option, each International Manager will be obligated, subject to certain
conditions, to purchase a number of additional shares of the Class A Common
Stock proportionate to such International Manager's initial amount reflected in
the foregoing table. The Company has also granted an option to the U.S.
Underwriters, exercisable for 30 days after the date of this Prospectus, to
purchase up to an aggregate of 17,212,500 additional shares of Class A Common
Stock to cover over-allotments, if any, on terms similar to those granted to the
International Managers.
At the request of the Company, the Underwriters have reserved for sale, at
the initial public offering price, up to 5% of the aggregate number of shares of
Class A Common Stock offered hereby to be sold to certain directors, officers
and employees of CBS and the Company (including Messrs. Karmazin, Suleman, Mason
and Apfelbaum) and other persons associated with the Company or with any
director, officer or employee of the Company who have expressed an interest in
purchasing such shares. The number of shares of Class A Common Stock available
for sale to the general public will be reduced to the extent such persons
purchase such reserved shares. Any reserved shares which are not orally
confirmed for purchase within one day of the pricing of the Offerings will be
offered by the Underwriters to the general public on the same terms as the other
shares offered by this Prospectus.
The Company, CBS and Mr. Karmazin have agreed, subject to certain
exceptions, with the Underwriters not to: (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of or otherwise dispose
of or transfer any shares of Common Stock (other than in the Offerings, pursuant
to the Company's 1998 Plan, Annual Incentive Plan and Savings Plans or in
connection with any acquisitions to be made by the Company in the future in
consideration for shares of Class A Common Stock) or securities convertible into
or exchangeable or exercisable for Common Stock, whether now owned or thereafter
acquired by the person executing the agreement or with respect to which the
person executing the agreement thereafter acquires the power of disposition, or
file a registration statement under the Securities Act with respect to the
foregoing; or (ii) enter into any swap or other agreement or any transaction
that transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or other securities, in cash or otherwise, without the prior
written consent of Merrill Lynch on behalf of the Underwriters for a period of
180 days after the date of this Prospectus. See "Shares Eligible for Future
Sale."
The International Managers and the U.S. Underwriters have entered into an
intersyndicate agreement (the "Intersyndicate Agreement") that provides for the
coordination of their activities. Pursuant to the Intersyndicate Agreement, the
International Managers and the U.S. Underwriters are permitted to sell shares of
Class A Common Stock to each other for purposes of resale at the initial public
offering price, less an amount not greater than the selling concession. Under
the terms of the Intersyndicate Agreement, the U.S. Underwriters and any dealer
to whom they sell shares of Class A Common Stock will not offer to sell or sell
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
shares of Class A Common Stock to persons who are non-U.S. or non-Canadian
persons or to persons they believe intend to resell to persons who are non-U.S.
or non-Canadian persons, and the International Managers and any dealer to whom
they sell shares of Class A Common Stock will not offer to sell or sell shares
of Class A Common Stock to U.S. persons or to Canadian persons or to persons
they believe intend to resell to U.S. persons or to Canadian persons, except in
the case of transactions pursuant to the Intersyndicate Agreement.
Prior to the Offerings, there has been no public market for the Class A
Common Stock of the Company. The initial public offering price will be
determined through negotiations among the Company and the U.S. Representative
and the Lead Manager. The factors considered in determining the initial public
offering price, in addition to prevailing market conditions, are price-earnings
ratios of publicly traded companies that the U.S. Representative and the Lead
Manager believe to be comparable to the Company, certain financial information
of the Company, the history of, and the prospects for, the Company and the
industry in which it competes, and an assessment of the Company's management,
its past and present operations, the prospects for, and timing of, future
revenues of the Company, the present state of the Company's development, and the
above factors in relation to market values and various valuation measures of
other companies engaged in activities similar to the Company. There can be no
assurance that an active trading market will develop for the Class A Common
Stock or that the Class A Common Stock will trade in the public market
subsequent to the Offerings at or above the initial public offering price.
The Class A Common Stock has been approved for listing on the NYSE under
the symbol "INF," subject to official notice of issuance. In order to meet the
requirements for listing of the Class A Common Stock on that exchange, the U.S.
Underwriters and the International Managers have undertaken to sell lots of 100
or more shares to a minimum of 2,000 beneficial owners.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including certain liabilities under the Securities Act, or to
contribute to payments the U.S. Underwriters and International Managers may be
required to make in respect thereof.
Until the distribution of the Class A Common Stock is completed, rules of
the Commission may limit the ability of the Underwriters and certain selling
group members to bid for and purchase the Class A Common Stock. As an exception
to these rules, the U.S. Representative is permitted to engage in certain
transactions that stabilize the price of the Class A Common Stock. Such
transactions consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Class A Common Stock.
If the Underwriters create a short position in the Class A Common Stock in
connection with the Offerings, i.e., if they sell more shares of the Class A
Common Stock than are set forth on the cover pages of this Prospectus, the U.S.
Representative and the Lead Manager, respectively, may reduce that short
position by purchasing Class A Common Stock in the open market. The U.S.
Representative and the Lead Manager, respectively, may also elect to reduce any
short position by exercising all or part of the over-allotment option described
above.
The U.S. Representative and the Lead Manager, respectively, may also impose
a penalty bid on certain Underwriters and selling group members. This means that
if the U.S. Representative or the Lead Manager purchases shares of the Class A
Common Stock in the open market to reduce the Underwriters' short position or to
stabilize the price of the Class A Common Stock, it may reclaim the amount of
the selling concession from the Underwriters and selling group members who sold
those shares as part of the Offerings.
In general, purchases of a security for the purpose of stabilization or to
reduce a short position could cause the price of the security to be higher than
it might be in the absence of such purchases. The imposition of a penalty bid
might also have an effect on the price of the Class A Common Stock to the extent
that it were to discourage resales of the Class A Common Stock.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Class A Common Stock. In addition, neither the Company nor any of the
Underwriters makes any representation that the U.S. Representative or the Lead
Manager will engage in such transactions or that such transactions, once
commenced, will not be discontinued without notice.
Each International Manager has agreed that: (i) it has not offered or sold
and, prior to the expiration of the period of six months from the Closing Date,
will not offer or sell any shares of Class A Common Stock to persons in the
United Kingdom, except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which do not
constitute an offer to the public in the United Kingdom within the meaning of
the Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Class A Common Stock in, from
or otherwise involving the United Kingdom; and (iii) it has only issued or
passed on and will only issue or pass on in the United Kingdom any document
received by it in connection with the issuance of Common Stock to a person who
is of a kind described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such
document may otherwise lawfully be issued or passed on.
No action has been or will be taken in any jurisdiction (except in the
United States) that would permit a public offering of the shares of Class A
Common Stock, or the possession, circulation or distribution of this Prospectus
or any other material relating to the Company or shares of Class A Common Stock
in any jurisdiction where action for that purpose is required. Accordingly, the
shares of Class A Common Stock may not be offered or sold, directly or
indirectly, and neither this Prospectus nor any other offering material or
advertisements in connection with the shares of Class A Common stock may be
distributed or published, in or from any country or jurisdiction except in
compliance with any applicable rules and regulations of any such country or
jurisdiction.
Purchasers of the shares offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.
The U.S. Underwriters and the International Managers have informed the
Company that they do not intend to confirm sales of the shares of the Class A
Common Stock offered hereby to any accounts over which they exercise
discretionary authority.
Certain of the Underwriters or their affiliates from time to time provided
investment banking financial advisory, general financing and banking services to
the Company, CBS Corporation and their respective affiliates, for which they
have received customary compensation, and may continue to do so in the future.
William H. Gray, III, a director of CBS Corporation, is a director of The Chase
Manhattan Corporation and The Chase Manhattan Bank, which are affiliates of
Chase Securities Inc., one of the International Managers.
Certain affiliates of the International Managers are lenders to CBS under
the CBS Credit Agreement. In the event that CBS uses amounts paid to it by the
Company in repayment of the CBS Note to repay amounts outstanding under the CBS
Credit Agreement, affiliates of members of the National Association of
Securities Dealers, Inc. ("NASD") participating in the distribution of the Class
A Common Stock in the Offerings may receive an amount greater than 10% of the
net proceeds of the Offerings. In such event, the underwriting arrangements for
the Offerings will be made in compliance with Rule 2710(c)(8) of the Conduct
Rules of the NASD, which requires that the public offering price of an equity
security be no higher than the price recommended by a qualified independent
underwriter which has participated in the preparation of the Registration
Statement and performed its usual standard of due diligence with respect
thereto. Accordingly, Merrill Lynch (in that capacity, the "Independent
Underwriter") is acting as a qualified independent underwriter for purposes of
determining the price of the Class A Common Stock offered hereby and has
conducted due diligence in connection with its responsibilities as a qualified
independent underwriter. The price at which the Class A Common Stock is being
sold to the public is no higher than the price recommended by the Independent
Underwriter. The Company has agreed to indemnify the Independent Underwriter
against certain liabilities, including liabilities under the Securities Act.
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
LEGAL MATTERS
The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company by Cravath, Swaine & Moore, New York, New York.
Certain legal matters will be passed upon for the Underwriters by Skadden, Arps,
Slate, Meagher & Flom LLP, New York, New York.
EXPERTS
The combined financial statements of the Company as of December 31, 1996
and 1997, and for each of the years in the three-year period ended December 31,
1997, included in this Prospectus and elsewhere in the Registration Statement
have been audited by KPMG Peat Marwick LLP, independent certified public
accountants. Such financial statements have been included herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of American Radio as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997, included in this Prospectus and elsewhere in the Registration
Statement have been audited by KPMG Peat Marwick LLP, independent certified
public accountants. Such financial statements have been included herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
The consolidated financial statements of Old Infinity as of December 31,
1995 and 1996, and for each of the years in the two-year period ended December
31, 1996, included in this Prospectus and elsewhere in the Registration
Statement have been audited by KPMG Peat Marwick LLP, independent certified
public accountants. Such financial statements have been included herein and in
the Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
Upon the effectiveness of a Registration Statement on Form S-1, of which
this Prospectus is a part, the Company will become subject to the information
requirements of the Exchange Act and in accordance therewith will file reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information may be inspected without charge at the public
reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the Commission's
Regional Offices at Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661; and 13th Floor, Seven World Trade Center, New York, New
York 10048. Copies of such material may be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549.
In addition, CBS is subject to the information requirements of the Exchange
Act and in accordance therewith files reports and other information with the
Commission. Such reports and other information may be inspected and copied at
the locations set forth above.
The Company has filed with the Commission a Registration Statement on Form
S-l under the Securities Act with respect to the Class A Common Stock offered
hereby. This Prospectus does not contain all of the information set forth in the
Registration Statement and the exhibits and schedules thereto. For further
information with respect to the Company and the Class A Common Stock offered
hereby, reference is made to the Registration Statement and the exhibits and
schedules filed as a part thereof. Statements contained in this Prospectus as to
the contents of any contract or any other document referred to are not
necessarily complete, and, in each instance, if such contract or document is
filed as an exhibit to the Registration Statement, each such statement is
qualified in all respects by such reference to such exhibit. The Registration
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
Statement, including exhibits and schedules thereto, may be inspected without
charge at the Commission's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof may be obtained
from such office after payment of fees prescribed by the Commission. The public
may obtain information on the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. Electronic filings made by the Company through the
Commission's Electronic Data Gathering, Analysis and Retrieval System are
publicly available through the Commission's World Wide Web site
(http://www.sec.gov), which contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission, including the Company. Upon listing on the NYSE (for which
application has been made), reports and other information concerning the Company
can also be inspected at the offices of the NYSE, 20 Broad Street, New York, New
York 10005.
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[ALTERNATE PAGE FOR INTERNATIONAL PROSPECTUS]
------------------------------------------------------
------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING COVERED BY THIS PROSPECTUS. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE CLASS A COMMON STOCK IN ANY
JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT THERE HAS
NOT BEEN ANY CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN THE AFFAIRS
OF THE COMPANY SINCE THE DATE HEREOF.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 8
Use of Proceeds............................ 16
Dividend Policy............................ 16
Dilution................................... 17
Capitalization............................. 18
Selected Combined and Pro Forma Financial
Data..................................... 19
Unaudited Combined Pro Forma Financial
Information.............................. 21
Management's Discussion and Analysis of
Financial Condition and Results of
Operations............................... 25
Business................................... 32
Management................................. 48
Principal Stockholders and Stock
Ownership................................ 56
Relationships Between the Company and
CBS...................................... 57
Description of Capital Stock............... 64
Certain Provisions of the Certificate of
Incorporation and By-Laws of the
Company.................................. 67
Description of Indebtedness................ 71
Shares Eligible for Future Sale............ 75
United States Tax Consequences to
Non-United States Holders................ 76
Underwriting............................... 78
Legal Matters.............................. 82
Experts.................................... 82
Available Information...................... 82
Index to Financial Statements.............. F-1
</TABLE>
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE CLASS A COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
135,000,000 SHARES
INFINITY LOGO
INFINITY
BROADCASTING
CORPORATION
CLASS A COMMON STOCK
------------------------
PROSPECTUS
------------------------
MERRILL LYNCH INTERNATIONAL
BT ALEX. BROWN INTERNATIONAL
GOLDMAN SACHS INTERNATIONAL
ALLEN & COMPANY INCORPORATED
CREDIT SUISSE FIRST BOSTON
DONALDSON, LUFKIN & JENRETTE
LEHMAN BROTHERS
MORGAN STANLEY DEAN WITTER
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON SMITH BARNEY INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
DEUTSCHE BANK
ING BARINGS
LAZARD CAPITAL MARKETS
PAINEWEBBER INTERNATIONAL
SANFORD C. BERNSTEIN & CO., INC.
SCHRODERS
SG COWEN INTERNATIONAL
ABN AMRO ROTHSCHILD
BANCBOSTON ROBERTSON STEPHENS
CHASE MANHATTAN INTERNATIONAL LIMITED
J.P. MORGAN SECURITIES LTD.
WASSERSTEIN PERELLA SECURITIES, INC.
, 1998
------------------------------------------------------
------------------------------------------------------
<PAGE> 198
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following is an itemization of all expenses (subject to future
contingencies) incurred or expected to be incurred by the Company in connection
with the issuance and distribution of the securities being offered hereby:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 949,679
NASD Filing Fee............................................. 30,500
New York Stock Exchange Listing Fee......................... *
Legal Fees and Expenses..................................... 1,200,000
Blue Sky Fees and expenses (including counsel fees)......... *
Accounting Fees and Expenses................................ 1,900,000
Transfer Agent and Registrar Fees........................... *
Printing and Engraving Expenses............................. 850,000
Underwriting Expense Allowance.............................. *
Miscellaneous Expense....................................... *
----------
Total............................................. $
==========
</TABLE>
- ---------------
* To be furnished by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware ("Section
145") provides that a Delaware corporation may indemnify any persons who are, or
are threatened to be made, parties to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his or
her conduct was illegal. A Delaware corporation may indemnify any persons who
are, or are threatened to be made, a party to any threatened, pending or
completed action or suit by or in the right of the corporation by reason of the
fact that such person was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees) actually and
reasonably incurred by such person in connection with the defense or settlement
of such action or suit, provided such person acted in good faith and in a manner
he or she reasonably believed to be in or not opposed to the corporation's best
interests except that no indemnification is permitted without judicial approval
if the officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him or her against
the expenses which such officer or director has actually and reasonably
incurred.
Section 145 further provides that the indemnification provisions of Section
145 shall not be deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in such person's
official capacity and as to action in another capacity while holding such
office. The Restated Certificate
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<PAGE> 199
contains a provision eliminating, to the fullest extent permitted by the DGCL as
it exists or may in the future be amended, the liability of a director to the
Company and its stockholders for monetary damages for breaches of fiduciary or
other duty as a director. However, the DGCL does not currently allow such
provision to limit the liability of a director for: (i) any breach of the
director's duty of loyalty to the Company or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of laws; (iii) payment of dividends, stock purchases or redemptions
that violate the DGCL; or (iv) any transaction from which the director derived
an improper personal benefit. Such limitation of liability also does not affect
the availability of equitable remedies such as injunctive relief or rescission.
The Restated Certificate and the By-Laws also provide that, to the fullest
extent permitted by the DGCL as it exists or may in the future be amended, the
Company will indemnify and hold harmless any officer or director who is or was
made a party or is threatened to be made a party to or is involved in any manner
in any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director or officer of the Company, and may indemnify
any employee or agent of the Company and any person serving at the request of
the Company as a officer, director, partner, member, employee or agent of
another corporation, partnership, limited liability company, joint venture,
trust, employee benefit plan or other enterprise; provided, however, that the
Company will indemnify any such person seeking indemnification in connection
with a proceeding (or part thereof) initiated by such person only if such
proceeding (or part thereof) was authorized by the Board of Directors or is a
proceeding to enforce such person's claim to indemnification pursuant to the
rights granted by the By-Laws. In addition, the Company will pay the expenses
incurred by any officers and directors, and may pay the expenses incurred by
other persons that may be indemnified pursuant to the Restated Certificate and
the By-Laws, in defending any such proceeding in advance of its final
disposition upon receipt (unless the Company upon authorization of the Board of
Directors waives such requirement to the extent permitted by applicable law) of
an undertaking by or on behalf of such person to repay such amount if it is
ultimately determined that such person is not entitled to be indemnified by the
Company as authorized in the By-Laws or otherwise. The Restated Certificate and
the By-Laws also state that such indemnification is not exclusive of any other
rights of the indemnified party, including rights under any indemnification
agreements or otherwise.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him or her and incurred by him or her in
any such capacity, arising out of his or her status as such, whether or not the
corporation would otherwise have the power to indemnify him or her under Section
145.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
Since the Company's inception, the Company has not sold any unregistered
securities.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
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<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
1. UNDERWRITING AGREEMENTS.
*1.1 Form of U.S. Purchase Agreement.
*1.2 Form of International Purchase Agreement.
2. PLANS OF ACQUISITION.
2.1 Agreement and Plan of Merger, dated August 1, 1995, among
Westinghouse Electric Corporation, Group W Acquisition Corp.
and CBS Inc., is incorporated herein by reference to Exhibit
2 to the report on Form 8-K of CBS Inc. filed with the
Securities and Exchange Commission on August 4, 1995.
2.2 Agreement and Plan of Merger, as amended, dated June 20,
1996, among Westinghouse Electric Corporation, R Acquisition
Corp. and Infinity Broadcasting Corporation, is incorporated
herein by reference to Annex I to the Westinghouse Electric
Corporation's Registration Statement No. 333-13219 on Form
S-4 filed with the Securities and Exchange Commission on
October 22, 1996.
2.3 Amended and Restated Agreement and Plan of Merger, dated
December 18, 1997, by and among American Radio Systems
Corporation, CBS Corporation and R Acquisition Corp., is
incorporated herein by reference to Exhibit 2.1 to the
report on Form 8-K of CBS Corporation filed with the
Securities and Exchange Commission on January 7, 1998.
2.4 First Amendment, dated December 19, 1997, to the Amended and
Restated Agreement and Plan of Merger, dated December 18,
1997, by and among American Radio Systems Corporation, CBS
Corporation and R Acquisition Corp., is incorporated herein
by reference to Exhibit 2.2 to the report on Form 8-K of CBS
Corporation filed with the Securities and Exchange
Commission on January 7, 1998.
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
*3.1 Certificate of Incorporation of the Registrant.
*3.2 By-Laws of the Registrant.
*3.3 Form of Restated Certificate of Incorporation of the
Registrant.
*3.4 Form of Restated By-Laws of the Registrant.
4. INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS,
INCLUDING INDENTURES.
*4.1 Specimen Certificate of Class A Common Stock.
5. OPINIONS.
**5.1 Form of Opinion of Cravath, Swaine & Moore with respect to
the legality of the Class A Common Stock.
10. MATERIAL CONTRACTS.
*10.1 Stock and Asset Transfer Agreement, dated December 2, 1998,
between CBS Broadcasting Inc. and the Registrant.
*10.2 Stock Transfer Agreement, dated December 3, 1998, between
CBS and the Registrant.
*10.3 Form of Intercompany Agreement between CBS and the
Registrant.
*10.4 Form of Tax Sharing Agreement between CBS and the
Registrant.
10.5 $4.0 billion Credit Agreement among CBS Corporation, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank, as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent, dated
August 29, 1996, is incorporated herein by reference to
Exhibit 10(1) to the report on Form 10-Q of CBS Corporation
for the quarter ended September 30, 1996.
</TABLE>
II-3
<PAGE> 201
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.6 First Amendment, dated January 29, 1997, to the CBS Credit
Agreement, dated August 29, 1996, among CBS Corporation, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is
incorporated herein by reference to Exhibit 10(p) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
10.7 Second Amendment, dated March 21, 1997, to the CBS Credit
Agreement, dated August 29, 1996, as amended by the First
Amendment thereto dated January 29, 1997, among CBS
Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is
incorporated herein by reference to Exhibit 10(q) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
10.8 Third Amendment, dated March 3, 1998, to the CBS Credit
Agreement, dated August 29, 1996, as amended by the First
Amendment thereto dated January 29, 1997, as amended by the
Second Amendment thereto dated March 21, 1997 among CBS
Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administration Agent, is
incorporated herein by reference to Exhibit 10(x) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1998.
10.9 Management Agreement, dated February 4, 1994, between
Westwood One, Inc. and Infinity Broadcasting Corporation is
incorporated herein by reference to Exhibit A to Appendix A
to the Proxy Statement of Westwood One, Inc. dated January
7, 1994.
10.10 Extension Agreement, dated March 31, 1997, extending term of
Management Agreement, dated February 4, 1994, between
Westwood One, Inc. and Infinity Broadcasting Corporation is
incorporated herein by reference to Exhibit 10.9 to the
report on Form 10-K of Westwood One, Inc. for the year ended
December 31, 1997.
10.11 Representation Agreement, dated March 31, 1997, between
Westwood One, Inc. and CBS, Inc. is incorporated herein by
reference to Exhibit 10.11 to the report on Form 10-K of
Westwood One, Inc. for the year ended December 31, 1997.
10.12 Employment Agreement, entered into on June 20, 1996 and
effective December 31, 1996, between CBS and Mel Karmazin is
incorporated herein by reference to Exhibit 10(s) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
*10.13 Employment Agreement, entered into on May 1996, effective
November 28, 1995 and amended January 29, 1997, between CBS
Broadcasting Inc. and Daniel Mason.
*10.14 Restated Employment Agreement, dated as of December 1, 1998,
between TDI Worldwide, Inc. and William Apfelbaum.
10.15 The CBS 1991 Long-Term Incentive Plan, as amended to January
28, 1998, is incorporated herein by reference to Exhibit
10(g) to the report on Form 10-K of CBS Corporation for the
year ended December 31, 1997.
10.16 The CBS 1993 Long-Term Incentive Plan, as amended to January
28, 1998, is incorporated herein by reference to Exhibit
10(b) to the report on Form 10-K of CBS Corporation for the
year ended December 31, 1997.
*10.17 Form of 1998 Long-Term Incentive Plan of the Registrant.
*10.18 Form of Executive Annual Incentive Plan of the Registrant.
</TABLE>
II-4
<PAGE> 202
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<C> <S>
10.19 The CBS Annual Performance Plan, as amended to November 1,
1996, is incorporated herein by reference to Exhibit 10(a)
to the report on Form 10-Q of CBS Corporation for the
quarter ended September 30, 1996.
10.20 The Westinghouse Executive Pension Plan, as amended to
December 1, 1997, is incorporated herein by reference to
Exhibit 10(d) to the report on Form 10-K of CBS Corporation
for the year ended December 31, 1997.
10.21 The CBS 1998 Executive Annual Incentive Plan is incorporated
herein by reference to Exhibit A to the Proxy Statement of
CBS Corporation dated May 6, 1998.
10.22 The amended and restated Infinity Broadcasting Corporation
Stock Option Plan is incorporated herein by reference to
Exhibit 4.4 to the CBS Corporation's Registration Statement
No. 333-13219 on Post-Effective Amendment No. 1 on Form S-8
to Form S-4 filed with the Securities and Exchange
Commission on January 2, 1997.
10.23 Infinity Broadcasting Corporation Warrant Certificate No. 3
to Mel Karmazin is incorporated herein by reference to
Exhibit 4.6 to the CBS Corporation's Registration Statement
No. 333-13219 on Post-Effective Amendment No. 1 on Form S-8
to Form S-4 filed with the Securities and Exchange
Commission on January 2, 1997.
*10.24 Form of Trademark License Agreement between CBS Worldwide
Inc. and the Registrant.
*10.25 Form of Trademark License Agreement between CBS Broadcasting
Inc. and the Registrant.
*10.26 Form of Trademark License Agreement between CBS Corporation
and the Registrant.
21. SUBSIDIARIES.
*21.1 Subsidiaries of the Registrant.
23. CONSENTS OF EXPERTS AND COUNSEL.
*23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of KPMG Peat Marwick LLP.
*23.3 Consent of KPMG Peat Marwick LLP.
**23.4 Form of Consent of Cravath, Swaine & Moore (included in
Exhibit 5.1).
24. POWERS OF ATTORNEY.
24.1 Power of Attorney of Mel Karmazin.
24.2 Power of Attorney of Farid Suleman.
27. FINANCIAL DATA SCHEDULE.
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
II-5
<PAGE> 203
(2) For purposes of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) It will provide to the underwriters at the closing specified in
the underwriting agreements certificates in such denominations and
registered in such names as required by the underwriters to permit prompt
delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
II-6
<PAGE> 204
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this Amendment No. 4 to this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of New
York, State of New York, on December 4, 1998.
INFINITY BROADCASTING CORPORATION
By: /s/ FARID SULEMAN
------------------------------------
Farid Suleman
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 4 to this Registration Statement has been signed below by the following
persons in the capacities indicated and on the dates stated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman, President and Chief December 4, 1998
- --------------------------------------------------- Executive Officer (Principal
Mel Karmazin Executive Officer) and
Director
* Executive Vice President, Chief December 4, 1998
- --------------------------------------------------- Financial Officer, Treasurer
Farid Suleman and Secretary (Principal
Financial and Accounting
Officer) and Director
*By /s/ FARID SULEMAN
----------------------------------------------
Farid Suleman
Attorney-In-Fact
</TABLE>
II-7
<PAGE> 205
INFINITY BROADCASTING CORPORATION
SCHEDULE II
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
<TABLE>
<CAPTION>
ADDITIONS
----------------------------------------
BALANCE AT CHARGED TO CHARGED INCREASE BALANCE
BEGINNING COSTS AND TO OTHER RESULTING FROM AT END OF
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS ACQUISITIONS DEDUCTIONS(1) PERIOD
- ----------- ---------- ---------- -------- -------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
1995
Allowance for doubtful
accounts....................... $1,834 $ 734 -- $2,717(2) $ (953) $4,332
1996
Allowance for doubtful
accounts....................... 4,332 2,398 -- 7,722(3) (3,035) 11,417
1997
Allowance for doubtful
accounts....................... 11,417 10,382 -- -- (6,713) 15,086
</TABLE>
- ---------------
(1) Represents amounts written off.
(2) Relates to the acquisition of CBS Inc. on November 24, 1995.
(3) Relates to the acquisition of Old Infinity on December 31, 1996.
<PAGE> 206
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
1. UNDERWRITING AGREEMENTS.
*1.1 Form of U.S. Purchase Agreement.
*1.2 Form of International Purchase Agreement.
2. PLANS OF ACQUISITION.
2.1 Agreement and Plan of Merger, dated August 1, 1995, among
Westinghouse Electric Corporation, Group W Acquisition Corp.
and CBS Inc., is incorporated herein by reference to Exhibit
2 to the report on Form 8-K of CBS Inc. filed with the
Securities and Exchange Commission on August 4, 1995.
2.2 Agreement and Plan of Merger, as amended, dated June 20,
1996, among Westinghouse Electric Corporation, R Acquisition
Corp. and Infinity Broadcasting Corporation, is incorporated
herein by reference to Annex I to the Westinghouse Electric
Corporation's Registration Statement No. 333-13219 on Form
S-4 filed with the Securities and Exchange Commission on
October 22, 1996.
2.3 Amended and Restated Agreement and Plan of Merger, dated
December 18, 1997, by and among American Radio Systems
Corporation, CBS Corporation and R Acquisition Corp., is
incorporated herein by reference to Exhibit 2.1 to the
report on Form 8-K of CBS Corporation filed with the
Securities and Exchange Commission on January 7, 1998.
2.4 First Amendment, dated December 19, 1997, to the Amended and
Restated Agreement and Plan of Merger, dated December 18,
1997, by and among American Radio Systems Corporation, CBS
Corporation and R Acquisition Corp., is incorporated herein
by reference to Exhibit 2.2 to the report on Form 8-K of CBS
Corporation filed with the Securities and Exchange
Commission on January 7, 1998.
3. CERTIFICATE OF INCORPORATION AND BY-LAWS.
*3.1 Certificate of Incorporation of the Registrant.
*3.2 By-Laws of the Registrant.
*3.3 Form of Restated Certificate of Incorporation of the
Registrant.
*3.4 Form of Restated By-Laws of the Registrant.
4. INSTRUMENTS DEFINING THE RIGHT OF SECURITY HOLDERS,
INCLUDING INDENTURES.
*4.1 Specimen Certificate of Class A Common Stock.
5. OPINIONS.
</TABLE>
<PAGE> 207
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
**5.1 Form of Opinion of Cravath, Swaine & Moore with respect to
the legality of the Class A Common Stock.
10. MATERIAL CONTRACTS.
*10.1 Stock and Asset Transfer Agreement, dated December 2, 1998,
between CBS Broadcasting Inc. and the Registrant.
*10.2 Stock Transfer Agreement, dated December 3, 1998, between
CBS and the Registrant.
*10.3 Form of Intercompany Agreement between CBS and the
Registrant.
*10.4 Form of Tax Sharing Agreement between CBS and the
Registrant.
10.5 $4.0 billion Credit Agreement among CBS Corporation, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank, as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York, as Administrative Agent, dated
August 29, 1996, is incorporated herein by reference to
Exhibit 10(1) to the report on Form 10-Q of CBS Corporation
for the quarter ended September 30, 1996.
10.6 First Amendment, dated January 29, 1997, to the CBS Credit
Agreement, dated August 29, 1996, among CBS Corporation, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is
incorporated herein by reference to Exhibit 10(p) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
10.7 Second Amendment, dated March 21, 1997, to the CBS Credit
Agreement, dated August 29, 1996, as amended by the First
Amendment thereto dated January 29, 1997, among CBS
Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administrative Agent, is
incorporated herein by reference to Exhibit 10(q) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
10.8 Third Amendment, dated March 3, 1998, to the CBS Credit
Agreement, dated August 29, 1996, as amended by the First
Amendment thereto dated January 29, 1997, as amended by the
Second Amendment thereto dated March 21, 1997 among CBS
Corporation, the Subsidiary Borrowers parties thereto, the
Lenders parties thereto, Nationsbank, N.A. and The
Toronto-Dominion Bank as Syndication Agents, The Chase
Manhattan Bank as Documentation Agent, and Morgan Guaranty
Trust Company of New York as Administration Agent, is
incorporated herein by reference to Exhibit 10(x) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1998.
10.9 Management Agreement, dated February 4, 1994, between
Westwood One, Inc. and Infinity Broadcasting Corporation is
incorporated herein by reference to Exhibit A to Appendix A
to the Proxy Statement of Westwood One, Inc. dated January
7, 1994.
</TABLE>
<PAGE> 208
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
10.10 Extension Agreement, dated March 31, 1997, extending term of
Management Agreement, dated February 4, 1994, between
Westwood One, Inc. and Infinity Broadcasting Corporation is
incorporated herein by reference to Exhibit 10.9 to the
report on Form 10-K of Westwood One, Inc. for the year ended
December 31, 1997.
10.11 Representation Agreement, dated March 31, 1997, between
Westwood One, Inc. and CBS, Inc. is incorporated herein by
reference to Exhibit 10.11 to the report on Form 10-K of
Westwood One, Inc. for the year ended December 31, 1997.
10.12 Employment Agreement, entered into on June 20, 1996 and
effective December 31, 1996, between CBS and Mel Karmazin is
incorporated herein by reference to Exhibit 10(s) to the
report on Form 10-Q of CBS Corporation for the quarter ended
March 31, 1997.
*10.13 Employment Agreement, entered into on May 1996, effective
November 28, 1995 and amended January 29, 1997, between CBS
Broadcasting Inc. and Daniel Mason.
*10.14 Restated Employment Agreement, dated as of December 1, 1998,
between TDI Worldwide, Inc. and William Apfelbaum.
10.15 The CBS 1991 Long-Term Incentive Plan, as amended to January
28, 1998, is incorporated herein by reference to Exhibit
10(g) to the report on Form 10-K of CBS Corporation for the
year ended December 31, 1997.
10.16 The CBS 1993 Long-Term Incentive Plan, as amended to January
28, 1998, is incorporated herein by reference to Exhibit
10(b) to the report on Form 10-K of CBS Corporation for the
year ended December 31, 1997.
*10.17 Form of 1998 Long-Term Incentive Plan of the Registrant.
*10.18 Form of Executive Annual Incentive Plan of the Registrant.
10.19 The CBS Annual Performance Plan, as amended to November 1,
1996, is incorporated herein by reference to Exhibit 10(a)
to the report on Form 10-Q of CBS Corporation for the
quarter ended September 30, 1996.
10.20 The Westinghouse Executive Pension Plan, as amended to
December 1, 1997, is incorporated herein by reference to
Exhibit 10(d) to the report on Form 10-K of CBS Corporation
for the year ended December 31, 1997.
10.21 The CBS 1998 Executive Annual Incentive Plan is incorporated
herein by reference to Exhibit A to the Proxy Statement of
CBS Corporation dated May 6, 1998.
10.22 The amended and restated Infinity Broadcasting Corporation
Stock Option Plan is incorporated herein by reference to
Exhibit 4.4 to the CBS Corporation's Registration Statement
No. 333-13219 on Post-Effective Amendment No. 1 on Form S-8
to Form S-4 filed with the Securities and Exchange
Commission on January 2, 1997.
10.23 Infinity Broadcasting Corporation Warrant Certificate No. 3
to Mel Karmazin is incorporated herein by reference to
Exhibit 4.6 to the CBS Corporation's Registration Statement
No. 333-13219 on Post-Effective Amendment No. 1 on Form S-8
to Form S-4 filed with the Securities and Exchange
Commission on January 2, 1997.
*10.24 Form of Trademark License Agreement between CBS Worldwide
Inc. and the Registrant.
</TABLE>
<PAGE> 209
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
- ------- ----------- ------------
<C> <S> <C>
*10.25 Form of Trademark License Agreement between CBS Broadcasting
Inc. and the Registrant.
*10.26 Form of Trademark License Agreement between CBS Corporation
and the Registrant.
21. SUBSIDIARIES.
*21.1 Subsidiaries of the Registrant.
23. CONSENTS OF EXPERTS AND COUNSEL.
*23.1 Consent of KPMG Peat Marwick LLP.
*23.2 Consent of KPMG Peat Marwick LLP.
*23.3 Consent of KPMG Peat Marwick LLP.
**23.4 Form of Consent of Cravath, Swaine & Moore (included in
Exhibit 5.1).
24. POWERS OF ATTORNEY.
24.1 Power of Attorney of Mel Karmazin.
24.2 Power of Attorney of Farid Suleman.
27. FINANCIAL DATA SCHEDULE.
27.1 Financial Data Schedule.
</TABLE>
- ---------------
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
Exhibit 1.1
INFINITY BROADCASTING CORPORATION
(a Delaware corporation)
114,750,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
U.S. PURCHASE AGREEMENT
December ,1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as U.S. Representative of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Infinity Broadcasting Corporation, a Delaware corporation (the
"Company"), confirms its agreement with Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and each of the other U.S.
Underwriters named in Schedule A hereto (collectively, the "U.S. Underwriters",
which term shall also include any underwriter substituted as hereinafter
provided in Section 10 hereof), for whom Merrill Lynch is acting as
representative (in such capacity, the "U.S. Representative"), with respect to
the issue and sale by the Company and the purchase by the U.S. Underwriters,
acting severally and not jointly, of the respective numbers of shares of Class A
Common Stock, par value $0.01 per share, of the Company (the "Class A Common
Stock" and, together with the Class B Common Stock, par value $0.01 per share,
of the Company (the "Class B Common Stock"), the "Common Stock") set forth in
said Schedule A, aggregating 114,750,000 shares of Class A Common Stock (the
"Initial U.S. Securities") and with respect to the grant by the Company to the
U.S. Underwriters, acting severally and not jointly, of the option described in
Section 2(b) hereof to purchase all or any part of 17,212,500 additional shares
of Class A Common Stock to cover over-allotments, if any. The Initial U.S.
Securities to be purchased by the U.S. Underwriters and all or any part of the
<PAGE> 2
additional 17,212,500 shares of Class A Common Stock subject to the option
described in Section 2(b) hereof (the "U.S. Option Securities") are hereinafter
called, collectively, the "U.S. Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement")
providing for the offering by the Company of an aggregate of 20,250,000 shares
of Class A Common Stock (collectively, the "Initial International Securities")
through arrangements with certain underwriters outside the United States and
Canada (the "International Managers") for which Merrill Lynch International is
acting as the lead manager (in such capacity, the "Lead Manager") and the grant
by the Company to the International Managers, acting severally and not jointly,
of an option to purchase all or any part of the International Managers' pro rata
portion of up to 3,037,500 additional shares of Class A Common Stock solely to
cover over-allotments, if any (the "International Option Securities" and,
together with the U.S. Option Securities, the "Option Securities"). The Initial
International Securities and the International Option Securities are hereinafter
called, collectively, the "International Securities". It is understood that the
Company is not obligated to sell, and the U.S. Underwriters are not obligated to
purchase, any Initial U.S. Securities unless all of the Initial International
Securities are contemporaneously purchased by the International Managers.
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate
Agreement of even date herewith (the "Intersyndicate Agreement") providing for
the coordination of certain transactions among the Underwriters under the
direction of Merrill Lynch (in such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the U.S. Representative deems
advisable after this Agreement has been executed and delivered.
The Company and the U.S. Underwriters agree that up to 5% of the
aggregate number of shares of the Initial Securities to be purchased by the
Underwriters (the "Reserved Securities") shall be reserved for offering and sale
by the Underwriters to certain eligible directors, officers and employees of the
Company and CBS Corporation and other persons associated with the Company or
with any director, officer or employee of the Company (collectively, the
"Eligible Reserved Share Participants"), as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. (the "NASD") and all other applicable laws, rules and
regulations. The Reserved Securities will be sold to the Eligible Reserved Share
Participants by the U.S. Underwriters pursuant to this Agreement at the initial
public offering price set forth
<PAGE> 3
on Schedule B hereto. To the extent that such Reserved Securities are not orally
confirmed for purchase (assuming reasonable efforts to contact such persons by
the U.S. Underwriters in accordance with the procedures set forth in the
prospectus wrapper material circulated to Eligible Reserved Share Participants
in connection with the sale of the Reserved Securities) by such Eligible
Reserved Share Participants by the end of the first business day after the date
of this Agreement, such Reserved Securities may be offered to the public as part
of the public offering contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-63727) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the U.S. Securities (the "Form of U.S.
Prospectus") and one relating to the International Securities (the "Form of
International Prospectus"). The Form of International Prospectus is identical to
the Form of U.S. Prospectus, except for the front cover and back cover pages and
the information set forth under the caption "Underwriting." The information
included in any such prospectus or in any such Term Sheet, as the case may be,
that was omitted from such registration statement at the time it became
effective but that is deemed to be part of such registration statement at the
time it became effective (a) pursuant to paragraph (b) of Rule 430A is referred
to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule 434 is
referred to as "Rule 434 Information." Each Form of U.S. Prospectus and Form of
International Prospectus used before such registration statement became
effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto and schedules thereto at the time it became effective and including the
Rule 430A Information or the Rule 434 Information, as applicable, is herein
called the "Registration Statement." Any registration statement filed pursuant
to Rule 462(b) of the 1933 Act Regulations is referred to herein as the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. The final Form
of U.S. Prospectus and the final Form of International Prospectus in the forms
first furnished to the Underwriters for use in connection with the offering of
the Securities are herein called the "U.S. Prospectus" and the "International
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "U.S. Prospectus" and "International Prospectus" shall
refer to the preliminary U.S. Prospectus dated November 12, 1998 (the "U.S.
Preliminary Prospectus"), and the preliminary International Prospectus dated
November 12, 1998 (the "International Preliminary Prospectus"), respectively,
each together with the applicable Term
<PAGE> 4
Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the U.S. Prospectus, the International Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to each U.S. Underwriter as of the date hereof, as of
the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:
(i) Compliance with Registration Requirements. Each
of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule
462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and
any request on the part of the Commission for additional information
has been complied with.
At the respective times the Registration Statement,
any Rule 462(b) Registration Statement and any post-effective
amendments thereto became effective and at the Closing Time (and, if
any U.S. Option Securities are purchased, at the Date of Delivery), the
Registration Statement, the Rule 462(b) Registration Statement and any
amendments and supplements thereto complied and will comply in all
material respects with the requirements of the 1933 Act and the 1933
Act Regulations and did not and will not contain 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, and
the Prospectuses, any preliminary prospectuses and any supplement
thereto or prospectus wrapper prepared in connection therewith, at
their respective times of issuance and at the Closing Time, complied
and will comply in all material respects with any applicable laws or
regulations of foreign jurisdictions in which the Prospectuses and such
preliminary prospectuses, as amended or supplemented, if applicable,
are distributed in connection with the offer and sale of Reserved
Securities. Neither of the Prospectuses nor any amendments or
supplements thereto (including any prospectus wrapper), at the time the
Prospectuses or any amendments or supplements thereto were issued and
at the Closing Time (and, if any U.S. Option Securities are purchased,
at the Date of Delivery), included or will include an untrue statement
of a material fact or omitted or will omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. If Rule 434
is used, the Company will comply with the requirements of Rule 434 and
the Prospectuses shall not
<PAGE> 5
be "materially different", as such term is used in Rule 434, from the
prospectuses included in the Registration Statement at the time it
became effective. The representations and warranties in this subsection
shall not apply to statements in or omissions from the Registration
Statement or the U.S. Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
U.S. Underwriter through the U.S. Representative expressly for use in
the Registration Statement or the U.S. Prospectus.
The U.S. Preliminary Prospectus and the International
Preliminary Prospectus filed as part of the Registration Statement and
each preliminary prospectus and the prospectuses filed as part of any
subsequent amendment thereto, or filed pursuant to Rule 424 under the
1933 Act, complied when so filed in all material respects with the 1933
Act Regulations and each preliminary prospectus and the Prospectuses
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to EDGAR, except to the extent permitted
by Regulation S-T.
The Company has filed a registration statement
pursuant to Section 12(b) of the Securities Exchange Act of 1934, as
amended (the "1934 Act"), to register the Class A Common Stock, and
such registration statement has become effective.
(ii) Independent Accountants. The accountants who
certified (A) the combined financial statements of the Company and its
consolidated subsidiaries and supporting schedule, (B) the financial
statements of CBS Radio, Inc. (formerly American Radio Systems
Corporation) ("CBS Radio") and its consolidated subsidiaries and (C)
the financial statements of Old Infinity (as defined in the
Registration Statement) and its consolidated subsidiaries, in each case
included in the Registration Statement are, in each case, independent
public accountants as required by the 1933 Act and the 1933 Act
Regulations.
(iii) Financial Statements. The combined financial
statements of the Company included in the Registration Statement and
the Prospectuses, together with the related schedule and notes (but not
including the information set forth in the Prospectuses under the
captions "Prospectus Summary-Summary Combined and Pro Forma Financial
Data", "Capitalization" and "Selected Combined and Pro Forma Financial
Data"), present fairly in all material respects the financial position
of the Company, its consolidated subsidiaries and the predecessor
entities to the Company at the dates indicated and the statements of
earnings, changes in stockholders' equity (deficiency) and cash flows
of the Company, its consolidated subsidiaries and the predecessor
entities to the Company for the periods specified; such financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods involved. The financial
statements of CBS Radio included in the Registration Statement and the
Prospectuses, together with the related
<PAGE> 6
notes, present fairly in all material respects the financial position
of CBS Radio and its consolidated subsidiaries at the dates indicated
and the statements of operations, stockholders' equity and cash flows
of CBS Radio and its consolidated subsidiaries for the periods
specified; such financial statements have been prepared in conformity
with GAAP applied on a consistent basis throughout the periods
involved. The financial statements of Old Infinity included in the
Registration Statement and the Prospectuses, together with the related
notes, present fairly in all material respects the financial position
of Old Infinity and its consolidated subsidiaries at the dates
indicated and the statements of earnings, changes in stockholders'
equity and cash flows of Old Infinity and its consolidated subsidiaries
for the periods specified; such financial statements have been prepared
in conformity with GAAP applied on a consistent basis throughout the
periods involved. The supporting schedule included in the Registration
Statement presents fairly in all material respects in conformity with
GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Prospectuses present fairly in all material respects the information
shown therein and have been compiled on a basis consistent with that of
the audited financial statements included in the Registration
Statement. The pro forma financial statements and the related notes
thereto included in the Registration Statement and the Prospectuses
present fairly in all material respects the information shown therein,
have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions and
circumstances referred to therein.
(iv) No Material Adverse Change in Business. Since
the respective dates as of which information is given in the
Registration Statement and the Prospectuses, except as otherwise stated
therein or contemplated thereby, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B)
there have been no transactions entered into by the Company or any of
its subsidiaries which are material with respect to the Company and its
subsidiaries considered as one enterprise, and (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has
been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, and has the corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and to enter into
and perform its obligations under this Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each other jurisdiction in which such qualification or
good standing is required, whether by reason of the ownership or
leasing of property or the conduct of business, except where the
failure so
<PAGE> 7
to qualify or to be in good standing would not result in a Material
Adverse Effect and except for jurisdictions not recognizing the legal
concepts of good standing or qualification.
(vi) Good Standing of Subsidiaries. Each "significant
subsidiary" of the Company (as such term is defined in Rule 1-02 of
Regulation S-X (each a "Subsidiary" and, collectively, the
"Subsidiaries") has been duly organized and is validly existing as a
corporation and, in jurisdictions where the legal concept exists, in
good standing under the laws of the jurisdiction of its incorporation
or organization, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectuses and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification or good standing is required, whether by reason of the
ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect and except for jurisdictions not
recognizing the legal concepts of good standing or qualification;
except as otherwise disclosed in the Registration Statement, all of the
issued and outstanding capital stock of each such Subsidiary has been
duly authorized and validly issued, is fully paid and non-assessable
and is owned by the Company, directly or through its subsidiaries
(except for directors' qualifying shares), free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity; none of the outstanding shares of capital stock of any
Subsidiary was issued in violation of any preemptive or similar rights
of any securityholder of such Subsidiary. The only subsidiaries of the
Company are the subsidiaries listed on Exhibit 21.1 to the Registration
Statement.
(vii) Capitalization. The authorized, issued and
outstanding capital stock of the Company is as set forth in the
Prospectuses in the column entitled "Actual" under the caption
"Capitalization" (except for the conversion of all the outstanding
shares of common stock, par value $1.00, of the Company, into
700,000,000 shares of Class B Common Stock or subsequent issuances, if
any, pursuant to this Agreement, or pursuant to reservations,
agreements or employee benefit plans referred to in the Prospectuses).
The shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar
rights of any securityholder of the Company. At the Closing Time, the
Company's Restated Certificate of Incorporation will be effective.
(viii) Authorization of Agreement. This Agreement and
the International Purchase Agreement have been duly authorized,
executed and delivered by the Company.
(ix) Authorization and Description of Securities.
Assuming the Restated Certificate of Incorporation of the Company has
become effective, the U.S. Securities and the International Securities
to be purchased by the U.S. Underwriters and the International
<PAGE> 8
Managers, respectively, from the Company have been duly authorized for
issuance and sale to the U.S. Underwriters pursuant to this Agreement
and the International Managers pursuant to the International Purchase
Agreement, respectively, and, when issued and delivered by the Company
pursuant to this Agreement and in the International Purchase Agreement,
respectively, against payment of the consideration set forth herein and
in the International Purchase Agreement, respectively, will be validly
issued, fully paid and non-assessable; assuming the Restated
Certificate of Incorporation of the Company has become effective, the
Common Stock conforms to all statements relating thereto contained in
the Prospectuses under the heading "Description of Capital Stock" and
such description conforms to the rights set forth in the instruments
defining the same; no holder of the Securities will be subject to
personal liability by reason of being such a holder; and the issuance
of the Securities is not subject to the preemptive or other similar
rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. (A) Neither
the Company nor any of its Subsidiaries is in violation of its charter
or by-laws or in default in the due performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which it or any of them may be bound,
or to which any of the property or assets of the Company or any of its
Subsidiaries is subject (collectively, "Agreements and Instruments"),
except for such defaults that would not result in a Material Adverse
Effect; and (B) the execution, delivery and performance of this
Agreement and the International Purchase Agreement and the consummation
of the transactions contemplated in this Agreement, the International
Purchase Agreement and in the Registration Statement (including the
Reorganization (as defined in note (1) to the Company's combined
financial statements included in the Prospectuses)), the issuance and
sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under
this Agreement and the International Purchase Agreement have been duly
authorized by all necessary corporate action of the Company and do not
and assuming application of the proceeds from the sale of the
Securities by the Company as described in the Prospectuses under the
caption "Use of Proceeds" will not, whether with or without the giving
of notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under, or
result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its Subsidiaries
pursuant to, the Agreements and Instruments (except for such conflicts,
breaches, defaults or Repayment Events or liens, charges or
encumbrances that, individually or in the aggregate, would not result
in a Material Adverse Effect), nor will such action result in any
violation of the provisions of the charter or by-laws of the Company or
any Subsidiary or any applicable law, statute, rule, regulation,
judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or any of their assets, properties or
operations. As
<PAGE> 9
used herein, a "Repayment Event" means any event or condition which
gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder's behalf) the right
to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its Subsidiaries.
(xi) Absence of Labor Dispute. No labor dispute with
the employees of the Company or any subsidiary exists or, to the
knowledge of the Company, is imminent which may reasonably be expected
to result in a Material Adverse Effect.
(xii) Absence of Proceedings. Except as disclosed in
the Registration Statement, there is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign (including, but not limited to, the
Federal Communications Commission (the "FCC")) now pending or, to the
knowledge of the Company, threatened, against or affecting the Company
or any Subsidiary, which is required to be disclosed in the
Registration Statement, or which is reasonably expected to result in a
Material Adverse Effect, or which is reasonably expected to materially
and adversely affect the consummation of the transactions contemplated
in this Agreement and the International Purchase Agreement or the
performance by the Company of its obligations hereunder or thereunder;
the aggregate of all pending legal or governmental proceedings to which
the Company or any Subsidiary is a party or of which any of their
respective properties or assets is the subject that are not described
in the Registration Statement, including ordinary routine litigation
incidental to the business, considered in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
(xiii) Intercompany Agreements. Each of the
Intercompany Agreement and the Tax Sharing Agreement (each as defined
in the Prospectuses) has been duly authorized, executed and delivered
by the Company and constitutes the binding agreement of the Company,
and is enforceable against the Company in accordance with its terms,
subject, as to enforcement of remedies, to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, general equitable principles and the discretion of courts in
granting equitable remedies and except that any rights to indemnify and
contribution may be limited by Federal and state securities laws and
public policy considerations.
(xiv) Accuracy of Exhibits. There are no contracts or
documents which are required to be described in the Registration
Statement or the Prospectuses or to be filed as exhibits thereto which
have not been so described and filed as required.
(xv) Absence of Further Requirements. No filing with,
or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale by
<PAGE> 10
the Company of the Securities under this Agreement and the
International Purchase Agreement or the consummation of the
transactions contemplated by this Agreement and the International
Purchase Agreement, except (A) such as have been already obtained or as
may be required under the 1933 Act or the 1933 Act Regulations and
foreign or state securities or blue sky laws or by the rules and
regulations of the NASD, (B) such as have been already obtained or may
be required under the Communications Act of 1934, as amended, (C) such
as have been obtained under the laws and regulations of jurisdictions
outside the United States in which the Reserved Securities are offered
and (D) the filing prior to the Closing Time of the Restated
Certificate of Incorporation of the Company with the Secretary of State
of the State of Delaware.
(xvi) Possession of Licenses and Permits. The Company
and its Subsidiaries possess such permits, licenses, approvals,
consents and other authorizations (collectively, "Governmental
Licenses") issued by the appropriate Federal, state, local or foreign
regulatory agencies or bodies (including, without limitation, the FCC)
necessary to conduct the business now operated by them; the Company and
its Subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, individually or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid and in full force and
effect, for the maximum term customarily issued, with no material
conditions, restrictions or qualifications except when the invalidity
of such Governmental Licenses or the failure of such Governmental
Licenses to be in full force and effect or the restrictions would not
have a Material Adverse Effect; and neither the Company nor any of its
Subsidiaries has received any notice from the FCC of the initiation of
proceedings other than release of public notices of filings with the
FCC by interested parties relating to the revocation, modification,
non-renewal or suspension of any such Governmental Licenses which,
individually or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would result in a Material Adverse Effect.
(xvii) Title to Property. The Company and its
Subsidiaries have good and marketable title to all real property owned
by the Company and its Subsidiaries and good title to all other
properties owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind, except such as (A) are described in the
Prospectuses or (B) would not, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect. All of
the leases and subleases material to the business of the Company and
its Subsidiaries, considered as one enterprise, and under which the
Company or any of its Subsidiaries holds properties described in the
Prospectuses, are in full force and effect except where the failure to
be in full force and effect would not reasonably be expected to have a
Material Adverse Effect.
(xviii) Tax Returns and Payment of Taxes. The Company
and its Subsidiaries have timely filed all Federal, state, local and
foreign tax returns that are
<PAGE> 11
required to be filed or have duly requested extensions thereof and all
such tax returns are true, correct and complete, except to the extent
that any failure to file or request an extension, or any incorrectness
would not, individually or in the aggregate, result in a Material
Adverse Effect. The Company and its Subsidiaries have timely paid all
taxes shown as due on such filed tax returns (including any related
assessments, fines or penalties), except to the extent that any such
taxes are being contested in good faith and by appropriate proceedings,
or to the extent that any failure to pay would not, individually or in
the aggregate, result in a Material Adverse Effect; and adequate
charges, accruals and reserves have been provided for in the financial
statements referred to in Section 1(a)(iii) above in accordance with
GAAP in respect of all Federal, state, local and foreign taxes for all
periods as to which the tax liability of the Company or any of its
Subsidiaries has not been finally determined or remains open to
examination by applicable taxing authorities. The Company is not a
"United States real property holding corporation" within the meaning of
Section 897(c)(3) of the Internal Revenue Code of 1986, as amended.
(xix) Investment Company Act. The Company is not, and
upon the issuance and sale of the Securities as herein contemplated and
the application of the net proceeds therefrom as described in the
Prospectuses will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(xx) Insurance. The Company and each of its
Subsidiaries are insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
prudent and customary in the businesses in which they are engaged; and
neither the Company nor any of its Subsidiaries has any reason to
believe that any of them will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business except where the failure to renew or maintain such
coverage is not reasonably expected to result in a Material Adverse
Effect.
(xxi) Registration Rights. Except pursuant to the
Intercompany Agreement described under the caption "Relationship
between the Company and CBS -- Intercompany Agreement-Registration
Rights" in the Prospectuses, no person has registration rights or other
similar rights to have any securities of the Company registered by the
Company pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act.
(xxii) No Stabilization or Manipulation. The Company
has not taken and will not take, directly or indirectly, any action
designed to, or that might be reasonably expected to, cause or result
in stabilization or manipulation of the price of the Securities in
violation of Regulation M under the 1934 Act.
<PAGE> 12
(b) Officer's Certificates. Any certificate signed by any officer of
the Company and delivered to the Global Coordinator, the U.S. Representative or
to counsel for the U.S. Underwriters shall be deemed a representation and
warranty by the Company to each U.S. Underwriter as to the matters covered
thereby.
SECTION 2. Sale and Delivery to U.S. Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each U.S. Underwriter, severally and not
jointly, and each U.S. Underwriter, severally and not jointly, agrees to
purchase from the Company, at the price per share set forth in Schedule B, the
number of Initial U.S. Securities set forth in Schedule A opposite the name of
such U.S. Underwriter, plus any additional number of Initial U.S. Securities
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to an additional 17,212,500 shares of
Class A Common Stock at the price per share set forth in Schedule B, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial U.S. Securities but not payable on the U.S. Option
Securities. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for the purpose
of covering over-allotments which may be made in connection with the offering
and distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising such option and the
time and date of payment and delivery for such U.S. Option Securities. Any such
time and date of delivery for the U.S. Option Securities (a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time (as defined in Section 2(c) below). If the option is exercised
as to all or any portion of the U.S. Option Securities, each of the U.S.
Underwriters, acting severally and not jointly, will purchase that proportion of
the total number of U.S. Option Securities then being purchased which the number
of Initial U.S. Securities set forth in Schedule A opposite the name of such
U.S. Underwriter bears to the total number of Initial U.S. Securities, subject
in each case to such adjustments as the Global Coordinator in its discretion
shall make to eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York, or at such other
place as shall be agreed upon by the Global Coordinator and the Company, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business
<PAGE> 13
days after such date as shall be agreed upon by the Global Coordinator and the
Company (such time and date of payment and delivery being herein called the
"Closing Time").
In addition, in the event that any or all of the U.S. Option Securities
are purchased by the U.S. Underwriters, payment of the purchase price for, and
delivery of certificates for, such U.S. Option Securities shall be made at the
above-mentioned offices, or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on each Date of Delivery as specified in the
notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the U.S. Representative for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized the U.S. Representative, for its
account, to accept delivery of, receipt for and make payment of the purchase
price for, the Initial U.S. Securities and the U.S. Option Securities, if any,
which it has agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters, may (but shall not be obligated to)
make payment of the purchase price for the Initial U.S. Securities or the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial U.S.
Securities and the U.S. Option Securities, if any, shall be in such
denominations and registered in such names as the U.S. Representative may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
U.S. Securities and the U.S. Option Securities, if any, will be made available
for examination and packaging by the U.S. Representative in The City of New York
not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company
hereby confirms its engagement of Merrill Lynch as, and Merrill Lynch hereby
confirms its agreement with the Company to render services as, a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the NASD with respect to the offering and sale of the U.S. Securities. Merrill
Lynch, solely in its capacity as qualified independent underwriter and not
otherwise, is referred to herein as the "Independent Underwriter".
SECTION 3. Covenants of the Company. The Company covenants with each
U.S. Underwriter as follows:
(a) Compliance with Securities Regulations and
Commission Requests. Subject to Section 3(b), the Company will comply
with the requirements of Rule 430A or Rule 434, as applicable, and will
notify the Global Coordinator immediately, and
<PAGE> 14
confirm the notice in writing, (i) when any post-effective amendment to
the Registration Statement shall become effective, or any supplement to
the Prospectuses or any amended Prospectuses shall have been filed,
(ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of
the Securities for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes.
The Company will promptly effect the filings necessary pursuant to Rule
424(b) and will take such steps as it deems necessary to ascertain
promptly whether the form of prospectus transmitted for filing under
Rule 424(b) was received for filing by the Commission and, in the event
that it was not, it will promptly file such prospectus. The Company
will make every reasonable effort to prevent the issuance of any stop
order and, if any stop order is issued, to obtain the lifting thereof
at the earliest possible moment.
(b) Filing of Amendments. The Company will give the
Global Coordinator notice of its intention to file or prepare any
amendment to the Registration Statement (including any filing under
Rule 462(b)), any Term Sheet or any amendment, supplement or revision
to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectuses, will furnish the
Global Coordinator with copies of any such documents a reasonable
period of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global
Coordinator or counsel for the U.S. Underwriters shall reasonably
object.
(c) Delivery of Registration Statements. The Company
has furnished or will deliver to the U.S. Representative and counsel
for the U.S. Underwriters, without charge, one signed copy of the
Registration Statement as originally filed and of each amendment
thereto (including exhibits filed therewith or incorporated by
reference therein) and one signed copy of all consents and certificates
of experts, and will also deliver to the U.S. Representative, without
charge, a conformed copy of the Registration Statement as originally
filed and of each amendment thereto (without exhibits) for each of the
U.S. Underwriters. The copies of the Registration Statement and each
amendment thereto furnished to the U.S. Underwriters will be identical
to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by
Regulation S-T.
(d) Delivery of Prospectuses. The Company has
delivered to each U.S. Underwriter, without charge, as many copies of
each preliminary prospectus as such U.S. Underwriter reasonably
requested, and the Company hereby consents to the use of such copies
for purposes permitted by the 1933 Act. The Company will furnish to
each U.S. Underwriter, without charge, during the period when the U.S.
Prospectus is required to
<PAGE> 15
be delivered under the 1933 Act or the 1934 Act, such number of copies
of the U.S. Prospectus (as amended or supplemented) as such U.S.
Underwriter may reasonably request. The U.S. Prospectus and any
amendments or supplements thereto furnished to the U.S. Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The
Company will comply with the 1933 Act and the 1933 Act Regulations so
as to permit the completion of the distribution of the Securities as
contemplated in this Agreement, the International Purchase Agreement
and the Prospectuses. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result
of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement or
amend or supplement any Prospectus in order that the Prospectuses will
not include any untrue statements of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion
of such counsel, at any such time to amend the Registration Statement
or amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company
will promptly prepare and file with the Commission, subject to Section
3(b), such amendment or supplement as may be necessary to correct such
statement or omission or to make the Registration Statement or the
Prospectuses comply with such requirements, and the Company will
furnish to the U.S. Underwriters such number of copies of such
amendment or supplement as the U.S. Underwriters may reasonably
request.
(f) Blue Sky Qualifications. The Company will use its
commercially reasonable efforts, in cooperation with the U.S.
Underwriters, to qualify the Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Global Coordinator may designate and to
maintain such qualifications in effect for a period of not less than
one year from the later of the effective date of the Registration
Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject. In each
jurisdiction in which the Securities have been so qualified, the
Company will file such statements and reports as may be required by the
laws of such jurisdiction to continue such qualification in effect for
a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
<PAGE> 16
(g) Rule 158. The Company will timely file such
reports pursuant to the 1934 Act as are necessary in order to make
generally available to its securityholders as soon as practicable an
earnings statement for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net
proceeds received by it from the sale of the Securities in the manner
specified in the Prospectuses under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to
effect the listing of the Class A Common Stock (including the
Securities) on the New York Stock Exchange.
(j) Restriction on Sale of Securities. During a
period of 180 days from the date of the Prospectuses, the Company will
not, without the prior written consent of the Global Coordinator (i)
offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer
any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration
statement under the 1933 Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) any shares of
Common Stock transferred to an affiliate of the Company or any CBS
Party (as defined in the Restated Certificate of Incorporation of the
Company) which agrees to be bound by the provisions of this Section
3(j), (B) the Securities to be sold hereunder or under the
International Purchase Agreement, (C) any shares of Common Stock issued
or options to purchase Common Stock granted pursuant to the Company's
1998 Long-Term Incentive Plan, Executive Annual Incentive Plan and
Savings Plans referred to in the Prospectuses or (D) any shares of
Class A Common Stock issued in connection with any acquisitions to be
made by the Company in the future in consideration for shares of Class
A Common Stock.
(k) Reporting Requirements. The Company, during the
period when the Prospectuses are required to be delivered under the
1933 Act or the 1934 Act, will file all documents required to be filed
with the Commission pursuant to the 1934 Act within the time periods
required by the 1934 Act and the rules and regulations of the
Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby
agrees that the Reserved Securities will be restricted as required by
the NASD under NASD Rule 2110(d) and the NASD's interpretations thereof
from sale, transfer, assignment, pledge or
<PAGE> 17
hypothecation for a period of three months following the date of this
Agreement. The Underwriters have notified the Company as to which
persons will need to be so restricted. At the request of the Global
Coordinator, the Company will direct the transfer agent to place a stop
transfer restriction upon such Reserved Securities for such period of
time. Should the Company release, or seek to release, from such
restrictions any of the Reserved Securities that are subject to resale
restrictions in accordance with NASD rules, the Company agrees to
reimburse the Underwriters for any reasonable expenses (including,
without limitation, legal expenses) they incur in connection with such
release.
(m) Compliance with Rule 463. The Company will file
with the Commission such reports and report the use of proceeds of the
sale of the Securities as may be required pursuant to Rule 463 of the
1933 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the performance of
its obligations under this Agreement, including (i) the preparation, printing
and filing of the Registration Statement (including financial statements and
exhibits) as originally filed with the Commission and of each amendment thereto,
(ii) any printing of this Agreement, any Agreement among Underwriters and such
other documents as may be required in connection with the offering, purchase,
sale, issuance or delivery of the Securities, (iii) the preparation, issuance
and delivery of the certificates for the Securities to the Underwriters,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the
Underwriters and the transfer of the Securities between the U.S. Underwriters
and the International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors, (v) the qualification of the Securities
under securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto, (vi) the printing and
delivery to the Underwriters of copies of each preliminary prospectus, any Term
Sheets and of the Prospectuses and any amendments or supplements thereto, (vii)
the preparation, printing and delivery to the Underwriters of copies of the Blue
Sky Survey and any supplement thereto, (viii) the fees and expenses of any
transfer agent or registrar for the Securities, (ix) the filing fees incident
to, and the fees and disbursements of counsel to the Underwriters in connection
with, the review by the NASD of the terms of the sale of the Securities, (x) the
fees and expenses incurred in connection with the listing of the Securities on
the New York Stock Exchange, Inc. and (xi) all reasonable costs and expenses of
the Underwriters, including the reasonable fees and disbursements of counsel for
the Underwriters, in connection with matters related to the Reserved Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
U.S. Representative in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the
<PAGE> 18
Company shall reimburse the U.S. Underwriters for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
U.S. Underwriters.
SECTION 5. Conditions of U.S. Underwriters' Obligations. The
obligations of the several U.S. Underwriters hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
Subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The
Registration Statement, including any Rule 462(b) Registration
Statement, has become effective and at the Closing Time no stop order
suspending the effectiveness of the Registration Statement shall have
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to
the reasonable satisfaction of counsel to the U.S. Underwriters. A
prospectus containing the Rule 430A Information shall have been filed
with the Commission in accordance with Rule 424(b) (or a post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434, a Term Sheet shall have been
filed with the Commission in accordance with Rule 424(b).
(b) Opinion of Counsel for Company. At the Closing
Time, the U.S. Representative shall have received the favorable opinion
and statement, dated as of the Closing Time, of each of (i) Louis J.
Briskman, Esq., and (ii) Cravath, Swaine & Moore, counsel for the
Company, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters in each case in the form set forth
in Exhibits A-1, A-2, A-3 and A-4, as applicable, hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably
request.
(c) Opinion of Regulatory Counsel for Company. At the
Closing Time, the U.S. Representative shall have received the favorable
opinion, dated as of the Closing Time, of Leventhal, Senter & Lerman,
PLLC, special regulatory counsel for the Company, together with signed
or reproduced copies of such letter for each of the other U.S.
Underwriters in the form set forth in Exhibit B hereto and to such
further effect as counsel to the U.S. Underwriters may reasonably
request.
(d) Opinion of Counsel for U.S. Underwriters. At the
Closing Time, the U.S. Representative shall have received the favorable
opinion, dated as of the Closing Time, of Skadden, Arps, Slate, Meagher
& Flom LLP, counsel for the U.S. Underwriters, together with signed or
reproduced copies of such letter for each of the other U.S.
Underwriters in form and substance satisfactory to the U.S.
Representative. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions
<PAGE> 19
other than the law of the State of New York, the federal law of the
United States and the General Corporation Law of the State of Delaware,
upon the opinions of counsel satisfactory to the U.S. Representative.
Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and
certificates of public officials.
(e) Officers' Certificate. At the Closing Time, there
shall not have been, since the date hereof or since the respective
dates as of which information is given in the Prospectuses, any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising
in the ordinary course of business, and the U.S. Representative shall
have received a certificate of the Company, signed by any one of the
Chairman of the Board, the President, Chief Executive Officer or an
Executive Vice President of the Company and of the chief financial or
chief accounting officer of the Company, dated as of the Closing Time,
to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1(a) hereof are true
and correct with the same force and effect as though expressly made at
and as of the Closing Time, (iii) the Company has complied with all
agreements set forth herein or in the International Purchase Agreement
or contemplated hereby or thereby and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Time, and
(iv) no stop order suspending the effectiveness of the Registration
Statement has been issued and, to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the
execution of this Agreement, the U.S. Representative shall have
received a letter dated such date, in form and substance satisfactory
to the U.S. Representative, together with signed or reproduced copies
of such letter for each of the other U.S. Underwriters containing
statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters from KPMG Peat Marwick
LLP with respect to (i) the combined financial statements of the
Company and its consolidated subsidiaries and certain financial
information contained in the Registration Statement and the
Prospectuses, (ii) the financial statements of CBS Radio and its
consolidated subsidiaries and certain financial information contained
in the Registration Statement and the Prospectuses and (iii) the
financial statements of Old Infinity and its consolidated subsidiaries
contained in the Registration Statement and the Prospectuses.
(g) Bring-down Comfort Letter. At the Closing Time,
the U.S. Representative shall have received a letter from KPMG Peat
Marwick LLP, dated as of the Closing Time, to the effect that they
reaffirm the statements made in the letter furnished by them, pursuant
to subsection (f) of this Section, except that the "specified
<PAGE> 20
date" referred to in such letter shall be a date not more than three
business days prior to the Closing Time.
(h) Approval of Listing. At the Closing Time, the
Securities shall have been approved for listing on the New York Stock
Exchange, Inc., subject only to official notice of issuance.
(i) No Objection. The NASD has confirmed that it has
not raised any objection with respect to the fairness and
reasonableness of the underwriting terms and arrangements.
(j) Lock-up Agreements. At the date of this
Agreement, the U.S. Representative shall have received an agreement
substantially in the form of Exhibit C hereto signed by the persons
listed on Schedule C hereto.
(k) Purchase of Initial International Securities.
Contemporaneously with the purchase by the U.S. Underwriters of the
Initial U.S. Securities under this Agreement, the International
Managers shall have purchased the Initial International Securities
under the International Purchase Agreement.
(l) Reorganization. At or prior to the Closing Time,
the Company shall have effected the Reorganization (as defined and
described in note (1) to the Company's combined financial statements
included in the Prospectuses).
(m) Conditions to Purchase of U.S. Option Securities.
In the event that the U.S. Underwriters exercise their option granted
in Section 2(b) hereof to purchase all or any portion of the U.S.
Option Securities, the representations and warranties of the Company
contained herein and the statements in any certificates furnished by
the Company or any subsidiary of the Company hereunder shall be true
and correct as of each Date of Delivery and, at the relevant Date of
Delivery, the U.S. Representative shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Company, signed by any one of the Chairman of
Board, the President, Chief Executive Officer or an Executive
Vice President of the Company and of the chief financial or
chief accounting officer of the Company confirming that the
certificate delivered at the Closing Time pursuant to Section
5(e) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion and
statement of each of Louis J. Briskman, Esq. and Cravath,
Swaine & Moore, counsel for the Company, in each case, dated
such Date of Delivery, relating to the U.S. Option
<PAGE> 21
Securities to be purchased on such Date of Delivery and
otherwise in the same form as the opinion and statement
required by Section 5(b) hereof.
(iii) Opinion of Regulatory Counsel for Company. The favorable
opinion of Leventhal, Senter & Lerman, PLLC, special
regulatory counsel for the Company, in form and substance
satisfactory to counsel for the U.S. Underwriters, dated such
Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(c) hereof.
(iv) Opinion of Counsel for U.S. Underwriters. The favorable
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel
for the U.S. Underwriters, dated such Date of Delivery,
relating to the U.S. Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the
opinion required by Section 5(d) hereof.
(v) Bring-down Comfort Letter. A letter from KPMG Peat Marwick
LLP, in form and substance satisfactory to the U.S.
Representative and dated such Date of Delivery, substantially
in the same form and substance as the letter furnished by them
to the U.S. Representative pursuant to Section 5(g) hereof,
except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five
days prior to such Date of Delivery.
(n) Additional Documents. At the Closing Time and at
each Date of Delivery, if any, counsel for the U.S. Underwriters shall
have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the U.S. Securities as herein contemplated, or in
order to evidence the accuracy of any of the representations or
warranties, or the fulfillment of any of the conditions, herein
contained; and all proceedings taken by the Company in connection with
the issuance and sale of the U.S. Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the U.S.
Representative and counsel for the U.S. Underwriters.
(o) Termination of Agreement. If any condition
specified in this Section shall not have been fulfilled when and as
required to be fulfilled, this Agreement (or, in the case of any
condition to the purchase of U.S. Option Securities on a Date of
Delivery which is after the Closing Time, the obligations of the
several U.S. Underwriters to purchase the relevant U.S. Option
Securities) may be terminated by the U.S. Representative by notice to
the Company at any time at or prior to the Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without
liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7 and 8 shall survive any such
termination and remain in full force and effect.
<PAGE> 22
SECTION 6. Indemnification.
(a) Indemnification of U.S. Underwriters. (1) The Company agrees to
indemnify and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the 1933 Act
or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information, if applicable, or
the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or
the Prospectuses (or any amendment or supplement thereto) or the
omission or alleged omission therefrom of a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of (A) the
violation of any applicable laws or regulations of foreign
jurisdictions where Reserved Securities have been offered and (B) any
untrue statement or alleged untrue statement of a material fact
included in the supplement or prospectus wrapper material distributed
in the United States, the United Kingdom or Singapore in connection
with the reservation and sale of the Reserved Securities to Eligible
Reserved Share Participants or the omission or alleged omission
therefrom of a material fact necessary to make the statements therein,
when considered in conjunction with the Prospectuses or preliminary
prospectuses, not misleading;
(iii) against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred to
in Section 6(a)(1)(ii)(A) hereof; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iv) against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by
Merrill Lynch), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission or in connection with any
violation of the nature referred to in
<PAGE> 23
Section 6(a)(1)(ii)(A) hereof, to the extent that any such expense is
not paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Global Coordinator expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
U.S. Prospectus (or any amendment or supplement thereto); and provided, further,
however, that the Company shall not be liable to any indemnified party with
respect to any preliminary prospectus (or supplement thereto) if the
Prospectuses corrected any such untrue statement or omission, was delivered to
such indemnified party (sufficiently in advance of the Closing Date and in
sufficient quantity to allow for distribution by the Closing Date) and such
indemnified party failed to furnish a copy of the applicable Prospectus in
contravention of a requirement of applicable law at or prior to the written
confirmation of the sale of Securities to the applicable purchaser.
(2) In addition to and without limitation of the Company's obligations
to indemnify Merrill Lynch as an Underwriter, the Company also agrees to
indemnify and hold harmless the Independent Underwriter and each person, if any,
who controls the Independent Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, incurred as a
result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the NASD in connection with the offering of the U.S. Securities, except for any
losses, claims, damages, liabilities and judgments found in a final judgment by
a court to have resulted from the Independent Underwriter's or such controlling
person's willful misconduct or gross negligence.
(b) Indemnification of Company, Directors and Officers. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a)(1) of this Section, as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto) in
reliance upon and in conformity with written information furnished to the
Company by such U.S. Underwriter through the U.S. Representative expressly for
use in the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the U.S. Prospectus (or any amendment or supplement thereto).
<PAGE> 24
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances; provided, that, if indemnity is
sought pursuant to Section 6(a)(2), then, in addition to the fees and expenses
of such counsel for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one counsel (in
addition to any local counsel) separate from its own counsel and that of the
other indemnified parties for the Independent Underwriter in its capacity as a
"qualified independent underwriter" and all persons, if any, who control the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of 1934 Act in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances if, in the reasonable judgment of the Independent
Underwriter, there may exist a conflict of interest between the Independent
Underwriter and the other indemnified parties. Any such separate counsel for the
Independent Underwriter and such control persons of the Independent Underwriter
shall be designated in writing by the Independent Underwriter. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and (ii) does not include
a statement as to or an admission of fault, culpability or a failure to act by
or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such
<PAGE> 25
settlement at least 30 days prior to such settlement being entered into and
(iii) such indemnifying party shall not have reimbursed such indemnified party
in accordance with such request prior to the date of such settlement.
(e) Indemnification for Reserved Securities. In connection with the
offer and sale of the Reserved Securities, the Company agrees, promptly upon a
request, in writing to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of Eligible Reserved Share Participants to
pay for and accept delivery of Reserved Securities which, by the end of the
first business day following the date of this Agreement, were subject to a
properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the U.S. Underwriters on the other hand from the offering of the U.S.
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and of the U.S.
Underwriters on the other hand in connection with the statements or omissions,
or in connection with any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof, which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
U.S. Underwriters on the other hand in connection with the offering of the U.S.
Securities pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the U.S.
Securities pursuant to this Agreement (before deducting expenses) received by
the Company and the total underwriting discount received by the U.S.
Underwriters, in each case as set forth on the cover of the U.S. Prospectus, or,
if Rule 434 is used, the corresponding location on the Term Sheet, bear to the
aggregate initial public offering price of the Initial U.S. Securities as set
forth on such cover.
The relative fault of the Company on the one hand and the U.S.
Underwriters on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the U.S. Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or any violation of the nature referred to in Section
6(a)(1)(ii)(A) hereof.
<PAGE> 26
The Company and the U.S. Underwriters agree that Merrill Lynch will not receive
any additional benefits hereunder for serving as the Independent Underwriter in
connection with the offering and sale of the U.S. Securities.
The Company and the U.S. Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the U.S. Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take account
of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a
U.S. Underwriter within the meaning of Section 15 of the 1933 Act or Section 20
of the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of Initial U.S. Securities set forth
opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company submitted pursuant
hereto, shall remain operative and in full force and effect, regardless of any
investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of the
U.S. Securities to the U.S. Underwriters.
SECTION 9. Termination of Agreement.
<PAGE> 27
(a) Termination; General. The U.S. Representative may terminate this
Agreement, by notice to the Company, at any time at or prior to the Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the respective dates as of which information is given in the U.S. Prospectus,
any material adverse change in the condition, financial or otherwise, or in the
earnings, business affairs or business prospects of the Company and its
subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States or the international
financial markets, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the U.S.
Representative, impracticable to market the Securities or to enforce contracts
for the sale of the Securities, or (iii) if trading in the Class A Common Stock
has been suspended or materially limited by the Commission or the New York Stock
Exchange, or if trading generally on the American Stock Exchange or the New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the NASD or any other governmental authority, or
(iv) if a banking moratorium has been declared by either Federal or New York
authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the U.S. Underwriters. If one or
more of the U.S. Underwriters shall fail at the Closing Time or a Date of
Delivery to purchase the Initial U.S. Securities or the U.S. Option Securities,
respectively, which it or they are obligated to purchase under this Agreement
(the "Defaulted Securities"), the U.S. Representative shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting U.S. Underwriters, or any other underwriters, to purchase all,
but not less than all, of the Defaulted Securities in such amounts as may be
agreed upon and upon the terms herein set forth. If, however, the U.S.
Representative shall not have completed such arrangements within such 24- hour
period, then:
(a) if the number of Defaulted Securities does not
exceed 10% of the number of U.S. Securities to be purchased on such
date, each of the non-defaulting U.S. Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations hereunder
bear to the underwriting obligations of all non-defaulting U.S.
Underwriters; or
<PAGE> 28
(b) if the number of Defaulted Securities exceeds 10%
of the number of U.S. Securities to be purchased on such date, this
Agreement (or, with respect to any Date of Delivery which occurs after
the Closing Time, the obligation of the U.S. Underwriters to purchase
and of the Company to sell the U.S. Option Securities to be purchased
and sold on such Date of Delivery) shall, upon prior notice to the
Company of such fact, terminate without liability on the part of any
non-defaulting U.S. Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination
of this Agreement or, in the case of a Date of Delivery which is after the
Closing Time and which does not result in a termination of the obligation of the
U.S. Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representative or the Company
shall have the right to postpone the Closing Time or the relevant Date of
Delivery, as the case may be, for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectuses or in
any other documents or arrangements. As used herein, the term "U.S. Underwriter"
includes any person substituted for a U.S. Underwriter under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed,
telecopied (which is confirmed), sent by overnight courier (providing proof of
delivery) or transmitted by any standard form of telecommunication. Notices to
the U.S. Underwriters shall be directed to the U.S. Representative(s) at North
Tower, World Financial Center, New York, New York 10281-1201, facsimile (212)
449-1642, attention of Gregg Seibert, Managing Director; and notices to the
Company shall be directed to it at Infinity Broadcasting Corporation, 40 West
57th Street, New York, New York 10019, facsimile (212) 314-9336, attention of
Mr. Farid Suleman.
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon each of the U.S. Underwriters and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the U.S. Underwriters and the Company and their respective successors and
the controlling persons and officers and directors referred to in Sections 6 and
7 and their respective heirs and legal representatives, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
herein contained. This Agreement and all conditions and provisions hereof are
intended to be for the sole and exclusive benefit of the U.S. Underwriters and
the Company and their respective successors, and such controlling persons and
officers and directors and their respective heirs and legal representatives, and
for the benefit of no other person, firm or corporation. No purchaser of
Securities from any U.S. Underwriter shall be deemed to be a successor by reason
merely of such purchase.
<PAGE> 29
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
<PAGE> 30
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the U.S. Underwriters and the Company in accordance with its terms.
Very truly yours,
INFINITY BROADCASTING
CORPORATION
By
----------------------------
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By
--------------------------------
Authorized Signatory
For themselves and as U.S. Representative of the
other U.S. Underwriters named in Schedule A hereto.
<PAGE> 31
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial U.S.
Name of U.S. Underwriter Securities
------------------------ ----------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner & Smith
Incorporated.................................................................
BT Alex. Brown Incorporated..............................................................
Goldman, Sachs & Co......................................................................
Allen & Company Incorporated.............................................................
Credit Suisse First Boston Corporation...................................................
Donaldson, Lufkin & Jenrette Securities Corporation......................................
Lehman Brothers Inc......................................................................
Morgan Stanley & Co. Incorporated........................................................
NationsBanc Montgomery Securities LLC....................................................
Salomon Smith Barney Inc.................................................................
Bear, Stearns & Co. Inc..................................................................
Deutsche Bank Securities Inc.............................................................
ING Baring Furman Selz LLC...............................................................
Lazard Freres & Co. LLC..................................................................
PaineWebber Incorporated.................................................................
Sanford C. Bernstein & Co., Inc..........................................................
Schroder & Co. Inc.......................................................................
SG Cowen Securities Corporation..........................................................
ABN AMRO Incorporated....................................................................
BancBoston Robertson Stephens Inc........................................................
Chase Securities Inc.....................................................................
J.P. Morgan Securities Inc...............................................................
Wasserstein Perella Securities, Inc......................................................
-----------
Total ................................................................................... 114,750,000
===========
</TABLE>
<PAGE> 32
SCHEDULE B
INFINITY BROADCASTING CORPORATION
114,750,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
1. The initial public offering price of the Securities,
determined as provided in said Section 2, shall be $- per share of Class A
Common Stock.
2. The purchase price per share for the Securities to be paid
by the several Underwriters shall be $-, being an amount equal to the initial
public offering price set forth above less $- per share; provided that the
purchase price per share for any U.S. Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial U.S. Securities but not payable on the U.S.
Option Securities.
<PAGE> 33
SCHEDULE C
List of persons and entities
subject to lock-up
1. CBS Corporation, a Pennsylvania corporation
2. CBS Broadcasting Inc., a New York corporation
3. Mr. Mel Karmazin
<PAGE> 34
Exhibit A-1
FORM OF OPINION OF LOUIS J. BRISKMAN, ESQ.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) Each Subsidiary is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation or other
organization (except for jurisdictions not recognizing the legal concept of good
standing), with full corporate or other power and authority to own, lease and
operate its properties and conduct its business as described in the
Prospectuses.
(ii) Each of the Company and each Subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the ownership or leasing of its properties or the conduct
of its business requires such qualification, other than jurisdictions in which
the failure so to qualify would not have a Material Adverse Effect and other
than jurisdictions not recognizing the legal concepts of good standing or
qualification.
(iii) Except as disclosed in the Registration Statement, all of the
issued and outstanding shares of capital stock of, each Subsidiary have been
duly authorized and validly issued, are fully paid and nonassessable, and, are
owned, directly or through Subsidiaries (except for directors' qualifying shares
or similar interests) by the Company.
(iv) To the knowledge of such counsel, (a) there are not any pending or
threatened actions, suits, proceedings, investigations or inquiries before any
court or governmental agency or authority or any arbitrator against the Company
or any subsidiary or a character required to be disclosed in the Registration
Statement or Prospectuses which is not adequately disclosed as required, and (b)
there is not contract, indenture, mortgage, loan agreement, not, lease or other
document of a character required to be described in the Registration Statement
or Prospectuses, or to be filed as an exhibit, which is not described or filed
as required.
(v) To the knowledge of such counsel, holders of outstanding shares of
capital stock of any Subsidiary are not entitled to statutory preemptive rights
or preemptive rights under their respective charter or by-laws in connection
with the issuance of the Securities, and holders of outstanding shares of
capital stock of the Company or any Subsidiary are not entitled to any
contractual preemptive rights in connection with the issuance of the Securities.
(vi) To the knowledge of such counsel, except as disclosed in the
Registration Statement and the Prospectuses, there are no persons with
registration rights or other similar
<PAGE> 35
rights to have any securities registered pursuant to the Registration Statement
or otherwise registered by the Company under the 1933 Act.
(vii) To the knowledge of such counsel, neither the Company nor any
Subsidiary is in violation of its charter or by-laws and no default by the
Company or any Subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement, except that such counsel expresses no opinion as to the
covenants referred to under the heading "Risk Factors- Significant Subsidiary
Debt Covenants" in the Registration Statement.
(viii) None of the issue and sale of the Securities, the consummation
of any other of the transaction contemplated by the Purchase Agreements, the
performance of the terms of the Purchase Agreements or the application of the
proceeds of the sale of the Securities with respect to the payment of the CBS
Note (A) will conflict with, result in a breach of, or constitute a default
under, the Restated Certificate of Incorporation or Restated By-laws of the
Company, or the terms of any indenture or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or bound and listed as an
exhibit to the Registration Statement, or described under the heading
"Description of Indebtedness" in the Registration Statement, except that, in
connection with the offering and sale of the Securities, CBS Radio, Inc. will be
required to make an offer to repurchase all of its existing indebtedness issued
pursuant to the CBS Indentures or (B) will contravene any law, rule or
regulation of the United States, the State of New York or the General
Corporation Law of the State of Delaware applicable to the Company or any of its
Subsidiaries, or, to the knowledge of such counsel, any order or decree of any
court or government agency or instrumentality. In connection with the foregoing,
such counsel points out that certain of the agreements referred to in clause (i)
above are or may be governed by laws other than the laws of the State of New
York. For purposed of the opinion expressed in this paragraph, however, such
counsel has assumed that all such agreements are governed by and would be
interpreted in accordance with the laws of the State of New York.
<PAGE> 36
Exhibit A-2
FORM OF STATEMENT OF LOUIS J.
BRISKMAN, ESQ. TO BE DELIVERED
PURSUANT TO SECTION 5(b)
In that capacity, I participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of (a) the Registration Statement on Form S-1 (Registration No.
333-63727) filed with the Securities and Exchange Commission (the "Commission")
on September 18, 1998, as amended by Amendment No. 1 thereto filed with the
Commission on November 2, 1998, Amendment No.2 thereto filed with the Commission
on November 12, 1998, and Amendment No. 4 thereto filed withe the Commission on
[ ], 1998 (such Registration Statement, as amended being hereinafter called the
"Registration Statement"), for registration of the Shares under the Securities
Act of 1933 (the "Securities Act"); and (b) the final U.S. Prospectus and the
final International Prospectus, each dated December [ ], 1998, relating to the
Shares, filed with the Commission pursuant to Rule 424 (b) of the General Rules
and Regulations under the Securities Act (the "Prospectus"). However, I have not
investigated the completeness or accuracy of the Registration Statement or the
Prospectus with respect to matters related to the Communications Act of 1934,
which matters have been addressed in the opinion of Leventhal, Senter & Lerman,
PLLC, special regulatory counsel to the Company.
Although I have made certain inquiries and investigations in
connection with the preparation of the Registration Statement and the
Prospectuses, I do not assume responsibility for the accuracy or completeness of
the statements made in the Registration Statement and the Prospectus. Subject to
the foregoing, I hereby advise you that my work in connection with this matter
did not disclose any information that gave us reason to believe that: (i) the
Registration Statement at the time the Registration Statement became effective,
or the Prospectuses, as of the date hereof, in each case except the financial
statements and other information of an accounting financial nature included
therein, as to which I do not express any view, was not appropriately responsive
in all material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, or (ii) the
Registration Statement at the time the Registration Statement became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that either of the Prospectuses, at the date hereof, includes
an untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (in each case except
for the financial statements and other information of an accounting or financial
nature included therein, as to which I do not express any view).
<PAGE> 37
Exhibit A-3
FORM OF OPINION OF COMPANY
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly organized and is a corporation validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectuses and to enter into and
perform its obligations under the Purchase Agreements. The opinion in this
paragraph (i) relating to the valid existence and good standing of the Company
is based solely on a certificate from the Secretary of State of the State of
Delaware.
(ii) The Company's authorized equity capitalization is as set forth in
the Prospectuses in the column entitled "Actual" under the caption
"Capitalization". The Securities conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectuses. The Securities have been duly and validly authorized, and, when
issued and delivered to and paid for by the Underwriters pursuant to the
Purchase Agreements, will be validly issued, fully paid and nonassessable. The
Class B Common Stock has been duly and validly authorized, and is validly
issued, fully paid and nonassessable. The certificates for the Securities are in
valid and sufficient form. Holders of outstanding shares of Class A Common Stock
and Class B Common Stock of the Company are not entitled to statutory preemptive
rights or preemptive rights under the Company's charter or by-laws in connection
with the issuance of the Securities.
(iii) Each of the Purchase Agreements has been duly authorized,
executed and delivered by the Company.
(iv) No authorization, approval or other action by, and no notice to,
consent of, order of or filing with, any United States Federal, New York or, to
the extent required under the General Corporation Law of the State of Delaware,
Delaware governmental authority or regulatory body is required for the Purchase
Agreements, except (A) such as have been obtained under the 1933 Act, the 1934
Act and such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters and (B) such as have been or may be required under the
Communications Act of 1934, as amended, and the rules, regulations and
administrative orders promulgated thereunder.
(v) None of the issue and sale of the Securities, the consummation of
any other of the transactions contemplated by the Purchase Agreements or the
performance of the terms of the Purchase Agreements or the application of the
proceeds of the sale of the Securities (A) will conflict with, result in a
breach of, or constitute a default under, the Restated Certificate of
<PAGE> 38
Incorporation or Restate By-laws of the Company or (B) will contravene any law,
rule or regulation of the United States, the State of New York or the General
Corporation Law of the State of Delaware applicable to the Company or any of its
Subsidiaries, or, to our knowledge, any order or decree of any court or
government agency or instrumentality.
(vi) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in, or
subject to regulation under, the 1940 Act.
(vii) The Registration Statement became effective under the 1933 Act on
December [ ], 1998, and thereupon the offering of the Securities as contemplated
by the Prospectuses became registered under the 1933 Act and, to knowledge, no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for the purpose have been instituted or are pending or
contemplated under the 1933 Act.
(viii) Each of the Intercompany Agreement and the Tax Sharing Agreement
has been duly authorized, executed and delivered by the Company, and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect, to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law)
and to the discretion of courts in granting equitable remedies, and except that
any rights to indemnity and contribution may be limited by Federal and state
securities laws and public policy considerations.
(ix) The statements made in the Prospectuses under the caption "Certain
United States Tax Consequences to Non-United States Holder", insofar as they
purport to describe the material tax consequences of an investment in the Class
A Common Stock, fairly summarize the matters therein described.
In rendering this opinion, we have assumed, without independent
investigation, the correctness of, and take no responsibility for, the opinion
dated the date hereof of Leventhal, Senter & Lerman, PLLC, special regulatory
counsel for the Company, delivered to you pursuant to Section 5(c) of each
Purchase Agreement, as to all matters of law covered therein relating to the
Communications Act of 1934, as amended, and the rules, regulations and
administrative orders promulgated thereunder, and we express no opinion with
respect to such matters.
<PAGE> 39
Exhibit A-4
FORM OF STATEMENT OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
In that capacity, we participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of (a) the Registration Statement on Form S-1 (Registration No.
333-63727) filed with the Securities and Exchange Commission (the "Commission")
on September 18, 1998, as amended by Amendment No. 1 thereto filed with the
Commission on November 2, 1998, Amendment No.2 thereto filed with the Commission
on November 12, 1998, and Amendment No. 4 thereto filed with the Commission on [
], 1998 (such Registration Statement, as amended being hereinafter called the
"Registration Statement"), for registration of the Shares under the Securities
Act of 1933 (the "Securities Act"); and (b) the final U.S. Prospectus and the
final International Prospectus, each dated December [ ], 1998, relating to the
Shares, filed with the Commission pursuant to Rule 424 (b) of the General Rules
and Regulations under the Securities Act (the "Prospectus"). However, we have
not investigated the completeness or accuracy of the Registration Statement or
the Prospectus with respect to matters related to the Communications Act of
1934, which matters have been addressed in the opinion of Leventhal, Senter &
Lerman, PLLC, special regulatory counsel to the Company.
Although we have made certain inquiries and investigations in
connection with the preparation of the Registration Statement and the
Prospectuses, the limitations inherent in the role of outside counsel are such
that we cannot and do not assume responsibility for the accuracy or completeness
of the statements made in the Registration Statement and Prospectuses except
insofar as such statements relate to us and except to the extent set forth in
the first two sentences of paragraph (iii), and paragraph (ix) of our opinion to
you dated the date hereof. Subject to the foregoing, we hereby advise you that
our work in connection with this matter did not disclose any information that
gave us reason to believe that: (A) the Registration Statement at the time the
Registration Statement became effective, or the Prospectuses, as of the date
hereof, in each case except the financial statements and other information of an
accounting financial nature included therein, as to which we do not express any
view, was not appropriately responsive in all material respects to the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder, or (B) the Registration Statement at the time the
Registration Statement became effective, contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that either of
the Prospectuses, at the date hereof, includes an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case except for the
<PAGE> 40
financial statements and other information of an accounting or financial nature
included therein, as to which we do not express any view).
<PAGE> 41
Exhibit B
FORM OF OPINION OF COMPANY'S SPECIAL REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
(i) The information in the Prospectuses under the captions "Risk
Factors-Government Regulation" and "Business-Government Regulation", to the
extent that such information constitutes a summary of federal communications law
and the rules, regulations and administrative orders promulgated or proposed
for promulgation thereunder, has been reviewed by such counsel and is correct in
all material respects.
(ii) Except as previously made or obtained, as the case may be, no
filing with, or authorization, approval, consent, license, order, registration,
qualification or decree of any court or administrative agency or authority is
necessary or required under the Communications Act of 1934, as amended, and the
rules, regulations and administrative orders promulgated thereunder
(collectively, the "Federal Communications Laws") in connection with the
execution or delivery by the Company of the Purchase Agreements, the performance
by the Company of the transactions contemplated thereby or the offering,
issuance or sale of the Securities, as applicable.
(iii) The Company and the subsidiaries are the holders of the Licenses
issued by the FCC listed in an attachment to such opinion (the "FCC Licenses"),
all of which are in full force and effect for the maximum license term
customarily issued, with no material conditions, restrictions or qualifications
other than as set forth on the face of authorizations evidencing the FCC
Licenses or as described in the Registration Statement and the Prospectuses.
(iv) To the best knowledge of such counsel, there is no unsatisfied
adverse FCC order, decree or ruling outstanding against the Company or any of
its Subsidiaries which would have a Material Adverse Effect, except as set forth
in the Registration Statement and the Prospectuses.
(v) To the best knowledge of such counsel, there is no proceeding
(including any rulemaking proceeding), complaint or investigation against the
Company or any of its Subsidiaries or in respect of any of the FCC Licenses
pending or threatened before the FCC which we believe will result in a Material
Adverse Effect except as set forth in the Registration Statement and the
Prospectuses.
(vi) To the best knowledge of such counsel, no action, suit, proceeding
or investigation is pending or threatened, and no judgment, order, decree or
ruling has been
<PAGE> 42
entered, against the Company or any of its Subsidiaries that gives us reason to
believe that any of the FCC Licenses will be revoked or not renewed in the
ordinary course.
The statements made under the captions "Risk Factors - Government Regulation",
"Business Competition", "Business - Government Regulation", and "Description of
Capital Stock Foreign Ownership Restrictions" in the Prospectuses, taken
together, insofar as they are, or refer to, statements of law, legal conclusions
or summaries relating to the Communications Act or the rules or regulations of
the FCC, fairly reflect the provisions purported to be summarized as material to
the Company and are in all material respects correct; and such counsel has no
reason to believe that such statements as of the time the Registration Statement
or any amendment became effective, at the time the Prospectuses were issued, at
the time any amendment or supplement thereto was issued or at the Closing Time,
contain any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make such statements, in light of the circumstances
under which they were made, not misleading.
<PAGE> 43
FORM OF LOCK-UP LETTER
Exhibit C
December , 1998
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated,
as Representative of the several
Underwriters to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Re: Infinity Broadcasting Corporation
Ladies and Gentlemen:
As of the closing of the Offering referred to below, the undersigned
will be the beneficial owner of - shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock") and - shares of Class B Common Stock, par
value $.01 per share (the "Class B Common Stock" and, together with the Class A
Common Stock", the "Common Stock") of Infinity Broadcasting Corporation (the
"Company"), a Delaware corporation. The undersigned understands that the Company
has filed a Registration Statement on Form S-1 (the "Registration Statement")
with the Securities and Exchange Commission for the registration of 155,250,000
shares of Class A Common Stock (the "Offering"). The undersigned further
understands that you are contemplating entering into a U.S. Purchase Agreement
and an International Purchase Agreement (together, the "Purchase Agreements")
with the Company is connection with the Offering. All terms not otherwise
defined herein shall have the same meanings as in the Purchase Agreements.
In recognition of the benefit that the Offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreements
(the "Underwriters") that, during a period of 180 days from the date of the
Purchase Agreements, the undersigned will not, without the prior written consent
of Merrill Lynch, Pierce, Fenner & Smith Incorporated directly or indirectly,
(i) offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right or
warrant for the sale of, or otherwise
<PAGE> 44
transfer or dispose of any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise. The foregoing sentence shall not apply to any
shares of Common Stock transferred to an affiliate of the Company or any CBS
Party (as defined in the Restated Certificate of Incorporation of the Company)
which agrees to be bound by the provisions of this agreement.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. This agreement shall be binding on the undersigned and his, her or its
respective successors, liens, personal representatives and assigns.
Very truly yours,
-----------------------------------
Name:
<PAGE> 1
Exhibit 1.2
INFINITY BROADCASTING CORPORATION
(a Delaware corporation)
20,250,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
INTERNATIONAL PURCHASE AGREEMENT
December, 1998
MERRILL LYNCH INTERNATIONAL
as Lead Manager of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Infinity Broadcasting Corporation, a Delaware corporation (the "Company"),
confirms its agreement with Merrill Lynch International ("Merrill Lynch") and
each of the other international underwriters named in Schedule A hereto
(collectively, the "International Managers," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Merrill Lynch is acting as representative (in such capacity, the "Lead
Manager"), with respect to the issue and sale by the Company and the purchase by
the International Managers, acting severally and not jointly, of the respective
numbers of shares of Class A Common Stock, par value $0.01 per share, of the
Company (the "Class A Common Stock" and, together with the Class B Common Stock,
par value $0.01 per share, of the Company (the "Class B Common Stock"), the
"Common Stock") set forth in said Schedule A,
<PAGE> 2
aggregating 20,250,000 shares of Class A Common Stock (the "Initial
International Securities") and with respect to the grant by the Company to the
International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of 3,037,500
additional shares of Class A Common Stock to cover over-allotments, if any. The
Initial International Securities to be purchased by the International Managers
and all or any part of the additional 3,037,500 shares of Class A Common Stock
subject to the option described in Section 2(b) hereof (the "International
Option Securities") are hereinafter called, collectively, the "International
Securities".
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement") providing for
the offering by the Company of an aggregate of 114,750,000 shares of Class A
Common Stock (collectively, the "Initial U.S. Securities") through arrangements
with certain underwriters in the United States and Canada (the "U.S.
Underwriters") for which Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated is acting as representative (in such capacity, the "U.S.
Representative") and the grant by the Company to the U.S. Underwriters, acting
severally and not jointly, of an option to purchase all or any part of the U.S.
Underwriters' pro rata portion of up to 17,212,500 additional shares of Class A
Common Stock solely to cover over-allotments, if any (the "U.S. Option
Securities" and, together with the International Option Securities, the "Option
Securities"). The Initial U.S. Securities and the U.S. Option Securities are
hereinafter called, collectively, the "U.S. Securities". It is understood that
the Company is not obligated to sell and the International Managers are not
obligated to purchase, any Initial International Securities unless all of the
Initial U.S. Securities are contemporaneously purchased by the U.S.
Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities and the U.S. Securities are
hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
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<PAGE> 3
The Company understands that the International Managers propose to make a
public offering of the Securities as soon as the Lead Manager deems advisable
after this Agreement has been executed and delivered.
The Company and the International Managers agree that up to 5% of the
aggregate number of shares of the Initial Securities to be purchased by the
Underwriters (the "Reserved Securities") shall be reserved for offering and sale
by the Underwriters to certain eligible directors, officers and employees of the
Company and CBS Corporation and other persons associated with the Company or
with any director, officer or employee of the Company (collectively, the
"Eligible Reserved Share Participants"), as part of the distribution of the
Securities by the Underwriters, subject to the terms of this Agreement, the
applicable rules, regulations and interpretations of the National Association of
Securities Dealers, Inc. (the "NASD") and all other applicable laws, rules and
regulations. The Reserved Securities will be sold to the Eligible Reserved Share
Participants by the International Underwriters pursuant to this Agreement at the
initial public offering price set forth on Schedule B hereto. To the extent that
such Reserved Securities are not orally confirmed for purchase (assuming
reasonable efforts to contact such persons by the U.S. Underwriters in
accordance with the procedures set forth in the prospectus wrapper material
circulated to Eligible Reserved Share Participants in connection with the sale
of the Reserved Securities) by such Eligible Reserved Share Participants by the
end of the first business day after the date of this Agreement, such Reserved
Securities may be offered to the public as part of the public offering
contemplated hereby.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (No. 333-63727) covering the
registration of the Securities under the Securities Act of 1933, as amended (the
"1933 Act"), including the related preliminary prospectus or prospectuses.
Promptly after execution and delivery of this Agreement, the Company will either
(i) prepare and file a prospectus in accordance with the provisions of Rule 430A
("Rule 430A") of the rules and regulations of the Commission under the 1933 Act
(the "1933 Act Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of
the 1933 Act Regulations or (ii) if the Company has elected to rely upon Rule
434 ("Rule 434") of the 1933 Act Regulations, prepare and file a term sheet (a
"Term Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two
forms of prospectus are to be used in connection with the offering and sale of
the Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the Form
of U.S. Prospectus, except for the
3
<PAGE> 4
front cover and back cover pages and the information set forth under the caption
"Underwriting." The information included in any such prospectus or in any such
Term Sheet, as the case may be, that was omitted from such registration
statement at the time it became effective but that is deemed to be part of such
registration statement at the time it became effective (a) pursuant to paragraph
(b) of Rule 430A is referred to as "Rule 430A Information" or (b) pursuant to
paragraph (d) of Rule 434 is referred to as "Rule 434 Information." Each Form of
International Prospectus and Form of U.S. Prospectus used before such
registration statement became effective, and any prospectus that omitted, as
applicable, the Rule 430A Information or the Rule 434 Information, that was used
after such effectiveness and prior to the execution and delivery of this
Agreement, is herein called a "preliminary prospectus." Such registration
statement, including the exhibits thereto and schedules thereto at the time it
became effective and including the Rule 430A Information or the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is referred to herein as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of International Prospectus and the final
Form of U.S. Prospectus in the forms first furnished to the Underwriters for use
in connection with the offering of the Securities are herein called the
"International Prospectus" and the "U.S. Prospectus," respectively, and
collectively, the "Prospectuses." If Rule 434 is relied on, the terms "U.S.
Prospectus" and "International Prospectus" shall refer to the preliminary
International Prospectus dated November 12, 1998 (the "International Preliminary
Prospectus"), and the preliminary U.S. Prospectus dated November 12, 1998 (the
"U.S. Preliminary Prospectus"), respectively, each together with the applicable
Term Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the International Prospectus, the U.S. Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company represents
and warrants to each International Manager as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if
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<PAGE> 5
any) referred to in Section 2(b) hereof, and agrees with each International
Manager, as follows:
(i) Compliance with Registration Requirements. Each of the
Registration Statement and any Rule 462(b) Registration Statement has
become effective under the 1933 Act and no stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are contemplated by the Commission, and any
request on the part of the Commission for additional information has been
complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), the Registration
Statement, the Rule 462(b) Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with
the requirements of the 1933 Act and the 1933 Act Regulations and did not
and will not contain 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, and the Prospectuses, any
preliminary prospectuses and any supplement thereto or prospectus wrapper
prepared in connection therewith, at their respective times of issuance
and at the Closing Time, complied and will comply in all material respects
with any applicable laws or regulations of foreign jurisdictions in which
the Prospectuses and such preliminary prospectuses, as amended or
supplemented, if applicable, are distributed in connection with the offer
and sale of Reserved Securities. Neither of the Prospectuses nor any
amendments or supplements thereto (including any prospectus wrapper), at
the time the Prospectuses or any amendments or supplements thereto were
issued and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery), included or will
include an untrue statement of a material fact or omitted or will omit to
state a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading. If Rule 434 is used, the Company will comply with the
requirements of Rule 434 and the Prospectuses shall not be "materially
different", as such term is used in Rule 434, from the prospectuses
included in the Registration Statement at the time it became effective.
The
5
<PAGE> 6
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager through the Lead Manager expressly for use in the Registration
Statement or the International Prospectus.
The International Preliminary Prospectus and the U.S. Preliminary
Prospectus filed as part of the Registration Statement and each
preliminary prospectus and the prospectuses filed as part of any
subsequent amendment thereto, or filed pursuant to Rule 424 under the 1933
Act, complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectuses delivered
to the Underwriters for use in connection with this offering was identical
to the electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
The Company has filed a registration statement pursuant to Section
12(b) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
to register the Class A Common Stock, and such registration statement has
become effective.
(ii) Independent Accountants. The accountants who certified (A) the
combined financial statements of the Company and its consolidated
subsidiaries and supporting schedule, (B) the financial statements of CBS
Radio, Inc. (formerly American Radio Systems Corporation) ("CBS Radio")
and its consolidated subsidiaries and (C) the financial statements of Old
Infinity (as defined in the Registration Statement) and its consolidated
subsidiaries, in each case included in the Registration Statement are, in
each case, independent public accountants as required by the 1933 Act and
the 1933 Act Regulations.
(iii) Financial Statements. The combined financial statements of the
Company included in the Registration Statement and the Prospectuses,
together with the related schedule and notes (but not including the
information set forth in the Prospectuses under the captions "Prospectus
Summary-Summary Combined and Pro Forma Financial Data", "Capitalization"
and "Selected Combined and Pro Forma Financial Data"), present fairly in
all material respects the financial position of the Company, its
consolidated subsidiaries and the predecessor entities to the Company at
the dates indicated
6
<PAGE> 7
and the statements of earnings, changes in stockholders' equity
(deficiency) and cash flows of the Company, its consolidated subsidiaries
and the predecessor entities to the Company for the periods specified;
such financial statements have been prepared in conformity with generally
accepted accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods involved. The financial statements
of CBS Radio included in the Registration Statement and the Prospectuses,
together with the related notes, present fairly in all material respects
the financial position of CBS Radio and its consolidated subsidiaries at
the dates indicated and the statements of operations, stockholders' equity
and cash flows of CBS Radio and its consolidated subsidiaries for the
periods specified; such financial statements have been prepared in
conformity with GAAP applied on a consistent basis throughout the periods
involved. The financial statements of Old Infinity included in the
Registration Statement and the Prospectuses, together with the related
notes, present fairly in all material respects the financial position of
Old Infinity and its consolidated subsidiaries at the dates indicated and
the statements of earnings, changes in stockholders' equity and cash flows
of Old Infinity and its consolidated subsidiaries for the periods
specified; such financial statements have been prepared in conformity with
GAAP applied on a consistent basis throughout the periods involved. The
supporting schedule included in the Registration Statement presents fairly
in all material respects in conformity with GAAP the information required
to be stated therein. The selected financial data and the summary
financial information included in the Prospectuses present fairly in all
material respects the information shown therein and have been compiled on
a basis consistent with that of the audited financial statements included
in the Registration Statement. The pro forma financial statements and the
related notes thereto included in the Registration Statement and the
Prospectuses present fairly in all material respects the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been
properly compiled on the bases described therein, and the assumptions used
in the preparation thereof are reasonable and the adjustments used therein
are appropriate to give effect to the transactions and circumstances
referred to therein.
(iv) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein or contemplated
thereby, (A) there has been no material adverse change in the condition,
financial or
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<PAGE> 8
otherwise, or in the earnings, business affairs or business prospects of
the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business (a "Material Adverse
Effect"), (B) there have been no transactions entered into by the Company
or any of its subsidiaries which are material with respect to the Company
and its subsidiaries considered as one enterprise, and (C) there has been
no dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
(v) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware, and has the corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and to enter into and perform
its obligations under this Agreement; and the Company is duly qualified as
a foreign corporation to transact business and is in good standing in each
other jurisdiction in which such qualification or good standing is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect and except for
jurisdictions not recognizing the legal concepts of good standing or
qualification.
(vi) Good Standing of Subsidiaries. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X (each
a "Subsidiary" and, collectively, the "Subsidiaries") has been duly
organized and is validly existing as a corporation and, in jurisdictions
where the legal concept exists, in good standing under the laws of the
jurisdiction of its incorporation or organization, has corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which such qualification or good standing is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect and except for
jurisdictions not recognizing the legal concepts of good standing or
qualification; except as otherwise disclosed in the Registration
Statement, all of the issued and outstanding capital stock of each such
Subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through its
subsidiaries (except for
8
<PAGE> 9
directors' qualifying shares), free and clear of any security interest,
mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of any Subsidiary was issued in
violation of any preemptive or similar rights of any securityholder of
such Subsidiary. The only subsidiaries of the Company are the subsidiaries
listed on Exhibit 21.1 to the Registration Statement.
(vii) Capitalization. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for the
conversion of all the outstanding shares of common stock, par value $1.00,
of the Company, into 700,000,000 shares of Class B Common Stock or
subsequent issuances, if any, pursuant to this Agreement, or pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectuses). The shares of issued and outstanding capital stock of the
Company have been duly authorized and validly issued and are fully paid
and non-assessable; none of the outstanding shares of capital stock of the
Company was issued in violation of the preemptive or other similar rights
of any securityholder of the Company. At the Closing Time, the Company's
Restated Certificate of Incorporation will be effective.
(viii) Authorization of Agreement. This Agreement and the U.S.
Purchase Agreement have been duly authorized, executed and delivered by
the Company.
(ix) Authorization and Description of Securities. Assuming the
Restated Certificate of Incorporation of the Company has become effective,
the International Securities and the U.S. Securities to be purchased by
the International Managers and the U.S. Underwriters, respectively, from
the Company have been duly authorized for issuance and sale to the
International Managers pursuant to this Agreement and the U.S.
Underwriters pursuant to the U.S. Purchase Agreement, respectively, and,
when issued and delivered by the Company pursuant to this Agreement and in
the U.S. Purchase Agreement, respectively, against payment of the
consideration set forth herein and in the U.S. Purchase Agreement,
respectively, will be validly issued, fully paid and non-assessable;
assuming the Restated Certificate of Incorporation of the Company has
become effective, the Common Stock conforms to all statements relating
thereto contained in the Prospectuses under the heading "Description of
Capital Stock" and such description conforms to the rights set
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<PAGE> 10
forth in the instruments defining the same; no holder of the Securities
will be subject to personal liability by reason of being such a holder;
and the issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company.
(x) Absence of Defaults and Conflicts. (A) Neither the Company nor
any of its Subsidiaries is in violation of its charter or by-laws or in
default in the due performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture, mortgage, deed
of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or
by which it or any of them may be bound, or to which any of the property
or assets of the Company or any of its Subsidiaries is subject
(collectively, "Agreements and Instruments"), except for such defaults
that would not result in a Material Adverse Effect; and (B) the execution,
delivery and performance of this Agreement and the U.S. Purchase Agreement
and the consummation of the transactions contemplated in this Agreement,
the U.S. Purchase Agreement and in the Registration Statement (including
the Reorganization (as defined in note (1) to the Company's combined
financial statements included in the Prospectuses)), the issuance and sale
of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectuses under the caption "Use of
Proceeds") and compliance by the Company with its obligations under this
Agreement and the U.S. Purchase Agreement have been duly authorized by all
necessary corporate action of the Company and do not and assuming
application of the proceeds from the sale of the Securities by the Company
as described in the Prospectuses under the caption "Use of Proceeds" will
not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default or Repayment
Event (as defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company
or any of its Subsidiaries pursuant to, the Agreements and Instruments
(except for such conflicts, breaches, defaults or Repayment Events or
liens, charges or encumbrances that, individually or in the aggregate,
would not result in a Material Adverse Effect), nor will such action
result in any violation of the provisions of the charter or by-laws of the
Company or any Subsidiary or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company or any Subsidiary or any of their assets, properties or
operations. As used herein, a "Repayment Event" means any
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<PAGE> 11
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any of its Subsidiaries.
(xi) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent which may reasonably be expected to result in a
Material Adverse Effect.
(xii) Absence of Proceedings. Except as disclosed in the
Registration Statement, there is no action, suit, proceeding, inquiry or
investigation before or brought by any court or governmental agency or
body, domestic or foreign (including, but not limited to, the Federal
Communications Commission (the "FCC")) now pending or, to the knowledge of
the Company, threatened, against or affecting the Company or any
Subsidiary, which is required to be disclosed in the Registration
Statement, or which is reasonably expected to result in a Material Adverse
Effect, or which is reasonably expected to materially and adversely affect
the consummation of the transactions contemplated in this Agreement and the
U.S. Purchase Agreement or the performance by the Company of its
obligations hereunder or thereunder; the aggregate of all pending legal or
governmental proceedings to which the Company or any Subsidiary is a party
or of which any of their respective properties or assets is the subject
that are not described in the Registration Statement, including ordinary
routine litigation incidental to the business, considered in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect.
(xiii) Intercompany Agreements. Each of the Intercompany Agreement
and the Tax Sharing Agreement (each as defined in the Prospectuses) has
been duly authorized, executed and delivered by the Company and constitutes
the binding agreement of the Company, and is enforceable against the
Company in accordance with its terms, subject, as to enforcement of
remedies, to bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditors' rights generally, general equitable principles
and the discretion of courts in granting equitable remedies and except that
any rights to indemnify and contribution may be limited by Federal and
state securities laws and public policy considerations.
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<PAGE> 12
(xiv) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement or the
Prospectuses or to be filed as exhibits thereto which have not been so
described and filed as required.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations hereunder, in connection with the offering, issuance or sale
by the Company of the Securities under this Agreement and the U.S.
Purchase Agreement or the consummation of the transactions contemplated by
this Agreement and the U.S. Purchase Agreement, except (A) such as have
been already obtained or as may be required under the 1933 Act or the 1933
Act Regulations and foreign or state securities or blue sky laws or by the
rules and regulations of the NASD, (B) such as have been already obtained
or may be required under the Communications Act of 1934, as amended, (C)
such as have been obtained under the laws and regulations of jurisdictions
outside the United States in which the Reserved Securities are offered and
(D) the filing prior to the Closing Time of the Restated Certificate of
Incorporation of the Company with the Secretary of State of the State of
Delaware.
(xvi) Possession of Licenses and Permits. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate Federal, state, local or foreign regulatory agencies or bodies
(including, without limitation, the FCC) necessary to conduct the business
now operated by them; the Company and its Subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, individually or in the
aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, for the maximum term
customarily issued, with no material conditions, restrictions or
qualifications except when the invalidity of such Governmen-
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<PAGE> 13
tal Licenses or the failure of such Governmental Licenses to be in full
force and effect or the restrictions would not have a Material Adverse
Effect; and neither the Company nor any of its Subsidiaries has received
any notice from the FCC of the initiation of proceedings other than
release of public notices of filings with the FCC by interested parties
relating to the revocation, modification, non-renewal or suspension of any
such Governmental Licenses which, individually or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, would result in
a Material Adverse Effect.
(xvii) Title to Property. The Company and its Subsidiaries have good
and marketable title to all real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except such as (A) are
described in the Prospectuses or (B) would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect.
All of the leases and subleases material to the business of the Company
and its Subsidiaries, considered as one enterprise, and under which the
Company or any of its Subsidiaries holds properties described in the
Prospectuses, are in full force and effect except where the failure to be
in full force and effect would not reasonably be expected to have a
Material Adverse Effect.
(xviii) Tax Returns and Payment of Taxes. The Company and its
Subsidiaries have timely filed all Federal, state, local and foreign tax
returns that are required to be filed or have duly requested extensions
thereof and all such tax returns are true, correct and complete, except to
the extent that any failure to file or request an extension, or any
incorrectness would not, individually or in the aggregate, result in a
Material Adverse Effect. The Company and its Subsidiaries have timely paid
all taxes shown as due on such filed tax returns (including any related
assessments, fines or penalties), except to the extent that any such taxes
are being contested in good faith and by appropriate proceedings, or to
the extent that any failure to pay would not, individually or in the
aggregate, result in a Material Adverse Effect; and adequate charges,
accruals and reserves have been provided for in the financial statements
referred to in Section 1(a)(iii) above in accordance with GAAP in respect
of all Federal, state, local and foreign taxes for all periods as to which
the tax liability of the Company or any of its Subsidiaries has not been
finally determined or remains open to examination by applicable taxing
authorities. The Company is not a "United States real property holding
corporation" within the meaning of Section 897(c)(3) of the Internal
Revenue Code of 1986, as amended.
(xix) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application
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of the net proceeds therefrom as described in the Prospectuses will not
be, an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940,
as amended.
(xx) Insurance. The Company and each of its Subsidiaries are insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; and neither the Company nor any of its
Subsidiaries has any reason to believe that any of them will not be able
to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers as may be necessary to
continue its business except where the failure to renew or maintain such
coverage is not reasonably expected to result in a Material Adverse
Effect.
(xxi) Registration Rights. Except pursuant to the Intercompany
Agreement described under the caption "Relationship between the Company
and CBS -- Intercompany Agreement-Registration Rights" in the
Prospectuses, no person has registration rights or other similar rights to
have any securities of the Company registered by the Company pursuant to
the Registration Statement or otherwise registered by the Company under
the 1933 Act.
(xxii) No Stabilization or Manipulation. The Company has not taken
and will not take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities in violation of Regulation M
under the 1934 Act.
(b) Officer's Certificates. Any certificate signed by any officer of the
Company and delivered to the Global Coordinator, the Lead Manager or to counsel
for the International Managers shall be deemed a representation and warranty by
the Company to each International Manager as to the matters covered thereby.
SECTION 2. Sale and Delivery to International Managers; Closing.
(a) Initial Securities. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth, the
Company agrees to sell to each International Manager, severally and not jointly,
and each International Manager, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule B, the number of
Initial
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<PAGE> 15
International Securities set forth in Schedule A opposite the name of such
International Manager, plus any additional number of Initial International
Securities which such International Manager may become obligated to purchase
pursuant to the provisions of Section 10 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the International Managers,
severally and not jointly, to purchase up to an additional 3,037,500 shares of
Class A Common Stock at the price per share set forth in Schedule B, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial International Securities but not payable on the
International Option Securities. The option hereby granted will expire 30 days
after the date hereof and may be exercised in whole or in part from time to time
only for the purpose of covering over-allotments which may be made in connection
with the offering and distribution of the Initial International Securities upon
notice by the Global Coordinator to the Company setting forth the number of
International Option Securities as to which the several International Managers
are then exercising such option and the time and date of payment and delivery
for such International Option Securities. Any such time and date of delivery for
the International Option Securities (a "Date of Delivery") shall be determined
by the Global Coordinator, but shall not be later than seven full business days
after the exercise of said option, nor in any event prior to the Closing Time
(as defined in Section 2(c) below). If the option is exercised as to all or any
portion of the International Option Securities, each of the International
Managers, acting severally and not jointly, will purchase that proportion of the
total number of International Option Securities then being purchased which the
number of Initial International Securities set forth in Schedule A opposite the
name of such International Manager bears to the total number of Initial
International Securities, subject in each case to such adjustments as the Global
Coordinator in its discretion shall make to eliminate any sales or purchases of
fractional shares.
(c) Payment. Payment of the purchase price for, and delivery of
certificates for, the Initial Securities shall be made at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York, or at such other
place as shall be agreed upon by the Global Coordinator and the Company, at 9:00
A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after
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<PAGE> 16
such date as shall be agreed upon by the Global Coordinator and the Company
(such time and date of payment and delivery being herein called the "Closing
Time").
In addition, in the event that any or all of the International Option
Securities are purchased by the International Managers, payment of the purchase
price for, and delivery of certificates for, such International. Option
Securities shall be made at the above-mentioned offices, or at such other place
as shall be agreed upon by the Global Coordinator and the Company, on each Date
of Delivery as specified in the notice from the Global Coordinator to the
Company.
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery to
the Lead Manager for the respective accounts of the International Managers of
certificates for the International Securities to be purchased by them. It is
understood that each International Manager has authorized the Lead Manager, for
its account, to accept delivery of, receipt for and make payment of the purchase
price for, the Initial International Securities and the International Option
Securities, if any, which it has agreed to purchase. Merrill Lynch, individually
and not as representative of the International Managers may (but shall not be
obligated to) make payment of the purchase price for the Initial International
Securities or the International Option Securities, if any, to be purchased by
any International Manager whose funds have not been received by the Closing Time
or the relevant Date of Delivery, as the case may be, but such payment shall not
relieve such International Manager from its obligations hereunder.
(d) Denominations; Registration. Certificates for the Initial
International Securities and the International Option Securities, if any, shall
be in such denominations and registered in such names as the Lead Manager may
request in writing at least one full business day before the Closing Time or the
relevant Date of Delivery, as the case may be. The certificates for the Initial
International Securities and the International Option Securities, if any, will
be made available for examination and packaging by the Lead Manager in The City
of New York not later than 10:00 A.M. (Eastern time) on the business day prior
to the Closing Time or the relevant Date of Delivery, as the case may be.
(e) Appointment of Qualified Independent Underwriter. The Company hereby
confirms its engagement of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated as, and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated hereby confirms its agreement with the Company to
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<PAGE> 17
render services as, a "qualified independent underwriter" within the meaning of
Rule 2720 of the Conduct Rules of the NASD with respect to the offering and sale
of the U.S. Securities. Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, solely in its capacity as qualified independent underwriter
and not otherwise, is referred to herein as the "Independent Underwriter".
SECTION 3. Covenants of the Company. The Company covenants with each
International Manager as follows:
(a) Compliance with Securities Regulations and Commission Requests.
Subject to Section 3(b), the Company will comply with the requirements of Rule
430A or Rule 434, as applicable, and will notify the Global Coordinator
immediately, and confirm the notice in writing, (i) when any post-effective
amendment to the Registration Statement shall become effective, or any
supplement to the Prospectuses or any amended Prospectuses shall have been
filed, (ii) of the receipt of any comments from the Commission, (iii) of any
request by the Commission for any amendment to the Registration Statement or any
amendment or supplement to the Prospectuses or for additional information, and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus, or of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction, or of
the initiation or threatening of any proceedings for any of such purposes. The
Company will promptly effect the filings necessary pursuant to Rule 424(b) and
will take such steps as it deems necessary to ascertain promptly whether the
form of prospectus transmitted for filing under Rule 424(b) was received for
filing by the Commission and, in the event that it was not, it will promptly
file such prospectus. The Company will make every reasonable effort to prevent
the issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Global Coordinator
notice of its intention to file or prepare any amendment to the Registration
Statement (including any filing under Rule 462(b)), any Term Sheet or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectuses,
will furnish the Global Coordinator with copies of any such documents a
reasonable period of time prior to such proposed filing or use, as the case may
be, and will not file or use any such document to which the Global Coordinator
or counsel for the International Managers shall reasonably object.
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<PAGE> 18
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Lead Manager and counsel for the International Managers, without
charge, one signed copy of the Registration Statement as originally filed and of
each amendment thereto (including exhibits filed therewith or incorporated by
reference therein) and one signed copy of all consents and certificates of
experts, and will also deliver to the Lead Manager, without charge, a conformed
copy of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the International Managers. The copies of
the Registration Statement and each amendment thereto furnished to the
International Managers will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the extent
permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the Company
hereby consents to the use of such copies for purposes permitted by the 1933
Act. The Company will furnish to each International Manager, without charge,
during the period when the International Prospectus is required to be delivered
under the 1933 Act or the 1934 Act, such number of copies of the International
Prospectus (as amended or supplemented) as such International Manager may
reasonably request. The International Prospectus and any amendments or
supplements thereto furnished to the International Managers will be identical to
the electronically transmitted copies thereof filed with the Commission pursuant
to EDGAR, except to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement, the U.S.
Purchase Agreement and the Prospectuses. If at any time when a prospectus is
required by the 1933 Act to be delivered in connection with sales of the
Securities, any event shall occur or condition shall exist as a result of which
it is necessary, in the opinion of counsel for the International Managers or for
the Company, to amend the Registration Statement or amend or supplement any
Prospectus in order that the Prospectuses will not include any untrue statements
of a material fact or omit to state a material fact necessary in order to make
the statements therein not misleading in the light of the circumstances existing
at the time it is delivered to a purchaser, or if it shall be necessary, in the
opinion of such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the requirements of
the 1933 Act or the 1933 Act Regulations, the Company will
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<PAGE> 19
promptly prepare and file with the Commission, subject to Section 3(b), such
amendment or supplement as may be necessary to correct such statement or
omission or to make the Registration Statement or the Prospectuses comply with
such requirements, and the Company will furnish to the International Managers
such number of copies of such amendment or supplement as the International
Managers may reasonably request.
(f) Blue Sky Qualifications. The Company will use its commercially
reasonable efforts, in cooperation with the International Managers, to qualify
the Securities for offering and sale under the applicable securities laws of
such states and other jurisdictions (domestic or foreign) as the Global
Coordinator may designate and to maintain such qualifications in effect for a
period of not less than one year from the later of the effective date of the
Registration Statement and any Rule 462(b) Registration Statement; provided,
however, that the Company shall not be obligated to file any general consent to
service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject
itself to taxation in respect of doing business in any jurisdiction in which it
is not otherwise so subject. In each jurisdiction in which the Securities have
been so qualified, the Company will file such statements and reports as may be
required by the laws of such jurisdiction to continue such qualification in
effect for a period of not less than one year from the effective date of the
Registration Statement and any Rule 462(b) Registration Statement.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectuses
under "Use of Proceeds".
(i) Listing. The Company will use its best efforts to effect the listing
of the Class A Common Stock (including the Securities) on the New York Stock
Exchange.
(j) Restriction on Sale of Securities. During a period of 180 days from
the date of the Prospectuses, the Company will not, without the prior written
consent of the Global Coordinator (i) offer, pledge, sell, contract to sell,
sell any option or
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contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant for the sale of or otherwise dispose of or transfer any shares
of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or file any registration statement under the 1933
Act with respect to any of the foregoing or (ii) enter into any swap or any
other agreement or any transaction that transfers, in whole or in part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) any shares of Common
Stock transferred to an affiliate of the Company or any CBS Party (as defined in
the Restated Certificate of Incorporation of the Company) which agrees to be
bound by the provisions of this Section 3(j), (B) the Securities to be sold
hereunder or under the U.S. Purchase Agreement, (C) any shares of Common Stock
issued or options to purchase Common Stock granted pursuant to the Company's
1998 Long-Term Incentive Plan, Executive Annual Incentive Plan and Savings Plans
referred to in the Prospectuses or (D) any shares of Class A Common Stock issued
in connection with any acquisitions to be made by the Company in the future in
consideration for shares of Class A Common Stock.
(k) Reporting Requirements. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934 Act,
will file all documents required to be filed with the Commission pursuant to the
1934 Act within the time periods required by the 1934 Act and the rules and
regulations of the Commission thereunder.
(l) Compliance with NASD Rules. The Company hereby agrees that the
Reserved Securities will be restricted as required by the NASD under NASD Rule
2110(d) and the NASD's interpretations thereof from sale, transfer, assignment,
pledge or hypothecation for a period of three months following the date of this
Agreement. The Underwriters have notified the Company as to which persons will
need to be so restricted. At the request of the Global Coordinator, the Company
will direct the transfer agent to place a stop transfer restriction upon such
Reserved Securities for such period of time. Should the Company release, or seek
to release, from such restrictions any of the Reserved Securities that are
subject to resale restrictions in accordance with NASD rules, the Company agrees
to reimburse the Underwriters for any reasonable expenses (including, without
limitation, legal expenses) they incur in connection with such release.
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(m) Compliance with Rule 463. The Company will file with the Commission
such reports and report the use of proceeds of the sale of the Securities as may
be required pursuant to Rule 463 of the 1933 Act Regulations.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed with the Commission and
of each amendment thereto, (ii) any printing of this Agreement, any Agreement
among Underwriters and such other documents as may be required in connection
with the offering, purchase, sale, issuance or delivery of the Securities, (iii)
the preparation, issuance and delivery of the certificates for the Securities to
the Underwriters, including any stock or other transfer taxes and any stamp or
other duties payable upon the sale, issuance or delivery of the Securities to
the Underwriters and the transfer of the Securities between the U.S.
Underwriters and the International Managers, (iv) the fees and disbursements of
the Company's counsel, accountants and other advisors, (v) the qualification of
the Securities under securities laws in accordance with the provisions of
Section 3(f) hereof, including filing fees and the reasonable fees and
disbursements of counsel for the Underwriters in connection therewith and in
connection with the preparation of the Blue Sky Survey and any supplement
thereto, (vi) the printing and delivery to the Underwriters of copies of each
preliminary prospectus, any Term Sheets and of the Prospectuses and any
amendments or supplements thereto, (vii) the preparation, printing and delivery
to the Underwriters of copies of the Blue Sky Survey and any supplement thereto,
(viii) the fees and expenses of any transfer agent or registrar for the
Securities, (ix) the filing fees incident to, and the fees and disbursements of
counsel to the Underwriters in connection with, the review by the NASD of the
terms of the sale of the Securities, (x) the fees and expenses incurred in
connection with the listing of the Securities on the New York Stock Exchange,
Inc. and (xi) all reasonable costs and expenses of the Underwriters, including
the reasonable fees and disbursements of counsel for the Underwriters, in
connection with matters related to the Reserved Securities.
(b) Termination of Agreement. If this Agreement is terminated by the Lead
Manager in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the International Managers for all of their
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out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the International Managers.
SECTION 5. Conditions of International Managers' Obligations. The
obligations of the several International Managers hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof or in certificates of any officer of the Company or any of its
Subsidiaries delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
the Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the Commission
in accordance with Rule 424(b) (or a post-effective amendment providing such
information shall have been filed and declared effective in accordance with the
requirements of Rule 430A) or, if the Company has elected to rely upon Rule 434,
a Term Sheet shall have been filed with the Commission in accordance with Rule
424(b).
(b) Opinion of Counsel for Company. At the Closing Time, the Lead Manager
shall have received the favorable opinion and statement, dated as of the Closing
Time, of each of (i) Louis J. Briskman, Esq., and (ii) Cravath, Swaine & Moore,
counsel for the Company, together with signed or reproduced copies of such
letter for each of the other International Managers in each case in the form set
forth in Exhibits A-1, A-2, A-3 and A-4, as applicable, hereto and to such
further effect as counsel to the International Managers may reasonably request.
(c) Opinion of Regulatory Counsel for Company. At the Closing Time, the
Lead Manager shall have received the favorable opinion, dated as of the Closing
Time, of Leventhal, Senter & Lerman, PLLC, special regulatory counsel for the
Company, together with signed or reproduced copies of such letter for each of
the other International Managers in the form set forth in Exhibit B hereto and
to such further effect as counsel to the International Managers may reasonably
request.
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(d) Opinion of Counsel for International Managers. At the Closing Time,
the Lead Manager shall have received the favorable opinion, dated as of the
Closing Time, of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
International Managers, together with signed or reproduced copies of such letter
for each of the other International Managers in form and substance satisfactory
to the Lead Manager. In giving such opinion such counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of the United States and the General Corporation Law
of the State of Delaware, upon the opinions of counsel satisfactory to the Lead
Manager. Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and certificates of
public officials.
(e) Officers' Certificate. At the Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, and the Lead Manager
shall have received a certificate of the Company, signed by any one of the
Chairman of the Board, the President, Chief Executive Officer or an Executive
Vice President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of the Closing Time, to the effect that (i)
there has been no such material adverse change, (ii) the representations and
warranties in Section 1(a) hereof are true and correct with the same force and
effect as though expressly made at and as of the Closing Time, (iii) the Company
has complied with all agreements set forth herein or in the U.S. Purchase
Agreement or contemplated hereby or thereby and satisfied all conditions on its
part to be performed or satisfied at or prior to the Closing Time, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and, to the best of their knowledge, no proceedings for that purpose have
been instituted or are pending or are contemplated by the Commission.
(f) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Lead Manager shall have received a letter dated such date, in
form and substance satisfactory to the Lead Manager, together with signed or
reproduced copies of such letter for each of the other International Managers
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters from KPMG Peat Marwick LLP with
respect to (i) the combined financial statements of the Company and its
consolidated subsidiaries and
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certain financial information contained in the Registration Statement and the
Prospectuses, (ii) the financial statements of CBS Radio and its consolidated
subsidiaries and certain financial information contained in the Registration
Statement and the Prospectuses and (iii) the financial statements of Old
Infinity and its consolidated subsidiaries contained in the Registration
Statement and the Prospectuses.
(g) Bring-down Comfort Letter. At the Closing Time, the Lead Manager shall
have received a letter from KPMG Peat Marwick LLP, dated as of the Closing Time,
to the effect that they reaffirm the statements made in the letter furnished by
them, pursuant to subsection (f) of this Section , except that the "specified
date" referred to in such letter shall be a date not more than three business
days prior to the Closing Time.
(h) Approval of Listing. At the Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, Inc., subject only to
official notice of issuance.
(i) No Objection. The NASD has confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(j) Lock-up Agreements. At the date of this Agreement, the Lead Manager
shall have received an agreement substantially in the form of Exhibit C hereto
signed by the persons listed on Schedule C hereto.
(k) Purchase of Initial U.S. Securities. Contemporaneously with the
purchase by the International Managers of the Initial International Securities
under this Agreement, the U.S. Underwriters shall have purchased the Initial
U.S. Securities under the U.S. Purchase Agreement.
(l) Reorganization. At or prior to the Closing Time, the Company shall
have effected the Reorganization (as defined and described in note (1) to the
Company's combined financial statements included in the Prospectuses).
(m) Conditions to Purchase of International Option Securities. In the
event that the International Managers exercise their option granted in Section
2(b) hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company contained herein
and the statements in any certificates furnished by the Company or any
subsidiary of the Company hereunder shall be true
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and correct as of each Date of Delivery and, at the relevant Date of Delivery,
the Lead Manager shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the Company, signed by any one of the Chairman of Board, the
President, Chief Executive Officer or an Executive Vice President of the
Company and of the chief financial or chief accounting officer of the
Company confirming that the certificate delivered at the Closing Time
pursuant to Section 5(e) hereof remains true and correct as of such Date
of Delivery.
(ii) Opinion of Counsel for Company. The favorable opinion and
statement of each of Louis J. Briskman, Esq. and Cravath, Swaine & Moore,
counsel for the Company, in each case, dated such Date of Delivery,
relating to the International Option Securities to be purchased on such
Date of Delivery and otherwise in the same form as the opinion and
statement required by Section 5(b) hereof.
(iii) Opinion of Regulatory Counsel for Company. The favorable
opinion of Leventhal, Senter & Lerman, PLLC, special regulatory counsel
for the Company, in form and substance satisfactory to counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(c)
hereof.
(iv) Opinion of Counsel for International Managers. The favorable
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities to be purchased on such Date of Delivery
and otherwise to the same effect as the opinion required by Section 5(d)
hereof.
(v) Bring-down Comfort Letter. A letter from KPMG Peat Marwick LLP,
in form and substance satisfactory to the Lead Manager and dated such Date
of Delivery, substantially in the same form and substance as the letter
furnished by them to the Lead Manager pursuant to Section 5(g) hereof,
except that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than five days prior to such Date of
Delivery.
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(n) Additional Documents. At the Closing Time and at each Date of
Delivery, if any, counsel for the International Managers shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and sale of the
International Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the International Securities as herein
contemplated shall be reasonably satisfactory in form and substance to the Lead
Manager and counsel for the International Managers.
(o) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement (or, in the case of any condition to the purchase of International
Option Securities on a Date of Delivery which is after the Closing Time, the
obligations of the several International Managers to purchase the relevant
International Option Securities) may be terminated by the Lead Manager by notice
to the Company at any time at or prior to the Closing Time or such Date of
Delivery, as the case may be, and such termination shall be without liability of
any party to any other party except as provided in Section 4 and except that
Sections 1, 6, 7 and 8 shall survive any such termination and remain in full
force and effect.
SECTION 6. Indemnification.
(a) Indemnification of International Managers. (1) The Company agrees to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information, if applicable, or the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising out of
any untrue statement or alleged untrue statement of a material fact
included in any preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto) or the omission or alleged omission
therefrom of a material fact necessary in
26
<PAGE> 27
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of (A) the violation of any
applicable laws or regulations of foreign jurisdictions where Reserved
Securities have been offered and (B) any untrue statement or alleged
untrue statement of a material fact included in the supplement or
prospectus wrapper material distributed in the United States, the United
Kingdom or Singapore in connection with the reservation and sale of the
Reserved Securities to Eligible Reserved Share Participants or the
omission or alleged omission therefrom of a material fact necessary to
make the statements therein, when considered in conjunction with the
Prospectuses or preliminary prospectuses, not misleading;
(iii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission or in connection with any violation
of the nature referred to in Section 6(a)(1)(ii)(A) hereof; provided that
(subject to Section 6(d) below) any such settlement is effected with the
written consent of the Company; and
(iv) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by Merrill Lynch), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission or in connection with any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof, to the extent that any such expense is not
paid under (i), (ii) or (iii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Global Coordinator expressly for use in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434
27
<PAGE> 28
Information, if applicable, or any preliminary prospectus or the International.
Prospectus (or any amendment or supplement thereto); and provided, further,
however, that the Company shall not be liable to any indemnified party with
respect to any preliminary prospectus (or supplement thereto) if the
Prospectuses corrected any such untrue statement or omission, was delivered to
such indemnified party (sufficiently in advance of the Closing Date and in
sufficient quantity to allow for distribution by the Closing Date) and such
indemnified party failed to furnish a copy of the applicable Prospectus in
contravention of a requirement of applicable law at or prior to the written
confirmation of the sale of Securities to the applicable purchaser.
(2) In addition to and without limitation of the Company's obligations to
indemnify Merrill Lynch as an Underwriter, the Company also agrees to indemnify
and hold harmless the Independent Underwriter and each person, if any, who
controls the Independent Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act, from and against any and all loss,
liability, claim, damage and expense whatsoever, as incurred, incurred as a
result of the Independent Underwriter's participation as a "qualified
independent underwriter" within the meaning of Rule 2720 of the Conduct Rules of
the NASD in connection with the offering of the International Securities, except
for any losses, claims, damages, liabilities and judgments found in a final
judgment by a court to have resulted from the Independent Underwriter's or such
controlling person's willful misconduct or gross negligence.
(b) Indemnification of Company, Directors and Officers. Each International
Manager severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a)(1) of this Section , as incurred, but only with respect to untrue statements
or omissions, or alleged untrue statements or omissions, made in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
international prospectus or the International Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with written information
furnished to the Company by such International Manager through the Lead Manager
expressly for use in the Registration Statement (or any amendment thereto) or
such preliminary prospectus or the International Prospectus (or any amendment or
supplement thereto).
28
<PAGE> 29
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by Merrill Lynch, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances; provided, that, if indemnity is
sought pursuant to Section 6(a)(2), then, in addition to the fees and expenses
of such counsel for the indemnified parties, the indemnifying party shall be
liable for the reasonable fees and expenses of not more than one counsel (in
addition to any local counsel) separate from its own counsel and that of the
other indemnified parties for the Independent Underwriter in its capacity as a
"qualified independent underwriter" and all persons, if any, who control the
Independent Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of 1934 Act in connection with any one action or separate but similar
or related actions in the same jurisdiction arising out of the same general
allegations or circumstances if, in the reasonable judgment of the Independent
Underwriter, there may exist a conflict of interest between the Independent
Underwriter and the other indemnified parties. Any such separate counsel for the
Independent Underwriter and such control persons of the Independent Underwriter
shall be designated in writing by the Independent Underwriter. No indemnifying
party shall, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding or claim and
29
<PAGE> 30
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a)(iii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall have received notice of
the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
(e) Indemnification for Reserved Securities. In connection with the offer
and sale of the Reserved Securities, the Company agrees, promptly upon a
request, in writing to indemnify and hold harmless the Underwriters from and
against any and all losses, liabilities, claims, damages and expenses incurred
by them as a result of the failure of Eligible Reserved Share Participants to
pay for and accept delivery of Reserved Securities which, by the end of the
first business day following the date of this Agreement, were subject to a
properly confirmed agreement to purchase.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the International Managers on the other hand from the offering of the
International Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion as
is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand and of the
International Managers on the other hand in connection with the statements or
omissions, or in connection with any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof, which resulted in such losses, liabilities,
claims, damages or expenses, as well as any other relevant equitable
considerations.
30
<PAGE> 31
The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the
International Securities pursuant to this Agreement (before deducting expenses)
received by the Company and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet, bear to the aggregate initial public offering price of the
Initial International Securities as set forth on such cover.
The relative fault of the Company on the one hand and the International
Managers on the other hand shall be determined by reference to, among other
things, whether any such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company or by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or any violation of the nature referred to in
Section 6(a)(1)(ii)(A) hereof.
The Company and the U.S. Underwriters agree that Merrill Lynch will not
receive any additional benefits hereunder for serving as the Independent
Underwriter in connection with the offering and sale of the U.S. Securities.
The Company and the International Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the International Managers were treated as one entity
for such purpose) or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such
31
<PAGE> 32
International Manager has otherwise been required to pay by reason of any such
untrue or alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Manager within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International.
Securities set forth opposite their respective names in Schedule A hereto and
not joint.
SECTION 8. Representations, Warranties and Agreements to Survive Delivery.
All representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any International Manager or controlling person, or by or on
behalf of the Company, and shall survive delivery of the International
Securities to the International Managers.
SECTION 9. Termination of Agreement.
(a) Termination; General. The Lead Manager may terminate this Agreement,
by notice to the Company, at any time at or prior to the Closing Time (i) if
there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the International
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
32
<PAGE> 33
conditions, in each case the effect of which is such as to make it, in the
judgment of the Lead Manager, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in the
Class A Common Stock has been suspended or materially limited by the Commission
or the New York Stock Exchange, or if trading generally on the American Stock
Exchange or the New York Stock Exchange or in the Nasdaq National Market has
been suspended or materially limited, or minimum or maximum prices for trading
have been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the NASD or any other
governmental authority, or (iv) if a banking moratorium has been declared by
either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 8 shall survive such termination and remain in full force and
effect.
SECTION 10. Default by One or More of the International Managers. If one
or more of the International Managers shall fail at the Closing Time or a Date
of Delivery to purchase the Initial U.S. Securities or the International Option
Securities, respectively, which it or they are obligated to purchase under this
Agreement (the "Defaulted Securities"), the Lead Manager shall have the right,
within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting International Managers, or any other underwriters, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth. If, however, the Lead
Manager shall not have completed such arrangements within such 24-hour period,
then:
(a) if the number of Defaulted Securities does not exceed 10% of the
number of International Securities to be purchased on such date, each of the
non-defaulting International Managers shall be obligated, severally and not
jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting International Managers; or
(b) if the number of Defaulted Securities exceeds 10% of the number of
International. Securities to be purchased on such date, this Agreement (or, with
respect to any Date of Delivery which occurs after the Closing Time, the
obligation of the International Managers to purchase and of the Company to sell
the International Option Securities to be purchased and sold on such Date of
Delivery) shall, upon prior
33
<PAGE> 34
notice to the Company of such fact, terminate without liability on the part of
any non-defaulting International Manager.
No action taken pursuant to this Section shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement or, in the case of a Date of Delivery which is after the Closing
Time and which does not result in a termination of the obligation of the
International Managers to purchase and the Company to sell the relevant
International Option Securities, as the case may be, either the Lead Manager or
the Company shall have the right to postpone the Closing Time or the relevant
Date of Delivery, as the case may be, for a period not exceeding seven days in
order to effect any required changes in the Registration Statement or
Prospectuses or in any other documents or arrangements. As used herein, the term
"International Manager" includes any person substituted for an International
Manager under this Section 10.
SECTION 11. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed, telecopied
(which is confirmed), sent by overnight courier (providing proof of delivery) or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to the Lead Manager at North Tower,
World Financial Center, New York, New York 10281-1201, facsimile (212) 449-1642,
attention of Gregg Seibert, Managing Director; and notices to the Company shall
be directed to it at Infinity Broadcasting Corporation, 40 West 57th Street, New
York, New York 10019, facsimile (212) 314-9336, attention of Mr. Farid Suleman.
SECTION 12. Parties. This Agreement shall inure to the benefit of and be
binding upon each of the International Managers and the Company and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the International Managers and the Company and their respective successors
and the controlling persons and officers and directors referred to in Sections 6
and 7 and their respective heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the
International Managers and the Company and their respective successors, and such
controlling persons and officers and directors and their respective heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No
34
<PAGE> 35
purchaser of Securities from any International Manager shall be deemed to be a
successor by reason merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. SPECIFIED
TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
35
<PAGE> 36
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
Very truly yours,
INFINITY BROADCASTING
CORPORATION
By:________________________________
Name:
Title:
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
By: MERRILL LYNCH INTERNATIONAL
By:__________________________________
Authorized Signatory
For themselves and as Lead Manager of
the other International Managers named in
Schedule A hereto.
36
<PAGE> 37
SCHEDULE A
<TABLE>
<CAPTION>
Number of
Initial
International
Name of International Manager Securities
- ----------------------------- ----------
<S> <C>
Merrill Lynch International..............................
BT Alex. Brown International, a division of Bankers Trust
International PLC........................................
Goldman Sachs International..............................
Allen & Company Incorporated.............................
Credit Suisse First Boston (Europe) Limited..............
Donaldson, Lufkin & Jenrette International...............
Lehman Brothers International (Europe)...................
Morgan Stanley & Co. International Limited...............
NationsBanc Montgomery Securities LLC....................
Salomon Brothers International Limited...................
Bear, Stearns International Limited......................
Deutsche Bank AG London..................................
ING Barings..............................................
Lazard Capital Markets...................................
PaineWebber International (U.K.) Ltd.....................
Sanford C. Bernstein & Co., Inc..........................
J. Henry Schroder & Co. Limited..........................
SG Cowen International L.P...............................
ABN AMRO Rothchild.......................................
BancBoston Robertson Stephens Inc........................
Chase Manhattan International Limited....................
J.P. Morgan Securities Ltd...............................
Wasserstein Perella Securities, Inc......................
----------
Total.................................................... 20,250,000
==========
</TABLE>
Sch A - 1
<PAGE> 38
SCHEDULE B
Infinity Broadcasting Corporation
20,250,000 Shares of Class A Common Stock
(Par Value $0.01 Per Share)
1. The initial public offering price of the Securities, determined as
provided in Section 2, shall be $|X| per share of Class A Common Stock.
2. The purchase price per share for the Securities to be paid by the
several Underwriters shall be $|X|, being an amount equal to the initial public
offering price set forth above less $|X| per share; provided that the purchase
price per share for any International Option Securities purchased upon the
exercise of the over-allotment option described in Section 2(b) shall be reduced
by an amount per share equal to any dividends or distributions declared by the
Company and payable on the Initial International Securities but not payable on
the International Option Securities.
Sch B - 1
<PAGE> 39
SCHEDULE C
List of persons and entities
subject to lock-up
1. CBS Corporation, a Pennsylvania corporation
2. CBS Broadcasting Inc., a New York corporation
3. Mr. Mel Karmazin
Sch C - 1
<PAGE> 40
Exhibit A-1
FORM OF OPINION OF LOUIS J. BRISKMAN, ESQ.,
TO BE DELIVERED PURSUANT TO SECTION 5(b)
(i) Each Subsidiary is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation or other organization
(except for jurisdictions not recognizing the legal concept of good standing),
with full corporate or other power and authority to own, lease and operate its
properties and conduct its business as described in the Prospectuses.
(ii) Each of the Company and each Subsidiary is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction in which the ownership or leasing of its properties or the conduct
of its business requires such qualification, other than jurisdictions in which
the failure so to qualify would not have a Material Adverse Effect and other
than jurisdictions not recognizing the legal concepts of good standing or
qualification.
(iii) Except as disclosed in the Registration Statement, all of the issued
and outstanding shares of capital stock of, each Subsidiary have been duly
authorized and validly issued, are fully paid and nonassessable, and, are owned,
directly or through Subsidiaries (except for directors' qualifying shares or
similar interests) by the Company.
(iv) To the knowledge of such counsel, (a) there are not any pending or
threatened actions, suits, proceedings, investigations or inquiries before any
court or governmental agency or authority or any arbitrator against the Company
or any subsidiary or a character required to be disclosed in the Registration
Statement or Prospectuses which is not adequately disclosed as required, and (b)
there is not contract, indenture, mortgage, loan agreement, not, lease or other
document of a character required to be described in the Registration Statement
or Prospectuses, or to be filed as an exhibit, which is not described or filed
as required.
(v) To the knowledge of such counsel, holders of outstanding shares of
capital stock of any Subsidiary are not entitled to statutory preemptive rights
or preemptive rights under their respective charter or by-laws in connection
with the issuance of the Securities, and holders of outstanding shares of
capital stock of the
A-1
<PAGE> 41
Company or any Subsidiary are not entitled to any contractual preemptive rights
in connection with the issuance of the Securities.
(vi) To the knowledge of such counsel, except as disclosed in the
Registration Statement and the Prospectuses, there are no persons with
registration rights or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the Company
under the 1933 Act.
(vii) To the knowledge of such counsel, neither the Company nor any
Subsidiary is in violation of its charter or by-laws and no default by the
Company or any Subsidiary exists in the due performance or observance of any
material obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument that is described or referred to in the Registration Statement or the
Prospectuses or filed or incorporated by reference as an exhibit to the
Registration Statement, except that such counsel expresses no opinion as to the
covenants referred to under the heading "Risk Factors-Significant Subsidiary
Debt Covenants" in the Registration Statement.
(viii) None of the issue and sale of the Securities, the consummation of
any other of the transaction contemplated by the Purchase Agreements, the
performance of the terms of the Purchase Agreements or the application of the
proceeds of the sale of the Securities with respect to the payment of the CBS
Note (A) will conflict with, result in a breach of, or constitute a default
under, the Restated Certificate of Incorporation or Restated Bylaws of the
Company, or the terms of any indenture or other agreement or instrument to which
the Company or any of its Subsidiaries is a party or bound and listed as an
exhibit to the Registration Statement, or described under the heading
"Description of Indebtedness" in the Registration Statement, except that, in
connection with the offering and sale of the Securities, CBS Radio, Inc. will be
required to make an offer to repurchase all of its existing indebtedness issued
pursuant to the CBS Indentures or (B) will contravene any law, rule or
regulation of the United States, the State of New York or the General
Corporation Law of the State of Delaware applicable to the Company or any of its
Subsidiaries, or, to the knowledge of such counsel, any order or decree of any
court or government agency or instrumentality. In connection with the foregoing,
such counsel points out that certain of the agreements referred to in clause (i)
above are or may be governed by laws other than the laws of the State of New
York. For purposed of the opinion expressed in this paragraph, however, such
counsel has assumed that all such agreements are governed by and would be
interpreted in accordance with the laws of the State of New York.
A-2
<PAGE> 42
Exhibit A-2
FORM OF STATEMENT OF LOUIS J.
BRISKMAN, ESQ. TO BE DELIVERED
PURSUANT TO SECTION 5(b)
In that capacity, I participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of (a) the Registration Statement on Form S-1 (Registration No.
333-63727) filed with the Securities and Exchange Commission (the "Commission")
on September 18, 1998, as amended by Amendment No. 1 thereto filed with the
Commission on November 2, 1998, Amendment No.2 thereto filed with the Commission
on November 12, 1998, and Amendment No. 4 thereto filed with the Commission on
[ ], 1998 (such Registration Statement, as amended being hereinafter
called the "Registration Statement"), for registration of the Shares under the
Securities Act of 1933 (the "Securities Act"); and (b) the final U.S. Prospectus
and the final International Prospectus, each dated December [ ], 1998, relating
to the Shares, filed with the Commission pursuant to Rule 424 (b) of the General
Rules and Regulations under the Securities Act (the "Prospectus"). However, I
have not investigated the completeness or accuracy of the Registration Statement
or the Prospectus with respect to matters related to the Communications Act of
1934, which matters have been addressed in the opinion of Leventhal, Senter &
Lerman, PLLC, special regulatory counsel to the Company.
Although I have made certain inquiries and investigations in
connection with the preparation of the Registration Statement and the
Prospectuses, I do not assume responsibility for the accuracy or completeness of
the statements made in the Registration Statement and the Prospectus. Subject to
the foregoing, I hereby advise you that my work in connection with this matter
did not disclose any information that gave us reason to believe that: (i) the
Registration Statement at the time the Registration Statement became effective,
or the Prospectuses, as of the date hereof, in each case except the financial
statements and other information of an accounting financial nature included
therein, as to which I do not express any view, was not appropriately responsive
in all material respects to the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder, or (ii) the
Registration Statement at the time the Registration Statement became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that either of the
A-3
<PAGE> 43
Prospectuses, at the date hereof, includes an untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (in each case except for the financial statements and other
information of an accounting or financial nature included therein, as to which I
do not express any view).
A-4
<PAGE> 44
Exhibit A-3
FORM OF OPINION OF COMPANY
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company has been duly organized and is a corporation validly
existing and in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectuses and to enter into and
perform its obligations under the Purchase Agreements. The opinion in this
paragraph (i) relating to the valid existence and good standing of the Company
is based solely on a certificate from the Secretary of State of the State of
Delaware.
(ii) The Company's authorized equity capitalization is as set forth in the
Prospectuses in the column entitled "Actual" under the caption "Capitalization".
The Securities conform in all material respects to the description thereof
contained in the Registration Statement and the Prospectuses. The Securities
have been duly and validly authorized, and, when issued and delivered to and
paid for by the Underwriters pursuant to the Purchase Agreements, will be
validly issued, fully paid and nonassessable. The Class B Common Stock has been
duly and validly authorized, and is validly issued, fully paid and
nonassessable. The certificates for the Securities are in valid and sufficient
form. Holders of outstanding shares of Class A Common Stock and Class B Common
Stock of the Company are not entitled to statutory preemptive rights or
preemptive rights under the Company's charter or by-laws in connection with the
issuance of the Securities.
(iii) Each of the Purchase Agreements has been duly authorized, executed
and delivered by the Company.
(iv) No authorization, approval or other action by, and no notice to,
consent of, order of or filing with, any United States Federal, New York or, to
the extent required under the General Corporation Law of the State of Delaware,
Delaware governmental authority or regulatory body is required for the Purchase
Agreements, except (A) such as have been obtained under the 1933 Act, the 1934
Act and such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Securities by the
Underwriters and (B) such as have
A-5
<PAGE> 45
been or may be required under the Communications Act of 1934, as amended, and
the rules, regulations and administrative orders promulgated thereunder.
(v) None of the issue and sale of the Securities, the consummation of any
other of the transactions contemplated by the Purchase Agreements or the
performance of the terms of the Purchase Agreements or the application of the
proceeds of the sale of the Securities (A) will conflict with, result in a
breach of, or constitute a default under, the Restated Certificate of
Incorporation or Restate By-laws of the Company or (B) will contravene any law,
rule or regulation of the United States, the State of New York or the General
Corporation Law of the State of Delaware applicable to the Company or any of its
Subsidiaries, or, to our knowledge, any order or decree of any court or
government agency or instrumentality.
(vi) The Company is not an "investment company" or an entity "controlled"
by an "investment company", as such terms are defined in, or subject to
regulation under, the 1940 Act.
(vii) The Registration Statement became effective under the 1933 Act on
December [ ], 1998, and thereupon the offering of the Securities as contemplated
by the Prospectuses became registered under the 1933 Act and, to knowledge, no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for the purpose have been instituted or are pending or
contemplated under the 1933 Act.
(viii)Each of the Intercompany Agreement and the Tax Sharing Agreement has
been duly authorized, executed and delivered by the Company, and constitutes the
legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject as to enforcement of remedies to
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and other similar laws affecting creditors' rights generally from time
to time in effect, to general principles of equity (including, without
limitation, concepts of materiality, reasonableness, good faith and fair
dealing, regardless of whether considered in a proceeding in equity or at law)
and to the discretion of courts in granting equitable remedies, and except that
any rights to indemnity and contribution may be limited by Federal and state
securities laws and public policy considerations.
(ix) The statements made in the Prospectuses under the caption "Certain
United States Tax Consequences to Non-United States Holder", insofar as they
purport to describe the material tax consequences of an investment in the Class
A Common Stock, fairly summarize the matters therein described.
A-6
<PAGE> 46
In rendering this opinion, we have assumed, without independent
investigation, the correctness of, and take no responsibility for, the opinion
dated the date hereof of Leventhal, Senter & Lerman, PLLC, special regulatory
counsel for the Company, delivered to you pursuant to Section 5(c) of each
Purchase Agreement, as to all matters of law covered therein relating to the
Communications Act of 1934, as amended, and the rules, regulations and
administrative orders promulgated thereunder, and we express no opinion with
respect to such matters.
A-7
<PAGE> 47
Exhibit A-4
FORM OF STATEMENT OF COMPANY'S
COUNSEL TO BE DELIVERED PURSUANT TO
SECTION 5(b)
In that capacity, we participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of (a) the Registration Statement on Form S-1 (Registration No.
333-63727) filed with the Securities and Exchange Commission (the "Commission")
on September 18, 1998, as amended by Amendment No. 1 thereto filed with the
Commission on November 2, 1998, Amendment No.2 thereto filed with the Commission
on November 12, 1998, and Amendment No. 4 thereto filed with the Commission on
[ ], 1998 (such Registration Statement, as amended being hereinafter
called the "Registration Statement"), for registration of the Shares under the
Securities Act of 1933 (the "Securities Act"); and (b) the final U.S. Prospectus
and the final International Prospectus, each dated December [ ], 1998, relating
to the Shares, filed with the Commission pursuant to Rule 424 (b) of the General
Rules and Regulations under the Securities Act (the "Prospectus"). However, we
have not investigated the completeness or accuracy of the Registration Statement
or the Prospectus with respect to matters related to the Communications Act of
1934, which matters have been addressed in the opinion of Leventhal, Senter &
Lerman, PLLC, special regulatory counsel to the Company.
Although we have made certain inquiries and investigations in
connection with the preparation of the Registration Statement and the
Prospectuses, the limitations inherent in the role of outside counsel are such
that we cannot and do not assume responsibility for the accuracy or completeness
of the statements made in the Registration Statement and Prospectuses except
insofar as such statements relate to us and except to the extent set forth in
the first two sentences of paragraph (iii), and paragraph (ix) of our opinion to
you dated the date hereof. Subject to the foregoing, we hereby advise you that
our work in connection with this matter did not disclose any information that
gave us reason to believe that: (A) the Registration Statement at the time the
Registration Statement became effective, or the Prospectuses, as of the date
hereof, in each case except the financial statements and other information of an
accounting financial nature included therein, as to which we do not express any
view,
A-8
<PAGE> 48
was not appropriately responsive in all material respects to the requirements
of the Securities Act and the applicable rules and regulations of the Commission
thereunder, or (B) the Registration Statement at the time the Registration
Statement became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that either of the Prospectuses,
at the date hereof, includes an untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (in each
case except for the financial statements and other information of an accounting
or financial nature included therein, as to which we do not express any view).
A-9
<PAGE> 49
Exhibit B
FORM OF OPINION OF COMPANY'S SPECIAL REGULATORY COUNSEL
TO BE DELIVERED PURSUANT TO
SECTION 5(c)
(i) The information in the Prospectuses under the captions "Risk
Factors-Government Regulation" and "Business-Government Regulation", to the
extent that such information constitutes a summary of federal communications law
and the rules, regulations and administrative orders promulgated or proposed for
promulgation thereunder, has been reviewed by such counsel and is correct in all
material respects.
(ii) Except as previously made or obtained, as the case may be, no filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of any court or administrative agency or authority is
necessary or required under the Communications Act of 1934, as amended, and the
rules, regulations and administrative orders promulgated thereunder
(collectively, the "Federal Communications Laws") in connection with the
execution or delivery by the Company of the Purchase Agreements, the performance
by the Company of the transactions contemplated thereby or the offering,
issuance or sale of the Securities, as applicable.
(iii) The Company and the subsidiaries are the holders of the Licenses
issued by the FCC listed in an attachment to such opinion (the "FCC Licenses"),
all of which are in full force and effect for the maximum license term
customarily issued, with no material conditions, restrictions or qualifications
other than as set forth on the face of authorizations evidencing the FCC
Licenses or as described in the Registration Statement and the Prospectuses.
(iv) To the best knowledge of such counsel, there is no unsatisfied
adverse FCC order, decree or ruling outstanding against the Company or any of
its Subsidiaries which would have a Material Adverse Effect, except as set forth
in the Registration Statement and the Prospectuses.
(v) To the best knowledge of such counsel, there is no proceeding
(including any rulemaking proceeding), complaint or investigation against the
Company or any of its Subsidiaries or in respect of any of the FCC Licenses
pending
B-1
<PAGE> 50
or threatened before the FCC which we believe will result in a Material Adverse
Effect except as set forth in the Registration Statement and the Prospectuses.
(vi) To the best knowledge of such counsel, no action, suit, proceeding or
investigation is pending or threatened, and no judgment, order, decree or ruling
has been entered, against the Company or any of its Subsidiaries that gives us
reason to believe that any of the FCC Licenses will be revoked or not renewed in
the ordinary course.
The statements made under the captions "Risk Factors - Government Regulation",
"Business - Competition", "Business - Government Regulation", and "Description
of Capital Stock - Foreign Ownership Restrictions" in the Prospectuses, taken
together, insofar as they are, or refer to, statements of law, legal conclusions
or summaries relating to the Communications Act or the rules or regulations of
the FCC, fairly reflect the provisions purported to be summarized as material to
the Company and are in all material respects correct; and such counsel has no
reason to believe that such statements as of the time the Registration Statement
or any amendment became effective, at the time the Prospectuses were issued, at
the time any amendment or supplement thereto was issued or at the Closing Time,
contain any untrue statement of a material fact or omitted or omits to state a
material fact necessary to make such statements, in light of the circumstances
under which they were made, not misleading.
B-2
<PAGE> 51
FORM OF LOCK-UP LETTER
Exhibit C
December , 1998
MERRILL LYNCH INTERNATIONAL
as Lead Manager of the several
International Managers to be named in the
within-mentioned Purchase Agreement
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC24 9L4
England
Re: Infinity Broadcasting Corporation
Ladies and Gentlemen:
As of the closing of the Offering referred to below, the undersigned will
be the beneficial owner of - shares of Class A Common Stock, par value $.01 per
share (the "Class A Common Stock") and - shares of Class B Common Stock, par
value $.01 per share (the "Class B Common Stock" and, together with the Class A
Common Stock", the "Common Stock") of Infinity Broadcasting Corporation (the
"Company"), a Delaware corporation. The undersigned understands that the Company
has filed a Registration Statement on Form S-1 (the "Registration Statement")
with the Securities and Exchange Commission for the registration of 155,250,000
shares of Class A Common Stock (the "Offering"). The undersigned further
understands that you are contemplating entering into an International Purchase
Agreement and a U.S. Purchase Agreement (together, the "Purchase Agreements")
with the Company is connection with the Offering. All terms not otherwise
defined herein shall have the same meanings as in the Purchase Agreements.
In recognition of the benefit that the Offering will confer upon the
undersigned as a stockholder of the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned agrees with each underwriter to be named in the Purchase Agreements
(the "Underwriters") that, during a period of 180 days from the date of the
Purchase Agreements, the
C-1
<PAGE> 52
undersigned will not, without the prior written consent of Merrill Lynch
International, directly or indirectly, (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant for the sale of, or otherwise
transfer or dispose of any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock, whether
any such swap transaction is to be settled by delivery of Common Stock or other
securities, in cash or otherwise. The foregoing sentence shall not apply to any
shares of Common Stock transferred to an affiliate of the Company or any CBS
Party (as defined in the Restated Certificate of Incorporation of the Company)
which agrees to be bound by the provisions of this agreement.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. This agreement shall be binding on the undersigned and his, her or its
respective successors, liens, personal representatives and assigns.
Very truly yours,
----------------------------------------
Name:
C-2
<PAGE> 1
Exhibit 3.1
CERTIFICATE OF INCORPORATION
OF
INFINITY MEDIA CORPORATION
--------------------------
I, Nigel D.J. Wilson, being a natural person over the age of 18 years with
a mailing address of Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth
Avenue, New York, N.Y. 10019, for the purpose of forming a corporation pursuant
to Section 102 of the Delaware General Corporation Law, do hereby certify as
follows:
ARTICLE I
The name of the corporation (hereinafter called the "Corporation") is
Infinity Media Corporation.
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County,
Delaware. The name of the registered agent at such address is The Corporation
Trust Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the Delaware General Corporation
Law (the "DGCL").
<PAGE> 2
2
ARTICLE IV
The total number of shares of all classes of stock that the Corporation
shall have authority to issue is 1,000 shares of Common Stock having the par
value of $1.00 per share.
ARTICLE V
The name and mailing address of the incorporator is Nigel D. J. Wilson, 825
Eighth Avenue, 47th Floor, New York, New York 10019.
ARTICLE VI
In furtherance and not in limitation of the powers conferred upon it by
law, the Board of Directors of the Corporation is expressly authorized to adopt,
amend or repeal the By-laws of the Corporation.
ARTICLE VII
Unless and except to the extent that the By-laws of the Corporation so
require, the election of directors of the Corporation need not be by written
ballot.
ARTICLE VIII
To the fullest extent permitted by the DGCL as it now exists and as it may
hereafter be amended, no director shall be personally liable to the Corporation
or any of its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach
<PAGE> 3
3
of the director's duty of loyalty to the Corporation or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL or
(iv) for any transaction from which the director derived an improper personal
benefit. Any repeal or modification of this Article Eighth by the stockholders
of the Corporation shall not adversely affect any right or protection of a
director of the Corporation existing at the time of such repeal or modification
with respect to acts or omissions occurring prior to such repeal or
modification.
IN WITNESS WHEREOF, I, Nigel D. J. Wilson, the sole incorporator of
Infinity Media Corporation, have executed this Certificate of Incorporation
this 15th day of September 1998, and DO HEREBY ACKNOWLEDGE under the penalties
of perjury that this instrument is my act and deed and that the facts stated
herein are true.
/s/ Nigel D. J. Wilson
--------------------------
Nigel D. J. Wilson
Sole Incorporator
<PAGE> 4
Certificate of Amendment of the Certificate of Incorporation
of
INFINITY MEDIA CORPORATION
Infinity Media Corporation, organized and existing under and by virtue
of the General Corporation Law of the State of Delaware, does hereby certify
that:
1. The name of the corporation (hereinafter called the
"corporation") is:
Infinity Media Corporation.
2. The certificate of incorporation of the corporation is hereby
amended by striking out Article I thereof and by substituting
in lieu of said Article the following new Article:
"The name of the corporation (hereinafter
called the "Corporation") is Infinity Broadcasting
Corporation".
3. The sole stockholder of the corporation has given written
consent to said amendment in accordance with the provisions of
Section 228 of the General Corporation Law of the State of
Delaware.
4. The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the
provisions of Sections 228 and 242 of the General Corporation
Law of the State of Delaware.
Signed and attested to on October 28, 1998
/s/ Mel Karmazin
--------------------------------------------
Name: Mel Karmazin
Title: President and Chief Executive Officer
ATTEST:
/s/ Farid Suleman
- --------------------------------------------
Name: Farid Suleman
Title: Secretary
<PAGE> 1
Exhibit 3.2
BY-LAWS
of
INFINITY MEDIA CORPORATION
(hereinafter called the "Corporation")
ARTICLE I
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. Meetings of the stockholders shall be
held at such time and place, either within or without the State of Delaware as
shall be designated from time to time by the Board of Directors or the Chairman
of the Board of Directors and stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. Quarterly Meetings. The quarterly meetings of the
stockholders shall be held on such date and at such time as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting, at which meetings the stockholders shall transact such business as may
be properly brought before the meeting. Written notice of each quarterly meeting
stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than 10 nor more than 60
days before the date of the meeting.
Section 3. Special Meetings. Unless otherwise prescribed by law or by
the Certificate of Incorporation, special meetings of stockholders, for any
purpose or purposes, may be called at any time by the Board of Directors.
Written notice of a special meeting stating the place, date and hour of the
meeting and the purpose or purposes for which the meeting is called shall be
given not less than 10 nor more than 60 days before the date of the meeting to
each stockholder entitled to vote at such meeting.
Section 4. Quorum. Except as otherwise provided by law or by the
Certificate of Incorporation, the holders of a majority of the capital stock
issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If, however, such quorum shall not
be present or represented at any meeting of the stockholders, the
<PAGE> 2
stockholders entitled to vote thereat, present in person or represented by
proxy, shall have power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until a quorum shall be present or
represented. At such adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been transacted at
the meeting as originally noticed. If the adjournment is for more than 30 days,
or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
entitled to vote at the meeting.
Section 5. Voting. Unless otherwise required by law, the Certificate of
Incorporation or these By-Laws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote thereat. Each stockholder represented at
a meeting of stockholders shall be entitled to cast one vote for each share of
the capital stock entitled to vote thereat held by such stockholder. Such votes
may be cast in person or by proxy but no proxy shall be voted on or after three
years from its date, unless such proxy provides for a longer period. The Board
of Directors, in its discretion, or the officer of the Corporation presiding at
a meeting of stockholders, in his discretion, may require that any votes cast at
such meeting be cast by written ballot.
Section 6. Consent of Stockholders in Lieu of Meeting. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any quarterly or special meeting of stockholders of the
Corporation may be taken without a meeting, without prior notice and without a
vote, in a consent in writing, setting forth the action so taken, signed by the
holders of outstanding stock entitled to vote thereon having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and
voted. Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. In the event that the action which is consented
to is such as would have required the filing of a certificate under the Delaware
General Corporation Law (the "DGCL"), if
2
<PAGE> 3
such action had been voted on by stockholders at a meeting thereof, the
certificate filed shall state, in lieu of any statement concerning any vote of
stockholders, that written consent and written notice has been given as provided
in this Section 6.
Section 7. Meeting by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, any stockholder
may participate in a meeting of the stockholders by means of a conference
telephone or similar communications equipment that enables all persons
participating in the meeting to hear each other, and participation in a meeting
pursuant to this Section 7 shall constitute presence in person at such meeting.
Section 8. List of Stockholders Entitled to Vote. The officer of the
Corporation who has charge of the stock ledger of the Corporation shall prepare
and make, at least five days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
examination by any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least five days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
Section 9. Stock Ledger. The stock ledger of the Corporation shall
constitute the list required by Section 8 of this Article I and shall be the
only evidence as to who are the stockholders entitled to examine the stock
ledger or to vote in person or by proxy at any meeting of stockholders.
3
<PAGE> 4
ARTICLE II
DIRECTORS
Section 1. Number and Election of Directors. The number of members
constituting the Board of Directors shall be determined from time to time by
resolutions adopted by a majority of the entire Board. Directors need not be
stockholders or citizens or residents of the United States of America. Each of
the directors of the Corporation shall hold office until his resignation or
removal in the manner hereinafter provided.
Section 2. Resignations. Any director may resign at any time. Such
resignation shall be made in writing, and shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the Chairman of the Board, if any, the President or the Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
Section 3. Removal. Except as hereinafter provided, any director or
directors may be removed either for or without cause at any time by the
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote for the election of directors, at a quarterly
meeting or a special meeting called for that purpose, and the vacancy thus
created may be filled, at such meeting, by the affirmative vote of holders of a
majority of all the shares of stock outstanding and entitled to vote.
Section 4. Vacancies. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors may be filled
by a majority of the directors then in office, though less than a quorum, or by
a sole remaining director, and the directors so chosen shall hold office until
their earlier resignation or removal.
Section 5. Duties and Powers. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the Corporation and do all such lawful acts and things as
4
<PAGE> 5
are not by statute or by the Certificate of Incorporation or by these By-Laws,
conferred upon or reserved to the stockholders; provided, however, that any
action taken by the Board of Directors shall be subject to reversal in the event
of a contrary vote by the Corporation's stockholders.
Section 6. Meetings. The Board of Directors of the Corporation may hold
meetings, both quarterly and special, either within or without the State of
Delaware. Quarterly meetings of the Board of Directors may be held without
notice at such time and at such place as may from time to time be determined by
the Board of Directors. Special meetings of the Board of Directors may be called
by the Chairman, if any, the President, or any two or more directors. Notice
thereof stating the place, date and hour of the meeting shall be given to each
director either by mail not less than 24 hours before the date of the meeting,
by telephone or telegram on 24 hours' notice, or on such shorter notice as the
person or persons calling such meeting may deem necessary or appropriate in the
circumstances.
Section 7. Quorum. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these By-Laws, at all meetings of the
Board of Directors, a majority of the entire Board of Directors then in office
shall constitute a quorum for the transaction of business and the act of a
majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors. If a quorum shall not be present at
any meeting of the Board of Directors, the directors present thereat may adjourn
the meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 8. Actions of Board. Unless otherwise provided by the
Certificate of Incorporation or these By-Laws, any action required or permitted
to be taken at any meeting of the Board of Directors may be taken without a
meeting, if all the members of the Board of Directors consent thereto in
writing, and such writing is filed with the minutes of proceedings of the Board
of Directors.
Section 9. Meeting by Means of Conference Telephone. Unless otherwise
provided by the Certificate of Incorporation or these By-Laws, members of the
Board of Directors of the Corporation, may participate in a meeting
5
<PAGE> 6
of the Board of Directors by means of a conference telephone or similar
communications equipment that enables all persons participating in the meeting
to hear each other, and participation in a meeting pursuant to this Section 9
shall constitute presence in person at such meeting.
Section 10. Committees. The Corporation shall not have any committees
of its Board of Directors.
Section 11. Compensation. The directors who are officers or employees
of an affiliate of the Corporation shall serve on the Board of Directors without
compensation or reimbursement of expenses. The compensation of any other
director shall be in the form of a fixed fee and expenses of attendance set by
resolution adopted by the Board of Directors. Nothing herein contained, however,
shall be construed to preclude any director from serving the Corporation in any
other capacity as an officer, agent or otherwise, and receiving compensation
therefor.
Section 12. Interested Directors. No contract or transaction between
the Corporation and one or more of its directors or officers, or between the
Corporation and any other corporation, partnership, association or other
organization in which one or more of its directors or officers are directors or
officers, or have a financial interest, shall be void or voidable solely for
this reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors which authorizes the
contract or transaction, or solely because his or their votes are counted for
such purpose if (i) the material facts as to his or their relationship or
interest and as to the contract or transaction are disclosed or are known to the
Board of Directors, and the Board of Directors in good faith authorizes the
contract or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested directors be less than a
quorum; (ii) the material facts as to his or their relationship or interest and
as to the contract or transaction are disclosed or are known to the stockholders
entitled to vote thereon, and the contract or transaction is specifically
approved in good faith by vote of the stockholders; or (iii) the contract or
transaction is fair as to the Corporation as of the time it is authorized,
approved or ratified, by the Board of Directors thereof or the stockholders.
Common or interested directors may be
6
<PAGE> 7
counted in determining the presence of a quorum at a meeting of the Board of
Directors which authorizes the contract or transaction.
ARTICLE III
OFFICERS
Section 1. General. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President, a Secretary and a Treasurer.
The Board of Directors, in its discretion, may also choose a Chairman of the
Board of Directors, one or more Vice Chairmen (who must be directors) and one or
more Vice Presidents, Assistant Secretaries and Assistant Treasurers as it may
deem proper. Any number of offices may be held by the same person, unless
otherwise prohibited by law, the Certificate of Incorporation or these By-Laws.
The officers of the Corporation need not be stockholders of the Corporation nor,
except in the case of the Chairman of the Board of Directors and any Vice
Chairman, need such officers be directors of the Corporation.
Section 2. Election. The Board of Directors shall elect the officers of
the Corporation who shall hold their offices for such terms and shall exercise
such powers and perform such duties as shall be determined from time to time by
the Board of Directors; and all officers of the Corporation shall hold office
until their successors are chosen and qualified, or until their earlier
resignation or removal. Any officer elected by the Board of Directors may be
removed at any time by the affirmative vote of a majority of the Board of
Directors. Any vacancy occurring in any office of the Corporation shall be
filled by the Board of Directors. The officers of the Corporation who are
officers or employees of an affiliate of the Corporation shall serve as an
officer and employee of the Corporation without compensation or reimbursement of
expenses. Nothing herein contained, however, shall be construed to preclude any
officer from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 3. Voting Securities Owned by the Corporation. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to
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securities owned by the Corporation may be executed in the name of and on behalf
of the Corporation by any officer of the Corporation and any such officer may,
in the name of and on behalf of the Corporation, take all such action as any
such officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
powers incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present, in each
case subject to having obtained the requisite Board of Directors' and
stockholders' approvals with respect to any such matter. The Board of Directors
may, by resolution, from time to time confer like powers upon any other person
or persons.
Section 4. Chairman of the Board of Directors. The Chairman of the
Board of Directors, if one shall be appointed, shall preside at all meetings of
the stockholders and of the Board of Directors. Except where by law the
signature of the President is required, the Chairman of the Board of Directors
shall possess the same power as the President to sign all contracts,
certificates and other instruments of the Corporation which may be authorized by
the Board of Directors. During the absence or disability of the President, the
Chairman of the Board of Directors shall exercise all the powers and discharge
all the duties of the President. The Chairman of the Board of Directors shall
also perform such other duties and may exercise such other powers as from time
to time may be assigned to him by these By-Laws or by the Board of Directors.
Section 5. Vice Chairman. The Vice Chairman of the Board of Directors,
if one shall be appointed, or the Vice Chairmen, if there shall be more than
one, shall perform such duties and may exercise such other powers as from time
to time may be assigned by these By-Laws, the Board of Directors or the Chairman
of the Board of Directors. In the absence or disability of the Chairman of the
Board of Directors, or if there be none, the Vice Chairman shall preside at
meetings of the stockholders and the Board of Directors.
Section 6. President. The President shall be the chief executive
officer of the Corporation and, subject to the control of the Board of Directors
and the stockholders,
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shall exercise general and active supervision over and management of the
property, affairs and business of the Corporation and shall authorize other
officers of the Corporation to exercise such powers as he, in his discretion,
may deem to be in the best interests of the Corporation. The President shall
preside at meetings of stockholders and the Board of Directors in the absence or
non-election of the Chairman of the Board. The President shall, in general,
perform all duties incident to the office of President and shall have such other
duties as the Board of Directors may from time to time prescribe.
Section 7. Vice President. The Vice President, or Vice Presidents, if
any shall be appointed, shall have such duties as the Board of Directors, the
President or the By-Laws may from time to time prescribe.
Section 8. Treasurer. The Treasurer shall have the custody of the
corporation funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
Corporation in such depositaries as may be designated by the Board of Directors.
He shall disburse the funds of the Corporation as may be ordered by the Board of
Directors, or the President, taking proper vouchers for such disbursements. He
shall render to the President, the Board of Directors and each stockholder at
the quarterly meetings of the Board of Directors and the stockholders, or
whenever any of the foregoing may request it, an account of all his transactions
as Treasurer and of the financial condition of the Corporation.
Section 9. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, the directors or stockholders, upon whose request the meeting
is called as provided in these By-Laws. He shall record all the proceedings of
the meetings of the Board of Directors, any committees thereof and the
stockholders of the Corporation in a book to be kept for that purpose, and shall
perform such other duties as may be assigned to him by the Board of Directors or
the President. He shall have the custody of
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<PAGE> 10
the seal of the Corporation and shall affix the same to all instruments
requiring it, when authorized by the Board of Directors or the President, and
attest the same.
Section 10. Assistant Treasurers and Assistant Secretaries. Assistant
Treasurers and Assistant Secretaries, if any shall be appointed, shall have such
powers and shall perform such duties as shall be assigned to them, respectively,
by the Board of Directors or the President.
ARTICLE IV
STOCK
Section 1. Form of Certificates. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman or the Vice Chairman of the Board of Directors,
or the President or a Vice President and (ii) by the Treasurer or an Assistant
Treasurer, or the Secretary or an Assistant Secretary of the Corporation,
certifying the number of shares owned by him in the Corporation.
Section 2. Signatures. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
Section 3. Lost Certificates. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such
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<PAGE> 11
lost, stolen or destroyed certificate, or his legal representative, to advertise
the same in such manner as the Board of Directors shall require and/or to give
the Corporation a bond in such sum as it may direct as indemnity against any
claim that may be made against the Corporation with respect to the certificate
alleged to have been lost, stolen or destroyed.
Section 4. Transfers. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these By-Laws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his attorney lawfully constituted in writing and upon the surrender of the
certificate therefor, which shall be cancelled before a new certificate shall be
issued.
Section 5. Record Date. In order that the Corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock, or for the
purpose of any other lawful action, the Board of Directors may fix, in advance,
a record date, which shall not be more than 60 days nor less than 10 days before
the date of such meeting, nor more than 60 days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the Board of Directors may fix a new record date for the adjourned
meeting.
Section 6. Beneficial Owners. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.
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ARTICLE V
NOTICES
Section 1. Notices. Whenever written notice is required by law, the
Certificate of Incorporation or these By-Laws, to be given to any director or
stockholder, such notice may be given by mail, addressed to such director or
stockholder, at his address as it appears on the records of the Corporation,
with postage thereon prepaid, and such notice shall be deemed to be given at the
time when the same shall be deposited in the United States mail. Written notice
may also be given personally or by telegram, telex or cable.
Section 2. Waivers of Notice. Whenever any notice is required by law,
the Certificate of Incorporation or these By-Laws, to be given to any director
or stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Attendance of a director or a stockholder in
person or by proxy at such a meeting shall constitute a waiver of notice to such
director or stockholder of such meeting, except when such director or
stockholder attends the meeting for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Subject to the provisions of the Certificate of
Incorporation, if any, dividends upon the capital stock of the Corporation may
be declared by the Board of Directors at any quarterly or special meeting, and
may be paid in cash or in property. Before payment of any dividend, there may be
set aside out of any funds of the Corporation available for dividends such sum
or sums as the Board of Directors from time to time, in its absolute discretion,
deems proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the Corporation or
for any
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<PAGE> 13
proper purpose, and the Board of Directors may modify or abolish any such
reserve.
Section 2. Disbursements. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.
Section 3. Fiscal Year. The fiscal year of the Corporation shall be the
calendar year, or such other period as may be adopted by resolution of the Board
of Directors.
Section 4. Corporate Seal. The corporate seal shall have inscribed
thereon the name of the Corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
Section 5. Section 203 Election. The Corporation hereby expressly
elects not to be governed by Section 203 of the DGCL.
ARTICLE VII
INDEMNIFICATION
Section 1. Power to Indemnify in Actions, Suits or Proceedings other
Than Those by or in the Right of the Corporation. Subject to Section 3 of this
Article VII, the Corporation shall indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of
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<PAGE> 14
the Corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
Corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
Section 2. Power to Indemnify in Actions, Suits or Proceedings by or in
the Right of the Corporation. Subject to Section 3 of this Article VII, the
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the Corporation; except that no indemnification shall be made
in respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the Corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 3. Authorization of Indemnification. Any indemnification under
this Article VII (unless ordered by a court) shall be made by the Corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct set forth in
Section 1 or
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<PAGE> 15
Section 2 of this Article VII, as the case may be. Such determination shall be
made (i) by the Board of Directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (ii) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders. To the extent, however, that a director,
officer, employee or agent of the Corporation has been successful on the merits
or otherwise in defense of any action, suit or proceeding described above, or in
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith, without the necessity of authorization in the specific
case.
Section 4. Good Faith Defined. For purposes of any determination under
Section 3 of this Article VII, a person shall be deemed to have acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, or, with respect to any criminal action or
proceeding, to have had no reasonable cause to believe his conduct was unlawful,
if his action is based on the records or books of account of the Corporation or
another enterprise, or on information supplied to him by the officers of the
Corporation or another enterprise in the course of their duties, or on the
advice of legal counsel for the Corporation or another enterprise or on
information or records given or reports made to the Corporation or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Corporation or another
enterprise. The term "another enterprise" as used in this Section 4 shall mean
any other corporation or any partnership, joint venture, trust, employee benefit
plan or other enterprise of which such person is or was serving at the request
of the Corporation as a director, officer, employee or agent. The provisions of
this Section 4 shall not be deemed to be exclusive or to limit in any way the
circumstances in which a person may be deemed to have met the applicable
standard of conduct set forth in Section 1 or 2 of this Article VII, as the case
may be.
Section 5. Indemnification by a Court. Notwithstanding any contrary
determination in the specific case under Section 3 of this Article VII, and
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<PAGE> 16
notwithstanding the absence of any determination thereunder, any director,
officer, employee or agent may apply to any court of competent jurisdiction in
the State of Delaware for indemnification to the extent otherwise permissible
under Section 1 and 2 of this Article VII. The basis of such indemnification by
a court shall be a determination by such court that indemnification of the
director, officer, employee or agent is proper in the circumstances because he
has met the applicable standards of conduct set forth in Sections 1 or 2 of this
Article VII, as the case may be. Neither a contrary determination in the
specific case under Section 3 of this Article VII nor the absence of any
determination thereunder shall be a defense to such application or create a
presumption that the director, officer, employee or agent seeking
indemnification has not met any applicable standard of conduct. Notice of any
application for indemnification pursuant to this Section 5 shall be given to the
Corporation promptly upon the filing of such application. If successful, in
whole or in part, the director, officer, employee or agent seeking
indemnification shall also be entitled to be paid the expense of prosecuting
such application.
Section 6. Expenses Payable in Advance. Expenses incurred in defending
or investigating a threatened or pending action, suit or proceeding shall be
paid by the Corporation in advance of the final disposition of such action, suit
or proceeding upon receipt of an undertaking by or on behalf of such director,
officer, employee or agent to repay such amount if it shall ultimately be
determined that he is not entitled to be indemnified by the Corporation as
authorized in this Article VII.
Section 7. Nonexclusivity of Indemnification and Advancement of
Expenses. The indemnification and advancement of expenses provided by or granted
pursuant to this Article VII shall not be deemed exclusive of any other rights
to which those seeking indemnification or advancement of expenses may be
entitled under any By-law, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, it
being the policy of the Corporation that indemnification of the persons
specified in Sections 1 and 2 of this Article VII shall be made to the
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<PAGE> 17
fullest extent permitted by law. The provisions of this Article VII shall not be
deemed to preclude the indemnification of any person who is not specified in
Section 1 or 2 of this Article VII but whom the Corporation has the power or
obligation to indemnify under the provisions of the DGCL or otherwise.
Section 8. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise against any
liability asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the Corporation would have the
power or the obligation to indemnify him against such liability under the
provisions of this Article VII.
Section 9. Certain Definitions. For purposes of this Article VII,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, shall stand in the same
position under the provisions of this Article VII with respect to the resulting
or surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued. For purposes of this
Article VII, references to "fines" shall include any excise taxes assessed on a
person with respect to an employee benefit plan; and references to "serving at
the request of the Corporation" shall include any service as a director,
officer, employee or agent of the Corporation which imposes duties on, or
involves services by, such director, officer, employee or agent with respect to
an employee benefit plan, its participants or beneficiaries; and a person who
acted in good faith and in a
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manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the Corporation" as referred to in
this Article VII.
Section 10. Survival of Indemnification and Advancement of Expenses.
The indemnification and advancement of expenses provided by, or granted pursuant
to, this Article VII shall, unless otherwise provided when authorized or
ratified, continue as to a person who has ceased to be a director, officer,
employee or agent and shall inure to the benefit of the heirs, executors and
administrators of such a person.
Section 11. Limitation on Indemnification. Notwithstanding anything
contained in this Article VII to the contrary, except for proceedings to enforce
rights to indemnification (which shall be governed by Section 5 hereof), the
Corporation shall not be obligated to indemnify any director, officer, employee
or agent in connection with a proceeding (or part thereof) initiated by such
person unless such proceeding (or part thereof) was authorized or consented to
by the Board of Directors of the Corporation.
ARTICLE VIII
AMENDMENTS
Section 1. Amendment, etc. The Board of Directors shall have the power
to adopt, amend or repeal By-Laws. By-Laws adopted by the Board of Directors may
be repealed or changed, and new By-Laws made, by the stockholders, and the
stockholders may prescribe that any By-Law made by them shall not be altered,
amended or repealed by the Board of Directors.
18
<PAGE> 1
EXHIBIT 3.3
RESTATED CERTIFICATE OF INCORPORATION
OF
INFINITY BROADCASTING CORPORATION
----------
Infinity Broadcasting Corporation, a corporation organized and
existing under the laws of the State of Delaware, for the purpose of amending
and restating its Certificate of Incorporation, does hereby certify as follows:
FIRST: The name of the corporation is Infinity Broadcasting
Corporation, and the name under which the corporation was originally
incorporated was Infinity Media Corporation. The original Certificate of
Incorporation (the "Original Certificate") was filed with the Secretary of State
of the State of Delaware on September 15, 1998, pursuant to and by virtue of the
General Corporation Law of the State of Delaware.
SECOND: Effective immediately upon the filing of this Restated
Certificate of Incorporation in the office of the Secretary of State of the
State of Delaware (the "Effective Time"), each share of previously existing
common stock, par value $1.00 per share, issued and outstanding or held in
treasury shall be and hereby is converted into and reclassified as [ ] shares
of Class B Common Stock, par value $.01 per share. Certificates which prior to
the Effective Time represented shares of common stock shall, at the Effective
Time, be hereby canceled and upon presentation of the canceled certificates to
Infinity Broadcasting Corporation, the holders thereof shall be entitled to
receive certificate(s) representing the shares of Class B Common Stock into
which such canceled shares have been converted.
THIRD: This Restated Certificate of Incorporation, having
been duly adopted in accordance with the provisions of Sections 228, 242 and
245 of the General Corporation Law of the State of Delaware by the unanimous
written consent of the Board of Directors and the written consent of the
stockholders of Infinity Broadcasting Corporation, restates and integrates and
further amends the provisions of the Original Certificate. As so restated and
integrated and further amended, the Restated Certificate of Incorporation
(hereinafter, the "Certificate of Incorporation") reads as follows:
<PAGE> 2
2
ARTICLE FIRST
Name of Corporation
The name of the corporation is Infinity Broadcasting
Corporation (the "Corporation").
ARTICLE SECOND
Registered Office and Registered Agent
The address of the Corporation's registered office in the
State of Delaware is The Corporation Trust Center, 1209 Orange Street,
Wilmington, New Castle County, Delaware 19801. The name of the registered agent
of the Corporation at such address is The Corporation Trust Company.
ARTICLE THIRD
Purpose
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOURTH
Capital Stock
A. The total number of shares of all classes of capital stock
which the Corporation shall have authority to issue is 4,050,000,000 shares
consisting of: (1) 2,000,000,000 shares of Class A Common Stock, par value $.01
per share (the "Class A Common Stock"), (2) 2,000,000,000 shares of Class B
Common Stock, par value $.01 per share (the "Class B Common Stock" and, together
with the Class A Common Stock, the "Common Stock") and (3) 50,000,000 shares of
Preferred Stock, par value $.01 per share (the "Preferred Stock"). The number of
authorized shares of Class A Common Stock, Class B Common Stock or Preferred
Stock may be increased or decreased (but not below the number of shares thereof
then outstanding or reserved for issuance upon conversion of the Class B Common
Stock or any series of Preferred Stock) by the affirmative vote of a majority of
the combined voting power of outstanding shares of capital stock of the
Corporation entitled to vote thereon, voting as a single class irrespective of
the provisions of Section 242(b)(2) of the General Corporation
<PAGE> 3
3
Law of the State of Delaware (or any successor provision thereto). This
paragraph A of Article FOURTH shall not in any way limit the provisions of
Section 242(b)(1) of the General Corporation Law of the State of Delaware other
than with respect to the elimination of any class vote that would otherwise be
required pursuant to Section 242(b)(2).
B. The Board of Directors shall have the full authority
permitted by law, at any time and from time to time, to provide for the issuance
of shares of Preferred Stock in one or more series and to determine by
resolution or resolutions the following provisions, designations, powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations or restrictions, of the shares of any such
series of Preferred Stock:
(1) the designation of such series (which may be by
distinguishing number, letter or title), the number of shares to
constitute such series (which number the Board of Directors may
thereafter increase or decrease (but not below the number of shares
thereof then outstanding or reserved for issuance upon conversion of
the Class B Common Stock or any series of Preferred Stock)) and the
stated or liquidation value thereof, if different from the par value
thereof;
(2) whether the shares of such series shall have voting rights
in addition to any voting rights provided by law, and, if so, the terms
of such voting rights, which may be full or limited;
(3) the dividends, if any, payable on such series, whether any
such dividends shall be cumulative and, if so, from what dates, the
conditions and dates upon which such dividends shall be payable, the
preference or relation which such dividends shall bear to the dividends
payable on any shares of any other class of capital stock or any other
series of Preferred Stock;
(4) whether the shares of such series shall be subject to
redemption at the election of the Corporation or the holders of such
series, or upon the occurrence of a specified event and, if so, the
times, prices and other terms and conditions of such redemption,
including the manner of selecting shares for redemption if less than
all shares are to be redeemed and the securities or other property
payable upon any such redemption, if any;
(5) the amount or amounts payable on, if any, and the
preferences, if any, of shares of such series in
<PAGE> 4
4
the event of any voluntary or involuntary liquidation, dissolution
or winding up of the affairs of, or upon any distribution of the assets
of, the Corporation;
(6) whether the shares of such series shall be subject to the
operation of a retirement or sinking fund and, if so, the extent to and
manner in which any such retirement or sinking fund shall be applied to
the purchase or redemption of the shares of such series for retirement
or other corporate purposes and the terms and provisions relative to
the operation thereof;
(7) whether the shares of such series shall be convertible
into, or exchangeable for, shares of any other class of capital stock
or any other series of Preferred Stock or any other securities (whether
or not issued by the Corporation) and, if so, the price or prices or
the rate or rates of conversion or exchange and the method, if any, of
adjusting the same, and any other terms and conditions of conversion or
exchange;
(8) the limitations and restrictions, if any, to be effective
while any shares of such series are outstanding upon the payment of
dividends or the making of other distributions on, or upon the
purchase, redemption or other acquisition by the Corporation of, the
Common Stock or shares of any other class of capital stock or any other
series of Preferred Stock;
(9) the conditions or restrictions, if any, upon the creation
of indebtedness of the Corporation or upon the issuance of any
additional stock, including additional shares of any other series of
Preferred Stock or of any other class of capital stock;
(10) the ranking (be it pari passu, junior or senior) of each
series vis-a-vis any other class of capital stock or series of
Preferred Stock as to the payment of dividends, the distribution of
assets and all other matters; and
(11) any other powers, preferences and relative,
participating, optional or other special rights, and any
qualifications, limitations or restrictions of such series of Preferred
Stock, insofar as they are not inconsistent with the provisions of this
Certificate of Incorporation, to the full extent permitted in
accordance with the General Corporation Law of the State of Delaware.
C. The powers, preferences and relative, participating,
optional or other special rights, if any, of
<PAGE> 5
5
each series of Preferred Stock, and the qualifications, limitations or
restrictions thereof, if any, may differ from those of any and all other series
of Preferred Stock at any time outstanding. All shares of any one series of
Preferred Stock shall be identical in all respects with all other shares of such
series, except that shares of any one series issued at different times may
differ as to the dates from which dividends thereon shall be cumulative.
D. Subject to the other provisions of this Article FOURTH and
actions taken by the Board of Directors pursuant to this Article FOURTH:
(1) The holders of shares of Class A Common Stock and Class B
Common Stock shall be entitled to receive such dividends or other
distributions payable in cash, capital stock or otherwise, when, as and
if declared by the Board of Directors at any time or from time to time,
out of funds legally available for the payment thereof, and shall share
equally on a per share basis in all such dividends or other
distributions. No dividend or other distribution may be declared or
paid on any share of Class A Common Stock unless a like dividend or
other distribution is simultaneously declared or paid, as the case may
be, on each share of Class B Common Stock, nor shall any dividend or
other distribution be declared or paid on any share of Class B Common
Stock unless a like dividend or other distribution is simultaneously
declared or paid, as the case may be, on each share of Class A Common
Stock, in each case without preference or priority of any kind;
provided, however, that if a dividend or other distribution payable in
shares of any class of Common Stock or in rights, options, warrants or
other securities convertible into or exchangeable or exercisable for
shares of Common Stock shall be declared with respect to the Common
Stock, the dividend or other distribution payable to holders of Class A
Common Stock shall be payable in shares of Class A Common Stock or in
rights, options, warrants or other securities convertible into or
exchangeable or exercisable for shares of Class A Common Stock, as the
case may be, and the dividend or other distribution payable to holders
of Class B Common Stock shall be payable in shares of Class B Common
Stock or in rights, options, warrants or other securities convertible
into or exchangeable or exercisable for shares of Class B Common Stock,
as the case may be. Neither the shares of Class A Common Stock nor the
shares of Class B Common Stock may be reclassified, subdivided or
combined unless such reclassification, subdivision or combination
occurs simultaneously and in the same proportion for each class of
Common Stock.
<PAGE> 6
6
(2) The voting power of the Corporation shall be exclusively
vested in the Common Stock.
(3) Holders of Preferred Stock and holders of Common Stock
shall not have any preemptive, preferential or other right to
subscribe for or purchase or acquire any shares of any class or series
of capital stock or any other securities of the Corporation, whether
now or hereafter authorized, and whether or not convertible into, or
evidencing or carrying the right to purchase, shares of any class or
series of capital stock or any other securities now or hereafter
authorized, and whether the same shall be issued for cash, services or
property, or by way of dividend or otherwise, other than such right, if
any, as the Board of Directors in its discretion from time to time may
determine. If the Board of Directors shall offer to the holders of the
Preferred Stock or the holders of the Common Stock, or any of them, any
such shares or other securities of the Corporation, such offer shall
not in any way constitute a waiver or release of the right of the Board
of Directors subsequently to dispose of other portions of said shares
or securities without so offering the same to said holders.
(4) The shares of Preferred Stock may be issued for such
consideration and for such corporate purposes as the Board of Directors
may from time to time determine.
(5) The powers, preferences and relative, participating,
optional or other special rights, if any, and any qualifications,
limitations or restrictions with respect to Class A Common Stock and
Class B Common Stock shall be in all respects identical, except as
otherwise required by law or expressly provided in this Certificate of
Incorporation.
(6) With respect to all matters upon which holders of Common
Stock are entitled to vote or to which holders of Common Stock are
entitled to give consent, except as may be provided in this Certificate
of Incorporation or by applicable law, every holder of Class A Common
Stock shall be entitled to cast thereon one vote in person or by proxy
for each share of Class A Common Stock standing in such holder's name
on the transfer books of the Corporation, and every holder of Class B
Common Stock shall be entitled to cast thereon five votes in person or
by proxy for each share of Class B Common Stock standing in such
holder's name on the transfer books of the Corporation. Except as
<PAGE> 7
7
otherwise required by law or as otherwise provided in this Certificate
of Incorporation, the holders of Class A Common Stock and Class B
Common Stock shall vote together as a single class, subject to any
voting rights which may be granted to holders of any outstanding
Preferred Stock, on all matters submitted to a vote of stockholders of
the Corporation. Holders of shares of Class A Common Stock and Class B
Common Stock are not entitled to cumulate their votes in the election
of directors.
E. (1) Prior to the date on which shares of Class B Common
Stock are transferred to stockholders of CBS Parent (as defined) in a Tax-Free
Spin-Off (as defined in paragraph E(2) of this Article FOURTH), each share of
Class B Common Stock is convertible while held by CBS (as defined in paragraph A
of Article SEVENTH), at the option of the holder thereof and in the manner
described below, into one share of Class A Common Stock, subject to adjustment
as provided in paragraph E(1)(b) of this Article FOURTH and subject to the
conditions and limitations described below:
(a) In order to voluntarily convert shares of Class B Common
Stock into shares of Class A Common Stock pursuant to this paragraph
E(1) of Article FOURTH, the holder thereof shall deliver to the office
of the Secretary of the Corporation (or at such additional place or
places as may from time to time be designated by the Secretary of the
Corporation) (the "Office of the Corporation") (i) the certificate or
certificates representing the shares of Class B Common Stock to be
converted, duly endorsed in blank or accompanied by proper instruments
of transfer and, if required by paragraph E(9) of this Article FOURTH,
by any required tax transfer stamps and (ii) written notice (the
"Conversion Notice") to the Corporation that such holder elects to
convert such shares of Class B Common Stock into shares of Class A
Common Stock and stating the name and address in which each certificate
representing shares of Class A Common Stock issued upon such conversion
is to be issued. To the extent permitted by law, such voluntary
conversion shall be deemed to have been effected at the close of
business on the date when such delivery is made to the Office of the
Corporation of the certificate representing the shares to be converted
together with the Conversion Notice, and the person exercising such
voluntary conversion shall be treated for all purposes as the holder of
the number of shares of Class A Common Stock issuable upon such
voluntary conversion at such time; provided, however, that, subject to
paragraph E(6) of this Article FOURTH, such holder shall be
<PAGE> 8
8
entitled to receive, when paid, any dividends or other distributions
declared on Class B Common Stock with a record date preceding the time
of such voluntary conversion and unpaid as of the time of such
voluntary conversion. Following a voluntary conversion, the Corporation
shall promptly issue and deliver, or cause to be issued and delivered,
a certificate or certificates representing the number of fully paid and
nonassessable shares of Class A Common Stock into which the shares of
Class B Common Stock formerly represented by such certificate has been
converted at the address set forth in the Conversion Notice.
(b) If there occurs any capital reorganization or any
reclassification of the capital stock of the Corporation (other than a
reclassification, subdivision or combination described in paragraph
D(1) of this Article FOURTH or pursuant to a merger, consolidation or
other restructuring referred to in paragraph F of this Article FOURTH),
each share of Class B Common Stock shall thereafter be convertible
into, in lieu of one share of Class A Common Stock, the same kind and
amount of securities or other assets, or both, that were issuable or
distributable to the holders of shares of outstanding Class A Common
Stock upon such reorganization or reclassification with respect to that
number of shares of Class A Common Stock into which such share of Class
B Common Stock would have been converted had such share of Class B
Common Stock been converted into Class A Common Stock immediately prior
to such reorganization or reclassification.
"CBS Parent" shall mean CBS Corporation, a Pennsylvania
corporation, or, if CBS Corporation is then a wholly owned subsidiary of another
entity, "CBS Parent" shall mean such parent entity, in either case together with
any successor by way of merger, consolidation, division (if permitted by law) or
sale of all or substantially all assets.
(2) Prior to a Tax-Free Spin-Off, except as otherwise provided
in this paragraph E(2) of Article FOURTH, upon the sale or other transfer
(whether by merger, operation of law or otherwise) by a stockholder of the
Corporation of shares of Class B Common Stock such that any person or persons,
other than CBS, shall have beneficial ownership thereof, including pursuant to
any private placement or public sale of such shares (including a public offering
registered under the Securities Act of 1933, as amended, and/or a sale pursuant
to Rule 144 or Rule 144A under the Securities Act of 1933, as amended, or any
similar rule then in force), such shares shall automatically convert
<PAGE> 9
9
into an equal number of shares of Class A Common Stock without any further
action on the part of the Corporation or any other person, and the certificates
representing such shares of Class B Common Stock shall thereafter be deemed to
represent shares of Class A Common Stock. For purposes of this paragraph E of
Article FOURTH, (i) "beneficial ownership" with respect to shares of Class B
Common Stock shall mean control, directly or indirectly, through record
ownership or any contract, arrangement, understanding, relationship or
otherwise, of the voting power (which includes the power to vote or to direct
the voting of such shares, except where such power arises solely from a
revocable proxy or consent given in response to a proxy or consent solicitation)
of such Class B Common Stock, (ii) a "person" shall mean a corporation, trust,
limited liability company, association, partnership, joint venture, organi-
zation, business, individual, government (or subdivision thereof), governmental
agency or other legal entity and (iii) the term "transfer" shall not include a
bona fide unforeclosed pledge of shares of Class B Common Stock.
Notwithstanding the foregoing, shares of Class B Common Stock
(A) shall not convert into shares of Class A Common Stock in any transfer of
Class B Common Stock beneficially owned by CBS Parent to stockholders of CBS
Parent in a transaction intended to be tax free under Section 355 of the
Internal Revenue Code (or any successor provision) (such a transfer, a "Tax-Free
Spin-Off") and (B) shall no longer be convertible into shares of Class A Common
Stock following a Tax-Free Spin-Off. For purposes of this paragraph E of Article
FOURTH, a Tax-Free Spin-Off shall be deemed to have occurred at the time shares
are first transferred to stockholders of CBS Parent following receipt of an
affidavit described in paragraph E(4) of this Article FOURTH.
Immediately upon any automatic conversion of shares of Class B
Common Stock into shares of Class A Common Stock pursuant to this Article
FOURTH, the rights of the holders of such converted shares of Class B Common
Stock as such shall cease and such holders shall be treated for all purposes as
having become the holders of the shares of Class A Common Stock issuable upon
such conversion; provided, however, that, subject to paragraph E(6) of this
Article FOURTH, such holders shall be entitled to receive, when paid, any
dividends or other distributions declared on Class B Common Stock with a record
date preceding the time of such automatic conversion and unpaid as of the time
of such automatic conversion.
As promptly as practicable on or after the date of any
conversion of shares of Class B Common Stock into shares
<PAGE> 10
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of Class A Common Stock pursuant to this Article FOURTH, upon the delivery to
the Corporation of a certificate formerly representing shares of Class B Common
Stock, the Corporation shall issue and deliver or cause to be delivered, to or
upon the written order of the holder of the surrendered certificate formerly
representing shares of Class B Common Stock, a certificate or certificates
representing the number of fully paid and nonassessable shares of Class A Common
Stock into which the shares of Class B Common Stock formerly represented by such
certificate have been converted in accordance herewith.
(3) Prior to a Tax-Free Spin-Off, holders of shares of Class B
Common Stock may (A) sell or otherwise dispose of or transfer any or all of such
shares held by them, respectively, only in connection with a transfer which
meets the qualifications of paragraph E(4) of this Article FOURTH, and under no
other circumstances, or (B) convert any or all of such shares into shares of
Class A Common Stock, as provided in paragraph E(1) of this Article FOURTH, for
the purpose of effecting the sale or disposition of such shares of Class A
Common Stock to any person. Prior to a Tax-Free Spin-Off, no person other than
CBS, or transferees or successive transferees who receive shares of Class B
Common Stock in connection with a transfer which meets the qualifications set
forth in paragraph E(4) of this Article FOURTH, shall by virtue of the
acquisition of a certificate for shares of Class B Common Stock have the status
of an owner or holder of shares of Class B Common Stock or be recognized as such
by the Corporation or be otherwise entitled to enjoy for such person's own
benefit the special rights and powers of a holder of shares of Class B Common
Stock.
(4) Prior to a Tax-Free Spin-Off, shares of Class B Common
Stock shall be transferred on the books of the Corporation, and a new
certificate or certificates issued therefor, upon presentation for transfer at
the Office of the Corporation of the certificate for such shares, in proper form
for transfer and accompanied by all requisite stock transfer tax stamps, only if
such certificate when so presented shall also be accompanied by any one of the
following:
(a) an affidavit from CBS Parent stating that such certificate
is being presented to effect a transfer by one CBS Party (as defined in
paragraph A of Article SEVENTH) of such shares to another CBS Party; or
(b) an affidavit from CBS Parent stating that such certificate
is being presented to effect a transfer of shares beneficially owned by
CBS Parent to the
<PAGE> 11
11
stockholders of CBS Parent in connection with a Tax-Free Spin-Off.
Each affidavit of CBS Parent furnished pursuant to paragraph
E(4) of this Article FOURTH shall be verified by an officer of CBS Parent as of
a date not earlier than five days prior to the date of delivery thereof.
If a holder of shares of Class B Common Stock shall present a
certificate for such shares, endorsed by said holder for transfer or accompanied
by an instrument of transfer signed by said holder, to a person who receives
such shares in connection with a transfer which does not meet the qualifications
set forth in paragraph E(4) of this Article FOURTH, then such shares shall
automatically convert into an equal number of shares of Class A Common Stock in
accordance with paragraph E(2) of this Article FOURTH.
If the Board of Directors (or any committee of the Board of
Directors, or any officer of the Corporation, designated for such purpose by the
Board of Directors) shall determine, upon the basis of facts not disclosed in
any affidavit or other document accompanying the certificate for shares of Class
B Common Stock when presented for transfer, that such shares of Class B Common
Stock have been registered in violation of the provisions of paragraph E(4) of
this Article FOURTH, or shall determine that a person is enjoying for such
person's own benefit the special rights and powers of shares of Class B Common
Stock in violation of such provisions, then the Corporation shall take such
action at law or in equity as is appropriate under the circumstances. A bona
fide unforeclosed pledge of shares of Class B Common Stock shall not be deemed
to violate such provisions.
(5) Prior to the occurrence of a Tax-Free Spin-Off, each
certificate for shares of Class B Common Stock shall bear a legend on the face
thereof reading as follows:
"The shares of Class B Common Stock represented by this
certificate may not be transferred to any person in connection with a
transfer that does not meet the qualifications set forth in paragraph
E(4) of Article FOURTH of the Restated Certificate of Incorporation, as
amended, of this corporation. Any person who receives such shares in
connection with a transfer which does not meet the qualifications
prescribed by paragraph E(4) of Article FOURTH is not entitled to own
or to be registered as the holder of such shares of Class B Common
Stock, and such shares of Class B Common Stock shall automatically
convert into an equal number of shares of Class A Common Stock. Each
holder of this
<PAGE> 12
12
certificate, by accepting the same, accepts and agrees to all of the
foregoing."
Upon and after the transfer of shares in a Tax-Free Spin-Off,
such shares shall no longer be required to bear the legend set forth above in
this paragraph E(5) of Article FOURTH (the "Transfer Legend"). After such
transfer of shares in a Tax-Free Spin-Off, upon the delivery to the Corporation
of certificates representing shares of Class B Common Stock that bear the
Transfer Legend, the Corporation shall issue and deliver, or cause to be
delivered, to or upon the written order of the holder of the surrendered
certificates, a certificate or certificates identical in all material respects
to such surrendered certificates except that the new certificate or certificates
will not contain the Transfer Legend.
(6) If (i) any dividend or other distribution has been
declared with respect to shares of Class B Common Stock which will be converted
into shares of Class A Common Stock pursuant to the provisions of this paragraph
E of Article FOURTH, (ii) the record date or payment date therefor will be
subsequent to such conversion and (iii) such dividend or other distribution was
declared prior to such conversion, then such dividend or other distribution
shall be deemed to have been declared, and shall be payable, with respect to the
shares of Class A Common Stock into which such shares of Class B Common Stock
shall have been converted (without duplication), and any such dividend or other
distribution which shall have been declared on such shares payable in shares of
Class B Common Stock or rights, options, warrants or other securities
convertible into or exchangeable or exercisable for shares of Class B Common
Stock, shall be deemed to have been declared, and shall be payable, in
corresponding shares of Class A Common Stock or rights, options, warrants or
other securities convertible into or exchangeable or exercisable for shares of
Class A Common Stock, as the case may be.
(7) The Corporation shall not reissue or resell any shares of
Class B Common Stock which shall have been converted into shares of Class A
Common Stock pursuant to or as permitted by the provisions of this paragraph E
of Article FOURTH, or any shares of Class B Common Stock which shall have been
acquired by the Corporation in any other manner. The Corporation shall, from
time to time, as determined by the Board of Directors, take such appropriate
action as may be necessary to retire such shares and to reduce the authorized
amount of Class B Common Stock accordingly.
<PAGE> 13
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The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Class
A Common Stock and its issued Class A Common Stock held in its treasury, solely
for the purpose of effecting any conversion of Class B Common Stock pursuant to
this Article FOURTH, the full number of shares of Class A Common Stock then
issuable or deliverable upon any such conversion of all of the then outstanding
shares of Class B Common Stock. All shares of Class A Common Stock issued upon
any conversion of Class B Common Stock pursuant to this Article FOURTH shall be
duly and validly issued, fully paid and nonassessable. The Corporation shall
take all such actions as it deems necessary or appropriate to ensure that all
such shares of Class A Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any securities
exchange upon which shares of Class A Common Stock may be listed.
(8) In connection with any transfer or conversion of any
capital stock of the Corporation pursuant to or as permitted by the provisions
of this paragraph E of Article FOURTH, or in connection with the making of any
determination referred to in this paragraph E of Article FOURTH:
(a) the Corporation shall be under no obligation to make any
investigation of facts unless an officer, employee or agent of the
Corporation responsible for making such transfer or determination or
issuing Class A Common Stock pursuant to such conversion has
substantial reason to believe, or unless the Board of Directors (or a
committee of the Board of Directors designated for the purpose)
determines that there is substantial reason to believe, that any
affidavit or other document is incomplete or incorrect in a material
respect or that an investigation would disclose facts indicating that
such conversion was in violation of paragraph E(4) of this Article
FOURTH, in either of which events the Corporation shall (i) make or
cause to be made such investigation as it may deem necessary or
desirable in the circumstances and (ii) have a reasonable time to
complete such investigation; and
(b) neither the Corporation nor any director, officer,
employee or agent of the Corporation shall be liable in any manner for
any action taken or omitted to be taken in good faith.
(9) The Corporation shall pay any and all documentary, stamp
or similar issue or transfer taxes payable in respect of the issue or delivery
of shares of
<PAGE> 14
14
Class A Common Stock upon any conversion of shares of Class B Common Stock
pursuant hereto; provided, however, that the Corporation shall not be required
to pay any tax which may be payable in respect of any registration of transfer
involved in the issue or delivery of shares of Class A Common Stock in a name
other than that of the registered holder of the shares of Class B Common Stock
to be converted, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Corporation the amount of any
such tax or has established, to the satisfaction of the Corporation, that such
tax has been paid.
F. In the event of a merger, consolidation or other
restructuring of the Corporation with or into one or more entities (whether or
not the Corporation is the surviving entity), the holders of Class A Common
Stock and Class B Common Stock shall be entitled to receive the same per share
consideration; provided, however, that, prior to a Tax-Free Spin-Off, if such
consideration includes voting securities (or rights, options, warrants or other
securities convertible into or exchangeable or exercisable for voting
securities), the Corporation shall, to the maximum extent practicable, provide
that the voting securities distributed or distributable to holders of Class B
Common Stock entitle such holders to five times the number of votes per share or
other applicable unit as the voting securities issued or issuable to the holders
of Class A Common Stock.
G. Except as otherwise provided in paragraph D(1) of this
Article FOURTH, the Corporation shall not be entitled to issue additional
shares of Class B Common Stock, or issue rights, options, warrants or other
securities convertible into or exchangeable or exercisable for shares of Class
B Common Stock, except that the Corporation may make an offer to all holders of
Common Stock of rights to purchase additional shares of the class of Common
Stock already held by such holders; provided, however, that the holders of each
share of Class A Common Stock and Class B Common Stock shall be entitled to
purchase the same number of additional shares or rights, options, warrants or
other securities convertible into or exchangeable or exercisable for additional
shares, and on the same terms, as the holders of each share of such other class
of capital stock. Class A Common Stock and Class B Common Stock will be treated
equally with respect to any offer made by the Corporation to holders of Common
Stock of rights, options, warrants or other securities convertible into or
exchangeable or exercisable for shares of any other capital stock of the
Corporation.
<PAGE> 15
15
H. In the event of any liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, and subject
to the rights of the holders of any series of Preferred Stock, the net assets of
the Corporation available for distribution to stockholders of the Corporation
shall be distributed pro rata to the holders of Common Stock in accordance with
their respective rights and interests and shares of Class B Common Stock shall
rank pari passu with shares of Class A Common Stock as to such distribution. For
purposes of this paragraph H of Article FOURTH, the voluntary sale, conveyance,
lease, exchange or transfer (for cash, shares of capital stock, securities or
other consideration) of all or substantially all the assets of the Corporation
or a consolidation, merger or other restructuring of the Corporation with or
into one or more other corporations or other entities (whether or not the
Corporation is the corporation surviving such consolidation, merger or other
restructuring) shall not be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation.
ARTICLE FIFTH
Board of Directors
A. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances, the
number of directors of the Corporation shall initially be fixed at six and may
be increased or decreased from time to time pursuant to a resolution adopted by
the affirmative vote of a majority of the directors then in office, though less
than a quorum of the Board of Directors, but the number of directors shall not
be less than three nor more than 24. If the number of directors is changed
pursuant to this paragraph A of Article FIFTH, any newly created directorships
or any decreases in directorships shall be so apportioned among the classes so
as to make all classes as nearly equal as practicable; provided, however, that
no decrease in the number of directors shall shorten the term of any incumbent
director.
B. Unless and except to the extent that the Bylaws so require,
the election of directors of the Corporation need not be by written ballot.
C. The directors, other than those who may be elected by the
holders of any series of Preferred Stock under specified circumstances, shall be
divided into three classes, each initially consisting of two directors. One
class of directors initially consisting of two directors
<PAGE> 16
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shall be initially elected for a term expiring at the annual meeting of
stockholders to be held in 1999, another class initially consisting of two
directors shall be initially elected for a term expiring at the annual meeting
of stockholders to be held in 2000, and another class initially consisting of
two directors shall be initially elected for a term expiring at the annual
meeting of stockholders to be held in 2001. Members of each class shall hold
office until their respective successors are duly elected and qualified. At each
annual meeting of the stockholders of the Corporation commencing with the 1999
annual meeting, directors, other than those who may be elected by the holders of
any series of Preferred Stock under specified circumstances, shall be elected to
succeed those directors whose terms then expire by a plurality of all votes cast
at such meeting by holders of outstanding shares of capital stock of the
Corporation entitled to vote in the election of such directors, voting as a
single class, to hold office for a term expiring at the third succeeding annual
meeting of stockholders after their election, with each director to hold office
until his or her successor shall have been duly elected and qualified.
D. Subject to the rights of the holders of any series of
Preferred Stock to elect additional directors under specified circumstances,
vacancies resulting from death, resignation, retirement, disqualification,
removal from office or other cause, and newly created directorships resulting
from any increase in the authorized number of directors or other cause, may be
filled only by the affirmative vote of a majority of the remaining directors,
though less than a quorum of the Board of Directors, or by a sole remaining
director, and directors so chosen shall hold office for a term expiring at the
annual meeting of stockholders at which the term of office of the class to which
they have been elected expires and until such director's successor shall have
been duly elected and qualified.
E. Subject to the rights of the holders of any series of
Preferred Stock to elect and remove additional directors under specified
circumstances, any director may be removed from office at any time, but only for
cause and by the affirmative vote of at least 80 percent of the combined voting
power of outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting as a single class, and subject to
any further restrictions on such removal, not inconsistent with this Article
FIFTH, as may be contained in the By-laws. Cause for removal shall be deemed to
exist only if the director whose removal is proposed (i) has been convicted in a
court of competent jurisdiction of a felony, and such
<PAGE> 17
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conduct or conviction results in material and demonstrable injury to the
Corporation, (ii) has been adjudged by a court of competent jurisdiction to be
mentally incompetent or (iii) has been adjudged by a court of competent
jurisdiction to be liable for fraudulent or dishonest conduct, or gross abuse of
authority or discretion, resulting in material and demonstrable injury to the
Corporation, and, in each case, such conviction or adjudication has become final
and nonappealable. A director may not be removed by the stockholders at a
meeting unless the notice of the meeting states that the purpose, or one of the
purposes, of the meeting is removal of the director.
F. A stockholder may raise business or make nominations for
the election of directors at a stockholders' meeting only by complying with all
of the provisions of the By-laws specifying the manner and extent to which
advance notice shall be given of and any other procedures regarding (i) the
submission of proposals to be considered at any meeting of stockholders or (ii)
nominations for the election of directors to be held at any such meeting.
ARTICLE SIXTH
Certain Matters Relating to Stockholder Actions
A. Any action required or permitted to be taken by the
stockholders of the Corporation shall be effected at a duly called annual or
special meeting of stockholders of the Corporation and may not be effected by
any consent in writing by such stockholders; provided, however, that this
Paragraph A of Article SIXTH shall be of no force and effect, and stockholders
shall be permitted to act by written consent, for so long as CBS shall
beneficially own Common Stock representing at least a majority of the combined
voting power of outstanding shares of Common Stock of the Corporation.
B. Special meetings of stockholders of the Corporation may be
called only by the Board of Directors pursuant to a resolution approved by a
majority of the total number of directors specified pursuant to paragraph A of
Article FIFTH of this Certificate of Incorporation which the Corporation would
have if there were no vacancies (the "Entire Board of Directors"); provided,
however, that if the holders of any series of Preferred Stock issued by the
Corporation shall have the right, voting separately by series, as applicable, to
elect additional directors at an annual or special meeting of stockholders, the
calling of special meetings of the holders of shares of such series shall be
governed by the terms of the applicable resolution
<PAGE> 18
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or resolutions of the Board of Directors adopted with respect to such series
pursuant to Article FOURTH of this Certificate of Incorporation.
ARTICLE SEVENTH
Conduct of Certain Affairs of the Corporation
A. For purposes of this Certificate of Incorporation, "CBS"
shall mean CBS Parent, any person or entity with a controlling interest in CBS
Parent, and all corporations, partnerships, joint ventures, associations and
other entities (each a "Subsidiary Entity") in which CBS Parent beneficially
owns, directly or indirectly, 50 percent or more of the outstanding voting
stock, voting power or similar voting interests ("Voting Interest"), but shall
not include the Corporation or any Subsidiary Entity in which the Corporation
beneficially owns, directly or indirectly, 50 percent or more of the outstanding
Voting Interest. CBS Parent and each other entity constituting part of CBS are
referred to in this Certificate of Incorporation as "CBS Parties". The
Corporation and each Subsidiary Entity of the Corporation are referred to in
this Certificate of Incorporation as "Corporation Parties".
B. In anticipation that:
(1) the Corporation will cease to be a wholly owned subsidiary
of CBS but that certain CBS Parties will remain, for some period of
time, stockholders of the Corporation;
(2) the Corporation Parties and CBS may engage in the same or
similar activities or lines of business and may have an interest in the
same or similar areas of corporate opportunities;
(3) there will be benefits to be derived by the Corporation
through continued contractual, corporate and business relations with
CBS (including the service of directors, officers or employees of CBS
Parties as directors, officers or employees of Corporation Parties);
and
(4) there will be benefits in providing guidelines for
directors, officers and employees of CBS Parties and of Corporation
Parties with respect to the allocation of corporate opportunities and
other matters;
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the provisions of this Article SEVENTH are set forth to regulate, define and
guide the conduct of certain affairs of the Corporation Parties as they may
involve CBS Parties and the CBS Parties' respective officers, directors, agents
and employees, and the powers, rights, duties and liabilities of the Corporation
Parties and the Corporation Parties' respective officers, directors, employees
and stockholders in connection therewith.
C. Except as CBS Parent may otherwise agree in writing, CBS
shall have the right to, and shall have no duty not to, (i) engage in the same
or similar business activities or lines of business as the Corporation Parties,
(ii) do business with any potential or actual customer or supplier of the
Corporation Parties or (iii) employ or otherwise engage, or solicit for such
purpose, any officer, director or employee of the Corporation Parties. Neither
CBS nor any officer, employee or director of any CBS Party (except as provided
in paragraph D of this Article SEVENTH) shall be liable to the Corporation
Parties or their stockholders for breach of any fiduciary or other duty that
such person or entity may have by reason of any activities set forth in the
preceding sentence. In the event that CBS acquires knowledge of a potential
transaction or matter that may be a corporate opportunity for both CBS and the
Corporation Parties, CBS shall have no duty to communicate or present such
corporate opportunity to the Corporation Parties and shall not be liable to the
Corporation Parties or their stockholders for breach of any fiduciary or other
duty that CBS may have as a stockholder of the Corporation or otherwise by
reason of the fact that CBS pursues or acquires such corporate opportunity for
itself, directs such corporate opportunity to another person or entity or does
not present such corporate opportunity to the Corporation Parties.
D. In the event that a director, officer or employee of a
Corporation Party who is also a director, officer or employee of a CBS Party
acquires knowledge of a potential transaction or matter that may be a corporate
opportunity for both a Corporation Party and CBS, such director, officer or
employee of the Corporation Party (i) shall have fully satisfied and fulfilled
any fiduciary or other duties such person may have to the Corporation Parties
and their stockholders with respect to such corporate opportunity, (ii) shall
not be liable to the Corporation Parties or their stockholders for breach of any
fiduciary or other duty by reason of the fact that CBS pursues or acquires such
corporate opportunity for itself or directs such corporate opportunity to
another person or entity or does not communicate information regarding such
corporate opportunity to the Corporation Parties,
<PAGE> 20
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(iii) shall be deemed to have acted in good faith and in a manner such person
reasonably believes to be in and not opposed to the best interests of the
Corporation Parties and (iv) shall be deemed not to have breached any duty of
loyalty or other duty such person may have to the Corporation Parties or their
stockholders and not to have derived an improper benefit therefrom, if such
director, officer or employee acts in a manner consistent with the following
policy:
(1) a corporate opportunity offered to any person who is a
director but not an officer or employee of a Corporation Party and who
is also an officer or employee (whether or not a director) of a CBS
Party shall belong to CBS, unless such opportunity is expressly offered
to such person primarily in his or her capacity as a director of the
Corporation Party, in which case such opportunity shall belong to the
Corporation Party;
(2) a corporate opportunity offered to any person who is an
officer or employee (whether or not a director) of a Corporation Party
and who is also a director but not an officer or employee of a CBS
Party shall belong to the Corporation Party, unless such opportunity is
expressly offered to such person primarily in his or her capacity as a
director of a CBS Party, in which case such opportunity shall belong to
CBS; and
(3) a corporate opportunity offered to any other person who is
(i) either an officer or employee of a Corporation Party and either an
officer or employee of a CBS Party or (ii) a director of both a
Corporation Party and a CBS Party shall belong to CBS, unless such
opportunity is expressly offered to such person primarily in his or her
capacity as an officer, employee or director of the Corporation Party,
in which case such opportunity shall belong to the Corporation Party.
E. Any corporate opportunity that belongs to CBS or to a
Corporation Party pursuant to the foregoing policy shall not be pursued by the
other, or directed by the other to another person or entity, unless and until
CBS or the Corporation Party, as the case may be, determines not to pursue such
opportunity. Notwithstanding the preceding sentence, if the party to whom the
corporate opportunity belongs does not within a reasonable period of time begin
to pursue, or thereafter continue to pursue, such opportunity diligently and in
good faith, the other party may then
<PAGE> 21
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pursue such opportunity or direct it to another person or entity.
F. For purposes of this Article SEVENTH, "corporate
opportunities" shall consist of business opportunities which (i) a Corporation
Party is financially able to undertake, (ii) are, by their nature, in the line
or lines of the Corporation Party's business and are of practical and material
advantage to it, and (iii) are ones in which the Corporation Party has an
interest or reasonable expectancy. "Corporate opportunities" shall not include,
and neither CBS nor any of its directors, officers or employees shall be liable
to the Corporation Parties or their stockholders by reason of, any transaction
in which a Corporation Party or CBS is permitted to participate pursuant to (a)
any agreement between one or more Corporation Parties and one or more CBS
Parties in effect as of the time any equity security of the Corporation is first
held of record by any person or entity other than CBS, as such agreement may be
amended thereafter with the approval of a majority of Disinterested Directors
(as defined), or (b) any subsequent agreement between one or more Corporation
Parties and one or more CBS Parties approved by a majority of Disinterested
Directors, it being acknowledged that the rights of the Corporation Parties
under any such agreement shall be deemed to be contractual rights and shall not
be corporate opportunities of the Corporation Parties for any purpose; provided,
however, that no presumption or implication as to corporate opportunities
relating to any transaction not explicitly covered by such an agreement shall
arise from the existence or absence of any such agreement.
"Disinterested Directors" shall mean the directors of the
Corporation who are not (i) officers or employees of either a Corporation Party
or a CBS Party or (ii) directors of a CBS Party.
G. Any person or entity purchasing or otherwise acquiring any
interest in any shares of capital stock of the Corporation shall be deemed to
have notice of and have consented to the provisions of this Article SEVENTH.
H. If any contract, agreement, arrangement or transaction
between one or more Corporation Parties and one or more CBS Parties involves a
corporate opportunity and is approved in accordance with the General Corporation
Law of the State of Delaware, CBS and its officers, directors and employees
shall also, for the purposes of this Article SEVENTH and the other provisions of
this Certificate of Incorporation, be deemed to (i) have fully satisfied and
fulfilled any fiduciary or other duties such person or
<PAGE> 22
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entity may have to the Corporation Parties and their stockholders with respect
to such corporate opportunity, (ii) not be liable to the Corporation Parties or
their stockholders for breach of any fiduciary or other duty by reason of the
fact that CBS pursues or acquires such corporate opportunity for itself or
directs such corporate opportunity to another person or entity or does not
communicate information regarding such corporate opportunity to the Corporation
Parties, (iii) have acted in good faith and in a manner such person or entity
reasonably believes to be in and not opposed to the best interests of the
Corporation Parties and (iv) not to have breached any duty of loyalty or other
duty of such person or entity to the Corporation Parties or their stockholders
and not to have derived an improper benefit therefrom. Any such contract,
agreement, arrangement or transaction involving a corporate opportunity not so
approved shall not by reason thereof result in any breach of any fiduciary or
other duty, but shall be governed by the other provisions of this Article
SEVENTH, this Certificate of Incorporation, the Bylaws, the General Corporation
Law of the State of Delaware and other applicable law.
I. For purposes of this Article SEVENTH, a director of the
Corporation who is Chairperson or Vice Chairperson of the Board of Directors or
a committee thereof shall not be deemed to be an officer of the Corporation by
reason of holding such position (regardless of whether such position is deemed
an office of the Corporation under the By-laws), unless such person is a
full-time employee of the Corporation.
J. Any conduct by CBS Parties or any of their respective
officers, directors, agents and employees in connection with the affairs of the
Corporation Parties that does not follow the guidelines set forth in this
Article SEVENTH shall not by reason thereof void the transaction or make it
voidable or be deemed a breach of any fiduciary or other duty to the Corporation
Parties but shall be governed by the other provisions of this Certificate of
Incorporation, the By-laws, the General Corporation Law of the state of Delaware
and other applicable law.
K. Notwithstanding anything in this Certificate of
Incorporation to the contrary, the foregoing provisions of this Article SEVENTH
shall expire on the first day on which CBS does not own beneficially Common
Stock representing at least 20 percent of the combined voting power of
outstanding shares of Common Stock of the Corporation and no person who is a
director or officer of the Corporation is also a director or officer of a CBS
Party. Neither the alteration, amendment or repeal of this Article SEVENTH nor
<PAGE> 23
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the adoption of any provision inconsistent with this Article SEVENTH shall
eliminate or reduce the effect of this Article SEVENTH in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
SEVENTH, would accrue or arise, prior to such alteration, amendment, repeal or
adoption.
ARTICLE EIGHTH
Amendments
A. The Corporation reserves the right to adopt, repeal, alter
or amend any provision of this Certificate of Incorporation, in the manner now
or hereafter prescribed by the laws of the State of Delaware and this
Certificate of Incorporation, and all rights, preferences and privileges
conferred on stockholders, directors, officers, employees, agents and other
persons in this Certificate of Incorporation, if any, are granted subject to
this reservation.
B. In addition to any requirements of law and any other
provisions of this Certificate of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law or this Certificate of
Incorporation), the affirmative vote of 80 percent or more of the combined
voting power of outstanding shares of capital stock of the Corporation entitled
to vote thereon, voting as a single class, shall be required to alter, amend or
repeal, or to adopt any provision of this Certificate of Incorporation (whether
directly or indirectly through any merger of the Corporation with any other
entity) which is inconsistent with, any provision of Articles FIFTH, SIXTH,
SEVENTH, NINTH, TENTH and ELEVENTH hereof or this Article EIGHTH.
C. Except where the Board of Directors is permitted by law or
by this Certificate of Incorporation to act without any action by the
stockholders and except as otherwise provided by law or as otherwise provided in
this Certificate of Incorporation, and subject to any voting rights granted to
holders of any outstanding shares of Preferred Stock, provisions of this
Certificate of Incorporation shall not be adopted, repealed, altered or amended,
in whole or in part, without the approval of a majority of the combined voting
power of the outstanding shares of capital stock of the Corporation entitled to
vote thereon, voting as a single class; provided, however, that with respect to
any proposed amendment of this Certificate of Incorporation which would alter or
change the powers, preferences and relative, participating, optional or other
special rights of the
<PAGE> 24
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shares of Class A Common Stock or Class B Common Stock so as to affect them
adversely, the approval of a majority of the combined voting power of the
outstanding shares of capital stock of the Corporation entitled to be voted by
the holders of all of the shares so affected by the proposed amendment, voting
separately as a class, shall be obtained in addition to the affirmative vote of
a majority of the combined voting power of the outstanding shares of capital
stock of the Corporation entitled to vote thereon, voting as a single class, as
hereinbefore provided. Any increase or decrease (but not below the number of
shares thereof then outstanding or reserved for issuance upon conversion of the
Class B Common Stock or any series of Preferred Stock) in the authorized number
of shares of any class or classes of capital stock of the Corporation or
creation, authorization or issuance of any rights, options, warrants or other
securities convertible into or exchangeable or exercisable for shares of any
such class or classes of capital stock shall be deemed not to affect adversely
the powers, preferences or special rights of the shares of Class A Common Stock
or Class B Common Stock.
D. In addition to any requirements of law and any other
provisions of this Certificate of Incorporation (and notwithstanding the fact
that a lesser percentage may be specified by law or this Certificate of
Incorporation), the affirmative vote of 80 percent or more of the combined
voting power of outstanding shares of capital stock of the Corporation entitled
to vote thereon, voting as a single class, shall be required to adopt, repeal,
alter or amend any provision of the By-laws; provided, however, that (i) this
Article EIGHTH shall not limit the authority granted to the Board of Directors
pursuant to Article ELEVENTH and (ii) if a majority of the Entire Board of
Directors has first recommended the adoption, repeal, alteration or amendment
for approval by the stockholders, the By-laws may be adopted, repealed, altered
or amended by the approval of a majority of the votes cast by holders of the
outstanding shares of capital stock of the Corporation entitled to vote thereon,
voting as a single class.
ARTICLE NINTH
Limitation on Director Liability
A. To the fullest extent permitted by the General Corporation
Law of the State of Delaware as it now exists and as it may hereafter be
amended, no director shall be personally liable to the Corporation or any of its
stockholders for monetary damages for breach of any fiduciary or other duty as a
director.
<PAGE> 25
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B. The rights and authority conferred in this Article NINTH
shall not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
C. Neither the amendment, alteration or repeal of this Article
NINTH, nor the adoption of any provision inconsistent with this Article TENTH,
shall adversely affect any right or protection of a director of the Corporation
existing at the time of such amendment, alteration or repeal with respect to
acts or omissions occurring prior to such amendment, alteration, repeal or
adoption.
ARTICLE TENTH
Indemnification
Each person who is or was a director or officer of the
Corporation shall be indemnified by the Corporation to the fullest extent
permitted from time to time by the General Corporation Law of the State of
Delaware as the same exists or may hereafter be amended (but, if permitted by
applicable law, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment) or any
other applicable laws as presently or hereafter in effect. The Corporation may,
by action of the Board of Directors, provide indemnification to employees and
agents (other than a director or officer) of the Corporation, to directors,
officers, employees or agents of a subsidiary, and to each person serving as a
director, officer, partner, member, employee or agent of another corporation,
partnership, limited liability company, joint venture, trust or other
enterprise, at the request of the Corporation, with the same scope and effect as
the foregoing indemnification of directors and officers of the Corporation. The
Corporation shall be required to indemnify any person seeking indemnification in
connection with a proceeding (or part thereof) initiated by such person only if
such proceeding (or part thereof) was authorized by the Board of Directors or is
a proceeding to enforce such person's claim to indemnification pursuant to the
rights granted by this Certificate of Incorporation or otherwise by the
Corporation. Without limiting the generality or the effect of the foregoing, the
Corporation may enter into one or more agreements with any person which provide
for indemnification greater or different than that provided in this Article
TENTH. Any amendment or repeal of this Article TENTH shall not adversely affect
any right or protection existing hereunder in respect of any act or omission
occurring prior to such amendment or repeal.
<PAGE> 26
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ARTICLE ELEVENTH
Amendments to By-laws by the Board of Directors
In furtherance of, and not in limitation of, the powers
conferred by law, the Board of Directors is expressly authorized and empowered
to:
(1) adopt any By-laws a majority of the Entire Board of
Directors may deem necessary or desirable in connection with the
conduct of the affairs of the Corporation, including provisions
governing the conduct of, and the matters which may properly be brought
before, meetings of the stockholders and provisions specifying the
manner and extent to which advance notice shall be given of and any
other procedures regarding (i) the submission of proposals to be
considered at any such meeting or (ii) nominations for the election of
directors to be held at any such meeting; and
(2) repeal, alter or amend the By-laws by the affirmative vote
of a majority of the Entire Board of Directors.
ARTICLE TWELFTH
Foreign Ownership Restrictions
The following provisions are included for the purpose of
ensuring that ownership of the Corporation remains with United States persons or
entities, to the extent required by the Communications Act of 1934 and the rules
and regulations promulgated thereunder, as the same may be amended from time to
time:
A. If the Corporation is a direct licensee of a broadcast
station, the Corporation shall not issue to "Aliens" (which term shall include
(i) a person who is a citizen of a country other than the United States; (ii)
any entity organized under the laws of a government other than the government of
the United States or any state, territory, or possession of the United States;
(iii) a government other than the government of the United States or of any
state, territory, or possession of the United States; and (iv) a representative
of, or an individual or entity controlled by, any of the foregoing), either
individually or in the aggregate, in excess of 20 percent of the total number
of shares of capital stock of the Corporation outstanding at any time and shall
seek not to permit the transfer on the books of
<PAGE> 27
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the Corporation of any capital stock to any Alien that would result in the total
number of shares of such capital stock held by Aliens exceeding such 20 percent
limit. If the Corporation is not a direct licensee of a broadcast station but
directly or indirectly controls such a licensee, the foregoing limit shall be 25
percent. In the event that the FCC amends the foregoing limits, such amended
limits shall apply to this paragraph A of Article TWELFTH.
B. If the Corporation is a direct licensee of a broadcast
station, no Alien or Aliens shall be entitled to vote or direct or control the
vote of more than 20 percent of (i) the total number of shares of capital stock
of the Corporation outstanding and entitled to vote at any time and from time to
time, or (ii) the total voting power of all shares of capital stock of the
Corporation outstanding and entitled to vote at any time and from time to time.
If the Corporation is not a direct licensee of a broadcast station but directly
or indirectly controls such licensee, the foregoing limit shall be 25 percent.
In the event that the FCC amends the foregoing limits, such amended limits shall
apply to this paragraph B of Article TWELFTH.
C. Without limiting the generality of the foregoing and
notwithstanding any other provision of these Articles of Incorporation to the
contrary, any shares of capital stock of the Corporation determined by the Board
of Directors to be owned by an Alien or Aliens shall always be subject to
redemption by the Corporation by action of the Board of Directors or any other
applicable provision of law, to the extent necessary in the judgment of the
Board of Directors to comply with the Alien ownership restrictions described in
this Article TWELFTH. The terms, conditions and procedures of such redemption
shall be as follows:
(1) the redemption price of the shares to be redeemed pursuant
to this Article TWELFTH shall be equal to the fair market value of the
shares to be redeemed, as determined by the Board of Directors in good
faith;
(2) the redemption price of such shares may be paid in cash,
securities or any combination thereof as determined by the Board of
Directors;
(3) if the aggregate redemption price for all of the
Alien-owned shares to be redeemed exceeds $5 million in the aggregate
during any one-year period consisting of any 12 consecutive calendar
months, then the Corporation may elect to pay the balance of any
redemption price after the Corporation has paid $5 million in any such
period in installments not to
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exceed $5 million per year in the aggregate, with interest payable
semiannually at a rate equal to the six-month LIBOR rate for such
six-month period from time to time as determined by the Board of
Directors in good faith;
(4) if less than all the shares held by Aliens are to be
redeemed, the shares to be redeemed shall be selected in any manner
determined by the Board of Directors to be fair and equitable;
(5) at least 10 days' prior written notice of the redemption,
which notice shall specify the date the redemption is to be effective
(the "Redemption Date"), shall be given to the holders of the shares
selected to be redeemed (unless waived in writing by any such holder);
provided that the Redemption Date may be the date on which written
notice shall be given to holders if the cash or securities necessary to
effect the redemption shall have been deposited in trust for the
benefit of such holders and such cash and securities are subject to
immediate withdrawal by them upon surrender of the stock certificates
for their shares to be redeemed duly endorsed in blank or accompanied
by duly executed proper instruments of transfer;
(6) without limiting any of the rights or remedies set forth
in this Article TWELFTH, from and after the Redemption Date, the shares
to be redeemed shall cease to be regarded as outstanding and any and
all rights of the holders in respect of the shares to be redeemed or
attaching to such shares of whatever nature (including any rights to
vote or participate in dividends declared on capital stock of the same
class or series as such shares, excepting only payment of dividends
declared prior to the Redemption Date for which the record date
precedes the Redemption Date) shall cease and terminate, and the
holders thereof thereafter shall be entitled only to receive the cash
or securities payable upon redemption; and
(7) such other terms and conditions as the Board of Directors
shall determine.
D. The Board of Directors shall have all powers necessary to
implement the provisions of this Article TWELFTH.
<PAGE> 29
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IN WITNESS WHEREOF, Infinity Broadcasting Corporation has
caused this Restated Certificate of Incorporation to be executed by the
following authorized officer of said corporation on this [ ] day of [ ], 1998.
INFINITY BROADCASTING CORPORATION,
by ___________________________________
Name: Mel Karmazin
Title: Chairman, President and
Chief Executive Officer
<PAGE> 1
EXHIBIT 3.4
RESTATED BY-LAWS
of
INFINITY BROADCASTING CORPORATION
(the "Corporation")
As Amended Effective [ ], 1998
ARTICLE 1
Meetings of Stockholders
SECTION 1.01. Annual Meetings. The annual meeting of the
stockholders of the Corporation shall be held on such date and at such time as
the Board of Directors of the Corporation (the "Board of Directors") may
designate and on any subsequent day or days to which such meeting may be
adjourned, for the purpose of electing directors and for the transaction of such
other business as may properly come before the meeting.
SECTION 1.02. Special Meetings. Unless otherwise prescribed by
law or by the Restated Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation"), special meetings of stockholders,
for any purpose or purposes, may be called at any time only by the Board of
Directors in the manner set forth in the Certificate of Incorporation, and shall
be held on such date and at such time as the Board of Directors may designate
and on any subsequent day or days to which such meeting may be adjourned.
SECTION 1.03. Notice of Stockholder Business and
Nominations.
(a) Annual Meetings of Stockholders.
(i) Subject to the rights of the holders of any series of
Preferred Stock pursuant to the Certificate of Incorporation to elect additional
directors under specified circumstances, nominations of persons for election to
the Board of Directors and the proposal of business to be considered by the
stockholders may be made at an annual meeting of stockholders (A) pursuant to
the Corporation's notice of meeting delivered at the direction of the Board of
Directors pursuant to Section 1.06 of these By-laws, (B) otherwise by or at the
direction of the Board of Directors or (C) by any stockholder of the Corporation
who is entitled to vote at the meeting, who complied with the procedures set
forth in clauses (ii) and (iii) of this
<PAGE> 2
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Section 1.03(a) and who was a stockholder of record at the time the notice
required by such procedures is delivered to the Secretary of the Corporation and
at the time of the meeting.
(ii) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (C) of paragraph
(a)(i) of this Section 1.03, the stockholder must have given timely notice
thereof in writing to the Secretary of the Corporation and, in the case of
business other than nominations, such other business must otherwise be a proper
matter for stockholder action. To be timely, a stockholder's notice must be
delivered to the Secretary at the principal executive offices of the Corporation
not less than 90 days nor more than 120 days prior to the first anniversary of
the preceding year's annual meeting; provided, however, that, with respect to
the annual meeting to be held in 1999 and in the event that the date of the
annual meeting is advanced by more than 30 days, or delayed by more than 90
days, from such anniversary date, notice by the stockholder to be timely must be
so delivered not earlier than the 120th day prior to such annual meeting and not
later than the close of business on the later of the ninetieth day prior to such
annual meeting or the tenth day following the day on which public announcement
of the date of such meeting is first made. In no event shall the public
announcement of an adjournment or postponement of an annual meeting commence a
new time period for the giving of a stockholder's notice as described in this
Section 1.03(a). Such stockholder's notice shall set forth (A) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an election
contest, or is otherwise required, in each case pursuant to Regulation 14A under
the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Rule
14a-11 thereunder, including such person's written consent to being named in the
proxy statement as a nominee and to serving as a director if elected; (B) as to
any other business that the stockholder proposes to bring before the meeting, a
brief description of the business desired to be brought before the meeting, the
reasons for conducting such business at the meeting and any material interest in
such business of such stockholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (C) as to the stockholder giving the notice and
the beneficial owner, if any, on whose behalf the nomination or proposal is made
(1) the name and address of such stockholder, as they appear on the
Corporation's books, and of such beneficial owner, (2) the
<PAGE> 3
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class and number of shares of the Corporation which are owned beneficially and
of record by such stockholder and such beneficial owner and (3) a representation
that the stockholder intends to remain a stockholder entitled to vote at the
meeting and to appear in person at the meeting to make the nomination or propose
such business.
(iii) Notwithstanding anything in the second sentence of
clause (ii) of this Section 1.03(a) to the contrary, in the event that the
number of directors to be elected to the Board of Directors is increased and
there is no public announcement naming all of the nominees for director or
specifying the size of the increased Board of Directors made by the Corporation
at least 100 days prior to the first anniversary of the preceding year's annual
meeting, a stockholder's notice required by this Section 1.03 shall also be
considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the Secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth calendar day following the day on which such public
announcement is first made by the Corporation.
(b) Special Meetings of Stockholders.
Only such business shall be conducted at a special meeting of
stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting delivered at the direction of the Board of
Directors pursuant to Section 1.06 of these By-laws.
(c) General.
(i) Subject to the rights of the holders of any series of
Preferred Stock pursuant to the Certificate of Incorporation to elect additional
directors under specified circumstances, only persons who are nominated in
accordance with the procedures set forth in this Section 1.03 shall be eligible
to be elected as directors at a meeting of stockholders and only such business
shall be conducted at a meeting of stockholders as shall have been brought
before the meeting in accordance with the procedures set forth in this Section
1.03. Except as otherwise provided by law, the Certificate of Incorporation or
these By-laws, the Chairperson of the Board of Directors shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 1.03 and, if any proposed nomination or business is not in
<PAGE> 4
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compliance with this Section 1.03, to declare that such defective proposal or
nomination shall be disregarded.
(ii) For purposes of this Section 1.03, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable national news service or in a document publicly
filed by the Corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(iii) Notwithstanding the foregoing provisions of this Section
1.03, a stockholder shall also comply with all applicable requirements of the
Exchange Act and the rules and regulations thereunder with respect to the
matters set forth in this Section 1.03. Nothing in this Section 1.03 shall be
deemed to affect any rights of stockholders to request inclusion of proposals in
the Corporation's proxy statement pursuant to Rule 14a-8 under the Exchange Act.
SECTION 1.04. Place of Meetings. Meetings of the stockholders,
annual or special, shall be held at such place, either within or without the
State of Delaware, as shall be designated from time to time by the Board of
Directors or the Chairperson of the Board of Directors and stated in the notice
of the meeting or in a duly executed waiver of notice thereof or, if not so
designated, at the registered office of the Corporation in the State of
Delaware.
SECTION 1.05. Inspectors of Election; Opening and Closing the
Polls. (a) In advance of any meeting of stockholders, the Board of Directors
shall appoint one or three inspectors (the "Inspectors"), which Inspector or
Inspectors may not be directors, officers or employees of the Corporation, to
act at such meeting or at any adjournment or adjournments thereof and make a
written report thereof. The Corporation may designate one or more persons as
alternate Inspectors to replace any Inspector who fails to act. If such
Inspectors are not so appointed or fail or refuse to act, the chairperson of any
such meeting shall make such appointments. If there are three Inspectors, the
decision, act or certificate of two Inspectors shall be effective in all
respects as the decision, act or certificate of all. Each Inspector, before
entering upon the discharge of the duties of Inspector, shall take and sign an
oath faithfully to execute the duties of Inspector with strict impartiality and
according to the best of such Inspector's ability. The Inspectors shall have
<PAGE> 5
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the duties prescribed by the General Corporation Law of the State of Delaware.
(b) The Chairperson of the Board of Directors shall fix and
announce at the meeting the date and time of the opening and the closing of the
polls for each matter upon which the stockholders will vote at the meeting.
SECTION 1.06. Notices. Whenever written notice is required by
law, the Certificate of Incorporation, or these By-laws, to be given to any
stockholder, such notice shall be given which shall state the place, date and
hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called. Such written notice shall be given to
each stockholder entitled to vote at such meeting not less than 10 nor more than
60 days before the date of the meeting. If mailed, notice is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at such stockholder's address as it appears on the records of the
Corporation. Written notice may also be given personally or by fax.
The notice of any meeting of the stockholders may be
accompanied by a form of proxy approved by the Board of Directors in favor of
such person or persons as the Board of Directors may select.
SECTION 1.07. Waivers of Notice. Whenever any notice is
required by law, the Certificate of Incorporation or these By-laws, to be given
to any stockholder, a waiver thereof in writing, signed by the person or persons
entitled to said notice, whether before or after the time stated therein, shall
be deemed equivalent thereto. Attendance of a stockholder in person or by proxy
at a meeting shall constitute a waiver of notice to such stockholder of such
meeting, except when such stockholder attends the meeting for the express
purpose of objecting at the beginning of the meeting to the transaction of any
business because the meeting is not lawfully called or convened.
SECTION 1.08. Meeting by Means of Conference Telephone. Unless
otherwise provided by the Certificate of Incorporation or these By-laws, any
stockholder may participate in a meeting of the stockholders by means of a
conference telephone or similar communications equipment that enables all
persons participating in the meeting to hear each other, and participation in a
meeting pursuant to this Section 1.08 will constitute presence in person at such
meeting.
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SECTION 1.09. Quorum. Except as otherwise provided by law or
by the Certificate of Incorporation, or by these By-laws, a majority of the
combined voting power of the outstanding shares of capital stock of the
Corporation entitled to vote generally in an election of directors, present in
person or represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business, except that where a separate vote
by a class or classes or series is required, a majority of the combined voting
power of the outstanding shares of such class or classes or series, present in
person or represented by proxy, shall constitute a quorum entitled to take
action with respect to that vote on that matter. The stockholders present in
person or by proxy at any duly organized meeting may continue to do business
until adjournment, notwithstanding the withdrawal of shares with enough voting
power to leave less than a quorum. If a meeting cannot be organized because of
lack of a quorum, those present may, except as otherwise provided by law,
adjourn the meeting to such time and place as they may determine.
SECTION 1.10. Adjournment. Any meeting of stockholders may be
adjourned from time to time, without notice other than the announcement of the
time and place thereof at the meeting at which such adjournment is taken, and at
any such adjourned meeting at which a quorum shall be present any action may be
taken that could have been taken at the meeting originally called. If the
adjournment is for more than 30 days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the adjourned meeting shall
be given to each stockholder entitled to vote at the meeting.
SECTION 1.11. Proxies and Voting. Each stockholder entitled
to vote at a meeting of stockholders may vote in person or may authorize another
person or persons to act for such stockholder by proxy, but no proxy shall be
voted on or acted upon after three years from its date, unless such proxy
provides for a longer period. The Board of Directors, in its discretion, or the
officer of the Corporation presiding at a meeting of stockholders, in such
officer's discretion, may require that any votes cast at such meeting be cast by
written ballot. Except as otherwise required by law, the Certificate of
Incorporation or these By-laws, the approval of a majority of the votes cast by
holders of the outstanding shares of capital stock of the Corporation entitled
to vote on the subject matter, voting as a single class, shall be sufficient for
the transaction of business with respect to such matter at any meeting at which
a quorum is present.
<PAGE> 7
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ARTICLE 2
Offices
SECTION 2.01. Delaware Office. The Corporation will have a
registered office in the State of Delaware which will be located in the City of
Wilmington, County of New Castle.
SECTION 2.02. Other Offices. The Corporation may have such
other offices, either within or without the State of Delaware, as the Board of
Directors may designate or as the business of the Corporation may from time to
time require.
ARTICLE 3
List of Stockholders Entitled To Vote
SECTION 3.01. List of Stockholders Entitled To Vote. The
officer of the Corporation who has charge of the stock ledger of the Corporation
shall prepare and make, at least 10 days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least 10 days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder of the Corporation who is
present.
SECTION 3.02. Stock Ledger. The stock ledger of the
Corporation will constitute the list required by Section 3.01 and will be the
only evidence as to who are the stockholders entitled to examine the stock
ledger or to vote in person or by proxy at any meeting of stockholders.
<PAGE> 8
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ARTICLE 4
Board of Directors--Powers and Duties
SECTION 4.01. Board of Directors. The business, affairs and
property of the Corporation shall be managed by or under the direction of the
Board of Directors, which, except as otherwise provided by law or the
Certificate of Incorporation, shall exercise all the powers of the Corporation.
SECTION 4.02. Number, Tenure and Qualifications. Subject to
the rights of the holders of any series of Preferred Stock pursuant to the
Certificate of Incorporation to elect additional directors under specified
circumstances, the number of directors shall be fixed from time to time as set
forth in the Certificate of Incorporation. The directors, other than those who
may be elected by the holders of any series of Preferred Stock pursuant to the
Certificate of Incorporation, shall be divided into such classes and hold office
for such terms as set forth in, and may be removed only in accordance with, the
Certificate of Incorporation.
SECTION 4.03. Resignations. Any director may resign at any
time. Such resignation shall be made in writing, and shall take effect at the
time specified therein, and if no time be specified, at the time of its receipt
by the Chairperson of the Board of Directors, the President or the Secretary.
The acceptance of a resignation shall not be necessary to make it effective.
SECTION 4.04. Compensation. Each director shall be entitled to
receive from the Corporation such annual and other fees and compensation as the
Board of Directors shall from time to time determine and to be reimbursed for
such director's reasonable expenses in connection with attendance at meetings.
Nothing herein contained shall preclude any director from serving the
Corporation or its subsidiaries in any other capacity and receiving compensation
therefor.
ARTICLE 5
Meetings of Directors
SECTION 5.01. Regular Meetings. Regular meetings of the
Board of Directors shall be held without notice at such place or places, either
within or without the state of
<PAGE> 9
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Delaware, at such hour and on such day as may be fixed by resolution of the
Board of Directors.
The Board of Directors shall meet for organization at its
first regular meeting after the annual meeting of stockholders or at a special
meeting of the Board of Directors called after the annual meeting of
stockholders and prior to said first regular meeting.
SECTION 5.02. Special Meetings. Special meetings of the Board
of Directors shall be held, whenever called by the Chairperson of the Board of
Directors or by any three or more directors or by resolution adopted by the
Board of Directors, at such place or places either within or without the State
of Delaware as may be stated in the notice of the meeting.
SECTION 5.03. Notice. Notice of the time and place of all
special meetings of the Board of Directors, and notice of any change in the time
or place of holding the regular meetings of the Board of Directors, shall be
given to each director at least one day before the day of the meeting (i) in
person or by telephone, (ii) by telegraph, cable, fax, e-mail or any other type
of electronic communication, (iii) by express mail or courier service, charges
prepaid or (iv) by first-class mail, postage prepaid, sent, in the case of (ii),
(iii) or (iv) above, to the number or address supplied by the director to the
Corporation for the purpose of notice; provided, however, that notice of any
meeting need not be given to any director if waived by such director in writing,
whether before or after the time stated therein, or if such director shall be
present at the beginning of such meeting and does not object at the beginning of
the meeting to the transaction of business because the meeting was not lawfully
called or convened. If the notice is sent by one of the methods set forth in (i)
above, it will be deemed to have been given to the director when communicated;
if the notice is sent by one of the methods set forth in (ii) above it will be
deemed to have been given to the director when dispatched; if the notice is sent
by one of the methods set forth in (iii) above, it will be deemed to have been
given on the day delivery is guaranteed by the courier service or express mail;
and if the notice is sent by first-class mail ((iv) above), it will be deemed to
have been given on the third day after dispatch.
In the absence of any resolution of the Board of Directors or
any committee governing rules of procedure to the contrary, notice of meetings
of any committee referred
<PAGE> 10
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to or provided for in these By-laws shall follow the same procedures as those
set forth in these By-laws for meetings of the Board of Directors.
SECTION 5.04. Quorum; Voting. Except as otherwise provided by
law or in these By-laws, a majority of the directors of the Corporation then in
office (but in no event less than one-third of the total number of directors
specified pursuant to paragraph A of Article FIFTH of the Certificate of
Incorporation which the Corporation would have if there were no vacancies (the
"Entire Board of Directors")) will constitute a quorum for the transaction of
business by the Board of Directors; but a lesser number may adjourn from day to
day until a quorum is present. Except as otherwise provided by law, in the
Certificate of Incorporation or in these By-laws, all questions shall be decided
by the vote of a majority of the directors present at any meeting at which there
is a quorum.
SECTION 5.05. Actions by Consent Without Meeting. Any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting, if all members of the
Board of Directors or such committee thereof, as the case may be, consent
thereto in writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors or such committee.
SECTION 5.06. Meeting by Means of Conference Telephone. All or
any number less than all of the directors may participate in a meeting of the
Board of Directors or of a committee of the Board of Directors by conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and participation in a meeting
pursuant to this Section 5.06 will constitute presence in person at such
meeting.
ARTICLE 6
Committees of the Board of Directors
SECTION 6.01. Committees. There shall be a Compensation
Committee and an Audit Committee. Each of the Audit Committee and the
Compensation Committee shall perform such functions and exercise such powers as
may be delegated to it from time to time by the Board of Directors.
<PAGE> 11
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The Board of Directors may from time to time appoint such
further standing or special committees as it may deem in the best interest of
the Corporation, but no such committee shall have any powers except such as are
expressly conferred upon it by the Board of Directors. With respect to each such
committee, the Board of Directors shall, by one or more resolutions adopted by a
majority of the Entire Board of Directors, determine the duties and
responsibilities, determine the number of members, appoint the members and the
committee chair and fill each vacancy occurring in the membership; provided,
however, that the Board of Directors may, by one or more resolutions adopted by
a majority of the Entire Board of Directors, allow the member or members present
at any committee meeting and not disqualified from voting, whether or not such
member or members constitute a quorum, to unanimously appoint another member of
the board of directors to act at the meeting in the place of any absent or
disqualified member. The Board of Directors may designate one or more directors
as alternate members of any committee. Each committee referred to in this
Article 6 shall act only as a committee, and the individual members shall have
no power as such.
The Board of Directors may abolish any committee established
by or pursuant to this Article 6 as it may deem advisable. In the absence or
disqualification of any member of any committee and any alternate member in his
or her place, the member or members of the committee present at the meeting and
not disqualified from voting whether or not such member or members constitute a
quorum, may by unanimous vote appoint another member of the Board of Directors
to act at the meeting in the place of the absent or disqualified member.
Each committee referred to or provided for in this Article 6
shall have authority, except as may otherwise be required by law or by
resolution of the Board of Directors, to fix its own rules of procedure and to
meet where and as provided by such rules; provided that a committee chair shall
always have the authority to call a meeting of the committee. The presence at
any meeting of any such committee of a majority of the members in office (but in
no event less than one-third of the total number of members which the committee
would have if there were no vacancies), including alternate members thereof,
shall be necessary to constitute a quorum for the transaction of business and in
every case the affirmative vote of a majority of such members present at any
meeting shall be necessary for the adoption of any resolution of such committee.
All action
<PAGE> 12
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taken at each committee meeting shall be recorded in minutes of the meeting.
ARTICLE 7
Contributions
SECTION 7.01. Contributions. The Board of Directors shall have
the power, at any time and from time to time, to make, or authorize the making
of, contributions and donations for the public welfare or for religious,
charitable, scientific or educational purposes.
ARTICLE 8
Election and Term of
Chairperson of the Board of Directors and Officers
SECTION 8.01. Election. The Board of Directors shall elect a
Chairperson of the Board of Directors (who must be a director and who may, but
need not, be designated an officer of the Corporation), a President or a Chief
Executive Officer or both, a Secretary and a Treasurer. There may also be one or
more Vice Chairpersons (each of whom must be a director), a Chief Financial
Officer, one or more Vice Presidents, one or more assistant secretaries and
treasurers and such other officers and assistant officers as the Board of
Directors may deem appropriate. The Board of Directors may assign any of the
officers such further designations or alternate titles as it considers
desirable. The Board of Directors shall elect all officers, except assistant
officers, which shall be appointed by the Chief Executive Officer or by the
officer to which they are an assistant. Any number of offices may be held by the
same person, unless otherwise prohibited by law, the Certificate of
Incorporation or these By-laws.
SECTION 8.02. Term. The term of office for all officers shall
be until the organization meeting of the Board of Directors following the next
annual meeting of stockholders and until their respective successors are elected
and qualified, or until their earlier death, resignation or removal. The
Chairperson of the Board of Directors or any officer may be removed from office,
either with or without cause, at any time by the affirmative vote of a majority
of the members of the Board of Directors then in office. A vacancy in any office
arising from any cause
<PAGE> 13
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may be filled for the unexpired term by the Board of Directors.
ARTICLE 9
Officers
SECTION 9.01. Chairperson of the Board of Directors. The
Chairperson of the Board of Directors shall preside at all meetings of the Board
of Directors at which he or she is present and shall call meetings of the Board
of Directors and committee meetings when he or she deems them necessary. Unless
otherwise precluded from doing so by these By-laws, the Chairperson of the Board
of Directors may be a member of any committees of the Board of Directors. He or
she shall act as chairperson at all meetings of the stockholders at which he or
she is present unless he or she elects that the Chief Executive Officer or a
Vice Chairperson, if any, shall so preside. The Chairperson of the Board of
Directors may be designated by the Board of Directors as an officer of the
Corporation and may be elected by the Board of Directors as the Chief Executive
Officer. The Chairperson of the Board of Directors shall perform all duties as
may be assigned to him or her by the Board of Directors.
In the absence of the Chairperson of the Board of Directors,
the Vice Chairperson so designated for such function, if any, or, if none, the
President or, if none, the Chief Executive Officer, shall perform the duties and
have the powers of the Chairperson of the Board of Directors, as determined by
the Board of Directors. The Vice Chairperson of the Board of Directors, if one
shall be appointed, or the Vice Chairpersons, if there shall be more than one,
shall otherwise perform such duties and may exercise such other powers as from
time to time may be assigned by these By-laws, the Board of Directors or the
Chairperson of the Board of Directors.
SECTION 9.02. President; Chief Executive Officer. The
President shall have such powers and duties as may, from time to time, be
prescribed by the Board of Directors or the Chairperson of the Board of
Directors. Unless the Board of Directors shall otherwise direct, the President
shall be the Chief Executive Officer of the Corporation.
The Chief Executive Officer shall have general charge of the
affairs of the Corporation, subject to the control of the Board of Directors. He
or she may appoint
<PAGE> 14
14
all officers and employees of the Corporation for whose election no other
provision is made in these By-laws and may discharge or remove any officer or
employee, subject to action thereon by the Board of Directors as required by
these By-laws. The Chief Executive Officer shall be the officer through whom the
Board of Directors delegates authority to corporate management, and shall be
responsible to see that all orders and resolutions of the Board of Directors are
carried into effect by the proper officers or other persons. The Chief Executive
Officer shall also perform all duties as may be assigned to him or her by the
Board of Directors.
SECTION 9.03. Secretary. The Secretary shall (i) attend
meetings of the directors and the stockholders of the Corporation, (ii) record
all the proceedings of such meetings in suitable books and (iii) send out all
notices of meetings as required by law or by these By-laws. In case of his or
her absence or refusal or neglect so to perform the foregoing duties, any such
notice may be given by any person thereunto directed by the Chairperson of the
Board of Directors or the directors upon whose request the meeting is called as
provided in these By-laws. He or she shall, in general, perform all duties
incident to the office of the Secretary and perform such other duties as may be
assigned to him or her by the Board of Directors, the Chairperson of the Board
of Directors or the President.
SECTION 9.04. Treasurer. The Treasurer shall have custody of,
and shall manage and invest, all moneys and securities of the Corporation, and
shall have such powers and duties as generally pertain to the office of
Treasurer.
To the extent not invested, the Treasurer shall deposit all
moneys in such banks or other places of deposit as the Board of Directors may
from time to time designate or as may be designated by the Treasurer or by any
officer or officers of the Corporation so authorized by resolution of the Board
of Directors. Unless otherwise provided by the Board of Directors, all checks,
drafts, notes and other orders for the payment of money from a disbursing
account shall be signed by the Treasurer or such person or persons as may be
designated by name by the Treasurer in writing. The Treasurer's signature and,
if authorized by the Treasurer in writing, the signature of such person or
persons as may be designated by the Treasurer as provided above, to a check,
draft, note or other order for the payment of money from a disbursing account
may be by facsimile or other means. Procedures for withdrawal of
<PAGE> 15
15
moneys from accounts other than disbursing accounts shall be established from
time to time by the Treasurer.
The Treasurer shall have such other powers and perform such
other duties as may be assigned by the Board of Directors. The Chief Financial
Officer of the Corporation, if any, shall have all of the powers granted to the
Treasurer under these By-laws, including the power to sign any check, draft,
note or other order for the payment of money from a disbursing account,
including by facsimile signature or other means.
SECTION 9.05. Assistant Secretary, Assistant Treasurer and
Other Officers. In the event of the absence or inability to serve of the
Secretary, or as delegated by the Secretary, an assistant secretary shall
perform all the duties of the Secretary; and in the event of the absence or
inability to serve of the Treasurer, or as delegated by the Treasurer, an
assistant treasurer shall perform all the duties of the Treasurer.
The powers and duties of other officers of the Corporation
shall be such as may, from time to time, be prescribed by the Board of
Directors, the Chairperson of the Board of Directors, the President or the Chief
Executive Officer.
In case of the absence of any officer of the Corporation, or
for any other reason that the Board of Directors may deem sufficient, the Board
of Directors, or in the absence of action by the Board of Directors, the Chief
Executive Officer, or in his or her absence, the President, or in his or her
absence, the Chairperson of the Board of Directors, may delegate for the time
being the powers and duties of any officer to any other officer or to any
director.
ARTICLE 10
Certificates of Stock
SECTION 10.01. Certificate. Every holder of capital stock in
the Corporation shall be entitled to have a certificate signed by or in the name
of the Corporation (a) by the Chairperson or any Vice Chairperson of the Board
of Directors or the President or any Vice President and (b) by the Treasurer or
any Assistant Treasurer or the Secretary or any Assistant Secretary of the
Corporation, certifying the number of shares owned by such holder in the
Corporation.
<PAGE> 16
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SECTION 10.02. Signatures. Any or all the signatures on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if such individual were such officer, transfer agent or registrar at the date
of issue.
ARTICLE 11
Transfers of Stock
SECTION 11.01. Transfers of Stock. Subject to any restrictions
imposed on the transfer or ownership of the Corporation's capital stock by
applicable law or by the Certificate of Incorporation, capital stock of the
Corporation shall be transferable in the manner prescribed in these By-laws.
Transfers of shares of capital stock of the Corporation shall be made on the
books of the Corporation by the holder thereof or his or her legal
representative, acting by his or her attorney-in-fact duly authorized by written
power of attorney filed with the Secretary of the Corporation, or with one of
its transfer agents, and on surrender for cancelation of the certificate or
certificates for such shares. Except as otherwise provided in these By-laws or
in the Certificate of Incorporation, the person in whose name shares of capital
stock stand on the books of the Corporation shall be deemed the owner thereof
for all purposes as regards the Corporation. The Corporation may have one or
more transfer offices or agencies and/or registrars for the transfer and/or
registration of shares of capital stock of the Corporation.
The Corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by law.
<PAGE> 17
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ARTICLE 12
Miscellaneous Provisions
SECTION 12.01. Fiscal Year. The fiscal year of the Corporation
shall be the calendar year, or such other period as may be adopted by resolution
of the Board of Directors.
SECTION 12.02. Corporate Seal. The Corporation shall have a
corporate seal, which shall have inscribed thereon the name of the Corporation,
the year of its organization and the words "Corporate Seal, Delaware". The seal
may be used by causing it or a facsimile thereof to be impressed or affixed or
otherwise reproduced.
SECTION 12.03. Amendments. These By-laws may be repealed,
altered or amended, or new By-laws may be adopted, only as set forth in the
Certificate of Incorporation.
These By-laws are subject to any requirements of law, any
provisions of the Certificate of Incorporation and any terms of any series of
Preferred Stock.
SECTION 12.04. Indemnification and Insurance. (a) Each person
who was or is made a party or is threatened to be made a party to or is involved
in any manner in any threatened, pending or completed action, suit, or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she is or was a
director or officer of the Corporation or a director or elected officer of a
Subsidiary (as defined in paragraph (f) of this Section 12.04), shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
from time to time by the General Corporation Law of the State of Delaware as the
same exists or may hereafter be amended (but, if permitted by applicable law, in
the case of any such amendment, only to the extent that such amendment permits
the Corporation to provide broader indemnification rights than said law
permitted the Corporation to provide prior to such amendment) or any other
applicable laws as presently or hereafter in effect, and such indemnification
shall continue as to a person who has ceased to be a director or officer and
shall inure to the benefit of his or her heirs, executors and administrators;
provided, however, that the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding (or part thereof) initiated by
such person only if such proceeding (or part thereof) was authorized by the
Board of Directors or is a proceeding to enforce such
<PAGE> 18
18
person's claim to indemnification pursuant to the rights granted by this By-law.
The Corporation shall pay the expenses incurred by such person in defending any
such proceeding in advance of its final disposition upon receipt (unless the
Corporation upon authorization of the Board of Directors waives such requirement
to the extent permitted by applicable law) of an undertaking by or on behalf of
such person to repay such amount if it shall ultimately be determined that such
person is not entitled to be indemnified by the Corporation as authorized in
this By-law or otherwise.
(b) The indemnification and the advancement of expenses
incurred in defending a proceeding prior to its final disposition provided by,
or granted pursuant to, this By-law shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, other provision of these By-laws, agreement,
vote of stockholders or Disinterested Directors (as defined in paragraph (f) of
this Section 12.04) or otherwise. No repeal, modification or amendment of, or
adoption of any provision inconsistent with, this Section 12.04, nor to the
fullest extent permitted by applicable law, any modification of law, shall
adversely affect any right or protection of any person granted pursuant hereto
existing at, or with respect to any events that occurred prior to, the time of
such repeal, amendment, adoption or modification.
(c) The Corporation may maintain insurance, at its expense, to
protect itself and any person who is or was a director, officer, partner,
member, employee or agent of the Corporation or a Subsidiary or of another
corporation, partnership, limited liability company, joint venture, trust or
other enterprise against any expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the General Corporation Law of the State of Delaware.
(d) The Corporation may, to the extent authorized from time to
time by the Board of Directors, grant rights to indemnification and rights to be
paid by the Corporation the expenses incurred in defending any proceeding in
advance of its final disposition, to any person who is or was an employee or
agent (other than a director or officer) of the Corporation or a Subsidiary and
to any person who is or was serving at the request of the Corporation or a
Subsidiary as a director, officer, partner, member, employee or agent of another
corporation, partnership, limited liability company,
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joint venture, trust or other enterprise, including service with respect to
employee benefit plans maintained or sponsored by the Corporation or a
Subsidiary, to the fullest extent of the provisions of this By-law with respect
to the indemnification and advancement of expenses of directors and officers of
the Corporation.
(e) If any provision or provisions of this Section 12.04 shall
be held to be invalid, illegal or unenforceable for any reason whatsoever: (1)
the validity, legality and enforceability of the remaining provisions of this
Section 12.04 (including, without limitation, each portion of any paragraph or
clause of this Section 12.04 containing any such provision held to be invalid,
illegal or unenforceable, that is not itself held to be invalid, illegal or
unenforceable) shall not in any way be affected or impaired thereby; and (2) to
the fullest extent possible, the provisions of this By-law (including, without
limitation, each such portion of any paragraph of this Section 12.04 containing
any such provision held to be invalid, illegal or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision held
invalid, illegal or unenforceable.
(f) For purposes of this Section 12.04:
(1) "Disinterested Director" means a director of the
Corporation who is not and was not a party to the proceeding or matter
in respect of which indemnification is sought by the claimant.
(2) "Subsidiary" means a corporation or limited liability
company, a majority of the capital stock of which is owned directly or
indirectly by the Corporation, other than directors' qualifying shares.
(g) Any notice, request, or other communication required or
permitted to be given to the Corporation under this By-law shall be in writing
and either delivered in person or sent by telecopy, telex, telegram, overnight
mail or courier service, or certified or registered mail, postage prepaid,
return receipt requested, to the Secretary of the Corporation and shall be
effective only upon receipt by the Secretary.
SECTION 12.05. Confidentiality in Voting. Stockholders shall
be provided permanent confidentiality in all voting, except as necessary to meet
applicable legal requirements.
<PAGE> 1
EXHIBIT 4.1
TEMPORARY CERTIFICATE-EXCHANGEABLE FOR DEFINITIVE ENGRAVED CERTIFICATE WHEN
READY FOR DELIVERY.
This certificate may be presented for CLASS A
transfer in Boston, MA or New York, NY COMMON
SHARES
CUSIP 45662S 10 2
SEE REVERSE FOR CERTAIN DEFINITIONS
[GRAPHIC]
Infinity Broadcasting Corporation
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
This is to Certify that
is the owner of
FULLY PAID AND NON-ASSESSABLE SHARES OF CLASS A COMMON STOCK OF THE PAR VALUE OF
$.01 PER SHARE OF
Infinity Broadcasting Corporation (hereinafter called the "Corporation"),
transferable on the books of the Corporation by the holder hereof in person or
by duly authorized attorney upon the surrender of this certificate properly
endorsed. This certificate and the shares represented hereby are issued and
shall be held subject to all the provisions of the Restated Certificate of
Incorporation and the Restated By-Laws of the Corporation and all amendments
thereto, copies of which are on file at the office of the Corporation, to which
the holder, by acceptance hereof, assents. This certificate is not valid until
countersigned by the Transfer Agent and registered by the Registrar.
Witness, the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
Dated:
Countersigned and Registered:
BankBoston, N.A. Chairman and Chief Executive Officer
Transfer Agent
and Registrar
By [SEAL]
Authorized Signature
Chief Financial Officer and Treasurer
<PAGE> 2
INFINITY BROADCASTING CORPORATION
RESTRICTIONS ON TRANSFER AND VOTING. The Restated Certificate of Incorporation
of the Corporation, as amended, provides that, except as otherwise provided by
law, the shares of capital stock represented by this certificate are subject to
certain Alien ownership and transfer restrictions. Such restrictions limit the
transfer and the issuance of capital stock to Aliens, as well as the total
number of shares of capital stock that may be owned by Aliens and the percentage
of total voting power that may be directed or controlled by Aliens. In addition,
all shares of capital stock owned by Aliens shall be subject to redemption to
the extent necessary to comply with such Alien ownership restrictions. As used
herein, "Aliens" shall include (i) a person who is a citizen of a foreign
country, (ii) any entity organized under the laws of a foreign government, (iii)
a foreign government and (iv) a representative of, or an individual or entity
controlled by, any of the foregoing.
CORPORATE OPPORTUNITY POLICY. The Restated Certificate of Incorporation contains
provisions that, among other things, permit CBS Corporation and its subsidiaries
(other than the Corporation), without liability for the breach of any duty, to
engage in the same or similar business activities and lines of business as the
Corporation, to do business with customers and suppliers of the Corporation and
to employ or otherwise engage officers, directors and employees of the
Corporation. In addition, such provisions effectively create a presumption that
transactions constituting corporate opportunities for the Corporation may be
pursued instead by CBS Corporation and its subsidiaries, absent a clear
indication that such opportunities were directed to the Corporation.
The Corporation will furnish without charge to each stockholder who so requests,
the powers, designations, preferences and relative, participating, optional or
other special rights of each class of capital stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM -- as tenants in common UNIF GIFT MIN ACT- Custodian
TEN ENT -- as tenants by the entireties ----------------------------- ----------------------
JT TEN -- as joint tenants with right of (Cust) (Minor)
survivorship and not as tenants
in common under Uniform Gifts to Minors Act
-----------------------------
(State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _____________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
_____________________________ ________________________________________________
Please print or typewrite name and address, including postal zip code, of
assignee
________________________________________________________________________________
________________________________________________________________________________
shares
of the capital stock represented by the within certificate and do hereby
irrevocably constitute and appoint
_________________________________________ ____________________________________
Attorney
<PAGE> 3
to transfer the said shares on the books of the within-named Corporation with
full power of substitution in the premises.
Dated:_________________ NOTICE:_____________________________________________
The signature of this assignment must correspond with
the name as written upon the face of the certificate,
in every particular, without alteration or
enlargement, or any change whatever.
Signature(s) Guaranteed:______________________________________________________
THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO
S.E.C. RULE 17Ad-15.
______________________________________________________________________________
THE FOLLOWING MUST BE EXECUTED BY THE ASSIGNEE OF THIS CERTIFICATE BEFORE
TRANSFER MAY BE MADE ON THE BOOKS OF THE CORPORATION:
The undersigned hereby certifies that the assignee of the shares referred to in
the foregoing Assignment is
_________ a citizen of the United States of America ___________ an Alien
and that, if any other person can vote or control the right to vote such shares,
such other person is
_________ a citizen of the United States of America ___________ an Alien
Dated ________________________ Signature _____________________________________
<PAGE> 1
Exhibit 10.1
STOCK AND ASSET TRANSFER AGREEMENT
between
CBS BROADCASTING INC.
and
INFINITY BROADCASTING CORPORATION
Dated as of December 2, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I
Definitions
SECTION 1.01. Definitions.......................................................................... 2
SECTION 1.02. References........................................................................... 3
ARTICLE II
Transfer of Shares and Assets
SECTION 2.01. Transfer of Shares and Assets........................................................ 3
SECTION 2.02. Transferred Assets and Excluded Assets............................................... 3
SECTION 2.03. Assumption of Certain Liabilities.................................................... 5
SECTION 2.04. Consents of Third Parties............................................................ 6
SECTION 2.05. Closing.............................................................................. 6
ARTICLE III
Representations and Warranties of Transferor
SECTION 3.01. Organization......................................................................... 7
SECTION 3.02. Authorization........................................................................ 7
SECTION 3.03. No Conflicts or Violations; No Consents or Approvals Required........................ 8
SECTION 3.04. Title to Transferred Assets.......................................................... 8
SECTION 3.05. Contracts............................................................................ 9
SECTION 3.06. Transferred Shares................................................................... 9
ARTICLE IV
Representations and Warranties of Transferee
SECTION 4.01. Organization......................................................................... 10
SECTION 4.02. Authorization........................................................................ 10
SECTION 4.03. No Conflicts or Violations; No Consents or Approvals Required........................ 10
SECTION 4.04. Securities Act....................................................................... 11
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE V
Covenants
SECTION 5.01. Consents............................................................................. 11
SECTION 5.02. Expenses; Transfer Taxes............................................................. 11
SECTION 5.03. Collection of Receivables............................................................ 11
SECTION 5.04. Post-Closing Cooperation............................................................. 12
SECTION 5.05. Bulk Transfer Laws................................................................... 12
SECTION 5.06. Further Assurances................................................................... 12
ARTICLE VI
Conditions to Performance
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification...................................................................... 13
SECTION 7.02. Survival of Representations.......................................................... 13
ARTICLE VIII
Miscellaneous
SECTION 8.01. Entire Agreement; Amendment; Waiver; No Third Party Beneficiaries.................... 13
SECTION 8.02. Severability......................................................................... 13
SECTION 8.03. Governing Law........................................................................ 14
SECTION 8.04. Captions............................................................................. 14
SECTION 8.05. Counterparts......................................................................... 14
SECTION 8.06. Notices.............................................................................. 14
SECTION 8.07. Construction......................................................................... 15
</TABLE>
ii
<PAGE> 4
STOCK AND ASSET TRANSFER AGREEMENT, dated as of December 2, 1998, between
CBS Broadcasting Inc., a New York corporation ("Transferor"), and Infinity
Broadcasting Corporation, a Delaware corporation ("Transferee").
W I T N E S S E T H:
WHEREAS Westinghouse CBS Holding Company, Inc., a Delaware corporation
("CBS Holding"), is a direct wholly owned subsidiary of CBS Corporation, a
Pennsylvania corporation ("CBS"), Transferor is a direct wholly owned subsidiary
of CBS Holding and Transferee is a direct wholly owned subsidiary of Transferor;
WHEREAS (i) Group W Broadcasting, Inc., a Delaware corporation ("Group W")
that was a wholly owned subsidiary of CBS, has been merged (the "Group W
Merger") with and into CBS pursuant to an Agreement and Plan of Merger, dated as
of December 2, 1998, between Group W and CBS, and (ii) Group W Broadcasting,
L.P., a Delaware limited partnership that became a wholly owned subsidiary of
CBS following the Group W Merger ("Group W L.P."), has been dissolved by CBS;
WHEREAS (i) CBS has transferred (a) certain radio and radio-related assets,
including the assets that it acquired as a result of the Group W Merger, (b) all
of the issued and outstanding shares of common stock, par value $0.002 per
share, of Infinity Media Corporation (formerly Infinity Broadcasting
Corporation), a Delaware corporation ("Old Infinity Stock"), and (c) 333 shares
of common stock, par value $0.01 per share, and 212,793 shares of Junior
Preferred Stock, par value $0.01 share, of CBS Radio, Inc. (formerly American
Radio Systems Corporation), a Delaware corporation (collectively, the "CBS Radio
Stock"), to CBS Holding pursuant to a Stock and Asset Transfer Agreement, dated
as of December 2, 1998, between CBS and CBS Holding (the "CBS Stock and Asset
Transfer Agreement"), and (ii) CBS Holding has transferred such radio and
radio-related assets and such Old Infinity Stock and CBS Radio Stock to
Transferor pursuant to a Stock and Asset Transfer Agreement, dated as of
December 2, 1998, between CBS Holding and Transferor (the "CBS Holding Stock and
Asset Transfer Agreement");
<PAGE> 5
2
WHEREAS, as a result of the aforementioned transactions, Transferor is the
owner of (i) the Transferred Assets (as defined in Section 2.02(a)),(ii) all of
the issued and outstanding shares of Old Infinity Stock and (iii) the CBS Radio
Stock;
WHEREAS (i) Transferee desires to acquire and Transferor desires to
transfer to Transferee (a) the Transferred Assets and (b) the CBS Radio Stock
and all of the issued and outstanding shares of Old Infinity Stock
(collectively, the "Transferred Shares"), and (ii) Transferor desires to
transfer to Transferee, and Transferee agrees to assume, the Assumed Liabilities
(as defined in Section 2.03(a)), each upon the terms and subject to the
conditions hereinafter set forth;
WHEREAS, Transferee intends to amend and restate its Certificate of
Incorporation to provide that the shares of common stock in Transferee held by
Transferor will be converted into shares of Class B Common Stock, par value
$0.01 per share, of Transferee ("Class B Common Stock"), which will have five
votes per share; and
WHEREAS, for Federal income tax purposes, it is intended that the transfer
of the Transferred Assets and the Transferred Shares be in exchange for the
issuance of such Class B Common Stock and qualify as a tax-free transaction
under Section 351 of the Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. For purposes of this Agreement, each of the
following terms is defined in the Section set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
<S> <C>
"Assigned Contract" 3.05(a)
"Assumed Liabilities" 2.03(a)
"CBS Radio Assets" 2.02(a)(i)
"Closing" 2.05
"Closing Date" 2.05
</TABLE>
<PAGE> 6
3
<TABLE>
<S> <C>
"Contracts" 2.02(a)(v)
"Damages" 7.01
"Excluded Assets" 2.02(b)
"Excluded Liabilities" 2.03(b)
"Governmental Entity" 3.03
"Intercompany Agreement" 5.02
"Liens" 3.03
"Material Adverse Effect" 3.01
"Permitted Liens" 3.04(b)
"Third Party Claim" 7.05(a)
"Transferee" Recitals
"Transferor" Recitals
"Transferred Assets" 2.02(a)
"Transferred Shares" Recitals
</TABLE>
SECTION 1.02. References. Except as otherwise specifically indicated, all
references in this Agreement to Sections refer to Sections of this Agreement,
and all references to Schedules refer to Schedules attached hereto and all such
Schedules are incorporated herein by reference.
ARTICLE II
Transfer of Shares and Assets
SECTION 2.01. Transfer of Shares and Assets. Except as otherwise provided
in Sections 2.02(b) and 2.03(b), upon the terms and subject to the conditions of
this Agreement, Transferor does hereby dispose of, transfer, assign and deliver
to Transferee any and all of Transferor's right, title and interest in, to and
under the Transferred Assets and the Transferred Shares, and Transferee does
hereby acquire and accept from Transferor the Transferred Assets and the
Transferred Shares and does hereby assume the Assumed Liabilities.
SECTION 2.02. Transferred Assets and Excluded Assets. (a) The term
"Transferred Assets" means:
(i) all assets used primarily in connection with the operation of the
radio and outdoor advertising businesses of CBS, CBS Holding and Transferor
(collectively, the "CBS Radio Assets"), including, but not limited to:
(x)(I) all licenses, permits, authorizations and other approvals
issued by the Federal
<PAGE> 7
4
Communications Commission (the "FCC") referred to on Schedule
2.02(a)(i) hereto and (II) all other licenses, permits,
authorizations, approvals and applications issued primarily in
connection with such businesses; and
(y) all the broadcasting and transmission equipment used primarily in
connection with such businesses together with any replacements thereof
and additions as well as spare parts for such equipment or
replacements thereof, and any cabinets, consoles or other housing
located in the space occupied by such businesses to the extent any
such equipment is housed therein, all in its and their "as is, where
is" condition as of the date of this Agreement, subject to ordinary
wear and tear, less any retirements or dispositions thereof made (I)
in the ordinary course of business as to any portion thereof which is
no longer used or useful or (II) in connection with the acquisition of
equivalent replacement property of equivalent kind and value;
(ii) all files, records and logs in Transferor's possession relating
primarily to, and reasonably necessary or appropriate to the use of, the
CBS Radio Assets, including Transferor's public inspection files; provided,
however, that Transferor may retain copies of same; and
(iii) all contracts, leases, licenses, agreements, commitments and all
other arrangements, whether oral or written (collectively, the
"Agreements"), to which CBS, CBS Holding or Transferor is a party, or by
which CBS, CBS Holding or Transferor is bound, on the date hereof that are
used, held for use or intended to be used primarily in, or that arise
primarily out of, the operation of the CBS Radio Assets, but only to the
extent such Agreements by their terms are assignable or the parties hereto
succeed in obtaining any necessary consent(s) to such assignment (the
contracts assigned pursuant to this clause being hereinafter referred to
collectively as the "Contracts").
<PAGE> 8
5
(b) It is expressly understood and agreed that the Transferred Assets shall
not include the following (collectively, the "Excluded Assets"):
(i) CBS's ownership interest in, and all assets of, USA Digital Radio
Partners, L.P., a New York partnership;
(ii) cash, cash equivalents, prepaid amounts, bank deposits,
certificates of deposit, Treasury bills and other marketable securities or
similar investments;
(iii) tax or other refunds, all returns, reports, forms, documents or
memoranda relating to taxes and all causes of action or claims of
Transferor which accrued prior to the Closing Date;
(iv) all rights of Transferor under this Agreement and the agreements,
certificates and instruments delivered in connection with this Agreement;
(v) all records prepared in connection with the transfer of the CBS
Radio Assets;
(vi) all rights relating to the Excluded Liabilities;
(vii) any CBS Radio Bonds (as defined in the Intercompany Agreement)
owned by CBS;
(viii) personnel records of Transferor; and
(ix) any other assets set forth on Schedule 2.02(b)(ix).
SECTION 2.03. Assumption of Certain Liabilities. (a) Upon the terms and
subject to the conditions of this Agreement, Transferee shall assume, effective
as of the date hereof, and from and after the date hereof Transferee shall pay,
perform and discharge when due, all the liabilities, obligations and
commitments, whether express or implied, liquidated, absolute, accrued,
contingent or otherwise, or known or unknown, of CBS or any of its current or
previously owned subsidiaries based upon, relating to, in connection with or
arising out of (i) the Transferred Assets and (ii) the radio or outdoor
advertising businesses conducted by CBS or any of its current or previously
owned subsidiaries on or prior to the date hereof (the "Assumed
<PAGE> 9
6
Liabilities"), other than any Excluded Liabilities of Transferor.
(b) Notwithstanding Section 2.03(a), or any other provision of this
Agreement, Transferee shall not assume any liability, obligation or commitment
of CBS, CBS Holding or Transferor that relates primarily to, or that arises
primarily out of, any Excluded Asset, or that arises out of the distribution to,
or ownership by, Transferor of the Excluded Assets or associated with the
realization of the benefits of any of the Excluded Assets (the "Excluded
Liabilities").
SECTION 2.04. Consents of Third Parties. (a) Notwithstanding anything in
this Agreement to the contrary, this Agreement shall not constitute an agreement
to assign any asset or any claim or right or any benefit arising under or
resulting from such asset if an attempted assignment thereof, without the
consent of a third party, would constitute a breach or other contravention of
the rights of such third party, would be ineffective with respect to any party
to an agreement concerning such asset or would in any way adversely affect the
rights of Transferor or, upon transfer, Transferee in, to or under such asset.
If any transfer or assignment by Transferor to, or any assumption by Transferee
of, any interest in, or liability, obligation or commitment under, any asset
requires the consent of a third party, then such assignment or assumption shall
be made subject to such consent being obtained.
(b) If any such consent has not been obtained prior to the date hereof,
Transferor and Transferee shall cooperate (at their own expense) in any lawful
and reasonable arrangement reasonably proposed by Transferor under which
Transferee shall obtain the economic claims, rights and benefits under the
asset, claim or right with respect to which the consent has not been obtained in
accordance with this Agreement. Such reasonable arrangement may include (i) the
subcontracting, sublicensing or subleasing to Transferee of any and all rights
of Transferor against the other party to such third-party agreement arising out
of a breach or cancelation thereof by the other party, and (ii) the enforcement
by Transferor of such rights.
SECTION 2.05. Closing. The closing (the "Closing") of the transactions
contemplated by this
<PAGE> 10
7
Agreement shall be held at the offices of Cravath, Swaine & Moore, 825 Eighth
Avenue, New York, New York, at 10:00 a.m. New York City time, on the date
hereof, or at such other time, date and place as the parties shall agree upon
(the date of the Closing being referred to herein as the "Closing Date").
Subject to satisfaction of the conditions set forth in Article VI, at the
Closing, Transferor shall deliver, or cause to be delivered, to Transferee one
or more certificates representing the Transferred Shares, duly endorsed in blank
or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed or such other
documentation acceptable to Transferee, in its sole discretion, evidencing
Transferee's ownership of the Transferred Shares as of the Closing.
The parties hereto agree that all transactions at the Closing shall be
deemed to take place simultaneously, and no delivery or payment shall be deemed
to have been made until all transactions are completed and all documents are
delivered.
ARTICLE III
Representations and Warranties of Transferor
Transferor hereby represents, warrants and agrees as follows to Transferee:
SECTION 3.01. Organization. Transferor is a corporation duly organized,
validly existing and in good standing under the laws of the State of New York.
Transferor has full corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold its properties and assets and to conduct its
business as presently conducted, other than any such items the absence of which,
individually or in the aggregate, have not had and are not reasonably expected
to have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of Transferor and its subsidiaries taken
as a whole (a "Material Adverse Effect").
SECTION 3.02. Authorization. Transferor has full corporate power and
authority to execute and deliver this Agreement and all other agreements,
certificates and
<PAGE> 11
8
documents contemplated hereby to be executed and delivered by Transferor and to
consummate the transactions contemplated hereby and thereby. Transferor has
taken all action required by its organizational documents to authorize the
execution and delivery of this Agreement and all other agreements, certificates
and documents contemplated hereby to be executed and delivered by Transferor and
to authorize the consummation of the transactions contemplated hereby and
thereby. This Agreement has been duly and validly executed and delivered by
Transferor and is a legal, valid and binding obligation of Transferor,
enforceable against it in accordance with its terms.
SECTION 3.03. No Conflicts or Violations; No Consents or Approvals
Required. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with or
violate any provision of the organizational documents of Transferor, (ii)
conflict with or violate any statute, law, rule, regulation, ordinance, order,
writ, injunction, judgment or decree applicable to Transferor, or (iii) conflict
with or result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would constitute a default) under any agreement
or other instrument to which Transferor is a party or to which any of the
Transferred Assets is subject that would result in the creation of any mortgage,
pledge, lien, claim, charge or other encumbrance of any kind (collectively,
"Liens") on any of the Transferred Assets, other than, in the case of clauses
(ii) and (iii) above, any such items or Liens that, individually or in the
aggregate, have not had and are not reasonably expected to have a Material
Adverse Effect. No notice, declaration, report or other filing or registration
with, and no waiver, consent, approval or authorization of, any Federal, state,
local or foreign court or governmental agency, authority, instrumentality or
regulatory body (other than the applicable consents granted by the FCC) (each a
"Governmental Entity") or any other person or entity is required to be made or
obtained by Transferor in connection with the execution, delivery and
performance of this Agreement by Transferor or the consummation by Transferor of
the transactions contemplated hereby, except to the extent that the failure to
make or obtain any such notice, declaration, report, filing, registration,
waiver, consent, approval or authorization has not had or is not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
<PAGE> 12
9
SECTION 3.04. Title to Transferred Assets. (a) Transferor has good and
valid title to the Transferred Assets, free and clear of any Liens other than
Permitted Liens, except to the extent that the failure to have good and valid
title to such Transferred Assets would not reasonably be expected to have a
Material Adverse Effect.
(b) The term "Permitted Liens" shall mean (i) Liens for taxes, assessments
or governmental charges or levies not yet due and delinquent or being diligently
contested in good faith, (ii) statutory Liens of carriers, warehousemen,
mechanics, materialmen and the like arising in the ordinary course of business
that do not impair in any material respect the use of the Transferred Assets in
the manner in which they are currently used and (iii) Liens previously disclosed
to Transferee and set forth on Schedule 3.04(b) hereto.
SECTION 3.05. Contracts. Each of the Transferred Assets that is a contract
(an "Assigned Contract") is valid and binding, and all the material provisions
thereof are enforceable in accordance with their terms (subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and
other similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including concepts of materiality,
reasonableness, good faith and fair dealing, regardless of whether considered in
a proceeding in equity or at law), except to the extent that the failure to be
valid, binding or enforceable has not had and is not reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. Transferor is
not, and to Transferor's knowledge no other party thereto is, in default in the
performance, observance or fulfillment of any such Assigned Contract; and, to
the knowledge of Transferor, no event has occurred which with or without the
giving of notice or lapse of time, or both, would constitute a default
thereunder, other than with respect to any default or event that, individually
or in the aggregate, have not had and are not expected to have a Material
Adverse Effect. Except as previously disclosed by Transferor to Transferee,
Transferor has not received any notice of the intention of any party to
terminate a material Assigned Contract of Transferor.
SECTION 3.06. Transferred Shares. Transferor has good and valid title to
the Transferred Shares, free and clear of any Liens. Assuming Transferee has the
requisite power and authority to be the lawful owner of the
<PAGE> 13
10
Transferred Shares, upon delivery to Transferee at the Closing of certificates
representing the Transferred Shares, duly endorsed by Transferor for transfer to
Transferee, and upon Transferor's receipt of certificates representing the
Transferee Shares, good and valid title to the Transferred Shares will pass to
Transferee, free and clear of any Liens other than Permitted Liens or Liens
arising from acts of Transferee or its affiliates. Other than this Agreement,
immediately following consummation of the transactions contemplated hereby, the
Transferred Shares will not be subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the
Transferred Shares, other than any voting trust agreement or contract,
agreement, arrangement, commitment or understanding entered into by Transferee
or its affiliates.
ARTICLE IV
Representations and Warranties of Transferee
Transferee hereby represents, warrants and agrees as follows to Transferor:
SECTION 4.01. Organization. Transferee is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Transferee has full corporate power and authority and possesses all governmental
franchises, licenses, permits, authorizations and approvals necessary to enable
it to own, lease or otherwise hold its properties and assets and to conduct its
business as presently conducted, other than any such items the absence of which,
individually or in the aggregate, have not had and are not reasonably expected
to have a Material Adverse Effect.
SECTION 4.02. Authorization. Transferee has full corporate power and
authority to execute and deliver this Agreement and all other agreements,
certificates and documents contemplated hereby to be executed and delivered by
Transferee and to consummate the transactions contemplated hereby and thereby.
Transferee has taken all corporate action required by its organizational
documents to authorize the execution and delivery of this Agreement and all
other agreements, certificates and documents
<PAGE> 14
11
contemplated hereby to be executed and delivered by Transferee and to authorize
the consummation of the transactions contemplated hereby and thereby. This
Agreement has been duly and validly executed and delivered by Transferee and is
a legal, valid and binding obligation of Transferee, enforceable against it in
accordance with its terms.
SECTION 4.03. No Conflicts or Violations; No Consents or Approvals
Required. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with or
violate any provision of the organizational documents of Transferee, (ii)
conflict with or violate any statute, law, rule, regulation, ordinance, order,
writ, injunction, judgment or decree applicable to Transferee, or (iii) conflict
with or result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would constitute a default) under any agreement
or other instrument to which Transferee is a party, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably expected to have a Material
Adverse Effect. No material notice, declaration, report or other filing or
registration with, and no material waiver, consent, approval or authorization
of, any Governmental Entity or any other person or entity is required to be made
or obtained by Transferee in connection with the execution, delivery and
performance of this Agreement by Transferee or the consummation by Transferee of
the transactions contemplated hereby, except to the extent that the failure to
make or obtain any such notice, declaration, report, filing, registration,
waiver, consent, approval or authorization, has not had or is not reasonably
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.04. Securities Act. The Transferred Shares received by Transferee
pursuant to this Agreement are being acquired for investment only and not with a
view to any public distribution thereof, and Transferee shall not offer to sell
or otherwise dispose of the Transferred Shares so acquired by it in violation of
any registration requirements of the Securities Act of 1933, as amended.
<PAGE> 15
12
ARTICLE V
Covenants
SECTION 5.01. Consents. Each party hereto shall, and shall cause its
affiliates to, use commercially reasonable efforts (at its own expense) to
obtain, and to cooperate in obtaining, all consents from third parties necessary
or appropriate to permit the transfer of the Transferred Assets to, and the
assumption of the Assumed Liabilities by, Transferee; provided, however, that
the parties shall not be required to pay or commit to pay any amount to (or
incur any obligation in favor of) any person from whom any such consent may be
required (other than nominal filing or application fees).
SECTION 5.02. Expenses; Transfer Taxes. All costs, expenses and taxes
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid in accordance with the provisions of Article II of the
Intercompany Agreement to be entered into on or about December 15, 1998, between
CBS and Transferee (the "Intercompany Agreement"), including all costs, expenses
and taxes incurred pursuant to Sections 5.01 and 5.04.
SECTION 5.03. Collection of Receivables. From and after the date hereof,
Transferee shall have the right and authority to collect for its own account all
receivables and other related items that are included in the Transferred Assets
transferred to it pursuant to Section 2.01 and to endorse with the name of CBS
or CBS Broadcasting, as applicable, any checks or drafts received with respect
to any receivables or such other related items. Transferor shall promptly
deliver to Transferee any cash or other property received directly or indirectly
by it with respect to such receivables after the consummation of the Initial
Public Offering (as defined in the Intercompany Agreement) and such other
related items, including any amounts payable as interest.
SECTION 5.04. Post-Closing Cooperation. (a) Transferor and Transferee shall
cooperate with each other, and shall cause their officers, employees, agents,
auditors and representatives to cooperate with each other to ensure the orderly
transfer of the Transferred Assets to Transferee, and the assumption by
Transferee of the Assumed Liabilities, and to minimize any disruption to the
business
<PAGE> 16
13
of Transferor that might result from the transactions contemplated hereby.
(b) Neither party shall be required by this Section 5.04 to take any action
that would unreasonably interfere with the conduct of its business or
unreasonably disrupt its normal operations.
SECTION 5.05. Bulk Transfer Laws. Transferee hereby waives compliance by
Transferor with the provisions of any so-called "bulk transfer law" of any
jurisdiction in connection with the transfer of the Transferred Assets under
this Agreement.
SECTION 5.06. Further Assurances. From time to time, as and when requested
by any party, each party shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments and shall take, or cause to be
taken, all such further or other actions (subject to Section 5.01), as such
other party may reasonably deem necessary or desirable to consummate the
transactions contemplated by this Agreement, including, in the case of
Transferor, executing and delivering to Transferee such assignments, deeds,
bills of sale, consents and other instruments as Transferee or its counsel may
reasonably request as necessary or desirable for such purpose.
ARTICLE VI
Conditions to Performance
The obligation of Transferor to transfer the Transferred Assets and the
Transferred Shares to Transferee is subject to the consummation of (i) the Group
W Merger and the dissolution of Group W L.P., (ii) the transfer of the
Transferred Assets and the Transferred Shares from CBS to CBS Holding pursuant
to the CBS Stock and Asset Transfer Agreement, and (iii) the transfer of the
Transferred Assets and the Transferred Shares from CBS Holding to Transferor
pursuant to the CBS Holding Stock and Asset Transfer Agreement.
<PAGE> 17
14
ARTICLE VII
Indemnification
SECTION 7.01. Indemnification. Each of Transferor and Transferee will be an
Indemnified Party under the Intercompany Agreement and, accordingly, will
benefit from the indemnification provisions thereunder.
SECTION 7.02. Survival of Representations. The representations, warranties,
covenants and agreements contained in this Agreement shall survive the date
hereof and shall terminate at the close of business on the first anniversary
following the date hereof unless otherwise expressly provided.
ARTICLE VIII
Miscellaneous
SECTION 8.01. Entire Agreement; Amendment; Waiver; No Third Party
Beneficiaries. This Agreement and the Schedules annexed hereto constitute the
entire understanding between the parties with respect to the subject matter
hereof, and supersedes all other understandings and negotiations with respect
thereto. This Agreement may be amended only in a writing signed by both parties
hereto. Any provision of this Agreement may be waived only in a writing signed
by the party to be charged with such waiver. No course of dealing between the
parties shall be effective to amend or waive any provision of this Agreement.
This Agreement shall not be assignable by Transferee without the prior written
consent of Transferor. Except as provided in Sections 7.01 and 7.02, this
Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any person (including any former subsidiary of CBS), other than the
parties hereto and such assigns, any legal or equitable rights hereunder.
SECTION 8.02. Severability. In the event that any provision contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any jurisdiction, such provision shall be ineffective as to
such jurisdiction to the extent of such invalidity, illegality or
unenforceability without invalidating or affecting the remaining provisions
hereof or affecting the
<PAGE> 18
15
validity, legality or enforceability of such provision in any other
jurisdiction.
SECTION 8.03. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
SECTION 8.04. Captions. The captions in this Agreement are for purposes of
reference only and shall not limit or otherwise affect the interpretation
hereof.
SECTION 8.05. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as effective
as delivery of a manually signed counterpart of this Agreement.
SECTION 8.06. Notices. All notices, requests and other communications to
any party hereunder shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
(i) if to Transferor, to:
CBS Broadcasting Inc.
40 West 57th Street
New York, New York 10019
Telephone: (212) 975-4915
Facsimile: (212) 597-4031
Attention: Louis J. Briskman, Esq.
Executive Vice President and
General Counsel
<PAGE> 19
16
(ii) if to Transferee, to:
Infinity Broadcasting Corporation
40 West 57th Street
New York, New York 10019
Telephone: (212) 314-9215
Facsimile: (212) 314-9336
Attention: Farid Suleman
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
SECTION 8.07. Construction. Notwithstanding any provision in this Agreement
to the contrary, in the event and to the extent that there shall be a conflict
between the provisions of this Agreement and the provisions of the Tax Sharing
Agreement to be entered into on or about December 15, 1998, between CBS and
Transferee, such Tax Sharing Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as for the day and year first above written.
CBS BROADCASTING INC.,
by____________________________________
Name:
Title:
INFINITY BROADCASTING
CORPORATION,
by____________________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.2
STOCK TRANSFER AGREEMENT
between
CBS CORPORATION
and
INFINITY BROADCASTING CORPORATION
Dated as of December 3, 1998
<PAGE> 2
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions
SECTION 1.01. Definitions................................................ 1
SECTION 1.02. References................................................. 2
ARTICLE II
Transfer of Shares
SECTION 2.01. Transfer of Shares......................................... 2
SECTION 2.02. Consideration.............................................. 2
SECTION 2.03. Closing.................................................... 2
ARTICLE III
Representations and Warranties of Transferor
SECTION 3.01. Organization............................................... 3
SECTION 3.02. Authorization.............................................. 3
SECTION 3.03. No Conflicts or Violations; No Consents or Approvals
Required................................................... 3
SECTION 3.04. Transferred Shares......................................... 4
SECTION 3.05. Securities Act............................................. 5
ARTICLE IV
Representations and Warranties of Transferee
SECTION 4.01. Organization............................................... 5
SECTION 4.02. Authorization.............................................. 5
SECTION 4.03. No Conflicts or Violations; No Consents or Approvals
Required................................................... 5
SECTION 4.04. Transferee Shares.......................................... 6
SECTION 4.05. Securities Act............................................. 6
ARTICLE V
Conditions to Performance................................. 7
i
<PAGE> 3
ARTICLE VI
Indemnification
SECTION 6.01. Indemnification.......................................... 7
SECTION 6.02. Survival of Representations.............................. 7
ARTICLE VII
Miscellaneous
SECTION 7.01. Entire Agreement; Amendment; Waiver...................... 7
SECTION 7.02. Severability............................................. 8
SECTION 7.03. Governing Law............................................ 8
SECTION 7.04. Captions................................................. 8
SECTION 7.05. Counterparts............................................. 8
SECTION 7.06. Notices.................................................. 8
SECTION 7.07. Construction............................................. 9
ii
<PAGE> 4
STOCK TRANSFER AGREEMENT, dated as of December 3, 1998,
between CBS Corporation, a Pennsylvania corporation ("Transferor"), and Infinity
Broadcasting Corporation, a Delaware corporation ("Transferee").
W I T N E S S E T H:
WHEREAS, Transferor is the owner of 667 of the issued and
outstanding shares of common stock, par value $0.01 per share, and 425,585
shares of Junior Preferred Stock, par value $0.01 per share, of CBS Radio, Inc.
(formerly American Radio Systems Corporation), a Delaware Corporation
(collectively, the "CBS Radio Stock");
WHEREAS, Transferee desires to acquire and Transferor desires
to transfer to Transferee the CBS Radio Stock (the "Transferred Shares") upon
the terms and subject to the conditions hereinafter set forth;
WHEREAS, as consideration for the transfer of the Transferred
Shares from Transferor to Transferee, Transferee intends to issue 90 shares of
common stock, par value $1.00 per share ("Common Stock"), of Transferee to
Transferor;
WHEREAS, Transferee intends to amend and restate its
Certificate of Incorporation to provide that the shares of Common Stock issued
by Transferee hereunder to Transferor will be converted into shares of Class B
Common Stock, par value $0.01, of Transferee ("Class B Common Stock"), which
will have five votes per share; and
WHEREAS, for Federal income tax purposes, it is intended that
the transfer of the Transferred Shares be in exchange for the issuance of shares
of Class B Common Stock and qualify as a tax-free transaction under Section 351
of the Internal Revenue Code of 1986, as amended.
<PAGE> 5
2
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. For purposes of this Agreement,
each of the following terms is defined in the Section set forth opposite such
term:
Term Section
- ---- -------
"Closing" 2.03
"Closing Date" 2.03
"Damages" 7.01
"Governmental Entity" 3.03
"Liens" 3.04(a)
"Material Adverse Effect" 3.01
"Third Party Claim" 7.05(a)
"Transferee" Recitals
"Transferee Shares" 2.02
"Transferor" Recitals
"Transferred Shares" Recitals
SECTION 1.02. References. Except as otherwise specifically
indicated, all references in this Agreement to Sections refer to Sections of
this Agreement, and all references to Schedules refer to Schedules attached
hereto and all such Schedules are incorporated herein by reference.
ARTICLE II
Transfer of Shares
SECTION 2.01. Transfer of Shares. Except as otherwise provided
below, upon the terms and subject to the conditions of this Agreement,
Transferor does hereby dispose of, transfer, assign and deliver to Transferee,
and Transferee does hereby acquire and accept from Transferor, all of
Transferor's right, title and interest in, to and under the Transferred Shares,
in exchange for the consideration set forth in Section 2.02 below.
SECTION 2.02. Consideration. On the date hereof, in exchange
for the Transferred Shares, Transferee shall deliver, or cause to be delivered,
to Transferor
<PAGE> 6
3
certificates representing 90 shares of newly-issued common stock, par value
$1.00 per share, of Transferee (the "Transferee Shares"), evidencing
Transferor's ownership of the Transferee Shares as of the Closing.
SECTION 2.03. Closing. The closing (the "Closing") of the
transactions contemplated by this Agreement shall be held at the offices of
Cravath, Swaine & Moore, 825 Eighth Avenue, New York, New York, at 10:00 a.m.
New York City time, on the date hereof, or at such other time, date and place as
the parties shall agree upon (the date of the Closing being referred to herein
as the "Closing Date"). Subject to satisfaction of the conditions set forth in
Article V, at the Closing:
(a) Transferor shall deliver, or cause to be delivered, to
Transferee certificates representing the Transferred Shares, duly endorsed in
blank or accompanied by stock powers duly endorsed in blank in proper form for
transfer, with appropriate transfer stamps, if any, affixed or such other
documentation acceptable to Transferee, in its sole discretion, evidencing
Transferee's ownership of the Transferred Shares as of the Closing; and
(b) Transferee shall deliver, or cause to be delivered, to
Transferor certificates representing the Transferee Shares, as set forth in
Section 2.02.
The parties hereto agree that all transactions at the Closing
shall be deemed to take place simultaneously, and no delivery or payment shall
be deemed to have been made until all transactions are completed and all
documents are delivered.
ARTICLE III
Representations and Warranties of Transferor
Transferor hereby represents, warrants and agrees as follows
to Transferee:
SECTION 3.01. Organization. Transferor is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. Transferor has full corporate power and authority
and possesses all governmental franchises, licenses, permits, authorizations and
approvals necessary to enable it to own,
<PAGE> 7
4
lease or otherwise hold its properties and assets and to conduct its business as
presently conducted, other than any such items the absence of which,
individually or in the aggregate, have not had and are not reasonably expected
to have a material adverse effect on the business, assets, condition (financial
or otherwise) or results of operations of Transferor and its subsidiaries taken
as a whole (a "Material Adverse Effect").
SECTION 3.02. Authorization. Transferor has full corporate
power and authority to execute and deliver this Agreement and all other
agreements, certificates and documents contemplated hereby to be executed and
delivered by Transferor and to consummate the transactions contemplated hereby
and thereby. Transferor has taken all action required by its organizational
documents to authorize the execution and delivery of this Agreement and all
other agreements, certificates and documents contemplated hereby to be executed
and delivered by Transferor and to authorize the consummation of the
transactions contemplated hereby and thereby. This Agreement has been duly and
validly executed and delivered by Transferor and is a legal, valid and binding
obligation of Transferor, enforceable against it in accordance with its terms.
SECTION 3.03. No Conflicts or Violations; No Consents or
Approvals Required. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with or
violate any provision of the organizational documents of Transferor, (ii)
conflict with or violate any statute, law, rule, regulation, ordinance, order,
writ, injunction, judgment or decree applicable to Transferor, or (iii) conflict
with or result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would constitute a default) under any agreement
or other instrument to which Transferor is a party other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably expected to have a Material
Adverse Effect. No notice, declaration, report or other filing or registration
with, and no waiver, consent, approval or authorization of, any Federal, state,
local or foreign court or governmental agency, authority, instrumentality or
regulatory body (each a "Governmental Entity") or any other person or entity is
required to be made or obtained by Transferor in connection with the execution,
delivery and performance of this Agreement by Transferor or the
<PAGE> 8
5
consummation by Transferor of the transactions contemplated hereby, except to
the extent that the failure to make or obtain any such notice, declaration,
report, filing, registration, waiver, consent, approval or authorization has not
had or is not reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect.
SECTION 3.04. Transferred Shares. Transferor has good and
valid title to the Transferred Shares, free and clear of any mortgage, pledge,
lien, claim, charge or other encumbrance of any kind (collectively, "Liens").
Assuming Transferee has the requisite power and authority to be the lawful owner
of the Transferred Shares, upon delivery to Transferee at the Closing of
certificates representing the Transferred Shares, duly endorsed by Transferor
for transfer to Transferee, and upon Transferor's receipt of certificates
representing the Transferee Shares, good and valid title to the Transferred
Shares will pass to Transferee, free and clear of any Liens other than Liens
arising from acts of Transferee or its affiliates. Other than this Agreement,
immediately following consummation of the transactions contemplated hereby, the
Transferred Shares will not be subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the
Transferred Shares, other than any voting trust agreement or contract,
agreement, arrangement, commitment or understanding entered into by Transferee
or its affiliates.
SECTION 3.05. Securities Act. The Transferee Shares received
by Transferor pursuant to this Agreement are being acquired for investment only
and not with a view to any public distribution thereof, and Transferor shall not
offer to sell or otherwise dispose of the Transferee Shares so acquired by it in
violation of any registration requirements of the Securities Act of 1933, as
amended.
ARTICLE IV
Representations and Warranties of Transferee
Transferee hereby represents, warrants and agrees as follows
to Transferor:
<PAGE> 9
6
SECTION 4.01. Organization. Transferee is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Transferee has full corporate power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary to enable it to own, lease or otherwise hold its properties and assets
and to conduct its business as presently conducted, other than any such items
the absence of which, individually or in the aggregate, have not had and are not
reasonably expected to have a Material Adverse Effect.
SECTION 4.02. Authorization. Transferee has full corporate
power and authority to execute and deliver this Agreement and all other
agreements, certificates and documents contemplated hereby to be executed and
delivered by Transferee and to consummate the transactions contemplated hereby
and thereby. Transferee has taken all corporate action required by its
organizational documents to authorize the execution and delivery of this
Agreement and all other agreements, certificates and documents contemplated
hereby to be executed and delivered by Transferee and to authorize the
consummation of the transactions contemplated hereby and thereby. This Agreement
has been duly and validly executed and delivered by Transferee and is a legal,
valid and binding obligation of Transferee, enforceable against it in accordance
with its terms.
SECTION 4.03. No Conflicts or Violations; No Consents or
Approvals Required. Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) conflict with or
violate any provision of the organizational documents of Transferee, (ii)
conflict with or violate any statute, law, rule, regulation, ordinance, order,
writ, injunction, judgment or decree applicable to Transferee, or (iii) conflict
with or result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would constitute a default) under any agreement
or other instrument to which Transferee is a party, other than, in the case of
clauses (ii) and (iii) above, any such items that, individually or in the
aggregate, have not had and are not reasonably expected to have a Material
Adverse Effect. No notice, declaration, report or other filing or registration
with, and no waiver, consent, approval or authorization of, any Governmental
Entity or any other person or entity is required to be made or obtained by
<PAGE> 10
7
Transferee in connection with the execution, delivery and performance of this
Agreement by Transferee or the consummation by Transferee of the transactions
contemplated hereby, except to the extent that the failure to make or obtain any
such notice, declaration, report, filing, registration, waiver, consent,
approval or authorization has not had or is not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
SECTION 4.04. Transferee Shares. Assuming Transferor has the
requisite power and authority to be the lawful owner of the Transferee Shares,
upon delivery to Transferor of certificates representing the Transferee Shares
and upon Transferee's receipt of the Transferred Assets and certificates
representing the Transferred Shares, good and valid title to the Transferee
Shares will pass to Transferor free and clear of any Liens, other than Liens
arising from acts of Transferor or its affiliates. Other than this Agreement,
immediately following consummation of the transactions contemplated hereby, the
Transferee Shares will not be subject to any voting trust agreement or other
contract, agreement, arrangement, commitment or understanding, including any
such agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the
Transferee Shares, other than any voting trust agreement or contract, agreement,
arrangement, commitment or understanding entered into by Transferor or its
affiliates.
SECTION 4.05. Securities Act. The Transferred Shares received
by Transferee pursuant to this Agreement are being acquired for investment only
and not with a view to any public distribution thereof, and Transferee shall not
offer to sell or otherwise dispose of the Transferred Shares so acquired by it
in violation of any registration requirements of the Securities Act of 1933, as
amended.
<PAGE> 11
8
ARTICLE V
Conditions to Performance
The obligation of Transferor to transfer the Transferred
Shares to Transferee is subject to the consummation of the transfer of (i) the
Transferred Assets (as such term is defined in the Stock and Asset Transfer
Agreement, dated as of December 2, 1998, between CBS Broadcasting Inc., a New
York corporation, and Transferee (the "CBS Broadcasting Stock and Asset Transfer
Agreement")) and (ii) all of the issued and outstanding shares of common stock,
par value $0.002 per share, of Infinity Media Corporation (formerly Infinity
Broadcasting Corporation), a Delaware corporation, from CBS Broadcasting to
Transferee, pursuant to the CBS Broadcasting Stock and Asset Transfer Agreement.
ARTICLE VI
Indemnification
SECTION 6.01. Indemnification. Each of Transferor and
Transferee will be an Indemnified Party under the Intercompany Agreement to be
entered into on or about December 15, 1998, between Transferor and Transferee
and, accordingly, will benefit from the indemnification provisions thereunder.
SECTION 6.02. Survival of Representations. The
representations, warranties, covenants and agreements contained in this
Agreement shall survive the date hereof and shall terminate at the close of
business on the first anniversary following the date hereof unless otherwise
expressly provided.
ARTICLE VII
Miscellaneous
SECTION 7.01. Entire Agreement; Amendment; Waiver; No Third
Party Beneficiaries. This Agreement and the Schedules annexed hereto constitute
the entire understanding between the parties with respect to the subject matter
hereof, and supersedes all other understandings and negotiations with respect
thereto. This
<PAGE> 12
9
Agreement may be amended only in a writing signed by both parties hereto. Any
provision of this Agreement may be waived only in a writing signed by the party
to be charged with such waiver. No course of dealing between the parties shall
be effective to amend or waive any provision of this Agreement. This Agreement
shall not be assignable by Transferee without the prior written consent of
Transferor. Except as provided in Sections 6.01 and 6.02, this Agreement is for
the sole benefit of the parties hereto and their permitted assigns and nothing
herein expressed or implied shall give or be construed to give to any person
(including any former subsidiary of Transferor), other than the parties hereto
and such assigns, any legal or equitable rights hereunder.
SECTION 7.02. Severability. In the event that any provision
contained in this Agreement shall for any reason be held to be invalid, illegal
or unenforceable in any jurisdiction, such provision shall be ineffective as to
such jurisdiction to the extent of such invalidity, illegality or
unenforceability without invalidating or affecting the remaining provisions
hereof or affecting the validity, legality or enforceability of such provision
in any other jurisdiction.
SECTION 7.03. Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York.
SECTION 7.04. Captions. The captions in this Agreement are for
purposes of reference only and shall not limit or otherwise affect the
interpretation hereof.
SECTION 7.05. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Delivery of an
executed signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.
SECTION 7.06. Notices. All notices, requests and other
communications to any party hereunder shall be deemed given if delivered
personally, telecopied (which is confirmed) or sent by overnight courier
(providing proof of delivery) to the parties at the following addresses (or at
<PAGE> 13
10
such other address for a party as shall be specified by like notice):
(i) if to Transferor, to:
CBS Corporation
51 West 52nd Street
New York, New York 10019
Telephone: (212) 975-4915
Facsimile: (212) 597-4031
Attention: Louis J. Briskman, Esq.
Executive Vice President and
General Counsel
(ii) if to Transferee, to:
Infinity Broadcasting Corporation
40 West 57th Street
New York, New York 10019
Telephone: (212) 314-9215
Facsimile: (212) 314-9336
Attention: Farid Suleman
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
SECTION 7.07. Construction. Notwithstanding any provision in
this Agreement to the contrary, in the event and to the extent that there shall
be a conflict between the provisions of this Agreement and the provisions of the
Tax Sharing Agreement to be entered into on or about December 15, 1998, between
Transferor and Transferee, such Tax Sharing Agreement shall control.
<PAGE> 14
11
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as for the day and year first above written.
CBS CORPORATION,
by
___________________________
Name:
Title:
INFINITY BROADCASTING
CORPORATION,
by
___________________________
Name:
Title:
<PAGE> 1
EXHIBIT 10.3
INTERCOMPANY AGREEMENT
between
CBS CORPORATION
and
INFINITY BROADCASTING CORPORATION
Dated as of December [ ], 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Definitions
SECTION 1.01. Definitions.......................................................................... 2
SECTION 1.02. Other Definitional Provisions........................................................ 13
ARTICLE II
Payment of Transaction Costs......................................................... 13
ARTICLE III
Services and Operations
SECTION 3.01. Services............................................................................. 14
SECTION 3.02. Expansion, Reduction or Termination of Services...................................... 15
SECTION 3.03. Payment of Expenses.................................................................. 15
SECTION 3.04. Employees............................................................................ 17
SECTION 3.05. Real Property; Leases; Operating Assets.............................................. 20
SECTION 3.06. Insurance............................................................................ 23
SECTION 3.07. Operations........................................................................... 24
SECTION 3.08. Further Assurances; No Agency........................................................ 25
SECTION 3.09. Limitation of Liability.............................................................. 25
SECTION 3.10. Competition.......................................................................... 26
ARTICLE IV
Use of Proceeds of Initial Public Offering........................................... 26
ARTICLE V
Registration Rights
SECTION 5.01. Demand Registration.................................................................. 27
SECTION 5.02. Piggyback Registration............................................................... 29
</TABLE>
<PAGE> 3
ii
<TABLE>
<CAPTION>
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----
<S> <C>
SECTION 5.03. Hold Back Agreement.................................................................. 31
SECTION 5.04. Registration Procedures.............................................................. 31
SECTION 5.05. Registration Expenses................................................................ 36
SECTION 5.06. Underwriting Requirements............................................................ 36
SECTION 5.07. Transfer of Registration Rights...................................................... 37
ARTICLE VI
Trademark Agreements................................................................. 37
ARTICLE VII
Information
SECTION 7.01. Provision of Corporate Records....................................................... 37
SECTION 7.02. Access to Information................................................................ 38
SECTION 7.03. Reimbursement; Other Matters......................................................... 38
SECTION 7.04. Confidentiality...................................................................... 38
SECTION 7.05. Destruction of Records............................................................... 39
ARTICLE VIII
Assumption and Satisfaction of Liabilities........................................... 40
ARTICLE IX
Indemnification
SECTION 9.01. General Cross Indemnification........................................................ 40
SECTION 9.02. Registration Statement Indemnification............................................... 41
SECTION 9.03. Limitations on Indemnification Obligations........................................... 43
SECTION 9.04. Procedures for Indemnification....................................................... 43
SECTION 9.05. Indemnification Payments............................................................. 45
SECTION 9.06. Other Adjustments.................................................................... 45
</TABLE>
<PAGE> 4
iii
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE X
Tax Indemnification
SECTION 10.01. Intercompany Transfers of Property and Services..................................... 46
SECTION 10.02. Special Procedures Regarding Tax Claims............................................. 46
SECTION 10.03. Tax-Free Spin-Off................................................................... 47
ARTICLE XI
Term of Agreement
SECTION 11.01. Termination......................................................................... 47
SECTION 11.02. Effect of Termination............................................................... 48
SECTION 11.03. Survival of Termination............................................................. 49
ARTICLE XII
Miscellaneous
SECTION 12.01. Complete Agreement; Construction.................................................... 49
SECTION 12.02. Ancillary Agreements................................................................ 49
SECTION 12.03. Counterparts........................................................................ 50
SECTION 12.04. Notices............................................................................. 50
SECTION 12.05. Waivers............................................................................. 50
SECTION 12.06. Amendments.......................................................................... 50
SECTION 12.07. Assignment.......................................................................... 51
SECTION 12.08. Successors and Assigns.............................................................. 51
SECTION 12.09. Subsidiaries........................................................................ 51
SECTION 12.10. Third Party Beneficiaries........................................................... 51
SECTION 12.11. Attorney Fees....................................................................... 51
SECTION 12.12. Title and Headings.................................................................. 52
SECTION 12.13. Schedules and Exhibits.............................................................. 52
SECTION 12.14. Specific Performance................................................................ 52
SECTION 12.15. GOVERNING LAW....................................................................... 52
SECTION 12.16. Consent to Jurisdiction............................................................. 52
SECTION 12.17. Severability........................................................................ 53
</TABLE>
<PAGE> 5
iv
SCHEDULES AND EXHIBITS
Schedule 1.01(a) CBS Employees
Schedule 1.01(b) IBC Business
Schedule 1.01(c) Transferring Employees
Schedule 1.01(d) Leased Properties
Schedule 1.01(e) Owned Properties
Schedule 3.01(a)(i) Services to be Provided by CBS
Affiliated Group to IBC Affiliated
Group
Schedule 3.01(a)(ii) Services to be Provided by IBC
Affiliated Group to CBS
Affiliated Group
Schedule 3.01(b)(i) CBS Benefit Plans
Schedule 3.01(b)(ii) IBC Benefit Plans
Schedule 3.04(g)(i) CBS Executives
Schedule 3.04(g)(ii) IBC Executives
Exhibit 6.1 Form of Trademark Agreement between CBS
Broadcasting and IBC
Exhibit 6.2 Form of Trademark Agreement between CBS
and IBC
Exhibit 6.3 Form of Trademark Agreement between CBS
Worldwide Inc. and CBS Broadcasting
<PAGE> 6
INTERCOMPANY AGREEMENT dated as of December
[ ], 1998, between CBS CORPORATION, a Pennsylvania
corporation ("CBS"), and INFINITY BROADCASTING
CORPORATION, a Delaware corporation (formerly
Infinity Media Corporation) ("IBC").
WHEREAS CBS caused IBC to be formed in September 1998 as a
direct wholly owned Subsidiary of CBS Broadcasting Inc., a New York corporation
that is an indirect wholly owned Subsidiary of CBS ("CBS Broadcasting"), to hold
the radio broadcasting and outdoor advertising business of CBS;
WHEREAS, pursuant to the reorganization of the radio
broadcasting and outdoor advertising assets of CBS and its Subsidiaries prior to
the consummation of the Initial Public Offering (as defined below), CBS and CBS
Broadcasting owned [ ]% and [ ]%, respectively, and immediately following the
consummation of the Initial Public Offering, CBS and CBS Broadcasting will own
[ ]% and [ ]%, respectively, of the issued and outstanding common stock of IBC;
WHEREAS the Board of Directors of CBS has determined that it
is appropriate and desirable for IBC to issue shares of its Class A Common
Stock, par value $0.01 per share, to the public in an initial public offering in
the United States and a concurrent international offering (collectively, the
"Initial Public Offering"); and
WHEREAS each of the parties hereto has determined that it is
desirable to set forth herein certain agreements that will govern the
relationship of the parties hereto following the Initial Public Offering, the
terms of which have not resulted from arms length negotiations between the
parties, and accordingly, such terms may be in some respects less favorable to
IBC than those that it could obtain from unaffiliated third parties;
<PAGE> 7
2
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Whenever used in this Agreement,
the following terms shall have the following meanings, and the definition of
such terms are applicable to the singular as well as the plural forms of such
terms and to the masculine as well as to the feminine and neutral genders of
such terms:
"Action" shall mean any action, suit, arbitration, inquiry,
proceeding or investigation by or before any court, any governmental or other
regulatory or administrative agency, body or commission or any arbitration
tribunal.
"Ancillary Agreement" shall mean any of the written
agreements, instruments, understandings, assignments or other arrangements
(other than this Agreement) entered into in connection with the transactions
contemplated hereby, including the Tax Sharing Agreement, the Asset
Restructuring Agreements and any CBS License.
"Asset Restructuring Agreements" shall mean (i) the Agreement
and Plan of Merger dated as of December [ ], 1998, between CBS and Group W
Broadcasting, Inc.; (ii) the Stock and Asset Transfer Agreement dated as of
December [ ], 1998, between CBS and Westinghouse CBS Holding Company, Inc.;
(iii) the Stock and Asset Transfer Agreement dated as of December [ ], 1998,
between Westinghouse CBS Holding Company, Inc. and CBS Broadcasting; (iv) the
Stock and Asset Transfer Agreement dated as of December [ ], 1998, between CBS
Broadcasting and IBC; and (v) the Stock Transfer Agreement dated as of December
[ ], 1998, between CBS and IBC;
"Benefit Plans" shall have the meaning specified in Section
3.01.
"Business Day" shall mean any day, other than a Saturday or
Sunday, which is not a day on which banking institutions in New York City are
authorized or obligated by law or executive order to close.
<PAGE> 8
3
"CBS" shall have the meaning specified in the introductory
statement to this Agreement.
"CBS Affiliated Group" shall mean, collectively, CBS and all
its direct and indirect Subsidiaries now or hereafter existing, other than the
IBC Affiliated Group.
"CBS Benefit Plans" shall have the meaning specified in
Section 3.01.
"CBS Broadcasting" shall have the meaning specified in the
preamble to this Agreement.
"CBS Business" shall mean the businesses of (i) any division,
Subsidiary or investment of the CBS Affiliated Group managed or operated as of
the date of this Agreement or any prior time by any member of the CBS Affiliated
Group and (ii) entities acquired or established by or for the CBS Affiliated
Group after the date of this Agreement, provided that the term "CBS Business"
shall not include the IBC Business.
"CBS Controlled Group" shall mean, collectively, CBS and all
Persons of which at least 80% of (i) the total combined voting power or (ii) the
total value of the outstanding capital stock or other equity interests thereof
is beneficially owned by CBS.
"CBS Credit Agreement" shall mean the $4.0 billion Credit
Agreement among CBS, the lenders named therein, NationsBank, N.A. and The
Toronto-Dominion Bank, as Syndication Agents, The Chase Manhattan Bank, as
Documentation Agent, and Morgan Guaranty Trust Company of New York, as
Administrative Agent, dated August 29, 1996, as amended by amendments thereto
dated January 29, 1997, March 21, 1997, and March 3, 1998.
"CBS Employees" shall mean those employees
described on Schedule 1.01(a).
"CBS Executives" shall have the meaning specified
in Section 3.04(g)(i).
"CBS Expenses" shall mean (i) all costs accrued or incurred by
CBS in respect of the CBS Services and CBS Benefits Plans, (ii) any expenses
relating to fixed assets (including any costs for furniture and personal
computers), (iii) any miscellaneous expenses (including insurance,
<PAGE> 9
4
travel and entertainment, advertising and licenses) accrued or incurred by CBS
and related to the businesses of the parties hereto and (iv) any other corporate
costs (other than any costs relating to the Federal regular income tax liability
of CBS's consolidated group) incurred by CBS.
"CBS Guarantee Liabilities" shall mean any payments made by
CBS pursuant to the performance of its guarantee of IBC's obligations under the
CBS Credit Agreement.
"CBS Indemnitees" shall mean each member of the CBS Affiliated
Group, each of their respective directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing.
"CBS Indenture Liabilities" shall mean any liabilities
incurred by IBC in the event that IBC is required to assume or guarantee the
obligations of CBS and/or CBS Broadcasting under any of the CBS Indentures.
"CBS Indentures" shall mean the indentures pursuant to which
the following bonds were issued: (i) with respect to CBS, 8 7/8% Notes Due 2001,
8 3/8% Notes Due 2002, 8 5/8% Debentures Due 2012, 6 7/8% Notes Due 2003, 7 7/8%
Debentures Due 2023, 8 7/8% Notes Due 2014 and 7.15% Senior Notes Due 2005; and
(ii) with respect to CBS Broadcasting, 7 5/8% Senior Notes Due 2002, 7 3/4%
Senior Notes Due 1999, 7 1/8% Senior Notes Due 2023 and 8 7/8% Senior Debentures
Due 2022.
"CBS Information" shall mean the information furnished to IBC
by or on behalf of CBS specifically for inclusion in the Prospectus which forms
a part of the Form S-1 in connection with the Initial Public Offering.
"CBS Liabilities" shall mean, collectively, (i) all the
Liabilities of the CBS Affiliated Group under this Agreement and any of the
Ancillary Agreements and (ii) all the Liabilities of the parties hereto or their
respective Subsidiaries (whenever arising whether prior to, at or following the
Closing Time) arising out of or in connection with or otherwise relating to the
management or conduct before or after the Closing Time of the CBS Business,
provided that the term "CBS Liabilities" shall not include the IBC Liabilities.
<PAGE> 10
5
"CBS Note" shall mean the floating rate promissory note due
September 18, 2003, in the aggregate principal amount of $2,500,000,000, that
was issued to CBS on September 18, 1998, by Infinity Media Corporation, a
Delaware corporation that is a wholly owned Subsidiary of IBC.
"CBS Operating Assets" shall mean assets (other than real and
leasehold property) used in the radio or outdoor advertising businesses of CBS
and its Subsidiaries prior to the effective date(s) of the Asset Restructuring
Agreements that were not transferred to IBC by CBS and its Subsidiaries pursuant
to the Asset Restructuring Agreements.
"CBS Parent" shall have the meaning specified in the Restated
Certificate of Incorporation of IBC as in effect upon the consummation of the
Initial Public Offering.
"CBS Party" shall have the meaning specified in the Restated
Certificate of Incorporation of IBC as in effect upon the consummation of the
Initial Public Offering.
"CBS Pension Liabilities" shall mean, with respect to any
qualified pension plan of the CBS Affiliated Group (including the Westinghouse
Pension Plan), any liabilities for pension funding, pension termination
liabilities and other pension-related excise and other taxes of any member of
the CBS Controlled Group (other than IBC or any of its Subsidiaries) that are
incurred by IBC in the event that such liabilities are incurred, and not
discharged, by such other member, provided that the term "CBS Pension
Liabilities" shall not include any such liabilities incurred with respect to
Transferring Employees who may continue to participate in any qualified pension
plan of the CBS Affiliated Group after January 1, 1999.
"CBS Radio" shall mean CBS Radio, Inc. (formerly American
Radio Systems Corporation), a Delaware corporation that is a direct wholly owned
Subsidiary of IBC.
"CBS Radio Bonds" shall mean the notes and debentures issued
by CBS Radio pursuant to the CBS Radio Indentures.
"CBS Radio Indentures" shall mean (i) the Indenture dated as
of February 1, 1996, among CBS Radio and the subsidiary guarantor and the
trustee named therein relating to the $175,000,000 9% Senior Subordinated Notes
<PAGE> 11
6
Due 2006, as amended by supplemental indentures dated as of May 31, 1996,
October 1, 1996, and April 28, 1998; (ii) the Indenture dated as of November 21,
1995, among CBS Radio and the subsidiary guarantor and the trustee named therein
relating to the $150,000,000 9 3/4% Senior Subordinated Notes Due 2005, as
amended by the supplemental indentures dated as of April 4, 1997, and April 28,
1998; and (iii) the Indenture dated as of January 30, 1997, between CBS Radio
and the trustee named therein relating to the $200,000,000 11 3/8% Subordinated
Exchange Debentures Due 2008. For purposes only of the definition of "CBS Radio
Bonds", the term "CBS Radio Indentures" shall also include the Indenture dated
as of June 25, 1996, among CBS Radio and the trustee named therein relating to
the $125,000,000 7% Convertible Subordinated Debentures Due 2011.
"CBS Services" shall have the meaning specified in Section
3.01.
"Class A Common Stock" shall mean the Class A Common Stock,
par value $0.01 per share, of IBC.
"Class B Common Stock" shall mean the Class B Common Stock,
par value $0.01 per share, of IBC.
"Closing Time" shall mean 11:59 p.m., New York City time, on
the Effective Date.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the United States Treasury regulations promulgated thereunder,
including any successor legislation.
"Commission" shall mean the Securities and Exchange
Commission.
"Common Stock" shall mean, collectively, the Class A Common
Stock and Class B Common Stock and any other class or series of common stock of
IBC hereafter created.
"Delay Period" shall have the meaning specified in Section
5.01(d).
"Demand Notice" shall have the meaning specified in Section
5.01(a).
"Demand Registration" shall have the meaning specified in
Section 5.01(b).
<PAGE> 12
7
"Effective Date" shall mean the date on which the Initial
Public Offering is consummated.
"Effectiveness Period" shall have the meaning specified in
Section 5.01(d).
"ERISA" shall have the meaning specified in Section 3.04(f).
"ERISA Event" shall have the meaning specified in Section
3.04(f).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.
"Form S-1" shall mean the Registration Statement of IBC on
Form S-1 (No. 333-63727) relating to the registration of shares of Class A
Common Stock under the Securities Act, as the same may be amended or
supplemented from time to time.
"Hold Back Period" shall have the meaning specified in Section
5.03.
"Holder" shall mean CBS, CBS Broadcasting and any Transferee.
"IBC" shall have the meaning specified in the introductory
statement to this Agreement.
"IBC Affiliated Group" shall mean, collectively, IBC and all
its direct and indirect Subsidiaries now or hereafter existing.
"IBC Benefit Plans" shall have the meaning specified in
Section 3.01.
"IBC Business" shall mean the businesses of (i) those entities
listed on Schedule 1.01(b), (ii) any other division, Subsidiary or enterprise of
the IBC Affiliated Group managed or operated as of the date of this Agreement or
any prior time by any member of the IBC Affiliated Group, and (iii) entities
acquired or established by or for the IBC Affiliated Group after the date of
this Agreement.
<PAGE> 13
8
"IBC Executives" shall have the meaning specified in Section
3.04(g)(ii).
"IBC Expenses" shall mean (i) all costs accrued or incurred by
IBC in respect of the IBC Services and IBC Benefit Plans, (ii) any expenses
relating to fixed assets (including any costs for furniture and personal
computers), (iii) any miscellaneous expenses (including insurance, travel and
entertainment, advertising and licenses) accrued or incurred by IBC and related
to the businesses of the parties hereto and (iv) any other corporate costs
incurred by IBC.
"IBC Indemnitees" shall mean each member of the IBC Affiliated
Group, each of their respective directors, officers, employees and agents and
each of the heirs, executors, successors and assigns of any of the foregoing.
"IBC Liabilities" shall mean, collectively, (i) all the
Liabilities of the IBC Affiliated Group under this Agreement, including its
allocated portion of CBS Expenses and all the costs described in Article II, and
any of the Ancillary Agreements, (ii) all the Liabilities of the parties hereto
or their respective Subsidiaries (whenever arising whether prior to, at or
following the Closing Time) arising out of or in connection with or otherwise
relating to the management or conduct, before or after the Closing Time, of the
IBC Business, (iii) all other Liabilities based upon, arising out of or in
connection with or otherwise relating to the radio or outdoor advertising
businesses conducted, directly or indirectly, by CBS and its current or former
Subsidiaries at any time prior to the Effective Date or any other businesses
conducted at any time prior to the Effective Date by the IBC Affiliated Group,
and (iv) any Liabilities incurred by IBC (other than in respect of CBS
Information) pursuant to the Underwriting Agreements.
"IBC Operating Assets" shall mean assets (other than real and
leasehold property) used in the businesses of CBS and its Subsidiaries prior to
the effective date(s) of the Asset Restructuring Agreements that were
transferred to IBC by CBS and its Subsidiaries pursuant to the Asset
Restructuring Agreements.
"IBC Services" shall have the meaning specified in Section
3.01.
<PAGE> 14
9
"Indemnifiable Losses" shall mean any and all losses,
liabilities, claims, damages, demands, costs or expenses (including attorneys'
fees and other out-of-pocket expenses) whatsoever reasonably incurred in
investigating, preparing for or defending against any Actions or potential
Actions.
"Indemnifying Party" shall have the meaning specified in
Section 9.03.
"Indemnitee" shall have the meaning specified in Section 9.03.
"Infinity Media" shall mean Infinity Media Corporation, a
Delaware corporation that is a wholly owned Subsidiary of IBC.
"Initial Public Offering" shall have the meaning specified in
the preamble to this Agreement.
"Inspectors" shall have the meaning specified in Section
5.04(j).
"Insurance Proceeds" shall mean the monies (i) received by an
insured from an insurance carrier or (ii) paid by an insurance carrier on behalf
of an insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention paid or held by or for the
benefit of such insured.
"Interim Period" shall have the meaning specified in Section
3.04(h).
"Internal Revenue Service" shall mean the United States
Internal Revenue Service.
"Interruption Period" shall have the meaning specified in
Section 5.04.
"Leased Properties" shall mean the properties described on
Schedule 1.01(d).
"Liabilities" shall mean any and all debts, liabilities and
obligations (relating to performance or otherwise), absolute or contingent,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
unknown, whenever arising, including those debts, liabilities and obligations
arising under any law, rule,
<PAGE> 15
10
regulation, Action, threatened Action, order or consent decree of any court, any
governmental or other regulatory or administrative agency or commission or any
award of any arbitration tribunal, and those arising under any contract,
guarantee, commitment or undertaking.
"Net Proceeds" shall have the meaning specified in Article IV.
"Notice Period" shall have the meaning specified in paragraph
(n)(i) of Article VI.
"Owned Properties" shall mean the properties described on
Schedule 1.01(e).
"Pass Through Basis" shall have the meaning specified in
Section 3.05(b).
"Person" shall mean any individual, corporation, partnership,
joint venture, limited liability company, association or other business entity
and any trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Piggyback Registration" shall have the meaning specified in
Section 5.02(a).
"Prospectus" shall mean the prospectus or prospectuses
included in any Registration Statement (including a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
Registration Statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement and by
all other amendments and supplements to such prospectus, including
post-effective amendments, and all material incorporated by reference or deemed
to be incorporated by reference in such prospectus or prospectuses.
"Recipient" shall have the meaning specified in Section
3.01(b).
"Records" shall have the meaning specified in Section 7.01(a).
"Registrable Securities" shall mean the Common Stock and any
stock or other securities into which or for which such Common Stock may
hereafter be changed, converted
<PAGE> 16
11
or exchanged and any other shares or securities issued to Holders of such Common
Stock (or such shares or other securities into which or for which such shares
are so changed, converted or exchanged) upon any reclassification, share
combination, share subdivision, share dividend, share exchange, merger,
consolidation or similar transaction. As to any particular Registrable
Securities, such Registrable Securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale by the Holder thereof
shall have been declared effective under the Securities Act and such securities
shall have been disposed of in accordance with such registration statement, (ii)
they shall have been distributed to the public in accordance with Rule 144
promulgated under the Securities Act, (iii) they shall have been otherwise
transferred, new certificates for them not bearing a legend restricting further
transfer shall have been delivered by IBC and subsequent disposition of them
shall not require registration or qualification of them under the Securities Act
or any state securities or blue sky law then in effect or (iv) they shall have
ceased to be outstanding.
"Registration" shall mean registration under the Securities
Act of an offering of Registrable Securities pursuant to a Demand Registration
or a Piggyback Registration.
"Registration Expenses" shall mean any and all costs, fees and
expenses incident to IBC's performance of or compliance with any registration of
securities in connection with the Initial Public Offering or pursuant to Article
V, including (i) the fees, disbursements and expenses of IBC's counsel and
accountants and the reasonable fees and expenses of counsel, if any, selected by
the Holders in accordance with this Agreement in connection with the
registration of the securities to be disposed of; (ii) all expenses, including
registration and filing fees, in connection with the preparation, printing and
filing of the registration statement, any preliminary prospectus or final
prospectus, any other offering document and amendments and supplements thereto,
any other filing pursuant to the Securities Act or the Exchange Act in
connection therewith and the mailing and delivering of copies thereof to any
underwriters and dealers; (iii) the cost of printing or producing any agreements
among underwriters, underwriting agreements and blue sky or legal investment
memoranda, any selling agreements and any other documents in connection with the
offering, sale or delivery of the securities to be disposed
<PAGE> 17
12
of; (iv) all expenses in connection with the qualification of the securities to
be disposed of for offering and sale under state securities laws, including the
fees and disbursements of counsel for the underwriters or the Holders of
securities in connection with such qualification and in connection with any blue
sky and legal investment surveys; (v) the filing fees incident to securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the securities to be disposed of; (iv) transfer agent and
registrar fees and expenses and the fees and expenses of any other agent or
trustee appointed in connection with such offering; (vii) all security engraving
and security printing expenses; (viii) all fees and expenses payable in
connection with the listing of the securities on any securities exchange or
automated interdealer quotation system or the rating of such securities; (ix)
any other fees and disbursements of underwriters customarily paid by the issuers
of securities, but excluding underwriting discounts and commissions and transfer
taxes, if any; and (x) other reasonable out-of-pocket expenses of Holders other
than legal fees and expenses referred to in clauses (i) and (iv) above.
"Registration Indemnitee" shall have the meaning
specified in Section 9.02(a).
"Registration Statement" shall mean any registration statement
of IBC (including the Form S-1) filed with the Commission under the Securities
Act, including in each such case the related Prospectus, all amendments and
supplements to such registration statement, including pre-and post-effective
amendments, all exhibits thereto and all materials incorporated by reference or
deemed to be incorporated by reference in such registration statement.
"Securities Act" shall mean the Securities Act of 1933 and the
rules and regulations of the Commission promulgated thereunder.
"Servicer" shall have the meaning specified in Section 3.01(b).
"Services" shall have the meaning specified in Section 3.01.
"Shelf Registration" shall have the meaning specified in Section
5.01(b).
<PAGE> 18
13
"Subsidiary" shall mean any corporation, partnership, joint
venture or other Person of which another Person (i) owns, directly or
indirectly, ownership interests sufficient to elect a majority of the board of
directors of such corporation, partnership, joint venture or other Person (or
Persons performing similar functions) (irrespective of whether at the time any
other class or classes of ownership interests of such corporation, partnership,
joint venture or other Person shall or might have such voting power upon the
occurrence of any contingency) or (ii) is a general partner or an entity
performing similar functions (e.g., a trustee or manager).
"Tax" shall mean all Federal, state, local or other
governmental taxes, assessments, duties, fees, levies or similar charges of any
kind, including all income, profits, franchise, excise, property, use,
intangibles, sales, value-added, ad valorem, payroll, employment, withholding,
estimated and other taxes of any kind whatsoever whether disputed or not, and
including all additions to tax, additional amounts, interest and penalties
imposed with respect to such amounts.
"Tax Claims" shall have the meaning specified in Section
10.02(a).
"Tax-Free Spin-Off" shall mean any transfer of the Class B
Common Stock beneficially owned by CBS Parent to stockholders of CBS Parent in a
transaction intended to be tax free under Section 355 of the Code.
"Tax Sharing Agreement" shall mean the Tax Sharing Agreement
dated the date hereof, between CBS and IBC.
"Third Party Claim" shall have the meaning specified in
Section 9.04(a).
"Transferee" shall have the meaning specified in Section 5.07.
"Transferring Employees" shall mean those employees described
on Schedule 1.01(c).
"Trigger Date" shall mean the date on which a CBS Party shall
cease to own, in the aggregate, 50% or more of the combined voting power of the
Voting Stock then issued and outstanding other than shares of Voting Stock held
by IBC as treasury stock or by any Subsidiary of IBC.
<PAGE> 19
14
"Underwriting Agreements" shall mean (i) the U.S. Purchase
Agreement dated as of December [ ], 1998, in connection with the Initial Public
Offering, between IBC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as
the representative of the several U.S. Underwriters named therein, and (ii) the
International Purchase Agreement dated as of December [ ], 1998, in connection
with the Initial Public Offering, between IBC and Merrill Lynch International,
as the lead manager of the several International Managers named therein.
"Voting Stock" shall mean all securities issued by IBC having
the ordinary power to vote in the election of directors of IBC, other than
securities having such power only upon the occurrence of a default or any other
extraordinary contingency.
SECTION 1.02. Other Definitional Provisions. The words
"hereof", "hereto", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; references to any Article, Section,
Exhibit or Schedule are references to Articles, Sections, Exhibits or Schedules
in or to this Agreement unless otherwise specified; and the term "including"
shall mean "including without limitation".
ARTICLE II
Payment of Transaction Costs
IBC shall pay (or, to the extent incurred by and paid for by
any member of the CBS Affiliated Group, shall promptly reimburse such member of
the CBS Affiliated Group for any and all amounts so paid) for all fees, costs
and expenses incurred in connection with: (a) IBC's formation and organization,
including any transactions contemplated by the Asset Restructuring Agreements
and any Taxes incurred in respect thereof; (b) the preparation and negotiation
of this Agreement, any Ancillary Agreement and any other documentation, forms,
applications, contracts, consents and other actions related thereto; (c) all
Registration Expenses with respect to the Initial Public Offering; and (d) all
expenses with respect to the offers to purchase outstanding debt securities of
its Subsidiaries that are required to be made in accordance with the terms of
the indentures
<PAGE> 20
15
(including the CBS Radio Indentures) pursuant to which such debt securities were
issued.
ARTICLE III
Services and Operations
SECTION 3.01. Services. (a) Beginning on the Effective Date
and continuing until the termination of this Agreement pursuant to Article XI,
CBS shall make available, and shall cause the CBS Affiliated Group to make
available, to the IBC Affiliated Group the services set forth on Schedule
3.01(a)(i) (the "CBS Services" and each, a "CBS Service"), and IBC shall, and
shall cause its Subsidiaries to, utilize such CBS Services set forth on Schedule
3.01(a)(i) in the conduct of their respective businesses. Beginning on the
Effective Date and continuing until the termination of this Agreement pursuant
to Article XI, IBC shall make available, and shall cause the other members of
the IBC Affiliated Group to make available, to the CBS Affiliated Group the
services set forth on Schedule 3.01(a)(ii) (the "IBC Services" and each, an "IBC
Service"). The CBS Services and IBC Services are hereinafter collectively
referred to as the "Services".
(b) CBS has agreed that the Transferring Employees be eligible
to continue to participate in the benefit plans and programs described on
Schedule 3.01(b)(i) to the extent that such Transferring Employees obtained
rights under such benefit plans prior to January 1, 1999 or may obtain rights
under such benefits plans on or after January 1, 1999 (collectively, "CBS
Benefit Plans"). IBC has agreed that the CBS Employees shall be eligible to
continue to participate in the benefit plans and programs described on Schedule
3.01(b)(ii) to the extent that such Transferring Employees obtained rights under
such benefit plans prior to January 1, 1999 or may obtain rights under such
benefit plans on or after January 1, 1999 (collectively, the "IBC Benefit Plans"
and, together with the CBS Benefit Plans, the "Benefit Plans"). CBS has agreed
that it shall continue to provide the CBS Services described on Schedule
3.01(a)(i) with respect to Transferring Employees participating in CBS Benefit
Plans and IBC has agreed that it shall continue to provide the IBC Services
described on Schedule 3.01(a)(ii) with respect to CBS Employees participating in
IBC Benefit Plans. In their respective capacities as service providers under
this
<PAGE> 21
16
Agreement, each of CBS and IBC are hereinafter referred to as a "Servicer" and
collectively as the "Servicers". In their respective capacities as service
receivers under this Agreement, each of CBS and IBC are hereinafter referred to
as a "Recipient" and collectively as "Recipients". The CBS Services may be
provided by (i) any employee of CBS or its Subsidiaries (other than IBC and its
Subsidiaries) or (ii) any third party designated by CBS, in its sole discretion
after consultation with IBC; provided, however, that notwithstanding any such
designation by CBS, CBS shall remain responsible in all respects for the
provision of the particular service or services to be provided by such
designated third party. The IBC Services may be provided by (i) any employee of
IBC or its Subsidiaries or (ii) any third party designated by IBC, in its sole
discretion after consultation with CBS; provided, however, that notwithstanding
any such designation by IBC, IBC shall remain responsible in all respects for
the provision of the particular service or services to be provided by such
designated third party.
SECTION 3.02. Expansion, Reduction or Termination of Services.
Except as otherwise provided in Section 12.01 or as otherwise agreed in writing
by the parties hereto, each of the CBS Services provided by CBS and each of the
IBC Services provided by IBC may be expanded, reduced or terminated upon the
mutual agreement of the parties hereto.
SECTION 3.03. Payment of Expenses. (a) CBS shall allocate the
portion of the CBS Expenses incurred on behalf of the IBC Affiliated Group
pursuant to allocation methodologies determined on an annual basis by CBS, in
its sole discretion, after consultation with IBC, which evidence each such
party's respective fair and reasonable share of the CBS Expenses.
(b) IBC shall pay all the IBC Expenses incurred by IBC. IBC
shall allocate the portion of IBC Expenses incurred on behalf of the CBS
Affiliated Group pursuant to allocation methodologies determined on an annual
basis by CBS, in its sole discretion, after consultation with IBC which,
evidence each such party's respective fair and reasonable share of the IBC
Expenses.
(c) Each of CBS and IBC shall submit to the other party within
15 working days following the end of each month an invoice for all charges
associated with Services provided by such party during the preceding month, any
adjustments
<PAGE> 22
17
for prior months and any other amounts payable in respect of the preceding
month. All invoices shall describe in reasonable detail a description of the
Services provided and the charges associated therewith, any prior month
adjustments and any other amounts that are payable. Except as provided in
Section 3.03(d), IBC shall remit payment on a monthly basis to CBS on behalf of
the IBC Affiliated Group for its portion of all charges invoiced on or before
the last working day of the month in which the invoice is received in respect of
CBS Expenses, net of the CBS Affiliated Group's allocated share of the IBC
Expenses that are invoiced on or before the last working day of the month in
which the invoice is received; provided, however, that if such net payment shall
be a negative amount, CBS shall remit payment to IBC on behalf of the CBS
Affiliated Group for such month in an amount equal to such negative amount
(taken as a positive number).
(d) In the event of a dispute as to an invoiced amount, the
party disputing such amount shall promptly pay all undisputed amounts on each
invoice, but shall be entitled to withhold payment of any amount in dispute, and
shall promptly notify the party providing the Services of the disputed amount
and the reasons each such charge is so disputed. The parties agree to provide
each other with sufficient records and information that will enable the parties
to resolve any such dispute and, without limiting the rights and remedies of the
parties hereunder, to negotiate in good faith a resolution thereto.
(e) It is understood and agreed that the Services provided
hereunder will be substantially identical in nature and quality (but not
necessarily in amount) to the Services performed by the parties for each other
during the year prior to the date of this Agreement, except as may be required
by virtue of IBC becoming a public company after the Initial Public Offering.
(f) Performance of any Services will not be required for the
benefit of any entity other than the parties and their respective Subsidiaries
and will not be required to be provided to the extent that a Servicer ceases to
provide the applicable Service to the CBS Affiliated Group or the IBC Affiliated
Group, as applicable. Each party represents and agrees that it will use the
Services only in accordance with all applicable federal, state and local laws,
regulations and tariffs and in accordance with the reasonable conditions, rules,
regulations and
<PAGE> 23
18
specifications that are or may be set forth in any manuals, materials, documents
or instructions of the party providing the Services. Each of CBS and IBC
reserves the right to take all actions, including termination of any Services,
that it reasonably believes to be necessary in order to ensure that the Services
are provided in compliance with any applicable laws, regulations and tariffs.
(g) Any input or information required by either party to
perform the Services pursuant to the provisions of this Agreement shall be
provided by the other party or its Subsidiaries, as the case may be, in a manner
consistent with the practices employed by the parties during the year prior to
the date of this Agreement. If the failure to provide such input or information
renders the performance of the Services impossible or unreasonably difficult,
the party providing the Services may, upon reasonable notice, refuse to provide
such Services.
(h) (i) With respect to those retired or former employees who
were or would have been Transferring Employees prior to the Effective Date, IBC
shall reimburse CBS, on demand or as otherwise directed, for all costs as
accrued or incurred by CBS or members of the CBS Affiliated Group with respect
to such retired or former employees pursuant to the Benefit Plans. (ii) With
respect to an individual who, prior to the date on which such individual retired
from or otherwise ceased to be an employee of CBS or any of its Subsidiaries,
worked (either simultaneously or at different times) both in and/or outdoor
advertising businesses conducted by CBS and its Subsidiaries, and (ii) any
business conducted by CBS and its Subsidiaries other than the businesses
referred to in clause (i) above, such individual shall be classified as (x) a
Transferring Employee if he/she was employed in the radio and/or outdoor
advertising businesses of CBS and its Subsidiaries on the date such individual
retired or otherwise ceased to be an employee of CBS or any of its Subsidiaries
and (y) a CBS Employee if he/she was employed in any other business conducted by
CBS and its Subsidiaries on such date.
SECTION 3.04. Employees. (a) Plans and Services. Prior to the
Effective Date, certain Transferring Employees participated in certain CBS
Benefit Plans. On and after the Effective Date, certain Transferring Employees
shall continue to be eligible to participate in certain CBS Benefit Plans,
subject to the terms of the governing plan documents as interpreted by the
appropriate plan fiduciaries. On and after the Effective Date, certain CBS
Employees shall be eligible to participate in the IBC Benefit Plans set forth on
Schedule 3.01(b)(ii), subject to the terms of the governing plan documents as
interpreted by the appropriate plan
<PAGE> 24
19
fiduciaries. On and after the Effective Date and until the termination of this
Agreement pursuant to Article XI, subject to regulatory requirements, CBS shall
continue to provide CBS Services with respect to Transferring Employees
participating in CBS Benefit Plans in substantially the same manner as it
administered such plans prior to the Effective Date and IBC shall continue to
provide IBC Services with respect to CBS Employees participating in IBC Benefit
Plans in substantially the same manner as it administered such plans prior to
the Effective Date, subject to CBS's or IBC's right, as applicable, to
terminate, amend and modify such Benefit Plans pursuant to Sections 3.04(c) and
(d).
(b) Direct Cost Reimbursement. Notwithstanding the provisions
of Section 3.03, if a Servicer provides a Recipient with at least five days'
advance written notice, such Recipient agrees to make funds available, as and
when required to be paid by such Servicer, to such Servicer so that such
Servicer may make contributions or payments to, for the account of, or in
respect of current or former employees or their spouses or other beneficiaries
(i) under tax-qualified benefit plans or (ii) that are generally made on a
predetermined periodic basis.
(c) Termination. A Recipient or a Servicer may terminate
participation by the employees of such Recipient in a Servicer's Benefit Plan by
giving reasonable written notice in advance of such termination to the other
party, taking into consideration all relevant factors applicable to the
Recipient or the Servicer and any applicable legal requirements. Such Servicer
shall promptly submit an invoice for, and such Recipient shall promptly pay to
such Servicer, all costs or accelerated payments or contributions incurred prior
to the date of termination, including costs resulting from the termination.
(d) Changes; Additional Services and Plan Terms. Nothing
contained in this Agreement shall be construed to limit the ability of CBS or
IBC to amend or modify any of the CBS Benefit Plans or IBC Benefit Plans,
respectively, consistent with the terms of such plans, as determined in CBS's or
IBC's sole discretion, as the case may be, provided that CBS or IBC, as
applicable, shall provide at least 30
<PAGE> 25
20
days' prior written notice to the other of any proposed significant amendment to
or modification of any Benefit Plan. Each Recipient may request additional
services that, if agreeable to the applicable Servicer, shall be provided on a
direct cost basis to such Recipient.
(e) Regulatory Matters. CBS and IBC agree to cooperate fully
with each other in the administration and coordination of regulatory and
administrative requirements associated with the Benefit Plans that apply either
to the other party or jointly to each party hereto. Such coordination, upon
request, shall include: sharing payroll data for determination of highly
compensated employees, providing census information (including accrued benefits)
for purposes of running discrimination tests, providing actuarial reports for
purposes of determining the funded status of any plan and providing for review
of all summary plan descriptions, requests for determination letters, Forms
5500, financial statement disclosures and plan documents.
(f) Certain Notices. In the event there is an ERISA Event with
respect to Benefit Plans administered by a Servicer, such Servicer shall advise
the Recipient as soon as reasonably practicable after such Servicer determines
the ERISA Event has occurred. For purposes of this Section 3.04(f), an "ERISA
Event" shall mean (i) the termination of a Benefit Plan or the filing of a
Notice of Intent to Terminate such a plan, in either case, under Section 4041(c)
of the Employee Retirement Income Security Act of 1974, as amended from time to
time ("ERISA"); (ii) the institution of proceedings by the Pension Benefit
Guaranty Corporation (or any successor thereof) to terminate a Benefit Plan or
to appoint a trustee to administer such a plan or the receipt of notice by such
Servicer that such an action has been taken with respect to such a plan; (iii)
any substantial accumulated funding deficiency within the meaning of Section 412
of the Code or Section 302 of ERISA is incurred with respect to any Benefit Plan
sponsored by such Servicer and no waiver of that deficiency has been obtained
from the Internal Revenue Service; (iv) the Internal Revenue Service determines
that a Benefit Plan that is intended to be qualified under Section 401 of the
Code fails to meet the applicable requirements of the Code and disqualifies the
plan; or (v) an amendment to a Benefit Plan sponsored by such Servicer that
results in a significant underfunding described in Section 401(a)(29) of the
Code or Section 307 of ERISA.
<PAGE> 26
21
(g) Executive Services. On the terms and subject to the
conditions set forth in this Agreement, (i) CBS shall make available to IBC the
services of the employees listed on Schedule 3.04(g)(i) hereto and certain other
officers and employees of CBS (collectively, "CBS Executives") as may be
mutually agreed upon in the future, and (ii) IBC shall make available to CBS the
services of the employees listed on Schedule 3.04(g)(ii) hereto and certain
other officers and employees of IBC (collectively, "IBC Executives") as may be
mutually agreed upon in the future. The obligations of CBS and IBC pursuant to
this Section 3.04(g) shall be subject to the reasonable demands imposed by, and
the reasonable requirements of, the on-going operations of CBS and IBC,
respectively. CBS and IBC shall allocate the portion of the compensation and
benefits costs of the CBS Executives and the IBC Executives, respectively,
pursuant to allocation methodologies determined on an annual basis by CBS or IBC
(as applicable), in its sole discretion, after consultation with IBC or CBS (as
applicable), which evidence IBC's and CBS's (as applicable) fair and reasonable
share of such compensation and benefits costs.
(h) Delayed Employee Transfers; Interim Period. With respect
to the period from and including the Effective Date to and including December
31, 1998 (the "Interim Period"), Transferring Employees shall continue to be
employees of the CBS Affiliated Group and shall continue to participate in the
CBS Benefit Plans in which they participated prior to the Effective Date. After
the expiration of the Interim Period, each such Transferring Employee then in
employment will become an employee of IBC. IBC will promptly reimburse CBS for
100% of the payroll, benefits (including statutory benefits, severance and other
termination benefits) and other costs and expenses directly or indirectly
relating to such Transferring Employees with respect to the Interim Period
within 15 days following receipt of each written notification from CBS of such
payroll, benefits and other costs and expenses. All services provided by such
Transferring Employees during the Interim Period shall be for the benefit of
IBC.
The CBS Affiliated Group shall be entitled to be indemnified
by IBC, and shall be entitled to the benefit of the provisions of Article IX of
this Agreement, with respect to any and all claims, losses, damages, liabilities
and expenses (including court costs and reasonable attorney fees) incurred by
CBS arising out of (i) any act or omission of any such Transferring Employees
occurring during the
<PAGE> 27
22
Interim Period or (ii) any loss of or damage to property of, or any bodily
injury, sickness and/or disease, including death, sustained by, any such
Transferring Employees during the Interim Period.
(i) Third-Party Beneficiary. Nothing in this Agreement is
intended to entitle any employee or individual to any benefit or compensation
from IBC or CBS or to otherwise establish or create any rights on the part of
any third party. Nothing in this Agreement is intended to restrict or limit a
Servicer in the exercise of its rights or the fulfillment of its duties as plan
sponsor.
(j) Conflicts. In the event of a conflict between the terms of
this Section 3.04 and the terms of Section 3.01 hereof relating to providing
Services in connection with Benefit Plans, the terms of this Section 3.04 shall
prevail.
SECTION 3.05. Real Property; Leases; Operating Assets. (a)
With respect to the Owned Properties, CBS shall, or, to the extent that another
member of the CBS Affiliated Group owns the Owned Properties, CBS shall cause
such member to, lease to IBC or any of its Subsidiaries, or otherwise permit the
continued occupancy by IBC or any of its Subsidiaries of, the space occupied in
each of such Owned Properties by the IBC Affiliated Group as of the Effective
Date on the terms set forth in the following paragraph.
Each lease for, or other agreement for occupancy of, space in
the Owned Properties referred to in this Section 3.05(a) shall, (i) until the
later of (x) the expiration of each such lease or other agreement and (y) the
Trigger Date, be on payment terms which are consistent with the past cost
allocation practices of CBS or on such other terms which are consistent with the
past practice and (ii) after such date, be on a fair market value basis and on
such other terms that are consistent with leases with similar rental periods and
for similar properties in the relevant local real estate market.
(b) With respect to the Leased Properties which are leased by
any member of the CBS Affiliated Group, CBS shall, or, to the extent that
another member of the CBS Affiliated Group is the lessee of any such Leased
Properties, CBS shall cause such member to, sublease (or otherwise permit the
continued occupancy of) the space occu-
<PAGE> 28
23
pied in each of such Leased Properties by the IBC Affiliated Group as of the
Effective Date to the IBC Affiliated Group (but only if and to the extent
permitted by the primary lease with respect to such property) until the
expiration of the primary lease with respect to such Leased Properties (or, if
the IBC Affiliated Group is the occupant of all the space under a particular
lease to the member of the CBS Affiliated Group, then until one day prior to the
expiration of the primary lease with respect to such Leased Properties) and on
payment terms which are consistent with the past cost allocation practices of
CBS or on such other terms which are consistent with past practice. As soon as
practicable after the Trigger Date, the portion of each lease referred to in the
first sentence of this Section 3.05(b) relating to the space attributable to the
IBC Affiliated Group in each of such Leased Properties shall be, in each case as
determined by CBS in its sole discretion, assigned to IBC or one of its
Subsidiaries (but only if and to the extent permitted by the primary lease with
respect to such property); otherwise, the IBC Affiliated Group's occupation of
such Leased Property shall continue on a Pass Through Basis until the expiration
of the underlying lease for such Leased Properties. Notwithstanding the
foregoing, if any lease in effect as of the Effective Date for any Leased
Properties expires prior to the Trigger Date, the IBC Affiliated Group shall
have the option, subject to negotiations with the lessor of each such Leased
Property, to lease the space occupied by the IBC Affiliated Group in any such
Leased Property directly from the lessor and CBS shall cooperate with and assist
IBC in such negotiations. As used herein, "Pass Through Basis" shall mean that
the occupation of any Leased Property by the IBC Affiliated Group shall be
subject to all provisions and restrictions contained in the primary lease
(including the term thereof) and the rental payments due from the IBC Affiliated
Group shall be based upon the pro rata occupation of the space in such Leased
Property, with an additional reasonable allocation to be made with respect to
any common areas to which the IBC Affiliated Group has access.
(c) With respect to the CBS Operating Assets, CBS shall, or,
to the extent that another member of the CBS Affiliated Group owns the CBS
Operating Assets, CBS shall cause such member to, permit the continued use by
IBC or any of its Subsidiaries of the CBS Operating Assets used by the IBC
Affiliated Group prior to the Effective Date. CBS shall allocate the costs for
the use by the IBC Affiliated Group of such CBS Operating Assets according to
established methodologies determined on an annual basis by CBS, in its
<PAGE> 29
24
sole discretion, after consultation with IBC, which will evidence each party's
fair and reasonable share of such costs.
(d) With respect to the IBC Operating Assets, IBC shall, or,
to the extent that another member of the IBC Affiliated Group owns the IBC
Operating Assets, IBC shall cause such member to, permit the continued use by
any member of the CBS Affiliated Group of the IBC Operating Assets used by CBS
and its Subsidiaries prior to the Effective Date. IBC shall allocate the costs
for the use by the CBS Affiliated Group of such IBC Operating Assets according
to established methodologies determined on an annual basis by IBC, in its sole
discretion, after consultation with CBS, which will evidence each party's fair
and reasonable share of such costs.
(e) IBC shall, and shall cause the other members of the IBC
Affiliated Group to, and CBS shall, and shall cause the other members of the CBS
Affiliated Group to, as applicable, negotiate diligently and in good faith the
leases and subleases referred to in this Section 3.05. Unless expressly provided
to the contrary herein, to the extent that any provision in this Section 3.05
obligates a lessor to lease any property described in such provision to a
lessee, such provision shall also be construed to obligate such lessee to lease
such property from such lessor.
SECTION 3.06. Insurance. (a) CBS shall use its commercially
reasonable efforts to cause IBC to be covered under CBS's insurance policies
(including directors' and officers' liability insurance and workers'
compensation) which will provide to IBC the type of insurance provided to IBC
immediately prior to the date hereof, subject to availability. CBS shall not be
responsible for obtaining or maintaining any additional insurance coverage for
IBC other than as set forth in the preceding sentence. The portion of such
premiums and other charges payable by IBC for such insurance coverage shall be
allocated by CBS, in its sole discretion, after consultation with IBC, and will
evidence IBC's fair and reasonable share of such premiums and other charges. CBS
shall use its commercially reasonable efforts to provide such allocation as soon
as practicable after receipt of the information to be included therein. The
insurance provided shall be subject to such policies of insurance or
self-insurance, and such guidelines or procedures in respect of insurance or
self-insurance, as are in effect immediately prior to the date hereof. In the
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25
event that the terms of the insurance (including the scope of coverage),
self-insurance, or other policies, guidelines or procedures relating to
insurance or self-insurance, change or require change from those terms in effect
immediately prior to the date hereof, CBS agrees (a) to the extent CBS is aware
of a material change prior to the effective date of the change, to provide
notice to IBC of such change prior to its effective date, or (b) otherwise to
provide notice to IBC upon becoming aware of the change. It is expressly agreed
by IBC and CBS that any self-insurance, retroactive assessments, retention or
deductible allocable to IBC shall be for the account of and be an obligation of
IBC, and that IBC's obligations in respect of such self-insurance, retention or
deductible shall survive the termination of this Agreement.
(b) Termination of Insurance. Either IBC or CBS may terminate
all or any portion of the insurance at any time on 90 days' prior written notice
to the other party hereto. Notwithstanding the foregoing, so long as CBS, CBS
Broadcasting or any other member(s) of the CBS Affiliated Group beneficially
owns shares of capital stock of IBC representing 50% or more of the voting power
of all then-outstanding shares of capital stock, IBC may not, without the prior
written consent of CBS, terminate all or any portion of the insurance. In the
event that all or any portion of the insurance is terminated, if appropriate,
the charges therefor shall be adjusted equitably to reflect such termination.
SECTION 3.07. Operations. (a) Prior to the Effective Date, the
CBS Affiliated Group provided to members of the IBC Affiliated Group, and the
IBC Affiliated Group provided to members of the CBS Affiliated Group,
advertising time and space for promotional purposes without charge in
circumstances where the Servicer determined that providing such advertising time
or space would not significantly affect such Servicer's potential revenues. On
and after the Effective Date, each of CBS and IBC agrees to make available, and
to cause the other members of the CBS Affiliated Group and the IBC Affiliated
Group, respectively, to make available, to the IBC Affiliated Group and the CBS
Affiliated Group, respectively, advertising time and space for promotional
purposes without charge or at rates that are more favorable to the Recipient
than those that would have been obtained in a comparable transaction by either
party with a non-affiliated Person; provided, however, that neither the CBS
Affiliated Group nor the IBC Affiliated
<PAGE> 31
26
Group shall be required to provide such advertising time or space if to do so
would significantly affect its potential revenues; provided further, however,
that if the CBS Affiliated Group or the IBC Affiliated Group determines that
providing such advertising time and space to the other party would significantly
affect its potential revenues, it shall be required to continue to make
available to the other party following such determination only the advertising
time and space that it had agreed to provide (or, pursuant to regulatory
obligations, is required to provide) to such party prior to the date of any such
determination. Notwithstanding the foregoing, each of CBS and IBC agrees that
nothing in this Agreement shall relieve any member of the CBS Affiliated Group
or the IBC Affiliated Group, respectively, of their obligation to comply with
the terms of any other arrangement, agreement, contract or other commitment in
writing that requires them to provide the IBC Affiliated Group or the CBS
Affiliated Group, respectively, with advertising time and space on terms no less
favorable to the other party than those that would be provided to an
unaffiliated third party. Each of CBS and IBC acknowledges that the CBS
Affiliated Group is likely to receive, in the aggregate, more advertising time
and space for promotional purposes from the IBC Affiliated Group pursuant to
this Section 3.07(a) than the IBC Affiliated Group is likely to receive from the
CBS Affiliated Group.
(b) Prior to the Effective Date, certain members of the IBC
Affiliated Group received from the CBS Affiliated Group radio broadcast rights
to television programming produced by the CBS Affiliated Group in exchange for
the IBC Affiliated Group providing advertising time and space for promotional
purposes to the CBS Affiliated Group during the broadcasting by the IBC
Affiliated Group of such television programming. On and after the Effective
Date, the CBS Affiliated Group agrees to provide the IBC Affiliated Group with
radio broadcast rights to television programming (of the same type and nature as
it provided prior to the Effective Date) produced by the CBS Affiliated Group,
and in exchange therefor, the IBC Affiliated Group agrees to provide the CBS
Affiliated Group with advertising time and space for promotional purposes during
the broadcasting by the IBC Affiliated Group of such television programming.
(c) Each of CBS and IBC will, and will cause each other member
of the CBS Affiliated Group and the IBC Affiliated Group, respectively, to, use
its best efforts to cooperate in jointly marketing its respective products and
<PAGE> 32
27
services to potential advertisers and to refer advertisers to the other party.
The costs associated with, and the revenues derived from, any such arrangements
will be allocated among the CBS Affiliated Group and the IBC Affiliated Group
pursuant to allocation methodologies determined on an annual basis by CBS, in
its sole discretion, after consultation with IBC, which evidence each such
party's respective fair and reasonable share of such costs and revenues.
SECTION 3.08. Further Assurances; No Agency. In case at any time after
the Effective Date any further action is reasonably necessary or desirable to
carry out the purposes of this Agreement or any Ancillary Agreement, the proper
officers of each party to this Agreement shall take all such necessary action.
Without limiting the foregoing, each of IBC and CBS shall use its commercially
reasonable efforts to obtain all consents and approvals, to enter into all
amendments and to make all filings and applications that may be required for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Agreements, including all applicable governmental and regulatory
filings. However, this Agreement in and of itself creates no agency relationship
between CBS and IBC.
SECTION 3.09. Limitation of Liability. Except as may be provided in
Articles IX and X, (i) no member of the CBS Affiliated Group, their respective
controlling Persons, if any, and their respective directors, officers,
employees, agents or permitted assigns, on the one hand (each, a "CBS Party"),
and (ii) no member of the IBC Affiliated Group, their respective controlling
Persons, if any, and their respective directors, officers, employees, agents or
permitted assigns, on the other hand (each, an "IBC Party"), shall be liable to
any IBC Party or CBS Party, as applicable, for any liabilities, claims, damages,
losses or expenses, including any special, indirect, incidental or consequential
damages, of an IBC Party or a CBS Party arising in connection with this
Agreement, the Services or the Benefit Plans.
SECTION 3.10. Competition. Each of the CBS Affiliated Group and the IBC
Affiliated Group shall be entitled to compete with each other in selling
advertising time and space and in making acquisitions of media properties,
subject to applicable laws, rules and regulations. If the ownership or operation
of the respective media assets of CBS on the one hand and IBC on
<PAGE> 33
28
the other hand, as the same exists from time to time, by reason of a potential
acquisition, change of law or regulation, any regulatory action, final judicial
determination or otherwise, places the ownership or operation of such media
assets of CBS and/or IBC in conflict with or violation of Federal law or the
rules or regulations of the Federal Communications Commission, then the parties
hereto will attempt to resolve in good faith such conflict or violation. In the
absence of such resolution, and until the Trigger Date, CBS may in its sole
discretion take any and all actions which it in good faith deems necessary to
avoid or eliminate such conflict or violation, including requiring IBC to
dispose of assets or take other specified action(s), provided that the same
shall not have a material adverse effect upon the overall business of IBC.
Should there be a dispute between CBS and IBC as to whether or not such actions
will result in such material adverse effect, the parties hereto hereby agree to
submit such dispute to arbitration, subject to the American Arbitration
Association Commercial Arbitration Rules.
ARTICLE IV
Use of Proceeds of Initial Public Offering
IBC covenants and agrees with CBS that, immediately following the
consummation of the Initial Public Offering, (a) it will contribute
$2,500,000,000 of the proceeds of the Initial Public Offering (net of
underwriting discounts and estimated offering expenses) ("Net Proceeds") to
Infinity Media and will cause Infinity Media to prepay the principal amount
outstanding as of such date under the CBS Note, together with accrued and unpaid
interest on the principal amount thereof to be paid to but excluding such date
of prepayment and (b) to the extent that the Net Proceeds exceed the amount
contributed to Infinity Media as described in clause (a) of the Article IV, IBC
will apply the requisite amount of such excess Net Proceeds to purchase from CBS
on the Closing Date any CBS Radio Bonds owned by CBS on the Closing Date for a
purchase price in cash equal to the amount of the purchase price paid by CBS for
such CBS Radio Bonds plus accrued and unpaid interest, if any, on such purchase
price (which interest shall be calculated in accordance with the terms of the
applicable CBS Radio Indentures).
<PAGE> 34
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ARTICLE V
Registration Rights
SECTION 5.01. Demand Registration. (a) The Holders shall have the
right, following the Effective Date, by written notice (a "Demand Notice") given
to IBC, to request IBC to register under and in accordance with the provisions
of the Securities Act all or any portion of the Registrable Securities
designated by such Holders; provided, however, that the aggregate number of
Registrable Securities requested to be registered pursuant to any Demand Notice
and pursuant to any related Demand Notices received pursuant to the following
sentence shall be at least 1,000,000. Upon receipt of any such Demand Notice,
IBC shall promptly notify all other Holders of the receipt of such Demand Notice
and allow them the opportunity to include Registrable Securities held by them in
the proposed registration by submitting their own Demand Notice. In the event
that such Demand Registration involves an underwritten offering and the managing
underwriter or underwriters participating in such offering advise the Holders in
writing of Registrable Securities to be included in such offering so that the
total number of Registrable Securities to be included in such offering exceeds
the amount that can be sold in (or during the time of) such offering without
delaying or jeopardizing the success of such offering (including the price per
share of the Registrable Securities to be sold), then the amount of Registrable
Securities to be offered for the account of such Holders shall be reduced pro
rata on the basis of the number of Registrable Securities to be registered by
each such Holder. The Holders as a group shall be entitled to (i) unlimited
Demand Registrations prior to the Trigger Date and (ii) three Demand
Registrations following the Trigger Date, each pursuant to this Section 5.01(a).
If any Demand Registration does not become effective or is not maintained for a
period (whether or not continuous) of at least 120 days (or such shorter period
as shall terminate when all the Registrable Securities covered by such Demand
Registration have been sold pursuant thereto), such Demand Registration shall be
disregarded and deemed not to have been made.
(b) Within 45 days of the date on which IBC receives a Demand Notice
from Holders in accordance with Section 5.01(a), IBC shall file with the
Commission, and IBC shall thereafter use its best efforts to cause to be
declared effective, a Registration Statement on the
<PAGE> 35
30
appropriate form for the registration and sale, in accordance with the intended
method or methods of distribution, of the total number of Registrable Securities
specified by the Holders in such Demand Notice, which may include a "shelf"
registration (a "Shelf Registration") pursuant to Rule 415 promulgated under the
Securities Act (a "Demand Registration").
(c) IBC shall use commercially reasonable efforts to keep each
Registration Statement filed pursuant to this Section 5.01 continuously
effective and usable for the resale of the Registrable Securities covered
thereby (i) in the case of a Registration that is not a Shelf Registration, for
a period of 120 days from the date on which the Commission declares such
Registration Statement effective and (ii) in the case of a Shelf Registration,
for a period of 180 days from the date on which the Commission declares such
Registration Statement effective, in either case (x) until all the Registrable
Securities covered by such Registration Statement have been sold pursuant to
such Registration Statement and (y) as such period may be extended pursuant to
this Section 5.01.
(d) IBC shall be entitled to postpone the filing of any Registration
Statement otherwise required to be prepared and filed by IBC pursuant to this
Section 5.01, or suspend the use of any effective Registration Statement under
this Section 5.01, for a reasonable period of time, but not in excess of 90 days
(a "Delay Period"), if the Chairman of the Board of Directors of IBC determines
that in such person's reasonable judgment and good faith the registration and
distribution of the Registrable Securities covered or to be covered by such
Registration Statement would materially interfere with any pending material
financing, acquisition or corporate reorganization or other material corporate
development involving IBC or any of its Subsidiaries or would require premature
disclosure thereof and promptly gives the Holders written notice of such
determination, containing a reference to this Section 5.01(d) and an
approximation of the period of the anticipated delay; provided, however, that
(i) the aggregate number of days included in all Delay Periods during any
consecutive twelve-month period shall not exceed the difference between (x) 120
days and (y) the number of days occurring during all Hold Back Periods and
Interruption Periods during such consecutive twelve-month period, and (ii) a
period of at least 60 days shall elapse between the termination of any Delay
Period, Hold Back Period or
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31
Interruption Period and the commencement of the immediately succeeding Delay
Period. If IBC shall so postpone the filing of a Registration Statement, the
Holders of Registrable Securities to be registered shall have the right to
withdraw the request for registration by giving written notice from the Holders
of a majority of the Registrable Securities that were to be registered to IBC
within 45 days after receipt of the notice of postponement and, if earlier,
before the termination of such Delay Period (and, in the event of such
withdrawal, such request shall not be counted for purposes of determining the
number of requests for registration to which the Holders of Registrable
Securities are entitled pursuant to this Section 5.01). The time period for
which IBC is required to maintain the effectiveness of any Registration
Statement shall be extended by the aggregate number of days of all Delay
Periods, all Hold Back Periods and all Interruption Periods occurring during
such Registration and such period and any extension thereof is hereinafter
referred to as the "Effectiveness Period". IBC shall not be entitled to initiate
a Delay Period unless it shall (A) to the extent permitted by agreements with
other security holders of IBC, concurrently prohibit sales by such other
security holders under registration statements covering securities held by such
other security holders and (B) in accordance with IBC's policies from time to
time in effect, prohibit purchases and sales in the open market by senior
executives and certain other employees of IBC.
(e) IBC shall not include any securities that are not Registrable
Securities in any Registration Statement filed pursuant to Section 5.01 without
the prior written consent of the Holders of a majority in number of the
Registrable Securities covered by such Registration Statement.
(f) Holders of a majority in number of the Registrable Securities to be
included in a Registration Statement pursuant to this Section 5.01 may, at any
time prior to the effective date of the Registration Statement relating to such
Registration, revoke such request by providing a written notice to IBC revoking
such request. The Holders of Registrable Securities who revoke such request
shall reimburse IBC for all its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration Statement; provided,
however, that, if such revocation was based on IBC's failure to comply in any
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material respect with its obligations hereunder, such reimbursement shall not be
required.
SECTION 5.02. Piggyback Registration. (a) Right To Piggyback. If at any
time following the Effective Date IBC proposes to file a Registration Statement
under the Securities Act with respect to a public offering of any of its Common
Stock pursuant to a firm commitment underwritten offering solely for cash for
its own account (other than a Registration Statement (i) on Form S-8 or any
successor forms thereto or (ii) filed solely in connection with a dividend
reinvestment plan or employee benefit plan covering officers or directors of any
of the IBC Affiliated Group) or for the account of any holder of Common Stock,
then IBC shall give written notice of such proposed filing to the Holders at
least 15 Business Days before the anticipated filing date. Such notice shall
offer the Holders the opportunity to register such amount of Registrable
Securities as they may request (a "Piggyback Registration"). Subject to Section
5.02(b), IBC shall include in each such Piggyback Registration all Registrable
Securities with respect to which IBC has received written requests for inclusion
therein within ten Business Days after notice has been given to the Holders.
Each Holder shall be permitted to withdraw all or any portion of the Registrable
Securities of such Holder from a Piggyback Registration at any time prior to the
effective date of such Piggyback Registration; provided, however, that if such
withdrawal occurs after the filing of the Registration Statement with respect to
such Piggyback Registration, the withdrawing Holders shall reimburse IBC for the
portion of the registration expenses payable with respect to the Registrable
Securities so withdrawn.
(b) Priority on Piggyback Registrations. IBC shall permit the Holders
to include all such Registrable Securities on the same terms and conditions as
any similar securities, if any, of IBC included therein. Notwith standing the
foregoing, if the managing underwriter or underwriters participating in such
offering advise the Holders in writing that the total amount of securities
requested to be included in such Piggyback Registration exceeds the amount which
can be sold in (or during the time of) such offering without delaying or
jeopardizing the success of the offering (including the price per share of the
securities to be sold), then the amount of securities to be offered for the
account of the Holders and other holders of securities who have piggyback
registration rights with
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33
respect thereto shall be reduced (to zero if necessary) pro rata on the basis of
the number of shares of Common Stock requested to be registered by each such
Holder or holder participating in such offering.
(c) Right To Abandon. Nothing in this Section 5.02 shall create any
liability on the part of IBC to the Holders if IBC in its sole discretion should
decide not to file a Registration Statement proposed to be filed pursuant to
Section 5.02(a) or to withdraw such Registration Statement subsequent to its
filing, regardless of any action whatsoever that a Holder may have taken,
whether as a result of the issuance by IBC of any notice hereunder or otherwise.
SECTION 5.03. Hold Back Agreement. If (i) during the applicable
Effectiveness Period, IBC shall file a Registration Statement (other than in
connection with the registration of securities issuable pursuant to an employee
stock option, stock purchase or similar plan or pursuant to a merger, exchange
offer or a transaction of the type specified in Rule 145(a) promulgated under
the Securities Act) with respect to the Common Stock or similar securities or
securities convertible into, or exchangeable or exercisable for, such securities
and (ii) with reasonable prior written notice, the managing underwriter or
underwriters (in the case of an underwritten public offering by IBC pursuant to
such Registration Statement) advises IBC in writing (in which case IBC shall
notify the Holders) that a public sale or distribution of Registrable Securities
would materially adversely impact such offering, then each Holder shall, to the
extent not inconsistent with applicable law, refrain from effecting any public
sale or distribution of Registrable Securities during the ten days prior to the
effective date of such Registration Statement and until the earliest to occur of
(A) the abandonment of such offering, (B) 90 days from the effective date of
such Registration Statement and (C) if such offering is an underwritten
offering, the termination in whole or in part of any "hold back" period obtained
by the underwriter or underwriters in such offering from IBC in connection
therewith (each such period, a "Hold Back Period").
SECTION 5.04. Registration Procedures. In connection with the
registration obligations of IBC pursuant to and in accordance with Sections 5.01
and 5.02 (and subject to Sections 5.01 and 5.02), IBC shall use commercially
reasonable efforts to effect such registration to permit the sale of such
Registrable Securities in
<PAGE> 39
34
accordance with the intended method or methods of disposition thereof, and
pursuant thereto IBC shall as expeditiously as possible (but subject to Sections
5.01 and 5.02):
(a) prepare and file with the Commission a Registration
Statement for the sale of the Registrable Securities on any form for
which IBC then qualifies or which counsel for IBC shall deem
appropriate in accordance with such Holders' intended method or methods
of distribution thereof, subject to Section 5.01(b), and, subject to
IBC's right to terminate or abandon a registration pursuant to Section
5.02(c), use commercially reasonable efforts to cause such Registration
Statement to become effective and remain effective as provided herein;
(b) prepare and file with the Commission such amendments
(including post-effective amendments) to such Registration Statement,
and such supplements to the related Prospectus, as may be required by
the rules, regulations or instructions applicable to the Securities Act
during the applicable period in accordance with the intended methods of
disposition specified by the Holders of the Registrable Securities
covered by such Registration Statement, make generally available
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act (provided that IBC shall be deemed to have complied with
this clause if it has complied with Rule 158 promulgated under the
Securities Act), and cause the related Prospectus as so supplemented to
be filed pursuant to Rule 424 promulgated under the Securities Act;
provided, however, that before filing a Registration Statement or
Prospectus, or any amendments or supplements thereto (other than
reports required to be filed by it under the Exchange Act), IBC shall
furnish to the Holders of Registrable Securities covered by such
Registration Statement and counsel to the Holders (provided that the
Holders shall appoint one counsel only) for review and comment, copies
of all documents required to be filed;
(c) notify the Holders of any Registrable Securities covered
by such Registration Statement promptly and (if requested) confirm such
notice in writing, (i) when a Prospectus or any Prospectus supplement
or post-effective amendment has been filed, and, with respect to such
Registration Statement or any
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35
post-effective amendment, when the same has become effective, (ii) of
any request by the Commission for amendments or supplements to such
Registration Statement or the related Prospectus or for additional
information regarding such Holders, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of such
Registration Statement or the initiation of any proceedings for that
purpose, (iv) of the receipt by IBC of any notification with respect to
the suspension of the qualification or exemption from qualification of
any of the Registrable Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose and (v) of
the happening of any event that requires the making of any changes in
such Registration Statement, Prospectus or documents incorporated or
deemed to be incorporated therein by reference so that they will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) use commercially reasonable efforts to obtain the
withdrawal of any order suspending the effectiveness of such
Registration Statement or the lifting of any suspension of the
qualification or exemption from qualification of any Registrable
Securities for sale in any jurisdiction in the United States;
(e) furnish to the Holder of any Registrable Securities
covered by such Registration Statement, counsel for such Holders and
each managing underwriter, if any, without charge, one conformed copy
of such Registration Statement, as declared effective by the
Commission, and each post-effective amendment thereto, in each case
including financial statements and schedules and all exhibits and
reports incorporated or deemed to be incorporated therein by reference;
and deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus
and any post-effective amendment or supplement thereto, as such Holder
may reasonably request in order to facilitate the disposition of the
Registrable Securities of such Holder covered by such Registration
Statement in conformity with the requirements of the Securities Act;
<PAGE> 41
36
(f) prior to any public offering of Registrable Securities
covered by such Registration Statement, use commercially reasonable
efforts to register or qualify such Registrable Securities for offer
and sale under the state securities laws of such jurisdictions as the
Holders of such Registrable Securities shall reasonably request in
writing; provided, however, that IBC shall in no event be required to
qualify generally to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not at the time so qualified or
to execute or file a general consent to service of process in any such
jurisdiction where it has not theretofore done so or to take any action
that would subject it to general service of process or taxation in any
such jurisdiction where it is not then subject;
(g) upon the occurrence of any event contemplated by paragraph
(c)(v) above, prepare a supplement or post-effective amendment to such
Registration Statement or the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference and file
any other required document so that, as thereafter delivered to the
purchasers of the Registrable Securities being sold thereunder
(including upon the termination of any Delay Period), such Prospectus
will not contain an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading;
(h) use commercially reasonable efforts to cause all
Registrable Securities covered by such Registration Statement to be
listed on each securities exchange or automated interdealer quotation
system, if any, on which similar securities issued by IBC are then
listed or quoted;
(i) on or before the effective date of such Registration
Statement, provide the transfer agent of IBC for the Registrable
Securities with printed certificates for the Registrable Securities
covered by such Registration Statement, which are in a form eligible
for deposit with The Depository Trust Company;
(j) if such offering is an underwritten offering, make
available for inspection by any Holder of Registrable Securities
included in such Registration
<PAGE> 42
37
Statement, any underwriter participating in any offering pursuant to
such Registration Statement and any attorney, accountant or other agent
retained by any such Holder or underwriter (collectively, the
"Inspectors"), all financial and other records and other information,
pertinent corporate documents and properties of any of IBC and its
Subsidiaries, as shall be reasonably necessary to enable them to
exercise their due diligence responsibilities; and
(k) if such offering is an underwritten offering, enter into
such agreements (including an underwriting agreement in form, scope and
substance as is customary in underwritten offerings) and take all such
other appropriate and reasonable actions requested by the Holders of a
majority of the Registrable Securities being sold in connection
therewith (including those reasonably requested by the managing
underwriters) in order to expedite or facilitate the disposition of
such Registrable Securities, and in such connection, (i) use
commercially reasonable efforts to obtain opinions of counsel to IBC
and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing
underwriters and counsel to the Holders of the Registrable Securities
being sold), addressed to each selling Holder of Registrable Securities
covered by such Registration Statement and each of the underwriters as
to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by such counsel and underwriters, (ii) use commercially
reasonable efforts to obtain "cold comfort" letters and updates thereof
from the independent certified public accountants of IBC (and, if
necessary, any other independent certified public accountants of any
Subsidiary of IBC or of any business acquired by IBC for which
financial statements and financial data are, or are required to be,
included in the Registration Statement), addressed to each selling
holder of Registrable Securities covered by the Registration Statement
(unless such accountants shall be prohibited from so addressing such
letters by applicable standards of the accounting profession) and each
of the underwriters, such letters to be in customary form and covering
matters of the type customarily covered in "cold comfort" letters in
connection with underwritten offerings, (iii) upon the reasonable
request of the
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38
underwriters, make senior officers of IBC available to participate in a
series of "roadshow" meetings and (iv) if requested and if an
underwriting agreement is entered into, provide indemnification
provisions and procedures substantially to the effect set forth in
Article IX hereof with respect to all parties to be indemnified
pursuant to said Article. The above shall be done at each closing under
such underwriting or similar agreement, or as and to the extent
required thereunder.
IBC may require each Holder of Registrable Securities covered by a
Registration Statement to furnish such information regarding such Holder and
such Holder's intended method of disposition of such Registrable Securities as
it may from time to time reasonably request in writing. If any such information
is not furnished within a reasonable period of time after receipt of such
request, IBC may exclude such Holder's Registrable Securities from such
Registration Statement.
Each Holder of Registrable Securities covered by a Registration
Statement agrees that, upon receipt of any notice from IBC of the happening of
any event of the kind described in Section 5.04(c)(ii), (iii), (iv) or (v), that
such Holder shall forthwith discontinue disposition of any Registrable
Securities pursuant to such Registration Statement or the related Prospectus
until receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5.04(g), or until such Holder is advised in writing by
IBC that the use of the applicable Prospectus may be resumed, and has received
copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such Prospectus (such period during which disposition is
discontinued being an "Interruption Period") and, if requested by IBC, the
Holder shall deliver to IBC (at the expense of IBC) all copies then in its
possession, other than permanent file copies then in such holder's possession,
of the Prospectus covering such Registrable Securities at the time of receipt of
such request.
Each Holder of Registrable Securities covered by a Registration
Statement further agrees not to utilize any material other than the applicable
current preliminary prospectus or Prospectus in connection with the offering of
such Registrable Securities.
<PAGE> 44
39
SECTION 5.05. Registration Expenses. Whether or not any Registration
Statement is filed or becomes effective, IBC shall pay all Registration Expenses
with respect to a particular offering (or proposed offering). Notwithstanding
the foregoing, the fees and expenses of any Persons retained by any Holder
(other than the fees and expenses of one counsel for all such Holders) any
discounts, commissions or brokers' fees or fees of similar securities industry
professionals, any transfer taxes relating to the disposition of the Registrable
Securities by a Holder and any internal administration and similar costs of such
Holder in connection with such offering (or proposed offering) will be payable
by such Holder and IBC will have no obligation to pay any such amounts.
SECTION 5.06. Underwriting Requirements. (a) Subject to Section
5.06(b), any Holder shall have the right, by written notice, to request that any
Demand Registration provide for an underwritten offering.
(b) In the case of any underwritten offering pursuant to a
Demand Registration, the Holders of a majority of the Registrable Securities to
be disposed of in connection therewith shall select the institution or
institutions that shall manage or lead such offering, which institution or
institutions shall be reasonably satisfactory to IBC. In the case of any
underwritten offering pursuant to a Piggyback Registration, IBC shall select the
institution or institutions that shall manage or lead such offering. No Holder
shall be entitled to participate in an underwritten offering unless and until
such Holder has entered into an underwriting or other agreement with such
institution or institutions for such offering in such form as IBC and such
institution or institutions shall determine.
SECTION 5.07. Transfer of Registration Rights. Any Holder may transfer
all or any portion of its rights under this Article V to (i) any affiliate
thereof in respect of any number of Registrable Securities or (ii) any other
transferee in respect of a number of Registrable Securities owned by such Holder
equal to or exceeding 5% of the outstanding Common Stock at the time of transfer
(each transferee that receives such minimum number of Registrable Securities
shall be referred to herein as a "Transferee"). Any transfer of registration
rights pursuant to this Section 5.07 shall be effective upon receipt by IBC of
(i) written notice from such Holder stating the name and address of any
Transferee and identifying the number of Registrable
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40
Securities with respect to which the 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 Agreement. The
Holders may exercise their rights hereunder in such priority as they shall agree
upon among themselves.
ARTICLE VI
Trademark Agreements
The forms of trademark license agreements set forth as
Exhibits 6.1, 6.2 and 6.3 hereto are hereby incorporated by reference herein.
ARTICLE VII
Information
SECTION 7.01. Provision of Corporate Records. (a) Subject to
applicable law and privileges, from and after the Effective Date, upon the prior
written request by CBS for specific and identified agreements, documents, books,
records or files, including, without limitation, computer files, microfiche,
tape recordings and photographs (collectively, "Records"), relating to or
affecting CBS, IBC shall arrange, as soon as reasonably practicable following
the receipt of such written request, for the provision of appropriate copies of
such Records (or the originals thereof if the party making the request has a
reasonable need for such originals) in the possession of IBC or any of its
Subsidiaries, but only to the extent such items are not already in the
possession of the requesting party.
(b) Subject to applicable law and privileges, from and after
the Effective Date, upon the prior written request by IBC for specific and
identified Records relating to or affecting IBC, CBS shall arrange, as soon as
reasonably practicable following the receipt of such request, for the provision
of appropriate copies of such Records (or the originals thereof if the party
making the request has a reasonable need for such originals) in the possession
of CBS or any of its Subsidiaries, but only to the extent such items are not
already in the possession of the requesting party.
<PAGE> 46
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SECTION 7.02. Access to Information. (a) Subject to applicable
law and privileges, from and after the Effective Date, IBC shall afford to CBS
and its authorized accountants, counsel and other designated representatives
reasonable access during normal business hours, subject to appropriate
restrictions for classified, privileged or confidential information, to the
personnel, properties, books and records of IBC and its Subsidiaries insofar as
such access is reasonably required by CBS.
(b) Subject to applicable law and privileges, from and after
the Effective Date, each of IBC and CBS shall provide to the other, within a
reasonable period of time prior to the time at which such documents shall be
filed with the Commission, all documents proposed to be filed by it and any of
its Subsidiaries with the Commission pursuant to the periodic and interim
reporting requirements of the Exchange Act.
SECTION 7.03. Reimbursement; Other Matters. Except to the
extent otherwise contemplated by any Ancillary Agreement, a party providing
Records or access to information to another party hereto pursuant to this
Article VII shall be entitled to receive from the recipient, upon the
presentation of invoices therefor, payments for such amounts, relating to
supplies, disbursements and other out-of-pocket expenses, as may be reasonably
incurred in providing such Records or access to information.
SECTION 7.04. Confidentiality. Each of IBC and CBS shall not
(without the prior written consent of the other party) use or permit the use of,
and shall hold, and shall cause its consultants and advisors to hold, in strict
confidence, all information concerning the other party in its possession, its
custody or under its control (except to the extent that (a) such information has
been in the public domain through no fault of such party, (b) such information
has been later lawfully acquired from a source other than the other party to
this Agreement or (c) this Agreement or any other Ancillary Agreement permits
the use or disclosure of such information), and each party shall not (without
the prior written consent of the other) otherwise release or disclose such
information to any other Person, except to such party's officers, directors,
employees, auditors, attorneys and agents, in each case on a confidential and
need-to-know basis, unless compelled to disclose such information by judicial or
administrative process or unless such disclosure is required by law and such
party has used
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42
commercially reasonable efforts to consult with the other affected party or
parties prior to such disclosure. To the extent that a party hereto is compelled
by judicial or administrative process to disclose such information under
circumstances in which any evidentiary privilege may be available, such party
agrees to assert such privilege in good faith prior to making such disclosure.
Each of the parties hereto agrees to immediately consult with the other party in
connection with any such judicial or administrative process, including, without
limitation, in determining whether any privilege is available, and further
agrees to allow each such relevant party and its counsel to participate in any
hearing or other proceeding (including, without limitation, any appeal of an
initial order to disclose) in respect of such disclosure and assertion of
privilege.
SECTION 7.05. Destruction of Records. In the event that a
Servicer intends to destroy any records relating to the employment of, or
participation in such Servicer's Benefit Plans by, a Recipient's employees
(including, but not limited to, personnel records and records relating to
medical and other health and welfare benefit plans), such Servicer shall provide
written notice to the Recipient of its intention to do so at least 90 days in
advance of the date that such destruction is expected to be undertaken. Such
Recipient shall have 30 days after receiving such notice to advise such Servicer
in writing whether such Recipient wishes to obtain copies of such records
pertaining to its employees. If such Recipient desires such records, such
Servicer shall, at the sole expense of the Recipient, either provide the
originals thereof to the Recipient or shall copy such records and provide them
to the Recipient.
ARTICLE VIII
Assumption and Satisfaction of Liabilities
From and after the date hereof, (i) CBS shall assume, pay,
perform and discharge all CBS Liabilities and (ii) IBC shall assume, pay,
perform and discharge all IBC Liabilities.
<PAGE> 48
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ARTICLE IX
Indemnification
SECTION 9.01. General Cross Indemnification. (a) Except as
otherwise specifically set forth in any provision of this Agreement, including
Article X relating to Tax Claims, or of any Ancillary Agreement, as of the
Effective Date, CBS shall indemnify, defend and hold harmless the IBC
Indemnitees from and against any and all Indemnifiable Losses of the IBC
Indemnitees arising out of, by reason of or otherwise in connection with (i) the
CBS Liabilities, (ii) the CBS Pension Liabilities, (iii) CBS Indenture
Liabilities, (iv) the breach by CBS or any of its Subsidiaries (other than IBC
and its subsidiaries) of any provision of this Agreement or any Ancillary
Agreement and (v) any claims by a third party unrelated to any IBC Indemnitee
caused by or arising in connection with the gross negligence or willful
misconduct on the part of any employee of any member of the CBS Affiliated Group
in connection with the performance of the CBS Services or the administration of
the CBS Benefit Plans, except to the extent that Indemnifiable Losses were
caused directly or indirectly by acts or omissions of any member of the IBC
Affiliated Group; provided, however, that in the case of any of the CBS Benefit
Plans, the right of indemnification of such member of the IBC Affiliated Group
shall also extend to claims of Transferring Employees but shall not extend to
any Indemnifiable Losses that otherwise would have been suffered by such IBC
Employee(s) in the absence of such gross negligence or willful misconduct on the
part of any employee of any member of the CBS Affiliated Group.
(b) Except as otherwise specifically set forth in any
provision of this Agreement, including Article X relating to Tax Claims, or of
any Ancillary Agreement, as of the Effective Date, IBC shall indemnify, defend
and hold harmless the CBS Indemnitees from and against any and all Indemnifiable
Losses of the CBS Indemnitees arising out of, by reason of or otherwise in
connection with (i) the IBC Liabilities, (ii) the breach by IBC or any of its
Subsidiaries of any provision of this Agreement or any Ancillary Agreement,
(iii) obligations or liabilities of any member of the CBS Affiliated Group, in
whatever form, under or in respect of any guarantees (including the CBS
Guarantee Liabilities) [in respect of bank indebtedness] entered into by such
member for the benefit of any member of the IBC Affiliated Group and (iv) any
third party claims that any
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44
employee of any member of the IBC Affiliated Group acted with gross negligence
or willful misconduct in connection with the performance of the IBC Services or
the administration of the IBC Benefit Plans, except to the extent that
Indemnifiable Losses were caused directly or indirectly by acts or omissions of
any member of the CBS Affiliated Group; provided, however, that in the case of
any of the IBC Benefit Plans, the right of indemnification of such member of the
CBS Affiliated Group shall also extend to claims of CBS Employees but shall not
extend to any Indemnifiable Losses that otherwise would have been suffered by
such CBS Employee(s) in the absence of such gross negligence or willful
misconduct on the part of any employee of any member of the IBC Affiliated
Group. In the event that, on or after the Effective Date, CBS Radio or any of
its Subsidiaries enters into any transaction or arrangement with CBS or any of
its Subsidiaries (other than CBS Radio and its Subsidiaries) pursuant to the
terms of this Agreement that would otherwise result in a violation or default of
the provisions of any of the CBS Radio Indentures that impose restrictions on
the ability of CBS Radio or its Subsidiaries to enter into transactions with any
of their affiliates, IBC agrees to make, and to cause CBS Radio to make, such
arrangements as are necessary to ensure that CBS Radio and its Subsidiaries
remain in compliance with such provisions of the CBS Radio Indentures.
(c) The indemnification provisions contained in this Section
9.01 shall be applicable whether or not any Action or the facts or transactions
giving rise to such Action arose prior to, on or subsequent to the date of this
Agreement.
SECTION 9.02. Registration Statement Indemnification. (a) IBC
shall indemnify and hold harmless, to the full extent permitted by law, CBS and
its Subsidiaries (other than any of the IBC Affiliated Group) in respect of the
Registration Statement and Prospectus in connection with the Initial Public
Offering, Holders of Registrable Securities whose Registrable Securities are
covered by a Registration Statement or Prospectus, the officers, directors,
employees and agents of each of them, each Person who controls any of them
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, employees and agents of each such
controlling Person (each, a "Registration Indemnitee"), from and against any
and all Indemnifiable Losses arising out of or based upon any untrue
<PAGE> 50
45
statement or alleged untrue statement of a material fact contained in such
Registration Statement or Prospectus, or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as the same is based on written information furnished to IBC by or on
behalf of any Registration Indemnitee specifically for inclusion therein;
provided, however, that IBC shall not be liable to any such Registration
Indemnitee to the extent that any such Indemnifiable Losses arise out of or are
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) having previously
been furnished by or on behalf of IBC with copies of the Prospectus, such
Registration Indemnitee (or any underwriter for such Registration Indemnitee)
failed to send or deliver a copy of the Prospectus with or prior to the delivery
of written confirmation of the sale of Registrable Securities by such
Registration Indemnitee to the Person asserting the claim from which such
Indemnifiable Losses arise and (ii) the Prospectus would have corrected in all
material respects such untrue statement or alleged untrue statement or such
omission or alleged omission; and provided further that IBC shall not be liable
in any such case to the extent that any such Indemnifiable Losses arise out of
or are based upon an untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if (x) such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in all material
respects in an amendment or supplement to the Prospectus and (y) having
previously been furnished by or on behalf of IBC with copies of the Prospectus
as so amended or supplemented, such Registration Indemnitee (or any underwriter
for such Registration Indemnitee) thereafter fails to deliver such Prospectus as
so amended or supplemented, prior to or concurrently with the sale of
Registrable Securities. This indemnity agreement will be in addition to any
liability that IBC may otherwise have.
(b) In connection with any Registration Statement in which a
Holder is participating, such Holder shall furnish to IBC in writing such
information as IBC reasonably requests in connection with such Registration
Statement or the related Prospectus and shall indemnify and hold harm less, to
the full extent permitted by law, IBC, its officers, directors, employees and
agents, each Person who controls IBC (within the meaning of Section 15 of the
<PAGE> 51
46
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
employees or agents of such controlling Persons, to the same extent as the
foregoing indemnity from IBC to each Registration Indemnitee described in
Section 9.02(a), but only with reference to written information relating to such
Holder furnished to IBC by or on behalf of such Holder specifically for
inclusion in the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability which any Holder may
otherwise have.
SECTION 9.03. Limitations on Indemnification Obligations. The
amount that any party (an "Indemnifying Party") is or may be required to pay to
any other Person (an "Indemnitee") pursuant to Section 9.01 or 9.02, as
applicable, shall be reduced (retroactively or prospectively) by any Insurance
Proceeds or other amounts actually recovered by or on behalf of such Indemnitee
in respect of the relevant Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently receive Insurance
Proceeds or other amounts in respect of such Indemnifiable Loss, then such
Indemnitee shall pay to such Indemnifying Party an amount equal to the
difference between (a) the sum of the amount of such Insurance Proceeds and
other amounts actually received by or on behalf of such Indemnitee in respect of
the relevant Indemnifiable Loss and (b) the amount of such Indemnifiable Loss.
SECTION 9.04. Procedures for Indemnification. (a) Third Party
Claims. If a claim or demand is made against an Indemnitee by any Person who is
not a party to this Agreement (a "Third Party Claim") as to which such
Indemnitee is entitled to indemnification pursuant to this Agreement, such
Indemnitee shall notify the Indemnifying Party in writing, and in reasonable
detail, of the Third Party Claim promptly (and in any event within 10 Business
Days) after receipt by such Indemnitee of written notice of the Third Party
Claim; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Party shall not be liable for any expenses
incurred during the period in which the Indemnitee failed to give such notice).
Thereafter, the Indemnitee shall deliver to the Indemnifying Party, promptly
(and in any event within 10 business days)
<PAGE> 52
47
after the Indemnitee's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnitee relating to the Third Party
Claim.
If a Third Party Claim is made against an Indemnitee, the
Indemnifying Party shall be entitled to participate in the defense thereof and,
if it so chooses and acknowledges in writing its obligation to indemnify the
Indemnitee therefor, to assume the defense thereof with counsel selected by the
Indemnifying Party, provided that such counsel is not reasonably objected to by
the Indemnitee. Should the Indemnifying Party so elect to assume the defense of
a Third Party Claim, the Indemnifying Party shall not be liable to the
Indemnitee for legal or other expenses subsequently incurred by the Indemnitee
in connection with the defense thereof. If the Indemnifying Party assumes such
defense, the Indemnitee shall have the right to participate in the defense
thereof and to employ counsel, at its own expense, separate from the counsel
employed by the Indemnifying Party, it being understood that the Indemnifying
Party shall control such defense. The Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the Indemnitee for any
period during which the Indemnifying Party has failed to assume the defense
thereof (other than during the period prior to the time the Indemnitee shall
have given notice of the Third Party Claim as provided above). If the
Indemnifying Party so elects to assume the defense of any Third Party Claim, all
the Indemnitees shall cooperate with the Indemnifying Party in the defense or
prosecution thereof.
If the Indemnifying Party acknowledges in writing
responsibility for a Third Party Claim, then in no event shall the Indemnitee
admit any liability with respect to, or settle, compromise or discharge, such
Third Party Claim without the Indemnifying Party's prior written consent;
provided, however, that the Indemnitee shall have the right to settle,
compromise or discharge such Third Party Claim without the consent of the
Indemnifying Party if the Indemnitee releases the Indemnifying Party from its
indemnification obligation hereunder with respect to such Third Party Claim and
such settlement, compromise or discharge would not otherwise adversely affect
the Indemnifying Party. If the Indemnifying Party acknowledges in writing
responsibility for a Third Party Claim, the Indemnitee shall agree to any
settlement, compromise or discharge of a Third Party Claim that the Indemnifying
Party
<PAGE> 53
48
may recommend and that by its terms obligates the Indemnifying Party to pay the
full amount of the liability in connection with such Third Party Claim and
releases the Indemnitee completely in connection with such Third Party Claim and
that would not otherwise adversely affect the Indemnitee; provided, however,
that the Indemnitee may refuse to agree to any such settlement, compromise or
discharge if the Indemnitee agrees that the Indemnifying Party's indemnification
obligation hereunder with respect to such Third Party Claim shall not exceed the
difference between (i) the amount that would be required to be paid by or on
behalf of the Indemnifying Party in connection with such settlement, compromise
or discharge and (ii) the amount actually paid by or on behalf of the
Indemnifying Party in connection with the settlement, compromise or discharge of
such Third Party Claim.
Notwithstanding the foregoing, the Indemnifying Party shall
not be entitled to assume the defense of any Third Party Claim (and shall be
liable for the fees and expenses of counsel incurred by the Indemnitee in
defending such Third Party Claim) if the Third Party Claim seeks an order,
injunction or other equitable relief or relief for other than money damages
against the Indemnitee which the Indemnitee reasonably determines, after
conferring with its counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief portion of the Third
Party Claim can be so separated from that for money damages, the Indemnifying
Party shall be entitled to assume the defense of the portion relating to money
damages.
SECTION 9.05. Indemnification Payments. Indemnification
required by this Article IX shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as and when bills are
received or loss, liability, claim, damage or expense is incurred.
SECTION 9.06. Other Adjustments. (a) The amount of any
Indemnifiable Loss shall be (i) increased to take into account any net Tax cost
actually incurred by the Indemnitee arising from any payments received from the
Indemnifying Party (grossed up for such increase) and (ii) reduced to take
account of any net Tax benefit actually realized by the Indemnitee arising from
the incurrence or payment of any such Indemnifiable Loss. In computing the
amount of such Tax cost or Tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain,
<PAGE> 54
49
loss, deduction or credit before recognizing any item arising from the receipt
of any payment with respect to an Indemnifiable Loss or the incurrence or
payment of any Indemnifiable Loss.
(b) In addition to any adjustments required pursuant to
Section 9.04 or Section 9.06(a), if the amount of any Indemnifiable Loss shall,
at any time subsequent to the payment required by this Agreement, be reduced by
recovery, settlement or otherwise, the amount of such reduction, less (i) any
expenses incurred in connection therewith and (ii) any Tax imposed thereon
(determined after taking into account any Tax benefit arising from the repayment
provided for in this Section 9.06(b)), shall promptly be repaid by the
Indemnitee to the Indemnifying Party, up to the aggregate amount of any payments
received from such Indemnifying Party pursuant to this Agreement in respect of
such Indemnifiable Loss.
ARTICLE X
Tax Indemnification
SECTION 10.01. Intercompany Transfers of Property and
Services. (a) Any sales or use tax arising from or imposed upon the transfer of
property or services by CBS or any of its Subsidiaries (other than IBC and its
Subsidiaries) to IBC or any of its Subsidiaries, or by IBC or any of its
Subsidiaries to CBS or any of its Subsidiaries (other than IBC and its
Subsidiaries), after the consummation of the Initial Public Offering shall be
the liability of the company receiving such property or services.
(b) Any payroll tax attributable to 1998 that arises from the
employment by IBC after the consummation of the Initial Public Offering of
individuals who performed services for IBC or any of its Subsidiaries during
1998 shall be the liability of IBC.
SECTION 10.02. Special Procedures Regarding Tax Claims. (a)
Any claims for indemnification arising under Section 10.01 are hereinafter
referred to as "Tax Claims".
(b) Section 4 of the Tax Sharing Agreement shall govern all
Tax controversies with respect to all Tax Claims, notwithstanding any
inconsistency between any of the
<PAGE> 55
50
provisions of this Agreement and Section 4 of the Tax Sharing Agreement.
Further, Sections 8(p) and 9 of the Tax Sharing Agreement shall govern the
meaning, interpretation, application or enforceability of any of the provisions
of this Agreement with respect to Tax Claims, notwithstanding any inconsistency
between any of the provisions of this Agreement and Sections 8(p) and 9 of the
Tax Sharing Agreement.
(c) Indemnification required by this Article X shall be made
within 24 hours of receipt of a written request from an indemnifiable party.
Such indemnifiable party shall attach to such written request documentation in
support of such Tax Claim.
(d) The amount of any indemnification payment in respect of
any Tax Claim shall be (i) increased to take account of any net Tax cost
actually incurred by the Indemnitee arising from any indemnification payments
received from the Indemnifying Party (grossed up for such increase) and (ii)
reduced to take account of any immediate net Tax benefit actually realized by
the Indemnitee arising from the incurrence or payment of any such
indemnification payment. In computing the amount of such Tax cost or Tax
benefit, the Indemnitee shall be deemed to recognize all other items of income,
gain, loss, deduction or credit before recognizing any item arising from the
receipt of any indemnification payment in respect of any Tax Claim or the
incurrence or payment of any indemnification payment in respect of any Tax
Claim.
(e) If the amount of any indemnification claim in respect of
any Tax Claim shall, at any time subsequent to the payment required by this
Agreement, be reduced by recovery, settlement or otherwise, the amount of such
reduction, less any expenses incurred in connection therewith, shall promptly be
repaid by the Indemnitee to the Indemnifying Party, up to the aggregate amount
of any indemnification payments received from such Indemnifying Party pursuant
to this Agreement in respect of any Tax Claim.
SECTION 10.03. Tax-Free Spin-Off. Prior to a Tax-Free
Spin-Off, CBS shall amend, or shall cause CBS Broadcasting or any other member
of the CBS Affiliated Group that owns Class B Common Stock to amend, the
Restated Certificate of Incorporation of IBC to provide for the automatic
conversion of shares of Class B Common Stock into
<PAGE> 56
51
shares of Class A Common Stock at a specified time following the Tax-Free
Spin-Off, if CBS determines, in its sole discretion, that such conversion would
be consistent with qualification of the transaction as a Tax-Free Spin-Off.
ARTICLE XI
Term of Agreement
SECTION 11.01. Termination. (a) Except as otherwise provided
in this Article XI or as otherwise agreed to in writing by the parties hereto,
this Agreement shall be subject to termination by either CBS or IBC, upon six
months' prior written notice, after the Trigger Date.
(b) CBS may terminate any CBS Service at any time if IBC shall
have failed to perform any of its material obligations under this Agreement
relating to any such CBS Service, provided that CBS has notified IBC in writing
of such failure and such failure shall have continued for a period of 60 days
after receipt by IBC of notice of such failure.
(c) IBC may terminate any IBC Service at any time if CBS shall
have failed to perform any of its material obligations under this Agreement
relating to any such IBC Service, provided that IBC has notified CBS in writing
of such failure and such failure shall have continued for a period of 60 days
after receipt by CBS of notice of such failure.
SECTION 11.02. Effect of Termination. (a) Other than as
required by law, upon termination of any Service pursuant to Section 11.01, and
upon termination of this Agreement in accordance with its terms, CBS or IBC, as
applicable, will have no further obligation to provide the terminated Service
(or any Service, in the case of termination of this Agreement) and IBC or CBS,
as applicable, shall have no obligation to pay any costs relating to such
Services or make any other payments hereunder, provided that notwithstanding any
such termination (i) IBC and/or CBS, as applicable, shall remain liable
to CBS and/or IBC, as applicable, for costs owed and payable in respect of
Services provided prior to the effective date of such termination or any costs
attributable to, arising out of or in connection with such termination
(including severance costs, long-term lease obligations and
<PAGE> 57
52
rent) and (ii) CBS and/or IBC, as applicable, shall continue to charge IBC
and/or CBS, as applicable, for administrative and program costs relating to
benefits provided after but incurred prior to the termination of any Service and
other services required to be provided after the termination of such Service and
IBC and/or CBS, as applicable, shall be obligated to pay such costs in
accordance with the terms of this Agreement.
(b) Following termination of any Service under this Agreement,
CBS and IBC agree to cooperate in providing for an orderly transition of such
Service to IBC or CBS, as applicable, or to a successor service provider.
Without limiting the foregoing, (i) CBS agrees to provide to IBC, within 90 days
of the termination of all CBS Services in respect of any Transferring Employees
participating in CBS Benefit Plans, and (ii) IBC agrees to provide to CBS,
within 90 days of the termination of all IBC Services in respect of any CBS
Employees participating in IBC Benefit Plans, copies in a format designated by
CBS or IBC, as applicable, of all records relating directly or indirectly to
benefit determinations of the IBC Affiliated Group, including compensation and
service records or records required to be maintained by law and (iii) CBS and
IBC shall work with the other party in developing a reasonable transition
schedule with respect thereto.
SECTION 11.03. Survival of Termination. Notwithstanding any
provisions in this Agreement to the contrary, any obligations of or covenants
and agreements made by each of CBS and IBC under this Article XI and Articles V,
VI, VIII, IX and X and Sections 3.03 and 7.04 shall survive (i) the sale or
other transfer by either of them of any assets or businesses or the assignment
by either of them of any Liabilities, with respect to any Indemnifiable Loss of
any Indemnitee related to such assets, businesses or Liabilities and (ii) the
termination of this Agreement, and shall continue in full force and effect
(subject to the terms of such provisions).
ARTICLE XII
Miscellaneous
SECTION 12.01. Complete Agreement; Construction. This
Agreement, including the Exhibits and Schedules, and the Ancillary Agreements
shall constitute the entire
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53
agreement between the parties with respect to the subject matter hereof and
shall supersede all previous negotiations, commitments and writings with respect
to such subject matter. In the event of any inconsistency between this Agreement
and any Exhibit or Schedule hereto, such Exhibit or Schedule shall prevail.
Notwithstanding any other provisions in this Agreement to the contrary, in the
event and to the extent that there shall be a conflict between the provisions of
this Agreement and the provisions of any Ancillary Agreement, such Ancillary
Agreement shall control.
SECTION 12.02. Ancillary Agreements. This Agreement is not
intended to address, and should not be interpreted to address, the matters
specifically and expressly covered by the Ancillary Agreements. In the event of
any inconsistency between this Agreement and any Ancillary Agreement, the terms
of such Ancillary Agreement shall govern.
SECTION 12.03. Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been signed by each of the parties and delivered to the other parties.
SECTION 12.04. Notices. All notices and other communications
hereunder shall be in writing and hand delivered or mailed by registered or
certified mail (return receipt requested) or sent by any means of electronic
message transmission with delivery confirmed (by voice or otherwise) to the
parties at the following addresses (or at such other addresses for a party as
shall be specified by like notice) and shall be deemed given on the date on
which such notice is received:
To IBC:
40 West 57th Street
New York, NY 10019
Attention: Farid Suleman
Executive Vice President,
Chief Financial Officer,
Treasurer and Secretary
Telephone: (212) 314-9215
Facsimile: (212) 314-9336
<PAGE> 59
To CBS:
51 West 52nd Street
New York, NY 10019
Attention: Louis J. Briskman, Esq.
Executive Vice President
and General Counsel
Telephone: (212) 975-4915
Facsimile: (212) 597-4031
SECTION 12.05. Waivers. The failure of either party to require
strict performance by the other party of any provision in this Agreement shall
not waive or diminish that party's right to demand strict performance thereafter
of that or any other provision hereof.
SECTION 12.06. Amendments. This Agreement may not be modified
or amended except by an agreement in writing signed by the parties.
SECTION 12.07. Assignment. This Agreement shall be assignable,
other than as provided in paragraph (u) of Article VI, in whole in connection
with a merger or consolidation or the sale of all or substantially all the
assets of a party hereto so long as the resulting, surviving or transferee
entity assumes all the obligations of the relevant party hereto by operation of
law or pursuant to an agreement in form and substance reasonably satisfactory to
the other party to this Agreement. Otherwise this Agreement shall not be
assignable, in whole or in part, directly or indirectly, by any party hereto
without the prior written consent of the others, and any attempt to assign any
rights or obligations arising under this Agreement without such consent shall be
void.
SECTION 12.08. Successors and Assigns. The provisions of this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties and their respective permitted successors and permitted assigns.
SECTION 12.09. Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements, covenants and obligations set forth herein to be performed by any
Subsidiary of such party or by any entity that is
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55
contemplated to be a Subsidiary of such party on and after the Effective Date.
SECTION 12.10. Third Party Beneficiaries. Except as provided
in Article IX relating to Indemnitees, this Agreement is solely for the benefit
of the parties hereto and their respective Subsidiaries and affiliates and
should not be deemed to confer upon or entitle any third party, including
employees of CBS or IBC (other than as provided in Sections 9.01(a) and (b)),
any remedy, claim, liability, benefit, reimbursement, compensation, claim of
action or otherwise establish or create any rights on the part of such third
party in excess of those existing without reference to this Agreement. Nothing
in this Agreement is intended to restrict or limit CBS or IBC, as applicable, in
the exercise of its rights or the fulfillment of its duties as a plan sponsor.
SECTION 12.11. Attorney Fees. A party in breach of this
Agreement shall, on demand, indemnify and hold harmless the other party hereto
for and against all out-of-pocket expenses, including, without limitation, legal
fees, incurred by such other party by reason of the enforcement and protection
of its rights under this Agreement. The payment of such expenses is in addition
to any other relief to which such other party may be entitled hereunder or
otherwise.
SECTION 12.12. Title and Headings. Titles and headings to
section herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
SECTION 12.13. Schedules and Exhibits. The Schedules and
Exhibits shall be construed with and as an integral part of this Agreement to
the same extent as if the same had been set forth verbatim herein.
SECTION 12.14. Specific Performance. Each of the parties
hereto acknowledges that there is no adequate remedy at law for failure by such
parties to comply with the provisions of this Agreement and that such failure
would cause immediate harm that would not be adequately compensable in damages,
and therefore agree that their agreements contained herein may be specifically
enforced without the requirement of posting a bond or other security, in
addition to all other remedies available to the parties hereto under this
Agreement.
<PAGE> 61
56
SECTION 12.15. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE
TO CONTRACTS EXECUTED IN AND TO BE PERFORMED IN THAT STATE.
SECTION 12.16. Consent to Jurisdiction. Each of the parties
hereto irrevocably submits to the exclusive jurisdiction of (a) the Supreme
Court of the State of New York, New York County, and (b) the United States
District Court for the Southern District of New York, for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of the parties agrees to commence any
action, suit or proceeding relating hereto either in the United States District
Court for the Southern District of New York or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each of the parties
further agrees that service of any process, summons, notice or document by
United States registered mail to such party's respective address set forth above
shall be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction in
this Section 12.16. Each of the parties irrevocably and unconditionally waives
any objection to the laying of venue of any action, suit or preceding arising
out of this Agreement or the transaction contemplated hereby in (i) the Supreme
Court of the State of New York, New York County, or (ii) the United States
District Court for the Southern District of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
SECTION 12.17. Severability. In the event any on or more of
the provisions contained in this Agreement should be held 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
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57
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the day and year first above written.
CBS CORPORATION,
by ________________________________
Name:
Title:
INFINITY BROADCASTING
CORPORATION,
by ________________________________
Name:
Title:
<PAGE> 1
Exhibit 10.4
TAX SHARING AGREEMENT
Tax Sharing and Indemnification Agreement (the "Agreement"), dated
as of [DATE], by and between CBS Corporation, a Pennsylvania corporation
("CBS"), and Infinity Broadcasting Corporation, a Delaware corporation
("Infinity").
WHEREAS, CBS and its direct and indirect domestic subsidiaries,
including Infinity, are currently members of an Affiliated Group, of which CBS
is the common parent corporation;
WHEREAS, Infinity, which owns (directly and indirectly) all of CBS's
radio broadcasting and outdoor advertising properties, intends to undertake an
initial public offering ("IPO");
WHEREAS, in contemplation of the IPO, the parties hereto have
determined to enter into this Tax Sharing (the "Agreement"), setting forth their
agreement with respect to certain tax matters;
NOW THEREFORE, in consideration of the premises set forth above and
the terms and conditions set forth below, the parties hereto agree as follows:
Section 1. Definitions. For purposes of this Agreement, the following
definitions shall apply:
(a) "Adjustment" shall mean any proposed or final change in the Tax
liability of a taxpayer.
(b) "Affiliated Group" shall mean an affiliated group of
corporations within the meaning of section 1504(a) of the Code.
(c) "CBS Group" shall mean CBS and its Subsidiaries, excluding,
however, any member of the Infinity Group.
1
<PAGE> 2
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Final Determination" shall mean the final resolution of any tax
matter, including, but not limited to, a closing agreement with the IRS or the
relevant state, local or foreign taxing authority, a claim for refund which has
been allowed, a deficiency notice with respect to which the period for filing a
petition with the Tax Court or the relevant state, local or foreign tribunal has
expired, or a decision of any court of competent jurisdiction that is not
subject to appeal or as to which the time for appeal has expired.
(f) "Income Taxes" shall mean all Taxes imposed on or measured in
whole or in part by income, capital or net worth or a taxable base in the nature
of income, capital or net worth, and shall include any addition to Tax,
additional amount, interest and penalty imposed with respect to such Taxes.
(g) "Income Tax Return" shall mean any Tax Return with respect to
Income Taxes.
(h) "Indemnifying Party" shall mean any party that is required to
pay any other party pursuant to the terms and conditions of this Agreement.
(i) "Indemnified Party" shall mean any party that is entitled to
receive payment from an Indemnifying Party pursuant to the terms and conditions
of this Agreement.
(j) "Infinity Group" shall mean Infinity and its Subsidiaries. With
respect to any Taxable Period beginning before the IPO, the Infinity Group shall
be determined as if the Infinity Group as constituted on the date of the IPO had
been constituted on the first day of such Taxable Period, and shall include the
assets and operations of the radio broadcasting, radio programming and outdoor
advertising businesses of CBS and its Subsidiaries as they existed for such
Taxable Period.
2
<PAGE> 3
(k) "IRS" shall mean the United States Internal Revenue Service or
any successor thereto, including but not limited to its agents, representatives,
and attorneys.
(l) "person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
(m) "Subsidiary" shall mean, with respect to any person, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such person or any Subsidiary of such person is a general partner or
(ii) at least 50% of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization or at least 50% of the value of the outstanding equity is directly
or indirectly owned or controlled by such person or by any one or more of its
Subsidiaries, or by such person and one or more of its Subsidiaries.
(n) "Taxes" shall mean all federal, state, local, foreign or other
governmental taxes, assessments, duties, fees, levies or similar charges of any
kind, including all income, profits, franchise, excise, property, use,
intangibles, sales, value-added, ad valorem, payroll, employment, withholding,
estimated and other taxes of any kind whatsoever whether disputed or not, and
including all additions to tax, additional amounts, interest and penalties
imposed with respect to such amounts.
(o) "Tax Benefit" shall mean a reduction in the Tax liability of a
taxpayer (or of the Affiliated Group of which it is a member) for any taxable
period. Except as otherwise provided in this Agreement, a Tax Benefit shall be
deemed to have been realized or received from a Tax Item in a taxable period
only if and to the extent that the Tax liability of the taxpayer (or of the
Affiliated Group of which it is a member) for such period is less than it would
have been if such Tax liability were determined without regard to such Tax Item.
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(p) "Tax Controversy" shall mean any examination, audit, claim,
dispute, litigation, proposed settlement, proposed adjustment or related matter
with respect to Taxes.
(q) "Tax Detriment" shall mean an increase in the Tax liability of a
taxpayer (or of the Affiliated Group of which it is a member) for any taxable
period. Except as otherwise provided in this Agreement, a Tax Detriment shall be
deemed to have been realized or suffered from a Tax Item in a taxable period,
only if and to the extent that the Tax liability of the taxpayer (or the
Affiliated Group of which it is a member) for such period is greater than it
would have been if such Tax liability were determined without regard to such Tax
Item.
(r) "Tax Item" shall mean any item of income, gain, loss, deduction,
credit, recapture of credit, or any other item which may have the effect of
increasing or decreasing Taxes paid or payable.
(s) "Taxable Period" shall mean any taxable year or portion thereof.
(t) "Tax Return" shall mean any return, report, form or other
information filed or required to be filed with any taxing authority with respect
to Taxes.
Section 2. Tax Payments
(a) Estimated Income Tax Payments. For each Taxable Period beginning
after the IPO, Infinity shall pay, or cause to be paid, to CBS the amount of
estimated Income Taxes incurred by the Infinity Group and its members or, in the
case of an Income Tax Return with respect to which any members of the Infinity
Group join any members of the CBS Group in filing on a consolidated, combined or
unitary basis, the amount of estimated Income Taxes that would be incurred by
the Infinity Group and its members had such members not filed an Income Tax
Return on such basis ("Estimated Income Tax Payments"). For any Taxable Period
that begins prior to and ends after the IPO (a "Straddle Period"), Infinity
shall pay, or cause to be paid, to CBS the Estimated
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Income Tax Payments that are attributable to the portion of the Straddle Period
beginning the day immediately following the date of the IPO (a "Post-Closing
Straddle Period"), calculated as if there was an interim closing of the books as
of the close of business on the date of the IPO. For purposes of the determining
the amount of a member of the Infinity Group's Estimated Income Tax Payments, to
the extent that such member would be entitled to file an Income Tax Return on a
consolidated, combined or unitary basis with any other member of the Infinity
Group, Estimated Income Tax Payments are determined as though such members filed
on a consolidated, combined or unitary basis.
(b) Separate Income Tax Liability. For each Taxable Period beginning
after the IPO, including any Post-Closing Straddle Period, Infinity shall pay,
or cause to be paid, to CBS an amount equal to the excess, if any, of (i) the
Income Taxes incurred by the Infinity Group and its members or, in the case of
an Income Tax Return with respect to which any members of the Infinity Group
join any members of the CBS Group in filing on a consolidated, combined or
unitary basis, the amount of Income Taxes that would be incurred by the Infinity
Group and its members had such members not filed an Income Tax Return on such
basis ("Separate Income Tax Liability"), over (ii) the aggregate amount of
Estimated Income Tax Payments actually made to CBS with respect to the Separate
Income Tax Liability for such Taxable Period. If the aggregate amount of
Estimated Income Tax Payments actually made to CBS with respect to the Separate
Income Tax Liability for such Taxable Period exceeds such Separate Income Tax
Liability, CBS shall pay to Infinity an amount equal to such excess. In
addition, to the extent that any member of the CBS Group may utilize for any
Taxable Period beginning after the IPO, including any Post-Closing Straddle
Period, any credits or deductions, including, without limitation, foreign tax
credits, alternative minimum tax credits, net operating losses or net capital
losses, which are attributable to the Infinity Group, and that such utilization
results in a Tax Benefit being realized by such member of the CBS Group
(treating any credits or deductions attributable to the CBS Group as utilized
prior to the utilization of any credits or deductions attributable to the
Infinity Group), then CBS shall pay to Infinity the amount of such Tax Benefit
at the time of filing of the Tax Return
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reflecting the realization of the Tax Benefit and such credits or deductions for
which CBS has paid Infinity shall not be treated as utilizable by any member of
the Infinity Group for purposes of computing such member's Estimated Income Tax
Payments or Separate Income Tax Liability. For purposes of the determining the
amount of a member of the Infinity Group's Separate Income Tax Liability, to the
extent that such member would be entitled to file an Income Tax Return on a
consolidated, combined or unitary basis with any other member of the Infinity
Group, the Separate Income Tax Liability is determined as though such members
filed on a consolidated, combined or unitary basis.
(c) Additional Calculations. For purposes of determining the amount
of a member of the Infinity Group's Estimated Income Tax Payments and Separate
Income Tax Liability, CBS shall be treated as entitled to claim all deductions
arising by reason of exercises of any stock options to purchase shares of CBS
stock, or arising by reason of payment of deferred or other compensation by CBS
to the extent such payment is not reimbursed by Infinity. In addition, for
purposes of any Income Tax Return filed by, or on behalf of, any member of the
Infinity Group (whether or not any member of the Infinity Group files an Income
Tax Return on a consolidated, combined or unitary basis with any member of the
CBS Group), CBS shall be treated, to the extent permitted by law, as entitled to
claim all deductions arising by reason of exercises of any stock options to
purchase CBS stock or arising by reason of payment of deferred or other
compensation by CBS to the extent such payment is not reimbursed by Infinity.
If, pursuant to a Final Determination, all or any part of such deduction is
disallowed or is proposed to be disallowed to CBS then, to the extent permitted
by law, the appropriate member of the Infinity Group shall report such deduction
on its Income Tax Return (including by way of an amended Income Tax Return). If
a member of the Infinity Group realizes a Tax Benefit in any Taxable Period
beginning after the IPO, including any Post-Closing Straddle Period, as a result
of a deduction arising by reason of exercises of any stock options to purchase
shares of CBS stock or arising by reason of payment of deferred or other
compensation by CBS to the extent such payment is not reimbursed by Infinity,
Infinity shall pay the amount of such Tax Benefit to CBS.
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(d) Timing. For each Taxable Period beginning after the IPO, including any
Post-Closing Straddle Period, CBS shall prepare and deliver to Infinity a
schedule showing in reasonable detail CBS's calculation of any Estimated Income
Tax Payments or Separate Income Tax Liability, as the case may be, and, subject
to Section 7, (i) Infinity shall pay to CBS the amount of any Estimated Income
Tax Payments shown on such schedule no later than fifteen days before the date
that such Estimated Income Tax Payments would have been due and payable had the
member of the Infinity Group with respect to which such Payments are determined
not filed an Income Tax Return on a consolidated, combined or unitary basis with
any member of the CBS Group, and (ii) payments between CBS and Infinity required
pursuant to Section 3(b) hereof shall be made, based on such schedule, no later
than fifteen days before the due date of the consolidated, combined or unitary
Income Tax Return for the Taxable Period for which such payments are due. Except
as otherwise provided herein, all indemnification or other payments to be made
pursuant to this Agreement shall be made within 15 days of written notice of a
request for indemnification or payment by the Indemnified Party, which notice
shall be accompanied by a computation of the amount due. If any payments
required to be made pursuant to this Agreement (including Estimated Income Tax
Payments) are not made when due, such payments shall bear interest at the
prevailing federal short-term interest rate as determined under Section 6621 of
the Code.
(e) Adjustments. If, as a result of a Final Determination, there is an
adjustment that would have the effect of increasing or decreasing a member of
the Infinity Group's Separate Income Tax Liability for any Taxable Period
beginning after the IPO, including any Post-Closing Straddle Period, then
Infinity shall pay to CBS the amount of any increased Separate Income Tax
Liability and CBS shall repay to Infinity the amount of any decreased Separate
Income Tax Liability, provided, however, that such repayment shall not exceed
the net amount of payments received by CBS from Infinity with respect to the
Separate Income Tax Liability for such Taxable Period. If, as a result of a
Final Determination, there is an adjustment to any of the credits or deductions
attributable to the Infinity Group which resulted in a payment by CBS to
Infinity pursuant
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to Section 2(b) of this Agreement that would have the effect of increasing or
decreasing the Tax Benefit to the member of the CBS Group utilizing such credit
or deduction, then Infinity shall repay to CBS the amount of any decreased Tax
Benefit and CBS shall pay to Infinity the amount of any increased Tax Benefit.
(f) Other Adjustments and Indemnification. If, as a result of a
Final Determination, there is an adjustment with respect to any Tax Item
relating to the Infinity Group for any Taxable Period ending on or before the
IPO, including any portion of a Straddle Period ending on the date of the IPO,
that results in a Tax Detriment being realized by any member of the CBS Group,
or by any member of the Infinity Group for which the CBS Group is otherwise
liable, then Infinity shall indemnify CBS against such Tax Detriment. In
addition, if there is an adjustment pursuant to Section 482 of the Code or
similar authority under state, local, or foreign law which results in a Tax
Detriment being realized by any member of the CBS Group or the Infinity Group,
on the one hand, and a corresponding Tax Benefit being realized by any member of
the Infinity Group or the CBS Group, on the other, which is not otherwise taken
into account through payments or indemnification under this Agreement, then
Infinity shall pay to CBS or CBS shall pay to Infinity, as the case may be, the
amount of such Tax Benefit.
CBS shall indemnify Infinity to the extent that any member of the
Infinity Group becomes liable for the federal, state or local income tax
liability of any member of the CBS Group, as a result of being a member of the
Affiliated Group, for federal tax purposes, or a member of the combined,
consolidated or unitary group, for state and local tax purposes, which includes
any member of the CBS Group, in excess of the Separate Income Tax Liability of
the Infinity Group, and, except as otherwise provided herein, CBS shall
indemnify Infinity against any Income Tax Liability for which Infinity has paid
to CBS pursuant to this Agreement. Infinity shall indemnify CBS against any and
all Taxes and related liabilities attributable to the acquisition by CBS of
American Radio Systems, Inc., including, without limitation, Taxes and related
liabilities arising as a
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result of the transactions described in Section 4.2(b) of the ARS-ATS Separation
Agreement dated as of June 4, 1998.
(g) Reimbursements. Notwithstanding the foregoing, each member of
the Infinity Group shall be jointly and severally liable to CBS for, and
Infinity, on behalf of each member of the Infinity Group, shall pay, or caused
to be paid, any payment made by CBS on behalf of any member of the Infinity
Group for Income Taxes incurred by such member other than pursuant to this
Agreement within five days of receipt of written notification from CBS that such
payment has been made.
Section 3. Return Preparation
CBS shall prepare and file, or cause to be filed, all Income Tax
Returns that are filed by, or on behalf of, any member of the Infinity Group,
including, without limitation, all Income Tax Returns which CBS determines shall
be filed on a consolidated, combined or unitary basis with any member of the CBS
Group, for any Taxable Period ending after the IPO. Infinity shall pay to CBS
the expenses incurred by CBS in preparing such returns, as reasonably determined
by CBS.
Section 4. Audits
CBS shall have sole responsibility for and control over any Tax
Controversy with respect to Taxes of members of the Infinity Group. Infinity
shall pay to CBS the expenses incurred by CBS in the conduct of such Tax
Controversies, as reasonably determined by CBS.
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Section 5. Cooperation
(a) Tax Information
(i) Infinity shall, and shall cause each appropriate member of
the Infinity Group, to cooperate with CBS in the filing of Income Tax Returns,
as described in Section 3, or in the conduct of Tax Controversies, as described
in Section 4, by maintaining such books and records and providing on a timely
basis such information as may be necessary or useful in the filing of such
returns or the conduct of such controversies and executing any documents,
providing any further information, and taking any actions which CBS may
reasonably request in connection therewith.
(ii) If any member of the Infinity Group fails to provide any
information requested pursuant to this Section on a timely basis, then CBS shall
have the right to engage an independent certified public accountant of its
choice to gather such information. Infinity agrees to permit any such
independent certified public accountant full access to all Tax Return and other
relevant information in the possession of any member of Infinity Group during
reasonable business hours, and to reimburse or pay directly all costs and
expenses incurred in connection with the engagement of such independent
certified public accountant.
(iii) If any member of the Infinity Group supplies information
to a member of the CBS Group in connection with the preparation of any Income
Tax Return or in connection with the conduct of any Tax Controversy and an
officer of the requesting party signs a statement or other document under
penalties of perjury in reliance upon the accuracy of such information, then a
duly authorized officer of the party supplying such information shall certify,
under penalties of perjury, the accuracy and completeness of the information so
supplied. Infinity shall indemnify and hold harmless each member of the CBS
Group and its respective officers and employees, against any cost, fine,
penalty, or other expenses of any kind attributable to a member of the Infinity
Group supplying a member of the other group with inaccurate or incomplete
information,
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in connection with the preparation of any Income Tax Return or in connection
with the conduct of any Tax Controversy.
(b) Other Cooperation
(i) Whenever any member of the Infinity Group learns of a
breach or a violation of any obligation or provision contained in this
Agreement, or receives in writing from any taxing authority notice of an
adjustment which may give rise to a payment under this Agreement, Infinity shall
give notice to CBS within 10 days of becoming aware of such breach, violation,
or receipt, but if a member of the CBS Group is required to respond to the IRS
or any other taxing authority, such notice shall be given no less than 10 days
before such response is required.
(ii) CBS may consult with Infinity, and Infinity agrees to
fully cooperate with CBS in the negotiation, settlement, or litigation of any
liability for Income Taxes of any member of the CBS Group, regardless of the
effect of any such negotiation, settlement, or litigation on the Separate Income
Tax Liability of any member of the Infinity Group.
(c) Agent
Each member of the Infinity Group hereby appoints CBS for any
Taxable Period as its agent for the purpose of filing any Income Tax Return of
such member (whether or not such Income Tax Return is filed on a consolidated,
combined or unitary basis with any member of the CBS Group), for the purpose of
representing such member in the course of any Tax Controversy as set forth in
Section 4, and for making any election or application or taking any action in
connection with any of the foregoing on behalf of any member of the Infinity
Group. Each member of the Infinity Group hereby consents to the filing of such
Income Tax Return and to the making of any elections and applications as set
forth above.
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Section 6. Retention of Records
(a) Infinity agrees to retain, and cause each member of the
Infinity Group to retain, the appropriate records which may affect the
determination the Separate Income Tax Liability of any member of the Infinity
Group or the Income Tax liability of any member of the CBS Group which files on
a consolidated, combined or unitary basis with any member of the Infinity Group
until such time as there has been a Final Determination with respect thereto.
(b) Any member of the Infinity Group intending to destroy any
materials, records, or documents relating to Income Taxes shall provide CBS with
90 days advance notice and the opportunity to copy or take possession of such
materials, records and documents.
Section 7. Resolution of Disputes
Any dispute concerning the calculation or basis of determination of
any payment provided for hereunder shall be resolved by the independent
certified public accountants for CBS, whose judgment shall be conclusive and
binding upon the parties.
Section 8. Miscellaneous
(a) Term of the Agreement. This Agreement shall become
effective as of the date of its execution and, except as otherwise expressly
provided herein, shall continue in full force and effect indefinitely.
(b) Injunctions. The parties acknowledge that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with its specific terms or were otherwise
breached. The parties hereto shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof in any court having jurisdiction,
such remedy being in addition to any other remedy to which they may be entitled
at law or in equity.
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(c) Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, void, or unenforceable, the remainder of the terms, provisions,
covenants, and restrictions set forth herein shall remain in full force and
effect, and shall in no way be affected, impaired, or invalidated. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants, and restrictions without
including any of such which may be hereafter declared invalid, void, or
unenforceable. In the event that any such term, provision, covenant, or
restriction is held to be invalid, void, or unforeseeable, the parties hereto
shall use their best efforts to find and employ an alternate means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant, or restriction.
(d) Assignment. Except by operation of law or in connection
with the sale of all or substantially all the assets of a party hereto, this
Agreement shall not be assignable, in whole or in part, directly or indirectly,
by any party hereto without the advance written consent of the other party; and
any attempt to assign any rights or obligations arising under this Agreement
without such consent shall be void; provided, however, that the provisions of
this Agreement shall be binding upon, inure to the benefit of, and be
enforceable by, the parties hereto and their respective successors and permitted
assigns.
(e) Further Assurances. Subject to the provisions hereof, the
parties hereto shall make, execute, acknowledge, and deliver such other
instruments and documents, and take all such other actions, as may be reasonably
required in order to effectuate the purposes of this Agreement and to consummate
the transactions contemplated hereby. Subject to the provisions hereof, each of
the parties shall, in connection with entering into this Agreement, performing
its obligations hereunder and taking any and all actions relating hereto, comply
with all applicable laws, regulations, orders, and decrees, obtain all required
consents and approvals and make all required filings with any governmental
agency, other regulatory or administrative agency,
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commission or similar authority, and promptly provide the other parties with all
such information as they may reasonably request in order to be able to comply
with the provisions of this sentence.
(f) Parties in Interest. Except as herein otherwise
specifically provided, nothing in this Agreement expressed or implied is
intended to confer any right or benefit upon any person, firm, or corporation
other than the parties hereto, their respective successors and permitted
assigns, and any Subsidiary that subsequently becomes a member of the CBS Group
or the Infinity Group, as the case may be.
(g) Waivers, Etc. No failure or delay on the part of the
parties in exercising any power or right hereunder shall operate as a waiver
thereof, not shall any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No modification or waiver of any provision of this Agreement nor
consent to any departure by the parties therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
(h) Setoff. All payments to be made by any party under this
Agreement shall be made without setoff, counterclaim, or withholding, all of
which are expressly waived.
(i) Change of Law. If, due to any change in applicable law or
regulations or their interpretation by any court of law or other governing body
having jurisdiction subsequent to the date of this Agreement, performance of any
provision of this Agreement or any transaction contemplated hereby shall become
impracticable or impossible, the parties hereto shall use their best efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such provision.
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(j) Confidentiality. Subject to any contrary requirement of
law and the right of each party to enforce its rights hereunder in any
arbitration or legal action, each party agrees that it shall keep strictly
confidential, and shall cause its employees and agents to keep strictly
confidential, any information which it or any of its employees or agents may
acquire pursuant to, or in the course of performing its obligations under, any
provision of this Agreement.
(k) Headings. Descriptive headings are for convenience only
and shall not control or affect the meaning or construction of any provision of
this Agreement.
(l) Counterparts. For the convenience of the parties, any
number of counterparts of this Agreement may be executed by the parties hereto,
and each such executive counterpart shall be, and shall be deemed to be, an
original instrument.
(m) Notices. All notices, consents, requests, instructions,
approvals, and other communications provided for herein shall be validly given,
made, or served, if in writing and delivered personally, by telegram or sent by
registered mail, postage prepaid, or by facsimile transmission to:
CBS at: CBS Corporation
51 W. 52nd Street
New York, New York 10019
Attn: Chief Financial Officer
Infinity at: Infinity Broadcasting Corporation
40 West 57th Street
New York, New York 10019
Attn: Chief Financial Officer
or to such other address as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by the
telegram shall be deemed delivered when received by the recipient. Notice given
by mail as set out above shall be deemed delivered five calendar days after the
date the same is mailed. Notice given by
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facsimile transmission shall be deemed delivered on the day of transmission
provided telephone confirmation of receipt is obtained promptly after completion
of transmission.
(o) Costs and Expenses. Unless otherwise specifically provided
herein, each party agrees to pay its own costs and expenses resulting from the
exercise of its respective rights or the fulfillment of its respective
obligations hereunder.
(p) Interpretation. The headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the
parties, and shall not in any way affect the meaning or interpretation of this
Agreement.
Section 9. Applicable Law. This Agreement shall be governed by and construed and
enforced in accordance with the domestic substantive laws of the State of New
York without regard to any choice or conflict of laws, rules, or provisions that
would cause the application of the domestic substantive laws of any other
jurisdiction.
IN WITNESS WHEREOF, the undersigned have caused this Agreement
to be duly executed by their respective officers, each of whom is duly
authorized, all as of the day and year first above written.
CBS CORPORATION,
By: _________________________
Title: Chief Financial Officer
INFINITY BROADCASTING CORPORATION
By:__________________________
Title: Chief Financial Officer
16
<PAGE> 1
EXHIBIT 10.13
AGREEMENT made as of the 29th day of January 1997,
by and between CBS Inc. ("CBS"), a New York corporation,
having its principal office at 51 West 52nd Street, New
York, New York 10019, and Daniel Mason ("Executive"),
residing at 21701 Club Hollow Road, Poolesville,
Maryland 20837.
W I T N E S S E T H :
WHEREAS Executive has been performing services as President of the
CBS Radio Division pursuant to an agreement between Executive and CBS made as of
May 22, 1996 (the "Agreement"); and
WHEREAS CBS and Executive have concluded good faith discussions for
the purpose of amending the Agreement and adjusting Executive's compensation
package in recognition of the merger of CBS and the Infinity Broadcasting
Corporation and the change in Executive's responsibilities in connection
therewith; and
WHEREAS CBS desires to secure the services of Executive as President
of CBS Radio and Executive is willing to perform such services, upon the terms,
provisions and conditions set forth in the Agreement as amended herein.
NOW, THEREFORE, in condition of the promises and the mutual
covenants herein contained, it is agreed upon between CBS and Executive to amend
the Agreement as follows:
1. Paragraph 1(b) of the Agreement shall be amended as follows:
Executive shall report to the Chairman and Chief Executive Officer
of CBS Radio (currently, Mel Karmazin), and shall perform services
assigned to him consistent with his position as President, CBS
Radio, but shall not be responsible for all of CBS Radio's operating
segments.
<PAGE> 2
2
2. Paragraph 2(a) of the Agreement shall be amended as follows:
CBS agrees to pay Executive, and Executive agrees to accept from CBS
for his services hereunder, a base salary of Eight hundred fifteen
thousand Dollars ($815,000) per annum effective January 1, 1997.
Thereafter, Executive's base salary shall be subject to merit review
and to the potential of increase in accordance with CBS compensation
guidelines and practices.
3. Paragraph 2(b) of the Agreement shall be amended as follows:
CBS agrees that Executive's Annual Incentive target payment shall be
forty percent (40%) of Executive's base salary. The precise amount
of such payments, if any, shall be determined on an annual basis at
the sole discretion of the Board of Directors of Westinghouse
Electric Corporation ("Westinghouse") based on goals set annually by
the Chairman and Chief Executive Officer of CBS Radio.
4. Paragraph 3 of the Agreement shall be amended as follows:
Executive shall be included in all plans now existing or hereafter
adopted for the general benefit of CBS Radio employees. Executive
will also participate in other CBS Radio benefit plans in which
participation is limited to CBS Radio executives in positions
comparable to or lesser than Executive's. To the extent Executive
participates in any benefit plan, such participation shall be based
upon Executive's base salary, unless otherwise indicated in the plan
document that such benefit should be based on base salary and bonus.
Participation in, or eligibility for participation in CBS Radio
benefit plans will be in lieu of eligibility for, or
<PAGE> 3
3
participation in any CBS or Westinghouse benefit plans.
5. Paragraph 7(a) of the Agreement shall be deleted.
The above amendments shall supersede, cancel and replace the cited
paragraphs in the Agreement in all respects. To the extent that the above
amendments may be inconsistent with any other provisions of the Agreement, the
above amendments shall govern.
Subject to the execution of this Amendment to the Agreement, in
recognition of Executive's new responsibilities as President, CBS Radio, and in
consideration of the amendments set forth herein, Executive shall receive a
special grant of 60,000 options of Westinghouse common stock with a purchase
price set at the Fair Market Value as of the date that the options are granted.
All options so granted shall be governed in accordance with the provisions of
the Westinghouse Long-Term Incentive Plan.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
March __, 1997.
CBS INC.,
by /s/ Mel Karmazin
-----------------------------
EXECUTIVE,
/s/ Daniel Mason
-----------------------------
<PAGE> 4
AGREEMENT made as of the 22nd day of May 1996, by
and between CBS Inc. ("CBS"), a New York corporation,
having its principal office at 51 West 52nd Street, New
York, New York 10019, and Daniel Mason ("Executive"),
residing at 21701 Club Hollow Road, Poolesville,
Maryland 20837.
W I T N E S S E T H :
WHEREAS, CBS desires to secure the services of Executive as
President of the CBS Radio Division, and Executive is willing to perform such
services, upon the terms, provisions and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, it is agreed upon between CBS and Executive as
follows:
1. (a) CBS hereby employs Executive, and Executive hereby accepts
employment as President of the CBS Radio Division for a term commencing November
28, 1995 and ending November 27, 1999 (the "Employment Term").
(b) Executive shall report to the Executive Vice President of CBS
and President of the CBS Station Group (currently, Bill Korn), and shall perform
services assigned to him consistent with his position as President of the CBS
Radio Division.
2. (a) CBS agrees to pay Executive, and Executive agrees to accept
from CBS for his services hereunder, a base salary of Five hundred seventy-five
thousand Dollars ($575,000) per annum for the first contract year. Thereafter,
Executive's salary shall be subject to merit review and to the potential of
increase in accordance with CBS compensation guidelines and practices.
(b) CBS agrees that Executive shall have an Annual Incentive target
payment of Three hundred fifty thousand Dollars ($350,000) with the potential of
up to an
<PAGE> 5
2
additional Three hundred fifty thousand Dollars ($350,000); of this amount, Two
hundred thousand Dollars ($200,000) shall be guaranteed on an annual basis. The
precise amount of such additional payments shall be determined on an annual
basis at the sole discretion of the Board of Directors of Westinghouse Electric
Corporation ("Westinghouse") based on goals set at the beginning of each fiscal
year with the active participation of Executive. Seventy percent (70%) of the
Annual Incentive payment amount shall be based on meeting financial goals and
thirty percent (30%) shall be based on meeting nonfinancial goals.
(c) Subject to the execution of this Agreement, Executive shall
receive a grant of 265,000 options of Westinghouse common stock (a standard
grant of 60,000 options, a special grant of 25,000 options and an additional
three year grant of 180,000 options, representing contract years 1997, 1998 and
1999), at $16.75 per option, the price as of December 6, 1995, the day that the
options were granted. Fifty percent of the options (132,500) shall vest one year
from the date of the grant and the second 50% (132,500) shall vest two years
from the grant. All options shall expire 10 years from the date of the grant or
upon the termination of Executive's employment with CBS, whichever occurs first.
3. Executive shall be included in all plans now existing or
hereafter adopted for the general benefit of Westinghouse employees, such as the
pension plan, savings programs and group medical, disability or other insurance
plans and benefits, subject to the provisions of such plans as the same may be
in effect from time to time. Executive will also participate in other
Westinghouse benefit plans in which participation is limited to Westinghouse
executives in positions comparable to or lesser than Executive's. To the extent
Executive participates in any benefit plan, such participation shall be based
upon Executive's base salary, unless otherwise indicated in the plan document
that such benefit should be based on base salary and bonus. Participation in, or
eligibility for participation in Westinghouse benefit plans will be in lieu of
eligibility for, or participation in any CBS benefit plan.
<PAGE> 6
3
4. Executive shall be entitled to four (4) weeks vacation with pay,
and vacation shall be governed in accordance with CBS policy and Executive shall
also be entitled to holidays in accordance with CBS policy.
5. Executive may elect to undergo an annual physical examination, at
the expense of Company, using a physician and medical facility chosen by
Executive, consistent with CBS policy. The results of such annual physical
examination shall be provided only to Executive, except with the prior,
voluntary, written authorization of Executive.
6. Company shall continue to furnish to Executive the office space,
furnishings and equipment, in the office he currently occupies, in the Semmes
Building in Potomac, Maryland. The parties acknowledge and agree that, although
Executive shall continue to maintain his principal office and his residence in
the greater Washington, D.C., metropolitan area, Executive shall travel
nationally, as needed, to perform his duties under this Agreement. Executive
further agrees that he shall make himself available during business hours, as
needed, in New York City, consistent with Executive's right to maintain his
principal office and sole residence in the greater Washington, D.C. metropolitan
area.
7. (a) If CBS should buy or merge with a major radio group, and
thereby substantially increase the number of radio properties it owns or
operates, Executive will continue to be President of the Radio Division and have
responsibility for all operating segments. He will report directly to the
Chairman of the radio group, if such a position exists as a result of this
acquisition, and the Chairman would report directly to the Executive Vice
President of CBS and the President of the CBS Station Group (presently Bill
Korn). CBS and Executive will enter into good faith discussions immediately
after the closing of such acquisition or merger for the purpose of adjusting
Executive's corporation package in recognition of his increased responsibility.
CBS may pay Executive a
<PAGE> 7
4
reasonable sum, either as a lump sum adjustment, deferred compensation,
increased wage bonus potential or other mutually agreed upon arrangements. CBS
and Executives will make a good faith effort to accomplish this goal. If
however, the parties fail to reach such agreement within ninety (90) days after
the closing date of such acquisition or merger, Executive may terminate this
Agreement without cause on no less than an additional sixty (60) days' notice,
it being understood that in such event, CBS would have no further financial
obligation to such Executive.
(b) If Executive is terminated by Mutual Agreement during the term
of this Agreement, CBS will pay Executive one year's base salary and Executive's
next scheduled guaranteed Annual Incentive payment, and Executive shall be free
of restrictions with respect to future assignments. For purposes of this
Agreement, "Mutual Agreement" shall mean that Executive's working conditions
have become intolerable, and that Executive has discussed the situation with
senior management and given appropriate notice of his intention to leave.
8. Executive agrees to devote his full efforts and attention to the
affairs of CBS during normal business hours during the Employment Term except
during vacation periods and reasonable periods of illness or other incapacity
consistent with the practices of CBS for executives in comparable positions, and
agrees that his services shall be completely exclusive to CBS during the
Employment Term.
9. Executive acknowledges that he has been furnished a copy of the
"Policy Notes from the President" concerning conflicts of interest ("Conflicts
Policy"), dated December 13, 1989, and a copy of the "CBS Policy Summary".
Executive further acknowledges that he has read and fully understands all the
requirements thereof, and acknowledges that at all times during the Employment
Term he shall perform his services hereunder in full compliance with the
Conflicts Policy and the CBS Policy Summary and with any revision thereof or
additions thereto.
<PAGE> 8
5
10. (a) In the event of the death or voluntary resignation of
Executive, salary payments and any Annual Incentives to be paid pursuant to the
Agreement shall cease immediately; provided, however, in the event of death, the
estate of Executive shall receive any salary due and not yet paid through the
date of Executive's death.
(b) If, during the Employment Term, CBS properly terminates the
employment of Executive for Cause, which for these purposes is defined as (i)
fraud, misappropriation or embezzlement on the part of Executive, (ii)
Executive's willful failure to perform services hereunder or (iii) Executive's
intentional breach of the provisions of paragraph 7 or of paragraph 8 hereof or
(iv) disregard of Executive's obligation pursuant to paragraph 7 hereof, to make
himself available for business in New York City during business hours,
consistent with maintenance of Executive's principal office and sold residence
in the greater Washington, D.C. metropolitan area, then CBS shall immediately
have the right to terminate this Agreement without further obligation.
(c) In the event that Executive is unable, due to illness, accident
or other physical or mental disability, to perform the essential functions of
his positions under this Agreement, even with reasonable accommodation, for a
continuous period of two (2) months, Company may terminate Executive's
employment. The termination of this Agreement because of Executive's incapacity
shall not affect Executive's eligibility for benefits under the terms of the
Westinghouse Long-Term Disability Plan, or its Accident and Sickness Plan and
Executive's continued accrual of service credit thereunder. Executive will
continue under the Westinghouse Salary Continuation and Extension Plan as
governed by Westinghouse policy based on service, and to the extent Executive
has enrolled in the Westinghouse Management Disability Plan, he would be covered
thereunder.
(d) If, during the Term of this Agreement the employment of
Executive by CBS should be terminated by CBS other than for cause, Executive
shall, despite the termination, be entitled to continue to receive his base
<PAGE> 9
6
salary and guaranteed bonus as provided for under paragraph 2(a) and (b) of the
Agreement throughout the remainder of the Employment Term so long as Executive
is willing, ready and able to render exclusive services hereunder during such
remainder of the term. Nothing herein shall obligate CBS to utilize Executive's
services, and CBS shall have fulfilled all of its obligations hereunder by
payment to Executive of the applicable amounts set forth herein for the term of
this Agreement. Notwithstanding anything contained in this Agreement (including
without limitation anything contained in paragraph 3 above), Executive shall not
be entitled to receive any severance pay upon the termination of this Agreement
or of the Executive's employment hereunder at any time during the term of this
Agreement, unless the amount of severance under the Westinghouse policy which
Executive would otherwise be entitled to receive (had Executive and CBS not
entered into this Agreement) exceeds the amount of basic salary payable for the
remainder of the term of this Agreement, in which case Executive shall receive
such severance pay in lieu of the amount of basic salary payable for the
remainder of the term (i.e., Executive shall be entitled to receive the greater
of the remaining basic salary under this Agreement or the applicable amount of
severance).
11. Any controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be settled by arbitration held in New
York City and administered by the American Arbitration Association in accordance
with its Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
12. This Agreement contains the entire understanding of the parties
with respect to the subject matter thereof, supersedes any and all prior
agreements of the parties with respect to the subject matter thereof, and cannot
be changed or extended except by a writing signed by both parties hereto. The
above notwithstanding, the parties acknowledge and agree that Executive shall
remain entitled to receive both an Annual Incentive and Group W Long-Term
Incentive bonus for his 1995 performance, under the terms of
<PAGE> 10
7
his April 29, 1993 letter agreement between Executive and Group W. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective legal representatives, executors, heirs, administrators,
successors and assigns. This Agreement and all matters and issues collateral
thereto other than benefits under a plan or option agreement which will be
subject to the laws specified therein, shall be governed by the laws of the
State of New York applicable to contracts performed entirely therein. If any
provision of this Agreement, as applied to either party or to any circumstance,
shall be adjudged by a court to be void or unenforceable, the same shall in no
way affect any other provision of this Agreement or the validity or
enforceability thereof.
13. All notices or other communications hereunder shall be given in
writing and shall be deemed given if served personally or mailed by registered
or certified mail, return receipt requested, to the parties at their addresses
above indicated, or at such other addresses as they may hereafter designate in
writing.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
May __, 1996.
CBS INC.,
by /s/ Peter A. Lund
---------------------------
EXECUTIVE,
/s/ Daniel Mason
---------------------------
<PAGE> 1
Exhibit 10.14
Restated terms of the Employment Agreement between Transportation
Displays Incorporated (the "Company") and William M. Apfelbaum ("Apfelbaum"),
dated as of December 22, 1989 as amended through January 1, 1996 and as in
effect as of November 20, 1998 (the "Agreement").
1. Apfelbaum is employed by the Company for a term ending March
25, 2001, unless terminated earlier as provided in the Agreement (the
"Employment Period").
2. (a) During the Employment Period, Apfelbaum will have
the titles of President and Chief Executive Officer of the Company, will be
entitled to a seat on the Company's Board of Directors, and, subject to the
direction of the Board of Directors, will be responsible for the operation of
the Company's businesses; provided, however, that material transactions not in
the ordinary course of business, including, but not limited to, divestitures and
acquisitions, will not be undertaken without approval of the Company's Board of
Directors. Apfelbaum will perform such services and duties necessary or
appropriate for the management of the Company's business as are normally
expected of officers appointed to similar positions in the franchise/transit
advertising business. During the Employment Period, Apfelbaum agrees to devote
all of his business time and efforts to the performance of his duties under the
Agreement. Apfelbaum will be available to travel as the needs of the business
required, but it is agreed that during the Employment Period he will be based in
New York City.
(b) Apfelbaum agrees that, during the Employment Period,
he will not act in any manner or capacity, directly or indirectly, in any
individual or representative capacity, whether as principal, agent, partner,
officer, director, employee, joint venturer, member of any business entity,
consultant, adviser or investor (except that he will have the right under the
Agreement to own up to 10% of one or more public companies having a class of
equity securities registered with the Securities and Exchange Commission under
the Securities and Exchange Act of 1934, as amended) or otherwise, in or for any
business entity or enterprise which engages in the franchise/transit advertising
business as such business is now [December 22, 1989] conducted by the Company,
in any market in which the Company shall then be conducting such business. The
Company acknowledges that Apfelbaum has advised the Company that he owns stock
in Gannett (less than 2,000 shares) and Apfelbaum agrees to advise the Company
if he owns more than two percent (2%) of the stock in a significant competitor
whose stock is publicly traded.
3. (a) Apfelbaum's base compensation for his services under
the Agreement during the Employment Period will be a salary payable by the
Company in equal semi-monthly installments. During calendar years 1996, 1997 and
1998, Apfelbaum's base compensation is payable at the annual rate of $950,000.
-1-
<PAGE> 2
(b) In addition to base compensation, Apfelbaum is
eligible to receive an annual bonus ("Bonus"). For each of 1996, 1997 and 1998,
the Bonus is based on the achievement by the Company of specified levels of
consolidated earnings before interest, taxes, depreciation and amortization
("EBITDA") and is calculated as set forth below:
<TABLE>
<S> <C>
For Company EBITDA for the year of
$30 million or less: -0-
For Company EBITDA for the year A ratable portion of
greater than $30 million and up to and $1 million (e.g., a Bonus of
including $50 million: $500,000 for EBITDA of
$40 million)
For Company EBITDA for the year of
$50 million or greater: $1 million
</TABLE>
Although the Bonus is based on an annual calculation, that
part of the Bonus which accrues each one-half year (allocating the appropriate
portion of Company EBITDA to the calendar one-half year involved) will be
calculated, on an estimated basis, by the Company's Chief Financial Officer and
as so calculated paid within ten (10) days of the end of each calendar one-half
year. Promptly after the end of each calendar year, a precise calculation of the
Bonus will be undertaken and an adjusting payment will be made from the Company
to Apfelbaum or from Apfelbaum to the Company, as the case may be, to equalize
the estimated Bonus payments and the actual Bonus.
4. Apfelbaum will be entitled to reimbursement for travel and
other out-of-pocket expenses necessarily incurred in the performance of his
duties under the Agreement, upon submission of appropriate written statements
and bills.
In addition, Apfelbaum will be entitled to medical and health
benefits at least as complete as those provided to the Company's chief executive
officer as of the date of the Agreement [December 22, 1989], dues and expenses
for one country club and one club located in New York City, $750,000 in life
insurance or reimbursement for the costs thereof to the extent of the cost of
such insurance for healthy men of the same age in the New York City area, and
such other fringe benefits as are commensurate with those provided to chief
executive officers of companies of similar size in the advertising industry.
5. Not Applicable. (Equity Participation Package and
Recapitalization Plan are no longer executory and therefore references to them
have been omitted or marked "Not Applicable.")
6. Notwithstanding anything contained in the Agreement, if on or
after the date of the Agreement [December 22, 1989] and prior to the end of the
Employment Period,
(a) Either (i) Apfelbaum becomes physically or mentally
incapacitated or disabled so that he is unable to discharge his duties under the
Agreement for a continuous
-2-
<PAGE> 3
period of six (6) months or an aggregate period of nine (9) months, (ii)
Apfelbaum is convicted of a felony or commits any act in bad faith which
materially and adversely affects the business of the Company, (iii) Apfelbaum
breaches any term of the Agreement and fails to correct such breach within
thirty (30) days after written notice of the same, (iv) Apfelbaum willfully
fails or willfully refuses to follow such reasonable directions of the Board of
Directors as are consistent with his duties and responsibilities as President
and Chief Executive Officer, and he does not cure such willful failure or
willful refusal within thirty (30) days after written notice thereof, (v) the
Board of Directors determines for any reason to terminate Apfelbaum's employment
with the Company, (vi) (Not Applicable), (vii) Apfelbaum's authority with
respect to the Company's operations or businesses is materially diminished, or
(viii) after December 31, 1990, Apfelbaum determines, for any reason, to
terminate his employment with the Company, then, in the case of items (i), (ii),
(iii), (iv) or (v), the Company, and, in the case of items [(vi)], (vii) or
(viii), Apfelbaum, will have the right to give written notice of termination of
Apfelbaum's services as of a date, not earlier than one (1) day nor more than
thirty (30) days from the date of such notice (except that if termination is
pursuant to item (viii), the one (1) day and thirty (30) day periods will be
extended to sixty (60) and ninety (90) days, respectively), to be specified in
such notice and the Employment Period will terminate on the date so specified;
or
(b) Apfelbaum dies, then the Employment Period will
terminate on the date of his death,
whereupon Apfelbaum or his estate, as the case may be, will be entitled to
receive his base salary, Bonus and other benefits provided under the Agreement
prorated to the date on which such termination takes effect and, in addition,
the following:
<TABLE>
<CAPTION>
Subparagraph of Paragraph 6 Additional Amount Payable
Giving Rise to Termination To Apfelbaum Upon Termination
-------------------------- -----------------------------
<S> <C>
(a)(i) $50,000
(a)(ii), (a)(iii), (a)(iv), or (a)(viii) -0-
(a)(v) Apfelbaum will receive those payments and benefits
(other than the Bonus), without offset, that he would
have received had he fully performed under the
Agreement for the full term of the Agreement, such
payments and benefits to be received by him pursuant
to the same schedule that would have existed had he
so performed. Such full payments and benefits will
not be reduced or abated even if he does nothing else
for the Company and is engaged for pay in other
endeavors.
</TABLE>
-3-
<PAGE> 4
<TABLE>
<S> <C>
[(a)(vi) is no longer applicable ] [or] $250,000 [; provided that said $250,000 shall not be
(a)(vii) payable if termination by you is pursuant to subparagraph
(a)(vi) and occurs after February 28, 1990.]
(b) All Insurance Proceeds from policies on your life, other
than key man insurance required by lending agreements to
be maintained for the benefit of the Company.
</TABLE>
Except as set forth in this Paragraph 6, the Company will have no right to
terminate Apfelbaum's employment prior to December 31, 1994.
7. The Company will indemnify Apfelbaum and hold him harmless
against and in respect of any and all claims, suits, judgments, liabilities and
legal and other expenses (including reasonable legal fees) if and when incurred
arising out of or based upon any breach by Apfelbaum or alleged breach by
Apfelbaum of any of the Non-Compete/Confidentiality Provisions, as defined
below, resulting from or based upon the Agreement, Apfelbaum's employment by the
Company and/or any services he renders to the Company pursuant thereto. The
Non-Compete/Confidentiality Provisions means the provisions of paragraphs 6 and
7 of the Consulting Agreement dated June 21, 1989 with Gannett Transit and
Gannett Outdoor Group, the provisions of that certain covenant not to compete
dated July 1, 1988 signed by Apfelbaum as Seller and issued to Gannett Co., Inc.
(copies of which have been previously delivered to the Company) and any
analogous confidentiality provisions contained in other agreements Apfelbaum has
with any Gannett companies. During the Employment Period, the Company will use
its best efforts to maintain directors' and officers' liability insurance with
reputable New York carriers in a reasonable amount, but not less than
$3,000,000, if obtainable at reasonable cost. Apfelbaum represents to the
Company that he has delivered to the Company true copies of the non-compete
provisions to which he is subject.
8. Except for Apfelbaum's obligations to render services, the
covenants, agreements, representations, and warranties contained in or made
pursuant to the Agreement will survive termination of Apfelbaum's employment.
9. The provisions of the Agreement will be binding upon and inure
to Apfelbaum's benefit and the benefit of his heirs and personal
representatives, and will be binding upon and inure to the benefit of the
Company and its successors and those who are its assigns.
10. If and only if the Employment Period is terminated pursuant to
items (ii), (iii), (iv) or (viii) of subparagraph 6(a) and the Company is not
then in default under the Agreement, then Apfelbaum agrees that the Company will
have the following option:
The Company will have an option, exercisable within 15 days of
the effective date of such termination, to deliver a written
demand to Apfelbaum to agree not to compete, and Apfelbaum, if
so notified, will agree not to compete and will
-4-
<PAGE> 5
not compete with the Company in the franchise/transit
advertising business of the Company in accordance with
Paragraph 2(b) of the Agreement for up to five years from the
effective date of termination of his employment, in
consideration for which the Company will continue to pay
Apfelbaum compensation at an annual rate equal to fifty (50%)
percent of his Base Compensation for the year in which the
effective date of termination occurred, which payment will be
in addition to any other compensation Apfelbaum is entitled to
receive under the Agreement. Compensation under this
subparagraph will be paid in equal quarterly installments. The
first installment will be due and payable within ten days
following the date of the Company's demand and will cover the
three-month period beginning on the first day of the
noncompete period. Each subsequent installment will be payable
within ten days after the beginning of each subsequent
three-month period.
-5-
<PAGE> 1
Exhibit 10.17
[Draft--11/20/98]
1998 LONG-TERM INCENTIVE PLAN
ARTICLE I
GENERAL
1.1 Purpose
The purposes of the 1998 Long-Term Incentive Plan ("Plan") for key
personnel of Infinity Broadcasting Corporation ("Corporation") and its
Subsidiaries (the Corporation and its Subsidiaries severally and collectively
referred to in the Plan as the "Company") are to foster and promote the
long-term financial success of the Company and materially increase stockholder
value by (i) attracting and retaining key personnel of outstanding ability, (ii)
strengthening the Company's capability to develop, maintain and direct a
competent management team, (iii) motivating key personnel, by means of
performance-related incentives, to achieve long-range performance goals, (iv)
providing incentive compensation opportunities competitive with those of other
major companies and (v) enabling key personnel to participate in the long-term
growth and financial success of the Company.
1.2 Administration
(a) The Plan will be administered by a committee of the Board of
Directors of the Corporation ("Committee") which will consist of two or more
members. Each member will be a "non-employee director," as that term is defined
by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as such rule may be amended, or any successor rule, and an
"outside director," as that term is defined by Section 162(m) of the Internal
Revenue Code of 1986, as amended. The members will be appointed by the Board of
Directors, and any vacancy on the Committee will be filled by the Board of
Directors or in a manner authorized by the Board.
(b) Subject to the limitations of the Plan, the Committee will have the
sole and complete authority: (i) to select in accordance with Section 1.3
persons who will participate in the Plan ("Participant" or "Participants")
(including the right to delegate authority to select as Participants persons who
are not required to file reports with respect to securities of the Company
pursuant to Section 16(a) of the Exchange Act ("Nonreporting Persons")); (ii) to
make Awards and payments in such forms and amounts as it may determine
(including the right to delegate authority to make Awards to Nonreporting
Persons within limits approved from time to time by the Committee), (iii) to
impose such limitations, restrictions and conditions upon such Awards as the
Committee, or, with respect to Awards to Nonreporting Persons, the Committee's
authorized delegates, deems appropriate; (iv) to interpret the Plan and the
terms of any document relating to the Plan and to adopt, amend and rescind
administrative guidelines and other rules and regulations relating to the Plan;
(v) to amend or cancel an existing Award in whole or in part (including the
right to delegate authority to amend or cancel an existing Award to a
Nonreporting Person in whole or in part within limits approved from time to time
by the Committee), except that the Committee and its authorized delegates may
not, unless otherwise provided in the Plan, or unless the Participant affected
thereby consents, take any action under this clause that would adversely affect
the rights of such Participant with respect to the Award, and except that the
Committee and its authorized delegates may not, unless otherwise provided in the
Plan, take any action to amend any outstanding Option under the Plan in order to
decrease the Option Price under such Option; and (vi) to make all other
determinations and to take all other actions necessary or advisable for the
interpretation, implementation and administration of the Plan. The Committee's
determinations on matters within its authority will be conclusive and binding
upon the Company and all other persons.
<PAGE> 2
2
(c) The Committee will act with respect to the Plan on behalf of the
Corporation and on behalf of any Subsidiary issuing stock under the Plan,
subject to appropriate action by the board of directors of any such Subsidiary.
All expenses associated with the Plan will be borne by the Corporation subject
to such allocation to its Subsidiaries and operating units as it deems
appropriate.
1.3 Selection for Participation
Participants selected by the Committee (or its authorized delegates)
must be Eligible Persons, as defined below, who are key personnel and have the
capacity to contribute to the success of the Company. "Eligible Persons" are
persons who are officers or salaried employees of the Company or its parent or
subsidiary corporations. Eligible Persons will also include independent
contractors of the Company as to an Award if the person is an independent
contractor at the time the Award is granted. In making this selection and in
determining the form and amount of Awards, the Committee may give consideration
to the functions and responsibilities of the Eligible Person, his or her past,
present and potential contributions to the Company and other factors deemed
relevant by the Committee.
1.4 Types of Awards under Plan
Awards ("Awards") under the Plan may be in the form of any one or more
of the following: (i) Incentive Stock Options ("ISOs") and Non-statutory Stock
options ("NSOs") (Incentive Stock Options and Non-statutory Stock Options
severally and collectively referred to in the Plan as "Options"), as described
in Article II; (ii) Stock Appreciation Rights ("SARs") and Limited Stock
Appreciation Rights ("Limited Rights"), as described in Article II; (iii)
Performance Awards ("Performance Awards") as described in Article IV; and (iv)
Restricted Stock ("Restricted Stock") and Restricted Units ("Restricted Units"),
each as described in Article V.
1.5 Shares Subject to the Plan
Shares of stock issued under the Plan may be in whole or in part
authorized and unissued or treasury shares of the Corporation's Class A Common
Stock, par value $0.01 per share ("Common Stock"), or "Formula Value Stock" as
defined in Section 8.12(d) (Common Stock and Formula Value Stock severally and
collectively referred to in the Plan as "Stock").
The maximum number of shares of Stock which may be issued for all
purposes under the Plan (including but not limited to shares issued pursuant to
the exercise of ISOs) will be 15,000,000. The maximum number of such shares
subject to options to purchase Stock, SARs and Limited Rights under the Plan
awarded to any one Participant in any one calendar year may not exceed 3,500,000
shares plus unused share amounts that could have been awarded to that
Participant in previous calendar years.
Except as otherwise provided below, any shares of Stock subject to an
Option or other Award which is canceled or terminates without any shares having
been issued pursuant thereto having been exercised will again be available for
Awards under the Plan. Shares subject to an option canceled upon the exercise of
an SAR will not again be available for Awards under the Plan except to the
extent the SAR is settled in cash. To the extent that an Award is settled in
cash, shares of Stock subject to that Award will again be available for Awards.
Shares of Stock tendered by a Participant or withheld by the Company to pay the
exercise price of an Option or to satisfy the tax withholding obligations of the
exercise or vesting of an Award will be available again for Awards under the
Plan. Shares of Restricted Stock forfeited to the Company in accordance with the
Plan and the terms of the particular Award will be available again for Awards
under the Plan.
<PAGE> 3
3
No fractional shares will be issued, and the Committee will determine
the manner in which fractional share value will be treated.
ARTICLE II
STOCK OPTIONS
2.1 Award of Stock Options
The Committee may, from time to time, subject to the provisions of the
Plan and such other terms and conditions as the Committee may prescribe, award
to any Participant ISOs and NSOs to purchase Stock.
The Committee may provide with respect to any option to purchase Stock
that, if the Participant, while an Eligible Person, exercises the option in
whole or in part using already-owned Stock, the Participant will, subject to
this Section 2.1 and such other terms and conditions as may be imposed by the
Committee, receive an additional option ("Reload Option"). The Reload Option
will be to purchase, at Fair Market Value as of the date the original option was
exercised, a number of shares of Stock equal to the number of whole shares used
by the Participant to exercise the original option. The Reload Option will be
exercisable only between the date of its grant and the date of expiration of the
original option.
A Reload Option will be subject to such additional terms and conditions
as the Committee may approve, which terms may provide that the Committee may
cancel the Participant's right to receive the Reload Option and that the Reload
Option will be granted only if the Committee has not canceled such right prior
to the exercise of the original option. Such terms may also provide that, upon
the exercise by a Participant of a Reload Option while an Eligible Person, an
additional Reload Option will be granted with respect to the number of whole
shares used to exercise the first Reload Option.
2.2 Stock Option Agreements
The award of an option will be evidenced by a signed written agreement
("Stock Option Agreement") containing such terms and conditions as the Committee
may from time to time determine. The Committee may also at any time and from
time to time provide for the deferral of delivery of any shares for which the
option may be exercisable until a specified date or dates and subject to terms
and conditions determined by the Committee.
2.3 Option Price
The purchase price of Stock under each Option ("Option Price") will not
be less than the Fair Market Value of such Stock on the date the Option is
awarded.
2.4 Exercise and Term of Options
(a) Except as otherwise provided in the Plan, Options will become
exercisable at such time or times as the Committee may specify. The Committee
may at any time and from time to time accelerate the time at which all or any
part of the Option may be exercised.
(b) The Committee will establish procedures governing the exercise of
options and will require that notice of exercise be given. Stock purchased on
exercise of an option must be paid for as follows: (1) in cash or by check
(acceptable to the Company in accordance with guidelines established for this
purpose), bank draft or money order payable to the order of the Company or (2)
if so provided by the Committee (not later than the time of grant, in the case
of
<PAGE> 4
4
an ISO) (i) through the delivery of shares of Stock which are then outstanding
and which have a Fair Market Value on the date of exercise equal to the exercise
price, (ii) by delivery of an unconditional and irrevocable undertaking by a
broker to deliver promptly to the Company sufficient funds to pay the exercise
price, or (iii) by any combination of the permissible forms of payment.
2.5 Termination of Eligibility
Unless the Committee provides otherwise, in the event the Participant
is no longer an Eligible Person and ceased to be such as a result of termination
of service to the Company with the consent of the Committee or as a result of
his or her death, retirement or disability, each of his or her outstanding
Options (whether held by the Participant or, if the Option is an NSO that has
been transferred to a Permissible Transferee (as defined in Section 8.12) in
accordance with Section 8.1, by that Permissible Transferee) will be exercisable
by the Participant (or his or her legal representative or designated
beneficiary) or Permissible Transferee, as the case may be, to the extent that
such Option was then exercisable, at any time prior to an expiration date
established by the Committee at the time of award, but in no event after such
expiration date. Unless the Committee provides otherwise, if the Participant
ceases to be an Eligible Person for any other reason, all of the Participant's
then outstanding Options (whether held by the Participant or, if the Option is
an NSO that has been transferred to a Permissible Transferee in accordance with
Section 8.1, by that Permissible Transferee) will terminate immediately.
ARTICLE III
STOCK APPRECIATION RIGHTS AND LIMITED RIGHTS
3.1 Award of Stock Appreciation Right
(a) An SAR is an Award entitling the recipient on exercise to receive
an amount, in cash or Stock or a combination thereof (such form to be determined
by the Committee), determined in whole or in part by reference to appreciation
in Stock value.
(b) In general, an SAR entitles the Participant to receive, with
respect to each share of Stock as to which the SAR is exercised, the excess of
the share's Fair Market Value on the date of exercise over its Fair Market Value
on the date the SAR was granted.
(c) SARs may be granted in tandem with options granted under the Plan
("Tandem SARS") or independently of Options ("Independent SARs"). An SAR granted
in tandem with an NSO may be granted either at or after the time the Option is
granted. An SAR granted in tandem with an ISO may be granted only at the time
the Option is granted.
(d) SARs awarded under the Plan will be evidenced by either a Stock
Option Agreement (when SARs are granted in tandem with an Option) or a separate
agreement between the Company and the Participant.
(e) Except as otherwise provided herein, a Tandem SAR will be
exercisable only at the same time and to the same extent and subject to the same
conditions as the Option related thereto is exercisable, and the Committee may
prescribe additional conditions and limitations on the exercise of the SAR. The
exercise of a Tandem SAR will cancel the related Option. Tandem SARs may be
exercised only when the Fair Market Value of Stock to which it relates exceeds
the Option Price.
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Except as otherwise provided herein, an Independent SAR will become
exercisable at such time or times, and on such conditions, as the Committee may
specify, and the Committee may at any time accelerate the time at which all or
any part of the SAR may be exercised.
The Committee may provide, under such terms and conditions as it may
deem appropriate, for the automatic grant of additional SARs upon the full or
partial exercise of an Independent SAR.
Any exercise of an Independent SAR must be in writing, signed by the
proper person and delivered or mailed to the Company, accompanied by any other
documents required by the Committee.
(g) Except as otherwise provided herein, all SARs will automatically be
exercised on the last trading day prior to the expiration date established by
the Committee at the time of the award for the SAR, or, in the case of a Tandem
SAR, for the related Option, so long as exercise on such date will result in a
payment to the Participant.
(h) Unless otherwise provided by the Committee, no SAR will become
exercisable or will be automatically exercised for six months following the date
on which it was granted or the effective date of the Plan, whichever is later.
(i) At the time of award of an SAR, the Committee may limit the amount
of the payment that may be made to a Participant upon the exercise of the SAR.
The Committee may further determine that, if the amount to be received by a
Participant in any year is limited pursuant to this provision, payment of all or
a portion of the amount that is unpaid as a result of the limitation may be made
to the Participant at a subsequent time. No such limitation will require a
Participant to return to the Company any amount theretofore received by him or
her upon the exercise of an SAR.
(j) Payment of the amount to which a Participant is entitled upon the
exercise of an SAR will be made in cash, Stock, or partly in cash and partly in
Stock, as the Committee may determine. To the extent that payment is made in
Stock, the shares will be valued at their Fair Market Value on the date of
exercise of the SAR. The Committee may also at any time and from time to time
provide for the deferral of delivery of any shares and/or cash for which the SAR
may be exercisable until a specified date or dates and subject to terms and
conditions determined by the Committee.
(k) Each SAR will expire on a date determined by the Committee or,
unless otherwise determined by the Committee, earlier upon the occurrence of the
first of the following: (i) in the case of a Tandem SAR, termination of the
related option, (ii) expiration of a period of six months after the
Participant's ceasing to be an Eligible Person as a result of termination of
service to the Company with the consent of the Committee or as a result of his
or her death, retirement or disability, or (iii) the Participant ceasing to be
an Eligible Person for any other reason.
3.2 Limited Rights
(a) The Committee may award Limited Rights pursuant to the provisions
of this Section 3.2 to the holder of an Option to purchase Common Stock granted
under the Plan (a "Related Option") with respect to all or a portion of the
shares subject to the Related Option. A Limited Right may be exercised only
during the period beginning on the first day following a Change in Control, as
defined in Article VII of the Plan, and ending on the thirtieth day following
such date. Each Limited Right will be exercisable only to the same extent that
the Related Option is exercisable, and in no event after the termination of the
Related Option. Limited Rights will be exercisable only when the Fair Market
Value (determined as of the date of exercise of the
<PAGE> 6
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Limited Rights) of each share of Common Stock with respect to which the Limited
Rights are to be exercised exceeds the Option Price per share of Common Stock
subject to the Related option.
(b) Upon the exercise of Limited Rights, the Related Option will be
considered to have been exercised to the extent of the number of shares of
Common Stock with respect to which such Limited Rights are exercised. Upon the
exercise or termination of the Related Option, the Limited Rights with respect
to such Related Option will be considered to have been exercised or terminated
to the extent of the number of shares of Common Stock with respect to which the
Related Option was so exercised or terminated.
(c) The effective date of the grant of a Limited Right will be the date
on which the Committee approves the grant of such Limited Right. Each grantee of
a Limited Right will be notified promptly of the grant of the Limited Right in
such manner as the Committee prescribes.
(d) Upon the exercise of Limited Rights, the holder thereof will
receive in cash an amount equal to the product computed by multiplying (i) the
excess of (a) the higher of (x) the Minimum Price Per Share (as hereinafter
defined), or (y) the highest reported closing sales price of a share of Common
Stock on the New York Stock Exchange at any time during the period beginning on
the sixtieth day prior to the date on which such Limited Rights are exercised
and ending on the date on which such Limited Rights are exercised, over (b) the
Option Price per share of Common Stock subject to the Related Option, by (ii)
the number of shares of Common Stock with respect to which such Limited Rights
are being exercised.
(e) For purposes of this Section 3.2, the term "Minimum Price Per
Share" will mean the highest gross price (before brokerage commissions and
soliciting dealers' fees) paid or to be paid for a share of Common Stock
(whether by way of exchange, conversion, distribution upon liquidation or
otherwise) in any Change in Control which is in effect at any time during the
period beginning on the sixtieth day prior to the date on which such Limited
Rights are exercised and ending on the date on which such Limited Rights are
exercised. For purposes of this definition, if the consideration paid or to be
paid in any such Change in Control will consist, in whole or in part, of
consideration other than cash, the Board will take such action, as in its
judgment it deems appropriate, to establish the cash value of such
consideration.
ARTICLE IV
PERFORMANCE AWARDS
4.1 Nature of Performance Awards
A Performance Award provides for the recipient to receive an amount in
cash of Stock or a combination thereof (such form to be determined by the
Committee) following the attainment of Performance Goals. Performance Goals may
be related to personal performance, corporate performance (including corporate
stock performance), departmental performance or any other category of
performance deemed by the Committee to be important to the success of the
Company or may be related to the occurrence of any triggering event or events
that the Committee may deem appropriate. The Committee will determine the
Performance Goals, the period or periods during which performance is to be
measured or otherwise determined and all other terms and conditions applicable
to the Award. Regardless of the degree to which Performance Goals are attained,
a Performance Award will be paid only when, if and to the extent that the
Committee determines to make such payment.
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4.2 Other Awards Subject to Performance Condition
The Committee may, at the time any Award described in this Plan is
granted, impose the condition (in addition to any conditions specified or
authorized in the Plan) that Performance Goals be met prior to the Participant's
realization of any payment or benefit under the Award.
ARTICLE V
RESTRICTED STOCK AND RESTRICTED UNITS
5.1 Awards of Restricted Stock and Restricted Units
The Committee may award to any Participant shares of Stock subject to
this Article V and such other terms and conditions as the Committee may
prescribe, such Stock referred to herein as "Restricted Stock". Each certificate
for Restricted Stock will be registered in the name of the Participant and
deposited by him or her, together with a stock power endorsed in blank, with the
Corporation.
The Committee may also award to any Participant Restricted Units
subject to this Article V and such other terms and conditions as the Committee
may prescribe. For purposes hereof, a "Restricted Unit" will mean any award of a
contractual right granted under this Article V to receive Stock (or, at the
discretion of the Committee, cash in an amount based on the Fair Market Value of
the Stock, or a combination of Stock and cash) which would become vested and
nonforfeitable, in whole or in part, upon the completion of such period of
service as may be determined by the Committee.
5.2 Restricted Stock/Restricted Unit Agreement
Awards of Restricted Stock and Restricted Units under the Plan will be
evidenced by a signed written agreement containing such terms and conditions as
the Committee may determine.
5. 3 Restriction Period; Dividend Equivalents
At the time of award of Restricted Stock or Restricted Units, there
will be established for each Participant a "Restriction Period" of such length
as the Committee determines. The Restriction Period may be waived by the
Committee. Shares of Restricted Stock and Restricted Units may not be sold,
assigned, transferred, pledged or otherwise encumbered, except as hereinafter
provided.
Subject to such restrictions on transfer, the Participant as owner of
such shares of Restricted Stock will have the rights of the holder of such
Restricted Stock, except that the Committee may provide at the time of the Award
that any dividends or other distributions paid with respect to such Stock during
the Restriction Period will be accumulated and held by the Company and will be
subject to the same forfeiture provisions and the same restrictions on transfer
as apply to the shares of Restricted Stock with respect to which they were paid.
Upon the expiration or waiver by the Committee of the Restriction
Period and the satisfaction (as determined by the Committee) of any other
conditions determined by the Committee, restrictions applicable to the
Restricted Stock or Restricted Units will lapse and the Corporation will, in the
case of Restricted Stock, redeliver to the Participant (or his or her legal
representative or designated beneficiary) the shares deposited pursuant to
Section 5.1 free and clear of all restrictions except as may be imposed by law
and, in the case of Restricted Units, will pay out such units as provided in the
Restricted Unit Agreement.
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5.4 Termination of Eligibility
Unless otherwise determined by the Committee, in the event the
Participant is no longer an Eligible Person and ceased to be such as a result of
termination of service to the Company with the consent of the Committee, or as a
result of his or her death, retirement or disability, the restrictions imposed
under this Article V will lapse with respect to such number of shares of
Restricted Stock and with respect to such number of Restricted Units theretofore
awarded to him or her as may be determined by the Committee. All other shares of
Restricted Stock and Restricted Units theretofore awarded to him or her which
are still subject to restrictions, along with any dividends or other
distributions thereon that have been accumulated and held by the Company, will
be forfeited, and in the case of Restricted Stock, the Corporation will have the
right to complete the blank stock power.
Unless otherwise determined by the Committee, in the event the
Participant ceases to be an Eligible Person for any other reason, all shares of
Restricted Stock and all Restricted Units theretofore awarded to him or her
which are still subject to restrictions, along with any dividend or other
distributions on Restricted Stock that have been accumulated and held by the
Company, will be forfeited, and, in the case of Restricted Stock, the
Corporation will have the right to complete the blank stock power.
5.5 Dividend Equivalents
The Committee will determine whether and to what extent, if any, to
credit to the account of, or to pay currently to, each recipient of Restricted
Units, an amount equal to any dividends or other distributions paid during the
Restriction Period with respect to the corresponding number of shares of Stock
covered thereby ("Dividend Equivalent"). To the extent provided by the Committee
at or after the date of grant, any Dividend Equivalents with respect to cash
dividends on the Stock credited to a Participant's account will be deemed to
have been invested in shares of Stock on the record date established for the
related dividend and, accordingly, a number of additional Restricted Units shall
be credited to such Participant's account equal to the greater whole number
which may be obtained by dividing (x) the value of such Dividend Equivalent on
the record date by (y) the Fair Market Value of a share of Stock on such date.
ARTICLE VI
DEFERRAL OF PAYMENTS
6.1 Deferral of Amounts
If the Committee makes a determination to designate Awards or, from
time to time, groups or types of Awards, eligible for deferral hereunder, a
Participant may, subject to such terms and conditions and within such limits as
the Committee may from time to time establish, elect to defer the receipt of
amounts due to him or her under the Plan. Amounts so deferred are referred to
herein as "Deferred Amounts." The Committee may also permit amounts now or
hereafter deferred or available for deferral under any present or future
incentive compensation program or deferral arrangement of the Company to be
deemed Deferred Amounts and to become subject to the provisions of this Article.
Awards which are so deferred will be deemed to have been awarded in cash and the
cash deferred as Deferred Amounts.
The period between the date on which the Participant's Deferred Amount
would have been payable absent deferral and the final payment of such Deferred
Amount will be referred to herein as the "Deferral Period."
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6.2 Participant Reports
Annually, each Participant who has a Deferred Amount will receive a
report setting forth all of his or her then Deferred Amounts and the yield
thereon to date.
6.3 Payment of Deferred Amounts
Payment of Deferred Amounts will be made on such terms and conditions
as the Committee may determine and will be made at such time or times, and may
be in cash, Stock, or partly in cash and partly in Stock, as the Committee in
its sole discretion may from time to time determine.
ARTICLE VII
CHANGES IN CONTROL
7.1 Effect of Change in Control
Upon the determination of the Committee that a change in control has
occurred for purposes of the Plan (a "Change in Control"), then, notwithstanding
any other provision of the Plan: (i) all Options and, subject to the exercise
provisions of Section 3.2(a) of the Plan, Limited Rights, but not SARS,
outstanding and unexercised on the date of the Change in Control will become
immediately exercisable; (ii) all Performance Awards will be deemed to have been
earned on such basis as the Committee may prescribe and then paid on such basis,
at such time and in such form as the Committee may prescribe, or may be deferred
in accordance with the elections of Participants; (iii) all Restricted Stock and
all Restricted Units will be deemed to be earned and the Restriction Period will
be deemed expired on such terms and conditions as the Committee may determine;
and (iv) all amounts deferred under this Plan will be paid to a trustee or
otherwise on such terms as the Committee determines.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Transferability
No Option, Limited Right, SAR, Performance Award, Restricted Unit or
share of Restricted Stock or Deferred Amount under the Plan will be transferable
other than by will, by the applicable laws of descent and distribution, or by
transfer to a properly designated beneficiary in the event of death; provided,
however, that the Committee may, in its sole discretion, permit the transfer of
an NSO Option (including any Tandem SARs or Limited Rights) by a Participant to
a Permissible Transferee (as defined in Section 8.12) subject to such terms and
conditions as the Committee may, from time to time, determine. All Awards and
Deferred Amounts will be exercisable or received during the Participant's
lifetime only by such Participant or his or her legal representative or, in the
case of an NSO Option (including any Tandem SARs or Limited Rights) that has
been transferred to a Permissible Transferee in accordance with this Section
8.1, by that Permissible Transferee. Any transfer contrary to this Section 8.1
will nullify the option, Limited Right, SAR, Performance Award, Restricted Unit
or share of Restricted Stock, and any attempted transfer of a Deferred Amount
contrary to this Section 8.1 will be void and of no effect.
8.2 Beneficiaries
The Committee may establish or authorize the establishment of
procedures not inconsistent with Section 8.1 under which a Participant may
designate a beneficiary or beneficiaries to hold, exercise and/or receive
amounts due under an Award or with respect to Deferred Amounts in the event of
the Participant's death.
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8.3 Adjustments Upon Changes in Stock
If there is any change in the Stock of the Company, through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split up, dividend in kind or other change in the corporate structure or
distribution to the stockholders, appropriate adjustments may be made by the
Board of Directors of the Company (or if the Company is not the surviving
corporation in any such transaction, the board of directors of the surviving
corporation) in the aggregate number and kind of shares subject to the Plan, and
the number and kind of shares and the price per share subject to outstanding
Options or which may be issued under outstanding Performance Awards or Awards of
Restricted Stock. Appropriate adjustments may also be made by the Board of
Directors or the Committee in the terms of any Awards under the Plan to reflect
such changes and to modify any other terms of outstanding Awards on an equitable
basis, including modifications of performance targets and changes in the length
of Performance Periods.
8.4 Conditions of Awards
(a) The rights of a Participant with respect to any Award received
under this Plan will be subject to the conditions that, until the Participant
has fully received all payments, transfers and other benefits under the Award,
he or she will (i) not engage, either directly or indirectly, in any manner or
capacity as advisor, principal, agent, partner, officer, director, employee,
member of any association or otherwise, in any business or activity which is at
the time competitive with any business or activity conducted by the Company and
(ii) be available, unless he or she has died, at reasonable times for
consultations at the request of the Company's management with respect to phases
of the business with which he or she is or was actively connected during the
time he or she was an officer, employee or independent contractor, but such
consultations will not (except in the case of a Participant whose active service
was outside the United States) be required to be performed at any place or
places outside of the United States of America or during usual vacation periods
or periods of illness or other incapacity. In the event that either of the above
conditions is not fulfilled, the Participant will forfeit all rights to any
unexercised Option or SAR, or any Performance Award or Stock held which has not
yet been determined by the Committee to be payable or unrestricted (and any
unpaid amounts equivalent to dividends or other distributions or amounts
equivalent to interest relating thereto) as of the date of the breach of
condition. Any determination by the Board of Directors of the Corporation, which
will act upon the recommendation of the Chief Executive Officer, that the
Participant is, or has, engaged in a competitive business or activity as
aforesaid or has not been available for consultations as aforesaid will be
conclusive.
(b) This Section 8.4 will not apply to Limited Rights.
8.5 Use of Proceeds
All cash proceeds from the exercise of Options will constitute general
funds of the Company.
8.6 Tax Withholding
The Company will collect, through withholding or otherwise, an amount
sufficient to satisfy any applicable federal, state and local withholding tax
requirements (the "withholding requirements") with respect to payments made
pursuant to the Plan.
In the case of an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy any
applicable withholding requirements, or make other arrangements satisfactory to
the Committee with regard to such requirements, prior to the delivery of any
Stock.
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If and to the extent that such withholding is required, the Committee may
permit the Participant or such other person to elect at such time and in such
manner as the Committee provides to have the Company hold back from the shares
to be delivered, or to deliver to the Company, Stock having a value calculated
to satisfy the withholding requirement. In the alternative, the Committee may,
at the time of grant of any such Award, require that the Company withhold from
any shares to be delivered Stock with a value calculated to satisfy any
applicable tax withholding requirements.
If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to a
disposition of the Stock received upon exercise, the Committee may require as a
condition of exercise that the person exercising the ISO agree (i) to inform the
Company promptly of any disposition of Stock received upon exercise, and (ii) to
give such security as the Committee deems adequate to meet the potential
liability of the Company for the withholding requirements and to augment such
security from time to time in any amount reasonably deemed necessary by the
Committee to preserve the adequacy of such security.
8.7 Non-Uniform Determinations
The Committee's determinations under the Plan, including without
limitation, (i) the determination of the Participants to receive Awards, (ii)
the form, amount, timing and payment of such Awards, (iii) the terms and
provisions of such Awards and (iv) the agreements evidencing the same, need not
be uniform and may be made by it selectively among Participants who receive, or
who are eligible to receive, Awards under the Plan, whether or not such
Participants are similarly situated.
8.8 Leaves of Absence; Transfers
The Committee will be entitled to make such rules, regulations and
determinations as it deems appropriate under the Plan in respect to any leave of
absence from the Company granted to a Participant. Without limiting the
generality of the foregoing, the Committee will be entitled to determine (i)
whether or not any such leave of absence will be treated as if the Participant
ceased to be an Eligible Person and (11) the impact, if any, of any such leave
of absence on Awards under the Plan. In the event a Participant transfers within
the Company, such Participant will not be deemed to have ceased to be an
Eligible Person for purposes of the Plan.
8.9 General Restriction
(a) Each Award under the Plan will be subject to the condition that, if
at any time the Committee determines that (i) the listing, registration or
qualification of shares of Stock upon any securities exchange or under any state
or federal law, (ii) the consent or approval of any government or regulatory
body or (iii) an agreement by the Participant with respect thereto, is necessary
or desirable, then such Award will not be consummated in whole or in part unless
such listing, registration, qualification, consent, approval or agreement has
been effected or obtained free from any conditions not acceptable to the
Committee.
(b) Shares of Common Stock for use under the provisions of this Plan
will not be issued until they have been duly listed, upon official notice of
issuance, upon the New York Stock Exchange and such other exchanges, if any, as
the Board of Directors of the Corporation determines, and a registration
statement under the Securities Act of 1933 with respect to such shares has
become, and is, effective.
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8.10 Effective Date
The Plan will be effective on December , 1998.
No Award may be granted under the Plan after December , 2008, but
Awards previously made may extend beyond that date and Reload Options and
additional Reload Options provided for with respect to original options
outstanding prior to that date may continue unless the Committee otherwise
provides and subject to such additional terms and conditions as the Committee
may provide except that all Reload Options issued after that date will be NSOs,
and the provisions of Article VI of the Plan will survive and remain effective
as to all present and future Deferred Amounts until such later date as the
Committee or the Board of Directors may determine.
The adoption of the Plan will not preclude the adoption by appropriate
means of any other stock option or other incentive plan for officers or
employees.
8.11 Amendment, Suspension and Termination of Plan
The Board of Directors may at any time or times amend the Plan for any
purpose which may at the time be permitted by law, or may at any time suspend or
terminate the Plan as to any further grants of Awards.
8.12 Certain Definitions
(a) The terms "retirement" and "disability" as used under the Plan will
have the meanings determined from time to time by the Committee.
(b) The term "Fair Market Value" as it relates to Common Stock means
the mean of the high and low prices of the Common Stock as reported by the
Composite Tape of the New York Stock Exchange (or such successor reporting
system as the Committee may select) on the relevant date or, if no sale of the
Common Stock has been reported for that day, the average of such prices on the
next preceding day and the next following day for which there were reported
sales. The term "Fair Market Value" as it relates to Formula Value Stock will
mean the value determined by the Committee.
(c) The term "Subsidiary" will mean, unless the context otherwise
requires, any corporation (other than the Corporation) in an unbroken chain of
corporations beginning with the corporation if each of the corporations other
than the last corporation in such chain owns stock possessing at least 50% of
the voting power in one of the other corporations in such chain.
(d) "Formula Value Stock" means shares of a class or classes of stock
the value of which is derived from a formula established by the Committee which
reflects such financial measures as the Committee may determine. Such shares
will have such other characteristics as may be determined at time of their
authorization.
(e) "Permissible Transferee" means any of the following: (1) a member
of the Participant's Immediate Family; (2) a trust solely for the benefit of the
Participant and/or the Participant's Immediate Family; and (3) a partnership or
limited liability company whose only partners or members, as the case may be,
are the Participant and/or Permissible Transferees of the Participant as
otherwise identified in this definition. "Immediate Family" has the meaning set
forth in Rule l6a-1(e) under the Exchange Act, as such rule may be amended from
time to time, or any successor rule.
8.13 Governing Law.
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The Plan and all agreements or other documents relating to the Plan
will be construed in accordance with and governed by the laws of the State of
Delaware, without regard to the principles of conflict of laws.
<PAGE> 1
Exhibit 10.18
INFINITY BROADCASTING CORPORATION
EXECUTIVE ANNUAL INCENTIVE PLAN
SECTION 1. PURPOSE
1.1 The purpose of the Infinity Broadcasting Corporation Executive
Annual Incentive Plan is to provide competitive annual or other incentive
opportunities that foster and promote the financial success of the Company by:
(a) aiding the Company in attracting and retaining key executives of outstanding
ability; (b) strengthening the Company's capability to develop, maintain and
direct a competent management team; and (c) motivating key executives who are in
a position to contribute materially to the success of the Company to achieve
measurable performance goals. The Plan is intended to permit the Company to pay
to Participants who are Covered Employees annual incentives that qualify as
performance-based compensation for purposes of Section 162(m) of the Internal
Revenue Code and that are fully deductible by the Company under the Code.
1.2 Certain terms used in the Plan are defined in Section 10.
SECTION 2. EFFECTIVE DATE
2.1 The Plan is effective as of December __, 1998.
SECTION 3. ELIGIBILITY; SELECTION FOR PARTICIPATION
3.1 Participation in the Plan will be limited to key executives of
the Company and/or its subsidiaries who are designated by the Committee as
Participants for a given Performance Period. In making this designation, the
Committee may give consideration to the functions and responsibilities of the
executive, his or her past, present and potential contributions to the Company,
and other factors deemed relevant by the Committee.
SECTION 4. AWARDS
4.1 The Committee may award incentives to Participants with
respect to Performance Periods, subject to the terms and conditions set forth in
the Plan.
4.2 The Committee will establish one or more objective performance
goals for a given Performance Period. Such performance goal or goals will be
based on one or more of the following business criteria as applied to the
relevant business unit or units, to the Company as a whole, or to any
combination thereof: earnings before interest, taxes, depreciation and
amortization ("EBITDA"); earnings before interest and taxes ("EBIT"); free cash
flow; earnings per share; and stock price.
4.3 The Committee will also establish target and maximum incentive
award opportunity amounts for each Participant for the given Performance Period
and the objective formula or standard that will be used by the Committee to
determine the amount of incentive
-1-
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compensation that may be payable to such Participant under the Plan if and to
the extent that the established performance goal or goals are achieved;
provided, however, that in no event may the maximum incentive award opportunity
or the maximum incentive award for any one Participant for any Performance
Period exceed the amount of six million dollars ($6,000,000). This maximum
amount will be adjusted annually to reflect increases in the Consumer Price
Index-U published by the Bureau of Labor Statistics, or any successor to such
index, for each twelve-month period commencing January 1.
4.4 After the close of the Performance Period, the Committee will
determine the extent to which the preestablished performance goal or goals for
that Performance Period have been achieved and the extent to which incentive
compensation for each Participant would be payable based on such performance and
the preestablished formula or method. Regardless of the degree to which a
performance goal or goals are achieved, incentive awards under the Plan will be
paid only when and if the Committee, in its sole discretion, determines to
approve the award or awards. The Committee, in its sole discretion, may reduce
(but may not increase) the amount which would otherwise be payable as incentive
compensation based on the extent to which the preestablished performance goal or
goals have been achieved and the preestablished formula or method, in which case
the Participant will receive only the reduced amount as an incentive award,
which may be zero, even if the performance goal or goals were achieved.
4.5 Appropriate adjustments may be made by the Committee in
performance goals, target and maximum incentive award opportunities, formulas or
standards, and/or in the measurement of the extent of achievement of performance
goals to reflect the impact of acquisitions, divestitures, changes in accounting
standards, or unusual or extraordinary events.
SECTION 5. FORM OF PAYMENT; SHARES OF STOCK
5.1 The Committee will also determine the time, form and manner of
payment of any incentive awards it may approve for payment under the Plan.
Incentive awards may be paid in cash, in Stock Options, in Stock Appreciation
Rights, in other Derivative Securities, in other securities of the Company, or
in any other form that the Committee may determine, or in any combination of
such forms, and may be paid in one or more installments and/or on a deferred
basis or on such other basis as the Committee may determine ("deferrals"), all
on such terms and conditions as are set forth in the Plan and otherwise as the
Committee may from time to time determine.
5.2 The maximum number of shares of Stock that may be issued for
all purposes under the Plan is one million (1,000,000); and the maximum number
of such shares of Stock subject to Stock Options and Stock Appreciation Rights
granted to any one Participant under the Plan in any one Performance Period is
six hundred thousand (600,000); in each case subject to adjustment and
substitution as set forth in this Section 5.
5.3 Shares of Stock issued under the Plan may be in whole or in
part authorized and unissued or treasury shares of Stock. No fractional shares
will be issued, and the Committee will determine the manner in which fractional
share value will be treated.
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5.4 Any shares of Stock that are issued pursuant to the Plan and
are subsequently forfeited, any shares of Stock subject to a Stock Option, Stock
Appreciation Right and/or other Derivative Security which is canceled or
terminates without any shares having been issued pursuant thereto, any shares of
Stock tendered by a Participant to pay the Exercise Price of a Stock Option or
other Derivative Security, and any shares of Stock tendered or withheld to
satisfy withholding tax requirements will automatically become available again
for use under the Plan; provided, however, this Section 5.4 will apply only to
the 1,000,000 share limit set forth in Section 5.2 (as adjusted in accordance
with the Plan).
5.5 If there is any change in the Stock of the Company, through
merger, consolidation, division, share exchange, combination, reorganization,
recapitalization, stock dividend, stock split, spin-off, split-up, dividend in
kind or other change in the corporate structure or distribution to the
shareholders, appropriate adjustments may be made by the Committee (or if the
Company is not the surviving corporation in any such transaction, the board of
directors (or a committee thereof consisting solely of Outside Directors) of the
surviving corporation) in the aggregate number and kind of shares subject to the
Plan, and the number and kind of shares and the price per share subject to
outstanding Stock Options, Stock Appreciation Rights and other Derivative
Securities or which may be issued under outstanding deferrals. Appropriate
adjustments may also be made by the Committee in the terms of any incentive
award opportunities under the Plan to reflect such changes and to modify any of
the terms of any outstanding Stock Options, Stock Appreciation Rights or other
Derivative Securities or deferrals.
SECTION 6. PAYMENT IN STOCK OPTIONS OR STOCK APPRECIATION RIGHTS
6.1 General. The Committee may, from time to time, subject to the
provisions of the Plan and such other terms and conditions as the Committee may
prescribe, determine that an incentive award or a portion of an incentive award
will be paid in the form of Stock Options or Stock Appreciation Rights. Stock
Appreciation Rights may be granted in tandem with Stock Options or independently
of Stock Options. The number of Stock Options or Stock Appreciation Rights will
be determined by dividing the amount of the incentive award to be paid in the
form of Stock Options or Stock Appreciation Rights by the value, as determined
by the Committee, of a Stock Option or Stock Appreciation Right, as the case may
be, for one share of Stock on the relevant date.
6.2 Stock Option/Stock Appreciation Right Agreement. All Stock
Options and all Stock Appreciation Rights will be evidenced by a signed written
agreement, with any amendments thereto, containing such terms and conditions as
are set forth in the Plan and otherwise as the Committee may from time to time
determine. Stock Appreciation Rights granted in tandem with Stock Options will
be evidenced by the Stock Option agreement. The Committee may also at any time
and from time to time provide for the deferral of delivery of any shares and/or
cash for which the Stock Option or Stock Appreciation Right may be exercisable
until a date or dates and subject to terms and conditions determined by the
Committee.
6.3 Exercise Price. The purchase price per share of Stock under
each Stock Option and the reference price per share of the Stock to which a
Stock Appreciation Right relates (in
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either case, "Exercise Price") will not be less than the Fair Market Value of
such Stock on the date the Stock Option is granted. A Stock Appreciation Right
may be exercised only when the Fair Market Value of the Stock to which it
relates exceeds the Exercise Price.
6.4 Rights as a Shareholder. The holder of a Stock Option, Stock
Appreciation Right or other Derivative Security will not have any of the rights
of a shareholder with respect to any shares of Stock that may be subject or
relate thereto unless and until such shares are issued by the Company following
its exercise or otherwise.
SECTION 7. ADMINISTRATION
7.1 The Plan will be administered by the Committee. Subject to the
terms of the Plan, the Committee will have the sole and complete authority: (a)
to designate Participants, to approve incentive awards, to determine the time,
form and manner of payment of any incentive awards it may approve, and to impose
such limitations, restrictions and conditions thereon as the Committee deems
appropriate; (b) to interpret the Plan and the terms of any document relating to
the Plan and to adopt, amend and rescind administrative guidelines and other
rules and regulations relating to the Plan; (c) to accelerate the time at which
all or any part of Stock Options, Stock Appreciation Rights and/or other
Derivative Securities may be exercised or the time when all or any part of
deferrals and/or Derivative Securities will be paid; (d) to otherwise amend or
cancel incentive award opportunities, Stock Options, Stock Appreciation Rights
or other Derivative Securities or deferrals under the Plan in whole or in part,
except that the Committee may not, unless otherwise provided in the Plan or
unless the Participant affected thereby consents, take any action under this
clause that would adversely affect the rights of such Participant with respect
to outstanding Stock Options, Stock Appreciation Rights or other Derivative
Securities or deferrals under the Plan, and except that the Committee may not,
unless otherwise provided in the Plan, take any action to amend any outstanding
Stock Option or Stock Appreciation Right under the Plan in order to decrease the
Exercise Price of such Stock Option or Stock Appreciation Right; and (e) to make
all other determinations and to take all other actions necessary or advisable
for the interpretation, implementation and administration of the Plan.
7.2 The Committee's determinations on matters within its authority
will be conclusive and binding upon the Company and all other persons unless and
until the Committee determines otherwise.
SECTION 8. GENERAL PROVISIONS
8.1 No Right to Awards or to Employment. No employee or other
person will have any claim or right to be designated as a Participant or to
receive an incentive award under the Plan. Participation in the Plan will not be
construed as a right to employment or other relationship(s) with the Company,
and the Company retains the right to terminate the employment or other
relationship(s) of an individual with the Company for any reason, with or
without cause.
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8.2 Assignability. During a Participant's lifetime, payments or
distributions under the Plan may be received only by the Participant or his or
her legal representative. Shares of restricted Stock during the applicable
restriction period, Stock Options, Stock Appreciation Rights, other Derivative
Securities, rights to deferral payments and any other rights or benefits under
the Plan will not be transferable or assignable by a Participant other than by
will, by the applicable laws of descent and distribution, or by transfer to a
Properly Designated Beneficiary in the event of death; provided, however, that
the Committee may, in its sole discretion, permit the transfer of Stock Options
(including any tandem Stock Appreciation Rights) by a Participant to Permissible
Transferees, subject to such terms and conditions as the Committee may
determine. Any transfer or assignment contrary to these provisions will be null
and void.
8.3 Tax Withholding. The Company will collect, through
withholdings or otherwise, an amount sufficient to satisfy all applicable
federal, state and local withholding tax requirements with respect to payments
made pursuant to the Plan.
8.4 Non-Uniform Determinations. The Committee's determinations
under the Plan, including without limitation, (a) the selection of Participants,
(b) the form, amount, timing and payment of incentive awards, (c) the terms and
provisions of incentive awards and the payment thereof, and (d) any agreements
evidencing the same, need not be uniform and may be made by it selectively among
Participants who receive, or who are eligible to receive, incentive awards,
whether or not such Participants are similarly situated.
8.5 Designation of Beneficiaries. The Committee may establish or
authorize the establishment of procedures not inconsistent with Section 8.2
under which a Participant may designate a beneficiary or beneficiaries in the
event of the Participant's death.
8.6 Non-Funded Plan. The Company will not be required to establish
any special or separate fund or to segregate any assets for purposes of the
Plan.
8.7 Other Plans or Compensation Arrangements. Nothing contained in
the Plan will be deemed to limit or restrict the right of the Company and its
subsidiaries to compensate any of their key executives and/or employees in whole
or in part under separate bonus or incentive plans or other compensation
arrangements.
8.8 Governing Law. The Plan and all agreements or other documents
relating to the Plan will be construed in accordance with and governed by the
laws of the State of Delaware, without regard to the principles of conflict of
laws.
SECTION 9. CHANGE IN CONTROL
9.1 Effect of Change in Control. Upon the determination of the
Committee that a change in control has occurred for purposes of the Plan, the
Committee may deem all or any part of any incentive award opportunity to have
been earned on such basis as the Committee may determine, and incentive awards
and outstanding Derivative Securities and deferrals may then be paid and Stock
Options, Stock Appreciation Rights and other Derivative Securities may then be
modified, and all or any part of any restrictions or conditions may be waived or
modified,
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all on such basis, at such time (which may, in the case of incentive
awards, be prior to the end of the Performance Period), in such form and subject
to such terms and conditions as the Committee may prescribe.
SECTION 10. CERTAIN DEFINITIONS
10.1 Definitions. The following terms or phrases will have the
meanings set forth below.
(a) "Board" means the Board of Directors of the Company.
(b) "Code" or "Internal Revenue Code" means the Internal Revenue
Code of 1986, as amended from time to time, or any successor statute or
statutes. Reference to any specific Code section will include any successor
section.
(c) "Committee" means the Compensation Committee of the Board (or
a subcommittee thereof) or any successor committee (or a subcommittee thereof)
established by the Board; provided, however, the Committee must consist of at
least two members and each member of the Committee must be an Outside Director.
(d) "Company" means Infinity Broadcasting Corporation, a Delaware
corporation, and any successor thereto.
(e) "Covered Employee" means a person who is a covered employee
within the meaning of Section 162(m) of the Code and regulations promulgated
thereunder.
(f) "Derivative Security" means a derivative security with respect
to an equity security of the Company, where "derivative security" has the
meaning set forth in Rule 16a-1(c) under the Exchange Act, as such rule may be
amended from time to time, or any successor rule.
(g) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(h) "Exercise Price" has the meaning assigned to it in Section
6.3.
(i) "Fair Market Value" means the mean of the high and low prices
of the Stock as reported by the Composite Tape of the New York Stock Exchange
(or such successor reporting system as may be selected by the Committee) on the
relevant date or, if no sale of the Stock has been reported for that day, the
average of such prices on the next preceding day and the next following day for
which there were reported sales.
(j) "Immediate Family" has the meaning set forth in Rule 16a-1(e)
under the Exchange Act, as such rule may be amended from time to time, or any
successor rule.
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(k) "Outside Director" means an outside director as that term is
defined by Section 162(m) of the Code and regulations promulgated thereunder.
(l) "Participant" means a key executive of the Company and/or its
subsidiaries who is designated by the Committee as a Plan participant for a
given Performance Period in accordance with Section 3.1.
(m) "Performance Period" means a calendar year or other fiscal
year of the Company or other longer or shorter period designated by the
Committee with respect to which incentive awards may be paid.
(n) "Permissible Transferee" means any of the following: (1) a
member of the Participant's Immediate Family; (2) a trust solely for the benefit
of the Participant and/or the Participant's Immediate Family; and (3) a
partnership or limited liability company whose only partners or members, as the
case may be, are the Participant and/or Permissible Transferees as otherwise
identified in this definition.
(o) "Plan" means the Company's 1998 Executive Annual Incentive
Plan, as amended from time to time.
(p) "Properly Designated Beneficiary" means a beneficiary or
beneficiaries designated by a Participant pursuant to Section 8.5 in the event
of the Participant's death.
(q) "Stock" means the Class A Common Stock and any other equity
stock of the Company, other than Class B Common Stock.
(r) "Stock Appreciation Right" means a right to receive, on
exercise, an amount, in cash or Stock or a combination thereof (such form to be
determined by the Committee), determined by reference to appreciation in Stock
value.
(s) "Stock Option" means a non-statutory stock option (that is, a
Stock Option which is not an incentive stock option as defined in Section 422(b)
of the Code) to purchase shares of Stock for the purchase price set forth in the
relevant Stock Option Agreement, all in accordance with the terms of the Plan.
10.2 Sections; Number. Except where otherwise indicated by the
context, references to sections will mean the Sections of the Plan and the
definition of any term herein in the singular will also include the plural.
Section or subsection headings are inserted for convenience only. Such headings
will not affect the meaning of any of the provisions of the Plan and will not be
deemed a part of the Plan.
SECTION 11. AMENDMENT, SUSPENSION AND/OR TERMINATION OF PLAN
11.1 The Board of Directors or the Committee may at any time and
from time to time amend the Plan, in whole or in part, for any purpose, or may
at any time or from time to time suspend or terminate the Plan.
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Exhibit 10.24
AGREEMENT made as of by and between CBS WORLDWIDE INC. ,
51 West 52nd Street, New York, New York 10019 (herein referred to as "CBS") and
INFINITY BROADCASTING CORPORATION, 40 West 57th Street, New York, New York 10019
(herein referred to as "Licensee")
WITNESSETH
WHEREAS, CBS is the owner of the trademarks set forth in Schedule A
(herein collectively referred to as the "Trademarks"); and
WHEREAS, Licensee had used the Trademarks and Licensee wishes to
continue to use the Trademarks;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained the parties have mutually agreed as follows:
1. (a) CBS hereby grants to Licensee, and Licensee hereby accepts a
non-exclusive, non-assignable, royalty-free, fully paid right and license to use
the Trademarks in the United States, its territories and possessions including
Puerto Rico only in connection with Licensee's radio broadcasting services
(herein referred to as the "Services") (and specifically excluding any other
current or future business of Licensee including but not limited to Licensee's
outdoor advertising business) and to use the Trademarks in the advertising,
marketing and promotion of the Services (herein called the "Trademark Usages")
during the Term; provided, however, that no advertising, marketing or promotion
use of the Trademarks will utilize or be made on or in connection with any
product, merchandise or services other than the Services without CBS's prior
written approval in each instance.
(b) Licensee shall have the right to sublicense the Trademarks to a
CBS Sublicensee; provided, however, Licensee obtains CBS's prior written
approval of any such proposed sublicense in each instance; and provided further,
that no such sublicense shall relieve Licensee of any of its obligations under
this Agreement. Any CBS Sublicensee will execute a trademark license agreement
containing substantially all of the same terms and conditions of this Agreement.
A "CBS Sublicensee" shall mean a current and future, direct or indirect
affiliate of Licensee in which CBS Corporation beneficially owns, directly or
indirectly, at least 50% of the voting power of such affiliate.
2. The Term of this Agreement shall commence on December , 1998 and
will continue, unless sooner terminated, with respect to each of the Trademarks
for the term of respective trademark's registration and any renewals thereof.
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3. Licensee will use the Trademarks only upon or in connection with
the Services in accordance with standards of quality specified or approved by
CBS. Prior to the commencement of the Trademark Usages, Licensee shall furnish
to CBS for its approval a sample of the Trademark Usages materials. In addition,
Licensee shall furnish to CBS samples of specific uses of the Trademarks in
connection with the Services. Licensee shall not authorize full-scale production
of the Trademark Usages until after CBS's approval has been obtained in writing
in each instance. Any change in the materials utilizing the Trademarks or the
Trademark Usages shall be subject to CBS's prior approval in each instance. If
CBS requests any change to any submitted Trademark Usages materials or use of
the Trademarks in connection with the Services, such item as changed shall be
resubmitted to CBS for approval. Approval by CBS shall not, however, relieve
Licensee of any of its warranties or obligations hereunder, and the uses of the
Trademarks in connection with the Services and each of Trademarks Usages
materials shall strictly conform with the samples and proofs approved by CBS.
Samples and materials to be approved shall be submitted to CBS c/o Associate
General Counsel, Contract, Rights and Development, CBS Broadcasting Inc. or such
other person that may be designated in writing by CBS.
4. Licensee admits the validity of the Trademarks and covenants that
Licensee will not directly or indirectly contest the validity of the Trademarks
or the right and title of CBS therein. Licensee recognizes the value of the
goodwill and secondary meaning associated with the Trademarks. Licensee shall
not register or attempt to register the Trademarks either alone or in
combination with any other mark, word, symbol, or the like anywhere in the world
or aid or abet anyone else in doing so. Licensee acknowledges that the
Trademarks (including all rights therein and goodwill associated therewith)
shall, as between Licensee and CBS, be and remain the exclusive and complete
property of CBS. CBS reserves the right to lease, authorize or permit the use of
the Trademarks by third parties as CBS may see fit. Licensee will not use or
authorize the use of the Trademarks in any manner, at any time or in any place
not specifically licensed herein. Licensee shall not adopt or use any name or
mark that CBS considers to be confusingly similar to the Trademarks.
5. Licensee warrants and represents that the Services will be of the
highest standard in style and quality; that the Trademark Usages will conform to
the specifications and quality of the samples furnished by Licensee to CBS
pursuant to paragraph 3 hereof; that the Services and Trademark Usages will be
in accordance with all applicable federal, state, local and foreign, if
applicable, laws and in a manner that will not reflect adversely upon CBS, its
licensees or assignees.
6. (a) Licensee shall, during the conduct of its business hereunder,
do everything necessary to protect and preserve CBS's Trademarks during the Term
hereof. In connection therewith, Licensee will comply with proper trademarks
usage in connection with the Services and the Trademark Usages and will comply
with proper trademark usage and trademark laws of the United States. CBS shall
from time to time advise Licensee what usage of the Trademarks shall be proper.
However, Licensee's obligations under this subparagraph shall be independent of
the instructions of CBS. At the request of CBS, Licensee shall execute all
documents
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necessary to procure, protect and preserve the aforesaid trademark rights,
including but not limited to, applications for recordation of Licensee as a
Registered User of the Trademarks.
(b) Licensee shall print, stamp or otherwise affix the following
Trademark notice "(R)" or "Trademark of CBS Worldwide Inc." on the Trademark
Usages and in connection with the Services, all in accordance with instructions
from CBS, including without being limited to, instructions with respect to
position, design, and letter size.
(c) The Trademarks and the right to use the Trademarks which arises
out of the license hereby granted to use the Trademarks shall be and remain the
sole and complete property of CBS. The right and license granted herein shall
not constitute an assignment by CBS of said Trademarks and Licensee shall not at
any time acquire or claim any right, title or interest of any nature whatsoever
in the Trademarks by virtue of this Agreement or of Licensee's use thereof on or
in connection with the Services. In the event that during the Term of this
Agreement, Licensee shall create any additional Trademarks or other proprietary
right related to or arising out of the aforesaid Trademarks, as a result of the
exercise by Licensee of any right granted to it hereunder, such Trademarks or
other proprietary right shall immediately vest in CBS and Licensee shall be
authorized to use such new Trademarks or proprietary right as though same had
specifically been included in this Agreement.
(d) Subject to paragraph 10 hereof, upon the termination of this
Agreement for any reason, Licensee will immediately cease all further use of the
Trademarks and all trademark rights shall forthwith revert to CBS. If deemed
necessary, Licensee shall execute any requested written reassignment of such
rights.
(e) All uses of the Trademarks by Licensee and all goodwill
associated with such uses will inure to the benefit of CBS.
7. Licensee shall promptly notify CBS of any unauthorized use or
infringement by third parties of any rights granted to Licensee herein, and will
cooperate fully in any action at law or in equity undertaken by CBS with respect
to such unauthorized use or infringement (it being understood that all expenses
in connection with such action shall be borne by CBS). CBS reserves the right
not to bring an infringement action.
8. (a) Licensee warrants and represents that Licensee is free to enter
into and fully perform this Agreement, that all ideas, creations, materials and
intellectual property furnished by Licensee in connection with the Services and
the Trademark Usages will be Licensee's own and original creation (except for
matter in the public domain or material which Licensee is fully licensed to use)
and that the Services and the Trademark Usages will not infringe upon or violate
any rights of any third party of any nature whatsoever.
(b) Licensee will at all times indemnify and hold harmless CBS from
and against any and all claims, damages, liabilities, costs and expenses,
including reasonable counsel fees arising out of Licensee's use of the
Trademarks in the Trademark Usages and/or the Services or out of any breach by
Licensee of any warranty or agreement made by Licensee herein.
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9. In the event that: (i) Licensee fails to comply with any of
Licensee's obligations hereunder, (ii) an involuntary petition in bankruptcy is
filed against Licensee and is not dismissed within thirty (30) days thereafter,
a receiver or trustee of any of Licensee's property is appointed and such
appointment is not vacated within thirty (30) days thereafter, or Licensee takes
advantage of any insolvency law, (iii) Licensee fails to conform to the
specifications of the samples furnished or reduces the quality of the Services
or the Trademark Usages approved by CBS without prior consent, (iv) Licensee
commits any act or omission which in CBS's opinion would be substantially likely
to materially impair, dilute or diminish the value, reputation or
distinctiveness of the Trademarks or in CBS's opinion would be substantially
likely to impair, dilute or diminish the value, image, integrity or reputation
of the CBS Corporation (or any business unit thereof), (v) the Intercompany
Agreement between CBS Corporation and Infinity Broadcasting Corporation dated as
of December ______, 1998 (herein called the "Intercompany Agreement")
terminates, or (vi) a Trigger Date (as defined in the Intercompany Agreement)
occurs, then, in any of such events, in addition to any other rights of any
nature that CBS may have at law or in equity, CBS shall have the right, at its
option, to terminate this Agreement.
10. Upon expiration or termination of this Agreement, all rights
granted to Licensee herein shall forthwith revert to CBS, with the following
consequences: (i) Licensee shall not thereafter make any use of the Trademarks
in the Trademark Usages and/or the Services whatsoever, except that in the event
of the termination of this Agreement, pursuant to any provision of paragraph 9
hereof, Licensee may continue the Services use or the Trademark Usages on a
non-exclusive basis during a period of sixty (60) days thereafter in accordance
with all of the terms and conditions contained in this Agreement.
11. (a) CBS warrants and represents that it has the right to enter into
this Agreement and to grant all of the rights granted hereunder. CBS also
warrants that it is the owner of United States Trademark Registrations set forth
in Schedule A and has all rights under said Registration for the services
specified therein.
(b) CBS will indemnify and hold Licensee harmless from and against
any and all claims, damages, liabilities, costs and expenses, including legal
expenses and reasonable counsel fees, arising out of CBS's use of the
Trademarks. Licensee shall promptly notify CBS in the event of any claim, suit
or proceeding being asserted or commenced against Licensee and CBS shall assume
the defense of such claim, suit or proceeding. Licensee shall cooperate fully
with CBS in the defense thereof. CBS may join Licensee as a party and shall not
settle any such claim, suit or proceeding without Licensee's written consent,
which consent shall not be unreasonably withheld. Licensee will promptly notify
CBS of any claim to which the above indemnity applies and CBS shall defend the
same at its expense. CBS's obligations with respect thereto shall be limited to
paying the amount of any judgment, or settlement approved by CBS in connection
therewith.
(c) CBS reserves the right to prosecute, defend and conduct at its
own expense all proceedings that it may deem proper or necessary for the
protection of said Trademarks, and at the sole option of CBS it may conduct
proceedings in its own name or in the name of Licensee, or jointly in its name
with Licensee, and Licensee agrees that it will not claim or reserve any
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rights against CBS as the result of such action, and furthermore agrees to
notify CBS promptly of any adverse, pending or threatened litigation in respect
of said Trademarks of which it becomes aware.
12. (a) Except as otherwise specifically provided herein, all notices
hereunder shall be in writing and shall be given by personal delivery,
registered or certified mail, at the respective addresses hereinabove set forth,
or such other address or addresses as may be designated by either party. Such
notices shall be deemed given when mailed except that notice of change of
address shall be effective only from the date of its receipt.
(c) Nothing herein contained shall be construed to constitute a
partnership or joint venture between the parties hereto, and neither Licensee
nor CBS shall become bound by any representation, act or omission of the other.
(d) A waiver by either party of any term or condition of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or of any subsequent breach thereof. All
remedies, rights, undertakings, obligations and agreements contained in this
Agreement shall be cumulative, and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement of either party.
(e) CBS may assign (by operation of law or otherwise) its rights
hereunder in whole or in part to any person, firm or corporation, and such
rights may be assigned by any assignee thereof; provided, however, that no such
assignment shall relieve CBS of any of its obligations hereunder. Licensee shall
not assign (by operation of law or otherwise), transfer, sublicense or otherwise
encumber this Agreement without the prior written approval of CBS. Any
assignment or other transfer, sublicense, or other encumbrance of this Agreement
by Licensee without the prior written approval of CBS shall be null and void and
of no effect ab initio.
(f) This Agreement has been entered into in the State of New York,
and the validity, interpretation and legal effect of this Agreement shall be
governed by the laws of the State of New York applicable to contracts entered
into and performed entirely within the State of New York, with respect to the
determination of any claim, dispute or disagreement, which may arise out of the
interpretation, performance or breach of this Agreement.
(g) This Agreement contains the entire understanding of the parties
hereto relating to the subject matter hereof and cannot be changed or terminated
orally.
IN WITNESS WHEREOF, this Agreement has been signed by the parties
as of the first above written.
INFINITY BROADCASTING CBS WORLDWIDE INC.
CORPORATION
By ______________________________ By _______________________________
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Exhibit 10.25
AGREEMENT made as of by and between CBS BROADCASTING INC.
(Formerly known as CBS INC.), 51 West 52nd Street, New York, New York 10019
(herein referred to as "CBS") and INFINITY BROADCASTING CORPORATION, 40 West
57th Street, New York, New York 10019 (herein referred to as "Licensee")
WITNESSETH
WHEREAS, CBS is the owner of the trademarks set forth in Schedule A
(herein collectively referred to as the "Trademarks"); and
WHEREAS, Licensee had used the Trademarks and Licensee wishes to
continue to use the Trademarks;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained the parties have mutually agreed as follows:
1. (a) CBS hereby grants to Licensee, and Licensee hereby accepts a
non-exclusive, non-assignable, royalty-free, fully paid right and license to use
the Trademarks in the United States, its territories and possessions including
Puerto Rico only in connection with Licensee's radio broadcasting services
(herein referred to as the "Services") (and specifically excluding any other
current or future business of Licensee including but not limited to Licensee's
outdoor advertising business) and to use the Trademarks in the advertising,
marketing and promotion of the Services (herein called the "Trademark Usages")
during the Term; provided, however, that no advertising, marketing or promotion
use of the Trademarks will utilize or be made on or in connection with any
product, merchandise or services other than the Services without CBS's prior
written approval in each instance, and provided further, that the CBS Eye device
shall be used by Licensee only in connection with the day to day business and
operations of the CBS Radio Networks.
(b) Licensee shall have the right to sublicense the Trademarks to a
CBS Sublicensee; provided, however, Licensee obtains CBS's prior written
approval of any such proposed sublicense in each instance; and provided further,
that no such sublicense shall relieve Licensee of any of its obligations under
this Agreement. Any CBS Sublicensee will execute a trademark license agreement
containing substantially all of the same terms and conditions of this Agreement.
A "CBS Sublicensee" shall mean a current and future, direct or indirect
affiliate of Licensee in which CBS Corporation beneficially owns, directly or
indirectly, at least 50% of the voting power of such affiliate.
-1-
<PAGE> 2
2. The Term of this Agreement shall commence on December , 1998 and
will continue, unless sooner terminated, with respect to each of the Trademarks
for the term of respective trademark's registration and any renewals thereof.
3. Licensee will use the Trademarks only upon or in connection with the
Services in accordance with standards of quality specified or approved by CBS.
Prior to the commencement of the Trademark Usages, Licensee shall furnish to CBS
for its approval a sample of the Trademark Usages materials. In addition,
Licensee shall furnish to CBS samples of specific uses of the Trademarks in
connection with the Services. Licensee shall not authorize full-scale production
of the Trademark Usages until after CBS's approval has been obtained in writing
in each instance. Any change in the materials utilizing the Trademarks or the
Trademark Usages shall be subject to CBS's prior approval in each instance. If
CBS requests any change to any submitted Trademark Usages materials or use of
the Trademarks in connection with the Services, such item as changed shall be
resubmitted to CBS for approval. Approval by CBS shall not, however, relieve
Licensee of any of its warranties or obligations hereunder, and the uses of the
Trademarks in connection with the Services and each of Trademarks Usages
materials shall strictly conform with the samples and proofs approved by CBS.
Samples and materials to be approved shall be submitted to CBS c/o Associate
General Counsel, Contract, Rights and Development, CBS Broadcasting Inc. or such
other person that may be designated in writing by CBS.
4. Licensee admits the validity of the Trademarks and covenants that
Licensee will not directly or indirectly contest the validity of the Trademarks
or the right and title of CBS therein. Licensee recognizes the value of the
goodwill and secondary meaning associated with the Trademarks. Licensee shall
not register or attempt to register the Trademarks either alone or in
combination with any other mark, word, symbol, or the like anywhere in the world
or aid or abet anyone else in doing so. Licensee acknowledges that the
Trademarks (including all rights therein and goodwill associated therewith)
shall, as between Licensee and CBS, be and remain the exclusive and complete
property of CBS. CBS reserves the right to lease, authorize or permit the use of
the Trademarks by third parties as CBS may see fit. Licensee will not use or
authorize the use of the Trademarks in any manner, at any time or in any place
not specifically licensed herein. Licensee shall not adopt or use any name or
mark that CBS considers to be confusingly similar to the Trademarks.
5. Licensee warrants and represents that the Services will be of the
highest standard in style and quality; that the Trademark Usages will conform to
the specifications and quality of the samples furnished by Licensee to CBS
pursuant to paragraph 3 hereof; that the Services and Trademark Usages will be
in accordance with all applicable federal, state, local and foreign, if
applicable, laws and in a manner that will not reflect adversely upon CBS, its
licensees or assignees.
6. (a) Licensee shall, during the conduct of its business hereunder, do
everything necessary to protect and preserve CBS's Trademarks during the Term
hereof. In connection therewith, Licensee will comply with proper trademarks
usage in connection with the Services
-2-
<PAGE> 3
and the Trademark Usages and will comply with proper trademark usage and
trademark laws of the United States. CBS shall from time to time advise Licensee
what usage of the Trademarks shall be proper. However, Licensee's obligations
under this subparagraph shall be independent of the instructions of CBS. At the
request of CBS, Licensee shall execute all documents necessary to procure,
protect and preserve the aforesaid trademark rights, including but not limited
to, applications for recordation of Licensee as a Registered User of the
Trademarks.
(b) Licensee shall print, stamp or otherwise affix the following
Trademark notice "(R)" or "Trademark of CBS Broadcasting Inc." on the Trademark
Usages and in connection with the Services, all in accordance with instructions
from CBS, including without being limited to, instructions with respect to
position, design, and letter size.
(c) The Trademarks and the right to use the Trademarks which arises
out of the license hereby granted to use the Trademarks shall be and remain the
sole and complete property of CBS. The right and license granted herein shall
not constitute an assignment by CBS of said Trademarks and Licensee shall not at
any time acquire or claim any right, title or interest of any nature whatsoever
in the Trademarks by virtue of this Agreement or of Licensee's use thereof on or
in connection with the Services. In the event that during the Term of this
Agreement, Licensee shall create any additional Trademarks or other proprietary
right related to or arising out of the aforesaid Trademarks, as a result of the
exercise by Licensee of any right granted to it hereunder, such Trademarks or
other proprietary right shall immediately vest in CBS and Licensee shall be
authorized to use such new Trademarks or proprietary right as though same had
specifically been included in this Agreement.
(d) Subject to paragraph 10 hereof, upon the termination of this
Agreement for any reason, Licensee will immediately cease all further use of the
Trademarks and all trademark rights shall forthwith revert to CBS. If deemed
necessary, Licensee shall execute any requested written reassignment of such
rights.
(e) All uses of the Trademarks by Licensee and all goodwill
associated with such uses will inure to the benefit of CBS.
7. Licensee shall promptly notify CBS of any unauthorized use or
infringement by third parties of any rights granted to Licensee herein, and will
cooperate fully in any action at law or in equity undertaken by CBS with respect
to such unauthorized use or infringement (it being understood that all expenses
in connection with such action shall be borne by CBS). CBS reserves the right
not to bring an infringement action.
8. (a) Licensee warrants and represents that Licensee is free to enter
into and fully perform this Agreement, that all ideas, creations, materials and
intellectual property furnished by Licensee in connection with the Services and
the Trademark Usages will be Licensee's own and original creation (except for
matter in the public domain or material which Licensee is fully licensed to use)
and that the Services and the Trademark Usages will not infringe upon or violate
any rights of any third party of any nature whatsoever.
-3-
<PAGE> 4
(b) Licensee will at all times indemnify and hold harmless CBS from
and against any and all claims, damages, liabilities, costs and expenses,
including reasonable counsel fees arising out of Licensee's use of the
Trademarks in the Trademark Usages and/or the Services or out of any breach by
Licensee of any warranty or agreement made by Licensee herein.
9. In the event that: (i) Licensee fails to comply with any of
Licensee's obligations hereunder, (ii) an involuntary petition in bankruptcy is
filed against Licensee and is not dismissed within thirty (30) days thereafter,
a receiver or trustee of any of Licensee's property is appointed and such
appointment is not vacated within thirty (30) days thereafter, or Licensee takes
advantage of any insolvency law, (iii) Licensee fails to conform to the
specifications of the samples furnished or reduces the quality of the Services
or the Trademark Usages approved by CBS without prior consent, (iv) Licensee
commits any act or omission which in CBS's opinion would be substantially likely
to materially impair, dilute or diminish the value, reputation or
distinctiveness of the Trademarks or in CBS's opinion would be substantially
likely to impair, dilute or diminish the value, image, integrity or reputation
of the CBS Corporation (or any business unit thereof), (v) the Intercompany
Agreement between CBS Corporation and Infinity Broadcasting Corporation dated as
of December ______, 1998 (herein called the "Intercompany Agreement")
terminates, or (vi) a Trigger Date (as defined in the Intercompany Agreement)
occurs, then, in any of such events, in addition to any other rights of any
nature that CBS may have at law or in equity, CBS shall have the right, at its
option, to terminate this Agreement.
10. Upon expiration or termination of this Agreement, all rights
granted to Licensee herein shall forthwith revert to CBS, with the following
consequences: (i) Licensee shall not thereafter make any use of the Trademarks
in the Trademark Usages and/or the Services whatsoever, except that in the event
of the termination of this Agreement, pursuant to any provision of paragraph 9
hereof, Licensee may continue the Services use or the Trademark Usages on a
non-exclusive basis during a period of sixty (60) days thereafter in accordance
with all of the terms and conditions contained in this Agreement.
11. (a) CBS warrants and represents that it has the right to enter into
this Agreement and to grant all of the rights granted hereunder. CBS also
warrants that it is the owner of United States Trademark Registrations set forth
in Schedule A and has all rights under said Registration for the services
specified therein.
(b) CBS will indemnify and hold Licensee harmless from and against
any and all claims, damages, liabilities, costs and expenses, including legal
expenses and reasonable counsel fees, arising out of CBS's use of the
Trademarks. Licensee shall promptly notify CBS in the event of any claim, suit
or proceeding being asserted or commenced against Licensee and CBS shall assume
the defense of such claim, suit or proceeding. Licensee shall cooperate fully
with CBS in the defense thereof. CBS may join Licensee as a party and shall not
settle any such claim, suit or proceeding without Licensee's written consent,
which consent shall not be unreasonably withheld. Licensee will promptly notify
CBS of any claim to which the above indemnity applies and CBS shall defend the
same at its expense. CBS's obligations with respect
-4-
<PAGE> 5
thereto shall be limited to paying the amount of any judgment, or settlement
approved by CBS in connection therewith.
(c) CBS reserves the right to prosecute, defend and conduct at its
own expense all proceedings that it may deem proper or necessary for the
protection of said Trademarks, and at the sole option of CBS it may conduct
proceedings in its own name or in the name of Licensee, or jointly in its name
with Licensee, and Licensee agrees that it will not claim or reserve any rights
against CBS as the result of such action, and furthermore agrees to notify CBS
promptly of any adverse, pending or threatened litigation in respect of said
Trademarks of which it becomes aware.
12. In the event CBS wishes to license any trademark or service mark
owned by the IBC Affiliated Group (as defined in the Intercompany Agreement),
CBS shall so notify Licensee and Licensee shall grant CBS a worldwide,
non-exclusive, royalty-free, fully paid right and license to use any such
trademark or service mark for the duration of such trademark or service mark
registration and any renewals thereof.
13. (a) Except as otherwise specifically provided herein, all notices
hereunder shall be in writing and shall be given by personal delivery,
registered or certified mail, at the respective addresses hereinabove set forth,
or such other address or addresses as may be designated by either party. Such
notices shall be deemed given when mailed except that notice of change of
address shall be effective only from the date of its receipt.
(c) Nothing herein contained shall be construed to constitute a
partnership or joint venture between the parties hereto, and neither Licensee
nor CBS shall become bound by any representation, act or omission of the other.
(d) A waiver by either party of any term or condition of this
Agreement in any instance shall not be deemed or construed to be a waiver of
such term or condition for the future, or of any subsequent breach thereof. All
remedies, rights, undertakings, obligations and agreements contained in this
Agreement shall be cumulative, and none of them shall be in limitation of any
other remedy, right, undertaking, obligation or agreement of either party.
(e) CBS may assign (by operation of law or otherwise) its rights
hereunder in whole or in part to any person, firm or corporation, and such
rights may be assigned by any assignee thereof; provided, however, that no such
assignment shall relieve CBS of any of its obligations hereunder. Licensee shall
not assign (by operation of law or otherwise), transfer, sublicense or otherwise
encumber this Agreement without the prior written approval of CBS. Any
assignment or other transfer, sublicense, or other encumbrance of this Agreement
by Licensee without the prior written approval of CBS shall be null and void and
of no effect ab initio.
(f) This Agreement has been entered into in the State of New York,
and the validity, interpretation and legal effect of this Agreement shall be
governed by the laws of the
-5-
<PAGE> 6
State of New York applicable to contracts entered into and performed entirely
within the State of New York, with respect to the determination of any claim,
dispute or disagreement, which may arise out of the interpretation, performance
or breach of this Agreement.
(g) This Agreement contains the entire understanding of the parties
hereto relating to the subject matter hereof and cannot be changed or terminated
orally.
IN WITNESS WHEREOF, this Agreement has been signed by the parties
as of the first above written.
INFINITY BROADCASTING CBS BROADCASTING INC.
CORPORATION
By _________________________ By _______________________________
-6-
<PAGE> 7
SCHEDULE A
Attached to and forming a part of the Agreement dated as of 1998,
between CBS BROADCASTING INC., and
INFINITY BROADCASTING CORPORATION
<TABLE>
<CAPTION>
TRADEMARK REGISTRATION COUNTRY REGISTRANT STATION
- --------- ------------ ------- ---------- -------
NO.
---
<S> <C> <C> <C> <C>
ASK THE GOVERNOR 1,698,112 US CBS Broadcasting Inc. WCBS-AM
CBS RADIO NETWORK and 1,683,994 US CBS Broadcasting Inc. NETWORK
Design
CBS SPECTRUM RADIO 1,683,993 US CBS Broadcasting Inc. NETWORK
NETWORK and Design
FIRST WEATHER 2,049,110 US CBS Broadcasting Inc. WINS-AM
TRAFFIC AND WEATHER 1,620,480 US CBS Broadcasting Inc. WCBS-AM
TOGETHER
CBS 852,481 US CBS Broadcasting Inc. CBS
KCBS 1,390,268 US CBS Broadcasting Inc. KCBS
WBBM 1,385,467 US CBS Broadcasting Inc. WBBM
WCBS 1,407,078 US CBS Broadcasting Inc. WCBS
WCBS NEWSRADIO 88 1,773,181 US CBS Broadcasting Inc. WCBS-AM
CBS EYE DEVICE 645,893 US CBS Broadcasting Inc. NETWORK
</TABLE>
COMMON LAW TRADEMARKS
WWJ
WCCO
-7-
<PAGE> 1
Exhibit 10.26
AGREEMENT made as of by and between CBS CORPORATION
(Formerly known as Westinghouse Electric Corporation), 51 West 52nd Street, New
York, New York 10019 (herein referred to as "CBS") and INFINITY BROADCASTING
CORPORATION, 40 West 57th Street, New York, New York 10019 (herein referred to
as "Licensee")
WITNESSETH
WHEREAS, CBS is the owner of the trademarks set forth in Schedule A
(herein collectively referred to as the "Trademarks"); and
WHEREAS, Licensee had used the Trademarks and Licensee wishes to
continue to use the Trademarks;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained the parties have mutually agreed as follows:
1. (a) CBS hereby grants to Licensee, and Licensee hereby accepts a
non-exclusive, non-assignable, royalty-free, fully paid right and license to use
the Trademarks in the United States, its territories and possessions including
Puerto Rico only in connection with Licensee's radio broadcasting services
(herein referred to as the "Services") (and specifically excluding any other
current or future business of Licensee including but not limited to Licensee's
outdoor advertising business) and to use the Trademarks in the advertising,
marketing and promotion of the Services (herein called the "Trademark Usages")
during the Term; provided, however, that no advertising, marketing or promotion
use of the Trademarks will utilize or be made on or in connection with any
product, merchandise or services other than the Services without CBS's prior
written approval in each instance.
(b) Licensee shall have the right to sublicense the Trademarks to a CBS
Sublicensee; provided, however, Licensee obtains CBS's prior written approval of
any such proposed sublicense in each instance; and provided further, that no
such sublicense shall relieve Licensee of any of its obligations under this
Agreement. Any CBS Sublicensee will execute a trademark license agreement
containing substantially all of the same terms and conditions of this Agreement.
A "CBS Sublicensee" shall mean a current and future, direct or indirect
affiliate of Licensee in which CBS Corporation beneficially owns, directly or
indirectly, at least 50% of the voting power of such affiliate.
2. The Term of this Agreement shall commence on December , 1998 and will
continue, unless sooner terminated, with respect to each of the Trademarks for
the term of respective trademark's registration and any renewals thereof.
- 1 -
<PAGE> 2
3. Licensee will use the Trademarks only upon or in connection with the
Services in accordance with standards of quality specified or approved by CBS.
Prior to the commencement of the Trademark Usages, Licensee shall furnish to CBS
for its approval a sample of the Trademark Usages materials. In addition,
Licensee shall furnish to CBS samples of specific uses of the Trademarks in
connection with the Services. Licensee shall not authorize full-scale production
of the Trademark Usages until after CBS's approval has been obtained in writing
in each instance. Any change in the materials utilizing the Trademarks or the
Trademark Usages shall be subject to CBS's prior approval in each instance. If
CBS requests any change to any submitted Trademark Usages materials or use of
the Trademarks in connection with the Services, such item as changed shall be
resubmitted to CBS for approval. Approval by CBS shall not, however, relieve
Licensee of any of its warranties or obligations hereunder, and the uses of the
Trademarks in connection with the Services and each of Trademarks Usages
materials shall strictly conform with the samples and proofs approved by CBS.
Samples and materials to be approved shall be submitted to CBS c/o Associate
General Counsel, Contract, Rights and Development, CBS Broadcasting Inc. or such
other person that may be designated in writing by CBS.
4. Licensee admits the validity of the Trademarks and covenants that
Licensee will not directly or indirectly contest the validity of the Trademarks
or the right and title of CBS therein. Licensee recognizes the value of the
goodwill and secondary meaning associated with the Trademarks. Licensee shall
not register or attempt to register the Trademarks either alone or in
combination with any other mark, word, symbol, or the like anywhere in the world
or aid or abet anyone else in doing so. Licensee acknowledges that the
Trademarks (including all rights therein and goodwill associated therewith)
shall, as between Licensee and CBS, be and remain the exclusive and complete
property of CBS. CBS reserves the right to lease, authorize or permit the use of
the Trademarks by third parties as CBS may see fit. Licensee will not use or
authorize the use of the Trademarks in any manner, at any time or in any place
not specifically licensed herein. Licensee shall not adopt or use any name or
mark that CBS considers to be confusingly similar to the Trademarks.
5. Licensee warrants and represents that the Services will be of the
highest standard in style and quality; that the Trademark Usages will conform to
the specifications and quality of the samples furnished by Licensee to CBS
pursuant to paragraph 3 hereof; that the Services and Trademark Usages will be
in accordance with all applicable federal, state, local and foreign, if
applicable, laws and in a manner that will not reflect adversely upon CBS, its
licensees or assignees.
6. (a) Licensee shall, during the conduct of its business hereunder, do
everything necessary to protect and preserve CBS's Trademarks during the Term
hereof. In connection therewith, Licensee will comply with proper trademarks
usage in connection with the Services and the Trademark Usages and will comply
with proper trademark usage and trademark laws of the United States. CBS shall
from time to time advise Licensee what usage of the Trademarks shall be proper.
However, Licensee's obligations under this subparagraph shall be independent of
the instructions of CBS. At the request of CBS, Licensee shall execute all
documents
- 2 -
<PAGE> 3
necessary to procure, protect and preserve the aforesaid trademark
rights, including but not limited to, applications for recordation of Licensee
as a Registered User of the Trademarks.
(b) Licensee shall print, stamp or otherwise affix the following
Trademark notice "(R)" or "Trademark of CBS Corporation" on the Trademark Usages
and in connection with the Services, all in accordance with instructions from
CBS, including without being limited to, instructions with respect to position,
design, and letter size.
(c) The Trademarks and the right to use the Trademarks which arises out
of the license hereby granted to use the Trademarks shall be and remain the sole
and complete property of CBS. The right and license granted herein shall not
constitute an assignment by CBS of said Trademarks and Licensee shall not at any
time acquire or claim any right, title or interest of any nature whatsoever in
the Trademarks by virtue of this Agreement or of Licensee's use thereof on or in
connection with the Services. In the event that during the Term of this
Agreement, Licensee shall create any additional Trademarks or other proprietary
right related to or arising out of the aforesaid Trademarks, as a result of the
exercise by Licensee of any right granted to it hereunder, such Trademarks or
other proprietary right shall immediately vest in CBS and Licensee shall be
authorized to use such new Trademarks or proprietary right as though same had
specifically been included in this Agreement.
(d) Subject to paragraph 10 hereof, upon the termination of this
Agreement for any reason, Licensee will immediately cease all further use of the
Trademarks and all trademark rights shall forthwith revert to CBS. If deemed
necessary, Licensee shall execute any requested written reassignment of such
rights.
(e) All uses of the Trademarks by Licensee and all goodwill associated
with such uses will inure to the benefit of CBS.
7. Licensee shall promptly notify CBS of any unauthorized use or
infringement by third parties of any rights granted to Licensee herein, and will
cooperate fully in any action at law or in equity undertaken by CBS with respect
to such unauthorized use or infringement (it being understood that all expenses
in connection with such action shall be borne by CBS). CBS reserves the right
not to bring an infringement action.
8. (a) Licensee warrants and represents that Licensee is free to enter
into and fully perform this Agreement, that all ideas, creations, materials and
intellectual property furnished by Licensee in connection with the Services and
the Trademark Usages will be Licensee's own and original creation (except for
matter in the public domain or material which Licensee is fully licensed to use)
and that the Services and the Trademark Usages will not infringe upon or violate
any rights of any third party of any nature whatsoever.
(b) Licensee will at all times indemnify and hold harmless CBS from and
against any and all claims, damages, liabilities, costs and expenses, including
reasonable counsel fees arising out of Licensee's use of the Trademarks in the
Trademark Usages and/or the Services or out of any breach by Licensee of any
warranty or agreement made by Licensee herein.
- 3 -
<PAGE> 4
9. In the event that: (i) Licensee fails to comply with any of Licensee's
obligations hereunder, (ii) an involuntary petition in bankruptcy is filed
against Licensee and is not dismissed within thirty (30) days thereafter, a
receiver or trustee of any of Licensee's property is appointed and such
appointment is not vacated within thirty (30) days thereafter, or Licensee takes
advantage of any insolvency law, (iii) Licensee fails to conform to the
specifications of the samples furnished or reduces the quality of the Services
or the Trademark Usages approved by CBS without prior consent, (iv) Licensee
commits any act or omission which in CBS's opinion would be substantially likely
to materially impair, dilute or diminish the value, reputation or
distinctiveness of the Trademarks or in CBS's opinion would be substantially
likely to impair, dilute or diminish the value, image, integrity or reputation
of the CBS Corporation (or any business unit thereof), (v) the Intercompany
Agreement between CBS Corporation and Infinity Broadcasting Corporation dated as
of December ______, 1998 (herein called the "Intercompany Agreement")
terminates, or (vi) a Trigger Date (as defined in the Intercompany Agreement)
occurs, then, in any of such events, in addition to any other rights of any
nature that CBS may have at law or in equity, CBS shall have the right, at its
option, to terminate this Agreement.
10. Upon expiration or termination of this Agreement, all rights granted to
Licensee herein shall forthwith revert to CBS, with the following consequences:
(i) Licensee shall not thereafter make any use of the Trademarks in the
Trademark Usages and/or the Services whatsoever, except that in the event of the
termination of this Agreement, pursuant to any provision of paragraph 9 hereof,
Licensee may continue the Services use or the Trademark Usages on a
non-exclusive basis during a period of sixty (60) days thereafter in accordance
with all of the terms and conditions contained in this Agreement.
11. (a) CBS warrants and represents that it has the right to enter into
this Agreement and to grant all of the rights granted hereunder. CBS also
warrants that it is the owner of United States Trademark Registrations set forth
in Schedule A and has all rights under said Registration for the services
specified therein.
(b) CBS will indemnify and hold Licensee harmless from and against any
and all claims, damages, liabilities, costs and expenses, including legal
expenses and reasonable counsel fees, arising out of CBS's use of the
Trademarks. Licensee shall promptly notify CBS in the event of any claim, suit
or proceeding being asserted or commenced against Licensee and CBS shall assume
the defense of such claim, suit or proceeding. Licensee shall cooperate fully
with CBS in the defense thereof. CBS may join Licensee as a party and shall not
settle any such claim, suit or proceeding without Licensee's written consent,
which consent shall not be unreasonably withheld. Licensee will promptly notify
CBS of any claim to which the above indemnity applies and CBS shall defend the
same at its expense. CBS's obligations with respect thereto shall be limited to
paying the amount of any judgment, or settlement approved by CBS in connection
therewith.
(c) CBS reserves the right to prosecute, defend and conduct at its own
expense all proceedings that it may deem proper or necessary for the protection
of said Trademarks, and at the sole option of CBS it may conduct proceedings in
its own name or in the name of Licensee, or jointly in its name with Licensee,
and Licensee agrees that it will not claim or reserve any
- 4 -
<PAGE> 5
rights against CBS as the result of such action, and furthermore agrees to
notify CBS promptly of any adverse, pending or threatened litigation in respect
of said Trademarks of which it becomes aware.
12. (a) Except as otherwise specifically provided herein, all notices
hereunder shall be in writing and shall be given by personal delivery,
registered or certified mail, at the respective addresses hereinabove set forth,
or such other address or addresses as may be designated by either party. Such
notices shall be deemed given when mailed except that notice of change of
address shall be effective only from the date of its receipt.
(c) Nothing herein contained shall be construed to constitute a
partnership or joint venture between the parties hereto, and neither Licensee
nor CBS shall become bound by any representation, act or omission of the other.
(d) A waiver by either party of any term or condition of this Agreement
in any instance shall not be deemed or construed to be a waiver of such term or
condition for the future, or of any subsequent breach thereof. All remedies,
rights, undertakings, obligations and agreements contained in this Agreement
shall be cumulative, and none of them shall be in limitation of any other
remedy, right, undertaking, obligation or agreement of either party.
(e) CBS may assign (by operation of law or otherwise) its rights
hereunder in whole or in part to any person, firm or corporation, and such
rights may be assigned by any assignee thereof; provided, however, that no such
assignment shall relieve CBS of any of its obligations hereunder. Licensee shall
not assign (by operation of law or otherwise), transfer, sublicense or otherwise
encumber this Agreement without the prior written approval of CBS. Any
assignment or other transfer, sublicense, or other encumbrance of this Agreement
by Licensee without the prior written approval of CBS shall be null and void and
of no effect ab initio.
(f) This Agreement has been entered into in the State of New York, and
the validity, interpretation and legal effect of this Agreement shall be
governed by the laws of the State of New York applicable to contracts entered
into and performed entirely within the State of New York, with respect to the
determination of any claim, dispute or disagreement, which may arise out of the
interpretation, performance or breach of this Agreement.
(g) This Agreement contains the entire understanding of the parties
hereto relating to the subject matter hereof and cannot be changed or terminated
orally.
IN WITNESS WHEREOF, this Agreement has been signed by the parties as of
the first above written.
INFINITY BROADCASTING CBS CORPORATION
CORPORATION
By_____________________________________ By__________________________________
- 5 -
<PAGE> 1
EXHIBIT 21.1
SUBSIDIARIES OF THE COMPANY
Set forth below is a list of subsidiaries of the Company. Such
companies are incorporated or organized in the jurisdictions indicated. CBS
Radio, Inc. and Infinity Media Corporation are each incorporated under the laws
of Delaware and are wholly owned subsidiaries of the Company. All other listed
companies are included in the Company's combined financial statements.
<TABLE>
<CAPTION>
NAME OF CORPORATION JURISDICTION OF PERCENTAGE OF
- ------------------- INCORPORATION VOTING STOCK
--------------- OWNED BY THE
COMPANY
-------------
<S> <C> <C>
The following companies are direct or
indirect subsidiaries of CBS Radio, Inc.:
ARS Acquisition II, Inc. Delaware 100.00
Radio Systems of Miami, Inc. Delaware 100.00
Radio Systems of Philadelphia, Inc. Delaware 100.00
CBS Radio License Inc. Delaware 100.00
Professional Broadcasting, Virginia 100.00
Incorporated
EZ Charlotte, Inc. Virginia 100.00
EZ Kansas City, Inc. Virginia 100.00
EZ New Orleans, Inc. Virginia 100.00
EZ Philadelphia, Inc. Virginia 100.00
EZ Pittsburgh, Inc. Virginia 100.00
EZ Sacramento, Inc. Virginia 100.00
EZ Seattle, Inc. Virginia 100.00
EZ St. Louis, Inc. Virginia 100.00
Radio Data Group, Inc. Virginia 50.00
The following companies are direct or
indirect subsidiaries or Infinity Media
Corporation:
13 Radio Corporation Delaware 100.00
Hemisphere Broadcasting Corporation Delaware 100.00
</TABLE>
<PAGE> 2
2
<TABLE>
<S> <C> <C>
Hit Radio, Inc. (inactive) New York 100.00
C&W Land Corporation (inactive) New Jersey 100.00
Infinity Broadcasting Corporation of Delaware 100.00
Atlanta
Infinity Broadcasting Corporation of Delaware 100.00
Boston
Infinity Broadcasting Corporation of Delaware 100.00
California
Infinity Broadcasting Corporation of Delaware 100.00
Chicago
Infinity Broadcasting Corporation of Delaware 100.00
Dallas
Infinity Broadcasting Corporation of Delaware 100.00
Dallas II (inactive)
Infinity Broadcasting Corporation of Delaware 100.00
Detroit
Infinity Broadcasting Corporation of Delaware 100.00
Florida
Infinity Broadcasting Corporation of Delaware 100.00
Glendale
Infinity Broadcasting Corporation of Delaware 100.00
Illinois
Infinity Broadcasting Corporation of Delaware 100.00
Los Angeles
Infinity Broadcasting Corporation of Delaware 100.00
Maryland
Infinity Broadcasting Corporation of New York 100.00
Baltimore
Infinity WLIF, Inc. Maryland 100.00
Infinity WLIF-AM, Inc. Maryland 100.00
Infinity WPGC (AM), Inc. Delaware 100.00
Infinity Broadcasting Corporation of Delaware 100.00
Michigan
Infinity Broadcasting Corporation of Delaware 100.00
New York
</TABLE>
<PAGE> 3
3
<TABLE>
<S> <C> <C>
Infinity Broadcasting Corporation of Delaware 100.00
Northern California
Infinity KFRC-FM, Inc. Delaware 100.00
Infinity Broadcasting Corporation of Pennsylvania 100.00
Pennsylvania
Infinity Broadcasting Corporation of Delaware 100.00
Philadelphia
Infinity Broadcasting Corporation of Delaware 100.00
San Francisco
Infinity Broadcasting Corporation of Delaware 100.00
Tampa
Infinity Broadcasting Corporation of Delaware 100.00
Texas
Infinity Broadcasting Corporation of Delaware 100.00
Washington (inactive)
Infinity Broadcasting Corporation of Delaware 100.00
Washington, D.C.
Infinity Holdings Corporation of Delaware 100.00
Chesapeake
Infinity Broadcasting Corporation of Delaware 100.00
Chesapeake
Infinity of Chesapeake Licensee Delaware 100.00
Corporation
Infinity Holdings Corporation of Ft. Delaware 100.00
Worth
Infinity Broadcasting Corporation of Delaware 100.00
Ft. Worth
Infinity of Ft. Worth Licensee Delaware 100.00
Corporation
Infinity Holdings Corporation of Delaware 100.00
Georgia
Infinity Broadcasting Corporation of Delaware 100.00
Georgia
Infinity of Georgia Licensee Delaware 100.00
Corporation
Infinity Holdings Corporation of Delaware 100.00
Massachusetts
</TABLE>
<PAGE> 4
4
<TABLE>
<S> <C> <C>
Infinity WOAZ-FM, Inc. Massachusetts 100.00
Infinity Holdings Corporation of Delaware 100.00
Orlando
Infinity KOAI-FM Holdings Delaware 100.00
Corporation
Infinity KOAI-FM, Inc. Delaware 100.00
Infinity KOAI-FM Licensee Delaware 100.00
Corporation
Infinity Network, Inc. (inactive) Delaware 100.00
Infinity Ventures, Inc. (inactive) Delaware 100.00
Sagittarius Broadcasting Corporation New York 100.00
TDI Worldwide, Inc. Delaware 100.00
The following companies are direct or
indirect subsidiaries of TDI
Worldwide, Inc.:
Transportation Displays Delaware 100.00
Incorporated
Washington Transit Washington 100.00
Advertising, Inc.
Washington Outdoor Washington 100.00
Advertising, Inc.
TDI International Delaware 100.00
Outdoor Media Network, Inc. California 100.00
TDI Metro Ltd. Ireland 51.00
Roadshow Advertising Ltd. Ireland 100.00
Metro Poster Advertising Ltd. Ireland 100.00
LDI Limited UK 100.00
TDI Advertising Ltd. UK 100.00
TDI Transit Advertising Ltd. UK 100.00
TDI Buses Limited UK 100.00
Outdoor Images Ltd. UK 100.00
TDI Mail Holdings Limited UK 75.00
TDI (BP) Limited UK 100.00
</TABLE>
<PAGE> 5
5
<TABLE>
<S> <C> <C>
Metrobus Advertising Limited UK 100.00
TDI (FB) Limited UK 100.00
Ripple Vale Holdings, Limited Virgin Islands 100.00
Sky Blue Investments, Limited New Jersey 100.00
(Jersey)
TDI Metro (NI) Limited UK 100.00
The Audio House, Inc. California 100.00
UCGI, Inc. Delaware 100.00
TMRG, Inc. Delaware 100.00
</TABLE>
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Infinity Broadcasting Corporation
Under date of September 15, 1998, except for note 16, which is as of December 3,
1998, we reported on the combined balance sheets of Infinity Broadcasting
Corporation as of December 31, 1996 and 1997, and the related combined
statements of earnings, changes in stockholders' equity and cash flows for each
of the years in the three-year period ended December 31, 1997, which are
included in the registration statement. In connection with our audits of the
aforementioned combined financial statements, we also audited the related
combined financial statement schedule in the registration statement. This
combined financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this combined
financial statement schedule based on our audits. In our opinion, such combined
financial statement schedule, when considered in relation to the basic combined
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.
We consent to the use of our reports included herein and to the reference to our
firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
New York, New York
December 3, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CBS Radio, Inc.
We consent to the use of our report dated November 2, 1998, related to CBS
Radio, Inc. (formerly known as American Radio Systems Corporation) and
subsidiaries as of December 31, 1997 and 1996 and for each of the years in the
three-year period ended December 31, 1997, included herein and to the reference
to our firm under the heading "Experts" in the registration statement.
/s/ KPMG Peat Marwick LLP
Boston, Massachusetts
November 30, 1998
<PAGE> 1
EXHIBIT 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Infinity Media Corporation
We consent to the use of our report dated September 15, 1998 except for
note 14, which is as of October 29, 1998, related to Infinity Media Corporation
(formerly known as Infinity Broadcasting Corporation) and subsidiaries as of
December 31, 1995 and 1996 and for each of the years then ended included herein
and to the reference to our firm under the heading "Experts" in the registration
statement.
/s/ KPMG Peat Marwick LLP
New York, New York
November 30, 1998
