-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, STd3OQQymXjG7rif4SaT5LRDumv+o9NDLeb9jXI5p27+m5fcmk8pmqRN/JADgap6 o5vHUr9jZPbiIZpHcBEczg== 0000950128-00-000584.txt : 20000329 0000950128-00-000584.hdr.sgml : 20000329 ACCESSION NUMBER: 0000950128-00-000584 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000328 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFINITY BROADCASTING CORP /DE/ CENTRAL INDEX KEY: 0001070518 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 134030071 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-14599 FILM NUMBER: 580452 BUSINESS ADDRESS: STREET 1: 40 WEST 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2123149200 MAIL ADDRESS: STREET 1: 40 WEST 57TH ST CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: INFINITY MEDIA CORP DATE OF NAME CHANGE: 19980917 10-K405 1 INFINITY BROADCASTING CORP. FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549-1004 FORM 10-K (MARK ONE) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ___________________ TO ____________________ COMMISSION FILE NUMBER 1-14599 INFINITY BROADCASTING CORPORATION - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 13-4030071 - ------------------------------------------------ ------------------------------------------------ (State of Incorporation) (I.R.S. Employer Identification No.) 40 WEST 57TH STREET NEW YORK, NEW YORK 10019 (212) 314-9200 - ------------------------------------------------ ------------------------------------------------ (Address of Principal Executive Offices) (Telephone No.) SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED - ------------------------------------------------ ------------------------------------------------ Class A Common Stock, par value $.01 per Share New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by checkmark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. X Infinity Broadcasting Corporation had 392,340,072 shares of Class A common stock and 700,000,000 shares of Class B common stock outstanding at February 29, 2000. As of that date, the aggregate market value of common stock held by non-affiliates was $12,530 million for Class A and $0 million for Class B. DOCUMENT INCORPORATED BY REFERENCE INTO THE PARTS OF THIS REPORT INDICATED: 1. Portions of Infinity Broadcasting Corporation's Notice of 2000 Annual Meeting and Proxy Statement to be filed with the Commission pursuant to Regulation 14A of the Securities Exchange Act of 1934 (the Proxy Statement). (Part III) - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 The terms "Infinity" and "Company" as used in this Report on Form 10-K refer to Infinity Broadcasting Corporation and its consolidated subsidiaries unless the context indicates otherwise. PART I ITEM 1. BUSINESS. GENERAL Infinity Broadcasting Corporation is one of the largest radio broadcasting and outdoor advertising companies in the United States, as well as the largest outdoor advertising company in North America. The Company's operations are focused on the out-of-home media business and are aligned in two business segments, Radio and Outdoor. The Company characterizes its radio and outdoor advertising businesses as out-of-home because a majority of radio listening, and virtually all viewing of outdoor advertising, takes place in automobiles, transit systems, on the street and other locations outside the consumer's home. The Company's strategy is to generally acquire out-of-home media properties in the largest markets. The Company was formed in September 1998 to own and operate the radio and outdoor advertising business of CBS Corporation and its subsidiaries (CBS). In December 1998, the Company completed an initial public offering of approximately 155 million shares of its Class A common stock (the IPO), resulting in gross proceeds of approximately $3.2 billion. At December 31, 1999, CBS beneficially owned 100% of the Company's Class B common stock, representing 64.3% of the Company's equity ownership and 90.0% of the combined voting power of Infinity's Class A and Class B common stock, on a fully diluted basis. In December 1996, CBS acquired Infinity Media Corporation, formerly known as Infinity Broadcasting Corporation (Old Infinity). On June 4, 1998, CBS acquired the radio broadcasting operations of American Radio Systems Corporation (American Radio), now known as CBS Radio Inc. Both Old Infinity and American Radio were publicly traded companies prior to their respective acquisitions by CBS. Prior to the IPO, CBS transferred substantially all of its radio, outdoor advertising and related assets to the Company. In December 1999, the Company acquired Outdoor Systems, Inc. (Outdoor Systems), now known as Infinity Outdoor, Inc., for approximately $8.7 billion. The purchase price included the issuance of approximately 233 million shares of the Company's Class A common stock, and the assumption of approximately $1.9 billion in debt, at fair value, and stock options to acquire approximately 28 million shares of the Company's Class A common stock. Outdoor Systems was a publicly traded company prior to its acquisition by Infinity. On March 3, 2000, the Company entered into an Asset Purchase Agreement to acquire 18 radio stations from Clear Channel Communications, Inc. (Clear Channel) for approximately $1.4 billion. These stations are located in San Diego, Phoenix, Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The purchase allows Infinity to expand into five new Top 50 markets, giving the Company 180 radio stations overall. The transaction is subject to regulatory reviews and approvals, and is expected to close by year-end 2000. On March 21, 2000, the Company announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. This acquisition expands the Company's position in Europe. Upon the expected mid-year 2000 completion of the Giraudy acquisition, TDI Europe, the Company's European outdoor advertising subsidiary, will have rights to approximately 430,000 display faces. The Company's Radio segment, which consists of 162 radio stations serving 34 markets (prior to the close of the Clear Channel acquisition), collectively accounted for approximately 12% of total 1999 U.S. radio advertising expenditures. The Company's stations ranked first or second, in terms of 1999 pro forma radio revenues, in 30 out of the 34 markets in which the Company operates stations. Approximately 93% of the Company's radio stations are located in the 50 largest radio markets in the United States, and 67% and 99% of the Company's pro forma 1999 net radio revenues were generated in the 10 and 50 largest U.S. radio markets, respectively. The Company believes that this focus on large markets makes it more appealing to advertisers, enables it to attract more highly skilled management, employees and on-air talent, and enables it to more efficiently manage its business and generate higher levels of cash flow than would be the case if it managed a larger number of smaller stations. The Company owns the CBS Radio Network and also has a minority equity investment in Westwood One, which it 2 INFINITY BROADCASTING CORPORATION 3 manages pursuant to a management agreement between the Company and Westwood One. Westwood One is a leader in producing and distributing syndicated and network radio programming, and it manages the CBS Radio Network. The Company's radio stations serve diverse target demographics through a broad range of programming formats. The Company believes that this diversity provides advertisers with the convenience to select stations to reach a targeted demographic group or to select groups of stations and outdoor advertising properties to reach broad groups of consumers within and across markets. The Company believes that this diversity also reduces its dependence on any single station, local economy, format or advertiser. The Company's Outdoor segment sells advertising space on various media, including billboards, bulletins, buses, bus shelters and benches, trains, train platforms and terminals throughout commuter rail systems, mall posters and on phone kiosks. The Company is the largest outdoor advertising company in North America, with operations in more than 90 markets and all 50 of the largest metropolitan markets in the United States, 14 of the 15 largest metropolitan markets in Canada and all of the 45 largest metropolitan markets in Mexico. Additionally, the Company has the exclusive rights to manage advertising space within the London Underground and on more than 90% of the buses in London and the United Kingdom, has the exclusive rights to transit advertising in the Republic of Ireland and parts of Northern Ireland, and has a variety of outdoor advertising displays in the Netherlands. The substantial majority of the Company's revenues are generated from the sale of local, regional and national advertising. The major categories of out-of-home advertisers include: automotive, retail, Internet, healthcare, telecommunications, fast food, beverage, movies, entertainment and services. For information about principal acquisitions and divestitures, see Note 3 to the consolidated financial statements included in Part II, Item 8 of this report. Infinity Broadcasting Corporation is a corporation organized under the laws of Delaware. Its principal executive offices are located at 40 West 57th Street, New York, New York, 10019, and its telephone number is (212) 314-9200. PROGRAMMING The Company seeks to maintain substantial diversity among its stations in many respects. The geographically wide-ranging stations serve diverse target demographics through a broad range of programming formats, such as rock, oldies, news/talk, adult contemporary, sports/talk and country, and the Company has established leading franchises in news, sports, and personality programming. This diversity reduces the Company's dependence on any particular station, local economy, format, on-air personality or advertiser. The overall mix of each radio station's programming is designed to fit the station's specific format and serve its local community. The Company's general programming strategy includes acquiring significant on-air talent and the rights to broadcast sports franchises and news content for its radio stations. The Company believes that this strategy, in addition to developing loyal audiences for its radio stations, creates the opportunity for the Company to obtain additional revenues from syndicating such programming franchises to other radio stations. Similarly, the Company's relationship with CBS gives it access to certain CBS programming. The Company beneficially owns shares and vested warrants representing approximately 17% of Westwood One's common stock. Westwood One is one of the leading producers and distributors of syndicated and network radio programming in the United States and distributes syndicated and network radio programming to the Company's radio stations as well as to competitors of the Company. INFINITY BROADCASTING CORPORATION 3 4 RADIO STATIONS AND OUTDOOR DISPLAYS The following table sets forth selected information with regard to the Company's radio stations and outdoor displays in the Top 50 U.S. markets as of March 6, 2000:
MARKET RANK BY 1999 RADIO(1) OUTDOOR(2)(3) METRO AREA ------------------------------------------------ -------------------------------- MARKET POPULATION STATIONS AM/FM FORMAT DISPLAY TYPE - ------------------------------------------------------------------------------------------------------------------------- New York, NY 1 WCBS FM Oldies Bus, Bus Shelters, Rail, Kiosks, WCBS AM News Billboards, Walls, Trestles, WFAN AM Sports 'Spectacular Signage', WINS AM News Bulletins, Posters, Mall Posters WNEW FM Talk WXRK FM Rock Los Angeles, CA 2 KCBS FM Classic Rock Bus, Bus Shelters, Kiosks, KFWB AM News Beach Panels, Bulletins, Walls, KLSX FM Talk Posters, Mall Posters KNX AM News KRLA AM Talk KROQ FM Alternative Rock KRTH FM Oldies KTWV FM Smooth Jazz Chicago, IL 3 WBBM FM Contemporary Hit, Radio/Dance Bus, Bus Shelters, Rail, WBBM AM News Bulletins, Posters, Mall Posters WCKG FM Talk WJMK FM Oldies WMAQ AM News/Sports WSCR AM Sports/Talk WUSN FM Country WXRT FM Adult Alternative Rock San Francisco, CA 4 KCBS AM News Bus, Bus Shelters, Rail, Cable KFRC FM Oldies Cars, Bulletins, Walls, Posters, KFRC AM Oldies Mall Posters KITS FM Alternative Rock KLLC FM Modern Rock KYCY AM Talk KYCY FM Country Philadelphia, PA 5 KYW AM News Bus Shelters, Rail, Bulletins, WIP AM Sports Mall Posters WOGL FM Oldies WPHT AM Talk WYSP FM Active Rock Dallas--Fort Worth, TX 6 KHVN AM Gospel Bus, Bulletins, Mall Posters KLUV FM Oldies KLUV AM Oldies KOAI FM Smooth Jazz KRBV FM Rhythmic Contemporary Hits KRLD AM News/Talk KVIL FM Adult Contemporary KYNG FM Country
4 INFINITY BROADCASTING CORPORATION 5
MARKET RANK BY 1999 RADIO(1) OUTDOOR(2)(3) METRO AREA ------------------------------------------------ ------------------------------- MARKET POPULATION STATIONS AM/FM FORMAT DISPLAY TYPE - ------------------------------------------------------------------------------------------------------------------------ Detroit, MI 7 WKRK FM Talk Bus, Bus Shelters, Bulletins, WOMC FM Oldies Posters, Mall Posters WVMV FM Smooth Jazz WWJ AM News WXYT AM Talk/Sports WYCD FM Country Boston, MA 8 WBCN FM Modern Rock/Sports Mall Posters WBMX FM Modern Adult Contemporary WBZ AM News/Talk/Sports WODS FM Oldies WZLX FM Classic Rock Washington, D.C. 9 WARW FM Classic Rock Bus, Rail, Mall Posters WHFS FM Alternative Rock WJFK FM Talk WPGC FM Contemporary Hit Radio/Rhythmic WPGC AM Gospel Houston, TX 10 KIKK FM Country Bulletins, Mall Posters KIKK AM Business KILT FM Country KILT AM Sports Atlanta, GA 11 WAOK AM Gospel Bus, Bus Shelters, Rail, WVEE FM Urban Bulletins, Posters, Mall Posters WZGC FM Classic Rock Miami-Ft. Lauderdale, FL 12 -- -- -- Bulletins, Mall Posters Seattle-Tacoma, WA 14 KBKS FM Modern Adult Contemporary Bus, Bulletins, Mall Posters KMPS FM Country KYCW AM Country KYPT FM Adult Contemporary KZOK FM Classic Rock San Diego, CA 15 KPLN(4) FM Classic Rock Bus, Bus Shelters, Bulletins, KYXY(4) FM Adult Contemporary Posters, Mall Posters Phoenix, AZ 16 KOOL(4) FM Oldies Bus, Bus Shelters, Bulletins, KZON(4) FM Alternative Rock Posters, Mall Posters KMLE(4) FM Country Minneapolis, MN 17 WCCO AM Full Service Bus, Bulletins, Mall Posters WLTE FM Soft Adult Contemporary WXPT FM Modern Adult Contemporary KSGS AM Urban Nassau-Suffolk, NY 18 -- -- -- Bulletins St. Louis, MO 19 KEZK FM Soft Adult Contemporary Bulletins, Posters, Mall Posters KMOX AM News/Talk/Sports KYKY FM Adult Contemporary
INFINITY BROADCASTING CORPORATION 5 6
MARKET RANK BY 1999 RADIO(1) OUTDOOR(2)(3) METRO AREA ------------------------------------------------ ------------------------------- MARKET POPULATION STATIONS AM/FM FORMAT DISPLAY TYPE - ------------------------------------------------------------------------------------------------------------------------ Baltimore, MD 20 WBGR AM Gospel Mall Posters WBMD AM Religion WJFK AM Talk WLIF FM Soft Adult Contemporary WQSR FM Oldies WWMX FM Hot Adult Contemporary WXYV FM Contemporary Hit Radio Tampa-St. Petersburg, FL 21 WLLD FM Contemporary Hit Radio Bulletins, Mall Posters WQYK FM Country WQYK AM Sports WYUU FM Oldies WRBQ FM Country WSJT FM Smooth Jazz Pittsburgh, PA 22 KDKA AM News/Talk Bus, Bulletins, Mall Posters WBZZ FM Contemporary Hit Radio WDSY FM Country WZPT FM Classic Hits Denver, CO 23 KDJM(4) FM Jammin' Oldies Bus Benches, Bulletins, Posters, KIMN(4) FM Adult Contemporary Mall Posters KXKL(4) FM Oldies Cleveland, OH 24 WNCX FM Classic Rock Bulletins, Mall Posters WDOK(4) FM Adult Contemporary WQAL(4) FM Adult Contemporary WZJM(4) FM Jammin' Oldies Portland, OR 25 KBBT FM Modern Adult Contemporary Bulletins, Mall Posters KINK FM Adult Alternative Rock KKJZ FM Smooth Jazz KUFO FM Album Oriented Rock KUPL FM Country KUPL AM Classic Country Cincinnati, OH 26 WGRR FM Oldies Bulletins, Mall Posters WKRQ FM Contemporary Hit Radio WYLX FM Classic Hits WUBE(4) FM Country San Jose, CA 27 KBAY FM Soft Adult Contemporary Bus, Bulletins, Posters, Mall KEZR FM Hot Adult Contemporary Posters Riverside, CA 28 KFRG FM Country Bulletins, Posters, Mall Posters KXFG FM Country Sacramento, CA 29 KHTK AM Sports Bulletins, Posters, Mall Posters KNCI FM Country KRAK AM Gold Country KXOA FM Classic Hits KSFM FM Contemporary Hit Radio KYMX FM Soft Adult Contemporary KZZO FM Modern Adult Contemporary Kansas City, MO 30 KBEQ FM Country Bulletins, Posters, Mall Posters KFKF FM Country KMXV FM Contemporary Hit Radio KSRC FM Soft Adult Contemporary
6 INFINITY BROADCASTING CORPORATION 7
MARKET RANK BY 1999 RADIO(1) OUTDOOR(2)(3) METRO AREA ------------------------------------------------ ------------------------------- MARKET POPULATION STATIONS AM/FM FORMAT DISPLAY TYPE - ------------------------------------------------------------------------------------------------------------------------ Milwaukee, WI 31 -- -- -- Bulletins, Mall Posters San Antonio, TX 32 -- -- -- Bus, Bulletins, Mall Posters Providence, RI 33 -- -- -- Mall Posters Columbus, OH 34 WAZU FM Album Oriented Rock Bulletins, Mall Posters WHOK FM Country WLVQ FM Classic Rock Salt Lake City, UT 35 -- -- -- Bulletins, Mall Posters Norfolk, VA 36 -- -- -- Mall Posters Charlotte, NC 37 WBAV FM Urban Adult Contemporary Bulletins, Mall Posters WFNZ AM Sports/Talk WGIV AM Gospel WNKS FM Contemporary Hit Radio WPEG FM Urban WSOC FM Country WSSS FM Adult Contemporary Indianapolis, IN 38 -- -- -- Bulletins, Mall Posters Orlando, FL 39 WJHM(4) FM Urban Contemporary Bulletins, Mall Posters WOCL(4) FM Jammin' Oldies WOMX(4) FM Adult Contemporary Las Vegas, NV 40 KLUC FM Contemporary Hit Radio Bulletins, Mall Posters KMXB FM Modern Adult Contemporary KMZQ FM Soft Adult Contemporary KSFN AM Oldies KXNT AM News/Talk/Sports KXTE FM Alternative New Orleans, LA 41 -- -- -- Bus, Bus Shelters, Bulletins, Posters, Mall Posters Greensboro-- Winston-Salem, NC 42 WMFR(4) AM News/Talk Bulletins, Mall Posters WSJS(4) AM News/Talk WSML(4) AM News/Talk Nashville, TN 43 -- -- -- Bulletins, Mall Posters Hartford, CT 44 WRCH FM Soft Adult Contemporary Bulletins, Posters, Mall Posters WTIC FM Top 40 WTIC AM News/Talk WZMX FM Classic Hits Buffalo, NY 45 WBLK(5)(6) FM Urban Adult Contemporary Bus, Bus Shelters, Rail, WECK AM Adult Standards Bulletins, Mall Posters WJYE FM Soft Adult Contemporary WBUF FM Modern Adult Contemporary WYRK FM Country Memphis, TN 46 -- -- -- Bulletins, Mall Posters Monmouth-Ocean, NJ 47 -- -- -- Bulletins, Posters, Mall Posters
INFINITY BROADCASTING CORPORATION 7 8
MARKET RANK BY 1999 RADIO(1) OUTDOOR(2)(3) METRO AREA ------------------------------------------------ ------------------------------- MARKET POPULATION STATIONS AM/FM FORMAT DISPLAY TYPE - ------------------------------------------------------------------------------------------------------------------------ Raleigh-Durham, NC 48 -- -- -- Bulletins, Mall Posters Austin, TX 49 KAMX FM Modern Adult Contemporary Bulletins, Mall Posters KJCE AM Urban Adult Contemporary KKMJ FM Soft Adult Contemporary KQBT FM Rhythmic Contemporary Hits West Palm Beach, FL 50 WEAT FM Soft Adult Contemporary Bulletins, Mall Posters WIRK FM Country WMBX(6) FM Hot Adult Contemporary WPBZ(6) FM Alternative - ------------------------------------------------------------------------------------------------------------------------
(1) The Radio segment also has radio stations in the following markets: Rochester, NY-- WCMF-FM, WPXY-FM, WRMM-FM, WZNE-FM; Fresno, CA-- KMJ-AM, KMGV-FM, KOOR-AM, KOQO-FM, KRNC-FM, KSKS-FM, KVSR-FM; and Palm Springs, CA-- KEZN-FM. (2) The Outdoor segment also has outdoor displays, including bus shelters, bulletins, posters and mall posters, in the following markets: Jacksonville, FL; Rochester, NY; Louisville, KY; Oklahoma City, OK; Birmingham, AL; Dayton, OH; Richmond, VA; Greenville-Spartanburg, SC; Albany, NY; Honolulu, HI; Tucson, AZ; Tulsa, OK; Scranton, PA; Fresno, CA; Grand Rapids, MI; Knoxville, TN; El Paso, TX; Ft. Myers, FL; Albuquerque, NM; Omaha, NE; Syracuse, NY; Harrisburg, PA; Sarasota, FL; Toledo, OH; Little Rock, AR; Wichita, KS; Stockton, CA; Bakersfield, CA; Charleston, SC; Mobile, AL; Columbia, SC; Des Moines, IA; Daytona Beach, FL; Colorado Springs, CO; Ft. Wayne, IN; New Haven, CT; Chattanooga, TN; Roanoke, VA; Jackson, MS; Flint, MI; Modesto, CA; Beaumont, TX; Reno, NV; Shreveport, LA; Tyler, TX; Eugene, OR; Palm Springs, CA; Columbus, GA; Midland-Odessa, TX; Green Bay, WI; Rio Grande, TX. (3) The Outdoor segment also has outdoor displays, including bus, bus shelters, rail, bulletins, posters and mall posters, in the following countries: Canada, Mexico, Great Britain, Ireland and the Netherlands. (4) Being acquired from Clear Channel Communications Inc. pursuant to an Asset Purchase Agreement, dated March 3, 2000, and subject to regulatory reviews and approvals. (5) Operated by the Company pursuant to a local marketing agreement. (6) Being acquired from Palm Beach Radio Broadcasting, Inc. pursuant to an Asset Purchase Agreement, dated February 3, 2000, and subject to Federal Communications Commission approval. 8 INFINITY BROADCASTING CORPORATION 9 COMPETITION RADIO The Company's radio business operates in a highly competitive industry. The Company's radio stations compete for audiences and advertising revenues directly with other radio stations, as well as with other media, such as broadcast and satellite-delivered television, outdoor advertising, newspapers, magazines, cable television, the Internet and direct mail, within their respective markets. The Company's audience ratings and market shares are subject to change and any adverse change in a particular market could have a material adverse effect on the Company's revenues in that market and possibly adversely affect revenues in other markets. Radio stations compete for listeners primarily on the basis of program content that appeals to a particular demographic group. From time to time, other stations may change their format or programming to compete directly with the Company's stations for audiences and advertisers, or engage in aggressive promotional campaigns, which could result in lower ratings and advertising revenues or increased promotion and other expenses. Audience preferences as to format or programming may also shift due to demographic or other reasons. Any failure by the Company to respond, or to respond as quickly as its competitors, could have a material adverse effect on the Company's position in that market. The radio broadcasting industry is also subject to competition from new media technologies that are being developed or introduced, such as the delivery of audio programming by cable television systems, by satellite and by terrestrial delivery of digital audio broadcasting. The Federal Communications Commission (FCC) has recently authorized spectrum for the use of a new technology, satellite digital audio radio services, to deliver audio programming, has adopted licensing and operating rules for this service and has awarded two licenses. The FCC also has pending a proceeding in which it is considering whether, and under what circumstances, digital technology also may be used in the future by existing radio broadcast stations either on existing (a so-called "in-band on-channel" approach) or alternate broadcasting frequencies. The FCC also recently created a new "low power" FM radio service which could open up opportunities for low cost neighborhood service, although the FCC's action is being challenged through judicial and legislative initiatives. The delivery of information through the presently unregulated Internet could also create a new form of competition. The radio broadcasting industry historically has grown despite the introduction of new technologies for the delivery of entertainment and information. There can be no assurance, however, that the development or introduction in the future of any new media technology will not have an adverse effect on the radio broadcasting industry. OUTDOOR The Company's outdoor business competes in each of its markets with other outdoor advertising operations as well as with other media, such as broadcast and satellite-delivered television, radio, newspapers, magazines, cable television, the Internet and direct mail, within its respective markets. In addition, the Company also competes with a wide variety of out-of-home media, including advertising in shopping centers and malls, airports, stadiums, movie theaters and supermarkets, as well as on taxis, trains, buses and subways. Advertisers compare the effectiveness of relative costs of available media and cost-per-thousand impressions, particularly when delivering a message to customers with distinct demographic characteristics. In competing with other media, outdoor advertising relies on its low cost per-thousand impressions and its ability to reach a broad segment of the population in a specific market or to target a particular geographic area or population with a particular set of demographic characteristics within that market. The outdoor advertising industry consists of several large outdoor advertising and media companies with operations in multiple markets, as well as numerous smaller and local companies operating a limited number of structures in a single or a few local markets. In several of its markets, the Company encounters direct competition from other major outdoor media companies. The Company believes that its strong emphasis on sales and customer service and its position as a major provider of advertising services in each of its markets enable it to compete effectively with the other outdoor advertising companies, as well as other media, within those markets. INFINITY BROADCASTING CORPORATION 9 10 SEASONALITY Seasonal revenue fluctuations are common in the out-of-home media industry and are primarily the result of fluctuations in advertising expenditures by retailers. The Company's revenues are typically lowest in the first quarter and highest in the third and fourth quarters. EMPLOYEES As of December 31, 1999, the Company had 8,287 full-time employees and 2,675 part-time employees. Of the Company's full-time employees, 1,679 are represented by unions. The Company believes that its relations with its employees and their unions are generally satisfactory. The Company employs several high-profile on-air personalities with large loyal audiences in their respective markets. The Company generally enters into employment agreements with its on-air talent and commissioned sales representatives to protect its interests in those relationships that it believes to be valuable. GOVERNMENT REGULATION FEDERAL REGULATION OF RADIO BROADCASTING The ownership, operation and sale of radio stations are subject to the jurisdiction of the FCC, which acts under authority granted by the Communications Act of 1934, as amended (the Communications Act). Among other things, the FCC assigns frequency bands for broadcasting; determines the particular frequencies, locations and operating power of stations; issues, renews, revokes and modifies station licenses; determines whether to approve changes in ownership or control of station licenses; establishes technical requirements for certain transmitting equipment used by stations; and adopts and implements regulations and policies that directly or indirectly affect the ownership, operation and employment practices of stations. The FCC has the power to impose penalties for violation of its rules or the Communications Act, including the revocation of operating authority. The following is a brief summary of certain provisions of the Communications Act and of specific FCC regulations and policies. Reference should be made to the Communications Act, FCC rules and the public notices and rulings of the FCC for further information concerning the nature and extent of federal regulation of radio stations. FCC Licenses FCC licenses are issued for fixed terms of eight years. Generally, the FCC renews radio broadcast licenses without a hearing upon finding that: (i) the radio station has served the public interest, convenience and necessity; (ii) there have been no serious violations by the licensee of the Communications Act or FCC rules and regulations; and (iii) there have been no other violations by the licensee of the Communications Act or FCC rules and regulations that, taken together, indicate a pattern of abuse. After considering these factors, the FCC may grant the license renewal application with or without conditions, including renewal for a term lesser than the eight year maximum otherwise permitted, or hold an evidentiary hearing. In addition, the Communications Act authorizes the filing of petitions to deny a license renewal during specific periods of time after a renewal application has been filed. Interested parties, including members of the public, may use such petitions to raise issues concerning a renewal applicant's qualifications. If a substantial and material question of fact concerning a renewal application is raised by the FCC or other interested parties, or if for any reason the FCC cannot determine that the grant of the renewal application would serve the public interest, convenience and necessity, the FCC will hold an evidentiary hearing on the application. If as a result of an evidentiary hearing the FCC determines that the licensee has failed to meet the requirements specified above and that no mitigating factors justify the imposition of a lesser sanction, then the FCC may deny a license renewal application. Only after a license renewal application is denied will the FCC accept and consider competing applications for the vacated frequency. Historically, FCC licenses have generally been renewed. The Company has no reason to believe that its licenses will not be renewed in the ordinary course, although there can be no assurance to that effect. The non-renewal of the Company's licenses could have a material adverse effect on the Company. 10 INFINITY BROADCASTING CORPORATION 11 Ownership Matters The Communications Act prohibits the assignment of a broadcast license or the transfer of control of a broadcast licensee without the prior approval of the FCC. In determining whether to grant such approval, the FCC considers a number of factors pertaining to the proposed assignee or transferee, including compliance with the various rules limiting common ownership of media properties in a given market, the "character" of the proposed assignee or transferee and those persons holding "attributable" interests therein, and compliance with the Communications Act's limitations on alien ownership and other FCC policies, including recently adopted equal employment opportunity requirements. The Telecommunications Act of 1996 (Telecom Act) eliminated national limits on the ownership of AM and FM stations. Additionally, it established new local ownership rules that use a sliding scale of permissible ownership, depending on the number of radio stations in a certain FCC-defined market. The FCC also has an unpublished policy that involves special review and notice of proposed transactions if such transactions would enable a single owner or two owners to attain a high degree of revenue concentration in a market. CBS has received, in the past, numerous permanent and temporary conditional waivers to permit ownership of a television station and numerous radio stations in the same market. The temporary waivers were subject to the outcome of pending rulemaking proceedings focusing upon the possible relaxation of the FCC rule restricting common ownership in the same market of radio and television stations (formerly known as the "one-to-a-market" rule). In August 1999, the FCC adopted a radio/television cross-ownership rule, which allows a single party to own in a market: (a) up to two television stations (if permitted by the FCC's newly promulgated television duopoly rule) and up to six radio stations; or (b) one television station and seven radio stations, in both instances if sufficient market "voices" (which include independently owned television and radio stations as well as daily newspapers and cable television) exist. CBS demonstrated compliance with the new rule in all markets other than Los Angeles, Chicago and Dallas-Fort Worth, in each of which the Company has attributable interests in eight radio stations and CBS has interests in one television station, and in Washington, D.C./Baltimore, where CBS has attributable interests in one television station and the Company has attributable interests in (depending on how the FCC interprets its new rule) either eight or eleven radio stations. As to those four markets, the new rule provides that the FCC would continue the temporary waivers until 2004, at which time the FCC will review its radio/television cross-ownership rule, and CBS and the Company would have an opportunity to demonstrate that the continued ownership of radio stations in these markets in excess of the limits set by the rules would serve the public interest. In connection with the merger of Viacom Inc. (Viacom) and CBS, which was announced in September 1999, FCC approval has been requested for the transfer of control to Viacom of the television licenses held by CBS and the radio licenses currently held by the Company. It is likely that the combined company will be required to divest some of its broadcasting assets in order to obtain such FCC approval. In particular, the combined company would not be permitted to continue the temporary conditional waivers of the radio/television cross-ownership rule until 2004, and the addition of certain Viacom television stations would obligate the combined company to divest additional radio stations. In total, subject to clarification of the radio/television cross-ownership rule as it applies to circumstances in which radio stations are located in a separate Designated Market Area (DMA) from a commonly-owned television station, which is the case in Washington, D.C./Baltimore and Sacramento, the combined company may be required to divest as many as nine radio stations in order to comply with the radio/television cross-ownership rule. In order to consummate the Viacom/CBS merger on an orderly and timely basis, Viacom and CBS have requested a period of six months from consummation of the merger within which to achieve compliance with the radio/television cross-ownership rule. The FCC generally applies its ownership limits to "attributable" interests held by an individual, corporation, partnership or other association. In the case of corporations holding, or through subsidiaries controlling, broadcast licenses, the interests of officers, directors and those who, directly or indirectly, have the right to vote 5% or more of the corporation's voting stock (or 20% or more of such stock in the case of insurance companies, investment INFINITY BROADCASTING CORPORATION 11 12 companies and bank trust departments that are passive investors) are generally attributable. If a single individual or entity controls more than 50% of a corporation's outstanding voting stock, that individual or entity is viewed as a single majority stockholder; thus, the FCC views CBS as a single majority stockholder of the Company. In the case of a single majority stockholder, the interests of other stockholders are not attributable unless the stockholders are also officers or directors of the corporation or the new "equity/debt plus" rule applies, under which an otherwise nonattributable debt or equity interest will be deemed attributable where: (a) the interest holder is also a program supplier to the licensee in question or is a same market broadcaster or other media outlet subject to the broadcast cross-ownership rules, including newspaper and cable operators; and (b) the equity and/or debt holding exceeds 33 percent of the media outlet's total asset value. The Communications Act prohibits the issuance of broadcast licenses to, or the holding of broadcast licenses by, any corporation of which more than 20% of the capital stock is owned of record or voted by non-U.S. citizens or their representatives or by a foreign government or a representative thereof, or by any corporation organized under the laws of a foreign country. The Communications Act also authorizes the FCC, if the FCC determines that it would be in the public interest, to prohibit the issuance of a broadcast license to, or the holding of a broadcast license by, any corporation directly or indirectly controlled by any other corporation (such as CBS in the case of the Company) of which more than 25% of the capital stock is owned of record or voted by aliens. As a result of these provisions, the licenses granted to the Company by the FCC could be revoked if more than 20% of the Company's stock were directly or indirectly owned or voted by aliens or if more than 25% of CBS's stock were directly or indirectly held or voted by aliens. The Company's restated certificate restricts the ownership, voting and transfer of the Company's capital stock in accordance with the Communications Act and the rules of the FCC, and prohibits the issuance of more than 20% of the Company's outstanding capital stock (or more than 20% of the voting rights it represents) to or for the account of aliens. The restated certificate authorizes the Company's Board of Directors to enforce these prohibitions. In addition, the restated certificate provides that shares of capital stock of the Company determined by the Company's Board of Directors to be owned beneficially by an alien or an entity directly or indirectly owned by aliens in whole or in part shall be subject to redemption by the Company by action of the Board of Directors to the extent necessary, in the judgment of the Board of Directors, to comply with these alien ownership restrictions. Time Brokerage Agreements Over the past few years, a number of radio stations have entered into what have commonly been referred to as Time Brokerage Agreements (TBAs). One typical type of TBA, commonly referred to as a local marketing agreement (LMA), is a programming agreement between two separately owned radio stations serving a common service area, whereby the licensee of one station provides substantial portions of the broadcast programming for airing on the other licensee's station. The FCC's multiple ownership rules provide that a licensee or a radio station that brokers more than 15% of the weekly broadcast time on another station serving the same market will be considered to have an attributable ownership interest in the brokered station. The Company is party to one LMA, with a station in Buffalo, New York. The Company has entered into an agreement to acquire the Buffalo station and an application for FCC consent is pending. Programming and Operations The Communications Act requires broadcasters to serve the "public interest." A licensee is required to present programming that is responsive to significant issues facing the station's community of license and to maintain certain records demonstrating such responsiveness. Complaints from listeners concerning a station's programming often will be considered by the FCC when it evaluates renewal applications of a licensee; however, the FCC may consider listener complaints at any time, and such complaints are required to be maintained in the station's public file. Stations also must pay regulatory and application fees and follow various rules promulgated under the Communications Act that regulate, among other things, political advertising, sponsorship identifications, the advertisement of contests and lotteries, obscene and indecent broadcasts, and technical operations, including limits on human exposure to radio frequency radiation. In addition, the FCC engages in random audits to ensure and verify licensee compliance with various FCC rules and regulations. 12 INFINITY BROADCASTING CORPORATION 13 Failure to observe these or other rules and policies can result in the imposition of various sanctions, including monetary forfeitures, the grant of "short term" (less than the maximum eight-year term) license renewal, the imposition of a condition on the renewal of a license or, for particularly egregious violations, the denial of a license renewal application or the revocation of a license during the license term. Possible Changes Congress and the FCC have under consideration, and in the future may consider and adopt, new laws, regulations and policies regarding a wide variety of matters that could affect, directly or indirectly, the operation, ownership and profitability of the Company's radio stations, result in the loss of audience share and advertising revenues for the Company's radio stations, and affect the ability of the Company to acquire additional radio stations or to finance those acquisitions. For example, as required by the Telecom Act, the FCC has instituted a proceeding to investigate, among other things, the effect of the revised ownership rules for radio stations adopted in accordance with the Telecom Act, and the resulting consolidation in the radio industry, on the diversity of programming and ownership, and on programming and advertising competition. The FCC may conclude, as a consequence of this review, to modify the radio ownership rules. The Company cannot predict what other matters might be considered in the future by the FCC or Congress, nor can it judge in advance what impact, if any, the implementation of any of these proposals or changes might have on its business. OUTDOOR ADVERTISING The outdoor advertising industry is subject to extensive governmental regulation in the United States at the federal, state and local levels. These regulations include restrictions on the construction, repair, upgrading, height, size and location of and, in some instances, content of advertising copy being displayed on outdoor advertising structures. There are also significant legal and regulatory constraints on the use of outdoor advertising to advertise tobacco products. In addition, the outdoor advertising industry is subject to certain foreign governmental regulation. Federal law, principally the Highway Beautification Act of 1965 (Highway Beautification Act), encourages states, by the threat of withholding 10% of the federal appropriations for the construction and improvement of highways within such states, to implement state legislation to prohibit billboards located within 660 feet of, or visible from, interstate and primary highways, except in commercial or industrial areas where off-site signage is permitted provided it meets spacing and size restrictions. All of the states have implemented regulations at least as restrictive as the Highway Beautification Act. The Highway Beautification Act, and the various state statutes implementing it, requires payment of just compensation whenever governmental authorities require legally erected and maintained billboards to be removed from areas adjacent to federally-aided highways. The states and local jurisdictions have, in some cases, passed additional and more restrictive regulations on the construction, repair, upgrading, height, size and location of outdoor advertising structures adjacent to federally-aided highways and other thoroughfares. In some cases, the construction of new billboards or the relocation or modification of existing billboards is prohibited. From time to time, governmental authorities order the removal of billboards by the exercise of eminent domain. Thus far, the Company believes it has been able to obtain satisfactory compensation for its structures removed at the direction of governmental authorities, although there is no assurance that it will be able to continue to do so in the future. Outdoor advertising in Canada is subject to regulation at the federal, provincial and municipal levels. These regulations may prohibit advertising of certain products on outdoor signs in certain locations. For example, in Ontario, billboards and posters advertising liquor may not be placed within 200 meters of a primary or secondary school. Additionally, Canadian federal legislation was enacted in April 1997, which effectively prohibits substantially all outdoor tobacco brand advertising, other than event sponsorship, which was given a three year exemption that expires in October 2000. The tobacco industry continues to challenge this legislation. In addition, the placement of outdoor billboards is primarily regulated at the provincial and local level. For example, Quebec regulates the placement of advertising adjacent to highways, as well as the language used on outdoor signs. INFINITY BROADCASTING CORPORATION 13 14 In Mexico, there are no current regulations which limit the advertising of any product on outdoor signs. While the Company is not aware of any such legislation being proposed, there can be no assurance that legislation restricting the advertising of any specific product on outdoor signs will not be enacted in the future. In addition, the placement of outdoor billboards is primarily regulated at the local level. For example, Mexico City regulates the placement of billboards near historical monuments. To date, regulations in the Company's markets have not materially adversely affected its operations. However, the outdoor advertising industry is heavily regulated and at various times and in various markets can be expected to be subject to varying degrees of regulation affecting the operation of advertising displays. Accordingly, although the Company's experience to date is that the regulatory environment is not prohibitive, no assurance can be given that existing or future laws or regulations will not materially adversely affect the Company. ANTITRUST An element of the Company's growth strategy involves the acquisition of additional radio stations and outdoor advertising properties, many of which are likely to require antitrust review by the Federal Trade Commission (FTC) and the Department of Justice (DOJ) prior to such acquisition. Following passage of the Telecom Act, the DOJ has become more aggressive in reviewing proposed acquisitions of radio stations and radio station networks, particularly in instances where the proposed acquirer already owns one or more radio station properties in a particular market and the acquisition involves another radio station in the same market. In connection with certain recent acquisitions, the DOJ has obtained consent decrees requiring certain radio station divestitures in a particular market based on allegations that acquisitions would lead to unacceptable concentration levels. The DOJ has also been active in reviewing proposed acquisitions of outdoor advertising properties. There can be no assurance that the DOJ or the FTC will not seek to bar the Company from acquiring additional radio stations or other media-related and outdoor advertising properties in any market where the Company already has a significant position. In addition, to the extent the Company makes acquisitions of international broadcasting properties or display faces, the Company will also be subject to the antitrust laws of foreign jurisdictions. On December 6, 1999, CBS, Infinity and Outdoor Systems (the Parties) entered into a final judgment with the United States in connection with Infinity's acquisition of Outdoor Systems. Under the terms of the final judgment, the Parties must divest certain outdoor advertising properties, principally in the New York City area, in accordance with the terms and conditions of the final judgment. The Company does not view these divestitures as material to its business. ENVIRONMENTAL As the owner, lessee or operator of various real properties and facilities, the Company is subject to various federal, state and local environmental laws and regulations. Historically, compliance with such laws and regulations has not had a material adverse effect on the Company's business. There can be no assurance, however, that compliance with existing or new environmental laws and regulations will not require the Company to make significant expenditures in the future. ITEM 2. PROPERTIES. The Company's corporate headquarters are located in midtown Manhattan and are leased from third parties. The types of properties required to support each of the Company's radio stations include offices, studios, transmitter sites and antenna sites. A station's studios are generally housed with its offices in downtown or business districts. The transmitter sites and antenna sites are generally located so as to provide maximum market coverage. The majority of the Company's advertising display sites are leased. However, the Company owns parcels of real property that serve as sites for a few of its outdoor displays. In addition, the Company possesses perpetual easements on parcels of real property owned by third parties on which it has placed a few of its outdoor displays. The Company's transit displays are owned by the transit system or other franchisors and are managed by the Company pursuant to three to five year agreements. The Company's leases are for varying terms ranging from monthly or annual periods to terms of ten years or longer, and many provide for renewal options. There is no significant concentration of displays under any one lease or subject to negotiation with any one landlord. 14 INFINITY BROADCASTING CORPORATION 15 No one property is material to the Company's overall operations. The Company believes that its properties are in good condition and suitable for its operations; however, the Company continually looks for opportunities to upgrade its properties. The Company owns substantially all of the equipment used in its radio broadcasting business. ITEM 3. LEGAL PROCEEDINGS. The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company likely to have a material adverse effect on the Company. For a description of certain matters before the FCC, see "Government Regulation." ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. In October 1999, Infinity commenced a consent solicitation seeking approval by written consent of its stockholders to the issuance of shares of its Class A common stock in connection with the acquisition of Outdoor Systems. The consent solicitation closed on November 4, 1999 and resulted in 3,607,993,161 votes for; 133,466 votes against; and 51,023 abstentions recorded in connection with the consent to this proposal. INFINITY BROADCASTING CORPORATION 15 16 EXECUTIVE OFFICERS OF THE REGISTRANT The name, age and positions held during the past five years by each of the executive officers of the Company as of March 6, 2000 are listed below. Officers are elected annually by the Board of Directors and hold office until the earlier of his or her resignation or removal. There are no family relationships among any of the directors and the executive officers of the Company.
NAME AND POSITIONS AGE - ----------------------------------------------------------------- Mel Karmazin--Chairman, President and Chief Executive Officer 56 Farid Suleman--Executive Vice President, Chief Financial Officer and Treasurer 48 William M. Apfelbaum--Chairman and Chief Executive Officer, TDI Worldwide, Inc. (TDI) 53 Louis J. Briskman--Executive Vice President and General Counsel 51 Daniel R. Mason--President, Infinity Radio Group, and Vice President of the Company 48 Fredric G. Reynolds--Executive Vice President 49 - -----------------------------------------------------------------
Messrs. Karmazin and Suleman provide services to the Company pursuant to the terms of an intercompany agreement between the Company and CBS. Messrs. Karmazin and Suleman also render services to CBS. Mr. Karmazin has been Chairman, President and Chief Executive Officer of the Company since September 1998. He joined CBS (then Westinghouse Electric Corporation) in December 1996 as Chairman and Chief Executive Officer of CBS Radio. In May 1997, he also assumed responsibility for CBS's owned and operated television stations and became Chairman and Chief Executive Officer of the CBS Station Group. In April 1998, Mr. Karmazin was elected President and Chief Operating Officer of CBS, and became its Chief Executive Officer in January 1999. Prior to joining CBS, from 1981 until December 1996, Mr. Karmazin served as President and Chief Executive Officer of Infinity Media Corporation, formerly known as Infinity Broadcasting Corporation. Mr. Suleman has been Executive Vice President, Chief Financial Officer and Treasurer of the Company since September 1998. He joined CBS (then Westinghouse Electric Corporation) in December 1996 as Senior Vice President and Chief Financial Officer of CBS Radio. In June 1997, he became Senior Vice President and Chief Financial Officer of the CBS Station Group. In August 1998, Mr. Suleman was elected Senior Vice President, Finance of CBS and was elected Treasurer of CBS in May 1999. Prior to joining CBS, from 1986 until December 1996, Mr. Suleman served as Executive Vice President, Finance and Chief Financial Officer of Infinity Media Corporation, formerly known as Infinity Broadcasting Corporation. Mr. Suleman has also been the Executive Vice President, Chief Financial Officer and Secretary of Westwood One since February 1994. Mr. Apfelbaum has been Chairman and Chief Executive Officer of TDI since July 1999. Mr. Apfelbaum served as President and Chief Executive Officer of TDI from August 1989 to July 1999. Mr. Apfelbaum will leave his position, effective April 30, 2000, and will serve as a consultant to the Company. Mr. Briskman has been Executive Vice President and General Counsel of the Company since January 2000. He has also served as Executive Vice President and General Counsel of CBS since April 1998. Mr. Briskman served as Senior Vice President and General Counsel of CBS from January 1993 to April 1998. Mr. Mason has been Vice President of the Company since September 1998. He has been President of the Infinity Radio Group since November 1995. From 1993 to 1995, Mr. Mason served as President of Group W Radio. Mr. Reynolds has been Executive Vice President of the Company since January 2000. He has also served as Executive Vice President and Chief Financial Officer of CBS since March 1994. 16 INFINITY BROADCASTING CORPORATION 17 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. The principal markets for the Company's Class A common stock are identified on page 1 of this report. The remaining information required by this item appears on pages 37 and 38 of this report and is incorporated herein by reference. ITEM 6. SELECTED FINANCIAL DATA. The information required by this item appears on page 45 of this report and is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The information required by this item appears on pages 18 through 24 of this report and is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The information required by this item appears on page 23 of this report and is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this item, together with the report of KPMG LLP dated January 25, 2000, except as to Note 17, which is as of March 21, 2000, appears on pages 26 through 44 of this report and is incorporated herein by reference.
PAGE - ------------------------------------------------------------------ Report of Management 25 Independent Auditors' Report 26 Consolidated Statements of Earnings and Comprehensive Income for the years ended December 31, 1999, 1998 and 1997 27 Consolidated Balance Sheet as of December 31, 1999 and 1998 28 Consolidated Statement of Cash Flows for the years ended December 31, 1999, 1998 and 1997 29 Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 1999, 1998 and 1997 30 Notes to the Consolidated Financial Statements 31 Quarterly Financial Data (unaudited) 44 Five-Year Summary of Selected Financial and Statistical Data (unaudited) 45 - ------------------------------------------------------------------
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. There were no reportable events. INFINITY BROADCASTING CORPORATION 17 18 MANAGEMENT'S DISCUSSION AND ANALYSIS GENERAL Infinity Broadcasting Corporation (Infinity or the Company) is one of the largest radio broadcasting and outdoor advertising companies in the United States, as well as the largest outdoor advertising company in North America. The Company's operations are principally focused on the out-of-home media business and are aligned in two business segments, Radio and Outdoor. The Company characterizes its radio and outdoor advertising businesses as out-of-home because a majority of radio listening, and virtually all viewing of outdoor advertising, takes place in automobiles, transit systems, on the street and other locations outside the consumer's home. The Company's strategy is to generally acquire out-of-home media properties in the largest markets. Infinity was incorporated in September 1998. The Company was formed to own and operate CBS Corporation's (CBS) out-of-home media business, consisting of radio and outdoor advertising. In December 1998, CBS contributed to the Company, at book value, its radio and outdoor advertising properties. Also in December 1998, the Company completed an initial public offering of approximately 155 million shares of its Class A common stock (the IPO). The consolidated financial statements present Infinity's operations as if the Company had been a separate entity for all periods presented. In addition, any acquisitions of radio and outdoor advertising properties by CBS during these periods are deemed to have been made by Infinity. The consideration to effect the acquisitions has been treated as a capital contribution by CBS to Infinity. These acquisitions include: (a) the November 24, 1995 acquisition of the radio operations of CBS Inc. for approximately $1.2 billion of cash; (b) the December 31, 1996 acquisition of Infinity Media Corporation, formerly known as Infinity Broadcasting Corporation (Old Infinity), for approximately $4.7 billion, consisting of approximately $3.8 billion of CBS's common stock and approximately $0.9 billion of debt that was repaid immediately prior to the acquisition; and (c) the June 4, 1998 acquisition of the radio operations of American Radio Systems Corporation (American Radio), now known as CBS Radio Inc., for approximately $1.4 billion of cash plus the assumption of approximately $1.3 billion of debt. See Note 3 to the consolidated financial statements. In December 1999, the Company acquired Outdoor Systems, Inc. (Outdoor Systems), now known as Infinity Outdoor, Inc., making the Company the largest outdoor advertising company in North America. The total purchase price of approximately $8.7 billion was financed by the issuance of approximately 233 million shares of the Company's Class A common stock, and the assumption of approximately $1.9 billion of debt, at fair value, and stock options to acquire approximately 28 million shares of the Company's Class A common stock. Subsequent to the acquisition of Outdoor Systems, CBS's equity ownership and voting power were 64.3% and 90.0%, respectively, on a fully diluted basis. On December 6, 1999, CBS, Infinity and Outdoor Systems (the Parties) entered into a final judgment with the United States in connection with Infinity's acquisition of Outdoor Systems. Under the terms of the final judgment, the Parties must divest certain outdoor advertising properties, principally in the New York City area, in accordance with the terms and conditions of the final judgment. The Company does not view these divestitures as material to its business. On March 3, 2000, the Company entered into an Asset Purchase Agreement to acquire 18 radio stations from Clear Channel Communications, Inc. for approximately $1.4 billion. These stations are located in San Diego, Phoenix, Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The purchase allows Infinity to expand into five new Top 50 markets, giving the Company 180 radio stations overall. The transaction is subject to regulatory reviews and approvals, and is expected to close by year-end 2000. On March 21, 2000, the Company announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. This acquisition expands the Company's position in Europe. Upon the expected mid-year 2000 completion of the Giraudy acquisition, TDI Europe, the Company's European outdoor advertising subsidiary, will have rights to approximately 430,000 display faces. While the Company does not believe that it needs to make acquisitions to grow its business, it intends to pursue acquisition opportunities that would enable it to continue to compete effectively for advertising revenues and to increase its cash flow growth rate. As an experienced operator of out-of-home media properties, the Company believes that it will have opportuni- 18 INFINITY BROADCASTING CORPORATION 19 ties to acquire additional properties and to improve its operating performance. In general, the Company intends to pursue acquisitions of radio stations primarily in the 50 largest radio markets in the United States. This strategy may include acquiring radio stations in markets where the Company currently owns stations, as well as in markets in which the Company does not currently operate. The Company will also seek to acquire additional outdoor properties both in the United States and internationally. The consolidated historical financial information presented in this report is not necessarily indicative of the results of operations, financial position, and cash flows that would have resulted had the Company actually operated as a separate, stand-alone entity since January 1, 1995. SOURCES OF REVENUE The Company derives substantially all of its revenues from sales of advertising, either on its radio stations or on its outdoor advertising displays. The Company's revenues are affected primarily by the advertising rates the Company is able to charge. These rates are in large part based on conditions in the economy, conditions in each market, and on the Company's ability to attract audiences in the demographic groups targeted by its advertisers. The ability to attract radio audiences is measured principally by independent national rating services. COMPONENTS OF EXPENSES The primary operating expenses involved in owning and operating radio stations and outdoor advertising facilities are employee costs, programming, solicitation of advertising, promotion, franchise payments and lease costs. The Company's net earnings also reflect substantial amortization of broadcast licenses and goodwill as well as income taxes. In addition, the Company's effective tax rate exceeds the federal statutory rate primarily because of the non-deductible goodwill amortization resulting from recent business acquisitions. USE OF EBITDA Management believes that earnings before interest, taxes, minority interest, depreciation and amortization (EBITDA) is an appropriate measure for evaluating the operating performance of the Company's business. EBITDA eliminates the effect of depreciation and amortization of tangible and intangible assets, most of which were acquired in acquisitions accounted for under the purchase method of accounting, including CBS Inc.'s radio operations, Old Infinity, American Radio and Outdoor Systems. The exclusion of amortization expense eliminates variations in results among stations or other entities caused by the timing of acquisitions. More recent acquisitions reflect higher amortization expense due to increasing prices associated with out-of-home properties. However, EBITDA should be considered in addition to, not as a substitute for, operating earnings, net earnings, cash flows and other measures of financial performance reported in accordance with generally accepted accounting principles. As EBITDA is not a measure of performance calculated in accordance with generally accepted accounting principles, this measure may not be comparable to similarly titled measures employed by other companies. EBITDA differs from cash flows from operating activities primarily because it does not consider changes in assets and liabilities from period to period, and it does not include cash flows for interest and taxes. RESULTS OF OPERATIONS Where appropriate, the discussion below provides a comparison of actual results with pro forma results. For the 1999 and 1998 comparisons, pro forma results exclude the acquisition of Outdoor Systems and were determined as if the acquisition of American Radio and related divestitures and exchanges had occurred on January 1, 1998. YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998 The Company's net revenues for 1999 were $2,449 million compared to $1,893 million for 1998, an increase of 29%. Radio net revenues for 1999 were $1,835 million compared to $1,459 million for 1998, an increase of approximately 26%. This increase was due to the strong performance of the stations and the inclusion of the operations of American Radio in the Company's results subsequent to its June 1998 acquisition. Outdoor net revenues for 1999 were $614 million compared to $434 million for 1998, an increase of approximately 41%. Driving this increase was the strong performance of the Company's outdoor advertising business and the acquisition of Outdoor Systems in December 1999. On a pro forma basis, the Company's net revenues for 1999 compared to 1998 increased approximately 17%. The Company's operating expenses excluding depreciation and amortization expense for 1999 were $1,383 million compared to $1,101 million for 1998, INFINITY BROADCASTING CORPORATION 19 20 an increase of 26%. Radio operating expenses for 1999 were $917 million compared to $756 million for 1998, an increase of approximately 21%. Outdoor operating expenses for 1999 were $454 million compared to $338 million for 1998, an increase of approximately 34%. These increases were due to the June 1998 acquisition of American Radio, the December 1999 acquisition of Outdoor Systems and expenses associated with higher revenues. On a pro forma basis, the Company's operating expenses for 1999 compared to 1998 increased approximately 13%. Operating expenses on a pro forma basis did not increase in the same proportion as the increase in revenues because a substantial portion of the Company's costs are fixed. The Company's corporate expenses for 1999 were $12 million compared to $7 million for the prior year, an increase of $5 million, mainly due to higher compensation expense. The Company's depreciation and amortization expense for 1999 was $325 million compared to $250 million for 1998, an increase of 30%. Radio depreciation and amortization expense for 1999 was $267 million compared to $227 million for 1998, an increase of approximately 18%. The increase primarily represents additional depreciation and amortization expense resulting from the June 1998 acquisition of American Radio. Outdoor depreciation and amortization expense for 1999 was $58 million compared to $23 million for 1998, an increase of approximately 157% resulting primarily from the December 1999 acquisition of Outdoor Systems. These costs will continue to increase due to the recent acquisition of Outdoor Systems. The Company's operating earnings for 1999 were $741 million compared to $542 million for 1998, an increase of 37%. Radio operating earnings for 1999 were $651 million compared to $476 million for 1998, an increase of approximately 37%. Outdoor operating earnings for 1999 were $102 million compared to $73 million for 1998, an increase of approximately 41%. These increases were primarily attributable to higher revenues at the existing radio and outdoor operations, as well as the June 1998 acquisition of American Radio and the December 1999 acquisition of Outdoor Systems. On a pro forma basis, the Company's operating earnings for 1999 compared to 1998 increased approximately 34%. The Company's EBITDA for 1999 was $1,067 million compared to $798 million for 1998, an increase of 34%. Radio EBITDA for 1999 was $918 million compared to $709 million for 1998, an increase of approximately 29%. Outdoor EBITDA for 1999 was $161 million compared to $96 million for 1998, an increase of approximately 67%. On a pro forma basis, the Company's EBITDA for 1999 compared to 1998 increased approximately 23%. Net interest expense for 1999 was $16 million compared to $64 million for 1998. The reduction in net interest expense resulted primarily from the December 1998 repayment of the $2.5 billion note due CBS that was created in connection with a dividend from Old Infinity as well as the reduction in the debt assumed in the American Radio acquisition in June 1998. The decrease in net interest expense was offset by additional interest expense associated with debt assumed in the December 1999 acquisition of Outdoor Systems. As a result of the debt assumed in connection with the acquisition of Outdoor Systems, the Company expects an increase in future interest expense. See Note 9 to the consolidated financial statements. Income taxes for 1999 were $349 million compared to $249 million for 1998. The effective tax rate was 48% for 1999 compared to 51% for the prior year. Net earnings for 1999 totaled $377 million, or $0.44 per basic share, compared to $235 million, or $0.33 per basic share, for 1998, an increase of $142 million, or $0.11 per basic share. YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997 The Company's net revenues for 1998 were $1,893 million compared to $1,480 million for 1997, an increase of 28%. Radio net revenues for 1998 were $1,459 million compared to $1,104 million for 1997, an increase of approximately 32%. Driving this increase was the continued strong performance of the stations and the inclusion of the operations of American Radio in the Company's results subsequent to its June 1998 acquisition. Outdoor net revenues for 1998 were $434 million compared to $376 million for 1997, an increase of approximately 15%. Driving this increase was the strong performance of the Company's outdoor advertising business. On a pro forma basis, the Company's net revenues for 1998 compared to 1997 increased approximately 12%. The Company's operating expenses excluding depreciation and amortization expense for 1998 were $1,101 million compared to $911 million for 1997, an increase of 21%. Radio operating expenses for 1998 were $756 million compared to $600 million for 1997, an increase of approximately 26%. These increases were due to Radio's June 1998 acquisition of American Radio and expenses associated with higher 20 INFINITY BROADCASTING CORPORATION 21 revenues. Outdoor operating expenses for 1998 were $338 million compared to $303 million for 1997, an increase of approximately 12%. The Company's corporate expenses for 1998 were $7 million compared to $8 million for the prior year, a decrease of $1 million. This improvement was driven by the efforts to control overhead costs, including transaction processing and information systems costs. On a pro forma basis, the Company's operating expenses for 1998 compared to 1997 increased approximately 7%. Operating expenses on a pro forma basis did not increase in the same proportion as the increase in revenues because a substantial portion of the Company's costs are fixed. The Company's depreciation and amortization expense for 1998 was $250 million compared to $197 million for 1997, an increase of 27%. Radio depreciation and amortization expense for 1998 was $227 million compared to $176 million for 1997, an increase of approximately 29%. The increase primarily represents additional depreciation and amortization expense resulting from the June 1998 acquisition of American Radio. Outdoor depreciation and amortization expense for 1998 was $23 million compared to $21 million for 1997, an increase of approximately 9%. The Company's operating earnings for 1998 were $542 million compared to $372 million for 1997, an increase of 46%. Radio operating earnings for 1998 were $476 million compared to $328 million for 1997, an increase of approximately 45%. Outdoor operating earnings for 1998 were $73 million compared to $52 million for 1997, an increase of approximately 39%. These increases were primarily attributable to higher revenues at the existing radio and outdoor operations, as well as the June 1998 acquisition of American Radio. On a pro forma basis, the Company's operating earnings for 1998 compared to 1997 increased approximately 36%. The Company's EBITDA for 1998 was $798 million compared to $575 million for 1997, an increase of 39%. Radio EBITDA for 1998 was $709 million compared to $510 million for 1997, an increase of approximately 39%. Outdoor EBITDA for 1998 was $96 million compared to $73 million for 1997, an increase of approximately 31%. On a pro forma basis, the Company's EBITDA for 1998 compared to 1997 increased approximately 21%. Net interest expense for 1998 was $64 million compared to $4 million for 1997. Net interest expense for 1998 resulted from debt assumed in the American Radio acquisition and interest on a $2.5 billion note due CBS that was created in connection with a dividend from Old Infinity to CBS and repaid in December 1998 with the proceeds from the stock offering (see Note 9 to the consolidated financial statements). Net interest expense for 1997 primarily represents interest on $149 million of notes issued by Old Infinity prior to its acquisition, which were redeemed by the Company in March 1997. Income taxes for 1998 were $249 million compared to $197 million for 1997. The effective tax rate was 51% for 1998 compared to 53% for the prior year. Net earnings for 1998 totaled $235 million, or $0.33 per basic share, compared to $178 million, or $0.25 per basic share, for 1997, an increase of $57 million, or $0.08 per basic share. NEW PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative Instruments and Hedging Activities." In June 1999, SFAS 133 was amended by SFAS 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of Effective Date of FASB Statement No. 133," which delays the effective date for adoption of SFAS No. 133 for one year, to fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. The Company's derivative and hedging transactions are not material and it is anticipated that adoption of this standard will not materially impact our financial results when adopted January 1, 2001. LIQUIDITY AND CAPITAL RESOURCES In general, the Company's operations generate cash substantially in excess of that required for recurring operations and capital expenditures. At December 31, 1999, the Company had approximately $1.9 billion of long-term debt outstanding, substantially all of which was assumed in the December 1999 acquisition of Outdoor Systems and the June 1998 acquisition of American Radio. The Company's equity at year-end 1999 totaled approximately $15.6 billion. As a result, management expects that the Company will have sufficient liquidity to meet its future business needs. Sources of liquidity generally available to the Company include cash from operations, cash and cash equivalents, borrowings, and issuance of equity securities. INFINITY BROADCASTING CORPORATION 21 22 In December 1999, the Company acquired Outdoor Systems for approximately $8.7 billion. The purchase price included the issuance of approximately 233 million shares of the Company's Class A common stock, and the assumption of approximately $1.9 billion of debt, at fair value, and stock options to acquire approximately 28 million shares of the Company's Class A common stock. In December 1998, the Company completed its IPO, resulting in gross proceeds to the Company of approximately $3.2 billion. The Company used the proceeds to prepay a $2.5 billion intercompany note to CBS, to purchase some of its outstanding debt, and for general corporate purposes. OPERATING ACTIVITIES The Company's operating activities provided $652 million of cash in 1999 compared to $442 million in 1998 and $310 million in 1997. The year to year increases relate to improved operating results and cash provided from the operations of American Radio, purchased in June 1998, and Outdoor Systems, purchased in December 1999. INVESTING ACTIVITIES The Company's investing activities used $155 million of cash in 1999 as a result of the net impact of acquisitions, divestitures and capital expenditures. During 1998, the Company's investing activities used approximately $1.4 billion of cash, primarily for the June 1998 acquisition of American Radio, compared to $22 million of cash provided in 1997. The Company's capital expenditures totaled $44 million in 1999 compared to $32 million in 1998 and $15 million in 1997. The Company's business does not require substantial investment of capital. The increase in capital expenditures during 1999 and 1998 was due to the Company's June 1998 acquisition of American Radio and December 1999 acquisition of Outdoor Systems. As a result of the Outdoor Systems acquisition, the Company expects capital expenditures to increase in future periods. FINANCING ACTIVITIES Cash used by financing activities totaled $923 million in 1999 compared to cash provided from financing activities of approximately $1.4 billion in 1998. Cash used for financing activities in 1999 related to the Company's repurchase of its Class A common stock and the purchase of its outstanding debt. During 1999, the Company, pursuant to a $500 million stock buyback authorization, acquired approximately 17.6 million shares of its Class A common stock at a cost of $485 million. In January 2000, the Company expanded its stock buyback authorization by an additional $500 million. As of March 20, 2000, the Company has purchased approximately 4.7 million additional shares at a cost of $156 million. The Company's revolving credit agreement provides for $1.5 billion of available borrowings. Infinity's borrowings are guaranteed by CBS. Borrowing availability under the credit agreement is subject to compliance with certain covenants, including a maximum leverage ratio and a minimum interest coverage ratio. In December 1999, the Company assumed approximately $1.9 billion in debt as part of the Outdoor Systems acquisition, comprised of revolving credit debt of approximately $1.1 billion and Senior Subordinated Notes (8 7/8% Notes and 9 3/8% Notes) of approximately $0.8 billion. At December 31, 1999, the Company had borrowings under the credit facility of $988 million, of which $38 million were short-term. These borrowings were principally from the refinancing of debt assumed in the Outdoor Systems acquisition. During 1999, the Company repurchased at market rates, certain outstanding 8 7/8%, 9% and 9 3/8% Senior Subordinated Notes, 9 3/4% Senior Notes and 11 3/8% Subordinated Exchange Debentures with an aggregate face value of $272 million, at a cost of $294 million. Additionally during 1999, the Company redeemed the remaining 7% Convertible Subordinated Debentures with a face value of $76 million, at a cost of $79 million. As previously discussed, on March 3, 2000, the Company entered into an Asset Purchase Agreement to acquire 18 radio stations from Clear Channel Communications, Inc. for approximately $1.4 billion. On March 21, 2000, the Company announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. The Company plans to finance these acquisitions with excess cash from operations and by executing a credit facility which will increase its borrowing availability by $2.0 billion. Cash provided by financing activities totaled approximately $1.4 billion in 1998 compared to cash used of $329 million in 1997. The Company's IPO generated gross proceeds of approximately $3.2 billion. Offsetting this amount was $2.5 billion of cash used to 22 INFINITY BROADCASTING CORPORATION 23 prepay the intercompany note to CBS. During the year, CBS contributed approximately $1.7 billion of cash to Infinity, of which approximately $1.4 billion was in connection with the American Radio acquisition. Also during 1998, the Company repaid $784 million of debt, including $567 million for the revolving credit debt assumed in the American Radio acquisition. Cash used by financing activities of $329 million during 1997 reflects the repayment of Old Infinity debt as well as $180 million of net payments to CBS as the Company generated cash earnings. Generally, the Company's excess cash can be distributed to shareholders, including CBS, through dividend declarations. However, the Company does not anticipate paying any dividends on its common stock in the near term. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to market risk from changes in interest rates and foreign exchange rates. To manage this exposure, the Company periodically enters into interest rate and currency exchange agreements. The Company does not use financial instruments for trading purposes and the Company is not a party to any leveraged derivatives. At December 31, 1999, the Company's long-term debt was approximately $1.9 billion, of which $888 million was fixed-rate debt. The fair value of the Company's fixed-rate debt was approximately $978 million. A 1% decrease in interest rates would increase the fair value of the Company's fixed-rate debt by approximately $30 million. Based on the balance of variable-rate debt at December 31, 1999, a 1% increase in interest rates would increase annual interest expense by approximately $10 million. At December 31, 1998, the Company's debt was $525 million, essentially all of which consisted of fixed-rate obligations. The fair value of the Company's debt at December 31, 1998 was approximately $527 million. At December 31, 1999, the Company had variable-to-fixed interest rate swap contracts outstanding with a notional value of $775 million. The swap contracts expire within three months. The fair value of these swaps at December 31, 1999, was not material. At December 31, 1998, no interest rate swap contracts were outstanding. The Company continually monitors its economic exposure to changes in foreign exchange rates and enters into foreign exchange forward contracts to hedge its transaction exposure where appropriate. Foreign exchange forward contracts are used to manage certain of these risks, specifically with respect to the Canadian dollar. These contracts generally mature in less than six months. At December 31, 1999 and 1998, the notional amount of forward contracts was $91 million and $0 million, respectively. A 10% change in Canadian dollar exchange rates in the Company's portfolio would not be material. The Company's credit exposure under these agreements is limited to the cost of replacing an agreement in the event of non-performance by the Company's counterparty. To minimize this risk, the Company selects high credit quality counterparties. For further information regarding our debt and financial instruments, see Notes 9 and 15 to the consolidated financial statements. YEAR 2000 The Company has not experienced any significant disruptions to its financial or operating activities caused by the failure of its computerized systems resulting from Year 2000 issues. In addressing this matter, the Company had undertaken efforts to identify, modify or replace and then test systems to ensure Year 2000 compliance by December 31, 1999. Total expenditures of $5 million were necessary to achieve Year 2000 compliance, of which $3 million was incurred in 1999 and $2 million was incurred through December 31, 1998. CBS has incurred an additional $2 million on behalf of the Company to ensure compliance of the management information systems infrastructure. Approximately 60% of these expenditures related to the replacement of existing systems. These costs were funded through the Company's cash flows from operations. All system modification costs were expensed as incurred. The Year 2000 effort also included communications with all significant third party suppliers and customers to determine the extent to which the Company's systems were vulnerable to those parties' failures to reach Year 2000 compliance. There has been no significant loss of revenue, unanticipated costs or service interruptions. INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K, including Item 7--"Management's Discussion and Analysis of Financial Condition and Results of Operations," contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of INFINITY BROADCASTING CORPORATION 23 24 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are not historical facts but rather reflect the Company's current expectations concerning future results and events. The words "believes," "expects," "intends," "plans," "anticipates," "likely," "will," and similar expressions identify such forward-looking statements. These forward-looking statements are subject to risks, uncertainties, and other factors, some of which are beyond the Company's control, that could cause actual results to differ materially from those forecast or anticipated in such forward-looking statements. Such risks, uncertainties, and factors include, but are not limited to, the impact of changes in national, regional and local economies; successful integration of any acquired properties; the Company's ability to develop and/or acquire radio on-air talent and programming and to attract and retain advertisers; the impact of significant competition from other radio stations and programming alternatives such as broadcast television, newspapers, magazines, cable television, the Internet, direct mail, and the impact of new technologies; changes in FCC regulations; increased governmental regulation of the location, size or content of outdoor advertising; and such other competitive and business risks as from time to time may be detailed in the Company's Securities and Exchange Commission reports. Readers are cautioned not to place undue reliance on these forward-looking statements which reflect management's view only as of the date of this Annual Report. The Company undertakes no obligation to publicly release the result of any revisions to these forward-looking statements which may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events. 24 INFINITY BROADCASTING CORPORATION 25 REPORT OF MANAGEMENT The Company has prepared the consolidated financial statements and related financial information included in this report. Management has the primary responsibility for the consolidated financial statements and other financial information and for ascertaining that the data fairly reflect the financial position, results of operations, and cash flows of the Company. The consolidated financial statements were prepared in accordance with generally accepted accounting principles appropriate in the circumstances, and necessarily include amounts that are based on best estimates and judgments with appropriate consideration given to materiality. Financial information included elsewhere in this report is presented on a basis consistent with the consolidated financial statements. The Company maintains a system of internal accounting controls, supported by adequate documentation, to provide reasonable assurance that assets are safeguarded and that the books and records reflect the authorized transactions of the Company. Limitations exist in any system of internal accounting controls based on the recognition that the cost of the system should not exceed the benefits derived. The Company believes its system of internal accounting controls appropriately balances the cost/benefit relationship. The independent auditors provide an objective assessment of the degree to which management meets its responsibility for fair financial reporting. They regularly evaluate elements of the internal control structure and perform such tests and procedures as they deem necessary to express an opinion on the fairness of the financial statements. The Board of Directors pursues its responsibility for the Company's financial statements through its Audit Committee composed of directors who are not officers or employees of the Company. The Audit Committee meets regularly with the independent auditors, management, and the corporate auditors. The independent auditors and the corporate auditors have direct access to the Audit Committee, with and without the presence of management representatives, to discuss the scope and results of their audit work and their comments on the adequacy of internal accounting controls and the quality of financial reporting. We believe that the Company's policies and procedures, including its system of internal accounting controls, provide reasonable assurance that the financial statements are prepared in accordance with the applicable securities laws and with a corresponding standard of business conduct. INFINITY BROADCASTING CORPORATION 25 26 INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF INFINITY BROADCASTING CORPORATION: We have audited the accompanying consolidated balance sheet of Infinity Broadcasting Corporation and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings and comprehensive income, cash flows, and changes in stockholders' equity for each of the years in the three-year period ended December 31, 1999. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Infinity Broadcasting Corporation and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. /s/ KPMG LLP KPMG LLP New York, New York January 25, 2000, except as to Note 17, which is as of March 21, 2000 26 INFINITY BROADCASTING CORPORATION 27 CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (in thousands except earnings per-share amounts)
YEAR ENDED DECEMBER 31, 1999 1998 1997 - --------------------------------------------------------------------------------------------------- Total revenues $2,790,571 $2,162,063 $1,691,517 Less agency commissions (341,439) (268,959) (211,426) - --------------------------------------------------------------------------------------------------- Net revenues 2,449,132 1,893,104 1,480,091 - --------------------------------------------------------------------------------------------------- Operating expenses excluding depreciation and amortization 1,383,010 1,101,562 910,682 Depreciation and amortization 324,956 249,652 197,135 - --------------------------------------------------------------------------------------------------- Total operating expenses 1,707,966 1,351,214 1,107,817 - --------------------------------------------------------------------------------------------------- Operating earnings 741,166 541,890 372,274 Interest expense, net (15,540) (63,773) (3,645) Other income, net 500 6,324 5,610 - --------------------------------------------------------------------------------------------------- Earnings before income taxes and minority interest 726,126 484,441 374,239 Income taxes (349,146) (248,776) (196,978) Minority interest in (income) loss of consolidated subsidiaries (16) (859) 368 - --------------------------------------------------------------------------------------------------- Net earnings $ 376,964 $ 234,806 $ 177,629 - --------------------------------------------------------------------------------------------------- Basic earnings per common share $ 0.44 $ 0.33 $ 0.25 Diluted earnings per common share $ 0.43 $ 0.33 $ 0.25 - --------------------------------------------------------------------------------------------------- Weighed average common shares outstanding -- Basic 866,553 706,379 700,000 Diluted 867,972 706,379 700,000 - --------------------------------------------------------------------------------------------------- COMPREHENSIVE INCOME: Net earnings $ 376,964 $ 234,806 $ 177,629 Foreign currency translation adjustment (13,300) -- -- - --------------------------------------------------------------------------------------------------- Comprehensive income $ 363,664 $ 234,806 $ 177,629 - ---------------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements. INFINITY BROADCASTING CORPORATION 27 28 CONSOLIDATED BALANCE SHEET (in thousands except per-share amounts)
DECEMBER 31, 1999 1998 - ------------------------------------------------------------------------------------------ ASSETS: Cash and cash equivalents $ 71,636 $ 497,701 Receivables (net of allowance for doubtful accounts of $48,868 and $27,463, respectively) 748,622 460,966 Prepaid and other current assets 108,846 39,206 Deferred income taxes 44,017 19,641 - ------------------------------------------------------------------------------------------ Total current assets 973,121 1,017,514 Property and equipment, net 2,091,735 236,584 Intangible assets, net 15,927,693 9,359,170 Other assets 334,906 184,975 - ------------------------------------------------------------------------------------------ Total assets $19,327,455 $10,798,243 - ------------------------------------------------------------------------------------------ LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses $ 314,014 $ 176,430 Accrued compensation 69,170 39,750 Accrued interest 17,112 12,113 Accrued income taxes 12,192 3,000 Short-term debt 38,000 -- Other current liabilities 943 647 - ------------------------------------------------------------------------------------------ Total current liabilities 451,431 231,940 Long-term debt 1,906,348 523,960 Deferred income taxes 1,313,398 1,156,244 Other noncurrent liabilities 65,236 28,072 - ------------------------------------------------------------------------------------------ Total liabilities 3,736,413 1,940,216 - ------------------------------------------------------------------------------------------ Contingent liabilities and other commitments - ------------------------------------------------------------------------------------------ Stockholders' equity: Preferred stock, par value $0.01 (50,000 shares authorized, no shares issued) -- -- Class A common stock, par value $0.01 (2,000,000 shares authorized, 390,709 and 155,250 shares issued at December 31, 1999 and 1998, respectively) 3,907 1,553 Class B common stock, par value $0.01 (2,000,000 shares authorized, 700,000 shares issued at December 31, 1999 and 1998, respectively) 7,000 7,000 Capital in excess of par value 15,657,734 8,805,448 Accumulated earnings 420,990 44,026 Accumulated other comprehensive loss (13,300) -- - ------------------------------------------------------------------------------------------ 16,076,331 8,858,027 Less: Common stock held in treasury, at cost (17,636 shares and zero shares held in treasury at December 31, 1999 and 1998, respectively) (485,289) -- - ------------------------------------------------------------------------------------------ Total stockholders' equity 15,591,042 8,858,027 - ------------------------------------------------------------------------------------------ Total liabilities and stockholders' equity $19,327,455 $10,798,243 - ------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements. 28 INFINITY BROADCASTING CORPORATION 29 CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands)
YEAR ENDED DECEMBER 31, 1999 1998 1997 - -------------------------------------------------------------------------------------------------------- Cash flows from operating activities: Net earnings $ 376,964 $ 234,806 $ 177,629 Adjustments to reconcile net earnings to net cash provided by operating activities: Depreciation and amortization 324,956 249,652 197,135 Deferred taxes 15,122 12,156 13,883 Gain on sales of assets, net -- (3,703) (3,584) Other noncash items (6,241) (6,970) -- Changes in assets and liabilities, net of acquisitions and dispositions: Increase in accounts receivable (94,068) (37,695) (35,382) (Increase) decrease in other assets (30,861) 14,120 (14,924) Increase (decrease) in accounts payable and accrued expenses 57,721 (7,633) (11,459) (Decrease) increase in accrued interest (19,279) 5,210 (3,858) Increase in accrued income taxes payable 30,511 3,000 -- Decrease in other liabilities (2,937) (20,940) (9,176) - -------------------------------------------------------------------------------------------------------- Net cash provided by operating activities 651,888 442,003 310,264 - -------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Proceeds from dispositions 58,750 138,731 87,475 Business acquisitions and investments (169,364) (1,509,634) (50,341) Capital expenditures (44,076) (31,717) (15,264) - -------------------------------------------------------------------------------------------------------- Net cash (used for) provided by investing activities (154,690) (1,402,620) 21,870 - -------------------------------------------------------------------------------------------------------- Cash flows from financing activities: Receipts from (payments to) CBS, net -- 1,698,429 (179,563) Repayment of CBS note -- (2,500,000) -- Dividends paid to CBS -- (25,200) -- Net proceeds from issuance of common stock -- 3,046,652 -- Net increase in short-term debt 38,000 -- -- Bank revolver borrowings 963,000 -- -- Bank revolver payments (13,000) -- -- Outdoor Systems bank revolver payments (1,054,162) -- -- Payment of notes and convertible debentures (373,007) (784,085) (149,931) Treasury stock repurchase (485,289) -- -- Proceeds from exercise of stock options 1,195 -- -- - -------------------------------------------------------------------------------------------------------- Net cash (used for) provided by financing activities (923,263) 1,435,796 (329,494) - -------------------------------------------------------------------------------------------------------- (Decrease) increase in cash and cash equivalents (426,065) 475,179 2,640 Cash and cash equivalents at beginning of year 497,701 22,522 19,882 - -------------------------------------------------------------------------------------------------------- Cash and cash equivalents at end of year $ 71,636 $ 497,701 $ 22,522 - -------------------------------------------------------------------------------------------------------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the year for: Interest $ 57,266 $ 67,974 $ 9,058 Income taxes 305,756 233,905 163,720 - --------------------------------------------------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements. INFINITY BROADCASTING CORPORATION 29 30 CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (in thousands)
CLASS A CLASS B ACCUMULATED PREFERRED STOCK COMMON STOCK COMMON STOCK CAPITAL IN OTHER --------------- ---------------- ---------------- EXCESS OF ACCUMULATED COMPREHENSIVE SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS LOSS - -------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1996 -- $ -- -- $ -- -- $ -- $ 6,216,175 $202,526 $ -- Net earnings 177,629 Contribution to prepay long-term debt 149,931 Cash from operations returned to CBS (329,493) Other intercompany activity, net (19,380) - -------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1997 -- $ -- -- $ -- -- $ -- $ 6,017,233 $380,155 $ -- Net earnings 234,806 Contribution for American Radio acquisition 1,400,000 Contribution to repay American Radio credit facility 566,576 Contribution to repay American Radio long-term debt 71,096 Dividends paid to CBS (1,954,265) (570,935) Issuance of Class A common stock 155,250 1,553 3,045,099 Issuance of Class B common stock 700,000 7,000 (7,000) Cash from operations returned to CBS (335,680) Other intercompany activity, net 2,389 - -------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1998 -- $ -- 155,250 $1,553 700,000 $7,000 $ 8,805,448 $ 44,026 $ -- Net earnings 376,964 Stock issued in conjunction with acquisition 234,735 2,347 6,770,511 Purchase of treasury stock Exercise of options, net of related tax benefit 724 7 12,571 Gain on equity method investment, net of related tax benefit 69,204 Comprehensive income: Foreign currency translation adjustment (13,300) - -------------------------------------------------------------------------------------------------------------------------------- Balance at December 31, 1999 -- $ -- 390,709 $3,907 700,000 $7,000 $15,657,734 $420,990 $(13,300) - -------------------------------------------------------------------------------------------------------------------------------- COMMON TOTAL STOCK HELD STOCKHOLDERS' IN TREASURY EQUITY Balance at December 31, 1996 $ -- $ 6,418,701 Net earnings 177,629 Contribution to prepay long-term debt 149,931 Cash from operations returned to CBS (329,493) Other intercompany activity, net (19,380) - ----------------------------------------------------------------- Balance at December 31, 1997 $ -- $ 6,397,388 Net earnings 234,806 Contribution for American Radio acquisition 1,400,000 Contribution to repay American Radio credit facility 566,576 Contribution to repay American Radio long-term debt 71,096 Dividends paid to CBS (2,525,200) Issuance of Class A common stock 3,046,652 Issuance of Class B common stock -- Cash from operations returned to CBS (335,680) Other intercompany activity, net 2,389 - ----------------------------------------------------------------- Balance at December 31, 1998 $ -- $ 8,858,027 Net earnings 376,964 Stock issued in conjunction with acquisition 6,772,858 Purchase of treasury stock (485,289) (485,289) Exercise of options, net of related tax benefit 12,578 Gain on equity method investment, net of related tax benefit 69,204 Comprehensive income: Foreign currency translation adjustment (13,300) - ----------------------------------------------------------------- Balance at December 31, 1999 $(485,289) $15,591,042 - -----------------------------------------------------------------
See accompanying Notes to the Consolidated Financial Statements. 30 INFINITY BROADCASTING CORPORATION 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1: BASIS OF PRESENTATION Infinity Broadcasting Corporation (Infinity or the Company) was incorporated in September 1998. The Company was formed to own and operate CBS Corporation's (CBS) out-of-home media business, consisting of radio and outdoor advertising. In December 1998, CBS contributed to the Company, at book value, its radio and outdoor advertising properties and related assets. The Company completed an initial public offering of approximately 155 million shares of its Class A common stock in December 1998 (the IPO). The consolidated financial statements have been prepared assuming that the Company existed as a stand-alone entity during all periods presented. Any acquisitions of radio or outdoor advertising properties by CBS during this period have been presented as the Company's transactions, and any consideration to effect these acquisitions has been treated as a capital contribution by CBS to the Company. These acquisitions include: (a) the radio operations of CBS Inc. in November 1995; (b) Infinity Media Corporation (formerly Infinity Broadcasting Corporation) and subsidiaries, which include TDI Worldwide Inc. (TDI), (collectively, Old Infinity) on December 31, 1996; and (c) the radio operations of American Radio Systems Corporation (American Radio), now known as CBS Radio Inc., on June 4, 1998. The operating results of the acquired entities have been included in the Company's Consolidated Statements of Earnings and Comprehensive Income from their respective dates of acquisition. See Note 3 to the consolidated financial statements. The financial information included herein may not necessarily reflect the consolidated results of operations, financial position, changes in stockholders' equity, and cash flows of the Company in the future or what they would have been had the Company been a separate, stand-alone entity during the periods presented. Certain previously reported amounts have been reclassified to conform to the 1999 presentation. NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the net assets and entities described in Note 1 to the consolidated financial statements. All material intercompany accounts and transactions have been eliminated. Equity method investments are stated at their cost of acquisition adjusted for our equity in undistributed net income (loss) since the date of acquisition. REVENUE RECOGNITION Revenues are primarily derived from the sale of radio advertising spots and outdoor advertising space. Radio advertising revenue is recognized when the spots are broadcast. Revenues from outdoor advertising space are recognized proportionately over the contract term. STOCK-BASED COMPENSATION The Company measures compensation cost for stock-based awards, including awards by CBS, using the intrinsic value based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25, "Accounting for Stock Issued to Employees." The pro forma net earnings and pro forma earnings per share disclosures using the fair value based method defined in Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation," and other related information are provided in Note 13 to the consolidated financial statements. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost and depreciated over their estimated useful lives. Depreciation is generally computed on the straight-line method based on useful lives of 27.5 to 40 years for buildings, 20 years for land improvements, 5 to 20 years for advertising structures and 3 to 12 years for equipment. Leasehold improvements are amortized over the shorter of the useful life or the term of the lease. Expenditures for additions and improvements are capitalized, and costs for repairs and maintenance are charged to operations as incurred. CASH AND CASH EQUIVALENTS The Company considers all investment securities with a maturity of three months or less when acquired to be cash equivalents. All cash and temporary investments are placed with high credit quality financial institutions, and the amount of credit exposure to any one financial institution is limited. INFINITY BROADCASTING CORPORATION 31 32 INTANGIBLE ASSETS Intangible assets primarily include goodwill, Federal Communications Commission (FCC) licenses, which are limited as to availability and have historically appreciated in value with the passage of time, and franchise agreements, which include transit franchise and other land rights. Goodwill represents the excess of the purchase price of acquired businesses over the estimated fair value of tangible and identifiable intangible net assets acquired. FCC licenses and goodwill are amortized using the straight-line method over 20 to 40 years. Franchise agreements are amortized over the anticipated life of the contract, which is between 20 to 25 years. Subsequent to the acquisition of an intangible or other long-lived asset, the Company evaluates whether later events and circumstances indicate the remaining estimated useful life of that asset may warrant revision or that the remaining carrying value of such asset may not be recoverable. When factors indicate that an intangible or other long-lived asset should be evaluated for possible impairment, the Company uses an estimate of the related asset's undiscounted future cash flows over the remaining life of that asset in measuring recoverability. If such an analysis indicates that impairment has in fact occurred, the Company writes down the book value of the intangible or other long-lived asset to its fair value, generally measured by discounted future cash flows. FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments is determined by the Company using the available market information and appropriate valuation methodologies. Accordingly, the estimates are not necessarily indicative of the amounts that the Company could realize in a current market exchange or the value that ultimately will be realized by the Company upon maturity or disposition. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. INCOME TAXES Income taxes are provided using the asset and liability method in accordance with SFAS No. 109, "Accounting for Income Taxes." Deferred tax assets and liabilities are recognized based on differences between book and tax basis of assets and liabilities using presently enacted tax rates. The provision for income taxes is the sum of the amount of income taxes paid or payable for the year as determined by applying the provisions of enacted tax laws to taxable income for that year and the net changes during the year in the Company's deferred tax assets and liabilities other than changes arising from acquisitions and dispositions. The Company has entered into a tax sharing agreement with CBS (the Tax Sharing Agreement) (see Note 14 to the consolidated financial statements). Prior to the Company's December 1998 initial public offering, current taxes payable were paid immediately through contributed capital. Subsequent to the initial public offering, the Company reimburses CBS as if it were a stand-alone taxpayer, based upon the terms of the Tax Sharing Agreement. During 1999, the Company paid to CBS $290 million for federal and state income and franchise taxes calculated on a stand-alone basis. Through December 7, 1999, the Company was included as part of CBS's consolidated federal income tax return. The Company has provided for income taxes as if it were a stand-alone taxpayer in accordance with SFAS 109. As a result of the dilution of CBS's ownership interest in Infinity caused by the issuance of shares to acquire Outdoor Systems, Inc. (Outdoor Systems), now known as Infinity Outdoor, Inc., Infinity and CBS will no longer be permitted to file consolidated federal tax returns. Subsequent to December 7, 1999, the Company will file a separate consolidated federal tax return. The Company will continue to be consolidated or combined with CBS in state filings, where applicable. EARNINGS PER SHARE The earnings per share have been presented assuming that 700 million shares of Class B common stock were outstanding for all periods presented prior to the Company's IPO. For the year ended December 31, 1999, basic and fully diluted weighted average shares outstanding totaled approximately 867 million and 868 million, respectively. The difference between basic and fully diluted weighted average shares outstanding relates to the dilutive effect of stock options. Basic and fully diluted weighted average shares outstanding totaled approximately 706 million at December 31, 1998. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the 32 INFINITY BROADCASTING CORPORATION 33 date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. On an ongoing basis, management reviews its estimates, including those related to intangible assets, program rights, contracts, allowances for doubtful accounts, income taxes and litigation based on currently available information. Changes in facts and circumstances may result in revised estimates. SUBSIDIARY STOCK TRANSACTIONS Gains and losses on subsidiary and equity investee stock transactions are recognized directly in stockholders' equity through an increase or decrease to capital in excess of par value in the period in which the transaction occurs. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments are used, from time to time, to manage interest rate and foreign currency exchange risks. The Company does not use financial instruments for trading or speculative purposes and the Company is not a party to any leveraged derivatives. Under interest rate swap contracts, the differentials to be received or paid are recognized as an adjustment to interest expense over the life of the contract. Gains and losses on terminations of swap contracts are recognized as interest expense when terminated in conjunction with the termination of the hedged transaction, or to the extent that such hedged transaction remains outstanding, deferred and amortized to interest expense over the remaining life of the hedged transaction. Forward exchange contracts are used to hedge the currency fluctuations on transactions denominated in foreign currencies. Gains and losses on forward exchange contracts and the offsetting losses and gains on hedged transactions are recorded currently in other income, net in the Consolidated Statements of Earnings and Comprehensive Income. Forward exchange contracts are carried at fair value and are reflected in other current assets or other current liabilities, as appropriate in the Consolidated Balance Sheet. NEW PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board issued SFAS 133, "Accounting for Derivative Instruments and Hedging Activities." In June 1999, SFAS 133 was amended by SFAS 137, "Accounting for Derivative Instruments and Hedging Activities -- Deferral of Effective Date of FASB Statement No. 133," which delays the effective date for adoption of SFAS No. 133 for one year, to fiscal years beginning after June 15, 2000. SFAS No. 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts, by requiring that an entity recognize those items as assets or liabilities in the statement of financial position and measure them at fair value. The Company's derivative and hedging transactions are not material and it is anticipated that adoption of this standard will not materially impact the Company's financial results when adopted January 1, 2001. NOTE 3: ACQUISITIONS On December 7, 1999, the Company completed the acquisition of Outdoor Systems, now known as Infinity Outdoor, Inc., for approximately $8.7 billion, which includes the issuance of approximately 233 million shares of the Company's Class A common stock and the assumption of approximately $1.9 billion of debt, at fair value, and stock options to acquire approximately 28 million shares of the Company's Class A common stock. The acquisition has been accounted for under the purchase method of accounting. The excess of the purchase price over the fair value of the net assets acquired is being amortized over a 30 year period. On December 6, 1999, CBS, Infinity and Outdoor Systems (the Parties) entered into a final judgment with the United States in connection with Infinity's acquisition of Outdoor Systems. Under the terms of the final judgment, the Parties must divest certain outdoor advertising properties, principally in the New York City area, in accordance with the terms and conditions of the final judgment. The Company does not view these divestitures as material to its business. On June 4, 1998, the Company completed the acquisition of the radio broadcasting operations of American Radio for approximately $1.4 billion in cash plus the assumption of debt with a fair value of approximately $1.3 billion. The Company received a capital contribution of approximately $1.4 billion from CBS to effect this acquisition and received an additional capital contribution of $567 million to repay a portion of the debt assumed in the American Radio acquisition. The acquisition has been accounted for under the purchase method of accounting. The excess of the purchase price over the fair value of the net assets acquired is being amortized over a 40 year period. The estimated fair values of the Outdoor Systems (which are based upon preliminary estimates that may INFINITY BROADCASTING CORPORATION 33 34 be modified at a later date) and American Radio assets acquired and liabilities assumed are summarized in the following table: FAIR VALUES OF ASSETS ACQUIRED AND LIABILITIES ASSUMED (in millions)
OUTDOOR AMERICAN SYSTEMS RADIO AT DECEMBER 7, AT JUNE 4, 1999 1998 - ----------------------------------------------------------- Cash $ 38 $ 18 Receivables 192 88 Property and equipment 1,846 129 Identifiable intangible assets: FCC licenses -- 2,346 Goodwill 6,531 825 Other assets 228 53 Debt (1,865) (1,316) Deferred income taxes (92) (654) Other liabilities (106) (89) - ----------------------------------------------------------- Total purchase price $ 6,772 $ 1,400 - -----------------------------------------------------------
The following unaudited pro forma information combines the consolidated results of operations of the Company with those of Outdoor Systems and American Radio as if the acquisitions occurred on January 1, 1998. The pro forma results give effect to certain purchase accounting adjustments, including additional depreciation expense resulting from a step-up in the basis of fixed assets, additional amortization expense from goodwill and other identifiable intangible assets, increased interest expense from acquisition debt, the related income tax effects and issuance of additional shares of Class A common stock. PRO FORMA RESULTS (unaudited, in millions except per-share amounts)
YEAR ENDED DECEMBER 31, 1999 1998 - ------------------------------------------------------ Net revenues $3,178 $2,734 Net earnings 238 73 Net earnings per common share -- Basic and diluted 0.22 0.08 - ------------------------------------------------------
This pro forma financial information is presented for comparative purposes only and is not necessarily indicative of the operating results that actually would have occurred had the Outdoor Systems and American Radio acquisitions been consummated on January 1, 1998. In addition, these results are not intended to be a projection of future results and do not reflect any synergies that might be achieved from combined operations. NOTE 4: EMPLOYEE BENEFIT PLANS Certain of the Company's employees are covered by various pension plans sponsored by CBS. Most pension plan benefits are based on either a formula based on career earnings or a final average compensation amount. Pension benefits generally are paid from trusts funded by contributions from the Company. The pension funding policy is consistent with funding requirements of U.S. federal and other governmental laws and regulations. Certain employees are also covered by postretirement benefit arrangements sponsored by CBS consisting of various retiree medical, dental and life insurance arrangements. The Company has accounted for these plans as multi-employer plans. The Company's allocated expense under benefit plans sponsored by CBS was as follows: BENEFIT PLAN COSTS (in thousands)
YEAR ENDED DECEMBER 31, 1999 1998 1997 - ---------------------------------------------------------- Pension plan cost $935 $4,199 $5,451 Postretirement benefit plan cost 430 1,647 1,524 - ----------------------------------------------------------
SFAS No. 112, "Employers Accounting for Postemployment Benefits," does not have a significant effect on the Company's consolidated financial position or results of operations. The majority of the Company's employees can participate in various defined contribution savings plans sponsored by the Company. During 1999, 1998 and 1997, certain employees of the Company participated in defined contribution savings plans sponsored by CBS. Such plans generally allow employees to contribute up to 15% of their income on a pretax basis. Depending on the particular plan, the Company will match from 30% to 50% of the first 5% of the employee's base earnings, match 50% of the first 6% of the employee's base earnings, match up to $1,000, or match on a discretionary basis. NOTE 5: INCOME TAXES INCOME TAX EXPENSE (in thousands)
YEAR ENDED DECEMBER 31, 1999 1998 1997 - ---------------------------------------------------------- Current: Federal $276,631 $185,598 $143,900 State 50,521 41,880 32,406 Foreign 6,872 9,142 6,789 - ---------------------------------------------------------- Total current income tax expense 334,024 236,620 183,095 - ---------------------------------------------------------- Deferred: Federal 10,212 10,004 11,426 State 4,910 2,152 2,457 - ---------------------------------------------------------- Total deferred income tax expense 15,122 12,156 13,883 - ---------------------------------------------------------- Income tax expense $349,146 $248,776 $196,978 - ----------------------------------------------------------
34 INFINITY BROADCASTING CORPORATION 35 The Company has Mexican net operating loss carry-forwards of $254 million as of December 31, 1999. These net operating losses arose from the operations of Outdoor Systems prior to its acquisition in December 1999. During 1999, the Company utilized U.S. net operating losses of $21 million or $7 million of income tax benefit. The Mexican net operating loss carryforwards expire in 2008. In addition, the Company has a U.S. alternative minimum tax loss carryforward of $14 million, comprised of $9 million from the acquisition of Outdoor Systems and $5 million generated during 1999. Although realization is not assured, management believes, based on operating results in 1999 and its expectations for the future, that the taxable income of the Company will more likely than not be sufficient to utilize all of the net operating loss carryforwards prior to their expiration. Deferred income taxes result from temporary differences in the financial bases and tax bases of assets and liabilities. The types of differences that give rise to deferred income tax assets and liabilities are presented in the table below: DEFERRED INCOME TAXES BY SOURCE (in thousands)
DECEMBER 31, 1999 1998 - ------------------------------------------------------- Deferred tax assets: Provision for expenses and losses $ 102,450 $ 112,936 Operating losses and credit Carryforwards 105,000 -- Other 20,556 -- - ------------------------------------------------------- Total deferred tax asset 228,006 112,936 - ------------------------------------------------------- Deferred tax liabilities: Property, equipment, and intangible assets 1,256,677 1,083,989 Other 240,710 165,550 - ------------------------------------------------------- Total deferred tax liabilities 1,497,387 1,249,539 - ------------------------------------------------------- Deferred income tax liabilities, net $1,269,381 $1,136,603 - -------------------------------------------------------
A reconciliation of the U.S. Federal statutory tax rate on earnings to the Company's effective tax rate on earnings before income taxes is summarized as follows: EFFECTIVE TAX RATE RECONCILIATION
YEAR ENDED DECEMBER 31, 1999 1998 1997 - ------------------------------------------------------ Federal income tax statutory rate 35% 35% 35% Increase in rate resulting from: Amortization of non-deductible goodwill 7 10 11 State income tax expense, net of federal effect 5 6 6 Other 1 -- 1 - ------------------------------------------------------ Income tax effective rate 48% 51% 53% - ------------------------------------------------------
The Company has entered into a Tax Sharing Agreement with CBS (see Notes 2 and 14 to the consolidated financial statements). NOTE 6: PROPERTY AND EQUIPMENT (in thousands)
DECEMBER 31, 1999 1998 - ------------------------------------------------------- Advertising structures $1,779,792 $ 12,622 Land and buildings 195,201 116,218 Equipment 205,026 169,867 Construction in progress 24,793 11,714 - ------------------------------------------------------- Property and equipment, at cost 2,204,812 310,421 Accumulated depreciation (113,077) (73,837) - ------------------------------------------------------- Property and equipment, net $2,091,735 $236,584 - -------------------------------------------------------
Included in advertising structures are costs allocated to display leases totaling $813 million and $0 million at December 31, 1999 and 1998, respectively. For the years ended December 31, 1999, 1998, and 1997, depreciation expense totaled $43 million, $26 million, and $20 million, respectively. NOTE 7: INTANGIBLE ASSETS (in thousands)
DECEMBER 31, 1999 1998 - -------------------------------------------------------- Goodwill $12,370,590 $5,789,580 FCC licenses 3,859,496 3,804,541 Transit franchise agreements 391,890 276,750 Other intangible assets 96,522 -- - -------------------------------------------------------- Intangible assets, at cost 16,718,498 9,870,871 Accumulated amortization (790,805) (511,701) - -------------------------------------------------------- Intangible assets, net $15,927,693 $9,359,170 - --------------------------------------------------------
For the years ended December 31, 1999, 1998 and 1997, amortization expense totaled $282 million, $223 million, and $177 million, respectively. Goodwill, FCC licenses and franchise agreements are presented in the Consolidated Balance Sheet net of accumulated amortization. As of December 31, 1999 and 1998, accumulated amortization for goodwill was $530 million and $363 million, respectively, accumulated amortization for FCC licenses was $217 million and $120 million, respectively, and accumulated amortization for franchise agreements and other intangible assets was $44 million and $28 million, respectively. INFINITY BROADCASTING CORPORATION 35 36 NOTE 8: ACCOUNTS PAYABLE AND ACCRUED EXPENSES (in thousands)
DECEMBER 31, 1999 1998 - --------------------------------------------------------- Accounts payable $ 75,898 $ 41,685 Accrued franchise payments 40,841 25,562 Other 197,275 109,183 - --------------------------------------------------------- Total accounts payable and accrued expenses $314,014 $176,430 - ---------------------------------------------------------
NOTE 9: DEBT LONG-TERM DEBT (in thousands)
DECEMBER 31, 1999 1998 - ----------------------------------------------------------- Revolver $ 950,000 $ -- 8 7/8% Senior Subordinated Notes, due 2007 447,360 -- 9 3/8% Senior Subordinated Notes, due 2006 212,120 -- 9 3/4% Senior Notes, due 2005 105,310 148,960 9% Senior Subordinated Notes, due 2006 67,802 152,485 11 3/8% Subordinated Exchange Debentures, due 2009 46,543 98,832 7% Convertible Subordinated Debentures, due 2011 -- 78,812 Other 8,855 3,191 Unamortized premium, net 69,280 42,328 - ----------------------------------------------------------- Total $1,907,270 $524,608 Less current portion (922) (648) - ----------------------------------------------------------- Long-term debt, net of current portion $1,906,348 $523,960 - -----------------------------------------------------------
In connection with the formation and capitalization of the Company as discussed in Note 1, the Company entered into an agreement with CBS, whereby Infinity had access to a five-year revolving credit agreement, expiring August 29, 2001. The revolving credit facility, as amended in December 1999, provides for $1.5 billion of credit available for the exclusive use of Infinity. Infinity borrowings are guaranteed by CBS. The credit facility provides for short-term money market loans and revolver borrowings. Borrowing rates under the facility are determined at the time of each borrowing and are based generally on a floating rate index, the London Interbank Offer Rate (LIBOR), plus a margin based on CBS's senior unsecured debt rating and leverage ratio. Borrowing availability under the credit agreement is subject to compliance with certain covenants, including a maximum leverage ratio and a minimum interest coverage ratio. At December 31, 1999, the Company had borrowings under the credit facility of $988 million, of which $38 million were short-term. These borrowings were principally from the refinancing of debt assumed upon the closing of the Outdoor Systems acquisition. In December 1999, the Company assumed approximately $1.9 billion in debt as part of the Outdoor Systems acquisition, comprised of revolving credit debt of approximately $1.1 billion and Senior Subordinated Notes (8 7/8% Notes and 9 3/8% Notes) of approximately $0.8 billion. The 8 7/8% Notes and 9 3/8% Notes were recorded at their fair market value as of the acquisition date, which resulted in a net premium of approximately $59 million. The indentures for each of these obligations contain covenants applicable to Outdoor Systems including, among others, limitations on sales of assets, dividend payments, future indebtedness and the issuance of preferred stock. Under the most restrictive of the covenants of these indentures, $440 million of Outdoor Systems net assets at December 31, 1999, are restricted. This in turn, limits the ability of Outdoor Systems to pay dividends. As a result of the change in control related to the acquisition of Outdoor Systems by Infinity, an offer to purchase the outstanding securities was made in January 2000. The offer expired in February 2000 and $6 million of the notes were redeemed. In conjunction with the June 1998 acquisition of American Radio, the Company assumed approximately $1.3 billion of American Radio debt, of which $567 million, borrowed under their revolving credit agreement, was repaid immediately upon acquisition. The 9% Senior Subordinated Notes, the 9 3/4% Senior Notes, and the 11 3/8% Cumulative Exchangeable Preferred Stock (subsequently exchanged into 11 3/8% Subordinated Exchange Debentures) were recorded at their fair market value as of the acquisition date, which resulted in a net premium of $73 million. At the time of the acquisition, American Radio's 7% Convertible Exchangeable Preferred Stock remained outstanding. In September 1998, this preferred stock was converted into 7% Convertible Subordinated Debentures. Under the most restrictive covenants of the indentures relating to the American Radio debt, approximately $1.2 billion of American Radio's net assets at December 31, 1999 are restricted. This, in turn, limits the ability of American Radio to pay dividends. During 1999, the Company purchased at market prices, certain outstanding 8 7/8%, 9% and 9 3/8% Senior Subordinated Notes, 9 3/4% Senior Notes and 11 3/8% Subordinated Exchange Debentures with an aggregate face value of $272 million, at a cost of $294 million. Additionally during 1999, the Company redeemed the remaining shares of the 7% Convertible Subordinated Debentures with a face value of $76 million, at a cost of $79 million. During 1998, the Company purchased at market prices, certain outstanding 11 3/8% Subordinated Exchange Debentures and 9% Senior Subordinated Notes with a face value of $128 million, at a cost of $148 million. Addition- 36 INFINITY BROADCASTING CORPORATION 37 ally during 1998, the Company redeemed shares of the 7% Convertible Subordinated Debentures with a face value of $61 million, at a cost of $64 million. There are no significant scheduled long-term debt repayments from January 1, 2000 to December 31, 2004, except for the revolving credit facility, which is due in 2001. NOTE 10: LEGAL MATTERS The Company is party to various legal proceedings arising in the ordinary course of business. In the opinion of management of the Company, however, there are no legal proceedings pending against the Company likely to have a material adverse effect on the Company. NOTE 11: CONTINGENT LIABILITIES AND OTHER COMMITMENTS LEASES The Company has commitments under operating leases for certain facilities and equipment. Rental expense for the years ended December 31, 1999, 1998, and 1997 was $52 million, $30 million, and $18 million, respectively. These totals include immaterial amounts for contingent rentals and sublease income. Additionally, the Company has franchise rights entitling it to display advertising on such outdoor media as buses, taxis, trains, bus shelters, terminals, billboards, and phone kiosks. Under most of these franchise agreements, the franchiser is entitled to receive the greater of a percentage of the relevant advertising revenues, net of advertising agency fees, or a specified guaranteed minimum annual payment. Franchise payments totaled $271 million, $222 million and $192 million in 1999, 1998 and 1997, respectively. At December 31, 1999, aggregate minimum rental and franchise payments due during the next five years and thereafter are as follows: MINIMUM RENTAL PAYMENTS (in thousands)
GUARANTEED MINIMUM OPERATING FRANCHISE LEASES PAYMENTS - ------------------------------------------------------- 2000 $130,177 $201,952 2001 101,289 189,738 2002 83,121 144,291 2003 69,587 107,633 2004 46,012 88,048 Thereafter 113,388 104,686 - ------------------------------------------------------- Minimum rental payments $543,574 $836,348 - -------------------------------------------------------
OTHER COMMITMENTS The Company routinely enters into commitments to purchase broadcast rights. Expenses for broadcast rights totaled $65 million, $48 million and $34 million for the years ended December 31, 1999, 1998 and 1997, respectively. These contracts permit the broadcast of such properties for various periods. At December 31, 1999, the Company was committed to make payments under such broadcasting contracts, along with commitments for talent contracts, of $154 million. At December 31, 1999, aggregate payments for these commitments during the next five years and thereafter are as follows: OTHER COMMITMENTS (in thousands) - ------------------------------------------------------- 2000 $ 84,667 2001 35,616 2002 20,490 2003 7,319 2004 3,962 Thereafter 2,228 - ------------------------------------------------------- Total other commitments $154,282 - -------------------------------------------------------
NOTE 12: STOCKHOLDERS' EQUITY In December 1998, the Company completed its IPO, resulting in gross proceeds to the Company of approximately $3.2 billion. Prior to December 1998, the Company was a wholly-owned subsidiary of CBS. Immediately prior to the IPO, the Company amended its Certificate of Incorporation to change its authorized capital stock to 50 million shares of Preferred Stock, 2 billion shares of Class A common stock, and 2 billion shares of Class B common stock. On June 17, 1999, the Company announced that its board of directors had authorized the purchase of up to $500 million of its Class A common stock. On January 13, 2000, the Company expanded its stock buy-back program to purchase an additional $500 million of the Company's Class A common stock. During 1999, the Company acquired approximately 17.6 million shares of its Class A common stock at a cost of $485 million and as of December 31, 1999, the acquired shares remain held in treasury. The entire buy-back was funded from the Company's internal cash resources. On December 7, 1999, the Company acquired Outdoor Systems for approximately $8.7 billion. The total purchase price was paid through the issuance of approximately 233 million shares of the Company's Class A common stock and the assumption of approximately $1.9 billion of debt, at fair value, and INFINITY BROADCASTING CORPORATION 37 38 stock options to acquire approximately 28 million shares of the Company's Class A common stock. The acquisition is being accounted for under the purchase method. Subsequent to the merger between Westwood One and Metro Networks, Inc., the Company beneficially owns shares and vested warrants representing approximately 17% of Westwood One's common stock. The Company recognized a change in interest gain of $69 million, net of deferred taxes of $45 million, increasing the carrying value of the Company's investment in Westwood One to $253 million. The Company accounts for its investment in Westwood One using the equity method of accounting. Based upon quoted market prices at December 31, 1999, the market value of the Company's investment in Westwood One would have exceeded the carrying value of the investment by $355 million. As of December 31, 1999, the Company had approximately 373 million shares of Class A common stock outstanding and 700 million shares of Class B common stock outstanding. As of December 31, 1998, the Company had approximately 155 million shares of Class A common stock outstanding and 700 million shares of Class B common stock outstanding. As of December 31, 1999 and 1998, no preferred shares were issued. As of December 31, 1999, CBS beneficially owned 100% of the Class B common stock, representing 64.3% of the Company's equity ownership and 90.0% of the combined voting power of the Company's Class A and Class B common stock, on a fully diluted basis. Holders of Class A common stock and Class B common stock generally have identical voting rights and vote together as a single class (and not as separate classes), except that holders of Class A common stock are entitled to one vote per share while holders of Class B common stock are entitled to five votes per share, and the shares of Class B common stock maintain certain conversion rights and transfer restrictions. Holders of Class A common stock and Class B common stock will share equally on a per-share basis in any dividends declared by the Board of Directors. At December 31, 1999, the number of recordholders of the Class A and Class B common stock was approximately 650 and 1, respectively. NOTE 13: STOCK-BASED COMPENSATION PLANS The Company accounts for stock-based compensation plans under APB Opinion 25. For stock options granted, the option price is not less than the market value of shares on the grant date; therefore, no compensation cost has been recognized for stock options granted. At December 31, 1999, the Company had several stock-based compensation plans that provide for the granting of stock-based awards, including non-statutory stock options, to non-employee directors of the Company, officers or employees of the Company, its parent, or their subsidiaries. At December 31, 1999, approximately 18 million shares of the Company's Class A common stock were authorized for awards under the plans, of which approximately 12 million shares remained available for future award. Generally, stock option awards vest over three years from the date of grant and expire ten years from the date of grant. In conjunction with the acquisition of Outdoor Systems on December 7, 1999, the Company assumed approximately 28 million options to acquire shares of the Company's Class A common stock with a weighted-average exercise price of $2.89 per share. INFINITY STOCK OPTION INFORMATION
1999 ---------------------- WEIGHTED- AVERAGE EXERCISE SHARES PRICE - --------------------------------------------------- Balance at January 1 -- $ -- Options granted 5,715,937 26.15 Awards assumed 27,821,998 2.89 Options exercised (723,903) 1.65 Options forfeited (48,000) 25.94 - --------------------------------------------------- Balance at December 31 32,766,032 $ 6.94 - --------------------------------------------------- Exercisable at December 31 27,098,095 $ 2.93 - ---------------------------------------------------
38 INFINITY BROADCASTING CORPORATION 39 INFINITY STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1999
WEIGHTED- WEIGHTED- AVERAGE OPTIONS AVERAGE EXERCISE OUTSTANDING AT WEIGHTED- REMAINING PRICE OF RANGE OF DECEMBER 31, AVERAGE CONTRACTUAL EXERCISABLE AT EXERCISABLE EXERCISE PRICES 1999 EXERCISE PRICE LIFE IN YEARS DECEMBER 31, 1999 OPTIONS - ----------------------------------------------------------------------------------------------------- $ -- 65,384(1) $ -- N/A 65,384 $ -- .01-- .99 17,162,897(2) .04 N/A 17,162,897 .04 1.00-- 4.99 5,802,700 1.58 6.4 5,802,700 1.58 5.00-- 9.99 158,920 7.25 7.4 158,920 7.25 10.00--14.99 1,259,518 12.47 8.1 1,259,518 12.47 15.00--19.99 2,648,676 19.87 9.2 2,648,676 19.87 20.00--27.99 5,667,937 26.15 9.2 -- -- - ----------------------------------------------------------------------------------------------------- Total 32,766,032 $ 6.94 27,098,095 $ 2.93 - -----------------------------------------------------------------------------------------------------
Notes: (1) These options have no exercise price, have no expiration date and are exercisable only upon termination. (2) These options are fully exercisable and have no expiration date. Certain employees of the Company have options to acquire shares of CBS's common stock that were issued prior to the initial public offering. The stock option information in the following tables reflects options to acquire CBS's common stock held by employees of the Company. CBS CORPORATION STOCK OPTION INFORMATION
1999 1998 1997 ----------------------- ----------------------- ----------------------- WEIGHTED- WEIGHTED- WEIGHTED- AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE SHARES PRICE SHARES PRICE SHARES PRICE - --------------------------------------------------------------------------------------------------------- Balance at January 1 20,206,220 $13.54 25,456,440 $ 7.30 23,723,498 $ 6.04 Options granted -- -- 3,459,745 30.01 2,623,653 18.56 Options exercised (1,449,368) 4.62 (8,491,073) 1.40 (846,829) 6.32 Options forfeited (63,475) 29.80 (218,892) 19.01 (43,882) 18.57 - --------------------------------------------------------------------------------------------------------- Balance at December 31 18,693,377 $14.17 20,206,220 $13.54 25,456,440 $ 7.30 - --------------------------------------------------------------------------------------------------------- Exercisable at December 31 17,121,659 $12.93 16,369,506 $10.02 19,426,144 $ 4.96 - ---------------------------------------------------------------------------------------------------------
CBS CORPORATION STOCK OPTIONS OUTSTANDING AT DECEMBER 31, 1999
WEIGHTED- WEIGHTED- AVERAGE OPTIONS AVERAGE EXERCISE OUTSTANDING AT WEIGHTED- REMAINING PRICE OF RANGE OF DECEMBER 31, AVERAGE CONTRACTUAL EXERCISABLE AT EXERCISABLE EXERCISE PRICES 1999 EXERCISE PRICE LIFE IN YEARS DECEMBER 31, 1999 OPTIONS - ----------------------------------------------------------------------------------------------------- $.0002-- 4.99 3,323,905 $ 1.92 2.4 3,323,905 $ 1.92 5-- 9.99 4,475,831 7.04 4.6 4,475,831 7.04 10--14.99 2,054,882 13.74 5.9 2,054,882 13.74 15--19.99 5,509,139 17.95 6.7 5,192,145 17.92 20--29.99 2,933,625 29.81 8.0 1,868,077 29.81 30--36.53 395,995 31.60 8.3 206,819 31.64 - ----------------------------------------------------------------------------------------------------- Total 18,693,377 $14.17 17,121,659 $12.93 - -----------------------------------------------------------------------------------------------------
The majority of the options to acquire shares of CBS common stock contain a provision that accelerates their vesting upon a change in control. The consummation of the merger with Viacom would be considered to be a change in control under these option agreements. Each CBS option outstanding at the time of the merger will convert into 1.085 options to purchase shares of Viacom Class B nonvoting common INFINITY BROADCASTING CORPORATION 39 40 stock at an exercise price adjusted for the 1.085 conversion factor. The merger between Viacom and CBS does not accelerate vesting for holders of options to acquire shares of Infinity's Class A common stock. RESULTS OF OPERATIONS (in thousands except per-share amounts) Assuming compensation cost for the 1999 Infinity stock option grants and the CBS stock option grants made prior to the IPO had been determined under the provisions of SFAS 123, the Company's net earnings and earnings per common share would have been as follows:
YEAR ENDED DECEMBER 31, 1999 1998 1997 - ---------------------------------------------------------------------------------------------- Net earnings as reported $376,964 $234,806 $177,629 Pro forma net earnings 355,999 226,212 165,274 Net earnings per basic common share as reported 0.44 0.33 0.25 Net earnings per diluted common share as reported 0.43 0.33 0.25 Pro forma net earnings per basic and diluted common share 0.41 0.32 0.24 - ----------------------------------------------------------------------------------------------
These pro forma effects may not be representative of future amounts since the estimated fair value of stock options on the date of grant is amortized to expense over the vesting period, and additional options may be granted in future years. Options to acquire shares of Infinity's Class A common stock granted during 1999 had a weighted average fair value per-share of $13.37. Options to acquire shares of CBS common stock granted during 1998 and 1997 had a weighted average fair value per-share of $14.08, and $7.79, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. The following weighted-average assumptions were used for option grants to acquire Infinity stock in 1999 and CBS stock in 1998, and 1997, respectively: risk-free interest rates of 5.1%, 5.5%, and 6.4%, expected dividend yields of 0.0%, 0.0%, and 1.0%; expected volatility of 38%, 31%, and 30%; and expected lives of 7.5 years, 7.5 years, and 7.3 years, respectively. Pursuant to the Tax Sharing Agreement, the tax deductions resulting from the exercise of CBS stock options by employees of the Company will not reduce the Company's federal taxable income. NOTE 14: RELATED PARTY TRANSACTIONS In December 1998, the Company completed its IPO. After the IPO, CBS beneficially owned 95.8% of the combined voting power and 81.8% of the equity of the Company. As of December 31, 1999, CBS beneficially owned 90.0% of the combined voting power and 64.3% of the equity of the Company, on a fully diluted basis. In connection with the IPO, the Company entered into an intercompany agreement with CBS (the Intercompany Agreement) pursuant to which CBS provides the Company with a number of services, including among others, certain legal, financial, administrative and executive services. The costs of these services are allocated according to established methodologies determined by CBS on an annual basis. For 1999, 1998, and 1997, allocated expenses of $8 million, $7 million, and $13 million, respectively, were included in the Company's Consolidated Statements of Earnings and Comprehensive Income. The Intercompany Agreement also requires the Company and CBS to provide broadcast time to each other. The Company expects to continue this practice. The revenues or costs associated with these intercompany transactions were not significant in the periods presented. The Company and CBS have entered into and expect to continue to enter into joint advertising arrangements. Revenues are distributed to the parties providing the services based upon the contract terms. The revenues associated with such sales were not significant in the periods presented. The Tax Sharing Agreement with CBS generally provides that the Company will pay to CBS an amount equal to the amount of income taxes the Company would have paid if it had filed separate income tax returns. After December 7, 1999, the Company will file a separate consolidated federal tax return. The Company will continue to be consolidated or combined with CBS in state filings, where applicable. Reference is made to the full text of the Intercompany and Tax Sharing Agreements, copies of 40 INFINITY BROADCASTING CORPORATION 41 which have been filed with the Securities and Exchange Commission. During 1999, CBS closed on a number of strategic investments focused on growing its Internet-based operations. CBS received an equity interest in these Internet companies, in exchange for future promotional time on CBS and the Company's properties. During the later half of 1999, the Company provided advertising and promotional time on behalf of these investments and will receive an economic interest in certain CBS Internet investments. The Company owns a minority equity interest in Westwood One. Many of the Company's radio stations are affiliated with Westwood One and Westwood One distributes nationally, certain of the Company's network programming. In connection with these arrangements, the Company receives affiliation fees as well as programming cost reimbursements and in certain instances, shares in revenue from the sale of the Company's programming. In addition, an officer and a non-executive employee of the Company serve as officers of Westwood One for which the Company receives a management fee, which includes warrants to acquire shares of Westwood One's common stock. Revenue and expense reimbursements from these arrangements recorded by the Company in 1999, 1998 and 1997 totaled $67 million, $64 million and $62 million, respectively. Mr. Karmazin is a director of Westwood One and Mr. Suleman is the executive vice president, chief financial officer and secretary and a director of Westwood One. Infinity Outdoor is a party to a Services Agreement with Williams Manufacturing, Inc. (WMI) and J&L Industries, Inc. (J&L), companies controlled by Mr. William S. Levine, a director of the Company and Chairman of Infinity Outdoor. Pursuant to the agreement, WMI and J&L made at least a majority of Mr. Levine's business time available to Infinity Outdoor, for which Infinity Outdoor paid WMI and J&L an aggregate of $450,000 in 1999. In addition, certain partnerships controlled by Mr. Levine or in which Mr. Levine is a partner lease certain sites to Infinity Outdoor on which the Company has placed advertising displays. Infinity Outdoor made aggregate lease payments to such partnerships of approximately $139,000 in 1999. In connection with the acquisition of Infinity Outdoor by the Company, these leases were renegotiated and new leases, on substantially identical terms, were entered into for terms commencing January 1, 2000 through December 31, 2004. The Company believes that these leases are on terms at least as favorable as would be available with unrelated third parties through arms-length negotiations. NOTE 15: FAIR VALUE OF FINANCIAL INSTRUMENTS The estimated fair value of financial instruments is determined using the best available market information and appropriate valuation methodologies. However, considerable judgment is necessary in interpreting market data to develop the estimates of fair value. Accordingly, the estimates presented are not necessarily indicative of the amounts that the Company could realize in a current market exchange or the value that ultimately will be realized upon maturity or disposition. Additionally, because of the variety of valuation techniques permitted under SFAS No. 107, "Disclosures about Fair Values of Financial Instruments," comparability of fair values among entities may not be meaningful. The use of different market assumptions or estimation methodologies may have a material effect on the estimated fair value amounts. As of December 31, 1999 and 1998, most of the Company's financial instruments including cash and cash equivalents, receivables, payables and accruals are short term in nature. Accordingly, the carrying amount of these financial instruments approximates their fair value. The following methods and assumptions were used to estimate the fair value of financial instruments for which it was practicable to estimate that value: - - The fair value of noncurrent customer and other receivables is estimated by discounting the expected future cash flows at interest rates commensurate with the creditworthiness of the customer or other third party. The fair value of the Company's noncurrent customer and other receivables approximates its carrying value at December 31, 1999 and 1998. - - The fair value of long-term debt is estimated using quoted market prices or discounted cash flow methods based on the Company's current borrowing rates for similar types of borrowing arrangements with comparable terms and maturities. The carrying values and fair values of the Company's fixed rate debt were $888 million and approximately $978 million, respectively, at December 31, 1999 and $525 million and approximately $527 million, respectively, at December 31, 1998. - - The Company is subject to risks associated with changes in foreign currency exchange rates that INFINITY BROADCASTING CORPORATION 41 42 affect the value of transactions denominated in foreign currencies. Foreign exchange forward contracts are used to manage certain of these risks, primarily with respect to the Canadian dollar. These contracts generally mature in less than six months. At December 31, 1999 and 1998, the notional amount of forward contracts was $91 million and $0 million, respectively. The increase in 1999 relates to contracts to hedge exposures at Outdoor Systems which was acquired in December 1999. Foreign exchange forward contracts are carried on the balance sheet at fair value based on quoted market prices to terminate the contracts. At December 31, 1999 and 1998, the fair value of these contracts was not material. - - At December 31, 1999, the Company had variable-to-fixed interest rate swap contracts outstanding with a notional value of $775 million. The swap contracts expire in less than three months. The fair value of these swaps at December 31, 1999 was not material. At December 31, 1998, no interest rate swap contracts were outstanding. - - The Company's credit exposure under foreign currency exchange contracts and interest rate swap contracts is limited to the cost of replacing a contract in the event of non-performance by our counterparties. To minimize this risk, we select high credit quality counterparties. We do not anticipate nonperformance by our counterparties. - - Outstanding letters of credit totaled $54 million in 1999 and $0 million in 1998. The Company does not believe it is practicable to estimate the fair value of these financial instruments and does not expect any material losses from their resolution since performance is not likely to be required. NOTE 16: SEGMENT AND GEOGRAPHIC INFORMATION The Company's operations are principally focused on the out-of-home media business and are aligned in two business segments, Radio and Outdoor. The Company's Radio segment has been restated for all periods presented to reflect the costs of the Company's corporate headquarters separately. These costs are comprised mainly of compensation and general operating expenses for the corporate headquarters. Previously, the costs related to the Company's corporate headquarters were reflected as a component of the Radio segment. SEGMENT DATA (in millions)
DEPRECIATION AND REVENUES EBITDA OPERATING EARNINGS AMORTIZATION ------------------------ -------------------- ------------------ ------------------ YEAR ENDED DECEMBER 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997 1999 1998 1997 - --------------------------------------------------------------------------------------------------------------------- Radio $1,835 $1,459 $1,104 $ 918 $709 $510 $651 $476 $328 $267 $227 $176 Outdoor 614 434 376 161 96 73 102 73 52 58 23 21 - --------------------------------------------------------------------------------------------------------------------- Total segments 2,449 1,893 1,480 1,079 805 583 753 549 380 325 250 197 Corporate -- -- -- (12) (7) (8) (12) (7) (8) -- -- -- - --------------------------------------------------------------------------------------------------------------------- Total $2,449 $1,893 $1,480 $1,067 $798 $575 $741 $542 $372 $325 $250 $197 - ---------------------------------------------------------------------------------------------------------------------
EXPENDITURES FOR LONG-LIVED ASSETS TOTAL ASSETS LONG-LIVED ASSETS -------------------- -------------------------- ------------------ YEAR ENDED DECEMBER 31, 1999 1998 1997 1999 1998 1997 1999 1998 1997 - ---------------------------------------------------------------------------------------------------------- Radio $ 530 $404 $229 $ 9,857 $ 9,869 $6,558 $38 $23 $10 Outdoor 1,894 15 12 9,423 522 505 15 7 5 - ---------------------------------------------------------------------------------------------------------- Total segments 2,424 419 241 19,280 10,391 7,063 53 30 15 Corporate 3 3 1 47 407 11 -- 2 -- - ---------------------------------------------------------------------------------------------------------- Total $2,427 $422 $242 $19,327 $10,798 $7,074 $53 $32 $15 - ----------------------------------------------------------------------------------------------------------
Management believes that earnings before interest, taxes, minority interest, depreciation and amortization (EBITDA) is an appropriate measure for evaluating the operating performance of the Company's business. EBITDA eliminates the effect of depreciation and amortization of tangible and intangible assets, most of which were acquired in acquisitions accounted for under the purchase method of accounting, including CBS Inc.'s radio operations, Old Infinity, American Radio and Outdoor Systems. The exclusion of amortization expense eliminates variations in results among stations or other entities caused by the timing of acquisitions. More recent acquisitions reflect higher amortization expense due to increasing prices associated with out-of-home properties. However, EBITDA should be considered in addition to, not as a substitute for, operating earnings, net 42 INFINITY BROADCASTING CORPORATION 43 earnings, cash flows and other measures of financial performance reported in accordance with generally accepted accounting principles. As EBITDA is not a measure of performance calculated in accordance with generally accepted accounting principles, this measure may not be comparable to similarly titled measures employed by other companies. The Company's operations are primarily based in the United States. However, net revenues of $204 million and $161 million in 1999 and 1998, respectively, were derived from the Company's foreign operations. The 1999 and 1998 foreign revenues were primarily attributable to TDI sales in the United Kingdom, Ireland and the Netherlands. As of December 31, 1999 and 1998, more than 83% and 95%, respectively, of the Company's long lived assets are located within the United States. Long-lived assets in the preceding table consist of equity investments, net property, plant and equipment, and long-term notes, and exclude such assets as goodwill, FCC licenses, and other intangible assets. Expenditures for long-lived assets correspond to the Company's capital expenditures and investments in equity method entities. NOTE 17: SUBSEQUENT EVENTS (AS OF MARCH 21, 2000) On March 3, 2000, the Company entered into an Asset Purchase Agreement to acquire 18 radio stations from Clear Channel Communications, Inc. for approximately $1.4 billion. These stations are located in San Diego, Phoenix, Denver, Cleveland, Cincinnati, Orlando and Greensboro--Winston-Salem. The transaction is subject to regulatory reviews and approvals, and is expected to close by year-end 2000. On March 21, 2000, the Company announced that it had entered into an agreement to purchase Giraudy, one of France's largest outdoor advertising companies, for approximately $425 million. The transaction is expected to close mid-year 2000. The Company plans to finance these acquisitions with excess cash from operations and by executing a credit facility which will increase its borrowing availability by $2.0 billion. INFINITY BROADCASTING CORPORATION 43 44 QUARTERLY FINANCIAL DATA (unaudited, in thousands except per-share amounts)
1999 1998 ----------------------------------------- ----------------------------------------- 4TH 3RD 2ND 1ST 4TH 3RD 2ND 1ST QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER QUARTER - ------------------------------------------------------------------------------------------------------------------ Net revenues $759,408 $618,716 $597,273 $473,735 $573,414 $534,318 $455,764 $329,608 Operating expenses 515,436 410,223 406,118 376,189 393,313 377,316 314,856 265,729 Operating earnings 243,972 208,493 191,155 97,546 180,101 157,002 140,908 63,879 Net earnings 118,208 111,468 99,628 47,660 69,226 67,261 66,877 31,442 Basic net earnings per share 0.13 0.13 0.12 0.06 0.10 0.10 0.10 0.04 Diluted net earnings per share 0.13 0.13 0.12 0.06 0.10 0.10 0.10 0.04 - ------------------------------------------------------------------------------------------------------------------ New York Stock Exchange market price per share: High 41 1/2 30 3/16 33 1/2 28 3/4 27 1/8 -- -- -- Low 27 3/4 24 15/16 24 3/16 23 1/2 22 1/16 -- -- -- - ------------------------------------------------------------------------------------------------------------------
44 INFINITY BROADCASTING CORPORATION 45 FIVE-YEAR SUMMARY OF SELECTED FINANCIAL AND STATISTICAL DATA (unaudited, in thousands except per-share amounts)
HISTORICAL ------------------------------------------------------------------ YEAR ENDED DECEMBER 31, 1999(A) 1998(A) 1997(A) 1996 1995(A) - ------------------------------------------------------------------------------------------------------------ STATEMENT OF EARNINGS DATA: Net revenues............................ $ 2,449,132 $ 1,893,104 $1,480,091 $ 554,088 $ 216,288 Operating expenses excluding depreciation and amortization.......... 1,383,010 1,101,562 910,682 357,354 145,155 Depreciation and amortization........... 324,956 249,652 197,135 57,528 17,914 Operating earnings...................... 741,166 541,890 372,274 139,206 53,219 Interest expense, net................... 15,540 63,773 3,645 -- -- Net earnings............................ 376,964 234,806 177,629 71,566 27,673 Net earnings per common share--basic.... $ 0.44 $ 0.33 $ 0.25 $ 0.10 $ 0.04 Weighted average shares outstanding--basic..................... 866,553 706,379 700,000 700,000 700,000 Net earnings per common share--diluted......................... $ 0.43 $ 0.33 $ 0.25 $ 0.10 $ 0.04 Weighted average shares outstanding--diluted................... 867,972 706,379 700,000 700,000 700,000 OTHER OPERATING DATA: EBITDA (b).............................. $ 1,066,622 $ 797,866 $ 575,019 $ 197,043 $ 71,324 Capital expenditures.................... 44,076 31,717 15,264 6,682 9,368 After-tax cash flow (b)................. 701,920 484,458 374,764 129,094 45,587 Cash flow from operating activities..... 651,888 442,003 310,264 103,943 49,401 Cash flow from investing activities..... (154,690) (1,402,620) 21,870 (1,000,847) (1,213,810) Cash flow from financing activities..... (923,263) 1,435,796 (329,494) 916,771 1,164,221 - ------------------------------------------------------------------------------------------------------------
AT DECEMBER 31, 1999(A) 1998(A) 1997 1996(A) 1995(A) - ---------------------------------------------------------------------------------------------------------- BALANCE SHEET DATA: Total assets.......................... $19,327,455 $10,798,243 $7,074,103 $ 7,261,952 $ 1,878,208 Long-term debt (including current portion)............................. 1,907,270 524,608 2,092 150,494 -- Stockholders' equity.................. 15,591,042 8,858,027 6,397,388 6,418,701 1,659,602 Working capital....................... 521,690 785,574 247,206 273,403 79,500 - ----------------------------------------------------------------------------------------------------------
(a) Includes financial information for the following acquired entities from their respective dates of acquisition: Outdoor Systems, Inc. from its date of acquisition, December 7, 1999; the radio operations of American Radio from June 4, 1998; Old Infinity from December 31, 1996; and the radio operations of CBS Inc. from November 24, 1995. (b) EBITDA represents earnings before interest, taxes, minority interest, depreciation and amortization. After-tax cash flow represents net earnings plus depreciation and amortization. Although EBITDA and after-tax cash flow are not measures of performance calculated in accordance with generally accepted accounting principles, management believes that they are useful to an investor in evaluating the Company because they are measures widely used in the broadcast industry to evaluate a company's operating performance. Nevertheless, EBITDA and after-tax cash flow should not be considered in isolation or as a substitute for operating income, cash flows from operating activities or any other measure for determining the Company's operating performance or liquidity that is calculated in accordance with generally accepted accounting principles. As EBITDA and after-tax cash flow are not measures of performance calculated in accordance with generally accepted accounting principles, these measures may not be comparable to similarly titled measures employed by other companies. As EBITDA is not a measure of performance calculated in accordance with generally accepted accounting principles, this measure may not be comparable to similarly titled measures employed by other companies. EBITDA differs from cash flows from operating activities primarily because it does not consider changes in assets and liabilities from period to period, and it does not include cash flows for interest and taxes. INFINITY BROADCASTING CORPORATION 45 46 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. Part of the information concerning executive officers required by this item is set forth in Part I pursuant to General Instruction G to Form 10-K and part is incorporated herein by reference to "Security Ownership" and "Principal Shareholders" in the Proxy Statement. The information as to directors is incorporated herein by reference to "Election of Directors" in the Proxy Statement. ITEM 11. EXECUTIVE COMPENSATION. The information required by this item is incorporated herein by reference to "Director Compensation" and "Executive Compensation" in the Proxy Statement. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. The information required by this item is incorporated herein by reference to "Security Ownership" and "Principal Shareholders" in the Proxy Statement. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. The information required by this item is incorporated herein by reference to "Related Party Transactions" in the Proxy Statement. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. (A)(1) FINANCIAL STATEMENTS The financial statements required by this item are listed under Part II, Item 8, which list is incorporated herein by reference. (A)(2) FINANCIAL STATEMENT SCHEDULES The following financial statement schedule for Infinity Broadcasting Corporation and the Independent Auditors' Report thereon are included in Part IV of this report:
PAGES ---- Independent Auditors' Report on Financial Statement Schedule 51 Schedule II--Valuation and Qualifying Accounts for the three years ended December 31, 1999 52
46 INFINITY BROADCASTING CORPORATION 47 Other schedules are omitted because they are not applicable or because the required information is included in the financial statements or notes thereto. (A)(3) EXHIBITS 3. CERTIFICATE OF INCORPORATION AND BY-LAWS. 3.1 Restated Certificate of Incorporation of the Company as of December 14, 1998 is incorporated by reference to Exhibit 3.1 to the report on Form 10-Q for the quarter ended June 30, 1999. 3.2 Restated By-Laws of the Company as of December 14, 1998 are incorporated by reference to Exhibit 3.2 to the report on Form 10-Q for the quarter ended June 30, 1999. 10. MATERIAL CONTRACTS. 10.1 Intercompany Agreement between CBS Corporation and the Company is incorporated by reference to Exhibit 10(x) to the report on Form 10-K of CBS Corporation for the year ended December 31, 1998. 10.2 Tax Sharing Agreement between CBS Corporation and the Company is incorporated by reference to Exhibit 10(y) to the report on Form 10-K of CBS Corporation for the year ended December 31, 1998. 10.3 $4.0 billion Credit Agreement among CBS Corporation, the Lenders parties thereto, Nationsbank, N.A. and the Toronto-Dominion Bank as Syndication Agents, The Chase Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent, dated August 29, 1996, is incorporated herein by reference to Exhibit 10(1) to the report on Form 10-Q of CBS Corporation for the quarter ended September 30, 1996. 10.4 First Amendment, dated January 29, 1997, to the CBS Corporation Credit Agreement, dated August 29, 1996, among CBS Corporation, the Lenders parties thereto, Nationsbank, N.A. and the Toronto-Dominion Bank as Syndication Agents, The Chase Manhattan Bank, as Documentation Agent, and Morgan Guaranty Trust Company of New York as Administrative Agent, is incorporated herein by reference to Exhibit 10(p) to the report on Form 10-Q of CBS Corporation for the quarter ended March 31, 1997. 10.5 Second Amendment, dated March 21, 1997, to the CBS Corporation Credit Agreement, dated August 29, 1996, as amended by the First Amendment thereto, dated January 29, 1997, among CBS Corporation, the Subsidiary Borrowers parties thereto, the Lenders parties thereto, Nationsbank, N.A. and The Toronto-Dominion Bank as Syndication Agents, The Chase Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust Company of New York as Administrative Agent, is incorporated herein by reference to Exhibit 10(q) to the report on Form 10-Q of CBS Corporation for the quarter ended March 31, 1997. 10.6 Third Amendment, dated March 3, 1998, to the CBS Corporation Credit Agreement, dated August 29, 1996, as amended by the First Amendment thereto, dated January 29, 1997, as amended by the Second Amendment thereto, dated March 21, 1997, among CBS Corporation, the Subsidiary Borrowers parties thereto, the Lenders parties thereto, Nationsbank, N.A. and The Toronto-Dominion Bank as Syndication Agents, The Chase Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust Company of New York as Administrative Agent, is incorporated herein by reference to Exhibit 10(x) to the report on Form 10-Q of CBS Corporation for the quarter ended March 31, 1998. 10.7 Fourth Amendment, dated February 26, 1999, to the CBS Corporation Credit Agreement, dated August 29, 1996, as amended by the First, Second, and Third Amendments, dated January 29, 1997, March 21, 1997 and March 3, 1999, respectively, among CBS Corporation, the Subsidiary Borrowers parties thereto, the Lenders parties thereto, Nationsbank, N.A. and the Toronto-Dominion Bank as Syndication Agents, The Chase Manhattan Bank as Documentation Agent, and Morgan Guaranty Trust Company of New York as Administrative Agent, is incorporated by reference to Exhibit 10.9 to the report on Form 10-Q for the quarter ended March 31, 1999. 10.8 Credit Agreement, dated December 10, 1999, among the Company, the Subsidiary Borrowers parties thereto, CBS Corporation, as Guarantor, the Lenders named therein, The Chase Manhattan Bank, as Documentation Agent, Morgan Guaranty Trust Company of New York, as Administrative Agent, and Bank of America, N.A. and The Toronto-Dominion Bank, as Syndication Agents.
INFINITY BROADCASTING CORPORATION 47 48 10.9 Management Agreement, dated March 30, 1999, between the Company and Westwood One, Inc., is incorporated herein by reference to Exhibit 10.17 to the report on Form 8-K of Westwood One, Inc., filed with the Securities and Exchange Commission on June 4, 1999. 10.10 Amendment and Restated Representation Agreement, dated March 30, 1999, between the Company and Westwood One, Inc., is incorporated herein by reference to Exhibit 10.18 to the report on Form 8-K of Westwood One, Inc., filed with the Securities and Exchange Commission on June 4, 1999. 10.11* Employment Agreement, entered into on June 20, 1996 and effective December 1996, between CBS Corporation and Mel Karmazin, is incorporated herein by reference to Exhibit 10(s) to the report on Form 10-Q of CBS Corporation for the quarter ended March 31, 1997. 10.12* Employment Agreement entered into on May 22, 1996, effective November 28, 1995, and amended January 29, 1997, between CBS Broadcasting Inc. and Daniel Mason, is incorporated by reference to Exhibit 10.13 to the Company's Registration Statement No. 333-63727 on Form S-1, Amendment No. 4, filed with the Securities and Exchange Commission on December 4, 1998. 10.13* Restated Employment Agreement, dated December 1, 1998, between TDI Worldwide, Inc. and William Apfelbaum, is incorporated by reference to Exhibit 10.14 to the Company's Registration Statement No. 33327 on Form S-1 Amendment No. 4, filed with the Securities and Exchange Commission on December 4, 1998. 10.14* The CBS Corporation 1991 Long-Term Incentive Plan, as amended to July 28, 1999, is incorporated by reference to Exhibit 10.15 to the report on Form 10-Q for the quarter ended September 30, 1999. 10.15* The CBS Corporation 1993 Long-Term Incentive Plan, as amended to July 28, 1999, is incorporated by reference to Exhibit 10.16 to the report on Form 10-Q for the quarter ended September 30, 1999. 10.16* 1998 Long-Term Incentive Plan of the Company. 10.17* Executive Annual Incentive Plan of the Company. 10.18* The CBS Corporation Annual Performance Plan, as amended to July 28, 1999, is incorporated by reference to Exhibit 10.19 to the report on Form 10-Q for the quarter ended September 30, 1999. 10.19* The Westinghouse Executive Pension Plan, as amended to July 28, 1999, is incorporated by reference to Exhibit 10.20 to the report on Form 10-Q for the quarter ended September 30, 1999. 10.20* The CBS Corporation 1998 Executive Annual Incentive Plan is incorporated herein by reference to Exhibit A to the Proxy Statement of CBS Corporation filed March 25, 1998. 10.21 Form of Trademark License Agreement between CBS Worldwide Inc. and the Company is incorporated by reference to Exhibit 10.24 to the Company's Registration Statement No. 333-63727 on Form S-1, Amendment No. 4, filed with the Securities and Exchange Commission on December 4, 1998. 10.22 Form of Trademark License Agreement between CBS Broadcasting Inc. and the Company is incorporated by reference to Exhibit 10.25 to the Company's Registration Statement No. 333-63727 on Form S-1, Amendment No. 4, filed with the Securities and Exchange Commission on December 4, 1998. 10.23 Form of Trademark License Agreement between CBS Corporation and the Company is incorporated by reference to Exhibit 10.26 to the Company's Registration Statement No. 333-63727 on Form S-1, Amendment No. 4, filed with the Securities and Exchange Commission on December 4, 1998. 10.24* The Infinity Broadcasting Corporation Stock Plan for Directors is incorporated by reference to Exhibit 10.25 to Form 10-K for the year ended December 31, 1998. 10.25 Agreement and Plan of Merger, dated May 27, 1999, among the Company, Burma Acquisition Corp. and Outdoor Systems, Inc., is incorporated herein by reference to Exhibit 99.1 to the report on Form 8-K of Outdoor Systems, Inc., filed with the Securities and Exchange Commission on June 3, 1999.
48 INFINITY BROADCASTING CORPORATION 49 10.26 Amendment No. 1, dated June 16, 1999, to the Agreement and Plan of Merger, dated May 27, 1999, among the Company, Burma Acquisitions Corp. and Outdoor Systems, Inc., is incorporated herein by reference to Exhibit 99.2 to the Company's report on Form 8-K, filed with the Securities and Exchange Commission on June 25, 1999. 10.27 Stockholders Agreement, dated May 27, 1999, among the Company, William S. Levine, Arturo R. Moreno, Carole D. Moreno, Levine Investments Limited Partnership and BRN Properties Limited Partnership, is incorporated herein by reference to Exhibit 99.2 to the report on Form 8-K of Outdoor Systems, Inc., filed with the Securities and Exchange Commission on June 3, 1999. 10.28 Amendment No. 1, dated July 15, 1999, to the Stockholders Agreement, dated May 27, 1999, among the Company and the stockholders named in the agreement, is incorporated herein by reference to Exhibit 2.4 to the Company's Registration Statement No. 333-88363 on Form S-4, filed with the Securities and Exchange Commission on October 4, 1999. 10.29 Voting Agreement, dated May 27, 1999, between CBS Broadcasting Inc. and Outdoor Systems, Inc. is incorporated herein by reference to Exhibit 99.3 to the report on Form 8-K of Outdoor Systems, Inc., filed with the Securities and Exchange Commission on June 3, 1999. 10.30 Asset Purchase Agreement, dated March 3, 2000, among Clear Channel Communications, Inc., AMFM Inc., CCU Merger Sub, Inc. and CBS Radio Inc. 21. SUBSIDIARIES 21.1 Subsidiaries of the Registrant 23. CONSENT OF KPMG LLP 24. POWERS OF ATTORNEY 24.1 Powers of Attorney of directors 27. FINANCIAL DATA SCHEDULE 27.1 Financial Data Schedule
* Identifies management contract or compensatory plan or arrangement. INFINITY BROADCASTING CORPORATION 49 50 (B) REPORTS ON FORM 8-K A Current Report on Form 8-K (Items 5 and 7), filed with the Securities and Exchange Commission on October 20, 1999, restating and updating the Company's description of its capital stock. A Current Report on Form 8-K (Items 5 and 7), filed with the Securities and Exchange Commission on October 29, 1999, filing a press release concerning the Company's earnings for the third quarter of 1999 and financial information for the three months ended September 30, 1999. A Current Report on Form 8-K (Items 2 and 7), filed with the Securities and Exchange Commission on December 22, 1999, filing a press release announcing that the Company completed its acquisition of Outdoor Systems, Inc. on December 7, 1999. 50 INFINITY BROADCASTING CORPORATION 51 INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULE TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF INFINITY BROADCASTING CORPORATION: Under date of January 25, 2000, except as to Note 17, which is as of March 21, 2000, we reported on the consolidated balance sheet of Infinity Broadcasting Corporation and subsidiaries as of December 31, 1999 and 1998, and the related consolidated statements of earnings and comprehensive income, cash flows, and changes in stockholders' equity for each of the years in the three-year period ended December 31, 1999, which are included in the 1999 Annual Report on Form 10-K. In connection with our audits of the aforementioned consolidated financial statements, we also audited the related consolidated financial statement schedule included in the 1999 Annual Report on Form 10-K. This consolidated financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion in this consolidated financial statement schedule based on our audits. In our opinion, such consolidated financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ KPMG LLP KPMG LLP New York, New York March 21, 2000 INFINITY BROADCASTING CORPORATION 51 52 SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997 (in thousands)
ADDITIONS --------------------------- INCREASE BALANCE AT CHARGED TO RESULTING AMOUNTS BALANCE BEGINNING COSTS AND FROM WRITTEN AT END DESCRIPTION OF YEAR EXPENSES ACQUISITIONS OFF OF YEAR - ----------------------------------------------------------------------------------------------------------- 1999 allowance for doubtful accounts $27,463 $13,590 $18,104(1) $(10,289) $48,868 1998 allowance for doubtful accounts 15,086 14,365 8,349(2) (10,337) 27,463 1997 allowance for doubtful accounts 11,417 10,382 -- (6,713) 15,086 - -----------------------------------------------------------------------------------------------------------
(1) Relates to the acquisition of Outdoor Systems, Inc. on December 7, 1999. (2) Relates to the acquisition of American Radio Systems, Inc. on June 4, 1998. 52 INFINITY BROADCASTING CORPORATION 53 SIGNATURE Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on the 27th of March, 2000. INFINITY BROADCASTING CORPORATION By: /s/ FARID SULEMAN -------------------------------------- Farid Suleman Executive Vice President, Chief Financial Officer and Treasurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. SIGNATURE AND TITLE Mel Karmazin, Chairman, President, and Chief Executive Officer (Principal Executive Officer) and Director Farid Suleman, Executive Vice President, Chief Financial Officer, Treasurer (Principal Financial and Accounting Officer) and Director George H. Conrades, Director Bruce S. Gordon, Director William S. Levine, Director Arturo R. Moreno, Director Richard R. Pivirotto, Director Jeffrey Sherman, Director Paula Stern, Director Robert D. Walter, Director By: /s/ FARID SULEMAN --------------------------- Farid Suleman Attorney-in-Fact March 27, 2000 Original powers of attorney authorizing Farid Suleman and certain others, individually, to sign this report on behalf of the listed directors and officers of the Company have been filed with the Securities and Exchange Commission and are included as Exhibit 24 to this report. INFINITY BROADCASTING CORPORATION 53 EX-10.8 2 CREDIT AGREEMENT 1 Exhibit 10.8 EXECUTION COPY - -------------------------------------------------------------------------------- $1,500,000,000 CREDIT AGREEMENT among INFINITY BROADCASTING CORPORATION, THE SUBSIDIARY BORROWERS PARTIES HERETO, CBS CORPORATION, as Guarantor THE LENDERS NAMED HEREIN, THE CHASE MANHATTAN BANK, as Documentation Agent, MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent, and BANK OF AMERICA, N.A. and THE TORONTO-DOMINION BANK, as Syndication Agents Dated as of December 10, 1999 - -------------------------------------------------------------------------------- CHASE SECURITIES INC., as Sole Lead Arranger and Book Manager 2 TABLE OF CONTENTS
Page ---- ARTICLE I. DEFINITIONS..............................................................................................1 SECTION 1.1. Defined Terms..............................................................................1 SECTION 1.2. Terms Generally...........................................................................18 ARTICLE II.THE CREDITS.............................................................................................19 SECTION 2.1. Commitments...............................................................................19 SECTION 2.2. Revolving Credit Loans; Competitive Loans.................................................19 SECTION 2.3. Competitive Bid Procedure.................................................................20 SECTION 2.4. Revolving Credit Borrowing Procedure......................................................22 SECTION 2.5. Repayment of Loans........................................................................22 SECTION 2.6. Swingline Loans...........................................................................22 SECTION 2.7. Letters of Credit.........................................................................25 SECTION 2.8. Conversion and Continuation Options.......................................................28 SECTION 2.9. Fees......................................................................................29 SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc...............................................29 SECTION 2.11. Default Interest..........................................................................30 SECTION 2.12. Alternate Rate of Interest................................................................30 SECTION 2.13. Termination and Reduction of Commitments..................................................31 SECTION 2.14. Optional Prepayments of Revolving Credit Loans............................................31 SECTION 2.15. Reserve Requirements......................................................................32 SECTION 2.16. Indemnity.................................................................................33 SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt.....................................34 SECTION 2.18. Sharing of Setoffs........................................................................35 SECTION 2.19. Payments..................................................................................36 SECTION 2.20. Taxes.....................................................................................36 SECTION 2.21. Termination or Assignment of Commitments Under Certain Circumstances......................37 ARTICLE III. REPRESENTATIONS AND WARRANTIES.......................................................................38 SECTION 3.1. Corporate Existence.......................................................................38 SECTION 3.2. Financial Condition.......................................................................38 SECTION 3.3. Litigation................................................................................39 SECTION 3.4. No Breach, etc............................................................................39 SECTION 3.5. Corporate Action..........................................................................40 SECTION 3.6. Approvals.................................................................................40 SECTION 3.7. ERISA.....................................................................................40 SECTION 3.8. Taxes.....................................................................................40 SECTION 3.9. Investment Company Act....................................................................40 SECTION 3.10. Hazardous Materials.......................................................................40 SECTION 3.11. Material Subsidiaries.....................................................................40 SECTION 3.12. No Material Misstatements.................................................................41 SECTION 3.13. Ownership of Property.....................................................................41 SECTION 3.14. Intellectual Property.....................................................................41 SECTION 3.15. FCC Matters...............................................................................41 SECTION 3.16. Year 2000 Matters.........................................................................41
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Page ---- ARTICLE IV. CONDITIONS OF EFFECTIVENESS AND LENDING................................................................42 SECTION 4.1. Effectiveness.............................................................................42 SECTION 4.2. Initial Loans to Subsidiary Borrowers.....................................................42 SECTION 4.3. All Credit Events.........................................................................43 ARTICLE V. COVENANTS...............................................................................................43 SECTION 5.1. Financial Statements......................................................................43 SECTION 5.2. Corporate Existence, Etc..................................................................45 SECTION 5.3. Insurance.................................................................................46 SECTION 5.4. Prohibition of Fundamental Changes........................................................46 SECTION 5.5. Limitation on Liens.......................................................................47 SECTION 5.6. Limitation on Subsidiary Indebtedness.....................................................49 SECTION 5.7. Consolidated Leverage Ratio...............................................................49 SECTION 5.8. Consolidated Coverage Ratio...............................................................49 SECTION 5.9. Use of Proceeds...........................................................................49 SECTION 5.10. Transactions with Affiliates..............................................................50 SECTION 5.11. Limitation on Negative Pledge Clauses.....................................................50 ARTICLE VI. EVENTS OF DEFAULT......................................................................................50 ARTICLE VII. THE AGENTS............................................................................................53 ARTICLE VIII. GUARANTEE............................................................................................55 SECTION 8.1. Guarantee.................................................................................55 SECTION 8.2. No Subrogation, etc.......................................................................55 SECTION 8.3. Amendments, etc. with respect to the Borrower Obligations.................................56 SECTION 8.4. Guarantee Absolute and Unconditional......................................................56 SECTION 8.5. Reinstatement.............................................................................57 SECTION 8.6. Payments..................................................................................57 SECTION 8.7. Infinity Guarantee........................................................................57 ARTICLE IX. MISCELLANEOUS..........................................................................................57 SECTION 9.1. Notices...................................................................................57 SECTION 9.2. Survival of Agreement.....................................................................58 SECTION 9.3. Binding Effect............................................................................58 SECTION 9.4. Successors and Assigns....................................................................58 SECTION 9.5. Expenses; Indemnity.......................................................................61 SECTION 9.6. Right of Setoff...........................................................................62 SECTION 9.7. APPLICABLE LAW............................................................................62 SECTION 9.8. Waivers; Amendment........................................................................62 SECTION 9.9. Entire Agreement..........................................................................63 SECTION 9.10. Waiver of Jury Trial......................................................................63 SECTION 9.11. Severability..............................................................................63 SECTION 9.12. Counterparts..............................................................................63 SECTION 9.13. Headings..................................................................................63 SECTION 9.14. Jurisdiction; Consent to Service of Process...............................................64 SECTION 9.15. Confidentiality...........................................................................64
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Page ---- EXHIBITS - -------- Exhibit A Administrative Questionnaire Exhibit B-1 Form of Competitive Bid Request Exhibit B-2 Form of Notice of Competitive Bid Request Exhibit B-3 Form of Competitive Bid Exhibit B-4 Form of Revolving Credit Borrowing Request Exhibit B-5 Form of Swingline Borrowing Request Exhibit B-6 Form of Notice of Designated Letter of Credit Exhibit B-7 Form of Subsidiary Borrower Designation Exhibit B-8 Form of Subsidiary Borrower Request Exhibit C Form of Assignment and Acceptance Exhibit D Form of Confidentiality Agreement Exhibit E-1 Omitted Exhibit E-2 Omitted Exhibit F Form of Closing Certificate Exhibit G Form of Issuing Lender Agreement SCHEDULES - --------- Schedule 1.1 Commitments; Addresses for Notices Schedule 3.11 Material Subsidiaries Schedule 5.5(m) Certain Infinity Assets Schedule 5.6 Existing Infinity Indebtedness
-iii- 5 CREDIT AGREEMENT entered into as of December 10, 1999, among INFINITY BROADCASTING CORPORATION, a Delaware corporation ("Infinity"), each Subsidiary Borrower (as herein defined); CBS Corporation, a Pennsylvania corporation ("CBS"), as a guarantor; the lenders whose names appear on Schedule 1.1 hereto or who subsequently become parties hereto as provided herein (the "Lenders"); BANK OF AMERICA, N.A. ("Bank of America") and THE TORONTO-DOMINION BANK ("Toronto Dominion"), as syndication agents for the Lenders (in such capacity, the "Syndication Agents"); THE CHASE MANHATTAN BANK, a New York banking corporation ("Chase"), as documentation agent for the Lenders; and MORGAN GUARANTY TRUST COMPANY OF NEW YORK, a New York banking corporation ("Morgan"), as administrative agent for the Lenders. W I T N E S S E T H : - - - - - - - - - - WHEREAS, Infinity is a party to the Credit Agreement dated as of August 29, 1996, as amended by the First Amendment thereto dated as of January 29, 1997, the Second Amendment thereto dated as of March 21, 1997, the Third Amendment thereto dated as of March 3, 1998 and the Fourth Amendment thereto dated as of February 26, 1999 (the "Existing Credit Agreement"), CBS ("CBS"), the Subsidiary Borrowers (as defined therein) parties thereto, the Lenders, NationsBank, N.A. and The Toronto-Dominion Bank, as Syndication Agents, The Chase Manhattan Bank, as Documentation Agent, and Morgan Guaranty Trust Company of New York, as Administrative Agent; WHEREAS, CBS and Infinity have requested the rights and obligations of Infinity under the Existing Credit Agreement (and those of any Subsidiary Borrower party to the Existing Credit Agreement that is a Subsidiary of Infinity) be re-evidenced in this separate credit agreement pursuant to which the Lenders shall provide extensions of credit to be used for general corporate purposes, which extensions of credit shall enable (a) each Borrower (as herein defined) to borrow loans on a revolving credit basis on and after the Closing Date (as herein defined) and prior to the Revolving Credit Maturity Date (as herein defined), (b) Infinity to request the issuance of Letters of Credit (as herein defined) and (c) each Borrower to invite the Lenders to bid on an uncommitted basis on short-term borrowings by such Borrower, in an aggregate principal amount for all such extensions of credit not in excess of $1,500,000,000; and WHEREAS, the Lenders are willing to extend credit to the Borrowers on the terms and subject to the conditions herein set forth; NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the parties hereto hereby agree as follows: ARTICLE I. DEFINITIONS SECTION 1.1. Defined Terms. As used in this Agreement, the following terms shall have the meanings specified below: "ABR Loan" shall mean (a) any Revolving Credit Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II and (b) any ABR Swingline Loan. 6 2 "ABR Revolving Credit Loan" shall mean any Revolving Credit Loan which is an ABR Loan. "ABR Swingline Exposures" shall mean at any time the aggregate principal amount at such time of the outstanding ABR Swingline Loans. The ABR Swingline Exposure of any Lender at any time shall mean its Revolving Credit Percentage of the aggregate ABR Swingline Exposures at such time. "ABR Swingline Loan" shall have the meaning assigned to such term in Section 2.6(a). "Absolute Rate Loan" shall mean any Competitive Loan bearing interest at a fixed percentage rate per annum (expressed in the form of a decimal rounded to no more than four decimal places) specified by the Lender making such Loan in its Competitive Bid. "Administrative Agent" shall mean Morgan, together with its affiliates, as an arranger of the Commitments and as the administrative agent for the Lenders under this Agreement, and any successor thereto pursuant to Article VII. "Administrative Agent Fee Letter" shall mean the Fee Letter with respect to this Agreement between CBS and the Administrative Agent, as amended, supplemented or otherwise modified from time to time. "Administrative Agent's Fees" shall have the meaning assigned to such term in Section 2.9(c). "Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit A hereto. "Affiliate" shall mean, as to Infinity, any Person which directly or indirectly controls, is under common control with or is controlled by Infinity. As used in this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise), provided that, in any event, any Person which owns directly or indirectly 10% or more of the securities having ordinary voting power for the election of directors or other governing body of a corporation or 10% or more of the partnership or other ownership interests of any other Person (other than as a limited partner of such other Person) will be deemed to control such corporation or other Person. Notwithstanding the foregoing, (a) no individual shall be deemed to be an Affiliate of Infinity solely by reason of his or her being an officer, director or employee of Infinity or any of its Subsidiaries and (b) CBS and Infinity and their Subsidiaries shall not be deemed to be Affiliates of each other. "Agents" shall mean the collective reference to the Administrative Agent, the Documentation Agent and the Syndication Agents. "Aggregate LC Exposure" shall mean, at any time, the sum of (a) the aggregate undrawn amount of all Letters of Credit outstanding at such time and (b) the aggregate amount which has been drawn under Letters of Credit but for which the applicable Issuing Lender or the Lenders, as the case may be, have not been reimbursed by Infinity at such time. 7 3 "Agreement" shall mean this Credit Agreement, as amended, supplemented or otherwise modified from time to time. "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For purposes hereof, "Prime Rate" shall mean the rate of interest per annum publicly announced from time to time by the Lender serving as the Administrative Agent as its prime rate in effect at its principal office in New York City; each change in the Prime Rate shall be effective on the date such change is publicly announced as effective; and "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for the day of such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it. If for any reason the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms thereof, the Alternate Base Rate shall be the Prime Rate until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Prime Rate or the Federal Funds Effective Rate, respectively. "Applicable Commitment Fee Rate" shall mean the "Applicable Commitment Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I hereto. "Applicable Eurodollar Margin" shall mean the "Applicable Eurodollar Margin" determined in accordance with the Pricing Grid set forth in Annex I hereto. "Applicable LC Fee Rate" shall mean (a) with respect to Financial Letters of Credit, the "Applicable Financial LC Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I hereto and (b) with respect to Non-Financial Letters of Credit, the "Applicable Non-Financial LC Fee Rate" determined in accordance with the Pricing Grid set forth in Annex I hereto. "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender and an assignee, and accepted by the Administrative Agent, in the form of Exhibit C. "Bank of America" shall have the meaning assigned to such term in the preamble to this Agreement. "Board" shall mean the Board of Governors of the Federal Reserve System of the United States. "Borrower" shall mean, as applicable, Infinity or the relevant Subsidiary Borrower. "Borrower Obligations" shall mean, with respect to each Borrower, the unpaid principal of and interest on the Loans made to such Borrower (including, without limitation, interest accruing after the maturity of the Loans made to such Borrower and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to such Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) 8 4 and all other obligations and liabilities of such Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement. "Business Day" shall mean any day (other than a day which is a Saturday, Sunday or legal holiday in the State of New York) on which banks are open for business in New York City; provided, however, that, when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in Dollar deposits in the London interbank market. "Capital Lease Obligations" of any Person shall mean the obligations of such Person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposes of this Agreement, the amount of such obligations at any time shall be the capitalized amount thereof at such time determined in accordance with GAAP. "Capital Stock" shall mean any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants or options to purchase any of the foregoing. "CBS" shall have the meaning assigned to such term in the preamble to this Agreement. "CBS Consolidated EBITDA" shall mean, with respect to CBS and its Consolidated Subsidiaries for any period, operating profit (loss) (excluding that related to Discontinued Operations), plus other income (loss), plus interest income, plus depreciation and amortization (excluding amortization related to programming rights), excluding (a) gains (losses) on sales of assets (except (I) gains (losses) on sales of inventory sold in the ordinary course of business and (II) gains (losses) on sales of other assets if such gains (losses) are less than $10,000,000 individually and less than $50,000,000 in the aggregate during such period), and (b) other non-cash items (including (i) provisions for losses and additions to valuation allowances, (ii) provisions for restructuring, litigation and environmental reserves and losses on the Disposition of businesses and (iii) pension settlement charges), in each case determined for such period on a basis consistent with that reported in CBS's Form 10-Q for the fiscal quarter ended September 30, 1998 filed with the SEC, minus cash payments made during such period in respect of non-cash charges taken during any previous period (excluding cash payments in respect of non-cash charges taken prior to December 31, 1998). "CBS Consolidated Leverage Ratio" shall mean, as of the last day of any period, the ratio of CBS Consolidated Total Funded Indebtedness at such date to CBS Consolidated EBITDA for such period. "CBS Consolidated Total Funded Indebtedness" shall mean, with respect to CBS and its Consolidated Subsidiaries at any date, the sum at such date of (a) all Indebtedness for Borrowed Money (including commercial paper and unpaid reimbursement obligations in respect of drawn letters of credit but otherwise excluding letters of credit), (b) all indebtedness for the deferred purchase price of Property or services (other than trade accounts payable and accruals in the ordinary course of business), (c) all Capital Lease Obligations, (d) the amount of any Indebtedness for Borrowed Money secured by receivables sold by Infinity and its Consolidated Subsidiaries pursuant to a program established for the purpose of financing such receivables, and (e) all Guarantees of indebtedness of the type referred to in 9 5 any of clauses (a) through (d) above (other than Guarantees of any such indebtedness of CBS and its Consolidated Subsidiaries); provided, that, in no event shall Indebtedness attributable to Discontinued Operations be included in Consolidated Total Funded Indebtedness. "Change of Control" shall mean that CBS, or following the Viacom Merger, Viacom, shall have ceased to hold, directly or indirectly, beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 promulgated by the SEC pursuant to the Exchange Act) of more than 50% of the outstanding shares of voting and economic stock of Infinity. "Chase" shall have the meaning assigned to such term in the preamble to this Agreement. "Closing Certificate" shall mean a certificate, substantially in the form of Exhibit F. "Closing Date" shall mean December 10, 1999. "Code" shall mean the Internal Revenue Code of 1986, as the same may be amended from time to time. "Commitment" shall mean, with respect to each Lender, the commitment of such Lender to make Revolving Credit Loans pursuant to Section 2.1, to make or refund ABR Swingline Loans pursuant to Section 2.6 and to issue or participate in Letters of Credit pursuant to Section 2.7, as set forth on Schedule 1.1, as such Lender's Commitment may be permanently terminated or reduced from time to time pursuant to Section 2.13 or changed pursuant to Section 9.4. "Commitment Fee Calculation Amount" shall mean, as to any Lender at any time, an amount equal to the excess, if any, of (a) such Lender's Commitment over (b) the sum of (i) the aggregate principal amount of all Revolving Credit Loans made by such Lender then outstanding, (ii) such Lender's LC Exposure at such time and (iii) in the case of each Swingline Lender, the aggregate principal amount of all Swingline Loans made by such Swingline Lender then outstanding. "Commitment Fees" shall mean all fees payable pursuant to Section 2.9(a). "Communications Act" shall mean the Communications Act of 1934, as amended. "Competitive Bid" shall mean an offer to make a Competitive Loan pursuant to Section 2.3. "Competitive Bid Rate" shall mean, as to any Competitive Bid made pursuant to Section 2.3(b), (a) in the case of a Eurodollar Competitive Loan, the Margin, and (b) in the case of an Absolute Rate Loan, the fixed rate of interest offered by the Lender making such Competitive Bid. "Competitive Bid Request" shall mean a request made pursuant to Section 2.3 in the form of Exhibit B-1. "Competitive Loan" shall mean a Loan from a Lender to a Borrower pursuant to the bidding procedure described in Section 2.3. Each Competitive Loan shall be a Eurodollar Competitive Loan or an Absolute Rate Loan. 10 6 "Compliance Certificate" shall have the meaning assigned to such term in Section 5.1. "Confidential Information" shall have the meaning assigned to such term in Section 9.15(a). "Confidential Information Memorandum" shall mean the Information Memorandum dated October 1999 and furnished to the Lenders. "Confidentiality Agreement" shall mean a confidentiality agreement substantially in the form of Exhibit D, with such changes as Infinity may approve. "Consolidated Coverage Ratio" shall mean, for any period, the ratio of (a) Consolidated EBITDA for such period to (b) Consolidated Interest Expense for such period. "Consolidated EBITDA" shall mean, with respect to Infinity and its Consolidated Subsidiaries for any period, operating profit (loss), plus other income (loss), plus interest income, plus depreciation and amortization (excluding amortization related to programming rights), excluding (a) gains (losses) on sales of assets (except (I) gains (losses) on sales of inventory sold in the ordinary course of business and (II) gains (losses) on sales of other assets if such gains (losses) are less than $10,000,000 individually and less than $50,000,000 in the aggregate during such period), and (b) other non-cash items (including (i) provisions for losses and additions to valuation allowances, (ii) provisions for restructuring, litigation and environmental reserves and losses on the Disposition of businesses and (iii) pension settlement charges), in each case determined for such period on a basis consistent with that reported in Infinity's Form 10-Q and 10-Q/A for the fiscal quarter ended June 30, 1999 filed with the SEC, minus cash payments made during such period in respect of non-cash charges taken during any previous period (excluding cash payments in respect of non-cash charges taken prior to December 31, 1998). "Consolidated Interest Expense" shall mean, for any period, the gross interest expense of Infinity and its Consolidated Subsidiaries for such period, computed and consolidated in accordance with GAAP, but excluding the amortization of deferred financing charges for such period. "Consolidated Leverage Ratio" shall mean, as of the last day of any period, the ratio of Consolidated Total Funded Indebtedness at such date to Consolidated EBITDA for such period. "Consolidated Subsidiary" shall mean, as to any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired) the financial statements of which shall be consolidated with the financial statements of such Person in accordance with GAAP. "Consolidated Total Funded Indebtedness" shall mean, with respect to Infinity and its Consolidated Subsidiaries at any date, the sum at such date of (a) all Indebtedness for Borrowed Money (including commercial paper and unpaid reimbursement obligations in respect of drawn letters of credit but otherwise excluding letters of credit), (b) all indebtedness for the deferred purchase price of Property or services (other than trade accounts payable and accruals in the ordinary course of business), (c) all Capital Lease Obligations, (d) the amount of any Indebtedness for Borrowed Money secured by receivables sold by Infinity and its Consolidated Subsidiaries pursuant to a program established for the purpose of financing such receivables, and (e) all Guarantees of indebtedness of the type referred to in any of clauses (a) through (d) above (other than Guarantees of any such indebtedness of Infinity and its Consolidated Subsidiaries). 11 7 "Credit Event" shall mean the making of any Loan or the issuance of any Letter of Credit hereunder (including the designation of a Designated Letter of Credit as a "Letter of Credit" hereunder). It is understood that conversions and continuations pursuant to Section 2.8 do not constitute "Credit Events". "Debt Rating" shall mean the rating applicable to CBS's senior, unsecured, non-credit-enhanced long-term indebtedness for borrowed money, as assigned by either Rating Agency. "Default" shall mean any event or condition which upon notice, lapse of time or both would constitute an Event of Default. "Designated Letters of Credit" shall mean each letter of credit issued by an Issuing Lender that (a) is not a Letter of Credit hereunder at the time of its issuance and (b) is designated on or after the Closing Date by Infinity, with the consent of such Issuing Lender, as a "Letter of Credit" hereunder by written notice to the Administrative Agent in the form of Exhibit B-6. "Discontinued Operations" shall mean the operations classified as "discontinued operations" pursuant to Accounting Principles Board Opinion No. 30 as presented in the quarterly report of CBS on Form 10-Q for the quarter ended September 30, 1997 and filed with the SEC on December 14, 1997. "Disposition" shall mean, with respect to any Property, any sale, lease, assignment, conveyance, transfer or other disposition thereof; and the terms "Dispose" and "Disposed of" shall have correlative meanings. "Documentation Agent" shall mean Chase, together with its affiliates, as an arranger of the Commitments and as the documentation agent for the Lenders under this Agreement. "Dollars" or "$" shall mean lawful money of the United States of America. "Environmental Laws" shall mean any and all Federal, state, local and foreign statutes, laws, regulations, ordinances, rules, judgments, orders, decrees, permits, concessions, grants, franchises, licenses, agreements or other governmental restrictions relating to the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals, or industrial, toxic or hazardous substances or wastes into the environment, including, without limitation, ambient air, surface water, ground water or land, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes. "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended from time to time. "ERISA Affiliate" shall mean, with respect to Infinity, any trade or business (whether or not incorporated) that is a member of a group of which Infinity is a member and which is treated as a single employer under Section 414 of the Code. "Eurodollar Competitive Loan" shall mean any Competitive Loan which is a Eurodollar Loan. 12 8 "Eurodollar Loan" shall mean any Loan bearing interest at a rate determined by reference to the Eurodollar Rate. "Eurodollar Rate" shall mean, with respect to an Interest Period pertaining to any Eurodollar Loan, the rate of interest determined on the basis of the rate for deposits in Dollars for a period equal to such Interest Period commencing on the first day of such Interest Period appearing on Page 3750 of the Telerate Screen as of 11:00 A.M., London time, two Business Days prior to the beginning of such Interest Period. In the event that such rate does not appear on Page 3750 of the Telerate Screen (or otherwise on the Telerate Service), the "Eurodollar Rate" shall be determined by reference to such other publicly available service for displaying eurodollar rates as may be agreed upon by the Administrative Agent and CBS or, in the absence of such agreement, the "Eurodollar Rate" shall instead be the interest rate per annum (rounded upwards, if necessary, to the next 1/16 of 1%) equal to the average of the rates at which Dollar deposits approximately equal in principal amount to (a) in the case of a Eurodollar Tranche, the portion of such Eurodollar Tranche of the Lender serving as Administrative Agent and (b) in the case of a Eurodollar Competitive Loan, a principal amount that would have been the portion of such Loan of the Lender serving as the Administrative Agent had such Loan been a Eurodollar Revolving Credit Loan, and for a maturity comparable to such Interest Period, are offered by the principal London offices of the Reference Banks (or, if any Reference Bank does not at the time maintain a London office, the principal London office of any affiliate of such Reference Bank) for immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period. "Eurodollar Revolving Credit Loan" shall mean any Revolving Credit Loan which is a Eurodollar Loan. "Eurodollar Tranche" shall mean the collective reference to Eurodollar Revolving Credit Loans made by the Lenders, the then current Interest Periods with respect to all of which begin on the same date and end on the same later date (whether or not such Loans shall originally have been made on the same day). "Event of Default" shall have the meaning assigned to such term in Article VI, provided that any requirement for the giving of notice, the lapse of time, or both, has been satisfied. "Exchange Act Report" shall have the meaning assigned to such term in Section 3.3. "Excluded Indebtedness" shall mean (a) Indebtedness of any Person which is acquired by Infinity or any of its Subsidiaries after the Original Closing Date, which Indebtedness was outstanding prior to the date of acquisition of such Person and was not created in anticipation thereof, (b) any Indebtedness owing by Infinity or any of its Subsidiaries to Infinity or any of its Subsidiaries (including any intercompany Indebtedness created by the declaration of a note payable dividend by any Subsidiary to Infinity or any of its other Subsidiaries) and (c) Specified Section 5.5(n) Indebtedness. "Existing Credit Agreement" shall have the meaning assigned to such term in the recitals to this Agreement. "Facility Exposure" shall mean, with respect to any Lender, the sum of (a) the Outstanding Revolving Extensions of Credit of such Lender, (b) the aggregate outstanding principal 13 9 amount of any Competitive Loans made by such Lender and (c) in the case of a Swingline Lender, the aggregate outstanding principal amount of any Quoted Swingline Loans made by such Swingline Lender. "FCC" shall mean the Federal Communications Commission. "FCC Licenses" shall mean, with respect to Infinity or any of its Subsidiaries, any radio, television or other license, permit, certificate of compliance or authorization issued by the FCC and required for the operation of its respective radio and television broadcast stations. "Federal Funds Effective Rate" shall have the meaning assigned to such term in the definition of "Alternate Base Rate". "Fees" shall mean the Commitment Fees, the Administrative Agent's Fees, the Issuing Lender Fees and the LC Fees. "Financial Covenants" shall have the meaning assigned to such term in Section 1.2(b). "Financial Letter of Credit" shall mean any Letter of Credit that, as determined by the Administrative Agent, (a) supports a financial obligation and (b) qualifies for the 100% credit conversion factor under the applicable Bank for International Settlements guidelines. "Financial Officer" of any corporation shall mean its chief financial officer, its Vice President and Treasurer or its Vice President and Chief Accounting Officer or, in each case, any comparable officer or any Person designated by any such officer. "Foreign Currency" shall mean any currency other than Dollars which is readily convertible by the relevant Issuing Lender into Dollars. "Foreign Exchange Rate" shall mean, with respect to any Foreign Currency on a particular date, the rate at which such Foreign Currency may be exchanged into Dollars, determined by reference to the selling rate in respect of such Foreign Currency published in the "Wall Street Journal" on the relevant date of determination. In the event that such rate is not, or ceases to be, so published by the "Wall Street Journal", the "Foreign Exchange Rate" with respect to such Foreign Currency shall be determined by reference to such other publicly available source for determining exchange rates as may be agreed upon by the Administrative Agent and Infinity or, in the absence of such agreement, such "Foreign Exchange Rate" shall instead be the Administrative Agent's spot rate of exchange in the interbank market where its foreign currency exchange operations in respect of such Foreign Currency are then being conducted, at or about 12:00 noon, local time, at such date for the purchase of Dollars with such Foreign Currency, for delivery two banking days later. "GAAP" shall mean generally accepted accounting principles applied on a consistent basis (but subject to changes approved by Infinity's independent public accountants, or, with respect to determining the CBS Consolidated Leverage Ratio, changes approved by CBS's independent public accountants). "Governmental Authority" shall mean any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body. "Granting Bank" shall have to meaning specified in Section 9.4(i). 14 10 "Guarantee" of or by any Person shall mean any obligation, contingent or otherwise, of such Person guaranteeing or entered into with the purpose of guaranteeing any Indebtedness of any other Person (the "primary obligor") in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or to purchase (or to advance or supply funds for the purchase of) any security for the payment of such Indebtedness, (b) to purchase Property, securities or services for the purpose of assuring the owner of such Indebtedness of the payment of such Indebtedness or (c) to maintain working capital, equity capital or other financial statement condition or liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness; provided, however, that the term "Guarantee" shall not include endorsements for collection or deposit, in either case in the ordinary course of business. "Indebtedness" of any Person shall mean, without duplication, (a) all obligations of such Person for borrowed money, (b) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such Person upon which interest charges are customarily paid, (d) all obligations of such Person under conditional sale or other title retention agreements relating to Property or assets purchased by such Person, (e) all obligations of such Person issued or assumed as the deferred purchase price of Property or services, (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on Property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person and (i) all obligations of such Person as an account party in respect of outstanding letters of credit (whether or not drawn) and bankers' acceptances; provided, however, that Indebtedness shall not include (i) trade accounts payable arising in the ordinary course of business, (ii) deferred compensation, (iii) any Indebtedness of such Person to the extent (A) such Indebtedness does not appear on the financial statements of such Person, (B) such Indebtedness is recourse only to certain assets of such Person and (C) the assets to which such Indebtedness is recourse only appear on the financial statements of such Person net of such Indebtedness or (iv) obligations (not constituting obligations for borrowed money) specifically with respect to the production, distribution and acquisition of television and other programming rights or talent; and provided further that the amount of any Indebtedness described in clause (f) above shall be the lower of the amount of the obligation or the fair market value of the collateral securing such obligation. The Indebtedness of any Person shall include the Indebtedness of any partnership in which such Person is a general partner, which Indebtedness is recourse to such general partner. "Indebtedness for Borrowed Money" shall mean Indebtedness of the type described in clause (a) or (b) of the definition of "Indebtedness" and any Guarantee thereof. "Infinity" shall have the meaning assigned to such term in the preamble to this Agreement. "Infinity Ratings" shall mean, at any time, the most recently announced rating applicable to Infinity's commercial paper, as assigned by each Rating Agency. "Information" shall have the meaning assigned to such term in Section 3.13. 15 11 "Intellectual Property" shall mean the collective reference to patents, trademarks (registered or unregistered), trade names, service marks, assumed names, copyrights, technology, know-how and processes. "Interest Payment Date" shall mean (a) with respect to any Eurodollar Loan or Absolute Rate Loan, the last day of the Interest Period applicable thereto and, in the case of a Eurodollar Loan with an Interest Period of more than three months' duration or an Absolute Rate Loan with an Interest Period of more than 90 days' duration, each day that would have been an Interest Payment Date for such Loan had successive Interest Periods of three months' duration or 90 days' duration, as the case may be, been applicable to such Loan and, in addition, the date of any conversion of any Eurodollar Revolving Credit Loan to an ABR Loan, the date of repayment or prepayment of any Eurodollar Loan and the applicable Maturity Date; (b) with respect to any ABR Loan (other than an ABR Swingline Loan which is not an Unrefunded Swingline Loan), the last day of each March, June, September and December and the applicable Maturity Date; (c) with respect to any ABR Swingline Loan (other than an Unrefunded Swingline Loan), the earlier of (i) the day that is five Business Days after such Loan is made and (ii) the Revolving Credit Maturity Date and (d) with respect to any Quoted Swingline Loan, the date established as such by the relevant Swingline Borrower and the relevant Swingline Lender prior to the making thereof (but in any event no later than the Revolving Credit Maturity Date). "Interest Period" shall mean (a) as to any Eurodollar Loan, the period commencing on the borrowing date or conversion date of such Loan, or on the last day of the immediately preceding Interest Period applicable to such Loan, as the case may be, and ending on the numerically corresponding day (or, if there is no numerically corresponding day, on the last day) in the calendar month that is 1, 2, 3 or 6 months or (subject, in the case of Revolving Credit Loans, to the prior consent of each Lender) 9 or 12 months thereafter, as the relevant Borrower may elect, and (b) as to any Absolute Rate Loan, the period commencing on the date of such Loan and ending on the date specified in the Competitive Bids in which the offer to make such Absolute Rate Loan was extended, which shall not be later than 180 days after the date of such Loan; provided, however, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of Eurodollar Loans only, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) notwithstanding anything to the contrary herein, no Borrower may select an Interest Period which would end after the Maturity Date applicable to the relevant Loan. Interest shall accrue from and including that first day of an Interest Period to but excluding the last day of such Interest Period. "Interim Certificate" shall have the meaning assigned to such term in Annex I hereto. "Issuing Lender" shall mean any Lender designated as an Issuing Lender in an Issuing Lender Agreement executed by such Lender, Infinity and the Administrative Agent. "Issuing Lender Agreement" shall mean an agreement, substantially in the form of Exhibit G, executed by a Lender, Infinity, and the Administrative Agent pursuant to which such Lender agrees to become an Issuing Lender hereunder, it being understood that any Issuing Lender Agreements under the Existing Credit Agreement with respect to Letters of Credit issued on behalf of Infinity or any Subsidiary Borrowers shall be deemed, on the Closing Date, to be between the Lender party thereto, Infinity, and the Administrative Agent and issued pursuant hereto. "Issuing Lender Fees" shall mean, as to any Issuing Lender, the fees set forth in the applicable Issuing Lender Agreement. 16 12 "LC Disbursement" shall mean any payment or disbursement made by an Issuing Lender under or pursuant to a Letter of Credit. "LC Exposure" shall mean, as to each Lender, such Lender's Revolving Credit Percentage of the Aggregate LC Exposure. "LC Fee" shall have the meaning assigned such term in Section 2.9(b). "Lenders" shall have the meaning assigned to such term in the preamble to this Agreement. "Letters of Credit" shall mean letters of credit or bank guarantees issued by an Issuing Lender for the account of Infinity pursuant to Section 2.7 (including any Designated Letters of Credit). "Lien" shall mean, with respect to any asset or Property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, charge or security interest in or on such asset or Property and (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement relating to such asset or Property. "Loan" shall mean any loan made by a Lender hereunder. "Margin" shall mean, as to any Eurodollar Competitive Loan, the margin (expressed as a percentage rate per annum in the form of a decimal rounded to no more than four places) to be added to or subtracted from the Eurodollar Rate in order to determine the interest rate applicable to such Loan, as specified in the Competitive Bid relating to such Loan. "Margin Stock" shall have the meaning assigned to such term under Regulation U. "Material Acquisition" shall mean any acquisition of Property or series of related acquisitions of Property (including by way of merger) which (a) constitutes assets comprising all or substantially all of an operating unit of a business or constitutes all or substantially all of the common stock of a Person and (b) involves the payment of consideration by Infinity and its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash consideration consisting of notes or other debt securities and valued at fair market value in the case of other non-cash consideration) in excess of $50,000,000. "Material Adverse Effect" shall mean (a) a material adverse effect on the Property, business, results of operations or financial condition of Infinity and its Subsidiaries taken as a whole or (b) material impairment of the ability of Infinity to perform any of its obligations under this Agreement. "Material Disposition" shall mean any Disposition of Property or series of related Dispositions of Property which yields gross proceeds to Infinity or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non-cash proceeds) in excess of $50,000,000. "Material Subsidiary" shall mean any Subsidiary of Infinity except for Subsidiaries which in the aggregate would not constitute a significant subsidiary under Regulation S-X of the SEC, provided, that each Subsidiary Borrower shall in any event constitute a Material Subsidiary. 17 13 "Maturity Date" shall mean (a) in the case of the Revolving Credit Loans and the ABR Swingline Loans, the Revolving Credit Maturity Date, (b) in the case of the Quoted Swingline Loans, the date established as such by the relevant Swingline Borrower and the relevant Swingline Lender prior to the making thereof (but in any event no later than the Revolving Credit Maturity Date) and (c) in the case of Competitive Loans, the last day of the Interest Period applicable thereto, as specified in the related Competitive Bid Request. "Moody's" shall mean Moody's Investors Service, Inc. "Morgan" shall have the meaning assigned to such term in the preamble to this Agreement. "Multiemployer Plan" shall mean a multiemployer plan as defined in Section 3(37) of ERISA to which contributions have been made by Infinity or any ERISA Affiliate of CBS and which is covered by Title IV of ERISA. "Net Cash Proceeds" shall mean, in connection with any Disposition of all or any material part of any Allocated Unit, the proceeds thereof in the form of cash and cash equivalents (including any such proceeds received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but only as and when received) of such Disposition, net of (i) attorneys' fees, accountants' fees, investment banking fees and other customary fees and expenses actually incurred in connection therewith, (ii) taxes paid or reasonably estimated to be payable on a current basis as a result thereof (after taking into account any available tax credits or deductions) and (iii) any cash purchase price adjustments paid in connection therewith (but only as and when paid). "1996 First Quarter Financial Statements" shall mean the unaudited consolidated financial statements of CBS and its subsidiaries as of and for the fiscal quarter ended March 31, 1996 as set forth in the Quarterly Report on Form 10-Q of CBS. "Non-Financial Letter of Credit" shall mean any Letter of Credit that is not a Financial Letter of Credit. "Non-U.S. Person" shall have the meaning assigned to such term in Section 2.20(f). "Original Closing Date" shall mean August 29, 1996. "Outdoor Systems" shall mean Outdoor Systems, Inc. "Outdoor Systems Merger" shall mean the merger of Outdoor Systems with and into a Subsidiary of Infinity. "Outdoor Systems Merger Date" shall mean the date of the consummation of the Outdoor Systems Merger. "Outstanding Revolving Extensions of Credit" shall mean, as to any Lender at any time, an amount equal to the sum of (a) the aggregate principal amount of all Revolving Credit Loans made by 18 14 such Lender then outstanding, (b) such Lender's LC Exposure at such time and (c) such Lender's ABR Swingline Exposure at such time. "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA, or any successor thereto. "Person" shall mean any natural person, corporation, business trust, joint venture, association, company, partnership, limited liability company or other entity, or any government or any agency or political subdivision thereof. "Plan" shall mean any employee pension benefit plan as defined in Section 3(2) of ERISA (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code and which is maintained for employees of CBS or any ERISA Affiliate. "Prime Rate" shall have the meaning assigned to such term in the definition of "Alternate Base Rate". "Pro Forma Period" shall have the meaning assigned to such term in Section 1.2(c). "Projections" shall have the meaning assigned to such term in Section 3.12. "Property" shall mean any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible, including, without limitation, Capital Stock. "Quoted Swingline Loans" shall have the meaning assigned to such term in Section 2.6(a). "Quoted Swingline Rate" shall have the meaning assigned to such term in Section 2.6(a). "Rating Agencies" shall mean S&P and Moody's. "Reference Banks" shall mean Chase, Morgan, Bank of America and Toronto Dominion. "Register" shall have the meaning assigned to such term in Section 9.4(d). "Regulation D" shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof. "Required Lenders" shall mean, at any time, Lenders whose respective Total Facility Percentages aggregate not less than 51%. "Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof responsible for the administration of the obligations of such corporation in respect of this Agreement (or, in the case of 19 15 matters relating to ERISA, any officer responsible for the administration of the pension funds of such corporation). "Revolving Credit Borrowing Request" shall mean a request made pursuant to Section 2.4 in the form of Exhibit B-4. "Revolving Credit Loans" shall mean the revolving loans made by the Lenders to any Borrower pursuant to Section 2.4. Each Revolving Credit Loan shall be a Eurodollar Loan or an ABR Loan. "Revolving Credit Maturity Date" shall mean August 29, 2001. "Revolving Credit Percentage" of any Lender at any time shall mean the percentage of the aggregate Commitments (or, following any termination of all the Commitments, the Commitments most recently in effect) represented by such Lender's Commitment (or, following any such termination, the Commitment of such Lender most recently in effect). "Sale/Leaseback" shall mean any lease, whether an operating lease or a capital lease, whereby Infinity or any of its Subsidiaries, directly or indirectly, becomes or remains liable as lessee or as guarantor or other surety, of any Property whether now owned or hereafter acquired, (a) that Infinity or any of its Subsidiaries, as the case may be, has sold or transferred or is to sell or transfer to any other Person (other than Infinity or any of its Subsidiaries), or (b) that is acquired by any other Person, as part of a financing transaction to which Infinity or any of its Subsidiaries is a party, in contemplation of leasing such Property to Infinity or any of its Subsidiaries, as the case may be. "Sale/Leaseback Attributable Debt" shall mean, for any Sale/Leaseback, the present value (discounted at the rate of interest implicit in such Sale/Leaseback, determined in accordance with GAAP or, in the event that such rate of interest is not reasonably determinable, discounted at the interest rate applicable to an ABR Revolving Credit Loan on the date of the commencement of such transaction), as of the date on which the amount thereof is to be determined, of the obligation of the lessee for net rental payments during the remaining term of such Sale/Leaseback (including any period for which such Sale/Leaseback may, at the option of the lessor, be extended). In the case of any master lease agreement, each fixed or capital asset subject thereto (or any related group of such assets for which the lease terms commence at the same time) shall be deemed to be the subject of a separate Sale/Leaseback, and, to the extent that any fixed or capital asset is the subject of a Sale/Leaseback and then of another, the Sale/Leaseback Attributable Debt will be deemed to be incurred only under the first such Sale/Leaseback. For the purposes of Section 5.5(m), the Sale/Leaseback Attributable Debt of any Subsidiary of CBS which is not a Wholly Owned Subsidiary shall be deemed to be the amount determined in accordance with the foregoing provisions of this definition multiplied by CBS's direct or indirect percentage common equity interest in such Subsidiary at the date of determination. "S&P" shall mean Standard & Poor's Ratings Services. "SEC" shall mean the Securities and Exchange Commission. "Specified Section 5.5(n) Indebtedness" shall have the meaning assigned to such term in Section 5.5(n). "SPC" shall have the meaning specified in Section 9.4(i). 20 16 "Subsidiary" shall mean, for any Person (the "Parent"), any corporation, partnership or other entity of which shares of Voting Capital Stock sufficient to elect a majority of the board of directors or other Persons performing similar functions of such corporation, partnership or other entity (irrespective of whether or not at the time securities or other ownership interests of any other class or classes of such corporation, partnership or other entity shall have or might have voting power by reason of the happening of any contingency) are at the time directly or indirectly owned or controlled by the Parent or one or more of its Subsidiaries or by the Parent and one or more of its Subsidiaries. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of Infinity. "Subsidiary Borrower" shall mean any Subsidiary (a) which is organized under the laws of the United States of America, any state, territory or possession thereof or the District of Columbia, (b) which is designated as a Subsidiary Borrower by Infinity pursuant to a Subsidiary Borrower Designation, (c) which has delivered to the Administrative Agent a Subsidiary Borrower Request and (d) whose designation as a Subsidiary Borrower has not been terminated pursuant to Section 4.2. Notwithstanding anything to the contrary herein, on the Closing Date, any Subsidiary of Infinity which is a Subsidiary Borrower under the Existing Credit Agreement shall be deemed to be a Subsidiary Borrower under this Agreement and not under the Existing Credit Agreement. "Subsidiary Borrower Designation" shall mean a designation, substantially in the form of Exhibit B-7, which may be delivered by Infinity and approved by CBS and shall be accompanied by a Subsidiary Borrower Request. "Subsidiary Borrower Obligations" shall mean, with respect to each Subsidiary Borrower, the unpaid principal of and interest on the Loans made to such Borrower (including, without limitation, interest accruing after the maturity of the Loans made to such Borrower and interest accruing after the filing of any petition in bankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating to such Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such proceeding) and all other obligations and liabilities of such Borrower to the Administrative Agent or to any Lender, whether direct or indirect, absolute or contingent, due or to become due, or now existing or hereafter incurred, which may arise under, out of, or in connection with, this Agreement. "Subsidiary Borrower Request" shall mean a request, substantially in the form of Exhibit B-8, which is received by the Administrative Agent in connection with a Subsidiary Borrower Designation. "Swingline Borrower" shall mean Infinity and any Subsidiary Borrower designated as a "Swingline Borrower" by Infinity in a written notice to the Administrative Agent, provided, that, unless otherwise agreed by the Administrative Agent, no more than one Subsidiary Borrower may be a Swingline Borrower at any one time. "Swingline Commitment" shall mean, with respect to any Swingline Lender, the commitment of such Lender to make ABR Swingline Loans pursuant to Section 2.6, as designated in accordance with Section 2.6(g). "Swingline Lender" shall mean any Lender designated by Infinity as a "Swingline Lender" pursuant to Section 2.6(g). 21 17 "Swingline Loans" shall mean the collective reference to the ABR Swingline Loans and the Quoted Swingline Loans. "Swingline Percentage" of any Swingline Lender at any time shall mean the percentage of the aggregate Swingline Commitments represented by such Swingline Lender's Swingline Commitment. "Syndication Agents" shall have the meaning assigned to such term in the preamble to this Agreement. "Test Period" shall have the meaning assigned to such term in Section 1.2(c). "Toronto Dominion" shall have the meaning assigned to such term in the preamble to this Agreement. "Total Commitment" shall mean at any time the aggregate amount of the Commitments in effect at such time. "Total Facility Exposure" shall mean at any time the aggregate amount of the Facility Exposures at such time. "Total Facility Percentage" shall mean, as to any Lender at any time, the quotient (expressed as a percentage) of (a) such Lender's Commitment (or (x) for the purposes of acceleration of the Loans pursuant to clause (II) of Article VI or (y) if the Commitments have terminated, such Lender's Facility Exposure) and (b) the aggregate of all Lenders' Commitments (or (x) for the purposes of acceleration of the Loans pursuant to clause (II) of Article VI or (y) if the Commitments have terminated, the Total Facility Exposure). "Transferee" shall mean any assignee or participant described in Section 9.4(b) or (f). "Type" when used in respect of any Loan, shall refer to the Rate by reference to which interest on such Loan is determined. For purposes hereof, "Rate" shall mean the Eurodollar Rate, the Alternate Base Rate, the Quoted Swingline Rate and the rate paid on Absolute Rate Loans. "Unrefunded Swingline Loans" shall have the meaning assigned to such term in Section 2.6(d). "U.S. Person" shall mean a citizen, national or resident of the United States of America, or an entity organized in or under the laws of the United States of America. "Viacom" shall mean Viacom, Inc., a Delaware corporation. "Viacom Merger" shall mean the merger between CBS and Viacom. "Voting Capital Stock" shall mean securities or other ownership interests of a corporation, partnership or other entity having by the terms thereof ordinary voting power to vote in the election of the board of directors or other Persons performing similar functions of such corporation, partnership or other entity (without regard to the occurrence of any contingency). 22 18 "Wholly Owned Subsidiary" shall mean any Subsidiary of which all shares of Voting Capital Stock (other than, in the case of a corporation, directors' qualifying shares) are owned directly or indirectly by the Parent (as defined in the definition of "Subsidiary"). SECTION 1.2. Terms Generally. (a) The definitions in Section 1.1 shall apply equally to both the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall, except where the context otherwise requires, be deemed to be followed by the phrase "without limitation". All references herein to Articles, Sections, Exhibits and Schedules shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement unless the context shall otherwise require. (b) Except as otherwise expressly provided herein, all terms of an accounting nature shall be construed in accordance with GAAP as in effect from time to time; provided, however, that, for purposes of determining compliance with the covenants set forth in Sections 5.7 and 5.8 (such Sections being referred to as the "Financial Covenants"), except as otherwise set forth in the Financial Covenants and the definitions related thereto, such terms shall be construed in accordance with GAAP as in effect on June 30, 1999. Any determination of the CBS Consolidated Leverage Ratio shall be made in a comparable manner by reference to the 1996 First Quarter Financial Statements. (c) For the purposes of calculating Consolidated EBITDA and Consolidated Interest Expense for any period (a "Test Period"), (i) if at any time from the period (a "Pro Forma Period") commencing on the second day of such Test Period and ending on the date which is ten days prior to the date of delivery of the Compliance Certificate or Interim Certificate, as the case may be, in respect of such Test Period (or, in the case of any pro forma calculation made pursuant hereto in respect of a particular transaction, ending on the date such transaction is consummated after giving effect thereto), Infinity or any Subsidiary shall have made any Material Disposition, the Consolidated EBITDA for such Test Period shall be reduced by an amount equal to the Consolidated EBITDA (if positive) attributable to the Property which is the subject of such Material Disposition for such Test Period or increased by an amount equal to the Consolidated EBITDA (if negative) attributable thereto for such Test Period, and Consolidated Interest Expense for such Test Period shall be reduced by an amount equal to the Consolidated Interest Expense for such Test Period attributable to any Indebtedness of Infinity or any Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to Infinity and its Subsidiaries in connection with such Material Disposition (or, if the Capital Stock of any Subsidiary is sold, the Consolidated Interest Expense for such Test Period directly attributable to the Indebtedness of such Subsidiary to the extent Infinity and its continuing Subsidiaries are no longer liable for such Indebtedness after such Disposition); (ii) if during such Pro Forma Period Infinity or any Subsidiary shall have made a Material Acquisition, Consolidated EBITDA and Consolidated Interest Expense for such Test Period shall be calculated after giving pro forma effect thereto (including the incurrence or assumption of any Indebtedness in connection therewith) as if such Material Acquisition (and the incurrence or assumption of any such Indebtedness) occurred on the first day of such Test Period; (iii) if during such Pro Forma Period any Person that subsequently became a Subsidiary or was merged with or into Infinity or any Subsidiary since the beginning of such Pro Forma Period shall have entered into any disposition or acquisition transaction that would have required an adjustment pursuant to clause (i) or (ii) above if made by Infinity or a Subsidiary during such Pro Forma Period, Consolidated EBITDA and Consolidated Interest Expense for such Test Period shall be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such Test Period; and (iv) with respect to CBS, the financial results and effects of the operations of the Eye on People and TeleNoticias businesses shall be entirely excluded from CBS Consolidated EBITDA. For the purposes of this paragraph, whenever pro forma effect is to be given to a Material Disposition or Material Acquisition, the amount of income 23 19 or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness discharged or incurred in connection therewith, the pro forma calculations shall be determined in good faith by a Financial Officer of Infinity. If any Indebtedness bears a floating rate of interest and the incurrence or assumption thereof is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the last day of the relevant Pro Forma Period had been the applicable rate for the entire relevant Test Period (taking into account any interest rate protection agreement applicable to such Indebtedness if such interest rate protection agreement has a remaining term in excess of 12 months). Comparable adjustments shall be made in connection with any determination of CBS Consolidated EBITDA. (d) For the purposes of the CBS Consolidated Leverage Ratio, (i) the Discontinued Operations shall be disregarded and (ii) the businesses classified as Discontinued Operations shall be limited to those businesses treated as such in the financial statements of CBS referred to in the definition of "Discontinued Operations" and the accounting treatment of Discontinued Operations shall be consistent with the accounting treatment thereof in such financial statements. ARTICLE II. THE CREDITS SECTION 2.1. Commitments. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly, to make Revolving Credit Loans to Infinity or any Subsidiary Borrower, at any time and from time to time on and after the Closing Date and until the earlier of (a) the Business Day immediately preceding the Revolving Credit Maturity Date and (b) the termination of the Commitment of such Lender, in an aggregate principal amount at any time outstanding not to exceed such Lender's Commitment. Each Borrower may borrow, prepay and reborrow Revolving Credit Loans on and after the Closing Date and prior to the Revolving Credit Maturity Date, subject to the terms, conditions and limitations set forth herein. On the Closing Date, all loans and obligations of, and any Letters of Credit issued on behalf of, Infinity and any Subsidiary Borrowers under or in connection with the Existing Credit Agreement shall be deemed to be outstanding hereunder and not under the Existing Credit Agreement. SECTION 2.2. Revolving Credit Loans; Competitive Loans. (a) Each Revolving Credit Loan shall be made to the relevant Borrower by the Lenders ratably in accordance with their respective Commitments. Each Competitive Loan shall be made to the relevant Borrower by the Lender whose Competitive Bid therefor is accepted, and in the amount so accepted, in accordance with the procedures set forth in Section 2.3. The Revolving Credit Loans or Competitive Loans shall be made in minimum amounts equal to (i) in the case of Competitive Loans, $5,000,000 or an integral multiple of $1,000,000 in excess thereof, (ii) in the case of Eurodollar Revolving Credit Loans, $50,000,000 or an integral multiple of $5,000,000 in excess thereof, and (iii) in the case of ABR Revolving Credit Loans, $25,000,000 or an integral multiple of $5,000,000 in excess thereof (or an aggregate principal amount equal to the remaining balance of the available Total Commitment). (b) Each Lender shall make each Loan (other than a Swingline Loan, as to which this Section 2.2 shall not apply) to be made by it on the proposed date thereof by wire transfer of immediately available funds to the Administrative Agent in New York, New York, not later than 12:00 noon, New York City time (or, in connection with an ABR Loan to be made on the same day on which a notice is submitted, 12:30 p.m., New York City time) and the Administrative Agent shall by 3:00 p.m., New York City time, credit the amounts so received to the general deposit account of the relevant Borrower with the Administrative Agent. 24 20 SECTION 2.3. Competitive Bid Procedure. (a) In order to request Competitive Bids, the relevant Borrower shall hand deliver or telecopy to the Administrative Agent a duly completed Competitive Bid Request in the form of Exhibit B-1, to be received by the Administrative Agent (i) in the case of a Eurodollar Competitive Loan, not later than 10:00 a.m., New York City time, four Business Days before a proposed Competitive Loan and (ii) in the case of an Absolute Rate Loan, not later than 10:00 a.m., New York City time, one Business Day before a proposed Competitive Loan. A Competitive Bid Request that does not conform substantially to the format of Exhibit B-1 may be rejected in the Administrative Agent's discretion (exercised in good faith), and the Administrative Agent shall promptly notify the relevant Borrower of such rejection by telephone, confirmed by telecopier. Such request shall in each case refer to this Agreement and specify (x) whether the Competitive Loan then being requested is to be a Eurodollar Competitive Loan or an Absolute Rate Loan, (y) the date of such Loan (which shall be a Business Day) and the aggregate principal amount thereof which shall be in a minimum principal amount of $5,000,000 and in an integral multiple of $1,000,000, and (z) the Interest Period with respect thereto (which may not end after the Revolving Credit Maturity Date). Promptly after its receipt of a Competitive Bid Request that is not rejected as aforesaid (and in any event by 5:00 p.m., New York City time, on the date of such receipt if such receipt occurs by the time specified in the first sentence of this paragraph), the Administrative Agent shall invite by telecopier (in the form set forth in Exhibit B-2) the Lenders to bid, on the terms and conditions of this Agreement, to make Competitive Loans pursuant to such Competitive Bid Request. (b) Each Lender may, in its sole discretion, make one or more Competitive Bids to the relevant Borrower responsive to a Competitive Bid Request. Each Competitive Bid must be received by the Administrative Agent by telecopier, in the form of Exhibit B-3, (i) in the case of a Eurodollar Competitive Loan, not later than 9:30 a.m., New York City time, three Business Days before a proposed Competitive Loan and (ii) in the case of an Absolute Rate Loan, not later than 9:30 a.m., New York City time, on the day of a proposed Competitive Loan. Multiple Competitive Bids will be accepted by the Administrative Agent. Competitive Bids that do not conform substantially to the format of Exhibit B-3 may be rejected by the Administrative Agent after conferring with, and upon the instruction of, the relevant Borrower, and the Administrative Agent shall notify the Lender making such nonconforming Competitive Bid of such rejection as soon as practicable. Each Competitive Bid shall refer to this Agreement and specify (x) the principal amount (which shall be in a minimum principal amount of $5,000,000 and in an integral multiple of $1,000,000 and which may equal the entire principal amount of the Competitive Loan requested by the relevant Borrower) of the Competitive Loan or Loans that the applicable Lender is willing to make to the relevant Borrower, (y) the Competitive Bid Rate or Rates at which such Lender is prepared to make the Competitive Loan or Loans and (z) the Interest Period and the last day thereof. A Competitive Bid submitted pursuant to this paragraph (b) shall be irrevocable (subject to the satisfaction of the conditions to borrowing set forth in Article IV). (c) The Administrative Agent shall promptly (and in any event by 10:15 a.m., New York City time, on the date on which such Competitive Bids shall have been made) notify the relevant Borrower by telecopier of all the Competitive Bids made, the Competitive Bid Rate and the principal amount of each Competitive Loan in respect of which a Competitive Bid was made and the identity of the Lender that made each Competitive Bid. The Administrative Agent shall send a copy of all Competitive Bids to the relevant Borrower for its records as soon as practicable after completion of the bidding process set forth in this Section 2.3. 25 21 (d) The relevant Borrower may in its sole and absolute discretion, subject only to the provisions of this paragraph (d), accept or reject any Competitive Bid referred to in paragraph (c) above. The relevant Borrower shall notify the Administrative Agent by telephone, confirmed by telecopier in such form as may be agreed upon by such Borrower and the Administrative Agent, whether and to what extent it has decided to accept or reject any of or all the Competitive Bids referred to in paragraph (c) above, (x) in the case of a Eurodollar Competitive Loan, not later than 11:00 a.m., New York City time, three Business Days before a proposed Competitive Loan, and (y) in the case of an Absolute Rate Loan, not later than 11:00 a.m., New York City time, on the day of a proposed Competitive Loan; provided, however, that (i) the failure by such Borrower to give such notice shall be deemed to be a rejection of all the Competitive Bids referred to in paragraph (c) above, (ii) such Borrower shall not accept a Competitive Bid made at a particular Competitive Bid Rate if it has decided to reject a Competitive Bid made at a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids accepted by such Borrower shall not exceed the principal amount specified in the Competitive Bid Request (but may be less than that requested), (iv) if such Borrower shall accept a Competitive Bid or Competitive Bids made at a particular Competitive Bid Rate but the amount of such Competitive Bid or Competitive Bids shall cause the total amount of Competitive Bids to be accepted by it to exceed the amount specified in the Competitive Bid Request, then such Borrower shall accept a portion of such Competitive Bid or Competitive Bids in an amount equal to the amount specified in the Competitive Bid Request less the amount of all other Competitive Bids accepted with respect to such Competitive Bid Request, which acceptance, in the case of multiple Competitive Bids at such Competitive Bid Rate, shall be made pro rata in accordance with the amount of each such Competitive Bid at such Competitive Bid Rate, and (v) except pursuant to clause (iv) above no Competitive Bid shall be accepted for a Competitive Loan unless such Competitive Loan is in a minimum principal amount of $5,000,000 and an integral amount multiple of $1,000,000; provided, further, however, that if a Competitive Loan must be in an amount less than $5,000,000 because of the provisions of clause (iv) above, such Competitive Loan may be for a minimum of $1,000,000 or any integral multiple thereof, and in calculating the pro rata allocation of acceptances of portions of multiple Competitive Bids at a particular Competitive Bid Rate pursuant to clause (iv) the amounts shall be rounded to integral multiples of $1,000,000 in a manner which shall be in the discretion of such Borrower. A notice given by any Borrower pursuant to this paragraph (d) shall be irrevocable. (e) The Administrative Agent shall promptly notify each bidding Lender whether or not its Competitive Bid has been accepted (and if so, in what amount and at what Competitive Bid Rate) by telecopy sent by the Administrative Agent, and each successful bidder will thereupon become bound, subject to the other applicable conditions hereof, to make the Competitive Loan in respect of which its Competitive Bid has been accepted. (f) A Competitive Bid Request shall not be made within five Business Days after the date of any previous Competitive Bid Request, unless the Administrative Agent shall agree otherwise. (g) If the Lender which is the Administrative Agent shall elect to submit a Competitive Bid in its capacity as a Lender, it shall submit such Competitive Bid directly to the relevant Borrower one quarter of an hour earlier than the latest time at which the other Lenders are required to submit their Competitive Bids to the Administrative Agent pursuant to paragraph (b) above. (h) All notices required by this Section 2.3 shall be given in accordance with Section 9.1. 26 22 (i) No Borrower shall have the right to prepay any Competitive Loan without the consent of the affected Lender or Lenders. SECTION 2.4. Revolving Credit Borrowing Procedure. In order to request a Revolving Credit Loan, the relevant Borrower shall hand deliver or telecopy to the Administrative Agent a Revolving Credit Borrowing Request in the form of Exhibit B-4 (a) in the case of a Eurodollar Revolving Credit Loan, not later than 11:00 a.m., New York City time, three Business Days before a proposed borrowing and (b) in the case of an ABR Revolving Credit Loan, not later than 11:00 a.m., New York City time, on the day of a proposed borrowing. Such notice shall be irrevocable and shall in each case specify (i) whether the Revolving Credit Loan then being requested is to be a Eurodollar Revolving Credit Loan or an ABR Revolving Credit Loan, (ii) the date of such Revolving Credit Loan (which shall be a Business Day) and the amount thereof; and (iii) in the case of a Eurodollar Revolving Credit Loan, the Interest Period with respect thereto. The Administrative Agent shall promptly advise the Lenders of any notice given pursuant to this Section 2.4 and of each Lender's portion of the requested Loan. SECTION 2.5. Repayment of Loans. Each Borrower shall repay all outstanding Revolving Credit Loans and ABR Swingline Loans made to it, in each case on the Revolving Credit Maturity Date (or such earlier date on which the Commitments shall terminate in accordance herewith). Each Borrower shall repay Quoted Swingline Loans and Competitive Loans made to it, in each case on the Maturity Date applicable thereto. Each Loan shall bear interest from and including the date thereof on the outstanding principal balance thereof as set forth in Section 2.10. SECTION 2.6. Swingline Loans. (a) Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Swingline Lender agrees, severally and not jointly, at any time and from time to time on and after the Closing Date and until the earlier of the Business Day immediately preceding the Revolving Credit Maturity Date and the termination of the Swingline Commitment of such Swingline Lender, (i) to make available to any Swingline Borrower Swingline Loans ("Quoted Swingline Loans") on the basis of quoted interest rates (each, a "Quoted Swingline Rate") furnished by such Swingline Lender from time to time in its discretion to such Swingline Borrower (through the Administrative Agent) and accepted by such Swingline Borrower in its discretion and (ii) to make Swingline Loans ("ABR Swingline Loans") to any Swingline Borrower bearing interest at a rate equal to the Alternate Base Rate in an aggregate principal amount (in the case of this clause (ii)) not to exceed such Swingline Lender's Swingline Commitment. The aggregate outstanding principal amount of the Quoted Swingline Loans of any Swingline Lender, when added to the aggregate outstanding principal amount of the ABR Swingline Loans of such Swingline Lender, may exceed such Swingline Lender's Swingline Commitment, provided, that in no event shall the aggregate outstanding principal amount of the Swingline Loans exceed the aggregate Swingline Commitments then in effect. Each Quoted Swingline Loan shall be made only by the Swingline Lender furnishing the relevant Quoted Swingline Rate. Each ABR Swingline Loan shall be made by the Swingline Lenders ratably in accordance with their respective Swingline Percentages. The Swingline Loans shall be made in a minimum aggregate principal amount of $5,000,000 or an integral multiple of $1,000,000 in excess thereof (or an aggregate principal amount equal to the remaining balance of the available Swingline Commitments). Each Swingline Lender shall make the portion of each Swingline Loan to be made by it available to any Swingline Borrower by means of a credit to the general deposit account of such Swingline Borrower with the Administrative Agent or a wire transfer, at the expense of such Swingline Borrower, to an account designated in writing by such Swingline Borrower, in each case by 3:30 p.m., New York City time, on the date such Swingline Loan is requested to be made pursuant to paragraph (b) below, in immediately available funds. Each Swingline Borrower may borrow, prepay and reborrow Swingline Loans on or after the Closing Date and prior to the Revolving Credit Maturity Date (or such 27 23 earlier date on which the Commitments shall terminate in accordance herewith) on the terms and subject to the conditions and limitations set forth herein. (b) The relevant Swingline Borrower shall give the Administrative Agent telephonic, written or telecopy notice substantially in the form of Exhibit B-5 (in the case of telephonic notice, such notice shall be promptly confirmed by telecopy) no later than 2:30 p.m., New York City time (or, in the case of a proposed Quoted Swingline Loan, 12:00 noon, New York City time), on the day of a proposed Swingline Loan. Such notice shall be delivered on a Business Day, shall be irrevocable (subject, in the case of Quoted Swingline Loans, to receipt by the relevant Swingline Borrower of Quoted Swingline Rates acceptable to it) and shall refer to this Agreement and shall specify the requested date (which shall be a Business Day) and amount of such Swingline Loan. The Administrative Agent shall promptly advise the Swingline Lenders of any notice received from any Swingline Borrower pursuant to this paragraph (b). In the event that a Swingline Borrower accepts a Quoted Swingline Rate in respect of a proposed Quoted Swingline Loan, it shall notify the Administrative Agent (which shall in turn notify the relevant Swingline Lender) of such acceptance no later than 2:30 p.m., New York City time, on the relevant borrowing date. (c) In the event that any ABR Swingline Loan shall be outstanding for more than five Business Days, the Administrative Agent shall, on behalf of the relevant Swingline Borrower (which hereby irrevocably directs and authorizes the Administrative Agent to act on its behalf), request each Lender, including the Swingline Lenders, to make an ABR Revolving Credit Loan in an amount equal to such Lender's Revolving Credit Percentage of the principal amount of such ABR Swingline Loan. Each Lender will make the proceeds of its Revolving Credit Loan available to the Administrative Agent for the account of the Swingline Lenders at the office of the Administrative Agent prior to 12:00 Noon, New York City time, in funds immediately available on the Business Day next succeeding the date such notice is given. The proceeds of such Revolving Credit Loans shall be immediately applied to repay the ABR Swingline Loans. (d) If, for any reason, Revolving Credit Loans may not be (as determined by the Administrative Agent in its sole discretion), or are not, made pursuant to Section 2.6(c) to repay ABR Swingline Loans as required by said Section, then, effective on the date such Revolving Credit Loans would otherwise have been made, each Lender severally, unconditionally and irrevocably agrees that it shall purchase an undivided participating interest in such ABR Swingline Loans ("Unrefunded Swingline Loans") in an amount equal to the amount of the Revolving Credit Loan which otherwise would have been made by such Lender pursuant to Section 2.6(c), which purchase shall be funded by the time such Revolving Credit Loan would have been required to be made pursuant to Section 2.6(c). In the event that the Lenders purchase undivided participating interests pursuant to the first sentence of this paragraph (d), each Lender shall immediately transfer to the Administrative Agent, for the account of the Swingline Lenders, in immediately available funds, the amount of its participation. Any Lender holding a participation in an Unrefunded Swingline Loan may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by the relevant Swingline Borrower to such Lender by reason thereof as fully as if such Lender had made a Loan directly to such Swingline Borrower in the amount of such participation. (e) Whenever, at any time after any Swingline Lender has received from any Lender such Lender's participating interest in an ABR Swingline Loan, such Swingline Lender receives any payment on account thereof, such Swingline Lender will promptly distribute to such Lender its participating interest in such amount (appropriately adjusted, in the case of interest payments, to reflect the period of time during which such Lender's participating interest was outstanding and funded); 28 24 provided, however, that in the event that such payment received by such Swingline Lender is required to be returned, such Lender will return to such Swingline Lender any portion thereof previously distributed by such Swingline Lender to it. (f) Notwithstanding anything to the contrary in this Agreement, each Lender's obligation to make the Revolving Credit Loans referred to in Section 2.6(c) and to purchase and fund participating interests pursuant to Section 2.6(d) shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Lender or any Swingline Borrower may have against any Swingline Lender, any Swingline Borrower or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the conditions specified in Article IV; (iii) any adverse change in the condition (financial or otherwise) of Infinity or any of its Subsidiaries; (iv) any breach of this Agreement by any Borrower or any Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (g) Upon written or telecopy notice to the Swingline Lenders and to the Administrative Agent, Infinity may at any time terminate, from time to time in part reduce, or from time to time (with the approval of the relevant Swingline Lender) increase, the Swingline Commitment of any Swingline Lender. At any time when there shall be fewer than ten Swingline Lenders, Infinity may appoint from among the Lenders a new Swingline Lender, subject to the prior consent of such new Swingline Lender and prior notice to the Administrative Agent, so long as at no time shall there be more than ten Swingline Lenders. Notwithstanding anything to the contrary in this Agreement, (i) if any ABR Swingline Loans shall be outstanding at the time of any termination, reduction, increase or appointment pursuant to the preceding two sentences, the Swingline Borrowers shall on the date thereof prepay or borrow ABR Swingline Loans to the extent necessary to ensure that at all times the outstanding ABR Swingline Loans held by the Swingline Lenders shall be pro rata according to the respective Swingline Commitments of the Swingline Lenders and (ii) in no event may the aggregate Swingline Commitments exceed $300,000,000. On the date of any termination or reduction of the Swingline Commitments pursuant to this paragraph (g), the Swingline Borrowers shall pay or prepay so much of the Swingline Loans as shall be necessary in order that, after giving effect to such termination or reduction, (i) the aggregate outstanding principal amount of the ABR Swingline Loans of any Swingline Lender will not exceed the Swingline Commitment of such Swingline Lender and (ii) the aggregate outstanding principal amount of all Swingline Loans will not exceed the aggregate Swingline Commitments. (h) Each Swingline Borrower may prepay any Swingline Loan in whole or in part at any time without premium or penalty; provided that such Swingline Borrower shall have given the Administrative Agent written or telecopy notice (or telephone notice promptly confirmed in writing or by telecopy) of such prepayment not later than 10:30 a.m., New York City time, on the Business Day designated by such Swingline Borrower for such prepayment; and provided further that each partial payment shall be in an amount that is an integral multiple of $1,000,000. Each notice of prepayment under this paragraph (h) shall specify the prepayment date and the principal amount of each Swingline Loan (or portion thereof) to be prepaid, shall be irrevocable and shall commit such Swingline Borrower to prepay such Swingline Loan (or portion thereof) by the amount stated therein on the date stated therein. All prepayments under this paragraph (h) shall be accompanied by accrued interest on the principal amount being prepaid to the date of payment. Each payment of principal of or interest on ABR Swingline Loans shall be allocated, as between the Swingline Lenders, pro rata in accordance with their respective Swingline Percentages. 29 25 SECTION 2.7. Letters of Credit. (a) Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Issuing Lender agrees, at any time and from time to time on or after the Closing Date until the earlier of (i) the tenth Business Day preceding the Revolving Credit Maturity Date and (ii) the termination of the Commitments in accordance with the terms hereof, to issue and deliver or to extend the expiry of Letters of Credit for the account of Infinity in an aggregate outstanding undrawn amount which does not exceed the maximum amount specified in the applicable Issuing Lender Agreement; provided that in no event shall the Aggregate LC Exposure exceed $750,000,000 at any time. Each Letter of Credit (i) shall be in a form approved in writing by Infinity and the applicable Issuing Lender and (ii) shall permit drawings upon the presentation of such documents as shall be specified by Infinity in the applicable notice delivered pursuant to paragraph (c) below. The Lenders agree that, subject to compliance with the conditions precedent set forth in Section 4.3, any Designated Letter of Credit may be designated as a Letter of Credit hereunder from time to time on or after the Closing Date pursuant to the procedures specified in the definition of "Designated Letters of Credit". (b) Each Letter of Credit shall by its terms expire not later than the fifth Business Day preceding the Revolving Credit Maturity Date. Any Letter of Credit may provide for the renewal thereof for additional periods (which shall in no event extend beyond the date referred to in the preceding sentence). Each Letter of Credit shall by its terms provide for payment of drawings in Dollars or in a Foreign Currency, provided that a Letter of Credit denominated in a Foreign Currency may not be issued if, after giving effect thereto, the Dollar equivalent of the aggregate face amount of all Letters of Credit denominated in Foreign Currencies then outstanding would exceed $150,000,000, as determined by the Administrative Agent. (c) Infinity shall give the applicable Issuing Lender and the Administrative Agent written or telecopy notice not later than 10:00 a.m., New York City time, five Business Days (or such shorter period as shall be acceptable to such Issuing Lender) prior to any proposed issuance of a Letter of Credit. Each such notice shall refer to this Agreement and shall specify (i) the date on which such Letter of Credit is to be issued (which shall be a Business Day) and the face amount of such Letter of Credit, (ii) the name and address of the beneficiary, (iii) whether such Letter of Credit is a Financial Letter of Credit or a Non-Financial Letter of Credit (subject to confirmation of such status by the Administrative Agent), (iv) whether such Letter of Credit shall permit a single drawing or multiple drawings, (v) the form of the documents required to be presented at the time of any drawing (together with the exact wording of such documents or copies thereof), (vi) the expiry date of such Letter of Credit (which shall conform to the provisions of paragraph (b) above) and (vii) if such Letter of Credit is to be in a Foreign Currency, the relevant Foreign Currency. The Administrative Agent shall give to each Lender prompt written or telecopy advice of the issuance of any Letter of Credit. Each determination by the Administrative Agent as to whether or not a Letter of Credit constitutes a Financial Letter of Credit shall be conclusive and binding upon Infinity and the Lenders. (d) By the issuance of a Letter of Credit and without any further action on the part of the applicable Issuing Lender or the Lenders in respect thereof, the applicable Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from such Issuing Lender, a participation in such Letter of Credit equal to such Lender's Revolving Credit Percentage at the time of any drawing thereunder of the face amount of such Letter of Credit, effective upon the issuance of such Letter of Credit. In addition, the applicable Issuing Lender hereby grants to each Lender, and each Lender hereby acquires from such Issuing Lender, a participation in each Designated Letter of Credit equal to such Lender's Revolving Credit Percentage at the time of any drawing thereunder of the face amount of such Designated Letter of Credit, effective on the date such Designated Letter of Credit is designated as a 30 26 Letter of Credit hereunder. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of each Issuing Lender, in accordance with paragraph (f) below, such Lender's Revolving Credit Percentage of each unreimbursed LC Disbursement made by such Issuing Lender; provided, however, that the Lenders shall not be obligated to make any such payment with respect to any payment or disbursement made under any Letter of Credit to the extent resulting from the gross negligence or wilful misconduct of such Issuing Lender. (e) Each Lender acknowledges and agrees that its acquisition of participations pursuant to paragraph (d) above in respect of Letters of Credit shall be absolute and unconditional and shall not be affected by any circumstance, including, without limitation, (i) any setoff, counterclaim, recoupment, defense or other right which such Lender or Infinity may have against any Issuing Lender, Infinity or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a Default or an Event of Default or the failure to satisfy any of the conditions specified in Article IV; (iii) any adverse change in the condition (financial or otherwise) of Infinity or any of its Subsidiaries; (iv) any breach of this Agreement by Infinity or any Lender; or (v) any other circumstance, happening or event whatsoever, whether or not similar to any of the foregoing. (f) On the date on which it shall have ascertained that any documents presented under a Letter of Credit appear to be in conformity with the terms and conditions of such Letter of Credit, the applicable Issuing Lender shall give written or telecopy notice to Infinity and the Administrative Agent of the amount of the drawing and the date on which payment thereon has been or will be made. If the applicable Issuing Lender shall not have received from Infinity the payment required pursuant to paragraph (g) below by 12:00 noon, New York City time, two Business Days after the date on which payment of a draft presented under any Letter of Credit has been made, such Issuing Lender shall so notify the Administrative Agent, which shall in turn promptly notify each Lender, specifying in the notice to each Lender such Lender's Revolving Credit Percentage of such LC Disbursement. Each Lender shall pay to the Administrative Agent, not later than 2:00 p.m., New York City time, on such second Business Day, such Lender's Revolving Credit Percentage of such LC Disbursement (which obligation shall be expressed in Dollars only), which the Administrative Agent shall promptly pay to the applicable Issuing Lender. The Administrative Agent will promptly remit to each Lender such Lender's Revolving Credit Percentage of any amounts subsequently received by the Administrative Agent from Infinity in respect of such LC Disbursement; provided that (i) amounts so received for the account of any Lender prior to payment by such Lender of amounts required to be paid by it hereunder in respect of any LC Disbursement and (ii) amounts representing interest at the rate provided in paragraph (g) below on any LC Disbursement for the period prior to the payment by such Lender of such amounts shall in each case be remitted to the applicable Issuing Lender. (g) If an Issuing Lender shall pay any draft presented under a Letter of Credit, Infinity shall pay to such Issuing Lender an amount equal to the amount of such draft before 12:00 noon, New York City time, on the second Business Day immediately following the date of payment of such draft, together with interest (if any) on such amount at a rate per annum equal to the interest rate in effect for ABR Loans (or, in the case of Foreign Currency-denominated Letters of Credit, the rate which would reasonably and customarily be charged by such Issuing Lender on outstanding loans denominated in the relevant Foreign Currency) from (and including) the date of payment of such draft to (but excluding) the date on which either Infinity shall have repaid, or the Lenders shall have refunded, such draft in full (which interest shall be payable on such second Business Day and from time to time thereafter on demand until either Infinity shall have repaid, or the Lenders shall have refunded, such draft in full). In the event that such drawing shall be refunded by the Lenders as provided in Section 2.7(f), Infinity shall 31 27 pay to the Administrative Agent, for the account of the Lenders, quarterly on the last day of each March, June, September and December, interest on the amount so refunded at a rate per annum equal to the interest rate in effect for ABR Loans from (and including) the date of such refunding to (but excluding) the date on which the amount so refunded by the Lenders shall have been paid in full in Dollars by Infinity. Each payment made to an Issuing Lender by Infinity pursuant to this paragraph shall be made at such Issuing Lender's address for notices specified herein in lawful money of (x) the United States of America (in the case of payments made on Dollar-denominated Letters of Credit) or (y) the applicable foreign jurisdiction (in the case of payments on Foreign Currency-denominated Letters of Credit) and in immediately available funds. The obligation of Infinity to pay the amounts referred to above in this paragraph (g) (and the obligations of the Lenders under paragraphs (d) and (f) above) shall be absolute, unconditional and irrevocable and shall be satisfied strictly in accordance with their terms irrespective of: (i) any lack of validity or enforceability of any Letter of Credit or any Issuing Lender Agreement or of the obligations of Infinity under this Agreement or any Issuing Lender Agreement; (ii) the existence of any claim, setoff, defense or other right which Infinity or any other Person may at any time have against the beneficiary under any Letter of Credit, the Agents, any Issuing Lender or any Lender (other than the defense of payment in accordance with the terms of this Agreement or a defense based on the gross negligence or wilful misconduct of the applicable Issuing Lender) or any other Person in connection with this Agreement or any other transaction; (iii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect; provided that payment by the applicable Issuing Lender under such Letter of Credit against presentation of such draft or document shall not have constituted gross negligence or wilful misconduct; (iv) payment by the applicable Issuing Lender under a Letter of Credit against presentation of a draft or other document which does not comply in any immaterial respect with the terms of such Letter of Credit; provided that such payment shall not have constituted gross negligence or wilful misconduct; or (v) any other circumstance or event whatsoever, whether or not similar to any of the foregoing; provided that such other circumstance or event shall not have been the result of gross negligence or wilful misconduct of the applicable Issuing Lender. It is understood that in making any payment under a Letter of Credit (x) such Issuing Lender's exclusive reliance on the documents presented to it under such Letter of Credit as to any and all matters set forth therein, including reliance on the amount of any draft presented under such Letter of Credit, whether or not the amount due to the beneficiary thereof equals the amount of such draft and whether or not any document presented pursuant to such Letter of Credit proves to be forged, fraudulent or invalid in any respect, if such document on its face appears to be in order, and whether or not any other statement or any other document presented pursuant to such Letter of Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in any respect whatsoever, and (y) any noncompliance in any immaterial respect of the documents presented under a Letter of Credit with the terms thereof shall, in either case, not, in and of itself, be deemed wilful misconduct or gross negligence of such Issuing Lender. 32 28 (h) (i) Notwithstanding anything to the contrary contained in this Agreement, for purposes of calculating any LC Fee or Commitment Fee payable in respect of any Business Day, the Administrative Agent shall convert the amount available to be drawn under any Letter of Credit denominated in Foreign Currency into an amount of Dollars based upon the relevant Foreign Exchange Rate in effect for such day. If on any date the Administrative Agent shall notify Infinity that, by virtue of any change in the Foreign Exchange Rate of any Foreign Currency in which a Letter of Credit is denominated, the Total Facility Exposure shall exceed the Total Commitment then in effect, then, within three Business Days after the date of such notice, Infinity shall prepay the Revolving Credit Loans and/or the Swingline Loans to the extent necessary to eliminate such excess. Each Issuing Lender which has issued a Letter of Credit denominated in a Foreign Currency agrees to notify the Administrative Agent of the average daily outstanding amount thereof for any period in respect of which LC Fees or Commitment Fees are payable and, upon request by the Administrative Agent, for any other date or period. For all purposes of this Agreement, determinations by the Administrative Agent of the Dollar equivalent of any amount expressed in a Foreign Currency shall be made on the basis of Foreign Exchange Rates reset monthly (or on such other periodic basis as shall be selected by the Administrative Agent in its sole discretion) and shall in each case be conclusive absent manifest error. (ii) Notwithstanding anything to the contrary contained in this Section 2.7, prior to demanding any reimbursement from the Lenders pursuant to Section 2.7(f) in respect of any Letter of Credit denominated in a Foreign Currency, the relevant Issuing Lender shall convert Infinity's obligation under Section 2.7(g) to reimburse such Issuing Lender in such Foreign Currency into an obligation to reimburse such Issuing Lender (and, in turn, the Lenders) in Dollars. The amount of any such converted obligation shall be computed based upon the relevant Foreign Exchange Rate (as quoted by the Administrative Agent to such Issuing Lender) in effect for the day on which such conversion occurs. SECTION 2.8. Conversion and Continuation Options. (a) The relevant Borrower may elect from time to time to convert Eurodollar Revolving Credit Loans (or, subject to Section 2.10(f), a portion thereof) to ABR Revolving Credit Loans on the last day of an Interest Period with respect thereto by giving the Administrative Agent prior irrevocable notice of such election. The relevant Borrower may elect from time to time to convert ABR Revolving Credit Loans (subject to Section 2.10(f)) to Eurodollar Revolving Credit Loans by giving the Administrative Agent at least three Business Days' prior irrevocable notice of such election. Any such notice of conversion to Eurodollar Revolving Credit Loans shall specify the length of the initial Interest Period therefor. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. All or any part of outstanding Eurodollar Revolving Credit Loans and ABR Revolving Credit Loans may be converted as provided herein, provided that no Revolving Credit Loan may be converted into a Eurodollar Revolving Credit Loan when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such a conversion. (b) Any Eurodollar Revolving Credit Loans (or, subject to Section 2.10(f), a portion thereof) may be continued as such upon the expiration of the then current Interest Period with respect thereto by the relevant Borrower giving irrevocable notice to the Administrative Agent, not less than three Business Days prior to the last day of the then current Interest Period with respect thereto, of the length of the next Interest Period to be applicable to such Revolving Credit Loans, provided that no Eurodollar Revolving Credit Loan may be continued as such when any Event of Default has occurred and is continuing and the Administrative Agent has or the Required Lenders have determined in its or their sole discretion not to permit such a continuation, and provided, further, that if the relevant Borrower shall fail to give any required notice as described above in this paragraph or if such continuation is not permitted pursuant to the preceding proviso such Eurodollar Revolving Credit Loans 33 29 shall be automatically converted to ABR Revolving Credit Loans on the last day of such then expiring Interest Period. Upon receipt of any notice from a Borrower pursuant to this Section 2.8(b), the Administrative Agent shall promptly notify each Lender thereof. SECTION 2.9. Fees. (a) Infinity agrees to pay to the Administrative Agent for the account of each Lender a Commitment Fee for the period from and including the Closing Date to the Revolving Credit Maturity Date (or such earlier date on which the Commitments shall terminate in accordance herewith), computed at a per annum rate equal to the Applicable Commitment Fee Rate on the average daily Commitment Fee Calculation Amount in respect of such Lender during the period for which payment is made. All Commitment Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days and shall be payable quarterly in arrears on the last day of each March, June, September and December, on the Revolving Credit Maturity Date or such earlier date on which the Commitments shall be terminated, commencing on the first of such dates to occur after the Closing Date. (b) Infinity agrees to pay each Lender, through the Administrative Agent, on the last day of each March, June, September and December and on the Revolving Credit Maturity Date or the date on which the Commitment of such Lender shall be terminated as provided herein and all Letters of Credit issued hereunder shall have expired, a letter of credit fee (an "LC Fee") computed at a per annum rate equal to the Applicable LC Fee Rate on such Lender's Revolving Credit Percentage of the average daily undrawn amount of the Financial Letters of Credit or Non-Financial Letters of Credit, as the case may be, outstanding during the preceding quarter (or shorter period commencing with the Closing Date or ending with the Revolving Credit Maturity Date or the date on which the Commitment of such Lender shall have been terminated and all Letters of Credit issued hereunder shall have expired). All LC Fees shall be computed on the basis of the actual number of days elapsed in a year of 360 days. (c) Infinity and CBS, jointly and severally, agree to pay, without duplication, to the Administrative Agent, for its own account, the administrative agent's fees ("Administrative Agent's Fees") provided for in the Administrative Agent Fee Letter at the times provided therein. (d) Infinity agrees to pay to each Issuing Lender, through the Administrative Agent, for its own account, the applicable Issuing Lender Fees. (e) All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the relevant Lenders or to the Issuing Lenders. Once paid, none of the Fees shall be refundable under any circumstances (other than corrections of errors in payment). SECTION 2.10. Interest on Loans; Eurodollar Tranches; Etc. (a) Subject to the provisions of Section 2.11, Eurodollar Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to (i) in the case of each Eurodollar Revolving Credit Loan, the Eurodollar Rate for the Interest Period in effect for such Loan plus the Applicable Eurodollar Margin and (ii) in the case of each Eurodollar Competitive Loan, the Eurodollar Rate for the Interest Period in effect for such Loan plus the Margin offered by the Lender making such Loan and accepted by the relevant Borrower pursuant to Section 2.3. The Eurodollar Rate for each Interest Period shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. The Administrative Agent shall promptly advise the relevant Borrower and each Lender of such determination. 34 30 (b) Subject to the provisions of Section 2.11, ABR Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 365 or 366 days, as the case may be, when determined by reference to the Prime Rate and over a year of 360 days at all other times) at a rate per annum equal to the Alternate Base Rate. The Alternate Base Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error. (c) Subject to the provisions of Section 2.11, Quoted Swingline Loans shall bear interest (computed on the basis of the actual number of days elapsed over a year of 360 days) at a rate per annum equal to the relevant Quoted Swingline Rate. (d) Subject to the provisions of Section 2.11, each Absolute Rate Loan shall bear interest at a rate per annum (computed on the basis of the actual number of days elapsed over a year of 360 days) equal to the fixed rate of interest offered by the Lender making such Loan and accepted by the relevant Borrower pursuant to Section 2.3. (e) Interest on each Loan shall be payable on each applicable Interest Payment Date. (f) Notwithstanding anything to the contrary in this Agreement, all borrowings, conversions, continuations, repayments and prepayments of Eurodollar Revolving Credit Loans hereunder and all selections of Interest Periods hereunder in respect of Eurodollar Revolving Credit Loans shall be in such amounts and shall be made pursuant to such elections so that, after giving effect thereto, the aggregate principal amount of the Eurodollar Revolving Credit Loans comprising each Eurodollar Tranche shall be equal to $50,000,000 or a whole multiple of $5,000,000 in excess thereof. Unless otherwise agreed by the Administrative Agent, in no event shall there be more than 25 Eurodollar Tranches outstanding at any time. (g) If no election as to the Type of Revolving Credit Loan is specified in any notice of borrowing with respect thereto, then the requested Loan shall be an ABR Loan. If no Interest Period with respect to a Eurodollar Revolving Credit Loan is specified in any notice of borrowing, conversion or continuation, then the relevant Borrower shall be deemed to have selected an Interest Period of one month's duration. SECTION 2.11. Default Interest. (a) If all or a portion of the principal amount of any Loan shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), all outstanding Loans (whether or not overdue) shall bear interest at a rate per annum which is equal to the rate that would otherwise be applicable thereto pursuant to the provisions of Section 2.10 plus 2% and (b) if all or a portion of any LC Disbursement, any interest payable on any Loan or LC Disbursement or any Fee or other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), such overdue amount shall bear interest at a rate per annum equal to the rate otherwise applicable to ABR Loans pursuant to Section 2.10(b) plus 2%, in each case, with respect to clauses (a) and (b) above, from the date of such non-payment until such amount is paid in full (as well after as before judgment). SECTION 2.12. Alternate Rate of Interest. In the event, and on each occasion, that on the day two Business Days prior to the commencement of any Interest Period for a Eurodollar Loan (i) the Administrative Agent shall have determined (which determination shall be conclusive and binding upon each Borrower) that, by reason of circumstances affecting the relevant market, adequate and reasonable means do not exist for ascertaining the Eurodollar Rate for such Interest Period, or (ii) the Required Lenders shall have determined and shall have notified the Administrative Agent that the Eurodollar Rate determined or to be determined for such Interest Period will not adequately and fairly 35 31 reflect the cost to such Lenders (as conclusively certified by such Lenders) of making or maintaining Eurodollar Loans during such Interest Period, the Administrative Agent shall, as soon as practicable thereafter, give written or telecopy notice of such determination to the Borrowers and the Lenders. In the event of any such determination, until the Administrative Agent shall have advised the Borrowers and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any request by a Borrower for a Eurodollar Competitive Loan pursuant to Section 2.3 to be made after such determination shall be of no force and effect and shall be denied by the Administrative Agent, (ii) any request by a Borrower for a Eurodollar Revolving Credit Loan pursuant to Section 2.4 to be made after such determination shall be deemed to be a request for an ABR Loan and (iii) any request by a Borrower for conversion into or a continuation of a Eurodollar Revolving Credit Loan pursuant to Section 2.8 to be made after such determination shall have no force and effect (in the case of a requested conversion) or shall be deemed to be a request for a conversion into an ABR Loan (in the case of a requested continuation). Also, in the event of any such determination, the relevant Borrower shall be entitled, in its sole discretion, if the requested Loan has not been made, to cancel its acceptance of the Competitive Bids or to cancel its Competitive Bid Request relating thereto. Each determination by the Administrative Agent or the Required Lenders hereunder shall be conclusive absent manifest error. SECTION 2.13. Termination and Reduction of Commitments. (a) Upon at least three Business Days' prior irrevocable written or telecopy notice to the Administrative Agent, Infinity may at any time in whole permanently terminate, or from time to time in part permanently reduce, the Commitments; provided, however, that (i) each partial reduction of the Commitments shall be in a minimum principal amount of $10,000,000 and in integral multiples of $1,000,000 in excess thereof and (ii) no such termination or reduction shall be made if, after giving effect thereto and to any prepayments of the Loans made on the effective date thereof, (x) the Outstanding Revolving Extensions of Credit of any Lender would exceed such Lender's Commitment then in effect or (y) the Total Facility Exposure would exceed the Total Commitment then in effect. The Administrative Agent shall promptly advise the Lenders of any notice given pursuant to this Section 2.13(a). (b) Except as otherwise provided in Section 2.21, each reduction in the Commitments hereunder shall be made ratably among the Lenders in accordance with their respective Commitments. Infinity agrees to pay to the Administrative Agent for the account of the Lenders, on the date of termination or reduction of the Commitments, the Commitment Fees on the amount of the Commitments so terminated or reduced accrued through the date of such termination or reduction. SECTION 2.14. Optional Prepayments of Revolving Credit Loans. The relevant Borrower may at any time and from time to time prepay the Revolving Credit Loans, in whole or in part, without premium or penalty, upon giving irrevocable written or telecopy notice (or telephone notice promptly confirmed by written or telecopy notice) to the Administrative Agent: (i) before 10:00 a.m., New York City time, three Business Days prior to prepayment, in the case of Eurodollar Revolving Credit Loans, and (ii) before 10:00 a.m., New York City time, one Business Day prior to prepayment, in the case of ABR Revolving Credit Loans. Such notice shall specify the date and amount of prepayment and whether the prepayment is of Eurodollar Revolving Credit Loans, ABR Revolving Credit Loans or a combination thereof, and, if of a combination thereof, the amount allocable to each. If a Eurodollar Revolving Credit Loan is prepaid on any day other than the last day of the Interest Period applicable thereto, the relevant Borrower shall also pay any amounts owing pursuant to Section 2.16. Upon receipt of any such notice the Administrative Agent shall promptly notify each Lender thereof. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with (except in the case of ABR Revolving Credit Loans) accrued interest to such date 36 32 on the amount prepaid. Partial prepayments of Revolving Credit Loans shall be in an aggregate principal amount of $10,000,000 or a whole multiple of $1,000,000 in excess thereof. SECTION 2.15. Reserve Requirements; Change in Circumstances. (a) Notwithstanding any other provision herein, if after the Original Closing Date any change in applicable law or regulation (including any change in the reserve percentages provided for in Regulation D) or in the interpretation or administration thereof by any Governmental Authority charged with the interpretation or administration thereof shall change the basis of taxation of payments to any Lender of the principal of or interest on any Eurodollar Loan or Absolute Rate Loan made by such Lender (other than changes in respect of taxes imposed on the overall net income of such Lender by the jurisdiction in which such Lender has its principal office (or in which it holds any Eurodollar Loan or Absolute Rate Loan) or by any political subdivision or taxing authority therein and other than taxes that would not have been imposed but for the failure of such Lender to comply with applicable certification, information, documentation or other reporting requirements), or shall impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of or deposits with or for the account of such Lender, or shall impose on such Lender or the London interbank market any other condition affecting this Agreement or any Eurodollar Loan or Absolute Rate Loan made by such Lender, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan or Absolute Rate Loan or to reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal, interest or otherwise) in respect of any Eurodollar Loan or Absolute Rate Loan by an amount deemed by such Lender to be material, then the relevant Borrower agrees to pay to such Lender as provided in paragraph (c) below such additional amount or amounts as will compensate such Lender for such additional costs incurred or reduction suffered. Notwithstanding the foregoing, no Lender shall be entitled to request compensation under this paragraph with respect to any Competitive Loan if the change giving rise to such request shall, or in good faith should, have been taken into account in formulating the Competitive Bid pursuant to which such Competitive Loan shall have been made. (b) If any Lender or any Issuing Lender shall have determined that the adoption after the Original Closing Date hereof of any law, rule, regulation or guideline regarding capital adequacy, or any change in any law, rule, regulation or guideline regarding capital adequacy or in the interpretation or administration of any of the foregoing by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by any Lender (or any lending office of such Lender) or Issuing Lender or any Lender's or Issuing Lender's holding company with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender's or Issuing Lender's capital or on the capital of such Lender's or Issuing Lender's holding company, if any, as a consequence of this Agreement or the Loans made by such Lender or the LC Exposure of such Lender or Letters of Credit issued by such Issuing Lender pursuant hereto to a level below that which such Lender or Issuing Lender or such Lender's or Issuing Lender's holding company could have achieved but for such applicability, adoption, change or compliance (taking into consideration such Lender's or Issuing Lender's policies and the policies of such Lender's or Issuing Lender's holding company with respect to capital adequacy) by an amount deemed by such Lender or Issuing Lender to be material, then from time to time Infinity agrees to pay to such Lender or Issuing Lender as provided in paragraph (c) below such additional amount or amounts as will compensate such Lender or Issuing Lender or such Lender's or Issuing Lender's holding company for any such reduction suffered. 37 33 (c) A certificate of each Lender or Issuing Lender setting forth such amount or amounts as shall be necessary to compensate such Lender or Issuing Lender as specified in paragraph (a) or (b) above, as the case may be, and the basis therefor in reasonable detail shall be delivered to the relevant Borrower and shall be conclusive absent manifest error. The relevant Borrower shall pay each Lender or Issuing Lender the amount shown as due on any such certificate within 30 days after its receipt of the same. Upon the receipt of any such certificate, the relevant Borrower shall be entitled, in its sole discretion, if any requested Loan has not been made, to cancel its acceptance of the relevant Competitive Bids or to cancel the Competitive Bid Request relating thereto, subject to Section 2.16. (d) Except as provided in this paragraph, failure on the part of any Lender to demand compensation for any increased costs or reduction in amounts received or receivable or reduction in return on capital with respect to any period shall not constitute a waiver of such Lender's right to demand compensation with respect to any other period. The protection of this Section 2.15 shall be available to each Lender regardless of any possible contention of the invalidity or inapplicability of the law, rule, regulation, guideline or other change or condition which shall have occurred or been imposed so long as it shall be customary for Lenders affected thereby to comply therewith. No Lender shall be entitled to compensation under this Section 2.15 for any costs incurred or reductions suffered with respect to any date unless it shall have notified the relevant Borrower that it will demand compensation for such costs or reductions under paragraph (c) above not more than 90 days after the later of (i) such date and (ii) the date on which it shall have become aware of such costs or reductions. Notwithstanding any other provision of this Section 2.15, no Lender shall demand compensation for any increased cost or reduction referred to above if it shall not at the time be the general policy or practice of such Lender to demand such compensation in similar circumstances under comparable provisions of other credit agreements, if any. In the event any Borrower shall reimburse any Lender pursuant to this Section 2.15 for any cost and such Lender shall subsequently receive a refund in respect thereof, such Lender shall so notify such Borrower and, upon its request, will pay to such Borrower the portion of such refund which such Lender shall determine in good faith to be allocable to the cost so reimbursed. The covenants contained in this Section 2.15 shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. SECTION 2.16. Indemnity. Each Borrower agrees to indemnify each Lender against any loss or expense described below which such Lender may sustain or incur as a consequence of (a) any failure by such Borrower to fulfill on the date of any borrowing hereunder the applicable conditions set forth in Article IV, (b) any failure by such Borrower to borrow, continue or convert any Loan hereunder after irrevocable notice of such borrowing, continuation or conversion has been given or deemed given or Competitive Bids have been accepted pursuant to Article II or (c) any payment, prepayment or conversion of a Eurodollar Loan or Absolute Rate Loan made to such Borrower required by any other provision of this Agreement or otherwise made or deemed made, whatever the circumstances may be that give rise to such payment, prepayment or conversion, or any transfer of any such Loan pursuant to Section 2.21 or 9.4(b), on a date other than the last day of the Interest Period applicable thereto. The loss or expense for which such Lender shall be indemnified under this Section 2.16 shall be equal to the excess, if any, as reasonably determined by such Lender, of (i) its cost of obtaining the funds for the Loan being paid, prepaid, converted or not borrowed, continued or converted (assumed to be the Eurodollar Rate in the case of Eurodollar Loans) for the period from the date of such payment, prepayment, conversion or failure to borrow, continue or convert to the last day of the Interest Period for such Loan (or, in the case of a failure to borrow, continue or convert, the Interest Period for such Loan which would have commenced on the date of such failure) over (ii) the amount of interest (as reasonably determined by such Lender) that would be realized by such Lender in reemploying the funds so paid, prepaid, converted or not borrowed, continued or converted for such period or Interest Period, as the case 38 34 may be; provided, however, that such amount shall not include any loss of a Lender's margin or spread over its cost of obtaining funds as described above. A certificate of any Lender setting forth any amount or amounts which such Lender is entitled to receive pursuant to this Section 2.16 shall be delivered to the relevant Borrower and shall be conclusive absent manifest error. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. SECTION 2.17. Pro Rata Treatment; Funding Matters; Evidence of Debt. (a) Except as required under Section 2.21, each payment or prepayment of principal of any Revolving Credit Loan, each payment of interest on the Revolving Credit Loans, each payment of the Commitment Fees pursuant to Section 2.9(a)(i), each payment of LC Fees, and each reduction of the Commitments, shall be allocated pro rata among the Lenders in accordance with their respective Commitments (or, if such Commitments shall have expired or been terminated, in accordance with the respective principal amounts of their outstanding Revolving Credit Loans). Each Lender agrees that in computing such Lender's portion of any Loan to be made hereunder, the Administrative Agent may, in its discretion, round such Lender's percentage of such Loan to the next higher or lower whole Dollar amount. (b) Unless the Administrative Agent shall have received notice from a Lender prior to the relevant borrowing date that such Lender will not make available to the Administrative Agent such Lender's portion of a borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such borrowing in accordance with this Agreement and the Administrative Agent may, in reliance upon such assumption, make available to the relevant Borrower on such date a corresponding amount. If and to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and the relevant Borrower agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to such Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of such Borrower, the interest rate applicable at the time to the relevant Loan and (ii) in the case of such Lender, the Federal Funds Effective Rate. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such borrowing for the purposes of this Agreement; provided that such repayment shall not release such Lender from any liability it may have to such Borrower for the failure to make such Loan at the time required herein. (c) The failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). (d) Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the relevant Borrower to repay such Loan in accordance with the terms of this Agreement. (e) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness to such Lender resulting from each Loan made by it from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Borrower with respect to each Loan, the Type of each Loan and each Interest Period, if any, applicable thereto, (ii) the amount of any principal or interest due and payable or to become due and payable from each Borrower to each Lender hereunder and (iii) the 39 35 amount of any sum received by the Administrative Agent hereunder from any Borrower and each Lender's share thereof. The entries made in the accounts maintained pursuant to this paragraph (e) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations therein recorded; provided, however, that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of any Borrower to repay the Loans in accordance with their terms. (f) In order to expedite the transactions contemplated by this Agreement, each Subsidiary Borrower shall be deemed, by its execution and delivery of a Subsidiary Borrower Request, to have appointed CBS to act as agent on behalf of such Subsidiary Borrower for the purpose of (a) giving any notices contemplated to be given by such Subsidiary Borrower pursuant to this Agreement, including, without limitation, borrowing notices, prepayment notices, continuation notices, conversion notices, competitive bid requests and competitive bid acceptances or rejections and (b) paying on behalf of such Subsidiary Borrower any Subsidiary Borrower Obligations owing by such Subsidiary Borrower; provided, that each Subsidiary Borrower shall retain the right, in its discretion, to directly give any or all of such notices or make any or all of such payments. (g) The Administrative Agent shall promptly notify the Lenders upon receipt of any Subsidiary Borrower Designation and Subsidiary Borrower Request. The Administrative Agent shall promptly notify the Swingline Lenders upon receipt of any designation of a Subsidiary Borrower as a Swingline Borrower. SECTION 2.18. Sharing of Setoffs. Except to the extent that this Agreement provides for payments to be allocated to Revolving Credit Loans, Swingline Loans or Competitive Loans, as the case may be, each Lender agrees that if it shall, through the exercise of a right of banker's lien, setoff or counterclaim against any Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the United States Code or other security or interest arising from, or in lieu of, such secured claim, received by such Lender under any applicable bankruptcy, insolvency or other similar law or otherwise, or by any other means (other than pursuant to any provision of this Agreement), obtain payment (voluntary or involuntary) in respect of any category of its Loans or such Lender's Revolving Credit Percentage of any LC Disbursement as a result of which the unpaid principal portion of such Loans or the unpaid portion of such Lender's Revolving Credit Percentage of the LC Disbursements shall be proportionately less than the unpaid principal portion of such Loans or the unpaid portion of the Revolving Credit Percentage of the LC Disbursements of any other Lender, it shall be deemed simultaneously to have purchased from such other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a participation in such Loans or the Revolving Credit Percentage of the LC Disbursements of such other Lender, so that the aggregate unpaid principal amount of such Loans and participations in such Loans held by each Lender or the Revolving Credit Percentage of LC Disbursements and participations in LC Disbursements held by each Lender shall be in the same proportion to the aggregate unpaid principal amount of all such Loans or LC Disbursements then outstanding as the principal amount of such Loans or the Revolving Credit Percentage of LC Disbursements of each Lender prior to such exercise of banker's lien, setoff or counterclaim or other event was to the principal amount of all such Loans or LC Disbursements outstanding prior to such exercise of banker's lien, setoff or counterclaim or other event; provided, however, that, if any such purchase or purchases or adjustments shall be made pursuant to this Section 2.18 and the payment giving rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be rescinded to the extent of such recovery and the purchase price or prices or adjustment restored without interest. Any Lender holding a participation in a Loan or LC Disbursement deemed to have been so purchased may exercise any and all rights of banker's lien, setoff or counterclaim with respect to any and all moneys owing by any Borrower to such Lender by reason 40 36 thereof as fully as if such Lender had made a Loan directly such Borrower or issued a Letter of Credit for the account of Infinity in the amount of such participation. SECTION 2.19. Payments. (a) Except as otherwise expressly provided herein, each Borrower shall make each payment (including principal of or interest on any Loan or any Fees or other amounts) hereunder without setoff or counterclaim and shall make each such payment not later than 12:00 noon, New York City time, on the date when due in Dollars to the Administrative Agent at its offices at 60 Wall Street, New York, New York, in immediately available funds. (b) Whenever any payment (including principal of or interest on any Loan or any Fees or other amounts) hereunder shall become due, or otherwise would occur, on a day that is not a Business Day, such payment may be made on the next succeeding Business Day, and such extension of time shall in such case be included in the computation of interest or Fees, if applicable. SECTION 2.20. Taxes. (a) Any and all payments by each Borrower hereunder to or for the benefit of a Non-U.S. Person shall be made, in accordance with Section 2.19, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto imposed by or on behalf of the United States or any political subdivision thereof, excluding taxes imposed on (or measured by) such Non-U.S. Person's net income or net receipts, franchise taxes, taxes on doing business or taxes imposed on capital or net worth (all such nonexcluded taxes, levies, imposts, deductions, charges, withholdings and liabilities being hereinafter referred to as "Taxes"). If any Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to a Non-U.S. Person, (i) the sum payable shall be increased by the amount necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 2.20) such Non-U.S. Person shall receive an amount equal to the sum it would have received had no such deductions been made, (ii) such Borrower shall make such deductions and (iii) such Borrower shall pay the full amount deducted to the relevant taxing authority or other Governmental Authority in accordance with applicable law. (b) The relevant Borrower agrees to pay and reimburse on demand all transfer, stamp, documentary or other similar taxes, assessments or charges levied by any Governmental Authority in respect of this Agreement, any of the Loans or the Letters of Credit (all such taxes, assessments or charges hereinafter referred to as "Other Taxes"). (c) The relevant Borrower will indemnify each Lender (or Transferee) and the Administrative Agent for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed by the applicable jurisdiction on amounts payable under this Section 2.20) paid by such Lender (or Transferee) or the Administrative Agent, as the case may be, and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, whether or not such Taxes or Other Taxes were correctly or legally asserted by the relevant taxing authority or other Governmental Authority. Such indemnification shall be made within 30 days after the date such Lender (or Transferee) or the Administrative Agent, as the case may be, makes written demand therefor. (d) Within 30 days after the date of any payment of Taxes or Other Taxes withheld by any Borrower in respect of any payment to a Non-U.S. Person, such Borrower will furnish to the Administrative Agent, at its address referred to in Section 9.1 for delivery to such Non-U.S. Person, the original or a certified copy of a receipt (if available) evidencing payment thereof. 41 37 (e) Without prejudice to the survival of any other agreement contained herein, the agreements and obligations contained in this Section 2.20 shall survive the payment in full of the principal of and interest on all Loans made hereunder and of all other amounts payable hereunder. (f) Each Lender (or Transferee) that is not a citizen or resident of the United States of America, a corporation, partnership or other entity created or organized in or under the laws of the United States of America, or any estate or trust that is subject to federal income taxation regardless of the source of its income (a "Non-U.S. Person") shall deliver to Infinity and the Administrative Agent (or, in the case of a participant, to the Lender from which the related participation shall have been purchased) two copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S. Person claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of "portfolio interest", a Form W-8, or any subsequent versions thereof or successors thereto (and, if such Non-U.S. Person delivers a Form W-8, an annual certificate representing that such Non-U.S. Person is not a "bank" for purposes of Section 881(c) of the Code, is not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Infinity and is not a controlled foreign corporation related to Infinity (within the meaning of Section 864(d)(4) of the Code)), properly completed and duly executed by such Non-U.S. Person claiming complete exemption from U.S. federal withholding tax on all payments by any Borrower under this Agreement. Such forms shall be delivered by each Non-U.S. Person promptly after it becomes a party to this Agreement (or, in the case of any participant, promptly after the date such participant purchases the related participation). In addition, each Non-U.S. Person shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Non-U.S. Person. Each Non-U.S. Person shall promptly notify Infinity at any time it determines that it is no longer in a position to provide any previously delivered certificate to Infinity (or any other form of certification adopted by the U.S. taxing authorities for such purpose). Unless Infinity and the Administrative Agent (or, in the case of a participant, the Lender from which the related participation shall have been purchased) have received forms or other documents satisfactory to them indicating that payments hereunder are not subject to United States withholding tax, the relevant Borrower or the Administrative Agent shall withhold taxes from such payments at the applicable statutory rate in the case of payments of interest to or for any Lender (or Transferee) that is a Non-U.S. Person. Notwithstanding any other provision of this Section 2.20(f), a Non-U.S. Person shall not be required to deliver any form pursuant to this Section 2.20(f) that such Non-U.S. Person is not legally able to deliver by reason of the adoption of any law, rule or regulation, or any change in any law, rule or regulation or in the interpretation thereof, in each case occurring after the date such Non-U.S. Person becomes a Lender (or Transferee). (g) No Borrower shall be required to pay any additional amounts to any Non-U.S. Person in respect of United States withholding tax pursuant to paragraph (a) above (i) if the obligation to pay such additional amounts would not have arisen but for a failure by such Non-U.S. Person to comply with the provisions of paragraph (f) above or (ii) in the case of a Transferee, to the extent such additional amounts exceed the additional amounts that would have been payable had no transfer or assignment to such Transferee occurred; provided, however, that each Borrower shall be required to pay those amounts to any Lender (or Transferee) that it was required to pay hereunder prior to the failure of such Lender (or Transferee) to comply with the provisions of such paragraph (f). SECTION 2.21. Termination or Assignment of Commitments Under Certain Circumstances. (a) Any Lender (or Transferee) claiming any additional amounts payable pursuant to Section 2.15 or Section 2.20 shall use reasonable efforts (consistent with legal and regulatory restrictions) to file any certificate or document requested by any Borrower or to change the jurisdiction of its applicable lending office if the making of such a filing or change would avoid the need for or 42 38 reduce the amount of any such additional amounts which may thereafter accrue and would not, in the sole determination of such Lender (or Transferee), be otherwise disadvantageous to such Lender (or Transferee). (b) In the event that (x) any Lender shall have delivered a notice or certificate pursuant to Section 2.15, (y) any Borrower shall be required to make additional payments to any Lender under Section 2.20, or (z) any Lender (a "Non-Consenting Lender") shall withhold its consent to any amendment described in clause (i) or (ii) of Section 9.8(b) as to which consents have been obtained from Lenders having Total Facility Percentages aggregating at least 90%, Infinity shall have the right, at its own expense, upon notice to such Lender (or Lenders) and the Administrative Agent, (i) to terminate the Commitments of such Lender (except in the case of clause (z) above) or (ii) to require such Lender (or, in the case of clause (z) above, each Non-Consenting Lender) to transfer and assign without recourse (in accordance with and subject to the restrictions contained in Section 9.4) all its interests, rights and obligations under this Agreement to one or more other financial institutions acceptable to the Administrative Agent (which approval shall not be unreasonably withheld) which shall assume such obligations; provided that (w) in the case of any replacement of Non-Consenting Lenders, each assignee shall have consented to the relevant amendment, (x) no such termination or assignment shall conflict with any law, rule or regulation or order of any Governmental Authority, (y) the Borrowers or the assignee (or assignees), as the case may be, shall pay to each affected Lender in immediately available funds on the date of such termination or assignment the principal of and interest accrued to the date of payment on the Loans made by it hereunder and all other amounts accrued for its account or owed to it hereunder and (z) Infinity may not terminate Commitments representing more than 10% of the original aggregate Commitments pursuant to this paragraph (b). ARTICLE III. REPRESENTATIONS AND WARRANTIES Infinity hereby represents and warrants, and each Subsidiary Borrower by its execution and delivery of a Subsidiary Borrower Request represents and warrants (to the extent specifically applicable to such Subsidiary Borrower), to each of the Lenders that: SECTION 3.1. Corporate Existence. Each of Infinity and each Material Subsidiary: (a) is a corporation, partnership or other entity duly organized and validly existing under the laws of the jurisdiction of its organization; (b) has all requisite corporate or other power, and has all material governmental licenses, authorizations, consents and approvals, necessary to own its assets and carry on its business as now being or as proposed to be conducted, except where the failure to have any of the foregoing would not result in a Material Adverse Effect; and (c) is qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure so to qualify would result in a Material Adverse Effect. SECTION 3.2. Financial Condition. (a) Each of (i) the consolidated balance sheet of Infinity and its Consolidated Subsidiaries as at December 31, 1998, and the related consolidated statements of income and cash flows of Infinity and its Consolidated Subsidiaries for the fiscal year ended on such date, with the opinion thereon of KPMG LLP, and (ii) the unaudited consolidated balance sheets of Infinity and its Consolidated Subsidiaries as at March 31, 1999 and June 30, 1999, and the related unaudited consolidated statements of income and cash flows of Infinity and its Consolidated Subsidiaries for the fiscal quarters ended on such dates, all certified by a Financial Officer of Infinity, 43 39 heretofore furnished to each of the Lenders, fairly present the consolidated financial condition of Infinity and its Consolidated Subsidiaries as at such dates and the consolidated results of their operations for the fiscal year or fiscal quarter ended on such dates in accordance with GAAP (subject, in the case of the statements referred to in clause (ii) above, to year-end audit adjustments). Neither Infinity nor any of its Material Subsidiaries had on such dates any known material contingent liability, except as referred to or reflected or provided for in the Exchange Act Report or in such balance sheets (or the notes thereto) as at such dates. (b) There has been no material adverse change in the consolidated financial condition, operations, assets, business or prospects taken as a whole of Infinity and its Consolidated Subsidiaries from that set forth in the consolidated financial statements of Infinity for the fiscal year ended December 31, 1998 referred to in Section 3.2(a) (it being agreed, however, that none of (i) the reduction by any rating agency of any rating assigned to Indebtedness of Infinity, (ii) non-cash provisions for loan losses and additions to valuation allowances, (iii) any change in GAAP or compliance therewith and (iv) any legal or arbitral proceedings which have been disclosed in the Exchange Act Report, whether threatened, pending, resulting in a judgment or otherwise, prior to the time a final judgment for the payment of money shall have been recorded against Infinity or any Material Subsidiary by any Governmental Authority having jurisdiction, and the judgment is non-appealable (or the time for appeal has expired) and all stays of execution have expired or been lifted shall, in and of itself, constitute such a material adverse change). SECTION 3.3. Litigation. Except as disclosed to the Lenders in the Exchange Act Report filed prior to the Closing Date or otherwise disclosed in writing to the Lenders prior to the Closing Date, there are no legal or arbitral proceedings, or any proceedings by or before any Governmental Authority, pending or (to the knowledge of Infinity) threatened against Infinity or any of its Material Subsidiaries which have resulted in a Material Adverse Effect (it being agreed that any legal or arbitral proceedings which have been disclosed in the Exchange Act Report, whether threatened, pending, resulting in a judgment or otherwise, prior to the time a final judgment for the payment of money shall have been recorded against Infinity or any Material Subsidiary by any Governmental Authority having jurisdiction, and the judgment is non-appealable (or the time for appeal has expired) and all stays of execution have expired or been lifted shall not, in and of itself, be deemed to result in a Material Adverse Effect). The "Exchange Act Report" shall mean, collectively, the Annual Report of Infinity on Form 10-K and Form 10-K/A for the year ended December 31, 1998, each Report on Form 8-K of Infinity filed subsequent to December 31, 1998 and delivered to the Lenders prior to the date hereof, and the Report of Infinity on Form 10-Q and Form 10-Q/A for the quarters ended March 31, 1999 and June 30, 1999. SECTION 3.4. No Breach, etc. None of the execution and delivery of this Agreement, the consummation of the transactions herein contemplated and compliance with the terms and provisions hereof will conflict with or result in a breach of, or require any consent under, the charter or By-laws (or other equivalent organizational documents) of any Borrower, or any applicable law or regulation, or any order, writ, injunction or decree of any Governmental Authority, or any material agreement or instrument to which Infinity or any of its Material Subsidiaries is a party or by which any of them is bound or to which any of them is subject, or constitute a default under any such agreement or instrument, or result in the creation or imposition of any Lien upon any of the revenues or assets of Infinity or any of its Material Subsidiaries pursuant to the terms of any such agreement or instrument. Neither Infinity nor any of its Material Subsidiaries is in default under or with respect to any of its material contractual obligations in any respect which would have a Material Adverse Effect. 44 40 SECTION 3.5. Corporate Action. Each Borrower has all necessary corporate power and authority to execute, deliver and perform its obligations under this Agreement; the execution and delivery by each Borrower of this Agreement (or, in the case of each Subsidiary Borrower, the relevant Subsidiary Borrower Request), and the performance by each Borrower of this Agreement, have been duly authorized by all necessary corporate action on such Borrower's part; this Agreement (or, in the case of each Subsidiary Borrower, the relevant Subsidiary Borrower Request) has been duly and validly executed and delivered by each Borrower; and this Agreement constitutes a legal, valid and binding obligation of each Borrower, enforceable in accordance with its terms except as such enforceability may be limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or similar laws of general applicability affecting the enforcement of creditors' rights and (b) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). SECTION 3.6. Approvals. No authorizations, approvals or consents of, and no filings or registrations with, any Governmental Authority are necessary for the execution, delivery or performance by each Borrower of this Agreement or for the validity or enforceability hereof. SECTION 3.7. ERISA. Infinity and, to the best of its knowledge, its ERISA Affiliates have fulfilled their respective obligations under the minimum funding standards of ERISA and the Code with respect to each Plan and are in compliance in all material respects with the currently applicable provisions of ERISA and the Code except where any failure or non-compliance would not result in a Material Adverse Effect. SECTION 3.8. Taxes. As of the Closing Date, United States Federal income tax returns of CBS and its Material Subsidiaries have been examined and closed through the fiscal year of CBS ended December 31, 1989. Infinity and its Material Subsidiaries have filed all United States Federal income tax returns and all other material tax returns which are required to be filed by them and have paid all taxes shown as due on such returns or pursuant to any assessment received by Infinity or any of its Material Subsidiaries, except those being contested and reserved against in accordance with Section 5.2. SECTION 3.9. Investment Company Act. No Borrower is an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. SECTION 3.10. Hazardous Materials. Infinity and each of its Subsidiaries have obtained all permits, licenses and other authorizations which are required under all Environmental Laws, except to the extent failure to have any such permit, license or authorization has not resulted in a Material Adverse Effect. Infinity and each of its Subsidiaries are in compliance with the terms and conditions of all such permits, licenses and authorizations, and are also in compliance with other limitations, restrictions, conditions, standards, prohibitions, requirements, obligations, schedules and timetables contained in any applicable Environmental Law or in any regulation, code, plan, order, decree, judgment, injunction, notice or demand letter issued, entered, promulgated or approved thereunder, except to the extent failure to comply would not result in a Material Adverse Effect. SECTION 3.11. Material Subsidiaries. Set forth in Schedule 3.11 is a complete and correct list, as of the Closing Date, of all Material Subsidiaries. 45 41 SECTION 3.12. No Material Misstatements. No written information, report, financial statement, exhibit or schedule (the "Information") furnished by or on behalf of Infinity to the Administrative Agent or any Lender in connection with the syndication of the Commitments or the negotiation of this Agreement or included in this Agreement or delivered pursuant hereto contained as of the time it was furnished any material misstatement of fact or omitted as of such time to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were, are or will be made, not misleading; provided that the foregoing representation and warranty is made only to the best of Infinity's knowledge in the case of Information relating to Outdoor Systems and its Subsidiaries furnished prior to the Outdoor Systems Merger Date (which knowledge, until the Outdoor Systems Merger Date, will be principally based upon public disclosure by Outdoor Systems); and provided, further, that with respect to Information consisting of statements, estimates and projections regarding the future performance of Infinity and its respective Subsidiaries ("Projections"), no representation or warranty is made other than that such Projections have been prepared in good faith utilizing due and careful consideration and the best information available to Infinity at the time of preparation thereof. SECTION 3.13. Ownership of Property. Each of Infinity and each of its Material Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other Property, except to the extent that the failure to have such title would not result in a Material Adverse Effect. SECTION 3.14. Intellectual Property. Each of Infinity and each of its Material Subsidiaries maintains, and is in compliance in all material respects with, appropriate policies and procedures for establishing and protecting their respective rights in Intellectual Property. Except as, in the aggregate, would not result in a Material Adverse Effect, (a) each of Infinity and each of its Material Subsidiaries owns, or is licensed to use, all Intellectual Property necessary for the conduct of their respective businesses; (b) no claim has been asserted and is pending by any Person challenging or questioning the use of any Intellectual Property or the validity or effectiveness of any Intellectual Property, nor does Infinity know of any valid basis for any such claim; and (c) to the best knowledge of Infinity, the use of the Intellectual Property by Infinity and its Material Subsidiaries does not infringe on the rights of any Person. SECTION 3.15. FCC Matters. Except as, in the aggregate, would not result in a Material Adverse Effect: (a) Infinity and each of its Material Subsidiaries have all the FCC Licenses necessary for the conduct of their respective businesses; (b) Infinity and each of its Material Subsidiaries are in substantial compliance with the Communications Act and with the rules and regulations thereunder; (c) neither Infinity nor any of its Material Subsidiaries is a party to, or has any knowledge of, any pending investigation, notice of violation, order or complaint issued with respect to it by or before the FCC; and (d) Infinity and its Material Subsidiaries have no reason to believe that any FCC License will not be renewed in the ordinary course of business. SECTION 3.16. Year 2000 Matters. The statements contained in Infinity's filings with the Securities and Exchange Commission with respect to year 2000 compliance are true and correct as they relate to Infinity. 46 42 ARTICLE IV. CONDITIONS OF EFFECTIVENESS AND LENDING SECTION 4.1. Effectiveness. The effectiveness of this Agreement is subject to the satisfaction of the following conditions (the date on which all of such conditions shall have been satisfied, the "Closing Date"): (a) Credit Agreement. The Administrative Agent shall have received this Agreement, executed and delivered by a duly authorized officer of Infinity and CBS. (b) Closing Certificate. The Administrative Agent shall have received a Closing Certificate, substantially in the form of Exhibit F, of CBS and Infinity, with appropriate insertions and attachments. (c) Consent. The Administrative Agent shall have (i) received the consent of the Required Lenders (as defined in the Existing Credit Agreement) authorizing the Administrative Agent to execute this Agreement and (ii) executed this Agreement. SECTION 4.2. Initial Loans to Subsidiary Borrowers. The obligation of each Lender to make its initial Loan to a particular Subsidiary Borrower, if designated as such after the Closing Date, is subject to the satisfaction of the conditions that (a) Infinity shall have delivered to the Administrative Agent a Subsidiary Borrower Designation for such Subsidiary Borrower and (b) such Subsidiary Borrower shall have furnished to the Administrative Agent (i) a Subsidiary Borrower Request, (ii) a Closing Certificate of such Subsidiary Borrower, with appropriate insertions and attachments and (iii) one or more executed legal opinions with respect to such Subsidiary Borrower, in form and substance reasonably satisfactory to the Administrative Agent and including, to the extent applicable, the opinions set forth in Exhibits B-7 and B-8. Infinity may from time to time deliver a subsequent Subsidiary Borrower Designation with respect to any Subsidiary Borrower, countersigned by such Subsidiary Borrower, for the purpose of terminating such Subsidiary Borrower's designation as such, so long as, on the effective date of such termination, all Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall have been paid in full. In addition, if on any date a Subsidiary Borrower shall cease to be a Subsidiary, all Subsidiary Borrower Obligations in respect of such Subsidiary Borrower shall automatically become due and payable on such date and no further Loans may be borrowed by such Subsidiary Borrower hereunder. 47 43 SECTION 4.3. All Credit Events. The obligation of each Lender to make each Loan, and the obligation of each Issuing Lender to issue each Letter of Credit, are subject to the satisfaction of the following conditions. (a) The Administrative Agent shall have received a request for, or notice of, such Credit Event if and as required by Section 2.3, 2.4, 2.6 or 2.7, as applicable. (b) Each of the representations and warranties made by Infinity and, in the case of a borrowing by a Subsidiary Borrower, by such Subsidiary Borrower, in Article III, or in any certificate delivered pursuant hereto, shall be true and correct in all material respects on and as of the date of such Credit Event with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date in which case such representations and warranties shall be true and correct in all material respects as of such earlier date provided that, with respect to any Loan made or Letter of Credit issued after the Closing Date, in the event that the Infinity Ratings are then A-2 or higher by S&P and P-2 or higher by Moody's, the representation in Section 3.2(b) shall be excluded from the foregoing requirement. (c) At the time of and immediately after giving effect to such Credit Event no Default or Event of Default shall have occurred and be continuing. (d) After giving effect to such Credit Event, (i) the Outstanding Revolving Extensions of Credit of each Lender shall not exceed such Lender's Commitment then in effect and (ii) the Total Facility Exposure shall not exceed the Total Commitment then in effect. Each Credit Event shall be deemed to constitute a representation and warranty by Infinity on the date of such Credit Event as to the matters specified in paragraphs (b) and (c) of this Section 4.3. ARTICLE V. COVENANTS Infinity covenants and agrees with each Lender that, as long as the Commitments shall be in effect or the principal of or interest on any Loan shall be unpaid, or there shall be any Aggregate LC Exposure, unless the Required Lenders shall otherwise consent in writing: SECTION 5.1. Financial Statements. Commencing on December 31, 1999, Infinity shall deliver to each of the Lenders: (a) within 55 days after the end of each of the first three quarterly fiscal periods of each fiscal year of Infinity, consolidated statements of income and cash flows of Infinity and its Consolidated Subsidiaries for such period and for the period from the beginning of the respective fiscal year to the end of such period, and the related consolidated balance sheet as at the end of such period, setting forth in each case in comparative form the corresponding consolidated 48 44 figures for the corresponding period in the preceding fiscal year, accompanied by a certificate of a Financial Officer of Infinity which certificate shall state that such financial statements fairly present the consolidated financial condition and results of operations of Infinity and its Consolidated Subsidiaries in accordance with GAAP as at the end of, and for, such period, subject to normal year-end audit adjustments (provided that the requirement herein for the furnishing of such quarterly financial statements may be fulfilled by providing to the Lenders the report of Infinity to the SEC on Form 10-Q for the applicable quarterly period, accompanied by the officer's certificate described in the last sentence of this Section 5.1); (b) within 105 days after the end of each fiscal year of Infinity, consolidated statements of income and cash flows of Infinity and its Consolidated Subsidiaries for such year and the related consolidated balance sheet as at the end of such year, setting forth in comparative form the corresponding consolidated figures for the preceding fiscal year, and accompanied by an opinion thereon (unqualified as to the scope of the audit) of independent certified public accountants of recognized national standing, which opinion shall state that such consolidated financial statements fairly present the consolidated financial condition and results of operations of Infinity and its Consolidated Subsidiaries as at the end of, and for, such fiscal year (provided that the requirement herein for the furnishing of annual financial statements may be fulfilled by providing to the Lenders the report of Infinity to the SEC on Form 10-K for the applicable fiscal year); (c) promptly upon their becoming publicly available, copies of all registration statements and regular periodic reports (including without limitation any and all reports on Form 8-K), if any, which Infinity or any of its Subsidiaries shall have filed with the SEC or any national securities exchange; (d) promptly upon the mailing thereof to the shareholders of Infinity generally, copies of all financial statements, reports and proxy statements so mailed; (e) within 30 days after a Responsible Officer of Infinity knows or has reason to believe that any of the events or conditions specified below with respect to any Plan or Multiemployer Plan have occurred or exist which would reasonably be expected to result in a Material Adverse Effect, a statement signed by a senior financial officer of Infinity setting forth details respecting such event or condition and the action, if any, which Infinity or its ERISA Affiliate proposes to take with respect thereto (and a copy of any report or notice required to be filed with or given to PBGC by Infinity or an ERISA Affiliate with respect to such event or condition): (i) any reportable event, as defined in Section 4043(b) of ERISA and the regulations issued thereunder, with respect to a Plan, as to which PBGC has not by regulation waived the requirement of Section 4043(a) of ERISA that it be notified within 30 days of the occurrence of such event (provided that a failure to meet the minimum funding standard of Section 412 of the Code or Section 302 of ERISA shall be a reportable event regardless of the issuance of any waiver in accordance with Section 412(d) of the Code); (ii) the filing under Section 4041 of ERISA of a notice of intent to terminate any Plan or the termination of any Plan; 49 45 (iii) the institution by PBGC of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by Infinity or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by PBGC with respect to such Multiemployer Plan; (iv) the complete or partial withdrawal by Infinity or any ERISA Affiliate under Section 4201 or 4204 of ERISA from a Multiemployer Plan, or the receipt by Infinity or any ERISA Affiliate of notice from a Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to terminate or has terminated under Section 4041A of ERISA; (v) the institution of a proceeding by a fiduciary of any Multiemployer Plan against Infinity or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is not dismissed within 30 days; and (vi) a failure to make a required installment or other payment with respect to a Plan (within the meaning of Section 412(n) of the Code), in which case the notice required hereunder shall be provided within 10 days after the due date for filing notice of such failure with the PBGC; (f) promptly after a Responsible Officer of Infinity knows or has reason to believe that any Default or Event of Default has occurred, a notice of such Default or Event of Default describing it in reasonable detail and, together with such notice or as soon thereafter as possible, a description of the action that Infinity has taken and proposes to take with respect thereto; (g) promptly after a Responsible Officer of Infinity knows that any change has occurred in CBS's Debt Rating by either Rating Agency, a notice describing such change; and (h) promptly from time to time such other information regarding the financial condition, operations or business of Infinity or any of its Subsidiaries (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA) as any Lender through the Administrative Agent may reasonably request. Infinity will furnish to the Administrative Agent and each Lender, at the time it furnishes each set of financial statements pursuant to paragraph (a) or (b) above, a certificate (which may be a copy in the case of each Lender) of a Financial Officer of Infinity (a "Compliance Certificate") (i) to the effect that no Default or Event of Default has occurred and is continuing (or, if any Default or Event of Default has occurred and is continuing, describing it in reasonable detail and describing the action that Infinity has taken and proposes to take with respect thereto), and (ii) setting forth in reasonable detail the computations (including any pro forma calculations as described in Section 1.2(c)) necessary to determine whether Infinity is in compliance with the Financial Covenants as of the end of the respective quarterly fiscal period or fiscal year. SECTION 5.2. Corporate Existence, Etc. Infinity will, and will cause each of its Material Subsidiaries to, preserve and maintain its legal existence and all of its material rights, privileges and franchises (provided that (a) nothing in this Section 5.2 shall prohibit any transaction expressly permitted under Section 5.4 and (b) Infinity or such Material Subsidiary shall not be required to preserve or maintain any such right, privilege or franchise if the Board of Directors of Infinity or such Material Subsidiary, as the case may be, shall determine that the 50 46 preservation or maintenance thereof is no longer desirable in the conduct of the business of Infinity or such Material Subsidiary, as the case may be); comply with the requirements of all applicable laws, rules, regulations and orders of Governmental Authorities (including, without limitation, all Environmental Laws) and with all contractual obligations if failure to comply with such requirements or obligations would reasonably be expected to result in a Material Adverse Effect; pay and discharge all material taxes, assessments, governmental charges, levies or other obligations of whatever nature imposed on it or on its income or profits or on any of its Property prior to the date on which penalties attach thereto, except for any such tax, assessment, charge, levy or other obligation the payment of which is being contested in good faith and by proper proceedings and against which adequate reserves are being maintained; maintain all its Property used or useful in its business in good working order and condition, ordinary wear and tear excepted, all as in the judgment of Infinity or such Material Subsidiary may be necessary so that the business carried on in connection therewith may be properly and advantageously conducted at all times (provided that Infinity or such Material Subsidiary shall not be required to maintain any such Property if the failure to maintain any such Property is, in the judgment of Infinity or such Material Subsidiary, desirable in the conduct of the business of Infinity or such Material Subsidiary); keep proper books of records and accounts in which entries that are full, true and correct in all material respects shall be made in conformity with GAAP; and permit representatives of any Lender, during normal business hours upon reasonable advance notice, to inspect any of its books and records and to discuss its business and affairs with its Financial Officers or their designees, all to the extent reasonably requested by such Lender. SECTION 5.3. Insurance. Infinity will, and will cause each of its Material Subsidiaries to, keep insured by financially sound and reputable insurers all Property of a character usually insured by corporations engaged in the same or similar business and similarly situated against loss or damage of the kinds and in the amounts consistent with prudent business practice and carry such other insurance as is consistent with prudent business practice (it being understood that self-insurance shall be permitted to the extent consistent with prudent business practice). SECTION 5.4. Prohibition of Fundamental Changes. Infinity will not, and will not permit any of its Material Subsidiaries to (i) enter into any transaction of merger, consolidation, liquidation or dissolution or (ii) Dispose of, in one transaction or a series of related transactions, all or a substantial part (determined by reference to Infinity and its Subsidiaries taken as a whole) of its business or Property, whether now owned or hereafter acquired (excluding (x) financings by way of sales of receivables or inventory, (y) inventory or other Property Disposed of in the ordinary course of business and (z) obsolete or worn-out Property, tools or equipments no longer used or useful in its business). Notwithstanding the foregoing provisions of this Section 5.4: (a) any Subsidiary of Infinity may be merged or consolidated with or into: (i) Infinity if Infinity shall be the continuing or surviving corporation or (ii) any other such Subsidiary; provided that (x) if any such transaction shall be between a Subsidiary and a Wholly Owned Subsidiary, such Wholly Owned Subsidiary shall be the continuing or surviving corporation and (y) if any such transaction shall be between a Subsidiary and a Subsidiary Borrower, the continuing or surviving corporation shall be a Subsidiary Borrower; (b) any Subsidiary of Infinity may distribute, dividend or Dispose of any of or all its Property (upon voluntary liquidation or otherwise) to Infinity or a Wholly Owned Subsidiary of Infinity; 51 47 (c) Infinity may merge or consolidate with or into any other Person if (i) either (x) Infinity is the continuing or surviving corporation or (y) the corporation formed by such consolidation or into which Infinity is merged shall be a corporation organized under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume the obligations of Infinity hereunder pursuant to a written agreement and shall have delivered to the Administrative Agent such agreement and a certificate of a Responsible Officer and an opinion of counsel to the effect that such merger or consolidation complies with this Section 5.4(c), and (ii) after giving effect thereto and to any repayment of Loans to be made upon consummation thereof (it being expressly understood that no repayment of Loans is required solely by virtue thereof), no Default or Event of Default shall have occurred and be continuing; (d) any Subsidiary of Infinity may merge or consolidate with or into any other Person if, after giving effect thereto and to any repayment of Loans to be made upon the consummation thereof (it being expressly understood that, except as otherwise expressly provided in Section 4.2 with respect to Subsidiary Borrowers, no repayment of Loans is required solely by virtue thereof), no Default or Event of Default shall have occurred and be continuing; and (e) Infinity or any Subsidiary of Infinity may Dispose of its Property if, after giving effect thereto and to any repayment of Loans to be made upon the consummation thereof (it being expressly understood that, except as otherwise expressly provided in Section 4.2 with respect to Subsidiary Borrowers, no repayment of Loans is required solely by virtue thereof), no Default or Event of Default shall have occurred and be continuing. SECTION 5.5. Limitation on Liens. Infinity will not, and will not permit any of its Material Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its Property, or enter into any Sale/Leaseback with respect to any such Property, whether now owned or hereafter acquired; provided that the foregoing restrictions shall not apply to: (a) Liens imposed by any Governmental Authority for taxes, assessments or charges not yet due and payable or which are being contested in good faith and by appropriate proceedings if adequate reserves with respect thereto are maintained; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's, architects' or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 30 days or which are being contested in good faith and by appropriate proceedings; (c) Liens securing judgments or to perfect an appeal of any order or decree but only to the extent, for an amount and for a period not resulting in an Event of Default under paragraph (h) of Article VI; (d) pledges or deposits under worker's compensation, unemployment insurance and other social security legislation; (e) pledges or deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations to secure surety, appeal or performance bonds and contractual and other obligations of a like nature incurred in the ordinary course of business and not involving the borrowing of money; 52 48 (f) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business and encumbrances consisting of zoning restrictions, easements, licenses, restrictions on the use of Property or minor imperfections in title thereto and Liens under leases and subleases which, in the aggregate, are not material in amount, and which do not interfere in any material respects with the ordinary conduct of the business of Infinity and its Subsidiaries taken as a whole; (g) Liens on Property of any Subsidiary of Infinity or of any Person which is or was merged with or into Infinity or any Subsidiary thereof, provided that such Liens are or were in existence at the time such Person becomes or became a Subsidiary of Infinity or such Person merged with or into Infinity or any Subsidiary thereof, as the case may be, were not created in anticipation thereof other than to finance the purchase thereof and are not spread to cover any Property other than the Property covered at the time of the relevant transaction; (h) Liens upon real and/or personal property acquired (by purchase, construction, foreclosure, deed in lieu of foreclosure or otherwise) by Infinity or any of its Subsidiaries, each of which Liens either (A) existed on such Property before the time of its acquisition and was not created in anticipation thereof or (B) was created solely for the purpose of securing Indebtedness representing, or incurred to finance, refinance or refund, all or a part of the cost (including the cost of construction) of such Property or improvements thereon; provided that no such Lien shall extend to or cover any Property of Infinity or such Subsidiary other than the respective Property so acquired and improvements thereon; (i) mortgages on Property securing indebtedness in favor of the United States of America or any state thereof or any department, agency or instrumentality or political subdivision of the United States of America or any state thereof, incurred for the purpose of financing all or any part of the purchase price or the cost of construction of the Property subject to such mortgages (including without limitation such debt secured by such mortgages in connection with pollution control, industrial revenue or similar financings) or incurred to secure progress, advance or other payments pursuant to any contract or provision of any statute; (j) Liens securing Indebtedness owed to Infinity or to any Wholly Owned Subsidiary of Infinity; (k) Liens (i) upon the receivables and inventory of Infinity or any of its Subsidiaries to secure Indebtedness resulting from financings of such receivables and inventory in an aggregate amount not greater than $400,000,000 less the aggregate amount of Indebtedness that is secured pursuant to clause (ii) below, provided that the terms of such Indebtedness do not provide for any recourse to Infinity or any Material Subsidiary (except to the extent of breaches of representations and warranties of Infinity or any of its Subsidiaries in connection with such financings and other recourse customary in connection with "off-balance sheet" financings) and (ii) upon the Property of Infinity to secure Indebtedness of Infinity in an aggregate amount not greater than $125,000,000; (l) Sale/Leasebacks consummated prior to the Closing Date; (m) any Sale/Leaseback of assets of Infinity owned on the Closing Date and listed on Schedule 5.5(m); 53 49 (n) additional Liens upon real and/or personal property, and additional Sale/Leasebacks, provided that the sum of (i) the aggregate principal amount of the obligations secured by such Liens (other than Indebtedness as defined in clause (f) of the definition thereof which has not been assumed by Infinity or any of its Subsidiaries and where the Lien relates to Property acquired by Infinity or any of its Subsidiaries in satisfaction, in whole or in part, of indebtedness to Infinity or any of its Subsidiaries, in the ordinary course of business (any such Indebtedness, "Specified Section 5.5(n) Indebtedness")) and (ii) the aggregate Sale/Leaseback Attributable Debt with respect to such Sale/Leasebacks shall not exceed $125,000,000 at any one time outstanding; and (o) any extension, renewal or replacement of the foregoing; provided, however, that, except to the extent otherwise permitted by this Section 5.5 (including Section 5.5(n)), the Liens permitted under this paragraph shall not be spread to cover any additional Indebtedness or Property (other than a substitution of like Property or improvements on such Property or other Property of equivalent value). SECTION 5.6. Limitation on Subsidiary Indebtedness. Infinity will not permit any of its Subsidiaries to create, incur, assume or suffer to exist any Indebtedness (which includes, for the purposes of this Section 5.6, any preferred stock), except (i) Excluded Indebtedness, (ii) Indebtedness of any Subsidiary Borrower under this Agreement and (iii) Indebtedness incurred on any date when, after giving effect thereto, the aggregate principal amount of Indebtedness incurred pursuant to this clause (iii) that is outstanding on such date (it being understood that, for the purposes of this clause (iiv), the term "Indebtedness" does not include borrowings under this Agreement or Excluded Indebtedness) does not exceed $300,000,000 at any time. SECTION 5.7. Consolidated Leverage Ratio. Infinity will not permit the Consolidated Leverage Ratio at the end of any period of four consecutive fiscal quarters ending on any date set forth below to be greater than the ratio set forth below opposite such date: Date Ratio ---- ----- 12/31/99 and 3/31/00 4.00 to 1 6/30/00 and 9/30/00 3.75 to 1 12/31/00 and thereafter 3.50 to 1 SECTION 5.8. Consolidated Coverage Ratio. Infinity will not permit the Consolidated Coverage Ratio for any period of four consecutive fiscal quarters to be less than 3.00 to 1. SECTION 5.9. Use of Proceeds. On and after the Closing Date, each Borrower will use the proceeds of the Loans and will use the Letters of Credit hereunder solely for general corporate purposes (in each case in compliance with all applicable legal and regulatory requirements, including, without limitation, Regulation U and the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, and the regulations thereunder), provided that neither any Agent nor any Lender shall have any responsibility as to the use of any of such proceeds. 54 50 SECTION 5.10. Transactions with Affiliates. Infinity will not, and will not permit any of its Material Subsidiaries to, directly or indirectly enter into any material transaction with any Affiliate of Infinity except on terms at least as favorable to Infinity or such Subsidiary as it could obtain on an arm's-length basis. SECTION 5.11. Limitation on Negative Pledge Clauses. Infinity will not, and will not permit any of its Material Subsidiaries to, enter into any contractual obligation (a "Lien Restriction") in connection with the incurrence of Indebtedness for Borrowed Money which, with respect to any material asset of Infinity or any of its Material Subsidiaries, would prohibit Infinity or such Material Subsidiary from granting a Lien on such asset as collateral security for the obligations of Infinity hereunder or, as applicable, a Guarantee of such obligations by such Material Subsidiary (collectively, "Credit Obligations"), except (a) Lien Restrictions with respect to any asset encumbered by a Lien permitted by Section 5.5, (b) Lien Restrictions with respect to any asset (or any proceeds thereof) which are comparable to Lien Restrictions affecting such asset on the Original Closing Date, (c) Lien Restrictions included in the documentation governing the terms of any Indebtedness of any Person which is acquired by Infinity or any of its Material Subsidiaries after the Original Closing Date, which Indebtedness was outstanding prior to the date of acquisition of such Person and was not created in anticipation thereof and (d) Lien Restrictions in connection with securitizations or other transactions involving sales of receivables affecting only such receivables. It is understood that an "equal and ratable" clause shall not be deemed to constitute a Lien Restriction so long as such clause would permit the obligations entitled to the benefit of such clause and the applicable Credit Obligations to be secured by Liens on the relevant assets on a pari passu basis. ARTICLE VI. EVENTS OF DEFAULT. In case of the happening of any of the following events ("Events of Default"): (a) (i) any Borrower shall default in the payment when due of any principal of any Loan or (ii) any Borrower shall default in the payment when due of any interest on any Loan, any reimbursement obligation in respect of any LC Disbursement, any Fee or any other amount payable by it hereunder and, in the case of this clause (ii), such default shall continue unremedied for a period of five Business Days; (b) any representation, warranty or certification made or deemed made herein (or in any modification or supplement hereto) by any Borrower, or any certificate furnished to any Lender or the Administrative Agent pursuant to the provisions hereof, shall prove to have been false or misleading in any material respect as of the time made, deemed made or furnished; (c) (i) Infinity shall default in the performance of any of its obligations under Section 5.1(f), Section 5.4, Section 5.5, Sections 5.7 through 5.9 (inclusive) or Section 5.11 or (ii) Infinity shall default in the performance of any of its other obligations under this Agreement and, in the case of this clause (ii), such default shall continue unremedied for a period of 15 days after notice thereof to Infinity by the Administrative Agent or the Required Lenders (through the Administrative Agent); 55 51 (d) Infinity or any of its Subsidiaries shall (i) fail to pay at maturity any Indebtedness in an aggregate amount in excess of $100,000,000, or (ii) fail to make any payment (whether of principal, interest or otherwise), regardless of amount, due in respect of, or fail to observe or perform any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or governing, any such Indebtedness in excess of $100,000,000 if the effect of any failure referred to in this clause (ii) (x) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf to cause, such Indebtedness to become due prior to its stated maturity (provided that this subclause (ii)(x) shall not apply to any provision that permits the holders, or a trustee on their behalf, to cause Indebtedness to become due prior to its stated maturity because of the failure to deliver to such holders or such trustee financial statements or certificates for any Subsidiary that is not required by law or regulation to file financial statements with the SEC, unless such Indebtedness has become due prior to its stated maturity as a result of such failure) or (y) has caused such Indebtedness to become due prior to its stated maturity (it being agreed that for purposes of this paragraph (d) only (other than subclause (ii)(x) of this paragraph (d)), the term "Indebtedness" shall include obligations under any interest rate protection agreement, foreign currency exchange agreement or other interest or exchange rate hedging agreement and that the amount of any Person's obligations under any such agreement shall be the net amount that such Person could be required to pay as a result of a termination thereof by reason of a default thereunder); (e) Infinity or any of its Material Subsidiaries shall admit in writing its inability, or be generally unable, to pay its debts as such debts become due; (f) Infinity or any of its Material Subsidiaries shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, trustee or liquidator of itself or of all or a substantial part of its Property, (ii) make a general assignment for the benefit of its creditors, (iii) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect), (iv) file a petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or readjustment of debts, (v) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition filed against it in an involuntary case under the Bankruptcy Code, or (vi) take any corporate action for the purpose of effecting any of the foregoing; (g) a proceeding or a case shall be commenced, without the application or consent of Infinity or any of its Material Subsidiaries, in any court of competent jurisdiction, seeking (i) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its debts, (ii) the appointment of a trustee, receiver, custodian, liquidator or the like of Infinity or such Material Subsidiary or of all or any substantial part of its assets or (iii) similar relief in respect of Infinity or such Material Subsidiary under any law relating to bankruptcy, insolvency, reorganization, winding-up, or composition or adjustment of debts, and such proceeding or case shall continue undismissed, or an order, judgment or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of 60 or more days; or an order for relief against Infinity or such Material Subsidiary shall be entered in an involuntary case under the Bankruptcy Code; (h) a final judgment or judgments for the payment of money in excess of $100,000,000 in the aggregate shall be rendered by one or more courts, administrative tribunals or other bodies having jurisdiction against Infinity and/or any of its Material Subsidiaries and the same shall not be paid or discharged (or provision shall not be made for such discharge), or a stay of execution 56 52 thereof shall not be procured, within 60 days from the date of the date of entry thereof and Infinity or the relevant Material Subsidiary shall not, within said period of 60 days, or such longer period during which execution of the same shall have been stayed, appeal therefrom and cause the execution thereof to be stayed during such appeal; (i) an event or condition specified in Section 5.1(e) shall occur or exist with respect to any Plan or Multiemployer Plan and, as a result of such event or condition, together with all other such events or conditions, Infinity or any ERISA Affiliate shall incur or in the good faith opinion of the Required Lenders shall be reasonably likely to incur a liability to a Plan, a Multiemployer Plan or PBGC (or any combination of the foregoing) which would constitute, in the good faith determination of the Required Lenders, a Material Adverse Effect; (j) a Change of Control shall have occurred or, with respect to any period of 25 consecutive calendar months (whether commencing before or after the date of this Agreement, but not before December 31, 1998), individuals who were directors of Infinity on the first day of such period or who were nominated by such directors (or by directors in a direct chain of directors so nominated) shall no longer occupy a majority of the seats (other than vacant seats) on the Board of Directors of Infinity (excluding by reason of the death or retirement of any director); (k) The guarantee by CBS contained in Article VIII shall cease, for any reason, to be in full force and effect or CBS shall so assert; or (l) The guarantee by Infinity contained in Article VIII shall cease, for any reason, to be in full force and effect or Infinity shall so assert; then and in every such event (other than an event with respect to Infinity described in paragraph (f) or (g) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to Infinity, take any or all of the following actions, at the same or different times: (I) terminate forthwith the Commitments, (II) declare the Loans then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of each Borrower accrued hereunder, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by each Borrower, anything contained herein to the contrary notwithstanding, and (III) require that Infinity deposit cash with the Administrative Agent, in an amount equal to the Aggregate LC Exposure, as collateral security for the repayment of any future LC Disbursements; and in any event with respect to any Borrower described in paragraph (f) or (g) above, (A) if such Borrower is Infinity, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of each Borrower accrued hereunder, shall automatically become due and payable and Infinity shall be required to deposit cash with the Administrative Agent, in an amount equal to the Aggregate LC Exposure, as collateral security for the repayment of any future drawings under the Letters of Credit and (B) if such Borrower is a Subsidiary Borrower, the principal of the Loans made to such Subsidiary Borrower then outstanding, together with accrued interest thereon and all other liabilities of such Subsidiary Borrower accrued hereunder, shall automatically become due and payable, in each case without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by each Borrower, anything contained herein to the contrary notwithstanding. 57 53 ARTICLE VII. THE AGENTS In order to expedite the transactions contemplated by this Agreement, each Agent is hereby appointed to act as Agent on behalf of the Lenders. Each of the Lenders and the Issuing Lenders hereby irrevocably authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are specifically delegated to the Administrative Agent by the terms and provisions hereof, together with such actions and powers as are reasonably incidental thereto. The Administrative Agent is hereby expressly authorized by the Lenders and the Issuing Lenders, without hereby limiting any implied authority, (a) to receive on behalf of the Lenders all payments of principal of and interest on the Loans and the LC Disbursements and all other amounts due to the Lenders and Issuing Lenders hereunder, and promptly to distribute to each Lender and Issuing Lender its proper share of each payment so received; (b) to give notice on behalf of each of the Lenders to the Borrowers of any Event of Default specified in this Agreement of which the Administrative Agent has actual knowledge acquired in connection with its agency hereunder; and (c) to distribute to each Lender and Issuing Lender copies of all notices, financial statements and other materials delivered by any Borrower pursuant to this Agreement as received by the Administrative Agent. Neither any Agent nor any of its directors, officers, employees or agents shall be liable as such for any action taken or omitted by any of them except for its or his own gross negligence or wilful misconduct, or be responsible for any statement, warranty or representation herein or the contents of any document delivered in connection herewith, or be required to ascertain or to make any inquiry concerning the performance or observance by any Borrower of any of the terms, conditions, covenants or agreements contained in this Agreement. The Agents shall not be responsible to the Lenders for the due execution, genuineness, validity, enforceability or effectiveness of this Agreement or other instruments or agreements. The Administrative Agent shall in all cases be fully protected in acting, or refraining from acting, in accordance with written instructions signed by the Required Lenders (or, when expressly required hereby, all the Lenders) and, except as otherwise specifically provided herein, such instructions and any action or inaction pursuant thereto shall be binding on all the Lenders and the Issuing Lenders. The Administrative Agent shall, in the absence of knowledge to the contrary, be entitled to rely on any instrument or document believed by it in good faith to be genuine and correct and to have been signed or sent by the proper Person or Persons. Neither the Agents nor any of their directors, officers, employees or agents shall have any responsibility to any Borrower on account of the failure of or delay in performance or breach by any Lender or Issuing Lender of any of its obligations hereunder or to any Lender or Issuing Lender on account of the failure of or delay in performance or breach by any other Agent, any other Lender or Issuing Lender or any Borrower of any of their respective obligations hereunder or in connection herewith. The Administrative Agent may execute any and all duties hereunder by or through agents or employees and shall be entitled to rely upon the advice of legal counsel selected by it with respect to all matters arising hereunder and shall not be liable for any action taken or suffered in good faith by it in accordance with the advice of such counsel. The Lenders and the Issuing Lenders hereby acknowledge that the Administrative Agent shall be under no duty to take any discretionary action permitted to be taken by it pursuant to the provisions of this Agreement unless it shall be requested in writing to do so by the Required Lenders. Subject to the appointment and acceptance of a successor Administrative Agent as provided below, the Administrative Agent may resign at any time by notifying the Lenders, the Issuing 58 54 Lenders and the Borrowers. Upon any such resignation, the Required Lenders shall have the right to appoint from the Lenders a successor. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may, on behalf of the Lenders, appoint from the Lenders a successor Administrative Agent which shall be a bank with an office in New York, New York, having a combined capital and surplus of at least $500,000,000 or an affiliate of any such bank, which successor shall be acceptable to Infinity (such acceptance not to be unreasonably withheld). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor bank, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent and the retiring Administrative Agent shall be discharged from its duties and obligations hereunder. After the Administrative Agent's resignation hereunder, the provisions of this Article and Section 9.5 shall continue in effect for its benefit in respect of any actions taken or omitted to be taken by it while it was acting as Administrative Agent. With respect to the Loans made by them and their LC Exposure hereunder, the Agents in their individual capacity and not as Agents shall have the same rights and powers as any other Lender and may exercise the same as though they were not Agents, and the Agents and their affiliates may accept deposits from, lend money to and generally engage in any kind of business with the Borrowers or any of their respective Subsidiaries or any Affiliate thereof as if they were not Agents. Each Lender and Issuing Lender agrees (i) to reimburse the Administrative Agent in the amount of its pro rata share (based on its Total Facility Percentage or, after the date on which the Loans shall have been paid in full, based on its Total Facility Percentage immediately prior to such date) of any reasonable, out-of-pocket expenses incurred for the benefit of the Lenders or the Issuing Lenders by the Administrative Agent, including reasonable counsel fees and compensation of agents and employees paid for services rendered on behalf of the Lenders or the Issuing Lenders, which shall not have been reimbursed by or on behalf of any Borrower and (ii) to indemnify and hold harmless the Administrative Agent and any of its directors, officers, employees or agents, in the amount of such pro rata share, from and against any and all liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against it in its capacity as Administrative Agent in any way relating to or arising out of this Agreement or any action taken or omitted by it under this Agreement, to the extent the same shall not have been reimbursed by or on behalf of Infinity, provided that no Lender or Issuing Lender shall be liable to the Administrative Agent or any such director, officer, employee or agent for any portion of such liabilities, taxes, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or wilful misconduct of the Administrative Agent or any of its directors, officers, employees or agents. Each Lender and Issuing Lender acknowledges that it has, independently and without reliance upon the Agents or any other Lender or Issuing Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and Issuing Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender or Issuing Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any related agreement or any document furnished hereunder or thereunder. Neither the Documentation Agent nor either Syndication Agent nor any managing agent shall have any duties or responsibilities hereunder in its capacity as such. 59 55 ARTICLE VIII. GUARANTEE SECTION 8.1. Guarantee. In order to induce the Administrative Agent and the Lenders to become bound by this Agreement and to make or maintain the Loans hereunder, and in consideration thereof, CBS hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to the Administrative Agent, for the ratable benefit of the Lenders, the prompt and complete payment and performance by each Borrower when due (whether at stated maturity, by acceleration or otherwise) of the Borrower Obligations, and CBS further agrees to pay any and all expenses (including, without limitation, all reasonable fees, charges and disbursements of counsel) which may be paid or incurred by the Administrative Agent or by the Lenders in enforcing, or obtaining advice of counsel in respect of, any of their rights under the guarantee contained in this Article VIII. The guarantee contained in this Article VIII, subject to Section 8.5, shall remain in full force and effect until the Borrower Obligations are paid in full and the Commitments are terminated, notwithstanding that from time to time prior thereto any Borrower may be free from any Borrower Obligations. CBS agrees that whenever, at any time, or from time to time, it shall make any payment to the Administrative Agent or any Lender on account of its liability under this Article VIII, it will notify the Administrative Agent and such Lender in writing that such payment is made under the guarantee contained in this Article VIII for such purpose. No payment or payments made by any Borrower or any other Person or received or collected by the Administrative Agent or any Lender from any Borrower or any other Person by virtue of any action or proceeding or any setoff or appropriation or application, at any time or from time to time, in reduction of or in payment of the Borrower Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of CBS under this Article VIII which, notwithstanding any such payment or payments, shall remain liable for the unpaid and outstanding Borrower Obligations until, subject to Section 8.5, the Borrower Obligations are paid in full and the Commitments are terminated. SECTION 8.2. No Subrogation, etc. Notwithstanding any payment or payments made by CBS hereunder, or any set-off or application of funds of CBS by the Administrative Agent or any Lender, CBS shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against any Borrower or against any collateral security or guarantee or right of offset held by the Administrative Agent or any Lender for the payment of the Borrower Obligations, nor shall CBS seek or be entitled to seek any contribution, reimbursement, exoneration or indemnity from or against any Borrower in respect of payments made by CBS hereunder, until all amounts owing to the Administrative Agent and the Lenders by the Borrowers on account of the Borrower Obligations are paid in full and the Commitments are terminated. So long as the Borrower Obligations remain outstanding, if any amount shall be paid by or on behalf of any Borrower or any other Person to CBS on account of any of the rights waived in this Section 8.2, such amount shall be held by CBS in trust, segregated from other funds of CBS, and shall, forthwith upon receipt by CBS, be turned over to the Administrative Agent in the exact form received by CBS (duly indorsed by CBS to the Administrative Agent, if required), to be applied against the Borrower Obligations, whether matured or unmatured, in such order as the Administrative Agent may determine. 60 56 SECTION 8.3. Amendments, etc. with respect to the Borrower Obligations. CBS shall remain obligated under this Article VIII notwithstanding that, without any reservation of rights against CBS, and without notice to or further assent by CBS, any demand for payment of or reduction in the principal amount of any of the Borrower Obligations made by the Administrative Agent or any Lender may be rescinded by the Administrative Agent or such Lender, and any of the Borrower Obligations continued, and the Borrower Obligations, or the liability of any other party upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Lender, and this Agreement and any other documents executed and delivered in connection herewith may be amended, modified, supplemented or terminated, in whole or in part, as the Required Lenders (or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Borrower Obligations may be sold, exchanged, waived, surrendered or released. Neither the Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any lien at any time held by it as security for the Borrower Obligations or for the guarantee contained in this Article VIII or any property subject thereto. SECTION 8.4. Guarantee Absolute and Unconditional. CBS waives any and all notice of the creation, renewal, extension or accrual of any of the Borrower Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon the guarantee contained in this Article VIII or acceptance of the guarantee contained in this Article VIII; the Borrower Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon the guarantee contained in this Article VIII; and all dealings between CBS or the Borrowers, on the one hand, and the Administrative Agent and the Lenders, on the other, shall likewise be conclusively presumed to have been had or consummated in reliance upon the guarantee contained in this Article VIII. CBS waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon CBS or any Borrower with respect to the Borrower Obligations. The guarantee contained in this Article VIII shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of this Agreement, any of the Borrower Obligations or any collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) the legality under applicable requirements of law of repayment by the relevant Borrower of any Borrower Obligations or the adoption of any requirement of law purporting to render any Borrower Obligations null and void, (c) any defense, setoff or counterclaim (other than a defense of payment or performance by the applicable Borrower) which may at any time be available to or be asserted by CBS against the Administrative Agent or any Lender, or (d) any other circumstance whatsoever (with or without notice to or knowledge of CBS or any Borrower) which constitutes, or might be construed to constitute, an equitable or legal discharge of any Borrower for any Borrower Obligations, or of CBS under the guarantee contained in this Article VIII, in bankruptcy or in any other instance. When the Administrative Agent or any Lender is pursuing its rights and remedies under this Article VIII against CBS, the Administrative Agent or any Lender may, but shall be under no obligation to, pursue such rights and remedies as it may have against any Borrower or any other Person or against any collateral security or guarantee for the Borrower Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to pursue such other rights or remedies or to collect any payments from any Borrower or any such other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Borrower or any such other Person or of any such collateral security, guarantee or right of offset, shall not relieve CBS of any liability under this Article VIII, and shall not impair or affect the 61 57 rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent and the Lenders against CBS. SECTION 8.5. Reinstatement. The guarantee contained in this Article VIII shall continue to be effective, or be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Borrower Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made. SECTION 8.6. Payments. CBS hereby agrees that any payments in respect of the Borrower Obligations pursuant to this Article VIII will be paid to the Administrative Agent without setoff or counterclaim in Dollars at the office of the Administrative Agent specified in Section 9.1. SECTION 8.7. Infinity Guarantee. Infinity hereby unconditionally and irrevocably guarantees, as primary obligor and not merely as surety, to the Administrative Agent, for the ratable benefit of the Lenders, the prompt and complete payment and performance by each Subsidiary Borrower when due (whether at stated maturity, by acceleration or otherwise) of the Borrower Obligations, and further agrees that all of the provisions of Sections 8.1 through 8.6, shall apply to the guarantee by Infinity of the Subsidiary Borrowers' performance and payment of the Subsidiary Borrower Obligations, to the same extent as the guarantee of CBS of the Borrowers' performance and payment of the Borrower Obligations. ARTICLE IX. MISCELLANEOUS SECTION 9.1. Notices. Notices and other communications provided for herein shall be in writing (or, where permitted to be made by telephone, shall be confirmed promptly in writing) and shall be delivered by hand or overnight courier service, mailed or sent by telecopier as follows: (a) if to Infinity, to it at Infinity Broadcasting Corporation, 40 West 52nd Street, New York, New York 10019, Attention of Chief Financial Officer and Treasurer (Telecopy No. (212) 314-9336), with a copy to General Counsel (Telecopy No. (212) 597-4031); (b) if to CBS, to it at CBS Corporation, 51 West 52nd Street, New York, New York 10019, Attention of Vice President and Treasurer (Telecopy No. (212) 314-9336), with a copy to General Counsel (Telecopy No. (212) 597-4031); (c) if to the Administrative Agent, to it at 60 Wall Street, New York, New York 10260, Attention of Laura Reim (Telecopy No. (212) 648-5336); (d) if to any Issuing Lender, to it at the address for notices specified in the applicable Issuing Lender Agreement; 62 58 (e) if to a Lender, to it at its address (or telecopy number) set forth in Schedule 1.1 or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto; and (f) if to a Subsidiary Borrower, to it at its address set forth in the relevant Subsidiary Request. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service, sent by telecopy or, if permitted by the terms hereof and if promptly confirmed in writing, by telephone, or on the date five Business Days after dispatch by registered mail if mailed, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 9.1 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 9.1. SECTION 9.2. Survival of Agreement. All representations and warranties made hereunder and in any certificate delivered pursuant hereto or in connection herewith shall be considered to have been relied upon by the Agents and the Lenders and shall survive the execution and delivery of this Agreement and the making of the Loans and other extensions of credit hereunder, regardless of any investigation made by the Agents or the Lenders or on their behalf. SECTION 9.3. Binding Effect. This Agreement shall be binding upon and inure to the benefit of each Borrower, each Agent and each Lender and their respective successors and assigns, except that Infinity shall not have the right to assign its rights or obligations hereunder or any interest herein without the prior consent of all the Lenders. SECTION 9.4. Successors and Assigns. (a) Whenever in this Agreement any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party, and all covenants, promises and agreements by or on behalf of each Borrower, CBS, either Agent or any Lender that are contained in this Agreement shall bind and inure to the benefit of their respective successors and assigns. (b) Each Lender may assign to one or more assignees all or a portion of its interests, rights and obligations under this Agreement (including all or a portion of its Commitment or Swingline Commitment and the Loans at the time owing to it); provided, however, that (i) except in the case of an assignment to a Lender or an affiliate of such Lender (other than if at the time of such assignment, such Lender or affiliate would be entitled to require any Borrower to pay greater amounts under Section 2.20(a) than if no such assignment had occurred, in which case such assignment shall be subject to the consent requirement of this clause (i)), Infinity and the Administrative Agent must give their prior written consent to such assignment (which consent shall not be unreasonably withheld), (ii) (x) except in the case of assignments of Competitive Loans or assignments to any Person that is a Lender prior to giving effect to such assignment, the amount of the aggregate Commitments and/or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $12,500,000 and (y) the amount of the aggregate Commitments and/or Loans retained by any assigning Lender (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than $12,500,000, unless (in the case of clause (x) or (y) above) the assigning Lender's Commitment and Loans (other than any 63 59 Competitive Loans) are being reduced to $0 pursuant to such assignment, (iii) the assignor and assignee shall execute and deliver to the Administrative Agent an Assignment and Acceptance, together with a processing and recordation fee of $3,500 and (iv) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire. Upon acceptance and recording pursuant to Section 9.4(e), from and after the effective date specified in each Assignment and Acceptance, which effective date shall be at least five Business Days after the execution thereof (or any lesser period to which the Administrative Agent and Infinity may agree), (A) the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement and (B) the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto (but shall continue to be entitled to the benefits of Sections 2.15, 2.16, 2.20 and 9.5, as well as to any Fees accrued for its account hereunder and not yet paid)). Notwithstanding the foregoing, any Lender or Issuing Lender assigning its rights and obligations under this Agreement may maintain any Competitive Loans or Letters of Credit made or issued by it outstanding at such time, and in such case shall retain its rights hereunder in respect of any Loans or Letters of Credit so maintained until such Loans or Letters of Credit have been repaid or terminated in accordance with this Agreement. (c) By executing and delivering an Assignment and Acceptance, the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (i) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim, (ii) except as set forth in clause (i) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Agreement or any other instrument or document furnished pursuant hereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any other instrument or document furnished pursuant hereto or the financial condition of Infinity or any of its Subsidiaries or the performance or observance by Infinity or any of its Subsidiaries of any of its obligations under this Agreement or any other instrument or document furnished pursuant hereto; (iii) such assignee represents and warrants that it is legally authorized to enter into such Assignment and Acceptance; (iv) such assignee confirms that it has received a copy of this Agreement, together with copies of the most recent financial statements delivered pursuant to Sections 3.2 and 5.1 and such other documents and information as it has deemed appropriate to make it own credit analysis and decision to enter into such Assignment and Acceptance; (v) such assignee will independently and without reliance upon the Administrative Agent, such assigning Lender or any other Agent or Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement; (vi) such assignee appoints and authorizes the Administrative Agent to take such action as agent on its behalf and to exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms hereof, together with such powers as are reasonably incidental thereto; and (vii) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Agreement are required to be performed by it as a Lender. (d) The Administrative Agent, acting for this purpose as agent of each Borrower, shall maintain at one of its offices in The City of New York a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitments of, and principal amount of the Loans owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive in the absence of 64 60 manifest error and each Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement. The Register shall be available for inspection by any Borrower and any Lender at any reasonable time and from time to time upon reasonable prior notice. (e) Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, an Administrative Questionnaire completed in respect of the assignee (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) above and, if required, the written consent of Infinity and the Administrative Agent to such assignment, the Administrative Agent shall (i) accept such Assignment and Acceptance, (ii) record the information contained therein in the Register and (iii) give prompt notice thereof to Infinity. (f) Each Lender may without the consent of any Borrower or the Agents sell participations to one or more banks, other financial institutions or other entities (provided that any such other entity is a not a competitor of Infinity or any Affiliate of Infinity) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitments and the Loans owing to it); provided, however, that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations, (ii) the participating banks or other entities shall be entitled to the benefit of the cost protection provisions contained in Sections 2.15, 2.16 and 2.20 to the same extent as if they were Lenders (provided that additional amounts payable to any Lender pursuant to Section 2.20 shall be determined as if such Lender had not sold any such participations) and (iv) the Borrowers, the Agents and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement, and such Lender shall retain the sole right to enforce the obligations of each Borrower relating to the Loans and the Letters of Credit and to approve any amendment, modification or waiver of any provision of this Agreement (other than amendments, modifications or waivers decreasing any fees payable hereunder or the amount of principal of or the rate at which interest is payable on the Loans or LC Disbursements, extending any scheduled principal payment date or date fixed for the payment of interest on the Loans or LC Disbursements or of LC Fees or Commitment Fees, increasing the amount of or extending the Commitments or releasing the guarantee contained in Article VIII, in each case to the extent the relevant participant is directly affected thereby). (g) Any Lender or participant may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 9.4, disclose to the assignee or participant or proposed assignee or participant any information relating to any Borrower furnished to such Lender by or on behalf of such Borrower; provided that, prior to any such disclosure of information designated by such Borrower as confidential, each such assignee or participant or proposed assignee or participant shall execute a Confidentiality Agreement whereby such assignee or participant shall agree (subject to the exceptions set forth therein) to preserve the confidentiality of such confidential information. A copy of each such Confidentiality Agreement executed by an assignee shall be promptly furnished to Infinity. It is understood that confidential information relating to the Borrowers would not ordinarily be provided in connection with assignments or participations of Competitive Loans. (h) Notwithstanding the limitations set forth in paragraph (b) above, (i) any Lender may at any time assign or pledge all or any portion of its rights under this Agreement to a Federal Reserve Bank and (ii) any Lender which is a "fund" may at any time assign or pledge all or any portion of its rights under this Agreement to secure such Lender's indebtedness, in each case without the prior written consent of any Borrower or the Administrative Agent; provided that each such assignment shall be made in accordance with applicable law and no such assignment shall release a Lender from any of its 65 61 obligations hereunder. In order to facilitate any such assignment, each Borrower shall, at the request of the assigning Lender, duly execute and deliver to the assigning Lender a registered promissory note or notes evidencing the Loans made to such Borrower by the assigning Lender hereunder. (i) Notwithstanding anything to the contrary contained herein, any Bank (a "Granting Bank") may grant to a special purpose funding vehicle (a "SPC"), identified as such in writing from time to time by the Granting Bank to the Administrative Agent and the Borrower, the option to provide to the Borrower all or any part of any Loan that such Granting Bank would otherwise be obligated to make to the Borrower pursuant to this Agreement; provided that (i) nothing herein shall constitute a commitment by any SPC to make any Loan, and (ii) if an SPC elects not to exercise such option or otherwise fails to provide all or any part of such Loan, the Granting Bank shall be obligated to make such Loan pursuant to the terms hereof. The making of an Loan by an SPC hereunder shall utilize the Commitment of the Granting Bank to the same extent, and as if, such Loan were made by such Granting Bank. Each party hereto hereby agrees that no SPC shall be liable for any indemnity or similar payment obligation under this Agreement (all liability for which shall remain with the Granting Bank). In furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the termination of this Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPC, it will not institute against, or join any other person in instituting against, such SPC any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof. In addition, notwithstanding anything to the contrary contained in this Section, any SPC may (i) with notice to, but without the prior written consent of, the Borrower and the Administrative Agent and without paying any processing fee therefor, assign all or a portion of its interests in any Loans to the Granting Bank or to any financial institutions (consented to by the Borrower and Administrative Agent ) providing liquidity and/or credit support to or for the account of such SPC to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancement to such SPC. This section may not be amended without the written consent of any SPC which has been identified as such by the Granting Bank to the Administrative Agent and the Borrower and which then holds any Loan pursuant to this paragraph (i). (j) Neither CBS nor Infinity shall assign or delegate any of its rights or duties hereunder without the prior consent of all the Lenders. SECTION 9.5. Expenses; Indemnity. (a) Infinity agrees to pay all reasonable out-of-pocket expenses incurred by the Agents in connection with the preparation, negotiation, execution and delivery of this Agreement or in connection with any amendments, modifications or waivers of the provisions hereof (whether or not the transactions hereby contemplated shall be consummated) or incurred by any Agent, any Lender or any Issuing Lender in connection with the enforcement or protection of the rights of the Agents, the Lenders or the Issuing Lenders under this Agreement or in connection with the Loans made or the Letters of Credit issued hereunder, including, without limitation, the reasonable fees, charges and disbursements of Simpson Thacher & Bartlett, counsel for the Agents, and, in connection with any such enforcement or protection, the reasonable fees, charges and disbursements of any other counsel for any Agent, Lender or Issuing Lender. (b) Infinity agrees to indemnify and hold harmless each Agent, each Lender, each Issuing Lender and each of their respective directors, officers, employees, affiliates and agents (each, an "Indemnified Person") against, and to reimburse each Indemnified Person, upon its demand, for, any 66 62 losses, claims, damages, liabilities or other expenses ("Losses") to which such Indemnified Person becomes subject insofar as such Losses arise out of or in any way relate to or result from (i) the execution or delivery of this Agreement, any Letter of Credit or any agreement or instrument contemplated hereby (and any amendment hereto or thereto), the performance by the parties hereto or thereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby or (ii) the use (or proposed use) of the proceeds of the Loans or other extensions of credit hereunder, including, without limitation, Losses consisting of reasonable legal or other expenses incurred in connection with investigating, defending or participating in any legal proceeding relating to any of the foregoing (whether or not such Indemnified Person is a party thereto); provided that the foregoing will not apply to any Losses to the extent they are found by a final decision of a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of such Indemnified Person. (c) The provisions of this Section 9.5 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the invalidity or unenforceability of any term or provision of this Agreement or any investigation made by or on behalf of any Agent or Lender. All amounts under this Section 9.5 shall be payable on written demand therefor. SECTION 9.6. Right of Setoff. If an Event of Default shall have occurred and be continuing, each Agent and each Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by such Agent or Lender to or for the credit or the account of any Borrower against any of and all the obligations of such Borrower now or hereafter existing under this Agreement or the Administrative Agent Fee Letter held by such Agent or Lender which shall be due and payable. The rights of each Agent and each Lender under this Section 9.6 are in addition to other rights and remedies (including other rights of setoff) which such Agent or Lender may have. SECTION 9.7. APPLICABLE LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE WITHIN SUCH STATE, WITHOUT REGARD TO CONFLICTS OF LAW PROVISIONS AND PRINCIPLES OF SUCH STATE. SECTION 9.8. Waivers; Amendment. (a) No failure or delay of any Agent, any Issuing Lender or any Lender in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the Agents, the Issuing Lenders and the Lenders hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have. No waiver of any provision of this Agreement or consent to any departure by any Borrower from any such provision shall in any event be effective unless the same shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice or demand on any Borrower in any case shall entitle any Borrower to any other or further notice or demand in similar or other circumstances. 67 63 (b) Neither this Agreement nor any provision hereof may be waived, amended or modified except pursuant to an agreement in writing entered into by the Borrowers, CBS and the Required Lenders; provided, however, that no such agreement shall (i) reduce the amount or extend the scheduled date of maturity of any Loan or of any installment thereof, or reduce the stated amount of any LC Disbursement, interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Commitment of any Lender, in each case without the prior written consent of each Lender directly affected thereby; (ii) amend, modify or waive any provision of this Section 9.8(b), or reduce the percentage specified in the definition of "Required Lenders", release the guarantee contained in Article VIII or consent to the assignment or transfer by CBS or Infinity of any of its rights and obligations under this Agreement, in each case without the prior written consent of all the Lenders; or (iii) amend, modify or waive any provision of Article VII without the prior written consent of each Agent affected thereby; provided, further that no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Swingline Lenders or the Issuing Lenders hereunder in such capacity without the prior written consent of the Administrative Agent, each Swingline Lender directly affected thereby or each Issuing Lender directly affected thereby, as the case may be. SECTION 9.9. Entire Agreement. This Agreement (together with the Issuing Lender Agreements, the Subsidiary Borrower Designations and the Subsidiary Borrower Requests) constitutes the entire contract between the parties relative to the subject matter hereof. Any previous agreement among the parties with respect to the subject matter hereof is superseded by this Agreement. Nothing in this Agreement, expressed or implied, is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Agreement. SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.10. SECTION 9.11. Severability. In the event any one or more of the provisions contained in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good-faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. SECTION 9.12. Counterparts. This Agreement may be executed in two or more counterparts, each of which constitute an original but all of which when taken together shall constitute but one contract, and shall become effective as provided in Section 9.3. SECTION 9.13. Headings. Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement. 68 64 SECTION 9.14. Jurisdiction; Consent to Service of Process. (a) Each Borrower hereby irrevocably and unconditionally submits, for itself and its Property, to the nonexclusive jurisdiction of any New York State court or Federal court of the United States of America sitting in New York City, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State court or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each Subsidiary Borrower designates and directs Infinity at its offices at 40 West 52nd Street, New York, New York 10019, as its agent to receive service of any and all process and documents on its behalf in any legal action or proceeding referred to in this Section 9.14 in the State of New York and agrees that service upon such agent shall constitute valid and effective service upon such Subsidiary Borrower and that failure of Infinity to give any notice of such service to any Subsidiary Borrower shall not affect or impair in any way the validity of such service or of any judgment rendered in any action or proceeding based thereon. Nothing in this Agreement shall affect any right that any Agent or any Lender may otherwise have to bring any action or proceeding relating to this Agreement against any Borrower or its Properties in the courts of any jurisdiction. (b) Each Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. (c) Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 9.1. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by law. SECTION 9.15. Confidentiality. (a) Each Lender agrees to keep confidential and not to disclose (and to cause its affiliates, officers, directors, employees, agents and representatives to keep confidential and not to disclose) and, at the request of Infinity (except as provided below or if such Lender is required to retain any Confidential Information (as defined below) pursuant to customary internal or banking practices, bank regulations or applicable law), promptly to return to Infinity or destroy the Confidential Information and all copies thereof, extracts therefrom and analyses or other materials based thereon, except that such Lender shall be permitted to disclose Confidential Information (i) to such of its officers, directors, employees, agents, affiliates and representatives as need to know such Confidential Information in connection with such Lender's participation in this Agreement, each of whom shall be informed by such Lender of the confidential nature of the Confidential Information and shall agree to be bound by the terms of this Section 9.15; (ii) to the extent required by applicable laws and regulations or by any subpoena or similar legal process or requested by any Governmental Authority or agency having jurisdiction over such Lender; provided, however, that, except in the case of disclosure to bank regulators or examiners in accordance with customary banking practices, written notice of each instance in which Confidential Information is required or requested to be disclosed shall be furnished to Infinity not less than 30 days prior to the expected date of such disclosure or, if 30 days' notice is not practicable under the circumstances, as 69 65 promptly as practicable under the circumstances; (iii) to the extent such Confidential Information (A) is or becomes publicly available other than as a result of a breach of this Agreement, (B) becomes available to such Lender on a non-confidential basis from a source other than a party to this Agreement or any other party known to such Lender to be bound by an agreement containing a provision similar to this Section 9.15 or (C) was available to such Lender on a non-confidential basis prior to this disclosure to such Lender by a party to this Agreement or any other party known to such Lender to be bound by an agreement containing a provision similar to this Section 9.15; (iv) as permitted by Section 9.4(g); or (v) to the extent Infinity shall have consented to such disclosure in writing. As used in this Section 9.15, "Confidential Information" shall mean any materials, documents or information furnished by or on behalf of any Borrower in connection with this Agreement designated by or on behalf of such Borrower as confidential. (b) Each Lender (i) agrees that, except to the extent the conditions referred to in subclause (A), (B) or (C) of clause (iii) of paragraph (a) above have been met and as provided in paragraph (c) below, (A) it will use the Confidential Information only in connection with its participation in this Agreement and (B) it will not use the Confidential Information in connection with any other matter or in a manner prohibited by any law, including, without limitation, the securities laws of the United States and (ii) understands that breach of this Section 9.15 might seriously prejudice the interest of the Borrowers and that the Borrowers are entitled to equitable relief, including an injunction, in the event of such breach. (c) Notwithstanding anything to the contrary contained in this Section 9.15, each Agent and each Lender shall be entitled to retain all Confidential Information for so long as it remains an Agent or a Lender to use solely for the purposes of servicing the credit and protecting its rights hereunder. 70 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. INFINITY BROADCASTING CORPORATION By: /s/ Farid Suleman -------------------------------------- Title: Executive Vice President and Chief Financial Officier and Treasurer INFINITY BROADCASTING CORPORATION OF BOSTON By: /s/ Farid Suleman -------------------------------------- Title: Executive Vice President and Chief Financial Officier and Treasurer INFINITY BROADCASTING CORPORATION OF NEW YORK By: /s/ Farid Suleman -------------------------------------- Title: Executive Vice President and Chief Financial Officier and Treasurer HEMISPHERE BROADCASTING CORPORATION By: /s/ Farid Suleman -------------------------------------- Title: Executive Vice President and Chief Financial Officier and Treasurer TRANSPORTATION DISPLAYS, INC. By: /s/ Farid Suleman -------------------------------------- Title: Executive Vice President and Chief Financial Officier and Treasurer CBS CORPORATION, as guarantor pursuant to Article 8 By: /s/ Fredric G. Reynolds -------------------------------------- Title: Executive Vice President and Chief Financial Officer MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Administrative Agent By: /s/ Dennis Wilczek -------------------------------------- Title: Associate EX-10.16 3 1998 LONG TERM INCENTIVE PLAN 1 Exhibit 10.16 INFINITY BROADCASTING CORPORATION 1998 LONG-TERM INCENTIVE PLAN ARTICLE I GENERAL 1.1 PURPOSE The purposes of the 1998 Long-Term Incentive Plan, as amended from time to time (the "Plan"), for key personnel of Infinity Broadcasting Corporation ("Corporation") and its subsidiaries (the Corporation and its subsidiaries severally and collectively referred to in the Plan as the "Company") are to foster and promote the long-term financial success of the Company and materially increase stockholder value by (i) attracting and retaining key personnel of outstanding ability, (ii) strengthening the Company's capability to develop, maintain and direct a competent management team, (iii) motivating key personnel, by means of performance-related incentives, to achieve long-range performance goals, (iv) providing incentive compensation opportunities competitive with those of other major companies and (v) enabling key personnel to participate in the long-term growth and financial success of the Company. 1.2 ADMINISTRATION (a) The Plan will be administered by a committee of the Board of Directors of the Corporation ("Committee") which will consist of two or more members. Each member will be a "non-employee director," as that term is defined by Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such rule may be amended, or any successor rule, and an "outside director," as that term is defined by Section 162(m) of the Internal Revenue Code of 1986, as amended. The members will be appointed by the Board of Directors, and any vacancy on the Committee will be filled by the Board of Directors or in a manner authorized by the Board. (b) Subject to the limitations of the Plan, the Committee will have the sole and complete authority: (i) to select in accordance with Section 1.3 persons who will participate in the Plan ("Participant" or "Participants") (including the right to delegate authority to select as Participants persons who are not required to file reports with respect to securities of the Company pursuant to Section 16(a) of the Exchange Act ("Nonreporting Persons")); (ii) to make Awards and payments in such forms and amounts as it may determine (including the right to delegate authority to make Awards to Nonreporting Persons within limits approved from time to time by the Committee), (iii) to impose such limitations, restrictions and conditions upon such Awards as the Committee, or, with respect to Awards to Nonreporting Persons, the Committee's authorized delegates, deems appropriate; (iv) to interpret the Plan and the terms of any document relating to the Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan; (v) to amend or cancel an existing Award in whole or in part (including the right to delegate authority to amend or cancel an existing Award to a Nonreporting Person in whole or in part within limits approved from time to time by the Committee), except that the Committee and its authorized delegates may not, unless otherwise provided in the Plan, or unless the Participant affected thereby consents, take any action under this clause that would adversely affect the rights of such Participant with respect to the Award, and except that the Committee and its authorized delegates may not, unless otherwise provided in the Plan, take any action to amend any outstanding Option under the Plan in order to decrease the Option Price under such Option; and (vi) to make all other determinations and to take all other actions necessary or 1 2 advisable for the interpretation, implementation and administration of the Plan. The Committee's determinations on matters within its authority will be conclusive and binding upon the Company and all other persons. (c) The Committee will act with respect to the Plan on behalf of the Corporation and on behalf of any subsidiary issuing stock under the Plan, subject to appropriate action by the board of directors of any such subsidiary. All expenses associated with the Plan will be borne by the Corporation subject to such allocation to its subsidiaries and operating units as it deems appropriate. 1.3 SELECTION FOR PARTICIPATION Participants selected by the Committee (or its authorized delegates) must be Eligible Persons, as defined below. "Eligible Persons" are key persons who are officers or salaried employees of the Company or its parent or their subsidiaries. Eligible Persons will also include independent contractors of the Company as to an Award if the person is an independent contractor at the time the Award is granted. In making this selection and in determining the form and amount of Awards, the Committee may give consideration to the functions and responsibilities of the Eligible Person, his or her past, present and potential contributions to the Company and such other factors as the Committee deems relevant. 1.4 TYPES OF AWARDS UNDER PLAN Awards ("Awards") under the Plan may be in the form of any one or more of the following: (i) Incentive Stock Options ("ISOs") and Non-statutory Stock options ("NSOs") (Incentive Stock Options and Non-statutory Stock Options severally and collectively referred to in the Plan as "Options"), as described in Article II; (ii) Stock Appreciation Rights ("SARs") and Participant Limited Stock Appreciation Rights ("Participant Limited Rights"), as described in Article II; (iii) Performance Awards ("Performance Awards") as described in Article IV; and (iv) Restricted Stock ("Restricted Stock") and Restricted Units ("Restricted Units"), each as described in Article V. 1.5 SHARES SUBJECT TO THE PLAN (a) Shares of stock issued under the Plan may be in whole or in part authorized and unissued or treasury shares of the Corporation's Class A Common Stock, par value $0.01 per share ("Common Stock"), or "Formula Value Stock" as defined in Section 8.12(d) (Common Stock and Formula Value Stock severally and collectively referred to in the Plan as "Stock"). (b) The maximum number of shares of Stock which may be issued for all purposes under the Plan (including but not limited to shares issued pursuant to the exercise of ISOs) will be 25,000,000, increased on January 1 of each calendar year from and including January 1, 2001 by 10,000,000 shares. The maximum number of such shares subject to options to purchase Stock, SARs and Participant Limited Rights under the Plan awarded to any one Participant in any one calendar year may not exceed 3,500,000 shares plus unused share amounts that could have been awarded to that Participant in previous calendar years. (c) Except as otherwise provided below, any shares of Stock subject to an Option or other Award which is canceled or terminates without any shares having been issued pursuant thereto having been exercised will again be available for Awards under the Plan. Shares subject to an Option canceled upon the exercise of an SAR will not again be available for Awards under the Plan except to the extent the SAR is settled in cash. To the extent that an Award is settled in cash, shares of Stock subject to that Award will again be available for Awards. Shares of Stock tendered by a Participant or withheld by the Company to pay the exercise price of an Option or to satisfy the tax withholding obligations of the 2 3 exercise or vesting of an Award will be available again for Awards under the Plan. Shares of Restricted Stock forfeited to the Company in accordance with the Plan and the terms of the particular Award will be available again for Awards under the Plan. (d) No fractional shares will be issued, and the Committee will determine the manner in which fractional share value will be treated. ARTICLE II STOCK OPTIONS 2.1 AWARD OF STOCK OPTIONS (a) The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, award to any Participant ISOs and NSOs to purchase Stock. (b) The Committee may provide with respect to any option to purchase Stock that, if the Participant, while an Eligible Person, exercises the option in whole or in part using already-owned Stock, the Participant will, subject to this Section 2.1 and such other terms and conditions as may be imposed by the Committee, receive an additional option ("Reload Option"). The Reload Option will be to purchase, at Fair Market Value as of the date the original option was exercised, a number of shares of Stock equal to the number of whole shares used by the Participant to exercise the original option. The Reload Option will be exercisable only between the date of its grant and the date of expiration of the original option. (c) A Reload Option will be subject to such additional terms and conditions as the Committee may approve, which terms may provide that the Committee may cancel the Participant's right to receive the Reload Option and that the Reload Option will be granted only if the Committee has not canceled such right prior to the exercise of the original option. Such terms may also provide that, upon the exercise by a Participant of a Reload Option while an Eligible Person, an additional Reload Option will be granted with respect to the number of whole shares used to exercise the first Reload Option. 2.2 STOCK OPTION AGREEMENTS The award of an option will be evidenced by a written agreement ("Stock Option Agreement") in such form and containing such terms and conditions as the Committee may from time to time determine. The Committee may also at any time and from time to time provide for the deferral of delivery of any shares for which the option may be exercisable until a specified date or dates and subject to terms and conditions determined by the Committee. 2.3 OPTION PRICE The purchase price of Stock under each Option ("Option Price") will not be less than the Fair Market Value of such Stock on the date the Option is awarded. 2.4 EXERCISE AND TERM OF OPTIONS (a) Except as otherwise provided in the Plan, Options will become exercisable at such time or times as the Committee may specify. The Committee may at any time and from time to time accelerate the time at which all or any part of the Option may be exercised. (b) The Committee will establish procedures governing the exercise of options and will require that notice of exercise be given. Stock purchased on exercise of an option must be paid for as follows: 3 4 (1) in cash or by check (acceptable to the Company in accordance with guidelines established for this purpose), bank draft or money order payable to the order of the Company or (2) if so provided by the Committee (not later than the time of grant, in the case of an ISO) (i) through the delivery of shares of Stock which are then outstanding and which have a Fair Market Value on the date of exercise equal to the exercise price, (ii) by delivery of an unconditional and irrevocable undertaking by a broker to deliver promptly to the Company sufficient funds to pay the exercise price, or (iii) by any combination of the permissible forms of payment. 2.5 TERMINATION OF ELIGIBILITY Unless the Committee provides otherwise: (a) in the event the Participant is no longer an Eligible Person and ceased to be such as a result of termination of service to the Company with the consent of the Committee or as a result of his or her death, retirement or disability, each of his or her outstanding Options (whether held by the Participant or, if the Option is an NSO that has been transferred to a Permissible Transferee (as defined in Section 8.12) in accordance with Section 8.1, by that Permissible Transferee) will be exercisable by the Participant (or his or her legal representative or designated beneficiary) or Permissible Transferee, as the case may be, to the extent that such Option was then exercisable, at any time prior to an expiration date established by the Committee at the time of award, but in no event after such expiration date; and (b) if the Participant ceases to be an Eligible Person for any other reason, all of the Participant's then outstanding Options (whether held by the Participant or, if the Option is an NSO that has been transferred to a Permissible Transferee in accordance with Section 8.1, by that Permissible Transferee) will terminate immediately. 2.6 COMPANY LIMITED RIGHTS (a) If so provided in the Stock Option Agreement, as it may be amended from time to time, in the event of a Change in Control (as defined in Article VII of the Plan), the Company will have the right to cancel any portion of the Option (whether vested or nonvested) that remains unexercised on the date the Company exercises its Company Limited Right pursuant to this Section 2.6 (or the entire Option if no part of the Option has yet been exercised) in exchange for a payment in cash of an amount equal to the number of shares of Common Stock as to which the Option remains unexercised at the time the Company exercises such right multiplied by the excess of (a) the higher of (x) the Minimum Price Per Share (as defined below), or (y) the highest reported closing sale price of a share of the Common Stock on the New York Stock Exchange at any time during the period beginning on the sixtieth (60th) day prior to the date on which the Company exercises such right and ending on the date on which the Company exercises such right, over (b) the Option Price per share. (b) For purposes of this Section 2.6, unless otherwise provided in the relevant Stock Option Agreement, the term "Minimum Price Per Share" will mean the highest gross price (before brokerage commissions and soliciting dealers' fees) paid or to be paid for a share of Common Stock (whether by way of exchange, conversion, distribution upon liquidation or otherwise) in any Change in Control which is in effect at any time during the period beginning on the sixtieth (60th) day prior to the date on which the Company exercises such right and ending on the date on which the Company exercises such right. For purposes of this definition, if the consideration paid or to be paid in any such Change in Control consists, in whole or in part, of consideration other than cash, then the Board will take such action as in its judgment it deems appropriate to establish the cash value of such consideration. (c) The Company's right to cancel an Option pursuant to Section 2.6 may be exercised at any time until the end of the thirtieth (30th) day following the occurrence of the Change in Control. 4 5 ARTICLE III STOCK APPRECIATION RIGHTS AND LIMITED RIGHTS 3.1 AWARD OF STOCK APPRECIATION RIGHT (a) An SAR is an Award entitling the recipient on exercise to receive an amount, in cash or Stock or a combination thereof (such form to be determined by the Committee), determined in whole or in part by reference to appreciation in Stock value. (b) In general, an SAR entitles the Participant to receive, with respect to each share of Stock as to which the SAR is exercised, the excess of the share's Fair Market Value on the date of exercise over its Fair Market Value on the date the SAR was granted. (c) SARs may be granted in tandem with options granted under the Plan ("Tandem SARS") or independently of Options ("Independent SARs"). An SAR granted in tandem with an NSO may be granted either at or after the time the Option is granted. An SAR granted in tandem with an ISO may be granted only at the time the Option is granted. (d) SARs awarded under the Plan will be evidenced by either a Stock Option Agreement (when SARs are granted in tandem with an Option) or a separate written agreement between the Company and the Participant in such form and containing such terms and conditions as the Committee may from time to time determine. (e) Except as otherwise provided herein, a Tandem SAR will be exercisable only at the same time and to the same extent and subject to the same conditions as the Option related thereto is exercisable, and the Committee may prescribe additional conditions and limitations on the exercise of the SAR. The exercise of a Tandem SAR will cancel the related Option. Tandem SARs may be exercised only when the Fair Market Value of Stock to which it relates exceeds the Option Price. (f) Except as otherwise provided herein, an Independent SAR will become exercisable at such time or times, and on such conditions, as the Committee may specify, and the Committee may at any time accelerate the time at which all or any part of the SAR may be exercised. The Committee may provide, under such terms and conditions as it may deem appropriate, for the automatic grant of additional SARs upon the full or partial exercise of an Independent SAR. Any exercise of an Independent SAR must be in writing, signed by the proper person and delivered or mailed to the Company, accompanied by any other documents required by the Committee. (g) Except as otherwise provided herein, all SARs will automatically be exercised on the last trading day prior to the expiration date established by the Committee at the time of the award for the SAR, or, in the case of a Tandem SAR, for the related Option, so long as exercise on such date will result in a payment to the Participant. (h) Unless otherwise provided by the Committee, no SAR will become exercisable or will be automatically exercised for six months following the date on which it was granted or the effective date of the Plan, whichever is later. (i) At the time of award of an SAR, the Committee may limit the amount of the payment that may be made to a Participant upon the exercise of the SAR. The Committee may further determine that, if the amount to be received by a Participant in any year is limited pursuant to this provision, payment of all or a portion of the amount that is unpaid as a result of the limitation may be made to the Participant at a subsequent time. No such limitation will require a Participant to return to the Company any amount theretofore received by him or her upon the exercise of an SAR. 5 6 (j) Payment of the amount to which a Participant is entitled upon the exercise of an SAR will be made in cash, Stock, or partly in cash and partly in Stock, as the Committee may determine. To the extent that payment is made in Stock, the shares will be valued at their Fair Market Value on the date of exercise of the SAR. The Committee may also at any time and from time to time provide for the deferral of delivery of any shares and/or cash for which the SAR may be exercisable until a specified date or dates and subject to terms and conditions determined by the Committee. (k) Unless otherwise determined by the Committee, each SAR will expire on the first to occur of the following: (i) the expiration date set by the Committee at the time of an award of an SAR, (ii) in the case of a Tandem SAR, termination of the related option, (iii) expiration of a period of six months after the Participant's ceasing to be an Eligible Person as a result of termination of service to the Company with the consent of the Committee or as a result of his or her death, retirement or disability, or (iv) the Participant ceasing to be an Eligible Person for any other reason. 3.2 PARTICIPANT LIMITED RIGHTS (a) The Committee may award Participant Limited Rights pursuant to the provisions of this Section 3.2 to the holder of an Option to purchase Common Stock granted under the Plan (a "Related Option") with respect to all or a portion of the shares subject to the Related Option. A Participant Limited Right may be exercised only during the period beginning on the first day following a Change in Control, as defined in Article VII of the Plan, and ending on the thirtieth day following such date. Each Participant Limited Right will be exercisable only to the same extent that the Related Option is exercisable, and in no event after the termination of the Related Option. Participant Limited Rights will be exercisable only when the Fair Market Value (determined as of the date of exercise of the Participant Limited Rights) of each share of Common Stock with respect to which the Participant Limited Rights are to be exercised exceeds the Option Price per share of Common Stock subject to the Related option. (b) Upon the exercise of Participant Limited Rights, the Related Option will be considered to have been exercised to the extent of the number of shares of Common Stock with respect to which such Participant Limited Rights are exercised. Upon the exercise or termination of the Related Option, the Participant Limited Rights with respect to such Related Option will be considered to have been exercised or terminated to the extent of the number of shares of Common Stock with respect to which the Related Option was so exercised or terminated. (c) The effective date of the grant of a Participant Limited Right will be the date on which the Committee approves the grant of such Participant Limited Right. Each grantee of a Participant Limited Right will be notified promptly of the grant of the Participant Limited Right in such manner as the Committee prescribes. (d) Upon the exercise of Participant Limited Rights, the holder thereof will receive in cash an amount equal to the product computed by multiplying (i) the excess of (a) the higher of (x) the Minimum Price Per Share (as hereinafter defined), or (y) the highest reported closing sales price of a share of Common Stock on the New York Stock Exchange at any time during the period beginning on the sixtieth day prior to the date on which such Participant Limited Rights are exercised and ending on the date on which such Participant Limited Rights are exercised, over (b) the Option Price per share of Common Stock subject to the Related Option, by (ii) the number of shares of Common Stock with respect to which such Participant Limited Rights are being exercised. (e) For purposes of this Section 3.2, the term "Minimum Price Per Share" will mean the highest gross price (before brokerage commissions and soliciting dealers' fees) paid or to be paid for a share of Common Stock (whether by way of exchange, conversion, distribution upon liquidation or otherwise) in any Change in Control which is in effect at any time during the period beginning on the sixtieth day 6 7 prior to the date on which such Participant Limited Rights are exercised and ending on the date on which such Participant Limited Rights are exercised. For purposes of this definition, if the consideration paid or to be paid in any such Change in Control will consist, in whole or in part, of consideration other than cash, the Board will take such action, as in its judgment it deems appropriate, to establish the cash value of such consideration. ARTICLE IV PERFORMANCE AWARDS 4.1 NATURE OF PERFORMANCE AWARDS A Performance Award provides for the recipient to receive an amount in cash or Stock or a combination thereof (such form to be determined by the Committee) following the attainment of Performance Goals. Performance Goals may be related to personal performance, corporate performance (including corporate stock performance), departmental performance or any other category of performance deemed by the Committee to be important to the success of the Company or may be related to the occurrence of any triggering event or events that the Committee may deem appropriate. The Committee will determine the Performance Goals, the period or periods during which performance is to be measured or otherwise determined and all other terms and conditions applicable to the Award. Regardless of the degree to which Performance Goals are attained, a Performance Award will be paid only when, if and to the extent that the Committee determines to make such payment. 4.2 OTHER AWARDS SUBJECT TO PERFORMANCE CONDITION The Committee may, at the time any Award described in this Plan is granted, impose the condition (in addition to any conditions specified or authorized in the Plan) that Performance Goals be met prior to the Participant's realization of any payment or benefit under the Award. ARTICLE V RESTRICTED STOCK AND RESTRICTED UNITS 5.1 AWARDS OF RESTRICTED STOCK AND RESTRICTED UNITS (a) The Committee may award to any Participant shares of Stock subject to this Article V and such other terms and conditions as the Committee may prescribe, such Stock referred to herein as "Restricted Stock." Each certificate for Restricted Stock will be registered in the name of the Participant and deposited by him or her, together with a stock power endorsed in blank, with the Corporation. (b) The Committee may also award to any Participant Restricted Units subject to this Article V and such other terms and conditions as the Committee may prescribe. For purposes hereof, a "Restricted Unit" will mean any award of a contractual right granted under this Article V to receive Stock (or, at the discretion of the Committee, cash in an amount based on the Fair Market Value of the Stock, or a combination of Stock and cash) which would become vested and nonforfeitable, in whole or in part, upon the completion of such period of service as may be determined by the Committee. 5.2 RESTRICTED STOCK/RESTRICTED UNIT AGREEMENT Awards of Restricted Stock and Restricted Units under the Plan will be evidenced by a written agreement in such form and containing such terms and conditions as the Committee may determine. 7 8 5.3 RESTRICTION PERIOD; DIVIDEND EQUIVALENTS (a) At the time of award of Restricted Stock or Restricted Units, there will be established for each Participant a "Restriction Period" of such length as the Committee determines. The Restriction Period may be waived by the Committee. Shares of Restricted Stock and Restricted Units may not be sold, assigned, transferred, pledged or otherwise encumbered, except as hereinafter provided. (b) Subject to such restrictions on transfer, the Participant as owner of such shares of Restricted Stock will have the rights of the holder of such Restricted Stock, except that the Committee may provide at the time of the Award that any dividends or other distributions paid with respect to such Stock during the Restriction Period will be accumulated and held by the Company and will be subject to the same forfeiture provisions and the same restrictions on transfer as apply to the shares of Restricted Stock with respect to which they were paid. (c) Upon the expiration or waiver by the Committee of the Restriction Period and the satisfaction (as determined by the Committee) of any other conditions determined by the Committee, restrictions applicable to the Restricted Stock or Restricted Units will lapse and the Corporation will, in the case of Restricted Stock, redeliver to the Participant (or his or her legal representative or designated beneficiary) the shares deposited pursuant to Section 5.1 free and clear of all restrictions except as may be imposed by law and, in the case of Restricted Units, will pay out such units as provided in the Restricted Unit Agreement. 5.4 TERMINATION OF ELIGIBILITY (a) Unless otherwise determined by the Committee, in the event the Participant is no longer an Eligible Person and ceased to be such as a result of termination of service to the Company with the consent of the Committee, or as a result of his or her death, retirement or disability, the restrictions imposed under this Article V will lapse with respect to such number of the shares of Restricted Stock and with respect to such number of Restricted Units previously awarded to him or her as may be determined by the Committee. All other shares of Restricted Stock and Restricted Units previously awarded to him or her which are still subject to restrictions, along with any dividends or other distributions thereon that have been accumulated and held by the Company, will be forfeited, and in the case of Restricted Stock, the Corporation will have the right to complete the blank stock power. (b) Unless otherwise determined by the Committee, in the event the Participant ceases to be an Eligible Person for any other reason, all shares of Restricted Stock and all Restricted Units previously awarded to him or her which are still subject to restrictions, along with any dividend or other distributions on Restricted Stock that have been accumulated and held by the Company, will be forfeited, and, in the case of Restricted Stock, the Corporation will have the right to complete the blank stock power. 5.5 DIVIDEND EQUIVALENTS The Committee will determine whether and to what extent, if any, to credit to the account of, or to pay currently to, each recipient of Restricted Units, an amount equal to any dividends or other distributions paid during the Restriction Period with respect to the corresponding number of shares of Stock covered thereby ("Dividend Equivalent"). To the extent provided by the Committee at or after the date of grant, any Dividend Equivalents with respect to cash dividends on the Stock credited to a Participant's account will be deemed to have been invested in shares of Stock on the record date established for the related dividend and, accordingly, a number of additional Restricted Units shall be credited to such Participant's account equal to the greatest whole number which may be obtained by 8 9 dividing (x) the value of such Dividend Equivalent on the record date by (y) the Fair Market Value of a share of Stock on such date. ARTICLE VI DEFERRAL OF PAYMENTS 6.1 DEFERRAL OF AMOUNTS (a) If the Committee makes a determination to designate Awards or, from time to time, groups or types of Awards, eligible for deferral hereunder, a Participant may, subject to such terms and conditions and within such limits as the Committee may from time to time establish, elect to defer the receipt of amounts due to him or her under the Plan. Amounts so deferred are referred to herein as "Deferred Amounts." The Committee may also permit amounts now or hereafter deferred or available for deferral under any present or future incentive compensation program or deferral arrangement of the Company to be deemed Deferred Amounts and to become subject to the provisions of this Article. Awards which are so deferred will be deemed to have been awarded in cash and the cash deferred as Deferred Amounts. (b) The period between the date on which the Participant's Deferred Amount would have been payable absent deferral and the final payment of such Deferred Amount will be referred to herein as the "Deferral Period." 6.2 PAYMENT OF DEFERRED AMOUNTS Payment of Deferred Amounts will be made on such terms and conditions as the Committee may determine and will be made at such time or times, and may be in cash, Stock, or partly in cash and partly in Stock, as the Committee in its sole discretion may from time to time determine. ARTICLE VII CHANGES IN CONTROL 7.1 EFFECT OF CHANGE IN CONTROL Upon the occurrence of a change in control (a) as defined in the relevant agreement for an Award or (b) as may be determined by the Committee (each of (a) and (b) a "Change of Control"), then notwithstanding any other provisions of the Plan: (i) if so provided in the respective Stock Option Agreements, as they may be amended from time to time, Options and, subject to the exercise provisions of Section 3.2(a) of the Plan, Participant Limited Rights, but not SARs, outstanding and unexercised on the date of the Change in Control will become immediately exercisable; (ii) if so provided in the respective Stock Option Agreements, as they may be amended from time to time, Company Limited Rights will become immediately exercisable; (iii) Performance Awards will be deemed to have been earned if so determined by the Committee and may be paid on such basis as the Committee may prescribe. (iv) Restricted Stock and Restricted Units may be deemed to be earned and the Restriction Period may be deemed to be expired on such terms and conditions as the Committee may determine; and (v) amounts deferred under this Plan may be paid on such terms as the Committee determines. 9 10 ARTICLE VIII GENERAL PROVISIONS 8.1 NON-TRANSFERABILITY No Option, Participant Limited Right, SAR, Performance Award, Restricted Unit or share of Restricted Stock or Deferred Amount under the Plan will be transferable other than by will, by the applicable laws of descent and distribution, or, if permitted by the Company, by transfer to a properly designated beneficiary in the event of death; provided, however, that the Committee may, in its sole discretion, permit the transfer of an NSO Option (including any Tandem SARs or Participant Limited Rights but not any right to receive a Reload Option upon exercise of the NSO Option) by a Participant to a Permissible Transferee (as defined in Section 8.12) subject to such terms and conditions as the Committee may, from time to time, determine. All Awards and Deferred Amounts will be exercisable or received during the Participant's lifetime only by such Participant or his or her legal representative or, in the case of an NSO Option (including any Tandem SARs or Participant Limited Rights) that has been transferred to a Permissible Transferee in accordance with this Section 8.1, by that Permissible Transferee. Any transfer contrary to this Section 8.1 will nullify the option, Participant Limited Right, SAR, Performance Award, Restricted Unit or share of Restricted Stock, and any attempted transfer of a Deferred Amount contrary to this Section 8.1 will be void and of no effect. 8.2 BENEFICIARIES The Committee may, but need not, establish or authorize the establishment of procedures not inconsistent with Section 8.1 under which a Participant may designate a beneficiary or beneficiaries to hold, exercise and/or receive amounts due under an Award or with respect to Deferred Amounts in the event of the Participant's death. 8.3 ADJUSTMENTS UPON CHANGES IN STOCK If there is any change in the Stock and/or the corporate structure of the Company, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, split up, dividend in kind or other change in the corporate structure or distribution to the stockholders, appropriate adjustments may be made by the Board of Directors of the Company (or if the Company is not the surviving corporation in any such transaction, the board of directors of the surviving corporation) in the aggregate number and kind of shares subject to the Plan, and the number and kind of shares and the price per share subject to outstanding Options or which may be issued under outstanding Performance Awards or Awards of Restricted Stock. Appropriate adjustments may also be made by the Board of Directors or the Committee in the terms of any Awards under the Plan to reflect such changes and to modify any other terms of outstanding Awards, including modifications of performance targets and changes in the length of Performance Periods. 8.4 CONDITIONS OF AWARDS (a) Unless the Committee determines otherwise, either by waiving the condition(s) or by limiting or otherwise amending the condition(s) with respect to any specified Award or group of Awards, the rights of a Participant with respect to any Award received under this Plan will be subject to the conditions that, until the Participant has fully received all payments, transfers and other benefits under the Award, he or she will (i) not engage, either directly or indirectly, in any manner or capacity as advisor, principal, agent, partner, officer, director, employee, member of any association or otherwise, in any business or activity which is at the time competitive with any business or activity conducted by the Company and (ii) be available, unless he or she has died, at reasonable times for consultations at 10 11 the request of the Company's management with respect to phases of the business with which he or she is or was actively connected during the time he or she was an officer, employee or independent contractor, but such consultations will not (except in the case of a Participant whose active service was outside the United States) be required to be performed at any place or places outside of the United States of America or during usual vacation periods or periods of illness or other incapacity. In the event that either of the above conditions is applicable (or is applicable as modified by the Committee) and is not fulfilled, the Participant will forfeit all rights to any unexercised Option or SAR, or any Performance Award or Stock held which has not yet been determined by the Committee to be payable or unrestricted (and any unpaid amounts equivalent to dividends or other distributions or amounts equivalent to interest relating thereto) as of the date of the breach of condition. Any determination by the Board of Directors of the Corporation, which will act upon the recommendation of the Chief Executive Officer, that the Participant is, or has, engaged in a competitive business or activity as aforesaid or has not been available for consultations as aforesaid or, if the Committee has modified such condition(s) with respect to the Participant's Award, that the Participant has not complied with such condition(s) as modified by the Committee will be conclusive. (b) This Section 8.4 will not apply to Participant Limited Rights. 8.5 USE OF PROCEEDS All cash proceeds from the exercise of Options will constitute general funds of the Company. 8.6 TAX WITHHOLDING (a) The Company will collect, through withholding or otherwise, an amount sufficient to satisfy any applicable statutory federal, state and local withholding tax requirements (the "withholding requirements") with respect to payments made pursuant to the Plan. (b) In the case of an Award pursuant to which Stock may be delivered, the Committee will have the right to require that the Participant or other appropriate person remit to the Company an amount sufficient to satisfy any applicable statutory withholding requirements, or make other arrangements satisfactory to the Committee with regard to such requirements, prior to the delivery of any Stock. If and to the extent that such withholding is required, the Committee may permit the Participant or such other person to elect at such time and in such manner as the Committee provides to have the Company hold back from the shares to be delivered, or to deliver to the Company, Stock having a value calculated to satisfy the statutory withholding requirement. In the alternative, the Committee may, at the time of grant of any such Award, require that the Company withhold from any shares to be delivered Stock with a value calculated to satisfy any applicable statutory tax withholding requirements. (c) If at the time an ISO is exercised the Committee determines that the Company could be liable for statutory withholding requirements with respect to a disposition of the Stock received upon exercise, the Committee may require as a condition of exercise that the person exercising the ISO agree (i) to inform the Company promptly of any disposition of Stock received upon exercise, and (ii) to give such security as the Committee deems adequate to meet the potential liability of the Company for the statutory withholding requirements and to augment such security from time to time in any amount reasonably deemed necessary by the Committee to preserve the adequacy of such security. 8.7 NON-UNIFORM DETERMINATIONS The Committee's determinations under the Plan, including without limitation, (i) the determination of the Participants to receive Awards, (ii) the form, amount, timing and payment of such Awards, 11 12 (iii) the terms and provisions of such Awards and (iv) the agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, Awards under the Plan, whether or not such Participants are similarly situated. 8.8 LEAVES OF ABSENCE; TRANSFERS The Committee will be entitled to make such rules, regulations and determinations as it deems appropriate under the Plan with respect to any leave of absence from the Company granted to a Participant. Without limiting the generality of the foregoing, the Committee will be entitled to determine (i) whether or not any such leave of absence will be treated as if the Participant ceased to be an Eligible Person and (ii) the impact, if any, of any such leave of absence on Awards under the Plan. In the event a Participant transfers within the Company, such Participant will not be deemed to have ceased to be an Eligible Person for purposes of the Plan. 8.9 GENERAL RESTRICTION (a) Each Award under the Plan will be subject to the condition that, if at any time the Committee determines that (i) the listing, registration or qualification of shares of Stock upon any securities exchange or under any state or federal law, (ii) the consent or approval of any government or regulatory body or (iii) an agreement by the Participant with respect thereto, is necessary or desirable, then such Award will not be consummated in whole or in part unless such listing, registration, qualification, consent, approval or agreement has been effected or obtained free from any conditions not acceptable to the Committee. (b) Shares of Common Stock for use under the provisions of this Plan will not be issued until they have been duly listed, upon official notice of issuance, upon the New York Stock Exchange and such other exchanges, if any, as the Board of Directors of the Corporation determines, and a registration statement under the Securities Act of 1933 with respect to such shares has become, and is, effective. 8.10 EFFECTIVE DATE (a) The Plan is effective on December 7, 1998, as amended. (b) No Award may be granted under the Plan after December 6, 2008, but Awards previously made may extend beyond that date and Reload Options and additional Reload Options provided for with respect to original options outstanding prior to that date may continue unless the Committee otherwise provides and subject to such additional terms and conditions as the Committee may provide except that all Reload Options issued after that date will be NSOs, and the provisions of Article VI of the Plan will survive and remain effective as to all present and future Deferred Amounts until such later date as the Committee or the Board of Directors may determine. (c) The adoption of the Plan will not preclude the adoption by appropriate means of any other stock option or other incentive plan for officers or employees. 8.11 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN The Board of Directors or the Committee may at any time or times amend the Plan for any purpose which may at the time be permitted by law, or may at any time suspend or terminate the Plan as to any further grants of Awards. 12 13 8.12 CERTAIN DEFINITIONS (a) The terms "retirement" and "disability" as used under the Plan will have the meanings determined from time to time by the Committee. (b) The term "Fair Market Value" as it relates to Common Stock means the average of the high and low prices of the Common Stock as reported by the Composite Tape of the New York Stock Exchange (or such successor reporting system as the Committee may select) on the relevant date or, if no sale of the Common Stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales. The term "Fair Market Value" as it relates to Formula Value Stock will mean the value determined by the Committee. (c) "subsidiary" means any corporation, partnership or other entity of which shares of voting stock sufficient to elect a majority of the Board of Directors, or other persons performing similar functions, is owned by the Corporation, either directly or indirectly through one or more subsidiaries. (d) "Formula Value Stock" means shares of a class or classes of stock the value of which is derived from a formula established by the Committee which reflects such financial measures as the Committee may determine. Such shares will have such other characteristics as may be determined at time of their authorization. (e) Unless otherwise determined by the Committee, "Permissible Transferee" means any of the following: (1) a member of the Participant's Immediate Family; (2) a trust solely for the benefit of the Participant and/or the Participant's Immediate Family; and (3) a partnership or limited liability company whose only partners or members, as the case may be, are the Participant and/or Permissible Transferees of the Participant as otherwise identified in this definition. "Immediate Family" has the meaning set forth in Rule l6a-1(e) under the Exchange Act, as such rule may be amended from time to time, or any successor rule. 8.13 GOVERNING LAW. The Plan and all agreements or other documents relating to the Plan will be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflict of laws. 13 EX-10.17 4 EXECUTIVE ANNUAL INCENTIVE PLAN 1 Exhibit 10.17 INFINITY BROADCASTING CORPORATION EXECUTIVE ANNUAL INCENTIVE PLAN SECTION 1. PURPOSE 1.1 The purpose of the Infinity Broadcasting Corporation Executive Annual Incentive Plan is to provide competitive annual or other incentive opportunities that foster and promote the financial success of the Company by: (a) aiding the Company in attracting and retaining key executives of outstanding ability; (b) strengthening the Company's capability to develop, maintain and direct a competent management team; and (c) motivating key executives who are in a position to contribute materially to the success of the Company to achieve measurable performance goals. The Plan is intended to permit the Company to pay to Participants who are Covered Employees annual incentives that qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code and that are fully deductible by the Company under the Code. 1.2 Certain terms used in the Plan are defined in Section 10. SECTION 2. EFFECTIVE DATE 2.1 The Plan is effective as of December 7, 1998, as amended. SECTION 3. ELIGIBILITY; SELECTION FOR PARTICIPATION 3.1 Participation in the Plan will be limited to key executives of the Company and/or its subsidiaries who are designated by the Committee as Participants for a given Performance Period. In making this designation, the Committee may give consideration to the functions and responsibilities of the executive, his or her past, present and potential contributions to the Company, and such other factors as the Committee deems relevant. SECTION 4. AWARDS 4.1 The Committee may award incentives to Participants with respect to Performance Periods, subject to the terms and conditions set forth in the Plan. 4.2 The Committee will establish one or more objective performance goals for a given Performance Period. Such performance goal or goals will be based on one or more of the following business criteria, as applied to the relevant business unit or units, to a specified portion or portions of the Company, to the Company as a whole, or to any combination thereof: revenues; earnings before interest, taxes, depreciation and amortization ("EBITDA"); earnings before interest and taxes ("EBIT"); free cash flow; earnings per share; ratings; cost reductions; capital expenditure; and stock price. 4.3 The Committee will also establish target and maximum incentive award opportunity amounts for each Participant for the given Performance Period and the objective formula or standard that will be used by the Committee to determine the amount of incentive compensation that may be payable to such Participant under the Plan if and to the extent that the established performance goal or goals are achieved; provided, however, that in no event may the maximum incentive award opportunity or the maximum incentive award for any one Participant for any Performance Period exceed the amount of ten million dollars ($10,000,000). This maximum amount will be adjusted annually to reflect increases in the Consumer Price Index-U published by the Bureau of Labor Statistics, or any successor to such index, for each twelve-month period commencing January 1. 1 2 4.4 After the close of the Performance Period, the Committee will determine the extent to which the preestablished performance goal or goals for that Performance Period have been achieved and the extent to which incentive compensation for each Participant would be payable based on such performance and the preestablished formula or method. Regardless of the degree to which a performance goal or goals are achieved, incentive awards under the Plan will be paid only when and if the Committee, in its sole discretion, determines to approve the award or awards. The Committee, in its sole discretion, may reduce (but may not increase) the amount which would otherwise be payable as incentive compensation based on the extent to which the preestablished performance goal or goals have been achieved and the preestablished formula or method, in which case the Participant will receive only the reduced amount as an incentive award, which may be zero, even if the performance goal or goals were achieved. 4.5 Appropriate adjustments may be made by the Committee in performance goals, target and maximum incentive award opportunities, formulas or standards, and/or in the measurement of the extent of achievement of performance goals to reflect the impact of acquisitions, divestitures, changes in accounting standards, or unusual or extraordinary events. SECTION 5. FORM OF PAYMENT; SHARES OF STOCK 5.1 The Committee will also determine the time, form and manner of payment of any incentive awards it may approve for payment under the Plan. Incentive awards may be paid in cash, in shares of Stock, in Stock Options, in Stock Appreciation Rights, in other Derivative Securities, in other securities of the Company, or in any other form that the Committee may determine, or in any combination of such forms, and may be paid in one or more installments and/or on a deferred basis or on such other basis as the Committee may determine ("deferrals"), all on such terms and conditions as are set forth in the Plan and otherwise as the Committee may from time to time determine. 5.2 The maximum number of shares of Stock subject to incentive stock options and Stock Options that may be issued under the Plan is ten million (10,000,000); and the maximum number of such shares of Stock subject to Stock Options and Stock Appreciation Rights granted to any one Participant under the Plan in any one Performance Period is one million (1,000,000); in each case subject to adjustment and substitution as set forth in this Section 5. 5.3 Shares of Stock issued under the Plan may be in whole or in part authorized and unissued or treasury shares of Stock. No fractional shares will be issued, and the Committee will determine the manner in which fractional share value will be treated. 5.4 Any shares of Stock that are issued pursuant to the Plan and are subsequently forfeited, any shares of Stock subject to a Stock Option, Stock Appreciation Right and/or other Derivative Security which is canceled or terminates without any shares having been issued pursuant thereto, any shares of Stock tendered by a Participant to pay the Exercise Price of a Stock Option or other Derivative Security, and any shares of Stock tendered or withheld to satisfy withholding tax requirements will automatically become available again for use under the Plan; provided, however, this Section 5.4 will apply only to the 10,000,000 share limit set forth in Section 5.2 (as adjusted in accordance with the Plan). 5.5 If there is any change in the Stock and/or the corporate structure of the Company, through merger, consolidation, division, share exchange, combination, reorganization, recapitalization, stock dividend, stock split, spin-off, split-up, dividend in kind or other change in the corporate structure or distribution to the shareholders, appropriate adjustments may be made by the Committee (or, if the Company is not the surviving corporation in any such transaction, by the board of directors (or a committee thereof consisting solely of Outside Directors) of the surviving corporation) in the aggregate 2 3 number and kind of shares subject to the Plan, and the number and kind of shares and the price per share subject to outstanding Stock Options, Stock Appreciation Rights and other Derivative Securities or which may be issued under outstanding deferrals. Appropriate adjustments may also be made by the Committee in the terms of any incentive award opportunities under the Plan to reflect such changes and to modify any of the terms of any outstanding Stock Options, Stock Appreciation Rights or other Derivative Securities or deferrals. SECTION 6. PAYMENT IN STOCK OPTIONS OR STOCK APPRECIATION RIGHTS 6.1 The Committee may, from time to time, subject to the provisions of the Plan and such other terms and conditions as the Committee may prescribe, determine that an incentive award or a portion of an incentive award will be paid in the form of Stock Options or Stock Appreciation Rights. Stock Appreciation Rights may be granted in tandem with Stock Options or independently of Stock Options. The number of Stock Options or Stock Appreciation Rights will be determined by dividing the amount of the incentive award to be paid in the form of Stock Options or Stock Appreciation Rights by the value, as determined by the Committee, of a Stock Option or Stock Appreciation Right, as the case may be, for one share of Stock on the relevant date. 6.2 All Stock Options and all Stock Appreciation Rights will be evidenced by a signed written agreement, with any amendments thereto, containing such terms and conditions as are set forth in the Plan and otherwise as the Committee may from time to time determine. Stock Appreciation Rights granted in tandem with Stock Options will be evidenced by the Stock Option agreement. The Committee may also at any time and from time to time provide for the deferral of delivery of any shares and/or cash for which the Stock Option or Stock Appreciation Right may be exercisable until a date or dates and subject to terms and conditions determined by the Committee. 6.3 The purchase price per share of Stock under each Stock Option and the reference price per share of the Stock to which a Stock Appreciation Right relates (in either case, "Exercise Price") will not be less than the Fair Market Value of such Stock on the date the Stock Option is granted. A Stock Appreciation Right may be exercised only when the Fair Market Value of the Stock to which it relates exceeds the Exercise Price. 6.4 The holder of a Stock Option, Stock Appreciation Right or other Derivative Security will not have any of the rights of a shareholder with respect to any shares of Stock that may be subject or relate thereto unless and until such shares are issued by the Company following its exercise or otherwise. SECTION 7. ADMINISTRATION 7.1 Subject to the terms of the Plan, the Committee will have the sole and complete authority: (a) to designate Participants, to approve incentive awards, to determine the time, form and manner of payment of any incentive awards it may approve, and to impose such limitations, restrictions and conditions thereon as the Committee deems appropriate; (b) to interpret the Plan and the terms of any document relating to the Plan and to adopt, amend and rescind administrative guidelines and other rules and regulations relating to the Plan; (c) to accelerate the time at which all or any part of Stock Options, Stock Appreciation Rights and/or other Derivative Securities may be exercised or the time when all or any part of deferrals and/or Derivative Securities will be paid; (d) to otherwise amend or cancel incentive award opportunities, Stock Options, Stock Appreciation Rights or other Derivative Securities or deferrals under the Plan in whole or in part, except that the Committee may not, unless otherwise provided in the Plan or unless the Participant affected thereby consents, take any action under this clause that would adversely affect the rights of such Participant with respect to outstanding Stock Options, Stock Appreciation Rights or other Derivative Securities or deferrals under the Plan, and 3 4 except that the Committee may not, unless otherwise provided in the Plan, take any action to amend any outstanding Stock Option or Stock Appreciation Right under the Plan in order to decrease the Exercise Price of such Stock Option or Stock Appreciation Right; and (e) to make all other determinations and to take all other actions necessary or advisable for the interpretation, implementation and administration of the Plan. 7.2 The Committee's determinations on matters within its authority will be conclusive and binding upon the Company and all other persons unless and until the Committee determines otherwise. SECTION 8. GENERAL PROVISIONS 8.1 No employee or other person will have any claim or right to be designated as a Participant or to receive an incentive award under the Plan. Participation in the Plan will not be construed as a right to employment or other relationship(s) with the Company and/or its subsidiaries, and the Company retains the right to terminate the employment or other relationship(s) of an individual with the Company and/or its subsidiaries for any reason, with or without cause. 8.2 During a Participant's lifetime, payments or distributions under the Plan may be received only by the Participant or his or her legal representative. Shares of restricted Stock during the applicable restriction period, Stock Options, Stock Appreciation Rights, other Derivative Securities, rights to deferral payments and any other rights or benefits under the Plan will not be transferable or assignable by a Participant other than by will, by the applicable laws of descent and distribution, or, if permitted by the Committee, by transfer to a Properly Designated Beneficiary in the event of death; provided, however, that the Committee may, in its sole discretion, permit the transfer of Stock Options (including any tandem Stock Appreciation Rights) by a Participant to Permissible Transferees, subject to such terms and conditions as the Committee may determine. Any transfer or assignment contrary to these provisions will be null and void. 8.3 The Company will collect, through withholdings or otherwise, an amount sufficient to satisfy all applicable statutory federal, state and local withholding tax requirements with respect to payments made pursuant to the Plan. 8.4 The Committee's determinations under the Plan, including without limitation, (a) the selection of Participants, (b) the form, amount, timing and payment of incentive awards, (c) the terms and provisions of incentive awards and the payment thereof, and (d) any agreements evidencing the same, need not be uniform and may be made by it selectively among Participants who receive, or who are eligible to receive, incentive awards, whether or not such Participants are similarly situated. 8.5 The Committee may, but need not, establish or authorize the establishment of procedures not inconsistent with Section 8.2 under which a Participant may designate a beneficiary or beneficiaries in the event of the Participant's death. 8.6 The Company will not be required to establish any special or separate fund or to segregate any assets for purposes of the Plan. 8.7 Nothing contained in the Plan will be deemed to limit or restrict the right of the Company and its subsidiaries to compensate any of their key executives and/or employees in whole or in part under separate bonus or incentive plans or other compensation arrangements. 8.8 The Plan and all agreements or other documents relating to the Plan will be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflict of laws. 4 5 SECTION 9. CHANGE IN CONTROL 9.1 Upon the determination of the Committee that a change in control has occurred for purposes of the Plan, the Committee may deem all or any part of any incentive award opportunity to have been earned on such basis as the Committee may determine, and incentive awards and outstanding Derivative Securities and deferrals may then be paid and Stock Options, Stock Appreciation Rights and other Derivative Securities may then be modified, and all or any part of any restrictions or conditions may be waived or modified, all on such basis, at such time (which may, in the case of incentive awards, be prior to the end of the Performance Period), in such form and subject to such terms and conditions as the Committee may prescribe. SECTION 10. CERTAIN DEFINITIONS 10.1 The following terms or phrases will have the meanings set forth below. - "Board" means the Board of Directors of the Company. - "Code" or "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor statute or statutes. Reference to any specific Code section will include any successor section. - "Committee" means the Compensation Committee of the Board (or a subcommittee thereof) or any successor committee (or a subcommittee thereof) established by the Board; provided, however, the Committee must consist of at least two members and each member of the Committee must be an Outside Director. - "Company" means Infinity Broadcasting Corporation, a Delaware corporation, and any successor thereto. - "Covered Employee" means a person who is a covered employee within the meaning of Section 162(m) of the Code and regulations promulgated thereunder. - "Derivative Security" means a derivative security with respect to an equity security of the Company, where "derivative security" has the meaning set forth in Rule 16a-1(c) under the Exchange Act, as such rule may be amended from time to time, or any successor rule. - "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time. - "Exercise Price" has the meaning assigned to it in Section 6.3. - "Fair Market Value" means the mean of the high and low prices of the Stock as reported by the Composite Tape of the New York Stock Exchange (or such successor reporting system as may be selected by the Committee) on the relevant date or, if no sale of the Stock has been reported for that day, the average of such prices on the next preceding day and the next following day for which there were reported sales. - "Immediate Family" has the meaning set forth in Rule 16a-1(e) under the Exchange Act, as such rule may be amended from time to time, or any successor rule. - "Outside Director" means an outside director as that term is defined by Section 162(m) of the Code and regulations promulgated thereunder. - "Participant" means a key executive of the Company and/or its subsidiaries who is designated by the Committee as a Plan participant for a given Performance Period in accordance with Section 3.1. 5 6 - "Performance Period" means a calendar year or other fiscal year of the Company or other longer or shorter period designated by the Committee with respect to which incentive awards may be paid. - "Permissible Transferee" means any of the following: (1) a member of the Participant's Immediate Family; (2) a trust solely for the benefit of the Participant and/or the Participant's Immediate Family; and (3) a partnership or limited liability company whose only partners or members, as the case may be, are the Participant and/or Permissible Transferees as otherwise identified in this definition. - "Plan" means the Company's Executive Annual Incentive Plan, as amended from time to time. - "Properly Designated Beneficiary" means a beneficiary or beneficiaries designated by a Participant pursuant to Section 8.5 in the event of the Participant's death, if such designation is permitted by the Committee. - "Stock" means the Class A Common Stock and any other equity stock of the Company, other than Class B Common Stock. - "Stock Appreciation Right" means a right to receive, on exercise, an amount, in cash or Stock or a combination thereof (such form to be determined by the Committee), determined by reference to appreciation in Stock value. - "Stock Option" means a non-statutory stock option (that is, a Stock Option which is not an incentive stock option as defined in Section 422(b) of the Code) to purchase shares of Stock for the purchase price set forth in the relevant Stock Option Agreement, all in accordance with the terms of the Plan. 10.2 Except where otherwise indicated by the context, references to sections will mean the Sections of the Plan and the definition of any term herein in the singular will also include the plural. Section or subsection headings are inserted for convenience only. Such headings will not affect the meaning of any of the provisions of the Plan and will not be deemed a part of the Plan. SECTION 11. AMENDMENT, SUSPENSION AND/OR TERMINATION OF PLAN 11.1 The Board of Directors or the Committee may at any time and from time to time amend the Plan, in whole or in part, for any purpose, or may at any time or from time to time suspend or terminate the Plan. 6 EX-10.30 5 ASSET PURCHASE AGREEMENT 1 Exhibit 10.30 ASSET PURCHASE AGREEMENT ------------------------ THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of March 3, 2000 among the company or companies designated as Seller on the signature page hereto (collectively, "Seller") and the company or companies designated as Buyer on the signature page hereto (collectively, "Buyer"). Recitals -------- A. Seller owns and operates the following radio broadcast stations (collectively, the "Stations") pursuant to certain authorizations issued by the Federal Communications Commission (the "FCC"): WUBE-FM, Cincinnati, OH WDOK(FM), Cleveland, OH WQAL(FM), Cleveland, OH WZJM(FM), Cleveland Heights, OH KDJM(FM), Greeley, CO KIMN(FM), Denver, CO KXKL-FM, Denver, CO WMFR(AM), High Point, NC WSJS(AM), Winston-Salem, NC WSML(AM), Graham, NC WJHM(FM), Daytona Beach, FL WOCL(FM), Deland, FL WOMX-FM, Orlando, FL KOOL-FM, Phoenix, AZ KZON(FM), Phoenix, AZ KMLE(FM), Chandler, AZ KPLN(FM), San Diego, CA KYXY(FM), San Diego, CA B. Subject to the terms and conditions set forth herein, Buyer desires to acquire the Station Assets (defined below). C. Clear Channel Communications, Inc. and AMFM Inc. (parents of Seller) and CCU Merger Sub, Inc. are parties to an Agreement and Plan of Merger dated October 2, 1999 (the "AMFM Agreement"). 2 Agreement --------- NOW, THEREFORE, taking the foregoing into account, and in consideration of the mutual covenants and agreements set forth herein, the parties, intending to be legally bound, hereby agree as follows: ARTICLE 1: PURCHASE OF ASSETS ------------------ 1.1. Station Assets. On the terms and subject to the conditions hereof, on the Closing Date (defined below), Seller shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase and acquire from Seller the following (the "Station Assets"): all of the right, title and interest of Seller in and to all of the assets, properties, interests and rights of Seller of whatsoever kind and nature, real and personal, tangible and intangible, which are either used exclusively in the operation of the Stations or necessary to operate the Stations in all material respects as currently operated, but excluding the Excluded Assets as hereafter defined. Except as provided in Section 1.2, the Station Assets include the following: (a) all licenses, permits and other authorizations which are issued to Seller by the FCC with respect to the Stations (the "FCC Licenses"), including those described on Schedule 1.1(a), including any pending applications for or renewals or modifications thereof between the date hereof and Closing; (b) all Seller's equipment, electrical devices, antennae, cables, tools, hardware, office furniture and fixtures, office materials and supplies, inventory, motor vehicles, spare parts and other tangible personal property of every kind and description which are either used exclusively in the operation of the Stations or necessary to operate the Stations in all material respects as currently operated, including those listed on Schedule 1.1(b), except any retirements or dispositions thereof made between the date hereof and Closing in the ordinary course of business and consistent with past practices of Seller consistent with Article 9 (the "Tangible Personal Property"), and any assignable vendor warranties with respect thereto; (c) the contracts, agreements, and leases which are used in the operation of the Stations and listed or described on Schedule 1.1(c), together with all contracts, agreements, and leases made between the date hereof and Closing in the ordinary course of business that are used in the operation of the Stations consistent with Article 9 (the "Station Contracts"); (d) all of Seller's rights in and to the Stations' call letters and Seller's rights in and to the trademarks, trade names, service marks, internet domain names, franchises, copyrights, computer software, programs and programming material, jingles, slogans, logos, and other intangible property which are either used exclusively in the operation of the Stations or necessary to operate the Stations in all material respects as currently operated (except that, as to items used by more than one station, the Station Assets include only the right to use such items in the manner used by Seller at the applicable Station on a basis exclusive in the market 3 so long as such items are used, but non-exclusive in that no right is granted to Buyer hereunder with respect to other markets (some of which may overlap), and such right is limited to the extent of Seller's rights), including those listed on Schedule 1.1(d) (the "Intangible Property"); (e) Seller's rights in and to all the files, documents, records, and books of account (or copies thereof) relating to the operation of the Stations, including the Stations' local public files, programming information and studies, blueprints, technical information and engineering data, advertising studies, marketing and demographic data, sales correspondence, lists of advertisers, credit and sales reports, and logs, but excluding records relating to Excluded Assets (defined below); and (f) except as set forth on Schedule 1.2(h), all interests in real property which is used in the operation of the Stations (including any of Seller's appurtenant easements and improvements located thereon), including the real property described on Schedule 1.1(f) (the "Real Property"). The Station Assets shall be transferred to Buyer free and clear of liens, claims and encumbrances ("Liens") except for (i) Assumed Obligations (defined in Section 2.1), (ii) liens for taxes not yet due and payable and for which Buyer receives a credit pursuant to Section 3.2, (iii) such liens, easements, rights of way, building and use restrictions, exceptions, reservations and limitations that do not in any material respect detract from the value of the property subject thereto or impair the use thereof in the ordinary course of the business of the Stations, and (iv) any items listed on Schedule 1.1(b) (collectively, "Permitted Liens"). 1.2. Excluded Assets. Notwithstanding anything to the contrary contained herein, the Station Assets shall not include the following assets along with all rights, title and interest therein (the "Excluded Assets"): (a) all cash and cash equivalents of Seller, including without limitation certificates of deposit, commercial paper, treasury bills, marketable securities, asset or money market accounts and all such similar accounts or investments; (b) all accounts receivable or notes receivable arising in the operation of the Stations prior to Closing; (c) all tangible and intangible personal property of Seller disposed of or consumed in the ordinary course of business of Seller between the date of this Agreement and Closing consistent with Article 9; (d) all Station Contracts that terminate or expire prior to Closing in the ordinary course of business of Seller; -3- 4 (e) Seller's name, corporate minute books, charter documents, corporate stock record books and such other books and records as pertain to the organization, existence or share capitalization of Seller, duplicate copies of the records of the Stations, and all records not relating to the operation of the Stations (it being understood that the Station Assets include copies of records shared by one or more Stations and one or more other stations in the market and that each party shall use reasonable efforts to maintain the confidentiality of the other's non-public information that is related to the Stations or other stations); (f) contracts of insurance, and all insurance proceeds or claims made thereunder; (g) except as provided in Section 10.4, all pension, profit sharing or cash or deferred (Section 401(k)) plans and trusts and the assets thereof and any other employee benefit plan or arrangement and the assets thereof, if any, maintained by Seller; (h) all rights, properties and assets described on Schedule 1.2(h); (i) all rights, properties and assets used in the operation of the Stations and also used in the operation of any other radio station or stations, except that any such items that are necessary to operate the Stations in all material respects as currently operated shall not be excluded unless replaced with items sufficient to operate the Stations in all material respects as currently operated (and such obligation shall not be subject to any minimum aggregate Damages limitations set forth in Article 15 hereof); and (j) the rights and interests of any counter-party to any Station Contract or licensor of Intangible Property 1.3. Lease Agreements. At Closing, Buyer and Seller shall enter into the lease agreements described on Schedule 1.2(h) pursuant to leases in the form of Exhibit A attached hereto. ARTICLE 2: ASSUMPTION OF OBLIGATIONS ------------------------- 2.1. Assumed Obligations. Subject to Section 3.2, on the Closing Date, Buyer shall assume the obligations of Seller arising after Closing under the Station Contracts (the "Assumed Obligations"), including without limitation all agreements for the sale of advertising time on the Stations for cash in the ordinary course of business ("Time Sales Agreements") and all agreements for the sale of advertising time on the Stations for non-cash consideration entered into in the ordinary course of business consistent with past practices ("Trade Agreements"). 2.2. Retained Obligations. Buyer does not assume or agree to discharge or perform and will not be deemed by reason of the execution and delivery of this Agreement or any agreement, instrument or document delivered pursuant to or in connection with this Agreement or otherwise by reason of the consummation of the transactions contemplated hereby, to have -4- 5 assumed or to have agreed to discharge or perform, any liabilities, obligations or commitments of Seller of any nature whatsoever whether accrued, absolute, contingent or otherwise and whether or not disclosed to Buyer, other than the Assumed Obligations (the "Retained Obligations"). ARTICLE 3: PURCHASE PRICE -------------- 3.1. Purchase Price. In consideration for the sale of the Station Assets to Buyer, in addition to the assumption of the Assumed Obligations, Buyer shall at Closing (defined below) deliver to Seller by wire transfer of immediately available funds One Billion Four Hundred Two Million Five Hundred Thousand Dollars ($1,402,500,000), subject to adjustment pursuant to Section 3.2 (the "Purchase Price"). 3.2. Prorations and Adjustments. Except as otherwise provided herein, all deposits, reserves and prepaid and deferred income and expenses relating to the Station Assets or the Assumed Obligations and arising from the conduct of the business and operations of the Stations shall be prorated between Buyer and Seller in accordance with generally accepted accounting principles consistently applied ("GAAP") as of 11:59 p.m. on the date immediately preceding the Closing Date. Such prorations shall include, without limitation, any prepayments on Time Sales Agreements for time to be aired after the Closing, all ad valorem, real estate and other property taxes (but excluding taxes arising by reason of the transfer of the Station Assets as contemplated hereby which shall be paid as set forth in Section 13.1), business and license fees, music and other license fees (including any retroactive adjustments thereof), any vacation leave accrued for Transferred Employees assumed by Buyer hereunder, utility expenses, amounts due or to become due under Station Contracts, rents, lease payments and similar prepaid and deferred items. Real estate taxes shall be apportioned on the basis of taxes assessed for the preceding year, with a reapportionment, if any, as soon as the new tax rate and valuation can be ascertained. Except as otherwise provided herein, the prorations and adjustments contemplated by this Section 3.2, to the extent practicable, shall be made on the Closing Date. As to those prorations and adjustments not capable of being ascertained on the Closing Date, an adjustment and proration shall be made within ninety (90) calendar days of the Closing Date. In the event of any disputes between the parties as to such adjustments, the amounts not in dispute shall nonetheless be paid at the time provided herein and such disputes shall be determined by an independent certified public accountant mutually acceptable to the parties, and the fees and expenses of such accountant shall be paid one-half by Seller and one-half by Buyer. With respect to Trade Agreements, if there exists on the Closing Date an aggregate negative trade balance in excess of $800,000 in the aggregate for all Stations determined in accordance with GAAP, then such excess will be treated as prepaid time sales and adjusted for as a proration in Buyer's favor, but no adjustment in favor of Seller shall be made for any positive trade balance existing on the Closing Date. 3.3. Allocation. The Purchase Price shall be allocated among the Station Assets in a manner as mutually agreed between the parties based upon an appraisal prepared by Bond & Pecaro (whose fees shall be paid one-half by Seller and one-half by Buyer). Seller and Buyer agree to use the allocations determined pursuant to this Section 3.3 for all tax purposes, -5- 6 including without limitation, those matters subject to Section 1060 of the Internal Revenue Code of 1986, as amended. ARTICLE 4: CLOSING ------- 4.1. Closing. The consummation of the sale and purchase of the Station Assets (the "Closing") shall occur on a date (the "Closing Date") and at a time and place designated solely by Seller after FCC Consent (defined below) (which date may be before, but shall not be later than, five business days after closing under the AMFM Agreement), subject to satisfaction or waiver of the conditions to Closing contained herein (other than those to be satisfied at Closing). If requested by Seller, prior to Closing the parties shall hold a pre-closing conference at a time and place designated by Seller, at which the parties shall provide (for review only) all documents to be delivered at Closing under this Agreement, each duly executed but undated, and otherwise confirm their ability to timely consummate the Closing. ARTICLE 5: GOVERNMENTAL CONSENTS --------------------- Closing is subject to and conditioned upon (i) prior FCC consent (the "FCC Consent") to the assignment of the FCC Licenses to Buyer, (ii) United States Department of Justice ("DOJ") prior approval (the "DOJ Consent") of the transactions contemplated hereby, including without limitation any such approval as may be necessary to enable Seller to consummate the merger under the AMFM Agreement, and (iii) expiration or termination of any applicable waiting period ("HSR Clearance") under the HSR Act (defined below). 5.1. FCC. On a date designated by Seller not earlier than three business days and not later than thirty calendar days after the date of this Agreement, Buyer and Seller shall file an application with the FCC (the "FCC Application") requesting the FCC Consent. Buyer and Seller shall diligently prosecute the FCC Application and otherwise use their best efforts to obtain the FCC Consent as soon as possible. If the FCC Consent imposes upon Buyer any condition, Buyer shall timely comply therewith, except as set forth in Section 5.3. 5.2. HSR. If not previously filed, then within five (5) business days after the execution of this Agreement, Buyer and Seller shall make any required filings with the Federal Trade Commission and the DOJ pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") with respect to the transactions contemplated hereby (including a request for early termination of the waiting period thereunder), and shall thereafter promptly respond to all requests received from such agencies for additional information or documentation. 5.3. General. Buyer and Seller shall notify each other of all documents filed with or received from any governmental agency with respect to this Agreement or the transactions contemplated hereby. Buyer and Seller shall furnish each other with such information and assistance as such the other may reasonably request in connection with their preparation of any governmental filing hereunder. If Buyer becomes aware of any fact relating to it which would prevent or delay the FCC Consent, the DOJ Consent or HSR Clearance, Buyer shall promptly -6- 7 notify Seller thereof and take such steps as necessary to remove such impediment, except as set forth below. During the four month period after the date of this Agreement, the parties shall use their best efforts to obtain the FCC Consent, the DOJ Consent and HSR Clearance. No party shall be required to divest any assets in order to obtain FCC Consent, DOJ Consent or HSR Clearance, unless related to a new acquisition or necessary to cure any inaccuracy in Buyer's representations under the first three sentences of Section 6.4 based upon the Communications Act and rules, regulations and policies of the FCC as in existence on the date of the Agreement. ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF BUYER --------------------------------------- Buyer hereby makes the following representations and warranties to Seller: 6.1. Organization and Standing. Buyer is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and is or at Closing will be qualified to do business in each jurisdiction in which the Station Assets are located. Buyer has the requisite power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Buyer pursuant hereto (collectively, the "Buyer Ancillary Agreements"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 6.2. Authorization. The execution, delivery and performance of this Agreement and the Buyer Ancillary Agreements by Buyer have been duly authorized and approved by all necessary action of Buyer and do not require any further corporate authorization or consent of Buyer. This Agreement is, and each Buyer Ancillary Agreement when executed and delivered by Buyer and the other parties thereto will be, a legal, valid and binding agreement of Buyer enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 6.3. No Conflicts Neither the execution and delivery by Buyer of this Agreement and the Buyer Ancillary Agreements or the consummation by Buyer of any of the transactions contemplated hereby or thereby nor compliance by Buyer with or fulfillment by Buyer of the terms, conditions and provisions hereof or thereof will: (i) conflict with any organizational documents of Buyer or any law, judgment, order or decree to which Buyer is subject; or (ii) require the approval, consent, authorization or act of, or the making by Buyer of any declaration, filing or registration with, any third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except the FCC Consent and DOJ Consent, and, if applicable, HSR Clearance. 6.4. Qualification. Buyer is legally, financially and otherwise qualified to be the licensee of, acquire, own and operate the Stations under the Communications Act of 1934, as -7- 8 amended (the "Communications Act") and the rules, regulations and policies of the FCC. There are no facts that would, under existing law and the existing rules, regulations, policies and procedures of the FCC, disqualify Buyer as an assignee of the FCC Licenses or as the owner and operator of the Stations. No waiver of any FCC rule or policy is necessary for the FCC Consent to be obtained. As of the date of this Agreement, to Buyer's knowledge, there is no action, suit or proceeding pending or threatened against Buyer which questions the legality or propriety of the transactions contemplated by this Agreement or could materially adversely affect Buyer's ability to perform its obligations hereunder. Buyer has and will have available on the Closing Date sufficient funds to enable it to consummate the transactions contemplated hereby. 6.5. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Buyer or any party acting on Buyer's behalf. ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF SELLER ---------------------------------------- Seller makes the following representations and warranties to Buyer: 7.1. Organization. Seller is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, and is qualified to do business in each jurisdiction in which the Station Assets are located. Seller has the requisite power and authority to execute and deliver this Agreement and all of the other agreements and instruments to be executed and delivered by Seller pursuant hereto (collectively, the "Seller Ancillary Agreements"), to consummate the transactions contemplated hereby and thereby and to comply with the terms, conditions and provisions hereof and thereof. 7.2. Authorization. The execution, delivery and performance of this Agreement and the Seller Ancillary Agreements by Seller have been duly authorized and approved by all necessary action of Seller and do not require any further corporate authorization or consent of Seller. This Agreement is, and each Seller Ancillary Agreement when executed and delivered by Seller and the other parties thereto will be, a legal, valid and binding agreement of Seller enforceable in accordance with its respective terms, except in each case as such enforceability may be limited by bankruptcy, moratorium, insolvency, reorganization or other similar laws affecting or limiting the enforcement of creditors' rights generally and except as such enforceability is subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 7.3. No Conflicts. Neither the execution and delivery by Seller of this Agreement and the Seller Ancillary Agreements or the consummation by Seller of any of the transactions contemplated hereby or thereby nor compliance by Seller with or fulfillment by Seller of the terms, conditions and provisions hereof or thereof will: (i) conflict with any organizational documents of Seller or any law, judgment, order, or decree to which Seller is subject or, -8- 9 except as set forth on Schedule 1.1(c) (which identifies Station Contracts that require third party consent to assign), any Station Contract; or (ii) require the approval, consent, authorization or act of, or the making by Seller of any declaration, filing or registration with, any other third party or any foreign, federal, state or local court, governmental or regulatory authority or body, except the FCC Consent and DOJ Consent and, if applicable, HSR Clearance. Except for any Affiliate (defined below) that conveys the appropriate interest to Buyer pursuant to this Agreement upon Closing, no Affiliate of Seller owns or holds any assets which are either used exclusively in the operation of the Stations or necessary to operate Stations in all material respects as currently operated other than Excluded Assets. 7.4. FCC Licenses. Seller (or one of the companies comprising Seller) is the holder of the FCC Licenses described on Schedule 1.1(a). The FCC Licenses listed in Schedule 1.1(a) comprise all material FCC licenses used in the present operation of the Stations and each is in full force and effect and has not been revoked, suspended, canceled, rescinded or terminated and has not expired. There is not pending any action by or before the FCC to revoke, suspend, cancel, rescind or materially adversely modify any of the FCC Licenses (other than proceedings to amend FCC rules of general applicability), and there is not now issued or outstanding, by or before the FCC, any order to show cause, notice of violation, notice of apparent liability, or notice of forfeiture against Seller with respect to the Stations. The Stations are operating in compliance in all material respects with the FCC Licenses, the Communications Act, and the rules, regulations and policies of the FCC. 7.5. Taxes. Seller has, in respect of the Stations' business, filed all foreign, federal, state, county and local income, excise, property, sales, use, franchise and other tax returns and reports which are required to have been filed by it under applicable law and has paid all taxes which have become due pursuant to such returns or pursuant to any assessments which have become payable. 7.6. Personal Property. Schedule 1.1(b) contains a list of all material items of Tangible Personal Property included in the Station Assets. Seller has title to the Tangible Personal Property free and clear of Liens other than Permitted Liens. The Station Assets include all items of Seller's equipment and other tangible personal property that are necessary to operate the Stations in all material respects as currently operated (or replacement items as provided by Section 1.2(i)). The items of Tangible Personal Property listed on Schedule 1.1(b) are in all material respects in normal working condition consistent with Seller's past practices, ordinary wear and tear excepted. 7.7. Real Property. Schedule 1.1(f) contains a description of all Real Property included in the Station Assets. Seller has fee simple title to the owned Real Property ("Owned Real Property") free and clear of Liens other than Permitted Liens. Schedule 1.1(f) includes a description of each lease of Real Property or similar agreement included in the Station Assets (the "Real Property Leases"). The Owned Real Property includes, and the Real Property Leases provide, access to the Stations' facilities. To Seller's knowledge, the Real Property is not subject to any suit for condemnation or other taking by any public authority. Seller has received no notice of termination of any material Real Property Leases. -9- 10 7.8. Contracts. Each of the Station Contracts (including without limitation each of the Real Property Leases) is in effect and is binding upon Seller and, to Seller's knowledge, the other parties thereto (subject to bankruptcy, insolvency, reorganization or other similar laws relating to or affecting the enforcement of creditors' rights generally). Seller has performed its obligations under each of the Station Contracts in all material respects, and is not in material default thereunder, and to Seller's knowledge, no other party to any of the Station Contracts is in default thereunder in any material respect. Seller has made available to Buyer for review all material Station Contracts existing as of the date of this Agreement. 7.9. Environmental. Except as set forth on Schedule 1.1(f), to Seller's knowledge, no hazardous or toxic substance or waste regulated under any applicable environmental, health or safety law has been generated, stored, transported or released on, in, from or to the Real Property included in the Station Assets. Except as set forth on Schedule 1.1(f), to Seller's knowledge, Seller has complied in all material respects with all environmental, health and safety laws applicable to the Stations. 7.10. Intangible Property. Schedule 1.1(d) contains a description of the material Intangible Property included in the Station Assets. Except as set forth on Schedule 1.1(d), Seller has received no notice of any claim that its use of the Intangible Property infringes upon any third party rights. Except as set forth on Schedule 1.1(d), Seller owns or has the right to use the Intangible Property free and clear of Liens other than Permitted Liens. 7.11. Compliance with Law. Seller has complied in all material respects with all laws, regulations, rules, writs, injunctions, ordinances, franchises, decrees or orders of any court or of any foreign, federal, state, municipal or other governmental authority which are applicable to the operation of the Stations. There is no action, suit or proceeding pending or threatened against Seller in respect of the Stations that will subject Buyer to liability or which questions the legality or propriety of the transactions contemplated by this Agreement. To Seller's knowledge, there are no governmental claims or investigations pending or threatened against Seller in respect of the Stations (except those affecting the industry generally). 7.12. No Finder. No broker, finder or other person is entitled to a commission, brokerage fee or other similar payment in connection with this Agreement or the transactions contemplated hereby as a result of any agreement or action of Seller or any party acting on Seller's behalf. 7.13. Financial Statements. Seller has delivered to Buyer copies of the unaudited results of operations of the Stations for the twelve months ended December 31, 1999, prepared in accordance with the books and records of the Stations. ARTICLE 8: ACCOUNTS RECEIVABLE ------------------- 8.1. Accounts Receivable. All accounts receivable arising prior to the Closing Date in connection with the operation of the Stations, including but not limited to accounts -10- 11 receivable for advertising revenues for programs and announcements performed prior to the Closing Date and other broadcast revenues for services performed prior to the Closing Date, shall remain the property of Seller (the "Accounts Receivable") and Buyer shall not acquire any right or interest therein; provided, however, that prepaid income and expenses of the Stations shall be prorated as of Closing as set forth in Section 3.2 hereof. For a period of six months from Closing (the "Collection Period"), Buyer shall collect the Accounts Receivable in the normal and ordinary course of Buyer's business and shall apply all such amounts collected to the debtor's oldest account receivable first unless the account debtor disputes the oldest receivable in good faith and expressly directs otherwise. Buyer's obligation shall not extend to the institution of litigation, employment of counsel or a collection agency or any other extraordinary means of collection. During the Collection Period, neither Seller nor its agents shall make any direct solicitation of any such account debtor for collection purposes or institute litigation for the collection of amounts due. Any amounts relating to the Accounts Receivable that are paid directly to Seller shall be retained by Seller. Within ten calendar days after the end of each month, Buyer shall make a payment to Seller equal to the amount of all collections of Accounts Receivable during the preceding month. At the end of the Collection Period, any remaining Accounts Receivable shall be returned to Seller for collection. ARTICLE 9: COVENANTS OF SELLER ------------------- 9.1. Seller's Covenants. Seller covenants and agrees with respect to the Stations that, between the date hereof and Closing, except as permitted by this Agreement or with the prior written consent of Buyer, which shall not be unreasonably withheld, Seller shall: (a) continue to promote and advertise the Stations consistent with past practice, make any capital expenses previously budgeted by Seller for the Stations for such period, and otherwise operate the Stations in the ordinary course of business consistent with past practice and in all material respects in accordance with FCC rules and regulations and with all other applicable laws, regulations, rules and orders; (b) not materially adversely modify any of the FCC Licenses or materially change the format of any of the Stations, or, other than in the ordinary course of business in accordance with past practice (and with replacement of any items that should be replaced in accordance with such practices), sell, lease or dispose of or agree to sell, lease or dispose of any of the Station Assets; (c) furnish Buyer with such information relating to the Station Assets as Buyer may reasonably request, at Buyer's expense and provided such request does not interfere unreasonably with the business of the Stations; (d) make available to Buyer, and authorize its accountants to cooperate and make available to Buyer, at Buyer's expense and reasonable request such financial information regarding the Stations as is maintained by Seller on a basis not consolidated with other stations, and provide to Buyer copies of any unaudited monthly results of operation of the Stations generated in the ordinary course of business; -11- 12 (e) after Seller publicly announces the transaction contemplated hereby and files this Agreement with the FCC, then, when reasonably requested by Buyer, provide Buyer access to the Stations' facilities that are included in the Station Assets during normal business hours, provided, however, that such access shall not interfere with the Stations' business; (f) (i) notify Buyer promptly if a Station is off the air for a continuous period of eight (8) hours or more or a Station's normal broadcast transmissions are interrupted or impaired in any material respect for a continuous period of 48 hours or more, (ii) maintain the Stations' inventories of spare parts and expendable supplies at levels in the ordinary course of business consistent with past practice, and (iii) maintain the Tangible Personal Property in the ordinary course of business consistent with past practice, and in the event of any loss or damage thereto, replace the lost or damaged items in the ordinary course of business; and (g) comply with reasonable requests of Buyer to request ordinary course renewals or cancellations of any of the Station Contracts, and, unless pursuant to Buyer's request or consent, and except for those terminable on ninety (90) days or less notice without penalty, not enter into any new Station Contracts (other than Time Sales Agreements or Trade Agreements) that involve a post-Closing term of more than one year or a post-Closing expense to Buyer in excess of $100,000 per Station Contract or that is with an Affiliate of Seller (unless the terms are no less favorable to the Stations than could be obtained on an arms-length basis from an unaffiliated third party). 9.2. Real Property. Buyer may at its expense conduct an environmental review of the Real Property and a title review of the owned Real Property prior to Closing. If it is established prior to Closing that there exists a material adverse violation of, or condition requiring remediation under, applicable environmental law at any of the Stations' owned Real Property (an "Environmental Condition"), then Buyer may elect to designate the affected Real Property as an Excluded Asset (but such exclusion shall not deprive Buyer of any other Station Assets at such site to which it is entitled upon Closing), and upon Closing the parties shall cooperate to facilitate Buyer's transition from such site to a new location at Buyer's expense (except as set forth below) and without delay of Closing. If Buyer makes such election with respect to an Environmental Condition that is not disclosed in any environmental report set forth on Schedule 1.1(f) and that at Closing has a remediation cost exceeding $250,000, then upon Closing Seller shall either (at Seller's option): (i) lease such Real Property to Buyer for a term of thirty years without basic rent but with reimbursement of all costs of ownership of such Real Property other than costs related to the Environmental Condition (and with reciprocal options to convey and acquire such Real Property for no additional consideration if the Environmental Condition is later remediated in all material respects) or (ii) acquire other Real Property, build out such property (in a manner substantially comparable to than the affected property) and move the affected Station facilities to such property or (iii) remediate the Environmental Condition in all material respects after Closing. If it is established prior to Closing that Seller's title to any owned real property currently used by Seller in the operation of the Stations is subject to a title defect or deficiency that materially adversely affects the operation of a Station located thereon as currently operated, then, except for Permitted Liens, -12- 13 Seller shall remedy such defect in all material respects, but the Closing shall not be delayed and Seller may remedy any such condition after Closing. ARTICLE 10: JOINT COVENANTS --------------- Buyer and Seller hereby covenant and agree that between the date hereof and Closing: 10.1. Cooperation. Subject to express limitations contained elsewhere herein, each party (i) shall cooperate fully with one another in taking any reasonable actions (including without limitation, reasonable actions to obtain the required consent of any governmental instrumentality or any third party) necessary or helpful to accomplish the transactions contemplated by this Agreement, including but not limited to the prompt satisfaction of any condition to Closing set forth herein, and (ii) shall not take any action that conflicts with its obligations hereunder or that causes its representations and warranties to become untrue in any material respect. 10.2. Control of Stations. Buyer shall not, directly or indirectly, control, supervise or direct the operations of the Stations prior to Closing. Such operations, including complete control and supervision of all Station programs, employees and policies, shall be the sole responsibility of Seller. 10.3. Consents to Assignment. Seller shall request, and the parties shall use commercially reasonable efforts to obtain, (i) any third party consents necessary for the assignment of any Station Contract (which shall not require any payment to any such third party unless specifically required by such Station Contract, in which case such payment shall be paid equally by Seller and Buyer), and (ii) the execution of reasonable estoppel certificates by lessors under any Real Property Leases requiring consent to assignment. To the extent that any Station Contract may not be assigned without the consent of any third party, and such consent is not obtained prior to Closing, this Agreement and any assignment executed pursuant hereto shall not constitute an assignment thereof, but to the extent permitted by law shall constitute an equitable assignment by Seller and assumption by Buyer of Seller's rights and obligations under the applicable Station Contract, with Seller making available to Buyer the benefits thereof and Buyer performing the obligations thereunder on Seller's behalf. 10.4. Employee Matters. ----------------- (a) After Seller publicly announces this transaction and files this Agreement with the FCC, Buyer may interview (and offer employment upon Closing) to the Stations' exclusive employees and the shared employees of the Stations allocated to it under Section 10.4(c); provided that (i) such activity shall not interfere with the business of the Stations and (ii) Buyer is obligated to hire only those employees that are under employment contracts (and assume Seller's obligations and liabilities under such employment contracts) which are included in the Station Contracts. With respect to employees potentially to be hired by Buyer, to the extent permitted by law Seller shall provide access to its personnel records and such other information as may be reasonably requested prior to Closing. With respect to employees -13- 14 hired by Buyer ("Transferred Employees"), Seller shall be responsible for the payment of all compensation and accrued employee benefits payable by it until Closing and thereafter Buyer shall be responsible for all such obligations payable by it. Buyer shall cause all Transferred Employees to be eligible to participate in its "employee welfare benefit plans" (as defined in Section 3(1) of ERISA) and its "defined contribution plans" (as defined in Section 414(i) of the Code) to the extent Buyer's similarly-situated employees are generally eligible to participate; provided, however, that all Transferred Employees and their spouses and dependents shall be eligible for coverage immediately after Closing (and shall not be excluded from coverage under any employee welfare benefit plan that is a group health plan on account of any pre-existing condition, as long as such condition was covered under Buyer's group health plan) to the extent provided under such employee welfare benefit plans. For purposes of any length of service requirements, waiting periods, vesting periods or differential benefits based on length of service in any such employee welfare benefit plans for which Transferred Employees may be eligible after Closing, Buyer shall ensure, to the extent permitted by applicable law (including, without limitation, ERISA and the Code), that service with Seller shall be deemed to have been service with Buyer. No such service credit must be granted with respect to participation or eligibility in any employee defined contribution plan. In addition, Buyer shall ensure, to the extent permitted by applicable law (including, without limitation, ERISA and the Code), that Transferred Employees receive credit under any welfare benefit plan of Buyer for any deductibles or co-payments paid by Transferred Employees and their spouses and dependents for the current plan year under a plan maintained by Seller. Notwithstanding any other provision contained herein, Buyer shall grant credit for all unused sick leave accrued by Transferred Employees on the basis of their service during the current calendar year as employees of Seller. Notwithstanding any other provision contained herein, Buyer shall assume and discharge Seller's liabilities for the payment of all unused vacation leave accrued by Transferred Employees on the basis of their service as employees of Seller. As provided in Section 3.2, Buyer shall be entitled to a proration in its favor for any accrued vacation leave (but not accrued sick leave) assumed hereunder. (b) At such time as the Seller can represent to the Buyer as to the tax-qualified status of the 401(k) savings plan(s) in which Transferred Employees retain account balances with the Seller or its subsidiaries (the "Saving Plan(s)") and furnish to Buyer a favorable Internal Revenue Service determination letter as to the tax-qualified status of such Savings Plan(s) under Section 401(a) of the Code (or an opinion of counsel that the form of the Savings Plan(s) is so qualified), Buyer and Seller may, at Buyer's sole discretion after review of Seller's Plan(s), enter into a 401(k) plan asset transfer agreement pursuant to which Buyer shall establish a defined contribution plan (or cover Transferred Employees under an existing defined contribution plan sponsored by Buyer) for the benefit of Transferred Employees who were participants in the Savings Plan(s). (c) Seller shall promptly provide Buyer a list of the Stations' exclusive employees (those who perform services solely for the Stations) and shared employees (those who perform services for the Stations and other radio stations). The parties will cooperate to equitably allocate the Stations' shared employees (in each market in a manner consistent with the relative size of operations of the Stations in such market compared to Seller's affected -14- 15 stations (being those for which any shared employee provided services on the date of this Agreement) based upon relative operating income). Those exclusive and shared Station employees so allocated to Buyer to whom Buyer before Closing offers post-Closing employment (and does not rescind such offer) are referred to herein as "Designated Employees." During the period from the date of this Agreement until the date three months after Closing, Buyer shall not solicit or hire Seller's radio station employees in the markets in which the Stations are located (other than solicitation and hiring (for post-Closing employment) of Designated Employees) and Seller shall not solicit or hire Buyer's radio station employees in the markets in which the Stations are located or Designated Employees (other than to retain Designated Employees until Closing but not transfer them from out of the market), in either case for employment at a radio station in the markets in which the Stations are located. During the three month period thereafter, Seller shall not solicit or hire Buyer's Designated Employees. The parties' nonsolicitation and no-hire obligations hereunder shall not apply to new hires or any employees terminated without cause. 10.5. 1031 Exchange. At or prior to Closing, Seller may assign its rights under this Agreement (in whole or in part) to a qualified intermediary (as defined in Treasury regulation section 1.1031(k)-1(g)(4)) or similar entity or arrangement ("Qualified Intermediary"). Upon any such assignment, Seller shall promptly give written notice thereof to Buyer, and Buyer shall cooperate with the reasonable requests of Seller and any Qualified Intermediary in connection therewith. Without limiting the generality of the foregoing, if Seller gives notice of such assignment, Buyer shall (i) promptly provide Seller with written acknowledgment of such notice and (ii) at Closing, pay the Purchase Price (or any portion thereof designated by the Qualified Intermediary) to or on behalf of the Qualified Intermediary (which payment shall, to the extent thereof, satisfy the obligations of Buyer to make such payment hereunder). Seller's assignment to a Qualified Intermediary will not relieve Seller of any of its duties or obligations herein. Except for the obligations of Buyer set forth in this Section, Buyer shall not have any liability or obligation to Seller for the failure of the contemplated exchange to qualify as a like-kind exchange under Section 1031 of the Internal Revenue Code. 10.6. Trust. Notwithstanding anything in this Agreement to the contrary, Seller may at it option assign this Agreement (in whole or part) and assign and transfer the Station Assets (in whole or in part) to a trustee to hold and operate pursuant to a trust agreement, provided such trustee assumes Seller's duties and obligations hereunder with respect to the Station Assets held in such trust. ARTICLE 11: CONDITIONS OF CLOSING BY BUYER ------------------------------ The obligations of Buyer hereunder are, at its option, subject to satisfaction, at or prior to Closing, of each of the following conditions: 11.1. Representations, Warranties and Covenants. The representations and warranties of Seller made in this Agreement shall be true and correct in all material respects as of the Closing Date except for changes permitted or contemplated by the terms of this Agreement, and the covenants and agreements to be complied with and performed by Seller at or prior to -15- 16 Closing shall have been complied with or performed in all material respects. Buyer shall have received a certificate dated as of the Closing Date from Seller, executed by an authorized officer of Seller to the effect that the conditions set forth in this Section have been satisfied. 11.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if applicable, HSR Clearance, shall have been obtained, and no court or governmental order prohibiting Closing shall be in effect. ARTICLE 12: CONDITIONS OF CLOSING BY SELLER ------------------------------- The obligations of Seller hereunder are, at its option, subject to satisfaction, at or prior to Closing, of each of the following conditions: 12.1. Representations, Warranties and Covenants. The representations and warranties of Buyer made in this Agreement shall be true and correct in all material respects as of the Closing Date except for changes permitted or contemplated by the terms of this Agreement, and the covenants and agreements to be complied with and performed by Buyer at or prior to Closing shall have been complied with or performed in all material respects. Seller shall have received a certificate dated as of the Closing Date from Buyer, executed by an authorized officer of Buyer, to the effect that the conditions set forth in this Section have been satisfied. 12.2. Governmental Consents. The FCC Consent and DOJ Consent, and, if applicable, HSR Clearance, shall have been obtained, and no court or governmental order prohibiting Closing shall be in effect. 12.3. AMFM Closing. The closing under the AMFM Agreement shall have been consummated. ARTICLE 13: EXPENSES -------- 13.1. Expenses. Each party shall be solely responsible for all costs and expenses incurred by it in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement, except that (i) all recordation, transfer and documentary taxes, fees and charges, and any excise, sales or use taxes, applicable to the transfer of the Station Assets shall be paid equally by Seller and Buyer, (ii) all FCC filing fees shall be paid equally by Buyer and Seller, and (iii) all HSR Act filing fees and expenses shall be paid equally by Seller and Buyer. ARTICLE 14: DOCUMENTS TO BE DELIVERED AT CLOSING ------------------------------------ 14.1. Seller's Documents. At Closing, Seller shall deliver or cause to be delivered to Buyer: -16- 17 (i) certified copies of resolutions authorizing its execution, delivery and performance of this Agreement, including the consummation of the transactions contemplated hereby; (ii) the certificate described in Section 11.1; and (iii) such bills of sale, assignments, special warranty deeds, documents of title and other instruments of conveyance, assignment and transfer as may be necessary to convey, transfer and assign the Station Assets to Buyer, free and clear of Liens, except for Permitted Liens. 14.2. Buyer's Documents. At Closing, Buyer shall deliver or cause to be delivered to Seller: (i) the certified copies of resolutions authorizing its execution, delivery and performance of this Agreement, including the consummation of the transactions contemplated hereby; (ii) the certificate described in Section 12.1; and (iii) such documents and instruments of assumption as may be necessary to assume the Assumed Obligations; and (iv) the Purchase Price in accordance with Section 3.1 hereof. ARTICLE 15: SURVIVAL; INDEMNIFICATION. -------------------------- 15.1. Survival. The covenants, agreements, representations and warranties in this Agreement shall survive Closing for a period of twelve (12) months from the Closing Date whereupon they shall expire and be of no further force or effect, except those under (i) this Article 15 that relate to Damages (defined below) for which written notice is given by the indemnified party to the indemnifying party prior to the expiration, which shall survive until resolved and (ii) Sections 2.1 (Assumed Obligations), 3.2 (Adjustments), 3.3 (Allocation), 8.1 (Accounts Receivable), 13.1 (Expenses) and 17.1 (Casualty Loss), and indemnification obligations with respect to such provisions, which shall survive until performed. 15.2. Indemnification. (a) From and after the Closing, Seller shall defend, indemnify and hold harmless Buyer from and against any and all losses, costs, damages, actions, suits, claims, demands, judgments, liabilities and expenses, including reasonable attorneys' fees and expenses ("Damages") incurred by Buyer arising out of or resulting from: (i) any breach or default by Seller under this Agreement or any Seller Ancillary Agreements; (ii) the Retained Obligations; or (iii) the business or operation of the Stations before Closing; provided, however, that (i) Seller shall have no liability to Buyer hereunder until Buyer's aggregate Damages exceed $500,000 and, once exceeded, Seller's liability shall be for all such Damages -17- 18 (except as provided in the following clause), and (ii) the maximum liability of Seller hereunder shall be an amount equal to 20% of the Purchase Price. (b) From and after the Closing, Buyer shall defend, indemnify and hold harmless Seller from and against any and all Damages incurred by Seller arising out of or resulting from: (i) any breach or default by Buyer under this Agreement or any Buyer Ancillary Agreements; (ii) the Assumed Obligations; or (iii) the business or operation of the Stations after Closing. 15.3. Procedures. The indemnified party shall give prompt written notice to the indemnifying party of any demand, suit, claim or assertion of liability by third parties or other circumstances that could give rise to an indemnification obligation hereunder against the indemnifying party (a "Claim"), but a failure to give such notice or delaying such notice shall not affect the indemnified party's right to indemnification and the indemnifying party's obligation to indemnify as set forth in this Agreement, except to the extent the indemnifying party's ability to remedy, contest, defend or settle with respect to such Claim is thereby prejudiced. The obligations and liabilities of the parties with respect to any Claim shall be subject to the following additional terms and conditions: (a) The indemnifying party shall have the right to undertake, by counsel or other representatives of its own choosing, the defense or opposition to such Claim. (b) In the event that the indemnifying party shall elect not to undertake such defense or opposition, or, within twenty (20) days after written notice (which shall include sufficient description of background information explaining the basis for such Claim) of any such Claim from the indemnified party, the indemnifying party shall fail to undertake to defend or oppose, the indemnified party (upon further written notice to the indemnifying party) shall have the right to undertake the defense, opposition, compromise or settlement of such Claim, by counsel or other representatives of its own choosing, on behalf of and for the account and risk of the indemnifying party (subject to the right of the indemnifying party to assume defense of or opposition to such Claim at any time prior to settlement, compromise or final determination thereof). (c) Anything herein to the contrary notwithstanding: (i) the indemnified party shall have the right, at its own cost and expense, to participate in the defense, opposition, compromise or settlement of the Claim; (ii) the indemnifying party shall not, without the indemnified party's written consent, settle or compromise any Claim or consent to entry of any judgment which does not include as an unconditional term thereof the giving by the claimant or the plaintiff to the indemnified party of a release from all liability in respect of such Claim; and (iii) in the event that the indemnifying party undertakes defense of or opposition to any Claim, the indemnified party, by counsel or other representative of its own choosing and at its sole cost and expense, shall have the right to consult with the indemnifying party and its counsel or other representatives concerning such Claim and the indemnifying party and the indemnified party and their respective counsel or other representatives shall cooperate in good faith with respect to such Claim. -18- 19 (d) All claims not disputed shall be paid by the indemnifying party within thirty (30) days after receiving notice of the Claim. "Disputed Claims" shall mean claims for Damages by an indemnified party which the indemnifying party objects to in writing within thirty (30) days after receiving notice of the Claim. In the event there is a Disputed Claim with respect to any Damages, the indemnifying party shall be required to pay the indemnified party the amount of such Damages for which the indemnifying party has, pursuant to a final determination, been found liable within ten (10) days after there is a final determination with respect to such Disputed Claim. A final determination of a Disputed Claim shall be (i) a judgment of any court determining the validity of a Disputed Claim, if no appeal is pending from such judgment and if the time to appeal therefrom has elapsed; (ii) an award of any arbitration determining the validity of such disputed claim, if there is not pending any motion to set aside such award and if the time within which to move to set aside such award has elapsed; (iii) a written termination of the dispute with respect to such claim signed by the parties thereto or their attorneys; (iv) a written acknowledgment of the indemnifying party that it no longer disputes the validity of such claim; or (v) such other evidence of final determination of a disputed claim as shall be acceptable to the parties. ARTICLE 16: TERMINATION ----------- 16.1. Termination. This Agreement may be terminated at any time prior to Closing as follows: (a) by mutual written consent of Buyer and Seller; (b) by written notice of Buyer to Seller if Seller (i) does not satisfy the conditions or perform the obligations to be satisfied or performed by it on the Closing Date; or (ii) otherwise breaches in any material respect any of its representations or warranties or defaults in any material respect in the performance of any of its covenants or agreements herein contained and such breach or default is not cured within the Cure Period (defined below); (c) by written notice of Seller to Buyer if Buyer (i) does not satisfy the conditions or perform the obligations to be satisfied or performed by it on the Closing Date; or (ii) otherwise breaches in any material respect any of its representations or warranties or defaults in any material respect in the performance of any of its covenants or agreements herein contained and such breach or default is not cured within the Cure Period (defined below); (d) by written notice of Buyer to Seller, or by Seller to Buyer, if the FCC denies the FCC Application; (e) by written notice of Seller to Buyer if the Closing shall not have been consummated on or before the date four months after the date of this Agreement and Seller determines in good faith that FCC Consent or HSR Clearance will not be obtained on or before March 31, 2001; -19- 20 (f) by written notice of Buyer to Seller if the Closing shall not have been consummated on or before the date nine months after the date of this Agreement and Buyer determines in good faith that FCC Consent or HSR Clearance will not be obtained on or before March 31, 2001; (g) by written notice of Seller to Buyer or Buyer to Seller if the Closing is not consummated on or before March 31, 2001; or (h) by written notice of Seller to Buyer if the AMFM Agreement is terminated or expires. The term "Cure Period" as used herein means a period commencing the date Buyer or Seller receives from the other written notice of breach or default hereunder and continuing until the earlier of (i) thirty (30) days thereafter or (ii) the Closing Date; provided, however, that if the breach or default cannot reasonably be cured within such period but can be cured before the Closing Date, and if diligent efforts to cure promptly commence, then the Cure Period shall continue as long as such diligent efforts to cure continue, but not beyond the Closing Date. Except as set forth below, the termination of this Agreement shall not relieve any party of any liability for breach or default under this Agreement prior to the date of termination. Notwithstanding anything contained herein to the contrary, Section 13.1 shall survive any termination of this Agreement. 16.2. Remedies. The parties recognize that if either party refuses to consummate the Closing pursuant to the provisions of this Agreement or either party otherwise breaches or defaults such that the Closing has not occurred ("Breaching Party"), monetary damages alone will not be adequate to compensate the non-breaching party ("Non-Breaching Party") for its injury. Such Non-Breaching Party shall therefore be entitled to obtain specific performance of the terms of this Agreement (without being required to prove actual damages, post bond or furnish other security) in lieu of, and not in addition to, any other remedies, including but not limited to monetary damages, that may be available to it; provided however, that Seller may elect to recover liquidated damages in lieu of obtaining specific performance. If any action is brought by the Non-Breaching Party to enforce this Agreement, the Breaching Party shall waive the defense that there is an adequate remedy at law. In the event of a default by the Breaching Party which results in the filing of a lawsuit for damages, specific performance, or other remedy, the Non-Breaching Party shall be entitled to reimbursement by the Breaching Party of reasonable legal fees and expenses incurred by the Non-Breaching Party, provided that the Non-Breaching Party is successful in such lawsuit. 16.3. Liquidated Damages. If Seller terminates this Agreement pursuant to Section 16.1(c)(i) due to Buyer's failure to consummate the Closing on the Closing Date or if this Agreement is otherwise terminated by Seller pursuant to Section 16.1(c), then Buyer shall pay Seller as liquidated damages an amount equal to 20% of the Purchase Price. If elected by and paid to Seller, such liquidated damage payment shall be Seller's sole remedy hereunder. It is understood and agreed that such liquidated damages amount represents Buyer's and Seller's reasonable estimate of actual damages and does not constitute a penalty. -20- 21 ARTICLE 17: MISCELLANEOUS PROVISIONS ------------------------ 17.1. Casualty Loss. In the event any loss or damage of the Station Assets exists on the Closing Date, Buyer and Seller shall consummate the Closing and after Closing the parties shall cooperate to repair or replace (as appropriate under the circumstances) the lost or damaged items at Seller's reasonable expense. 17.2. Further Assurances. After the Closing, Seller shall from time to time, at the request of and without further cost or expense to Buyer, execute and deliver such other instruments of conveyance and transfer and take such other actions as may reasonably be requested in order to more effectively consummate the transactions contemplated hereby to vest in Buyer good title to the Station Assets, and Buyer shall from time to time, at the request of and without further cost or expense to Seller, execute and deliver such other instruments and take such other actions as may reasonably be requested in order more effectively to relieve Seller of any obligations being assumed by Buyer hereunder. 17.3. Assignment. Except as set forth in Sections 10.5 (1031 Exchange) and 10.6 (Trust), neither party may assign this Agreement without the prior written consent of the other party hereto, provided that Buyer may assign its right to acquire one or more Stations to one or more Affiliates of Buyer if such assignment does not delay the governmental consents contemplated by Article 5 (or otherwise delay Closing), the representations made by it under this Agreement are true with respect to the assignee(s), the assigning party gives Seller prior written notice thereof, and the assignee(s) deliver to Seller a written assumption hereof. No such assignment shall relieve Buyer of any obligation or liability under this Agreement. With respect to any permitted assignment, the parties shall take all such actions as are reasonably necessary to effectuate such assignment, including but not limited to cooperating in any appropriate filings with the FCC or other governmental authorities. All covenants, agreements, statements, representations, warranties and indemnities in this Agreement by and on behalf of any of the parties hereto shall bind and inure to the benefit of their respective successors and permitted assigns of the parties hereto. 17.4. Amendments. No amendment, waiver of compliance with any provision or condition hereof or consent pursuant to this Agreement shall be effective unless evidenced by an instrument in writing signed by the party against whom enforcement of any waiver, amendment, change, extension or discharge is sought. 17.5. Headings; Affiliates. The headings set forth in this Agreement are for convenience only and will not control or affect the meaning or construction of the provisions of this Agreement. As used herein, the term "Affiliate" means an entity controlling, controlled by or under common control with any other entity. 17.6. Governing Law. The construction and performance of this Agreement shall be governed by the laws of the State of New York without giving effect to the choice of law -21- 22 provisions thereof. Each party irrevocably waives all right to trial by jury in any legal proceeding arising out of this Agreement. 17.7. Notices. Any notice, demand or request required or permitted to be given under the provisions of this Agreement shall be in writing, including by facsimile, and shall be deemed to have been received on the date of personal delivery, on the third day after deposit in the U.S. mail if mailed by registered or certified mail, postage prepaid and return receipt requested, on the day after delivery to a nationally recognized overnight courier service if sent by an overnight delivery service for next morning delivery or when delivered by facsimile transmission, and shall be addressed as follows (or to such other address as any party may request by written notice): if to Seller: c/o Clear Channel Broadcasting, Inc. 200 Concord Plaza, Suite 600 San Antonio, Texas 78216 Attention: President Facsimile: (210) 822-2299 with a copy (which shall not constitute notice) to: Wiley, Rein & Fielding 1776 K Street, N.W. Washington, D.C. 20006 Attention: Richard J. Bodorff, Esq. Facsimile: (202) 719-7049 if to Buyer: Infinity Broadcasting Corporation 40 West 57th Street 14th Floor New York, NY 10019 Attention: Mr. Farid Suleman Fax: (212) 314-9336 with a copy (which shall not constitute notice) to: Leventhal, Senter & Lerman, P.L.L.C. 2000 K Street, N.W., Suite 600 Washington, D.C. 20006 Attn: Steven A. Lerman, Esq. Fax: (202) 293-7783 Stephen A. Hildebrandt, Esq. Infinity Broadcasting Corporation 10220 River Road, Suite 305 Potomac, MD 20854 Fax: 301-983-6439 -22- 23 17.8. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original and all of which together will constitute one and the same instrument. 17.9. No Third Party Beneficiaries. Nothing herein expressed or implied is intended or shall be construed to confer upon or give to any person or entity other than the parties hereto and their successors or permitted assigns, any rights or remedies under or by reason of this Agreement. Without limiting the foregoing, no third party rights are created by the provisions of Section 10.4 or Article 15. 17.10. Severability. The parties agree that if one or more provisions contained in this Agreement shall be deemed or held to be invalid, illegal or unenforceable in any respect under any applicable law, this Agreement shall be construed with the invalid, illegal or unenforceable provision deleted, and the validity, legality and enforceability of the remaining provisions contained herein shall not be affected or impaired thereby. 17.11. Entire Agreement. This Agreement embodies the entire agreement and understanding of the parties hereto and supersedes any and all prior agreements, arrangements and understandings relating to the matters provided for herein. This Agreement does not supersede any confidentiality agreement relating to the Stations other than any non-solicitation provision contained therein. [SIGNATURE PAGE FOLLOWS] -23- 24 SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ------------------------------------------ IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above. BUYER: CBS RADIO, INC. By: /s/ FARID SULEMAN ----------------------------------- Name: Farid Suleman Title: Executive Vice President - Chief Financial Officer SELLER: CLEAR CHANNEL BROADCASTING, INC. AMFM SAN DIEGO, INC. CLEAR CHANNEL BROADCASTING LICENSES, INC. By: /s/ MARK P. MAYS By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- ----------------------------------- Name: Mark P. Mays Name: William S. Banowsky, Jr. Title: President Title: Executive Vice President CAPSTAR TX LIMITED PARTNERSHIP AMFM HOUSTON, INC. By: /s/ WILLIAM S. BANOWSKY, JR. By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- ----------------------------------- Name: William S. Banowsky, Jr. Name: William S. Banowsky, Jr. Title: Executive Vice President Title: Executive Vice President AMFM OHIO, INC. AMFM RADIO LICENSES, LLC By: /s/ WILLIAM S. BANOWSKY, JR. By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- ----------------------------------- Name: William S. Banowsky, Jr. Name: William S. Banowsky, Jr. Title: Executive Vice President Title: Executive Vice President CLEVELAND RADIO LICENSES LLC ZEBRA BROADCASTING CORPORATION By: /s/ WILLIAM S. BANOWSKY, JR. By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- ----------------------------------- Name: William S. Banowsky, Jr. Name: William S. Banowsky, Jr. Title: Executive Vice President Title: Executive Vice President 25 SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ------------------------------------------ (CONTINUED) SELLER: CAPSTAR RADIO OPERATING COMPANY By: /s/ WILLIAM S. BANOWSKY, JR. ----------------------------------- Name: William S. Banowsky, Jr. Title: Executive Vice President 26 Schedules - --------- 1.1(a) - FCC Licenses 1.1(b) - Tangible Personal Property 1.1(c) - Station Contracts 1.1(d) - Intangible Property 1.1(f) - Real Property 1.2(h) - Excluded Assets Exhibit - ------- A - Form of Lease EX-21.1 6 SUBSIDIARIES 1 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT Subsidiary companies of the Registrant as of March 1, 2000 are listed below. With respect to the companies named, all voting securities are owned directly or indirectly by the Registrant, except where otherwise indicated.
INCORPORATED OWNED BY UNDER IMMEDIATE NAME LAWS OF PARENT - ----------------------------------------------------------------------------------------------- Infinity Broadcasting Corporation Delaware 65.20 Infinity Media Corporation(1) Delaware 100.00 TDI Worldwide, Inc.(2) Delaware 100.00 TDI Metro Limited Ireland 100.00 Metro Poster Advertising Ltd. Ireland 100.00 Roadshow Advertising Ltd. Ireland 100.00 TDI Holdings Limited(3) UK 100.00 LDI Limited UK 100.00 TDI Advertising Limited(4) UK 100.00 TDI Mail Holdings Limited(5) Northern Ireland 75.00 Infinity Outdoor, Inc.(6) Delaware 100.00 Mediacom, Inc. Canada 100.00 Outdoor Systems Mexico, S.A. de C.V.(7) Mexico 100.00 Spark Network Services, Inc. Delaware 100.00 CBS Radio Inc.(8) Delaware 100.00 Radio Data Group, Inc. Virginia 56.00 - -----------------------------------------------------------------------------------------------
(1) Infinity Media Corporation is also the parent company of 54 wholly-owned subsidiaries which consist primarily of radio stations operations, all of which are incorporated in the United States. (2) TDI Worldwide, Inc. is also the parent company of six wholly-owned outdoor and transit advertising companies and franchises, all of which are incorporated in the United States. (3) TDI Holdings Limited is also the parent company of five wholly-owned subsidiaries which consist primarily of outdoor and transit advertising operations, all of which are incorporated in the Netherlands. (4) TDI Advertising Limited is also the parent company of six wholly-owned outdoor and transit advertising companies and franchises, all of which are incorporated in the United Kingdom. (5) TDI Mail Holdings Limited is also the parent company of three wholly-owned outdoor and transit advertising companies, of which 2 are incorporated in the United Kingdom and one in the U.S. Virgin Islands. (6) Infinity Outdoor, Inc. is also the parent company of 16 wholly-owned outdoor advertising companies, all of which are incorporated in the United States. (7) Outdoor Systems Mexico, S.A. de C.V. is also the parent company of three wholly-owned outdoor advertising companies, all of which are incorporated in Mexico. (8) CBS Radio Inc. is also the parent company of 15 wholly-owned subsidiaries, which consist primarily of radio station operations, all of which are incorporated in the United States. EX-23.A 7 CONSENT OF KPMG 1 EXHIBIT 23(A) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in each prospectus constituting part of the Registration Statements on Form S-8 (No. 333-74387, 333-75837, 333-75841, 333-75847, 333-89403 and 333-88363) of Infinity Broadcasting Corporation of our report dated January 25, 2000, except as to Note 17, which is as of March 21, 2000, appearing on page 26 of this Form 10-K. We also consent to the incorporation by reference of our report on the financial statement schedule, which appears on page 51 of this Form 10-K. /s/ KPMG LLP KPMG LLP New York, New York March 27, 2000 EX-24.1 8 POWERS OF ATTORNEY 1 Exhibit 24 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ George H. Conrades ---------------------- 2 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Bruce S. Gordon ------------------- 3 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ William S. Levine --------------------- 4 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Arturo R. Moreno -------------------- 5 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Mel Karmazin ---------------- 6 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Richard R. Pivirotto ------------------------- 7 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Jeffrey Sherman ------------------- 8 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Paula Stern --------------- 9 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Farid Suleman ----------------- 10 POWER OF ATTORNEY -------------------- KNOW ALL MEN BY THESE PRESENTS that the undersigned director and/or officer of INFINITY BROADCASTING CORPORATION, a Delaware corporation (the "Corporation"), which is about to file with the Securities and Exchange Commission, Washington, D.C., under the provisions of the Securities Exchange Act of 1934, as amended, its Annual Report on Form 10-K, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the fiscal year ended December 31, 1999, hereby constitutes and appoints Mel Karmazin and Farid Suleman, his/her true and lawful attorneys-in-fact and agents, and each of them, with full power to act without the others, for him/her and in his/her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K and any and all amendments thereto, with power where appropriate to affix the corporate seal of said Corporation thereto and to attest said seal, and to file said Form 10-K and any and all other documents in connection therewith, with the Securities and Exchange Commission, hereby granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform any and all acts and things requisite and necessary to be done in and about the premises as fully to all intents and purposes as he/she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has duly signed this Power of Attorney this 27th day of March, 2000. /s/ Robert D. Walter -------------------- EX-27.1 9 FINANCIAL DATA SCHEDULE
5 1,000 12-MOS 12-MOS 12-MOS DEC-31-1999 DEC-31-1998 DEC-31-1997 JAN-01-1999 JAN-01-1998 JAN-01-1997 DEC-31-1999 DEC-31-1998 DEC-31-1997 71,636 497,701 22,522 0 0 0 797,490 488,429 350,000 48,868 27,463 15,086 0 0 0 973,121 1,017,514 399,025 2,204,812 310,421 174,094 113,077 73,837 55,623 19,327,455 10,798,243 7,074,103 451,431 231,940 151,819 1,945,270 524,608 2,092 0 0 0 0 0 0 10,907 8,553 0 15,580,135 8,849,474 6,397,388 19,327,455 10,798,243 7,074,103 2,449,132 1,893,104 1,480,091 2,449,132 1,893,104 1,480,091 1,383,010 1,101,562 910,682 1,383,010 1,101,562 910,682 324,956 249,652 197,135 13,590 14,365 10,382 15,540 63,773 3,645 726,110 483,582 374,607 349,146 248,776 196,978 376,964 234,806 196,978 0 0 0 0 0 0 0 0 0 376,964 234,806 177,629 0.44 0.33 0.25 0.43 0.33 0.25
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