Exhibit 10.9
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LBI HOLDINGS I, INC.
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WARRANT AGREEMENT
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DATED AS OF MARCH 20, 2001
WARRANTS TO PURCHASE COMMON STOCK,
$0.01 PAR VALUE
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TABLE OF CONTENTS
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES .......................... 1
1.1 Form of Warrant Certificates ............................................ 1
1.2 Execution of Warrant Certificates; Registration Books ................... 2
1.3 Transfer, Split Up, Combination and Exchange of Warrant Certificates;
Lost or Stolen Warrant Certificates ..................................... 2
1.4 Subsequent Issuance of Warrant Certificates ............................. 3
2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE. .............................. 4
2.1 Exercise of Warrant ..................................................... 4
2.2 Cashless Exercise of Warrants ........................................... 4
2.3 Issuance of Common Stock ................................................ 5
2.4 [Intentionally Omitted] ................................................. 5
2.5 Cancellation and Destruction of Warrant Certificates .................... 5
2.6 Legend .................................................................. 5
3. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK; TRANSFER TAXES ........ 6
3.1 Reservation of Common Stock ............................................. 6
3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable ........................................................... 6
3.3 Transfer Taxes .......................................................... 6
3.4 Common Stock Record Date ................................................ 6
3.5 CUSIP Number ............................................................ 7
4. ADJUSTMENTS; DISTRIBUTIONS; CONSOLIDATION, MERGER, SALE, RECLASSIFICATION;
FRACTIONAL SHARES; SPECIAL AGREEMENTS. ........................................ 7
4.1 Adjustment to Purchase Price ............................................ 7
4.2 Fractional Shares ....................................................... 11
4.3 Right of Action ......................................................... 11
4.4 Special Agreement of Warrant Certificate Holders ........................ 12
4.5 Special Agreements of the Company ....................................... 12
5. PUT RIGHTS; CALL RIGHTS. ...................................................... 13
5.1 Put Rights .............................................................. 13
5.2 Call Right .............................................................. 13
5.3 Put and Call Closings ................................................... 14
6. REGISTRATION .................................................................. 14
6.1 Piggyback Registration .................................................. 14
6.2 Registration Procedures ................................................. 15
6.3 Grant of Other Registration Rights ...................................... 17
6.4 Indemnification ......................................................... 18
6.5 Contribution ............................................................ 18
7. INTERPRETATION OF THIS AGREEMENT .............................................. 19
7.1 Certain Defined Terms ................................................... 19
7.2 Use of the Term "Underwritten ........................................... 28\
7.3 Descriptive Headings .................................................... 28
8. MISCELLANEOUS ................................................................. 28
8.1 Amendment and Waiver .................................................... 28
8.2 No Rights or Liabilities as Stockholder ................................. 28
8.3 Directly or Indirectly .................................................. 29
8.4 Survival of Representations and Warranties; Entire Agreement ............ 29
8.5 Successors and Assigns .................................................. 29
8.6 Notices ................................................................. 29
8.7 Severability ............................................................ 30
8.8 Counterparts ............................................................ 30
8.9 Waiver of Jury Trial, Consent to Jurisdiction ........................... 31
8.10 Governing Law ........................................................... 31
8.11 Expiration .............................................................. 32
8.12 Equitable Remedies ...................................................... 32
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of March 20, 2001, among LBI HOLDINGS I,
INC., a California corporation (together with its successors and assigns, the
"Company"), and THE PURCHASERS LISTED ON SCHEDULE A HERETO (collectively, the
"Purchasers").
RECITALS:
A. Certain capitalized terms used in this Agreement shall have the
meanings ascribed to them in Section 7 hereof.
B. The Board of Directors has authorized the issuance of an aggregate
of warrants (the "Warrants") of the Company, each Warrant representing the right
to purchase, upon the terms and subject to the conditions hereinafter set forth,
and subject to adjustment as set forth herein, one (1) share of Common Stock.
C. The Company and the Purchasers have entered into that certain
Securities Purchase Agreement (as it may be amended from time to time, the
"Purchase Agreement"), of even date herewith, pursuant to which the Company
agreed to sell, and the Purchasers agreed to purchase, Thirty Million Dollars
($30,000,000) in aggregate principal amount of the Company's Junior Subordinated
Notes (the "Notes") and Warrants for 14.02 shares of Common Stock. There are
currently 200 shares of Common Stock outstanding at the time of the initial
issuance of the Warrants.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties to this Agreement hereby agree as
follows:
1. FORM, EXECUTION AND TRANSFER OF WARRANT CERTIFICATES.
1.1 Form of Warrant Certificates. The warrant certificates
(individually, a "Warrant Certificate" and, collectively, the "Warrant
Certificates") evidencing the Warrants, and the forms of assignment and of
election to purchase shares to be attached to such certificates, shall be
substantially in the form set forth in Exhibit A hereto and may have such
letters, numbers or other marks of identification or designation as may be
required to comply with any law or with any rule or regulation of any
governmental authority, stock exchange or self-regulatory organization made
pursuant thereto. Each Warrant Certificate shall be dated the date of issuance
thereof by the Company, either upon initial issuance or upon transfer or
exchange, and on its face shall initially entitle the holder thereof to purchase
a number of shares of Common Stock equal to the number of Warrants represented
by such Warrant Certificate at a price per share equal to the Purchase Price,
but the number of shares of Common Stock purchasable pursuant to a Warrant
Certificate and the Purchase Price shall be subject to adjustment as provided
herein.
1.2 Execution of Warrant Certificates; Registration Books.
(a) Execution of Warrant Certificates. The Warrant
Certificates shall be executed on behalf of the Company by its
President, its Executive Vice President or any other officer of the
Company authorized by the Board of Directors. In case the officer of
the Company who shall have signed any Warrant Certificate shall cease
to be such an officer of the Company before issuance and delivery by
the Company of such Warrant Certificate, such Warrant Certificate
nevertheless may be issued and delivered with the same force and effect
as though the individual who signed such Warrant Certificate had not
ceased to be such an officer of the Company, and any Warrant
Certificate may be signed on behalf of the Company by any individual
who, at the actual date of the execution of such Warrant Certificate,
shall be a proper officer of the Company to sign such Warrant
Certificate, although at the date of the execution of this Agreement
any such individual was not such an officer.
(b) Registration Books. The Company will keep or cause to be
kept at its office maintained at the address of the Company set forth
in Section 8.6 hereof, or at such other office of the Company in the
United States of America of which the Company shall have given notice
to each holder of Warrant Certificates, books for registration and
transfer of the Warrant Certificates issued hereunder. Such books shall
show the names and addresses of the respective holders of the Warrant
Certificates, the registration number and the number of Warrants
evidenced on its face by each of the Warrant Certificates and the date
of each of the Warrant Certificates.
1.3 Transfer, Split Up, Combination and Exchange of Warrant
Certificates; Lost or Stolen Warrant Certificates.
(a) Transfer, Split Up, etc. Any Warrant Certificate, with or
without other Warrant Certificates, may be sold, transferred,
hypothecated or pledged (collectively, "transferred") split up,
combined or exchanged for another Warrant Certificate or Warrant
Certificates, entitling the registered holder or transferee thereof to
purchase a like number of shares of Common Stock as the Warrant
Certificate or Warrant Certificates surrendered then entitled such
registered holder to purchase; provided that any transfer of any
Warrant Certificate shall be (i) subject to the limitations set forth
in the Purchase Agreement and the Related Agreements and shall be made
only to Permitted Holders and (ii) subject to compliance with all
applicable federal and state securities laws by the transferor and the
transferee (including the delivery of investment representation letters
and legal opinions reasonably satisfactory to the Company, if such are
requested by the Company). Any registered holder desiring to transfer,
split up, combine or exchange any Warrant Certificate shall make such
request in writing delivered to the Company, and shall surrender the
Warrant Certificate or Warrant Certificates to be transferred, split
up, combined or exchanged at the office of the Company referred to in
Section 1.2(b) hereof, whereupon the Company shall, subject to the
limitations on transfer set forth herein and in the Purchase Agreement
and the Related Agreements,
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deliver promptly to the Person entitled thereto a Warrant Certificate
or Warrant Certificates, as the case may be, as so requested; provided,
however, that the Company shall have no such obligation in the event
that it reasonably determines that such transfer, split up, combination
or exchange would constitute a violation of the Communications Act of
1934 or the rules and regulations for the Federal Communications
Commission (the "FCC") as then in effect ("FCC Laws"). In the event
that the Company, on advice of its FCC counsel, or the holder, on
advice of FCC counsel reasonably acceptable to the Company, reasonably
determines that such violation may be remedied by receiving the consent
of the FCC prior to such transfer, split up, combination or exchange,
the Company and the registered holder, at the Company's expense, shall
promptly take such actions as are reasonably necessary in order to
obtain the FCC's consent to such transaction. Each registered holder of
a Warrant Certificate, by its acceptance thereof, agrees not to
transfer any Warrant Certificate in any manner which would violate
Section 5 of the Securities Act or any other applicable securities laws
or any other applicable laws (including the FCC Laws) or the Purchase
Agreement or any Related Agreement.
(b) Loss, Theft, etc. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the
loss, theft, destruction or mutilation of any Warrant Certificate
(which evidence shall be, in the case of an Institutional Investor,
notice from such Institutional Investor of such ownership (or of
ownership by such Institutional Investor's nominee) and such loss,
theft, destruction or mutilation), and:
(i) in the case of loss, theft or destruction, of
indemnity reasonably satisfactory to the Company (which in any
event shall not require the posting of a bond or other
security therefor); or in the case of mutilation, upon
surrender and cancellation thereof;
the Company at its own expense will execute and deliver, in lieu thereof, a new
Warrant Certificate, dated the date of such lost, stolen, destroyed or mutilated
Warrant Certificate and of like tenor, in lieu of the lost, stolen, destroyed or
mutilated Warrant Certificate.
1.4 Subsequent Issuance of Warrant Certificates. Subsequent to the
original issuance, no Warrant Certificates shall be issued except:
(a) Warrant Certificates issued upon any transfer,
combination, split up or exchange of Warrants pursuant to
Section 1.3(a) hereof; and
(b) Warrant Certificates issued in replacement of
mutilated, destroyed, lost or stolen Warrant Certificates
pursuant to Section 1.3(b) hereof; and
(c) Warrant Certificates issued in respect of
unexercised Warrants pursuant to Section 2.4 hereof.
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2. EXERCISE OF WARRANTS; PAYMENT OF PURCHASE PRICE.
2.1 Exercise of Warrant. Subject to Section 4.5 of the Purchase
Agreement, any time on or before the Expiration Date, the holder of any Warrant
Certificate may exercise the Warrants evidenced thereby, in whole or in part, by
surrender of such Warrant Certificate, with an election to purchase (a form of
which is attached to each Warrant Certificate) attached thereto duly executed,
to the Company at its office referred to in Section 1.2(b) hereof, together with
payment of the Purchase Price for each share of Common Stock with respect to
which the Warrants are then being exercised; provided, however, that no such
exercise shall be valid in the event that the Company reasonably determines that
such exercise would constitute a violation of the FCC Laws. In the event that
the Company, on advice of its FCC counsel or the registered holder, on advice of
FCC counsel reasonable acceptable to the Company, reasonably determines that
such violation may be remedied by receiving the consent of the FCC prior to such
exercise, the Company and registered holder, at the Company's expense, shall
promptly take such actions as are reasonably necessary to obtain the FCC's
consent to such transaction. Such Purchase Price shall be payable in cash, by
check payable to the order of the Company or by wire transfer of immediately
available funds to the account of the Company.
2.2 Cashless Exercise of Warrants. Subject to Section 4.5 of the
Purchase Agreement and notwithstanding the provisions of Section 2.1 hereof, if
the FMV (as defined below in this Section) of the Common Stock for which a
Warrant may be exercised is greater than the Purchase Price payable in
connection with the exercise thereof (at the date of calculation, as set forth
below), in lieu of exercising such Warrant as permitted in Section 2.1, the
holder of a Warrant Certificate may elect to receive shares of Common Stock
equal to the value (as determined below) of the Warrant (or the portion thereof
being canceled) by surrender of the Warrant Certificate, together with the
election to purchase (a form of which is attached to each Warrant Certificate)
attached thereto duly executed, to the Company at its office referred to in
Section 1.2(b) hereof, in which event the Company shall issue to the holder of
the Warrant Certificate that number of shares of Common Stock computed using the
following formula:
CS = WCS x (FMV - PP)
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FMV
Where
CS equals the number of shares of Common Stock to be issued to the holder
of the Warrant Certificate;
WCS equals the number of shares of Common Stock then purchasable under the
Warrant (at the date of such calculation);
FMV equals the fair market value of one share of the Common Stock (at the
date of such calculation) as determined by the Company's Board of Directors in
good faith; and
PP equals the Purchase Price (as adjusted to the date of such calculation);
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provided, however, that no such exercise shall be valid in the event
that the Company reasonably determines that such exercise would constitute a
violation of the FCC Laws. In the event that the Company, on advice of its FCC
counsel or the registered holder, on advice of FCC counsel reasonable acceptable
to the Company, reasonably determines that such violation may be remedied by
receiving the consent of the FCC prior to such exercise, the Company and the
registered holder, at the Company's expense, shall promptly take such actions as
are reasonably necessary to obtain the FCC's consent to such transaction.
2.3 Issuance of Common Stock. Upon timely receipt of a Warrant
Certificate, with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for each of the shares to be purchased in the
manner provided in Section 2.1 or Section 2.2 hereof and an amount equal to any
applicable transfer tax (if not payable by the Company as provided in Section
3.3 hereof) and the receipt of any FCC consent required in accordance with
Section 2.1 or Section 2.2 and receipt of evidence of compliance with Section
4.5 of the Securities Purchase Agreement, the Company shall thereupon promptly
cause certificates representing the number of shares (including fractional
shares) of Common Stock then being purchased to be delivered to or upon the
order of the registered holder of such Warrant Certificate, registered in such
name or names as may be designated by such holder.
2.4 Unexercised Warrants. In case the registered holder of any Warrant
Certificate shall exercise less than all the Warrants evidenced thereby (a) the
number of shares of Common Stock purchasable pursuant to such Warrant
Certificate shall be reduced by the number of shares of Common Stock purchased
upon such exercise of Warrants; and (b) a new Warrant Certificate evidencing
Warrants equal in number to the number of Warrants remaining unexercised shall
be issued by the Company to the registered holder of such Warrant Certificate or
to its duly authorized assigns.
2.5 Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered to the Company for the purpose of exercise, exchange,
substitution or transfer shall be cancelled by it, and no Warrant Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Company shall cancel and retire any other
Warrant Certificates purchased or acquired by the Company otherwise than upon
the exercise thereof.
2.6 Legend. Each Warrant Certificate issued pursuant to this Agreement
shall be stamped or otherwise have endorsed or imprinted thereon a legend in
substantially the form set forth in the form of Warrant Certificate attached
hereto as Exhibit A.
3. RESERVATION AND AVAILABILITY OF SHARES OF COMMON STOCK; TRANSFER TAXES.
3.1 Reservation of Common Stock. The Company covenants and agrees that
it will at all times cause to be reserved and kept available out of its
authorized and unissued shares of Common Stock such number of shares of Common
Stock as will be sufficient to permit the exercise in full of all Warrants then
outstanding hereunder.
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3.2 Common Stock To Be Duly Authorized and Issued, Fully Paid and
Nonassessable. The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all shares of Common Stock delivered
upon the exercise of any Warrants, at the time of delivery of the certificates
representing such shares, shall be duly and validly authorized and issued and
fully paid and nonassessable, free of any preemptive rights and free of any
Lien, other than Liens arising from the actions of the applicable holder of a
Warrant.
3.3 Transfer Taxes. The Company covenants and agrees that it will pay
when due and payable any and all federal and state transfer taxes and charges
that may be payable in respect of the initial issuance or delivery of:
(a) each Warrant Certificate;
(b) each Warrant Certificate issued in exchange for any other
Warrant Certificate pursuant to Section 1.3(a) hereof; and
(c) each share of Common Stock issued upon the exercise of any
Warrant.
The Company shall not, however, be required to pay any transfer tax that may be
payable in respect of the transfer or delivery of Warrant Certificates or the
issuance or delivery of certificates for shares of Common Stock in a name other
than that of the registered holder of the Warrant Certificate evidencing any
Warrant surrendered for exercise (any such tax being payable by the holder of
such Warrant Certificate at the time of surrender).
3.4 Common Stock Record Date. Each Person in whose name any certificate
for shares of Common Stock is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record of the Common Stock
represented thereby on, and such certificate shall be dated, the date upon which
the originally executed Warrant Certificate evidencing such Warrants was duly
surrendered and delivered to the Company with an election to purchase attached
thereto duly executed and payment of the aggregate Purchase Price (and any
applicable transfer taxes, if payable by such Person) was made. Prior to the
exercise of the Warrants evidenced thereby, the holder of a Warrant Certificate
shall not be entitled to any rights of a stockholder in the Company with respect
to shares for which the Warrants shall be exercisable, including, without
limitation, the right to vote, receive dividends or other distributions or to
exercise any preemptive rights, and shall not be entitled to receive any notice
of any proceedings of the Company, except as provided herein, including without
limitation Section 4.1(a) hereof, or in any other applicable agreement between
the Company and such holder.
3.5 CUSIP Number. The Company covenants and agrees that on or before
the earlier of (i) the date of the first offer for sale of Common Stock pursuant
to an effective registration statement filed by the Company under the Securities
Act, or (ii) the date thirty (30) days after the first exercise of a Warrant, it
shall have obtained, and thereafter shall maintain, a CUSIP or private placement
number, as applicable, in respect of the Common Stock from the CUSIP Service
Bureau of Standard & Poor's, a division of McGraw-Hill, Inc.
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4. ADJUSTMENTS; DISTRIBUTIONS; CONSOLIDATION, MERGER, SALE,
RECLASSIFICATION; FRACTIONAL SHARES; SPECIAL AGREEMENTS.
4.1 Adjustment to Purchase Price. The Authorized Number of Shares and
the Purchase Price shall be subject to adjustment pursuant to the provisions of
this Section 4.
(a)(1) Distribution of Property. In case, at any time during
the term of the Warrants, the Company shall declare a dividend of cash
or cash equivalents upon its Common Stock, or shall distribute to
holders of its Common Stock (i) shares of its capital stock (other than
Common Stock), (ii) Other Distributions (as defined in the Purchase
Agreement) or (iii) other Securities of any other Person(s), evidences
of indebtedness issued by the Company or any other Person(s), other
assets or options or warrants or rights, then, as a condition of such
declaration or distribution, lawful and adequate provision shall be
made, and such funds, assets, Securities or other rights set aside and
segregated, whereby each holder of Warrants shall thereafter have the
right to receive, upon the exercise by such holder of any Warrants or
the repurchase of any Warrants or sale of the Warrants in connection
with a Sale of the Company, to the exclusion of other shareholders or
creditors of the Company, such cash dividend (and interest thereon, as
provided below), shares of stock, other Securities, evidences of
indebtedness, other assets or options or warrants or rights as would
have paid or distributed to such holder of the Warrants being exercised
or repurchased or sold if the Warrants being exercised or repurchased
or sold had been fully exercised immediately prior to the record date
for determining the holders of Common Stock entitled to participate in
such declaration or distribution, provided that any dividend of cash or
cash equivalents shall accrue interest at the rate of six percent (6%),
compounded annually in arrears on each anniversary of the date of
payment, until payment of the dividend upon exercise or repurchase or
sale of the Warrants as provided above. If not sooner paid above, the
amounts payable under this Section 4.1(a)(1) shall in all events be
paid on the Maturity Date (as defined in the Purchase Agreement). The
foregoing provisions of this Section 4.1(a)(1) shall not apply to
dividends or distributions made pursuant to Section 7.5(i), (ii) or
(iii) of the Purchase Agreement.
(a)(2) Corporate Overhead Expense Adjustment. Schedule B
attached hereto sets forth Corporate Overhead Expense levels for the
periods 2001 through 2007. Upon the occurrence of the Sale of the
Company, each holder of the Warrants shall be entitled to receive a
payment equal to the aggregate amount of any Corporate Overhead Expense
Adjustment, if any, multiplied by such holder's percentage of the
Fully-Diluted Outstanding Equity of the Company at such time. If not
sooner paid above, the amounts payable under this Section 4.1(a)(2)
shall in all events be paid on the Maturity Date (as defined in the
Purchase Agreement). Notwithstanding the foregoing, no payment will be
owed to the holders of Warrants under this Section 4.1(a)(2) if there
occurs an event that triggers a calculation of Fair Market Value under
this Agreement.
(b) Dividends, Subdivisions and Combinations. In case at
any time during the term of the Warrants the number of shares of Common
Stock outstanding is increased by a stock dividend payable in shares of
Common Stock or by a subdivision or split-up of
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shares of Common Stock, then, following the record date fixed for the
determination of holders of Common Stock entitled to receive such stock
dividend, subdivision or split-up, the Authorized Number of Shares
shall be increased in proportion to such increase in outstanding shares
and the Purchase Price in effect immediately prior to such stock
dividend, subdivision or split-up shall be proportionately reduced.
Conversely, in case at any time during the term of this Warrant the
Company shall combine its outstanding shares of Common Stock into a
smaller number of shares, the Authorized Number of Shares immediately
prior to such combination shall be proportionately reduced and the
Purchase Price in effect immediately prior to such combination shall be
proportionately increased.
(c) Consolidation; Merger; Sale; Reclassification. If at any
time during the term of the Warrants any capital reorganization or
reclassification of the capital stock of the Company (other than a
change in par value or from no par value to par value or as a result of
a stock dividend, exchange or subdivision or split-up or combination of
shares), or consolidation or merger of the Company with another
corporation, or the sale or other disposition of all or substantially
all of the Company's outstanding shares of Common Stock or properties
and assets or the properties and assets of the Company's Subsidiaries,
on a consolidated basis, to another Person, shall be effected in such a
way that holders of shares of Common Stock shall be entitled to receive
stock, other Securities or assets with respect to or in exchange for
Common Stock (collectively, the "Specified Events"), then, unless the
holders of the Warrants shall be required to participate in such
Specified Event pursuant to Section 3.3 of the Voting and Co-Sale
Agreement, as a condition of such reorganization, reclassification,
consolidation, merger, sale or disposition, lawful and adequate
provision shall be made whereby the holders of the Warrants shall
thereafter have the right to receive upon the exercise of the Warrants,
during the period specified herein and upon payment of the Purchase
Price, and in lieu of the shares of Common Stock immediately
theretofore receivable upon the exercise of the Warrants, such shares
of stock, other Securities or assets as may be issued or payable with
respect to or in exchange for a number of outstanding shares of Common
Stock equal to the number of shares of Common Stock immediately
theretofore so receivable had such reorganization, reclassification,
consolidation, merger, sale or disposition not taken place, and in any
such case lawful and adequate provision shall be made with respect to
the rights and interests of the holders of the Warrants to the end that
the provisions of this Agreement and of the Warrants (including without
limitation provisions for adjustment of the Purchase Price and
Authorized Number of Shares) shall thereafter be applicable, as nearly
as may be, in relation to any shares of stock, other Securities or
assets thereafter deliverable upon the exercise of the Warrants. The
Company shall not effect any such consolidation, merger or sale unless
prior to or simultaneously with the consummation thereof the survivor
or successor corporation (if other than the Company) resulting from
such consolidation or merger or the Person purchasing such properties
and assets shall assume by written instrument executed and mailed or
delivered to the holders of the Warrants, the obligation to deliver to
such holders such shares of stock, other Securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled
to receive, and containing the express assumption of all liabilities
and obligations of the Company hereunder and thereunder, unless the
holders of the Warrants are required to
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participate in such transaction pursuant to Section 3.3 of the Voting
and Co-Sale Agreement. The provisions of this Section 4.1(c) shall
similarly apply to successive reorganizations, reclassifications,
consolidations, mergers, sales or other dispositions. In furtherance of
the foregoing, upon the occurrence of a Specified Event constituting a
Sale of the Company, the holder of the Warrants shall be entitled, at
its option, to either (i) exercise the Warrants in order to receive
amounts available to the holders or Common Stock as described above or
(ii) sell the Warrants, either to the Company or its successor, as the
Company so elects, in exchange for a cash purchase price equal to the
fair market value of the assets or other Securities issuable or payable
with respect to the number of shares of Common Stock underlying the
Warrant, minus the Purchase Price of such Warrants. In connection with
any Specified Event, if the form of the transaction of any such
Specified Event results in the receipt of consideration by the Company,
the Company shall promptly (and in any event within sixty (60) days)
distribute such consideration after the receipt thereof by the Company
to the holders of the Warrants as set forth above.
(d) Performance-Based Adjustment. The Authorized Number of
Shares shall be subject to decrease or increase at the earliest of (i)
the Maturity Date (as defined in the Purchase Agreement); or (ii)
prepayment in full of the Notes and repurchase of the Warrants; or
(iii) a Sale of the Company; or (iv) the determination of the Warrant
Purchase Price pursuant to Section 5.1 or 5.2, according to the
following: (a) the Authorized Number of Shares shall be decreased by
multiplying such number by .9367 if the Company achieves Broadcast Cash
Flow for the trailing twelve (12) months ended at the end of its most
recently completed fiscal quarter immediately prior to the date of the
applicable event specified in clauses (i) through (iv) above (the
"Trailing Twelve Months Broadcast Cash Flow") in excess of 125% of
those thresholds set forth in the projections attached as Schedule C
(the "Budgeted Plan") and, in the case of a Sale of the Company, the
Sale Consideration, or in the case of a determination of the Warrant
Purchase Price, the Total Fair Market Value, is greater than 13 times
Trailing Twelve Months Broadcast Cash Flow; or (b) the Authorized
Number of Shares shall be increased by multiplying such number by
1.0633 if the Company achieves Trailing Twelve Months Broadcast Cash
Flow less than 75% of the Budgeted Plan and, in the case of a Sale of
the Company, the Sale Consideration, or in the case of determination of
the Warrant Purchase Price, the Total Fair Market Value, is less than
15 times Trailing Twelve Months Broadcast Cash Flow. For purposes
hereof, the term "Broadcast Cash Flow" means, for any period, an amount
equal to (a) Consolidated EBITDA of the Company and its Subsidiaries
plus (b) Corporate Overhead Expense. The parties agree that the
Budgeted Plan presently contains projections set forth on an annual
basis and that the Company shall, within a reasonable period of time
after the date of this Agreement, provide a breakdown of the Budgeted
Plan on a quarter-annual basis, reasonably acceptable to the Required
Holders, which shall thereupon constitute Schedule C. For purposes of
this Section 4.1(d), the Total Fair Market Value shall mean the Net
Asset Value as determined pursuant to the definition of Fair Market
Value.
(e) Other Adjustments. In case at any time or from time to
time during the term of the Warrants conditions arise by reason of any
action(s) taken or omitted to be
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taken by the Company which, in the opinion of the Company's Board of
Directors, are not adequately covered by the provisions of this Section
4, and which could reasonably be expected to be materially and
adversely affect the exercise rights of the holders of the Warrants,
the Company shall obtain advice from the Company's independent
certified public accountants, or of other independent certified public
accountants selected by the Company and reasonably satisfactory to the
Required Holders, setting forth any adjustment of the Authorized Number
of Shares and/or of the Purchase Price, on a basis consistent with the
standards established in the other provisions of this Section 4.1,
necessary in order to preserve, without diminution the exercise and
other rights of the holders of the Warrants. Upon receipt of such
advice, the Board of Directors of the Company shall forthwith make the
adjustments described therein.
(f) Company Stock. For purposes of this Section 4.1, the
number of shares of Common Stock outstanding or deemed to be
outstanding at any given time shall not include shares owned or held by
or for the account of the Company, and the disposition of any such
shares shall be considered an issuance or sale of Common Stock for the
purposes of this Section 4.1.
(g) Notice of Adjustment. Upon each adjustment of the Purchase
Price, and upon each change in the Authorized Number Shares, and in the
event of any change in the rights of the holders of the Warrants by
reason of any other event(s) herein set forth, then and in each such
case the Company promptly shall deliver to the holders of the Warrants,
by first-class certified mail, return receipt requested, postage
prepaid, a statement, signed by the Company's principal financial
officer, showing in reasonable detail the basis of such determination
or the facts requiring such adjustment and/or change, and stating the
adjusted Purchase Price, and the new Authorized Number of Shares, or
specifying the other shares of stock, other Securities or assets and
the amount thereof receivable as a result of such change in rights, and
setting forth in reasonable detail the method of calculation and the
facts upon which such calculation is based. Where appropriate, such
statement may be given in advance and may be included as part of a
notice required to be mailed under the provisions of Section 4.1(h).
(h) Notice of Certain Events. If the Company shall propose to
take any action requiring a calculation pursuant to this Section 4.1,
the Company shall give notice to the holders of the Warrants in the
manner set forth in Section 4.1(g), which notice shall specify the
record date, if any, with respect to any such action and the date on
which such action is to take place. Such notice also shall set forth
such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action (to the extent such effect may be
known at the date of such notice) on the Authorized Number of Shares
and the number, kind or class of shares or other Securities or other
property or assets which shall be deliverable or purchasable upon the
occurrence of such action or deliverable upon the exercise of the
Warrants. In the case of any action which would require the fixing of a
record date, such notice shall be given at least fifteen (15) days
prior to the date so fixed, and in the case of all other actions, such
notice shall be given at least fifteen (15) days prior to the taking of
such proposed action. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of any such action.
The holder of
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any Warrant may within fifteen (15) days of any notice delivered by the
Company pursuant to this Section 4.1(h) object to any of the Company's
calculations contained in such notice by delivery of a notice setting
forth such objection in reasonable detail. If such holder of any
Warrant and the Company shall be unable to resolve such objection
within ten (10) days of delivery of such notice to the Company, such
objection shall be resolved by an independent accounting firm mutually
agreed upon by the Company and such holder of the Warrant. The Company
shall bear the fees and expenses of such firm.
(i) Agreement and Warrants Not Required to be Restated.
Irrespective of any adjustments in the Authorized Number of Shares, the
Purchase Price or the number or kind of cash, Securities or other
property or assets purchasable upon the exercise of the Warrants, this
Agreement and the Warrants may continue to express the same number of
Warrants, Purchase Price and number and kind of Securities as are
initially stated in this Agreement and the Warrants.
(j) Rounding. All calculations under this Section 4.1 shall be
made to the nearest sixth decimal place.
(k) Single Adjustment. In no event shall the Authorized Number
of Shares or Purchase Price be adjusted pursuant to more than one
paragraph of this Section 4.1 with respect to a single event.
4.2 Fractional Shares. The Company shall issue fractional shares
of Common Stock upon the exercise of any Warrant, as appropriate.
4.3 Right of Action. All rights of action in respect of the
Warrants are vested in the respective registered holders of the Warrant
Certificates, and any registered holder of any Warrant Certificate, without the
consent of the registered holder of any other Warrant Certificate, may, in its
own behalf and for its own benefit, enforce, and may institute and maintain any
suit, action or proceeding against the Company to enforce, or otherwise act in
respect of, its right to exercise the Warrants evidenced by such Warrant
Certificate in the manner provided in such Warrant Certificate and in this
Agreement.
4.4 Special Agreement of Warrant Certificate Holders. Every
holder of a Warrant Certificate by accepting the same consents and agrees with
the Company and with every other holder of a Warrant Certificate that:
(a) the Warrant Certificates are transferable only in
accordance with the Purchase Agreement and the Related Agreements
(subject to the conditions contained in Article XI of the Purchase
Agreement) and only on the registry books of the Company if surrendered
at the office of the Company referred to in Section 1.2(b) hereof, duly
endorsed or accompanied by an instrument of transfer (in the form
attached hereto); and
(b) the Company may deem and treat the Person in whose name
each Warrant Certificate is registered as the absolute owner thereof
and of the Warrants evidenced thereby (notwithstanding any notations of
ownership or writing on the Warrant
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Certificates made by anyone other than the Company) for all purposes
whatsoever, and the Company shall not be affected by any notice to the
contrary;
4.5 Special Agreements of the Company. The Company covenants and
agrees that:
(a) The Company shall not, by amendment to its Articles of
Incorporation, as in effect on the date hereof, or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
liquidation, issuance or sale of Securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but
shall at all times in good faith assist in the carrying out of all the
provisions of this Section 4 and in the taking of all such actions as
may be necessary or appropriate in order to protect the rights of the
holders of the Warrant Certificates against impairment.
(b) Before taking any action that would result in an
adjustment to the then current Purchase Price to a price that would be
below the then current par value of Common Stock issuable upon exercise
of any Warrant, the Company will take or cause to be taken any and all
necessary corporate or other action that may be necessary in order that
the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon payment of such Purchase Price as so
adjusted, provided, that if, under applicable law, no such corporate or
other action may be lawfully taken, then the Company may nevertheless
take the action that would result in an adjustment to the then current
Purchase Price, and all other adjustments called for by this Section 4
shall be made, but the Purchase Price shall not be adjusted until such
corporate or other action is lawfully taken.
5. PUT RIGHTS; CALL RIGHTS.
5.1 Put Rights. Subject to and to the extent permitted by the Loan
Documents, the Required Holders have the right, at any time on or after the
Maturity Date of the Notes (as defined in the Purchase Agreement) (other than a
Maturity Date occasioned by a Sale of the Company that is either (i) a Specified
Event under Section 4.1(c) or (ii) a transaction in which the Warrant holders
are entitled to participate under Section 3.1 of the Voting and Co-Sale
Agreement or (iii) a transaction in which the Warrant holders are required to
participate under Section 3.3 of the Voting and Co-Sale Agreement), to require
the Company to purchase (the "Put") all of the Warrants at the Warrant Purchase
Price or if, in accordance with the Purchase Agreement and the Related
Agreements, the holder has exercised the Warrant, the shares of Common Stock
issued on exercise of the Warrant ("Warrant Shares") at the Fair Market Value
thereof, by delivering a written notice to the Company (the "Put Notice").
Within ten (10) days after receipt of any Put Notice, the Company will give
written notice of such requested Put to all other holders of Warrants and
Warrant Shares, and all such holders shall be required to participate in the
sale of Warrants and Warrant Shares pursuant to the Put.
5.2 Call Right. If the Company proposes an acquisition with a
valuation of at least $5,000,000, in connection with which the senior lenders,
subordinated lenders or any proposed financing source (each a "Financial Party")
reasonably require in good faith, as a condition to the
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financing and/or permitting the acquisition, an amendment to the Maturity Date
of the Notes or an amendment to the dates set forth in the definition of
Maturity Date or the dates set forth in the definition of Expiration Date, and
the Majority Purchasers (as defined in the Purchase Agreement) or the Required
Holders, as appropriate, do not agree to such amendment, subject to and to the
extent permitted by the Loan Documents, the Company shall have the right to
purchase the Warrants at the Warrant Purchase Price or the Warrant Shares at the
Fair Market Value thereof in connection with its payment in full of the
aggregate principal amount and interest outstanding under the Notes, by
providing written notice of such election to the holders of the Warrants and
Warrant Shares (a "Call Notice"). The Company shall give the Purchasers written
notice (the "Requirement Notice") of any such requirement of a Financial Party,
which notice shall specify the waiver or amendment requested and the terms of
the proposed Acquisition, including, without limitation, the proposed financing,
and shall include as an attachment thereto an executed copy of the term sheet
(if any) and any other agreements (if any) relating to such proposed financing
or if no such term sheet or other agreement exists, an outline of proposed,
material terms described in good faith. Within twenty (20) days of delivery of
the Requirement Notice, the Majority Purchasers or the Required Holders shall
inform the Company in writing whether or not they shall agree to the
amendment(s) being required. In the event the Majority Purchasers or Required
Holders reject the proposed amendment(s) in their response pursuant to the
preceding sentence (a "Written Rejection") or fail to respond to the Requirement
Notice within such 20-day period, the Company, by delivery of a Call Notice
within sixty (60) days after the earlier of the delivery of a Written Rejection
or the expiration of the 20-day period, may elect to exercise its repurchase
rights set forth in this Section 5.2, provided such right shall lapse if the
repurchase is not consummated in full within six (6) months of the date of the
Company's delivery of the Call Notice.
5.3 Put and Call Closings. The Company shall pay to each holder, in
cash or by wire transfer of immediately available funds, the Warrant Purchase
Price or Fair Market Value, as appropriate, as soon as practicable after its
receipt of the Put Notice or its delivery of the Call Notice, but in any event
within 30 days after the later of (i) the final determination of the Warrant
Purchase Price or Fair Market Value, as appropriate, and (ii) in the case of a
Call Notice, the closing date of the acquisition described in Section 5.2 (a
"Put/Call Closing Date"). In the event the Warrant Purchase Price or Fair Market
Value, as appropriate, is not paid in full by the Put/Call Closing Date, such
unpaid amount shall accrue interest at the applicable default rate of interest
under the Notes, as it may adjust from time to time, so long as the Notes remain
outstanding. If the Notes have been repaid in full in accordance with their
terms but the Warrant Purchase Price or Fair Market Value, as appropriate, has
not yet been paid in full, then the default rate of interest in effect under the
Notes immediately prior to their repayment shall be the applicable rate of
interest for purposes hereof, and such rate shall continue to increase on the
same schedule as was in effect while the Notes were outstanding, until the
Warrant Purchase Price or Fair Market Value and all accrued interest thereon has
been paid in full. Interest on the unpaid Warrant Purchase Price or Fair Market
Value, as appropriate, shall be compounded and calculated in the same manner as
provided in Section 2.4 of the Purchase Agreement with respect to the Notes.
6. REGISTRATION.
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6.1 Piggyback Registration. The Company agrees that if at any time
after the date hereof the Company shall propose to file a registration statement
with respect to any of its Common Stock on a form other than a Form S-4 or Form
S-8 (including its initial public offering), it will give notice in writing to
such effect to the Holders at least thirty (30) days prior to such filing, and,
at the written request of any such Holder, made within ten (10) days after the
receipt of such notice, will include therein at the Company's cost and expense
(including the reasonable fees and expenses of one counsel to such Holders, but
excluding underwriting discounts, commissions and filing fees attributable to
the shares of Common Stock included therein), such of the shares of Common Stock
as such Holder(s) shall request (the "Shares"); provided, however, that if the
offering being registered by the Company is underwritten and if the
representative of the underwriters certifies in writing that the inclusion
therein of the Shares would materially and adversely affect the sale of the
securities to be sold by the Company thereunder, then the Company shall be
required to include in the offering only that number of securities, including
the Shares, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among all selling shareholders according to the total
amount of securities entitled to be included therein owned by each selling
shareholder, but in no event shall the total amount of Shares included in the
offering be less than the number of securities included in the offering by any
other single selling shareholder other than a Holder, unless all of the Shares
are included in the offering).
6.2 Registration Procedures. Whenever the Company undertakes to
effect the registration of any of the Shares, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the Securities and Exchange
Commission (the "Commission") a registration statement covering such
Shares and use its best efforts to cause such registration statement to
be declared effective by the Commission as expeditiously as possible
and to keep such registration effective until the earlier of (A) the
date when all Shares covered by the registration statement have been
sold or (B) one hundred eighty (180) days from the effective date of
the registration statement; provided, that before filing a registration
statement or prospectus or any amendment or supplements thereto, the
Company will furnish to each Holder of Shares covered by such
registration statement and the underwriters, if any, copies of all such
documents proposed to be filed (excluding exhibits, unless any such
person shall specifically request exhibits), which documents will be
subject to the review of such Holders and underwriters, and the Company
will not file such registration statement or any amendment thereto or
any prospectus or any supplement thereto (including any documents
incorporated by reference therein) with the Commission if (A) the
underwriters, if any, shall reasonably object to such filing or (B) if
information in such registration statement or prospectus concerning a
particular selling Holder has changed and such Holder or the
underwriters, if any, shall reasonably object.
(b) Prepare and file with the Commission such amendments and
post-effective amendments to such registration statement as may be
necessary to keep such registration statement effective during the
period referred to in Section 6.2(a) and to comply with the provisions
of the Securities Act with respect to the disposition of all securities
covered by
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such registration statement, and cause the prospectus to be
supplemented by any required prospectus supplement, and as so
supplemented to be filed with the Commission pursuant to Rule 424 under
the Securities Act.
(c) Furnish to the selling Holder(s) such numbers of copies
of such registration statement, each amendment thereto, the prospectus
included in such registration statement (including each preliminary
prospectus), each supplement thereto and such other documents as they
may reasonably request in order to facilitate the disposition of the
Shares owned by them.
(d) Use its best efforts to register and qualify under such
other securities laws of such jurisdictions as shall be reasonably
requested by any selling Holder and do any and all other acts and
things which may be reasonably necessary or advisable to enable such
selling Holder to consummate the disposition of the Shares owned by
such Holder, in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition thereto
to qualify to transact business or to file a general consent to service
of process in any such states or jurisdictions.
(e) Promptly notify each selling Holder of the happening of
any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact
or omits any fact necessary to make the statements therein not
misleading and, at the request of any such Holder, the Company will
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such prospectus
will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading.
(f) Provide a transfer agent and registrar for all such
Shares not later than the effective date of such registration
statement.
(g) Enter into such customary agreements (including
underwriting agreements in customary form for a primary offering) and
take all such other actions as the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such
Shares (including, without limitation, effecting a stock split or a
combination of shares).
(h) Make available for inspection by any selling Holder or
any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent
retained by any such selling Holder or underwriter, all financial and
other records, pertinent corporate documents and properties of the
Company, and cause the officers, directors, employees and independent
accountants of the Company to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or
agent in connection with such registration statement.
(i) Promptly notify the selling Holder(s) and the
underwriters, if any, of the following events and (if requested by any
such person) confirm such notification in
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writing: (A) the filing of the prospectus or any prospectus supplement
and the registration statement and any amendment or post-effective
amendment thereto and, with respect to the registration statement or
any post-effective amendment thereto, the declaration of the
effectiveness of such documents, (B) any requests by the Commission for
amendments or supplements to the registration statement or the
prospectus or for additional information, (C) the issuance or threat of
issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose and (D) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Shares for sale in any jurisdiction or the initiation or threat of
initiation of any proceeding for such purposes.
(j) Make every reasonable effort to prevent the entry of
any order suspending the effectiveness of the registration statement
and obtain at the earliest possible moment the withdrawal of any such
order, if entered.
(k) Cooperate with the selling Holder(s) and the
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing the Shares to be sold and not bearing any
restrictive legends, and enable such Shares to be in such lots and
registered in such names as the underwriters may request at least two
(2) business days prior to any delivery of the Shares to the
underwriters.
(l) Provide a CUSIP number for all the Shares not later
than the effective date of the registration statement.
(m) Prior to the effectiveness of the registration
statement and any post-effective amendment thereto in connection with,
and at each closing of, an underwritten offering, (A) make such
representations and warranties to the selling Holder(s) and the
underwriters, if any, with respect to the Shares and the registration
statement as are customarily made by issuers in primary underwritten
offerings; (B) use its best efforts to obtain "cold comfort" letters
and updates thereof from the Company's independent certified public
accountants addressed to the selling Holders and the underwriters, if
any, such letters to be in customary form and covering matters of the
type customarily covered in "cold comfort" letters by underwriters in
connection with primary underwritten offerings; (C) deliver such
documents and certificates as may be reasonably requested (1) by the
holders of a majority of the Shares being sold, and (2) by the
underwriters, if any, to evidence compliance with clause (A) above and
with any customary conditions contained in the underwriting agreement
or other agreement entered into by the Company; and (D) obtain opinions
of counsel to the Company and updates thereof (which counsel and which
opinions shall be reasonably satisfactory to the underwriters, if any),
covering the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably
requested by the selling Holders and underwriters or their counsel.
Such counsel shall also state that, subject to appropriate
qualifications, no facts have come to the attention of such counsel
which cause them to believe that such registration statement, the
prospectus contained therein, or any amendment or supplement thereto,
as of their respective effective or issue dates, contains any untrue
statement of any material fact or omits to state any material
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fact necessary to make the statements therein not misleading (except
that no statement need be made with respect to any financial
statements, notes thereto or other financial data or other expertized
material contained therein). If for any reason the Company's counsel is
unable to give such opinion, the Company shall so notify the Holders of
the Shares and shall use its best efforts to remove expeditiously all
impediments to the rendering of such opinion.
(n) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders earnings statements satisfying the
provisions of Section 11(a) of the Securities Act, no later than
forty-five (45) days after the end of any twelve-month period (or
ninety (90) days, if such period is a fiscal year) (A) commencing at
the end of any fiscal quarter in which the Shares are sold to
underwriters in a firm or best efforts underwritten offering, or (B) if
not sold to underwriters in such an offering, beginning with the first
month of the first fiscal quarter of the Company commencing after the
effective date of the registration statement, which statements shall
cover such twelve-month periods.
6.3 Grant of Other Registration Rights. After the date hereof, the
Company shall not grant to any holder of securities of the Company any
registration rights which have a priority greater than those granted to Holders
pursuant to this Warrant or in contravention of Section 7.6 of the Purchase
Agreement without the prior written consent of the Required Holders.
6.4 Indemnification. The Company's obligations under Section 6.1
above with respect to each Holder of Shares are expressly conditioned upon such
Holder's furnishing to the Company in writing such information concerning such
Holder and the terms of such Holder's proposed offering as the Company shall
reasonably request for inclusion in the registration statement. If any
registration statement including any of the Shares is filed, then the Company
shall indemnify each Holder thereof (and each underwriter for such Holder and
each person, if any, who controls such Holder or such underwriter within the
meaning of the Securities Act) (collectively, the "Holder Indemnified Parties")
from any loss, claim, damage or liability arising out of, based upon or in any
way relating to any untrue statement or alleged untrue statement of a material
fact contained in such registration statement or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except for any such
statement or alleged statement or omission or alleged omission made in reliance
upon and in conformity with information furnished in writing by such Holder of
the Shares expressly for use in connection with such registration statement, and
the Company will reimburse the Holder Indemnified Parties for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; and such Holder
shall indemnify the Company (and each of its officers and directors who has
signed such registration statement, each director, each person, if any, who
controls the Company within the meaning of the Securities Act, each underwriter
for the Company and each person, if any, who controls such underwriter within
the meaning of the Securities Act) (collectively the "Company Indemnified
Parties") and each other Holder Indemnified Party against any loss, claim,
damage or liability arising from any such statement or alleged statement or
omission or alleged omission which was made in reliance upon and in conformity
with information furnished in writing to the Company
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by such Holder of the Shares expressly for use in connection with such
registration statement; provided, however, that the obligation of any Holder
hereunder shall be limited to an amount equal to the proceeds received by such
Holder upon the sale of Shares sold in the offering covered by such
registration.
6.5 Contribution. If the indemnification provided for in Section
6.4 is unavailable or insufficient to hold harmless any of the Holder
Indemnified Parties or Company indemnified parties (each an "Indemnified
Party"), then each indemnifying party thereunder (an "Indemnifying Party") shall
contribute to the amount paid or payable by such Indemnified Party as a result
of the losses, claims, damages or liabilities referred to in Section 6.4 an
amount or additional amount, as the case may be, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party or Parties,
on the one hand, and the Indemnified Party, on the other, in connection with the
statements or omissions which resulted in such losses, claims, demands or
liabilities as well as any other relevant equitable considerations. The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
Indemnifying Party or Parties, on the one hand, or the Indemnified Party, on the
other, and the parties' relative, intent, knowledge, access to information and
opportunity to correct or prevent such untrue or alleged untrue statement or
omission or alleged omission. The amount payable to an Indemnified Party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 6.5 shall be deemed to include any legal or other
expenses reasonably incurred by such Indemnified Party in connection with
investigating or defending any action or claim which is the subject of Section
6.4. 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.
7. INTERPRETATION OF THIS AGREEMENT.
7.1 Certain Defined Terms. For the purpose of this Agreement,
the following terms shall have the meanings specified with respect thereto
below:
Affiliate - has the meaning specified in the Purchase Agreement.
Agreement, this -- and references thereto shall mean this Warrant
Agreement as it may from time to time be amended or supplemented.
Authorized Number of Shares - means the number of shares of Common
Stock purchasable upon the exercise of the Warrants, initially 14.02 shares, as
adjusted in accordance with Section 4.1.
Board of Directors -- means the board of directors of the Company or
any committee thereof that, in the instance, shall have the lawful power to
exercise the power and authority of such board of directors.
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Business Day -- means a day other than a Saturday, a Sunday or a day on
which banks in the state in which the office maintained by the Company pursuant
to Section 1.2(b) is located are required or permitted by law to be closed
(other than a general banking moratorium or holiday for a period exceeding four
(4) consecutive days).
Capital Lease -- means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
Capital Securities - has the meaning specified in the Purchase
Agreement.
Closing Date -- means the "Closing Date" as defined in the Purchase
Agreement.
Common Stock -- means the Common Stock, $0.01 par value, of the
Company.
Company -- shall have the meaning specified in the introductory
paragraph hereof.
Consolidated or consolidated -- means, with reference to any term
defined herein, that term as applied to the Company's accounts and all of its
Subsidiaries' accounts, that may in accordance with GAAP, be consolidated with
the Company.
Consolidated EBITDA -- means for any period, without duplication, an
amount equal to Consolidated Net Income of a Person for such period, plus (a)
Taxes of such Person for such period (plus Permitted Holdings Tax Distributions
and Permitted Shareholder Tax Distributions (each as defined in the Senior Loan
Agreement)), plus (b) Consolidated Interest Expense paid or accrued for such
period, plus (c) other extraordinary charges incurred during such period, plus
(d) depreciation, amortization and other non-cash charges for such period, plus
(e) Transaction Costs (as defined in the Senior Loan Agreement), plus (f)
Extraordinary Expenses (as defined in the Senior Loan Agreement); all to the
extent deducted in computing Consolidated Net Income for such period, in each
case determined on a consolidated basis in accordance with GAAP, plus (g)
without duplication, costs, expenses and other amounts described in clause (ii)
of the definition of Net Cash Proceeds as set forth in the Senior Loan Agreement
incurred in connection with any Relocation (as defined in the Senior Loan
Agreement).
Consolidated Interest Expense -- means for any period, without
duplication, the sum of all interest (including without limitation interest on
Capital Leases) and commitment, letter of credit and similar fees on all
Indebtedness of any Person which was paid or accrued during such period plus the
net amounts payable (or minus the net amounts receivable) under Hedging
Agreements (as currently defined in the Senior Loan Agreement) accrued during
such period; in each case determined on a consolidated basis in accordance with
GAAP.
Consolidated Net Income - means for any period, the net income (or
loss) of any Person, excluding any extraordinary income (or loss) for such
period (taken as a cumulative whole), after deducting all operating expenses,
provisions for all taxes and reserves (including reserves for deferred income
taxes) and all other proper deductions; in each case determined on a
consolidated basis in accordance with GAAP.
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Convertible Securities - has the meaning specified in the Purchase
Agreement.
Corporate Overhead Expense Adjustment - means the adjustment as
determined in accordance with Schedule B.
Corporate Overhead Expense - means all general and administrative
expenses incurred during any fiscal period which are not associated with, or
attributable to, the particular operations of one or more of the stations owned
and operated by the Company's Subsidiaries and which are properly classified as
general and administrative expenses on the Company's financial statements,
prepared on a consolidated basis in accordance with GAAP; provided, however
that, notwithstanding any generally accepted accounting principles to the
contrary, Corporate Overhead Expense shall include all compensation paid to
Lenard or Jose Liberman and any of their relatives, except to the extent such
compensation is associated with, or attributable to, the particular operations
of one or more of the stations owned and operated by the Company's Subsidiaries
and such compensation is attributable to functions being performed by Lenard or
Jose Liberman which otherwise would have been performed by an unrelated party.
Expiration Date - means 5:00 p.m. Eastern Time on the earlier of (a)
the later of (i) March 20, 2011, or (ii) the date which is six (6) months from
the date of payment in full of all outstanding principal and interest on the
Notes and (b) the closing of the sale and issuance of shares of Common Stock of
the Company in an underwritten public offering pursuant to an effective
registration statement under the Securities Act of 1933, as amended, the gross
proceeds of which exceed $25,000,000; provided if the holders have not had the
right to put their Warrants under Section 5.1 of this Agreement, the Expiration
Date of the Warrant shall extend until such time as the holders have such right.
Fair Market Value - means (a)(i) the total consideration that would be
received by the holders of the Common Stock upon the sale of all of the
Company's and its Subsidiaries' assets (exclusive of cash and cash equivalents)
in a single transaction or series of related transactions to a buyer or buyers
willing to pay the highest purchase price that would be received in a sale,
which buyer or buyers is under no compulsion to buy and the Company is under no
compulsion to sell, all parties having reasonable knowledge of all relevant
facts, with no minority interest, illiquidity, restrictions on transfer or
exercise discount being applied and no other discount being applied for any
other reason, plus (ii) cash and cash equivalents of the Company and its
Subsidiaries as of the date of the determination, plus (iii) the aggregate
exercise or conversion price of all Rights in existence and remaining
unexercised on such date, plus (iv) the aggregate amount of any Corporate
Overhead Expense Adjustment, less (v) the amount of all accrued Indebtedness and
other liabilities of the Company and its Subsidiaries (collectively, the net
effect of the clauses (i) through (v), "Net Asset Value"), less (vi) 2.5% of
such Net Asset Value to take into account the existing Phantom Stock identified
in Schedule 3.4(b) to the Purchase Agreement and any Capital Securities,
Convertible Securities or Phantom Stock hereafter issued pursuant to clause (A)
of the last sentence of Section 7.6 of the Purchase Agreement, and such Phantom
Stock, Convertible Securities and Capital Securities shall not be included in
"Indebtedness and other liabilities" in the computation of the Net Asset Value,
divided by
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(b) the number of shares of Fully-Diluted Outstanding
Equity, which shall not include for purposes of this definition any
Phantom Stock, Convertible Securities or Capital Securities referred to
in subclause (vi) of the foregoing clause (a).
The Fair Market Value shall be that which is negotiated by the Company
and the Required Holders. The procedures set forth in this definition shall
govern the determination of the Fair Market Value. The following principles and
procedures shall govern this analysis.
(1) The Company shall within thirty (30) days of the
occurrence of the event under this Agreement which requires the
determination of the Fair Market Value inform the Purchasers in writing
of its good faith determination of the Fair Market Value. The Company
shall set forth its determination of the Fair Market Value in a
reasonably detailed schedule which shall include all factors relevant
to the Company's determination, including the Company's good faith
determination of each of clauses (a)(i) through (a)(vi) described in
the first paragraph of this definition. The schedule setting forth the
Company's good faith determination of the Fair Market Value as set
forth in this definition may be referred to herein as "Company's Fair
Market Value Notice."
(2) Following receipt of Company's Fair Market Value
Notice, the Required Holders may request from the Company such
additional information, data or other evidence as the Required Holders
may reasonably determine to be necessary to verify the Company's
determination of the Fair Market Value. The Company agrees to promptly
respond to the Required Holders' requests for such additional
information and shall cooperate in good faith with the Required
Holders to assist the Required Holders in reaching such verification.
(3) Within fifteen (15) days following the date of delivery
of the Company's Fair Market Value Notice (which term may be extended
by mutual agreement of the parties), the Required Holders shall deliver
to the Company a written notice either (i) accepting the amount of the
Fair Market Value set forth in the Company's Fair Market Value Notice
or (ii) challenging the Company's determination of the Fair Market
Value (a "Challenge Notice").
(4) If the Required Holders do not elect to deliver a
timely Challenge Notice, then the Fair Market Value set forth in the
Company's Fair Market Value Notice shall be deemed to have been
accepted. If the Required Holders elect to deliver a Challenge Notice,
such notice shall include, in reasonable detail, the Required Holders'
good faith determination of the Fair Market Value, including reasonable
backup evidence and data. Such Challenge Notice shall specifically and
in reasonable detail address each of the aspects of Company's Fair
Market Value Notice which the Required Holders believe to be incorrect.
(5) The Company and the Required Holders shall, promptly
following the Company's receipt of the Required Holders' Challenge
Notice, meet in good faith to
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review the aspects of the calculation of the Fair Market Value upon
which the parties have a material disagreement.
(6) If, despite such meeting and the good faith efforts of
the parties to agree, the parties are unable to reach agreement
regarding the amount of the Fair Market Value, or if one party fails to
make itself available for such meeting within 10 days of the delivery
of the Challenge Notice, either party may, by written notice to the
other ("Valuation Commencement Notice"), elect to have the value of the
assets to be valued as part of the calculation of the Fair Market Value
determined by the Valuation Mechanism set forth below.
(7) As used herein, the "Valuation Mechanism" shall be the
procedures pursuant to which the parties may elect to have the assets
valued as part of the calculation of Fair Market Value determined by
third party valuation professionals. The following are the procedures
for the Valuation Mechanism:
Within thirty (30) days after delivery of the Valuation Commencement
Notice, the Company and the Required Holders shall attempt to agree upon an
appraiser to determine the Fair Market Value, which appraiser shall be a
nationally recognized broker, investment banker or appraisal firm with expertise
in the broadcast radio and television industry (the "Appraiser"). If, within
such thirty (30) day period, the Company and the Required Holders agree upon an
Appraiser to determine the Fair Market Value, then such Appraiser shall be
engaged by the parties to conduct an independent appraisal to make a
determination of Fair Market Value based on the definition of Fair Market Value
set forth herein and shall prepare a written report explicitly identifying its
conclusion as to Fair Market Value and the assumptions, methodology and
comparables used by the Appraiser to reach that conclusion. The Appraiser shall
deliver its written report to the Company and the Required Holders within thirty
(30) days of the date of the Appraiser's engagement, provided however, that if
the Appraiser reasonably requires additional time to complete its appraisal
report and to arrive at a determination of Fair Market Value, the parties shall
grant the Appraiser one reasonable extension of time, not to exceed thirty (30)
days, to deliver its report and make its determination of Fair Market Value. The
determination of the Appraiser shall govern.
If the Company and the Required Holders do not, within such thirty (30)
day period, agree as to a single Appraiser, or if the Appraiser appointed as
provided above fails to timely deliver to the Company and the Required Holders a
written report explicitly identifying its conclusion as to Fair Market Value and
the assumptions, methodology and comparables used by the Appraiser to reach that
conclusion, then each of the Company and the Required Holders shall within ten
(10) days thereafter appoint one Appraiser who meets the standards described in
the above definition with written notice of each party's appointment of an
Appraiser to be delivered to the other party within such ten (10) day period, or
any extension of that time period that is agreed to by the parties (the
"Appointment Date"). Any party failing to provide written notice of its
selection of an Appraiser within the time period specified above shall be deemed
to have waived its right to appoint its own Appraiser to make that determination
and to have agreed to accept as its own the Appraiser appointed by the other
party. Each of the two appraisers shall be a nationally recognized broker,
investment banker or appraisal firm with
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expertise in the broadcast radio and television industry. Each of the two
Appraisers so selected shall conduct an independent appraisal of Fair Market
Value based on the definition of Fair Market Value set forth herein and shall
prepare a written report explicitly identifying its conclusion as to Fair Market
Value and the assumptions, methodology and comparables used by the Appraiser to
reach that conclusion. Each Appraiser shall deliver its written report to the
Company, the Required Holders and the other Appraiser within thirty (30) days
after the Appointment Date, provided however, that if either Appraiser
reasonably requires additional time to complete its appraisal report and to
arrive at a determination of Fair Market Value, the parties shall grant the
Appraisers one extension of time, not to exceed thirty (30) days, to deliver
their reports and make their determinations of Fair Market Value. If the two
Appraisers so selected agree upon a determination of Fair Market Value, their
joint determination shall govern.
If the two Appraisers cannot reach agreement within the time period
allowed for their respective determinations of Fair Market Value, the two
Appraisers selected shall, within a ten (10) day period following the time
period allowed for their respective determinations of Fair Market Value, select
a third Appraiser who meets the standards described above (the "Third
Appraiser"). The Third Appraiser shall conduct an independent appraisal of Fair
Market Value based on the definition of Fair Market Value set forth herein and
shall prepare a written report explicitly identifying its conclusion as to Fair
Market Value and the assumptions, methodology and comparables used by the Third
Appraiser to reach that conclusion. The Third Appraiser shall deliver its
written report to the Company and the Required Holders within thirty (30) days
of the date of its selection, provided however, that if the Third Appraiser
reasonably requires additional time to complete its appraisal report and to
arrive at a determination of Fair Market Value, the parties shall grant the
Third Appraiser one reasonable extension of time, not to exceed thirty (30)
days, to deliver its report and make its determination of Fair Market Value. The
Fair Market Value shall be the average of (i) the appraisal of the Third
Appraiser and (ii) the closest in value of the appraisal of the first two
Appraisers to the appraisal of the Third Appraiser. All decisions of the
Appraiser(s) shall be rendered in writing and shall be signed by the
Appraiser(s). Except as set forth in the next succeeding paragraph, the Fair
Market Value determined as herein provided shall be conclusive, final and
binding on the parties and shall be enforceable in any court having jurisdiction
over a proceeding brought to seek such enforcement. The cost of the Fair Market
Value determination shall not be taken into account in determining Fair Market
Value and shall be borne by the Company.
If either party contends and produces credible, substantive evidence
that any Appraiser has acted with gross negligence or serious and willful
misconduct in the conduct of his or her appraisal, or that such Appraiser has
grossly or willfully failed to follow the appraisal methodology described in the
definition of Fair Market Value, but not otherwise, such party may by written
notice to the other party (with a copy to the American Arbitration Association)
demand that such alleged negligence, misconduct or failure be adjudicated by an
arbitration conducted in accordance with the then existing rules for commercial
arbitration of the American Arbitration Association before a single arbitrator.
Within ten (10) days following receipt of such notice, the Company and the
Required Holders shall attempt to agree upon an arbitrator, who shall be an
attorney or retired judge, preferably with experience handling
-23-
disputes involving the radio or television industries (the "Arbitrator"). If the
parties are unable to agree upon an Arbitrator within ten (10) days, the parties
or either party may request the American Arbitration Association to appoint the
Arbitrator. Each party shall use its commercially reasonable best efforts to
cause the arbitration to be completed within sixty (60) days after the
appointment of the Arbitrator. Either party may apply to the Arbitrator for
interim or injunctive relief, and may seek from any court having jurisdiction
any interim or provisional relief that is necessary to protect the rights of
that party pending conclusion of the arbitration. The parties shall be allowed
discovery in the arbitration, but with depositions to be limited to a maximum of
two per party to be held within thirty (30) days after the making of a request
for depositions. If the Arbitrator determines that any Appraiser has acted with
gross negligence or serious and willful misconduct or has grossly or willfully
failed to follow the appraisal methodology described in the definition of Fair
Market Value, the Arbitrator may order appropriate relief including but not
limited to the appointment of a new Appraiser or the selection of a new
Appraiser by the parties, in either case within a ten (10) day period, to
determine Fair Market Value applying the correct methodology within a thirty
(30) day period following such selection or appointment.
FCC and FCC Laws - have the meaning specified in Section 1.3.
Fully-Diluted Outstanding Equity -- means, as of any time of
determination, the sum of
(i) the total number of shares of Common Stock outstanding
at such time; plus
(ii) the aggregate number of shares of Common Stock issuable
in respect of Rights in existence and remaining unexercised at such
time, determined based on the maximum number of shares of Common Stock
issuable pursuant to Rights, without regard to whether such Rights are
then exercisable.
Generally accepted accounting principles or GAAP -- means accounting
principles which are (a) consistent with the principles promulgated or adopted
by the United States Financial Accounting Standards Board and its predecessors
and other recognized principle setting bodies, in effect from time to time, (b)
applied on a basis consistent with prior periods, and (c) such that a certified
public accountant would, insofar as the use of accounting principles is
pertinent, be in a position to base an opinion as to financial statements in
which such principles have been properly applied.
Holders -- means the registered holders of the Warrants.
Indebtedness -- means all obligations, contingent and otherwise, which
in accordance with GAAP should be classified on the obligor's balance sheet as
liabilities, or to which reference should be made by footnotes thereto,
including without limitation, in any event and whether or not so classified: (i)
all debt and similar monetary obligations, whether direct or indirect; (ii) all
liabilities secured by any mortgage, pledge, security interest, lien, charge or
other encumbrance existing on property owned or acquired subject thereto,
whether or not the liability secured thereby shall have been assumed; (iii) all
guaranties, endorsements and other contingent
-24-
obligations whether direct or indirect in respect of Indebtedness or performance
of others, including any obligation to supply funds to or in any manner to
invest in, directly or indirectly, the debtor, to purchase Indebtedness, or to
ensure the owner of Indebtedness against loss,through an agreement to purchase
goods, supplies or services for the purpose of enabling the debtor to make
payment of the Indebtedness held by such owner or otherwise, and (iv)
obligations to reimburse issuers of any letters of credit.
Initial Purchase Price -- means $0.01 per share.
Institutional Investor - means the Purchasers, any affiliate of the
Purchasers, and any holder of Warrants that is an "accredited investor" as
defined in Section 2(15) of the Securities Act.
Lien -- means any mortgage, pledge, security interest, encumbrance,
lien (statutory or otherwise) or charge of any kind (including any agreement to
give any of the foregoing), any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction or any other type of preferential arrangement for the purpose, or
having the effect, of protecting a creditor against loss or securing the payment
or performance of an obligation.
Loan Documents - shall have the meaning specified in the Purchase
Agreement.
Nasdaq -- means the National Association of Securities Dealers
Automated Quotation System.
Notes -- shall have the meaning specified in Recital C of this
Agreement.
Permitted Holders -- shall have the meaning specified in the Purchase
Agreement.
Person -- means an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
Property -- means any interest in any kind of property or asset,
whether real, personal or mixed, and whether tangible or intangible.
Purchase Agreement -- shall have the meaning specified in Recital C of
this Agreement.
Purchase Price -- means, prior to any adjustment pursuant to Section 4
of this Agreement, the Initial Purchase Price and thereafter, the Initial
Purchase Price as adjusted and readjusted from time to time.
Put/Call Closing Date - has the meaning specified in Section 5.3.
Related Agreements - shall have the meaning specified in the Purchase
Agreement.
-25-
Required Holders -- means, at any time, the holders (other than the
Company or any Affiliate) of more than fifty percent (50%) of the Warrants,
subject to the proxy granted to Alta Communications VIII, L.P. or its successor
pursuant to Section 3.4 of the Voting and Co-Sale Agreement.
Right -- means and includes any warrant (including, without limitation,
any Warrant), option or other right, to acquire Common Stock and any evidence of
indebtedness, equity security or other instruments or right convertible or
exchangeable into Common Stock, including, without limitation, any right which,
pursuant to the provisions of any Security, is convertible or exchangeable into
Common Stock.
Sale Consideration - means the aggregate consideration received by (i)
the Company or (ii) the holders of Capital Securities and Convertible Securities
of the Company in connection with the Sale of the Company, provided that in the
case of a Sale of the Company that involves a transfer of less than 100% of the
ownership of the Capital Securities of the Company, the Sale Consideration means
the implied equity value of the Company based on the aggregate consideration
payable for the percentage ownership of the Company being transferred and (B) in
the case of a Sale of the Company that involves a transfer of less than 100% of
the assets of the Company and its Subsidiaries (except to the extent the unsold
assets are of a de minimis amount), the Sale Consideration means the aggregate
consideration received by the Company and its Subsidiaries with respect to the
sold assets plus the fair market value of the remaining assets (determined in
accordance with the Valuation Mechanism set forth in the definition of Fair
Market Value).
Sale of the Company -- means one or more of the following, effected in
a single transaction or series of transactions, whether or not related, with one
or more Persons that is not an Affiliate of the Company:
(a) The sale or other disposition of all or substantially all
of the Company's assets or the assets of the Company's Subsidiaries, on
a consolidated basis:
(b) The sale or other disposition of a majority of the issued
and outstanding Capital Securities of the Company or other rights
giving such Person or Persons the power to elect a majority of the
Company's board of directors (whether by merger, consolidation or
issuance, sale or transfer of Capital Securities of the Company); or
(c) The merger or consolidation of the Company or
substantially all of its Subsidiaries with one or more third parties in
a transaction in which such third party(ies) or the holders of their
Capital Securities thereafter control, directly or indirectly, the
business and affairs of the Company or the Subsidiaries party to such
transaction.
Securities Act -- means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
Security -- shall have the meaning specified in Section 2(1) of the
Securities Act.
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Senior Loan Agreement - shall have the meaning specified in the
Purchase Agreement.
Shares - has the meaning specified in Section 6.1.
Subsidiary -- means any Person which the Company now or hereafter shall
at the time own, directly or indirectly through another Person, at least a
majority of the outstanding Capital Securities entitled to vote generally; and
the term "Subsidiaries" means all of such Persons collectively.
Voting and Co-Sale Agreement -- means the Voting and Co-Sale Agreement,
dated as of the date hereof, among the Company, the Purchasers and the other
shareholders of the Company named therein, as the same may be amended,
supplemented or otherwise modified from time to time.
Voting Stock -- means, with respect to any corporation, any shares of
stock of such corporation whose holders are entitled under ordinary
circumstances to vote for the election of directors of such corporation
(irrespective of whether at the time stock of any other class or classes shall
have or might have voting power by reason of the happening of any contingency).
Warrant -- shall have the meaning specified in Recital B hereof.
Warrant Certificate -- shall have the meaning specified in Section 1.1
hereof.
Warrant Purchase Price - shall mean the Fair Market Value of the shares
of Common Stock then issuable to holders upon the exercise of the Warrants as of
the date of the Put Notice or Call Notice or such other date of an adjustment to
the Authorized Number of Shares pursuant to Section 4.1(d)(i), (ii) or (iv),
less the aggregate Purchase Price of such Warrants.
7.2 Use of the Term "Underwritten." Wherever this Agreement refers to
an "underwriting" or an "underwritten offering," such term shall mean and
include any sale pursuant to any arrangement by which any Person engages in a
distribution of the Securities subject to such underwriting, whether such
underwriting is undertaken on a best efforts or firm commitment basis.
7.3 Descriptive Headings. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
8. MISCELLANEOUS.
8.1 Amendment and Waiver. This Agreement and the Warrant Certificates
may be amended, and the observance of any term of this Agreement may be waived,
with and only with the written consent of the Company and:
(a) in the case of Section 1 through Section 8, inclusive,
hereof (other than this Section 8.1) and the Warrant Certificates, the
written consent of the Required Holders; or
-27-
(b) in the case of this Section 8.1, the written consent of
all holders of Warrant Certificates;
provided that no such amendment or waiver of any of the provisions of this
Agreement or the Warrant Certificates, in each case pertaining to the Purchase
Price or the number of shares of Common Stock that may be purchased upon
exercise of each Warrant shall be effective as to the holder of any Warrant,
absent such holder's written consent, unless such amendment or waiver applies
equally and ratably to all holders of Warrants.
8.2 No Rights or Liabilities as Stockholder. Except as expressly
provided herein, nothing contained in this Agreement shall be construed as
conferring upon the holder of any Warrant any rights of a stockholder of the
Company or as imposing any obligation on such holder to purchase any securities
or as imposing any liabilities on such holder as a stockholder of the Company,
whether such obligation or liabilities are asserted by the Company or by
creditors of the Company.
8.3 Directly or Indirectly. Where any provision in this Agreement
refers to any action to be taken by any Person, or that such Person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such Person, including actions taken by or on
behalf of any partnership in which such Person is a general partner.
8.4 Survival of Representations and Warranties; Entire Agreement.
All representations and warranties contained herein and in the Purchase
Agreement in connection herewith shall survive the execution and delivery of
this Agreement and the Warrant Certificates, the transfer by the Purchasers of
any Warrant Certificate or portion thereof or interest therein and the exercise
or expiration of any Warrant, and may be relied upon by the Purchasers or other
holder of a Warrant Certificate or the Company, as applicable, regardless of any
investigation made at any time by or on behalf of the Purchasers or such other
holder or the Company, as applicable. Subject to the preceding sentence, this
Agreement, the Warrant Certificates, the Purchase Agreement and the Related
Agreements embody the entire agreement and understanding between the Purchasers
and the Company, and supersede all prior agreements and understandings, relating
to the subject matter hereof.
8.5 Successors and Assigns. All covenants and other agreements in
this Agreement contained by or on behalf of any of the parties hereto shall bind
and inure to the benefit of the respective permitted successors and permitted
assigns of the parties hereto (including, without limitation, any Permitted
Holder of a Warrant Certificate) whether so expressed or not.
8.6 Notices. All communications hereunder or under the Warrants
shall be in writing, shall be delivered by United States mail (postage prepaid),
nationwide overnight courier, or facsimile transmission (confirmed by delivery
by nationwide overnight courier sent on the day of the sending of such facsimile
transmission), and
-28-
(a) if to a Purchaser, addressed to it at the address set
forth on Schedule A, or at such other address as the Purchaser shall
have specified to the Company in writing, with a copy to:
Richard G. Small, Esq.
Edwards & Angell, LLP
2800 Financial Plaza
Providence, RI 02903
Telephone: (401) 276-6582
Facsimile: (401) 276-6611
(b) if to any other holder of a Warrant Certificate, addressed
to such other holder at such address as such holder shall have
specified to the Company in writing or, if any such other holder shall
not have so specified an address to the Company, then addressed to such
other holder in care of the last holder of such Warrant Certificate
that shall have so specified an address to the Company; and
(c) if to the Company, addressed to it at:
LBI Holdings I, Inc.
c/o Liberman Broadcasting, Inc.
1813 Victory Place
Burbank, CA 91504
Attn.: Executive Vice President
Telephone: (818) 563-5722
Facsimile: (818) 563-4244
with a copy to:
O'Melveny & Myers LLP
400 South Hope Street
Los Angeles, CA 90071
Attention: Joseph K. Kim, Esq.
Facsimile: (213) 430-6407
Telephone: (213) 430-6511
or at such other address as the Company shall have specified to the
holders of the Warrant Certificates in writing; provided that any such
communication to the Company may also, at the option of any holder of a
Warrant Certificate, be delivered by any other means either to the
Company at its address specified above or to any officer of the
Company.
Any communication addressed and delivered as herein provided shall be deemed to
be received when actually delivered to the address of the addressee (whether or
not delivery is accepted) or received by the telecopy machine of the recipient.
Any communication not so addressed and delivered shall be ineffective.
-29-
8.7 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.8 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument.
8.9 Waiver of Jury Trial, Consent to Jurisdiction.
(a) Waiver of Jury Trial. THE PARTIES HERETO VOLUNTARILY AND
INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION ARISING OUT OF, UNDER OR IN CONNECTION
WITH THIS AGREEMENT OR ANY OF THE DOCUMENTS, AGREEMENTS OR TRANSACTIONS
CONTEMPLATED HEREBY.
(b) Consent to the Exclusive Jurisdiction of the Courts of the
Commonwealth of Massachusetts. EACH OF THE PARTIES HERETO HEREBY
CONSENTS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS AND THE UNITED STATES DISTRICT COURT FOR
THE DISTRICT OF THE COMMONWEALTH OF MASSACHUSETTS, AS WELL AS TO THE
JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH
COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT INCLUDING, WITHOUT
LIMITATION, ANY PROCEEDING RELATING TO ANCILLARY MEASURES IN AID OF
ARBITRATION, PROVISIONAL REMEDIES AND INTERIM RELIEF, OR ANY PROCEEDING
TO ENFORCE ANY ARBITRAL DECISION OR AWARD.
EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING
ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF OR IN CONNECTION
WITH THIS AGREEMENT IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE
COURTS OF THE COMMONWEALTH OF MASSACHUSETTS AND COVENANTS THAT IT SHALL
NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OTHER THAN AS SET FORTH
IN THIS SECTION 8.9 OR IN THE DEFINITION OF FAIR MARKET VALUE OR TO
CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT OBTAINED IN
ACCORDANCE WITH THE PROVISIONS HEREOF OR IN THE DEFINITION OF FAIR
MARKET VALUE IN SECTION 7.1.
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EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL
OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE
INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS. IN ADDITION, EACH
OF THE PARTIES CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL SERVICE
OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED HEREUNDER IN ACCORDANCE
WITH SECTION 8.6.
8.10 Governing Law. THIS AGREEMENT AND THE WARRANT CERTIFICATES
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE
PARTIES SHALL BE GOVERNED BY, THE INTERNAL LAW OF THE COMMONWEALTH OF
MASSACHUSETTS (WITHOUT GIVING EFFECT TO ANY CONFLICTS OR CHOICE OF LAWS
PROVISIONS WHICH WOULD CAUSE THE APPLICATIONS OF THE DOMESTIC SUBSTANTIVE LAWS
OF ANY OTHER JURISDICTION).
8.11 Expiration. All Warrants that have not been exercised or
purchased in accordance with the provisions of this Agreement shall expire and
all rights of holders of such Warrants shall terminate and cease on the
Expiration Date.
8.12 Equitable Remedies. The parties hereto agree that irreparable
harm would occur in the event that any of the agreements and provisions of this
Agreement were not performed fully by the parties hereto in accordance with
their specific terms or conditions or were otherwise breached, and that money
damages are an inadequate remedy for breach of this Agreement because of the
difficulty of ascertaining and quantifying the amount of damage that will be
suffered by the parties hereto in the event that this Agreement is not performed
in accordance with its terms or conditions or is otherwise breached. It is
accordingly hereby agreed that the parties hereto shall be entitled to an
injunction or injunctions to restrain, enjoin and prevent breaches of this
Agreement by the other parties and to enforce specifically such terms and
provisions of such Articles in any court of the United States or any state
having jurisdiction, such remedy being in addition to and not in lieu of, any
other rights and remedies to which the other parties are entitled to at law or
in equity.
[Remainder of page intentionally left blank; next page is a signature page.]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered by one of its duly authorized
officers or representatives.
LBI HOLDINGS I, INC.
By /s/ Lenard Liberman
--------------------------------------
Name: Lenard Liberman
Title: Executive Vice President
Accepted:
ALTA COMMUNICATIONS VIII, L.P.
By: Alta Communications VIII Managers, LLC,
its General Partner
By: /s/ Eileen McCarthy
-------------------------------------
Name:___________________________________
Title:__________________________________
ALTA-COMM VIII S BY S, LLC
By: /s/ Eileen McCarthy
-------------------------------------
Name:___________________________________
Title:__________________________________
ALTA COMMUNICATIONS VIII-B, L.P.
By: Alta Communications VIII Managers, LLC,
its General Partner
By: /s/ Eileen McCarthy
-------------------------------------
Name:___________________________________
Title:__________________________________
ALTA VIII ASSOCIATES, LLC
By: Alta Communications, Inc.
By: /s/ Eileen McCarthy
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Name:__________________________________________
Title:_________________________________________
CALIFORNIA STATE TEACHERS'
RETIREMENT SYSTEM
By: /s/ Christopher J. Ailman
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Name: Christopher J. Ailman
------------------------------------------
Title: Chief Investment Officer
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BANCBOSTON INVESTMENTS INC.
By: /s/ Lars A. Swanson
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Name: Lars A. Swanson
------------------------------------------
Title: Director
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UNIONBANCALEQUITIES, INC.
By: /s/ J. Kevin Sampson /s/ David Bonrouhi
--------------------------------------------
Name: J. Kevin Sampson David Bonrouhi
------------------------------------------
Title: Vice President Vice President
-----------------------------------------
Schedule A
Schedule of Purchasers
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Purchaser Address No. of Warrants
- --------- ------- ---------------
- -----------------------------------------------------------------------------------------
Alta Communications VIII, L.P. 200 Clarendon Street 7.398725
Boston, MA 02109
Attn: Bob Emmert
- -----------------------------------------------------------------------------------------
Alta-Comm VIII S By S, LLC 200 Clarendon Street 0.122340
Boston, MA 02109
Attn: Bob Emmert
- -----------------------------------------------------------------------------------------
Alta Communications VIII-B, L.P. 200 Clarendon Street 0.411919
Boston, MA 02109
Attn: Bob Emmert
- -----------------------------------------------------------------------------------------
Alta VIII Associates, LLC 200 Clarendon Street 0.011683
Boston, MA 02109
Attn: Bob Emmert
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California State Teachers' Mail Station #4 2.336667
Retirement System Investments Office
7667 Folsom Boulevard
P. O. Box 163749, MS4
Sacramento, CA 95816-3749
Attn: Deanna Winter
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BancBoston Investments Inc. 175 Federal Street 2.804000
10/th/ Floor
Boston, MA 02110
Attn: Lars Swanson
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UnionBanCal Equities, Inc. c/o Union Private Equity 0.934667
445 South Figueroa St.
21/st/ Floor
Los Angeles, CA 90071
Attn: Kevin Sampson
- -----------------------------------------------------------------------------------------
Schedule B
Corporate Overhead Expense Adjustment to
Fair Market Value
If the Company's Corporate Overhead Expense exceeds the amounts shown below
during any calendar year, the amount of such excess, together with interest
thereon from the end of such calendar year to the date of the final
determination of the Fair Market Value, at the rate of six percent (6%), as
compounded and calculated under the Notes, shall be added to the other elements
of Fair Market Value.
2001 $1.4 million
2002 $1.6 million
2003 $1.8 million
2004 $2.1 million
2005 $2.4 million
2006 $2.8 million
2007 $3.2 million
Schedule C
Projections for Performance-Based Adjustment pursuant to
Section 4.1(d) are attached
EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES
ISSUABLE UPON EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND THEY MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR THE
AVAILABILITY OF AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAWS.
THE SALE, TRANSFER, PLEDGE, OR HYPOTHECATION (COLLECTIVELY, THE
"TRANSFER") OR EXERCISE OF THIS WARRANT AND THE TRANSFER OF THE SECURITIES
ISSUABLE UPON EXERCISE ARE SUBJECT TO THE COMMUNICATIONS ACT OF 1934, AS
AMENDED, AND THE RULES AND REGULATIONS OF THE FEDERAL COMMUNICATIONS COMMISSION.
FURTHERMORE, THE WARRANTS REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED OR EXERCISED AND THE SECURITIES ISSUABLE UPON EXERCISE MAY NOT BE
TRANSFERRED, IN EACH CASE, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF TAX
COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY IN FORM AND SUBSTANCE REASONABLY
ACCEPTABLE TO THE COMPANY TO THE EFFECT THAT SUCH TRANSFER OR EXERCISE, AS
APPLICABLE, WILL NOT TERMINATE THE COMPANY'S CLASSIFICATION AS AN "S"
CORPORATION EXCEPT TO THE EXTENT SUCH EXERCISE IS OTHERWISE PERMITTED UNDER THE
PURCHASE AGREEMENT DEFINED IN THE BELOW-REFERENCED WARRANT AGREEMENT.
THIS INSTRUMENT IS SUBJECT TO A SUBORDINATION AND INTERCREDITOR
AGREEMENT DATED AS OF MARCH 20, 2001 BY AND AMONG LBI HOLDINGS I, INC., A
CALIFORNIA CORPORATION, THE PURCHASERS PARTY TO THE PURCHASE AGREEMENT, AND
FLEET NATIONAL BANK, INDIVIDUALLY AND AS ADMINISTRATIVE AGENT (THE
"ADMINISTRATIVE AGENT") FOR THE LENDERS UNDER THE CREDIT AGREEMENT BY AND AMONG
LBI HOLDINGS II, INC. (THE "BORROWER"), THE DIRECT AND INDIRECT SUBSIDIARIES OF
THE BORROWER WHICH ARE CREDIT PARTIES THEREUNDER, THE LENDERS PARTY THERETO AND
THE ADMINISTRATIVE AGENT AND UNION BANK OF CALIFORNIA, N.A. AS SYNDICATION
AGENT, AND CIT LENDING SERVICES CORPORATION AND GENERAL ELECTRIC CAPITAL
CORPORATION AS CO-DOCUMENTATION AGENTS. BY ITS ACCEPTANCE OF THIS INSTRUMENT,
THE HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH SUBORDINATION AND
INTERCREDITOR
AGREEMENT TO THE SAME EXTENT THAT THE SUBORDINATED CREDITORS (AS DEFINED
THEREIN) ARE BOUND.
THIS INSTRUMENT IS SUBJECT TO A SUBORDINATION AND INTERCREDITOR
AGREEMENT, DATED AS OF MARCH 20, 2001, AMONG LBI HOLDINGS I, INC., THE
PURCHASERS PARTY TO THE PURCHASE AGREEMENT, OAKTREE CAPITAL MANAGEMENT, LLC,
INDIVIDUALLY AND AS AGENT FOR CERTAIN HOLDERS, AND OTHERS. BY ITS ACCEPTANCE OF
THIS INSTRUMENT, THE HOLDER HEREOF AGREES TO BE BOUND BY THE PROVISIONS OF SUCH
SUBORDINATION AND INTERCREDITOR AGREEMENT TO THE SAME EXTENT THAT THE
SUBORDINATED CREDITORS (AS DEFINED THEREIN) ARE BOUND.
WARRANT CERTIFICATE
LBI HOLDINGS I, INC.
No. WR-___ [_____] Warrants
Date: ________
This Warrant Certificate certifies that ________, or registered
assigns, is the registered holder of ____________ (__________) Warrants to
purchase shares of Common Stock of LBI HOLDINGS I, INC. (the "Company"), a
California corporation. Each Warrant initially entitles the owner thereof to
purchase at any time on or before the Expiration Date one (1) fully paid and
nonassessable share of Common Stock of the Company, at a Purchase Price of one
cent ($0.01) upon (i) presentation and surrender of this Warrant Certificate
with a form of election to purchase duly executed and (ii) delivery to the
Company of the payment of the Purchase Price in the manner set forth in the
Warrant Agreement referred to below. The number of shares of Common Stock
purchasable pursuant to this Warrant Certificate and the Purchase Price therefor
are subject to adjustment as referred to below.
The Warrants are issued pursuant to the Warrant Agreement, dated as of
_____________, 2001 (as it may from time to time be amended or supplemented, the
"Warrant Agreement"), between the Company and the purchasers named therein, and
are subject to all of the terms, provisions and conditions thereof, which
Warrant Agreement is hereby incorporated herein by reference and made a part
hereof and to which Warrant Agreement reference is hereby made for a full
description of the rights, obligations, duties and immunities of the Company and
the holders of the Warrant Certificates. Capitalized terms used, but not
defined, herein have the respective meanings ascribed to them in the Warrant
Agreement.
As provided in the Warrant Agreement, the number of shares of Common
Stock purchasable pursuant to this Warrant Certificate and/or the Purchase Price
are, upon the happening of certain events, subject to adjustment. As further set
forth in, and subject to, the Warrant Agreement, the expiration date of this
Warrant Certificate is 5:00 p.m. Eastern Time on
A-2
the earlier of (a) the later of (i) March 20, 2011, or (ii) the date which is
six (6) months from the date of payment in full of all outstanding principal and
interest on the Notes and (b) the closing of the sale and issuance of shares of
Common Stock of the Company in an underwritten public offering pursuant to an
effective registration statement under the Securities Act of 1933, as amended,
the gross proceeds of which exceed $25,000,000.
This Warrant Certificate shall be exercisable, at the election of the
holder, either as an entirety or in part from time to time. If this Warrant
Certificate shall be exercised in part, the holder shall be entitled to receive,
upon surrender hereof, another Warrant Certificate or Warrant Certificates for
the number of Warrants not exercised. This Warrant Certificate, with or without
other Warrant Certificates, upon surrender in the manner set forth in the
Warrant Agreement, may be exchanged for another Warrant Certificate or Warrant
Certificates of like tenor evidencing Warrants entitling the holder to purchase
a like aggregate number of shares of Common Stock as the Warrants evidenced by
the Warrant Certificate or Warrant Certificates surrendered shall have entitled
such holder to purchase.
Except as expressly set forth in the Warrant Agreement, no holder of
this Warrant Certificate shall be entitled to vote or receive dividends or be
deemed for any purpose the holder of shares of Common Stock or of any other
Securities of the Company that may at any time be issued upon the exercise
hereof, nor shall anything contained in the Warrant Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
holder of a share of Common Stock in the Company or any right to vote upon any
matter submitted to holders of shares of Common Stock at any meeting thereof, or
to give or withhold consent to any corporate action (whether upon any
recapitalization, issuance of stock, reclassification of Securities, change of
par value, consolidation, merger, conveyance, or otherwise) or, except as
provided in the Warrant Agreement, to receive notice of meetings, or to receive
dividends or subscription rights, or otherwise, until the Warrant or Warrants
evidenced by this Warrant Certificate shall have been exercised as provided in
the Warrant Agreement.
THIS WARRANT CERTIFICATE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, AND THE RIGHTS OF THE COMPANY AND THE HOLDER HEREOF SHALL BE GOVERNED BY,
THE LAWS OF THE COMMONWEALTH OF MASSACHUSETTS (OTHER THAN ITS CONFLICTS OF LAW
PRINCIPLES). THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO
AGREEMENTS, COVENANTS AND RESTRICTIONS PROVIDED IN THE VOTING AND CO-SALE
AGREEMENT DATED MARCH 20, 2001, AND THE SECURITIES PURCHASE AGREEMENT DATED
MARCH 20, 2001, EACH AS AMENDED FROM TIME TO TIME, BY AND AMONG THE COMPANY AND
THE PERSONS NAMED THEREIN. A COPY OF SUCH AGREEMENTS MAY BE OBTAINED BY ANY
HOLDER OF THIS WARRANT UPON REQUEST WITHOUT CHARGE FROM THE SECRETARY OF THE
COMPANY AT THE PRINCIPAL OFFICE OF THE COMPANY.
WITNESS the signature of a proper officer of the Company as of the date first
above written.
ATTEST: LBI HOLDINGS I, INC.
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______________________________ By:_____________________________
Secretary Name:
Title:
A-4
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder desires to
transfer the Warrant Certificate)
FOR VALUE RECEIVED, _______________________________ hereby sells,
assigns and transfers unto
_________________________________________________________________________
(Please print name, address and taxpayer identification number or social
security number of transferee.) the accompanying Warrant Certificate, together
with all right, title and interest therein, and does hereby irrevocably
constitute and appoint: ___________________________________________ attorney, to
transfer the accompanying Warrant Certificate on the books of the Company, with
full power of substitution.
Dated: _________________, ______.
_____________________
Signature of Holder
NOTICE
The signature to the foregoing Assignment must correspond to the name
as written upon the face of the accompanying Warrant Certificate or any prior
assignment thereof in every particular, without alteration or enlargement or any
change whatsoever.
[FORM OF ELECTION TO PURCHASE]
(To be executed by the registered holder if
such holder desires to exercise the Warrant Certificate)
To: ___________:
The undersigned hereby irrevocably elects to exercise _____ Warrants represented
by the accompanying Warrant Certificate to purchase the shares of Common Stock
issuable upon the exercise of such Warrants and requests that certificates for
such shares be issued in the name of:
_________________________________________________________________________
(Please print name and address.)
_________________________________________________________________________
(Please insert social security or other identifying number.)
If such number of Warrants shall not be all the Warrants evidenced by the
accompanying Warrant Certificate, a new Warrant Certificate for the balance
remaining of such Warrants shall be registered in the name of and delivered to:
_________________________________________________________________________
(Please print name and address.)
_________________________________________________________________________
(Please insert social security or other identifying number.)
Dated: __________,_____.
_____________________
Signature of Holder
NOTICE
The signature to the foregoing Election to Purchase must correspond to
the name as written upon the face of the accompanying Warrant Certificate or any
prior assignment thereof in every particular, without alteration or enlargement
or any change whatsoever.