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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 27, 1999
SPANISH BROADCASTING SYSTEM, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE 13-3827791
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3191 CORAL WAY, MIAMI, FLORIDA 33145
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (305) 441-6901
(Former name or former address, if changed since last report.)
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Item 5. Other Events
On August 18, 1999, Spanish Broadcasting System, Inc. (the "Company")
filed a registration statement on Form S-1 with the U.S. Securities and Exchange
Commission (the "Commission") with respect to its proposed initial public
offering of shares of its Class A Common Stock (the "Shares"). On October 27,
1999, the SEC declared the Company's registration statement effective, and the
Company launched an initial public offering of its Shares (the "IPO"). The
Company and certain of its selling shareholders closed the IPO on November 2,
1999 and issued and sold 20,768,110 (including over-allotment options of
3,268,110) and 4,287,400 Shares, respectively. The Shares were offered at an
initial offering price of $20.
On August 18, 1999, the Company filed a registration statement on Form
S-1 with the Commission with respect to an offering of $235,000,000 of its
9 5/8% Senior Subordinated Notes due 2009 (the "Senior Subordinated Notes"). On
November 2, 1999, the Company closed the offering of the Senior Subordinated
Notes.
On November 3, 1999, the Company accepted for payment consent
solicitations and tender offers for two series of outstanding Senior Notes
totaling $176,559,000 million. The first series, aggregate principal amount
$101,559,000 of outstanding 12 1/2% Senior Notes due 2002 (the "12 1/2% Note"),
was redeemed at $1,142.86 per each validly tendered $1,000 12 1/2% Note. The
Company received consents and tenders from over $101,459,000 of its 12 1/2%
Notes.
The second series, aggregate principal amount $75.0 million of
outstanding 11% Senior Notes due 2004, Series B (the "11% Notes") was purchased
by the Company at $1,108.04 per each validly tendered $1,000 11% Note. The
Company received consents and tenders from 100% of the holders of its 11% Notes.
On November 2, 1999, the Company commenced a mandatory redemption of
all of its outstanding 14 1/4% Senior Exchangeable Preferred Stock (the
"Preferred Stock") at 105% of the liquidation preference of each share. The
Company will pay holders of its Preferred Stock an aggregate amount of
approximately $265.0 million. The Company expects the redemption to occur on
December 2, 1999.
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Item 7. Exhibits
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Exhibit No. Exhibit
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1. Underwriting Agreement with Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated
October 27, 1999.
2. Underwriting Agreement with Lehman Brothers Inc. and CIBC
World Markets Corp., dated October 28, 1999.
3. Indenture with respect to 9 5/8% Senior Subordinated Notes
due 2009 with The Bank of New York as Trustee, dated
November 2, 1999.
4. Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP
regarding legality.
6. Indemnification Agreement with Raul Alarcon, Jr. dated as
of November 2, 1999.
8. Indemnification Agreement with Roman Martinez IV dated as
of November 2, 1999.
9. Indemnification Agreement with Jason L. Shrinsky dated as
of November 2, 1999.
10. Employment Agreement with Luis Diaz-Albertini dated as of
October 25, 1999.
11. Option Grant not under the Stock Option Plans with Arnold
Sheiffer, dated October 27, 1999.
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SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SPANISH BROADCASTING SYSTEM, INC.
(Registrant)
November 8, 1999 /s/ Joseph A. Garcia
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Joseph A. Garcia, Executive Vice President,
Chief Financial Officer and Secretary
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EXHIBIT INDEX
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Exhibit No. Exhibit Page No.
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1. Underwriting Agreement with Lehman Brothers Inc. and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, dated
October 27, 1999.
2. Underwriting Agreement with Lehman Brothers Inc. and CIBC
World Markets Corp., dated October 28, 1999.
3. Indenture with respect to 9 5/8% Senior Subordinated Notes
due 2009 with The Bank of New York as Trustee, dated
November 2, 1999.
4. Opinion of Kaye, Scholer, Fierman, Hays & Handler, LLP
regarding legality.
6. Indemnification Agreement with Raul Alarcon, Jr. dated as
of November 2, 1999.
8. Indemnification Agreement with Roman Martinez IV dated as
of November 2, 1999.
9. Indemnification Agreement with Jason L. Shrinsky dated as
of November 2, 1999.
10. Employment Agreement with Luis Diaz-Albertini dated as of
October 25, 1999.
11. Option Grant not under the Stock Option Plans with Arnold
Sheiffer, dated October 27, 1999.
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EXHIBIT 1
21,787,400 SHARES
SPANISH BROADCASTING SYSTEM, INC.
CLASS A COMMON STOCK
UNDERWRITING AGREEMENT
October 27, 1999
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Subject to the conditions hereinafter stated, Spanish Broadcasting
System, Inc., a Delaware corporation (the "Company"), and certain stockholders
of the Company named in Schedule 2 hereto (the "Selling Stockholders") propose
to sell an aggregate of 21,787,400 shares (the "Firm Stock") of the Company's
Class A Common Stock, par value $.0001 per share (the "Common Stock") to the
several Underwriters named in Schedule 1 hereto (collectively, the
"Underwriters") for whom Lehman Brothers Inc. and Merrill Lynch, Pierce, Fenner
& Smith Incorporated shall act as representatives (collectively, the
"Representatives"). Of the 21,787,400 shares of the Firm Stock, 17,500,000 are
being sold by the Company and 4,287,400 by the Selling Stockholders. In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 3,268,110 shares of the Common Stock on the terms
and for the purposes set forth in Section 3 (the "Option Stock"). The Firm Stock
and the Option Stock, if purchased, are hereinafter collectively called the
"Stock." This is to confirm the agreement concerning the purchase of the Stock
from the Company and the Selling Stockholders by the Underwriters.
It is further understood that 1,300,000 shares of the Firm Stock (the
"Directed Stock") will initially be reserved by the several Underwriters for
offer and sale, upon the terms and conditions set forth in the Prospectus and in
accordance with the rules and regulations of the National Association of
Securities Dealers, Inc. (the "Directed Stock Program"), to employees and
persons having business relationships with the Company and its subsidiaries
(collectively, "Participants") who have heretofore delivered to the
Representatives offers or indications of interest to purchase shares of Directed
Stock in form reasonably satisfactory to the Representatives, and that any
allocation of such Directed Stock among such persons will be made in accordance
with timely directions received by the Representatives from the Company;
provided, that under no circumstances will the Representatives or any
Underwriter be liable to the Company or to any such person for any action taken
or omitted in good faith in connection with such offering to any Participant. It
is further understood that any shares of Directed Stock which are not purchased
by Participants will be offered by the Underwriters to the public upon the terms
and conditions set forth in the Prospectus.
Section 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
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(a) A registration statement on Form S-1 with respect to the Stock
has (i) been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act, and (iii) become effective under the Securities Act
(other than any Rule 462 Registration Statement to be filed after the execution
of this Agreement which will become effective no later than the day after the
execution of this Agreement). Copies of such registration statement and each of
the amendments thereto have been delivered by the Company to you. As used in
this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such registration
statement, including all material incorporated by reference therein, as amended
at the Effective Time, including all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations and deemed to be a part of the registration statement as of the
Effective Time pursuant to Rule 430A of the Rules and Regulations; and
"Prospectus" means the prospectus in the form first used to confirm sales of
Stock. If the Company has filed an abbreviated registration statement to
register additional shares of Common Stock pursuant to Rule 462(b) under the
Securities Act (the "Rule 462 Registration Statement"), then any reference
herein to the term "Registration Statement" shall be deemed to include such Rule
462 Registration Statement. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as of the applicable
effective date (as to the Registration Statement and any amendment thereto) and
as of the applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in
Section 17) have been duly incorporated and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the general affairs, management, consolidated
financial position, stockholders' equity or results of operation of the Company
and its subsidiaries taken as a whole (a "Material Adverse Effect"). The Company
and each of its subsidiaries have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which they are
engaged; and none of the subsidiaries of the Company other than Alarcon
Holdings, Inc., SBS of Greater New York, Inc., Spanish Broadcasting System of
Florida, Inc., Spanish Broadcasting System of Greater Miami, Inc., Spanish
Broadcasting System, Inc., (a New Jersey corporation), Spanish Broadcasting
System of Illinois, Inc. and Spanish Broadcasting System of San Antonio, Inc. is
a "significant subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
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(d) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims and none of such shares of capital stock was
issued in violation of preemptive or other similar rights arising by operation
of law, under the charter and by-laws of the Company or under any agreement to
which the Company or any subsidiary is a party or otherwise.
(e) The shares of the Stock to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized and, when
issued and delivered against payment therefor in accordance with this Agreement,
will be duly and validly issued, fully paid and non-assessable; and the Stock
and the Common Stock will conform to the descriptions thereof contained in the
Prospectus.
(f) This Agreement has been duly authorized, executed and
delivered by the Company and each of the other documents relating to this
Agreement to which the Company is a party has been duly authorized, executed and
delivered by the Company.
(g) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby and in the Registration
Statement and the Prospectus (including the issuance and sale of the Stock and
the use of proceeds from the sale of the Stock as described under the caption
"Use of Proceeds") will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, except for such defaults
which, individually or in the aggregate, would not result in a Material Adverse
Effect, nor will such actions result in any violation of the provisions of the
charter, certificate of designation, by-laws or similar governing document of
the Company or any of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their properties or assets; and
except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act of 1934, as amended (the "Exchange Act") and
applicable state securities laws in connection with the purchase and
distribution of the Stock by the Underwriters no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
(h) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(i) Except as described in the Prospectus, the Company has not
sold or issued any shares of Common Stock, or Securities that are convertible
into Common Stock, during the six-month period preceding the date of the
Prospectus, including any sales pursuant to Rule 144A under, or Regulations D or
S of, the Securities Act.
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(j) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus that would result in a Material Adverse
Effect; and, since such date, there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, consolidated financial
position, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
(k) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(l) To the best knowledge of the Company, KPMG LLP, who have
certified certain financial statements of the Company, whose report appears in
the Prospectus and who have delivered the initial letter referred to in Section
9(f) hereof, are independent public accountants as required by the Securities
Act and the Rules and Regulations.
(m) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and valid title to
all material personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the Prospectus
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and all assets held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(n) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is reasonably adequate
for the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(o) The Company and each of its subsidiaries own, license or
possess adequate rights to use all patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service mark registrations,
copyrights and licenses necessary for the conduct of their respective businesses
and have no reason to believe that the conduct of their respective businesses
will conflict with, and have not received any notice of any claim of conflict
with, any such rights of others, except as disclosed in the Prospectus or where
the failure to so own, license or possess such rights would not, individually or
in the aggregate, have a Material Adverse Effect.
(p) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might have a
Material Adverse Effect; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
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(q) There are no contracts, arrangements or other documents which
are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated by reference therein as permitted by the
Rules and Regulations.
(r) No relationship, direct or indirect, exists between or among
the Company on the one hand, and any of its former or present directors,
officers, stockholders, customers or suppliers on the other hand, which is
required to be described in the Prospectus which is not so described.
(s) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent, which might be expected to
have a Material Adverse Effect.
(t) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in Section 4043 of
ERISA) has occurred with respect to any "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal from, any "defined
benefit plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of 1986,
as amended, including the regulations and published interpretations thereunder
(the "Code"); and each "defined benefit plan" for which the Company has any
liability or to which it makes contributions that is intended to be qualified
under Section 401(a) of the Code is so qualified in all material respects and
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.
(u) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all shown as taxes due thereon, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries which has had (nor does the
Company have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, might have) a Material Adverse
Effect. The are no tax audits presently being conducted which, if determined
adversely to the Company or any of its subsidiaries, could have a Material
Adverse Effect.
(v) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business, or (iv) declared or paid any dividend on its capital stock.
(w) The Company (i) makes and keeps accurate books and records,
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's general or specific authorization and (D) the reported
accountability for its assets is compared with existing assets at reasonable
intervals.
(x) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter, certificate of designation, by-laws or similar
governing document, (ii) is in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture,
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mortgage, deed of trust, loan agreement or other agreement or instrument to
which it is a party or by which it is bound or to which any of its properties or
assets is subject or (iii) is in violation in any material respect of any law,
ordinance, governmental rule, regulation or court decree to which it or its
property or assets may be subject.
(y) Each of the radio stations owned, operated, programmed, or to
which sales and marketing services are provided, by the Company and its
subsidiaries is validly licensed by the Federal Communications Commission (the
"FCC") and no administrative or judicial proceedings are pending before or, to
the knowledge of the Company or its subsidiaries, threatened by the FCC with
respect to such licenses; the Company and its subsidiaries possess adequate
certificates, authorizations, consents, orders, approvals, licenses or permits
which are in full force and effect issued by all appropriate governmental
agencies or bodies necessary to the ownership of their respective properties and
the conduct of the businesses now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority, consent, order, approval, license or permit and the
Company and its subsidiaries are in compliance in all material respects with the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC.
(z) The Company believes the statistical and market-related data
included in the Prospectus are accurate and are based on or derived from
reliable sources.
(aa) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(bb) Neither the Company nor any subsidiary is, or, as of the
Closing Date after giving effect to the application of the net proceeds as
described in the Prospectus, will be, an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(cc) None of the Directed Stock distributed in connection with the
Directed Stock Program will be offered or sold outside of the United States.
(dd) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder or is exempt
therefrom.
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Section 2. Representations, Warranties and Agreements of the Selling
Stockholders. Each Selling Stockholder severally represents, warrants and agrees
that:
(a) Each Selling Stockholder has, and immediately prior to the
First Delivery Date (as defined in Section 5 hereof) each Selling Stockholder
will have good and valid title to the shares of Stock to be sold by such Selling
Stockholder hereunder on such date, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such shares and payment therefor
pursuant hereto, good and valid title to such shares, free and clear of all
liens, encumbrances, equities or claims, will pass to the several Underwriters.
(b) Each Selling Stockholder has placed in custody under a custody
agreement (the "Custody Agreement") with First Union National Bank, as custodian
(the "Custodian"), for delivery under this Agreement, certificates in negotiable
form (with signature guaranteed by a commercial bank or trust company having an
office or correspondent in the United States or a member firm of the New York or
American Stock Exchanges) representing the shares of Stock to be sold by such
Selling Stockholder hereunder.
(c) Each Selling Stockholder has duly and irrevocably executed and
delivered a power of attorney (the "Power of Attorney") appointing the Custodian
and one or more other persons, as attorneys-in-fact, with full power of
substitution, and with full authority (exercisable by any one or more of them)
to execute and deliver this Agreement and to take such other action as may be
necessary or desirable to carry out the provisions hereof on behalf of such
Selling Stockholder.
(d) Each Selling Stockholder has full right, power and authority
to enter into this Agreement, the Power of Attorney and the Custody Agreement.
The execution, delivery and performance of this Agreement, the Power of Attorney
and the Custody Agreement by such Selling Stockholder and the consummation by
such Selling Stockholder of the transactions contemplated hereby and thereby
will not conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (i) any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound or to which
any of the property or assets of such Selling Stockholder is subject, (ii) if
such Selling Stockholder is not a natural person, the provisions of the charter,
by-laws, articles of partnership, deed of trust or similar governing document of
such Selling Stockholder, and (iii) any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over such
Selling Stockholder or the property or assets of such Selling Stockholder.
Except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or foreign securities laws
in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Power of Attorney
or the Custody Agreement by such Selling Stockholder and the consummation by
such Selling Stockholder of the transactions contemplated hereby and thereby.
(e) All information relating to each Selling Stockholder in the
Registration Statement and the Prospectus and any further amendments or
supplements to the Registration Statement or the Prospectus will, when they
become effective or are filed with the Commission, as the case may be, does not
and will not, as of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable filing date (as to
the Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading;
provided that no representation or warranty is made as to information contained
in or omitted from the Registration Statement or the
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Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein.
(f) The Selling Stockholder is not prompted to sell shares of
Stock by any information concerning the Company which is not set forth in the
Registration Statement and the Prospectus.
(g) Each Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has constituted
or which might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the shares of the Stock.
Section 3. Purchase of the Stock by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, (i) the Company agrees to sell 17,500,000 shares
of the Firm Stock, (ii) each Selling Stockholder hereby agrees, severally and
not jointly, to sell the number of shares of Firm Stock set forth opposite its
name on Schedule 2 hereto to the several Underwriters, and (iii) each of the
Underwriters, severally and not jointly, agrees to purchase the number of shares
of the Firm Stock set forth opposite that Underwriter's name in Schedule 1
hereto. The respective purchase obligations of the Underwriters with respect to
the Firm Stock shall be rounded among the Underwriters to avoid fractional
shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 3,268,110 shares of Option Stock. Such option is granted for the
purpose of covering over-allotments in the sale of Firm Stock and is exercisable
as provided in Section 5 hereof. Shares of Option Stock shall be purchased
severally for the account of the Underwriters in proportion to the number of
shares of Firm Stock set forth opposite the name of such Underwriters in
Schedules 1 hereto. The respective purchase obligations of each Underwriter with
respect to the Option Stock shall be adjusted by the Representatives so that no
Underwriter shall be obligated to purchase Option Stock other than in 100 share
amounts.
The price of both the Firm Stock and any Option Stock shall be $[ ] per
share.
The Company and Selling Stockholders shall not be obligated to deliver
any of the Stock to be delivered on any Delivery Date (as hereinafter defined),
except upon payment for all the Stock to be purchased on such Delivery Date as
provided herein.
Section 4. Offering of Stock by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Stock, the several Underwriters propose to offer the Firm Stock for sale upon
the terms and conditions set forth in the Prospectus.
Section 5. Delivery of and Payment for the Stock. Delivery of and
payment for the Firm Stock shall be made at the offices of Rogers & Wells LLP,
200 Park Avenue, New York, New York 10166, at 10:00 A.M., New York City time, on
the fourth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the
Representatives and the Company. This date and time are sometimes referred to as
the "First Delivery Date." On the First Delivery Date, the Company and the
Selling Stockholders shall deliver or cause to be delivered certificates
representing the Firm Stock to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company and the Selling
Stockholders of the purchase price by certified or official bank check or checks
payable in or wire transfer in immediately available funds provided, that the
amount of such payment shall be reduced by one days' interest on the amount of
gross proceeds at the Underwriters' cost of borrowing such funds plus any other
expenses associated with such payment of immediately available funds. Time shall
be of the essence, and delivery at the time and place
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specified pursuant to this Agreement is a further condition of the obligation of
each Underwriter hereunder. Upon delivery, the Firm Stock shall be registered in
such names and in such denominations as the Representatives shall request in
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Stock, the Company and the Selling Stockholders shall make the
certificates representing the Firm Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
The option granted in Section 3 will expire 30 days after the date of
this Agreement and may be exercised in whole or in part from time to time by
written notice being given to the Company by the Representatives. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Representatives, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier than the
second business day after the date on which the option shall have been exercised
nor later than the fifth business day after the date on which the option shall
have been exercised. The date and time the shares of Option Stock are delivered
are sometimes referred to as a "Second Delivery Date" and the First Delivery
Date and any Second Delivery Date are sometimes each referred to as a "Delivery
Date."
Delivery of and payment for the Option Stock shall be made at the place
specified in the first sentence of the first paragraph of this Section 5 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on such Second Delivery
Date. On such Second Delivery Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Option Stock shall be registered in
such names and in such denominations as the Representatives shall request in the
aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates for the Option Stock, the Company shall make the
certificates representing the Option Stock available for inspection by the
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to such Second Delivery Date.
Section 6. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Stock for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
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<PAGE> 10
(b) To furnish promptly to each of the Representatives and to
counsel for the Underwriters a signed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement) and (ii) each Preliminary Prospectus, the Prospectus and
any amended or supplemented Prospectus; and, if the delivery of a prospectus is
required at any time after the Effective Time in connection with the offering or
sale of the Stock or any other securities relating thereto and if at such time
any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply with the
Securities Act, to notify the Representatives and, upon their request, to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the Common Stock may be listed pursuant to requirements of
or agreements with such exchange or to the Commission pursuant to the Exchange
Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Stock for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Stock; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(i) For a period of 180 days from the date of the Prospectus, not
to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of)
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<PAGE> 11
any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the Stock and shares issued pursuant to employee
benefit plans, qualified stock option plans or other employee compensation plans
existing on the date hereof or pursuant to currently outstanding options,
warrants or rights), or sell or grant options, rights or warrants with respect
to any shares of Common Stock or securities convertible into or exchangeable for
Common Stock (other than the grant of options pursuant to option plans existing
on the date hereof), or (2) enter into any swap or other derivatives transaction
that transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case without the prior
written consent of Lehman Brothers Inc. on behalf of the Underwriters; and to
use its reasonable best efforts to cause each stockholder listed on Exhibit A
hereto and each officer and director of the Company to furnish to the
Representatives, prior to the First Delivery Date, a letter or letters,
substantially in the form of Exhibit B hereto, pursuant to which each such
person shall agree not to, directly or indirectly, (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
in each case for a period of 180 days from the date of the Prospectus, without
the prior written consent of Lehman Brothers Inc. on behalf of the Underwriters;
(j) To apply for the listing of the Stock on The Nasdaq Stock
Market's National Market, and to use its best efforts to complete that listing,
subject only to official notice of issuance, prior to the First Delivery Date;
(k) To apply the net proceeds from the sale of the Stock as set
forth in the Prospectus;
(l) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment company" as
defined in the Investment Company Act of 1940, as amended; and
(m) In connection with the Directed Stock Program, to ensure that
the Directed Stock will be restricted to the extent required by the National
Association of Securities Dealers, Inc. or the rules of such association from
sale, transfer, assignment, pledge or hypothecation for a period of three months
following the date of the effectiveness of the Registration Statement, and
Lehman Brothers Inc. will notify the Company as to which Participants will need
to be so restricted. At the request of Lehman Brothers Inc., the Company will
direct the transfer agent to place stop transfer restrictions upon such
securities for such period of time.
Section 7. Further Agreements of the Selling Stockholders. Each Selling
Stockholder agrees:
(a) For a period of 180 days from the date of the Prospectus, not
to, directly or indirectly,(1) offer for sale, sell, pledge or otherwise dispose
of (or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any time in the future
of) any shares of Common Stock or securities convertible into or exchangeable
for Common Stock (other than the Stock) or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common Stock,
whether any such transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in cash or otherwise,
in each case without the prior written consent of Lehman Brothers Inc.
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(b) That the Stock to be sold by such Selling Stockholder
hereunder, which is represented by the certificates held in custody for such
Selling Stockholder, is subject to the interest of the Underwriters and the
other Selling Stockholders thereunder, that the arrangements made by such
Selling Stockholder for such custody are to that extent irrevocable, and that
the obligations of such Selling Stockholder hereunder shall not be terminated by
any act of such Selling Stockholder, by operation of law, by the death or
incapacity of any individual Selling Stockholder or, in the case of a trust, by
the death or incapacity of any executor or trustee or the termination of such
trust, or the occurrence of any other event.
(c) To deliver to the Representatives prior to the First Delivery
Date a properly completed and executed United States Treasury Department Form
W-8 (if such Selling Stockholder is a non-United States person) or Form W-9 (if
such Selling Stockholder is a United States person.)
Section 8. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Stock and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement, and any other related documents in connection with the offering,
purchase, sale and delivery of the stock; (e) the filing fees incident to
securing the review by the National Association of Securities Dealers, Inc. of
the terms of sale of the Stock; (f) any applicable listing or other fees; (g)
the fees and expenses (not in excess, in the aggregate, of $10,000) of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 6(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including related fees and expenses of counsel to the Underwriters);
(h) all costs and expenses of the Underwriters, including the fees and
disbursements of counsel for the Underwriters, incident to the Directed Stock
Program; (i) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the offering of the Stock, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
cost of any aircraft chartered in connection with the road show (i) and (j) all
other costs and expenses incident to the performance of the obligations of the
Company under this Agreement; provided that, except as provided in this Section
8 and in Section 13 the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the
Stock which they may sell and the expenses of advertising any offering of the
Stock made by the Underwriters and the Selling Stockholders shall pay the fees
and expenses of counsel to the Selling Stockholders, the Custodian (and any
other attorney-in-fact) and any transfer taxes payable in connection with their
respective sales of stock to the Underwriters and reimburse the Company for
their pro rata share of the fees and expenses paid by the Company in connection
with the offering of the Stock.
Section 9. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and the Selling Stockholders contained herein, to the performance by the Company
and the Selling Stockholders of their respective obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 6(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the
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Commission; and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to each Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of Rogers & Wells LLP, counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Custody Agreements,
the Powers of Attorney, the Stock, the Registration Statement and the
Prospectus, and all other legal matters relating to this Agreement, and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company and the
Selling Stockholders shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters.
(d) Kaye, Scholer, Fierman, Hays & Handler LLP shall have
furnished to the Representatives their written opinion, as counsel to the
Company, addressed to the Underwriters and dated such Delivery Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification and have all
power and authority necessary to own or hold their respective properties and
conduct the businesses in which they are engaged;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid,
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims and none of such shares of capital stock was issued in
violation of preemptive or other similar rights arising by operation of law,
under the charter and by-laws of the Company or under any agreement known to
such counsel to which the Company or any subsidiary is a party or otherwise;
(iii) The shares of the Stock being delivered on such
Delivery Date to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor will be duly
and validly issued, fully paid and nonassessable;
(iv) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer of, any
shares of the Stock pursuant to the Company's charter or by-laws or any
agreement or other instrument known to such counsel;
(v) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries, might
have a material
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adverse effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its subsidiaries
taken as a whole; and, to the best of such counsel's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(vi) The Registration Statement has been declared effective
under the Securities Act, the Prospectus was filed with the Commission pursuant
to the subparagraph of Rule 424(b) of the Rules and Regulations specified in
such opinion on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to such
Delivery Date (except for the financial statements and financial schedules and
other financial and statistical data included therein, as to which such counsel
need express no belief) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus under the
captions "Risk Factors -- Government Regulation," "Risk Factors -- Antitrust
Matters," "Description of Capital Stock," "Description of Indebtedness, "Certain
Federal Income Tax Considerations," "Business -- Antitrust," "Business --
Federal Regulation of Radio Broadcasting," "Business -- FCC Licenses,"
"Executive Compensation -- Employment Agreement and Arrangements," "Executive
Compensation -- Option Plan," "Executive Compensation -- Limitation on
Directors' and Officers' Liability," insofar as they describe contracts,
agreements or other legal documents or they describe federal statutes, rules and
regulations, constitute a fair summary thereof;
(ix) To the best of such counsel's knowledge, there are no
contracts, arrangements or other documents which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been described or
filed as exhibits to the Registration Statement or incorporated therein as
permitted by the Rules and Regulations;
(x) This Agreement has been duly authorized, executed and
delivered by the Company; and each of the other documents relating to the this
Agreement to which the Company is a party has been duly authorized, executed and
delivered by the Company;
(xi) The issue and sale of the shares of Stock being
delivered on such Delivery Date by the Company pursuant to this Agreement and
the execution, delivery and compliance by the Company with all of the provisions
of this Agreement and each of the other documents to be entered into in
connection with and the consummation of the transactions contemplated hereby and
in the Registration Statement and the Prospectus (including the issuance and
sale of the Stock and the use of proceeds from the sale of the Stock as
described under the caption "Use of Proceeds") will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement, license (including FCC Licenses (as hereinafter defined)) or
instrument known to such counsel to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to
which any of the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions of the
charter, certificate of designation, by-laws or similar governing document of
the Company or any of its subsidiaries or any New York or federal statute, rule
or regulation (including the Federal Communications Laws (as hereinafter
defined)) or any order, judgment or decree known to such counsel; and, except
for the registration of the Stock under the Securities Act and such
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consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Stock by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body (including pursuant to the
Communications Act of 1934, as amended and the rules, regulations and
administrative orders promulgated thereunder (collectively, the Federal
Communications Laws")) is required for the execution, delivery and performance
of this Agreement or any of the other documents to be entered into in connection
with this Agreement by the Company and the consummation of the transactions
contemplated hereby, including the issue, sale and delivery of the Stock to be
issued, sold and delivered by the Company hereunder;
(xii) Except as described in the Prospectus, to the best of
such counsel's knowledge, there are no contracts, agreements or understandings
between the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such person or to
require the Company to include such securities in the securities registered
pursuant to the Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the Company under the
Securities Act;
(xiii) Neither the Company nor any subsidiary is an
"investment company" as defined in the Investment Company Act of 1940, as
amended;
(xiv) The Company and its subsidiaries are the holders of
the FCC licenses listed in an attachment to such opinion (the "FCC Licenses"),
all of which are in full force and effect, for the maximum term customarily
issued, with no material conditions, restrictions or qualifications other than
as described in the Prospectus, and to such counsel's knowledge such FCC
Licenses constitute all of the commercial radio station licenses necessary for
the Company and the subsidiaries to operate their radio stations as described in
the Prospectus; and
(xv) There are no published or, to such counsel's
knowledge, unpublished FCC orders, decrees or rulings outstanding against the
Company or any of its subsidiaries or any pending or threatened actions, suits
or proceedings against the Company or any of its subsidiaries by or before the
FCC that seek to revoke, or if determined adversely to the Company or any of its
subsidiaries, would have a material adverse effect on the Company and its
subsidiaries taken as whole or would result in a revocation or nonrenewal of,
any of the FCC Licenses, other than as disclosed in the Registration Statement
or Prospectus.
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such opinion shall also be to the effect that (x) such counsel has
acted as counsel to the Company in connection with the preparation of the
Registration Statement and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement (except for the financial statements and financial schedules and other
financial, statistical and market data included therein, as to which such
counsel need express no belief) as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus (except as stated above) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (viii) above).
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(e) Kaye, Scholer, Fierman, Hays & Handler LLP (with respect to
Messrs. Pablo Raul Alarcon, Sr., Raul Alarcon, Jr. and Jose Grimalt) and such
other counsel or counsels reasonably acceptable to the Representatives (with
respect to each other Selling Stockholder listed on Schedule 2 hereto), shall
have each furnished to the Representatives its written opinion, as counsel to
each such Selling Stockholder, addressed to the Underwriters and dated the First
Delivery Date, in form and substance reasonably satisfactory to the
Representatives, to the effect that:
(i) Such Selling Stockholder has full right, power and
authority to enter into this Agreement, the Power of Attorney and the Custody
Agreement; the execution, delivery and performance of this Agreement, the Power
of Attorney and the Custody Agreement by such Selling Stockholder and the
consummation by such Selling Stockholder of the transactions contemplated hereby
and thereby will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, (i) any New York or
Federal statute, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which such Selling Stockholder
is a party or by which such Selling Stockholder is bound or to which any of the
property or assets of such Selling Stockholder is subject, (ii) if such selling
stockholder is not a natural person, the charter or by-laws, the articles of
partnership, the deed of trust or similar governing document of such Selling
Stockholder; and (iii) any order, judgment or decree known to such counsel.
Except for the registration of the Stock under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be
required under the Exchange Act and applicable state or foreign securities laws
in connection with the purchase and distribution of the Stock by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Power of Attorney
or the Custody Agreement by such Selling Stockholder and the consummation by
such Selling Stockholder of the transactions contemplated hereby and thereby;
(ii) This Agreement has been duly authorized (if such
Selling Stockholder is not a natural person), executed and delivered by or on
behalf of such Selling Stockholder;
(iii) A Power-of-Attorney and a Custody Agreement have been
duly authorized (if such Selling Stockholder is not a natural person), executed
and delivered by such Selling Stockholder and constitute valid and binding
agreements of such Selling Stockholder, enforceable in accordance with their
respective terms;
(iv) Immediately prior to the First Delivery Date, such
Selling Stockholder had good and valid title to the shares of Stock to be sold
by such Selling Stockholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and authority to sell,
assign, transfer and deliver such shares to be sold by such Selling Stockholder
hereunder; and
(v) Good and valid title to the shares of Stock to be sold
by such Selling Stockholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, has been transferred to each of the several
Underwriters.
In rendering such opinion, such counsel may (i) state that its opinion
is limited to matters governed by the Federal laws of the United States of
America, the laws of the State of New York and the State of Delaware and [insert
description of law (e.g., corporate, partnership, trust, etc.) of the
jurisdiction in which the selling stockholder is organized (e.g., "the General
Corporation Law of the State of Delaware")] and (ii) in rendering the opinion in
Section 9(d)(iv) above, rely upon a certificate of such Selling Stockholder in
respect of matters of fact as to ownership of and liens, encumbrances, equities
or claims on the shares of Stock sold by such Selling Stockholder, provided that
such counsel shall
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furnish copies thereof to the Representatives and state that it believes that
both the Underwriters and it are justified in relying upon such certificate.
Such counsel shall also have furnished to the Representatives a written
statement, addressed to the Underwriters and dated the First Delivery Date, in
form and substance satisfactory to the Representatives, to the effect that (x)
such counsel has acted as counsel to such Selling Stockholder in connection with
the preparation of the Registration Statement, and (y) based on the foregoing,
no facts have come to the attention of such counsel which lead it to believe
that the Registration Statement, as of the Effective Date, contained any untrue
statement of a material fact relating to such Selling Stockholder or omitted to
state such a material fact required to be stated therein or necessary in order
to make the statements therein not misleading, or that the Prospectus contains
any untrue statement of a material fact relating to such Selling Stockholder or
omits to state such a material fact required to be stated therein or necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement or the Prospectus.
(f) The Representatives shall have received from Rogers & Wells
LLP, counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Stock, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(g) At the time of execution of this Agreement, the
Representatives shall have received from each of KPMG LLP and
PricewaterhouseCoopers LLP a letter, in form and substance satisfactory to the
Representatives, addressed to the Underwriters and dated the date hereof (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(h) With respect to the letters of each of KPMG LLP and
Pricewaterhouse Coopers LLP referred to in the preceding paragraph and delivered
to the Representatives concurrently with the execution of this Agreement (the
"initial letters"), the Company shall have furnished to the Representatives
letters (the "bring-down letters") of such accountants, addressed to the
Underwriters and dated such Delivery Date (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five days prior to the date of the bring-down letter), the conclusions and
findings of such firms with respect to the financial information and other
matters covered by the initial letters and (iii) confirming in all material
respects the conclusions and findings set forth in the initial letters.
(i) The Company shall have furnished to the Representatives a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
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<PAGE> 18
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of such Delivery Date; the Company
has complied with all its agreements contained herein; and the conditions set
forth in Sections 9(a), 9(k) and 9(l) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(B) since the Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement or the
Prospectus.
(j) Each Selling Stockholder (or the Custodian or one or more
attorneys-in-fact on behalf of the Selling Stockholders) shall have furnished to
the Representatives on the First Delivery Date a certificate, dated the First
Delivery Date, signed by, or on behalf of, such Selling Stockholder (or the
Custodian or one or more attorneys-in-fact) stating that the representations,
warranties and agreements of such Selling Stockholder contained herein are true
and correct as of the First Delivery Date and that such Selling Stockholder has
complied with all agreements contained herein to be performed by such Selling
Stockholder at or prior to the First Delivery Date.
(k) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (A) any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (B) since such date there
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Representatives, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Stock being delivered on such Delivery Date on the terms and in the
manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of the Company's debt securities.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Stock Market's National Market or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices shall have
been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial
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markets in the United States shall be such) as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the public
offering or delivery of the Stock being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(n) The Nasdaq Stock Market's National Market shall have approved
the Stock for listing, subject only to official notice of issuance.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 10. Indemnification and Contribution.
(a) The Company and Alarcon Holdings, Inc., a New York
corporation, SBS of Greater New York, Inc., a New York corporation, Spanish
Broadcasting System of Florida, Inc., a Florida corporation, Spanish
Broadcasting System, Inc., a New Jersey corporation, Spanish Broadcasting System
of Greater Miami, Inc., a Delaware corporation, Spanish Broadcasting System of
Illinois, Inc., a Delaware corporation and Spanish Broadcasting System of San
Antonio, Inc., a Delaware corporation (collectively, the "Principal
Subsidiaries"), jointly and severally, shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of Stock), to which that Underwriter,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Stock or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered by clause (i)
or (ii) above (provided that the Company and the Principal Subsidiaries shall
not be liable under this clause (iii) to the extent that it is determined in a
final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company and the Principal
Subsidiaries shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein, which information consists solely of the
information specified in Section 10(f); provided, further however, that the
Company and the Principal Subsidiaries shall not be liable to any Underwriter
under the agreement in this subsection 10(a) with respect to any Prospectus to
the extent that any such loss, claim, damage or liability of such Underwriter
results from the fact that such Underwriter sold Stock to a person as to whom
there was not sent or given, at or prior to written confirmation of such sale, a
copy of the
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<PAGE> 20
Prospectus or of the Prospectus as then amended or supplemented in any case
where such delivery is required by the Securities Act if the Company previously
furnished copies thereof in the quantity requested in accordance with Section
6(c) hereof to such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement or omission of a material fact
contained in the Prospectus and corrected in the Prospectus or the Prospectus as
then amended or supplemented. The foregoing indemnity agreement is in addition
to any liability which the Company and the Principal Subsidiaries may otherwise
have to any Underwriter or to any officer, employee or controlling person of
that Underwriter.
The Company and the Principal Subsidiaries, jointly and severally,
agree to indemnify and hold harmless Lehman Brothers Inc. (including its
officers and employees) and each person, if any, who controls Lehman Brothers
Inc. within the meaning of the Securities Act ("Lehman Brothers Entities"), from
and against any loss, claim, damage or liability or any action in respect
thereof to which any of the Lehman Brothers Entities may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon (i) the failure of any Participant to
pay for and accept delivery of the Directed Stock sold pursuant to the Directed
Stock Program which, immediately following the effectiveness of the Registration
Statement, were subject to a properly confirmed agreement to purchase or (ii)
the Directed Stock Program, provided that, the Company and the Principal
Subsidiaries shall not be responsible under this subparagraph (ii) for any loss,
claim, damage, liability or action that is finally judicially determined to have
resulted from the gross negligence or willful misconduct of the Lehman Brothers
Entities. The Company and the Principal Subsidiaries, jointly and severally,
shall reimburse the Lehman Brothers Entities promptly upon demand for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred.
(b) Each of the Selling Stockholders, severally and not jointly,
shall indemnify and hold harmless each Underwriter, its officers and employees,
and each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Stock), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto, but only to the extent that the untrue
statement or alleged untrue statement was made in reliance upon and in
conformity with information furnished to the Company by such Selling
Stockholder, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that the
omission or alleged omission was made in reliance upon and in conformity with
information furnished to the Company by such Selling Stockholder, or (iii) any
act or failure to act or any alleged act or failure to act by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Selling Stockholders
shall not be liable under this clause (iii) to the extent that it is determined
in a final judgment by a court of competent jurisdiction that such loss, claim,
damage, liability or action resulted directly from any such acts or failures to
act undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter and each
such officer, employee or controlling person promptly upon demand for any legal
or other expenses reasonably incurred by that Underwriter, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Selling
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<PAGE> 21
Stockholders shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any such amendment or supplement, in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of any Underwriter
specifically for inclusion therein which information consists solely of the
information specified in Section 10(f); provided, however, that in no event
shall any Selling Stockholder be liable in an amount in excess of the gross
proceeds to be received by such Selling Stockholder from the sale of Stock
hereunder. The foregoing indemnity agreement is in addition to any liability
which the Selling Stockholders may otherwise have to any Underwriter or any
officer, employee or controlling person of that Underwriter.
(c) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company through the
Representatives by or on behalf of that Underwriter specifically for inclusion
therein, and shall reimburse the Company and any such director, officer or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer, employee or
controlling person.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 10, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 10 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 10.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 10 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the Representatives shall have the right to employ counsel to represent jointly
the Representatives and those other Underwriters and their respective officers,
employees and controlling persons who may be subject to liability arising out of
any claim in respect of which indemnity may be sought by the Underwriters
against the Company, the Principal Subsidiaries or the Selling Stockholders
under this
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Section 10 if, in the reasonable judgment of the Representatives, it is
advisable for the Representatives and those Underwriters, officers, employees
and controlling persons to be jointly represented by separate counsel, and in
that event the fees and expenses of such separate counsel shall be paid by the
Company, the Principal Subsidiaries or the Selling Stockholders, as the case may
be. Notwithstanding anything contained herein to the contrary, if indemnity may
be sought pursuant to Section 10(a) hereof in respect of such claim or action,
then in addition to such separate firm for the indemnified parties, the
indemnifying party shall be liable for the fees and expenses of not more than
one separate firm (in addition to any local counsel) for the Lehman Brothers
Entities for the defense of any loss, claim, damage, liability or action arising
out of the Directed Stock Program. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(e) If the indemnification provided for in this Section 10 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 10(a), 10(b) or 10(c) in respect of any loss, claim, damage
or liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, the Principal Subsidiaries and the Selling Stockholders
on the one hand and the Underwriters on the other from the offering of the Stock
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the Principal Subsidiaries and the Selling Stockholders on the one
hand and the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or action in
respect thereof, as well as any other relevant equitable considerations. The
relative benefits received by the Company, the Principal Subsidiaries and the
Selling Stockholders on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Stock purchased under this Agreement
(before deducting expenses) received by the Company, the Principal Subsidiaries
and the Selling Stockholders, on the one hand, and the total underwriting
discounts and commissions received by the Underwriters with respect to the
shares of the Stock purchased under this Agreement, on the other hand, bear to
the total gross proceeds from the offering of the shares of the Stock under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault shall be determined by reference to whether the
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by the
Company, the Principal Subsidiaries and the Selling Stockholders or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of the preceding two sentences, the net proceeds deemed to be
received by the Company shall be deemed to be also for the benefit of the
Principal Subsidiaries and information supplied by the Company shall also be
deemed to have been supplied by the Principal Subsidiaries. The Company, the
Principal Subsidiaries and the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section were to be determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or by any other method of
allocation which does not take into account the equitable considerations
referred
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to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this Section
10(e), any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 10(e), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Stock underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 10(e) are several in proportion to their respective
underwriting obligations and not joint.
(f) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Stock by the Underwriters set forth on the cover page of, the legend concerning
over-allotments on the inside front cover page of and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
Section 11. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule 1 or
Schedule 2 hereto bears to the total number of shares of the Firm Stock set
opposite the names of all the remaining non-defaulting Underwriters in Schedule
1 or Schedule 2 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Stock on such
Delivery Date if the total number of shares of the Stock which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of shares of the Stock to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of shares of the Stock which
it agreed to purchase on such Delivery Date pursuant to the terms of Section 3.
If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representatives
who so agree, shall have the right, but shall not be obligated, to purchase, in
such proportion as may be agreed upon among them, all the Stock to be purchased
on such Delivery Date. If the remaining Underwriters or other underwriters
satisfactory to the Representatives do not elect to purchase the shares which
the defaulting Underwriter or Underwriters agreed but failed to purchase on such
Delivery Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Stockholders, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 8 and 13. As used in this Agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule 1 or 2 hereto who, pursuant
to this Section 11, purchases which a defaulting Underwriter agreed but failed
to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Stock of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may
23
<PAGE> 24
postpone the Delivery Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
Section 12. Termination. The obligations of the Underwriters hereunder
may be terminated by the Representatives by notice given to and received by the
Company and the Selling Stockholders prior to delivery of and payment for the
Firm Stock if, prior to that time, any of the events described in Sections 9(k),
9(l) or 9(m), shall have occurred or if the Underwriters shall decline to
purchase the Stock for any reason permitted under this Agreement.
Section 13. Reimbursement of Underwriters' Expense. If the Company or
any Selling Stockholder shall fail to tender the Stock for delivery to the
Underwriters by reason of any failure, refusal or inability on the part of the
Company or the Selling Stockholders to perform any agreement on its part to be
performed, or because any other condition of the Underwriters' obligations
hereunder required to be fulfilled by the Company or the Selling Stockholders is
not fulfilled, the Company and the Selling Stockholders, jointly and severally,
will reimburse the Underwriters for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Underwriters in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company and the Selling Stockholders, jointly and severally, shall
pay the full amount thereof to the Representatives. If this Agreement is
terminated pursuant to Section 11 by reason of the default of one or more
Underwriters, neither the Company nor the Selling Stockholders shall be
obligated to reimburse any defaulting Underwriter on account of those expenses.
Section 14. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant to Section 10(d),
to the Director of Litigation, Office of the General Counsel, Lehman Brothers
Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Raul Alarcon, Jr. (Fax: (305) 444-2179;
provided, however, that any notice to an Underwriter pursuant to Section 10(d)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement given
or made on behalf of the Underwriters by Lehman Brothers Inc. on behalf of the
Representatives.
(c) if to any Selling Stockholder, shall be delivered or sent by
mail, telex or facsimile transmission to such Selling Stockholder at the address
set forth on Schedule 3 hereto.
Section 15. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters, the Company,
the Selling Stockholders and their respective personal representatives and
successors. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that (A) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders contained
in this Agreement shall also be deemed to be for the benefit of the person or
persons, if any, who control any Underwriter within the
24
<PAGE> 25
meaning of Section 15 of the Securities Act and (B) the indemnity agreement of
the Underwriters contained in Section 8(b) of this Agreement shall be deemed to
be for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
Section 16. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Principal Subsidiaries, the
Selling Stockholders and the Underwriters contained in this Agreement or made by
or on behalf on them, respectively, pursuant to this Agreement, shall survive
the delivery of and payment for the Stock and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
Section 17. Definition of the Terms "Business Day" and "subsidiary".
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 18. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
Section 19. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 20. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
25
<PAGE> 26
If the foregoing correctly sets forth the agreement between the
Company, the Principal Subsidiaries, the Selling Stockholders and the
Underwriters, please indicate your acceptance in the space provided for that
purpose below.
Very truly yours,
SPANISH BROADCASTING SYSTEM, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM, INC.
(a New Jersey corporation)
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
GREATER MIAMI, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
ILLINOIS, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
SAN ANTONIO, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
26
<PAGE> 27
ALARCON HOLDINGS, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SBS OF GREATER NEW YORK, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
FLORIDA, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
27
<PAGE> 28
The Selling Stockholders named in Schedule 2 to
this Agreement
By Raul Alarcon Jr.
--------------------------------------------
Attorney-in-Fact
Accepted:
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By LEHMAN BROTHERS INC.
By Elizabeth Satin
-------------------------------------
Authorized Representative
28
<PAGE> 29
SCHEDULE 1
<TABLE>
<CAPTION>
Number of Shares of Firm
Underwriters Stock to be Purchased
------------------------
<S> <C>
Lehman Brothers Inc............................ 11,107,400
Merrill Lynch, Pierce, Fenner & 7,155,000
Smith Incorporated...........................
Bear, Stearns & Co. Inc. 300,000
BancBoston Robertson Stephens Inc. 300,000
Deutsche Bank Securities Inc. 300,000
Lazard Freres & Co. LLC 300,000
Morgan Stanley & Co. Incorporated 300,000
Prudential Securities Incorporated 300,000
Salomon Smith Barney Inc. 300,000
Wasserstein Perella Securities, Inc. 300,000
Gabelli & Company, Inc. 150,000
First Union Securities, Inc. 150,000
Neuberger & Berman, LLC 150,000
Raymond James & Associates, Inc. 150,000
Sutro & Company Incorporated 150,000
The Chapman Company 75,000
Chatsworth Securities LLC 75,000
Guzman & Company 75,000
Pryor, McClendon, Counts & Co., Inc. 75,000
Ramirez & Co., Inc. 75,000
Total.......................................... 21,787,400
</TABLE>
29
<PAGE> 30
SCHEDULE 2
<TABLE>
<CAPTION>
Number of Shares of Firm
Selling Stockholder Address Stock to be Purchased
- ------------------- ------- ------------------------
<S> <C> <C>
Pablo Raul Alarcon, Sr. 750,000
Raul Alarcon, Jr. 1,750,000
Jose Grimalt 60,000
The Mainstay Funds, on Behalf of its 1,614,400
High Yield Corporate Bond Fund Series
The Mainstay VP Series Fund, Inc., 107,950
on Behalf of its High Yield
Corporate Bond Portfolio
Davis Intermediate Investment Grade 5,050
Bond Fund
Total................................ 4,287,400
</TABLE>
30
<PAGE> 31
Exhibit A
STOCKHOLDERS EXECUTING LOCK-UP LETTERS
Pablo Raul Alarcon, Sr.
Raul Alarcon, Jr.
Luis Diaz-Albertini
Joseph A. Garcia
Jose Grimalt
Arnold Sheiffer
<PAGE> 32
Exhibit B
LOCK-UP LETTER AGREEMENT
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
As Representatives of the several
Underwriters named in Schedule 1,
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "Underwriting Agreement") providing
for the purchase by you and such other firms (the "Underwriters") of shares (the
"Shares") of Class A Common Stock, par value $.0001 per share (the "Common
Stock"), of Spanish Broadcasting System, Inc., a Delaware corporation (the
"Company"), and that the Underwriters propose to reoffer the Shares to the
public (the "Offering").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of Lehman
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
shares of Common Stock (including, without limitation, shares of Common Stock
that may be deemed to be beneficially owned by the undersigned in accordance
with the rules and regulations of the Securities and Exchange Commission and
shares of Common Stock that may be issued upon exercise of any option or
warrant) or securities convertible into or exchangeable for Common Stock (other
than the Shares) owned by the undersigned on the date of execution of this
Lock-Up Letter Agreement or on the date of the completion of the Offering, or
(2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, for a period of 180 days after the date of the
final Prospectus relating to the Offering.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the Underwriting Agreement does not
become effective, or if the Underwriting Agreement (other than the provisions
thereof which survive termination) shall terminate or be terminated prior to
payment for and delivery of the Shares, we will be released from our obligations
under this Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
1
<PAGE> 33
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By:
-------------------------------------
Name:
Title:
Dated:
----------------------
2
<PAGE> 1
EXHIBIT 2
SPANISH BROADCASTING SYSTEM, INC.
9 5/8% SENIOR SUBORDINATED NOTES
UNDERWRITING AGREEMENT
October 28, 1999
LEHMAN BROTHERS INC .
CIBC WORLD MARKETS CORP.
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
Spanish Broadcasting System, Inc., a Delaware corporation (the
"Company") proposes to issue and sell to the several underwriters named in
Schedule 1 hereto (the "Underwriters"), an aggregate of $235 million principal
amount of 9 5/8% Senior Subordinated Notes due 2009 (the "Notes") to be
guaranteed (the "Subsidiary Guarantees") by certain of the Company's
subsidiaries specified in the Indenture (as hereinafter defined)(the "Subsidiary
Guarantors") and to be issued under an indenture (the "Indenture") dated
November 2, 1999, by and between the Company, the Subsidiary Guarantors and the
Bank of New York, as trustee (the "Trustee").
It is understood that the Company is currently entering into an
agreement (the "Equity Underwriting Agreement"), pursuant to which an aggregate
of 21,787,400 shares (the "Firm Stock") of the Company's Class A Common Stock,
par value $.0001 share (the "Class A Common Stock") , will be sold by the
Company and certain selling stockholders of the Company to the several
Underwriters named in Schedule 1 to the Equity Underwriting Agreement (the
"Underwriters").
Section 1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
(a) A registration statement on Form S-1 with respect to the Notes
has (i) been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder, (ii) been filed with the Commission
under the Securities Act, and (iii) become effective under the Securities Act
(other than any Rule 462 Registration Statement to be filed after the execution
of this Agreement which will become effective no later than the day after the
execution of this Agreement). Copies of such registration statement and each of
the amendments thereto have been delivered by the Company to you. As used in
this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus, included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Underwriters pursuant to Rule 424(a) of
the Rules and Regulations; "Registration Statement" means such registration
statement, including all material incorporated by reference therein, as amended
at the Effective Time, including all
<PAGE> 2
information contained in the final prospectus filed with the Commission pursuant
to Rule 424(b) of the Rules and Regulations and deemed to be a part of the
registration statement as of the Effective Time pursuant to Rule 430A of the
Rules and Regulations; and "Prospectus" means the prospectus in the form first
used to confirm sales of the Notes. If the Company has filed an abbreviated
registration statement to register additional Notes pursuant to Rule 462(b)
under the Securities Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall be deemed to include
such Rule 462 Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all respects to the requirements of the Securities
Act and the Rules and Regulations and do not and will not, as of the applicable
effective date (as to the Registration Statement and any amendment thereto) and
as of the applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided that no representation or warranty
is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The Company and each of its subsidiaries (as defined in
Section 14) have been duly incorporated and are validly existing as corporations
in good standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires such
qualification, except where the failure to be so qualified would not have a
material adverse effect on the general affairs, management, consolidated
financial position, stockholders' equity or results of operation of the Company
and its subsidiaries taken as whole (a "Material Adverse Effect"). The Company
and each of its subsidiaries have all power and authority necessary to own or
hold their respective properties and to conduct the businesses in which they are
engaged; and none of the subsidiaries of the Company other than Alarcon
Holdings, Inc., SBS of Greater New York, Inc., Spanish Broadcasting System of
Florida, Inc., Spanish Broadcasting System of Greater Miami, Inc., Spanish
Broadcasting System, Inc., (a New Jersey corporation), Spanish Broadcasting
System of Illinois, Inc. and Spanish Broadcasting System of Sam Antonio, Inc. is
a "significant subsidiary," as such term is defined in Rule 405 of the Rules and
Regulations.
(d) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid
and non-assessable and (except for directors' qualifying shares) are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims and none of such shares of capital stock was
issued in violation of preemptive or other similar rights arising by operation
of law, under the charter and by-laws of the Company or under any agreement to
which the Company or any subsidiary is a party or otherwise.
(e) This Agreement has been duly authorized, executed and
delivered by the Company and each of the other documents relating to this
Agreement to which the Company is a party has been duly authorized, executed and
delivered by the Company.
2
<PAGE> 3
(f) The Indenture between the Company, the Subsidiary Guarantors
and the Trustee has been duly qualified under the Trust Indenture Act of 1939,
as amended (the "Trust Indenture Act") and has been duly authorized, executed
and delivered by the Company and the Subsidiary Guarantors and is a valid and
legally binding agreement of the Company and the Subsidiary Guarantors,
enforceable in accordance with its terms except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency or similar laws affecting
creditor's rights generally and (ii) rights of acceleration and the availability
of equitable remedies may be limited by equitable principles of general
applicability.
(g) The Notes and the Subsidiary Guarantees have been duly
authorized and, when executed, authenticated and issued in accordance with the
provisions of the Indenture and delivered to and paid for by the purchasers
thereof, will be in the form contemplated by and will be entitled to the
benefits of, the Indenture and will be validly issued and free and clear of all
liens and restrictions on transfer and will constitute valid and legally binding
obligations of the Company and the Subsidiary Guarantors, enforceable in
accordance with their respective terms except as (i) enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
(h) The execution, delivery and performance of this Agreement, the
Indenture, the Notes and the Subsidiary Guarantees and the consummation of the
transactions contemplated hereby, thereby and in the Registration Statement and
the Prospectus (including the issuance and sale of the Notes and the Subsidiary
Guarantees and the use of proceeds from the sale of the Notes as described under
the caption "Use of Proceeds") will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement,
license or instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject,
except for such defaults which, individually or in the aggregate, would not
result in a Material Adverse Effect, nor will such actions result in any
violation of the provisions of the charter, certificate of designation, by-laws
or similar governing document of the Company or any of its subsidiaries or any
statute or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets; and except for the registration of the Notes and the
Subsidiary Guarantees under the Securities Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Exchange Act of 1934, as amended (the "Exchange Act") and applicable state
securities laws in connection with the purchase and distribution of the Notes by
the Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is required for
the execution, delivery and performance of this Agreement, the Indenture, the
Notes or the Subsidiary Guarantees and the consummation of the transactions
contemplated hereby or thereby, including the issuance, sale and delivery of the
Notes to be issued, sold and delivered by the Company hereunder.
(i) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(j) Except as described in the Prospectus, the Company has not
sold or issued any securities, or securities that are convertible into other
securities, with terms that are substantially similar
3
<PAGE> 4
to the Notes during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of, the
Securities Act.
(k) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which constitutes or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the Notes to facilitate the sale or resale of the
Notes.
(l) Neither the Company nor any of its subsidiaries has sustained,
since the date of the latest audited financial statements included in the
Prospectus, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus that would result in a Material Adverse
Effect; and, since such date, there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, consolidated financial
position, stockholders' equity, results of operations, business or prospects of
the Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus.
(m) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or included in
the Prospectus present fairly the financial condition and results of operations
of the entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved.
(n) Immediately after the sale of the Notes by the Company
hereunder, the aggregate amount of Notes which shall have been issued and sold
by the Company hereunder and of any debt securities of the Company (other than
the Notes) that shall have been issued and sold pursuant to the Registration
Statement will not exceed the amount of debt securities registered under the
Registration Statement.
(o) No default or event of default with respect to any
Indebtedness (as such term is defined in the Indenture) or will exist as a
result of the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby and each of the Company and its
subsidiaries has duly performed or observed all material obligations,
agreements, covenants or conditions contained in any contract, indenture,
mortgage, agreement or instrument relating to any Indebtedness.
(p) None of the Company or its subsidiaries, or any agent acting
on their behalf, has taken or will take any action that might cause this
Agreement or the sale of the Notes to violate Regulation G, T, U or X of the
Board of Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(q) The Notes and the Indenture conform, in all material respects,
to the descriptions thereof in the Prospectus.
(r) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of the Company will exceed the sum of its stated liabilities and
identified contingent liabilities; the Company is not, nor will the Company be,
after giving effect to the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, (i) left with
unreasonably small capital with which to carry on its business as it is proposed
to be conducted, (ii) unable to pay its debts (contingent and otherwise) as they
mature or (iii) otherwise insolvent.
4
<PAGE> 5
(s) To the best knowledge of the Company, KPMG LLP, who have
certified certain financial statements of the Company, whose report appears in
the Prospectus and who have delivered the initial letter referred to in Section
7(e) hereof, are independent public accountants as required by the Securities
Act and the Rules and Regulations.
(t) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and valid title to
all material personal property owned by them, in each case free and clear of all
liens, encumbrances and defects, except such as are described in the Prospectus
or such as do not materially affect the value of such property and do not
materially interfere with the use made and proposed to be made of such property
by the Company and its subsidiaries; and all assets held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases, with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(u) The Company and each of its subsidiaries carry, or are covered
by, insurance in such amounts and covering such risks as is reasonably adequate
for the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
(v) The Company and each of its subsidiaries own, license or
possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of their
respective businesses and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflict with, any such rights of others, except as disclosed in
the Prospectus or where the failure to so own, license or possess such rights
would not, individually or in the aggregate, have a Material Adverse Effect.
(w) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any property
or assets of the Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries, might have a
Material Adverse Effect; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(x) There are no contracts, arrangements or other documents which
are required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described in the Prospectus or filed as exhibits to the
Registration Statement or incorporated by reference therein as permitted by the
Rules and Regulations.
(y) No relationship, direct or indirect, exists between or among
the Company on the one hand, and any of its former or present directors,
officers, stockholders, customers or suppliers on the other hand, which is
required to be described in the Prospectus which is not so described.
(z) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent, which might be expected to
have a Material Adverse Effect.
(aa) The Company is in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security
Act of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in Section 4043 of
ERISA) has occurred with respect to any "defined benefit plan" (as defined in
Section 3(35) of ERISA) for which the Company would have any liability; the
Company has not incurred and does not expect to incur liability under (i) Title
IV of ERISA with respect to termination of, or withdrawal
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from, any "defined benefit plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "Code"); and each "defined benefit plan" for
which the Company has any liability or to which it makes contributions that is
intended to be qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by failure to
act, which would cause the loss of such qualification.
(bb) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof and has paid
all taxes shown as due thereon, and no tax deficiency has been determined
adversely to the Company or any of its subsidiaries which has had (nor does the
Company have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, might have) a Material Adverse
Effect. The are no tax audits presently being conducted which, if determined
adversely to the Company or any of its subsidiaries, could have a Material
Adverse Effect.
(cc) Since the date as of which information is given in the
Prospectus through the date hereof, and except as may otherwise be disclosed in
the Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any material liability or obligation, direct or contingent, other than
liabilities and obligations which were incurred in the ordinary course of
business, (iii) entered into any transaction not in the ordinary course of
business, or (iv) declared or paid any dividend on its capital stock.
(dd) The Company (i) makes and keeps accurate books and records,
and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
general or specific authorization, (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets, (C) access to its assets is permitted only in accordance with
management's general or specific authorization and (D) the reported
accountability for its assets is compared with existing assets at reasonable
intervals.
(ee) Neither the Company nor any of its subsidiaries (i) is in
violation of its charter, certificate of designation, by-laws or similar
governing document, (ii) is in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would constitute such a
default, in the due performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is in violation in any
material respect of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject.
(ff) Each of the radio stations owned, operated, programmed, or to
which sales and marketing services are provided, by the Company and its
subsidiaries is validly licensed by the Federal Communications Commission (the
"FCC") and no administrative or judicial proceedings are pending before or, to
the knowledge of the Company or its subsidiaries, threatened by the FCC with
respect to such licenses; the Company and its subsidiaries possess adequate
certificates, authorizations, consents, orders, approvals, licenses or permits
which are in full force and effect issued by all appropriate governmental
agencies or bodies necessary to the ownership of their respective properties and
the conduct of the businesses now operated by them and have not received any
notice of proceedings relating to the revocation or modification of any such
certificate, authority, consent, order, approval, license or permit and the
Company and its subsidiaries are in compliance in all material respects with the
Communications Act of 1934, as amended, and the rules, regulations and policies
of the FCC.
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(gg) The Company believes the statistical and market-related data
included in the Prospectus are accurate and are based on or derived from
reliable sources.
(hh) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or its subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or remedial action
which would not have, or could not be reasonably likely to have, singularly or
in the aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak, emission,
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by the Company
or any of its subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not have or would
not be reasonably likely to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(ii) Neither the Company nor any subsidiary is, or, as of the
Closing Date after giving effect to the application of the net proceeds as
described in the Prospectus, will be, an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(jj) The Company has complied with, and is and will be in
compliance with, the provisions of that certain Florida act relating to
disclosure of doing business with Cuba, codified as Section 517.075 of the
Florida statutes, and the rules and regulations thereunder or is exempt
therefrom.
Section 2. Purchase of the Notes by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell the Notes to the
several Underwriters and each of the Underwriters, severally and not jointly,
agrees to purchase the aggregate principal amount of Notes set opposite that
Underwriter's name in Schedule 1 hereto. Each Underwriter will purchase such
aggregate principal amount of Notes at an aggregate purchase price equal to 97%
of the principal amount thereof (the "Purchase Price").
The Company shall not be obligated to deliver any of the Notes to be
delivered on the Delivery Date (as hereinafter defined), except upon payment for
all the Notes to be purchased on the Delivery Date as provided herein.
Section 3. Offering of Notes by the Underwriters.
Upon authorization by the Underwriters of the release of the Notes, the
several Underwriters propose to offer the Notes for sale upon the terms and
conditions set forth in the Prospectus.
Section 4. Delivery of and Payment for the Notes. Delivery of and
payment for the Notes shall be made at the office of Rogers & Wells LLP, 200
Park Avenue, New York, New York 10166 at 10:00 A.M., New York City time, on the
third full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between the Underwriters and
the Company. This date and time are sometimes referred to as the "Delivery
Date." On the Delivery Date, the Company shall deliver or cause to be delivered
certificates representing the Notes to the Underwriters for the
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<PAGE> 8
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by certified or official bank check or checks payable in
or wire transfer in immediately available funds; provided, that the amount of
such payment shall be reduced by one days' interest on the amount of gross
proceeds at the Underwriters' cost of borrowing such funds plus any other
expenses associated with such payment of immediately available funds. Time shall
be of the essence, and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Notes shall be registered in such names and in
such denominations as the Underwriters shall request in writing not less than
two full business days prior to the Delivery Date. For the purpose of expediting
the checking and packaging of the certificates for the Notes, the Company shall
make the certificates representing the Notes available for inspection by the
Underwriters in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Delivery Date.
Section 5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Underwriters, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Underwriters with copies thereof; to advise the
Underwriters, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Notes for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Underwriters and to counsel
for the Underwriters a signed copy of the Registration Statement as originally
filed with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission and
each amendment thereto (in each case excluding exhibits other than this
Agreement and the computation of the Ratio of Earnings to Fixed Charges) and
(ii) each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Notes or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Underwriters and, upon their request, to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended or
supplemented Prospectus which will correct such statement or omission or effect
such compliance.
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(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriters, be required by the
Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Underwriters and counsel for the Underwriters and obtain the consent of the
Underwriters to the filing;
(f) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver to the
Underwriters an earnings statement of the Company and its subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Underwriters copies of all materials furnished by the Company to
its shareholders and holders of Notes and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Class A Common Stock or Notes may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Notes for offering and sale
under the securities laws of such jurisdictions as the Underwriters may request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Notes; provided that in connection therewith
the Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction;
(i) To apply the net proceeds from the sale of the Notes as set
forth in the Prospectus; and
(j) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an "investment company" as
defined in the Investment Company Act of 1940, as amended.
Section 6. Expenses. The Company agrees to pay (a) the costs incident
to the authorization, issuance, sale and delivery of the Notes and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement and the Indenture, and any other related documents in connection
with the offering, purchase, sale and delivery of the Notes; (e) the filing fees
incident to securing the review by the National Association of Securities
Dealers, Inc. of the terms of sale of the Notes; (f) any applicable listing or
other fees; (g) the fees and expenses (not in excess, in the aggregate, of
$10,000) of qualifying the Notes under the securities laws of the several
jurisdictions as provided in Section 5(h) and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriters); (h) any fees charged by securities rating agencies
for rating the Notes; (i) the costs and expenses of the Company relating to
investor presentations on any "road show" undertaken in connection with the
marketing of the offering of the Notes, including, without limitation, expenses
associated with the production of road show
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<PAGE> 10
slides and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company, travel
and lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with the
road show (i) and (j) all other costs and expenses incident to the performance
of the obligations of the Company under this Agreement; provided that, except as
provided in this Section 6 and in Section 10 the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel, any
transfer taxes on the Notes which they may sell and the expenses of advertising
any offering of the Notes made by the Underwriters.
Section 7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on the Delivery Date, of the representations and warranties of the Company
contained herein, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of fact which, in the opinion of Rogers & Wells LLP, counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture, the
Notes, the Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement, and the transactions contemplated hereby
shall be reasonably satisfactory in all material respects to counsel for the
Underwriters, and the Company shall have furnished to such counsel all documents
and information that they may reasonably request to enable them to pass upon
such matters.
(d) Kaye, Scholer, Fierman, Hays & Handler LLP shall have
furnished to the Underwriters their written opinion, as counsel to the Company,
addressed to the Underwriters and dated the Delivery Date, in form and substance
reasonably satisfactory to the Underwriters, to the effect that:
(i) The Company and each of its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation, are duly qualified to
do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification and have all
power and authority necessary to own or hold their respective properties and
conduct the businesses in which they are engaged;
(ii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid and
nonassessable and conform to the description thereof contained in the
Prospectus; and all of the issued shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued and are fully paid,
non-assessable and (except for directors' qualifying shares) are owned directly
or indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims and none of such shares of capital stock was issued in
violation of
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preemptive or other similar rights arising by operation of law, under the
charter and by-laws of the Company or under any agreement known to such counsel
to which the Company or any subsidiary is a party or otherwise;
(iii) The Notes have been duly authorized, executed and
issued by the Company and the Subsidiary Guarantors have been duly authorized,
executed and issued by the Subsidiary Guarantors and, assuming due
authentication thereof by the Trustee and upon payment and delivery in
accordance with the terms of the Underwriting Agreement, will be entitled to the
benefits of the Indenture and will be validly issued and free and clear of all
liens and restrictions on transfer and will constitute valid and legally binding
obligations of the Company and the Subsidiary Guarantors enforceable against the
Company and the Subsidiary Guarantors in accordance with their terms except as
(i) enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability;
(iv) The Notes and the Subsidiary Guarantees conform to the
descriptions thereof contained in the Registration Statement, the Prospectus and
the Indenture. The Indenture conforms to the description thereof in the
Registration Statement and the Prospectus;
(v) To the best of such counsel's knowledge and other than
as set forth in the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries, might
have a material adverse effect on the consolidated financial position,
stockholders' equity, results of operations, business or prospects of the
Company and its subsidiaries taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(vi) The Registration Statement has been declared effective
under the Securities Act and the Indenture was qualified under the Trust
Indenture Act, the Prospectus was filed with the Commission pursuant to the
subparagraph of Rule 424(b) of the Rules and Regulations specified in such
opinion on the date specified therein and no stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission;
(vii) The Registration Statement and the Prospectus and any
further amendments or supplements thereto made by the Company prior to such
Delivery Date (except for the financial statements and financial schedules and
other financial and statistical data included therein, as to which such counsel
need express no belief) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations;
(viii) The statements contained in the Prospectus under the
captions "Risk Factors- Government Regulation," "Risk Factors- Antitrust
Matters," "Description of Notes," "Description of Other Indebtedness," "Certain
Federal Income Tax Considerations," "Business -- Antitrust," "Business --
Federal Regulation of Radio Broadcasting," "Business- FCC Licenses," "Executive
Compensation- Employment Agreement and Arrangements," "Executive Compensation-
Option Plan," "Executive Compensation- Limitation on Directors' and Officers'
Liability," insofar as they describe contracts, agreements or other legal
documents or they describe federal statutes, rules and regulations, constitute a
fair summary thereof;
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(ix) To the best of such counsel's knowledge, there are no
contracts, arrangements or other documents which are required to be described in
the Prospectus or filed as exhibits to the Registration Statement by the
Securities Act or by the Rules and Regulations which have not been described or
filed as exhibits to the Registration Statement or incorporated therein as
permitted by the Rules and Regulations;
(x) This Agreement has been duly authorized, executed and
delivered by the Company and each Principal Subsidiary; and each of the other
documents relating to the this Agreement to which the Company or any Principal
Subsidiary is a party has been duly authorized, executed and delivered by the
Company and each Principal Subsidiary;
(xi) The Indenture has been duly authorized, executed and
delivered by the Company and the Subsidiary Guarantors and duly qualified under
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act") and
assuming due authorization, execution and delivery thereof by the Trustee,
constitutes a valid and, legally binding obligation of the Company and each
Subsidiary Guarantor enforceable against the Company and each Subsidiary
Guarantor in accordance with its terms except as (i) enforceability thereof may
be limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability;
(xii) The issue and sale of the Notes and the Subsidiary
Guarantees being delivered on the Delivery Date by the Company and the
Subsidiary Guarantors pursuant to this Agreement and the execution, delivery and
compliance by the Company the Principal Subsidiaries, and the Subsidiary
Guarantors with all of the provisions of this Agreement, the Indenture, the
Notes and the Subsidiary Guarantees and each of the other documents to be
entered into in connection with the consummation of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus (including the issuance and sale of the Notes and the Subsidiary
Guarantees and the use of proceeds from the sale of the Notes as described under
the caption "Use of Proceeds") will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust, loan agreement or other agreement,
license (including FCC Licenses (as hereinafter defined )) or instrument known
to such counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject, nor
will such actions result in any violation of the provisions of the charter,
certificate of designation, by-laws or similar governing document of the Company
or any of its subsidiaries or any New York or federal statute, rule or
regulation (including the Federal Communications Laws (as hereinafter defined))
or any order, judgment or decree known to such counsel; and, except for the
registration of the Notes and the Subsidiary Guarantees under the Securities Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under the Exchange Act and applicable state securities laws in
connection with the purchase and distribution of the Notes by the Underwriters,
no consent, approval, authorization or order of, or filing or registration with,
any such court or governmental agency or body (including pursuant to the
Communications Act of 1934, as amended and the rules, regulations and
administrative orders promulgated thereunder (collectively, the Federal
Communications Laws")) is required for the execution, delivery and performance
of this Agreement, the Indenture, the Notes or the Subsidiary Guarantees or any
of the other documents to be entered into in connection with this Agreement by
the Company the Principal Subsidiaries and the Guarantor Subsidiaries and the
consummation of the transactions contemplated hereby or thereby, including the
issue, sale and delivery of the Notes to be issued, sold and delivered by the
Company hereunder;
(xiii) Except as described in the Prospectus, to the best
of such counsel's knowledge, there are no contracts, agreements or
understandings between the Company and any person
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granting such person the right (other than rights which have been waived or
satisfied) to require the Company to file a registration statement under the
Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act;
(xiv) The Company and its subsidiaries are the holders of
the FCC licenses listed in an attachment to such opinion (the "FCC Licenses"),
all of which are in full force and effect, for the maximum term customarily
issued, with no material conditions, restrictions or qualifications other than
as described in the Prospectus, and to such counsel's knowledge, such FCC
Licenses constitute all of the commercial radio station licenses necessary for
the Company and the subsidiaries to operate their radio stations as described in
the Prospectus;
(xv) There are no published or, to such counsel's
knowledge, unpublished FCC orders, decrees or rulings outstanding against the
Company or any of its subsidiaries or any pending or threatened actions, suits
or proceedings against the Company or any of its subsidiaries by or before the
FCC that seek to revoke, or if determined adversely to the Company or any of its
subsidiaries, would have a material adverse effect on the Company and its
subsidiaries taken as whole or would result in a revocation or nonrenewal of,
any of the FCC Licenses, other than as disclosed in the Registration Statement
or Prospectus;
(xvi) Neither the Company nor any subsidiary is an
"investment company" as defined in the Investment Company Act of 1940, as
amended;
In rendering such opinion, such counsel may state that their opinion is
limited to matters governed by the Federal laws of the United States of America,
the laws of the State of New York and the General Corporation Law of the State
of Delaware. Such opinion shall also be to the effect that (x) such counsel has
acted as counsel to the Company in connection with the preparation of the
Registration Statement and (y) based on the foregoing, no facts have come to the
attention of such counsel which lead them to believe that the Registration
Statement (except for the financial statements and financial schedules and other
financial, statistical and market data included therein, as to which such
counsel need express no belief) as of the Effective Date, contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading, or that the Prospectus (except as stated above) contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The foregoing
opinion and statement may be qualified by a statement to the effect that such
counsel does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (other than as set forth in clause (viii) above).
(e) The Underwriters shall have received from Rogers & Wells LLP,
counsel for the Underwriters, such opinion or opinions, dated the Delivery Date,
with respect to the issuance and sale of the Notes, the Registration Statement,
the Prospectus and other related matters as the Underwriters may reasonably
require, and the Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to pass upon such
matters.
(f) At the time of execution of this Agreement, the Underwriters
shall have received from each of KPMG LLP and PricewaterhouseCoopers LLP a
letter, in form and substance satisfactory to the Underwriters, addressed to the
Underwriters and dated the date hereof (i) confirming that they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of
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the Commission and (ii) stating, as of the date hereof (or, with respect to
matters involving changes or developments since the respective dates as of which
specified financial information is given in the Prospectus, as of a date not
more than five days prior to the date hereof), the conclusions and findings of
such firm with respect to the financial information and other matters ordinarily
covered by accountants' "comfort letters" to underwriters in connection with
registered public offerings.
(g) With respect to the letters of KPMG LLP and
PricewaterhouseCoopers LLP referred to in the preceding paragraph and delivered
to the Underwriters concurrently with the execution of this Agreement (the
"initial letters"), the Company shall have furnished to the Underwriters letters
(the "bring-down letters") of such accountants, addressed to the Underwriters
and dated the Delivery Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and are in compliance with
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letters (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letters), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letters and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letters.
(h) The Company shall have furnished to the Underwriters a
certificate, dated such Delivery Date, of its Chairman of the Board, its
President or a Vice President and its chief financial officer stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Delivery Date; the Company
has complied with all its agreements contained herein; and the conditions set
forth in Sections 7(a), 7(i) and 7(j) have been fulfilled; and
(ii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion (A) as of the Effective Date,
the Registration Statement and Prospectus did not include any untrue statement
of a material fact and did not omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
(B) since the Effective Date no event has occurred which should have been set
forth in a supplement or amendment to the Registration Statement or the
Prospectus.
(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Prospectus (A) any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or (B) since such date there
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving a
prospective change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Underwriters, so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Notes being delivered on the Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(j) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
Rules and Regulations and (ii) no such organization shall have publicly
announced that it has under
14
<PAGE> 15
surveillance or review, with possible negative implications, its rating of any
of the Company's debt securities.
(k) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange, the
Nasdaq Stock Market's National Market or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the
over-the-counter market, shall have been suspended or minimum prices shall have
been established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the United States
shall be such) as to make it, in the judgment of the Underwriters, impracticable
or inadvisable to proceed with the public offering or delivery of the Notes
being delivered on the Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(l) The closing under the Equity Underwriting Agreement shall have
occurred prior to the closing hereunder on the Delivery Date.
(m) The Company shall have commenced a tender offer and consent
solicitation with respect to its 11% Senior Notes due 2004 (the "2004 Notes")
and 12 -1/2% Senior Notes due 2002 (the "2002 Notes"), and shall have accepted
and paid for, not less than a majority in aggregate principal amount of the
outstanding 2004 Notes and 2002 Notes.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 8. Indemnification and Contribution.
(a) The Company and Alarcon Holdings, Inc., a New York
corporation, SBS of Greater New York, Inc., a New York corporation, Spanish
Broadcasting System of Florida, Inc., a Florida corporation, Spanish
Broadcasting System, Inc., a New Jersey corporation, Spanish Broadcasting System
of Greater Miami, Inc., a Delaware corporation, Spanish Broadcasting System of
Illinois, Inc., a Delaware corporation, Spanish Broadcasting System of San
Antonio, Inc., a Delaware corporation, (collectively, the "Principal
Subsidiaries"), jointly and severally, shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Notes), to which that Underwriter,
officer, employee or controlling person may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, or (iii) any act or failure to
act or any alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Notes or the offering contemplated hereby, and
which is included as part of or referred to in any loss, claim, damage,
liability or action arising out of or based upon matters covered
15
<PAGE> 16
by clause (i) or (ii) above (provided that the Company and the Principal
Subsidiaries shall not be liable under this clause (iii) to the extent that it
is determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such acts or
failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or willful misconduct), and shall reimburse each
Underwriter and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Underwriter,
officer, employee or controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company and
the Principal Subsidiaries shall not be liable in any such case to the extent
that any such loss, claim, damage, liability or action arises out of, or is
based upon, any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or in any such amendment or supplement, in reliance upon and
in conformity with written information concerning such Underwriter furnished to
the Company by or on behalf of any Underwriter specifically for inclusion
therein which information consists solely of the information specified in
Section 8(e) provided, further however, that the Company and the Principal
Subsidiaries shall not be liable to any Underwriter under the agreement in this
subsection 8(a) with respect to any Prospectus to the extent that any such loss,
claim, damage or liability of such Underwriter results from the fact that such
Underwriter sold Notes to a person as to whom there was not sent or given, at or
prior to written confirmation of such sale, a copy of the Prospectus or of the
Prospectus as then amended or supplemented in any case where such delivery is
required by the Securities Act if the Company previously furnished copies
thereof in the quantity requested in accordance with Section 5(c) hereof to such
Underwriter and the loss, claim, damage or liability of such Underwriter results
from an untrue statement or omission of a material fact contained in the
Prospectus and corrected in the Prospectus or the Prospectus as then amended or
supplemented. The foregoing indemnity agreement is in addition to any liability
which the Company and the Principal Subsidiaries may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter. The foregoing indemnity agreement is in addition to any liability
which the Company and the Principal Subsidiaries may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the meaning
of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or any
such director, officer or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus, the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Underwriter furnished to the Company by or on behalf
of that Underwriter specifically for inclusion therein, and shall reimburse the
Company and any such director, officer or controlling person for any legal or
other expenses reasonably incurred by the Company or any such director, officer
or controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to any
liability which any Underwriter may otherwise have to the Company or any such
director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is
16
<PAGE> 17
to be made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 8 except to
the extent it has been materially prejudiced by such failure and, provided
further, that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise than
under this Section 8. If any such claim or action shall be brought against an
indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Underwriters shall have the
right to employ counsel to represent jointly the Underwriters and their
respective officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Underwriters against the Company or the Principal Subsidiaries under this
Section 8 if, in the reasonable judgment of the Underwriters, it is advisable
for the Underwriters and their officers, employees and controlling persons to be
jointly represented by separate counsel, and in that event the fees and expenses
of such separate counsel shall be paid by the Company or the Principal
Subsidiaries, as the case may be. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Principal Subsidiaries on the one hand and the
Underwriters on the other from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
the Principal Subsidiaries on the one hand and the Underwriters on the other
with respect to the statements or omissions which resulted in such loss, claim,
damage or liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Principal Subsidiaries on the one hand and the Underwriters on the other with
respect to such offering shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Notes purchased under this Agreement
(before deducting expenses) received by the Company and the Principal
Subsidiaries, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the Notes purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the Notes under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
17
<PAGE> 18
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company and the Principal Subsidiaries or the
Underwriters, the intent of the parties and their relative knowledge, access to
information and opportunity to correct or prevent such statement or omission.
For purposes of the preceding two sentences, the net proceeds deemed to be
received by the Company shall be deemed to be also for the benefit of the
Principal Subsidiaries and information supplied by the Company shall also be
deemed to have been supplied by the Principal Subsidiaries. The Company and the
Principal Subsidiaries and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed to
include, for purposes of this Section 8(e), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes underwritten by
it and distributed to the public was offered to the public exceeds the amount of
any damages which such Underwriter has otherwise paid or become liable to pay by
reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute as provided in this Section 8(d) are
several in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering of the
Notes by the Underwriters set forth on the cover page of, and the concession and
reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
Section 9. Termination. The obligations of the Underwriters hereunder
may be terminated by the Underwriters by notice given to and received by the
Company prior to delivery of and payment for the Notes if, prior to that time,
any of the events described in Sections 7(i), 7(j) or 7(k), shall have occurred
or if the Underwriters shall decline to purchase the Notes for any reason
permitted under this Agreement.
Section 10. Reimbursement of Underwriters' Expense. If the Company
shall fail to tender the Notes for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company is
not fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Notes, and upon demand the Company shall pay the full amount thereof to the
Underwriters.
Section 11. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to Lehman Brothers Inc., Three World Financial
Center, New York, New York 10285, Attention: Syndicate Department (Fax:
212-526-6588), with a copy, in the case of any notice pursuant to
18
<PAGE> 19
Section 8(c), to the Director of Litigation, Office of the General Counsel,
Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, NY 10285;
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Raul Alarcon, Jr. (Fax: (305) 444-2179);
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Underwriters, which address will be supplied to any other party hereto by the
Underwriters upon request. Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be entitled
to act and rely upon any request, consent, notice or agreement given or made on
behalf of the Underwriters by Lehman Brothers Inc.
Section 12. Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Underwriters and the
Company, and their respective personal representatives and successors. This
Agreement and the terms and provisions hereof are for the sole benefit of only
those persons, except that (A) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement shall also be deemed to be
for the benefit of the person or persons, if any, who control any Underwriter
within the meaning of Section 15 of the Securities Act and (B) the indemnity
agreement of the Underwriters contained in Section 8(b) of this Agreement shall
be deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
Section 13. Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Principal Subsidiaries and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Notes and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
Section 14. Definition of the Terms "Business Day" and "subsidiary".
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 15. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
Section 16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 17. Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.
19
<PAGE> 20
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
SPANISH BROADCASTING SYSTEM OF FLORIDA, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------------
Name: Raul Alarcon Jr.
Title: President
ALARCON HOLDINGS, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------------
Name: Raul Alarcon Jr.
Title: President
SBS OF GREATER NEW YORK, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------------
Name: Raul Alarcon Jr.
Title: President
20
<PAGE> 21
If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
SPANISH BROADCASTING SYSTEM, INC.
By /s/ Raul Alarcon Jr.
----------------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM, INC.
(A NEW JERSEY CORPORATION)
By /s/ Raul Alarcon Jr.
----------------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
GREATER MIAMI, INC.
By /s/ Raul Alarcon Jr.
----------------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
ILLINOIS, INC.
By /s/ Raul Alarcon Jr.
----------------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
SAN ANTONIO, INC.
By /s/ Raul Alarcon Jr.
----------------------------------------
Name: Raul Alarcon Jr.
Title: President
Accepted:
LEHMAN BROTHERS INC.
CIBC WORLD MARKETS CORP.
By LEHMAN BROTHERS INC.
By Elizabeth Satin
-------------------------------------
Authorized Representative
21
<PAGE> 22
SCHEDULE 1
<TABLE>
<CAPTION>
Principal Amount of
U.S. Underwriters Notes to be Purchased
- ----------------- ---------------------
<S> <C>
Lehman Brothers Inc.............................. $141,000,000
CIBC World Markets Corp.......................... $ 94,000,000
Total............................................ $235,000,000
</TABLE>
<PAGE> 1
Exhibit 3
=================================================
SPANISH BROADCASTING SYSTEM, INC.
9 5/8% SENIOR SUBORDINATED NOTES DUE 2009
-------------------------------
INDENTURE
Dated as of November 2, 1999
-------------------------------
-------------------------------
THE BANK OF NEW YORK
-------------------------------
Trustee
===============================================================
<PAGE> 2
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
Trust Indenture Act Section Indenture Section
<S> <C>
310(a)(1).................................................................... 7.10
(a)(2)....................................................................... 7.10
(a)(3)....................................................................... N.A.
(a)(4)....................................................................... N.A.
(a)(5)....................................................................... 7.10
(i)(b)....................................................................... 7.10
(ii)(c)...................................................................... N.A.
311(a)....................................................................... 7.11
(b).......................................................................... 7.11
(iii)(c)..................................................................... N.A.
312(a)....................................................................... 2.05
(b).......................................................................... 12.03
(iv)(c)...................................................................... 12.03
313(a)....................................................................... 7.06
(b)(2)....................................................................... 7.07
(v)(c)....................................................................... 7.06; 12.02
(vi)(d)...................................................................... 7.06
314(a)....................................................................... 4.03;12.02
(c)(1)....................................................................... 12.04
(c)(2)....................................................................... 12.04
(c)(3)....................................................................... N.A.
(vii)(e)..................................................................... 11.05
(f).......................................................................... NA
315(a)....................................................................... 7.01
(b).......................................................................... 7.05,12.02
(A)(c)....................................................................... 7.01
(d).......................................................................... 7.01
(e).......................................................................... 6.11
316(a)(last sentence)........................................................ 2.09
(a)(1)(A).................................................................... 6.05
(a)(1)(B).................................................................... 6.04
(a)(2)....................................................................... N.A.
(b).......................................................................... 6.07
(B)(c)....................................................................... 2.12
317(a)(1).................................................................... 6.08
(a)(2)....................................................................... 6.09
(b).......................................................................... 2.04 N.A. means not
applicable.
</TABLE>
*This Cross-Reference Table is not part of the Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE............................................................ 1
Section 1.01. Definitions.......................................................................... 1
Section 1.02. Other Definitions.................................................................... 15
Section 1.03. Incorporation By Reference Of Trust Indenture Act.................................... 16
Section 1.04. Rules Of Construction................................................................ 16
ARTICLE II THE NOTES............................................................................................ 17
Section 2.01. Form And Dating...................................................................... 17
Section 2.02. Execution And Authentication......................................................... 17
Section 2.03. Registrar And Paying Agent........................................................... 18
Section 2.04. Paying Agent To Hold Money In Trust.................................................. 18
Section 2.05. Holder Lists......................................................................... 19
Section 2.06. Transfer And Exchange................................................................ 19
Section 2.07. Replacement Notes.................................................................... 22
Section 2.08. Outstanding Notes.................................................................... 23
Section 2.09. Treasury Notes....................................................................... 23
Section 2.10. Temporary Notes...................................................................... 23
Section 2.11. Cancellation......................................................................... 24
Section 2.12. Defaulted Interest................................................................... 24
Section 2.13. CUSIP Numbers........................................................................ 24
ARTICLE III REDEMPTION AND PREPAYMENT........................................................................... 24
Section 3.01. Notices To Trustee................................................................... 24
Section 3.02. Selection Of Notes To Be Redeemed.................................................... 25
Section 3.03. Notice Of Redemption................................................................. 25
Section 3.04. Effect Of Notice Of Redemption....................................................... 26
Section 3.05. Deposit Of Redemption Price.......................................................... 26
Section 3.06. Notes Redeemed In Part............................................................... 26
Section 3.07. Optional Redemption.................................................................. 27
Section 3.08. Mandatory Redemption................................................................. 27
Section 3.09. Offer To Purchase By Application Of Excess Proceeds.................................. 27
ARTICLE IV COVENANTS........................................................................................... 29
Section 4.01. Payment Of Notes..................................................................... 29
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Section 4.02. Maintenance Of Office Or Agency...................................................... 29
Section 4.03. Reports.............................................................................. 30
Section 4.04. Compliance Certificate............................................................... 31
Section 4.05. Taxes................................................................................ 31
Section 4.06. Stay, Extension And Usury Laws....................................................... 31
Section 4.07. Restricted Payments.................................................................. 32
Section 4.08. Dividend And Other Payment Restrictions Affecting Subsidiaries....................... 34
Section 4.09. Incurrence Of Indebtedness And Issuance Of Preferred Stock........................... 35
Section 4.10. Asset Sales.......................................................................... 37
Section 4.11. Transactions With Affiliates......................................................... 38
Section 4.12. Liens................................................................................ 39
Section 4.13. Asset Swaps.......................................................................... 39
Section 4.14. Corporate Existence.................................................................. 40
Section 4.15. Offer To Repurchase Upon Change Of Control........................................... 40
Section 4.16. No Senior Subordinated Debt.......................................................... 41
Section 4.17. Issuances And Sales Of Equity Interests In Restricted Subsidiaries................... 41
Section 4.18. Limitation On Sale And Leaseback Transactions........................................ 41
Section 4.19. Payments For Consent................................................................. 42
Section 4.20. Additional Subsidiary Guarantees..................................................... 42
ARTICLE V SUCCESSORS ..................................................................................... 42
Section 5.01. Merger, Consolidation, Or Sale Of Assets............................................. 42
Section 5.02. Successor Corporation Substituted.................................................... 43
ARTICLE VI DEFAULTS AND REMEDIES................................................................................ 43
Section 6.01. Events Of Default.................................................................... 43
Section 6.02. Acceleration......................................................................... 45
Section 6.03. Other Remedies....................................................................... 45
Section 6.04. Waiver Of Past Defaults.............................................................. 46
Section 6.05. Control By Majority.................................................................. 46
Section 6.06. Limitation On Suits.................................................................. 46
Section 6.07. Rights Of Holders Of Notes To Receive Payment........................................ 47
Section 6.08. Collection Suit By Trustee........................................................... 47
</TABLE>
ii
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 6.09. Trustee May File Proofs Of Claim..................................................... 47
Section 6.10. Priorities........................................................................... 48
Section 6.11. Undertaking For Costs................................................................ 48
Section 6.12. No Personal Liability Of Directors, Officers, Employees And Stockholders............. 48
ARTICLE VII TRUSTEE............................................................................................. 48
Section 7.01. Duties Of Trustee.................................................................... 49
Section 7.02. Rights Of Trustee.................................................................... 50
Section 7.03. Individual Rights Of Trustee......................................................... 51
Section 7.04. Trustee's Disclaimer................................................................. 51
Section 7.05. Notice Of Defaults................................................................... 51
Section 7.06. Reports By Trustee To Holders Of The Notes........................................... 51
Section 7.07. Compensation And Indemnity........................................................... 52
Section 7.08. Replacement Of Trustee............................................................... 52
Section 7.09. Successor Trustee By Merger, Etc..................................................... 53
Section 7.10. Eligibility; Disqualification........................................................ 53
Section 7.11. Preferential Collection Of Claims Against Company.................................... 54
ARTICLE VIII LEGAL DEFEASANCE AND COVENANT DEFEASANCE........................................................... 54
Section 8.01. Option To Effect Legal Defeasance Or Covenant Defeasance............................. 54
Section 8.02. Legal Defeasance And Discharge....................................................... 54
Section 8.03. Covenant Defeasance.................................................................. 55
Section 8.04. Conditions To Legal Or Covenant Defeasance........................................... 55
Section 8.05. Deposited Money And Government Securities To Be Held In Trust; Other Miscellaneous
Provisions........................................................................... 56
Section 8.06. Repayment To Company................................................................. 57
Section 8.07. Reinstatement........................................................................ 57
ARTICLE IX AMENDMENT, SUPPLEMENT AND WAIVER..................................................................... 58
Section 9.01. Without Consent Of Holders Of Notes.................................................. 58
Section 9.02. With Consent Of Holders Of Notes..................................................... 58
Section 9.03. Compliance With Trust Indenture Act.................................................. 60
Section 9.04. Revocation And Effect Of Consents.................................................... 60
Section 9.05. Notation On Or Exchange Of Notes..................................................... 60
</TABLE>
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Section 9.06. Trustee To Sign Amendments, Etc...................................................... 60
ARTICLE X SUBORDINATION ..................................................................................... 61
Section 10.01. Agreement To Subordinate............................................................. 61
Section 10.02. Certain Definitions.................................................................. 61
Section 10.03. Liquidation; Dissolution; Bankruptcy................................................. 62
Section 10.04. Default On Designated Senior Debt.................................................... 62
Section 10.05. Acceleration Of Securities........................................................... 63
Section 10.06. When Distribution Must Be Paid Over.................................................. 63
Section 10.07. Notice By Company.................................................................... 64
Section 10.08. Subrogation.......................................................................... 64
Section 10.09. Relative Rights...................................................................... 64
Section 10.10. Subordination May Not Be Impaired By Company......................................... 64
Section 10.11. Distribution Or Notice To Representative............................................. 65
Section 10.12. Rights Of Trustee And Paying Agent................................................... 65
Section 10.13. Authorization To Effect Subordination................................................ 65
Section 10.14. Amendments........................................................................... 66
ARTICLE XI SUBSIDIARY GUARANTEES................................................................................ 66
Section 11.01. Guarantee............................................................................ 66
Section 11.02. Subordination Of Subsidiary Guarantee................................................ 67
Section 11.03. Limitation On Guarantor Liability.................................................... 67
Section 11.04. Execution And Delivery Of Note Guarantee............................................. 67
Section 11.05. Guarantors May Consolidate, Etc., On Certain Terms................................... 68
Section 11.06. Releases Following Sale Of Assets.................................................... 69
ARTICLE XII MISCELLANEOUS...................................................................................... 69
Section 12.01. Trust Indenture Act Controls......................................................... 69
Section 12.02. Notices.............................................................................. 69
Section 12.03. Communication By Holders Of Notes With Other Holders Of Notes........................ 70
Section 12.04. Certificate And Opinion As To Conditions Precedent................................... 71
Section 12.05. Statements Required In Certificate Or Opinion........................................ 71
Section 12.06. Rules By Trustee And Agents.......................................................... 71
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Section 12.07. No Personal Liability Of Directors, Officers, Employees And Stockholders............. 71
Section 12.08. Governing Law........................................................................ 72
Section 12.09. No Adverse Interpretation Of Other Agreements........................................ 72
Section 12.10. Successors........................................................................... 72
Section 12.11. Severability......................................................................... 72
Section 12.12. Counterpart Originals................................................................ 72
Section 12.13. Table Of Contents, Headings, Etc..................................................... 72
</TABLE>
EXHIBITS
Exhibit A FORM OF NOTE
Exhibit B FORM OF SUBSIDIARY GUARANTEE
Exhibit C CERTIFICATE TO BE DELIVERED UPON REGISTRATION OF
TRANSFER OF NOTES
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INDENTURE dated as of November 2, 1999 among Spanish
Broadcasting System, Inc., a Delaware corporation (the "Company"), each of the
entities listed on the signature pages hereto and The Bank of New York, a New
York banking corporation, as trustee (the "Trustee").
The Company, the Guarantors and the Trustee agree as follows
for the benefit of each other and for the equal and ratable benefit of the
Holders (as defined below) of the 9 5/8% Senior Subordinated Notes due 2009:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 DEFINITIONS.
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Acquisition Indebtedness" means Indebtedness incurred by the
Company or by a Restricted Subsidiary the proceeds of which are used for the
acquisition of a Permitted Business and related facilities and assets or for the
construction of a facility pursuant to a construction permit issued by the FCC.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by," and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that (a) beneficial ownership of at least 10% of the Voting
Stock of a Person shall be deemed to be control and (b) for purposes of the
"Transactions with Affiliates" covenant contained in Section 4.11, for so long
as Raul Alarcon Sr., Raul Alarcon Jr. or Jose Grimalt are directors, officers or
shareholders of the Company, they, their respective spouses, lineal descendants
and any Person controlled by any of them shall be Affiliates of the Company and
its Subsidiaries.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Procedures" means, with respect to any transfer or
exchange of or for beneficial interests in the Global Note, the rules and
procedures of the Depositary, that apply to such transfer or exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback), excluding sales of services and goods in the ordinary
course of business consistent with past practices (provided
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that the sale, lease, conveyance or other disposition of all or substantially
all of the assets of the Company and its Restricted Subsidiaries taken as a
whole will be governed by the provisions of Section 4.15 hereof and/or the
provisions of Section 5.01 hereof and not by the provisions of Section 4.10
hereof) and (ii) the issue or sale by the Company or any of its Subsidiaries of
Equity Interests of any of the Company's Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $5.0 million or (b)
for net proceeds in excess of $5.0 million.
Notwithstanding the foregoing, the following items will not be
deemed to be Asset Sales: (i) a transfer of assets by the Company to a Guarantor
or by a Guarantor to the Company or to another Guarantor, (ii) an issuance of
Equity Interests by a Guarantor to the Company or to another Guarantor, (iii)
the sale, lease or other disposition of equipment or other assets in the
ordinary course of business, (iv) the sale and leaseback of any assets within 90
days of the acquisition of such assets, (v) a Restricted Payment that is
permitted by Section 4.07 hereof, (vi) a transfer of any FCC License to a
Non-Guarantor Subsidiary, described in clause (i) of the definition thereof, and
(vii) an Asset Swap.
"Asset Swap" means the execution of a definitive agreement,
subject only to regulatory approval and other customary closing conditions, that
the Company in good faith believes will be satisfied, for a substantially
concurrent purchase and sale, or exchange, of assets used or useful in a
Permitted Business between the Company or any of its Restricted Subsidiaries and
another person or group of affiliated persons; provided that any amendment to or
waiver of any closing conditions which individually or in the aggregate is
material to the Asset Swap shall be deemed to be a new Asset Swap.
"Attributable Debt" in respect of a sale and leaseback
transaction means, at the time of determination, the present value (discounted
at the rate of interest implicit in such transaction, determined in accordance
with GAAP) of the obligation of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended).
"Bank Indebtedness" means (i) Indebtedness of the Company
incurred in accordance with this Indenture owing to one or more commercial
banking institutions that are members of the Federal Reserve System and (ii) any
guarantee by a Guarantor of any Indebtedness of the Company of the type set
forth in clause (i) of this definition.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal or state law for the relief of debtors.
"Beneficial Owner" has the meaning assigned to such term in
Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the
beneficial ownership of any particular "person," as such term is used in Section
13(d)(3) of the Exchange Act, such "person" shall be deemed to have beneficial
ownership of all securities that such "person" has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition.
"Board of Directors" means the Board of Directors of the
Company, or any authorized committee of the Board of Directors.
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"Business Day" means any day other than a Legal Holiday.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
capital lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership or limited
liability company, partnership or membership interests (whether general or
limited) and (iv) any other interest or participation that confers on a Person
the right to receive a share of the profits and losses of, or distributions of
assets of, the issuing Person.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof having maturities of
not more than one year from the date of acquisition, (iii) certificates of
deposit and eurodollar time deposits with maturities of one year or less from
the date of acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any domestic commercial
bank having capital and surplus in excess of $500.0 million and a Thompson Bank
Watch Rating of "B" or better, (iv) repurchase obligations with a term of not
more than seven days for underlying securities of the types described in clauses
(ii) and (iii) above entered into with any financial institution meeting the
qualifications specified in clause (iii) above and (v) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Corporation and in each case maturing within 270 days after the date of
acquisition and (vi) money market funds at least 95% of the assets of which
constitute Cash Equivalents of the kinds described in clauses (i) - (v) of this
definition.
"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition (or by
way of merger or consolidation), in one or a series of related transactions, of
all or substantially all of the assets of the Company and its Subsidiaries taken
as a whole to any "person" (as such term is used in Section 13(d)(3) of the
Exchange Act) other than the Principal or a Related Party of the Principal, (ii)
the adoption of a plan relating to the liquidation or dissolution of the
Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), other than the Principal and his Related Parties,
becomes the "Beneficial Owner," directly or indirectly, of more than 35% of the
Voting Stock of the Company or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Company" means Spanish Broadcasting System, Inc., a Delaware
corporation, and any and all successors thereto.
"Consolidated Cash Flow" means, with respect to any Person for
any period, the Consolidated Net Income of such Person for such period plus,
without duplication, (i) an amount equal to any extraordinary loss plus any net
loss realized in connection with an Asset Sale, to the extent such losses were
deducted in computing such Consolidated Net Income, plus (ii) provision for
taxes based on income or profits of such Person and its Restricted Subsidiaries
for such period, to the extent that such provision for taxes was deducted in
computing such Consolidated
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Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of debt issuance
costs and original issue discount, non-cash interest payments, the interest
component of any deferred payment obligations, the interest component of all
payments associated with Capital Lease Obligations, imputed interest with
respect to Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation expense for such period, to the extent the same was deducted in
computing such Consolidated Net Income, plus (v) all amortization expense and
other non-cash expenses (excluding any such non-cash expense to the extent that
it represents an accrual of or reserve for cash expenses in any future period)
for such period, to the extent the same was deducted in computing such
Consolidated Net Income, minus (vi) non-cash items increasing such Consolidated
Net Income for such period.
Consolidated Cash Flow shall be calculated on a pro forma
basis after giving effect to any acquisition as if such acquisition (including
any Consolidated Cash Flow associated with such acquisition) occurred on the
first day of the most recently ended four quarter period, giving pro forma
effect to any non-recurring expenses, non-recurring costs and cost reductions
within the first year after such acquisition which the Company anticipates if
the Company delivers to the Trustee an officer's certificate executed by its
chief financial or accounting officer certifying to and describing and
quantifying with reasonable specificity such non-recurring expenses,
non-recurring costs and cost reductions.
"Consolidated Indebtedness" means, with respect to any Person
as of any date of determination, the sum, without duplication, of (i) the total
amount of Indebtedness and Attributable Debt of such Person and its Restricted
Subsidiaries, plus (ii) the total amount of Indebtedness and Attributable Debt
of any other Person, to the extent that such Indebtedness or Attributable Debt
has been guaranteed by the referent Person or by one or more of its Restricted
Subsidiaries or is secured by a Lien on assets of the referent Person or any of
its Restricted Subsidiaries, plus (iii) the aggregate liquidation value of all
Disqualified Stock of such Person and all preferred stock of Restricted
Subsidiaries of such Person, in each case, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Interest Expense" means, with respect to any
Person for any period, the sum of: (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, imputed interest with respect to Attributable Debt,
commissions, discounts and other fees and charges incurred in respect of letters
of credit or bankers' acceptance financing, and net payments (if any) pursuant
to Hedging Obligations); and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period;
and (iii) any interest expense on Indebtedness or Attributable Debt of another
Person that is guaranteed by such Person or one of its Restricted Subsidiaries
or secured by a Lien on assets of such Person or one of its Restricted
Subsidiaries (whether or not such guarantee or Lien is called upon).
4
<PAGE> 12
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) except as otherwise provided in clause (v) below,
the positive Net Income of any Person that is not a Restricted Subsidiary or
that is accounted for by the equity method of accounting shall be included only
to the extent of the amount of dividends or distributions paid in cash to the
referent Person or a Restricted Subsidiary thereof, (ii) the Net Income of any
Restricted Subsidiary shall be excluded to the extent that the declaration or
payment of dividends or similar distributions by that Restricted Subsidiary of
that Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or indirectly,
by operation of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders, (iii) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition shall be excluded, (iv) the cumulative effect of a change in
accounting principles shall be excluded and (v) the Net Income of any
Unrestricted Subsidiary shall be excluded, whether or not distributed to the
Company or one of its Restricted Subsidiaries.
"Continuing Directors" means, as of any date of determination,
any member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the date hereof or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.
"Corporate Trust Office of the Trustee" shall be at the
address of the Trustee specified in Section 12.02 hereof or such other address
as to which the Trustee may give notice to the Company.
"Credit Facility" or "Credit Facilities" means one or more
debt facilities (including, without limitation, the Senior Credit Facilities) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as now in effect or at any time hereafter entered into and as amended,
restated, modified, renewed, refunded, replaced or refinanced in whole or in
part from time to time. Indebtedness under Credit Facilities outstanding on the
date on which Notes are first issued and authenticated under this Indenture
shall be deemed to have been incurred on such date in reliance on the exception
provided by clause (i) of the definition of Permitted Debt.
"Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.
"Debt to Cash Flow Ratio" means, with respect to any Person as
of any date of determination (the "Calculation Date"), the ratio of (a) the
Consolidated Indebtedness of such Person as of such date to (b) the Consolidated
Cash Flow of such Person for the four most recent full fiscal quarters ending
immediately prior to such date for which internal financial statements are
available, determined on a pro forma basis after giving effect to all
acquisitions and dispositions of assets made by such Person and its Restricted
Subsidiaries from the beginning of such four-quarter period through and
including such date of determination (including any related
5
<PAGE> 13
financing transactions) as if such acquisitions and dispositions had occurred at
the beginning of such four-quarter period. For purposes of making the
computation referred to above, (i) acquisitions that have been made by such
Person or any of its Restricted Subsidiaries, including through mergers or
consolidations and including any related financing transactions, during the
four-quarter reference period or subsequent to such reference period and on or
prior to the Calculation Date shall be deemed to have occurred on the first day
of the four-quarter reference period and Consolidated Cash Flow for such
reference period shall be calculated without giving effect to clause (iii) of
the proviso set forth in the definition of Consolidated Net Income and (ii) the
Consolidated Cash Flow attributable to discontinued operations, as determined in
accordance with GAAP, and operations or businesses disposed of by the Company or
any of its Restricted Subsidiaries prior to the Calculation Date, shall be
excluded.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Definitive Note" means a certificated Note registered in the
name of the Holder thereof and issued in accordance with Section 2.06 hereof, in
the form of Exhibit A hereto except that such Note shall not bear the Global
Note Legend and shall not have the "Schedule of Exchanges of Interests in the
Global Note" attached thereto.
"Depositary" means, with respect to the Notes issuable or
issued in whole or in part in global form, the Person specified in Section 2.03
hereof as the Depositary with respect to the Notes, and any and all successors
thereto appointed as depositary hereunder and having become such pursuant to the
applicable provision of this Indenture.
"Disqualified Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable at the option of the holder thereof), or upon the happening
of any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the date that is 91 days after the date on
which the Notes mature, provided, however, that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof have the right
to require the Company to repurchase such Capital Stock upon the occurrence of a
Change of Control or an Asset Sale shall not constitute Disqualified Stock if
the terms of such Capital Stock provide that the Company may not repurchase or
redeem any such Capital Stock pursuant to such provisions unless such repurchase
or redemption complies with Section 4.07 hereof.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing Indebtedness" means Indebtedness in existence on the
date hereof (other than Indebtedness under Credit Facilities), until such
Indebtedness is repaid.
"FCC License" means any licenses, permits and authorizations
issued by the Federal Communications Commission for the operation of stations.
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<PAGE> 14
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are in effect from time to time.
"Global Notes" means, the Global Notes, in the form of Exhibit
A hereto issued in accordance with Section 2.01 or 2.06(d)(i) hereof.
"Global Note Legend" means the legend set forth in Section
2.06(g)(ii), which is required to be placed on all Global Notes issued under
this Indenture.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America, and the payment for
which the United States pledges its full faith and credit.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, by way of a
pledge of assets or through letters of credit and reimbursement agreements in
respect thereof), of all or any part of any Indebtedness.
"Guarantor" means any Subsidiary of the Company that executes
a Subsidiary Guarantee.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"Holder" means a Person in whose name a Note is registered.
"Indebtedness" means, with respect to any Person, without
duplication, (i) any indebtedness of such Person, whether or not contingent, in
respect of borrowed money or evidenced by bonds, notes, debentures or similar
instruments or letters of credit (or reimbursement agreements in respect
thereof) or banker's acceptances or representing Capital Lease Obligations or
the balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations, except any such balance that constitutes
an accrued expense or trade payable, if and to the extent any of the foregoing
indebtedness (other than letters of credit and Hedging Obligations) would appear
as a liability upon a balance sheet of such Person prepared in accordance with
GAAP, (ii) all indebtedness of others secured by a Lien on any asset of such
Person (whether or not such indebtedness is assumed by such Person) and (iii) to
the extent not otherwise included, the guarantee by such Person of any
indebtedness of any other Person. Notwithstanding the foregoing, the term
"Indebtedness" shall not include Non-Recourse Debt or indebtedness that
constitutes "Indebtedness" merely by virtue of a pledge of Equity Interests of
an Unrestricted Subsidiary. The amount of any Indebtedness outstanding as of any
date shall be (A) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount, (B) the principal amount of the
Indebtedness secured, together with any interest thereon that is more than 30
days past due, in the case of any Indebtedness of the type described in clause
(ii) above, (C) the principal amount of the Indebtedness guaranteed, together
with any interest thereon that is more than 30 days past due, in the case of any
Indebtedness of
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<PAGE> 15
the type described in clause (iii) above, (D) the amount of the net settlement
payment payable on termination, in the case of any Indebtedness constituting a
Hedging Obligation (assuming for this purpose that the Hedging Obligation was
terminated on the date as of which the calculation of the amount of Indebtedness
is being made), and (E) the principal amount thereof, together with any interest
thereon that is more than 30 days past due, in the case of any other
Indebtedness.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Indirect Participant" means a Person who holds a beneficial
interest in a Global Note through a Participant.
"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of direct or indirect loans (including guarantees of Indebtedness or other
obligations), advances or capital contributions (excluding commission, travel
and similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities, together with all items that are or would
be classified as investments on a balance sheet prepared in accordance with
GAAP. If the Company or any Subsidiary of the Company sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of the
Company such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of the Company, the Company shall be deemed to
have made an Investment on the date of any such sale or disposition equal to the
fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the third paragraph of
Section 4.07 hereof.
"Legal Holiday" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a payment
date is a Legal Holiday at a place of payment, payment may be made at that place
on the next succeeding day that is not a Legal Holiday, and no interest shall
accrue on such payment for the intervening period.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Make-Whole Premium" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Premium may in no
event be less than zero. For the purposes of determining the Make-Whole Premium,
the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the
principal of such Note that is declared to be immediately due and payable.
"Discounted Value" means, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with
8
<PAGE> 16
respect to such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with respect
to such Called Principal.
"Reinvestment Yield" means, with respect to the Called
Principal of any Note, 0.5% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (Eastern Standard time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as "Page 678" on the Telerate Access Service (or such other
display as may replace Page 678 on the Telerate Access Service) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are not
ascertainable, the Treasury Constant Maturity Series Yields reported, for the
latest day for which such yields have been so reported as of the second Business
Day preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable successor
publication) for actively traded U.S. Treasury securities having a constant
maturity equal to the Remaining Average Life of such Called Principal as of such
Settlement Date. Such implied yield will be determined, if necessary, by (a)
converting U.S. Treasury bill quotations to bond-equivalent yields in accordance
with accepted financial practice and (b) interpolating linearly between (1) the
actively traded U.S. Treasury security with the duration closest to and greater
than the Remaining Average Life and (2) the actively traded U.S. Treasury
security with the duration closest to and less than the Remaining Average Life.
"Remaining Average Life" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth year)
obtained by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining Scheduled
Payment with respect to such Called Principal by (b) the number of years
(calculated to the nearest one-twelfth year) that will elapse between the
Settlement Date with respect to such Called Principal and the scheduled due date
of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the
Called Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such Called
Principal if no payment of such Called Principal were made prior to its
scheduled due date, provided that if such Settlement Date is not a date on which
interest payments are due to be made under the terms of the Notes, then the
amount of the next succeeding scheduled interest payment will be reduced by the
amount of interest accrued to such Settlement Date and required to be paid on
such Settlement Date.
"Settlement Date" means, with respect to the Called
Principal of any Note, the date on which such Called Principal is declared to be
immediately due and payable.
"Net Income" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions) or
(b) the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries and (ii)
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<PAGE> 17
any extraordinary gain (but not loss), together with any related provision for
taxes on such extraordinary gain (but not loss).
"Net Proceeds" means the aggregate cash proceeds received by
the Company or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale or disposition (including, without
limitation, legal, accounting and investment banking fees, and sales
commissions) and any relocation expenses incurred as a result thereof, taxes
paid or payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements), amounts required to be
applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for indemnities,
reimbursements or adjustment in respect of the sale price of such asset or
assets established in accordance with GAAP.
"Non-Guarantor Subsidiaries" means (i) those single-purpose
Restricted Subsidiaries of the Company created or acquired after the date of
this Indenture which own one or more FCC Licenses and related rights and no
other material assets, (ii) those Subsidiaries of the Company created or
acquired after the date of the Indenture that are not incorporated under the
laws of the United States of America or a state of the United States of America,
and (iii) JuJu Media, Inc., a New York corporation.
"Non-Recourse Debt" means Indebtedness: (i) as to which
neither the Company nor any of its Restricted Subsidiaries (a) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise) or (c) constitutes the lender; (ii) no default with
respect to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the Notes being offered hereby) of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Company or any of its Restricted
Subsidiaries.
"Non-U.S. Person" means a Person who is not a U.S. Person.
"Notes" means the 9 5/8% Senior Subordinated Notes due 2009,
authenticated and issued by the Company pursuant to this Indenture.
"Obligations" means any principal, interest, prepayment or
make-whole premium, penalties, fees, indemnifications, reimbursements, damages
and other liabilities payable under the documentation governing any Indebtedness
or any guarantee thereof.
"Offering" means the offering of the Notes by the Company.
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice-President of such Person.
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<PAGE> 18
"Officers' Certificate" means a certificate signed on behalf
of the Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer or the principal accounting
officer of the Company, that meets the requirements of Section 12.05 hereof.
"Opinion of Counsel" means an opinion from legal counsel who
is reasonably acceptable to the Trustee, that meets the requirements of Section
12.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"Participant" means, with respect to the Depositary, a Person
who has an account with the Depositary.
"Participating Broker-Dealer" has the meaning set forth in the
Registration Rights Agreement.
"Permitted Business" means the media business and any business
reasonably similar, complementary, ancillary or related thereto, including, the
operation of latin music Web sites and internet portals.
"Permitted Investments" means (i) any Investment in the
Company or in a Restricted Subsidiary; (ii) any Investment in Cash Equivalents;
(iii) any Investment by the Company or any Restricted Subsidiary of the Company
in a Person engaged in a Permitted Business, if (a) as a result of, or
concurrently with, such Investment such Person becomes a Restricted Subsidiary
or (b) as a result of, or concurrently with, such Investment such Person is
merged, consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary; or (c) the Company or a Restricted Subsidiary has entered
into a binding agreement to acquire such Person or all or substantially all of
the assets of such Person, which agreement is in effect on the date of such
Investment, and such Person becomes a Restricted Subsidiary or such transaction
is consummated, in each case, within 180 days of the date of such Investment;
(iv) any Restricted Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with Section 4.10 hereof; (v) any obligations or shares of Capital Stock
received in connection with or as a result of a bankruptcy, workout or
reorganization of the issuer of such obligations or shares of Capital Stock;
(vi) any Investment received involuntarily; (vii) any acquisition of assets
solely in exchange for the issuance of Equity Interests (other than Disqualified
Stock) of the Company; (viii) other Investments in Persons engaged in Permitted
Businesses (measured on the date each such Investment was made and without
giving effect to subsequent changes in value), when taken together with all
other Investments made pursuant to this clause (viii) that are at the time
outstanding, not to exceed $7.5 million; (ix) Investments by the Company or any
of its Restricted Subsidiaries in any other person pursuant to the terms of a
"local marketing agreement" or similar arrangement relating to a radio station
owned or licensed by such Person; (x) Hedging Obligations; (xi) the incurrence
by the Company or any of its Restricted Subsidiaries of performance, bid or
advance payment bonds, surety bonds, custom bonds, utility bonds and similar
obligations arising in the ordinary course of business; (xii) endorsements of
instruments for collection or deposit in the ordinary course of business; (xiii)
loans and advances to employees and officers not to exceed $2.5 million
outstanding in the aggregate at any time; (xiv) loans to employees, directors
and officers in connection with the purchase by such Persons of Equity Interests
of the Company; (xv) investments in account debtors received in connection with
the bankruptcy or
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<PAGE> 19
reorganization, or in settlement of delinquent obligations, of customers; and
(xvi) investments in existence on the date of this Indenture.
"Permitted Liens" means (i) Liens securing Senior Debt that
was permitted by the terms hereof to be incurred; (ii) Liens in favor of the
Company or any of its Restricted Subsidiaries; (iii) Liens on property of a
Person existing at the time such Person is merged into or consolidated with the
Company or any Restricted Subsidiary of the Company; provided that such Liens
were not incurred in contemplation of such merger or consolidation and do not
extend to any assets other than those of the Person merged into or consolidated
with the Company; (iv) Liens on property existing at the time of acquisition
thereof by the Company or any Restricted Subsidiary of the Company, provided
that such Liens were in existence prior to the contemplation of such
acquisition; (v) Liens to secure the performance of statutory obligations,
surety or appeal bonds, performance bonds or other obligations of a like nature
incurred in the ordinary course of business; (vi) Liens existing on the date
hereof; (vii) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently concluded, provided
that any reserve or other appropriate provision as shall be required in
conformity with GAAP shall have been made therefor; (viii) Liens incurred in the
ordinary course of business of the Company or any Restricted Subsidiary of the
Company with respect to obligations that do not exceed $2.5 million at any one
time outstanding; (ix) Liens securing industrial revenue bonds; (x) Liens to
secure Purchase Money Indebtedness that is otherwise permitted under the
Indenture, provided that (a) any such Lien is created solely for the purpose of
securing Indebtedness representing, or incurred to finance, refinance or refund,
the cost (including sales and excise taxes, installation and delivery charges
and other direct costs of, and other direct expenses paid or charged in
connection with, such purchase or construction) of such Property, (b) the
principal amount of the Indebtedness secured by such Lien does not exceed 100%
of such costs, and (c) such Lien does not extend to or cover any Property other
than such item of Property and any improvements on such item; (xi) Liens
securing Obligations in respect of the Senior Credit Facilities; (xii) Liens
securing Bank Indebtedness; (xiii) Liens securing Acquisition Indebtedness,
provided that such Liens do not extend to or cover any Property other than the
Property acquired with the proceeds of such Acquisition Indebtedness and any
improvements thereto; (xiv) Liens securing Permitted Refinancing Indebtedness;
and (xv) Liens securing Ratio Indebtedness; (xvi) Liens to secure Indebtedness
(including Capital Lease Obligations) permitted to be incurred by the section
entitled "Incurrence of Indebtedness and Issuance of Preferred Stock," covering
only the assets acquired with such Indebtedness; (xvii) zoning restrictions,
easements, licenses, covenants and other similar restrictions and encumbrances
affecting the use of real property not interfering in any material respect with
the ordinary conduct of business of the Company and its Restricted Subsidiaries;
(xviii) judgment liens not giving rise to an Event of Default; (xix) Liens,
rights to setoff and credit balances with respect to deposit accounts and other
Cash Equivalents; (xx) deposits with the owner or lessor of premises leased and
operated in the ordinary course of business; (xxi) nonconsensual liens that do
not individually or in the aggregate detract materially from the value of
transferability of the assets of the Company or any of its Restricted
Subsidiaries, or impair materially the use of any such assets in the operation
of the respective businesses of the Company and its Restricted Subsidiaries; and
(xxii) Liens securing Hedging Obligations.
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<PAGE> 20
"Permitted Refinancing Indebtedness" means any Indebtedness of
the Company or any of its Restricted Subsidiaries or any Disqualified Stock of
the Company issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund other Indebtedness of the
Company or any of its Restricted Subsidiaries; provided that: (i) the principal
amount (or accreted value or liquidation preference, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount of (or
accreted value, if applicable), plus accrued interest on, the Indebtedness so
extended, refinanced, renewed, replaced, defeased or refunded (plus the amount
of reasonable expenses and premiums incurred in connection therewith); (ii) such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of, the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or refunded
is pari passu with the Notes, such Permitted Refinancing Indebtedness is pari
passu with or subordinated in right of payment to the Notes or is Disqualified
Stock; (iv) if the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded is subordinated in right of payment to the Notes, such
Permitted Refinancing Indebtedness is subordinated in right of payment to the
Notes on terms at least as favorable to the Holders of Notes as those contained
in the documentation governing the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded or is Disqualified Stock; and (v) such
Indebtedness is incurred either by the Company or by the Restricted Subsidiary
that is the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded, or such Disqualified Stock is issued by the
Company, as applicable.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or agency or political subdivision thereof (including any subdivision
or ongoing business of any such entity or substantially all of the assets of any
such entity, subdivision or business).
"Principal" means Raul Alarcon, Jr.
"Property" of any Person means all types of real, Personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Purchase Money Indebtedness" means any Indebtedness incurred
in the ordinary course of business by a Person to finance the cost (including
the cost of construction) of an item of property, the principal amount of which
Indebtedness does not exceed the sum of (i) 100% of such cost and (ii)
reasonable fees and expenses of such Person incurred in connection therewith.
"Ratio Indebtedness" means (i) Indebtedness of the Company
incurred in compliance with the first paragraph of the Section 4.09 which is not
Permitted Refinancing Indebtedness and (ii) any guarantee by a Restricted
Subsidiary of any Indebtedness of the Company of the type set forth in clause
(i) of this definition.
"Related Party" with respect to the Principal means (i) any
spouse or immediate family member of the Principal or (ii) any trust,
corporation, partnership or other entity, the beneficiaries, stockholders,
partners, owners or Persons beneficially holding an 50% or more
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<PAGE> 21
controlling interest of which consist of the Principal and/or such other Persons
referred to in the immediately preceding clause (i).
"Responsible Officer," when used with respect to the Trustee,
means any officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Restricted Investment" means an Investment other than a
Permitted Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of
the referent Person that is not an Unrestricted Subsidiary.
"Rule 903" means Rule 903 promulgated under the Securities
Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facilities" means the senior credit facilities
contemplated to be entered into by the Company and Lehman Commercial Paper Inc.
as amended, restated, modified, renewed, refunded, replaced or refinanced in
whole or in part from time to time.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof.
"Stated Maturity" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
total voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or indirectly, by
such Person or one or more of the other Subsidiaries of that Person (or a
combination thereof).
"Subsidiary Guarantee" means the Guarantee by each Guarantor
of the Company's payment obligations under this Indenture and the Notes,
executed pursuant to the provisions of this Indenture.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA, except as provided by Section 9.03 hereof.
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<PAGE> 22
"Trustee" means the party named as such above until a
successor replaces it in accordance with the applicable provisions of this
Indenture and thereafter means the successor serving hereunder.
"Unrestricted Subsidiary" means (i) any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
resolution of the Board of Directors, but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Restricted Subsidiary than those that might be obtained at the time from Persons
who are not Affiliates of the Company; (c) is a Person with respect to which
neither the Company nor any of its Restricted Subsidiaries has any direct or
indirect obligation (1) to subscribe for additional Equity Interests or (2) to
maintain or preserve such Person's financial condition or to cause such Person
to achieve any specified levels of operating results; (d) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Restricted Subsidiaries; and (e) has at least one
director on its board of directors that is not a director or executive officer
of the Company or any of its Restricted Subsidiaries and has at least one
executive officer that is not a director or executive officer of the Company or
any of its Restricted Subsidiaries.
"U.S. Person" means a U.S. person as defined in Rule 902(o)
under the Securities Act.
"Voting Stock" of any Person as of any date means the Capital
Stock of such Person that is at the time entitled to vote in the election of the
Board of Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"Wholly Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
other ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly Owned
Restricted Subsidiaries of such Person and one or more Wholly Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
<S> <C>
"Affiliate Transaction"............................................ 4.11
"Asset Sale Offer"................................................. 4.10
"Authentication Order"............................................. 2.02
"Change of Control Offer".......................................... 4.15
</TABLE>
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<PAGE> 23
<TABLE>
<S> <C>
"Change of Control Payment"........................................ 4.15
"Change of Control Payment Date"................................... 4.15
"Covenant Defeasance".............................................. 8.03
"Designated Senior Debt"........................................... 10.02
"DTC".............................................................. 2.03
"Event of Default"................................................. 6.01
"Excess Proceeds".................................................. 4.10
"incur"............................................................ 4.09
"Legal Defeasance"................................................. 8.02
"Notice of Default"................................................ 6.01
"Offer Amount"..................................................... 3.09
"Offer Period"..................................................... 3.09
"Paying Agent"..................................................... 2.03
"Payment Blockage Notice".......................................... 10.04
"Payment Default".................................................. 6.01
"Permitted Debt"................................................... 4.09
"Permitted Junior Securities"...................................... 10.02
"Purchase Date".................................................... 3.09
"Registrar"........................................................ 2.03
"Representative"................................................... 10.02
"Restricted Payments".............................................. 4.07
"Senior Debt"...................................................... 10.02
</TABLE>
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the
following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the
Trustee; and
"obligor" on the Notes and the Subsidiary Guarantees means the
Company and the Guarantors, respectively, and any successor obligor upon the
Notes and the Subsidiary Guarantees, respectively.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule under
the TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
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<PAGE> 24
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined
has the meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the
plural, and in the plural include the singular;
(5) provisions apply to successive events
and transactions; and
(6) references to sections of or rules under
the Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the SEC from time to time.
ARTICLE II
THE NOTES
SECTION 2.01. FORM AND DATING.
(a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.
(b) The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.
(c) Global Notes.
Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the Global Note Legend thereon
and the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Notes issued in definitive form shall be substantially in the form of
Exhibit A attached hereto (but without the Global Note Legend thereon and
without the "Schedule of Exchanges of Interests in the Global Note" attached
thereto). Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate principal amount of outstanding Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding Notes represented
thereby may from time to time be reduced or increased, as appropriate, to
reflect exchanges and redemptions. Any endorsement of a Global Note to reflect
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<PAGE> 25
the amount of any increase or decrease in the aggregate principal amount of
outstanding Notes represented thereby shall be made by the Trustee or the Note
Custodian, at the direction of the Trustee, in accordance with instructions
given by the Holder thereof as required by Section 2.06 hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers shall sign the Notes for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds
that office at the time a Note is authenticated, the Note shall nevertheless be
valid.
A Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that the
Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed
by two Officers (an "Authentication Order"), authenticate Notes for original
issue in any aggregate principal amount. The aggregate principal amount of Notes
that may be authenticated and delivered under the Indenture is unlimited.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Notes. An authenticating agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Holders or an
Affiliate of the Company.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Notes may
be presented for registration of transfer or for exchange ("Registrar") and an
office or agency where Notes may be presented for payment ("Paying Agent"). The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may appoint one or more co-registrars and one or more additional
paying agents. The term "Registrar" includes any co-registrar and the term
"Paying Agent" includes any additional paying agent. The Company may change any
Paying Agent or Registrar without notice to any Holder. The Company shall notify
the Trustee in writing of the name and address of any Agent not a party to this
Indenture. If the Company fails to appoint or maintain another entity as
Registrar or Paying Agent, the Trustee shall act as such. The Company or any of
its Subsidiaries may act as Paying Agent or Registrar.
The Company initially appoints The Depository Trust Company
("DTC") to act as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the
Registrar and Paying Agent and to act as Note Custodian with respect to the
Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all
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<PAGE> 26
money held by the Paying Agent for the payment of principal, premium, if any, or
interest on the Notes, and will notify the Trustee of any default by the Company
in making any such payment. While any such default continues, the Trustee may
require a Paying Agent to pay all money held by it to the Trustee. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the
Company or a Subsidiary) shall have no further liability for the money. If the
Company or a Subsidiary acts as Paying Agent, it shall segregate and hold in a
separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the
Company, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish to the Trustee at
least fifteen days before each interest payment date and at such other times as
the Trustee may request in writing, a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of the Holders of
Notes and the Company shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole
except by the Depositary to a nominee of the Depositary, by a nominee of the
Depositary to the Depositary or to another nominee of the Depositary, or by the
Depositary or any such nominee to a successor Depositary or a nominee of such
successor Depositary. All Global Notes will be exchanged by the Company for
Definitive Notes if (i) the Company delivers to the Trustee notice from the
Depositary that it is unwilling or unable to continue to act as Depositary or
that it is no longer a clearing agency registered under the Exchange Act and, in
either case, a successor Depositary is not appointed by the Company within 120
days after the date of such notice from the Depositary or (ii) the Company in
its sole discretion determines that the Global Notes (in whole but not in part)
should be exchanged for Definitive Notes and delivers a written notice to such
effect to the Trustee. Upon the occurrence of either of the preceding events in
(i) or (ii) above, Definitive Notes shall be issued in such names as the
Depositary shall instruct the Trustee. Global Notes also may be exchanged or
replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or
2.10 hereof, shall be authenticated and delivered in the form of, and shall be,
a Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.06(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.06(b), (c) or (f)
hereof.
(b) Transfer and Exchange of Beneficial Interests in the
Global Notes.
The transfer and exchange of beneficial interests in
the Global Notes shall be effected through the Depositary, in accordance with
the provisions of this Indenture and the
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Applicable Procedures. Transfers of beneficial interests in the Global Notes
also shall require compliance with the following subparagraphs:
(i) Transfer of Beneficial Interests in the Same Global Note.
Beneficial interests in any Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in such Global Note. No
written orders or instructions shall be required to be delivered to the
Registrar to effect the transfers described in this Section 2.06(b)(i).
(ii) All Other Transfers and Exchanges of Beneficial Interests
in Global Notes. In connection with all transfers and exchanges of beneficial
interests that are not subject to Section 2.06(b)(i) above, the transferor of
such beneficial interest must deliver to the Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by
the Depositary to the Registrar containing information regarding the Person in
whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (1) above.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
(i) If any holder of a beneficial interest in a Global Note
proposes to exchange such beneficial interest for a Definitive Note or to
transfer such beneficial interest to a Person who takes delivery thereof in the
form of a Definitive Note, then, upon satisfaction of the conditions set forth
in Section 2.06(b)(ii) hereof, the Trustee shall cause the aggregate principal
amount of the applicable Global Note to be reduced accordingly pursuant to
Section 2.06(g) hereof, and the Company shall execute and the Trustee shall,
upon receipt of an Authentication Order in accordance with Section 2.02 hereof,
authenticate and deliver to the Person designated in the instructions a
Definitive Note in the appropriate principal amount. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.06(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Notes are so registered.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) A Holder of Definitive Note may exchange such Note for a
beneficial interest in Global Note or transfer such Definitive Notes to a Person
who takes delivery thereof in the form of a beneficial interest in Global Note
at any time. Upon receipt of a request for such an exchange or transfer, the
Trustee shall cancel the applicable Definitive Note and increase or cause to be
increased the aggregate principal amount of one of the Global Notes.
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If any such exchange or transfer from a
Definitive Note to a beneficial interest is effected at a time when
Global Note has not yet been issued, the Company shall issue and, upon
receipt of an Authentication Order in accordance with Section 2.02
hereof, the Trustee shall authenticate one or more Global Notes in an
aggregate principal amount equal to the principal amount of Definitive
Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive
Notes.
Upon request by a Holder of Definitive Notes and such
Holder's compliance with the provisions of this Section 2.06(e), the Registrar
shall register the transfer or exchange of Definitive Notes. Prior to such
registration of transfer or exchange, the requesting Holder shall present or
surrender to the Registrar the Definitive Notes duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar duly
executed by such Holder or by his attorney, duly authorized in writing.
(f) Legend.
The following legend shall appear on the face of all
Global Notes issued under this Indenture unless specifically stated otherwise in
the applicable provisions of this Indenture.
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR
THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT
TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT
(I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE
REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS
GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT
TO SECTION 2.06(a) OF THE INDENTURE, (III) THIS GLOBAL NOTE
MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
CONSENT OF THE COMPANY."
(g) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a
particular Global Note have been exchanged for Definitive Notes or a particular
Global Note has been redeemed, repurchased or canceled in whole and not in part,
each such Global Note shall be returned to or retained and canceled by the
Trustee in accordance with Section 2.11 hereof. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for or
transferred to a Person who will take delivery thereof in the form of a
beneficial interest in another Global Note or for Definitive Notes, the
principal amount of Notes represented by such Global Note shall be reduced
accordingly and an endorsement shall be made on such Global Note by the Trustee
or by the Depositary to reflect such reduction; and if the beneficial interest
is being exchanged for or transferred to a Person who will take delivery thereof
in the form of a beneficial interest in
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<PAGE> 29
another Global Note, such other Global Note shall be increased accordingly and
an endorsement shall be made on such Global Note by the Trustee or by the
Depositary to reflect such increase.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
the Company shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon the Company's order or at the Registrar's request.
(ii) No service charge shall be made to a holder of a
beneficial interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require payment of a
sum sufficient to cover any transfer tax or similar governmental charge payable
in connection therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer pursuant to Sections 2.10,
3.06, 3.09, 4.10, 4.15 and 9.05 hereof).
(iii) The Registrar shall not be required to register
the transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(iv) All Global Notes and Definitive Notes issued upon
any registration of transfer or exchange of Global Notes or Definitive Notes
shall be the valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Global Notes or
Definitive Notes surrendered upon such registration of transfer or exchange.
(v) The Company shall not be required (A) to issue, to
register the transfer of or to exchange any Notes during a period beginning at
the opening of business 15 days before the day of mailing of a notice of
redemption of Notes selected for redemption under Section 3.02 hereof and ending
at the close of business on the day of such mailing, (B) to register the
transfer of or to exchange any Note so selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part or (C) to
register the transfer of or to exchange a Note between a record date and the
next succeeding Interest Payment Date.
(vi) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and the Company may deem and treat
the Person in whose name any Note is registered as the absolute owner of such
Note for the purpose of receiving payment of principal of and interest on such
Notes and for all other purposes, and none of the Trustee, any Agent or the
Company shall be affected by notice to the contrary.
(vii) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.02 hereof.
(viii) All certifications, certificates and Opinions of Counsel required to be
submitted to the Registrar pursuant to this Section 2.06 to effect a
registration of transfer or exchange may be submitted by facsimile.
SECTION 2.07. REPLACEMENT NOTES.
If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, the
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Company shall issue and the Trustee, upon receipt of an Authentication Order,
shall authenticate a replacement Note if the Trustee's requirements are met. If
a Note is destroyed, lost or stolen, an indemnity bond must be supplied by the
Holder that is sufficient in the reasonable judgment of the Trustee and the
Company to protect the Company, the Trustee, any Agent and any authenticating
agent from any loss that any of them may suffer if a Note is replaced. The
Company may charge for its expenses in replacing a Note.
Every replacement Note is an additional obligation of the
Company and shall be entitled to all of the benefits of this Indenture equally
and proportionately with all other Notes duly issued hereunder.
SECTION 2.08. OUTSTANDING NOTES.
The Notes outstanding at any time are all the Notes
authenticated by the Trustee except for those canceled by it, those delivered to
it for cancellation, those reductions in the interest in a Global Note effected
by the Trustee in accordance with the provisions hereof, and those described in
this Section as not outstanding. Except as set forth in Section 2.09 hereof, a
Note does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note; however, Notes held by the Company or a Subsidiary of
the Company shall not be deemed to be outstanding for purposes of Section
3.07(b) hereof.
If a Note is replaced pursuant to Section 2.07 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
If the Paying Agent (other than the Company, a Subsidiary or
an Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company, shall
be considered as though not outstanding, except that for the purposes of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Notes that a Responsible Officer of the
Trustee actually knows are so owned shall be so disregarded. The Company agrees
to notify the Trustee of the existence of any Notes owned by the Company, any
Guarantor, or, to the extent known by the Company, any Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company or any Guarantor.
SECTION 2.10. TEMPORARY NOTES.
Until certificates representing Notes are ready for delivery,
the Company may prepare and the Trustee, upon receipt of an Authentication
Order, shall authenticate temporary
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Notes. Temporary Notes shall be substantially in the form of certificated Notes
but may have variations that the Company considers appropriate for temporary
Notes and as shall be reasonably acceptable to the Trustee.
Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Notes in exchange for temporary Notes.
Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee and no one else shall cancel all Notes surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall dispose of
such cancelled Notes in accordance with its customary procedures subject to any
requirements imposed by law. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Company defaults in a payment of interest on the Notes,
it shall pay the defaulted interest in any lawful manner plus, to the extent
lawful, interest payable on the defaulted interest, to the Persons who are
Holders on a subsequent special record date, in each case at the rate provided
in the Notes and in Section 4.01 hereof. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each Note and
the date of the proposed payment. The Company shall fix or cause to be fixed
each such special record date and payment date, provided that no such special
record date shall be less than 10 days prior to the related payment date for
such defaulted interest. At least 15 days before the special record date, the
Company (or, upon the written request of the Company, the Trustee in the name
and at the expense of the Company) shall mail or cause to be mailed to Holders a
notice that states the special record date, the related payment date and the
amount of such interest to be paid.
SECTION 2.13. CUSIP NUMBERS.
The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
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ARTICLE III
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Company elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.07 hereof, it shall furnish to the Trustee,
at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed, (iv) the redemption price, and (v) the CUSIP
numbers of the Notes to be redeemed.
If the Company is required to make an offer to purchase Notes
pursuant to the provisions of Section 3.09 or 4.15 hereof, it shall furnish to
the Trustee an Officers' Certificate setting forth (i) the Section of this
Indenture pursuant to which the purchase shall occur, (ii) the purchase date,
(iii) the principal amount of Notes to be purchased, (iv) the purchase price and
(v) a statement to the effect that (a) the Company or one of its Subsidiaries
has effected an Asset Sale and the conditions set forth in Sections 3.09 and
4.10 have been satisfied or (b) a Change of Control has occurred and the
conditions set forth in Section 4.15 have been satisfied, as applicable.
SECTION 3.02. SELECTION OF NOTES TO BE REDEEMED.
If less than all of the Notes are to be redeemed or purchased
in an offer to purchase at any time, the Trustee shall select the Notes to be
redeemed or purchased among the Holders of the Notes in compliance with the
requirements of the principal national securities exchange, if any, on which the
Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular Notes to
be redeemed shall be selected, unless otherwise provided herein, not less than
30 nor more than 60 days prior to the redemption date by the Trustee from the
outstanding Notes not previously called for redemption.
The Trustee shall promptly notify the Company in writing of
the Notes selected for redemption and, in the case of any Note selected for
partial redemption, the principal amount thereof to be redeemed. Notes and
portions of Notes selected shall be in amounts of $1,000 or whole multiples of
$1,000; except that if all of the Notes of a Holder are to be redeemed, the
entire outstanding amount of Notes held by such Holder, even if not a multiple
of $1,000, shall be redeemed. Except as provided in the preceding sentence,
provisions of this Indenture that apply to Notes called for redemption also
apply to portions of Notes called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30
days but not more than 60 days before a redemption date, the Company shall mail
or cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Notes are to be redeemed at its registered address.
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<PAGE> 33
The notice shall identify the Notes to be redeemed, including
the CUSIP numbers, and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption date
upon surrender of such Note, a new Note or Notes in principal amount equal to
the unredeemed portion shall be issued upon cancellation of the original Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(f) that, unless the Company defaults in making such
redemption payment, interest on Notes called for redemption ceases to accrue on
and after the redemption date;
(g) the paragraph of the Notes and/or Section of this
Indenture pursuant to which the Notes called for redemption are being redeemed;
and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; provided, however, that the
Company shall have delivered to the Trustee, at least 45 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and setting forth the information to be stated in such notice as provided
in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Notes called for redemption become irrevocably due and payable on
the redemption date at the redemption price. A notice of redemption may not be
conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of and accrued interest on all Notes to be redeemed on that
date. The Trustee or the Paying Agent shall promptly return to the Company any
money deposited with the Trustee or the Paying Agent by the Company in excess of
the amounts necessary to pay the redemption price of, and accrued interest on,
all Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue on
the Notes or the portions of Notes
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called for redemption. If a Note is redeemed on or after an interest record date
but on or prior to the related interest payment date, then any accrued and
unpaid interest shall be paid to the Person in whose name such Note was
registered at the close of business on such record date. If any Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Company to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the Notes and in Section 4.01
hereof.
SECTION 3.06. NOTES REDEEMED IN PART.
Upon surrender of a Note that is redeemed in part, the Company shall
issue and, upon the Company's written request, the Trustee shall authenticate
for the Holder at the expense of the Company a new Note equal in principal
amount to the unredeemed portion of the Note surrendered.
SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 3.07, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.07 prior to November 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest and Liquidated
Damages, if any, thereon to the applicable redemption date, if redeemed during
the twelve-month period beginning on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2004......................................... 104.813%
2005......................................... 103.208%
2006......................................... 101.604%
2007 and thereafter.......................... 100.000%
</TABLE>
(b) Notwithstanding the foregoing, prior to November 1, 2002, the
Company may, on any one or more occasions, redeem up to 35% of the aggregate
principal amount of Notes originally issued in the Offering at a redemption
price of 109.625% of the principal amount thereof, plus accrued and unpaid
interest, thereon to the redemption date, with the net cash proceeds of an
offering of common equity of the Company (other than Disqualified Stock);
provided that (i) at least 65% of the aggregate principal amount of the Notes
originally issued in the Offering remain outstanding immediately after the
occurrence of each such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) each such redemption shall occur within 75 days after the
date of the closing of any such offering of common equity of the Company.
(c) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
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SECTION 3.08. MANDATORY REDEMPTION.
The Company shall not be required to make mandatory redemption
payments with respect to the Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the
Company shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20
Business Days following its commencement and no longer, except to the extent
that a longer period is required by applicable law (the "Offer Period"). No
later than five Business Days after the termination of the Offer Period (the
"Purchase Date"), the Company shall purchase the principal amount of Notes
required to be purchased pursuant to Section 4.10 hereof (the "Offer Amount")
or, if less than the Offer Amount has been tendered, all Notes tendered in
response to the Asset Sale Offer. Payment for any Notes so purchased shall be
made in the same manner as interest payments are made.
If the Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest shall be paid to the Person in whose name a Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company
shall send, by first class mail, a notice to the Trustee and each of the
Holders. The notice shall contain all instructions and materials necessary to
enable such Holders to tender Notes pursuant to the Asset Sale Offer. The Asset
Sale Offer shall be made to all Holders. The notice, which shall govern the
terms of the Asset Sale Offer, shall state:
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer shall
remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Note not tendered or accepted for payment shall
continue to accrete or accrue interest;
(d) that, unless the Company defaults in making such payment, any
Note accepted for payment pursuant to the Asset Sale Offer shall cease to
accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to an
Asset Sale Offer may only elect to have all of such Note purchased and may not
elect to have only a portion of such Note purchased;
(f) that Holders electing to have a Note purchased pursuant to any
Asset Sale Offer shall be required to surrender the Note, with the form entitled
"Option of Holder to Elect Purchase" on the reverse of the Note completed, or
transfer by book-entry transfer, to the
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<PAGE> 36
Company, a depositary, if appointed by the Company, or a Paying Agent at the
address specified in the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased;
(h) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Offer Amount, the Company shall select the Notes to be
purchased on a pro rata basis (with such adjustments as may be deemed
appropriate by the Company so that only Notes in denominations of $1,000, or
integral multiples thereof, shall be purchased); and
(i) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered (or transferred by book-entry transfer).
On or before the Purchase Date, the Company shall, to
the extent lawful, accept for payment, on a pro rata basis to the extent
necessary, the Offer Amount of Notes or portions thereof tendered pursuant to
the Asset Sale Offer, or if less than the Offer Amount has been tendered, all
Notes tendered, and shall deliver to the Trustee an Officers' Certificate
stating that such Notes or portions thereof were accepted for payment by the
Company in accordance with the terms of this Section 3.09. The Company, the
Depositary or the Paying Agent, as the case may be, shall promptly (but in any
case not later than five days after the Purchase Date) mail or deliver to each
tendering Holder an amount equal to the purchase price of the Notes tendered by
such Holder and accepted by the Company for purchase, and the Company shall
promptly issue a new Note, and the Trustee, upon written request from the
Company shall authenticate and mail or deliver such new Note to such Holder, in
a principal amount equal to any unpurchased portion of the Note surrendered. Any
Note not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company shall publicly announce the results of the Asset
Sale Offer on the Purchase Date.
Other than as specifically provided in this Section
3.09, any purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof.
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ARTICLE IV
COVENANTS
SECTION 4.01. PAYMENT OF NOTES.
The Company or a Guarantor shall pay or cause to be paid the
principal of, premium, if any, and interest, on the Notes on the dates and in
the manner provided in the Notes. Principal, premium, if any, and interest, if
any, shall be considered paid on the date due if the Paying Agent, if other than
the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the
due date money deposited by the Company in immediately available funds and
designated for and sufficient to pay all principal, premium, if any, and
interest, then due.
The Company or a Guarantor shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
principal at the rate equal to 1% per annum in excess of the then applicable
interest rate on the Notes to the extent lawful; it shall pay interest
(including post-petition interest in any proceeding under any Bankruptcy Law) on
overdue installments of interest and Liquidated Damages (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Notes may be
surrendered for registration of transfer or for exchange and where notices and
demands to or upon the Company in respect of the Notes and this Indenture may be
served. The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Company shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the Corporate Trust
Office of the Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Notes may be presented or surrendered for
any or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York for such purposes. The Company shall
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
SECTION 4.03. REPORTS.
(a) Whether or not required by the rules and regulations of
the SEC, so long as any Notes are outstanding, the Company shall furnish to the
Trustee and the Holders of Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms,
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including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" that describes the financial condition and results of
operations of the Company and its consolidated Subsidiaries (showing in
reasonable detail, either on the face of the financial statements or in the
footnotes thereto and in Management's Discussion and Analysis of Financial
Condition and Results of Operations, the financial condition and results of
operations of the Company and its Restricted Subsidiaries separate from the
financial information and results of operations of the Unrestricted Subsidiaries
of the Company) and, with respect to the annual information only, a report
thereon by the Company's certified independent accountants and (ii) all current
reports that would be required to be filed with the SEC on Form 8-K if the
Company were required to file such reports, in each case, within the time
periods specified in the SEC's rules and regulations. In addition, following
consummation of the Exchange Offer, whether or not required by the rules and
regulations of the SEC, the Company shall file a copy of all such information
and reports with the SEC for public availability within the time periods
specified in the SEC's rules and regulations (unless the SEC will not accept
such a filing) and make such information available to securities analysts and
prospective investors upon request. The Company shall at all times comply with
TIA Section 314(a). Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
reports, information and documents shall not constitute constructive notice of
any information contained therein or determinable from the information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely exclusively on Officers'
Certificates).
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company and each Guarantor (to the extent that such
Guarantor is so required under the TIA) shall deliver to the Trustee, within 90
days after the end of each fiscal year, an Officers' Certificate stating that a
review of the activities of the Company and its Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture, and further
stating, as to each such Officer signing such certificate, that to the best of
his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and conditions of this
Indenture (or, if a Default or Event of Default shall have occurred, describing
all such Defaults or Events of Default of which he or she may have knowledge and
what action the Company is taking or proposes to take with respect thereto) and
that to the best of his or her knowledge no event has occurred and remains in
existence by reason of which payments on account of the principal of or
interest, if any, on the Notes is prohibited or if such event has occurred, a
description of the event and what action the Company is taking or proposes to
take with respect thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.03(a) above shall
be accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements,
nothing has come to their attention that would lead them to believe that the
Company has violated any provisions of Article 4 or Article 5 hereof or, if any
such violation has occurred, specifying the
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nature and period of existence thereof, it being understood that such
accountants shall not be liable directly or indirectly to any Person for any
failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its
Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company and each of the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay, extension or usury law wherever enacted, now or at any time hereafter
in force, that may affect the covenants or the performance of this Indenture;
and the Company and each of the Guarantors (to the extent that it may lawfully
do so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it shall not, by resort to any such law, hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly: (i) declare or pay any
dividend or make any other payment or distribution on account of the Company's
or any of its Restricted Subsidiary's Equity Interests (including, without
limitation, any payment in connection with any merger or consolidation involving
the Company or any Restricted Subsidiary) or to any direct or indirect holders
of the Company's Equity Interests in their capacity as such (other than
dividends or distributions (a) payable in Equity Interests (other than
Disqualified Stock) of the Company or (b) to the Company or any Wholly Owned
Restricted Subsidiary of the Company); (ii) purchase, redeem or otherwise
acquire or retire for value (including, without limitation, in connection with
any merger or consolidation involving the Company) any Equity Interests of the
Company or any of its Restricted Subsidiaries or any direct or indirect parent
of the Company (other than any such Equity Interests owned by the Company or any
Restricted Subsidiary of the Company or Permitted Investments); (iii) make any
payment on or with respect to, or purchase, redeem, defease or otherwise acquire
or retire for value any Indebtedness of the Company or any Restricted Subsidiary
that is subordinated to the Notes or any guarantee of the Notes, except a
payment of interest or principal at Stated Maturity; or (iv) make any Restricted
Investment (all such payments and other actions set forth in clauses (i) through
(iv) above being collectively
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referred to as "Restricted Payments"), unless, at the time of and after giving
effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) the Company would, at the time of such Restricted Payment and after
giving pro forma effect thereto as if such Restricted Payment had been made at
the beginning of the applicable four-quarter period, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow Ratio test set forth in the first paragraph of Section 4.09 hereof, and
(c) such Restricted Payment, together with the aggregate amount of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted by
clauses (ii), (iii) and (iv) of the next succeeding paragraph), is less than the
sum, without duplication, of (i) an amount equal to the Consolidated Cash Flow
of the Company for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing after the date of this
Indenture to the end of the Company's most recently ended full fiscal quarter
for which financial statements have been filed with the SEC (the "Basket
Period") less the product of 1.4 times the Consolidated Interest Expense of the
Company for the Basket Period), plus (ii) 100% of the aggregate net cash
proceeds received by the Company as a contribution to its common equity capital
or from the issue or sale since the date of this Indenture of Equity Interests
of the Company (other than Disqualified Stock) or from the issue or sale of
Disqualified Stock or debt securities of the Company that have been converted
into such Equity Interests (other than Equity Interests (or Disqualified Stock
or convertible debt securities) sold to a Subsidiary of the Company and other
than Disqualified Stock or convertible debt securities that have been converted
into Disqualified Stock), plus (ii) to the extent that any Restricted Investment
that was made after the date of this Indenture is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash return of capital with
respect to such Restricted Investment (less the cost of disposition, if any) and
(B) the initial amount of such Restricted Investment.
The foregoing provisions will not prohibit (i) the payment of
any dividend within 60 days after the date of declaration thereof, if at the
date of declaration such payment would have complied with the provisions of this
Indenture; (ii) the redemption, repurchase, retirement, defeasance or other
acquisition of any Equity Interests of Company or subordinated Indebtedness of
the Company or any Guarantor in exchange for, or out of the net cash proceeds of
the substantially concurrent sale (other than to a Subsidiary of the Company)
of, other Equity Interests of the Company (other than any Disqualified Stock);
provided that the amount of any such net cash proceeds that are utilized for any
such redemption, repurchase, retirement, defeasance or other acquisition shall
be excluded from clause (c)(ii) of the preceding paragraph; and, provided
further, that no Default or Event of Default shall have occurred and be
continuing immediately after such transaction; (iii) the defeasance, redemption,
repurchase or other acquisition of subordinated Indebtedness with the net cash
proceeds from an incurrence of Permitted Refinancing Indebtedness; provided that
no Default or Event of Default shall have occurred and be continuing immediately
after such transaction; (iv) the payment of any dividend by a Restricted
Subsidiary of the Company to the holders of Equity Interests on a pro rata
basis;
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(v) the repurchase, redemption or other acquisition or retirement for value of
any Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Restricted Subsidiaries')
management or board of directors pursuant to any management equity subscription
agreement, stock option agreement or other similar agreement; provided that the
aggregate price paid for all such repurchased, redeemed, acquired or retired
Equity Interests shall not exceed $5.0 million (excluding for purposes of
calculating such amounts during any period, loans incurred to finance the
purchase of such Equity Interests that are repaid contemporaneously) in any
twelve-month period and no Default or Event of Default shall have occurred and
be continuing immediately after such transaction; (vi) repurchases of stock
deemed to have occurred by virtue of the exercise of stock options; and (vii)
other Restricted Payments in an aggregate amount not to exceed $5 million in any
twelve-month period so long as no Default or Event of Default shall have
occurred and be continuing.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the asset(s)
or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.
The fair market value of any non-cash Restricted Payment shall be determined in
good faith by the Board of Directors whose resolution with respect thereto shall
be delivered to the Trustee. Not later than the date of making any Restricted
Payment, the Company shall deliver to the Trustee an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which any calculation required by this Section 4.07 were computed.
The Board of Directors may designate any Restricted Subsidiary
to be an Unrestricted Subsidiary if such designation would not cause a Default.
For purposes of making such determination, the aggregate fair market value of
all outstanding Investments by the Company and its Restricted Subsidiaries in
the Subsidiary so designated will be deemed to be a Restricted Payment at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will only
be permitted if such Restricted Payment would be permitted at such time and if
such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
Any such designation by the Board of Directors shall be
evidenced to the Trustee by filing with the Trustee a certified copy of the
Board Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions. If, at
any time, any Unrestricted Subsidiary would fail to meet the definition of an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of this Indenture and any Indebtedness of such
Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the
Company as of such date (and, if such Indebtedness is not permitted to be
incurred as of such date under Section 4.09 hereof, the Company shall be in
default). The Board of Directors of the Company may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation shall only be permitted if (i) such Indebtedness
is permitted under Section 4.09 hereof, calculated on a pro forma basis as if
such designation had occurred at the beginning of the four-quarter reference
period and (ii) no Default or Event of Default would be in existence immediately
following such designation.
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SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING
SUBSIDIARIES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
suffer to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to (a)(i) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (A) on its
Capital Stock or (B) with respect to any other interest or participation in, or
measured by, its profits or (ii) pay any indebtedness owed to the Company or any
of its Restricted Subsidiaries, (b) make loans or advances to the Company or any
of its Restricted Subsidiaries or (c) transfer any of its properties or assets
to the Company or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (i) Existing
Indebtedness as in effect on the date hereof, (ii) the Senior Credit Facilities
and any amendments, modifications, restatements, renewals, increases,
supplements, refundings, replacements or refinancings thereof, and any other
agreement governing or relating to Senior Debt, provided that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings and other agreements are, taken as a whole, no more
restrictive with respect to such dividend and other payment restrictions than
those contained in the Senior Credit Facilities, (iii) this Indenture as in
effect on the date hereof, the Notes and the Subsidiary Guarantees, (iv)
applicable law, (v) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such Indebtedness
was incurred in connection with or in anticipation of such acquisition), which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person, or the property or assets of the
Person, so acquired, provided that, in the case of Indebtedness, such
Indebtedness was permitted by the terms of this Indenture to be incurred, (vi)
by reason of customary non-assignment provisions in leases and other agreements
entered into in the ordinary course of business and consistent with past
practices, (vii) purchase money obligations (including Capital Lease
Obligations) for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (c) above on the property
so acquired, (viii) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive, taken as a whole than those contained in
the agreements governing the Indebtedness being refinanced, (ix) secured
Indebtedness otherwise permitted to be incurred pursuant to the provisions of
Section 4.12 hereof that limits the right of the debtor to dispose of the assets
securing such Indebtedness, (x) provisions with respect to the disposition or
distribution of assets or property in joint venture agreements and other similar
agreements entered into in the ordinary course of business, (xi) restrictions on
cash or other deposits or net worth imposed by customers under contracts entered
into in the ordinary course of business, and (xii) any agreement for the sale or
other disposition of a Restricted Subsidiary that restricts distributions by
that Restricted Subsidiary pending its sale or other disposition.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED
STOCK.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly, create, incur, issue,
assume, guarantee or otherwise become directly or indirectly liable,
contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Debt) or issue any shares of Disqualified Stock
and will not
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permit any of its Restricted Subsidiaries to issue any shares of preferred
stock; provided, however, that, so long as no Default or Event of Default has
occurred and is continuing, the Company may incur Indebtedness (including
Acquired Debt) or issue shares of Disqualified Stock and the Guarantors may
issue shares of preferred stock if, in each case, the Company's Debt to Cash
Flow Ratio at the time of incurrence of such Indebtedness or the issuance of
such Disqualified Stock or preferred stock, as the case may be, after giving pro
forma effect to such incurrence or issuance as of such date and to the use of
the proceeds therefrom as if the same had occurred at the beginning of the most
recently ended four full fiscal quarter period of the Company for which internal
financial statements are available, would have been no greater than 7.0 to 1.0.
The provisions of the first paragraph of this covenant will
not apply to the incurrence of any of the following (collectively, "Permitted
Debt"):
(i) the incurrence by the Company (and the guarantee thereof
by any Restricted Subsidiary) of Indebtedness and Letters of Credit under one or
more Credit Facilities in an aggregate principal amount at any time outstanding
not to exceed $250.0 million (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of the Company and the
Restricted Subsidiaries thereunder), less the aggregate amount of all mandatory
repayments of the principal of any term Indebtedness under a Credit Facility
that have been made since the date hereof (other than from the proceeds of any
other Credit Facility) and less the aggregate amount of all commitment
reductions of any revolving Indebtedness under a Credit Facility pursuant to
clause (i) of the third paragraph of Section 4.10 hereof;
(ii) the incurrence by the Company and the guarantee thereof
by the Guarantors of Indebtedness represented by the Notes and the Subsidiary
Guarantees;
(iii) the incurrence by the Company and its Restricted
Subsidiaries of the Existing Indebtedness;
(iv) the incurrence by the Company or its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or Purchase Money Indebtedness, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction or
improvement of property, plant or equipment used in the business of the Company
or such Restricted Subsidiary, in an aggregate amount not to exceed $5.0 million
at any time outstanding, including all Permitted Refinancing Debt incurred
pursuant to clause (v) below to refund, replace or refinance any Indebtedness
pursuant to this clause (iv);
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net
proceeds of which are used to refund, refinance or replace Indebtedness (other
than intercompany Indebtedness) that was permitted by this Indenture to be
incurred by the first paragraph of this Section 4.09, or by clauses (ii), (iii),
(iv), (v), (vii), (xviii), (ix), (x), (xi) or (xii) of this paragraph;
(vi) the incurrence of Indebtedness between or among the
Company and any of its Restricted Subsidiaries; provided, however, that (a) if
the Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinated to the prior payment in full of
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all Senior Debt and all Obligations with respect to the Notes and (b) any
subsequent issuance or transfer of Equity Interests that results in any such
Indebtedness being held by a Person other than the Company or a Restricted
Subsidiary, and any sale or other transfer of any such Indebtedness to a Person
that is not either the Company or a Restricted Subsidiary, shall be deemed, in
each case, to constitute an incurrence of such Indebtedness by the Company or
such Restricted Subsidiary, as the case may be;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding;
(viii) the guarantee by the Company or any of the Guarantors
(or, in the case of a Credit Facility, any Restricted Subsidiary) of
Indebtedness that was permitted to be incurred by another provision of this
Section 4.09;
(ix) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the form
of additional Indebtedness with the same terms, and the payment of dividends on
Disqualified Stock in the form of additional shares of the same class of
Disqualified Stock;
(x) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness consisting of performance, bid or advance payment
bonds, surety bonds, custom bonds, utility bonds and similar obligations arising
in the ordinary course of business;
(xi) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, in each
case incurred or assumed in connection with the disposition of any business,
asset or Subsidiary of the Company, provided that the maximum assumable
Indebtedness shall at no time exceed the gross proceeds actually received by the
Company and its Restricted Subsidiaries in connection with the disposition of
any business, asset or Subsidiary of the Company; and
(xii) the incurrence by the Company or any of its Restricted
Subsidiaries of additional Indebtedness in an aggregate principal amount at any
time outstanding, including all Permitted Refinancing Indebtedness incurred
pursuant to clause (v) above to refund, refinance or replace any Indebtedness
incurred pursuant to this clause (xii), not to exceed $10 million.
For purposes of determining compliance with this covenant, in
the event that an item of Indebtedness meets the criteria of more than one of
the categories of Permitted Debt described in clauses (i) through (xii) above or
is entitled to be incurred pursuant to the first paragraph of this covenant, the
Company shall, in its sole discretion, classify and reclassify such item of
Indebtedness in whole or in part in any manner that complies with this Section
4.09 and such item of Indebtedness will be treated as having been incurred
pursuant to such clauses or pursuant to the first paragraph hereof. Accrual of
interest, the accretion of accreted value, the payment of interest on any
Indebtedness in the form of additional Indebtedness with the same
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terms and the payment of dividends on Disqualified Stock in the form of
additional shares of the same class of Disqualified Stock will not be deemed to
be an incurrence of Indebtedness or an issuance of Disqualified Stock for
purposes of this covenant.
SECTION 4.10. ASSET SALES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Company or
such Restricted Subsidiary, as the case may be, receives consideration at the
time of such Asset Sale at least equal to the fair market value (as determined
in good faith by the Board of Directors of the Company or such Subsidiary) of
the assets or Equity Interests issued or sold or otherwise disposed of and (ii)
at least 75% of the consideration therefor received by the Company or such
Restricted Subsidiary is in the form of cash or Cash Equivalents; provided that
the amount of (a) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet) of the Company or such Restricted
Subsidiary (other than contingent liabilities and liabilities that are by their
terms subordinated to the Notes or any guarantee thereof) that are assumed by
the transferee of any such assets pursuant to a customary novation agreement
that releases the Company or such Restricted Subsidiary from further liability,
and (b) any securities, notes or other obligations received by the Company or
such Restricted Subsidiary from such transferee that are converted by the
Company or such Restricted Subsidiary into cash (to the extent of the cash
received) within 90 days following the closing of such Asset Sale, shall be
considered cash for purposes of this clause (ii).
Notwithstanding the immediately preceding paragraph, the
Company and its Restricted Subsidiaries will be permitted to consummate an Asset
Sale without complying with such paragraph if (i) the Company or the applicable
Restricted Subsidiary, as the case may be, receives consideration at the time of
such Asset Sale at least equal to the fair market value of the assets or other
property sold, issued or otherwise disposed of (as evidenced by a resolution of
the Company's Board of Directors set forth in an Officers' Certificate delivered
to the Trustee) and (ii) at least 75% of the consideration for such Asset Sale
constitutes a controlling interest in a Permitted Business, long-term assets
used or useful in a Permitted Business and/or cash or Cash Equivalents; provided
that any cash or Cash Equivalents received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Proceeds subject to the
provisions of the next succeeding paragraph.
Within 365 days of the receipt of any Net Proceeds from an
Asset Sale, the Company may apply such Net Proceeds, at its option, (i) to repay
Senior Debt under a Credit Facility (and to correspondingly reduce commitments
with respect thereto in the case of revolving borrowings), (ii) to the
acquisition of a controlling interest in a Permitted Business, or (iii) to the
making of a capital expenditure or the acquisition of other long-term assets
used or useful in a Permitted Business. Pending the final application of any
such Net Proceeds, the Company may temporarily reduce Senior Debt or otherwise
invest such Net Proceeds in any manner that is not prohibited by this Indenture.
Any Net Proceeds from Asset Sales that are not applied or invested as provided
in the first sentence of this paragraph shall be deemed to constitute "Excess
Proceeds." When the aggregate amount of Excess Proceeds exceeds $10.0 million,
the Company shall be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in this Indenture
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with respect to offers to purchase or redeem such other pari passu Indebtedness
with the proceeds of sales of assets (an "Asset Sale Offer") to purchase the
maximum principal amount of Notes and such other pari passu Indebtedness that
may be purchased out of the Excess Proceeds at an offer price in cash in an
amount equal to 100% of the principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase, in accordance with the
procedures set forth in this Indenture and in such other pari passu
Indebtedness. To the extent that the aggregate amount of Notes and such other
pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for any
purpose not otherwise prohibited by this Indenture. If the aggregate principal
amount of Notes and such other pari passu Indebtedness surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other pari passu Indebtedness to be purchased on a pro rata
basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, make any payment to, or sell, lease, transfer or
otherwise dispose of any of its properties or assets to, or purchase any
property or assets from, or enter into or make or amend any transaction,
contract, agreement, understanding, loan, advance or guarantee with, or for the
benefit of, any Affiliate (each of the foregoing, an "Affiliate Transaction"),
unless (i) such Affiliate Transaction is on terms that are no less favorable to
the Company or such Restricted Subsidiary than those that would have been
obtained in a comparable transaction by the Company or such Restricted
Subsidiary with an unrelated Person and (ii) the Company delivers to the Trustee
(a) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $2.5 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the members
of the Board of Directors that are disinterested as to such Affiliate
Transaction and (b) with respect to any Affiliate Transaction or series of
related Affiliate Transactions involving aggregate consideration in excess of
$10.0 million, an opinion as to the fairness to the Company of such Affiliate
Transaction from a financial point of view issued by an accounting, appraisal or
investment banking firm of national standing; provided that (1) any transaction
approved by the Board of Directors of the Company, with an officer or director
of the Company or of any of its Subsidiaries in his or her capacity as an
officer or director entered into in the ordinary course of business; (2)
transactions between or among the Company and/or its Restricted Subsidiaries;
(3) payment of reasonable directors fees to the Board of Directors of the
Company and of its Restricted Subsidiaries; (4) fees and compensation paid to,
and indemnity provided on behalf of, officers, directors or employees of the
Company or any of its Restricted Subsidiaries, as determined in good faith by
the Board of Directors of the Company or of any such Restricted Subsidiary, to
the extent the same are reasonable and customary; (5) any Restricted Payment
that is permitted by Section 4.07; and (6) agreements in effect on the date of
this Indenture and any modification thereto or any transaction contemplated
thereby (including pursuant to any modification thereto) in any replacement
agreement therefor so long as such modification or replacement is not more
disadvantageous to the holders of the Notes in any material respect than the
original agreement as in effect on the date of this Indenture, in each case,
shall not be deemed to be Affiliate Transactions.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, directly or indirectly create, incur, assume or
suffer to exist any Lien securing Indebtedness or trade payables on any asset
now owned or hereafter acquired, or any income or profits therefrom or assign or
convey any right to receive income therefrom, except Permitted Liens.
SECTION 4.13. ASSET SWAPS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, in one or a series of related transactions, directly
or indirectly, engage in any Asset Swaps, unless: (i) at the time of entering
into the agreement to swap assets and immediately after giving effect to the
proposed Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; (ii) the Company would,
after giving pro forma effect to the proposed Asset Swap, have been permitted to
incur at least $1.00 of additional Indebtedness pursuant to the Debt to Cash
Flow Ratio in Section 4.09; (iii) the respective fair market values of the
assets being purchased and sold by the Company or any of its Restricted
Subsidiaries (as determined in good faith by the management of the Company or,
if such Asset Swap includes consideration in excess of $1.0 million by the Board
of Directors of the Company, as evidenced by a Board Resolution) are
substantially the same at the time of entering into the agreement to swap
assets; and (iv) at the time of the consummation of the proposed Asset Swap, the
percentage of any decline in the fair market value (determined as aforesaid) of
the asset or assets being acquired by the Company and its Restricted
Subsidiaries shall not be significantly greater than the percentage of any
decline in the fair market value (determined as aforesaid) of the assets being
disposed of by the Company or its Restricted Subsidiaries, calculated from the
time the agreement to swap assets was entered into.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of the Company or any
such Subsidiary and (ii) the rights (charter and statutory), licenses and
franchises of the Company and its Subsidiaries; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Subsidiaries, if
the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and its
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any
material respect to the Holders of the Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, the Company
shall be obligated to make an offer (a "Change of Control Offer") to each Holder
of Notes to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Notes at an offer price in cash equal to 101% of the
principal amount thereof, plus accrued and unpaid interest thereon to the date
of purchase (the "Change of Control Payment"). Within ten days following a
Change of
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Control, the Company will mail a notice to the Trustee and each Holder
describing the transaction or transactions that constitute the Change of Control
and offering to repurchase Notes on the date specified in such notice, which
date shall be no earlier than 30 days and no later than 60 days from the date
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by this Indenture and described in such notice. The Company
will comply with the requirements of Rule 14e-1 under the Exchange Act and any
other securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the repurchase of the Notes as a
result of a Change of Control.
(b) On the Change of Control Payment Date, the Company will,
to the extent lawful, (i) accept for payment all Notes or portions thereof
properly tendered pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent an amount equal to the Change of Control Payment in respect of all
Notes or portions thereof so tendered and (iii) deliver or cause to be delivered
to the Trustee the Notes so accepted together with an Officers' Certificate
stating the aggregate principal amount of Notes or portions thereof being
purchased by the Company. The Paying Agent will promptly mail to each Holder of
Notes so tendered the Change of Control Payment for such Notes, and the Trustee
will promptly authenticate and mail (or cause to be transferred by book entry)
to each Holder a new Note equal in principal amount to any unpurchased portion
of the Notes surrendered, if any; provided that each such new Note will be in a
principal amount of $1,000 or an integral multiple thereof.
The Change of Control provisions described above will be
applicable whether or not any other provisions of this Indenture are applicable.
(c) Notwithstanding anything to the contrary in this Section
4.15, the Company shall not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section 4.15 hereof and purchases all Notes validly tendered and not
withdrawn under such Change of Control Offer.
SECTION 4.16. NO SENIOR SUBORDINATED DEBT.
Notwithstanding the provisions of Section 4.09 hereof, (i) the
Company shall not directly or indirectly incur any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes and (ii) no Guarantor shall incur any
Indebtedness that is subordinated or junior in right of payment to any
Guarantees of Senior Debt and senior in any respect in right of payment to the
Subsidiary Guarantees.
SECTION 4.17. [INTENTIONALLY OMITTED]
SECTION 4.18. LIMITATION ON SALE AND LEASEBACK TRANSACTIONS.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, enter into any sale and leaseback transaction;
provided that the Company and the Guarantors may enter into a sale and leaseback
transaction if (i) the Company or such Guarantor could have (a) incurred
Indebtedness in an amount equal to the Attributable Debt relating to such sale
and leaseback transaction pursuant to the Debt to Cash Flow Ratio test set forth
in the first paragraph of Section 4.09 hereof and (b) incurred a Lien to secure
such Attributable Debt pursuant to
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Section 4.12 hereof, (ii) the gross cash proceeds of such sale and leaseback
transaction are at least equal to the fair market value (as determined in good
faith by the Board of Directors in good faith) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of assets
in such sale and leaseback transaction is permitted by, and the proceeds of such
transaction are applied in compliance with Section 4.10 hereof.
SECTION 4.19. PAYMENTS FOR CONSENT.
Neither the Company nor any of its Subsidiaries shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Notes unless such consideration is offered to be paid
or is paid to all Holders of the Notes that consent, waive or agree to amend in
the time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
SECTION 4.20. ADDITIONAL SUBSIDIARY GUARANTEES.
If the Company or any of its Restricted Subsidiaries shall
acquire or create another Restricted Subsidiary after the date of this Indenture
(other than a Subsidiary described in clauses (i) and (ii) of the definition of
the Non-Guarantor Subsidiaries), or any Unrestricted Subsidiary (other than a
Subsidiary described in clause (ii) of the definition of Non-Guarantor
Subsidiary) shall become a Restricted Subsidiary of the Company, then such
Subsidiary shall become a Guarantor by executing a supplemental indenture in a
form reasonably satisfactory to the Trustee, pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Company's Obligations
under the Notes and this Indenture and deliver an Opinion of Counsel to the
Trustee to the effect that such supplemental indenture has been duly authorized,
executed and delivered by such Subsidiary and constitutes a valid and binding
obligation of such Subsidiary, enforceable against such Subsidiary in accordance
with its terms (subject to customary exceptions).
ARTICLE V
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions, to another
corporation, Person or entity unless (i) the Company is the surviving
corporation or the entity or the Person formed by or surviving any such
consolidation or merger (if other than the Company) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of the United States,
any state thereof or the District of Columbia; (ii) the entity or Person formed
by or surviving any such consolidation or merger (if other than the Company) or
the entity or Person to which such sale, assignment, transfer, lease, conveyance
or other disposition shall have been made assumes all the obligations of the
Company under the Notes and the Indenture pursuant to a supplemental indenture
in a form reasonably satisfactory to the Trustee; (iii) immediately after such
transaction
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no Default or Event of Default exists; and (iv) except in the case of a merger
of the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made would, both immediately prior to and immediately after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt to Cash Flow Ratio test set forth
in Section 4.09 hereof.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "Company" shall
refer instead to the successor corporation and not to the Company), and may
exercise every right and power of the Company under this Indenture with the same
effect as if such successor Person had been named as the Company herein;
provided, however, that the predecessor Company shall not be relieved from the
obligation to pay the principal of and interest on the Notes except in the case
of a sale of all of the Company's assets that meets the requirements of Section
5.01 hereof.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
An "Event of Default" occurs if:
(a) the Company defaults for 30 days in the payment when due
of interest on, the Notes, whether or not such payment is prohibited by the
provisions of Article 10 hereof;
(b) the Company defaults in payment when due of the principal
of or premium, if any, on the Notes, whether or not such payment is prohibited
by the provisions of Article 10 hereof;
(c) the Company or any Restricted Subsidiary fails to comply
with any of the provisions of Section 4.15 or 5.01 hereof;
(d) the Company or any Restricted Subsidiary fails for 30 days
after written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with the provisions of Section
3.09, 4.07, 4.09 or 4.10 hereof (such notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default");
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(e) the Company or any Restricted Subsidiary fails for 60 days
after written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with any of its other agreements
in this Indenture or the Notes (such notice must specify the Default, demand
that it be remedied and state that the notice is a "Notice of Default");
(f) the Company or any Significant Subsidiary defaults under
any mortgage, indenture or instrument under which there may be issued or by
which there may be secured or evidenced any Indebtedness for money borrowed by
the Company or any of its Significant Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Significant Subsidiaries), whether such
Indebtedness or guarantee now exists or is created after the date hereof, which
default (a) is caused by a failure to pay (a "Payment Default") principal of or
premium, if any, or interest on such Indebtedness when due (after giving effect
to any applicable grace period provided in such Indebtedness on the date of such
default) or (b) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5.0 million or more;
(g) the Company or any of its Significant Subsidiaries fails
to pay final judgments aggregating in excess of $5.0 million (net of amounts
covered by insurance), which judgments are not paid, discharged or stayed for a
period of 60 days;
(h) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable or
invalid or shall cease for any reason to be in full force and effect or any
Guarantor, or any Person acting on behalf of any Guarantor, shall deny or
disaffirm its obligations under its Subsidiary Guarantee;
(i) the Company or any of the Company's Restricted
Subsidiaries that constitutes a Significant Subsidiary or any group of
Restricted Subsidiaries of the Company that, taken together, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief
against it in an involuntary case,
(iii) consents to the appointment of a custodian of it
or for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become
due;
(j) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that: (i) is for relief against the Company or
any of its Restricted Subsidiaries that constitutes a Significant Subsidiary or
any group of Restricted Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary in an involuntary case; (ii) appoints a custodian
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of the Company or any of its Restricted Subsidiaries that constitutes a
Significant Subsidiary or any group of Restricted Subsidiaries that, taken as a
whole, would constitute a Significant Subsidiary or for all or substantially all
of the property of the Company or any of its Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary; or (iii)
orders the liquidation of the Company or any of its Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary; and the order
or decree remains unstayed and in effect for 60 consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default
specified in clause (i) or (j) of Section 6.01 hereof with respect to the
Company, any Significant Subsidiary or any group of Significant Subsidiaries
that, taken as a whole, would constitute a Significant Subsidiary) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Notes may declare all the Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (i) or (j) of Section 6.01 hereof occurs with respect to the Company, any
Restricted Subsidiary of the Company that constitutes a Significant Subsidiary
or any group of Restricted Subsidiaries of the Company that, taken together,
would constitute a Significant Subsidiary, all outstanding Notes will
automatically become due and payable without further action or notice. Holders
of the Notes may not enforce this Indenture or the Notes except as provided in
this Indenture. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest.
If an Event of Default occurs on or after November 1, 2004 by
reason of any willful action (or inaction) taken (or not taken) by or on behalf
of the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Notes pursuant to Section 3.07 hereof, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in this Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to November 1,
2004 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then, upon acceleration of the
Notes, the Make Whole Premium shall also become and be immediately due and
payable.
The Holders of a majority in aggregate principal amount of the
Notes then outstanding by notice to the Trustee may on behalf of the Holders of
all of the Notes waive any existing Default or Event of Default and its
consequences under this Indenture except a continuing Default or Event of
Default in the payment of interest on, or the principal of, the Notes.
The Company is required to deliver to the Trustee annually a
statement regarding compliance with this Indenture, and the Company is required
upon becoming aware of any
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Default or Event of Default, to deliver to the Trustee a statement specifying
such Default or Event of Default.
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee
may pursue any available remedy to collect the payment of principal, premium, if
any, and interest on the Notes or to enforce the performance of any provision of
the Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Notes or does not produce any of them in the proceeding. A
delay or omission by the Trustee or any Holder of a Note in exercising any right
or remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes by notice to the Trustee may on behalf of
the Holders of all of the Notes waive an existing Default or Event of Default
and its consequences hereunder, except a continuing Default or Event of Default
in the payment of the principal of, premium, if any, or interest on, the Notes
(including in connection with an offer to purchase) (provided, however, that the
Holders of a majority in aggregate principal amount of the then outstanding
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then
outstanding Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of Notes or that may
involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Note may pursue a remedy with respect to this
Indenture or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice
of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the
then outstanding Notes make a written request to the Trustee to pursue the
remedy;
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(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Note may not use this Indenture to prejudice the
rights of another Holder of a Note or to obtain a preference or priority over
another Holder of a Note.
SECTION 6.07. RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Note to receive payment of principal, premium, if any,
and interest on the Note, on or after the respective due dates expressed in the
Note (including in connection with an offer to purchase), or to bring suit for
the enforcement of any such payment on or after such respective dates, shall not
be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b)
occurs and is continuing, the Trustee is authorized to recover judgment in its
own name and as trustee of an express trust against the Company for the whole
amount of principal of, premium, if any, and interest remaining unpaid on the
Notes and interest on overdue principal and, to the extent lawful, interest and
such further amount as shall be sufficient to cover the costs and expenses of
collection, including the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the Notes allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money or
other property payable or deliverable on any such claims and any custodian in
any such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee, and in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay to the Trustee any
amount due to it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 7.07 hereof. To the extent that the payment of any such
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof out
of the estate in any such proceeding shall be denied for any reason, payment of
the same shall be secured by a Lien on, and shall be paid out of, any and all
distributions, dividends, money, securities and other properties that after
giving effect to Article 10 the Holders may be entitled to receive in such
proceeding whether in liquidation or
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under any plan of reorganization or arrangement or otherwise. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Notes or the rights of any Holder, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection;
Second: to Holders of Notes for amounts due and unpaid on the
Notes for principal, premium, if any, and interest, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Notes
for principal, premium, if any and interest, respectively; and
Third: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing by
any party litigant in the suit of an undertaking to pay the costs of the suit,
and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made by
the party litigant. This Section does not apply to a suit by the Trustee, a suit
by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding Notes.
SECTION 6.12. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No director, officer, employee or stockholder of the Company
or any Guarantor, as such, shall have any liability for any obligations of the
Company or any Guarantor under the Notes, the Subsidiary Guarantees, the
Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for issuance of the Notes. Such waiver may not be effective to
waive liabilities under the federal securities laws and it is the view of the
SEC that such a waiver is against public policy.
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ARTICLE VII
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in its exercise, as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the TIA and the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others, and no implied covenants or obligations shall be read into this
Indenture or the TIA against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Indenture. However, in the
case of any such certificates or opinions which by any provision hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein).
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b) of
this Section;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture that in any way relates to the Trustee is subject to paragraphs
(a), (b), and (c) of this Section.
(e) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or incur any liability. The Trustee shall be under no
obligation to exercise any of its rights and powers under this Indenture at the
request of any Holders, unless such Holder shall
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have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense that might be incurred by it in compliance with
such request or direction.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel of its reasonable discretion and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection from liability in respect of any action taken, suffered or omitted by
it hereunder in good faith and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture, any
demand, request, direction or notice from the Company or any Guarantor shall be
sufficient if signed by an Officer of the Company or Guarantor issuing such
demand, request, direction or notice.
(f) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or direction
of any of the Holders unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(g) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its discretion, may make such reasonable further inquiry or
investigation into such facts or matters as it may determine, and, if the
Trustee makes such inquiry or investigation, it shall be entitled on reasonable
prior notice to examine during customary business hours the books, records and
premises of the Company, personally or by agent or attorney at the sole cost of
the Company and shall incur no liability or additional liability of any kind by
reason of such inquiry or investigation.
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(h) The Trustee shall not be deemed to have notice of any Default
or Event of Default unless a Responsible Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default is received by the Trustee at the Corporate Trust Office of the Trustee,
and such notice references the Notes and this Indenture.
(i) The rights, privileges, protections, immunities and benefits
given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and to each agent, custodian and other Person
employed to act hereunder.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company or any
Affiliate of the Company with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with like
rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the Notes, it
shall not be accountable for the Company's use of the proceeds from the Notes or
any money paid to the Company or upon the Company's direction under any
provision of this Indenture, it shall not be responsible for the use or
application of any money received by any Paying Agent other than the Trustee,
and it shall not be responsible for any statement or recital herein or any
statement in the Notes or any other document in connection with the sale of the
Notes or pursuant to this Indenture other than its certificate of
authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Notes a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment of principal of,
premium, if any, or interest on any Note, the Trustee may withhold the notice if
and so long as a committee of its Responsible Officers in good faith determines
that withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES.
Within 60 days after each September 15 beginning with the
September 15 following the date of this Indenture, and for so long as Notes
remain outstanding, the Trustee shall mail to the Holders of the Notes a brief
report dated as of such reporting date that complies with TIA Section 313(a)
(but if no event described in TIA Section 313(a) has occurred within the twelve
months preceding the reporting date, no report need be transmitted). The Trustee
also shall comply with TIA Section 313(b)(2). The Trustee shall also transmit by
mail all reports as required by TIA Section 313(c).
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A copy of each report at the time of its mailing to the
Holders of Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). The Company shall promptly notify the Trustee when the Notes are listed
on any stock exchange or of any delisting thereof.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company and the Guarantors shall pay to the Trustee from
time to time such compensation for its acceptance of this Indenture and the
rendering by it of the services required hereunder as shall be agreed in writing
with the Company. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company and the Guarantors
shall reimburse the Trustee promptly upon request for all reasonable
disbursements, advances and expenses incurred or made by it in addition to the
compensation for its services. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents and counsel.
The Company and the Guarantors shall indemnify each of the
Trustee and any predecessor of the Trustee against any and all losses,
liabilities, damages, claims or expenses, including taxes (other than taxes
based on the income of the Trustee) incurred by it arising out of or in
connection with the acceptance or administration of its duties under this
Indenture, including the costs and expenses of enforcing this Indenture against
the Company and the Guarantors (including this Section 7.07) and defending
itself against any claim (whether asserted by the Company and the Guarantors or
any Holder or any other person) or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent any
such loss, liability or expense may be attributable to its gross negligence or
bad faith. The Trustee shall notify the Company and the Guarantors promptly of
any claim for which it may seek indemnity.
The obligations of the Company and the Guarantors under this
Section 7.07 shall survive the satisfaction and discharge of this Indenture.
To secure the Company's and the Guarantors' payment
obligations in this Section, the Trustee shall have a Lien prior to the Notes on
all money or property held or collected by the Trustee, except that held in
trust to pay principal and interest on particular Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture. Compensation, reimbursement
and indemnification of the Trustee under this Section 7.07 is not subordinated
to Senior Debt of the Company.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(i) or (j) hereof occurs, the expenses
and the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section
313(b)(2) to the extent applicable.
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SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged
from the trust hereby created by so notifying the Company. The Holders of Notes
of a majority in principal amount of the then outstanding Notes may remove the
Trustee by so notifying the Trustee and the Company in writing. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an
order for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in
the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office, the
Holders of a majority in principal amount of the then outstanding Notes may
appoint a successor Trustee to replace the successor Trustee appointed by the
Company.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the Company,
or the Holders of Notes of at least 10% in principal amount of the then
outstanding Notes may petition, at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who
has been a Holder of a Note for at least six months, fails to comply with
Section 7.10, such Holder of a Note may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly transfer
all property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien provided
for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant
to this Section 7.08, the Company's obligations under Section 7.07 hereof shall
continue for the benefit of the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the successor corporation without any further act shall be the
successor Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States of
America or of any state thereof that is authorized under such laws to exercise
corporate trustee power, that is subject to supervision or examination by
federal or state authorities and that has a combined capital and surplus of at
least $50.0 million as set forth in its most recent published annual report of
condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding
Notes upon compliance with the conditions set forth below in this Article 8.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding Notes
and to have each Guarantor's obligation discharged with respect to its
Subsidiary Guarantee on the date the conditions set forth below are satisfied
(hereinafter, "Legal Defeasance"). For this purpose, Legal Defeasance means that
the Company shall be deemed to have paid and discharged the entire Indebtedness
represented by the outstanding Notes, which shall thereafter be deemed to be
"outstanding" only for the purposes of Section 8.05 hereof and the other
Sections of this Indenture referred to in (a) and (b) below, and to have
satisfied all its other obligations under such Notes and this Indenture (and the
Trustee, on demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions which
shall survive until otherwise terminated or discharged hereunder: (a) the rights
of Holders of outstanding Notes to receive solely from the trust fund described
in
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Section 8.04 hereof, and as more fully set forth in such Section, payments in
respect of the principal of and premium and interest, on such Notes when such
payments are due, (b) the Company's obligations with respect to such Notes under
Article 2 and Section 4.02 hereof, (c) the rights, powers, trusts, duties and
immunities of the Trustee hereunder and the Company's obligations in connection
therewith and (d) this Article 8. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company and each Guarantor shall,
subject to the satisfaction of the conditions set forth in Section 8.04 hereof,
be released from their obligations under the covenants contained in Sections
4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.18, 4.19, 4.20, 5.01 and
11.01 hereof with respect to the outstanding Notes on and after the date the
conditions set forth in Section 8.04 are satisfied (hereinafter, "Covenant
Defeasance"), and the Notes shall thereafter be deemed not "outstanding" for the
purposes of any direction, waiver, consent or declaration or act of Holders (and
the consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such Notes shall not be deemed outstanding for accounting
purposes). For this purpose, Covenant Defeasance means that, with respect to the
outstanding Notes, the Company and each Guarantor may omit to comply with and
shall have no liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03 hereof, subject to the satisfaction of the conditions set forth in
Section 8.04 hereof, Sections 6.01(d) through 6.01(f) hereof shall not
constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders, cash in United States dollars,
non-callable Government Securities, or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium and, if any,
and interest on the outstanding Notes on the stated date for payment thereof or
on the applicable redemption date, as the case may be, and the Company must
specify whether the Notes are being defeased to maturity or to a particular
redemption date;
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(b) in the case of an election under Section 8.02 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling or (B) since the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the Holders of the
outstanding Notes will not recognize income, gain or loss for federal income tax
purposes as a result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of Default
resulting from the incurrence of Indebtedness all or a portion of the proceeds
of which will be used to defease the Notes pursuant to this Article 8
concurrently with such incurrence) or insofar as Sections 6.01(i) or 6.01(j)
hereof is concerned, at any time in the period ending on the 91st day after the
date of deposit (or greater period of time in which any such deposit of trust
funds may remain subject to bankruptcy or insolvency laws insofar as those apply
to the deposit by the Company);
(e) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which the Company or any
of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an Opinion of
Counsel (which may be subject to customary exceptions) to the effect that (A) on
the 91st day following the deposit (or greater period of time in which any such
deposit of trust funds may remain subject to bankruptcy or insolvency laws
insofar as those apply to the deposit by the Company), the trust funds will not
be subject to the effect of any applicable bankruptcy, insolvency,
reorganization or similar laws affecting creditors' rights generally and (B) the
trust funds will not be subject to the rights of holders of Indebtedness other
than the Notes;
(g) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and
(h) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance have been complied with.
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SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN
TRUST; OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as
Paying Agent) as the Trustee may determine, to the Holders of such Notes of all
sums due and to become due thereon in respect of principal, premium, if any, and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company and the Guarantors shall pay and indemnify the
Trustee against any tax, fee or other charge imposed on or assessed against the
cash or non-callable Government Securities deposited pursuant to Section 8.04
hereof or the principal and interest received in respect thereof other than any
such tax, fee or other charge which by law is for the account of the Holders of
the outstanding Notes.
Anything in this Article 8 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
Any deposit made pursuant to this Article VIII shall be subject
to the provisions of Article X only if payment in respect of the Notes is
prohibited under Article X on the date such deposit is made.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Note and remaining unclaimed for two years after such
principal, and premium, if any, or interest has become due and payable shall be
paid to the Company on its request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
secured creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, shall thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense of the Company cause to be
published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
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SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United
States dollars or non-callable Government Securities in accordance with Section
8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee
or Paying Agent is permitted to apply all such money in accordance with Section
8.02 or 8.03 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest on any Note
following the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Notes to receive such payment from the
money held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company, a
Guarantor (with respect to a Subsidiary Guarantee or this Indenture to which it
is a party) and the Trustee may amend or supplement this Indenture, the
Subsidiary Guarantee or the Notes without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated Notes in addition to or in
place of certificated Notes or to alter the provisions of Article 2 hereof
(including the related definitions) in a manner that does not materially
adversely affect any Holder;
(c) to provide for the assumption of the Company's or a
Guarantor's obligations to the Holders of the Notes by a successor to the
Company or a Guarantor pursuant to Article 5 or Article 11 hereof;
(d) to make any change that would provide any additional rights
or benefits to the Holders of the Notes or that does not adversely affect the
legal rights hereunder of any Holder of the Notes;
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA;
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company and
the Guarantors in the execution of any amended or supplemental indenture
authorized or permitted by the terms of this Indenture and to make any further
appropriate agreements and stipulations that may be therein contained, but the
Trustee shall not
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be obligated to enter into such amended or supplemental indenture that affects
its own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF NOTES.
Except as provided below in this Section 9.02, the Company and
the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10
and 4.15 hereof) , the Subsidiary Guarantees and the Notes may be amended or
supplemented with the consent of the Holders of at least a majority in principal
amount of the Notes then outstanding voting as a single class (including
consents obtained in connection with a tender offer or exchange offer for, or
purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any
existing Default or Event of Default (other than a Default or Event of Default
in the payment of the principal of, premium, if any, or interest on the Notes,
except a payment default resulting from an acceleration that has been rescinded)
or compliance with any provision of this Indenture, the Subsidiary Guarantees or
the Notes may be waived with the consent of the Holders of a majority in
principal amount of the then outstanding Notes voting as a single class
(including consents obtained in connection with a tender offer or exchange offer
for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes
are considered to be "outstanding" for purposes of this Section 9.02.
Upon the request of the Company accompanied by a resolution of
its Board of Directors authorizing the execution of any such amended or
supplemental indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid,
and upon receipt by the Trustee of the documents described in Section 7.02
hereof, the Trustee shall join with the Company in the execution of such amended
or supplemental indenture unless such amended or supplemental indenture directly
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Trustee may in its discretion, but shall not be
obligated to, enter into such amended or supplemental indenture.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.02 to approve the particular form of any proposed amendment
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders of Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the
Holders of a majority in aggregate principal amount of the Notes then
outstanding voting as a single class may waive compliance in a particular
instance by the Company with any provision of this Indenture or the Notes.
However, without the consent of each Holder affected, an amendment or waiver
under this Section 9.02 may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
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(b) reduce the principal of or change the fixed maturity of any
Note or alter or waive any of the provisions with respect to the redemption of
the Notes except as provided above with respect to Sections 3.09, 4.10 and 4.15
hereof;
(c) reduce the rate of or change the time for payment of interest
on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium or interest on the Notes (except a rescission of
acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the payment
default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or premium or interest on the Notes;
(g) waive a redemption payment with respect to any Note (other
than a payment required by one of the covenants described in Sections 3.09, 4.10
and 4.15).
(h) release any Guarantor from its Subsidiary Guarantee; or
(i) make any change in Section 6.04 or 6.07 hereof or in the
foregoing amendment and waiver provisions.
In addition, any amendment to the provisions of Article 10 of
this Indenture (which relate to subordination) will require the consent of the
Holders of at least 75% in aggregate principal amount of the Notes then
outstanding if such amendment would adversely affect the rights of Holders of
Notes.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Notes
shall be set forth in a amended or supplemental indenture that complies with the
TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a
consent to it by a Holder of a Note is a continuing consent by the Holder of a
Note and every subsequent Holder of a Note or portion of a Note that evidences
the same debt as the consenting Holder's Note, even if notation of the consent
is not made on any Note. However, any such Holder of a Note or subsequent Holder
of a Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment becomes
effective. An amendment, supplement or waiver becomes effective in accordance
with its terms and thereafter binds every Holder.
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SECTION 9.05. NOTATION ON OR EXCHANGE OF NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. The Company in
exchange for all Notes may issue and the Trustee shall, upon receipt of an
Authentication Order, authenticate new Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental indenture
authorized pursuant to this Article 9 if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
The Company may not sign an amendment or supplemental indenture until the Board
of Directors approves it. In executing any amended or supplemental indenture,
the Trustee shall be entitled to receive and (subject to Section 7.01 hereof)
shall be fully protected in relying upon, in addition to the documents required
by Section 12.04 hereof, an Officers' Certificate and an Opinion of Counsel
stating that (i) the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture, (ii) such amended or supplemental
indenture complies with this Indenture and, (iii) in the event that such
amendment or supplemental indenture is being executed pursuant to Section 5.01
or 11.01 hereof, the surviving Person assumes the Obligations of this Indenture
and the Notes.
ARTICLE X
SUBORDINATION
SECTION 10.01. AGREEMENT TO SUBORDINATE.
The Company and the Guarantors agree, and each Holder by
accepting a Note and Subsidiary Guarantee agrees, that the principal of and
interest and premium (if any) on the Notes and all Subsidiary Guarantees in
respect thereof are subordinated in right of payment, to the extent and in the
manner provided in this Article 10 and Section 11.03, to the prior payment in
full in cash or Cash Equivalents of all Senior Debt (whether outstanding on the
date hereof or hereafter created, incurred, assumed or guaranteed), and that the
subordination is for the benefit of the holders of Senior Debt, each of whom
shall be entitled to enforce this Article 10 and Section 11.02 as a third party
beneficiary hereof.
SECTION 10.02. CERTAIN DEFINITIONS.
"Designated Senior Debt" means any Indebtedness outstanding under
the Senior Credit Facilities until the Senior Credit Facilities have been paid
in full in cash and discharged, and thereafter means any Credit Facility
designated by the Company as "Designated Senior Debt" for the purposes of this
Article 10.
"Permitted Junior Securities" means Equity Interests in the
Company or debt securities of the Company or the relevant Guarantor that are
subordinated to all Senior Debt (and any debt
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securities issued in exchange for Senior Debt) or Guarantor Senior Debt (and any
debt securities issued in exchange for Guarantor Senior Debt), as applicable, to
substantially the same extent as, or to a greater extent than, the Notes are
subordinated to Senior Debt or the Subsidiary Guarantees are subordinated to
Guarantor Senior Debt, as applicable, pursuant to this Indenture.
"Representative" means the indenture trustee or other trustee,
agent or representative for any holder or holders of Senior Debt.
"Senior Debt" means (i) all Indebtedness outstanding under
Credit Facilities and all Hedging Obligations with respect thereto, (ii) any
other Indebtedness of the Company or any Guarantor permitted to be incurred
under the terms of this Indenture, unless the instrument under which such
Indebtedness is incurred expressly provides that it is on a parity with or
subordinated in right of payment to the Notes or the Subsidiary Guarantees and
(iii) all Obligations of the Company or any Guarantor with respect to the
foregoing. Notwithstanding anything to the contrary in the foregoing, Senior
Debt will not include (a) any liability for federal, state, local or other taxes
owed or owing by the Company, (b) any Indebtedness of the Company or any
Guarantor to any of its Subsidiaries or other Affiliates, (c) any trade payables
or (d) any Indebtedness that is incurred in violation of this Indenture;
provided that Indebtedness under Credit Facilities will not cease to be Senior
Debt if incurred based upon a written certificate from a purported officer of
the Company to the effect that such Indebtedness was permitted by this Indenture
to be incurred.
A distribution may consist of cash, securities or other
property, by set-off or otherwise. Any payment pursuant to an Asset Sale Offer
or Change of Control Offer shall constitute a distribution subject to this
Article 10. The making of any deposit pursuant to Article 8 shall constitute a
distribution subject to this Article 10 to the extent provided in Article 8.
SECTION 10.03. LIQUIDATION; DISSOLUTION; BANKRUPTCY.
Upon any payment or distribution to creditors of the Company or
any Guarantor in a liquidation or dissolution of the Company or any Guarantor or
in a bankruptcy, reorganization, insolvency, receivership or similar proceeding
relating to the Company or any Guarantor or its property, in an assignment for
the benefit of creditors or any marshaling of the Company's or any Guarantor's
assets and liabilities:
(1) holders of Senior Debt shall be entitled to receive payment
in full in cash or Cash Equivalents of all Obligations due in respect of such
Senior Debt (including interest after the commencement of any such proceeding at
the rate and on the terms specified in the applicable Senior Debt whether or not
the claim for such interest is allowable or enforceable in such proceeding)
before Holders of the Notes shall be entitled to receive any payment or
distribution with respect to the Notes (except that Holders may receive (i)
Permitted Junior Securities and (ii) payments and other distributions made from
any defeasance trust created pursuant to Section 8.01 hereof, if payment of the
Notes was permitted on the date the defeasance deposit was made); and
(2) until all Obligations with respect to Senior Debt (including
interest after the commencement of any such proceeding at the rate and on the
terms specified in the applicable Senior Debt whether or not the claim for such
interest is allowable or enforceable in such proceeding) are paid in full in
cash or Cash Equivalents, any payment or distribution to which the Holders of
Notes would be entitled but for this Article 10 shall be made to holders of
Senior
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Debt (except that Holders of Notes may receive (i) Permitted Junior Securities
and (ii) payments and other distributions made from any defeasance trust created
pursuant to Section 8.01 hereof, if payment of the Notes was permitted on the
date the defeasance deposit was made), as their interests may appear.
SECTION 10.04. DEFAULT ON DESIGNATED SENIOR DEBT.
The Company may not make (and the Guarantors may not make) any
payment or distribution to the Trustee or any Holder in respect of Obligations
with respect to the Notes and may not acquire from the Trustee or any Holder any
Notes for cash or property (other than (i) Permitted Junior Securities and (ii)
payments and other distributions made from any defeasance trust created pursuant
to Section 8.01 hereof) until all principal and other Obligations with respect
to the Senior Debt have been paid in full in cash or Cash Equivalents if:
(i) a default in the payment of any principal or other
Obligations with respect to any Credit Facility occurs and is continuing beyond
any applicable grace period in the agreement, indenture or other document
governing such Credit Facility; or
(ii) a default, other than a payment default, on Designated
Senior Debt occurs and is continuing that then permits holders of the Designated
Senior Debt to accelerate its maturity and the Trustee receives a notice of the
default (a "Payment Blockage Notice") from a Person who may give it pursuant to
Section 10.12 hereof. If the Trustee receives any such Payment Blockage Notice,
no subsequent Payment Blockage Notice shall be effective for purposes of this
Section unless and until (i) at least 360 days shall have elapsed since the
effectiveness of the immediately prior Payment Blockage Notice and (ii) all
scheduled payments of principal, premium, if any, and interest on the Notes that
have come due have been paid in full in cash. No nonpayment default that existed
or was continuing on the date of delivery of any Payment Blockage Notice to the
Trustee shall be, or be made, the basis for a subsequent Payment Blockage
Notice.
The Company may and shall resume payments on and distributions
in respect of the Notes and may acquire them upon the earlier of:
(1) the date upon which the default is cured or waived, or
(2) in the case of a default referred to in Section 10.04(ii)
hereof, 179 days after notice is received if the maturity of such Designated
Senior Debt has not been accelerated, if this Article 10 otherwise permits the
payment, distribution or acquisition at the time of such payment or acquisition.
SECTION 10.05. ACCELERATION OF SECURITIES.
If payment of the Securities is accelerated because of an
Event of Default, the Company shall promptly notify holders of Senior Debt of
the acceleration.
SECTION 10.06. WHEN DISTRIBUTION MUST BE PAID OVER.
In the event that the Trustee receives any payment or
distribution in respect of any Obligations with respect to the Notes at a time
when a Responsible Officer of the Trustee has actual knowledge that such payment
or distribution is prohibited by Section 10.03 or 10.04
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hereof or in the event any Holder receives any payment of any Obligations with
respect to the Notes at a time when such payment is prohibited by Section 10.03
or 10.04 hereof, such payment or distribution shall be held by the Trustee or
such Holder in trust for the benefit of, and shall be paid forthwith over and
delivered, upon written request, to, the holders of Senior Debt or their
Representative under the indenture or other agreement (if any) pursuant to which
Senior Debt may have been issued, as their respective interests may appear, for
application to the payment of all Obligations with respect to Senior Debt
remaining unpaid (including interest after the commencement of any such
proceeding at the rate and on the terms specified in the applicable Senior Debt
whether or not the claim for such interest is allowable or enforceable in such
proceeding) to the extent necessary to pay such Obligations in full in cash or
Cash Equivalents in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the Trustee
undertakes to perform only such obligations on the part of the Trustee as are
specifically set forth in this Article 10, and no implied covenants or
obligations with respect to the holders of Senior Debt shall be read into this
Indenture against the Trustee. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Debt.
SECTION 10.07. NOTICE BY COMPANY.
The Company shall promptly notify the Trustee and the Paying
Agent of any facts known to the Company that would cause a payment of any
Obligations with respect to the Notes to violate this Article 10, but failure to
give such notice shall not affect the subordination of the Notes to the Senior
Debt or the rights of holders of Senior Debt as provided in this Article 10.
SECTION 10.08. SUBROGATION.
After all Senior Debt is paid in full in cash or Cash
Equivalents and until the Notes are paid in full, Holders of Notes shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Notes) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Holders of Notes have been applied to the payment of Senior Debt, except
that no right of subrogation shall apply to the extent any distribution is
applied to pay any claim for interest that is not allowed or enforceable in any
proceeding referred to in Section 10.03. A distribution made under this Article
10 to holders of Senior Debt that otherwise would have been made to Holders of
Notes is not, as between the Company and Holders, a payment by the Company on
the Notes.
SECTION 10.09. RELATIVE RIGHTS.
This Article 10 defines the relative rights of Holders of
Notes and holders of Senior Debt. Nothing in this Indenture shall:
(1) impair, as between the Company and Holders of Notes, the
obligation of the Company, which is absolute and unconditional, to pay principal
of and interest on the Notes in accordance with their terms;
(2) affect the relative rights of Holders of Notes and
creditors of the Company other than their rights in relation to holders of
Senior Debt; or
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(3) prevent the Trustee or any Holder of Notes from exercising
its available remedies upon a Default or Event of Default, subject to the rights
of holders and owners of Senior Debt to receive distributions and payments
otherwise payable to Holders of Notes.
If the Company fails because of this Article 10 to pay
principal of or interest on a Note on the due date, the failure is still a
Default or Event of Default.
SECTION 10.10. SUBORDINATION NOT PREJUDICED.
No right of any holder of any Senior Debt to enforce
subordination as provided in this Article 10 shall at any time in any way be
prejudiced, affected or impaired by any act or failure to act on the part of the
Company or any of its Subsidiaries or by any act or failure to act on the part
of any holder of Senior Debt or by any breach or default by the Company or any
of its Subsidiaries in the performance or observance of any promise, covenant or
obligation enforceable by any Holder of the Notes, regardless of any knowledge
thereof that any holder of Senior Debt may have or otherwise be charged with.
Without limiting the foregoing, each holder of any Senior Debt may at any time
and from time to time, without the consent of or notice of any Holder of the
Notes, without incurring any responsibility or liability to any Holder of the
Notes and without in any manner prejudicing, affecting or impairing the
obligations of any Holder of the Notes under this Article 10:
(1) change the manner, place or terms of payment or extend the
time of payment of, or increase (subject to Section 4.09), renew or alter,
compromise, accelerate, extend or refinance, any Senior Debt or any agreement,
guaranty, lien or obligation of the Company or any of its Subsidiaries or any
other Person in any manner related thereto, or otherwise amend, supplement or
change in any manner any Senior Debt or any such agreement, guaranty, lien or
obligation;
(2) take or fail to take any collateral security for any
Senior Debt or take or fail to take any action which may be necessary or
appropriate to ensure that any security interest or lien upon any property
securing any Senior Debt is duly enforceable or perfected or entitled to
priority as against any other lien or to ensure that any proceeds of any
property subject to any security interest or lien are applied to the payment of
any Senior Debt;
(3) release, discharge or permit the lapse of any or all
security interests or liens upon any property at any time securing any Senior
Debt; or
(4) exercise or enforce, in any manner, order or sequence, or
fail to exercise or enforce, any right or remedy against the Company or any of
its Subsidiaries or any collateral security or any other Person or property in
respect of any Senior Debt or any security interest or lien securing any Senior
Debt or any right under this Indenture, and apply any payment or proceeds of
collateral in any order of application.
No exercise of, delay in exercising or failure to exercise any
right arising under this Article 10, no act or omission of any holder of Senior
Debt in respect of the Company or any of its Subsidiaries or any other Person or
any collateral security for any Senior Debt or any right arising under this
Article 10, no change, impairment, or suspension of any right or remedy of any
holder of any Senior Debt, no other act, failure to act, circumstance,
occurrence or event which, but for this provision, would or could act as a
release or exoneration of the obligations of the Holders of the Notes under this
Article 10 shall in any way affect, decrease, diminish or impair
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any of the obligations of the Holders of the Notes under this Article 10 or give
any Holder of the Notes any recourse or defense against any holder of the Senior
Debt in respect of any right arising under this Article 10.
SECTION 10.11. DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to
holders of Senior Debt, the distribution may be made and the notice given to
their Representative.
Upon any payment or distribution of assets of the Company
referred to in this Article 10, the Trustee and the Holders of Notes shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Trustee or to the Holders of Notes for the purpose of ascertaining the Persons
entitled to participate in such distribution, the holders of the Senior Debt and
other Indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article 10.
SECTION 10.12. RIGHTS OF TRUSTEE AND PAYING AGENT.
Notwithstanding the provisions of this Article 10 or any other
provision of this Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment or
distribution by the Company, unless the Trustee shall have received at its
Corporate Trust Office not later than the fifth Business Day immediately
preceding the date of such payment written notice of facts that would cause the
payment of any Obligations with respect to the Notes to violate this Article 10.
Only the Company or a Representative (or, if there is no Representative for any
holder of Senior Debt, such holder) may give the notice. Nothing in this Article
10 shall impair the claims of, or payments to, the Trustee under or pursuant to
Section 7.07 hereof.
The Trustee in its individual or any other capacity may hold
Senior Debt with the same rights, and subject to the same obligations, it would
have if it were not Trustee. Any Agent may do the same with like rights and
obligations.
SECTION 10.13. AUTHORIZATION TO EFFECT SUBORDINATION.
Each Holder of Notes, by the Holder's acceptance thereof,
authorizes and directs the Trustee on such Holder's behalf to take such action
as may be necessary or appropriate to effectuate the subordination as provided
in this Article 10, and appoints the Trustee to act as such Holder's
attorney-in-fact for any and all such purposes. If the Trustee does not file a
proper proof of claim or proof of debt in the form required in any proceeding
referred to in Section 6.09 hereof at least 30 days before the expiration of the
time to file such claim, each Representative is hereby authorized to file an
appropriate claim for and on behalf of the Holders of the Notes.
SECTION 10.14. REINSTATEMENT.
The provisions of this Article 10 shall continue to be
effective or reinstated, as the case may be, if at any time any payment of any
of the Senior Debt is rescinded or must otherwise be returned by the
Representative or any other holder of Senior Debt upon the insolvency,
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bankruptcy or reorganization of the Company or any Guarantor or otherwise, all
as though such payment had not been made.
SECTION 10.15. AMENDMENTS.
The provisions of this Article 10 and Section 11.02 and
related definitions of terms used therein shall not be amended or modified
without the written consent of the holders of all Senior Debt at the time
outstanding.
ARTICLE XI
SUBSIDIARY GUARANTEES
SECTION 11.01. GUARANTEE.
Subject to this Article 11, each of the Guarantors hereby,
jointly and severally, unconditionally guarantees to each Holder of a Note
authenticated and delivered by the Trustee and to the Trustee and its successors
and assigns, irrespective of the validity and enforceability of this Indenture,
the Notes or the obligations of the Company hereunder or thereunder, that: (a)
the principal of and interest on the Notes will be promptly paid in full when
due, whether at maturity, by acceleration, redemption or otherwise, and interest
on the overdue principal of and interest on the Notes, if any, if lawful, and
all other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and (b) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that same will
be promptly paid in full when due or performed in accordance with the terms of
the extension or renewal, whether at stated maturity, by acceleration or
otherwise. Failing payment when due of any amount so guaranteed or any
performance so guaranteed for whatever reason, the Guarantors shall be jointly
and severally obligated to pay the same immediately. Each Guarantor agrees that
this is a guarantee of payment and not a guarantee of collection.
The Guarantors hereby agree that their obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of a guarantor.
Each Guarantor hereby waives diligence, presentment, demand of payment, filing
of claims with a court in the event of insolvency or bankruptcy of the Company,
any right to require a proceeding first against the Company, protest, notice and
all demands whatsoever and covenant that this Note Guarantee shall not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company, the Guarantors or any custodian, trustee,
liquidator or other similar official acting in relation to either the Company or
the Guarantors, any amount paid by either to the Trustee or such Holder, this
Note Guarantee, to the extent theretofore discharged, shall be reinstated in
full force and effect.
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Each Guarantor agrees that it shall not be entitled to any
right of subrogation in relation to the Holders in respect of any obligations
guaranteed hereby until payment in full of all obligations guaranteed hereby.
Each Guarantor further agrees that, as between the Guarantors, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article 6 hereof
for the purposes of this Subsidiary Guarantee, notwithstanding any stay,
injunction or other prohibition preventing such acceleration in respect of the
obligations guaranteed hereby, and (y) in the event of any declaration of
acceleration of such obligations as provided in Article 6 hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Subsidiary Guarantee. The
Guarantors shall have the right to seek contribution from any non-paying
Guarantor so long as the exercise of such right does not impair the rights of
the Holders under the Guarantee.
SECTION 11.02. SUBORDINATION OF SUBSIDIARY GUARANTEE.
The Obligations of each Guarantor under its Subsidiary
Guarantee pursuant to this Article 11 shall be junior and subordinated to the
Senior Debt of such Guarantor on the same basis as the Notes are junior and
subordinated to Senior Debt of the Company. For the purposes of the foregoing
sentence, the Trustee and the Holders shall have the right to receive and/or
retain payments by any of the Guarantors only at such times as they may receive
and/or retain payments in respect of the Notes pursuant to this Indenture,
including Article 10 hereof.
SECTION 11.03. LIMITATION ON GUARANTOR LIABILITY.
Each Guarantor, and by its acceptance of Notes, each Holder,
hereby confirms that it is the intention of all such parties that the Subsidiary
Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance
for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the
Uniform Fraudulent Transfer Act or any similar federal or state law to the
extent applicable to any Subsidiary Guarantee. To effectuate the foregoing
intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree
that the obligations of such Guarantor under its Subsidiary Guarantee and this
Article 11 shall be limited to the maximum amount as will, after giving effect
to such maximum amount and all other contingent and fixed liabilities of such
Guarantor that are relevant under such laws, and after giving effect to any
collections from, rights to receive contribution from or payments made by or on
behalf of any other Guarantor in respect of the obligations of such other
Guarantor under this Article 11, result in the obligations of such Guarantor
under its Subsidiary Guarantee not constituting a fraudulent transfer or
conveyance.
SECTION 11.04. EXECUTION AND DELIVERY OF NOTE GUARANTEE.
To evidence its Subsidiary Guarantee set forth in Section
11.01, each Guarantor hereby agrees that a notation of such Subsidiary Guarantee
substantially in the form included in Exhibit B shall be endorsed by an Officer
of such Guarantor on each Note authenticated and delivered by the Trustee and
that this Indenture shall be executed on behalf of such Guarantor by its
President or one of its Vice Presidents.
Each Guarantor hereby agrees that its Subsidiary Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Subsidiary a notation of such Subsidiary Guarantee.
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If an Officer whose signature is on this Indenture or on the
Subsidiary Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which a Subsidiary Guarantee is endorsed, the
Subsidiary Guarantee shall be valid nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Subsidiary Guarantee set forth in this Indenture on behalf of the Guarantors.
In the event that the Company creates or acquires any new
domestic Restricted Subsidiaries subsequent to the date of this Indenture, if
required by Section 4.20 hereof, the Company shall cause such domestic
Restricted Subsidiaries to execute supplemental indentures to this Indenture in
the form contemplated by Section 4.20 and Subsidiary Guarantees in the form
included in Exhibit B in accordance with Section 4.20 hereof and this Article
11, to the extent applicable.
SECTION 11.05. GUARANTORS MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
No Guarantor may consolidate with or merge with or into
(whether or not such Guarantor is the surviving Person) another corporation,
Person or entity whether or not affiliated with such Guarantor unless:
(a) subject to the provisions of Section 11.06 hereof, the
Person formed by or surviving any such consolidation or merger (if other than a
Guarantor) assumes all the obligations of such Guarantor pursuant to a
supplemental indenture in form and substance reasonably satisfactory to the
Trustee, under the Notes, the Indenture and the Registration Rights Agreement;
(b) immediately after giving effect to such transaction, no
Default or Event of Default exists; and
(c) the Company would be permitted by virtue of the Company's
pro forma Debt to Cash Flow Ratio, immediately after giving effect to such
transaction, to incur at least $1.00 of additional Indebtedness pursuant to the
Debt to Cash Flow Ratio test set forth in Section 4.09 hereof.
In case of any such consolidation, merger, sale or conveyance
and upon the assumption by the successor Person, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the Trustee,
of the Subsidiary Guarantee endorsed upon the Notes and the due and punctual
performance of all of the covenants and conditions of this Indenture to be
performed by the Guarantor, such successor Person shall succeed to and be
substituted for the Guarantor with the same effect as if it had been named
herein as a Guarantor. Such successor Person thereupon may cause to be signed
any or all of the Subsidiary Guarantees to be endorsed upon all of the Notes
issuable hereunder which theretofore shall not have been signed by the Company
and delivered to the Trustee. All the Subsidiary Guarantees so issued shall in
all respects have the same legal rank and benefit under this Indenture as the
Subsidiary Guarantees theretofore and thereafter issued in accordance with the
terms of this Indenture as though all of such Subsidiary Guarantees had been
issued at the date of the execution hereof.
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Except as set forth in Articles 4 and 5 hereof, and
notwithstanding clauses (a) and (b) above, nothing contained in this Indenture
or in any of the Notes shall prevent any consolidation or merger of a Guarantor
with or into the Company or another Guarantor, or shall prevent any sale or
conveyance of the property of a Guarantor as an entirety or substantially as an
entirety to the Company or another Guarantor.
SECTION 11.06. RELEASES FOLLOWING SALE OF ASSETS.
If any Guarantor at any time ceases to be a Subsidiary of the
Company by reason of any Asset Sale, merger or consolidation or otherwise, or in
the event of a sale or other disposition of all or substantially all of the
assets of any Guarantor, then such Guarantor (in the event of any Asset Sale or
other disposition, by way of merger, consolidation or otherwise, of capital
stock of such Guarantor) or the Person acquiring the property (in the event of a
sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations (if any) under the
Guarantor's Subsidiary Guarantee. Upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel to the effect that such sale
or other disposition was made by the Company in accordance with the applicable
provisions of this Indenture, including without limitation Section 4.10 hereof
(to the extent application to such sale or disposition at the time of
consummation thereof), the Trustee shall execute any documents reasonably
required in order to evidence the release of any Guarantor from its obligations
under its Subsidiary Guarantee.
Any Guarantor not released from its obligations under its
Subsidiary Guarantee shall remain liable for the full amount of principal of and
interest on the Notes and for the other obligations of any Guarantor under this
Indenture as provided in this Article 11.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by a provision of the TIA or another provision
that would be required or deemed under the TIA to be part of and govern this
Indenture if this Indenture were subject thereto, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the TIA that may be so modified or excluded, the later provision shall be
deemed to apply to this Indenture as so modified or to be excluded, as the case
may be.
SECTION 12.02. NOTICES.
Any notice or communication by the Company, any Guarantor or
the Trustee to the others is duly given if in writing and delivered in Person or
mailed by first class mail, telecopier or overnight air courier guaranteeing
next day delivery, to the others' address:
If to the Company and/or any Guarantor:
Spanish Broadcasting System, Inc.
3191 Coral Way
70
<PAGE> 78
Miami, Florida 33145
Telecopier No.: (305) 446-5148
Attention: Joseph A. Garcia
With a copy to:
Kaye, Scholer, Fierman, Hays & Handler LLP
425 Park Avenue
New York, New York 10022
Telecopier No. (212) 836-7152
Attention: Jason L. Shrinsky, Esq.
William E. Wallace, Jr., Esq.
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee Administration
The Company, any Guarantor or the Trustee, by notice to the
others may designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by
first class mail or by overnight air courier guaranteeing next day delivery to
its address shown on the register kept by the Registrar. Any notice or
communication shall also be so mailed to any Person described in TIA
Section 313(c), to the extent required by the TIA. Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Company mails a notice or communication to Holders, it
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 12.03. COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF
NOTES.
Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the Notes.
The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
71
<PAGE> 79
SECTION 12.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth in
Section 12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent and covenants have been satisfied; provided, however, that
the provisions of Section 12.04(b) shall not apply to the initial issuance of
securities under this Indenture.
SECTION 12.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she
has made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition has
been satisfied; and
(d) a statement as to whether or not, in the opinion of such
Person, such condition or covenant has been satisfied.
SECTION 12.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.
SECTION 12.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company or any Guarantor, as such, shall have
any liability for any obligations of the Company or such Guarantor under the
Notes, the Subsidiary Guarantees, this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder by
accepting a Note waives and releases all such liability.
72
<PAGE> 80
The waiver and release are part of the consideration for
issuance of the Notes.
SECTION 12.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE
USED TO CONSTRUE THIS INDENTURE, THE NOTES AND THE NOTE GUARANTEES WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other
indenture, loan or debt agreement of the Company or its Subsidiaries or of any
other Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 12.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Notes
shall bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 12.11. SEVERABILITY.
In case any provision in this Indenture or in the Notes shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
SECTION 12.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
SECTION 12.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
73
<PAGE> 81
SIGNATURES
Dated as of November 2, 1999
SPANISH BROADCASTING SYSTEM, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF
CALIFORNIA, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM NETWORK,
INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SBS PROMOTIONS, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SBS FUNDING, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
ALARCON HOLDINGS, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
Indenture signature page - 1
<PAGE> 82
SBS OF GREATER NEW YORK, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF FLORIDA,
INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF GREATER
MIAMI, INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF PUERTO
RICO, INC. (DELAWARE)
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM, INC. (NEW
JERSEY)
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF ILLINOIS,
INC.
By /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
Indenture signature page - 2
<PAGE> 83
SPANISH BROADCASTING SYSTEM OF SAN
ANTONIO, INC.
By: /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
SPANISH BROADCASTING SYSTEM OF PUERTO
RICO, INC. (PUERTO RICO)
By: /s/ Raul Alarcon Jr.
-----------------------------------
Name: Raul Alarcon Jr.
Title: President
THE BANK OF NEW YORK
By: /s/ Annette Kos
-----------------------------------
Name: Annette Kos
Title: Assistant Vice President
Indenture signature page - 3
<PAGE> 84
EXHIBIT A
(Face of Note)
[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE
BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY
CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY
BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY
BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE
INDENTURE, (III) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR
CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE
MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY.]
CUSIP/CINS _________
9 5/8% Senior Subordinated Notes due 2009
No.________ $__________
SPANISH BROADCASTING SYSTEM, INC.
promises to pay to _________________________________________ registered assigns,
the principal sum of _______________ Dollars on _________, 2009.
Interest Payment Dates: ___________, and __________.
Record Dates: ____________ and ____________.
DATED:
SPANISH BROADCASTING SYSTEM, INC.
BY: _______________________________
Name:
Title:
BY: _______________________________
Name:
Title:
This is one of the Global
Notes referred to in the
within-mentioned Indenture:
The Bank of New York,
as Trustee
By: _____________________________________
Date of Authentication: ________________
<PAGE> 85
(Reverse face of Note)
9 5/8% Senior Subordinated Notes due 2009
Capitalized terms used herein shall have the meanings assigned
to them in the Indenture referred to below unless otherwise indicated.
1. INTEREST. Spanish Broadcasting System, a Delaware
corporation (the "Company"), promises to pay interest on the principal amount of
this Note at 9 5/8% per annum from ____________ until maturity. The Company will
pay interest semi-annually on [___________] and [_____________] of each year, or
if any such day is not a Business Day, on the next succeeding Business Day (each
an "Interest Payment Date"). Interest on the Notes will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the date of issuance; provided that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a record date
referred to on the face hereof and the next succeeding Interest Payment Date,
interest shall accrue from such next succeeding Interest Payment Date; provided,
further, that the first Interest Payment Date shall be [_____________], 2000.
The Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal and premium, if any,
from time to time on demand at a rate that is 1% per annum in excess of the rate
then in effect; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the same rate to the extent lawful. Interest will be computed on the basis of a
360-day year of twelve 30-day months.
2. METHOD OF PAYMENT. The Company will pay interest on the
Notes (except defaulted interest) to the Persons who are registered Holders of
Notes at the close of business on the [_____________] or [_____________] next
preceding the Interest Payment Date, even if such Notes are canceled after such
record date and on or before such Interest Payment Date, except as provided in
Section 2.12 of the Indenture with respect to defaulted interest. The Notes will
be payable as to principal, premium, if any, and interest at the office or
agency of the Company maintained for such purpose within or without the City and
State of New York, or, at the option of the Company, payment of interest may be
made by check mailed to the Holders at their addresses set forth in the register
of Holders, and provided that payment by wire transfer of immediately available
funds will be required with respect to principal of and interest and premium on,
all Global Notes and all other Notes the Holders of which shall have provided
written wire transfer instructions to the Company or the Paying Agent on or
prior to the record date. Such payment shall be in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, The Bank of New
York, the Trustee under the Indenture, will act as Paying Agent and Registrar.
The Company may change any Paying Agent or Registrar without notice to any
Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. INDENTURE. The Company issued the Notes under an Indenture
dated as of November 2, 1999 ("Indenture") among the Company, the Guarantors
named therein and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code
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<PAGE> 86
Sections 77aaa-77bbbb). The Notes are subject to all such terms, and Holders are
referred to the Indenture and such Act for a statement of such terms. To the
extent any provision of this Note conflicts with the express provisions of the
Indenture, the provisions of the indenture shall govern and be controlling. The
aggregate principal amount of the Notes that may be authenticated and delivered
under the Indenture is unlimited.
5. OPTIONAL REDEMPTION.
(a) Except as set forth in clause (b) of this Section 5, the
Company shall not have the option to redeem the Notes pursuant to this Section 5
prior to November 1, 2004. Thereafter, the Company shall have the option to
redeem the Notes, in whole or in part, upon not less than 30 nor more than 60
days' notice, at the redemption prices (expressed as percentages of principal
amount) set forth below, plus accrued and unpaid interest, thereon to the
applicable redemption date, if redeemed during the twelve-month period beginning
on November 1 of the years indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2004....................................... 104.813%
2005....................................... 103.208%
2006....................................... 101.604%
2007 and thereafter........................ 100.000%
</TABLE>
(b) Notwithstanding the foregoing, prior to November 1, 2002,
the Company may, on any one or more occasions, redeem up to 35% of the aggregate
principal amount of Notes originally issued in the Offering at a redemption
price of 109.625% of the principal amount thereof, plus accrued and unpaid
interest, thereon to the redemption date, with the net cash proceeds of an
offering of common equity of the Company (other than Disqualified Stock);
provided that (i) at least 65% of the aggregate principal amount of the Notes
originally issued in the Offering remain outstanding immediately after the
occurrence of each such redemption (excluding Notes held by the Company and its
Subsidiaries) and (ii) each such redemption shall occur within 75 days after the
date of the closing of any such offering of common equity of the Company.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Company shall
not be required to make mandatory redemption or sinking fund payments with
respect to the Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) If there is a Change of Control, the Company shall be
obligated to make an offer (a "Change of Control Offer") to each Holder of Notes
to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes at an offer price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, thereon to the date of
purchase (the "Change of Control Payment"). Within ten days following a Change
of Control, the Company will mail a notice to each Holder describing the
transaction or transactions that constitute the Change of Control and offering
to repurchase Notes on the date specified in such notice, which date shall be no
earlier than 30 days and no later than 60 days from the date
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<PAGE> 87
such notice is mailed (the "Change of Control Payment Date"), pursuant to the
procedures required by the Indenture and described in such notice.
(b) If the Company or a Subsidiary consummates any Asset
Sales, when the aggregate amount of Excess Proceeds exceeds $10.0 million, the
Company shall be required to make an offer to all Holders of Notes and all
holders of other pari passu Indebtedness containing provisions similar to those
set forth in the Indenture with respect to offers to purchase or redeem such
other pari passu Indebtedness with the proceeds of sales of assets (an "Asset
Sale Offer") to purchase the maximum principal amount of Notes and such other
pari passu Indebtedness that may be purchased out of the Excess Proceeds at an
offer price in cash in an amount equal to 100% of the principal amount thereof,
plus accrued and unpaid interest, thereon to the date of purchase, in accordance
with the procedures set forth in the Indenture and in such other pari passu
Indebtedness. To the extent that the aggregate amount of Notes and such other
pari passu Indebtedness tendered pursuant to an Asset Sale Offer is less than
the Excess Proceeds, the Company may use any remaining Excess Proceeds for any
purpose not otherwise prohibited by the Indenture. If the aggregate principal
amount of Notes and such other pari passu Indebtedness surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
Notes and such other pari passu Indebtedness to be purchased on a pro rata
basis. Upon completion of an Asset Sale Offer, the amount of Excess Proceeds
shall be reset at zero.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed
at least 30 days but not more than 60 days before the redemption date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in whole
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes or
portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed in
part. Also, the Company need not exchange or register the transfer of any Notes
for a period of 15 days before the mailing of a notice of redemption of Notes to
be redeemed or during the period between a record date and the corresponding
Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a Note may
be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain
exceptions, the Indenture, the Subsidiary Guarantees or the Notes may be amended
or supplemented with the consent of the Holders of at least a majority in
principal amount of the then outstanding Notes voting as a single class
(including without limitation, consents obtained in connection with a purchase
of, or tender offer or exchange offer for, Notes), and any existing default or
compliance with any provision of the Indenture, the Subsidiary Guarantees or the
Notes may be waived with the consent of the Holders of a majority in principal
amount of the
A-4
<PAGE> 88
then outstanding Notes voting as a single class (including consents obtained in
connection with a tender offer or exchange offer for Notes). Without the consent
of any Holder of Notes, the Indenture, the Subsidiary Guarantees or the Notes
may be amended or supplemented to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Company's or any Guarantor's
obligations to Holders of the Notes in the case of a merger or consolidation or
sale of substantially all of the Company's assets, to make any change that would
provide any additional rights or benefits to the Holders of the Notes or that
does not adversely affect the legal rights under the Indenture of any such
Holder or to comply with the requirements of the SEC in order to effect or
maintain the qualification of the Indenture under the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (a) the
Company defaults for 30 days in the payment when due of interest on, the Notes,
whether or not such payment is prohibited by the provisions of Article 10 of the
Indenture; (b) the Company defaults in payment when due of the principal of or
premium, if any, on the Notes, whether or not such payment is prohibited by the
provisions of Article 10 of the Indenture; (c) the Company or any Restricted
Subsidiary fails to comply with any of the provisions of Section 4.15 or 5.01 of
the Indenture; (d) the Company or any Restricted Subsidiary fails for 30 days
after written notice by the Trustee or the Holders of at least 25% in principal
amount of the then outstanding Notes to comply with the provisions of Section
3.09, 4.07, 4.09 or 4.10 of the Indenture; (e) the Company or any Restricted
Subsidiary fails for 60 days after written notice by the Trustee or the Holders
of at least 25% in principal amount of the then outstanding Notes to comply with
any of its other agreements in the Indenture or the Notes; (f) the Company or
any Significant Subsidiary defaults under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by the Company or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by the Company or any of its
Restricted Subsidiaries), whether such Indebtedness or guarantee now exists or
is created after the date of the Indenture, which default (i) is caused by a
failure to pay (a "Payment Default") principal, or interest on such Indebtedness
when due (after giving effect to any applicable grace period provided in such
Indebtedness on the date of such default) or (ii) results in the acceleration of
such Indebtedness prior to its express maturity and, in each case, the principal
amount of any such Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a Payment Default or the maturity
of which has been so accelerated, aggregates $5.0 million or more; (g) the
Company or any of its Significant Subsidiaries fails to pay final judgments
aggregating in excess of $5.0 million (net of amounts covered by insurance),
which judgments are not paid, discharged or stayed for a period of 60 days; (h)
except as permitted by the Indenture, any Subsidiary Guarantee shall be held in
any judicial proceeding to be unenforceable or invalid or shall cease for any
reason to be in full force and effect or any Guarantor, or any Person acting on
behalf of any Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; (i) certain events of bankruptcy or insolvency with
respect to the Company or any of the Company's Restricted Subsidiaries that
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries of
the Company that, taken together, would constitute a Significant Subsidiary. If
any Event of Default occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the then outstanding Notes may declare all the
Notes to be due and payable immediately. Notwithstanding the foregoing, in the
case of an Event of Default arising from certain events of bankruptcy or
insolvency, with respect to the Company, any Restricted Subsidiary of the
Company that
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<PAGE> 89
constitutes a Significant Subsidiary or any group of Restricted Subsidiaries of
the Company that, taken together, would constitute a Significant Subsidiary, all
outstanding Notes will become due and payable without further action or notice.
Holders of the Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. Subject to certain limitations, Holders of a majority
in principal amount of the then outstanding Notes may direct the Trustee in its
exercise of any trust or power. The Trustee may withhold from Holders of the
Notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in their interest. In the case of any
Event of Default occurring by reason of any willful action (or inaction) taken
(or not taken) by or on behalf of the Company with the intention of avoiding
payment of the premium that the Company would have had to pay if the Company
then had elected to redeem the Notes pursuant to Section 3.07 of the Indenture,
an equivalent premium shall also become and be immediately due and payable to
the extent permitted by law upon the acceleration of the Notes. If an Event of
Default occurs on or after November 1, 2004 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Notes pursuant to the redemption
provisions contained in the Notes, then, upon acceleration of the Notes, an
equivalent premium shall also become and be immediately due and payable, to the
extent permitted by law, anything in the Indenture or in the Notes to the
contrary notwithstanding. If an Event of Default occurs prior to November 1,
2004 by reason of any willful action (or inaction) taken (or not taken) by or on
behalf of the Company with the intention of avoiding the prohibition on
redemption of the Notes prior to such date, then the Make Whole Premium
specified in the Indenture shall also become immediately due and payable to the
extent permitted by law upon the acceleration of the Notes. The Holders of a
majority in aggregate principal amount of the Notes then outstanding by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of interest on,
or the principal of, the Notes. The Company is required to deliver to the
Trustee annually a statement regarding compliance with the Indenture, and the
Company is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH COMPANY. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Note waives and releases all such
liability. The waiver and release are part of the consideration for the issuance
of the Notes.
15. AUTHENTICATION. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.
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<PAGE> 90
16. ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT
(= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).
17. THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND
BE USED TO CONSTRUE THIS NOTE WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
18. SUBORDINATION. Principal of an interest and premium (if
any) on this Note and all Subsidiary Guarantees in respect hereof are
subordinated in right of payment, to the extent and in the manner provided in
the Indenture, to the prior payment in full in cash or Cash Equivalents of all
Senior Debt (each as defined in the Indenture).
19. CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Requests may be made to:
Spanish Broadcasting System, Inc.
3191 Coral Way
Miami, Florida 33145
Attention: Joseph A. Garcia
A-7
<PAGE> 91
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_______________________________________________to
transfer this Note on the books of the Company. The agent may substitute another
to act for him.
________________________________________________________________________________
Date: ____________ Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No:__________________
SIGNATURE GUARANTEE:
________________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or
such other "signature guarantee program"
as may be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A-8
<PAGE> 92
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the
Company pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
[ ] Section 4.10 [ ] Section 4.15
If you want to elect to have only part of the Note purchased
by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state
the amount you elect to have purchased: $________
Date: ____________ Your Signature:_________________________
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No:
SIGNATURE GUARANTEE:
________________________________________
Signatures must be guaranteed by an
"eligible guarantor institution" meeting
the requirements of the Registrar, which
requirements include membership or
participation in the Security Transfer
Agent Medallion Program ("STAMP") or
such other "signature guarantee program"
as may be determined by the Registrar in
addition to, or in substitution for,
STAMP, all in accordance with the
Securities Exchange Act of 1934, as
amended.
A-9
<PAGE> 93
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an
interest in another Global Note or for a Definitive Note, or exchanges of a part
of another Global Note or Definitive Note for an interest in this Global Note,
have been made:
<TABLE>
<CAPTION>
Principal Amount of Signature of
Amount of increase this Global Note authorized
Amount of decrease in Principal following such Signatory of
in Principal Amount Amount of this decrease (or Trustee or Note
Date of Exchange of this Global Note Global Note increase) Custodian
<S> <C> <C> <C> <C>
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
__________________________________________________________________________________________________________
</TABLE>
A-10
<PAGE> 94
GUARANTY
For good and valuable consideration received from the Company
by the undersigned (hereinafter referred to as the "Guarantors," which term
includes any successor or additional Guarantors), the receipt and sufficiency of
which is hereby acknowledged, subject to Section 11.03 of the Indenture, each of
the Guarantors hereby, jointly and severally, unconditionally guarantees,
irrespective of the validity or enforceability of the Obligations of the Company
under the Indenture, the Notes or the Obligations of any other party under the
Notes or the Indenture: (a) the due and punctual payment of the principal and
premium, if any, of and interest on the Notes, whether at maturity, or on an
interest payment date, by acceleration, call for redemption or otherwise, (b)
the due and punctual payment of interest on the overdue principal and premium,
if any, of and interest on the Notes, if any, if lawful, (c) the due and
punctual payment and performance of all other Obligations of the Company under
the Indenture and the Notes, all in accordance with the terms set forth in the
Indenture; and (d) in case of any extension of time of payment or renewal of any
Notes or any of such other Obligations under the Indenture of the Notes, the due
and punctual payment or performance thereof in accordance with the terms of the
extension or renewal, whether at stated maturity, by acceleration or otherwise.
Reference is made to Article 11 of the Indenture for a further
description of the terms of this Guaranty.
This Guaranty is subordinated in right of payment, to the
extent and in the manner provided in the Indenture, to the prior payment in full
in cash or Cash Equivalents of all Senior Debt (each as defined in the
Indenture).
SIGNATURES
Dated as of ___________________
SPANISH BROADCASTING SYSTEM OF
CALIFORNIA, INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM NETWORK, INC.
By:____________________________________________
Name:
Title:
SBS PROMOTIONS, INC.
A-11
<PAGE> 95
By:____________________________________________
Name:
Title:
SBS FUNDING, INC.
By:____________________________________________
Name:
Title:
ALARCON HOLDINGS, INC.
By:____________________________________________
Name:
Title:
SBS OF GREATER NEW YORK, INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF FLORIDA, INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF GREATER
MIAMI, INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF PUERTO RICO, INC
(DELAWARE)
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM, INC. (NEW
JERSEY)
A-12
<PAGE> 96
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF ILLINOIS,
INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF SAN
ANTONIO, INC.
By:____________________________________________
Name:
Title:
SPANISH BROADCASTING SYSTEM OF PUERTO
RICO, INC. (PUERTO RICO)
By:____________________________________________
Name:
Title:
A-13
<PAGE> 1
Exhibit 4
[On Kaye, Scholer, Fierman, Hays & Handler, LLP Letterhead]
November 2, 1999
Spanish Broadcasting System, Inc.
3191 Coral Way
Miami, Florida 33145
Re: Spanish Broadcasting System, Inc. - Registration
Statements on Form S-1
Ladies and Gentlemen:
We have acted as counsel to Spanish Broadcasting System, Inc.,
a Delaware corporation (the "Company"), in connection with the preparation of
registration statements on Form S-1 (the "Registration Statements") and the
amendments thereto filed with the Securities and Exchange Commission pursuant to
the provisions of the Securities Act of 1933, relating to the issuance and sale
of (i) up to 21,787,400 shares of the Company's Class A common stock, par value
$0.0001 per share ("Class A Common Stock"), to the underwriters ("Stock
Underwriters") named in the underwriting agreement proposed to be entered into
among the Company and the underwriters party thereto (the "Stock Underwriting
Agreement") and (ii) up to 3,268,110 shares of Class A Common Stock to the Stock
Underwriters to the extent they exercise their over-allotment option and (iii)
up to $235,000,000 aggregate principal amount of the Company's 95/8% Senior
Subordinated Notes due 2009 (the "Notes") to the underwriters named in an
underwriting agreement proposed to be entered into among the Company and the
underwriters party thereto (the "Notes Underwriting Agreement").
In rendering the opinion set forth below, we have examined
originals or copies, certified or otherwise identified to our satisfaction, of
such documents, corporate records, certificates of public officials and other
instruments as we have deemed necessary or advisable for the purpose of
rendering this opinion.
Based on and subject to the foregoing, it is our opinion that:
1. The shares of Class A common stock to be sold by the
Company and certain selling stockholders of the Company have been duly
authorized and, when issued and delivered in accordance with the terms of the
Stock Underwriting Agreement, will be validly issued, fully paid and
non-assessable.
<PAGE> 2
2. The Notes have been duly authorized by the Company and when
(i) the indenture (the "Indenture") between the Company and The Bank of New
York, as Trustee, has been duly executed and delivered by the parties thereto
and (ii) the Notes have been duly authenticated by the Trustee and have been
duly executed, issued and delivered by the Company in accordance with the
Indenture and sold in accordance with the Notes Underwriting Agreement, the
Notes will constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture and enforceable against the Company in accordance
with their terms, except to the extent enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws relating to or affecting enforcement of creditors' rights
generally and except as enforcement thereof is subject to general principles of
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law) and except that certain of the remedies therein contained may
not be enforceable or may be subject to available defenses and procedural
requirements which are not necessarily reflected therein.
Our opinions expressed above are limited to the General
Corporation law of the State of Delaware and the laws of the State of New York
which are normally applicable to transactions of the type contemplated by the
Indenture and the Notes.
We hereby consent to the use of this opinion as Exhibit 5.1 to
the Registration Statements and to the reference to this firm under the caption
"Legal Matters." In giving such opinion, we do not thereby admit that we are
acting within the category of persons whose consent is required under Section 7
of the Securities Act of 1933 or the rules and regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
/s/ Kaye, Scholer, Fierman, Hays & Handler, LLP
<PAGE> 1
Exhibit 6
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of November 2, 1999 between
Spanish Broadcasting System, Inc., a Delaware corporation (the "Company"), and
Raul Alarcon, Jr. ("Indemnitee").
WHEREAS, it is essential that the Company retain as directors and
executive officers the most capable persons available;
WHEREAS, Indemnitee is a director and an executive officer of the
Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors of public
companies in today's environment;
WHEREAS, the Third Amended and Restated Certificate of Incorporation
of the Company (the "Charter") requires the Company to indemnify directors,
officers and certain other persons to the fullest extent permitted by law and
Indemnitee has been serving and continues to serve as a director and an
executive officer of the Company in part in reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability and to provide Indemnitee with specific
contractual assurance that the protection provided by the Charter will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of the Charter or any change in the composition of the Company's
Board of Directors or any acquisition transaction relating to the Company), the
Company wishes to provide in this agreement for the indemnification of and the
advancement of expenses to Indemnitee to the fullest extent permitted by law and
as set forth in this agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) Change in Control: shall be deemed to have occurred if, (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 15% or more of
the total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the
<PAGE> 2
Company and any new director whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.
(b) Claim: any threatened, pending or completed action, suit,
proceeding, arbitration, alternate dispute resolution mechanism, (whether civil,
criminal, administrative or investigative, whether instituted by or in the right
of the Company or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding, arbitration or
alternate dispute resolution mechanism, whether civil, criminal, administrative
or investigative, arising from or in connection with the fact that Indemnitee,
or a person for whom Indemnitee is the legal representative, is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans.
(c) Expenses: include reasonable attorneys' fees and all other
costs, expenses and obligations actually and reasonably incurred by the
Indemnitee in connection with investigating, defending, or preparing to defend
any Claim.
(d) Independent Legal Counsel: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3, who shall not have
otherwise performed services for the Company or Indemnitee within the last five
years (other than with respect to matters concerning the rights of Indemnitee
under this Agreement, or of other indemnitees under similar indemnity
agreements).
(e) Reviewing Party: (1) a Majority of directors who are not parties
to the action, even though less than a quorum, or (2) a Committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
independent legal counsel, or (4) the stockholders.
(f) Voting Securities: any securities which vote generally in the
election of directors.
<PAGE> 3
2. INDEMNIFICATION.
(a) In General. In connection with any Claim, whether relating to
events occurring before or after the Effective Date, the Company shall
indemnify, and advance Expenses, to Indemnitee as provided in this Agreement and
to the fullest extent permitted by law.
(b) Claims Other Than Claims by or in the Right of the Company. In
the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in any proceeding pursuant to any Claim, other than a Claim by or in
the right of the Company, the Company shall, subject to Sections 2(e) and 2(f),
indemnify Indemnitee against any and all Expenses, judgments, fines, penalties
and amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Claim;
provided, however, that Indemnitee shall not be entitled to indemnification
pursuant to this Section 2(b) in connection with conduct finally adjudged as
constituting acts or omissions not in good faith or which involved a knowing
violation of the law.
(c) Proceedings by or in the Right of the Company. In the event
Indemnitee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in any
proceeding pursuant to any Claim brought by or in the right of the Company to
procure a judgment in its favor, the Company shall, subject to Sections 2(e) and
2(f), indemnify Indemnitee against any and all Expenses (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses) of such Claim. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any Claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery or the court in which
such Claim was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
which the Court of Chancery or such other court shall deem proper.
(d) Payment of Indemnification; Advancement of Expenses. Subject to
Sections 2(e) and 2(f), the Company shall indemnify Indemnitee as soon as
practicable but in any event no later than 60 days after written demand is
presented to the Company. If so requested by Indemnitee, the Company shall
advance (within 10 business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance"); provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of the Claim
will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
(e) Indemnitee Not Entitled to Indemnification. Notwithstanding
anything in this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification pursuant to
<PAGE> 4
this Agreement in connection with any Claim (or part thereof) initiated by
Indemnitee unless the Board of Directors has authorized or consented to the
initiation of such Claim (or part thereof).
(f) Determination of Entitlement. Notwithstanding anything in this
Agreement to the contrary, (i) the obligations of the Company under this Section
2 shall be subject to the condition that the Reviewing Party shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 3 is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 2(d) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be selected by the Board of Directors, and
if there has been such a Change in Control (other than a Change in Control which
has been approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3. If there has
been no determination by the Reviewing Party within 60 days after written demand
for indemnification made under Section 2(d) or if the Reviewing Party determines
that Indemnitee would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence litigation in
any court in the State of Delaware having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
3. CHANGE IN CONTROL.
If there is a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense Advances under this Agreement, the
Company shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law. The Company shall pay the
reasonable fees of the Independent Legal Counsel referred to above and fully
indemnify such counsel against any and
<PAGE> 5
all expenses (including reasonable attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES.
The Company shall indemnify Indemnitee against any and all Expenses
(including reasonable attorneys' fees) and, if requested by Indemnitee, shall
(within 10 business days of such request) advance such Expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement, the Charter or any other agreement, certificate of
incorporation or Company by-law now or hereafter in effect relating to Claims
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company; provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of such
action will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
5. PARTIAL INDEMNITY.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
6. BURDEN OF PROOF.
In connection with any determination by the Reviewing Party or otherwise
as to whether Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
7. NO PRESUMPTIONS.
For purposes of this Agreement, the termination of any claim, action, suit
or proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law. In addition, neither
the failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that Indemnitee has
not met such standard of conduct or did not have such
<PAGE> 6
belief, prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
8. NONEXCLUSIVITY.
The rights of Indemnitee hereunder shall be in addition to any other
rights Indemnitee may have under the Charter, the Company's by-laws, the
Delaware General Corporation Law or otherwise. To the extent that a change in
the Delaware General Corporation Law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Charter and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. LIABILITY INSURANCE.
Subject to the availability of insurance at substantially similar rates
for similar coverage (as determined in the sole discretion of the Company), the
Company will maintain insurance (i) at the levels in effect as of the date
hereof with respect to Indemnitee until the third anniversary of the date
hereof, or (ii) at the levels in effect as of the date of the expiration of the
term, death, removal, retirement or resignation of Indemnitee for a period of
three years after such event, whichever level is greater, in either case, with
respect to any Claim, against all liability and loss suffered and Expenses
(including reasonable attorney's fees) reasonably incurred by Indemnitee at the
Company's expense, to protect the Company and Indemnitee against any such
liability, cost, payment or Expense; provided, however, that subject to the
provisions of this Section 9, the Company shall only be required to maintain
insurance until the earlier of the date which is (a) three years after the
expiration of the term, death, removal, retirement or resignation of Indemnitee
and (b) the sixth anniversary of the date hereof.
10. AMENDMENTS AND WAIVERS.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
11. SUBROGATION.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
<PAGE> 7
12. NO DUPLICATION OF PAYMENTS.
The Company shall not be liable under this Agreement to make any payment
in connection with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance policy, the Charter
or otherwise) of the amounts otherwise indemnifiable hereunder.
13. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an executive officer or director of the Company or of any other
enterprise at the Company's request.
14. SEVERABILITY.
The provisions of this Agreement shall be severable in the event that any
of the provisions hereof (including any provision within a single section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the fullest extent permitted by law.
15. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state without giving effect to the principles of
conflicts of laws.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Joseph A. Garcia
----------------------------------
Name: Joseph A. Garcia
Title: Chief Financial Officer
INDEMNITEE
/s/ Pablo Raul Alarcon, Jr.
----------------------------------
<PAGE> 1
Exhibit 8
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of November 2, 1999 between
Spanish Broadcasting System, Inc., a Delaware corporation (the "Company"), and
Roman Martinez IV ("Indemnitee").
WHEREAS, it is essential that the Company retain as directors and
executive officers the most capable persons available;
WHEREAS, Indemnitee is a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the increased
risk of litigation and other claims being asserted against directors of public
companies in today's environment;
WHEREAS, the Third Amended and Restated Certificate of Incorporation
of the Company (the "Charter") requires the Company to indemnify directors,
officers and certain other persons to the fullest extent permitted by law and
Indemnitee will serve as a director of the Company in part in reliance on the
Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability and to provide Indemnitee with specific
contractual assurance that the protection provided by the Charter will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of the Charter or any change in the composition of the Company's
Board of Directors or any acquisition transaction relating to the Company), the
Company wishes to provide in this agreement for the indemnification of and the
advancement of expenses to Indemnitee to the fullest extent permitted by law and
as set forth in this agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies.
NOW, THEREFORE, in consideration of the premises and intending to be
legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) Change in Control: shall be deemed to have occurred if, (i) any
"person" (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended), other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 15% or more of
the total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the
<PAGE> 2
Company and any new director whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.
(b) Claim: any threatened, pending or completed action, suit,
proceeding, arbitration, alternate dispute resolution mechanism, (whether civil,
criminal, administrative or investigative, whether instituted by or in the right
of the Company or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding, arbitration or
alternate dispute resolution mechanism, whether civil, criminal, administrative
or investigative, arising from or in connection with the fact that Indemnitee,
or a person for whom Indemnitee is the legal representative, is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans.
(c) Expenses: include reasonable attorneys' fees and all other
costs, expenses and obligations actually and reasonably incurred by the
Indemnitee in connection with investigating, defending, or preparing to defend
any Claim.
(d) Independent Legal Counsel: an attorney or firm of attorneys,
selected in accordance with the provisions of Section 3, who shall not have
otherwise performed services for the Company or Indemnitee within the last five
years (other than with respect to matters concerning the rights of Indemnitee
under this Agreement, or of other indemnitees under similar indemnity
agreements).
(e) Reviewing Party: (1) a Majority of directors who are not parties
to the action, even though less than a quorum, or (2) a Committee of such
directors designated by majority vote of such directors, even though less than a
quorum, or (3) if there are no such directors, or if such directors so direct,
independent legal counsel, or (4) the stockholders.
(f) Voting Securities: any securities which vote generally in the
election of directors.
<PAGE> 3
2. INDEMNIFICATION.
(a) In General. In connection with any Claim, whether relating to
events occurring before or after the Effective Date, the Company shall
indemnify, and advance Expenses, to Indemnitee as provided in this Agreement and
to the fullest extent permitted by law.
(b) Claims Other Than Claims by or in the Right of the Company. In
the event Indemnitee was, is or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in any proceeding pursuant to any Claim, other than a Claim by or in
the right of the Company, the Company shall, subject to Sections 2(e) and 2(f),
indemnify Indemnitee against any and all Expenses, judgments, fines, penalties
and amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Claim;
provided, however, that Indemnitee shall not be entitled to indemnification
pursuant to this Section 2(b) in connection with conduct finally adjudged as
constituting acts or omissions not in good faith or which involved a knowing
violation of the law.
(c) Proceedings by or in the Right of the Company. In the event
Indemnitee was, is or becomes a party to or witness or other participant in, or
is threatened to be made a party to or witness or other participant in any
proceeding pursuant to any Claim brought by or in the right of the Company to
procure a judgment in its favor, the Company shall, subject to Sections 2(e) and
2(f), indemnify Indemnitee against any and all Expenses (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such Expenses) of such Claim. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any Claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery or the court in which
such Claim was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
which the Court of Chancery or such other court shall deem proper.
(d) Payment of Indemnification; Advancement of Expenses. Subject to
Sections 2(e) and 2(f), the Company shall indemnify Indemnitee as soon as
practicable but in any event no later than 60 days after written demand is
presented to the Company. If so requested by Indemnitee, the Company shall
advance (within 10 business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance"); provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of the Claim
will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
(e) Indemnitee Not Entitled to Indemnification. Notwithstanding
anything in this Agreement to the contrary, Indemnitee shall not be entitled to
indemnification pursuant to
<PAGE> 4
this Agreement in connection with any Claim (or part thereof) initiated by
Indemnitee unless the Board of Directors has authorized or consented to the
initiation of such Claim (or part thereof).
(f) Determination of Entitlement. Notwithstanding anything in this
Agreement to the contrary, (i) the obligations of the Company under this Section
2 shall be subject to the condition that the Reviewing Party shall not have
determined (in a written opinion, in any case in which the Independent Legal
Counsel referred to in Section 3 is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 2(d) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be selected by the Board of Directors, and
if there has been such a Change in Control (other than a Change in Control which
has been approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3. If there has
been no determination by the Reviewing Party within 60 days after written demand
for indemnification made under Section 2(d) or if the Reviewing Party determines
that Indemnitee would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence litigation in
any court in the State of Delaware having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
3. CHANGE IN CONTROL.
If there is a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense Advances under this Agreement, the
Company shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law. The Company shall pay the
reasonable fees of the Independent Legal Counsel referred to above and fully
indemnify such counsel against any and
<PAGE> 5
all expenses (including reasonable attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES.
The Company shall indemnify Indemnitee against any and all Expenses
(including reasonable attorneys' fees) and, if requested by Indemnitee, shall
(within 10 business days of such request) advance such Expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement, the Charter or any other agreement, certificate of
incorporation or Company by-law now or hereafter in effect relating to Claims
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company; provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of such
action will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
5. PARTIAL INDEMNITY.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
6. BURDEN OF PROOF.
In connection with any determination by the Reviewing Party or otherwise
as to whether Indemnitee is entitled to be indemnified hereunder, the burden of
proof shall be on the Company to establish that Indemnitee is not so entitled.
7. NO PRESUMPTIONS.
For purposes of this Agreement, the termination of any claim, action, suit
or proceeding, by judgment, order, settlement (whether with or without court
approval) or conviction, or upon a plea of nolo contendere, or its equivalent,
shall not create a presumption that Indemnitee did not meet any particular
standard of conduct or have any particular belief or that a court has determined
that indemnification is not permitted by applicable law. In addition, neither
the failure of the Reviewing Party to have made a determination as to whether
Indemnitee has met any particular standard of conduct or had any particular
belief, nor an actual determination by the Reviewing Party that Indemnitee has
not met such standard of conduct or did not have such
<PAGE> 6
belief, prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
8. NONEXCLUSIVITY.
The rights of Indemnitee hereunder shall be in addition to any other
rights Indemnitee may have under the Charter, the Company's by-laws, the
Delaware General Corporation Law or otherwise. To the extent that a change in
the Delaware General Corporation Law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Charter and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. LIABILITY INSURANCE.
Subject to the availability of insurance at substantially similar rates
for similar coverage (as determined in the sole discretion of the Company), the
Company will maintain insurance (i) at the levels in effect as of the date
hereof with respect to Indemnitee until the third anniversary of the date
hereof, or (ii) at the levels in effect as of the date of the expiration of the
term, death, removal, retirement or resignation of Indemnitee for a period of
three years after such event, whichever level is greater, in either case, with
respect to any Claim, against all liability and loss suffered and Expenses
(including reasonable attorney's fees) reasonably incurred by Indemnitee at the
Company's expense, to protect the Company and Indemnitee against any such
liability, cost, payment or Expense; provided, however, that subject to the
provisions of this Section 9, the Company shall only be required to maintain
insurance until the earlier of the date which is (a) three years after the
expiration of the term, death, removal, retirement or resignation of Indemnitee
and (b) the sixth anniversary of the date hereof.
10. AMENDMENTS AND WAIVERS.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
11. SUBROGATION.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
<PAGE> 7
12. NO DUPLICATION OF PAYMENTS.
The Company shall not be liable under this Agreement to make any payment
in connection with any Claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance policy, the Charter
or otherwise) of the amounts otherwise indemnifiable hereunder.
13. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an executive officer or director of the Company or of any other
enterprise at the Company's request.
14. SEVERABILITY.
The provisions of this Agreement shall be severable in the event that any
of the provisions hereof (including any provision within a single section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the fullest extent permitted by law.
15. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state without giving effect to the principles of
conflicts of laws.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Joseph A. Garcia
----------------------------------
Name: Joseph A. Garcia
Title: Chief Financial Officer
INDEMNITEE
/s/ Roman Martinez IV
----------------------------------
<PAGE> 1
Exhibit 9
INDEMNIFICATION AGREEMENT
INDEMNIFICATION AGREEMENT, dated as of November 2, 1999
between Spanish Broadcasting System, Inc., a Delaware corporation (the
"Company"), and Jason L. Shrinsky ("Indemnitee").
WHEREAS, it is essential that the Company retain as directors
and executive officers the most capable persons available;
WHEREAS, Indemnitee is or was a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the
increased risk of litigation and other claims being asserted against directors
of public companies in today's environment;
WHEREAS, the Third Amended and Restated Certificate of
Incorporation of the Company (the "Charter") requires the Company to indemnify
directors, officers and certain other persons to the fullest extent permitted by
law and Indemnitee and will serve as a director of the Company in part in
reliance on the Charter;
WHEREAS, in recognition of Indemnitee's need for substantial
protection against personal liability and to provide Indemnitee with specific
contractual assurance that the protection provided by the Charter will be
available to Indemnitee (regardless of, among other things, any amendment to or
revocation of the Charter or any change in the composition of the Company's
Board of Directors or any acquisition transaction relating to the Company), the
Company wishes to provide in this agreement for the indemnification of and the
advancement of expenses to Indemnitee to the fullest extent permitted by law and
as set forth in this agreement, and, to the extent insurance is maintained, for
the continued coverage of Indemnitee under the Company's directors' and
officers' liability insurance policies.
NOW, THEREFORE, in consideration of the premises and intending
to be legally bound hereby, the parties hereto agree as follows:
1. CERTAIN DEFINITIONS.
(a) Change in Control: shall be deemed to have occurred if,
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended), other than a trustee or other
fiduciary holding securities under an employee benefit plan of the Company or a
corporation owned directly or indirectly by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company,
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 15% or more of
the total voting power represented by the Company's then outstanding Voting
Securities, or (ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the
<PAGE> 2
Company and any new director whose election by the Board of Directors or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the period or whose election or nomination for
election was previously so approved, cease for any reason to constitute a
majority thereof, or (iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the Voting Securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) at least 80% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of (in one transaction or a series of
transactions) all or substantially all of the Company's assets.
(b) Claim: any threatened, pending or completed action, suit,
proceeding, arbitration, alternate dispute resolution mechanism, (whether civil,
criminal, administrative or investigative, whether instituted by or in the right
of the Company or any other party, that Indemnitee in good faith believes might
lead to the institution of any such action, suit, proceeding, arbitration or
alternate dispute resolution mechanism, whether civil, criminal, administrative
or investigative, arising from or in connection with the fact that Indemnitee,
or a person for whom Indemnitee is the legal representative, is or was a
director or officer of the Company, or is or was serving at the request of the
Company as a director, officer, employee or agent of another corporation or of a
partnership, joint venture, trust, enterprise or nonprofit entity, including
service with respect to employee benefit plans.
(c) Expenses: include reasonable attorneys' fees and all other
costs, expenses and obligations actually and reasonably incurred by the
Indemnitee in connection with investigating, defending, or preparing to defend
any Claim.
(d) Independent Legal Counsel: an attorney or firm of
attorneys, selected in accordance with the provisions of Section 3, who shall
not have otherwise performed services for the Company or Indemnitee within the
last five years (other than with respect to matters concerning the rights of
Indemnitee under this Agreement, or of other indemnitees under similar indemnity
agreements).
(e) Reviewing Party: (1) a Majority of directors who are not
parties to the action, even though less than a quorum, or (2) a Committee of
such directors designated by majority vote of such directors, even though less
than a quorum, or (3) if there are no such directors, or if such directors so
direct, independent legal counsel, or (4) the stockholders.
(f) Voting Securities: any securities which vote generally in
the election of directors.
<PAGE> 3
2. INDEMNIFICATION.
(a) In General. In connection with any Claim, whether relating
to events occurring before or after the Effective Date, the Company shall
indemnify, and advance Expenses, to Indemnitee as provided in this Agreement and
to the fullest extent permitted by law.
(b) Claims Other Than Claims by or in the Right of the
Company. In the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or other
participant in any proceeding pursuant to any Claim, other than a Claim by or in
the right of the Company, the Company shall, subject to Sections 2(e) and 2(f),
indemnify Indemnitee against any and all Expenses, judgments, fines, penalties
and amounts paid in settlement (including all interest, assessments and other
charges paid or payable in connection with or in respect of such Expenses,
judgments, fines, penalties or amounts paid in settlement) of such Claim;
provided, however, that Indemnitee shall not be entitled to indemnification
pursuant to this Section 2(b) in connection with conduct finally adjudged as
constituting acts or omissions not in good faith or which involved a knowing
violation of the law.
(c) Proceedings by or in the Right of the Company. In the
event Indemnitee was, is or becomes a party to or witness or other participant
in, or is threatened to be made a party to or witness or other participant in
any proceeding pursuant to any Claim brought by or in the right of the Company
to procure a judgment in its favor, the Company shall, subject to Sections 2(e)
and 2(f), indemnify Indemnitee against any and all Expenses (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses) of such Claim. Notwithstanding the foregoing, no such
indemnification shall be made in respect of any Claim, issue or matter as to
which Indemnitee shall have been finally adjudged to be liable to the Company
unless and only to the extent that the Court of Chancery or the court in which
such Claim was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses
which the Court of Chancery or such other court shall deem proper.
(d) Payment of Indemnification; Advancement of Expenses.
Subject to Sections 2(e) and 2(f), the Company shall indemnify Indemnitee as
soon as practicable but in any event no later than 60 days after written demand
is presented to the Company. If so requested by Indemnitee, the Company shall
advance (within 10 business days of such request) any and all Expenses to
Indemnitee (an "Expense Advance"); provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of the Claim
will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
(e) Indemnitee Not Entitled to Indemnification.
Notwithstanding anything in this Agreement to the contrary, Indemnitee shall not
be entitled to indemnification pursuant to
<PAGE> 4
this Agreement in connection with any Claim (or part thereof) initiated by
Indemnitee unless the Board of Directors has authorized or consented to the
initiation of such Claim (or part thereof).
(f) Determination of Entitlement. Notwithstanding anything in
this Agreement to the contrary, (i) the obligations of the Company under this
Section 2 shall be subject to the condition that the Reviewing Party shall not
have determined (in a written opinion, in any case in which the Independent
Legal Counsel referred to in Section 3 is involved) that Indemnitee would not be
permitted to be indemnified under applicable law, and (ii) the obligation of the
Company to make an Expense Advance pursuant to Section 2(d) shall be subject to
the condition that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so indemnified under
applicable law, the Company shall be entitled to be reimbursed by Indemnitee
(who hereby agrees to reimburse the Company) for all such amounts theretofore
paid; provided, however, that if Indemnitee has commenced or thereafter
commences legal proceedings in a court of competent jurisdiction to secure a
determination that Indemnitee should be indemnified under applicable law, any
determination made by the Reviewing Party that Indemnitee would not be permitted
to be indemnified under applicable law shall not be binding and Indemnitee shall
not be required to reimburse the Company for any Expense Advance until a final
judicial determination is made with respect thereto (as to which all rights of
appeal therefrom have been exhausted or lapsed). If there has not been a Change
in Control, the Reviewing Party shall be selected by the Board of Directors, and
if there has been such a Change in Control (other than a Change in Control which
has been approved by a majority of the Company's Board of Directors who were
directors immediately prior to such Change in Control), the Reviewing Party
shall be the Independent Legal Counsel referred to in Section 3. If there has
been no determination by the Reviewing Party within 60 days after written demand
for indemnification made under Section 2(d) or if the Reviewing Party determines
that Indemnitee would not be permitted to be indemnified in whole or in part
under applicable law, Indemnitee shall have the right to commence litigation in
any court in the State of Delaware having subject matter jurisdiction thereof
and in which venue is proper seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect thereof,
including the legal or factual bases therefor, and the Company hereby consents
to service of process and to appear in any such proceeding. Any determination by
the Reviewing Party otherwise shall be conclusive and binding on the Company and
Indemnitee.
3. CHANGE IN CONTROL.
If there is a Change in Control of the Company (other than a Change in
Control which has been approved by a majority of the Company's Board of
Directors who were directors immediately prior to such Change in Control), then
with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense Advances under this Agreement, the
Company shall seek legal advice only from Independent Legal Counsel selected by
Indemnitee and approved by the Company (which approval shall not be unreasonably
withheld). Such counsel, among other things, shall render its written opinion to
the Company and Indemnitee as to whether and to what extent Indemnitee would be
permitted to be indemnified under applicable law. The Company shall pay the
reasonable fees of the Independent Legal Counsel referred to above and fully
indemnify such counsel against any and
<PAGE> 5
all expenses (including reasonable attorneys' fees), claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.
4. INDEMNIFICATION FOR ADDITIONAL EXPENSES.
The Company shall indemnify Indemnitee against any and all Expenses
(including reasonable attorneys' fees) and, if requested by Indemnitee, shall
(within 10 business days of such request) advance such Expenses to Indemnitee,
which are incurred by Indemnitee in connection with any action brought by
Indemnitee for (i) indemnification or advance payment of Expenses by the Company
under this Agreement, the Charter or any other agreement, certificate of
incorporation or Company by-law now or hereafter in effect relating to Claims
and/or (ii) recovery under any directors' and officers' liability insurance
policies maintained by the Company; provided, however, that the payment of
Expenses incurred by Indemnitee in advance of the final disposition of such
action will be made only upon receipt by the Company of an undertaking by the
Indemnitee to repay all amounts advanced if it should be ultimately determined
that the Indemnitee is not entitled to be indemnified under this Agreement or
otherwise.
5. PARTIAL INDEMNITY.
If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for a portion of the Expenses, judgments, fines,
penalties and amounts paid in settlement of a Claim but not, however, for the
total amount thereof, the Company shall nevertheless indemnify Indemnitee for
the portion thereof to which Indemnitee is entitled. Moreover, notwithstanding
any other provision of this Agreement, to the extent that Indemnitee has been
successful on the merits or otherwise in defense of any or all Claims or in
defense of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.
6. BURDEN OF PROOF.
In connection with any determination by the Reviewing Party or
otherwise as to whether Indemnitee is entitled to be indemnified hereunder, the
burden of proof shall be on the Company to establish that Indemnitee is not so
entitled.
7. NO PRESUMPTIONS.
For purposes of this Agreement, the termination of any claim, action,
suit or proceeding, by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law. In addition,
neither the failure of the Reviewing Party to have made a determination as to
whether Indemnitee has met any particular standard of conduct or had any
particular belief, nor an actual determination by the Reviewing Party that
Indemnitee has not met such standard of conduct or did not have such
<PAGE> 6
belief, prior to the commencement of legal proceedings by Indemnitee to secure a
judicial determination that Indemnitee should be indemnified under applicable
law shall be a defense to Indemnitee's claim or create a presumption that
Indemnitee has not met any particular standard of conduct or did not have any
particular belief.
8. NONEXCLUSIVITY.
The rights of Indemnitee hereunder shall be in addition to any other
rights Indemnitee may have under the Charter, the Company's by-laws, the
Delaware General Corporation Law or otherwise. To the extent that a change in
the Delaware General Corporation Law (whether by statute or judicial decision)
permits greater indemnification by agreement than would be afforded currently
under the Charter and this Agreement, it is the intent of the parties hereto
that Indemnitee shall enjoy by this Agreement the greater benefits so afforded
by such change.
9. LIABILITY INSURANCE.
Subject to the availability of insurance at substantially similar rates
for similar coverage (as determined in the sole discretion of the Company), the
Company will maintain insurance (i) at the levels in effect as of the date
hereof with respect to Indemnitee until the third anniversary of the date
hereof, or (ii) at the levels in effect as of the date of the expiration of the
term, death, removal, retirement or resignation of Indemnitee for a period of
three years after such event, whichever level is greater, in either case, with
respect to any Claim, against all liability and loss suffered and Expenses
(including reasonable attorney's fees) reasonably incurred by Indemnitee at the
Company's expense, to protect the Company and Indemnitee against any such
liability, cost, payment or Expense; provided, however, that subject to the
provisions of this Section 9, the Company shall only be required to maintain
insurance until the earlier of the date which is (a) three years after the
expiration of the term, death, removal, retirement or resignation of Indemnitee
and (b) the sixth anniversary of the date hereof.
10. AMENDMENTS AND WAIVERS.
No supplement, modification or amendment of this Agreement shall be
binding unless executed in writing by the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a waiver of
any other provisions hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.
11. SUBROGATION.
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.
<PAGE> 7
12. NO DUPLICATION OF PAYMENTS.
The Company shall not be liable under this Agreement to make any
payment in connection with any Claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
the Charter or otherwise) of the amounts otherwise indemnifiable hereunder.
13. BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors, assigns,
including any direct or indirect successor by purchase, merger, consolidation or
otherwise to all or substantially all of the business and/or assets of the
Company, spouses, heirs, executors and personal and legal representatives. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an executive officer or director of the Company or of any other
enterprise at the Company's request.
14. SEVERABILITY.
The provisions of this Agreement shall be severable in the event that
any of the provisions hereof (including any provision within a single section,
paragraph or sentence) is held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable in any respect, and the validity and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired and shall remain enforceable
to the fullest extent permitted by law.
15. GOVERNING LAW.
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state without giving effect to the principles of
conflicts of laws.
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SPANISH BROADCASTING SYSTEM, INC.
/s/ Joseph A. Garcia
By: ______________________________
Name: Joseph A. Garcia
Title: Chief Financial Officer
INDEMNITEE
/s/ Jason L. Shrinsky
_____________________________
<PAGE> 1
Exhibit 10
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT dated as of October 25, 1999, by and
between Spanish Broadcasting System, Inc., a Delaware corporation (the
"Company") and Luis Diaz-Albertini (the "Executive").
WHEREAS, the Executive has been employed by the Company for a
number of years as its Vice President/Group Sales; and
WHEREAS, the Company desires to assure the continued services
of the Executive and the Executive is willing to continue to serve in the employ
of the Company for the period set forth herein upon the terms and conditions
hereinafter provided;
NOW, THEREFORE, in consideration of the mutual promises and
agreements set forth below, the Company and the Executive agree as follows:
1. Term. Except as otherwise provided in Section 4
hereof, the Company agrees to employ the Executive, and the Executive agrees to
serve, for a period commencing on the date the Company's registration statement
relating to its initial public offering is declared effective (the "Effective
Date") and ending on the third anniversary of the Effective Date, provided that,
unless either party otherwise elects by notice in writing to the other at least
90 days prior to the third anniversary of the Effective Date or any succeeding
anniversary of the Effective Date, the employment term shall be automatically
renewed for successive one-year terms unless sooner terminated pursuant to the
terms of the Agreement (the "Employment Term").
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2. Positions and Duties; Place of Performance.
(a) Positions and Duties. The Executive shall be
employed as Vice President/Group Sales of the Company and shall have the duties,
responsibilities and authority as may from time to time be assigned to him by
the Company's Chief Executive Officer (the "CEO") that are consistent with and
normally associated with such position, and shall continue to have
responsibility for those segments of the Company's business for which he is
currently responsible. The Executive shall devote substantially all of his
business time, effort and energies exclusively to the business of the Company,
and shall not serve as an active principal or a director or officer of any other
company or entity without the prior written consent of the CEO, except that the
Executive may serve as a director or officer of any trade association, civic,
religious, business, educational or charitable organization without such
consent.
(b) Place of Performance. The Executive shall be
based in Miami, Florida, but shall be required to visit and work with all
Company broadcast stations wherever located on a regular and continuing basis.
3. Compensation and Benefits.
(a) Base Salary. During the Employment Term, the
Company shall pay the Executive a base salary at the annual rate of $ 225,000.00
per year (the "Base Salary"), payable in accordance with the Company's normal
payroll practices for executive compensation, but not less frequently than
monthly. The Executive shall be entitled to such increases (but not decreases)
in his Base Salary as may be determined from time to time by the Company's Board
of Directors (the "Board") or pursuant to its delegation, provided that the
Executive's Base Salary will be reviewed
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<PAGE> 3
not less often than annually. If the Base Salary is increased, the new salary
shall thereafter constitute the "Base Salary" for purposes of this Agreement.
(b) Bonuses. In addition to the Base Salary, the
Executive shall be entitled to receive a cash bonus each year in accordance with
a bonus program or arrangement established by the Company, as determined by the
Board after the date hereof for the benefit of the Company's management
executives.
(c) Other Benefit Plans and Fringe Benefits. The
Executive shall be eligible (i) to participate in any and all retirement, group
health and insurance plans and in all other employee benefit plans in which he
currently participates and/or in any such plans established or maintained by the
Company during the Employment Term that are made available to its management
executives generally, and (ii) to receive all fringe benefits, for which his
status and level of employment qualify him in accordance with the Company's
usual policies and arrangements and the terms of such plans, policies and
arrangements.
(d) Options. The Company shall grant the Executive
options to purchase 50,000 shares of common stock of the Company upon the
Effective Date (the "Option") with the exercise price to be equal to the public
offering price of the Company's initial public offering. The Options shall be
incentive stock options (within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code") to the maximum extent possible
(subject to qualification of such options or any portion thereof as incentive
stock options, and shall be nonqualified stock options to the extent they do not
so qualify). The Option for 10,000 shares shall vest effective on the closing of
the Company's initial public offering; the remaining shares shall vest over the
four years following the Effective Date (i.e., 10,000 on each of the first,
second, third and fourth
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<PAGE> 4
anniversary of the Effective Date) provided the Executive is employed on each
such date. Notwithstanding the foregoing, the Executive shall be eligible to
participate in any stock option or other equity-based program established by the
Company during the Employment Term.
(e) Expenses. The Company shall reimburse the
Executive for any and all out-of-pocket expenses incurred by the Executive
during the Employment Term in connection with his duties and responsibilities
hereunder in accordance with the Company's usual policy of reimbursing senior
executives.
4. Termination.
(a) Compensation and Benefits. Except as otherwise
provided in this section or Section 6 hereof, upon termination of the
Executive's employment hereunder, his right to any form of compensation
hereunder shall cease, except that he shall be entitled to receive any salary or
other benefits accrued but not paid up to his Date of Termination (as
hereinafter defined in Section 4(f) or for any period required by law and any
out-of-pocket expenses reasonably incurred by the Executive prior to such date.
(b) Death and Disability. The Executive's employment
hereunder shall terminate upon his death, and may be terminated by the Company
due to Disability. For purposes of this Agreement, "Disability" shall mean the
determination by the Board that the Executive is physically or mentally
incapacitated and has been unable for a period of six consecutive months, or for
shorter periods aggregating six months in any period of twelve (12) consecutive
months, to perform the duties for which he was responsible immediately before
the onset of his incapacity. In order to assist the Board in making such a
determination, the Executive shall, as reasonably requested by the Board, make
himself available for medical examinations by a physician chosen by
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<PAGE> 5
the Board and approved by the Executive. The determination of the physician
chosen in accordance with the preceding sentence shall be final and binding on
the Company and the Executive.
(c) Termination By the Company For Cause. The
Executive's employment hereunder may be terminated by the Company for Cause at
any time. For purposes of this Agreement, the term "Cause" shall mean the
Executive's (i) commission of an illegal act or acts that was intended to and
did defraud the Company or any of its affiliates, (ii) gross negligence or
willful misconduct in the management of the Company's affairs which materially
harms the Company and which is not remedied within 30 days of receiving notice
of same, or (iii) breach of the provisions of Section 5(a) or (b) hereof. In any
case described in this section, the Executive shall be given written notice, in
accordance with Section 4(f), that the Company intends to terminate his
employment for Cause. Such written notice shall specify the particular act or
acts, or failure to act, that is or are the basis for the decision to so
terminate the Executive's employment for Cause, and shall give the Executive the
right to cure any breach so specified for a period of thirty (30) days.
(d) Termination By the Executive For Good Reason. The
Executive may terminate his employment hereunder for Good Reason. For purposes
of this Agreement, the term "Good Reason" shall mean and shall be deemed to
exist if, without the prior written consent of the Executive, (i) the Executive
is assigned duties or responsibilities that are inconsistent in any material
respect with the scope of the duties or responsibilities associated with his
titles or positions, as set forth in this Agreement (or to which he is
promoted), (ii) the Executive's duties or responsibilities are significantly
reduced, (iii) benefits to which the Executive is entitled under the employee
benefit plans of the Company are in the aggregate materially decreased, unless
such decrease is required by law or is applicable to all employees of the
Company eligible to participate in any plan so affected,
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<PAGE> 6
not just those covered by employment agreements with the Company, (iv) the
Executive's Base Salary is reduced, (v) the Company fails to perform any
material term or provision of this Agreement, (vi) the Executive's office
location is relocated to one that is more than fifty (50) miles from the
location at which the Executive was based immediately prior to the relocation,
or (vii) the Company fails to obtain the full assumption of this Agreement by a
successor.
(e) Compensation Upon Termination Without Cause or
for Death or Disability.
(i) If the Company terminates the Executive's
employment hereunder other than for Cause or other than in accordance with
Section 4(b), or the Executive terminates his employment for Good Reason,
notwithstanding any other provision of this Agreement to the contrary:
(A) In addition to the amounts paid to the Executive
pursuant to Section 4(a), in lieu of any further salary payments to the
Executive for periods subsequent to the Date of Termination, the Company shall
pay the Executive an amount equal to two times the Executive's annual Base
Salary rate in effect as of the Date of Termination, plus two times the bonus
paid him with respect to the year preceding such Date of Termination. Except as
provided in Section 6(a)(i), this amount shall be paid in substantially equal
monthly payments during the two years following the Executive's Date of
Termination, provided, however, that the Company may determine, in its sole
discretion, to pay such amount (or any portion remaining during such period if
periodic payments have commenced) in a single lump sum in cash.
(B) The Company shall continue to provide the
Executive (and his eligible dependents, if any) with group health and life
insurance benefits and long-term disability insurance
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<PAGE> 7
coverage (or the economic equivalent thereof) at the level (including, if
applicable, the portion of the premium paid by the Company for such coverage) in
effect on the Date of Termination for the one-year period following such date,
provided that such coverage shall cease to be provided if the Executive is
employed by another employer within such one-year period, and further provided
that, the date of the expiration of the extended period of coverage provided
under this clause (i)(B) shall be treated as the date of the termination of the
Executive's employment solely for the purpose of determining the rights of the
Executive (and his eligible dependents, if any) to the continuation coverage
provided under Section 4980B of the Internal Revenue Code of 1986, as amended
(the "Code").
(C) All nonvested Options previously granted to
Executive shall immediately vest and remain exercisable until the earlier of (i)
two years from the Executive's Date of Termination and (ii) the remaining term
of the Option.
(D) If the Executive's employment hereunder is
terminated as a result of death or Disability, he shall be paid a single lump
sum in cash within thirty (30) days of his Date of Termination in an amount
equal to fifty percent (50%) of his Base Salary.
(f) Notice of Termination; Date of Termination. Any
termination of the Executive's employment, other than by reason of his death,
shall be communicated by the terminating party by a written notice of
termination (the "Notice of Termination"). The Notice of Termination shall (i)
indicate the specific termination provision in this Agreement relied upon, (ii)
set forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated, and (iii) if the termination date is other than the date of receipt
of such notice, specify the date on which the
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<PAGE> 8
Executive's employment is to be terminated (which date shall not be earlier than
the date on which such notice is actually received, or in the case of a
termination for Disability, the sixtieth (60th) day after such notice is
received). In the case of a termination by the Company for Cause, the Notice of
Termination shall be given within one hundred and eighty (180) business days
after the Company's CEO has actual knowledge of the events justifying the
purported termination, and in the case of a termination by the Executive for
Good Reason, the notice shall be given within one hundred and eighty (180) days
of the Executive's having actual knowledge of the events justifying such
termination. For purposes of this Agreement, "Date of Termination" shall mean
(i) if the Executive's employment is terminated by his death, the date of his
death, and (ii) in all other cases, the later of the date of actual receipt of
the Notice of Termination, or the date specified in such notice.
(g) No Mitigation; No Offset. In the event of any
termination of the Executive's employment under this Section 4, the Executive
shall be under no obligation to seek other employment and there shall be no
offset against any amounts due the Executive under this Agreement on account of
any remuneration that the Executive may obtain from any subsequent employment.
Any amounts due under this Section 4 are in the nature of liquidated damages,
and not in the nature of a penalty.
5. Covenants.
(a) Competitive Activity. During the Term, and for a
period of twelve (12) months after the Executive's Date of Termination, the
Executive agrees that, without the prior written consent of the Board, he shall
not render services in any capacity for a radio station competitive with the
Company's radio business, nor shall he be directly or indirectly involved in any
radio business competitive with the Company's radio business.
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<PAGE> 9
(b) Solicitation or Interference. During the Term
and for a period of twelve (12) months after the Executive's Date of
Termination, the Executive shall not, either for himself or on behalf of any
third party: (i) in any manner induce any employee, agent, representative,
customer, former customer, or any other person or concern, dealing with or in
some other way associated with the Company, to terminate such dealings or
association; or (ii) do anything, directly or indirectly, to interfere with the
relationship between the Company and any such person or concern.
(c) Non-Disclosure of Proprietary Information. The
Executive agrees that he will not disclose the trade secrets or confidential and
proprietary information of the Company during the Term or thereafter. The
parties understand and agree that nothing contained herein shall prevent the
Executive from disclosing: (1) information required to be disclosed pursuant to
compulsory legal process, provided that he shall give the Company prompt notice
of such process prior to disclosure; (2) information which was in his lawful
possession at the time of or prior to its submission to him by the Company; or
(3) information which is in the public domain.
(d) Remedy for Breach. If any provision of this
Section 4 is deemed invalid or unenforceable, such provision shall be deemed
modified and limited to the extent necessary to make it valid and enforceable.
The Executive acknowledges and agrees that the provisions of this section are
reasonable and necessary for the protection of the Company and that the Company
will be irrevocably damaged if such provisions are not specifically enforced.
Accordingly, money damages from the Executive for a breach of this section would
be difficult, if not impossible, to calculate and the most appropriate relief in
the event of the Executive's breach would be injunctive relief. Nothing
contained herein shall be deemed to prohibit the Company, for
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<PAGE> 10
any such breach, from instituting or prosecuting any other proceeding in any
court of competent jurisdiction, in either law or equity, to obtain damages for
any breach of this Agreement. All remedies given to the Company by this
Agreement shall be construed as cumulative remedies and shall not be alternative
or exclusive remedies.
6. Change in Control Provisions.
(a) Impact of Event. In the event of a "Change in
Control" of the Company, as defined in Section 6(b), the following provisions
shall apply in addition to the other provisions of this Agreement:
(i) If, on or before the first anniversary of
the Change in Control, the Executive's employment hereunder is terminated by the
Company for any reason other than for Cause or by the Executive for Good Reason,
(A) Section 5(a) shall not be applicable to the Executive from and after his
Date of Termination, (B) the Executive shall be entitled to receive the amount
determined under Section 4(e)(i)(A) in a single lump sum in cash within thirty
(30) days of the Executive's Date of Termination, and such amount shall not be
discounted in any way to reflect its present value, (C) any and all Options the
Executive then holds which are not exercisable shall vest and be exercisable
immediately, and (D) notwithstanding Section 4(e)(B) hereof, at the Company's
expense, the Executive shall continue to be a participant in any group health
plan (which may be provided by payment of COBRA continuation coverage premiums)
maintained by the Company (or the economic equivalent in cash) at the level in
effect on the Executive's Date of Termination for a period of eighteen (18)
months following his Date of Termination.
(ii) All expenses (including, without
limitation, legal fees and expenses) incurred by the Executive in connection
with, or in prosecuting or defending, any claim
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<PAGE> 11
or controversy arising out of or relating to this Agreement shall be paid by the
Company, unless the Executive fails to prevail at least in part in any such
claim or controversy and the Company receives a written opinion of independent
legal counsel, selected by the Board, to the effect that such expenses were not
incurred by the Executive in good faith. Pending any such determination, such
expenses shall be paid by the Company in advance on a monthly basis, upon an
undertaking by the Executive to repay such advanced amounts if the Executive
fails to prevail in any such claim or controversy and it should thus be
determined that the expenses were not incurred by the Executive in good faith.
(b) Definition of Change in Control. A Change in
Control shall mean the happening of any of the following:
(i) any "person," as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange
Act") (other than the Company or any subsidiary of the Company, or any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing [thirty percent (30%)] or more of the combined voting power
of the Company's then outstanding securities;
(ii) during any period of two consecutive years
beginning on or after the Effective Date hereof, individuals who at the
beginning of such period constitute the Board, and any new director (other than
a director designated by a person who has entered into an agreement with the
Company to effect a transaction described in clause (i), (iii) or (iv)) whose
election by the Board or nomination for election by the Company's shareholders
was approved by
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a vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the period or whose election or
nomination for election was previously so approved (unless the approval of the
election or nomination for election of such new directors was in connection with
an actual or threatened election or proxy contest), cease for any reason to
constitute at least a majority thereof;
(iii) the shareholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than
(x) a merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than eighty percent (80%) of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (y) a merger or consolidation
effected to implement a recapitalization of the Company (or similar transaction)
in which no "person" (as defined above in clause (i)) acquires more than [thirty
percent (30%)] of the combined voting power of the Company's then outstanding
securities; or
(iv) the shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets or any transaction having a similar effect, or the
Company, directly or indirectly, begins proceedings to effect a complete
liquidation.
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7. Miscellaneous.
(a) Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York applicable
to agreements made and to be performed in that State.
(b) Notice. Any notice, consent, request or other
communication made or given in connection with this Agreement shall be in
writing and shall be deemed to have been duly given when delivered or mailed by
registered or certified mail, return receipt requested, to those listed below at
their following respective addresses or at such other address as each may
specify by notice to the others:
To the Executive:
Luis Diaz-Albertini
c/o Spanish Broadcasting System, Inc.
3191 Coral Way
Suite 805
Miami, Florida 33145
To the Company:
Spanish Broadcasting System, Inc.
3191 Coral Way
Suite 805
Miami, Florida 33145
ATTN: Raul Alarcon, Jr.
with a copy to:
Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
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(c) Entire Agreement; Amendment. This Agreement
shall supersede any and all existing agreements between the Executive and the
Company or any of its affiliates relating to the terms of the Executive's
employment during the Employment Term. It may not be amended except by a written
agreement signed by both parties.
(d) Waiver. The failure of a party to insist upon
strict adherence to any term of this Agreement on any occasion shall not be
considered a waiver thereof or deprive that party of the right thereafter to
insist upon strict adherence to that term or any other term of this Agreement.
(e) Assignment. Except as otherwise provided in this
Section 9(e), this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective heirs, representatives, successors and
assigns. This Agreement shall not be assignable by the Executive, and shall be
assignable by the Company only to any corporation or other entity resulting from
the reorganization, merger or consolidation of the Company with any other
corporation or entity or any corporation or entity to or with which the
Company's business or substantially all of its business or assets may be sold,
exchanged or transferred, and it must be so assigned by the Company to, and
accepted as binding upon it by, such other corporation or entity in connection
with any such reorganization, merger, consolidation, sale, exchange or transfer
(the provisions of this sentence also being applicable to any successive such
transaction).
(f) Headings. Section headings are used herein for
convenience of reference only and shall not affect the meaning of any provision
of this Agreement.
(g) Rules of Construction. Whenever the context so
requires, the use of the masculine gender shall be deemed to include the
feminine and vice versa, and the use of the singular shall be deemed to include
the plural and vice versa.
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(h) Arbitration. Any dispute or controversy arising
out of, or relating to this Agreement, shall be resolved by arbitration at the
American Arbitration Association ("AAA") at its New York City office before a
panel of three arbitrators under the then existing rules and regulations of the
AAA. The determination of the arbitrators shall be final and binding on the
parties hereto and judgment on it may be entered in any court of competent
jurisdiction. In the event the Executive prevails in such proceedings, as
determined by the arbitration panel, the Company shall reimburse the Executive
for all expenses (including, without limitation, reasonable legal fees and
expenses) he incurred in connection with any such proceeding. All such amounts
shall be paid promptly but in any event within ten (10) business days after the
Executive provides the Company with a statement of the amounts to be reimbursed.
In all other cases, each party shall be responsible for their own expenses
incurred in connection with such proceedings.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SPANISH BROADCASTING SYSTEM, INC.
By: /s/ Raul Alarcon, Jr.
------------------------------------------
Name: Raul Alarcon, Jr.
Title: Chief Executive Officer and President
LUIS DIAZ-ALBERTINI
/s/ Luis Diaz-Albertini
------------------------------------------
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<PAGE> 1
Exhibit 11
October 27, 1999
Arnold Sheiffer
c/o SmartRoute Systems
141 Portland Street
Suite 8100
Cambridge, MA 02139
Dear Mr. Sheiffer:
This letter is to advise you that, in recognition of your prior
services, Spanish Broadcasting System, Inc. (the "Company") hereby grants you a
nonqualified stock option (the "Option") to purchase 250,000 shares of the
Company's common stock, par value $.0001 (the "Shares") on the terms and
conditions set forth below.
1. EXERCISE PRICE. The exercise price shall be the price at which the
Shares are initially offered to the public (the "IPO") on the date hereof.
2. EXERCISABILITY. The Option shall be vested and exercisable on the
date the IPO is consummated, and shall remain exercisable for a term of 10 years
from the Date of Grant, provided that, if an IPO is not consummated on or before
the close of business on December 31, 1999, the Option shall expire and be null
and void.
3. FORM OF EXERCISE. You may exercise an Option in whole or in part at
any time after it becomes exercisable by delivering written notice of such
exercise to the Secretary of the Company of the number of Shares as to which the
Option is being exercised, and enclosing payment for the Shares with respect to
which the Option is being exercised. Such payment shall be in cash or by check,
or if approved by the Committee, by the delivery of Shares previously owned by
you, duly endorsed for transfer to the Company, with a Fair Market Value on the
date of delivery equal to the aggregate purchase price of the Shares with
respect to which the Option is being exercised, or pursuant to a "cashless
exercise," or any combination of the foregoing approved by the Committee, in its
sole discretion. Partial exercise shall be for whole Shares only and shall not
be for less than one hundred (100) Shares unless the number of Shares purchased
constitutes the total number of Shares then remaining subject to the Option or
the Committee permits such smaller exercise in its sole discretion.
4. NONTRANSFERABILITY. The Option shall not be transferable other than
by will or the laws of descent and distribution, and no transfer so effected
shall be effective to bind the Company unless the Company has been furnished
with written notice thereof and a copy of the will and/or such other evidence as
the Committee may deem necessary to establish the validity of
<PAGE> 2
the transfer and the acceptance by the transferee or transferees of the terms
and conditions of the Option, provided, however, that, in the discretion of the
Committee, Options may be transferred pursuant to a Qualified Domestic Relations
Order (within the meaning of the Internal Revenue Code of 1986).
5. CONDITIONS TO ISSUANCE. (1) The Shares deliverable upon the exercise
of the Option, or any portion thereof, may be either previously authorized but
unissued Shares or issued Shares which have been reacquired by the Company. Such
Shares shall be fully paid and non-assessable. The stock certificates evidencing
the Shares shall bear such legends restricting transferability as the Committee
deems necessary or advisable. (2) The Company shall not be required to issue or
deliver any certificate or certificates for Shares deliverable upon any exercise
of the Option prior to fulfillment of all of the following conditions:
a. The completion of any registration or other qualification of
such Shares under any state or federal law or under rulings or
regulations of the Securities and Exchange Commission or of
any other governmental regulatory body, or the obtaining of
approval or other clearance from any state or federal
governmental agency which the Committee shall, in its sole
discretion, deem necessary or advisable.
b. If, in its sole discretion, the Committee deems it necessary
or advisable, the execution by you of a written representation
and agreement, in a form satisfactory to the Committee, in
which you represent that the Shares acquired by you upon
exercise are being acquired for investment and not with a view
to distribution thereof.
6. RIGHTS AS STOCKHOLDER. You shall not be, nor have any of the rights
or privileges of, a stockholder of the Company in respect of any Shares
purchasable upon the exercise of the Option unless and until certificates
representing such Shares have been issued by the Company.
7. ADMINISTRATION. The Compensation Committee of the Company's Board of
Directors shall have the power to interpret this Agreement, and all actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Optionee, the Company, and all other interested
persons.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, and supersedes
all prior agreements and understandings between the parties with respect to such
subject matter. Any term or provision of this Agreement may be waived at any
time by the party which is entitled to the benefits thereof, and any term or
provision of this Agreement may be amended or supplemented at any time by the
mutual consent of the parties hereto, except that any waiver of any term or
condition, or any amendment, of this Agreement must be in writing.
<PAGE> 3
9. NOTICES. All notices or other communications made or given in
connection with this Agreement shall be in writing and shall be deemed to have
been duly given when delivered or mailed by registered or certified mail, return
receipt requested, to you at the address noted above, and to the Company as set
forth below or at such other address as each may specify by notice to the
others:
To the Company:
Spanish Broadcasting System, Inc.
319 Coral Way
Miami, Florida 33143
Attention: Joseph A. Garcia
Copy to:
Kaye, Scholer, Fierman, Hays & Handler, LLP
425 Park Avenue
New York, New York 10022
Attention: William E. Wallace, Jr., Esq.
Please acknowledge your understanding of the terms of, and acceptance
of, the Option by signing the enclosed copy of this letter and returning it
pursuant to the above.
Sincerely,
SPANISH BROADCASTING SYSTEM, INC.
/s/ Joseph A. Garcia
By:____________________________________________
Name: Joseph A. Garcia
Title: Chief Financial Officer and Secretary
Understood & Accepted
/s/ Arnold Sheiffer
By:____________________________
Arnold Sheiffer
