As filed with the Securities and Exchange Commission on November 21, 1996
Registration No. 333-15469
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
SFX BROADCASTING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 13-3649750
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
150 EAST 58TH STREET, 19TH FLOOR
NEW YORK, NEW YORK 10155
(212) 407-9191
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
ROBERT F.X. SILLERMAN
EXECUTIVE CHAIRMAN
150 EAST 58TH STREET, 19TH FLOOR
NEW YORK, NEW YORK 10155
(212) 407-9191
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
With a copy to:
HOWARD M. BERKOWER, ESQ.
BAKER & MCKENZIE
805 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 751-5700
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Approximate date of commencement of proposed sale to the public: From
time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
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
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please 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 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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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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 an 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, DATED NOVEMBER 21, 1996
PROSPECTUS
S F X Broadcasting, Inc. [LOGO]
221,321 shares of Class A Common Stock
This Prospectus relates to 221,321 shares (the "Offered Stock") of the
Class A Common Stock, $.01 par value per share (the "SFX Class A Shares"), of
SFX Broadcasting, Inc., a Delaware corporation ("SFX") which may be
distributed, sold or otherwise transferred from time to time by and for the
account of the holders thereof (the "Selling Stockholders"). SFX will not
receive any of the proceeds from any sale of the Offered Stock, but has agreed
to bear certain costs relating to the registration, offer and sale of the
Offered Stock (currently estimated to be $25,000) and of any offering and sale
hereunder, not including certain expenses such as commissions and discounts of
underwriters, dealers or agents. See "Selling Stockholders" and "Plan of
Distribution."
Pursuant to that certain Amended and Restated Agreement and Plan of
Merger, as amended (the "Merger Agreement"), among SFX, SFX Merger Company, a
Delaware corporation and a wholly-owned subsidiary of SFX ("Acquisition Sub"),
and Multi-Market Radio, Inc., a Delaware corporation ("MMR"), MMR merged with
and into Acquisition Sub (the "Merger") on November 22, 1996 and became a
wholly-owned subsidiary of SFX. As a result of the Merger, each outstanding
share of Class A Common Stock, par value $.01 per share, of MMR (the "MMR
Class A Shares") and Series B Convertible Preferred Stock, par value $.01 per
share, of MMR (the "MMR Series B Preferred Shares") was converted into .2983
SFX Class A Shares and each outstanding share of other classes of capital stock
of MMR was converted into .2983 shares of Class B Common Stock, par value $.01
per share, of SFX (the "SFX Class B Shares" and, collectively with the SFX Class
A Shares, the "SFX Shares"). The Selling Stockholders received 263,530 SFX Class
A Shares in the Merger, representing approximately 3.3% of the SFX Class A
Shares outstanding after the Merger and approximately 1.4% of the combined
voting power of the SFX Shares after the Merger. SFX has agreed that it will
cause to be registered under the Securities Act of 1933, as amended (the
"Securities Act"), the resale of the SFX Class A Shares received by the Selling
Stockholders in the Merger. See "The Selling Stockholders." The economic
rights of the SFX Class A Shares and the SFX Class B Shares are identical but
the voting rights differ in that in that each SFX Class A Share is entitled to
one vote and each SFX Class B Share is generally entitled to ten votes. See
"Description of Common Stock." As of the date of this Prospectus, Robert F.X.
Sillerman, the Chairman of the Board and Chief Executive Officer of SFX, holds
approximately 54.2%, and together with the other members of management holds
approximately 55.8%, of the combined voting power of SFX. See "Risk
Factors--Control by Management."
(cover page continued on next page)
SEE "RISK FACTORS" BEGINING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS.
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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.
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The date of this Prospectus is November ___, 1996.
<PAGE>
(cover page continued)
The SFX Class A Shares are traded on The Nasdaq Stock Market, Inc.'s
National Market System (the "Nasdaq National Market") under the symbol
"SFXBA." On November 20, 1996, the last reported sales price of an SFX Class
A Share on the Nasdaq National Market was $34.25 per share.
The shares of Offered Stock may be offered and sold from time to time by
the Selling Stockholders directly or through broker-dealers or underwriters
who may act solely as agents, or who may acquire shares as principals. The
distribution of the shares of Offered Stock may be effected in one or more
transactions that may take place through the Nasdaq National Market or any
national securities exchange on which the Offered Stock is approved for
listing in the future, including block trades or ordinary broker's
transactions, or through privately negotiated transactions, or through an
underwritten public offering, or through a combination of any such methods of
sale, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. Usual and customary or
specially negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with such sales. See "Plan of Distribution."
To the extent required, the specific shares of the Offered Stock to be
sold, the names of the Selling Stockholders, purchase price, public offering
price, the names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying Prospectus Supplement. The aggregate proceeds to the
Selling Stockholders from the SFX Class A Shares will be the purchase price
thereof less commissions and discounts, if any, and other expenses of
distribution not borne by SFX.
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AVAILABLE INFORMATION
SFX is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements, information statements and other
information with the Securities and Exchange Commission (the "Commission").
The reports, proxy statements and other information filed by SFX with the
Commission can be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Seven World Trade Center, 13th Floor, New York, New York 10048 and
Northwest Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material also can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. SFX is an electronic filer under the EDGAR
(Electronic Data Gathering, Analysis and Retrieval) system maintained by the
Commission. The Commission maintains a Web site (http://www.sec.gov) on the
Internet that contains reports, proxy statements, information statements and
other information regarding companies that file electronically with the
Commission. In addition, material filed by SFX can be inspected at the offices
of The Nasdaq Stock Market, Inc., Reports Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
SFX has filed with the Commission a Registration Statement on Form S-3
(together with any amendments or supplements thereto, the "Registration
Statement") under the Securities Act with respect to the Offered Stock. This
Prospectus does not contain all the information set forth in the Registration
Statement. Such additional information may be obtained from the Commission's
principal office in Washington, D.C. Statements contained in this Prospectus
as to the contents of any contract or other document referred to herein are
not necessarily complete, and in each instance reference is made to the copy
of such contract or other documents filed as an exhibit to the Registration
Statement, each such statement being qualified by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by SFX with the Commission
under the Exchange Act are incorporated herein by reference:
(i) SFX's Annual Report on Form 10-K, as amended, for the fiscal
year ended December 31, 1995 (the "SFX Form 10-K");
(ii) SFX's Quarterly Report on Form 10-Q, as amended, for the
quarter ended March 31, 1996 and SFX's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1996 (collectively, the "SFX Forms 10-Q");
(iii) SFX's Current Reports on Form 8-K dated April 18, 1996, May
8, 1996, May 9, 1996, May 16, 1996, May 29, 1996, June 21, 1996, July
10, 1996 (as amended), August 8, 1996, October 3, 1996, October 30, 1996
and November 1, 1996 (collectively, with the SFX Form 10-K and the SFX
Forms 10-Q, the "SFX Reports"); and
(iv) The description of the SFX Class A Shares contained in
Exhibit (a) to SFX's Registration Statement on Form 8-A filed with the
Commission on September 17, 1993.
All documents filed by SFX pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the SFX Class A Shares shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from
the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in any
other subsequently filed document that is or is deemed to be incorporated by
reference herein) modifies or supersedes such previous statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.
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This Prospectus incorporates documents by reference that are not
presented herein or delivered herewith. These documents (other than exhibits
to such documents unless such exhibits are specifically incorporated by
reference herein) are available, without charge, upon oral or written request
by any person to whom this Prospectus has been delivered, from SFX
Broadcasting, Inc., 150 East 58th Street, 19th Floor, New York, New York
10155, Attention: Cynthia A. Bond, Director of Investor Relations; telephone
number (212) 407-9191.
TABLE OF CONTENTS
PAGE
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AVAILABLE INFORMATION ................................................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE ...................... 2
RISK FACTORS ......................................................... 4
DESCRIPTION OF COMMON STOCK .......................................... 11
USE OF PROCEEDS ...................................................... 12
SELLING STOCKHOLDERS ................................................. 12
PLAN OF DISTRIBUTION ................................................. 14
EXPERTS .............................................................. 15
LEGAL MATTERS ........................................................ 16
---------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH THE OFFERING
MADE HEREBY AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY SFX, THE SELLING STOCKHOLDERS
OR ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR ANY OFFER TO OR SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE UNDER THIS
PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF SFX SINCE THE DATE OF THIS PROSPECTUS.
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RISK FACTORS
The following risk factors should be considered carefully in evaluating
an investment in the Offered Stock. Many of the statements included or
incorporated by reference in this Prospectus are forward-looking in nature
and, accordingly, whether they prove to be accurate is subject to many risks
and uncertainties. The actual results that SFX achieves may differ materially
from any forward-looking statements included or incorporated by reference in
this Prospectus. Factors that could cause or contribute to such differences
includes, but are not limited to, those discussed below and those contained in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Business and other information which are incorporated by reference
herein from the SFX Reports. An investment in the Offered Stock involves a
high degree of risk.
RISKS RELATED TO THE PENDING ACQUISITIONS AND DISPOSITIONS
Consummation of each of the pending acquisitions (the "Pending
Acquisitions") and pending dispositions (the "Pending Dispositions") of radio
stations by SFX is subject to a number of closing conditions, certain of which
are beyond SFX's control. In particular, consummation of each of the Pending
Acquisitions and Pending Dispositions is dependent upon the prior approval by
the Federal Communications Commission (the "FCC") of the assignments or
transfers of control of operating licenses issued by the FCC and the continued
operating performance of the stations to be acquired or disposed such that
there is no material adverse change in such stations that would prevent
consummation of any such transactions. Furthermore, as a result of the
elimination of the national ownership limits and the liberalization of the
local ownership limits effected by the Telecommunications Act of 1996 (the
"Recent Legislation"), certain of the Pending Acquisitions and Pending
Dispositions may be, and have been, subject to antitrust review by the Federal
Trade Commission and the U.S. Department of Justice, Antitrust Division (the
"Antitrust Agencies"), even if approved by the FCC, and there can be no
assurance that the Antitrust Agencies will approve such Pending Acquisitions
and Pending Dispositions. See"--Extensive Regulation of the Radio Broadcasting
Business." As a result of the foregoing, there can be no assurance as to when
the Pending Acquisitions or Pending Dispositions will be consummated or that
they will be consummated on the terms contained therein or at all.
RISKS ASSOCIATED WITH INTEGRATION OF THE STATIONS TO BE ACQUIRED
SFX's plans with respect to the radio stations acquired or to be
acquired in the Pending Acquisitions and its recently completed acquisitions
involve, to a substantial degree, strategies to increase net revenue while at
the same time reducing operating expenses, as well as the implementation of a
new regional management structure and a modified senior management team.
Although SFX believes that its strategies are reasonable, there can be no
assurance that it will be able to implement its plans without delay or that,
when implemented, its efforts will result in the increased Broadcast cash flow
or other benefits currently anticipated by SFX. The radio stations to be
acquired from MMR in the Merger are generally in smaller markets than the
markets SFX currently operates in. In addition, there can be no assurance that
SFX will not encounter unanticipated problems or liabilities in connection
with the implementation of the new management changes or the operation of the
radio stations acquired or to be acquired by SFX. The integration of such
stations into SFX will require substantial attention from members of SFX's
senior management, which will limit the amount of time such members have
available to devote to SFX's existing operations.
SUBSTANTIAL LEVERAGE; INABILITY TO SERVICE OBLIGATIONS
In connection with its acquisitions of radio stations, SFX has incurred
and will incur significant amounts of indebtedness. In addition, subject to
the restrictions in the debt instruments to which it is a party and
restrictions contained in the certificate of designations regarding certain
series of preferred stock of SFX, SFX may incur additional indebtedness from
time to time to finance acquisitions, for capital expenditures or for other
purposes. The degree to which SFX is leveraged could have material
consequences to SFX and the holders of the SFX Shares, including, but not
limited to, the following: (i) SFX's ability to obtain additional financing in
the future for acquisitions, working capital, capital expenditures, general
corporate or other purposes may be impaired, (ii) a substantial portion of
SFX's cash flow from operations will be dedicated to the payment of the
principal and interest on its debt and dividends on the 6.5% Series D
Cumulative Convertible Exchangeable Preferred Stock due 2007 of SFX (the "SFX
Series D Preferred Shares") and other preferred shares that may be issued by
SFX that require the payment of dividends and will not be available for other
purposes, (iii) certain of SFX's borrowings may be at variable rates of
interest, which could result
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in higher interest expense in the event of increases in interest rates, (iv)
the agreements governing SFX's long-term debt contain restrictive financial
and operating covenants, and the failure by SFX to comply with such covenants
could result in an event of default under the applicable instruments, which
could permit acceleration of the debt under such instrument and in some cases
acceleration of debt under other instruments that contain cross-default or
cross-acceleration provisions, and (v) SFX's level of indebtedness could make
it more vulnerable to economic downturns, limit its ability to withstand
competitive pressures and limit its flexibility in reacting to changes in its
industry and general economic conditions. Certain of SFX's competitors operate
on a less leveraged basis, and have significantly greater operating and
financial flexibility, than SFX.
HISTORICAL LOSSES
Although SFX had net income of $1.8 million for the year ended December
31, 1994, SFX had net losses of $45.3 million, $4.4 million (including a
charge of $5.0 million relating to the write-down of the Texas Rangers
broadcast rights) and $17.8 million (including a non-recurring charge of
approximately $14.0 million, substantially all of which was non-cash) for the
nine months ended September 30, 1996 and the years ended December 31, 1995 and
1993, respectively. On a pro forma basis, after giving effect to the Recent
Acquisitions and the Transactions (as such terms are used in the Form 8-K
of SFX (File No. 0-22486) filed with the Commission on October 30, 1996), as
if such transactions had occurred on January 1, 1995, for the year ended
December 31, 1995 and the nine months ended June 30, 1996, SFX would have
had net losses of approximately $22.3 million and $32.0 million,
respectively. In connection with the execution of the SCMC Termination
Agreement (as defined herein) with Sillerman Communications Management
Corporation ("SCMC"), SFX has agreed to the cancellation of $2.0 million of
indebtedness plus accrued interest thereon owing from SCMC to SFX and SFX has
issued warrants to SCMC to purchase up to 600,000 shares of SFX Class A Shares
at an initial exercise price of $33.75 per share (the market price at the time
the financial consulting arrangement was terminated). In connection with such
agreement, SFX recognized a charge to earnings of approximately $5.6 million
during the three-month period ended June 30, 1996. Pursuant to certain
agreements with such individuals, SFX paid an aggregate of $23.2 million to R.
Steven Hicks, the former President and Chief Executive Officer and a Director
of SFX, and D. Geoffrey Armstrong, the current Chief Operating Officer, Chief
Financial Officer, Executive Vice President and Treasurer and a Director of
SFX. In connection with such payments, SFX recognized a charge to earnings of
approximately $19.8 million during the three-month period ended June 30, 1996.
In addition, SFX recognized an extraordinary loss of approximately $15.2
million relating to the write-off of deferred financing costs of a certain
credit agreement and the costs of its tender offer for its 11.375% Senior
Subordinated Notes due 2000 during the three-month period ended June 30, 1996.
Depreciation and amortization relating to past acquisitions and future
acquisitions, interest expenses under SFX's debt and dividend payments on the
SFX Series D Preferred Shares and other preferred shares that may be issued
that require the payment of dividends will continue to affect SFX's net income
(loss) in the future.
EXPANSION STRATEGY; NEED FOR ADDITIONAL FUNDS
SFX's principal growth strategy is to operate and acquire highly-ranked
radio stations with attractive audience demographics in major and medium-sized
markets located throughout the United States. SFX regularly explores
acquisition opportunities; however, with the exception of the Pending
Acquisitions, SFX has no agreements or understandings regarding such possible
future acquisitions. There can be no assurance that SFX will consummate all of
the Pending Acquisitions or be able to identify stations to acquire in the
future. Each acquisition will be subject to the prior approval of the FCC and
of the lenders under debt instruments to which SFX is a party. Furthermore, as
a result of the Recent Legislation, future acquisitions may be subject to
antitrust review by the Antitrust Agencies, even if approved by the FCC. In
addition, SFX may require additional debt or equity financing to finance
properties it may seek to acquire in the future. The availability of
additional acquisition financing cannot be assured, and depending on the terms
of proposed acquisitions and financings, could be restricted by the terms of
debt instruments to which SFX is a party. There can be no assurance that any
future acquisitions will be successfully integrated into SFX's operations or
that such acquisitions will not have a material adverse effect on SFX's
financial condition and results of operations.
CONTROL BY MANAGEMENT
Robert F.X. Sillerman, the Chairman of the Board of SFX, may be deemed
to be the beneficial owner of approximately 5.9% of the outstanding SFX Class
A Shares and 100.0% of the outstanding SFX Class B Shares, which
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(excluding options and warrants to acquire SFX Shares) represents
approximately 12.5% of the outstanding SFX Shares and approximately 54.2% of
the combined voting power of the outstanding SFX Shares. Mr. Sillerman and
other members of SFX's management may be deemed to be the beneficial owners of
approximately 7.0% of the outstanding SFX Class A Shares and 100.0% of the
outstanding SFX Class B Shares, which (excluding options and warrants to
acquire SFX Shares) represent approximately 13.2% of the outstanding SFX
Shares and approximately 55.8% of the combined voting power of the outstanding
SFX Shares.
The SFX Class A Shares have one vote per share on all matters, whereas
the SFX Class B Shares have ten votes per share except in certain matters.
Accordingly, management currently is, and following the Merger will be, able
to control the vote on all matters except (i) in the election of directors,
with respect to which the holders of the SFX Class A Shares will be entitled
to elect, by a class vote, two-sevenths (2/7ths) of SFX's directors (or if
such number of directors is not a whole number, the next higher whole number),
(ii) in connection with any proposed "going private" transaction between SFX
and Mr. Sillerman or his affiliates, with respect to which the holders of the
SFX Class A Shares and the SFX Class B Shares vote as a single class, with
each SFX Class A Share and SFX Class B Share entitled to one vote per share
and (iii) as otherwise provided by law. The control of SFX by management may
have the effect of discouraging certain types of change-of-control
transactions, including transactions in which the holders of capital stock of
SFX might otherwise receive a premium for their shares over the then current
market price. In addition, in the event dividends on the SFX Preferred Shares
are unpaid in an aggregate amount equal to six full quarterly dividends and in
certain other circumstances, the holders of the SFX Series D Preferred Shares
(voting separately as a class) will be entitled to elect two additional
members of the Board of Directors of SFX. Other preferred shares that may be
issued by SFX may give the holders thereof the right to appoint directors in
the event of dividend defaults or upon the occurrence of other events.
POTENTIAL CONFLICTS OF INTEREST; TRANSACTIONS WITH AFFILIATES
Mr. Sillerman and other members of SFX's management have direct and
indirect investments and interests in entities that own and operate radio
stations, including radio stations that are in certain of the same markets as
SFX's existing or proposed radio stations. These investments and interests
(and any similar investments and interests in the future) may give rise to
certain conflicts of interest as well as to potential attribution under FCC
rules or invocation of the FCC's cross-interest policy, which could restrict
SFX's ability to acquire radio stations in certain markets.
SCMC, Mr. Sillerman and Howard J. Tytel, a Director and Executive Vice
President of SFX, have interests in entities that own and operate radio
stations other than SFX. Messrs. Sillerman and Tytel and their affiliates
(including SCMC) hold a substantial equity interest in, and are parties to
consulting and marketing agreements with, each of MMR and Triathlon
Broadcasting Company ("Triathlon"), a publicly-traded radio company operating
in small and medium markets in the Midwest and the West. Pursuant to the
consulting and marketing agreements, SCMC is obligated to offer to such
companies any radio broadcasting opportunities that come to their attention in
medium and small markets (defined in such agreements as those markets ranked
71st and smaller out of the radio markets summarized by Duncan's Radio Market
Guide (1995 ed.)). SFX does not intend to pursue acquisitions in the
medium-sized markets in the eastern United States that MMR primarily focuses
on until the consummation of the Merger or in the small and medium-sized
markets in the Midwest and Western regions of the United States that Triathlon
primarily focuses on, except that, as a result of the acquisition of
substantially all of the assets of Prism Radio Partners, L.P. used in the
operation of ten FM and six AM radio stations located in five markets
(Louisville, Kentucky; Jacksonville, Florida; Raleigh, North Carolina; Tucson,
Arizona; and Wichita, Kansas), SFX owns three radio stations in the Wichita,
Kansas market, a market in which Triathlon has radio station ownership
interests. SFX has entered into an LMA with Triathlon with respect to such
stations.
SCMC has acted from time to time as SFX's financial advisor since SFX's
inception. SCMC is controlled by Mr. Sillerman, and Messrs. Sillerman and
Tytel are officers and directors of SCMC. SCMC acts in similar capacities for
each of MMR and Triathlon. These companies may seek to participate in business
opportunities which may be suitable for SFX.
On April 15, 1996, SFX and SCMC entered into an agreement (the "SCMC
Termination Agreement") pursuant to which SCMC assigned to SFX its rights to
receive fees for consulting and marketing services payable by each of MMR and
Triathlon, except for fees relating to certain transactions pending at the
date of such agreement, and SFX and
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SCMC terminated the arrangement pursuant to which SCMC performed financial
consulting services for SFX. In consideration therefor, SFX issued to SCMC
warrants to purchase up to 600,000 SFX Class A Shares at an initial exercise
price of $33.75 per share (the market price at the time the financial
consulting arrangement was terminated), and SFX will forgive, upon the
consummation of the Merger, a $2.0 million loan made to SCMC plus accrued and
unpaid interest thereon. Pursuant to the SCMC Termination Agreement, SCMC has
agreed to continue to provide consulting and marketing services to each of MMR
and Triathlon until the expiration of their agreements on July 28, 1998 and
June 1, 2005, respectively, and not to perform any consulting or investment
banking services for any person or entity, other than MMR or Triathlon, in the
radio broadcasting industry or in any business which uses technology for the
audio transmission of information or entertainment. Subsequent to the
termination of its current relationship with SCMC, SFX intends to perform
internally the functions previously performed by SCMC.
SCMC has acted as an investment advisor to SFX with respect to the
Pending Acquisitions and its recently completed acquisitions and to MMR in
connection with the Merger. SCMC received a fee of approximately $2.0 million
from MMR, which fee was paid by SFX on behalf of MMR and represents a portion
of the $23.0 million SFX has agreed to advance to MMR pursuant to a loan
agreement entered into in September 1996 (the "Loan Agreement"). Such $2.0
million payment is nonrefundable even if the Merger is not consummated. As of
September 30, 1996, SFX had loaned MMR approximately $20.0 million pursuant to
the Loan Agreement, which funds were used primarily to fund the acquisition of
radio station WKSS-FM, operating in Hartford, Connecticut.
The SFX Loan bears interest at 12% per annum.
RELIANCE ON KEY PERSONNEL
Following consummation of the Merger, SFX's business will be dependent
to a significant extent upon the performance of certain key individuals,
including Messrs. Sillerman and Armstrong and Michael G. Ferrel. Mr. Ferrel,
the Chief Executive Officer, President and Chief Operating Officer of MMR, has
agreed to become the Chief Executive Officer of SFX upon consummation of the
Merger and currently serves as a consultant to SFX pursuant to the Merger
Agreement. SFX has entered into a five-year employment agreement with each of
Messrs. Sillerman and Armstrong, effective as of April 1, 1995. In addition,
SFX anticipates entering into an employment agreement with Mr. Ferrel, to be
effective upon the consummation of the Merger. Mr. Ferrel currently serves as
a consultant to SFX pursuant to the Merger Agreement, which provides that MMR
shall make Mr. Ferrel available to SFX for consulting services until the
consummation or termination of the Merger. There can be no assurance that the
services of Messrs. Sillerman, Ferrel or Armstrong will continue to be
provided for the term of such agreements. Pursuant to Mr. Armstrong's
employment agreement, he has the right to terminate such employment agreement
during the one-month period commencing on the first anniversary of the
Effective Time. In such event, Mr. Armstrong will receive substantial
payments. Messrs. Sillerman's and Armstrong's employment agreements require,
and Mr. Ferrel's employment agreement will require, that they devote
substantially all of their business time to the business and affairs of SFX,
except that Mr. Sillerman's agreement permits him to fulfill his obligations
as a director and officer of companies in which he currently serves in such
capacities and to devote a portion of his business time to personal,
non-broadcast investments or commitments or to certain broadcast investments.
It is anticipated that in the event that the Merger is not consummated, the
services of Mr. Ferrel will not be available to SFX and Mr. Sillerman will
continue to serve as the Chief Executive Officer of SFX. The loss of the
services of Messrs. Sillerman, Armstrong or Ferrel could have a material
adverse effect on SFX.
In addition, SFX has entered into employment agreements with several
high-profile on-air personalities. However, there can be no assurance that SFX
will be able to retain any of such employees or prevent them from competing
with SFX in the event of their departure.
DEPENDENCE ON ECONOMIC FACTORS
Because SFX derives substantially all of its revenue from the sale of
advertising time, its revenues may be adversely affected by economic
conditions which affect advertisers. In particular, because approximately 75%
of SFX's revenue has generally been derived from local advertisers, operating
results in individual geographic markets will be adversely affected by local
or regional economic downturns. Such economic downturns might have an adverse
impact on SFX's financial condition and results of operations. In addition,
revenues of radio stations may be affected by many other factors including:
(i) the popularity of programming, including programming such as sports
programming where SFX makes long-term commitments; (ii) regulatory
restrictions on types of programming or advertising (such as beer
-7-
<PAGE>
and wine advertising); (iii) competition within national, regional or local
markets from programming on other stations or from other media; (iv) loss of
market share to other technologies; and (v) challenges to license renewals.
EXTENSIVE REGULATION OF THE RADIO BROADCASTING BUSINESS
The radio broadcasting industry is subject to extensive regulation by
the FCC. In particular, SFX's business depends on its continuing to hold, and,
in connection with acquisitions of radio stations, on obtaining prior FCC
consent to assignments or transfers of control of, broadcasting station
operating licenses issued by the FCC. Radio broadcasting licenses may be
granted for maximum terms of seven years, although the FCC has proposed in a
recent rulemaking raising the maximum term to eight years, as permitted by the
Recent Legislation. There can be no assurance that SFX's licenses will be
renewed or that the FCC will approve the Pending Acquisitions or Pending
Dispositions, especially if third parties challenge SFX's renewal, acquisition
or disposition applications. Third parties have challenged certain FCC
applications of SFX or the radio stations involved in the Pending
Acquisitions. Failure to obtain the renewal of any of SFX's principal
broadcast licenses or to obtain FCC approval for an assignment or transfer of
control to SFX of a license in connection with a station acquisition could
have a material adverse effect on SFX's business and operations. In addition,
the number and locations of radio stations SFX may acquire is limited by FCC
rules and will vary depending upon whether the interests in other radio
stations or certain other media properties of certain individuals affiliated
with SFX are attributable to those individuals. Moreover, under the FCC's
cross-interest policy, the FCC in certain instances may prohibit one party
from acquiring an attributable interest in one media outlet and a substantial
non-attributable economic interest in another media outlet in the same market,
thereby prohibiting a particular acquisition by SFX. Also, the activities of
persons who are deemed by the FCC to control SFX could adversely affect SFX's
ability to obtain license renewals and to acquire radio stations.
The issuance of SFX Class A Shares, including those issuable upon the
conversion or exercise of the SFX Series D Preferred Shares or the Exchange
Notes issuable upon the exchange thereof and all other rights, options or
warrants to purchase SFX Class A Shares that would cause Robert F.X. Sillerman
not to hold directly voting stock of SFX representing more than 50% of the
total voting power of SFX, would require SFX to seek and obtain the consent of
the FCC. SFX intends to seek such consent at such time as it may be required.
Presently, due to the single majority stockholder exemption, stockholders
holding 5% or more of the total voting power of SFX do not have an
attributable interest in SFX because Mr. Sillerman owns more than 50% of the
voting power of SFX. In the event that Mr. Sillerman's voting power in SFX
dropped to 50% or less, all stockholders holding 5% or more of the total
voting power of SFX would have an attributable interest in SFX for purposes of
the FCC's local ownership rules, which could adversely affect SFX's ability to
acquire or to hold interests in radio stations in particular markets,
depending upon the other media interests of those stockholders. The FCC has
outstanding a notice of proposed rulemaking that, among other things, seeks
comment on whether the FCC should modify its attribution rules by (i)
restricting the availability of the single majority stockholder exemption and
(ii) attributing under certain circumstances certain interests such as
non-voting stock or debt. SFX cannot predict the outcome of this proceeding or
how it will affect SFX's business.
Adoption of the Recent Legislation in February 1996 eliminated the
national limits and liberalized the local limits on radio station ownership by
a single company. However, the Antitrust Agencies have indicated that, in
certain cases, ownership of the number of radio stations permitted by the
Recent Legislation may result in the undue concentration of ownership within a
market or otherwise have an anti-competitive effect. The Antitrust Agencies
are increasingly scrutinizing acquisitions of radio stations and the entering
into of JSAs and LMAs. In particular, the Department of Justice ("DOJ") has
indicated that a prospective buyer of a radio station may not enter into an
LMA in connection with the acquisition of such station before expiration of
the applicable waiting period under the the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended. In a recent case, the DOJ has also, for
the first time, required the termination of a radio station JSA that, in the
opinion of the DOJ, would have given a radio station owner, together with its
proposed acquisition of other radio stations in the market, control over more
than 60% of the sales of radio advertising time in the market. Certain of the
Pending Acquisitions and the JSAs entered into by the Company have been the
subject of inquiries from the Antitrust Agencies. See "Agreements Relating to
the Pending Acquisitions and the Pending Disposition." There can be no
assurance that future inquiries or policy and rule-making activities of the
Antitrust Agencies will not impact the Company's operations (including
existing stations or markets), expansion strategy or its ability to realize
the benefits which management had anticipated obtaining following the adoption
of the Recent Legislation.
-8-
<PAGE>
The Congress and/or 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 SFX's radio broadcast stations, result in the
loss of audience share and advertising revenues for SFX's radio broadcast
stations, and affect the ability of SFX to acquire additional radio broadcast
stations or finance such acquisitions. Such matters may include: changes to
the license renewal process; spectrum use or other fees on FCC licensees;
revisions to the FCC's equal employment opportunity rules and other matters
relating to minority and female involvement in the broadcasting industry;
proposals to change rules relating to political broadcasting; technical and
frequency allocation matters; proposals to permit expanded use of FM
translator stations; 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 cross-ownership policies; changes to
broadcast technical requirements; delivery by telephone companies of audio and
video programming to the home through existing phone lines; proposals to limit
the tax deductibility of advertising expenses by advertisers; and proposals to
auction the right to use the radio broadcast spectrum to the highest bidder.
The FCC is currently considering whether to authorize the use of a new
technology, digital audio broadcasting, to deliver audio programming. Digital
audio broadcasting may provide a medium for the delivery by satellite or
terrestrial means of multiple new audio programming formats to local and
national audiences. It is not presently known precisely how in the future this
technology may be used by existing radio broadcast stations either on existing
or alternate broadcasting frequencies.
There can be no assurance that there will not be changes in the current
regulatory requirements, the imposition of additional regulations or the
creation of new regulatory agencies, which changes would restrict or curtail
the ability of SFX to acquire, operate and dispose of stations or, in general,
to compete profitably with other operators of radio and other media
properties. Moreover, there can be no assurance that there will not be other
regulatory changes, including aspects of deregulation, that will result in a
decline in the value of broadcasting licenses held by SFX or adversely affect
SFX's business, competitive position or results of operations.
NO TRANSFER OF COMMON STOCK TO ALIENS
SFX's Restated Certificate of Incorporation restricts the ownership,
voting and transfer of SFX's capital stock in accordance with the Federal
Communications Act of 1934, as amended (the "Communications Act"), and the
rules of the FCC to prohibit ownership of more than 25% of SFX's outstanding
capital stock, or more than 25% of the voting rights it represents (such
percentage, however, is 20% in the case of those subsidiaries of SFX that are
direct holders of FCC licenses), by or for the account of non-U.S. citizens or
their representatives or a foreign government or a representative thereof or a
corporation organized under the laws of a foreign country ("Aliens") or
corporations otherwise subject to domination or control by Aliens. Based upon
reports filed with the Commission, SFX believes that there are 1,071,429 SFX
Class A Shares held by Nomura Holdings America, Inc. ("Nomura"), representing
16.7% of the outstanding SFX Class A Shares and 7.1% of the combined voting
power of SFX. Because a substantial portion of the common stock of Nomura is
owned and voted by Aliens, SFX, in order to comply with the requirements of
the Communications Act and the rules and regulations of the FCC promulgated
thereunder, may decide not to permit or recognize any issuance or transfer of
its common stock to an Alien. Failure to comply with such rules and
regulations could result in the imposition of penalties on SFX. This
restriction on transfers to Aliens may adversely affect the market for SFX's
securities, including SFX Class A Shares. In addition, SFX's Restated
Certificate of Incorporation provides that shares of capital stock of SFX
determined by the Board of Directors of SFX to be owned beneficially by an
Alien shall always be subject to redemption by SFX by action of the Board of
Directors of SFX to the extent necessary, in the judgment of the Board of
Directors of SFX, to comply with the alien ownership restrictions of the
Communications Act and the FCC rules and regulations.
COMPETITION
The radio broadcasting industry is highly competitive. The financial
results of each of SFX's stations are dependent to a significant degree upon
its audience ratings and its share of the overall advertising revenue within
the station's geographic market. Each of SFX's stations competes for audience
share and advertising revenue directly with other FM and AM radio stations, as
well as with other media, within their respective markets. SFX's audience
ratings and market share are subject to change and any adverse change in
audience share and advertising ratings in any
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<PAGE>
particular market could have a material and adverse effect on SFX's net
revenues. The Recent Legislation will permit other radio broadcasting
companies to enter the markets in which SFX operates or may operate in the
future, some of which may be larger and have more financial resources than
SFX. SFX's stations also compete with other advertising media such as
newspapers, television, magazines, billboard advertising, transit advertising
and direct mail advertising. Radio broadcasting 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 or the
introduction of digital audio broadcasting. Competition within the radio
broadcasting industry occurs primarily in individual markets, so that a
station in one market does not generally compete directly with stations in
other markets. Although SFX believes that each of its stations is able to
compete effectively in its market, there can be no assurance that any of SFX's
stations will be able to maintain or increase current audience ratings and
advertising revenue market share.
DIVIDEND POLICY; RESTRICTIONS ON PAYMENT OF DIVIDENDS
SFX has not paid any dividends since its inception in 1992 and does not
anticipate that it will pay any dividends on the SFX Class A Shares or the SFX
Class B Shares in the foreseeable future. Earnings, if any, will be retained
by SFX to fund its growth. Certain of SFX's debt instruments include covenants
restricting SFX's ability to pay dividends or to make certain other
distributions to stockholders. SFX is a holding company, substantially all of
the operations of which are conducted through subsidiaries. The ability of
such subsidiaries to pay dividends is subject to applicable state law and
certain other restrictions.
MARKET RISK WITH RESPECT TO COMMON STOCK; CERTAIN INVESTMENT LIMITATIONS
The SFX Class A Shares are quoted on the Nasdaq National Market.
However, the prices at which the SFX Class A Shares trade may depend upon many
factors, including markets for similar securities, industry conditions, and
the performance of, and investor expectations for, SFX. No assurance can be
given that a holder of the SFX Class A Shares will be able to sell such shares
at any particular price. Certain institutional investors may invest only in
dividend-paying equity securities or may operate under other restrictions that
may prohibit or limit their ability to invest in the SFX Class A Shares.
SHARES ELIGIBLE FOR FUTURE SALE AND POSSIBLE ADVERSE EFFECT THEREOF
There are 6,431,897 SFX Class A Shares and 856,126 SFX Class B Shares
issued and outstanding. Of these outstanding shares, 1,281,897 SFX Class A
Shares and all of the SFX Class B Shares are "Restricted Securities," as that
term is defined in Rule 144 ("Rule 144") promulgated under the Securities Act.
Of such shares, 210,468 SFX Class A Shares and the 856,126 SFX Class A Shares
issuable upon conversion of the SFX Class B Shares are currently eligible for
sale in the open market under Rule 144 (subject to the limitations set forth
herein). SFX believes that the remaining 1,071,429 SFX Class A Shares (which
were transferred to Nomura in December 1994) may not be able to be sold in the
open market under Rule 144 until December 8, 1996. In addition, the SFX Class
A Shares held by Nomura have one demand and certain piggy-back registration
rights which expire on October 7, 2000 with respect thereto. Approximately
77,944 SFX Class A Shares (including SFX Class A Shares issuable upon the
exercise of options and warrants) and approximately 208,810 SFX Class B Shares
issued in the Merger are subject to restrictions on resale under Rule 145 ("Rule
145") promulgated under the Securities Act. In addition, each of the 2,990,000
outstanding SFX Series D Preferred Share is convertible at the option of the
holder thereof into 1.0987 SFX Class A Shares (subject to adjustments in certain
events) at any time prior to the close of business on May 31, 2007, the maturity
date of the SFX Series D Preferred Shares. SFX has filed a registration
statement with the Commission with respect to the resale by the holders thereof
of the SFX Series D Preferred Shares, the SFX Class A Shares issuable upon
conversion thereof and the Exchange Notes issuable upon the exchange thereof.
Such registration statement was declared effective in July 1996. The sale, or
availability for sale, of substantial amounts of SFX Shares in the public
market pursuant to Rule 145, Rule 144 or otherwise could adversely affect the
prevailing market price of the shares of SFX Class A Shares and could impair
SFX's ability to raise additional capital through the sale of equity
securities.
POSSIBLE ADVERSE IMPACT OF AUTHORIZED BUT UNISSUED SHARES OF CAPITAL STOCK
AND DELAWARE LAW
Assuming that certain proposals are approved by SFX's stockholders, SFX
will have 100,000,000 SFX Class A Shares, 10,000,000 SFX Class B Shares,
1,200,000 shares of Class C Common Stock, par value $0.01 share (the "SFX
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<PAGE>
Class C Shares"), and 10,010,000 shares of preferred stock, par value $0.01
per share (the "SFX Preferred Shares"), authorized, of which approximately
8,063,347 SFX Class A Shares, 1,064,936 SFX Class B Shares, no SFX
Class C Shares and 2,993,000 SFX Preferred Shares (including 2,990,000 SFX
Series D Preferred Shares) are outstanding as of November 22, 1996. Pursuant to
SFX's Restated Certificate of Incorporation, the unissued SFX Preferred Shares
shall have such designations rights and preferences as may be determined from
time to time by the Board of Directors of SFX. Accordingly, the Board of
Directors of SFX is empowered, without stockholder approval, to issue SFX
Preferred Shares with dividend, liquidation, conversion, voting or other rights
which could adversely affect the voting power or other rights of the holders of
the SFX Shares. In addition, the Board of Directors of SFX may authorize the
issuance of substantial amounts of SFX Shares or SFX Class C Shares, as a
financing technique or otherwise, the effect of which would be to dilute the
economic and voting rights of existing stockholders and might adversely affect
the prices at which the SFX Class A Shares trade. The Board of Directors of
SFX could use the issuance of additional shares of capital stock of SFX as a
method of discouraging, delaying or preventing a change in control of SFX.
SFX is subject to the "business combination" statute of Section 203 of
the General Corporation Law of the State of Delaware (the "DGCL"). In general,
Section 203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
"interested stockholder," with certain specified exceptions. A "business
combination" includes mergers, stock or asset sales and other transactions
resulting in a financial benefit to the "interested stockholder." An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or, within three years, owned) 15% or more of the
corporation's voting stock. The effect of Section 203 of the DGCL may be to
make it more difficult to effect a change in control of SFX.
DESCRIPTION OF COMMON STOCK
Assuming that certain proposals are approved by the stockholders of SFX,
SFX will be authorized to issue 100,000,000 SFX Class A Shares 10,000,000 SFX
Class B Shares and 1,200,000 SFX Class C Shares (collectively, the "SFX Common
Stock"). In addition, SFX is authorized to issue shares of preferred stock.
See "Risk Factors--Possible Adverse Impact of Authorized but Unissued Shares
of Capital Stock and Delaware Law."
Dividends. Holders of shares of SFX Common Stock are entitled to receive
such dividends as may be declared by the Board of Directors out of funds
legally available for such purpose. No dividend may be declared or paid in
cash or property on any share of any class of SFX Common Stock, however,
unless simultaneously the same dividend is declared or paid on each share of
the other classes of SFX Common Stock. In the case of any stock dividend,
holders of SFX Class A Shares are entitled to receive the same percentage
dividend (payable in SFX Class A Shares) as the holders of SFX Class B Shares
(payable in SFX Class B Shares) and SFX Class C Shares (payable in SFX Class C
Shares). The payment of dividends is limited by certain agreements to which
SFX is a party and is expected to be limited by other indebtedness which may
be incurred in the future.
Voting Rights. Holders of SFX Class A Shares and SFX Class B Shares vote
as a single class on all matters submitted to a vote of the stockholders, with
each SFX Class A Share entitled to one vote and each SFX Class B Share
entitled to ten votes, except (i) for the election of directors, (ii) with
respect to any "going private" transaction between SFX and Mr. Sillerman or
any of his affiliates and (iii) as otherwise provided by law. The holders of
SFX Class C Shares have no voting rights except as otherwise provided by law.
In the election of directors, the holders of SFX Class A Shares, voting
as a separate class, are entitled to elect two-sevenths (2/7ths) of SFX
directors (or, if such number of directors is not a whole number, the next
higher whole number). Any person nominated by the Board of Directors for
election by the holders of SFX Class A Shares as a director of SFX must be
qualified to be an Independent Director ( in general, a director who is not
(i) an officer, employee or affiliate of SFX or any of its subsidiaries or any
affiliate of Robert F.X. Sillerman, (ii) an affiliate of Mr. Sillerman or
(iii) an individual having a relationship with SFX which, in the opinion of
the Board of Directors, would interfere with such person's exercise of
independent judgement in carrying out the responsibilities of a director). In
the event of the death, removal or resignation of a director elected by the
holders of SFX Class A Shares prior to the expiration of his term, the vacancy
on the Board of Directors created thereby may be filled by a person appointed
by a majority of the directors then in office, although less than a quorum.
Any person appointed to fill any such vacancy
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must, however, be qualified to be an Independent Director. Any director
elected by the holders of SFX Class A Shares or appointed by the Board of
Directors as specified in this paragraph is referred to as a "Class A
Director." The holders of SFX Class A Shares and SFX Class B Shares, voting as
a single class, with each SFX Class A Share entitled to one vote and each SFX
Class B Share, entitled to ten votes, are entitled to elect the remaining
directors. The holders of Common Stock of SFX are not entitled to cumulative
votes in the election of directors.
Each of Mr. Sillerman and SCMC has agreed to abstain, and has agreed to
cause each of his and its respective affiliated transferees to abstain, from
voting in any election of Class A Directors.
The holders of the SFX Class A Shares and SFX Class B Shares vote as a
single class with respect to any proposed "going private" transaction with Mr.
Sillerman or any of his affiliates, with each SFX Class A Share and each SFX
Class B Share entitled to one vote.
Under Delaware law, the affirmative vote of the holders of a majority
outstanding shares of any class of SFX Common Stock is required to approve,
among other things, a change in the designations, preferences or limitations
of the shares of such class of SFX Common Stock.
Liquidation Rights. Upon the liquidation, dissolution, or winding-up of
SFX, the holders of shares of SFX Common Stock are entitled to share ratably
in all assets available for distribution after payment in full of creditors.
Other Provisions. Each SFX Class B Share is convertible, subject to
compliance with FCC rules and regulations, at the option of its holder, into
one SFX Class A Share at any time. Each SFX Class B Share and each SFX Class C
Share converts automatically into one SFX Class A Share upon its sale or other
transfer to a party not affiliated with SFX, subject to compliance with FCC
rules and regulations. The holders of SFX Common Stock are not entitled to
preemptive or subscription rights. The shares of SFX Common Stock presently
outstanding are validly issued, fully-paid and nonassessable. In any merger,
consolidation or business combination, the consideration to be received per
share per share by holders of SFX Class A Shares, SFX Class B Shares and SFX
Class C Shares must be identical except that in any such transaction in which
shares of common stock are distributed to the stockholders of SFX, such shares
may differ as to voting rights to the extent that voting rights now differ
among the classes of SFX Common Stock. No class of SFX Common Stock of may be
subdivided, consolidated, reclassified or otherwise changed unless
concurrently the other classes of SFX Common Stock are subdivided,
consolidated, reclassified or otherwise changed in the same proportion and in
the same manner.
USE OF PROCEEDS
SFX will not receive any of the proceeds from the Offered Stock sold by
the Selling Stockholders nor will any such proceeds be available for use by
SFX or otherwise for SFX's benefit. SFX has agreed to maintain a "shelf"
registration statement pursuant to Rule 415 under the Securities Act covering
the sale of the Offered Stock. In addition, SFX has agreed to bear certain
expenses related to the registration, offer and sale of the Offered Stock
(currently estimated to be $25,000) excluding certain expenses such as
commissions of discounts of underwriters or agents and fees attributable to
the sale of such Offered Stock.
SELLING STOCKHOLDERS
This Prospectus covers the offer and sale by each Selling Stockholder of
the SFX Class A Shares issued to each such Selling Stockholder in connection
with the Merger. Pursuant to that certain Amended and Restated Agreement and
Plan of Merger, dated as of April 15, 1996, as amended on May 6, 1996, July
30, 1996 and September 30, 1996 (the "Merger Agreement"), among SFX,
Acquisition Sub and MMR, MMR merged with and into Acquisition Sub (the
"Merger") on November 22, 1996 and became a wholly-owned subsidiary of SFX. As
a result of the Merger, each MMR Class A Share and MMR Series B Preferred Share
outstanding at the time of the Merger was converted into .2983 SFX Class A
Shares and each share of Class B Common Stock, par value $.01 per share, of MMR
(the "MMR Class B Shares") and Original Preferred Stock, par value $.01 per
share, of MMR (the "MMR Original Preferred Shares") was converted into
.2983 shares of
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Class B Common Stock, par value $.01 per share, of SFX (the "SFX Class B
Shares" and, collectively with the SFX Class A Shares, the "SFX Shares").
MMR's stockholders received approximately 1,631,152 SFX Class A Shares and
approximately 208,810 SFX Class B Shares as a result of the Merger, representing
approximately 20.2% of the outstanding SFX Class A Shares after the Merger,
approximately 19.6% of the outstanding SFX Class B Shares after the Merger and
approximately 19.9% of the combined voting power of the SFX Shares after the
Merger. The Selling Stockholders received 263,530 SFX Class A Shares in the
Merger, representing approximately 3.3% of the SFX Class A Shares outstanding
after the Merger and approximately 1.4% of the combined voting power of the SFX
Shares after the Merger. SFX has agreed that it will cause to be registered
under the
Securities Act of 1933, as amended, the resale of the SFX Class A Shares
received by the Selling Stockholders in the Merger.
In connection with entering into Amendment No. 2 to the Merger
Agreement, which, among other things, raised the value of the SFX Shares to be
issued in respect of each outstanding share of common and preferred stock of
MMR (subject to certain adjustments and conditions), the Selling Stockholders
entered into an agreement with SFX pursuant to which they agreed to vote their
MMR Class A Shares in favor of the Merger and an amendment to MMR's
certificate of incorporation that would permit the MMR Class B Shares and MMR
Original Preferred Shares to receive SFX Class B Shares in the Merger. The
foregoing agreement only applied to the MMR Class A Shares owned by the
Selling Stockholders on the record date for the special meeting of the
stockholders of MMR called for the purpose of voting on the Merger and the
amendment to MMR's certificate of incorporation. In addition, the agreement of
Blair and J. Morton Davis to vote in favor of the Merger was conditioned upon
there not being any pending competing offers which could be expected to
provide a higher value for the MMR Class A Shares than that provided for in
the Merger.
SFX has agreed to cause to be registered under the Securities Act the
resale of the SFX Class A Shares received by the Selling Stockholders in the
Merger. In addition, SFX has agreed to indemnify certain of the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act.
The following table sets forth the names of the Selling Stockholders and
the number of SFX Class A Shares which they own as a result of the consummation
of the Merger and which may be offered for resale hereunder. Since the Selling
Stockholders may sell all, some or none of their shares, no estimate can be
made of the aggregate number of SFX Class A Shares that are to be offered
hereby or that will be owned by each Selling Stockholder upon completion of
the offering to which this Prospectus relates. If, however, each of the
Selling Stockholders were to sell all of the SFX Class A Shares set across
from his or its name, each Selling Stockholder would beneficially own less
than one percent of the SFX Class A Shares.
<TABLE>
<CAPTION>
Name Number of Shares
- ----------------------------------- --------------------
<S> <C>
D.H. Blair Investment Banking Corp. 93,280
J. Morton Davis 93,280 (1)
Gabriel Capital, L.P. 30,898
Ariel Fund Limited 45,572
Chilton Investment Partners, L.P. 51,571
Richard L. Chilton 51,571 (2)
</TABLE>
- --------------
(1) J. Morton Davis is the beneficial owner of the 93,280 SFX Class A
Shares held by D.H. Blair Investment Banking Corp. by virtue of the
fact that he has the sole power to vote or direct the vote, or to
dispose or to direct the disposition of, such shares.
(2) Richard L. Chilton is a beneficial owner of 51,571 SFX Class
A Shares held by Chilton Investment Partners, L.P. by virtue of
the fact that he has the sole power to vote or direct the vote, or to
dispose or to direct the disposition of, such shares.
The Selling Stockholders may sell up to all of the shares of SFX Class A
Shares shown above under the heading "Number of Shares" pursuant to this
Prospectus in one of more transactions from time to time as described below
under "Plan of Distribution."
To SFX's knowledge, none of the Selling Stockholders has had any
material relationship within the past three years with SFX or any of its
predecessors or affiliates, except as follows: D.H. Investment Banking Corp.
("Blair") acted as one of two managing underwriters (the "Managing
Underwriters") of MMR's public offering of securities in March 1994. The
Managing Underwriters received customary underwriting fees and an expense
allowance. In connection with any exercise of the warrants issued by MMR in
such public offering, the Managing Underwriters are entitled to receive
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<PAGE>
a fee of 4% of the exercise price for each Class A Warrant and each Class B
Warrant of MMR that is exercised by the holders thereof. Such fee is equal to
$.31 for each Class A Warrant and $.46 for each Class B Warrant and is payable
to whichever of the two Managing Underwriters solicited the exercise of the
warrant. In October 1996 MMR called all of its outstanding Class A Warrants
for redemption. In connection with the exercise of its Class A Warrants, MMR
paid approximately $570,400 to the Managing Underwriters in payment of such 4%
fee. In connection with the closing of its public offering in March 1994, MMR
(i) issued options ("Unit Purchase Options") to purchase up to 160,000 Units,
each of which consisted of securities substantially similar to those offered
to the public, at an exercise price of $7.75 per Unit, to the Managing
Underwriters and designees of the Managing Underwriters and granted the
holders of the Unit Purchase Options certain registration rights in respect
thereof and (ii) entered into a financial consulting agreement with the
Managing Underwriters which provides for the payment of a fee to the Managing
Underwriters in the event that either of the Managing Underwriters are
responsible for a merger, acquisition, joint venture or corporate financing
transaction to which MMR is a party during the five-year period beginning on
March 23, 1994. The Unit Purchase Options will convert into securities of SFX
in the Merger.
As of October 1, 1996, the record date for the purpose of voting on the
Merger by the stockholders of MMR, Blair may be deemed to beneficially own
(within the meaning of the federal securities laws) approximately 19.2% of the
MMR Class A Shares, Gabriel Capital, L.P. may be deemed to beneficially own
2.6% of the MMR Class A Shares, Ariel Fund may be deemed to beneficially own
4.2% of the MMR Class A Shares, Chilton Investment Partners, L.P. may be
deemed to beneficially own 4.3% of the MMR Class A Shares, and Richard L.
Chilton, Jr. may be deemed to beneficially own 4.3% of the MMR Class A Shares.
As the general partner of Gabriel Capital, L.P. and the sole stockholder and
President of the investment advisor of Ariel Fund Limited, J. Ezra Merkin may
be deemed to beneficially own the MMR Class A Shares held by such entities, in
addition to shares beneficially owned through other entities.
PLAN OF DISTRIBUTION
Each of the Selling Stockholders may sell his or its shares of Offered
Stock directly or through broker-dealers or underwriters who may act solely as
agents, or who may acquire shares as principals. The distribution of the
shares may be effected in one or more transactions that may take place through
the Nasdaq National Market or any national securities exchange on which the
Offered Stock is approved for listing in the future, including block trades or
ordinary broker's transactions, or through privately negotiated transactions,
or through an underwritten public offering, or in accordance with Rule 144
under the Securities Act, through a combination of any such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. In addition, certain of the
Selling Stockholders have advised SFX that they may use all or a part of their
shares of Offered Stock in order to cover "short" positions in SFX Class A
Shares. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the Selling Stockholders in connection with such
sales.
The aggregate proceeds to the Selling Stockholders from the sale of the
Offered Stock will be the purchase price of the Offered Stock sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by SFX. The Selling
Stockholders and any dealers or agents that participate in the distribution of
the Offered Stock may be deemed to be "underwriters" within the meaning of the
Securities Act, and any profit on the sale of the Offered Stock by them and
any commissions received by any such dealers or agents night be deemed to be
underwriting discounts and commissions under the Securities Act.
The Selling Stockholders may effect transactions by selling the Offered
Stock directly or through broker-dealers acting either as principal or as
agent, and such broker-dealers may receive compensation in the form of usual
and customary or specifically negotiated underwriting discounts, concessions
or commissions from the Selling Stockholders.
To the extent required, the specific shares of the Offered Stock to be
sold, the names of the Selling Stockholders, purchase price, public offering
price, the names of any such agent, dealer or underwriter and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying Prospectus Supplement.
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<PAGE>
EXPERTS
The consolidated financial statements of SFX and subsidiaries at
December 31, 1995 and 1994, and for each of the three years in the period
ended December 31, 1995, the consolidated financial statements of MMR at
December 31, 1995 and 1994, and for the years then ended, and the financial
statements of KKRW-FM (a division of CBS, Inc.) at December 31, 1995 and 1994,
and for the years then ended, all incorporated herein by reference to the Form
8-K filed by SFX with the Commission on May 30, 1996, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their reports thereon
and incorporated herein by reference, and have been so incorporated by
reference in reliance upon the reports of such firm given upon their authority
as experts in accounting and auditing.
The financial statements of KTXQ-FM and KRRW-FM (divisions of CBS Inc.)
at December 31, 1995 and 1994 and for the years then ended, all incorporated
by reference to the Form 8-K filed by SFX with the Commission on October 30,
1996, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon and incorporated herein by reference, and have
been so incorporated by reference in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
The financial statements of WKSS 95.7-FM (a division of Precision Media
Corporation) at December 31, 1995 and 1994 and for the years then ended and
the combined financial statements of WRFX-FM and WEDJ-FM (divisions of Pyramid
Communication, Inc.) at December 31, 1995 and for the year then ended, all
incorporated herein by reference to the Form 8-K filed by SFX with the
Commission on November 1, 1996, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon and incorporated
herein by reference, and have been so incorporated by reference in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Liberty Broadcasting, Inc. at
December 31, 1995 and 1994 and for the years ended December 31, 1995, 1994,
and the nine months ended December 31, 1993 and the combined financial
statements of HMW Communication, Inc.--Selected Operations (combination of six
radio stations to be sold) as of December 31, 1995 and 1994, for the year
ended December 31, 1995, and various periods from January 6, 1994 to December
31, 1994, all incorporated herein by reference to the Form 8-K filed by SFX
with the Commission on May 9, 1996, have been audited by Coopers & Lybrand
L.L.P., independent accountants, as set forth in their reports thereon and
incorporated herein by reference. Such consolidated financial statements are
incorporated by reference herein in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Prism Radio Partners, L.P. as of December
31, 1995 and 1994 and for each of the three years in the period ended December
31, 1995, incorporated herein by reference to the Form 8-K filed by SFX with
the Commission on May 9, 1996, have been audited by KPMG Peat Marwick L.L.P.,
independent certified public accountants, to the extent and for the period
indicated in their report thereon, which is incorporated herein by reference,
and have been so incorporated by reference in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
The financial statements of ABS Greenville Partners, L.P. at December
31, 1995 and for the year then ended, incorporated herein by reference to the
Form 8-K filed by SFX with the Commission on May 9, 1996, have been audited by
Cheely Burcham Eddins Rokenbrod & Carroll, independent auditors, as set forth
in their report thereon and incorporated herein by reference, and have been so
incorporated by reference in reliance upon the report of such firm given upon
their authority as experts in accounting and auditing.
The combined balance sheets of The Secret Stations: Cleveland,
Indianapolis, Pittsburgh as of June 30, 1996 and 1995 and the related combined
statements of operations and cash flows for the year ended June 30, 1996 and
the eleven month period ended June 30, 1995, all incorporated by reference to
the Form 8-K filed by SFX with the Commission on October 30, 1996, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report with respect thereto and incorporated herein by reference and
have been so incorporated by reference in reliance upon the authority of said
firm as experts in giving said report.
The financial statements of Texas Coast Broadcasters, Inc. at December
31, 1995 and 1994 and for the years then ended, all incorporated by reference
to the Form 8-K filed by SFX with the Commission on October 30, 1996, have
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<PAGE>
been audited by Mohle, Adams, Till, Guidry & Wallace, LLP, independent
auditors, as set forth in their report thereon and incorporated herein by
reference, and have been so incorporated by reference in reliance upon the
report of such firm given upon their authority as experts in accounting and
auditing.
LEGAL MATTERS
The legality of the SFX Class A Shares being offered hereby will be
passed upon for SFX by Baker & McKenzie, New York, New York. Howard J. Tytel,
who has an equity interest in and is the Executive Vice President, the
Secretary and a Director of SFX, is Of Counsel to Baker & McKenzie. Fisher
Wayland Cooper Lender & Zaragoza LLP, Washington, D.C., has represented SFX
with respect to legal matters under the Communications Act and the rules and
regulations promulgated by the FCC.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth an estimate of the various expenses to be
paid in connection with the issuance and distribution of the securities being
registered hereby, other than commissions or discounts with respect to the
sale of the shares of Offered Stock. SFX will pay for all of the expenses
listed below and the Selling Stockholders will bear any such commissions or
discounts.
Securities and Exchange Commission registration fee $ 3,486
Fees and expenses of counsel for SFX .............. 10,000
Blue Sky fees and expenses ........................ 2,000
Printing expenses ................................. 7,500
Miscellaneous ..................................... 2,014
---------
Total $ 25,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
SFX's Restated Certificate of Incorporation provides that no director of
SFX shall be personally liable to SFX or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to SFX or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware or (iv) for any transaction from which the
director derived an improper personal benefit.
Section 145 of the General Corporation Law of the State of Delaware
empowers a Delaware corporation to indemnify any person who is, 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 such corporation) by reason of the
fact that such person is or was an officer or director 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 that 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, and, with respect to any criminal
action or proceeding, had no reasonable cause to believe his conduct was
unlawful. A Delaware corporation may indemnify officers and directors against
expenses (including attorneys' fees) in an action by or in the right of the
corporation under similar conditions, 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 against the expenses which he actually and
reasonably incurred in connection therewith.
SFX's By-Laws provide that SFX 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, administrative or
investigative (other than an action by or in the right of SFX) by reason of
the fact that he is, was or has agreed to become a director or officer of SFX,
or is or was serving or has agreed to serve at the request of SFX as a
director or officer of another company, partnership, joint venture, trust or
other enterprise, against costs, charges, expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him or on his behalf in connection with such action, suit or
proceeding and any appeal therefrom, if he acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of SFX,
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 SFX, and, with
respect to any criminal action or proceeding, had reasonable cause to believe
that his conduct was unlawful.
II-1
<PAGE>
SFX's By-Laws also provide that SFX 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 SFX to procure a judgment in
its favor by reason of the fact that he is, was or has agreed to become a
director or officer of SFX, or is or was serving at the request of SFX as a
director or officer of another company, partnership, joint venture, trust or
other enterprise, or by reason of any action alleged to have been taken or
omitted in such capacity, against costs, charges and expenses (including
attorneys' fees) actually and reasonably incurred by him or on his behalf in
connection with the defense or settlement of such action or suit and any
appeal therefrom, if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of SFX and except that
no such 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 SFX unless
and only to the extent that the Court of Chancery of Delaware or the court in
which such action or suit was brought shall determine upon application that,
despite the adjudication of such liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which such Court of Chancery or such other court
shall deem proper.
SFX's By-Laws state that, the extent that a director or officer of SFX
shall be successful on the merits or otherwise, including, without limitation,
the dismissal of an action without prejudice, in defense of any action, suit
or proceeding referred to above, or in the defense of any claim, issue or
matter therein, he shall be indemnified against all costs, charges and
expenses (including attorneys' fees) actually and reasonably incurred by him
or on his behalf in connection therewith.
SFX's By-Laws further provide that any indemnification (unless ordered
by a court) shall be paid by SFX as authorized in the specific case upon a
determination that indemnification of the director or officer is proper in the
circumstances because he has met the applicable standard of conduct set forth
in the By-Laws unless a determination is made that indemnification of the
director or officer is not proper in the circumstances because he has not met
the applicable standard of conduct set forth in the By-Laws. Such
determination shall be made (i) by the Board of Directors of SFX 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.
SFX's By-Laws further provide that expenses incurred by an officer or
director in defending a civil or criminal action, suit or proceeding shall be
paid by SFX in advance of the final disposition of such action, suit or
proceeding upon receipt of an undertaking by or on behalf of such director or
officer to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by SFX as authorized in the By-Laws.
SFX's By-Laws require the Board of Directors of SFX to purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a director or officer of SFX, or is or was serving at the request of
SFX as a director or officer of another company, partnership, joint venture,
trust or other enterprise against any liability asserted against him and
incurred by him or on his behalf in any such capacity, or arising out of his
status as such, whether or not SFX would have the power to indemnify him
against such liability under the provisions of the By-Laws, provided that such
insurance is available on acceptable terms, which determination shall be made
by a vote of a majority of the Board of Directors.
SFX's By-Laws also provide that the indemnification and advancement of
expenses provided by, or granted pursuant to, the By-Laws shall continue as to
a person who has ceased to be a director or officer and shall inure to the
benefit of the estate, heirs, executors and administrators of such person.
II-2
<PAGE>
ITEM 16. EXHIBITS
3.1* By-laws of SFX Broadcasting, Inc.
5.1* Opinion of Baker & McKenzie.
23.1* Consent of Baker & McKenzie (included in Exhibit 5.1).
23.2+ Consent of Ernst & Young LLP.
23.3+ Consent of KPMG Peat Marwick LLP.
23.4+ Consent of Cheely Burcham Eddins Rokenbrod & Carroll.
23.5+ Consent of Coopers & Lybrand L.L.P. with respect to HMW
Communications, Inc.--Selected Operations.
23.6+ Consent of Coopers & Lybrand L.L.P. with respect to Liberty
Broadcasting, Inc.
23.7+ Consent of Arthur Andersen LLP with respect to The Secret
Stations: Cleveland, Indianapolis, Pittsburgh.
23.8+ Consent of Mohle, Adams, Till, Guidry & Wallace, LLP with
respect to Texas Coast Broadcasters, Inc.
24+ Powers of Attorney.
99.1 Agreement, dated July 26, 1996, among SFX Broadcasting,
Inc., Chilton Investment Partners, L.P. and Richard L. Chilton
(Incorporated by reference to Exhibit 99.1 to the Form 8-K filed
by Multi-Market Radio, Inc. on August 8, 1996).
99.2 Agreement, dated July 26, 1996, among SFX Broadcasting,
Inc., Gabriel Capital, L.P. and Ariel Fund Limited (Incorporated
by reference to Exhibit 99.2 to the Form 8-K filed by
Multi-Market Radio, Inc. on August 8, 1996).
99.3 Agreement, dated July 31, 1996, among SFX Broadcasting,
Inc., J. Morton Davis and D.H. Blair Investment Banking Corp.
(Incorporated by reference to Exhibit 99.3 to the Form 8-K filed
by Multi-Market Radio, Inc. on August 8, 1996).
- ---------------
+ Previously filed
* Filed herewith
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a) (3)
of the Securities Act of 1933 unless the information required to
be included in such post-effective amendment is contained in
periodic reports filed with the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this registration
statement;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement unless
the information required to be included in such post-effective
amendment is contained in periodic reports filed with the
Commission by the registrant pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation form the low
or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
II-3
<PAGE>
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment 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) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) 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 provisions described in Item 15
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. 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 persons 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 and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
the requirements for filing on Form S-3 and has duly caused 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 the 19th day of
November, 1996.
SFX BROADCASTING, INC.
By: *
--------------------------------
ROBERT F.X. SILLERMAN,
Chairman of the Board and
Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
Signature Title Date
--------- ----- ----
/s/ * Chairman of the Board of November 19, 1996
- -------------------------- Directors, Chief Executive
Robert F.X. Sillerman Officer and Director (principal
executive officer)
* Executive Vice President, November 19, 1996
- -------------------------- Treasurer, Chief Operating
D. Geoffrey Armstrong Officer and Director
(principal financial and
accounting officer)
* Executive Vice President, November 19, 1996
- -------------------------- Secretary and Director
Howard J. Tytel
/s/ Richard A. Liese Vice President and Director November 19, 1996
- --------------------------
Richard A. Liese
Director November __, 1996
- --------------------------
James F. O'Grady, Jr.
* Director November 19, 1996
- --------------------------
Paul Kramer
By: /s/ Richard A. Liese
--------------------------
Richard A. Liese, as
attorney in fact
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- -------- -----------
3.1* By-laws of SFX Broadcasting, Inc.
5.1* Opinion of Baker & McKenzie.
23.1* Consent of Baker & McKenzie (included in Exhibit 5.1).
23.2+ Consent of Ernst & Young LLP.
23.3+ Consent of KPMG Peat Marwick LLP.
23.4+ Consent of Cheely Burcham Eddins Rokenbrod & Carroll.
23.5+ Consent of Coopers & Lybrand L.L.P. with respect to HMW
Communications, Inc.--Selected Operations.
23.6+ Consent of Coopers & Lybrand L.L.P. with respect to Liberty
Broadcasting, Inc.
23.7+ Consent of Arthur Andersen LLP with respect to The Secret
Stations: Cleveland, Indianapolis, Pittsburgh.
23.8+ Consent of Mohle, Adams, Till, Guidry & Wallace, LLP with
respect to Texas Coast Broadcasters, Inc.
24+ Powers of Attorney.
99.1 Agreement, dated July 26, 1996, among SFX Broadcasting,
Inc., Chilton Investment Partners, L.P. and Richard L. Chilton
(Incorporated by reference to Exhibit 99.1 to the Form 8-K filed
by Multi-Market Radio, Inc. on August 8, 1996).
99.2 Agreement, dated July 26, 1996, among SFX Broadcasting,
Inc., Gabriel Capital, L.P. and Ariel Fund Limited (Incorporated
by reference to Exhibit 99.2 to the Form 8-K filed by
Multi-Market Radio, Inc. on August 8, 1996).
99.3 Agreement, dated July 31, 1996, among SFX Broadcasting,
Inc., J. Morton Davis and D.H. Blair Investment Banking Corp.
(Incorporated by reference to Exhibit 99.3 to the Form 8-K filed
by Multi-Market Radio, Inc. on August 8, 1996).
- ---------------
+ Previously filed
* Filed herewith
<PAGE>
BY LAWS
OF
SFX BROADCASTING, INC.
ARTICLE I
STOCKHOLDERS
Section 1.01. Annual Meetings. The annual meeting of the
stockholders of the Corporation for the election of Directors and for the
transaction of such other business as properly may come before such meeting
shall be held at such place, either within or without the State of Delaware,
and at 10:00 A.M. local time on the last day of April of each year (or, if
such day is a legal holiday, then on the next succeeding business day), or at
such other date and hour, as may be fixed from time to time by resolution of
the Board of Directors and set forth in the notice or waiver of notice of the
meeting.
Section 1.02. Special Meetings. Special meetings of the
stockholders may be called at any time by the Chairman, the Chief Executive
Officer, the Board of Directors or any officer designated by the Board of
Directors. Such special meetings of the stockholders shall be held at such
places, within or without the State of Delaware, as shall be specified in the
respective notices or waivers of notice thereof.
Section 1.03. Notice of Meetings; Waiver. The Secretary
shall cause written notice of the place, date and hour of each meeting of the
stockholders, and, in the case of a special meeting, the purpose or purposes
for which such meeting is called, to be given personally or by mail, not less
than ten nor more than sixty days prior to the meeting, to each stockholder of
record entitled to vote at such meeting. If such notice is mailed, it shall be
deemed to have been given to a stockholder when deposited in the United States
mail, postage prepaid, directed to the stockholder at his address as it
appears on the record of stockholders of the Corporation, or, if he shall have
filed with the Secretary of the Corporation a written request that notices to
him be mailed to some other address, then directed to him at such other
address. Such further notice shall be given as may be required by law.
No notice of any meeting of stockholders need be given to
any stockholder who submits a signed waiver of notice, whether before or after
the meeting. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in a written
waiver of notice. The attendance of any stockholder at a meeting of
stockholders shall constitute a waiver of notice of such meeting, except when
the stockholder attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business on the ground
that the meeting is not lawfully called or convened.
<PAGE>
Section 1.04. Quorum. Except as otherwise required by law or
by the certificate of incorporation of the Corporation, including any
amendment or restatement thereof (the "Certificate of Incorporation"), the
presence in person or by proxy of the holders of record of a majority of the
combined voting power of the outstanding shares entitled to vote at a meeting
of stockholders shall constitute a quorum for the transaction of business at
such meeting.
Section 1.05. Voting. If, pursuant to Section 5.05 of these
By-Laws, a record date has been fixed, every holder of record of shares
entitled to vote at a meeting of stockholders shall be entitled to such number
of votes for each share outstanding in his name on the books of the
Corporation at the close of business on such record date as is provided for in
the Certificate of Incorporation. If no record date has been fixed, then every
holder of record of shares entitled to vote at a meeting of stockholders shall
be entitled to such number of votes for each share of stock outstanding in his
name on the books of the Corporation at the close of business on the day next
preceding the day on which notice of the meeting is given, or, if notice is
waived, at the close of business on the day next preceding the day on which
the meeting is held, as is provided for in the Certificate of Incorporation.
Except as otherwise required by law or by the Certificate of Incorporation,
the vote of a majority of the combined voting power of the outstanding shares
represented in person or by proxy at any meeting at which a quorum is present
shall be sufficient for the transaction of any business at such meeting.
Section 1.06. Voting by Ballot. No vote of the stockholders
need be taken by written ballot or conducted by inspectors of election, unless
otherwise required by law. Any vote which need not be taken by ballot may be
conducted in any manner approved by the meeting.
Section 1.07. Adjournment. If a quorum is not present at any
meeting of the stockholders, the stockholders present in person or by proxy
shall have the power to adjourn any such meeting from time to time until a
quorum is present. Notice of any adjourned meeting of the stockholders of the
Corporation need not be given if the place, date and hour thereof are
announced at the meeting at which the adjournment is taken, provided, however,
that if the adjournment is for more than thirty days, or if after the
adjournment a new record date for the adjourned meeting is fixed pursuant to
Section 5.05 of these By-Laws, a notice of the adjourned meeting, conforming
to the requirements of Section 1.03 hereof, shall be given to each stockholder
of record entitled to vote at such meeting. At any adjourned meeting at which
a quorum is present, any business may be transacted that might have been
transacted on the original date of the meeting.
Section 1.08. Proxies. Any stockholder entitled to vote at
any meeting of the stockholders or to express consent to or dissent from
corporate action without a meeting may, by a written instrument signed by such
stockholder or his attorney-in-fact, authorize another person or persons to
vote at any such meeting and express such consent or dissent for him by proxy.
No such proxy shall be voted or acted upon after the expiration of three years
from the date of such proxy, unless such proxy provides for a longer period.
Every proxy shall be revocable at the pleasure of the stockholder executing
it, except in those cases where applicable law provides that a proxy shall be
irrevocable. A stockholder may revoke any proxy which is not irrevocable by
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attending the meeting and voting in person or by filing an instrument in
writing revoking the proxy or by filing another duly executed subsequent proxy
with the Secretary.
Section 1.09. Organization; Procedure. At every meeting of
stockholders the presiding officer shall be the Chairman or, in the event of
his absence or disability, the Chief Executive Officer or a presiding officer
chosen by a majority of the stockholders present in person or by proxy. The
Secretary, or in the event of his absence or disability, the Assistant
Secretary, if any, or if there be no Assistant Secretary, in the absence of
the Secretary, an appointee of the presiding officer, shall act as Secretary
of the meeting. The order of business and all other matters of procedure at
every meeting of stockholders may be determined by such presiding officer.
ARTICLE II
BOARD OF DIRECTORS
Section 2.01. General Powers. Except as may otherwise be
provided by law, by the Certificate of Incorporation or by these By-Laws, the
property, affairs and business of the Corporation shall be managed by or under
the direction of the Board of Directors and the Board of Directors may
exercise all the powers of the Corporation.
Section 2.02. Number and Term of Office. The number of
Directors constituting the entire Board of Directors shall be a number which
is no less than two and no more than seven, which number may be modified from
time to time by resolution of the Board of Directors. Each Director (whenever
elected) shall hold office until his successor has been duly elected and
qualified, or until his earlier death, resignation or removal.
Section 2.03. Election of Directors. Except as otherwise
provided in Sections 2.12 and 2.13 of these By-Laws, the Directors shall be
elected at each annual meeting of the stockholders. If the annual meeting for
the election of Directors is not held on the date designated therefor, the
Directors shall cause the meeting to be held as soon thereafter as convenient.
Except as provided in the Certificate of Incorporation, at each meeting of the
stockholders for the election of Directors, provided a quorum is present, the
Directors shall be elected by a plurality of the votes validly cast in such
election.
Section 2.04. Annual and Regular Meetings. The annual
meeting of the Board of Directors for the purpose of electing officers and for
the transaction of such other business as may come before the meeting shall be
held as soon as possible following adjournment of the annual meeting of the
stockholders at the place of such annual meeting of the stockholders or a
place determined by the Board of Directors. Notice of such annual meeting of
the Board of Directors need not be given. The Board of Directors from time to
time may by resolution provide for the holding of regular meetings and fix the
place (which may be within or without the State of Delaware) and the date and
hour of such meetings. Notice of regular meetings need not be given, provided,
however, that if the Board of Directors shall fix or change the time or place
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of any regular meeting, notice of such action shall be mailed promptly, or
sent by telegram or cable, to each Director who shall not have been present at
the meeting at which such action was taken, addressed to him at his usual
place of business, or shall be delivered to him personally. Notice of such
action need not be given to any Director who attends the first regular meeting
after such action is taken without protesting the lack of notice to him, prior
to or at the commencement of such meeting, or to any Director who submits a
signed waiver of notice, whether before or after such meeting. The Chairman
or, in the event of his absence or disability, the Chief Executive Officer,
shall preside at meetings.
Section 2.05. Special Meetings; Notice. Special meetings of
the Board of Directors shall be held whenever called by the Chairman or by the
President at such place (within or without the State of Delaware), date and
hour as may be specified in the respective notices or waivers of notice of
such meetings. Special meetings of the Board of Directors may be called on two
days' notice, if notice is given to each Director personally or by telephone
or facsimile, or on five days' notice, if notice is mailed to each Director,
addressed to him at his usual place of business. Notice of any special meeting
need not be given to any Director who attends such meeting without protesting
the lack of notice to him, prior to or at the commencement of such meeting, or
to any Director who submits a signed waiver of notice, whether before or after
such meeting, and any business may be transacted thereat. The Chairman or, in
the event of his absence or disability, the Chief Executive Officer, shall
preside at such meetings.
Section 2.06. Quorum; Voting. At all meetings of the Board
of Directors, the presence of a majority of the total authorized number of
Directors shall constitute a quorum for the transaction of business. Except as
otherwise required by applicable law or the Certificate of Incorporation, the
vote of a majority of the Directors present at any meeting at which a quorum
is present shall be the act of the Board of Directors.
Section 2.07. Adjournment. A majority of the Directors
present, whether or not a quorum is present, may adjourn any meeting of the
Board of Directors to another time or place. No notice need be given of any
adjourned meeting unless the time and place of the adjourned meeting are not
announced at the time of adjournment, in which case notice conforming to the
requirements of Section 2.05 shall be given to each Director.
Section 2.08. Action Without a Meeting. Any action required
or permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting if all members of the Board of Directors consent thereto in
writing, and such writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 2.09. Regulations; Manner of Action. To the extent
consistent with applicable law, the Certificate of Incorporation and these
By-Laws, the Board of Directors may adopt such rules and regulations for the
conduct of meetings of the Board of Directors and for the management of the
property, affairs and business of the Corporation as the Board of Directors
may deem appropriate. The Directors shall act only as a Board, and the
individual Directors shall have no power as such.
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Section 2.10. Action by Telephonic Communications. Members
of the Board of Directors may participate in a meeting of the Board of
Directors by means of 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 provision shall
constitute presence in person at such meeting.
Section 2.11. Resignations. Any Director may resign at any
time by delivering a written notice of resignation, signed by such Director,
to the Chairman, the Chief Executive Officer or the Secretary. Unless
otherwise specified therein, such resignation shall take effect upon delivery.
Section 2.12. Removal of Directors. Subject to applicable
laws and the Certificate of Incorporation, any Director may be removed at any
time, either for or without cause, upon the affirmative vote of the holders of
a majority of the combined voting power of the shares of stock of the
Corporation entitled to vote for the election of such Director, cast at a
special meeting of stockholders called for the purpose. Subject to applicable
law and the Certificate of Incorporation, any vacancy in the Board of
Directors caused by any such removal may be filled at such meeting by the
stockholders entitled to vote for the election of the Director so removed. If
such stockholders do not fill such vacancy at such meeting (or in the written
instrument effecting such removal, if such removal was effected by consent
without a meeting), such vacancy may be filled in the manner provided in
Section 2.13 of these By-Laws.
Section 2.13. Vacancies and Newly Created Directorships.
Subject to applicable law and the Certificate of Incorporation, if any
vacancies shall occur in the Board of Directors, by reason of death,
resignation, removal or otherwise, or if the authorized number of Directors
shall be increased, the Directors then in office shall continue to act, and
such vacancies and newly created directorships may be filled by a majority of
the Directors then in office, although less than a quorum. A Director elected
to fill a vacancy or a newly created directorship shall hold office until his
successor has been elected and qualified or until his earlier death,
resignation or removal. Any such vacancy or newly created directorship may
also be filled at any time by vote of the stockholders.
Section 2.14. Compensation. The amount, if any, which each
Director shall be entitled to receive as compensation for his services as such
shall be fixed from time to time by resolution of the Board of Directors.
Section 2.15. Reliance on Accounts and Reports, etc. A
Director, or a member of any Committee at any time designated by the Board of
Directors shall, in the performance of his duties, be fully protected in
relying in good faith upon the books of account or reports made to the
Corporation by any of its officers, or by an independent certified public
accountant, or by an appraiser selected with reasonable care by the Board of
Directors or by any such Committee, or in relying in good faith upon other
records of the Corporation.
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ARTICLE III
COMMITTEES
Section 3.01. How Constituted. The Board of Directors may,
by resolution adopted by a majority of the whole Board, designate one or more
Committees, including an Executive Committee, each such Committee to consist
of such number of Directors as from time to time may be fixed by the Board of
Directors. The Board of Directors may designate one or more Directors as
alternate members of any such Committee, who may replace any absent or
disqualified member or members at any meeting of such Committee. Thereafter,
members (and alternate members, if any) of each such Committee may be
designated at the annual meeting of the Board of Directors. Any such Committee
may be abolished or re-designated from time to time by the Board of Directors.
Each member (and each alternate member) of any such Committee (whether
designated at an annual meeting of the Board of Directors or to fill a vacancy
or otherwise) shall hold office until his successor shall have been designated
or until he shall cease to be a Director, or until his earlier death,
resignation or removal.
Section 3.02. Audit Committee. The Board of Directors shall
elect an audit committee to serve at the pleasure of the Board of Directors
which shall consist of three Directors, including two Directors elected or
appointed pursuant to Paragraph 5.4(c) or 5.4(e) of Article Five of the
Certificate of Incorporation (the "Class A Directors"). During the intervals
between meetings of the Board of Directors, the audit committee shall meet to
review and make recommendations with respect to the selection and the terms of
engagement of the Corporation's independent public accountants and any
transactions of parties related to the Corporation and potential
conflict-of-interest situations involving officers, Directors or stockholders
of the Corporation. The audit committee shall report its findings to the Board
of Directors at its next scheduled meeting following such review and shall
generally maintain communications among the Board of Directors, such
independent public accountants and the Corporation's internal accounting staff
with respect to accounting and audit procedures, the implementation of
recommendations by the independent public accountants, the adequacy of the
Corporation's internal controls and related matters. The audit committee is
authorized only to review and make recommendations to the Board of Directors
and shall have no power to take corporate action.
Section 3.03. Compensation Committee. The Board of Directors
shall elect a compensation committee to serve at the pleasure of the Board of
Directors which shall consist of three Directors, including two Class A
Directors. The compensation committee shall meet as necessary to review and
make recommendations with respect to certain of the Corporation's compensation
programs and the compensation arrangements of officers of the Corporation. The
compensation committee is authorized only to review and make recommendations
to the Board of Directors and shall have no power to take corporate action.
Section 3.04. Powers. Except as may otherwise be required by
applicable law or the Certificate of Incorporation, each Committee, except as
otherwise provided in this section, shall have and may exercise such powers of
the Board of Directors as may be provided by
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resolution or resolutions of the Board of Directors. No Committee shall have
the power or authority:
(a) to amend the Certificate of Incorporation
(except that a Committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of
stock adopted by the Board of Directors as provided in Section 151(a)
of the General Corporation Law of the State of Delaware, fix the
designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of
assets of the Corporation or the conversion into, or the exchange of
such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the
Corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series),
(b) to adopt an agreement of merger or
consolidation,
(c) to recommend to the stockholders the sale,
lease or exchange of all or substantially all of the Corporation's
property and assets, or
(d) to recommend to the stockholders a dissolution
of the Corporation or a revocation of a dissolution.
Any Committee may be granted by the Board of Directors, power to authorize the
seal of the Corporation to be affixed to any or all papers which may require
it.
Section 3.05. Proceedings. Each Committee may fix its own
rules of procedure and may meet at such place (within or without the State of
Delaware), at such time and upon such notice, if any, as it shall determine
from time to time. Each Committee shall keep minutes of its proceedings and
shall report such proceedings to the Board of Directors at the meeting of the
Board of Directors next following any such proceedings.
Section 3.06. Quorum and Manner of Acting. Except as may be
otherwise provided in the resolution creating such Committee, at all meetings
of any Committee the presence of members (or alternate members) constituting a
majority of the total authorized membership of such Committee shall constitute
a quorum for the transaction of business. The act of the majority of the
members present at any meeting at which a quorum is present shall be the act
of such committee. Any action required or permitted to be taken at any meeting
of any such Committee may be taken without a meeting, if all members of such
Committee shall consent to such action in writing and such writing or writings
are filed with the minutes of the proceedings of the Committee. The members of
any Committee shall act only as a Committee and the individual members of such
Committee shall have no power as such.
Section 3.07. Action by Telephonic Communications. Members
of any Committee designated by the Board of Directors may participate in a
meeting of such Committee by means of conference telephone or similar
communications equipment by means of which all
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persons participating in the meeting can hear each other, and participation in
a meeting pursuant to this provision shall constitute presence in person at
such meeting.
Section 3.08. Absent or Disqualified Members. In the absence
or disqualification of a member of any Committee, the member or members
thereof present at any meeting and not disqualified from voting, whether or
not he or they constitute a quorum, may unanimously appoint another Director
to act at the meeting in the place of any such absent or disqualified member;
provided, however, that if such absent or disqualified member is a Class A
Director, the Director acting at such meeting in the place of such absent or
disqualified member shall be a Class A Director.
Section 3.09. Resignations. Any member (and any alternate
member) of any Committee may resign at any time by delivering a written notice
of resignation, signed by such member, to the Chairman or the Chief Executive
Officer. Unless otherwise specified therein, such resignation shall take
effect upon delivery.
Section 3.10. Removal. Any member (and any alternate member)
of any Committee may be removed at any time, either for or without cause, by
resolution adopted by a majority of the Board of Directors.
Section 3.11. Vacancies. If any vacancy shall occur in any
Committee, by reason of disqualification, death, resignation, removal or
otherwise, the remaining members (and any alternate members) shall continue to
act, and any such vacancy may be filled by the Board of Directors; provided,
however, that if any vacancy in any Committee is caused by the
disqualification, death, resignation, removal or otherwise of a Class A
Director, the Director filling such vacancy shell be a Class A Director.
ARTICLE IV
OFFICERS
Section 4.01. Number. The officers of the Corporation shall
be chosen by the Board of Directors and shall consist of a Chairman, a
President, a Chief Executive Officer, a Chief Operating Officer, a Chief
Financial Officer, one or more Vice Presidents (which may include senior,
executive or other similar categories of Vice Presidents), a Secretary and a
Treasurer. Any number of offices may be held by the same person. No officer
need be a Director of the Corporation, and any officer may be a Director of
the Corporation.
Section 4.02. Election. Unless otherwise determined by the
Board of Directors, the officers of the Corporation shall be elected by the
Board of Directors at the annual meeting of the Board of Directors, and shall
be elected to hold office until the next succeeding annual meeting of the
Board of Directors. In the event of the failure to elect officers at such
annual meeting, officers may be elected at any regular or special meeting of
the Board of Directors.
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Each officer shall hold office until his successor has been elected and
qualified, or until his earlier death, resignation or removal.
Section 4.03. Salaries. The salaries, bonuses and other
compensation arrangements of all officers and agents of the Corporation shall
be fixed by the Board of Directors, subject, with respect to officers of the
Corporation, to the affirmative recommendation of the Compensation Committee.
Section 4.04. Removal and Resignation Vacancies. Except as
may otherwise be required by applicable law or the Certificate of
Incorporation, any officer may be removed for or without cause at any time by
the Board of Directors. An officer may resign at any time by delivering a
written notice of resignation, signed by such officer, to the Board of
Directors or the Chief Executive Officer. Unless otherwise specified therein,
such resignation shall take effect upon delivery. Except as may otherwise be
required by law or the Certificate of Incorporation, any vacancy occurring in
any office of the Corporation by death, resignation, removal or otherwise,
shall be filled by the Board of Directors.
Section 4.05. Authority and Duties of Officers. The officers
of the Corporation shall have such authority and shall exercise such powers
and perform such duties as may be specified in these By-Laws or as may from
time to time specifically be conferred or imposed by resolution of the Board
of Directors, except that in any event each officer shall exercise such powers
and perform such duties as may be required by law.
Section 4.06. The Chairman. The Chairman shall be the
Chairman of the Board of Directors of the Corporation, shall preside at all
meetings of the stockholders and the Directors and shall have such other
powers and duties as the Board of Directors may from time to time prescribe.
Section 4.07. The Chief Executive Officer. The Chief
Executive Officer shall preside at all meetings of the stockholders and at
meetings of the Board of Directors if the Chairman is absent or otherwise
disabled. He shall have general control and supervision of the policies and
operations of the Corporation and shall see that all orders and resolutions of
the Board of Directors are carried into effect. He shall manage and administer
the Corporation's business and affairs and shall also perform all duties and
exercise all powers usually pertaining to the office of a chief executive
officer of a corporation. Subject to Section 4.03 of this Article, he shall
have the authority to sign, in the name and on behalf of the Corporation,
checks, orders, contracts, leases, notes, drafts and other documents and
instruments in connection with the business of the Corporation. He shall have
the authority to cause the employment or appointment of such employees and
agents of the Corporation as the conduct of the business of the Corporation
may require, to fix their compensation, and to remove or suspend any employee
or agent elected or appointed by him. The Chief Executive Officer shall
perform such other duties and have such other powers as the Board of Directors
may from time to time prescribe.
Section 4.08 President. The President, if there be one,
shall, subject to the supervisory powers of the Chairman of the Board and the
Chief Executive Officer, be the chief
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operating officer of the Corporation and shall be responsible for directing
such operational functions and activities of the Corporation and performing
such duties as are assigned by the Board of Directors or the Chief Executive
Officer. In the absence of the Chairman of the Board and the Chief Executive
Officer, the President shall also preside at all meetings of the shareholders
and at all meetings of the Board of Directors.
Section 4.09. Vice President. Any Vice President shall
perform such duties and exercise such powers as may be assigned from time to
time by the Chief Executive Officer or by the Chairman.
Section 4.10. The Secretary. The Secretary shall have the
following powers and duties:
(a) He shall keep or cause to be kept a record of
all the proceedings of the meetings of the stockholders and of the
Board of Directors in books provided for that purpose.
(b) He shall cause all notices to be duly given in
accordance with the provisions of these By-Laws and as required by
law.
(c) Whenever any Committee shall be appointed
pursuant to a resolution of the Board of Directors, he shall furnish
a copy of such resolution to the members of such committee.
(d) He shall be the custodian of the records and of
the seal of the Corporation and may cause such seal (or a facsimile
thereof) to be affixed to any document that has been duly authorized
by the Corporation, and, when so affixed, he may attest the same.
(e) He shall properly maintain and file all books,
reports, statements, certificates and all other documents and records
required by law, the Certificate of Incorporation or these By-Laws.
(f) He shall have charge of the stock books and
ledgers of the Corporation and shall cause the stock and transfer
books to be kept in such manner as to show at any time the number of
shares of stock of the Corporation of each class issued and
outstanding, the names (alphabetically arranged) and the addresses of
the holders of record of such shares, the number of shares held by
each holder and the date as of which each became such holder of
record.
(g) He shall sign (unless the Treasurer shall have
signed) certificates representing shares of the Corporation the
issuance of which shall have been authorized by the Board of
Directors.
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(h) He shall perform, in general, all duties
incident to the office of secretary and such other duties as may be
specified in these By-Laws or as may be assigned to him from time to
time by the Board of Directors, by the Chairman or by the Chief
Executive Officer.
Section 4.11. The Treasurer. The Treasurer shall have the
following powers and duties:
(a) He shall have charge and supervision over and
be responsible for the moneys, securities, receipts and disbursements
of the Corporation, and shall keep or cause to be kept full and
accurate records of all receipts of the Corporation.
(b) He shall cause the moneys and other valuable
effects of the Corporation to be deposited in the name and to the
credit of the Corporation in such banks or trust companies or with
such bankers or other depositaries as shall be selected in accordance
with Section 8.05 of these By-Laws.
(c) He shall cause the moneys of the Corporation to
be disbursed by checks or drafts (signed as provided in Section 8.06
of these By-Laws) upon the authorized depositaries of the Corporation
and cause to be taken and preserved proper vouchers for all moneys
disbursed.
(d) He shall render to the Board of Directors, the
Chairman or the Chief Executive Officer, whenever requested, a
statement of the financial condition of the Corporation and of all
his transactions as Treasurer, and render a full financial report at
the annual meeting of the stockholders, if called upon to do so.
(e) He shall be empowered from time to time to
require from all officers or agents of the Corporation reports or
statements giving such information as he may desire with respect to
any and all financial transactions of the Corporation..
(f) He may sign (unless the Secretary shall have
signed) certificates representing stock of the Corporation the
issuance of which shall have been authorized by the Board of
Directors.
(g) He shall perform, in general, all duties
incident to the office of treasurer and such other duties as may be
specified in these By-Laws or as may be assigned to him from time to
time by the Board of Directors, the Chairman or the Chief Executive
Officer.
In the event that any officer of the Corporation other than the Treasurer
shall be designated as the Corporation's chief financial officer, the
Treasurer shall share the foregoing powers and duties with such chief
financial officer, and all references in these By-Laws to the Treasurer shall
be deemed to include such chief financial officer of the Corporation.
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Section 4.12. Additional Officers. The Board of Directors
may appoint such other officers and agents as it may deem appropriate, and
such other officers and agents shall hold their offices for such terms and
shall exercise such powers and perform such duties as may be determined from
time to time by the Board of Directors. The Board of Directors from time to
time may delegate to any officer or agent the power to appoint subordinate
officers or agents and to prescribe their respective rights, terms of office,
authorities and duties. Any such officer or agent may remove any such
subordinate officer or agent appointed by him, for or without cause.
Section 4.13. Security. The Board of Directors may require
any officer, agent or employee of the Corporation to provide security for the
faithful performance of his duties, in such amount and of such character as
may be determined from time to time by the Board of Directors.
ARTICLE V
CAPITAL STOCK
Section 5.01. Certificates of Stock, Uncertificated Shares.
The shares of the Corporation shall be represented by certificates, provided
that the Board of Directors may provide by resolution or resolutions that some
or all of any or all classes or series of the stock of the Corporation shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until each certificate is surrendered to the
Corporation. Notwithstanding the adoption of such a resolution by the Board of
Directors, every holder of stock in the Corporation represented by
certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate signed by, or in the name of the Corporation,
by the Chairman, the President or a Vice President, and by the Treasurer or an
Assistant Treasurer, or the Secretary or an Assistant Secretary, representing
the number of shares registered in certificate form. Such certificate shall be
in such form as the Board of Directors may determine, to the extent consistent
with applicable law, the Certificate of Incorporation and these By-Laws. No
certificate representing shares shall be issued until the full amount of
consideration therefor has been paid, except as otherwise permitted by law.
Section 5.02. Signatures; Facsimile. All of such signatures
on the certificate may be a facsimile, engraved or printed, to the extent
permitted by law. 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 5.03. Lost, Stolen or Destroyed Certificates. The
Board of Directors may direct that a new certificate be issued in place of any
certificate theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon delivery to the Board of Directors of an affidavit
of the owner or owners of such certificate, setting forth such allegation or
on production of such evidence of loss or destruction as the Board of
Directors in its discretion
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may require. The Board of Directors may require the owner of such lost, stolen
or destroyed certificate, or his legal representative, to give the Corporation
a bond sufficient to indemnify it against any claim that may be made against
it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
Section 5.04. Transfer of Stock. Subject to any restrictions
imposed on the ownership of the Corporation's stock by applicable law or the
Certificate of Incorporation, upon surrender to the Corporation or the
transfer agent of the Corporation of a certificate for shares, duly endorsed
and accompanied by such evidence of succession, assignment or authority to
transfer as the Corporation or its agents may require, the Corporation shall
issue a new certificate to the person entitled thereto, cancel the old
certificate and record the transaction upon its books. No transfer of stock of
the Corporation shall be made in violation of the Certificate of
Incorporation. Without limiting the generality of the foregoing, transfers of
stock of the Corporation are subject to the provisions of Article Eight of the
Certificate of Incorporation relating to restrictions on the issuance of
shares of stock of the Corporation, or the transfer of such shares, to Aliens
(as such term is defined therein) and relating to the power of the Board of
Directors to implement such provisions, including, without limitation, the
power to prohibit any such transfer. Each certificate of any class or series
of stock shall bear a legend referring to such provisions of the Certificate
of Incorporation. In addition to the foregoing and subject to the provisions
of the Certificate of Incorporation and these By-Laws, the Board of Directors
may prescribe such additional rules and regulations as it may deem appropriate
relating to the issue, transfer and registration of shares of the Corporation.
Section 5.05. Record Date. In order to 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 sixty nor less than ten
days before the date of such meeting, nor more than sixty 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 5.06. Registered Stockholders. Prior to due
surrender of a certificate for registration of transfer, the Corporation may
treat the registered owner as the person exclusively entitled to receive
dividends and other distributions, to vote, to receive notice and otherwise to
exercise all the rights and powers of the owner of the shares represented by
such certificate, and the Corporation shall not be bound to recognize any
equitable or legal claim to or interest in such shares on the part of any
other person, whether or not the Corporation shall have notice of such claim
or interests. Whenever any transfer of shares shall be made for collateral
security, and not absolutely, it shall be so expressed in the entry of the
transfer if, when the certificates are presented to the Corporation for
transfer or uncertificated shares are requested to be transferred, both the
transferor and transferee request the Corporation to do so.
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Section 5.07. Transfer Agent and Registrar. The Board of
Directors may appoint one or more transfer agents and one or more registrars,
and may require all certificates representing shares to bear the signature of
any such transfer agents or registrars.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Actions, Suits or Proceedings Other Than by or
in the Right of the Corporation. 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, 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 or has agreed to become a Director or
officer, or is or was serving or has agreed to serve at the request of the
Corporation as a Director or officer of another corporation, partnership,
joint venture, trust or other enterprise, or by reason of any action alleged
to have been taken or omitted in such capacity, against costs, charges,
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him or on his behalf in
connection with such action, suit or proceeding and any appeal therefrom, 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, 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. The Corporation shall be required to indemnify a person
in connection with any action, suit or proceeding (or part thereof) initiated
by such person only if the proceeding (or part thereof) was authorized by the
Board of Directors.
Section 6.02. Actions or Suits by or in the Right of the
Corporation. 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 or has agreed to become a
Director or officer of the Corporation, or is or was serving or has agreed to
serve at the request of the Corporation as a Director or officer of another
corporation, partnership, joint venture, trust or other enterprise, or by
reason of any action alleged to have been taken or omitted in such capacity,
against costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection with the defense or
settlement of such action or suit and any appeal therefrom, 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 of Delaware or the court in which such
action or suit was brought shall determine upon application that, despite the
adjudication of such liability but in view of all the circumstances of
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the case, such person is fairly and reasonably entitled to indemnity for such
costs, charges and expenses which the Court of Chancery or such other court
shall deem proper. The Corporation shall be required to indemnify a person in
connection with any action, suit or proceeding (or part thereof) initiated by
such person only if the proceeding (or part thereof) was authorized by the
Board of Directors.
Section 6.03. Indemnification for Costs, Charges and
Expenses of Successful Party. Notwithstanding the other provisions of this
Article, to the extent that a Director or officer of the Corporation has been
successful on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, in defense of any action, suit or
proceeding referred to in Sections 6.01 or 6.02 of this Article, or in defense
of any claim, issue or matter therein, he shall be indemnified against all
costs, charges and expenses (including attorneys' fees) actually and
reasonably incurred by him or on his behalf in connection therewith.
Section 6.04. Determination of Right to Indemnification. Any
indemnification under Sections 6.01 and 6.02 of this Article (unless ordered
by a court) shall be paid by the Corporation unless a determination is made
(1) 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 (2) 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 (3) by the stockholders, that indemnification of the Director or
officer is not proper in the circumstances because he has not met the
applicable standard of conduct set forth in Sections 6.01 and 6.02 of this
Article.
Section 6.05. Advance of Costs, Charges and Expenses. Costs,
charges and expenses (including attorneys' fees) incurred by a person referred
to in Sections 6.01 and 6.02 of this Article in defending a civil or criminal
action, suit or proceeding shall be paid by the Corporation in advance of the
final disposition of such action, suit or proceeding; provided, however, that
the payment of such costs, charges and expenses incurred by a Director or
officer in his capacity as a Director or officer (and not in any other
capacity in which service was or is rendered by such person while a Director
or officer) in advance of the final disposition of such action, suit or
proceeding shall be made only upon receipt of an undertaking by or on behalf
of the Director or officer to repay all amounts so advanced in the event that
it shall ultimately be determined that such Director or officer is not
entitled to be indemnified by the Corporation as authorized in this Article.
The Board of Directors may, in the manner set forth above, and upon approval
of such Director or officer of the Corporation, authorize the Corporation's
counsel to represent such person, in any action, suit or proceeding, whether
or not the Corporation is a party to such action, suit or proceeding.
Section 6.06. Procedure for Indemnification. Any
indemnification under Sections 6.01, 6.02 and 6.03, or advance of costs,
charges and expenses under Section 6.05 of this Article, shall be made
promptly, and in any event within 60 days, upon the written request of the
Director or officer. The right to indemnification or advances as granted by
this Article shall be enforceable by the Director or officer in any court of
competent jurisdiction, if the Corporation denies such request, in whole or in
part, or if no disposition thereof is made within 60 days. Such person's costs
and expenses incurred in connection with successfully establishing
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his right to indemnification, in whole or in part, in any such action shall
also be indemnified by the Corporation. It shall be a defense to any such
action (other than an action brought to enforce a claim for the advance of
costs, charges and expenses under Section 6.05 of this Article where the
required undertaking, if any, has been received by the Corporation) that the
claimant has not met the standard of conduct set forth in Sections 6.01 or
6.02 of this Article, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, its independent legal counsel, and its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he has met the applicable
standard of conduct set forth in Sections 6.01 or 6.02 of this Article, nor
the fact that there has been an actual determination by the Corporation
(including its Board of Directors, its independent legal counsel, and its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 6.07. Other Rights; Continuation of Right to
Indemnification. The indemnification provided by this Article shall not be
deemed exclusive of any other rights to which a person seeking indemnification
may be entitled under any law (common or statutory), provision of the
Certificate of Incorporation, other By-Law, agreement, vote of stockholders or
disinterested Directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office or while
employed by or acting as agent for the Corporation, and shall continue as to a
person who has ceased to be a Director or officer and shall inure to the
benefit of the estate, heirs, executors and administrators of such person. All
rights to indemnification under this Article shall be deemed to be a contract
between the Corporation and each Director or officer of the Corporation who
serves or served in such capacity at any time while this Article is in effect.
Any repeal or modification of this Article or any repeal or modification of
relevant provisions of the General Corporation Law of the State of Delaware or
any other applicable laws shall not in any way diminish any rights to
indemnification of such Director or officer or the obligations of the
Corporation arising hereunder. The Corporation may also indemnify any and all
other persons whom it shall have power to indemnify under any applicable law
from time to time in effect to the extent authorized by the Board of Directors
and permitted by such law.
Section 6.08. Insurance. The Corporation shall purchase and
maintain insurance on behalf of any person who is or was or has agreed to
become a Director or officer of the Corporation, or is or was serving at the
request of the Corporation as a Director or officer of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him or on his behalf in any such
capacity, or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article, provided that such insurance is available on
acceptable terms, which determination shall be made by a vote of a majority of
the Board of Directors in their sole discretion.
Section 6.09. Savings Clause. If this Article or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the Corporation shall
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nevertheless indemnify each Director and officer of the Corporation as to
costs, charges and expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement with respect to any action, suit or proceeding,
whether civil, criminal, administrative or investigative, including an action
by or in the right of the Corporation, to the full extent permitted by any
applicable portion of this Article that shall not have been invalidated and to
the full extent permitted by applicable law.
Section 6.10. Definition. For purposes of this Article, the
term "corporation" shall include constituent corporations referred to in
Subsection (h) of Section 145 of the General Corporation Law of the State of
Delaware (or any similar provision of applicable law at the time in effect).
ARTICLE VII
OFFICES
Section 7.01. Registered Office. The registered office of
the Corporation in the State of Delaware shall be located at National
Corporate Research, Ltd., 15 North Street, Dover County of Kent, Delaware
19901.
Section 7.02. Other Offices. The Corporation may maintain
offices or places of business at such other locations within or without the
State of Delaware as the Board of Directors may from time to time determine or
as the business of the Corporation may require.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. Dividends. Subject to any applicable
provisions of law and the Certificate of Incorporation, dividends upon the
shares of the Corporation may be declared by the Board of Directors at any
regular or special meeting of the Board of Directors in such amounts and at
such time or times as the Board of Directors may determine, and any such
dividend may be paid in cash, property, or shares of the Corporation.
Section 8.02. Reserves. 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, thinks 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 such other
purpose as the Board of Directors shall believe conducive to the interest of
the Corporation, and the Board of Directors may similarly modify or abolish
any such reserve.
Section 8.03. Execution of Instruments. Except as may
otherwise be required by law or the Certificate of Incorporation, the
Chairman, the Chief Executive Officer, the President,
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any Vice President, the Secretary or the Treasurer may enter into any contract
or arrangement or execute and deliver any instrument in the name and on behalf
of the Corporation, subject to the affirmative recommendation of the Audit
Committee or Compensation Committee, as may be appropriate, with respect to an
agreement or arrangement between the Corporation, on the one hand, and an
officer, director or stockholder which owns 10% or more of the combined voting
power of the Corporation, or any of their respective Affiliates (as defined in
the Certificate of Incorporation), on the other hand. Except as may otherwise
be required by law or the Certificate of Incorporation, the Board of
Directors, the Chairman or the Chief Executive Officer may authorize any other
officer or agent to enter into any contract or execute and deliver any
instrument in the name and on behalf of the Corporation. Any such
authorization may be general or limited to specific contracts or instruments.
Section 8.04. Corporate Indebtedness. No loan shall be
contracted on behalf of the Corporation, and no evidence of indebtedness shall
be issued in its name, unless authorized by the Board of Directors, the
Chairman, the Chief Executive Officer or any other officer designated by
resolution of the Board of Directors, subject to any applicable provisions of
law and the Certificate of Incorporation and subject to the affirmative
recommendation of the Audit Committee with respect to a loan to an officer,
director or stockholder which owns 10% or more of the combined voting power of
the Corporation or to any of their respective Affiliates. Such authorization
may be general or confined to specific instances. Loans so authorized may be
effected at any time for the Corporation from any bank, trust company or other
institution, or from any firm, corporation or individual. All bands,
debentures, notes and other obligations or evidences of indebtedness of the
Corporation issued for such loans shall be made, executed and delivered as the
Board of Directors, the Chairman, the Chief Executive Officer or the officer
designated by the Board of Directors under this Section shall authorize. When
so authorized, any part of or all the properties, including contract rights,
assets, business or good will of the Corporation, whether then owned or
thereafter acquired, may be mortgaged, pledged, hypothecated or conveyed or
assigned in trust as security for the payment of such bands, debentures, notes
and other obligations or evidences of indebtedness of the Corporation, and of
the interest thereon, by instruments executed and delivered in the name of the
Corporation.
Section 8.05. Deposits. Any funds of the Corporation may be
deposited from time to time in such banks, trust companies or other
depositaries as may be determined by the Board of Directors, the Chairman or
the Chief Executive officer, or by such officers or agents as may be
authorized by the Board of Directors, the Chairman or the Chief Executive
Officer to make such determination.
Section 8.06. Checks. All checks or demands for money and
notes of the Corporation shall be signed by such officer or officers or such
agent or agents of the Corporation, and in such manner, as the Board of
Directors, the Chairman or the Chief Executive Officer from time to time may
determine.
Section 8.07. Voting as Stockholder. Unless otherwise
determined by resolution of the Board of Directors, the Chairman, the Chief
Executive Officer, the President or any Vice President or such other officer
or individual as the Board of Directors may authorize shall have
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full power and authority on behalf of the Corporation to attend any meeting of
stockholders of any corporation in which the Corporation may hold stock, and
to act, vote (or execute proxies to vote) and exercise in person or by proxy
all other rights, powers and privileges incident to the ownership of such
stock, subject to any applicable provisions of law and the Certificate of
Incorporation. Such officers acting on behalf of the Corporation shall have
full power and authority to execute any instrument expressing consent to or
dissent from any action of any such corporation without a meeting, subject to
any applicable provisions of law and the Certificate of Incorporation. The
Board of Directors may by resolution from time to time confer such power and
authority upon any other person or persons.
Section 8.08. Fiscal Year. The fiscal year of the
Corporation shall be such as determined by the Board of Directors from time to
time.
Section 8.09. Seal. The seal of the Corporation shall be
circular in form and shall contain the name of the Corporation, the year of
its incorporation and the words "Corporate Seal" and "Delaware". The form of
such seal shall be subject to alteration by the Board of Directors. The seal
may be used by causing it or a facsimile thereof to be impressed, affixed or
reproduced, or may be used in any other lawful manner.
Section 8.10. Books and Records; Inspection. Except to the
extent otherwise required by law, the books and records of the Corporation
shall be kept at such place or places within or without the State of Delaware
as may be determined from time to time by the Board of Directors.
ARTICLE IX
AMENDMENT OF BY-LAWS
Section 9.01. Amendment. Except as may otherwise be required
by applicable law or the Certificate of Incorporation, these By-Laws may be
amended, altered or repealed:
(a) by resolution adopted by a majority of the
Board of Directors at any special or regular meeting of the Board if,
in the case of such special meeting only, notice of such amendment,
alteration or repeal is contained in the notice or waiver of notice
of such meeting, except that the Board of Directors shall have no
paver to change any provisions of the By-Laws with respect to the
removal of Directors or the filling of vacancies on the Board of
Directors; Provided, further, any amendment, alteration or repeal of
the By-laws that would adversely affect the holders of Class A Shares
shall be approved by a majority of the Class A Directors; or
(b) at any regular or special meeting of the
stockholders if, in the case of such special meeting only, notice of
such amendment, alteration or repeal is contained in the notice or
waiver of notice of such meeting.
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<PAGE>
Section 9.02. Super-Majority Requirement. Notwithstanding
the provisions of Section 9.01 hereof, no section of Article VI of these
By-Laws, and no provision of any such section, may be amended, modified or
repealed, except:
(a) by resolution adopted by two-thirds of the
total number of members of the Board of Directors at any special or
regular meeting of the Board if, in the case of such special meeting
only, notice of such amendment, alteration or repeal is contained in
the notice or waiver of notice of such meeting; or
(b) at any regular or special meeting of the
stockholders upon the affirmative vote of the holders of at least 75%
of the combined voting power of outstanding shares eligible to vote
at such meeting if, in the case of a special meeting only, notice of
such amendment, alteration or repeal is contained in the notice or
waiver of notice of such meeting.
ARTICLE X
CONSTRUCTION
Section 10.01. Certificate of Incorporation Prevails. In the
event of any conflict between the provisions of these By-Laws as in effect
from time to time and the provisions of the Certificate of Incorporation of
the Corporation as in effect from time to time, the provisions of such
Certificate of Incorporation shall be controlling.
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SECRETARY'S CERTIFICATE
SFX BROADCASTING, INC.
The undersigned, being the Secretary of SFX Broadcasting,
Inc., a Delaware corporation (the "Company"), does hereby certify that the
following resolution of the Board of Directors of the Company was adopted in a
Unanimous Written Consent of the Board of Directors of the Company dated
November 19, 1996:
RESOLVED, that Section 2.02 of the By-Laws is hereby amended
to read in its entirety as follows:
"Section 2.02. Number and Term of Office. The number
of Directors constituting the entire Board of Directors
shall be a number which is no less than two and no more than
nine, which number may be modified from time to time by
resolution of the Board of Directors. Each Director
(whenever elected) shall hold office until his successor has
been duly elected and qualified, or until his earlier death,
resignation or removal."
/s/ Howard J. Tytel
--------------------------
Howard J. Tytel, Secretary
Dated: November 19, 1996
SFX Broadcasting, Inc.
November 20, 1996
Page 1
November 20, 1996
SFX Broadcasting, Inc.
150 East 58th Street
New York, New York 10155
Re: Securities and Exchange Commission -
Registration Statement on Form S-3
Gentlemen:
As counsel to SFX Broadcasting, Inc., a Delaware corporation
(the "Company"), we have assisted in the preparation of the Company's
Registration Statement on Form S-3, File No. 333-15469 (the "Registration
Statement"), filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, covering up to 278,230 shares of the
Company's Class A Common Stock, par value $.01 per share (the "Class A Common
Stock"), which may be distributed, sold or otherwise transferred from time to
time by and for the account of the holders thereof (the "Selling
Shareholders").
In this connection, we have examined and considered the
original or copies, certified or otherwise identified to our satisfaction, of
the Company's Restated Certificate of Incorporation, as amended to date, its
By-laws, as amended to date, resolutions of its Board of Directors, and such
other documents and corporate records relating to the Company and the issuance
and sale of the Common Stock, as we have deemed appropriate for purposes of
rendering this opinion.
In all examinations of documents, instruments and other
papers, we have assumed the genuineness of all signatures on original and
certified documents and the conformity to original and certified documents of
all copies submitted to us as conformed, photostat or other copies. As to
matters of fact which have not been independently established, we have relied
upon representations of officers of the Company.
<PAGE>
SFX Broadcasting, Inc.
November 20, 1996
Page 2
Based upon the foregoing examination, and the information
thus supplied, it is our opinion that the shares of Class A Common Stock to be
issued to the Selling Shareholders upon (i) the approval by the shareholders of
the Company of an amendment to the Company's Restated Certificate of
Incorporation to authorize an increase in the number of shares of Class A
Common Stock the Company is authorized to issue from 10,000,000 to 100,000,000
shares and (ii) the consummation of the merger of Multi-Market Radio, Inc.
("MMR") with and into the SFX Merger Company ("Acquisition Sub") in accordance
with the terms and conditions of that certain Amended and Restated Agreement
and Plan of Merger among the Company, MMR and Acquisition Sub (the "Merger
Agreement") when sold by the Selling Shareholders pursuant to the Registration
Statement, will be validly issued, fully paid and nonassessable.
We hereby expressly consent to the reference to our Firm in
the Registration Statement under the Prospectus caption "Legal Matters," to the
inclusion of this opinion as an exhibit to the Registration Statement, and to
the filing of this opinion with any other appropriate government agency.
Sincerely,
/s/ Baker & McKenzie
Baker & McKenzie
HMB/RSM/ncd
