<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 1999
Cox Radio, Inc.
------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
--------------------
(State or other jurisdiction of incorporation or organization)
1-12187 58-1620022
------- ----------
(Commission File Number) (I.R.S. Employer Identification Number)
1400 Lake Hearn Drive
Atlanta, Georgia 30319
---------------------- ------
(Address of principal executive offices) (Zip Code)
(404) 843-5000
-----------------------
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 5. OTHER EVENTS.
In August 1999, Cox Radio, Inc. agreed to acquire the plant and
equipment, intangible assets and FCC broadcast licenses of WEDR-FM in Miami,
Florida; WFOX-FM in Atlanta, Georgia; WFYV-FM, WAPE-FM, WBWL-AM, WKQL-FM,
WMXQ-FM and WOKV-AM in Jacksonville, Florida; WEFX-FM, WNLK-AM, WKHL-FM and
WSTC-AM in Stamford/Norwalk, Connecticut; and WPLR-FM (collectively, the "AMFM
Stations") and local sales rights at WYBC-FM in New Haven, Connecticut in
exchange for the plant and equipment, intangible assets and FCC broadcast
licenses of KFI-AM and KOST-FM in Los Angeles, California and approximately $3
million in cash. In October 1999, Cox Radio began operating the AMFM Stations to
be acquired pursuant to a time brokerage agreement and WYBC-FM pursuant to a
joint sales agreement. Pending certain regulatory approvals, including obtaining
a temporary waiver of the FCC's newspaper-radio cross-ownership rule for the
acquisition of WFOX-FM in Atlanta, Cox Radio anticipates consummating this
transaction in the second quarter of 2000.
In March 2000, Cox Radio entered into an agreement to acquire the plant
and equipment, intangible assets and FCC broadcast licenses of KKBQ-FM, KLDE-FM,
and KKTL-FM serving the Houston, Texas market, and WKHK-FM, WMXB-FM, WKLR-FM and
WTVR-AM serving the Richmond, Virginia market (collectively, the "Clear Channel
Radio Stations") for consideration of approximately $380 million. Pending
receipt of all necessary legal and regulatory approvals, Cox Radio anticipates
closing this transaction during the second half of 2000.
Also in March 2000, Cox Radio entered into an agreement to acquire the
outstanding capital stock of Marlin Broadcasting, Inc. which owns radio stations
WTMI-FM serving Miami, Florida, WCCC-FM and WCCC-AM serving Hartford,
Connecticut and WBOQ-FM serving Gloucester, Massachusetts, for approximately
$125 million. As part of this transaction, Cox Radio will sell certain net
assets of Marlin Broadcasting, comprising WCCC-FM, WCCC-AM and WBOQ-FM, to
certain principals of Marlin Broadcasting for approximately $25 million. Pending
receipt of all necessary legal and regulatory approvals, Cox Radio anticipates
closing these transactions during the second quarter of 2000.
This report is being filed to provide certain audited financial
information for the AMFM Radio Stations and for Marlin Broadcasting, Inc. and to
provide an unaudited pro forma combined balance sheet as of December 31, 1999 as
if the transactions referred to above had been consummated as of December 31,
1999 and an unaudited pro forma combined statement of operations for the year
ended December 31, 1999 as if such transactions had been consummated on January
1, 1999.
-2-
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of businesses to be acquired
1. Combined Statements of Assets to be Acquired of the AMFM Radio
Stations (Radio Stations owned by AMFM Inc.) as of December
31, 1999 and 1998 and Combined Statements of Revenues and
Direct Operating Expenses (while under ownership of AMFM Inc.)
during the years ended December 31, 1999 and 1998.
2. Combined Statements of Revenues and Direct Expenses of
WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM,
WKHL-FM, WSTC-AM, WEFX-FM and WNLK-AM (while under ownership
of Capstar Broadcasting Corporation) during the years ended
December 31, 1999 and 1998.
3. Financial Statements of Marlin Broadcasting, Inc. as of and
for the years ended December 31, 1999 and 1998.
(b) Pro forma financial information
1. Unaudited Pro Forma Combined Balance Sheet for Cox Radio, Inc.
as of December 31, 1999 giving effect to the acquisition of
the plant and equipment, intangible assets and FCC broadcast
licenses of the AMFM Radio Stations and the Clear Channel
Radio Stations, the exchange of plant and equipment,
intangible assets and FCC broadcast licenses of KFI-AM and
KOST-FM and the Marlin transaction, as if such transactions
had been consummated as of December 31, 1999. 2. Unaudited Pro
Forma Combined Statement of Operations for Cox Radio, Inc. for
the year ended December 31, 1999 giving effect to the
acquisition of the plant and equipment, intangible assets and
FCC broadcast licenses of the AMFM Radio Stations and the
Clear Channel Radio Stations, the exchange of plant and
equipment, intangible assets and FCC broadcast licenses of
KFI-AM and KOST-FM and the Marlin transaction, as if such
transactions had been consummated as of January 1, 1999.
-3-
<PAGE> 4
(c) Exhibits
2.1 Asset Exchange Agreement by and among Cox Radio, Inc.
and AMFM Inc., dated as of August 30, 1999
(incorporated by reference to exhibit 99.1 to Cox
Radio's report on Form 8-K dated August 30, 1999 and
filed September 17, 1999).
2.2 Merger Agreement by and Among Marlin Broadcasting,
Inc., Cox Radio, Inc., Cox Miami Merger Sub, Inc. and
Marlin Broadcasting, LLC relating radio stations
WTMI-FM, Miami, Florida, WCCC-AM/FM, Hartford
Connecticut and WBOQ-FM, Gloucester, Massachusetts,
dated as of March 14, 2000.
2.3 Asset Purchase Agreement, dated as of March 3, 2000,
by and among Clear Channel Broadcasting, Inc., Clear
Channel Broadcasting Licenses, Inc., Citicasters Co.,
Capstar Radio Operating Company, Capstar TX Limited
Partnership, AMFM Texas Broadcasting, L.P., AMFM
Texas Licenses Limited Partnership and Cox Radio,
Inc., CXR Holdings, Inc.
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Deloitte & Touche LLP
23.3 Consent of Ernst & Young LLP
-4-
<PAGE> 5
INDEX TO FINANCIAL STATEMENTS
AMFM, Inc.
<TABLE>
<S> <C>
Independent Auditors' Report.................................................................................F-2
WEDR-FM, WFOX-FM, WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM,
WKHL-FM, WSTC-AM, WEFX-FM and WNLK-AM (radio stations owned by AMFM Inc.) - Combined Statements
of Assets to be Acquired as of December 31, 1999 and 1998....................................................F-3
WEDR-FM, WFOX-FM, WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM,
WKHL-FM, WSTC-AM, WEFX-FM and WNLK-AM (while under ownership of AMFM Inc.) - Combined Statements
of Revenues and Direct Operating Expenses during the years ended
December 31, 1999 and 1998...................................................................................F-4
Notes to Combined Financial Statements (while under ownership of AMFM Inc.)..................................F-5
Independent Auditors' Report.................................................................................F-10
WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM, WKHL-FM, WSTC-AM,
WEFX-FM and WNLK-AM (while under ownership of Capstar Broadcasting Corporation)
- - Combined Statements of Revenues and Direct Operating Expenses during the years
ended December 31, 1999 and 1998.............................................................................F-11
Notes to Combined Financial Statements (while under ownership of
Capstar Broadcasting Corporation)............................................................................F-12
Marlin Broadcasting, Inc.
Report of Independent Auditors...............................................................................F-14
Balance Sheets as of December 31, 1999 and 1998..............................................................F-15
Statements of Operations for the years ended December 31, 1999 and 1998 .....................................F-17
Statements of Stockholders' Equity for the years ended December 31, 1999 and 1998............................F-18
Statements of Cash Flows for the years ended December 31, 1999 and 1998......................................F-19
Notes to Financial Statements................................................................................F-21
Unaudited Pro Forma Financial Information....................................................................F-30
Unaudited Pro Forma Combined Balance Sheet of Cox Radio, Inc. as of
December 31, 1999............................................................................................F-32
Unaudited Pro Forma Combined Statement of Operations of Cox Radio, Inc.
for the year ended December 31, 1999.........................................................................F-36
</TABLE>
F-1
<PAGE> 6
INDEPENDENT AUDITORS' REPORT
The Board of Directors
AMFM Inc.
We have audited the accompanying combined statements of assets to be acquired as
of December 31, 1999 and 1998 and the related combined statements of revenues
and direct operating expenses of WEDR-FM Miami, Florida; WFOX-FM Atlanta,
Georgia; WAPE-FM Jacksonville, Florida; WFYV-FM Jacksonville, Florida; WKQL-FM
Jacksonville, Florida; WMXQ-FM Jacksonville, Florida; WOKV-AM Jacksonville,
Florida; WBWL-AM Jacksonville, Florida; WPLR-FM New Haven, Connecticut; WKHL-FM
Stamford-Norwalk, Connecticut; WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM
Stamford-Norwalk, Connecticut; and WNLK-AM Stamford-Norwalk, Connecticut
(collectively referred to as the "Radio Stations" ) while under ownership of
AMFM Inc. during the years ended December 31, 1999 and 1998. These financial
statements are the responsibility of the Radio Stations' management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
The accompanying combined financial statements reflect the assets to be acquired
and the revenues and direct operating expenses attributable to the Radio
Stations as described in Note 1 and are not intended to be a complete
presentation of the assets or revenues and expenses of the Radio Stations.
In our opinion, the combined financial statements present fairly, in all
material respects, the assets to be acquired of the Radio Stations as of
December 31, 1999 and 1998, and the revenues and direct operating expenses of
the Radio Stations while under ownership of AMFM Inc. as described in Note 1
during the years ended December 31, 1999 and 1998, in conformity with accounting
principles generally accepted in the United States of America.
Atlanta, Georgia
March 31, 2000
F-2
<PAGE> 7
WEDR-FM, WFOX-FM, WAPE-FM, WFYV-FM, WKQL-FM,
WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM,
WKHL-FM, WSTC-AM, WEFX-FM AND WNLK-AM
(RADIO STATIONS OWNED BY AMFM INC.)
COMBINED STATEMENTS OF ASSETS TO BE ACQUIRED
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
---------- ----------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Property and equipment, net............. $ 16,126 $ 5,993
Intangible assets, net.................. 346,799 125,469
---------- ----------
Total......................... $ 362,925 $ 131,462
========== ==========
</TABLE>
See notes to combined financial statements.
F-3
<PAGE> 8
WEDR-FM, WFOX-FM, WAPE-FM, WFYV-FM, WKQL-FM,
WMXQ-FM, WOKV-AM, WBWL-AM, WPLR-FM,
WKHL-FM, WSTC-AM, WEFX-FM AND WNLK-AM
(WHILE UNDER OWNERSHIP OF AMFM INC.)
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
DURING THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revenues:
Gross revenues ........................... $ 33,298 $ 26,620
Less: Agency commissions ................. (3,946) (3,294)
-------- --------
Total net revenues ................... 29,352 23,326
Direct operating expenses:
Programming, technical and news .......... 4,270 2,909
Selling, promotional, general
and administrative ...................... 9,281 7,038
Depreciation and amortization ............ 17,915 10,117
-------- --------
Total direct operating expenses ...... 31,466 20,064
-------- --------
Excess (Deficiency) of net revenues over
direct operating expenses ............... $ (2,114) $ 3,262
======== ========
</TABLE>
See notes to the combined financial statements.
F-4
<PAGE> 9
WEDR-FM, WFOX-FM, WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM,
WBWL-AM, WPLR-FM, WKHL-FM, WSTC-AM, WEFX-FM AND WNLK-AM
(WHILE UNDER OWNERSHIP OF AMFM INC.)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying combined financial statements include certain accounts
of WEDR-FM Miami, Florida; WFOX-FM Atlanta, Georgia; WAPE-FM Jacksonville,
Florida; WFYV-FM Jacksonville, Florida; WKQL-FM Jacksonville, Florida; WMXQ-FM
Jacksonville, Florida; WOKV-AM Jacksonville, Florida; WBWL-AM Jacksonville,
Florida; WPLR-FM New Haven, Connecticut; WKHL-FM Stamford-Norwalk, Connecticut;
WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM Stamford-Norwalk, Connecticut;
and WNLK-AM Stamford-Norwalk, Connecticut (collectively referred to as the
"Radio Stations"), while under the ownership of AMFM Inc. (formerly Chancellor
Media Corporation) (the "Company") as of and during the years presented.
The combined statements of assets to be acquired and combined
statements of revenues and direct operating expenses have been prepared in
accordance with generally accepted accounting principles and were derived from
the historical accounting records of the Radio Stations. Significant
intercompany balances and transactions have been eliminated in combination.
The accompanying combined statements of assets to be acquired include
the property and equipment and intangible assets of the Radio Stations to be
acquired by Cox Radio, Inc (see Note 7). These statements do not include cash,
accounts receivable, prepaid or other assets, accounts payable, accrued expenses
or other liabilities. The combined statements of revenues and direct operating
expenses include the revenues and expenses directly attributable to the Radio
Stations. These statements do not include corporate overhead costs, interest
expense or income taxes.
Certain expenses reflect corporate allocations from AMFM Inc. These
expenses include expenses for medical, property, workers compensation and other
insurance coverages. Expense allocations are based on medical coverage
selection, property value, and headcount for the individual stations using
corporate insurance rates. Although such allocations are included in the
accompanying statements of revenue and direct operating expenses, the Radio
Stations' expense for these allocations was not material for the periods
presented. Management believes that these allocations were made on a reasonable
basis. However, the allocations are not necessarily indicative of the level of
expenses that might have been incurred had the Radio Stations contracted
directly with third parties. Management has not made a study or any attempt to
obtain quotes from third parties to determine what the cost of obtaining such
services from third parties would have been.
Complete combined financial statements, including historical balance
sheets and statements of cash flows, were not prepared as the Company has not
segregated indirect corporate operating cost information or related assets and
liabilities in its accounting records. The Radio Stations were not accounted for
as separate entities.
F-5
<PAGE> 10
The accompanying combined statements of revenues and direct operating
expenses for the years ended December 31, 1999 and 1998 include the combined
operations of the Radio Stations for periods of ownership by the Company as
follows:
<TABLE>
<CAPTION>
STATION 1999 1998
- -------------- ----------------------------------- ------------------------------------
<S> <C> <C>
WEDR-FM January 1, 1999 - December 31, 1999 January 1, 1998 - December 31, 1998
WFOX-FM January 1, 1999 - December 31, 1999 January 1, 1998 - December 31, 1998
WAPE-FM July 13, 1999 - December 31, 1999
WFYV-FM July 13, 1999 - December 31, 1999
WKQL-FM July 13, 1999 - December 31, 1999
WMXQ-FM July 13, 1999 - December 31, 1999
WOKV-AM July 13, 1999 - December 31, 1999
WBWL-AM July 13, 1999 - December 31, 1999
WPLR-FM July 13, 1999 - December 31, 1999
WKHL-FM July 13, 1999 - December 31, 1999
WSTC-AM July 13, 1999 - December 31, 1999
WEFX-FM July 13, 1999 - December 31, 1999
WNLK-AM July 13, 1999 - December 31, 1999
</TABLE>
On July 13, 1999, the stockholders of Chancellor Media Corporation and
Capstar Broadcasting Corporation ("Capstar") voted to approve the merger of the
two companies (the "Capstar Merger"). Concurrent with the stockholders' approval
of the merger, the stockholders also voted to re-name the new company AMFM Inc.
The Radio Stations, except for WFOX-FM and WEDR-FM, were acquired by the Company
as a result of the Capstar Merger. The Capstar Merger was accounted for using
the purchase method. The combined statements of assets to be acquired and
combined statements of revenues and direct operating expenses reflect the
allocation of purchase price as a result of the Capstar Merger.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue is derived primarily from the sale of commercial
announcements to local and national advertisers. Revenue is recognized
as advertising airtime is broadcast and is net of advertising agency
commissions.
Property and Equipment
Property and equipment are stated at cost less accumulated
depreciation. Depreciation is computed using the straight-line method
at rates based upon the estimated useful lives. Repairs and maintenance
costs are charged to expense when incurred. At the time of retirements,
sales or other dispositions of property, the original cost and related
accumulated depreciation are written off.
Intangible Assets
Intangible assets consist of Federal Communications Commission
("FCC") broadcast licenses and goodwill. Intangible assets resulting
from acquisitions are valued based upon estimated fair values. The
Company amortizes such intangible assets using the straight-line method
at rates based upon the estimated useful lives.
F-6
<PAGE> 11
Impairment of Long Lived Assets
Long-lived assets and certain intangibles are required to be
reviewed for impairment when events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable,
with any impairment losses being reported in the period in which any
impairment is first identified. Long-lived assets and certain
intangibles to be disposed of are required to be reported at the lower
of carrying amount or fair value less cost to sell.
The Radio Stations continually evaluate the propriety of the
carrying amount of property and equipment to determine whether current
events or circumstances warrant adjustment of the carrying value. At
this time, the Radio Stations believe that no impairment of property
and equipment has occurred and that no revisions to the depreciation
periods are warranted.
The Radio Stations continually evaluate the propriety of the
carrying amount of goodwill and other intangible assets and related
amortization periods to determine whether current events or
circumstances warrant adjustments to the carrying value and/or revised
estimates of amortization periods. These evaluations consist of the
projection of undiscounted cash flows over the remaining amortization
periods of the related intangible assets. The projections are based on
historical trend lines of actual results, adjusted for expected changes
in operating results. To the extent such projections indicate that
undiscounted cash flows is not expected to be adequate to recover the
carrying amounts of the related intangible assets, such carrying
amounts are written down by charges to expense, based on a discounted
cash flow analysis. At this time, the Radio Stations believe that no
impairment of goodwill or other intangible assets has occurred and that
no revisions to the amortization periods are warranted.
Use of Estimates
The preparation of combined financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets to be acquired at the date of the financial statements and the
reported amounts of revenues and direct operating expenses during the
reporting period. Actual results could differ from those estimates.
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
USEFUL DECEMBER 31,
------ ------------------------
LIVES 1999 1998
----- ------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Land and land improvements ............. -- $ 861 $ 330
Buildings and building improvements .... 3-35 Years 2,566 782
Furniture and fixtures ................. 5-7 Years 525 187
Office equipment ....................... 5-7 Years 638 409
Vehicles ............................... 5-7 Years 448 202
Broadcast equipment .................... 3-20 Years 13,758 5,945
Computer software ...................... 3-5 Years 197 --
Construction in progress ............... -- 112 --
-------- -------
Property and equipment, at cost ........ (19,105 7,855
Less accumulated depreciation .......... 2,979) (1,862)
-------- -------
Net property and equipment ... $ 16,126 $ 5,993
======== =======
</TABLE>
F-7
<PAGE> 12
4. INTANGIBLE ASSETS
<TABLE>
<CAPTION>
USEFUL DECEMBER 31,
------ ---------------------------
LIVES 1999 1998
----- --------- ---------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
FCC broadcast licenses ............. 15 Years $ 369,163 $131,050
Goodwill ........................... 15 Years 10,742 10,742
--------- --------
Intangible assets, at cost ......... 379,905 141,792
Less accumulated amortization ...... (33,106) (16,323)
--------- --------
Net intangible assets .... $ 346,799 $125,469
========= ========
</TABLE>
5. TRANSACTIONS WITH AFFILIATED COMPANIES
The Company also operates a national radio network, the AMFM
Radio Networks, which broadcasts advertising and syndicated programming
shows to a national audience of approximately 66 million listeners in
the United States (including approximately 59 million listeners from
the Company's portfolio of stations). The revenues and direct operating
expenses of the AMFM Radio Networks allocated to the Radio Stations for
the years ended December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
------- -----
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revenues ...................................................... $ 1,140 $ 933
Direct operating expenses ..................................... (301) (319)
------- -----
Revenues in excess of direct operating expenses ..... $ 839 $ 614
======= =====
</TABLE>
The AMFM Radio Networks allocates revenues and direct
operating expenses to the Radio Stations based upon the individual
station's percentage of the total AMFM Radio Networks listening
audience. Management believes that these allocations were made on a
reasonable basis.
6. COMMITMENTS
The Radio Stations have long-term operating leases for land,
office space, and certain broadcasting facilities and equipment. The
leases expire at various dates, generally during the next ten years,
and have varying options to renew and cancel. Rental expense for
operating leases was approximately (in thousands) $357 and $283 for the
years ended December 31, 1999 and 1998, respectively. Future minimum
lease payments for all non-cancelable operating leases (with initial or
remaining lease terms in excess of one year) as of December 31, 1999
are as follows (in thousands):
<TABLE>
<S> <C>
2000...................................................... $ 16
2001...................................................... 16
2002...................................................... 4
------
Total $ 36
======
</TABLE>
F-8
<PAGE> 13
7. SALE OF RADIO STATIONS
On August 30, 1999, the Company entered into an agreement with
Cox Radio, Inc. ("Cox Radio") to exchange the property, intangibles and
FCC broadcast licenses of the Radio Stations for the property,
intangibles and FCC broadcast licenses of KFI-AM and KOST-FM in Los
Angeles, California, plus $3 million, in cash. Effective October 1,
1999, the Company and Cox Radio entered into a Time Brokerage Agreement
under which Cox Radio provides the programming for the Radio Stations.
Since Cox Radio legally owns the operations of the Radio Stations under
the Time Brokerage Agreement, beginning October 1, 1999, the net
revenues and direct operating expenses, excluding depreciation and
amortization, have been excluded from the results of operations of the
Radio Stations.
F-9
<PAGE> 14
INDEPENDENT AUDITORS' REPORT
The Board of Directors
AMFM Inc.
We have audited the accompanying combined statements of revenues and direct
operating expenses for the years ended December 31, 1999 and 1998 of
WAPE-FM-Jacksonville, Florida; WFYV-FM Jacksonville, Florida; WKQL-FM
Jacksonville, Florida; WMXQ-FM Jacksonville, Florida; WOKV-AM Jacksonville,
Florida; WBWL-AM Jacksonville, Florida; WPLR-FM New Haven, Connecticut; WKHL-FM
Stamford-Norwalk, Connecticut; WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM
Stamford-Norwalk, Connecticut; and WNLK-AM Stamford-Norwalk, Connecticut
(collectively referred to as the "Radio Stations") while under the ownership of
Capstar Broadcasting Corporation during the years ended December 31, 1999 and
1998. These financial statements are the responsibility of the Radio Stations'
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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.
The accompanying combined financial statements reflect the revenues and direct
operating expenses attributable to the Radio Stations as described in Note 1 and
are not intended to be a complete presentation of the revenues and expenses of
the Radio Stations.
In our opinion, the combined financial statements present fairly, in all
material respects, the revenues and direct operating expenses of the Radio
Stations while under the ownership of Capstar Broadcasting Corporation as
described in Note 1 during the years ended December 31, 1999 and 1998, in
conformity with accounting principles generally accepted in the United States of
America.
Atlanta, Georgia
March 31, 2000
F-10
<PAGE> 15
WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM,
WPLR-FM, WKHL-FM, WSTC-AM, WEFX-FM AND WNLK-AM
(WHILE UNDER THE OWNERSHIP OF CAPSTAR BROADCASTING CORPORATION)
COMBINED STATEMENTS OF REVENUES AND DIRECT OPERATING EXPENSES
FOR THE YEARS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Revenues:
Gross revenues ......................... $ 20,540 $ 28,181
Less: Agency commissions ............... (2,314) (2,950)
-------- --------
Total net revenues ................. 18,226 25,231
Direct operating expenses:
Programming, technical and news ........ 3,461 5,711
Selling, promotional, general
and administrative ................... 7,854 9,594
Depreciation and amortization .......... 2,666 3,389
-------- --------
Total direct operating expenses .... 13,981 18,694
-------- --------
Excess of net revenues over direct
operating expenses .................. $ 4,245 $ 6,537
======== ========
</TABLE>
See notes to combined financial statements.
F-11
<PAGE> 16
WAPE-FM, WFYV-FM, WKQL-FM, WMXQ-FM, WOKV-AM, WBWL-AM,
WPLR-FM, WKHL-FM, WSTC-AM, WEFX-FM AND WNLK-AM
(WHILE UNDER THE OWNERSHIP OF CAPSTAR BROADCASTING CORPORATION)
NOTES TO COMBINED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION
The accompanying combined financial statements include certain accounts
of WAPE-FM Jacksonville, Florida; WFYV-FM Jacksonville, Florida; WKQL-FM
Jacksonville, Florida; WMXQ-FM Jacksonville, Florida; WOKV-AM Jacksonville,
Florida; WBWL-AM Jacksonville, Florida; WPLR-FM New Haven, Connecticut; WKHL-FM
Stamford-Norwalk, Connecticut; WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM
Stamford-Norwalk, Connecticut; and WNLK-AM Stamford-Norwalk, Connecticut
(collectively referred to as the "Radio Stations"), while under the ownership of
Capstar Broadcasting Corporation ("Capstar") (subsequently merged on July 13,
1999 with Chancellor Media Corporation and was renamed AMFM Inc.) for the years
presented.
The combined statements of revenues and direct operating expenses have
been prepared in accordance with generally accepted accounting principles and
were derived from the historical accounting records of the Radio Stations.
Significant intercompany balances and transactions have been eliminated in
combination.
The combined statements of revenues and direct operating expenses
include the revenues and expenses directly attributable to the Radio Stations.
These statements do not include corporate general and administrative costs,
interest expense or income taxes.
Complete combined financial statements, including statements of cash
flows, were not prepared as the Company has not segregated indirect corporate
operating cost information or related assets and liabilities in its accounting
records.
Certain expenses reflect corporate allocations from Capstar
Broadcasting Corporation. These expenses include expenses for medical, property,
workers compensation and other insurance coverages. Expense allocations are
based on medical coverage selection, property value, and headcount for the
individual stations using corporate insurance rates. Although such allocations
are included in the accompanying statements of revenue and direct operating
expenses, the Radio Stations' expense for these allocations was not material for
the periods presented. However, the allocations are not necessarily indicative
of the level of expenses that might have been incurred had the Radio Stations
contracted directly with third parties. Management has not made a study or any
attempt to obtain quotes from third parties to determine what the cost of
obtaining such services from third parties would have been.
F-12
<PAGE> 17
The accompanying combined statements of revenues and direct operating
expenses for the years ended December 31, 1999 and 1998 include the combined
operations of the Radio Stations for the periods of Capstar ownership as
follows:
<TABLE>
<CAPTION>
STATION 1999 1998
- --------------- -------------------------------- -------------------------------------
<S> <C> <C>
WAPE-FM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WFYV-FM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WKQL-FM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WMXQ-FM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WOKV-AM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WBWL-AM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WPLR-FM January 1, 1999 - July 12, 1999 May 29, 1998 - December 31, 1998
WKHL-FM January 1, 1999 - July 12, 1999 January 1, 1998 - December 31, 1998
WSTC-AM January 1, 1999 - July 12, 1999 January 1, 1998 - December 31, 1998
WEFX-FM January 1, 1999 - July 12, 1999 January 1, 1998 - December 31, 1998
WNLK-AM January 1, 1999 - July 12, 1999 January 1, 1998 - December 31, 1998
</TABLE>
On July 13, 1999, the stockholders of Chancellor Media Corporation and
Capstar voted to approve the merger of the two companies (the "Capstar Merger").
Concurrent with the stockholders' approval of the merger, the stockholders also
voted to re-name the new company AMFM Inc. The Radio Stations were acquired by
the Company in the Capstar Merger.
On May 28, 1998, Capstar purchased the Radio Stations, except for
WEFX-FM, WKHL-FM, WSTC-AM, and WNLK-AM, from SFX Broadcasting. The transaction
was accounted for using the purchase method. The combined statements of revenues
and direct operating expenses reflect the allocation of purchase price as a
result of the transaction.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Revenue is derived primarily from the sale of commercial
announcements to local and national advertisers. Revenue is recognized
as advertising airtime is broadcast and is net of advertising agency
commissions.
Use of Estimates
The preparation of combined financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
revenues and direct operating expenses during the reporting period.
Actual results could differ from those estimates.
3. COMMITMENTS
The Radio Stations have long-term operating leases for land,
office space, and certain broadcasting facilities and equipment. The
leases expire at various dates, generally during the next ten years,
and have varying options to renew and cancel. Rental expense for
operating leases was approximately (in thousands) $327 and $366 for the
years ended December 31, 1999 and 1998, respectively.
F-13
<PAGE> 18
Report of Independent Auditors
Board of Directors
Marlin Broadcasting, Inc.
We have audited the accompanying balance sheets of Marlin Broadcasting, Inc.
(the "Corporation") as of December 31, 1999 and 1998, and the related
statements of operations, stockholders' equity and cash flows for the years
then ended. These financial statements are the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audit 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 financial statements referred to above present fairly, in
all material respects, the financial position of Marlin Broadcasting, Inc. at
December 31, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted
accounting principles.
/s/Ernst & Young LLP
---------------------
Hartford, Connecticut
March 16, 2000
F-14
<PAGE> 19
Marlin Broadcasting, Inc.
Balance Sheets
(In thousands, except for share data)
<TABLE>
<CAPTION>
December 31
1999 1998
-------- --------
<S> <C> <C>
Assets
Current assets:
Cash $ 36 $ 77
Accounts receivable, less allowance of $166 in 1999 and $92 in 1998 2,084 1,788
Prepaid expenses and other current assets 73 50
Deferred barter expenses 375 254
Program rights 361 395
------- -------
Total current assets 2,929 2,564
Property and equipment:
Land 261 261
Buildings 415 384
Equipment 2,447 2,255
Leasehold improvements 81 81
Construction in progress 9
------- -------
3,213 2,981
Less accumulated depreciation and amortization 1,155 745
------- -------
2,058 2,236
Other assets, primarily cost in excess of net assets of businesses acquired,
less accumulated amortization of $3,164 in 1999 and $1,991 in 1998 33,092 34,278
Program rights 115 476
------- -------
Total assets $38,194 $39,554
======= =======
</TABLE>
F-15
<PAGE> 20
<TABLE>
<CAPTION>
December 31
1999 1998
--------------- ---------------
<S> <C> <C>
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt $ 90 $ 90
Accounts payable 175 268
Salaries, wages and commissions payable 303 213
Accrued interest payable 264 246
Other accrued expenses 174 155
Current portion of program rights liability 361 395
Deferred barter revenue 397 431
--------------- ---------------
Total current liabilities 1,764 1,798
Long-term debt, less current portion 18,804 18,364
Long-term portion of program rights liability 115 476
Stockholders' equity:
1998 Series Convertible Preferred Stock (minimum preference value in
liquidation - $9,363), par value $.10: authorized shares - 633,334;
issued and outstanding shares - 624,228 62 62
Class A Common Stock, par value $.10: authorized shares - 290,900; issued
and outstanding shares - 290,900 29 29
Class B Common Stock, par value $.10: authorized shares - 2,500,000; issued
and outstanding shares - 1,004,063 100 100
Additional paid-in-capital 21,952 21,952
Accumulated deficit (4,632) (3,227)
--------------- ---------------
17,511 18,916
--------------- ---------------
Total liabilities and stockholders' equity $ 38,194 $ 39,554
=============== ===============
</TABLE>
See accompanying notes.
F-16
<PAGE> 21
Marlin Broadcasting, Inc.
Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
------- -------
<S> <C> <C>
Broadcasting revenues:
Local $ 8,982 $ 6,682
National and regional 2,329 1,647
Other 100 97
------- -------
11,411 8,426
Less advertising agency commissions 1,089 756
------- -------
Net revenues 10,322 7,670
Station operating costs and expenses:
Broadcasting operations 1,647 1,295
Selling, general and administrative 5,435 4,207
Depreciation and amortization 1,583 1,285
Corporate general and administrative expenses 1,269 1,044
------- -------
Total operating costs 9,934 7,831
------- -------
Operating income (loss) 388 (161)
Interest expense 1,775 1,482
------- -------
Loss before cumulative effect of accounting change and state taxes (1,387) (1,643)
State taxes 18 40
------- -------
Loss before cumulative effective of accounting change (1,405) (1,683)
Cumulative effect of accounting change for organization costs 137
======= =======
Net loss $(1,405) $(1,820)
======= =======
</TABLE>
See accompanying notes.
F-17
<PAGE> 22
Marlin Broadcasting, Inc.
Statement of Stockholders' Equity
(In thousands, except for share data)
<TABLE>
<CAPTION>
Convertible Common Stock
----------------------------------------------------------
Preferred Stock Class A Class B
-------------------------- --------------------------- ------------------------------
Shares Amount Shares Amount Shares Amount
------------- ------------ ------------- ------------- ---------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1998 290,900 $ 29 1,004,063 $ 100
Proceeds from issuance of
convertible preferred stock at
$15 per share, less costs
related to issuance of $169 624,228 $ 62
Net loss for 1998
------------- ------------ ------------- ------------- ---------------- -------------
Balance at December 31, 1998 624,228 62 290,900 29 1,004,063 100
Net loss for 1999
============= ============ ============= ============= ================ =============
Balance at December 31, 1999 624,228 $ 62 290,900 $ 29 1,004,063 $ 100
============= ============ ============= ============= ================ =============
<CAPTION>
Additional
Paid-In Accumulated
Capital Deficit Total
---------- ------------ ---------
<S> <C> <C> <C>
Balance at January 1, 1998 $ 12,820 $(1,407) $11,542
Proceeds from issuance of
convertible preferred stock at
$15 per share, less costs
related to issuance of $169 9,132 9,194
Net loss for 1998 (1,820) (1,820)
-------- ------- -------
Balance at December 31, 1998 21,952 (3,227) 18,916
Net loss for 1999 (1,405) (1,405)
======== ======= =======
Balance at December 31, 1999 $ 21,952 $(4,632) $17,511
======== ======= =======
</TABLE>
See accompanying notes.
F-18
<PAGE> 23
Marlin Broadcasting, Inc.
Statements of Cash Flows
(In thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
-------- --------
<S> <C> <C>
Operating activities
Net loss $(1,405) $(1,820)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 1,583 1,285
Cumulative effect of accounting change 137
Provision for losses on accounts receivable 148 110
Program rights amortization 395 230
Changes in operating assets and liabilities:
Accounts receivable (444) (990)
Prepaid expenses and other current assets (23) (21)
Deferred barter expenses (121) (78)
Other assets 13 20
Accounts payable (93) 123
Salaries, wages and commissions payable 90 149
Accrued interest payable 18 23
Other accrued expenses 19 (28)
Program rights liability (395) (230)
Deferred barter revenue (34) 269
------- -------
Net cash used by operating activities (249) (821)
Investing activities
Purchases of property and equipment (232) (814)
Decrease in cash in escrow 1,000
Purchase of radio broadcasting properties:
Property and equipment (250)
Intangibles (14,927)
------- -------
-- (15,177)
------- -------
Net cash used by investing activities (232) (14,991)
</TABLE>
F-19
<PAGE> 24
Marlin Broadcasting, Inc.
Statements of Cash Flows (continued)
(In thousands)
<TABLE>
<CAPTION>
Year ended December 31
1999 1998
-------- --------
<S> <C> <C>
Financing activities
Principal payments and refinancing of debt, including payments of $1,720 to
stockholders in 1998 $(2,510) $(12,192)
Proceeds from borrowings, including $602 from stockholders in 1998 2,950 19,143
Deferred debt costs (440)
Net proceeds from convertible preferred stock issuance 9,194
------- -------
Net cash provided by financing activities 440 15,705
------- -------
Decrease in cash (41) (107)
Cash at beginning of year 77 184
------- -------
Cash at end of year $ 36 $ 77
======= =======
</TABLE>
See accompanying notes.
F-20
<PAGE> 25
Marlin Broadcasting, Inc.
Notes to Financial Statements
December 31, 1999
1. Business
Marlin Broadcasting, Inc. (the "Company") operates exclusively in the radio
broadcasting industry. The Company owns and operates four radio stations
located in three geographical markets in the Southeastern and Northeastern
regions of the United States. In the normal course of business, the Company
grants credit to customers for which it does not require collateral. Credit
losses are provided for and have been within normal expectations.
2. Significant Accounting Policies
Revenue Recognition
Revenue is recognized as advertising services are broadcast.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts and disclosures reported in the financial statements
and accompanying notes. Actual results could differ from those estimates.
Property and Equipment
Property and equipment is stated on the basis of cost. Depreciation of
equipment is computed by the straight-line method over the estimated useful
lives of the assets. Leasehold improvements are amortized by the straight-line
method over the lesser of the useful lives of the improvements or the lease
term.
F-21
<PAGE> 26
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Intangibles
The excess of cost over the net assets of broadcasting properties acquired,
attributable primarily to Federal Communications Commission ("FCC") licenses,
is being amortized over a forty-year period by the straight-line method. Other
intangible assets consisting of deferred debt costs and a covenant not to
compete are being amortized over the terms of the related agreements. Upon the
determination by management that any impairment has occurred in the carrying
value of an intangible, based on economic events or circumstances, an
adjustment is recorded reducing such intangible during such determination
period. The valuation method used to determine if any impairment has occurred
is based on fair value measurements provided by independent sources or
undiscounted future cash flows. Such cash flows are defined by management as
earnings before interest, income taxes, depreciation and amortization expenses.
No impairment was required to be recognized through December 31, 1999.
Interest Rate Swap Arrangements
The Company enters into interest rate swap arrangements to manage and reduce
credit risk by generating cash flows which offset the cash flows in certain
underlying financial obligations. An adjustment to interest expense is recorded
to recognize the difference in such cash flows in the year the cash flows
occur. The Company's interest rate swap arrangements are not executed for
speculative purposes.
Barter Transactions
The Company records barter transactions at the fair value of goods and/or
services received. Expenses from barter transactions are recognized when goods
and/or services received have been used. Barter expenses applicable to future
periods are shown as deferred barter expenses. Revenue from barter transactions
is recognized when advertising services are provided; revenue applicable to
future periods is shown as deferred barter revenue.
Program Rights and Obligation
The cost of program rights are capitalized and the related obligation recorded
at the gross amount of the payments to be made under the license agreement when
the license period begins and the program is available for use. Such costs are
amortized over the license term by the straight-line method. Unamortized costs
are classified as current or non-current based on the remaining term. The
obligation for the program rights liability is classified as current or
non-current based on the payment terms of the license agreement.
F-22
<PAGE> 27
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
2. Significant Accounting Policies (continued)
Deferred Income Taxes
Deferred income taxes are provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
those for income tax reporting purposes and on net operating loss
carryforwards.
Advertising Expense
The cost of advertising ($225,922 and $231,170 in 1999 and 1998, respectively)
is expensed as incurred.
Stock Based Compensation
The Company grants stock incentives to employees with an exercise price equal
to the fair value of the shares at the date of grant. The Company recognizes
compensation expense related to stock incentives in accordance with APB Opinion
No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related
interpretations. Under APB 25, if the exercise price of the Company's employee
stock incentives equals the estimated fair market price of the underlying stock
on the date of grant no compensation expense is recognized.
Defined Contribution Plan
The Company sponsors a defined contribution plan (the "Plan") that covers all
employees who meet the eligibility conditions of the Plan, as defined.
Contributions to the Plan by the Company are determined annually by its Board
of Directors in accordance with the terms of the Plan. For 1999 and 1998, the
Company did not contribute to the Plan. Employee contributions to the Plan are
voluntary and are based on eligible compensation, as defined.
Radio Station Format Costs
Costs incurred in connection with changing the programming format of the
Company's radio stations are expensed as incurred.
F-23
<PAGE> 28
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
3. Debt
Long-term debt follows (in thousands):
<TABLE>
<CAPTION>
December 31
1999 1998
--------- ---------
<S> <C> <C>
Senior credit facility borrowings $ 18,714 $ 18,184
Other 180 270
--------- ---------
18,894 18,454
Less current portion 90 90
--------- ========
$ 18,804 $ 18,364
========= ========
</TABLE>
As amended May 21, 1998, the Company has a $21,000,000 Senior Credit Facility
(the "Facility") that expires on May 31, 2001. Borrowings and repayments under
the Facility can be made at any time through expiration with no scheduled
reductions except in the case of certain defined events. At December 31, 1999,
$2,286,000 was available for future borrowing under the Facility.
Interest on borrowings under the Facility is set for stated periods at the
Company's option at either the prime interest rate plus 2.50% or LIBOR plus
3.50% at the time of borrowing or at the end of the stated interest period. At
December 31, 1999, interest rates ranged from 8.6% to 9.7% (8.7% to 9.0% at
December 31, 1998) through March 2000. In addition, the Company had entered
into an interest rate swap arrangement that expires in May 2001 for a notional
amount of $16,000,000. The economic effect of this arrangement is to fix the
interest rate at 9.53% on the entire $16,000,000 notional amount through May
2001.
The terms of the Facility, among other conditions, restrict the Company's
future ability to pay dividends and incur additional indebtedness; require the
Company to maintain a minimum level of cash flow, as defined; and restrict
annual capital expenditures. Substantially all assets of the Company have been
pledged as collateral to secure all Facility borrowings.
The "Other" long-term debt at December 31, 1999 is due in annual payments of
$90,000 through 2001 to the former owner of a radio broadcasting property
acquired by the Company in 1996.
F-24
<PAGE> 29
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
4. Acquisition
On May 21, 1998, the Company acquired substantially all the assets of radio
broadcasting properties WCCC-AM and WCCC-FM located in Hartford, Connecticut
for cash of $15,177,000, including acquisition costs of $177,000 (the
"Acquisition"). The Acquisition was financed with a combination of borrowings
under the Facility (see Note 3), the proceeds from a convertible preferred
stock issuance and available cash.
The Acquisition was accounted for by the purchase method of accounting.
Accordingly, the accompanying financial statements reflect the operating
results of the radio broadcasting properties from the date of acquisition. A
substantial portion of the purchase price was allocated to FCC broadcasting
licenses acquired.
5. Capital Stock
The 1998 Series Convertible Preferred Stock (the "Preferred Stock") is
convertible at any time into Class B Common Stock based on a conversion ratio
as defined by the Company's certificate of incorporation. The holders of the
Preferred Stock are entitled to one vote for each share of Class B Common Stock
issuable upon conversion, even if such conversion has not yet been effected.
The Preferred Stock outstanding is subject to mandatory conversion and optional
redemption provisions. The mandatory conversion provision occurs upon the
Company receiving a minimum of $25 per share and $10,000,000 aggregate proceeds
pursuant to an effective registration statement filed with the Securities and
Exchange Commission. The optional redemption provision of the Preferred Stock
begins June 1, 2001 at the discretion of the Board of Directors. The optional
redemption price per share is to be determined based on liquidation values, as
defined, included in the Company's certificate of incorporation. In the event
of the liquidation or dissolution of the Company, the Preferred Stock
shareholders are entitled to an amount per share, before any payments to the
Common Stock shareholders, that is equal to the greater of either $15 per
share, plus any declared but unpaid distributions or dividends, or the amount
per share such Preferred Stock shareholders would have been entitled to receive
had they converted such shares into shares of Class B Common Stock prior to
liquidation.
Dividends are payable to the holders of any class of capital stock only upon
the declaration of a dividend by the Board of Directors. Any dividends paid to
the Class A Common Stock shareholders are also payable to the Class B Common
Stock shareholders. Also, the Preferred Stock shareholders share in any
dividends paid to Class B Common Stock shareholders.
F-25
<PAGE> 30
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
5. Capital Stock (continued)
The shareholders of Class A and Class B Common Stock have the right to vote,
with Class A shares having ten times the voting rights of Class B shares. Under
the terms of the Facility, the Company's ability to pay cash dividends is
restricted, as defined. The outstanding Class A shares, owned in full by an
officer of the Company, are convertible into an equal number of Class B shares
at any time.
Commencing June 1, 2003, any group of shareholders who hold a minimum of 25% of
the combined outstanding shares of all classes of capital stock (the "Minimum
Shareholders") may require the Company's Board of Directors to effect a
liquidity event, as defined, that would allow the Minimum Shareholders to sell,
or otherwise make liquid, their respective shares. Such liquidity events
include, but are not limited to, the sale of any, or all, of the Company's
assets or a merger with another entity.
The Company has entered into a registration rights agreement with the holders
of the Preferred Stock that permits such holders to participate, as defined, in
the registration of the Preferred Stock, or Class B shares upon conversion,
under the Securities Act of 1933.
As of December 31, 1999, the Company had reserved 200,000 shares of Class B
Common Stock for future issuance under a stock incentive plan.
In addition, because of certain conversion rights granted to the Class A and
the Preferred Stock shareholders, the Company has reserved 915,128 shares of
Class B shares for future issuance at December 31, 1999, which equals the
aggregate outstanding shares of the Preferred Stock and Class A Common Stock at
that date.
F-26
<PAGE> 31
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
6. Stock Incentive Plan
During 1998 the Company created the 1998 Stock Incentive Plan (the "Plan").
Under the Plan, 200,000 shares of Class B Common Stock are authorized for
issuance. The Plan provides that the Board of Directors may authorize the grant
of stock options, restricted stock awards and other stock based awards to
executives, directors or others at exercise prices and other conditions as
determined by the Board of Directors. During 1999 and 1998, stock options for
an aggregate of 21,800 and 107,539, respectively, Class B shares were granted
under the Plan. All such options were outstanding at December 31, 1999; 70,661
Class B shares are available for future grant under the Plan. The exercise
price for all stock options granted in 1999 and 1998 was $15 a share, which
approximated the fair market value as of the grant date. As such, no
compensation expense was recognized in either 1999 or 1998. All stock options
granted in 1999 and 1998 become fully vested in May 2002 and May 2001,
respectively, and expire in May 2008. During 1998, no other stock based awards
were granted, exercised or expired. At December 31, 1999, 35,846 options were
exercisable.
If the Company had recognized compensation expense under the provisions of
Financial Accounting Standard No. 123, "Accounting for Stock Based
Compensation," the impact on results of operations for 1998 and 1999 would have
been immaterial.
7. Lease Commitments
The Company conducts certain of its operations from leased premises and also
leases various equipment. The leases, classified as operating leases, extend
through 2008 and provide for options to extend lease terms in certain
instances.
Future annual minimum payments under noncancelable operating leases at December
31, 1999 follow:
<TABLE>
<S> <C>
2000 $ 291,468
2001 174,004
2002 175,348
2003 167,533
2004 195,464
Thereafter 790,850
===========
$ 1,794,667
===========
</TABLE>
Rent expense attributable to all operating leases was $346,000 and $289,000 for
1999 and 1998, respectively.
F-27
<PAGE> 32
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
8. Barter Transactions
The accompanying statements of operations include revenue from barter
transactions of $1,152,000 and $772,000 and expenses from barter transactions
of $1,015,000 and $1,011,000 in 1999 and 1998, respectively.
9. Income Taxes
Significant components of the Company's deferred income tax liability and
assets are as follows (in thousands):
<TABLE>
<CAPTION>
December 31
1999 1998
--------- --------
<S> <C> <C>
Deferred income tax liability - Intangibles and property and
equipment $(1,543) $(1,006)
Deferred income tax assets:
Net operating loss carryforwards 3,046 2,062
All others 104 105
------- -------
Total deferred income tax assets 3,150 2,167
Valuation allowance for deferred income tax assets (1,607) (1,161)
======= =======
Net deferred income taxes $ -- $ --
======= =======
</TABLE>
The valuation allowance for deferred income tax assets was $337,000 at December
31, 1997.
At December 31, 1999, the Company has federal net operating loss carryforwards
of approximately $7,800,000 which expire in varying amounts through 2014.
No federal income taxes were recorded in the accompanying statements of
operations due to the operating losses incurred. State taxes recorded were
related to stockholders' equity.
10. Contingencies
The Company is party to certain litigation arising in the ordinary course of
business. Management believes, based upon discussion with counsel, that such
litigation will not have any material adverse effect on the financial
condition, cash flows or results of operations of the Company.
F-28
<PAGE> 33
Marlin Broadcasting, Inc.
Notes to Financial Statements (continued)
11. Supplemental Cash Flow Information
During 1999, interest paid was $1,754,000. During 1998, interest paid was
$1,467,000, including an aggregate of $46,000 paid to an officer and a board
member. No income tax payments were made in either 1999 or 1998.
12. Other Related Party Transactions
The Company has an arrangement with an officer, who is also a major
shareholder, whereby a portion of the compensation payments for his services to
the Company are paid to a separate entity controlled by the officer. During
1999 and 1998, such payments were $204,000 and $200,000 respectively.
Separately, certain family members of the same officer, including a member of
the Company's Board of Directors, received aggregate payments of $60,000 in
1999 and 1998 for consulting services rendered during those years in accordance
with consulting agreements.
13. New Accounting Standards
Financial Accounting Standard (FAS) No. 133 "Accounting for Derivative
Instruments" establishes new accounting and reporting standards for derivative
financial instruments and hedging activities, including interest rate swap
arrangements. As amended, FAS No. 133 is required to be implemented by the
Company no later than January 1, 2001. Upon implementation, FAS No. 133 is not
expected to have a material impact on results of operations, financial position
or cash flows.
In 1999, the Company elected early adoption of Statement of Position 98-5
"Reporting the Costs of Start-Up Activities" (the "SOP"). The SOP requires that
costs related to start-up activities, including organization costs, be expensed
as incurred. As such, the Company wrote-off unamortized organizational costs as
of January 1, 1998 as a "cumulative effect of a change in accounting principle"
in the accompanying statements of operations.
14. Sale of Company
The Company has reached an agreement in principle to sell all of its
outstanding capital stock to Cox Radio, Inc. This transaction is subject to
obtaining regulatory, stockholder, and other necessary approvals.
F-29
<PAGE> 34
COX RADIO, INC.
UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
The following unaudited pro forma combined financial information has
been derived from (i) the historical consolidated financial statements of Cox
Radio, Inc. appearing in Cox Radio's Annual Report on Form 10-K/A dated March
20, 2000; (ii) the historical combined statement of assets to be acquired and
the historical combined statements of revenues and direct operating expenses of
WEDR-FM Miami, Florida; WFOX-FM Atlanta, Georgia; WAPE-FM Jacksonville,
Florida; WFYV-FM Jacksonville, Florida; WKQL-FM Jacksonville, Florida; WMXQ-FM
Jacksonville, Florida; WOKV-AM Jacksonville, Florida; WBWL-AM Jacksonville,
Florida; WPLR-FM New Haven, Connecticut; WKHL-FM Stamford-Norwalk, Connecticut;
WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM Stamford-Norwalk, Connecticut;
and WNLK-AM Stamford-Norwalk, Connecticut (which we refer to collectively as
the "AMFM Radio Stations") appearing in Item 7 of this Current Report on Form
8-K; (iii) the unaudited historical combined statement of assets to be acquired
and the historical combined statements of revenues and direct operating
expenses of KKBQ-FM Houston, Texas; KLDE-FM Houston, Texas; KKTL-FM Houston,
Texas; WKHK-FM Richmond, Virginia; WMXB-FM Richmond, Virginia; WKLR-FM
Richmond, Virginia; and WTVR-AM Richmond, Virginia (which we refer to
collectively as the "Clear Channel Radio Stations") and (iv) the historical
financial statements of Marlin Broadcasting, Inc. ("Marlin") appearing in Item
7 of this Current Report on Form 8-K. Audited financial information related to
the acquisition of the Clear Channel Radio Stations will be included in a
Current Report on Form 8-K within 75 days of the consummation of such
acquisition.
On August 30, 1999, Cox Radio agreed to acquire the plant and
equipment, intangible assets, and FCC broadcast licenses of the AMFM Radio
Stations in exchange for the plant and equipment, intangible assets, and FCC
broadcast licenses of KFI-AM and KOST-FM in Los Angeles, California and
approximately $3 million in cash. Effective October 1, 1999, Cox Radio began
operating the AMFM Radio Stations to be acquired pursuant to a Time Brokerage
Agreement. Pending certain regulatory approvals, including obtaining a
temporary waiver of the FCC's newspaper-radio cross-ownership rule for the
acquisition of WFOX-FM in Atlanta, Cox Radio anticipates consummating this
transaction in the second quarter of 2000.
On March 3, 2000, Cox Radio entered into an agreement to acquire the
plant and equipment, intangible assets, and FCC broadcast licenses of the Clear
Channel Radio Stations for consideration of approximately $380 million. Pending
receipt of all necessary legal and regulatory approvals, Cox Radio anticipates
closing this transaction during the second half of 2000.
On March 14, 2000, Cox Radio entered into an agreement to acquire the
outstanding capital stock of Marlin, which owns radio stations WTMI-FM serving
Miami, Florida; WCCC-FM and WCCC-AM serving Hartford, Connecticut and WBOQ-FM
serving Gloucester, Massachusetts, for approximately $125 million. As part of
this transaction, Cox Radio will sell certain net assets of Marlin comprising
WCCC-FM, WCCC-AM and WBOQ-FM to certain principals of Marlin Broadcasting, Inc.
for approximately $25 million. Pending receipt of all necessary legal and
regulatory approvals, Cox Radio anticipates closing these transactions during
the second quarter of 2000.
The unaudited pro forma combined balance sheet as of December 31, 1999
has been presented as if the exchange of the plant and equipment, intangible
assets and FCC broadcast licenses of KFI-AM Los Angeles, California and KOST-FM
Los Angeles, California for the plant and equipment, intangible assets and FCC
broadcast licenses of the AMFM Radio Stations; the acquisition of the plant and
equipment, intangible assets, and FCC broadcast licenses of the Clear Channel
Radio Stations; and the Marlin transaction, as described in Note 4 to the
unaudited pro forma combined balance sheet (collectively referred to herein as
the "Transactions") had been consummated on that date. The unaudited pro forma
combined statement of operations for the year ended December 31, 1999 has been
presented as if the Transactions had been consummated on January 1, 1999.
The unaudited pro forma combined financial information gives effect to
the Transactions under the purchase method of accounting for business
combinations and is based upon the assumptions and adjustments described in the
accompanying notes to the unaudited pro forma combined financial information
presented on the following pages. Because the Transactions have not yet been
consummated, a
F-30
<PAGE> 35
final determination of required purchase accounting adjustments, including the
allocation of the purchase price to the assets acquired and liabilities assumed
based on their respective fair values, has not yet been made. Accordingly, the
purchase accounting adjustments made in connection with the development of the
unaudited pro forma combined financial information are preliminary and have
been made solely for purposes of developing such unaudited pro forma combined
financial information. Upon determination of the final fair values of certain
assets and liabilities, the actual financial position and results of operations
may differ from the unaudited pro forma combined amounts reflected herein
because of a variety of factors, including availability of additional
information, changes in values not currently identified and changes in
operating results between the dates of the unaudited pro forma combined
financial information and the date on which the acquisitions are consummated
and such final fair values are determined. However, the Company does not expect
that such final determination will have a material impact on its financial
position or results of operations.
The pro forma adjustments do not reflect any operating efficiencies
and cost savings that Cox Radio may achieve with respect to the combined
entities. The pro forma adjustments do not include any adjustments to
historical revenues for any future price changes nor any adjustments to
operating, marketing and general and administrative expenses for any future
operating changes.
The unaudited pro forma combined results are not necessarily
indicative of the financial position or operating results that would have
occurred had the Transactions been consummated on the date, or at the beginning
of the period, for which such acquisition has been given effect. In addition,
the unaudited pro forma combined results are not necessarily indicative of the
combined results of future operations.
All per share amounts reflected in the unaudited pro forma combined
financial information have been recast to reflect Cox Radio's three-for-one
stock split, which was approved by Cox Radio's Board of Directors on February
7, 2000 and will be voted on by Cox Radio's shareholders on May 11, 2000.
F-31
<PAGE> 36
COX RADIO, INC.
Unaudited Pro Forma Combined Balance Sheet
December 31, 1999
(In Thousands)
<TABLE>
<CAPTION>
AMFM PRO FORMA CLEAR CHANNEL
COX RADIO RADIO STATIONS ADJUSTMENTS SUBTOTAL RADIO STATIONS
(1) (1) (2) (1)
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents ............................ $ 14,704 $ -- $ (3,000) $ 11,704 $ --
Accounts and notes receivable, less allowance --
for doubtful accounts ............................. 74,775 -- -- 74,775 --
Prepaid expenses and other current assets ............ 4,387 -- 4,387 --
------------ ------------ ------------ ------------ ------------
Total current assets ............................ 93,866 -- (3,000) 90,866 --
Plant and equipment, net ............................. 56,582 16,126 (4,079) 68,629 8,528
Intangible assets, net ............................... 829,307 346,799 (346,799) 1,278,882 251,487
455,174
(4,901)
(698)
Other assets ......................................... 6,866 -- -- 6,866 --
------------ ------------ ------------ ------------ ------------
Total assets ..................................... $ 986,621 $ 362,925 $ 95,697 $ 1,445,243 $ 260,015
============ ============ ============ ============ ============
Current Liabilities:
Accounts payable and accrued expenses ................ $ 35,055 $ -- $ -- $ 35,055 $ --
Income taxes payable ................................. 5,462 -- 1,200 6,662 --
Other current liabilities ............................ 1,572 -- -- 1,572 --
------------ ------------ ------------ ------------ ------------
Total current liabilities ....................... 42,089 -- 1,200 43,289 --
Notes payable ........................................ 420,105 -- 1,300 421,405 --
Deferred income taxes ................................ 128,623 -- 182,924 310,849 --
(698)
Other long-term liabilities .......................... -- -- -- -- --
Amounts due to Cox Enterprises, Inc. ................. 17,138 -- -- 17,138 --
------------ ------------ ------------ ------------ ------------
Total liabilities ............................... 607,955 -- 184,726 792,681 --
------------ ------------ ------------ ------------ ------------
Shareholders' Equity:
Preferred stock ...................................... -- -- -- -- --
Class A common stock ................................. 9,339 -- -- 9,339 --
Class B common stock ................................. 19,578 -- -- 19,578 --
Additional paid-in capital ........................... 264,865 362,925 (362,925) 264,865 260,015
Retained earnings .................................... 86,535 -- 467,000 360,431 --
(184,124)
(4,079)
(4,901)
Less: Class A common stock in treasury ............... (1,651) -- -- (1,651) --
------------ ------------ ------------ ------------ ------------
Total shareholders' equity ...................... 378,666 362,925 (89,029) 652,562 260,015
------------ ------------ ------------ ------------ ------------
Total liabilities and shareholders' equity ...... $ 986,621 $ 362,925 $ 95,697 $ 1,445,243 $ 260,015
============ ============ ============ ============ ============
<CAPTION>
PRO FORMA PRO FORMA COX RADIO
ADJUSTMENTS SUBTOTAL MARLIN ADJUSTMENTS PRO FORMA
(3) (1) (4)
<S> <C> <C> <C> <C> <C>
Current Assets:
Cash and cash equivalents ............................ $ -- $ 11,704 $ 36 $ (34) $ 11,706
Accounts and notes receivable, less allowance -- --
for doubtful accounts ............................. -- 74,775 2,084 (1,188) 75,671
Prepaid expenses and other current assets ............ -- 4,387 809 (577) 4,619
------------ ------------ ------------ ------------ ------------
Total current assets ............................ -- 90,866 2,929 (1,799) 91,996
Plant and equipment, net ............................. -- 77,157 2,058 (2,058) 77,811
654
Intangible assets, net ............................... (251,487) 1,652,404 33,092 (33,092) 1,784,854
373,522 132,450
Other assets ......................................... -- 6,866 115 (115) 6,866
------------ ------------ ------------ ------------ ------------
Total assets .................................... $ 122,035 $ 1,827,293 $ 38,194 $ 96,040 $ 1,961,527
============ ============ ============ ============ ============
Current Liabilities:
Accounts payable and accrued expenses ................ $ -- $ 35,055 $ 916 $ (645) $ 35,326
Income taxes payable ................................. -- 6,662 -- -- 6,662
Other current liabilities ............................ -- 1,572 848 (555) 1,865
------------ ------------ ------------ ------------ ------------
Total current liabilities ....................... -- 43,289 1,764 (1,200) 43,853
--
Notes payable ........................................ 382,050 803,455 18,804 81,506 903,765
Deferred income taxes ................................ -- 310,849 -- 33,360 344,209
Other long-term liabilities .......................... -- -- 115 (115) --
Amounts due to Cox Enterprises, Inc. ................. -- 17,138 -- -- 17,138
------------ ------------ ------------ ------------ ------------
Total liabilities ............................... 382,050 1,174,731 20,683 113,551 1,308,965
------------ ------------ ------------ ------------ ------------
--
Shareholders' Equity: --
Preferred stock ...................................... -- -- 62 (62) --
Class A common stock ................................. -- 9,339 29 (29) 9,339
Class B common stock ................................. -- 19,578 100 (100) 19,578
Additional paid-in capital ........................... (260,015) 264,865 21,952 (21,952) 264,865
Retained earnings .................................... -- 360,431 (4,632) 4,632 360,431
Less: Class A common stock in treasury .............. -- (1,651) -- -- (1,651)
------------ ------------ ------------ ------------ ------------
Total shareholders' equity ...................... (260,015) 652,562 17,511 (17,511) 652,562
------------ ------------ ------------ ------------ ------------
Total liabilities and shareholders' equity ...... $ 122,035 $ 1,827,293 $ 38,194 $ 96,040 $ 1,961,527
============ ============ ============ ============ ============
</TABLE>
See notes to unaudited pro forma combined balance sheet.
F-32
<PAGE> 37
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Balance Sheet
December 31, 1999
(In Thousands)
(1) Represents the historical amounts of (i) Cox Radio, Inc., as reflected
in Cox Radio's Annual Report on Form 10-K/A dated March 20, 2000; (ii)
the AMFM Radio Stations and Marlin, as reflected in Item 7 of this
Current Report of Cox Radio on Form 8-K; and (iii) the Clear Channel
Radio Stations. Audited financial information related to the Clear
Channel Radio Stations will be included in a Current Report on Form
8-K within 75 days of the consummation of the transaction.
AMFM RADIO STATIONS
(2) On August 30, 1999, Cox Radio agreed to acquire the plant and
equipment, intangible assets, and FCC broadcast rights of the AMFM
Radio Stations in exchange for the plant and equipment, intangible
assets, and FCC broadcast licenses of KFI-AM and KOST-FM in Los
Angeles, California and approximately $3 million in cash. Effective
October 1, 1999, Cox Radio began operating the AMFM Radio Stations to
be acquired pursuant to a Time Brokerage Agreement. Pending certain
regulatory approvals, including obtaining a temporary waiver of the
FCC's newspaper-radio cross-ownership rule for the acquisition of
WFOX-FM in Atlanta, Cox Radio anticipates consummating this
transaction in the second quarter of 2000.
Accordingly, the following adjustment reflects the exchange of the
plant and equipment, intangible assets, and FCC broadcast licenses of
KFI-AM and KOST-FM (herein collectively referred to as "KFI-AM and
KOST-AM") and the payment of $3 million in cash consideration for the
plant and equipment, intangible assets and FCC broadcast licenses of
the AMFM Radio Stations and the application of the purchase accounting
method in accordance with APB Opinion No. 16, "Business Combinations":
<TABLE>
<S> <C>
Estimated fair value of the AMFM Radio Stations based on a preliminary appraisal ......... $ 470,000
Preliminary estimate of direct acquisition costs funded through borrowings ............... 1,300
----------
Total adjusted purchase price .......................................................... $ 471,300
Allocation of total adjusted purchase price as follows:
Preliminary estimate of the fair value of the AMFM Radio Stations' plant and
equipment ............................................................................ 16,126
----------
Preliminary estimate of excess of purchase price over tangible assets acquired ........... $ 455,174
==========
In addition, the pro forma adjustments reflect the following:
Elimination of the historical plant and equipment of KFI-AM and KOST-FM ................ $ (4,079)
Elimination of the historical intangible assets of KFI-AM and KOST-FM .................. (4,901)
Elimination of the historical deferred income tax liabilities of KFI-AM and KOST-FM .... (698)
Elimination of the historical intangible assets of the AMFM Radio Stations ............. (346,799)
Elimination of the historical equity accounts of the AMFM Radio Stations ............... (362,925)
Cash consideration paid to AMFM Inc. upon exchange ..................................... (3,000)
Preliminary estimate of deferred income taxes payable related to the pre-tax gain on
exchange of KFI-AM and KOST-FM for the AMFM Radio Stations ........................... $ 182,924
Preliminary estimate of current income taxes payable related to the pre-tax gain on
exchange of KFI-AM and KOST-FM for the AMFM Radio Stations ........................... $ 1,200
</TABLE>
F-33
<PAGE> 38
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Balance Sheet
December 31, 1999
(In Thousands)
The unaudited pro forma combined statement of operations does not
include the estimated net after-tax gain upon the exchange of KFI-AM
and KOST-FM for the AMFM Radio Stations as follows:
<TABLE>
<S> <C>
Estimated value of the AMFM Radio Stations, net of cash consideration paid to
AMFM Inc. .............................................................................. $ 467,000
Less: Net book value of the plant and equipment, intangible assets, and FCC broadcast
licenses of KFI-AM and KOST-FM ......................................................... (8,980)
----------
Preliminary estimate of pre-tax gain on the exchange ................................... 458,020
Statutory income tax rate ................................................................ 40.2%
----------
Preliminary estimated income tax effect of the exchange ................................ 184,124
----------
Preliminary estimate of net after-tax gain on the exchange ............................... $ 273,896
==========
</TABLE>
CLEAR CHANNEL RADIO STATIONS
(3) On March 3, 2000, Cox Radio entered into an agreement to acquire the
plant and equipment, intangible assets, and FCC broadcast licenses of
the Clear Channel Radio Stations for consideration of approximately
$380 million. Pending receipt of all necessary legal and regulatory
approvals, Cox Radio anticipates closing this transaction during the
second half of 2000.
Accordingly, the following adjustment reflects the acquisition of
the Clear Channel Radio Stations and the application of the
purchase accounting method in accordance with APB Opinion No. 16:
<TABLE>
<S> <C>
Cash purchase price ...................................................................... $ 380,000
Preliminary estimate of direct acquisitions costs funded through borrowings .............. 2,050
----------
Total adjusted purchase price .......................................................... 382,050
Allocation of total adjusted purchase price as follows:
Preliminary estimate of the fair value of the Clear Channel Stations' plant and
equipment ............................................................................. (8,528)
----------
Preliminary estimate of excess of purchase price over tangible assets acquired ...... $ 373,522
==========
In addition, the pro forma adjustments reflect the following:
Elimination of the historical intangible assets of the Clear Channel Radio Stations .... $ (251,487)
Elimination of the historical equity accounts of the Clear Channel Radio Stations ...... $ (260,015)
</TABLE>
F-34
<PAGE> 39
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Balance Sheet
December 31, 1999
(In Thousands)
MARLIN
(4) On March 14, 1999, Cox Radio entered into an agreement to acquire
Marlin for $125 million in cash consideration. As part of this
transaction, Cox Radio will sell certain net assets of Marlin
comprising WCCC-AM and WCCC-FM serving Hartford, Connecticut and
WBOQ-FM serving Gloucester, Massachusetts to certain principals of
Marlin for approximately $25 million in cash consideration (the
"Marlin Transaction"). Accordingly, the following adjustments reflect
the acquisition of Marlin, less the net assets to be sold to certain
principals of Marlin, and the application of the purchase accounting
method in accordance with APB Opinion No. 16:
<TABLE>
<S> <C>
Total purchase price ..................................................................... $ 125,000
Less: cash consideration for the net assets of WCCC-AM, WCCC-FM, and
WBOQ-FM ................................................................................ (25,000)
Preliminary estimate of direct acquisition costs funded through borrowings ............... 310
----------
Total adjusted purchase price .......................................................... 100,310
Allocation of total adjusted purchase price:
Preliminary estimate of fair value of acquired Marlin plant and equipment .............. (654)
Preliminary estimate of net working capital acquired ................................... (566)
Preliminary estimate of deferred income taxes related to the acquisition of Marlin ..... 33,360
----------
Preliminary estimate of excess of purchase price over tangible assets acquired ........ $ 132,450
==========
In addition, the pro forma adjustments reflect the following:
Elimination of the net working capital of WCCC-AM, WCCC-FM and WBOQ-FM ................. $ (599)
Elimination of the historical intangible assets of Marlin .............................. (33,092)
Elimination of the historical equity accounts of Marlin ................................ (17,511)
Elimination of the historical plant and equipment of Marlin ............................ $ (2,058)
</TABLE>
The $115 included in other assets and other long-term liabilities in
the accompanying unaudited pro forma combined balance sheet has been
eliminated as such assets and liabilities will not be acquired or
assumed by Cox Radio.
F-35
<PAGE> 40
COX RADIO, INC.
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1999
(In Thousands Except Per Share Data)
<TABLE>
<CAPTION>
AMFM CAPSTAR PRO FORMA CLEAR CHANNEL
COX RADIO RADIO STATIONS RADIO STATIONS ADJUSTMENTS SUB TOTAL RADIO STATIONS
(1) (1) (1) (1)
<S> <C> <C> <C> <C> <C> <C>
Net revenues ................................ $ 300,494 $ 29,352 $ 18,226 $ (42,551)(2) $ 305,521 $ 39,491
Costs and expenses:
Operating ............................... 68,923 4,270 3,461 (8,014)(2) 68,640 8,510
Selling, general and administrative ..... 114,996 9,281 7,854 (9,150)(2) 122,981 12,882
Corporate general and administrative .... 10,038 -- -- -- 10,038 --
Depreciation and amortization ........... 29,112 17,915 2,666 (400)(3) 51,645 15,432
(357)(4)
2,709 (5)
Gain on sales of radio stations ......... (40,509) -- -- -- (40,509) --
---------- ---------- ---------- ---------- ---------- ----------
Operating income (loss) .................... 117,934 (2,114) 4,245 (27,339) 92,726 2,666
Interest expense, net ...................... (22,760) -- -- (90)(6) (22,850) --
Other expenses - net ....................... (348) -- -- -- (348) --
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes .......... 94,826 (2,114) 4,245 (27,429) 69,528 2,666
Income tax expense (benefit) ............... 39,566 -- -- (10,170)(7) 29,396 --
---------- ---------- ---------- ---------- ---------- ----------
Net Income (loss) .......................... $ 55,260 $ (2,114) $ 4,245 $ (17,259) $ 40,132 $ 2,666
========== ========== ========== ========== ========== ==========
Net income per common share: $ 0.64
Basic ..................................... ==========
$ 0.64
Diluted ................................... ==========
Weighted average common shares outstanding: 86,127
Basic ..................................... ==========
86,637
Diluted ................................... ==========
<CAPTION>
PRO FORMA PRO FORMA COX RADIO
ADJUSTMENTS SUB TOTAL MARLIN ADJUSTMENTS PRO FORMA
(1)
<S> <C> <C> <C> <C> <C>
Net revenues ................................ $ -- $ 345,012 $ 10,322 $ (5,868)(11) $ 349,466
Costs and expenses:
Operating ............................... -- 77,150 1,647 (1,166)(11) 77,631
Selling, general and administrative ..... -- 135,864 5,435 (2,873)(11) 138,426
Corporate general and administrative .... -- 10,038 1,269 -- 11,307
Depreciation and amortization ........... 3,151(8) 70,228 1,583 (930)(11) 73,365
2,484 (12)
Gain on sales of radio stations ......... -- (40,509) -- -- (40,509)
---------- ---------- ---------- ---------- ----------
Operating income (loss) .................... (3,151) 92,241 388 (3,383) 89,246
Interest expense, net ...................... (26,361)(9) (49,211) (1,775) (5,146)(13) (56,132)
Other expenses - net ....................... -- (348) -- -- (348)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes .......... (29,512) 42,682 (1,387) (8,529) 32,766
Income tax expense (benefit) ............... (10,792)(10) 18,604 18 (17)(11) 14,619
(3,986)(14)
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) .......................... $ (18,720) $ 24,078 $ (1,405) $ (4,526) $ 18,147
========== ========== ========== ========== ==========
Net income per common share:
Basic ...................................... $ 0.21
==========
Diluted .................................... $ 0.21
==========
Weighted average common shares outstanding:
Basic ...................................... 86,127
==========
Diluted .................................... 86,637
==========
</TABLE>
See notes to unaudited pro forma combined statement of operations.
F-36
<PAGE> 41
COX RADIO, INC.
Notes to Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1999
(In Thousands)
(1) Represents the historical amounts of (i) Cox Radio, Inc., as reflected
in Cox Radio's Annual Report on Form 10-K/A dated March 20, 2000; (ii)
the AMFM Radio Stations during the year ended December 31, 1999 while
under ownership of AMFM Inc. and during the year ended December 31,
1999 while under ownership of Capstar Broadcasting Corporation, as
reflected in Item 7 of this Current Report on Form 8-K, (iii) the Clear
Channel Radio Stations and (iv) Marlin Broadcasting, Inc., as reflected
in Item 7 of this Current Report on Form 8-K. Audited financial
information related to the Clear Channel Radio Stations will be
included in a Current Report on Form 8-K within 75 days of the
consummation of the related acquisition.
AMFM RADIO STATIONS
(2) To eliminate revenues and direct operating expenses related to KFI-AM
and KOST-FM for the year ended December 31, 1999.
(3) To eliminate actual depreciation expense related to the KFI-AM and
KOST-FM plant and equipment for the year ended December 31, 1999.
(4) To eliminate actual amortization expense related to the KFI-AM and
KOST-FM intangible assets for the year ended December 31, 1999.
(5) To record incremental amortization expense on intangibles assets
related to the exchange of KFI-AM and KOST-FM for the AMFM Radio
Stations as follows:
<TABLE>
<S> <C>
Preliminary estimate of excess of purchase price over tangible assets acquired ........... $ 455,174
Historical intangible assets of the AMFM Radio Stations .................................. 346,799
----------
Incremental intangible assets .......................................................... 108,375
Amortization period ...................................................................... 40
----------
Incremental amortization expense ....................................................... $ 2,709
==========
</TABLE>
(6) To record incremental interest expense on borrowings to fund the
estimated direct acquisition costs related to the exchange of KFI-AM
and KOST-FM for the AMFM Radio Stations using an incremental borrowing
rate of 6.9%, based on Cox Radio's line of credit borrowing rate as of
December 31, 1999, as follows:
<TABLE>
<S> <C>
Estimated borrowings ..................................................................... $ 1,300
Incremental borrowing rate ............................................................... 6.9%
----------
Incremental interest expense ........................................................... $ 90
==========
</TABLE>
A 1/8% increase or decrease in the incremental borrowing rate would
not have a significant impact on incremental interest expense.
(7) To record the effect on income taxes related to pro forma adjustments
2 through 6 using a statutory income tax rate of 40.2% as follows:
<TABLE>
<S> <C>
Historical income (loss) before income taxes of AMFM Radio Stations while under
ownership of:
AMFM Inc. ............................................................................. $ (2,114)
Capstar Broadcasting Corporation ...................................................... 4,245
Net pro forma adjustments to the statement of operations ................................ (27,429)
----------
(25,298)
Statutory income tax rate ............................................................... 40.2%
----------
Preliminary estimate of income tax benefit .............................................. $ (10,170)
==========
</TABLE>
CLEAR CHANNEL RADIO STATIONS
(8) To record incremental amortization expense related to the intangible
assets arising from the acquisition of the Clear Channel Radio
Stations, net of the amount of amortization expense previously
recorded in the historical financial
F-37
<PAGE> 42
COX RADIO, INC.
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1999
(In Thousands Except Per Share Data)
statements of the Clear Channel Radio Stations, as follows:
<TABLE>
<S> <C>
Excess of purchase price over tangible assets acquired ................................... $ 377,522
Elimination of historical intangible assets .............................................. (251,487)
----------
Incremental intangible assets .......................................................... 126,035
Amortization period ...................................................................... 40
----------
Incremental amortization expense ....................................................... $ 3,151
==========
</TABLE>
(9) To record incremental interest expense on borrowings to fund the
estimated purchase price, including the direct acquisition costs,
related to the Clear Channel Radio Stations exchange using an
incremental borrowing rate of 6.9%, based on Cox Radio's line of
credit borrowing rate as of December 31, 1999, as follows:
<TABLE>
<S> <C>
Estimated borrowings for purchase price, including direct acquisition costs .............. $ 382,050
Incremental borrowing rate ............................................................... 6.9%
----------
Incremental interest expense ........................................................... $ 26,361
==========
</TABLE>
A 1/8% increase or decrease in the incremental borrowing rate would
result in an increase or decrease of incremental interest expense of
approximately $482.
(10) To record the effect on income taxes related to pro forma adjustments
8 and 9 using a statutory income tax rate of 40.2%, as follows:
<TABLE>
<S> <C>
Historical income before income taxes of the Clear Channel Radio Stations ................ $ 2,666
Net pro forma adjustments to the statement of operations ................................. (29,512)
----------
(26,846)
Statutory income tax rate ................................................................ 40.2%
----------
Preliminary estimate of income tax benefit ............................................. $ (10,792)
==========
</TABLE>
MARLIN
(11) To eliminate the historical results of operations of WCCC-AM, WCCC-FM
and WBOQ-FM.
(12) To record incremental amortization expense related to the intangible
assets arising from the Marlin Transaction, net of the amount of
amortization expense previously recorded in the historical financial
statements of Marlin as follows:
<TABLE>
<S> <C>
Excess of purchase price over tangible assets acquired ................................... $ 132,450
Elimination of historical intangible assets .............................................. (33,092)
----------
Incremental intangible assets .......................................................... 99,358
Amortization period ...................................................................... 40
----------
Incremental amortization expense ....................................................... $ 2,484
==========
</TABLE>
F-38
<PAGE> 43
COX RADIO, INC.
Unaudited Pro Forma Combined Statement of Operations
Year Ended December 31, 1999
(In Thousands Except Per Share Data)
(13) To record incremental interest expense on borrowings to fund the
estimated purchase price, including the direct acquisition costs,
related to the Marlin Transaction using an incremental borrowing rate
of 6.9%, based on Cox Radio's line of credit borrowing rate as of
December 31, 1999, as follows:
<TABLE>
<S> <C>
Estimated borrowings for purchase price, including direct acquisition costs .............. $ 100,310
Incremental borrowing rate ............................................................... 6.9%
----------
6,921
Less: Historical Marlin interest expense ................................................. (1,775)
----------
Incremental interest expense ........................................................... $ 5,146
==========
</TABLE>
(14) To record the effect on income taxes related to pro forma adjustments
11 through 13 using a statutory income tax rate of 40.2%, as follows:
<TABLE>
<S> <C>
Historical loss before income taxes of Marlin ............................................ $ (1,387)
Net pro forma adjustments to the statement of operations ................................. (8,529)
----------
(9,916)
Statutory income tax rate ................................................................ 40.2%
----------
Preliminary estimate of income tax benefit ............................................. $ (3,986)
==========
</TABLE>
F-39
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COX RADIO, INC.
Dated: April 19, 2000 By: /s/ Maritza C. Pichon
-------------------------
Maritza C. Pichon
Chief Financial Officer
<PAGE> 1
EXHIBIT 2.2
MERGER AGREEMENT
BY AND AMONG
MARLIN BROADCASTING, INC.,
COX RADIO, INC.,
COX MIAMI MERGER SUB, INC.
AND
MARLIN BROADCASTING, LLC
RELATING TO
RADIO STATIONS
WTMI(FM), MIAMI, FLORIDA,
WCCC(AM/FM), HARTFORD, CONNECTICUT
AND
WBOQ(FM), GLOUCESTER, MASSACHUSETTS
* * *
MARCH 14, 2000
<PAGE> 2
<TABLE>
<S> <C> <C>
Section 1. DEFINITIONS............................................... 1
Section 2. Merger.................................................... 4
2.1 Merger.................................................... 4
2.2 Merger Consideration...................................... 4
2.3 Conversion and Cancellation of Shares..................... 5
Section 3. Assets and Liabilities at Closing; Adjustments to Merger
Consideration; Payment of Merger Consideration;
Escrow Funds.............................................. 5
3.1 Assets of the Company at Closing.......................... 5
3.2 Liabilities of the Company at Closing..................... 6
3.3 Adjustment to Merger Consideration at Closing............. 6
3.4 Payment; Delivery of Shares Certificates.................. 7
3.5 Lost, Stolen or Destroyed Certificates.................... 9
3.6 Escrows................................................... 9
3.7 Final Adjustment of Merger Consideration.................. 10
3.8 Dissenting Shares......................................... 12
3.9 Stock Options............................................. 12
Section 4. PURCHASE AND SALE OF WCCC/WBOQ ASSETS..................... 12
4.1 Agreement to Sell and Buy................................. 12
4.2 Retained Assets........................................... 13
4.3 Purchase Price............................................ 14
4.4 Payment of Purchase Price................................. 15
4.5 Assumption of Liabilities and Obligations................. 16
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............. 17
5.1 Organization, Standing, and Authority..................... 17
5.2 Authorization and Binding Obligation...................... 17
5.3 Capitalization of the Company; Stock Ownership............ 18
5.4 Absence of Conflicting Agreements......................... 18
5.5 Governmental Licenses..................................... 18
5.6 Title to and Condition of Real Property................... 19
5.7 Title to and Condition of Tangible Personal Property...... 19
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
5.8 Contracts................................................. 19
5.9 Consents.................................................. 20
5.10 Intangibles............................................... 20
5.11 Insurance................................................. 20
5.12 Reports................................................... 20
5.13 Employee Plans and Matters................................ 20
5.14 Tax Matters............................................... 23
5.15 Claims and Legal Actions.................................. 24
5.16 Environmental Matters..................................... 25
5.17 Compliance with Laws...................................... 26
5.18 Conduct of Business in Ordinary Course.................... 26
5.19 Financial Statements...................................... 26
5.20 Transactions with Affiliates.............................. 27
5.21 Broker.................................................... 27
5.22 Full Disclosure........................................... 27
5.23 Labor Relations........................................... 27
5.24 Bank Accounts; Powers of Attorney......................... 27
5.25 Certain Statutes.......................................... 27
Section 6. REPRESENTATIONS AND WARRANTIES OF THE PARENT.............. 28
6.1 Organization, Standing, and Authority..................... 28
6.2 Authorization and Binding Obligation...................... 28
6.3 Absence of Conflicting Agreements......................... 28
6.4 Broker.................................................... 28
6.5 The Parent's Qualifications............................... 28
6.6 Full Disclosure........................................... 29
6.7 WCCC/WBOQ Sale............................................ 29
6.8 Litigation................................................ 29
Section 7. REPRESENTATIONS AND WARRANTIES OF MERGER SUB.............. 29
7.1 Organization, Standing, and Authority..................... 29
7.2 Authorization and Binding Obligation...................... 29
7.3 Absence of Conflicting Agreements......................... 29
7.4 Broker.................................................... 30
7.5 Full Disclosure........................................... 30
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C> <C>
Section 8. REPRESENTATIONS AND WARRANTIES OF THE WCCC/WBOQ BUYER..... 30
8.1 Organization, Standing, and Authority..................... 30
8.2 Authorization and Binding Obligation...................... 30
8.3 Absence of Conflicting Agreements......................... 31
8.4 Broker.................................................... 31
8.5 WCCC/WBOQ Buyer's Qualifications.......................... 31
8.6 Availability of Funds..................................... 31
8.7 Full Disclosure........................................... 31
Section 9. OPERATIONS OF THE STATION PRIOR TO CLOSING................ 31
9.1 Generally................................................. 31
9.2 Employees and Compensation................................ 31
9.3 Contracts................................................. 32
9.4 Disposition of Assets..................................... 32
9.5 Encumbrances.............................................. 32
9.6 Licenses.................................................. 32
9.7 Rights.................................................... 33
9.8 No Inconsistent Action.................................... 33
9.9 Access to Information..................................... 33
9.10 Maintenance of Assets..................................... 33
9.11 Insurance................................................. 33
9.12 Consents.................................................. 33
9.13 Books and Records......................................... 34
9.14 Notification.............................................. 34
9.15 Financial Information..................................... 34
9.16 Compliance with Laws...................................... 34
9.17 Collection of Accounts Receivable......................... 34
9.18 Capital Expenditures...................................... 34
9.19 Mergers................................................... 34
9.20 Amendments................................................ 34
9.21 Securities................................................ 34
9.22 Termination of Certain Agreements......................... 35
Section 10. SPECIAL COVENANTS AND AGREEMENTS.......................... 35
</TABLE>
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<PAGE> 5
<TABLE>
<S> <C> <C>
10.1 FCC Consent............................................... 35
10.2 Control of the Station.................................... 35
10.3 Risk of Loss.............................................. 35
10.4 Confidentiality........................................... 35
10.5 Environmental Audit....................................... 36
10.6 Engineering Study......................................... 36
10.7 Cooperation............................................... 36
10.8 Bulk Sales Law............................................ 36
10.9 Taxes..................................................... 36
10.10 Access to Books and Records............................... 36
10.11 HSR Act Filing............................................ 36
10.12 Title Insurance and Surveys............................... 37
10.13 Employee Matters.......................................... 37
10.14 Tax Matters............................................... 39
10.15 Release of Liens.......................................... 43
10.16 Accounts Receivable....................................... 43
10.17 Insurance................................................. 43
Section 11. CONDITIONS TO OBLIGATIONS AT CLOSING...................... 44
11.1 Conditions to Obligations of the Parent, Merger Sub and the
Surviving Corporation..................................... 44
11.2 Conditions to Obligations of the Company and the WCCC/WBOQ
Buyer .................................................... 45
Section 12. CLOSING AND CLOSING DELIVERIES............................ 46
12.1 Closing................................................... 46
12.2 Deliveries by the Company................................. 47
12.3 Deliveries by the Parent.................................. 48
12.4 Deliveries by the Surviving Corporation to the WCCC/WBOQ
Buyer..................................................... 49
12.5 Deliveries by the WCCC/WBOQ Buyer to the Surviving
Corporation............................................... 49
Section 13. TERMINATION............................................... 49
13.1 Termination by the Company or the WCCC/WBOQ Buyer......... 49
13.2 Termination by the Parent................................. 50
13.3 Rights on Termination..................................... 51
13.4 Specific Performance...................................... 51
</TABLE>
-iv-
<PAGE> 6
<TABLE>
<S> <C> <C>
Section 14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES.......................................... 52
14.1 Representations and Warranties............................ 52
14.2 Indemnification by the Stockholders from the Indemnification
Escrow Fund............................................... 52
14.3 Indemnification by the WCCC/WBOQ Buyer.................... 53
14.4 Indemnification by the Surviving Corporation.............. 53
14.5 Indemnification by the Parent............................. 54
14.6 Procedure for Indemnification............................. 54
14.7 Attorneys' Fees........................................... 55
Section 15. MISCELLANEOUS............................................. 56
15.1 Fees and Expenses......................................... 56
15.2 Notices................................................... 56
15.3 Benefit and Binding Effect................................ 57
15.4 Further Assurances........................................ 57
15.5 Governing Law............................................. 57
15.6 Headings.................................................. 57
15.7 Gender and Number......................................... 57
15.8 Entire Agreement.......................................... 57
15.9 Waiver of Compliance; Consents............................ 58
15.10 Press Release............................................. 58
15.11 Stockholders' Agent....................................... 58
15.12 Counterparts.............................................. 58
</TABLE>
-v-
<PAGE> 7
THE FOLLOWING DOCUMENTS HAVE BEEN OMITTED PURSUANT TO RULE 601(b)(2) OF
REGULATION S-K. COX RADIO, INC. WILL FURNISH, SUPPLEMENTALLY, A COPY OF ANY
OMITTED DOCUMENTS TO THE SECURITIES AND EXCHANGE COMMISSION UPON REQUEST.
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit A - Form of Stockholder's Transmittal Agreement
Exhibit B - Escrow Agreement
Exhibit C - Indemnification Escrow Agreement
LIST OF SCHEDULES
Schedule 2.3(b) - Allocation of Merger Consideration among
Company Stock
Schedule 3.1 - Assets not Owned by the Company
Schedule 4.1 - Internet Assets
Schedule 5.1 - Qualifications
Schedule 5.3 - Authorized & Outstanding Company Stock &
Options
Schedule 5.4 - Consents
Schedule 5.5 - Licenses
Schedule 5.6 - Real Property
Schedule 5.7 - Tangible Personal Property
Schedule 5.8 - Contracts
Schedule 5.10 - Intangibles
Schedule 5.11 - Insurance
Schedule 5.13 - Employee Matters
Schedule 5.14 - Taxes
Schedule 5.15 - Litigation
Schedule 5.19 - Financial Statements
Schedule 5.20 - Transactions with Affiliates
Schedule 5.24 - Bank Accounts; Powers of Attorney
Schedule 6.3 - The Parent Consents
Schedule 7.3 - Merger Sub Consents
Schedule 8.3 - The WCCC/WBOQ Buyer Consents
Schedule 9.18 - Capital Expenditures
Schedule 9.22 - Agreements to be Terminated
Schedule 12.2 - Form of Legal Opinion for Company's Counsel
Schedule 12.3(c) - Form of Legal Opinion of the Parent's and
Merger
Sub's Counsel
Schedule 12.5(d) - Form of Legal Opinion of the WCCC/WBOQ
Buyer's Counsel
</TABLE>
<PAGE> 8
MERGER AGREEMENT
This MERGER AGREEMENT is dated as of the 14th day of March, 2000, by
and among Marlin Broadcasting, Inc., a Delaware corporation (the "Company"),
Cox Radio, Inc., a Delaware corporation (the "Parent"), Cox Miami Merger Sub,
Inc., a Delaware corporation and a wholly owned subsidiary of the Parent (the
"Merger Sub"), and Marlin Broadcasting, LLC, a Delaware limited liability
company (the "WCCC/WBOQ Buyer").
RECITALS
A. The Company is the licensee of and owns and operates radio stations
WTMI(FM), Miami, Florida ("WTMI"), WCCC(AM/FM), Hartford, Connecticut ("WCCC"),
and WBOQ(FM), Gloucester, Massachusetts ("WBOQ" and together with WTMI and
WCCC, individually a "Station" and collectively, the "Stations"), pursuant to
licenses issued by the Federal Communications Commission ("FCC").
B. The respective boards of directors of each of the Parent, Merger Sub
and the Company have determined that it is in the best interests of their
respective stockholders for Merger Sub to merge with and into the Company with
the Company being the surviving corporation (the "Merger") in accordance with
the Delaware General Corporation Law (the "DGCL") upon the terms and subject to
the conditions set forth in this Agreement.
C. The parties hereto intend that the Company shall sell to the WCCC/WBOQ
Buyer, and the WCCC/WBOQ Buyer shall purchase from the Company, immediately
following the consummation of the Merger substantially all of the assets of
WCCC and WBOQ and certain other assets (the "WCCC/WBOQ Sale") for the price and
subject to the terms and conditions set forth in this Agreement.
D. The Parent intends the WCCC/WBOQ Sale to qualify, to the extent
possible, as part of a deferred exchange of like-kind assets pursuant to
Section 1031 of the Code (as defined below), on the terms and conditions set
forth herein.
E. The parties hereto desire to make certain representations, warranties,
covenants and agreements in connection with the Merger and the WCCC/WBOQ Sale.
AGREEMENTS
In consideration of the above recitals and of the mutual agreements
and covenants contained in this Agreement, the parties hereto, intending to be
bound legally, agree as follows:
Section 1. DEFINITIONS
The following terms, as used in this Agreement, shall have the
meanings set forth in this Section:
<PAGE> 9
"Accounts Receivable" means the rights of the Company to cash payment
for the sale of advertising time run on the Stations by the Company prior to
the Closing Date.
"Assets" means all of the tangible and intangible assets of the
Company used or useful in connection with the conduct of the business or
operations of the Stations.
"Closing" means the consummation of the Merger immediately followed
by the consummation of the WCCC/WBOQ Sale pursuant to this Agreement in
accordance with the provisions of Section 12.
"Closing Date" means the date on which the Closing occurs, as
determined pursuant to Section 12.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder, or any subsequent legislative enactment thereof, as in
effect from time to time.
"Consents" means the consents, permits, or approvals of government
authorities and other third parties necessary to consummate the Merger and the
WCCC/WBOQ Sale contemplated by this Agreement.
"Contracts" means all contracts, leases, non-governmental licenses,
and other agreements (including leases for personal or real property and
employment agreements), written or oral (including any amendments and other
modifications thereto), to which the Company is a party or which are binding
upon the Company, and (i) which are in effect on the date of this Agreement or
(ii) which are entered into by the Company between the date of this Agreement
and the Closing Date.
"FCC Consent" means actions by the FCC granting its consent to the
change of control of the Company to the Parent and to the sale of WCCC and WBOQ
to the WCCC/WBOQ Buyer as contemplated by this Agreement.
"FCC Licenses" means all Licenses issued by the FCC in connection with
the business or operations of the Stations.
"Final Order" means an action by the FCC that has not been reversed,
stayed, enjoined, set aside, annulled, or suspended, and with respect to which
no timely requests are pending for administrative or judicial review,
reconsideration, appeal, or stay, and the time for filing any such requests and
the time for the FCC to set aside the action on its own motion have expired.
"GAAP" means generally accepted accounting principles consistently
applied.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Intangibles" means all copyrights, trademarks, trade names, service
marks, service names, licenses, patents, permits, jingles, proprietary
information, technical information and data, machinery and equipment
warranties, and other similar intangible property rights and interests (and any
goodwill associated with any of the foregoing) applied for, issued to, or owned
-2-
<PAGE> 10
by the Company or under which the Company is licensed or franchised and which
are used or useful in the business and operations of the Stations, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Licenses" means all licenses, permits, and other authorizations
issued by the FCC, the Federal Aviation Administration, or any other federal,
state, or local governmental authorities in connection with the conduct of the
business or operations of the Stations, together with any additions thereto
between the date of this Agreement and the Closing Date.
"Permitted Encumbrances" means (i) liens for current taxes not yet due
and payable, (ii) easements, encroachments, encumbrances, rights of way and
other imperfections of title on the Real Property which do not materially
adversely affect the value or use of the applicable parcel of real estate for
its current purposes, (iii) security interests securing Indebtedness (as
defined below) for which the Parent receives a credit in its favor under
Section 3.3(b) except to the extent such Indebtedness is repaid in full at
Closing pursuant to the terms of Section 3.3(b) and (iv) Encumbrances
exclusively on the WCCC/WBOQ Assets (as defined below) which are assumed at
Closing by the WCCC/WBOQ Buyer and for which the Surviving Corporation (as
defined below) has no obligation following the Closing.
"Person" means any individual, partnership, corporation, limited
liability company, trust or other entity.
"Real Property" means all real property and interests in real
property, including fee estates, leaseholds and subleaseholds, purchase
options, easements, licenses, rights to access, and rights of way, and all
buildings and other improvements thereon, and other real property interests
which are used or useful in the business or operations of the Stations,
together with any additions thereto between the date of this Agreement and the
Closing Date.
"Subsidiary" means, with respect to the Company, any entity of which
the Company (either alone or through or together with any other Subsidiary),
owns directly or indirectly, stock or other equity interests constituting 50%
or more of the voting or economic interest in such entity.
"Tangible Personal Property" means all machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant,
inventory, spare parts, and other tangible personal property which is used or
useful in the conduct of the business or operations of the Stations, together
with any additions thereto between the date of this Agreement and the Closing
Date.
"Taxes" means all federal, state, local or foreign income, gross
receipts, windfall profits, severance, property, production, sales, use,
license, excise, franchise, capital, transfer, employment, withholding and
other taxes and assessments, together with any interest, additions or penalties
with respect thereto and any interest in respect of such additions or
penalties.
"Tax Returns" means all federal, state, local and foreign income and
franchise Tax returns and Tax reports (including any attached schedules) and
other Tax statements and other similar filings required to be filed, including
any information return, claim for refund, amended return, extension or
declaration of estimated Tax.
-3-
<PAGE> 11
"To Seller's knowledge" means the actual knowledge of Howard P. Tanger,
John Riccardi, John Berkavage and Alan Tolz after due inquiry into the
respective areas of their responsibility.
Section 2. Merger.
2.1 Merger.
(a) Structure of the Merger. Subject to the terms and conditions of this
Agreement, Merger Sub shall be merged with and into the Company in accordance
with the DGCL, the separate existence of Merger Sub shall cease and the Company
shall be the surviving corporation (the "Surviving Corporation"). Upon the
consummation of the Merger on the terms and conditions of this Agreement, the
Surviving Corporation shall succeed to all of the rights, assets, liabilities
and obligations of Merger Sub and the Company in accordance with the provisions
of the DGCL.
(b) Consummation of Merger. At the Closing, the parties hereto shall cause
the Merger to be consummated by duly filing with the Secretary of State of
Delaware a properly executed certificate of merger in accordance with the
provisions of the DGCL (the "Certificate of Merger"). In accordance with the
DGCL and the terms of the Certificate of Merger, the Merger shall be effective
at the time and date which is the date and time of the filing of the
Certificate of Merger with the Secretary of State of Delaware or such other
time and date as the Parent and the Company may agree (such time and date being
hereinafter referred to as the "Effective Time").
(c) Certificate of Incorporation and Bylaws. The certificate of
incorporation of Merger Sub, as in existence immediately prior to the Effective
Time, shall be the certificate of incorporation of the Surviving Corporation
from and after the Effective Time unless and until amended in accordance with
its terms and as provided by law. The bylaws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the bylaws of the Surviving
Corporation from and after the Effective Time unless and until amended in
accordance with their terms and the terms of the certificate of incorporation
of the Surviving Corporation and as provided by law.
(d) Directors and Officers. The initial directors of the Surviving
Corporation shall be from and after the Effective Time the persons that are the
directors of Merger Sub immediately prior to the Effective Time, and the
initial officers of the Surviving Corporation shall be from and after the
Effective Time the persons that are the officers of Merger Sub immediately
prior to the Effective Time, all such persons to serve as directors of or to
hold office in accordance with the certificate of incorporation and bylaws of
the Surviving Corporation until their respective successors are duly elected
and qualified.
2.2 Merger Consideration. The total consideration for the capital stock of
the Company shall be One Hundred Twenty-Five Million Dollars ($125,000,000)
(the "Merger Consideration"), as adjusted pursuant to Sections 3.3(a) and (b).
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<PAGE> 12
2.3 Conversion and Cancellation of Shares. As of the Effective Time, by
virtue of the Merger and without any action on the part of the Parent, Merger
Sub, the Company or any holder of any shares of the capital stock of Merger Sub
or the Company:
(a) Cancellation of Treasury Stock. All of the shares of the capital stock
of the Company owned by the Company or any Subsidiary, as treasury stock or
otherwise, shall automatically be cancelled and retired and shall cease to
exist and no consideration shall be delivered in exchange therefor.
(b) Conversion of Company Stock. Each share of the capital stock of the
Company (collectively, the "Company Stock") issued and outstanding immediately
prior to the Effective Time shall be converted into the right to receive the
portion of the Merger Consideration, as adjusted under Sections 3.3(a) and (b),
allocable to such share in accordance with Schedule 2.3(b). As of the Effective
Time, all of the Company Stock shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each
holder of a certificate representing any such shares shall cease to have any
rights with respect thereto, other than the right to receive, upon surrender of
such certificate in accordance with Section 3.4, the portion of the Merger
Consideration, as adjusted pursuant to Sections 3.3(a) and (b), allocable to
such shares pursuant to Schedule 2.3(b). As set forth in the hypothetical
calculations in Schedule 2.3(b), in no event shall the aggregate amount payable
to all of the holders of the capital stock of the Company pursuant to this
Agreement exceed $125,000,000, as adjusted under Sections 3.3(a) and (b).
(c) Conversion of Stock of Merger Sub. Each share of the capital stock of
Merger Sub issued and outstanding immediately prior to the Effective Time shall
be converted into one validly issued, fully paid and nonassessable share of the
Common Stock, par value $.01 per share, of the Surviving Corporation and the
Surviving Corporation shall be a wholly-owned subsidiary of the Parent.
Section 3. Assets and Liabilities at Closing; Adjustments to Merger
Consideration; Payment of Merger Consideration; Escrow Funds.
3.1 Assets of the Company at Closing. The Assets to be owned by the Company
at the Closing, all of which shall be free and clear of any claims,
liabilities, security interests, mortgages, liens, pledges, conditions, charges
or encumbrances of any nature whatsoever (the "Encumbrances"), except for
Permitted Encumbrances, shall consist of all tangible and intangible assets,
both real and personal, used or useful in the operations of the Stations,
including the following:
(a) The Tangible Personal Property;
(b) The Real Property;
(c) The Licenses;
(d) The Contracts;
-5-
<PAGE> 13
(e) The Intangibles and all intangible assets of the Company relating to
the Stations that are not specifically included within the Intangibles,
including the goodwill of the Stations, if any;
(f) All of the Company's proprietary information, technical information
and data, machinery and equipment warranties, maps, computer discs and tapes,
plans, diagrams, blueprints, and schematics, including filings with the FCC
relating to the business and operation of the Stations;
(g) All choses in action of the Company relating to the Stations;
(h) All books and records relating to the business or operations of the
Stations, including executed copies of the Contracts, and all records required
by the FCC to be kept by the Stations;
(i) All Accounts Receivable; and
(j) The Company's cash, cash equivalents and marketable securities on hand
as of the Closing, and all other cash in any of the Company's bank accounts,
any and all insurance policies, bonds, letters of credit or similar items, any
cash surrender value in regard thereto, and any and all claims receivable under
any and all insurance policies.
The Parent acknowledges that the "Beethoven bus" vehicle used by WTMI
and the office furnishings and assets set forth in Schedule 3.1 which have a
value not in excess of $50,000 are not owned by the Company and will not be
included among the Assets at Closing.
3.2 Liabilities of the Company at Closing. At the Closing, the Company
shall have no liabilities or obligations other than the following liabilities
or obligations:
(a) liabilities and obligations arising under the terms of the following
Contracts:
(i) Contracts listed on Schedule 5.8;
(ii) Contracts of the type described in Section 5.8 that are not required
to be listed in Schedule 5.8 pursuant to the exceptions set forth in Section
5.8; and
(iii) Contracts entered into by the Company between the date of this
Agreement and the Closing Date in compliance with the provisions of Section
9.3.
(b) Current liabilities reflected in the Working Capital adjustment made
pursuant to Section 3.3(a).
(c) Long term indebtedness for which the Parent receives an adjustment to
the Merger Consideration in its favor under Section 3.3(b).
3.3 Adjustment to Merger Consideration at Closing.
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<PAGE> 14
(a) Working Capital Adjustment. The Merger Consideration shall be reduced
by the amount by which the Working Capital of the Company as of the Closing
Date (but without regard for any assets or liabilities arising on the Closing
Date but after the Effective Time) is less than One Million Dollars
($1,000,000). "Working Capital" shall mean current assets less current
liabilities determined in accordance with GAAP. Current assets shall include,
without duplication, cash, prepaid expenses, and Accounts Receivable (except
for intercompany and related party receivables). Subject to the provisions of
the next sentence, current liabilities shall include accounts payable and
accrued expenses and shall exclude the principal and interest payable on the
Company's long-term indebtedness which shall be governed by Section 3.3(b).
Indebtedness which is long-term on the date of this Agreement shall continue to
be governed by Section 3.3(b) even if it becomes current prior to the Closing.
Trade and barter assets and liabilities will be excluded from the calculation
of the Working Capital. Accounts Receivable shall be included in current assets
net of an appropriate reserve for doubtful accounts calculated in accordance
with the accounting policies of the Company used in the preparation of the
Financial Statements (as defined below).
(b) Indebtedness Adjustment. The Merger Consideration shall be further
decreased by the aggregate amount of the Company's outstanding long-term
indebtedness as of the Closing Date (but without regard for any liabilities
arising on the Closing Date but after the Effective Time), accrued interest,
fees and expenses thereon as of the Closing Date, and the amount of any
prepayment penalty or premium payable with respect to such debt if it were
repaid in full as of the Effective Time (the "Indebtedness"). The Parent shall
pay at Closing an amount of cash equal to the Indebtedness (which is then being
deducted from the Merger Consideration pursuant to this Section 3.3(b)) to the
Company's lenders in satisfaction of such Indebtedness.
(c) Option Exercise Price. The cash proceeds of the exercise of stock
options paid at Closing as a set-off against the Merger Consideration shall not
be included in the calculation of the Working Capital but shall be treated as
indicated in Schedule 2.3(b).
(d) Adjusted Merger Consideration. The Merger Consideration, as adjusted
at Closing pursuant to Sections 3.3(a) and (b), shall be referred to herein as
the "Preliminary Adjusted Merger Consideration".
(e) Adjustment Procedures. Not later than five (5) business days before
the Closing Date, the Company shall prepare and deliver to the Parent a closing
statement of the Company (i) which shall set forth all information reasonably
necessary to determine the reductions to the Merger Consideration under
Sections 3.3(a) and (b), to the extent such adjustments can be determined or
estimated as of the date of such statement, and such other information as may
be reasonably requested by the Parent, and (ii) shall be certified by the chief
financial officer of the Company to be his best estimate of such reductions.
3.4 Payment; Delivery of Shares Certificates.
(a) The Company shall advise each holder of the Company Stock
(individually, a "Stockholder" and collectively, the "Stockholders") to deliver
at the Closing to the Parent stock certificates (the "Certificates")
representing all of such Stockholder's Company Stock together
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with a transmittal agreement in the form of Exhibit A hereto (the "Transmittal
Agreement") duly executed by such Stockholder and any other required documents
of transfer.
(b) Pursuant to an agreement in the form and substance reasonably
acceptable to the Company to be entered into prior to Closing between the
Parent and The Bank of New York (the "Disbursement Agent") and subject to
satisfaction or waiver by the Parent of the conditions of Closing set forth in
Section 11.1, the Parent shall make available to the Disbursement Agent at
Closing the aggregate amount in cash of the Preliminary Adjusted Merger
Consideration (as reduced by the Post-Closing Escrow Funds).
(c) At least two days prior to Closing, the Company shall deliver to the
Parent a certificate setting forth a list of all of the Stockholders as of the
Closing, including Stockholders that have asserted appraisal rights, the number
of shares of the Company Stock owned by each Stockholder and the amount of the
Preliminary Adjusted Merger Consideration (as reduced by the Post-Closing
Escrow Funds) payable at Closing to each Stockholder in accordance with
Schedule 2.3(b) (subject to the exercise of any unexercised stock options
between the date of the Stockholder Statement and the Effective Time) (the
"Stockholder Statement"). The Stockholder Statement shall be duly certified by
the Chief Financial Officer of the Company as being a true and correct list of
all Stockholders and (assuming no further exercises of options) a true and
correct calculation of the portion of the Preliminary Adjusted Merger
Consideration (as reduced by the Post-Closing Escrow Funds) payable at Closing
to each of the Company's equity holders under the Company's certificate of
incorporation.
(d) Upon delivery by the Parent of the Preliminary Adjusted Merger
Consideration (as reduced by the Post-Closing Escrow Funds) to the Disbursement
Agent, the Parent and the Company shall jointly instruct the Disbursement Agent
to disburse at Closing to each Stockholder that has delivered to the Parent its
Certificates and a duly executed Transmittal Agreement with respect to such
Certificates the amount of the Preliminary Adjusted Merger Consideration (as
reduced by the Post-Closing Escrow Funds and assuming no further exercises of
options) to which such Stockholder is entitled for its surrendered Certificates
as set forth in the Stockholder Statement by wire transfer of immediately
available funds to an account designated in such Stockholder's Transmittal
Agreement. Any Stockholder that has not surrendered its Certificates and a
Transmittal Agreement with respect thereto shall not be entitled to payment for
its Certificates until such Stockholder has delivered to the Parent its
Certificates together with its Transmittal Agreement at which time, the Parent
shall instruct the Disbursement Agent to disburse to such Stockholder the
amount to which such Stockholder is entitled for its surrendered Certificates
as set forth in the Stockholder Statement by wire transfer of immediately
available funds to an account designated in such Stockholder's Transmittal
Agreement. Any amount held by the Disbursement Agent allocable to the Company
Stock owned by a Dissenting Stockholder (as defined below) shall be retained by
the Disbursement Agent until the Parent instructs the Disbursement Agent to
apply it towards any payment payable by the Parent or the Surviving Corporation
to any Dissenting Stockholder. Any amount still held by the Disbursement Agent
on the second anniversary of this Agreement shall be returned by the
Disbursement Agent to the Parent. If any stock options are exercised between
delivery of the Stockholder Statement and the Effective Time, the Company's
Chief Financial Officer shall deliver an appropriately revised Stockholder
Statement to the Parent and the Disbursement Agent and the Preliminary Adjusted
Merger Consideration (as reduced by the Post-Closing Escrow Funds) shall be
disbursed to the
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Stockholders in accordance with such revised Stockholder Statement subject to
the terms of this Section 3.4.
(e) Neither the Parent nor the Surviving Corporation shall have any
liability or responsibility for the accuracy of the Stockholder Statement and
shall have the right to rely on the Stockholder Statement in disbursing the
Preliminary Adjusted Merger Consideration (as reduced by the Post-Closing
Escrow Funds).
3.5 Lost, Stolen or Destroyed Certificates. In the event any Certificate
shall have been lost, stolen or destroyed, upon the making of an affidavit of
that fact by the Stockholder claiming such Certificate to be lost, stolen or
destroyed in a form reasonably required by the Parent as indemnity against any
claim that may be made against it or the Surviving Corporation with respect to
such Certificate, the Parent will pay in exchange for such lost, stolen or
destroyed Certificate the consideration to which such Stockholder is entitled
pursuant to this Agreement.
3.6 Escrows.
(a) Escrow Deposit. Simultaneously with the execution of this Agreement,
the Parent, the Company and The Bank of New York (the "Escrow Agent") shall
enter into an Escrow Agreement in the form of Exhibit B hereto (the "Escrow
Agreement") pursuant to which the Parent will deposit a Ten Million Dollar
($10,000,000) irrevocable letter of credit payable to the Escrow Agent (the
"Escrow Deposit") in escrow with the Escrow Agent to secure the performance of
the Parent and Merger Sub hereunder and to be held by the Escrow Agent pursuant
to the terms of the Escrow Agreement. The costs of obtaining and maintaining
such irrevocable letter of credit shall be split equally between the Company
and the Parent. At Closing, such letter of credit shall be returned to the
Parent or if such letter of credit has been drawn down, all proceeds of such
letter of credit and any earnings thereon shall be paid to the Parent or as the
Parent may otherwise direct.
(b) Post-Closing Escrow Deposit.
(i) At Closing, Howard P. Tanger, as the Stockholder's agent (the
"Stockholders' Agent"), the Parent and the Escrow Agent shall enter into an
Escrow Agreement in the form of Exhibit C hereto (the "Post-Closing Escrow
Agreement").
(ii) At Closing, the Parent shall pay One Hundred Thousand Dollars
($100,000) of the Preliminary Adjusted Merger Consideration (the "Adjustment
Escrow Fund") to the Escrow Agent to be held in accordance with the terms of
the Post-Closing Escrow Agreement. The Adjustment Escrow Fund shall be
disbursed as provided in Section 3.7.
(iii) At Closing, the Parent shall pay Two Million Dollars ($2,000,000) of
the Preliminary Adjusted Merger Consideration (the "Indemnification Escrow
Fund" and collectively with the Adjustment Escrow Fund, the "Post-Closing
Escrow Funds") to the Escrow Agent to be held in accordance with the terms of
the Post-Closing Escrow Agreement. The Indemnification Escrow Fund shall be
retained by the Escrow Agent for a period of two (2) years to satisfy claims of
the Parent and the Surviving Corporation under Sections 3.7, 10.14 and 14.2 of
this Agreement. On the second anniversary of the Closing Date, any amount
remaining in the Indemnification Escrow Fund (less the amount of any unresolved
pending claims by the
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Parent or the Surviving Corporation under Sections 3.7, 10.14 and 14.2) shall
be released and paid to the Stockholders' Agent for distribution to the
Stockholders in accordance with Schedule 2.3(b). Neither the Parent nor the
Surviving Corporation shall have any responsibility or liability whatsoever for
the payment or use by the Stockholders' Agent of any proceeds paid to the
Stockholders' Agent from the Post-Closing Escrow Funds.
3.7 Final Adjustment of Merger Consideration. The Preliminary Adjusted
Merger Consideration shall be subject to further adjustment after the Closing
as follows:
(a) Not later than ninety-five (95) days after the Closing Date, the
Parent will deliver to the Stockholders' Agent a Closing Balance Sheet (the
"Closing Balance Sheet") which shall be an unaudited balance sheet of the
Company as of the Effective Time and a statement setting forth the Parent's
determination of the adjustments under Sections 3.3(a) and (b) as modified with
respect to the WTMI Accounts Receivable only by Section 3.7(g). If the
Stockholders' Agent disputes the amount of the adjustments determined by the
Parent, the Stockholders' Agent shall deliver to the Parent within thirty (30)
days after its receipt of the Parent's statement a statement setting forth the
Stockholders' Agent determination of the amount of the adjustments. If the
Stockholders' Agent notifies the Parent of its acceptance of the Parent's
statement, or if the Stockholders' Agent fails to deliver his or her statement
within the thirty (30) day period specified in the preceding sentence, the
Parent's determination of the adjustments shall be conclusive and binding on
the parties as of the last day of the thirty (30) day period.
(b) The Parent and the Stockholders' Agent shall use good faith efforts to
resolve any dispute involving the determination of the adjustments under
Sections 3.3(a) and (b). If the parties are unable to resolve the dispute
within fifteen (15) days following the delivery of the Stockholders' Agent's
statement, the Parent and the Stockholders' Agent shall jointly designate an
independent certified public accountant, who shall be knowledgeable and
experienced in the operation of radio broadcasting stations, to resolve the
dispute. The accountant's resolution of the dispute shall be final and binding
on the parties, and a judgment may be entered thereon in any court of competent
jurisdiction. Any fees of this accountant shall be split equally between the
Stockholders' Agent on the one hand and the Parent on the other hand.
(c) The Merger Consideration, as reduced by the adjustments under Sections
3.3(a) and (b) as finally determined pursuant to Sections 3.7(a) and (b),shall
be referred to herein as the "Final Adjusted Merger Consideration".
(d) In the event that the Final Adjusted Merger Consideration exceeds the
Preliminary Adjusted Merger Consideration, the Parent shall pay the amount of
such excess at the direction of the Stockholders' Agent by wire transfer of
same day funds within five (5) business days of the final determination of the
Final Adjusted Merger Consideration pursuant to Sections 3.7(a) and (b) and
within such five (5) business day period, the Parent and the Stockholders'
Agent shall instruct the Escrow Agent to disburse to or at the direction of the
Stockholders' Agent the Adjustment Escrow Fund together with all earnings
thereon.
(e) In the event that the Final Adjusted Merger Consideration is less than
the Preliminary Adjusted Merger Consideration, the Parent and the Stockholders'
Agent shall
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instruct the Escrow Agent within five (5) business days of the final
determination of the Final Adjusted Merger Consideration to disburse to the
Parent from the Adjustment Escrow Fund an amount equal to the difference
between the Final Adjusted Merger Consideration and the Preliminary Adjusted
Merger Consideration. If following such disbursement to the Parent from the
Adjustment Escrow Fund any amounts remain in the Adjustment Escrow Fund, the
Parent and the Stockholders' Agent shall direct the Escrow Agent to disburse
such remaining amount to or at the direction of the Stockholders' Agent. If the
difference between the Preliminary Adjusted Merger Consideration and the Final
Adjusted Merger Consideration exceeds the amount of the Adjustment Escrow Fund,
the Parent shall have the right to make a claim against the Indemnification
Escrow Fund in the amount of such excess.
(f) Neither the Parent nor the Surviving Corporation shall have any
responsibility or liability for the disbursement or application of any funds
paid to or at the direction of the Stockholders' Agent under this Agreement.
(g) The Parent shall indicate in the Closing Balance Sheet the amount of
the WTMI Accounts Receivable (as defined below) remitted to the Surviving
Corporation during the WTMI Collection Period (as defined below) pursuant to
Section 10.16(b). If the Working Capital as finally determined is less than
$1,000,000 (such shortfall in the Working Capital shall be referred to as the
"Working Capital Deficit") and the WTMI Accounts Receivable remitted to the
Surviving Corporation during the WTMI Collection Period is less than the amount
of the WTMI Accounts Receivable included in the Working Capital at Closing
(such shortfall is hereby referred to as the "WTMI Accounts Receivable
Deficit"), the Parent shall be entitled to either (i) retain the uncollected
WTMI Accounts Receivable and have the full right to collect and retain all
collections therefrom or (ii) receive the lesser of (a) the Working Capital
Deficit and (b) the WTMI Accounts Receivable Deficit from the Adjustment Escrow
Fund or to the extent such fund is insufficient to cover the WTMI Accounts
Receivable Deficit, from the Indemnification Escrow Fund (without taking into
account the limitation set forth in Section 14.6(f)), provided that to extent
the Parent determines to proceed under clause (ii) above, the Surviving
Corporation shall reassign to the WCCC/WBOQ Buyer the uncollected WTMI Accounts
Receivable. If the Working Capital as finally determined is more than
$1,000,000, the Surviving Corporation shall retain the uncollected WTMI
Accounts Receivable and the Surviving Corporation shall have the right to
collect such uncollected WTMI Accounts Receivable.
(h) Following Closing, the Surviving Corporation will agree to air on WTMI
up to 3,750 commercials under trade and barter arrangements entered into by the
Company prior to the Closing (the "Trade and Barter Arrangements"). If the
Surviving Corporation is required to air following the Closing on WTMI a number
of commercials under Trade and Barter Arrangements in excess of 3,750, the
Stockholders shall pay to the Surviving Corporation $80 per commercial run by
WTMI following the Closing in excess of 3,750. Such payment shall be made
exclusively out of the Indemnification Escrow Fund (without regard to any
limitation set forth in Section 14.6(f)).
(i) To the extent that the aggregate value of trade and barter liabilities
of WTMI as of the Closing, calculated in accordance with GAAP, is greater than
the aggregate value of trade and barter assets of WTMI as of the Closing,
calculated in accordance with GAAP, by an amount in excess of $100,000, then
the Parent shall be entitled to a payment in its favor equal to
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the amount of the trade and barter deficit in excess of $100,000. The amount of
such trade and barter deficit shall be determined and paid as far as feasible
on the Closing Date as part of the adjustments to the Merger Consideration and
shall be finally determined and paid simultaneously with the other adjustments
to the Merger Consideration as provided in this Section 3.7 from the Adjustment
Escrow Fund or to the extent such fund is insufficient from the Indemnification
Escrow Fund without taking into account the limitation set forth in Section
14.6(f).
3.8 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, any issued and outstanding shares of Company Stock held by a
Stockholder who objects to the Merger and complies with all of the provisions
of the DGCL concerning the right of holders of Company Stock to dissent from
the Merger and require appraisal of its shares of Company Stock (a "Dissenting
Stockholder") shall not be converted into the right to receive the Merger
Consideration as described in Section 2.3(b), but instead shall become the
right to receive such consideration as may be determined to be due to such
Dissenting Stockholder pursuant to the DGCL; provided, however, that each share
of Company Stock issued and outstanding immediately prior to the Effective Time
of the Merger and held by a Dissenting Stockholder ("Dissenting Shares") who
shall, after the Effective Time of the Merger, withdraw its demand for
appraisal or lose its right of appraisal, in either case pursuant to the DGCL,
shall be deemed to be converted into the right to receive the Merger
Consideration in accordance with Section 2.3(b). The Company shall give the
Parent (i) prompt notice of any written demands for appraisal of shares of
Company Stock received by the Company, and (ii) the opportunity to direct all
negotiations and proceedings with respect to any such demands. The Company
shall not, without the prior written consent of the Parent, voluntarily make
any payment with respect to, or settle, or offer to settle or otherwise
negotiate, any such demands.
3.9 Stock Options. All options to acquire Company Stock, whether or not
currently vested, shall be either cancelled or exercised prior to or as of the
Closing Date, and no such stock options shall remain outstanding as of the
Closing Date. At the option of each option holder who exercises outstanding
stock options, the exercise price of such options may be set off by each option
holder against the portion of the Preliminary Adjusted Merger Consideration (as
reduced by the Post-Closing Escrow Funds) that is to become payable for such
option holder's stock at Closing and the proceeds of the exercise of stock
options shall be treated as indicated in Schedule 2.3(b).
Section 4. PURCHASE AND SALE OF WCCC/WBOQ ASSETS
4.1 Agreement to Sell and Buy. On the Closing Date immediately following
the Effective Time, the Surviving Corporation shall sell, transfer and deliver
to the WCCC/WBOQ Buyer and the WCCC/WBOQ Buyer shall purchase, all of the
Surviving Corporation's rights, title and interest in and to the following
assets:
(a) except for the Retained Assets described in Section 4.2, the tangible
and intangible assets, both real and personal, used or useful in the operations
of WCCC and WBOQ, including the current assets attributable to WCCC and WBOQ
which are included in the calculation of the Working Capital under Section
3.3(a) and all trade and barter assets relating to WCCC and WBOQ;
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(b) the name and/or mark "Marlin Broadcasting", the Marlin logo and all
other related names or marks used by the Company immediately prior to the
Closing, including, without limitations, those marks set forth on Schedule 4.1;
(c) all Internet URLs, including, without limitation, those set forth on
Schedule 4.1 and related computer hardware and software and their related
assets owned by the Surviving Corporation described on Schedule 4.1, any
similar assets acquired between the date of this Agreement and the Closing, and
related computer hardware and software and related assets owned by the
Surviving Corporation not listed on Schedule 4.1 with a value not in excess of
$5,000 per item and $25,000 in the aggregate for all items; and
(d) certain land in Osceola County, Florida owned on the date hereof by
the Company and described on Schedule 5.6.
The assets described in Sections 4.1(a) through (d) shall be referred
to as the "WCCC/WBOQ Assets".
If on any date prior to the fifth anniversary of this Agreement less
than 75% of the daytime schedule of WTMI consists of programming relating to
classical music, then the Surviving Corporation shall transfer to the WCCC/WBOQ
Buyer at no cost to the WCCC/WBOQ Buyer the classical music library of WTMI
within 10 business days of such date. If the Surviving Corporation intends at
any time prior to the fifth anniversary of this Agreement to cease to use the
call letters "WTMI", the Surviving Corporation shall notify the WCCC/WBOQ Buyer
and at the option of the WCCC/WBOQ Buyer, the Surviving Corporation shall use
commercially reasonable efforts to assist the WCCC/WBOQ Buyer to obtain such
call letters for any station owned by the WCCC/WBOQ Buyer.
4.2 Retained Assets.
(a) Except for the assets expressly described in Sections 4.1(b), (c) and
(d), in no event shall any assets used or useful in connection with the
operations of WTMI be included in the WCCC/WBOQ Assets and except for the
assets expressly described in Sections 4.1(b), (c) and (d), the Surviving
Corporation shall retain all of the assets used or useful in connection with
the operations of WTMI, including, without limitation, the following assets:
(i) the Tangible Personal Property used or useful in connection with the
operations of WTMI;
(ii) the Real Property used or useful in connection with the operations of
WTMI;
(iii) the Licenses used or useful in connection with the operations of WTMI;
(iv) the Contracts used or useful in connection with the operations of WTMI;
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(v) the Intangibles and all intangible assets of the Surviving Corporation
relating to WTMI that are not specifically included within the
Intangibles, including the goodwill of WTMI, if any;
(vi) all of the Surviving Corporation's proprietary information, technical
information and data, machinery and equipment warranties, maps,
computer discs and tapes, plans, diagrams, blueprints, and schematics,
including filings with the FCC, relating to the business and operation
of WTMI; and
(vii) all books and records relating to the business or operations of WTMI
and all records required by the FCC to be kept by WTMI.
(b) The WCCC/WBOQ Assets shall also exclude the following assets which
shall be retained by the Surviving Corporation:
(i) All of the Surviving Corporation's cash on hand as of the Closing and
all other cash in any of the Surviving Corporation's bank or savings
accounts; any insurance policies, letters of credit, deposits,
prepayments or other similar items and cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar
investments except for any current assets attributable to WCCC and WBOQ
and included in the calculation of the Working Capital under Section
3.3(a) and any trade and barter assets relating to WCCC and WBOQ;
(ii) Accounts Receivable attributable to WTMI;
(iii) All books and records that the Surviving Corporation is required by
law to retain or that pertain to the Surviving Corporation's corporate
organization;
(iv) Except as provided in Section 10.13, any pension, profit-sharing and
employee benefit plans; and
(v) Any other current assets included in the calculation of the Working
Capital and attributable to WTMI.
The assets described in Sections 4.2(a) and (b) shall be referred to as
the "Retained Assets."
4.3 Purchase Price. The purchase price for the WCCC/WBOQ Assets
shall be Twenty-Five Million Dollars ($25,000,000) (the "Asset Purchase
Price"), adjusted and paid as provided below:
(a) Prorations. The Asset Purchase Price shall be increased by the amount
of the current assets included in the calculation of the Working Capital under
Section 3.3(a) which are attributable to WCCC and WBOQ and shall be reduced by
the amount of the current liabilities included in the calculation of the
Working Capital under Section 3.3(a) which are attributable to WCCC and WBOQ,
which liabilities shall be assumed at Closing by the WCCC/WBOQ Buyer together
with any trade and barter liabilities attributable to WCCC and WBOQ.
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(b) Manner of Determining Adjustments. The Asset Purchase Price, taking
into account the adjustments and prorations pursuant to Section 4.3(a), will be
determined finally in accordance with the following procedures:
(i) Not later than five (5) business days before the Closing Date, the
Company shall prepare and deliver to the WCCC/WBOQ Buyer and the Parent a
preliminary statement which shall set forth the Company's good faith estimate of
the prorations to be made pursuant to Section 4.3(a) (the "Prorations
Statement"). The Prorations Statement shall contain all information reasonably
necessary to determine the adjustments to the Asset Purchase Price under Section
4.3(a) to the extent such adjustments can be determined or estimated as of the
date of such statement, and such other information as may be reasonably
requested by the WCCC/WBOQ Buyer and the Parent.
(ii) The final adjustments under Section 4.3(a) shall be equal to the
difference between the current assets and the current liabilities attributable
to WCCC and WBOQ in the calculation of the Final Adjusted Merger Consideration
under Section 3.7.
4.4 Payment of Purchase Price.
(a) Payment of Estimated Purchase Price. The WCCC/WBOQ Buyer shall make
available to the Disbursement Agent at Closing an amount in cash equal to the
Asset Purchase Price, as adjusted under Section 4.3(a) (the "Estimated Asset
Purchase Price") with instructions to the Disbursement Agent to disburse on the
Closing Date the Estimated Asset Purchase Price to the Surviving Corporation or
the Surviving Corporation's designee pursuant to Section 4.7 by wire transfer
of same day funds pursuant to wire instructions which shall be delivered by the
Parent to the Disbursement Agent at least two (2) days prior to the Closing
Date. In the event that the Asset Purchase Price exceeds the Estimated Asset
Purchase Price, the Surviving Corporation may elect to transfer to the
WCCC/WBOQ Buyer by wire transfer of same-day funds the amount of such excess,
and to direct the transfer of the entire unadjusted Asset Purchase Price to its
designee pursuant to Sections 4.6 and 4.7. At least five (5) business days
prior to the Closing, the Company, the WCCC/WBOQ Buyer and the equity holders
of the WCCC/WBOQ Buyer (the "WCCC/WBOQ Equity Holders") shall certify to Buyer
the identity of the WCCC/WBOQ Equity Holders and the amount of the Merger
Consideration payable to them at Closing that they have invested in the
WCCC/WBOQ Buyer and that they authorize the WCCC/WBOQ Buyer to make available
to the Disbursement Agent for disbursement of the Estimated Asset Purchase
Price to the Surviving Corporation or its designee.
(b) Payments to Reflect Adjustments.
(i) If the Asset Purchase Price as finally determined pursuant to Section
4.3(b)(ii) exceeds the Estimated Asset Purchase Price, the WCCC/WBOQ Buyer shall
pay to the Surviving Corporation or to the Surviving Corporation's designee
pursuant to Section 4.7, in immediately available funds within five (5) business
days after the date on which the Asset Purchase Price is finally determined
pursuant to Section 4.3(b)(ii), the difference between the Asset Purchase Price
and the Estimated Asset Purchase Price.
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(ii) If the Asset Purchase Price as finally determined pursuant to Section
4.3(b)(ii) is less than the Estimated Asset Purchase Price, the Surviving
Corporation shall pay to the WCCC/WBOQ Buyer, in immediately available funds
within five (5) business days after the date on which the Asset Purchase Price
is finally determined pursuant to Section 4.3(b)(ii), the difference between the
Asset Purchase Price and the Estimated Asset Purchase Price; provided, that in
no event shall the Surviving Corporation be required to make any payments to the
WCCC/WBOQ Buyer under this Section 4.4(b)(ii) until the date on which the Parent
has been paid in full by the Stockholders under Section 3.7(e), and upon receipt
by the Parent of such payment from the Stockholders, the Surviving Corporation
shall immediately pay to the WCCC/WBOQ Buyer the amount owed by the Surviving
Corporation under this Section 4.4(b)(ii).
4.5 Assumption of Liabilities and Obligations. Immediately following the
consummation of the Merger and as of the Closing Date, the WCCC/WBOQ Buyer
shall assume and undertake to pay, discharge and perform (i) all obligations
and liabilities of the Surviving Corporation under the Licenses and the
Contracts which are used or useful in the operations of WCCC and WBOQ insofar
as they relate to the time on and after the Closing Date, (ii) to the extent
set forth in Section 10.13, all obligations and liabilities of the Surviving
Corporation, if any, to any employee employed at WCCC and WBOQ prior to or at
the Effective Time, (iii) all obligations and liabilities relating to the
ownership and operations of WCCC and WBOQ on and after the Closing Date, (iv)
all claims and pending litigation or proceedings relating to the operations of
WCCC or WBOQ prior to or on and after the Closing Date, (v) all obligations and
liabilities of the Surviving Corporation for which the WCCC/WBOQ Buyer gets an
adjustment in its favor under Section 4.3(a), (vi) all obligations and
liabilities relating to the operations of WCCC and WBOQ prior to the Closing
Date for which the Parent has not received a credit in its favor under Section
3.3(a), (vii) the liabilities assumed by the WCCC/WBOQ Buyer under Section
4.3(a) and (viii) all obligations and liabilities under the AAA Agreement
(collectively, the "Assumed Liabilities").
4.6 Like Kind Exchange. The WCCC/WBOQ Buyer shall reasonably cooperate
with the Parent and the Surviving Corporation, as necessary, to qualify the
transfer of the WCCC/WBOQ Assets to the WCCC/WBOQ Buyer as part of a like-kind
exchange of property within the meaning of Section 1031 of the Code, which
cooperation shall include, without limitation, the acceptance of notice of the
assignment of the Parent's and/or the Surviving Corporation's respective rights
under this Agreement, and the manner in which the Purchase Price, as adjusted,
is paid to, and the WCCC/WBOQ Assets are transferred through, a qualified
intermediary (as defined in Treas. Reg. ss. 1.1031(i)-1(g)) (a "Qualified
Intermediary").
4.7 Qualified Intermediary. The Parent desires and intends to effect the
transfers of the WCCC/WBOQ Assets held by the Surviving Corporation, pursuant
to this Agreement as part of an exchange of like-kind properties under Section
1031 of the Code (the "1031 Exchange"). To facilitate the completion of the
1031 Exchange, the Surviving Corporation may assign to a Qualified Intermediary
its rights with respect to the transfer of the WCCC/WBOQ Assets, and its rights
to receive the Asset Purchase Price, as adjusted, transferred by the WCCC/WBOQ
Buyer. The parties hereto agree to cooperate with any other party to complete
the 1031 Exchange; provided, however that (i) the WCCC/WBOQ Buyer shall not
assume responsibility for the tax consequences to the Surviving Corporation or
the Parent arising out of the 1031
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<PAGE> 24
Exchange; (ii) any assignment(s) by the Surviving Corporation to a Qualified
Intermediary shall not limit or modify any obligations or liabilities of the
assigning party, and, notwithstanding any such assignment(s), the Surviving
Corporation shall remain directly and primarily bound by all conditions,
representations, warranties and covenants contained herein and all remedies
related thereto; (iii) title to the WCCC/WBOQ Assets shall be delivered by the
Surviving Corporation directly to the WCCC/WBOQ Buyer; (iv) the Qualified
Intermediary, and not the WCCC/WBOQ Buyer, shall be solely responsible for all
actions necessary to acquire and transfer any replacement property not being
acquired pursuant to this Agreement in connection with the 1031 Exchange; (v)
the 1031 Exchange shall be consummated only if it can be consummated on what
would otherwise be the Closing Date and shall not be consummated if doing so
would delay the Closing (whether because of the need for governmental consents
involving the Qualified Intermediary or for any other reason whatsoever); and
(vi) the Parent shall indemnify the Stockholders against any loss, cost or
damage sustained by them arising out of the 1031 Exchange.
4.8 Financial and Tax Reporting. The WCCC/WBOQ Buyer, the Parent, and the
Surviving Corporation agree to use reasonable business efforts to engage in the
mutually agreeable sharing of valuation information in order to obtain mutually
consistent financial and tax reporting, to the greatest extent practicable.
Section 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and Merger Sub as
follows which representations and warranties shall be true and correct as of
the date hereof and true and correct in all material respects as of the
Closing:
5.1 Organization, Standing, and Authority. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and is duly qualified and in good standing as a foreign
corporation in the jurisdictions listed on Schedule 5.1 hereto. The Company is
duly qualified to conduct business and is in good standing in all jurisdictions
where the nature of its business makes such qualification necessary, except
where the failure to do so would not have a material adverse effect on the
Company. The Company has all requisite power and authority (i) to own, lease,
and use its assets and property as now owned, leased, and used, (ii) to conduct
its businesses and operations as now conducted, and (iii) to execute and
deliver this Agreement and the documents contemplated hereby and thereby, and
to perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by it hereunder and thereunder. The Company is not
a participant in any joint venture or partnership with any other Person with
respect to any part of the operations of its assets. The Company does not
conduct any other business other than the operations of the Stations and an
associated website business.
5.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by the Company have been duly authorized by all
necessary actions on the part of the board of directors of the Company. This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid, and binding obligation of the Company, enforceable against it
in accordance with its terms except as the enforceability of this Agreement
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may be affected by bankruptcy, insolvency, or similar laws affecting creditors'
rights generally and by judicial discretion in the enforcement of equitable
remedies.
5.3 Capitalization of the Company; Stock Ownership. The authorized, issued
and outstanding capital stock of the Company is set forth on Schedule 5.3. All
issued and outstanding capital stock of the Company is owned beneficially and
of record in the manner set forth on Schedule 5.3. Schedule 5.3 also sets forth
a list of all of the outstanding options of the Company and the name of the
holders thereof. The Company Stock is validly issued, fully paid and
nonassessable. Other than this Agreement or as set forth on Schedule 5.3, there
is no subscription, option, warrant, call, right, agreement or commitment
obligating the Company to issue, deliver or sell any shares of the capital
stock of the Company or obligating the Company to grant, extend or enter into
any such option, warrant, call or other such right, agreement or commitment.
The Company has delivered to the Parent true and correct copies of the
certificate of incorporation and bylaws of the Company. Schedule 5.3 contains
the name and position of each officer and director of the Company. The Company
has no Subsidiaries and holds no equity interest in any Person.
5.4 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the Consents listed on Schedule 5.4, and making any filing required
under the HSR Act, the execution, delivery, and performance of this Agreement
and the documents contemplated hereby and thereby (with or without the giving
of notice, the lapse of time, or both): (i) do not require the consent of any
third party; (ii) will not conflict with any provision of the organizational
documents of the Company; (iii) will not conflict with, result in a breach of,
or constitute a default under, any law, judgment, order, ordinance, injunction,
decree, rule, regulation, or ruling of any court or governmental
instrumentality; (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which the Company is a
party or by which the Company may be bound; and (v) will not create any claim,
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon any of the Assets.
5.5 Governmental Licenses. Schedule 5.5 lists for each Station all of the
Licenses of such Station. The Company has delivered to the Parent true and
complete copies of the Licenses issued with respect to WTMI (the "WTMI
Licenses") (including any amendments and other modifications thereto). The WTMI
Licenses have been validly issued, and the Company is the authorized legal
holder thereof. The WTMI Licenses listed on Schedule 5.5 comprise all of the
material licenses, permits, and other authorizations required from any
governmental or regulatory authority for the lawful conduct of the business and
operations of WTMI in the manner and to the full extent they are now conducted,
and none of the WTMI Licenses is subject to any restriction or condition that
would limit in any material respect the operation of WTMI as now operated. The
WTMI Licenses are in full force and effect, and the conduct of the business and
operations of WTMI is in accordance therewith. The Company has no reason to
believe that any of the WTMI Licenses would not be renewed by the FCC or other
granting authority in the ordinary course. The Company is the holder of the
Licenses set forth on Schedule 5.5 with respect to WCCC and WBOQ and has the
right to assign such Licenses to the WCCC/WBOQ Buyer as contemplated by this
Agreement.
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5.6 Title to and Condition of Real Property. Schedule 5.6 lists all the
Real Property for each Station and the Company's interests therein. The Real
Property listed on Schedule 5.6 with respect to WTMI (the "WTMI Real Property")
comprises all real property interests necessary to conduct the business and
operations of WTMI as now conducted. The Company has good and marketable fee
simple title, insurable at standard rates, to all fee estates (including the
improvements thereon) included in the WTMI Real Property, free and clear of all
Encumbrances of any nature whatsoever, and without reservation or exclusion of
any mineral, timber, or other rights or interests, except for Permitted
Encumbrances. The Company is the lessee under the WTMI tower lease described on
Schedule 5.6. The WTMI tower lease is in full force and effect in accordance
with its terms. There is not under the WTMI tower lease, any default by the
Company or to the Company's knowledge, by any other party thereto or any event
that, after notice or lapse of time or both, could constitute a default. To the
Company's knowledge, all towers, guy anchors, and buildings and other
improvements used or useful in connection with the operations of WTMI are
located entirely on the WTMI Real Property listed in Schedule 5.6. The Company
has delivered to the Parent true and complete copies of all deeds and leases
pertaining to the WTMI Real Property. All WTMI Real Property (i) is in
operating condition consistent with its present use, (ii) is available for
immediate use in the conduct of the business and operations of WTMI, and (iii)
to the Company's knowledge, complies in all material respects with all
applicable building or zoning codes and the regulations of any governmental
authority having jurisdiction. To the Company's knowledge, the Company has full
legal and practical access to the WTMI Real Property. The Parent and the Merger
Sub acknowledge that the studio lease for WTMI will expire in September 2000.
5.7 Title to and Condition of Tangible Personal Property. Schedule 5.7
lists all material items of Tangible Personal Property for WTMI and all items
of Tangible Personal Property having an individual value of $50,000 or more for
each other Station. The Company owns and has good title to each item of
Tangible Personal Property used or useful in connection with the operations of
WTMI (the "WTMI Tangible Personal Property"), and none of the WTMI Tangible
Personal Property owned by the Company is subject to any Encumbrance, except
for Permitted Encumbrances. The Tangible Personal Property used in connection
with the operations of WTMI is operational so that it permits the transmission
of WTMI's signal in compliance with the FCC Licenses and applicable rules,
regulations and policies of the FCC and other applicable governmental
authorities.
5.8 Contracts. Schedule 5.8 is a true and complete list of all Contracts
except (a) Contracts with advertisers for the sale of advertising time on the
Stations for cash at prevailing rates and (b) Contracts entered into in the
ordinary course of business that do not involve liabilities at Closing in
excess of Twenty-Five Thousand Dollars ($25,000) individually and Two Hundred
Thousand Dollars ($200,000) in the aggregate for all such Contracts for WTMI
and One Hundred Thousand Dollars ($100,000) individually and Five Hundred
Thousand Dollars ($500,000) in the aggregate for the other Stations. The
Company has delivered to the Parent true and complete copies of all Contracts
listed on Schedule 5.8, true and complete memoranda of all oral Contracts
listed on Schedule 5.8 (including any amendments and other modifications to
such Contracts), and a schedule summarizing the Company's obligations under
trade and barter agreements relating to each Station. Schedule 5.8 also
includes an amortization schedule for all of the Stations' programming
Contracts prepared in accordance with the Company's normal practices and
accounting procedures. The Company has and, to the Company's knowledge, each
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<PAGE> 27
other party to the Contracts has complied in all material respects with all of
the terms and conditions of the Contracts and there is not under any Contract
any default by the Company, or to the Company's knowledge, by any party thereto
or any event that, after notice or lapse of time or both, could constitute a
default.
5.9 Consents. Except for the FCC Consent provided for in Section 10.1 and
the other Consents described in Schedule 5.4, and any filing required under the
HSR Act, no consent, approval, permit, or authorization of, or declaration to
or filing with any governmental or regulatory authority, or any other third
party is required to consummate the Merger and the WCCC/WBOQ Sale or to enable
the Surviving Corporation to conduct the business and operations of WTMI in
essentially the same manner as such business and operations are now conducted.
5.10 Intangibles. Schedule 5.10 is a true and complete list of all material
Intangibles for WTMI (exclusive of those listed in Schedule 5.5). The Company
is not infringing upon or otherwise acting adversely to any trademarks, trade
names, service marks, service names, copyrights, patents, patent applications,
know-how, methods, or processes owned by any other Person, and there is no
claim or action pending, or to the knowledge of the Company threatened, with
respect thereto.
5.11 Insurance. Schedule 5.11 is a true and complete list of all insurance
policies of the Company. All policies of insurance listed in Schedule 5.11 (i)
are adequate in amount with respect to and for the full value of the Assets,
(ii) are in full force and effect and (iii) insure the Assets and the business
of the Company against all customary and foreseeable risks.
5.12 Reports. All returns, reports, and statements that the Company is
currently required to file with the FCC or with any other governmental agency
with respect to WTMI have been filed, and all reporting requirements of the FCC
and other governmental authorities having jurisdiction over WTMI have been
complied with in all material respects. All of such returns, reports, and
statements are substantially complete and correct as filed. The Company has
timely paid to the FCC all annual regulatory fees payable with respect to the
FCC Licenses. All tower registration applications that the Company is required
to file with the FCC with respect to WTMI have been filed and the FCC has
issued registrations with respect to such towers.
5.13 Employee Plans and Matters.
(a) Schedule 5.13 includes a complete and accurate list of all employees
of the Company, their job descriptions, current compensation levels, dates of
hire and amounts and dates of last salary or wage increase as of the date of
this Agreement.
(b) All of the Company's Employee Plans and Compensation Arrangements are
listed in Schedule 5.13, and complete and accurate copies of (including any
amendments to) any such written Employee Plans and Compensation Arrangements
(or related insurance policies) have been furnished or made available to the
Parent, along with copies of any employee handbooks or similar documents
describing such Employee Plans and Compensation Arrangements. Any unwritten
Employee Plans or Compensation Arrangements also are listed in Schedule 5.13,
and complete descriptions have been furnished or made available to the Parent.
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Except as disclosed in Schedule 5.13, the Company is not a party to and does
not have in effect or to become effective after the date of this Agreement any
plan arrangement or other scheme which will become an Employee Plan or
Compensation Arrangement (including, but not limited to, any bonus, cash or
deferred compensation, severance, medical, pension, profit sharing or thrift,
stock option, employee stock ownership, life or group insurance, death benefit,
vacation, sick leave, disability or trust agreement or arrangement), or any
amendment to an Employee Plan or Compensation Arrangement.
(c) The Company has furnished or made available to the Parent the Forms
5500 filed for each of the Company's Employee Plans (including all attachments
and schedules), actuarial reports, summaries of material modifications, summary
annual reports, and any other employer notices (including, governmental filings
and descriptions of material changes to Employee Plans and/or Compensation
Arrangements) relating to the Company's Employee Plans for the last three plan
years, and the current summary plan descriptions.
(d) Each Employee Plan and Compensation Arrangement has been administered
in compliance with its own terms in all material respects and in material
compliance with the provisions of ERISA, the Code, the Age Discrimination in
Employment Act and any other applicable Federal or state laws.
(e) Neither the Company nor any ERISA Affiliate is contributing to, is
required to contribute to, or has contributed within the last six (6) years to,
any Multiemployer Plan, and neither the Company nor any ERISA Affiliate has
incurred within the last six (6) years, or reasonably expects to incur, any
"withdrawal liability," as defined under Section 4201 et seq. of ERISA.
(f) The Company is not aware of the existence of any governmental
inspection, investigation, audit or examination of any Employee Plan or
Compensation Arrangement listed on Schedule 5.13 or of any facts which would
lead it to believe that any such governmental inspection, investigation, audit
or examination is pending or threatened. There exists no action, suit or claim
(other than routine claims for benefits) with respect to any Employee Plan or
Compensation Arrangement pending or, to the knowledge of the Company,
threatened against any of such Employee Plan or Compensation Arrangement, and
the Company possesses no knowledge of any facts which could give rise to any
such action, suit or claim.
(g) Neither the Company nor any ERISA Affiliate sponsors, maintains or
contributes to any Employee Plan or Compensation Arrangement that provides
retiree medical or retiree life insurance coverage to former employees of the
Company, except to the extent required by Section 4980B of the Code or other
applicable law.
(h) Except as described in Schedule 5.13, with respect to each Employee
Plan and, to the extent applicable, each Compensation Arrangement: (i) each
Employee Plan that is intended to be tax-qualified, and each amendment thereto,
is the subject of a favorable determination letter, and no plan amendment that
is not the subject of a favorable determination letter would affect the
validity of an Employee Plan's letter; (ii) no condition or event exists or is
expected to occur that could reasonably be expected to subject, directly or
indirectly, the Company or any ERISA Affiliate to any material liability,
contingent or otherwise, or the
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<PAGE> 29
imposition of any lien on the assets of the Company or any ERISA Affiliate
under the Code or Title IV of ERISA whether to the Pension Benefit Guaranty
Corporation, the Internal Revenue Service, or any other person; (iii) no
Employee Plan ever has incurred an "accumulated funding deficiency," as such
term is defined in Section 302(a)(2) of ERISA and Section 412(a) of the Code,
whether or not waived, and otherwise always has fully met the funding standards
required under Title I of ERISA and Section 412 of the Code; (iv) no
"reportable event," as that term is defined in Section 4043(c)(1) through (8)
of ERISA and, to the knowledge of the Company, Section 4043(c)(9) of ERISA,
ever has occurred with respect to any Employee Plan and no reportable event
requires prior notice; (v) there are no unfunded liabilities with respect to
any tax-qualified Employee Plan, i.e., the actuarial present value of all
"benefit liabilities" (determined within the meaning of Section 401(a)(2) of
the Code) under such Employee Plan, whether or not vested, does not exceed the
current value of the assets of such Employee Plan; and (vi) no prohibited
transaction, within the definition of Section 4975 of the Code or Title 1, Part
4 of ERISA, has occurred which would subject the Company to material liability.
(i) Schedule 5.13 contains a complete and accurate list of qualified
beneficiaries as defined under Section 4980B(g)(1) of the Code, as of the
effective date of this Agreement (including qualified beneficiaries who are in
the election period for continuation coverage but who have not yet elected
continuation coverage), the date of the applicable qualifying event and the
nature of the qualifying event relating to the duration of such coverage.
Schedule 5.13 shall only contain the names of those qualified beneficiaries
whose status as such is attributable to prior employment at WTMI. There have
been no failures to provide continuation coverage as required by Section
4980B(f) of the Code that would result in any material liability to the
Company. The Company agrees to provide to the Parent prior to Closing an
updated list of such qualified beneficiaries, as described above, effective as
of the Closing Date.
(j) All contributions or premium payments with respect to Employee Plans
and Compensation Arrangements accrued for any period ending on or before the
Closing Date have been or will be timely paid by the Company before the Closing
Date or will be reflected in the computation of the Working Capital. Except as
disclosed in Schedule 5.13(j) neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
result in any payment (including, without limitation, severance, stay bonus, or
unemployment compensation) becoming due to any director or employee of the
Company, (ii) result in the acceleration of vesting under any Employee Plan or
Compensation Arrangement, or (iii) increase any benefits otherwise payable
under any Employee Plan or Compensation Arrangement; and any such payment or
increase in benefits is fully deductible by Company under the Code, including
but not limited to Sections 162, 280G and 404.
(k) All Employee Plans listed on Schedule 5.13 that provide health and
welfare benefits coverage to current and/or former employees, directors or
independent contractors of the Company or any other trade or business under
common control with the Company (within the meaning of Sections 414(b), (c),
(m) or (o) of the Code), including the Surviving Corporation, are fully
insured.
(l) For purposes of this Agreement, the following terms shall have the
meaning indicated: (i) "Employee Plan" shall mean any retirement or welfare
plan or arrangement or any other employee benefit plan as defined in Section
3(3) of ERISA to which
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the Company or any ERISA Affiliate contributes or to which the Company or any
ERISA Affiliate sponsors, maintains or otherwise is bound; (ii) "Code" shall
mean the Internal Revenue Code of 1986, as amended, any successor thereto and
any regulations promulgated thereunder; (iii) "Compensation Arrangement" shall
mean any plan or compensation arrangement other than an Employee Plan, whether
written or unwritten, which provides to employees, former employees, officers,
directors and shareholders of the Company or any ERISA Affiliate any
compensation or other benefits, whether deferred or not, in excess of base
salary or wages, including, but not limited to, any bonus or incentive plan,
stock rights plan, deferred compensation arrangement, life insurance, stock
purchase plan, severance pay plan and any other employee fringe benefit plan;
(iv) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, any successor thereto and any regulations promulgated thereunder; (v)
"Multiemployer Plan" means a plan, as defined in ERISA Section 3(37), to which
the Company or any ERISA Affiliate has contributed, is contributing or is
required to contribute; and (vi) "ERISA Affiliate" shall mean any trade or
business related to the Company under the terms of Sections 414(b), (c), (m) or
(o) of the Code.
5.14 Tax Matters. Except as set forth on Schedule 5.14 hereof:
(a) The Company has filed or has caused to be filed in accordance with
applicable law all Tax Returns of the Company required to be filed with the
appropriate governmental authorities in all jurisdictions in which such Tax
Returns are required to be filed by the Company (except Tax Returns for which
the filing date has not expired or has been extended and such extension period
has not expired and Tax Returns which the failure to file would not,
individually or in the aggregate, have a material adverse effect on the
Company), and all Taxes shown on such Tax Returns and any other Taxes claimed
to be due by any federal or state taxing authority have been properly paid to
the extent such Taxes have become due and payable. All such Tax Returns are
correct and complete in all material respects. The Company has also paid all
Taxes required to be paid but for which no Tax Return was required to be filed,
to the extent such Taxes have become due and payable. The Company has delivered
to Parent true and complete copies of all income Tax Returns of the Company for
the tax years ended December 31, 1997, and December 31, 1998 (and will deliver
true and complete copies of all income Tax Returns of the Company for the tax
year ended December 31, 1999, and any other income Tax Returns filed after the
date hereof, within 30 days after filing unless otherwise provided in Section
10.14.) Schedule 5.14 lists all jurisdictions where Tax Returns are required to
be filed with respect to the Company except for any jurisdiction for which a
failure to file such Tax Returns, individually or in the aggregate, would not
have a material adverse effect on the Company. The Financial Statements for the
period ended January 31, 2000 reflect an adequate reserve in accordance with
GAAP (without regard to any amounts reserved for deferred taxes) for all unpaid
Taxes payable by the Company for all Tax periods and portions thereof through
the date of such Financial Statements.
(b) The Company has not executed any waiver or extension of any statute of
limitations on the assessment or collection of any Tax or with respect to any
liability arising therefrom which waiver or extension remains in effect. None
of the federal, state or local income Tax Returns filed by or on behalf of the
Company are currently being audited by any taxing authority, and there are no
other examinations, requests for information or other administrative or
judicial proceedings pending with respect to Taxes of the Company. Neither
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the Internal Revenue Service nor any other taxing authority has asserted any
deficiency or claim for additional Taxes against, or any adjustment of Taxes
relating to the Company, and there are no proposed reassessments of any
property owned by the Company that would affect the Taxes of the Company. There
are no Tax liens on any assets of the Company, other than liens for current
Taxes not yet due and payable without penalty and liens for Taxes that are
being contested in good faith by appropriate proceedings.
(c) The Company has not been at any time a member of any partnership,
joint venture or other arrangement or contract which is treated as a
partnership for federal, state, local or foreign tax purposes or the holder of
a beneficial interest in any trust for any period for which the statute of
limitations for any Tax has not expired.
(d) As of the Closing, there will be no tax sharing agreements or similar
arrangements with respect to or involving the Company. The Company is not, and
has never been, a member of an affiliated group filing a consolidated federal
income tax return pursuant to Sections 1501 of the Code or comparable
provisions of any State or local law. The Company has no liability for the
Taxes of any Person pursuant to Section 1.1502-6 of the Treasury Regulations
promulgated under the Code or comparable provisions of any taxing authority in
respect of a consolidated, combined or unitary Tax Return, or as a transferee
or successor to any other Person.
(e) No consent under Section 341(f) of the Code has ever been filed with
respect to the Company.
(f) The Company is not, and for the five years preceding the Closing Date
has not been, a "United States real property holding corporation" within the
meaning of Section 897(c)(2) of the Code.
(g) Within sixty (60) days following the date of this Agreement, the
Company shall deliver to the Parent a summary setting forth: (i) the tax basis
of the assets of the Company as of December 31, 1998 and estimated as of
December 31, 1999; (ii) the net operating loss carryover, general business
credit carryover, alternative minimum tax carryover and capital loss carryover
of the Company available for federal, state and local income tax purposes as of
December 31, 1998 and estimated as of December 31, 1999; and (iii) all federal,
state and local tax elections in effect for the Company as of December 31,
1998.
(h) As of December 31, 1999, the aggregate net operating loss carryover
under Code Section 172 of the Company for all taxable years ending on or prior
to December 31, 1999 is estimated to be not less than $7,500,000, and as of the
Effective Time (assuming the exercise of all outstanding stock options and
payment of the amounts set forth in John Riccardi's employment agreement), the
aggregate net operating loss carryover under Code Section 172 of the Company
for all taxable years ending on or prior to the taxable year ending on the
Effective Time is estimated to be not less than $14,000,000.
5.15 Claims and Legal Actions. Except for any FCC rulemaking proceedings
generally affecting the broadcasting industry and except as set forth in
Schedule 5.15, there is no claim, legal action, counterclaim, suit,
arbitration, governmental investigation or other legal,
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administrative, or tax proceeding, nor any order, decree or judgment, in
progress or pending, or to the knowledge of the Company threatened, against or
relating to the Company nor does the Company know or have reason to be aware of
any basis for the same.
5.16 Environmental Matters. To the Company's knowledge:
(a) The Company has complied in all material respects with all laws, rules,
and regulations of all federal, state, and local governments (and all agencies
thereof) concerning the environment, public health and safety, and employee
health and safety, and no charge, complaint, action, suit, proceeding, hearing,
investigation, claim, demand, or notice has been filed or commenced against the
Company alleging any material failure to comply with any such law, rule, or
regulation.
(b) The Company has no liability (and there is no basis related to the past
or present operations, properties, or facilities of the Company for any present
or future charge, complaint, action, suit, proceeding, hearing, investigation,
claim, or demand against the Company giving rise to any such liability) under
the Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Federal Water Pollution Control
Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances
Control Act, the Refuse Act, or the Emergency Planning and Community
Right-to-Know Act (each as amended) or any other law, rule, or regulation of
any federal, state, or local government (or agency thereof) concerning release
or threatened release of hazardous substances, public health and safety, or
pollution or protection of the environment.
(c) The Company has no material liability (and there is no basis for any
present or future charge, complaint, action, suit, proceeding, hearing,
investigation, claim, or demand against the Company giving rise to any such
liability) under the Occupational Safety and Health Act, as amended, or under
any other law, rule, or regulation of any federal, state, or local government
(or agency thereof) concerning employee health and safety.
(d) The Company has obtained and been in compliance with all of the terms
and conditions of all material permits, licenses, and other authorizations
which are required under, and has complied with all other material limitations,
restrictions, conditions, standards, prohibitions, requirements, obligations,
schedules, and timetables which are contained in, all federal, state, and local
laws, rules, and regulations (including all codes, plans, judgments, orders,
decrees, stipulations, injunctions, and charges thereunder) relating to public
health and safety, worker health and safety, and pollution or protection of the
environment, including laws relating to emissions, discharges, releases, or
threatened releases of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling of
pollutants, contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes.
(e) All properties and equipment used in the business of the Company are
and have been free of asbestos and asbestos-related products, PCB's, methylene
chloride, trichloroethylene, 1, 2-trans-dichloroethylene, dioxins,
dibenzofurans, and Extremely Hazardous
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Substances (as defined in Section 302 of the Emergency Planning and Community
Right-to-Know Act).
(f) No pollutant, contaminant, or chemical, industrial, hazardous, or
toxic material or waste has ever been manufactured, buried, stored, spilled,
leaked, discharged, emitted, or released by the Company at any site including
on the Real Property or by any other party on any Real Property in a manner
that could result in a material liability under any environmental laws or
regulations.
5.17 Compliance with Laws. To the Company's knowledge, the Company has
complied in all material respects with the WTMI Licenses and all federal,
state, and local laws, rules, regulations, and ordinances. To the Company's
knowledge, neither the ownership or use of the properties of the Stations nor
the conduct of the business or operations of the Company conflicts with the
rights of any other person or entity.
5.18 Conduct of Business in Ordinary Course. Since December 31, 1999, the
Company has conducted the business and operations of the Stations only in the
ordinary course and has not:
(a) Suffered any adverse change (other than changes generally affecting
the radio broadcasting industry or the Miami/Ft. Lauderdale radio broadcasting
market) in the business, assets, properties, prospects or condition (financial
or otherwise) of the Company materially and adversely affecting the valuation
of WTMI as a licensed and transmitting radio broadcasting facility without
regard to its programming format, employees or results of operations (it being
acknowledged that adverse changes having an effect on the Company's Working
Capital will be given effect through the Working Capital adjustment in Section
3.3(a)).
(b) Made any material increase in compensation payable or to become payable
to any of the employees of the Company, or any bonus payment made or promised
to any employee of the Company, or any material change in personnel policies,
employee benefits, or other compensation arrangements affecting the employees
of the Company;
(c) Made any sale, assignment, lease, or other transfer of any of WTMI's
properties other than in the normal and usual course of business with suitable
replacements being obtained therefor; or
(d) Transferred or granted any right under, or entered into any settlement
regarding the breach or infringement of, any license, patent, copyright,
trademark, trade name, franchise, or similar right, or modified any existing
right of the Company.
5.19 Financial Statements. The Company has furnished the Parent with true
and complete copies of audited balance sheets of the Company for the period
ended December 31, 1998, unaudited balance sheets of the Company for the period
ended December 31, 1999 and unaudited balance sheets of the Company for the
period ending January 31, 2000 ("Financial Statements") which are attached
hereto as Schedule 5.19. The Financial Statements have been prepared from the
books and records of the Company, have been prepared in accordance with
generally accepted accounting principles consistently applied and maintained
throughout the periods indicated, accurately reflect the books, records, and
accounts of the Company (which
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books, records, and accounts are complete and correct), are complete and
correct in all material respects, and present fairly the financial condition of
the Company as at their respective dates. None of the Financial Statements
fails to disclose any material contingent liabilities of the Company that are
required to be disclosed in accordance with GAAP. Except for obligations and
liabilities (i) set forth in the Financial Statements or (ii) incurred in the
ordinary course of business (other than contingent liabilities) since the date
of the most recent balance sheet included in the Financial Statements, the
Company has no liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise). No dividends have been declared on any
capital stock of the Company which are unpaid.
5.20 Transactions with Affiliates. Except as disclosed in Schedule 5.20, the
Company has not been involved in any business arrangement or relationship in
connection with WTMI with any Stockholder or any affiliate of any Stockholder
or the Company, and no Stockholder or affiliate of the Company or any
Stockholder owns any property or right, tangible or intangible, which is used
in the business of WTMI. As used in this paragraph, "affiliate" has the meaning
set forth in Rule 12b-2 promulgated under the Securities and Exchange Act of
1934.
5.21 Broker. Neither the Company nor any person acting on the Company's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
5.22 Full Disclosure. No representation or warranty made by the Company in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by the Company pursuant hereto intentionally, knowingly or
recklessly contains or will contain any untrue statement of a material fact, or
intentionally, knowingly or recklessly omits or will omit to state any material
fact and required to make any statement made herein or therein not misleading.
5.23 Labor Relations. The Company is not a party to or subject to any
collective bargaining agreements. The Company has no written or oral contracts
of employment other than those listed in Schedule 5.7. The Company has complied
in all material respects with all laws, rules, and regulations relating to the
employment of labor, including those related to wages, hours, collective
bargaining, occupational safety, discrimination, and the payment of social
security and other payroll related taxes, and the Company has not received any
written notice alleging that it has failed to comply with any such laws, rules,
or regulations. No controversies, disputes, or proceedings are pending or, to
the Company's knowledge, threatened, between the Company and any employee
(singly or collectively). No labor union or other collective bargaining unit
represents or claims to represent any of the employees of the Company. There is
no union campaign being conducted to represent employees of the Company or to
solicit cards from employees to authorize a union to request a National Labor
Relations Board certification election with respect to any employees of the
Company.
5.24 Bank Accounts; Powers of Attorney. All of the Company's bank accounts,
and the names of all authorized signatories on all such accounts, are set forth
on Schedule 5.24. All of the Company's powers of attorney are also set forth on
Schedule 5.24.
5.25 Certain Statutes. The Stockholders and the Company have taken all
appropriate and necessary actions to ensure that the restrictions on business
combinations in Section 203 of
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the DGCL will not have any effect on the Merger or the other transactions
contemplated by this Agreement. No "fair price," "moratorium," "control share
acquisition" or other similar state or federal anti-takeover statute or
regulation (each a "Takeover Statute") is applicable to the Merger or the other
transactions contemplated by this Agreement.
Section 6. REPRESENTATIONS AND WARRANTIES OF THE PARENT
The Parent represents and warrants to the Company and the WCCC/WBOQ
Buyer as follows which representations and warranties shall be true and correct
as of the date hereof and true and correct in all material respects as of the
Closing:
6.1 Organization, Standing, and Authority. The Parent is a corporation duly
organized, validly existing, and in good standing under the laws of the State
of Delaware. The Parent has all requisite power and authority to execute and
deliver this Agreement and the documents contemplated hereby and thereby, and
to perform and comply with all of the terms, covenants, and conditions to be
performed and complied with by the Parent hereunder and thereunder.
6.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by the Parent have been duly authorized by all
necessary actions on the part of the Parent. This Agreement has been duly
executed and delivered by the Parent and constitutes the legal, valid, and
binding obligations of the Parent, enforceable against the Parent in accordance
with its terms except as the enforceability of this Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
6.3 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the Consents listed on Schedule 6.3, and making any filing required
under the HSR Act, the execution, delivery, and performance by the Parent of
this Agreement and the documents contemplated hereby and thereby (with or
without the giving of notice, the lapse of time, or both): (i) do not require
the consent of any third party; (ii) will not conflict with the organizational
documents of the Parent; (iii) will not conflict with, result in a breach of,
or constitute a default under, any law, judgment, order, injunction, decree,
rule, regulation, or ruling of any court or governmental instrumentality; or
(iv) will not conflict with, constitute grounds for termination of, result in a
breach of, constitute a default under, or accelerate or permit the acceleration
of any performance required by the terms of, any agreement, instrument,
license, or permit to which the Parent is a party or by which the Parent may be
bound, in each case under clauses (i) (ii), (iii) and (iv), such that the
Parent could not perform its obligations under this Agreement.
6.4 Broker. Neither the Parent nor any person acting on the Parent's behalf
has incurred any liability for any finders' or brokers' fees or commissions in
connection with the transactions contemplated by this Agreement.
6.5 The Parent's Qualifications. The Parent is in all material respects
legally, financially and otherwise qualified to acquire control of the Company
under the Communications Act of 1934, as amended (the "Act"), and the rules,
regulations and policies of the FCC.
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6.6 Full Disclosure. No representation or warranty made by the Parent in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by the Parent pursuant hereto intentionally, knowingly or
recklessly contains or will contain any untrue statement of a material fact, or
intentionally, knowingly or recklessly omits or will omit to state any material
fact and required to make any statement made herein or therein not misleading.
6.7 WCCC/WBOQ Sale. Following the consummation of the Merger, the Parent
hereby represents to the WCCC/WBOQ Buyer that subject to the terms and
conditions of this Agreement, the Surviving Corporation shall have the right to
assign the FCC Licenses of WCCC and WBOQ to the WCCC/WBOQ Buyer. Other than as
set forth in the previous sentence, the Company, the Surviving Corporation, the
Parent and the Merger Sub make no representations or warranties whatsoever to
the WCCC/WBOQ Buyer, whether express or implied, relating to the WCCC/WBOQ Sale
or the WCCC/WBOQ Assets.
6.8 Litigation. Except for administrative rulemaking or other proceedings
of general applicability to the radio broadcast industry, there is, as of the
date hereof, no civil, criminal or administrative action, notice of apparent
violation, notice of apparent liability, suit, demand, claim, complaint,
hearing, litigation, action, proceeding or investigation of any nature pending
or, to the Parent's knowledge, threatened against or affecting it that would
materially adversely impair the ability of the Parent to consummate the
transactions contemplated by, or to satisfy its obligations under, this
Agreement, or delay in any material respect or prevent the consummation of any
of the transactions contemplated by this Agreement.
Section 7. REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Merger Sub represents and warrants to the Company and the WCCC/WBOQ
Buyer as follows which representations and warranties shall be true and correct
as of the date hereof and true and correct in all material respects as of the
Closing:
7.1 Organization, Standing, and Authority. Merger Sub is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Merger Sub has all requisite power and authority to execute
and deliver this Agreement and the documents contemplated hereby and thereby,
and to perform and comply with all of the terms, covenants, and conditions to
be performed and complied with by Merger Sub hereunder and thereunder.
7.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by Merger Sub have been duly authorized by all
necessary actions on the part of Merger Sub. This Agreement has been duly
executed and delivered by Merger Sub and constitutes the legal, valid, and
binding obligations of Merger Sub, enforceable against Merger Sub in accordance
with its terms except as the enforceability of this Agreement may be affected
by bankruptcy, insolvency, or similar laws affecting creditors' rights
generally and by judicial discretion in the enforcement of equitable remedies.
7.3 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the Consents listed on Schedule 7.3, and making any filing required
under the HSR Act, the execution, delivery, and performance by Merger Sub of
this Agreement and the documents
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contemplated hereby and thereby (with or without the giving of notice, the
lapse of time, or both): (i) do not require the consent of any third party;
(ii) will not conflict with the organizational documents of Merger Sub; (iii)
will not conflict with, result in a breach of, or constitute a default under,
any law, judgment, order, injunction, decree, rule, regulation, or ruling of
any court or governmental instrumentality; or (iv) will not conflict with,
constitute grounds for termination of, result in a breach of, constitute a
default under, or accelerate or permit the acceleration of any performance
required by the terms of, any agreement, instrument, license, or permit to
which Merger Sub is a party or by which Merger Sub may be bound, in each case
under clauses (i) through (iv) such that Merger Sub could not perform its
obligations under this Agreement.
7.4 Broker. Neither Merger Sub nor any person acting on Merger Sub's
behalf has incurred any liability for any finders' or brokers' fees or
commissions in connection with the transactions contemplated by this Agreement.
7.5 Full Disclosure. No representation or warranty made by Merger Sub in
this Agreement or in any certificate, document, or other instrument furnished
or to be furnished by Merger Sub pursuant hereto intentionally, knowingly or
recklessly contains or will contain any untrue statement of a material fact, or
intentionally, knowingly or recklessly omits or will omit to state any material
fact and required to make any statement made herein or therein not misleading.
Section 8. REPRESENTATIONS AND WARRANTIES OF THE WCCC/WBOQ BUYER
The WCCC/WBOQ Buyer represents and warrants to the Parent and Merger
Sub and at Closing to the Surviving Corporation as follows which
representations and warranties shall be true and correct as of the date hereof
and true and correct in all material respects as of the Closing:
8.1 Organization, Standing, and Authority. The WCCC/WBOQ Buyer is a
limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware and at Closing, will be duly
qualified to conduct business as a foreign limited liability company under the
laws of the State of Connecticut and Massachusetts. The WCCC/WBOQ Buyer has all
requisite power and authority to execute and deliver this Agreement and the
documents contemplated hereby and thereby, and to perform and comply with all
of the terms, covenants, and conditions to be performed and complied with by
the WCCC/WBOQ Buyer hereunder and thereunder.
8.2 Authorization and Binding Obligation. The execution, delivery, and
performance of this Agreement by the WCCC/WBOQ Buyer have been duly authorized
by all necessary actions on the part of the WCCC/WBOQ Buyer. This Agreement has
been duly executed and delivered by the WCCC/WBOQ Buyer and constitutes the
legal, valid, and binding obligations of the WCCC/WBOQ Buyer, enforceable
against the WCCC/WBOQ Buyer in accordance with its terms except as the
enforceability of this Agreement may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally and by judicial discretion
in the enforcement of equitable remedies.
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8.3 Absence of Conflicting Agreements. Subject to obtaining the FCC
Consent, the Consents listed on Schedule 8.3, and making any filing required
under the HSR Act, the execution, delivery, and performance by the WCCC/WBOQ
Buyer of this Agreement and the documents contemplated hereby and thereby (with
or without the giving of notice, the lapse of time, or both): (i) do not
require the consent of any third party; (ii) will not conflict with the
organizational documents of the WCCC/WBOQ Buyer; (iii) will not conflict with,
result in a breach of, or constitute a default under, any law, judgment, order,
injunction, decree, rule, regulation, or ruling of any court or governmental
instrumentality; or (iv) will not conflict with, constitute grounds for
termination of, result in a breach of, constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any agreement, instrument, license, or permit to which the WCCC/WBOQ Buyer
is a party or by which the WCCC/WBOQ Buyer may be bound, in each case under
clauses (i) through (iv) such that the WCCC/WBOQ Buyer could not acquire or
operate the WCCC/WBOQ Assets.
8.4 Broker. Neither the WCCC/WBOQ Buyer nor any person acting on the
WCCC/WBOQ Buyer's behalf has incurred any liability for any finders' or
brokers' fees or commissions in connection with the transactions contemplated
by this Agreement.
8.5 WCCC/WBOQ Buyer's Qualifications. The WCCC/WBOQ Buyer is in all
material respects legally, financially and otherwise qualified to acquire the
WCCC/WBOQ Assets under the Act and the rules, regulations and policies of the
FCC.
8.6 Availability of Funds. The WCCC/WBOQ Buyer will have available on the
Closing Date sufficient funds to acquire the WCCC/WBOQ Assets.
8.7 Full Disclosure. No representation or warranty made by the WCCC/WBOQ
Buyer in this Agreement or in any certificate, document, or other instrument
furnished or to be furnished by the WCCC/WBOQ Buyer pursuant hereto
intentionally, knowingly or recklessly contains or will contain any untrue
statement of a material fact, or intentionally, knowingly or recklessly omits
or will omit to state any material fact and required to make any statement made
herein or therein not misleading.
Section 9. OPERATIONS OF THE STATION PRIOR TO CLOSING
9.1 Generally. The Company agrees that, between the date of this Agreement
and the Closing Date, the Company shall operate without material exception its
business in the ordinary course of business in accordance with its past
practices (except where such conduct would conflict with the following
covenants or with the Company's other obligations under this Agreement), and in
accordance with the other covenants in this Section 9.
9.2 Employees and Compensation. Except as specifically contemplated by this
Agreement, the Company shall not take any action to (i) institute any
severance, retention or termination pay practices with respect to any
directors, officers or employees of the Company or to increase the benefits
payable under its severance or termination pay practices in effect on the date
hereof and set forth in Schedule 5.13; (ii) increase the compensation payable,
or to become payable, to employees of the Company, except as required by
existing written agreements disclosed in Schedule 5.13 or increases in the
ordinary course of business consistent with past
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practice not exceeding 5% for any individual employee; (iii) adopt any Employee
Plan or Compensation Arrangement; (iv) amend any Employee Plan or Compensation
Arrangement; (v) pay or award or agree to pay or award any pension, retirement
allowance or other incentive awards or other employee benefit not required by
this Agreement or any of the Employee Plans or Compensation Arrangements to any
current or former director, officer or employee of the Company; (vi) enter into
any collective bargaining agreement covering any employees, through negotiations
or otherwise, or make any commitments or incur any liability to any labor
organization with respect to any employees of the Company; (vii) renew,
terminate, waive or amend, except as may be required by applicable law, any
collective bargaining agreement; or (viii) voluntarily recognize any union or
other entity as the collective bargaining representative for any of the
employees of the Company.
9.3 Contracts. Without the written consent of the Parent, the Company will
not enter into any contract or commitment, or amend or terminate any Contract
(or waive any material right thereunder), or incur any obligations (including
obligations relating to the borrowing of money or the guaranteeing of
indebtedness), except for (a) cash time sales agreements made in the ordinary
course of business, (b) Contracts entered into in the ordinary course of
business and having a cost or value of Twenty-Five Thousand Dollars ($25,000) or
less individually or Two Hundred Thousand Dollars ($200,000) or less in the
aggregate, and (c) Contracts relating to WCCC and WBOQ which will be assumed at
Closing by the WCCC/WBOQ Buyer so that the Surviving Corporation will have no
liability thereunder following the Closing. Prior to the Closing Date, the
Company shall deliver to the Parent a list of all Contracts entered into between
the date of this Agreement and the Closing Date, together with copies of such
Contracts. Prior to Closing, the Company shall use its commercially reasonable
best efforts to obtain the cancellation of its agreement with Advertising Agency
Associates (the "AAA Agreement"). To the extent the Company is unable to obtain
the cancellation of the AAA Agreement prior to Closing, the WCCC/WBOQ Buyer
shall assume at Closing all obligations and liabilities of the Company under the
AAA Agreement.
9.4 Disposition of Assets. The Company shall not sell, assign, lease, or
otherwise transfer or dispose of any of the Assets used or useful in connection
with the operations of WTMI, except where no longer used or useful in the
business or operations of any Station or in connection with the acquisition of
replacement property of equivalent kind and value.
9.5 Encumbrances. The Company shall not create, assume or permit to exist
any claim, liability, mortgage, lien, pledge, condition, charge, or encumbrance
of any nature whatsoever upon the Assets used or useful in connection with the
operations of WTMI, except for Permitted Liens and Encumbrances existing on the
date hereof which shall be removed prior to or concurrently with the Closing.
9.6 Licenses. The Company shall not cause or permit, by any act or failure
to act, any of the WTMI Licenses to expire or to be revoked, suspended, or
modified adversely, or take any action that could cause the FCC or any other
governmental authority to institute proceedings for the suspension, revocation,
or adverse modification of any of the WTMI Licenses. The Company shall not fail
to prosecute with due diligence any applications to any governmental authority
in connection with the operation of WTMI.
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9.7 Rights. The Company shall not waive any material right relating to WTMI.
The Company shall not make any Tax elections or compromise any Tax liabilities
without the Parent's prior consent.
9.8 No Inconsistent Action. Neither the Company nor the WCCC/WBOQ Buyer shall
take any action that is inconsistent with its obligations under this Agreement
or that could hinder or delay the consummation of the transactions contemplated
by this Agreement.
9.9 Access to Information. The Company shall give the Parent and its counsel,
accountants, engineers, and other authorized representatives reasonable access
to the Assets and to all other properties, equipment, books, records,
Contracts, and documents of the Company or otherwise relating to the Stations
for the purpose of audit and inspection, including inspections incident to the
environmental study described in Section 10.6 and the engineering study
described in Section 10.7, and will furnish or cause to be furnished to the
Parent or its authorized representatives all information with respect to the
affairs and business of the Stations and the Company that the Parent may
reasonably request (including any financial reports and operations reports
produced with respect to the affairs and business of the Stations). Without
limiting the generality of the foregoing, the Company shall give the Parent and
its counsel, accountants and other authorized representatives reasonable access
to the Company's financial records and the Company's employees, counsel,
accountants and other representatives for the purpose of preparing and auditing
such financial statements as the Parent determines, in its reasonable judgment,
are required or advisable to comply with federal or state securities laws and
the rules and regulations of securities markets as a result of the execution
and delivery of this Agreement or the consummation of the transactions
contemplated hereby.
9.10 Maintenance of Assets. The Company shall use its commercially reasonable
best efforts and take all reasonable actions to maintain all of the Assets used
or useful in connection with the operations of WTMI in substantially the same
condition as such Assets are on the date hereof (ordinary wear and tear
excepted), and use, operate, and maintain all of such Assets in a reasonable
manner and in accordance with the terms of the FCC Licenses, all rules and
regulations of the FCC and generally accepted standards of good engineering
practice. The Company shall maintain inventories of spare parts and expendable
supplies for WTMI at levels consistent with past practices. If any loss,
damage, impairment, confiscation, or condemnation of or to any of the Assets
used or useful in connection with the operations of WTMI occurs, the Company
shall repair, replace, or restore such Assets to their prior condition as soon
thereafter as possible, and the Company shall use the proceeds of any claim
under any insurance policy solely to repair, replace, or restore any of such
Assets that are lost, damaged, impaired, or destroyed.
9.11 Insurance. The Company shall maintain adequate insurance policies on the
Stations and the Assets.
9.12 Consents. The Company shall use its commercially reasonable best efforts
to obtain the Consents, without any change in the terms or conditions of any
Contract that could be less advantageous to WTMI or the Surviving Corporation
than those pertaining under such Contract as in effect on the date of this
Agreement. The Company shall promptly advise the Parent of any difficulties
experienced in obtaining any of the Consents and of any conditions proposed,
considered, or requested for any of the Consents. Upon the Parent's request,
the
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Company shall cooperate with the Parent and use its commercially reasonable
best efforts to obtain from the lessor under WTMI's tower lease such customary
estoppel certificates as the Parent may reasonably request.
9.13 Books and Records. The Company shall maintain its books and records in
accordance with past practices.
9.14 Notification. The Company shall promptly notify the Parent in writing of
any unusual or material developments with respect to the business or operations
of the Stations or the Company, and of any material change in any of the
information contained in the Company's representations and warranties contained
in Section 5 of this Agreement. The WCCC/WBOQ Buyer shall promptly notify the
Parent of any material change in any information contained in its
representations and warranties contained in Section 8 of this Agreement.
9.15 Financial Information. The Company shall furnish to the Parent such
financial information (including information on payables and receivables) as
the Parent may reasonably request. All financial information delivered by the
Company to the Parent pursuant to this Section shall accurately reflect the
books, records, and accounts of the Company, shall be complete and correct in
all material respects, and shall present fairly the financial condition of the
Company as at their respective dates. The Company shall deliver to the Parent
audited financial statements for fiscal year ended 1999 no later than March 31,
2000.
9.16 Compliance with Laws. The Company shall comply in all material respects
with all laws, rules, and regulations.
9.17 Collection of Accounts Receivable. The Company shall collect the accounts
receivable of the Stations only in the ordinary course consistent with its past
practices and will not take any action designed or likely to accelerate the
collection of its accounts receivable.
9.18 Capital Expenditures. The Company shall continue to make capital
expenditures with respect to WTMI that materially conform to the Company's
budget for fiscal 2000, as described on Schedule 9.18.
9.19 Mergers. The Company shall not permit its reorganization, liquidation,
merger or consolidation with any other entity.
9.20 Amendments. The Company shall not amend, change or modify its certificate
of incorporation or bylaws.
9.21 Securities. Except with respect to the issuance of shares of the Company
upon the exercise of stock options described on Schedule 5.3 and except with
respect to the possible issuance to employees of the Company of additional
options to acquire up to 5,000 additional shares of Company Stock, the Company
shall not issue any shares of its capital stock or any options, warrants or
other rights to acquire any shares of its capital stock. The Company shall not
declare any dividends or make any other distributions with respect to its
capital stock, split, combine or reclassify any of its capital stock or acquire
or redeem any of its capital stock or any other equity interest in the Company.
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9.22 Termination of Certain Agreements. Prior to or at Closing, the Company
shall terminate all agreements and transactions between it, on the one hand,
and any of its affiliates, Stockholders or affiliates of Stockholders, on the
other hand, including, without limitations, the agreements listed on Schedule
9.22; provided, however, that any Stockholder may offset any amount owed by it
to the Company against the portion of the Adjusted Preliminary Merger
Consideration payable to such Stockholder at Closing. Following the Closing,
the Surviving Corporation shall have no liability under such agreements and
transactions whatsoever.
Section 10. SPECIAL COVENANTS AND AGREEMENTS
10.1 FCC Consent.
(a) The consummation of the Merger and the WCCC/WBOQ Sale pursuant to this
Agreement shall be subject to the prior consent and approval of the FCC.
(b) The Parent, the Company and the WCCC/WBOQ Buyer shall promptly prepare
appropriate applications for the FCC Consent and shall file the application
with the FCC within five (5) business days of the execution of this Agreement.
The parties shall prosecute the applications with all reasonable diligence and
otherwise use their commercially reasonable best efforts to obtain a grant of
the applications as expeditiously as practicable. Each party agrees to comply
with any condition imposed on it by the FCC Consent, except that no party shall
be required to comply with a condition to the extent it would have a material
adverse effect on it or its affiliates. The parties shall oppose any requests
for reconsideration or judicial review of the FCC Consent. If the Closing shall
not have occurred for any reason within the original effective period of the
FCC Consent, and neither party shall have terminated this Agreement under
Section 13, the parties shall jointly request an extension of the effective
period of the FCC Consent. No extension of the FCC Consent shall limit the
exercise by any party of its rights under Section 13.
10.2 Control of the Station. Prior to Closing, neither the Parent, nor the
WCCC/WBOQ Buyer shall, directly or indirectly, control, supervise, direct, or
attempt to control, supervise, or direct, the operations of the Stations; such
operations, including complete control and supervision of all of the Stations'
programs, employees, and policies, shall be the sole responsibility of the
Company until the Closing.
10.3 Risk of Loss. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
the Company at all times prior to the Closing.
10.4 Confidentiality. The negotiations related to, and the information
exchanged by the parties in connection with, the execution and delivery of this
Agreement, and the transactions contemplated hereby, shall be kept in strictest
confidence and may not be disclosed by any party, or by any party's agents,
representatives, employees, consultants or agents, in whole or in part, without
the prior written consent of each other party, other than as required by
applicable laws, valid legal process, or the rules and regulations of
securities markets and except for information that is or becomes publicly known
otherwise than through a breach of this Agreement. If this Agreement is
terminated, each party will promptly return to each other party all information
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obtained by such party from such other party in connection with the
transactions contemplated by this Agreement.
10.5 Environmental Audit. The Parent may, at its option and expense, obtain
Phase I environmental surveys of the Real Property. If such surveys disclose
any material environmental hazard or material possibility of future liability
for environmental damages or clean-up costs, the Parent shall notify the
Company and the Company shall remedy any such environmental problems prior to
the Closing.
10.6 Engineering Study. The Parent may, at its option and expense, retain an
engineering firm to conduct a proof of performance study of WTMI.
10.7 Cooperation. The parties hereto shall cooperate fully with each other and
their respective counsel and accountants in connection with any actions
required to be taken as part of their respective obligations under this
Agreement, and the parties hereto shall execute such other documents as may be
necessary and desirable to the implementation and consummation of this
Agreement, and otherwise use their commercially reasonable best efforts to
consummate the transactions contemplated hereby and to fulfill their
obligations under this Agreement. Notwithstanding the foregoing, neither the
Company nor the Parent shall have any obligation to expend funds to obtain any
of the Consents and the Parent shall have no obligation to agree to any adverse
change in any Contract to obtain a Consent required with respect thereto.
10.8 Bulk Sales Law. The WCCC/WBOQ Buyer hereby waives compliance with any bulk
sales laws and hereby waives any claims it may have against the Company, the
Surviving Corporation, the Parent or Merger Sub with respect thereto.
10.9 Taxes. Until the Closing, the Company shall continue to file all Tax
Returns and to pay all Taxes with respect to the Stations and shall
concurrently deliver copies of all such returns to the Parent.
10.10 Access to Books and Records. The WCCC/WBOQ Buyer shall provide the
Surviving Corporation access and the right to copy for a period of three (3)
years from the Closing Date any books and records relating to the WCCC/WBOQ
Assets.
10.11 HSR Act Filing. The parties hereto agree to (a) file, or cause to be
filed, with the U.S. Department of Justice ("DOJ") and Federal Trade Commission
("FTC") all filings which are required in connection with the transactions
contemplated hereby under the HSR Act within ten (10) business days of the date
of this Agreement; (b) submit to the other party, prior to filing, their
respective HSR Act filings to be made hereunder, and to discuss with the other
any comments the reviewing party may have; (c) cooperate with each other in
connection with such HSR Act filings, which cooperation shall include
furnishing the other with any information or documents in such party's
possession that may be reasonably required in connection with such filings; (d)
promptly file, after any request by the FTC or DOJ, any information or
documents requested by the FTC or DOJ; and (e) furnish each other with any
correspondence from or to, and notify each other of any other communications
with, the FTC or DOJ which relates to the transactions contemplated hereunder,
and to the extent practicable, to permit each other to
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participate in any conferences with the FTC or DOJ. The Parent and the Company
shall each pay one-half of all necessary HSR filing fees.
10.12 Title Insurance and Surveys.
(a) Title Insurance on Fee Property. With respect to each parcel of WTMI Real
Property that the Company owns, the Parent may obtain at its expense, at or
prior to Closing, an ALTA Owner's Policy of Title Insurance Form B-1987 (or
equivalent policy acceptable to the Parent), issued by a title insurer
satisfactory to the Parent, in an amount equal to the fair market value of the
property and any improvements thereon (as reasonably determined by the Parent),
insuring title to such parcel in the name of the Company as of the Closing,
subject only to Permitted Encumbrances.
(b) General Requirements as to Title Insurance Policies. Each title insurance
policy obtained and delivered by the Parent pursuant to this Agreement shall
(1) insure title to the WTMI Real Property described in the policy and all
recorded easements benefiting such WTMI Real Property, (2) contain an "extended
coverage endorsement" insuring over the general exceptions customarily
contained in title policies, (3) contain an endorsement insuring that the WTMI
Real Property described in the policy is the same real estate shown in the
survey, if any, obtained by the Parent with respect to such property, (4)
contain a "contiguity" endorsement with respect to any WTMI Real Property
consisting of more than one record parcel, and (5) not be subject to any survey
exception or any defect or encroachment disclosed by a survey delivered with
respect to the property, other than Permitted Encumbrances.
(c) Surveys. With respect to each parcel of WTMI Real Property, as to which a
title insurance policy is to be procured pursuant to this Agreement, the Parent
may procure at its expense a current survey of the parcel, prepared by a
licensed surveyor and conforming to current ALTA Minimum Detail Requirements
for Land Title Surveys, disclosing the location of all improvements, easements,
party walls, sidewalks, roadways, utility lines, and other matters customarily
shown on such surveys, and showing access affirmatively to public streets and
roads.
10.13 Employee Matters.
(a) Prior to the Closing Date, the Company shall terminate the employment of
all employees of the Company for whom the Parent has provided notice to the
Company that it does not intend to retain after the Closing Date, provided such
notice shall be delivered to Company in writing not less than 30 days prior to
the Closing Date. With respect to such terminated employees, Company shall
discharge in full prior to the Closing Date any and all liabilities owed by the
Company to such employees (including, but not limited to, any liability for
stay bonuses, health and welfare benefits, severance pay or deferred
compensation benefits), other than any liabilities to provide future benefits
to such employees under any tax-qualified Employee Plan or under ERISA Section
601.
(b) Effective as of the Closing Date, WCCC/WBOQ Buyer shall offer employment to
each employee of the Company who is employed at WCCC and WBOQ immediately prior
to the Closing Date. Except as otherwise provided in this Section 10.13 or as
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required under any employment agreement between the Company and any such
employee, WCCC/WBOQ Buyer shall offer employment to such employees at the
Company's current pay rates and with benefits no less favorable as of the
Closing Date than those benefits being provided to such employees immediately
prior to the Closing Date. Each such Employee who accepts employment with the
WCCC/WBOQ Buyer as of the Closing Date is hereinafter referred to as a
"Transferred Employee." The WCCC/WBOQ Buyer shall assume all contracts of
employment with respect to any Transferred Employees that are in effect as of
the Closing Date.
(c) Prior to the Closing Date, the WCCC/WBOQ Buyer shall take any and all
action necessary or appropriate to assume all the Employee Plans and
Compensation Arrangements listed on Schedule 3.15, other than those plans or
programs terminated under the provisions of subsection (d) hereof, including
any trusts associated with any such Employee Plans; provided, that the
WCCC/WBOQ Buyer shall not assume the Employee Plan that provides health care
coverage to employees of the Company employed as of the Closing Date at WTMI.
With respect to all Employee Plans listed on Schedule 3.15 that are assumed by
the WCCC/WBOQ Buyer and that provide health and welfare benefits coverage, the
Parent and WCCC/WBOQ Buyer agree to use best faith efforts to cooperate in
securing the assumption or assignment of such Employee Plans as contemplated
herein. The WCCC/WBOQ Buyer shall hold the Surviving Corporation and the Parent
and any entity required to be combined with the Surviving Corporation and the
Parent (within the meaning of Sections 414(b), (c), (m) or (o) of the Code)
harmless from and fully indemnify them against any costs, expenses, losses,
damages and liabilities incurred or suffered by them directly or indirectly,
including, but not limited to, reasonable attorneys' fees and expenses, which
relate to the assumption by the WCCC/WBOQ Buyer of Employee Plans and
Compensation Arrangements under this Section 10.13(c) and the provision of
benefits under such Employee Plans and Compensation Arrangements.
(d) At the request of the Parent, the Company shall, prior to the Closing Date,
take any and all action necessary or appropriate (i) to terminate no later than
the Closing Date any Employee Plan or Compensation Arrangement which provides
non-qualified deferred compensation, non-qualified retirement benefits,
severance benefits, retention benefits, change in control benefits, or similar
benefits (the "Nonqualified Plans"), and (ii) to pay all liabilities accrued
for the benefit of the participants under the Nonqualified Plan (whether or not
actively employed by the Company or currently entitled to a benefit payment
under the Nonqualified Plans) and under any arrangement directly related to the
Nonqualified Plans (including, but not limited to, any promised adjustment for
taxes).
(e) The WCCC/WBOQ Buyer shall assume full responsibility and liability for
offering and providing "continuation coverage" to any "qualified beneficiary"
who is covered by a "group health plan" sponsored or contributed to by the
Company and who has experienced a "qualifying event" or is receiving
"continuation coverage" on or prior to the Closing, except for those qualified
beneficiaries whose entitlement to COBRA is attributable to their employment at
WTMI. "Continuation coverage," "Qualified beneficiary," "Qualifying event" and
"group health plan" all shall have the meanings given such terms under Section
4980B of the Code and Section 601 et seq. of ERISA. The WCCC/WBOQ Buyer shall
hold the Parent and any entity required to be combined with the Parent (within
the meaning of Sections 414(b), (c), (m) or (i) of the Code) harmless from and
fully indemnify them against any costs, expenses, losses, damages and
liabilities incurred or suffered by them directly or indirectly, including, but
not limited to,
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reasonable attorneys' fees and expenses, which relate to continuation coverage
and arise as a result of any action or omission by the WCCC/WBOQ Buyer that is
inconsistent with the provisions of this Section 10.13 (e). (f) The WCCC/WBOQ
Buyer shall offer group health plan coverage to all of the Transferred
Employees and to the dependents of such Transferred Employees as of the Closing
Date on terms and conditions substantially comparable to the coverage generally
applicable to the Transferred Employees prior to the Closing Date. For purposes
of providing such coverage, the WCCC/WBOQ Buyer shall waive all preexisting
condition limitations for all such Transferred Employees and their dependents
covered by the Company's health care plan as of the Closing Date and shall
provide such health care coverage effective as of the Closing Date without the
application of any eligibility period for coverage. In addition, the WCCC/WBOQ
Buyer shall use commercially reasonable best efforts to credit all employee
payments toward deductible, out-of-pocket and co-payment obligation limits
under Company's health care plans for the plan year which includes the Closing
Date as if such payments had been made for similar purposes under the WCCC/WBOQ
Buyer's health care plans during the plan year which includes the Closing Date
with respect to the Transferred Employees and their dependents.
(g) The WCCC/WBOQ Buyer shall assume and be responsible for the payment of any
severance payments, if any, due to any Transferred Employee that becomes due on
account of the consummation of the transactions contemplated by this Agreement.
(h) For each Transferred Employee, the WCCC/WBOQ Buyer shall provide credit
under all of its employee benefit programs, and for all purposes thereunder,
all of the Transferred Employee's employment service with the Company prior to
the Closing Date.
(i) The WCCC/WBOQ Buyer shall grant the Transferred Employees credit for and
shall assume and be responsible for any liabilities with respect to any accrued
but unused vacation for such employees as of the Closing Date. The WCCC/WBOQ
Buyer also shall grant the Transferred Employees credit for and shall assume
and be responsible for any liabilities with respect to sick leave and personal
days accrued but unused by any WCCC/WBOQ Employees as of the Closing Date.
(j) Notwithstanding any provision of this Agreement to the contrary, the
WCCC/WBOQ Buyer shall have full freedom to change or modify at any time after
the Closing the compensation or benefits provided to its employees.
(k) The provisions of this Section 10.13 are not intended to be for the benefit
of, or otherwise enforceable by any third person including, without limitation,
any employee of the Company or WCCC/WBOQ Buyer, any collective bargaining unit,
or any employee organization.
10.14 Tax Matters.
(a) "Booked Taxes" means Taxes of the Company payable with respect to a
Reporting Period (as defined below) ending on or before the Effective Time, or
with respect to a Short Period (as defined below), that in each case are taken
into account in computing the Working Capital adjustment under Section 3.3
hereof.
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(b) Subject to Section 10.14(i), Taxes of the Company with respect to the
period ending on (and including) the Effective Time, other than the Booked
Taxes, shall be the responsibility of the Stockholders. Taxes of the Company
with respect to the period after the Effective Time shall be the responsibility
of Parent (and the Company).
(i) In accordance with the terms of this Section 10.14, the
Stockholders agree to pay and, notwithstanding any disclosure of potential Tax
liabilities made by the Company, to indemnify, reimburse, and hold harmless
Parent, its affiliates, and the Company, and their respective successors, and
their respective officers, directors, employees, agents, and representatives,
from and against any and all Taxes of the Company payable with respect to, and
any and all claims, liabilities, losses, damages, costs and expenses (including
without limitation court costs and reasonable professional fees incurred in the
investigation, defense or settlement of any claims covered by this indemnity)
(herein referred to as "Indemnifiable Tax Damages"), arising out of or in any
manner incident, relating or attributable to Taxes of the Company payable with
respect to, or Tax Returns required to be filed by the Company on or prior to
the Closing Date with respect to, (i) any taxable year (or other applicable
reporting period) ("Reporting Period") of the Company ending on or before the
Effective Time, and (ii) any period beginning on the first day of any Reporting
Period that begins before the Effective Time but which is not completed as of
the Effective Time and ending as of the Effective Time (a "Short Period"), to
the extent that such Taxes exceed the amount of the Booked Taxes.
(ii) Parent agrees to pay and to indemnify, reimburse and hold
harmless the Stockholders, their agents and representatives, from and against
(i) any and all Booked Taxes and (ii) any and all Taxes of the Company payable
with respect to, and any and all Indemnifiable Tax Damages, arising out of or
in any manner incident, relating or attributable to, Taxes of the Company
payable with respect to, or Tax Returns required to be filed by the Company
with respect to, (A) any Reporting Period of the Company beginning after the
Effective Time; and (B) that portion of any Reporting Period that includes the
Effective Time which commences after the Effective Time.
(c) The Parent shall be responsible for preparing and filing on behalf of the
Company all Tax Returns for the Company which have not been filed as of the
Effective Time, including (i) all Tax Returns for Reporting Periods of the
Company ending on or before the Effective Time which have not been filed on or
before the Effective Time; (ii) all Tax Returns of the Company for Reporting
Periods beginning before and ending after the Effective Time; and (iii) all Tax
Returns for Reporting Periods of the Company beginning on or after the
Effective Time; provided, however, that with respect to Tax Returns described
in clauses (i) and (ii), the Parent shall consult in good faith with the
Stockholders' Agent in preparing such returns, and such Tax Returns shall not
report any item in a manner that is inconsistent with the manner in which any
corresponding item has been previously reported in any such Tax Return already
filed, unless such inconsistent treatment is (x) required by law or due to a
change in circumstances, or (y) is permitted by law, the Parent elects to make
such change in treatment, and such change would not be prejudicial to the
Stockholders or to the Company. The Parent shall provide Stockholders' Agent
with drafts of such Tax Returns for Reporting Periods ending on or prior to the
Effective Time and for Short Periods (at the Parent's election, pro forma
returns for a Short Period) at least twenty (20) days prior to the due date
(including any
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extensions) of such Tax Return. If the Stockholders' Agent notifies the Parent
at least ten (10) days prior to the due date (including any extensions) that
the Stockholders' Agent does not approve a Tax Return provided to it pursuant
to the foregoing sentence, the Parent and the Stockholders' Agent shall consult
in good faith to resolve such dispute. If the Parent and the Stockholders'
Agent are unable to resolve such dispute, the Parent and the Stockholders'
Agent shall attempt to agree upon a suitably qualified and experienced
independent certified public accountant, which shall not have been retained by
either the Parent and the Stockholders' Agent within the past two (2) years of
the date of selection ("CPA"), to resolve such dispute. If the Parent and the
Stockholders' Agent are unable to agree upon a CPA, then the CPAs selected by
each of the Parent and the Stockholders' Agent shall jointly select a third CPA
to resolve any Tax Return dispute. If the CPA selected either by agreement of
the Parent and the Stockholders' Agent or by agreement of the CPAs selected by
the Parent and the Stockholders' Agent (the "Selected CPA") resolves all
disputes prior to the due date of the Tax Return, the Parent shall file such
Tax Return consistently with such dispute resolution. If the Selected CPA has
not resolved all such disputes prior to the due date of the Tax Return, Parent
shall file such Tax Return on the due date in such form as Parent has
determined complies with applicable law and conforms to the first sentence of
this paragraph (c); provided however, that to the extent any Indemnifiable Tax
Damage is attributable to an item of dispute between the Parent and the
Stockholders' Agent, which item is ultimately decided in favor of the
Stockholders' Agent by the Selected CPA, the Parent shall not have the right to
indemnification from the Indemnification Escrow Fund with respect to such item
to the extent Indemnifiable Tax Damages exceed Indemnifiable Tax Damages if the
Tax Return had been filed in accordance with the determination of the Selected
CPA. The cost of all CPAs including the Selected CPA shall be borne equally by
the Parent and the Stockholders. Notwithstanding the foregoing, the Parent
shall have no obligation to consult with the Stockholders' Agent regarding
matters that would not raise a claim for indemnification under this Agreement.
The Parent shall furnish the Stockholders' Agent with copies of Tax Returns
described in clauses (i) and (ii) of this paragraph (c) (in the case of (ii),
at the Parent's election, pro forma Tax Returns for the Short Period) within 30
days following the filing date.
(d) Except as otherwise provided in this Section 10.14, any amounts owed by the
Stockholders to any party under this Section 10.14 shall be paid within ten
business days of notice from such party; provided that if such party has not
paid such amounts and such amounts are being contested before the appropriate
governmental authorities in good faith, the Stockholders shall not be required
to make payment until it is determined finally by an appropriate governmental
authority or court that payment is due, provided that the Stockholders post
appropriate security as necessary to protect such party from (i) the immediate
imposition of a lien that arises or attaches from nonpayment after assessment
and demand of such amounts, or (ii) seizures of assets. Except as otherwise
provided in this Section 10.14, any amounts owed by the Parent to any party
under this Section 10.14 shall be paid within ten business days of notice from
such party; provided that if such party has not paid such amounts and such
amounts are being contested before the appropriate governmental authorities in
good faith, the Parent shall not be required to make payment until it is
determined finally by an appropriate governmental authority or court that
payment is due if the Parent posts appropriate security as necessary to protect
such party from (A) the immediate imposition of a lien that arises or attaches
from nonpayment after assessment and demand of such amounts, or (B) seizures of
assets. Any amounts that are not paid within the period provided in this
Section 10.14(d) shall accrue interest
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at the "Underpayment Rate" under Section 6621 of the Code for the underpayment
of taxes by corporations.
(e) The Tax liabilities for each Short Period for the Company shall be
determined by closing the books and records of the Company as of the Effective
Time, by treating each such Short Period as if it were a separate Reporting
Period, and by employing accounting methods which are consistent with those
employed in preparing the Tax Returns for the Company in prior Reporting
Periods and which do not have the effect of distorting income or expenses
(taking into account the transactions contemplated by this Merger Agreement);
provided that the purchase of the WCCC/WBOQ Assets shall in all events be
allocated to the Reporting Period that commences immediately following the
Effective Time. Notwithstanding the preceding sentence, Taxes based on items
other than income or sales shall be computed for the Reporting Period beginning
on the first day of the applicable Short Period and prorated on a time basis
between the Short Period and the period beginning on the first day after the
Effective Time and ending on the last day of the Reporting Period which
includes the Effective Time; provided that with respect to any Tax which is not
in effect during the entire Short Period, the proration of such Tax shall be
based on the period during the Short Period that such Tax was in effect.
(f) The Parent shall promptly notify the Stockholders' Agent in writing of any
notice, letter, correspondence, claim, determination, decision or decree ("Tax
Claim") received by the Parent or the Company and its Subsidiaries or their
successors for any Reporting Period ending on or before the Effective Time or
any Short Period that might raise a claim for indemnification hereunder. The
Parent shall have the sole right to handle, answer, defend, compromise or
settle any Tax Claim arising from Reporting Periods ending after the Effective
Time, including periods beginning before and ending after the Effective Time.
Notwithstanding the foregoing, the Stockholders' Agent, at the cost and expense
of the Stockholders, shall have the option to handle, answer, defend,
compromise, or settle any Tax Claim arising from a Reporting Period (i) ending
on or before the Effective Time, or (ii) beginning before the Effective Time
and ending after the Effective Time, that might raise a claim for
indemnification hereunder but in the case of (ii), solely with respect to
issues not affecting the Company with respect to any Reporting Periods ending
after the Effective Time and to the extent that the Parent would be entitled to
indemnification hereunder (and not with respect to Indemnifiable Tax Damages
which would exceed the then existing balance of the Indemnification Escrow);
provided that the Parent shall have the right to (and shall promptly notify the
Stockholders' Agent as to whether it will) participate in any Tax examination,
audit, contest, or litigation in connection with such Tax Claim; and further
provided that the Stockholders' Agent may not compromise or settle any such Tax
Claim giving rise to Indemnifiable Tax Damages, determined without regard to
net operating losses of the Company, which exceed the then existing balance of
the Indemnification Escrow Fund, or which would affect the Company with respect
to any Reporting Periods ending after the Effective Time, without the written
consent of the Parent which will not be unreasonably withheld. If the
Stockholders' Agent has not notified the Parent that it elects to handle a Tax
Claim pursuant to the foregoing sentence within ten (10) days of its receipt of
notice of the respective Tax Claim, then the Parent shall have the sole right
to handle, answer, defend, compromise, or settle such Tax Claim. The Parent
shall cause the Company to give promptly to the Stockholders' Agent any
relevant information relating to such Tax Claim which may be particularly
within the knowledge of the Company and otherwise to cooperate fully with the
Stockholders' Agent in good faith with respect to such Tax Claim. If the
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Stockholders' Agent fails within a reasonable time after notice to participate
in any Tax Claim or any examination, audit, contest or litigation as provided
herein, the Stockholders shall be bound by the results obtained by the Parent,
or its successors or assigns, in connection with such Tax Claim and such
examination, audit, contest or litigation.
(g) Each of the parties hereto will provide the other with such assistance as
may reasonably be requested by any of them in connection with the preparation
of any Tax Return (including amended Tax Returns and claims for Tax refunds),
any audit or other examination by any taxing authority, or any judicial or
administrative proceedings relating to liability for Taxes, and each will
retain until the expiration of any relevant statutes of limitations (and, to
the extent notified by the other party, any extension thereof) and provide the
other, at all reasonable times, with any work papers, records or other
information which may be relevant to such return, audit or examination,
proceeding or determination (including, but not limited to, determinations
under this Section 10.14). The party requesting assistance or documents
hereunder shall reimburse the other parties for reasonable expenses incurred in
providing such assistance or documents.
(h) The Parent shall not make any election under Section 338 of the Code with
respect to the Merger.
(i) All indemnification claims by the Parent (or the Company) pursuant to this
Section 10.14 shall be paid exclusively out of the Post-Closing Indemnification
Fund.
10.15 Release of Liens. At or prior to Closing, the Company shall obtain the
release of all Encumbrances on the Assets except for Permitted Encumbrances,
and the Company shall provide the Parent with evidence of such release
reasonably acceptable to the Parent.
10.16 Accounts Receivable.
(a) The Company shall deliver to the Parent on the Closing Date a complete and
detailed statement of all Accounts Receivable as of the Closing Date, showing
the name, amount and age of each account.
(b) At Closing, the Surviving Corporation shall assign the Accounts Receivable
for WTMI (the "WTMI Accounts Receivable") for collection purposes only to the
WCCC/WBOQ Buyer. The WCCC/WBOQ Buyer shall cause an agent reasonably acceptable
to the Parent (the "Collection Agent") to collect the WTMI Accounts Receivable
for a period of 90 days following the Closing (the "WTMI Collection Period").
At the end of each 30 day period during such collection period, the WCCC/WBOQ
Buyer shall cause the Collection Agent to remit to the Surviving Corporation
all amounts collected with respect to the WTMI Accounts Receivable during such
period.
10.17 Insurance. Prior to Closing, the Company shall obtain at its expense and
fully prepay insurance coverage for a period of six years from the Closing Date
insuring the Company for employee practices, officer and director liability,
storage tank liability, fiduciary liability and any other such claims made
insurance coverage with respect to actions, omissions or occurrences relating
to the period prior to the Closing Date and such coverage shall be on
substantially the same terms as the current insurance coverage of the Company
and with insurers reasonably acceptable to the Parent.
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Section 11. CONDITIONS TO OBLIGATIONS AT CLOSING
11.1 Conditions to Obligations of the Parent, Merger Sub and the Surviving
Corporation. All obligations of the Parent, Merger Sub and the Surviving
Corporation at the Closing are subject at their option to the fulfillment prior
to or at the Closing Date of each of the following conditions:
(a) Representations and Warranties. All representations and warranties of the
Company and the WCCC/WBOQ Buyer contained in this Agreement shall be true and
complete in all material respects at and as of the Closing Date as though made
at and as of that time.
(b) Covenants and Conditions. The Company and the WCCC/WBOQ Buyer shall have
performed and complied in all material respects with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
them prior to or on the Closing Date.
(c) Consents. All Consents designated as material on Schedule 5.4 shall have
been obtained and delivered to the Parent without any adverse change in the
terms or conditions of any agreement or any governmental license, permit, or
other authorization.
(d) FCC Consent. (i) The FCC Consent shall have been granted without the
imposition on the Parent, Merger Sub or the Surviving Corporation or any
affiliate thereof of any materially adverse condition, (ii) the Company and the
WCCC/WBOQ Buyer shall have complied with any conditions imposed on them by the
FCC Consent, and (iii) no timely petition, administrative pleading or notice of
appeal or other timely request for administrative or judicial review has been
filed challenging the FCC Consent within thirty (30) days following the date of
publication of a public notice announcing the FCC Consent. If there is such a
challenge within such 30-day period, counsel to each of the Parent and the
Company shall jointly select an independent and well recognized attorney
specializing in communications law to determine whether such challenge raises a
substantial and material question of fact or law. If such communications
attorney determines that such challenge does raise a substantial and material
question of fact or law, the Parent's obligation to close will be subject to
the FCC Consent becoming a Final Order and if such communications attorney
determines that such challenge does not raise a substantial and material
question of fact or law, the Parent's obligation to close will not be subject
to the FCC Consent becoming a Final Order. The costs of such communications
attorney will be shared equally by the Parent and the Company. A challenge
based only on a change in programming format of WTMI will not be considered a
substantial and material question of fact or law. The Surviving Corporation and
the Parent shall control the response to and pay the legal fees associated with
any challenge of the FCC Consent based on an alleged change in programming
format of WTMI.
(e) Governmental Authorizations. The Company shall be the holder of all WTMI
Licenses set forth on Schedule 5.5 and there shall not have been any
modification of any such WTMI License that could have a material adverse effect
on WTMI or the conduct of its business and operations. No proceeding shall be
pending or threatened the effect of which could be to revoke, cancel, fail to
renew, suspend, or modify adversely any such License.
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(f) Deliveries. The Company shall have made or stand willing to make all the
deliveries set forth in Section 12.2 and the WCCC/WBOQ Buyer shall have made or
stand willing to make all the deliveries set forth in Section 12.5.
(g) Adverse Change. Between the date of this Agreement and the Closing Date,
there shall not have been any change (other than changes generally affecting
the radio broadcasting industry or the Miami / Ft. Lauderdale radio
broadcasting market) in the business, assets, properties, prospects or
condition (financial or otherwise) of the Company materially and adversely
affecting the valuation of WTMI as a licensed and transmitting radio
broadcasting facility without regard to its programming format, employees or
results of operations (it being acknowledged that adverse changes having an
effect on the Company's working capital will be given effect in the Working
Capital adjustment in Section 3.3(a)).
(h) HSR Act. The waiting period under the HSR Act shall have expired without
unresolved action by the DOJ or the FTC to prevent the Closing.
(i) Transmittal Agreements. Stockholders who own 95% of the Company Stock
(assuming the exercise of all options) at Closing shall have delivered to the
Parent duly executed Transmittal Agreements and the representations and
warranties of each Stockholder in each such Transmittal Agreement shall be true
and correct.
(j) Legal Action. The consummation of the Merger or the WCCC/WBOQ Sale shall
not be restrained, enjoined or prohibited by any order, judgment, decree or
ruling of any court or other governmental authority and no action or proceeding
shall be pending before any court or other governmental authority in which it
is sought to restrain or prohibit or obtain material damages or other material
relief in connection with the transactions contemplated hereby.
(k) Corporate Proceeding. All material proceedings to be taken by the Company
and its Stockholders in connection with the performance of this Agreement shall
have been taken. In particular, the execution, delivery and performance of this
Agreement by the Company shall have been duly authorized by all necessary
actions on the part of the Company and its stockholders.
(l) Stock Options. The Company shall have effected the cancellation or exercise
of all outstanding stock options of the Company.
11.2 Conditions to Obligations of the Company and the WCCC/WBOQ Buyer. All
obligations of the Company and the WCCC/WBOQ Buyer at the Closing are subject
at their option to the fulfillment prior to or at the Closing Date of each of
the following conditions:
(a) Representations and Warranties. All representations and warranties of the
Parent and Merger Sub contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date as though made at and as of
that time.
(b) Covenants and Conditions of the Parent and Merger Sub. The Parent and
Merger Sub shall have performed and complied in all material respects with all
covenants,
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agreements, and conditions required by this Agreement to be performed or
complied with by them prior to or on the Closing Date.
(c) Covenants and Conditions of the Surviving Corporation. As a condition to
the obligations of the WCCC/WBOQ Buyer with respect to the WCCC/WBOQ Sale, the
Surviving Corporation shall have performed and complied in all material
respects with all covenants, agreements and conditions in regard to the
WCCC/WBOQ Sale required by this Agreement to be performed immediately following
the consummation of the Merger but prior to or on the Closing Date.
(d) Deliveries. The Parent shall have made or stand willing to make all the
deliveries set forth in Section 12.3 and the Surviving Corporation shall have
made or stand willing to make all of the deliveries set forth in Section 12.4.
(e) FCC Consent. The FCC Consent shall have been granted without the imposition
on the WCCC/WBOQ Buyer of any materially adverse condition, and the Parent or
Merger Sub shall have complied with any conditions imposed on it by the FCC
Consent.
(f) HSR Act. The waiting period under the HSR Act shall have expired without
unresolved action by the DOJ or the FTC to prevent the Closing.
(g) Legal Action. The consummation of the Merger or the WCCC/WBOQ Sale shall
not be restrained, enjoined or prohibited by any order, judgment, decree or
ruling of any court or other governmental authority and no action or proceeding
shall be pending before any court or other governmental authority in which it
is sought to restrain or prohibit or obtain material damages or other material
relief against the WCCC/WBOQ Buyer or any Stockholder in connection with the
transactions contemplated hereby.
(h) Corporate Proceedings. All material proceedings to be taken by the Parent
and the Merger Sub in connection with the performance of this Agreement shall
have been taken.
Section 12. CLOSING AND CLOSING DELIVERIES
12.1 Closing.
(a) Closing Date. Subject to the satisfaction or waiver of all of the
conditions precedent to the Closing, the Closing shall take place at 10:00 a.m.
on a date, to be set by the Parent following the date upon which the conditions
set forth in Sections 11.1(d) and (h) have been satisfied on at least five (5)
days' written notice to the Company and the WCCC/WBOQ Buyer that is not later
than ten (10) business days following the date upon which the conditions set
forth in Sections 11.1(d) and (h) have been satisfied. If the Parent fails to
specify the date for Closing prior to the fifth business day after the date
upon which the conditions set forth in Sections 11.1(d) and (h) have been
satisfied, the Closing shall take place on the tenth business day after the
date upon which such conditions have been satisfied.
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(b) Closing Place. The Closing shall be held at the law offices of Hale and
Dorr, LLP, 60 State Street, Boston, Massachusetts 02109, or any other place
that is agreed upon by the Parent and the Company.
12.2 Deliveries by the Company. Prior to or on the Closing Date, the Company
shall deliver to the Parent the following, in form and substance reasonably
satisfactory to the Parent and its counsel:
(a) Transmittal Agreements. Duly executed Transmittal Agreements, together with
cancelled Certificates, from Stockholders who own at least 95% of all of the
issued and outstanding capital stock of the Company (assuming the exercise of
all options) and any other documents of transfer that may be reasonably
necessary and there shall not be any material discrepancies between the
respective numbers of shares owned by such Stockholders set forth in such
Transmittal Agreements and the respective number of shares owned by such
Stockholders in the Stockholder Statement;
(b) Certificate of Merger. A Certificate of Merger duly executed by the Company
providing for the consummation of the Merger in accordance with the terms of
this Agreement;
(c) Estoppel Certificates. Estoppel certificates of the lessor of the WTMI
tower, in form and substance reasonably acceptable to the Parent;
(d) Consents. A manually executed copy of any instrument evidencing receipt of
any Consent indicated as material on Schedule 5.4 and to the extent obtained,
any other Consent;
(e) Officer's Certificate. A certificate, dated as of the Closing Date,
executed on behalf of the Company by an officer of the Company, certifying (1)
that the representations and warranties of the Company contained in this
Agreement are true and complete in all material respects as of the Closing Date
as though made on and as of that date (except those which expressly speak as of
a specified date); and (2) that the Company has in all material respects
performed and complied with all of its obligations, covenants, and agreements
set forth in this Agreement to be performed and complied with on or prior to
the Closing Date;
(f) Opinion of Counsel. An opinion of the Company's counsel dated as of the
Closing Date, substantially in the form of Schedule 12.2(f) hereto;
(g) Authorizing Resolutions. Certified copies of the resolutions of the
Company's board of directors and shareholders approving the transactions
contemplated by this Agreement;
(h) UCC, Tax, Lien and Judgment Searches. Results of a search for UCC, tax,
lien and judgment filings in the Secretary of State's records of the State of
Florida, Connecticut and Massachusetts and in the records of the county or
counties in which the Company's assets are located, such searches having been
made no earlier than fifteen (15) days prior to the Closing Date;
(i) Indemnification Escrow Agreement. The Indemnification Escrow Agreement
executed by the Stockholders' Agent;
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(j) Secretary's Certificate. A certificate executed by the Company's Secretary
certifying as in effect as of the Closing Date: as attached to such
certificate, the Company's Certificate of Incorporation and a Certificate of
Good Standing from the State of Florida, Connecticut and Massachusetts , as
certified not more than twenty days earlier by an appropriate state official,
and the Company's Bylaws;
(k) Resignations. Written resignations, effective on the Closing Date, of the
Company's officers and directors, in which each such officer and director
waives against the Company all rights and claims to compensation, bonuses or
other obligations or liabilities of whatsoever kind, nature or description;
(l) Corporate, Financial and Tax Records. All corporate records (including
minute books and stock books and registers) and financial and tax records of
the Company;
(m) Evidence of Appointment of Stockholders' Agent. Evidence that Howard P.
Tanger has been duly appointed by all of the Stockholders referred to in
Section 12.2(a) as the Stockholders' Agent pursuant to Section 15.11; and
(n) Evidence of Termination of Certain Agreement. Evidence that all agreements
to be terminated under Section 9.22 have been terminated.
12.3 Deliveries by the Parent. Prior to or on the Closing Date, the Parent
shall deliver to the Company the following, in form and substance reasonably
satisfactory to the Company and its counsel:
(a) Merger Consideration. The Preliminary Adjusted Merger Consideration, as
reduced by the Post-Closing Escrow Funds, payable to each Stockholder in the
manner provided in Section 3.4 in proportion to the stockholdings listed in the
Stockholder Statement;
(b) Certificate of Merger. A Certificate of Merger duly executed by the Merger
Sub providing for the consummation of the Merger;
(c) Officer's Certificate. A certificate, dated as of the Closing Date,
executed on behalf of the Parent and Merger Sub by an officer of the Parent and
Merger Sub, certifying (1) that the representations and warranties of the
Parent and Merger Sub contained in this Agreement are true and complete in all
material respects as of the Closing Date as though made on and as of that date,
and (2) that the Parent and Merger Sub have in all material respects performed
and complied with all of their obligations, covenants, and agreements set forth
in this Agreement to be performed and complied with on or prior to the Closing
Date;
(d) Opinion of Counsel. An opinion of the Parent's and Merger Sub's counsel
dated as of the Closing Date, substantially in the form of Schedule 12.3(c)
hereto;
(e) Authorizing Resolutions. Certified copies of the resolutions of the boards
of directors of the Parent and Merger Sub approving the transactions
contemplated by this Agreement; and
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(f) Indemnification Escrow Agreement. The Indemnification Escrow Agreement duly
executed by the Parent.
12.4 Deliveries by the Surviving Corporation to the WCCC/WBOQ Buyer. On the
Closing Date immediately following the Merger, the Surviving Corporation shall
deliver to the WCCC/WBOQ Buyer the following, in form and substance reasonably
satisfactory to the WCCC/WBOQ Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, deeds, assignments of
leases, motor vehicle titles, assignments, and other transfer documents to
transfer the WCCC/WBOQ Assets to the WCCC/WBOQ Buyer, including, if applicable,
a corporate excise tax lien waiver from the Massachusetts Department of Revenue
(or an affidavit in favor of WCCC/WBOQ Buyer's title insurance company
sufficient to enable the title insurance company to issue a policy without
exception for corporate excise tax liens), without any warranty of any type on
the part of the Surviving Corporation except as set forth in Section 6.7; and
(b) Authorizing Resolutions. Certified copies of resolutions of the Surviving
Corporation's board of directors and sole shareholder approving the WCCC/WBOQ
Sale.
12.5 Deliveries by the WCCC/WBOQ Buyer to the Surviving Corporation. On the
Closing Date immediately following the Merger, the WCCC/WBOQ Buyer shall
deliver to the Surviving Corporation the following, in form and substance
reasonably satisfactory to the Surviving Corporation and its counsel:
(a) Asset Purchase Price. The Asset Purchase Price, as adjusted;
(b) Assumption Agreements. Appropriate assumption agreements pursuant to which
the WCCC/WBOQ Buyer shall assume and undertake to perform the Assumed
Liabilities;
(c) Officer's Certificate. A certificate, dated as of the Closing Date,
executed on behalf of the WCCC/WBOQ Buyer, certifying (i) that the
representations and warranties of the WCCC/WBOQ Buyer contained in this
Agreement are true and complete in all material respects as of the Closing Date
as though made on and as of that date, and (ii) that the WCCC/WBOQ Buyer has in
all material respects performed and complied with all of its obligations,
covenants, and agreements set forth in this Agreement to be performed and
complied with on or prior to the Closing Date;
(d) Opinion of Counsel. An opinion of the WCCC/WBOQ Buyer's counsel dated as of
the Closing Date, substantially in the form of Schedule 12.5(d) hereto;
(e) Authorizing Resolutions. Certified copies of the resolutions of the members
of the WCCC/WBOQ Buyer approving the transactions contemplated by this
Agreement.
Section 13. TERMINATION
13.1 Termination by the Company or the WCCC/WBOQ Buyer. This Agreement may be
terminated by the Company or the WCCC/WBOQ Buyer prior to the Closing if
neither the
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Company nor the WCCC/WBOQ Buyer is then in material default, upon written
notice to the Parent, upon the occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the Closing Date any of
the conditions precedent to the obligations of the Company and the WCCC/WBOQ
Buyer set forth in this Agreement have not been satisfied or waived in writing
by the Company and the WCCC/WBOQ Buyer and such conditions remain unsatisfied
and unwaived 15 business days after the Company or the WCCC/WBOQ Buyer delivers
written notice to the Parent that it intends to terminate this Agreement
pursuant to this Section 13.1(a).
(b) Judgments. If there shall be in effect on the date that would otherwise be
the Closing Date any judgment, decree, or order that would prevent or make
unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by twelve (12) months
after the date of this Agreement except that such upset date shall be extended
for an additional period of twelve (12) months if the Closing has not occurred
within twelve (12) months of this Agreement solely because of the filing of a
petition or protest against the applications for FCC Consent.
(d) Breach. Without limiting the Company's and the WCCC/WBOQ Buyer's rights
under the other provisions of this Section 13.1, if the Parent or Merger Sub
has failed to cure any material breach of any of its representations,
warranties or covenants under this Agreement within fifteen (15) days after the
Parent or Merger Sub receives written notice of such breach from the Company or
the WCCC/WBOQ Buyer.
13.2 Termination by the Parent. This Agreement may be terminated by the Parent
prior to the Closing if neither the Parent nor Merger Sub is then in material
default, upon written notice to the Company and the WCCC/WBOQ Buyer, upon the
occurrence of any of the following:
(a) Conditions. If on the date that would otherwise be the Closing Date any of
the conditions precedent to the obligations of the Parent and Merger Sub set
forth in this Agreement have not been satisfied or waived in writing by the
Parent and Merger Sub and such conditions remain unsatisfied and unwaived 15
business days after the Parent delivers written notice to the Company and the
WCCC/WBOQ Buyer that it intends to terminate this Agreement pursuant to this
Section 13.2(a).
(b) Judgments. If there shall be in effect on the date that would otherwise be
the Closing Date any judgment, decree, or order that would prevent or make
unlawful the Closing.
(c) Upset Date. If the Closing shall not have occurred by twelve (12) months
after the date of this Agreement except that such upset date shall be extended
for an additional period of twelve (12) months if the Closing has not occurred
within twelve (12) months of this Agreement solely because of the filing of a
petition or protest against the applications for FCC Consent.
(d) Interruption of Service. If any event shall have occurred that prevented
signal transmission of WTMI in the normal and usual manner or through the use
of reasonably
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satisfactory temporary alternative transmission facilities for a continuous
period of seven (7) days.
(e) Breach. Without limiting the Parent's rights under the other provisions of
this Section 13.2, if the Company or the WCCC/WBOQ Buyer has failed to cure any
material breach of any of its representations, warranties or covenants under
this Agreement within fifteen (15) days after the Company or the WCCC/WBOQ
Buyer receives written notice of such breach from the Parent.
13.3 Rights on Termination. If this Agreement is terminated pursuant to Section
13.1 or Section 13.2 and neither party is in material breach of this Agreement,
the parties hereto shall not have any further liability to each other with
respect to this Agreement and the Escrow Deposit shall be returned to the
Parent. If this Agreement is terminated by the Company or the WCCC/WBOQ Buyer
as a result of a material breach by the Parent or Merger Sub under this
Agreement and neither the Company nor the WCCC/WBOQ Buyer is in material breach
of this Agreement, the Company shall be entitled to the Escrow Deposit as
liquidated damages and the sole and exclusive remedy of the Company and the
WCCC/WBOQ Buyer for such breach and all earnings on the Escrow Deposit shall be
returned to the Parent. The parties hereto agree that actual damages would be
difficult to ascertain and that the Escrow Deposit is a fair and equitable
amount to pay to the Company for damages sustained by the Company or the
WCCC/WBOQ Buyer due to the Parent's or Merger Sub's material breach of this
Agreement. If this Agreement is terminated for any reason other than a material
breach of this Agreement by the Parent or Merger Sub or if this Agreement is
terminated because of a material breach by the Parent or Merger Sub but the
Company or the WCCC/WBOQ Buyer is in material breach of this Agreement, the
Escrow Deposit together with all earnings thereon shall be returned to the
Parent. If this Agreement is terminated due to a breach by the Company or the
WCCC/WBOQ Buyer, the Escrow Deposit together with all earnings thereon shall be
returned to the Parent and the parties shall have no further obligation to one
another, except the Parent or Merger Sub may pursue a remedy of specific
performance under Section 13.4.
13.4 Specific Performance.
(a) The parties recognize that if the Company breaches this Agreement and
refuses to perform under the provisions of this Agreement, monetary damages
alone would not be adequate to compensate the Parent or Merger Sub for its
injury. The Parent or Merger Sub shall therefore be entitled, as its sole and
exclusive remedy (subject to Section 14.7), to obtain specific performance of
the terms of this Agreement. If any action is brought by the Parent or Merger
Sub to enforce this Agreement, the Company shall waive the defense that there
is an adequate remedy at law.
(b) The parties recognize that if the Surviving Corporation breaches this
Agreement by not selling the WCCC/WBOQ Assets to the WCCC/WBOQ Buyer in
accordance with the terms and conditions of this Agreement following the
consummation of the Merger, monetary damages would not be adequate to
compensate the WCCC/WBOQ Buyer for its injury and the WCCC/WBOQ Buyer shall
therefore be entitled, in addition to any other remedies that may be available,
including money damages pursuant to Section 13.3, to require the Surviving
Corporation to sell the WCCC/WBOQ Assets to the WCCC/WBOQ Buyer subject to the
terms
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and conditions set forth in this Agreement. If any action is brought by the
WCCC/WBOQ Buyer to enforce this Agreement pursuant to this Section 13.4(b), the
Surviving Corporation shall waive the defense that there is an adequate remedy
at law.
Section 14. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION;
CERTAIN REMEDIES
14.1 Representations and Warranties. All representations and warranties
contained in this Agreement shall be deemed continuing representations and
warranties and shall survive the Closing for a period of two (2) years. Any
investigations by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, or covenant contained
in this Agreement.
14.2 Indemnification by the Stockholders from the Indemnification Escrow Fund.
Notwithstanding the Closing, and regardless of any investigation made at any
time by or on behalf of the Parent, the Merger Sub or the Surviving Corporation
or any information the Parent, Merger Sub or the Surviving Corporation may
have, the Stockholders hereby agree to indemnify and hold the Parent and the
Surviving Corporation harmless against and with respect to, and shall reimburse
the Parent and the Surviving Corporation for:
(a) Any and all losses, liabilities or damages resulting from any breach of a
representation or warranty made by the Company under Section 5 or in any
certificate, document or instrument delivered by the Company to the Parent at
the Closing under this Agreement.
(b) Any and all losses, liabilities or damages resulting from any breach by the
Company of any covenant or agreement in this Agreement before the Closing.
(c) Any and all losses, liabilities or damages resulting from any liability or
obligation of the Company in existence as of the Closing and not permitted by
Section 3.2.
(d) Any and all losses, liabilities or damages resulting from the operation of
the Company prior to the Closing which are not taken into account in
calculating the Working Capital, including any losses, liabilities or damages
resulting from any litigation or other proceeding relating to matters occurring
before the Closing.
(e) Any and all losses, liabilities or damages resulting from the breach of any
representation or warranty by any Stockholder in such Stockholder's Transmittal
Agreement.
(f) Any and all losses, liabilities or damages resulting from any payment by
the Surviving Corporation or the Parent following the Closing for severance and
related expenses to persons employed by the Company and terminated pursuant to
Section 10.13.
(g) Liabilities for Taxes and indemnification therefor in accordance with
Section 10.14.
(h) Any and all losses, liabilities or damages resulting from any
misrepresentation in the Stockholder Statement.
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(i) Any and all obligations and liabilities relating to or arising under the
AAA Agreement.
(j) Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs, and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity except to the extent any of the foregoing has been taken into account
under Sections 3.3(a) and (b) as a reduction in the Merger Consideration.
All indemnification claims by the Parent or the Surviving Corporation
pursuant to this Section 14.2 shall be paid exclusively out of the
Indemnification Escrow Fund.
14.3 Indemnification by the WCCC/WBOQ Buyer. Notwithstanding the Closing, and
regardless of any investigation made at any time by or on behalf of the
Surviving Corporation or the Parent or any information the Surviving
Corporation or the Parent may have, the WCCC/WBOQ Buyer hereby agrees to
indemnify and hold the Surviving Corporation and the Parent harmless against
and with respect to, and shall reimburse the Surviving Corporation and the
Parent for:
(a) Any and all losses, liabilities, or damages resulting from any untrue
representation, breach of warranty, or nonfulfillment of any covenant or
agreement by the WCCC/WBOQ Buyer contained in this Agreement or in any
certificate, document, or instrument delivered to the Surviving Corporation or
the Parent under this Agreement.
(b) Any obligations relating to any Assumed Liabilities.
(c) Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof, or in enforcing this
indemnity.
14.4 Indemnification by the Surviving Corporation. Notwithstanding the Closing,
and regardless of any investigation made at any time by or on behalf of the
WCCC/WBOQ Buyer or any information the WCCC/WBOQ Buyer may have, the Surviving
Corporation hereby agrees to indemnify and hold the WCCC/WBOQ Buyer harmless
against and with respect to, and shall reimburse the WCCC/WBOQ Buyer for:
(a) Any and all losses, liabilities, or damages of the WCCC/WBOQ Buyer
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or agreement by the Surviving Corporation in favor of the
WCCC/WBOQ Buyer contained in this Agreement or in any certificate, document or
instrument delivered to the WCCC/WBOQ Buyer under this Agreement.
(b) Any losses, liabilities or damages of the WCCC/WBOQ Buyer for preclosing
liabilities of the Company for which the Parent receives a credit in its favor
under Section 3.3 except to the extent the WCCC/WBOQ Buyer gets a credit for
such liability under Section 4.3(a).
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(c) Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof or in enforcing this
indemnity.
In no event shall the Surviving Corporation be required to indemnify
the WCCC/WBOQ Buyer for any action or omission of the Company prior to the
Closing or for breaches by the Company prior to Closing of any representation,
warranty or covenant in this Agreement.
14.5 Indemnification by the Parent. Notwithstanding the Closing, and regardless
of any investigation made at any time by or on behalf of the Stockholders'
Agent or any information the Stockholders' Agent may have, the Parent hereby
agrees to indemnify the Stockholders' Agent, on behalf of the Stockholders, and
hold the Stockholders' Agent, on behalf of the Stockholders, harmless against
and with respect to, and shall reimburse the Stockholders' Agent for:
(a) Any failure by the Parent to make any payment to the Stockholders' Agent or
give any instructions to the Escrow Agent under Sections 3.6(b)(iii) and 3.7(d)
and (e).
(b) Any losses, liabilities or damages suffered by any Stockholder for
pre-closing liabilities of the Company for which the Parent receives a credit
in its favor under Section 3.3 except to the extent the WCCC/WBOQ Buyer gets a
credit for such liability under Section 4.3(a).
(c) Liabilities for Taxes and indemnification therefor in accordance with
Section 10.14.
(d) Any and all actions, suits, proceedings, claims, demands, assessments,
judgments, costs and expenses, including reasonable legal fees and expenses,
incident to any of the foregoing or incurred in investigating or attempting to
avoid the same or to oppose the imposition thereof or in enforcing this
indemnity.
14.6 Procedure for Indemnification. The procedure for indemnification shall be
as follows:
(a) The party claiming indemnification (the "Claimant") shall promptly give
notice to the party from which indemnification is claimed (the "Indemnifying
Party") of any claim, whether between the parties or brought by a third party,
specifying in reasonable detail the factual basis for the claim. If the claim
relates to an action, suit, or proceeding filed by a third party against
Claimant, such notice shall be given by Claimant within five (5) business days
after written notice of such action, suit, or proceeding was given to Claimant.
Notice of claims by the Parent or the Surviving Corporation for indemnification
under Section 14.2 shall be given to the Escrow Agent as described in the
Indemnification Escrow Agreement and to the Stockholders' Agent.
(b) With respect to claims solely between the parties, following receipt of
notice from the Claimant of a claim, the Indemnifying Party shall have thirty
(30) days to make such investigation of the claim as the Indemnifying Party
deems necessary or desirable. For the
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purposes of such investigation, the Claimant agrees to make available to the
Indemnifying Party and/or its authorized representatives the information relied
upon by the Claimant to substantiate the claim. If the Claimant and the
Indemnifying Party agree at or prior to the expiration of the thirty (30) day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such claim, the Indemnifying Party shall immediately pay to the
Claimant the full amount of the claim. If the Claimant and the Indemnifying
Party do not agree within the thirty (30) day period (or any mutually agreed
upon extension thereof), the Claimant may seek appropriate remedy at law or
equity.
(c) With respect to any claim by a third party as to which the Claimant is
entitled to indemnification under this Agreement, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party, subject to reimbursement for actual out-of-pocket expenses
incurred by the Claimant as the result of a request by the Indemnifying Party.
If the Indemnifying Party elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of such claim at its own expense. If the Indemnifying Party does not
elect to assume control or otherwise participate in the defense of any third
party claim, it shall be bound by the results obtained by the Claimant with
respect to such claim.
(d) If a claim, whether between the parties or by a third party, requires
immediate action, the parties will make every effort to reach a decision with
respect thereto as expeditiously as possible.
(e) The indemnification rights provided in this Section 14 shall extend to the
shareholders, directors, officers, employees, and representatives of any
Claimant although for the purpose of the procedures set forth in this Section
14.6, any indemnification claims by such parties shall be made by and through
the Claimant.
(f) No party shall be entitled to indemnification under this Section 14 unless
and until indemnifiable losses of such party exceed in the aggregate One
Hundred Thousand Dollars ($100,000); provided, however, that if such amount
exceeds $100,000, the Indemnifying Party or Parties shall be liable to the
Claimant for the entirety of the losses and not just that portion in excess of
$100,000. This limitation shall not apply to any adjustments to the Merger
Consideration or the Asset Purchase Price, any obligations of the WCCC/WBOQ
Buyer to discharge Assumed Liabilities and any losses of the Parent or the
Surviving Corporation as a result of any litigation described on Schedule 5.15.
For purposes of determining whether losses exceed $100,000, the Parent and the
Surviving Corporation shall be considered as one party.
(g) The provisions of Sections 14.6(a) and 14.6(c) shall not apply to any claim
asserted by the Internal Revenue Service or any other Tax authority, which
claim shall be subject to the provisions of Section 10.14.
14.7 Attorneys' Fees. In the event of a default by any party which results in a
lawsuit or other proceeding for any remedy available under this Agreement, the
prevailing party shall be entitled to reimbursement from the other party of its
reasonable legal fees and expenses.
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Section 15. MISCELLANEOUS
15.1 Fees and Expenses. Any federal, state, or local sales or transfer tax
arising in connection with the Merger shall be shared by the Stockholders and
the Parent and any federal, state or local sales or transfer tax arising in
connection with the WCCC/WBOQ Sale shall be shared by the Surviving Corporation
and the WCCC/WBOQ Buyer. Except as otherwise provided in this Agreement, each
party shall pay its own expenses incurred in connection with the authorization,
preparation, execution, and performance of this Agreement, including all fees
and expenses of counsel, accountants, agents, and representatives, except that
the Company and the Parent shall each pay one-half of all filing fees required
by the FCC and the letter of credit referred to in Section 3.6(a).
15.2 Notices. All notices, demands, and requests required or permitted to be
given under the provisions of this Agreement shall be (a) in writing, (b)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, (c) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (d) addressed as follows:
If to the Company Marlin Broadcasting, Inc.
prior to the Closing: 32 Fairfield Street
Boston, MA 02116
Attention: Howard P. Tanger
With a copy to: Edward Young, Esq.
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
If to the Parent, Cox Radio, Inc.
Merger Sub or 1400 Lake Hearn Drive, N.E.
the Surviving Atlanta, Georgia 30319
Corporation: Attention: Mr. Robert F. Neil
With a copy to: Kevin F. Reed, Esq.
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036
If to the Howard P. Tanger
Stockholders' Tanger Properties
Agent: 32 Fairfield Street
Boston, MA 02116
If to the Marlin Broadcasting, LLC
WCCC/WBOQ 32 Fairfield Street
Buyer: Boston, MA 02116
Attention: Howard P. Tanger
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With a copy to: Edward Young, Esq.
Hale and Dorr, LLP
60 State Street
Boston, MA 02109
or to any other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
15.2.
15.3 Benefit and Binding Effect. No party hereto may assign this Agreement
without the prior written consent of the other parties hereto; provided,
however, that the Parent, Merger Sub or the WCCC/WBOQ Buyer may assign its
rights and obligations under this Agreement, in whole or in part, to one or
more subsidiaries or commonly controlled affiliates of the Parent, Merger Sub
or the WCCC/WBOQ Buyer, as applicable, without seeking or obtaining any other
party's prior approval so long as the Parent, Merger Sub or the WCCC/WBOQ
Buyer, as applicable, remain liable hereunder and provided, further, that the
Surviving Corporation, without prior written consent of any other party, may
assign its rights under this Agreement to a Qualified Intermediary in
accordance with Section 4.6. Upon any permitted assignment by any party hereto
in accordance with this Section 15.3, all references to such party herein shall
be deemed to be references to such party's assignee. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
15.4 Further Assurances. The parties shall take any actions and execute any
other documents that may be necessary or desirable to the implementation and
consummation of this Agreement, including, in the case of the Stockholders, any
additional stock powers or other transfer documents that, in the reasonable
opinion of the Parent, may be necessary to ensure, complete, and evidence the
full and effective cancellation of the Company Stock pursuant to this
Agreement.
15.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED, CONSTRUED, AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE
CHOICE OF LAW PROVISIONS THEREOF).
15.6 Headings. The headings in this Agreement are included for ease of
reference only and shall not control or affect the meaning or construction of
the provisions of this Agreement.
15.7 Gender and Number. Words used in this Agreement, regardless of the gender
and number specifically used, shall be deemed and construed to include any
other gender, masculine, feminine, or neuter, and any other number, singular or
plural, as the context requires.
15.8 Entire Agreement. This Agreement, the schedules hereto, and all documents,
certificates, and other documents to be delivered by the parties pursuant
hereto, collectively represent the entire understanding and agreement among the
parties hereto with respect to the subject matter hereof. This Agreement
supersedes all prior negotiations between the parties and cannot be amended,
supplemented, or changed except by an agreement in writing that makes
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specific reference to this Agreement and which is signed by the party against
which enforcement of any such amendment, supplement, or modification is sought.
15.9 Waiver of Compliance; Consents. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement, or condition herein may be
waived by the party entitled to the benefits thereof only by a written
instrument signed by the party granting such waiver, but such waiver or failure
to insist upon strict compliance with such obligation, representation,
warranty, covenant, agreement, or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 15.9.
15.10 Press Release. Neither party shall publish any press release, make any
other public announcement or otherwise communicate with any news media
concerning this Agreement or the transactions contemplated hereby without the
prior written consent of the other party; provided, however, that any party to
this Agreement may make public announcements and filings with governmental
authorities to the extent required under applicable laws and rules of
securities exchanges as may in that party's judgment be required or advisable
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby without the consent of the
other parties to this Agreement if such party first gives the other parties
hereto notice of its intention of so doing and a reasonable opportunity to
comment on a draft of the proposed announcement or filing.
15.11 Stockholders' Agent. The Company has appointed Howard P. Tanger as the
Stockholders' Agent and each Stockholder's attorney-in-fact and representative,
to do any and all things and to execute any and all documents in such
Stockholder's name, place and stead (other than each Transmittal Agreement and
related transfer documents which shall be signed by each Stockholder
personally), in any way which such Stockholder could do if personally present,
in connection with this Agreement and the transactions contemplated hereby,
including, without limitation, to resolve issues relating to the adjustment of
the Merger Consideration on such Stockholder's behalf. The Parent, the Merger
Sub and the Surviving Corporation shall have the right to rely in all respects
on the authority of the Stockholders' Agent to act on behalf of the
Stockholders.
15.12 Counterparts. This Agreement may be signed in counterparts with the same
effect as if the signature on each counterpart were upon the same instrument.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Merger
Agreement as of the day and year first above written.
MARLIN BROADCASTING, INC.
By: /s/ Howard P. Tanger
------------------------
Name: Howard P. Tanger
Title: President and CEO
COX RADIO, INC.
By: /s/ Andrew A. Merdek
------------------------
Name: Andrew A. Merdek
Title: Secretary
COX MIAMI MERGER SUB, INC.
By: /s/ Andrew A. Merdek
------------------------
Name: Andrew A. Merdek
Title: Secretary
MARLIN BROADCASTING, LLC
By: /s/ Howard P. Tanger
------------------------
Name: Howard P. Tanger
Title: President and CEO
<PAGE> 1
EXHIBIT 2.3
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, together with Station KLDE/KTBZ described below, the "Stations")
pursuant to certain authorizations issued by the Federal Communications
Commission (the "FCC"):
WKHK(FM), Colonial Heights, Virginia
WKLR(FM), Fort Lee, Virginia
WMXB(FM), Richmond, Virginia
WTVR(AM), Richmond, Virginia
KKTL-FM, Cleveland, Texas
KKBQ-FM, Pasadena, Texas
B. Seller also owns and holds the following (the "Station KLDE/KTBZ"):
(i) the studio site assets and intangible property used to operate the
FM radio station licensed to Houston, Texas and broadcasting on the 94.5 MHz
frequency ("Station 94.5") and using the "KLDE" call letters as of the date
hereof; and
(ii) the transmitter site assets and FCC licenses used to operate the
FM radio station licensed to Lake Jackson, Texas and broadcasting on the 107.5
MHz frequency ("Station 107.5") and using the "KTBZ" call letters as of the
date hereof.
C. Subject to the terms and conditions set forth herein, Buyer desires to
acquire the Station Assets (defined below).
D. Clear Channel Communications, Inc. (Seller's parent), CCU Merger Sub,
Inc. and AMFM Inc. are parties to an Agreement and Plan of Merger dated October
2, 1999 (the "AMFM Agreement").
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:
<PAGE> 2
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, 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 used exclusively in the
operation of the Stations and specifically described in this Section 1.1, but
excluding the Excluded Assets as hereafter defined (the "Station Assets"):
(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 renewals or modifications
thereof between the date hereof and Closing;
(b) all 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 used in the operation of the Stations and
listed or described 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 (the "Tangible Personal
Property");
(c) all Time Sales Agreements and Trade Agreements (both defined in
Section 2.1), Real Property Leases (defined in Section 7.7), and other
contracts, agreements, and leases which are used in the operation of the
Stations and listed 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 (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 used exclusively in the operation of the Stations and 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 exclusively 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
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(f) any real property which is used exclusively in the operation of
the Stations (including any of Seller's appurtenant easements and improvements
located thereon) and 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;
(d) all Station Contracts that terminate or expire prior to Closing in
the ordinary course of business of Seller;
(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 exclusively to the
operation of the 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; and
(h) all rights, properties and assets described on Schedule 1.2(h),
and all rights, properties and assets not specifically described in Section
1.1.
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1.3. Lease Agreements. At Closing, Buyer and Seller shall enter into the
lease agreements described on Schedule 1.1(f) and Schedule 1.2(h) pursuant to
leases in the form of Exhibit A attached hereto.
ARTICLE 2: ASSUMPTION OF OBLIGATIONS
2.1. Assumed Obligations. On the Closing Date, Buyer shall assume the
obligations of Seller (the "Assumed Obligations") arising after Closing under
the Station Contracts, 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 ("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 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, Three Hundred Eighty Million Dollars ($380,000,000), 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 as of 11:59
p.m. on the date immediately preceding the Closing Date. Such prorations shall
include, without limitation, 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
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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.
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, 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),
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, 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 (including without limitation any
divestiture condition), Buyer shall timely comply therewith.
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
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<PAGE> 6
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 notify Seller thereof and take such steps as necessary to remove such
impediment, including but not limited to divesting any stations and terminating
any agreements to acquire or program or market any stations.
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 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
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
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<PAGE> 7
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 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. 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 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).
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<PAGE> 8
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, except as set
forth on Schedule 1.1(c), 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 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.
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
are in full force and effect and have not been revoked, suspended, canceled,
rescinded or terminated and have 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 Tangible Personal Property on Schedule 1.1(b) is in all
material respects in normal working condition, 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.
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
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<PAGE> 9
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.
7.9. Environmental. Except as set forth in any environmental report
delivered by Seller to Buyer prior to the date of this Agreement and 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 in any
environmental report delivered by Seller to Buyer prior to the date of this
Agreement and 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.
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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 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. 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. 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 or 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) make any capital expenses previously budgeted by Seller (corporate
approved only) 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 change
the format of any of the Stations, or, other than in the ordinary course of
business in accordance with past practice, sell, lease or dispose of or agree
to sell, lease or dispose of any of the Station Assets, or create, assume or
permit to exist any Liens upon the Station Assets, except for Permitted Liens;
(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) after Seller publicly announces the transaction contemplated by
this Agreement and files this Agreement with the FCC, then, when reasonably
requested by Buyer, provide Buyer access to the Station facilities that are
included in the Station Assets during the
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Stations' normal business hours, provided such access does not interfere
unreasonably with the business of the Stations;
(e) not make material changes to the compensation or employment
agreements of any Transferred Employees (defined below), except annual ordinary
course compensation adjustments consistent with past practice;
(f) make available to Buyer, and authorize and direct its accountants
to cooperate and make available to Buyer and its accountants, 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, including in connection with any registration statement, report or
other document which Buyer files with the Securities and Exchange Commission,
the New York Stock Exchange, Inc. or any other applicable regulatory authority;
and
(g) other than with respect to those shared with a station other than
the Stations, (i) comply with Buyer's requests for ordinary course renewals or
cancellations effective as of the Closing Date of any of the Station Contracts,
and (ii) 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 except those entered into in the ordinary course of
business 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
$1,000,000 in the aggregate for all such Station Contracts.
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. The parties shall use commercially
reasonable efforts to obtain any third party consents necessary for the
assignment of any Station Contract (which shall not require any payment to any
such third party). To the extent that any Station Contract may not be assigned
without the consent of any third party, and such consent is not obtained
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<PAGE> 12
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) Prior to Closing, Seller shall deliver to Buyer a list of
employees of the Stations that Seller does not intend to retain after Closing.
Buyer may interview and elect to hire such listed employees, but not any other
employees of Seller. 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 hired by Buyer ("Transferred Employees"), to the
extent permitted by law, Seller shall provide Buyer access to its personnel
records and such other information as Buyer may reasonably request prior to
Closing. With respect to such hired 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 employees it hires to be
eligible to participate in its "employee welfare benefit plans" and "employee
pension benefit plans" (as defined in Section 3(1) and 3(2) of ERISA,
respectively) in which similarly situated employees are generally eligible to
participate; provided, however, that all such employees and their spouses and
dependents shall be eligible for coverage immediately after Closing (and shall
not be excluded from coverage on account of any pre-existing condition) to the
extent provided under such plans. For purposes of any length of service
requirements, waiting periods, vesting periods or differential benefits based
on length of service in any such plan for which such employees may be eligible
after Closing, Buyer shall ensure that (other than for purposes of benefits
accrual under any defined benefit pension plan or retiree medical or life plans
maintained by Buyer) service with Seller shall be deemed to have been service
with the Buyer. In addition, Buyer shall ensure that each such employee
receives credit under any welfare benefit plan of Buyer for any deductibles or
co-payments paid by such employees 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) From and after the Closing, Buyer shall cooperate with the
reasonable requests of Seller to continue to withhold from the pay checks of
Transferred Employees who, as of the Closing Date, have outstanding participant
loan balances in Seller's 401(k) Savings Plan and who remain employed by Buyer
such withheld amounts as Seller notifies Buyer are necessary
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<PAGE> 13
to satisfy the loan amortization schedules established with respect to such
participant loans. Buyer's obligations hereunder are contingent upon Seller
providing to Buyer information with respect to each such participant loan to
determine both the amount that should be withheld from each pay check and the
total number of pay checks for which such a withholding shall be made. Buyer
shall not be under any obligation to assure that any such participant loan does
not go into default, either at the Closing or at any time thereafter. Any
remittances to Seller made by Buyer hereunder shall be made in aggregate
amounts, and shall be broken down to reference individual participant loans,
and Buyer may make such remittances in separate payments to Seller from the
individual Stations.
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 unless such failure is the
result of the material breach or default by Buyer under this Agreement.
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 expressly 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 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.
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<PAGE> 14
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.
11.3. Deliveries. Seller shall have made or stand willing to make the
deliveries set forth in Section 14.1.
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 expressly 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.
12.4. Deliveries. Buyer shall have made or stand willing to make the
deliveries set forth in Section 14.2.
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 by 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 by
Buyer.
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<PAGE> 15
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:
(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 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 six (6) 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) and 13.1 (Expenses), 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,
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; (ii) the
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<PAGE> 16
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 Damages aggregate $175,000 (but if Buyer's Damages
exceed such amount, then Seller's liability shall be for all such Damages
except as provided in the following clause), and (ii) the maximum liability of
Seller hereunder shall be $10,000,000.
(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; (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
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<PAGE> 17
indemnified party and their respective counsel or other representatives shall
cooperate in good faith with respect to such Claim.
(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. No undertaking of defense
or opposition to a Claim shall be construed as an acknowledgment by such party
that it is liable to the party claiming indemnification with respect to the
Claim at issue or other similar Claims.
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;
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<PAGE> 18
(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; or
(f) 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 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 due to
Buyer's failure to consummate the Closing on the Closing Date in accordance
with this Agreement 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 15% of the Purchase Price which, if elected by and paid to
Seller shall be Seller's sole and exclusive 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.
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
Seller shall, at Buyer's
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<PAGE> 19
option, (i) assign to Buyer the proceeds of any insurance payable to Seller on
account of such damage or loss, or (ii) repair or replace the lost or damaged
items promptly after Closing.
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, except that Buyer may assign rights (which
shall not relieve Buyer of any obligation or liability) to a Qualified
Intermediary if such assignment does not delay the governmental consents
contemplated by Article 5 (or otherwise delay Closing) and Seller has no
obligation or liability in respect thereof (other than to acknowledge in
writing any written notice of Seller of such assignment). 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. 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.
17.6. Governing Law. The construction and performance of this Agreement
shall be governed by the laws of the State of Texas without giving effect to
the choice of law provisions thereof.
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):
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<PAGE> 20
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: c/o Cox Radio, Inc.
1400 Lake Hearn Drive, NE
Atlanta, Georgia 30348
Attention: President
Facsimile: (404) 843-5586
with a copy (which shall not
constitute notice) to: Dow, Lohnes & Albertson, PLLC
1200 New Hampshire, N.W.
Suite 800
Washington, D.C. 20036
Attention: Kevin Reed, Esq.
Facsimile: (202) 776-2222
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.
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
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<PAGE> 21
and understandings relating to the matters provided for herein. This Agreement
does not supersede any confidentiality agreement relating to the Stations.
[SIGNATURE PAGE FOLLOWS]
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<PAGE> 22
SELLER SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, Seller has executed this Agreement as of the date
first set forth above.
SELLER:
CLEAR CHANNEL BROADCASTING, INC.
CLEAR CHANNEL BROADCASTING
LICENSES, INC. CITICASTERS CO.
By: /s/ Mark P. Mays By: /s/ Mark P. Mays
---------------------------- ---------------------------
Name: Mark P. Mays Name: Mark P. Mays
Title: President Title: President
CAPSTAR RADIO OPERATING COMPANY CAPSTAR TX LIMITED PARTNERSHIP
By: /s/ William Banowsky By: /s/ William Banowsky
---------------------------- ---------------------------
Name: William Banowsky Name: William Banowsky
Title: Executive Vice President Title: Executive Vice President
AMFM TEXAS LICENSES LIMITED
AMFM TEXAS BROADCASTING, LP PARTNERSHIP
By: /s/ William Banowsky By: /s/ William Banowsky
---------------------------- ---------------------------
Name: William Banowsky Name: William Banowsky
Title: Executive Vice President Title: Executive Vice President
<PAGE> 23
BUYER SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT
IN WITNESS WHEREOF, Buyer has executed this Agreement as of the date first
set forth above.
BUYER: COX RADIO, INC.
By: Andrew A. Merdek
----------------------
Name: Andrew A. Merdek
Title: Secretary
CXR HOLDINGS, INC.
By: Andrew A. Merdek
----------------------
Name: Andrew A. Merdek
Title: Secretary
<PAGE> 24
<TABLE>
<CAPTION>
Schedules
<S> <C> <C>
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
Exhibits
A - Forms of Lease Agreement
</TABLE>
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
333-13281 and 333-87193 of Cox Radio, Inc. on Form S-8 of our report dated
March 31, 2000 (relating to the combined statements of assets to be acquired of
WEDR-FM Miami, Florida; WFOX-FM Atlanta, Georgia; WAPE-FM Jacksonville,
Florida; WFYV-FM Jacksonville, Florida; WKQL-FM Jacksonville, Florida; WMXQ-FM
Jacksonville, Florida; WOKV-AM Jacksonville, Florida; WBWL-AM Jacksonville,
Florida; WPLR-FM New Haven, Connecticut; WKHL-FM Stamford-Norwalk, Connecticut;
WSTC-AM Stamford-Norwalk, Connecticut; WEFX-FM Stamford-Norwalk, Connecticut;
and WNLK-AM Stamford-Norwalk, Connecticut (radio stations owned by AMFM Inc.)
and the related combined statements of revenues and direct operating expenses
(while under ownership of AMFM Inc.)) appearing in the Current Report on Form
8-K of Cox Radio, Inc. dated August 30, 1999.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
April 18, 2000
<PAGE> 1
EXHIBIT 23.2
Independent Auditors Consent
We consent to the incorporation by reference in Registration Statement Nos.
333-13281 and 333-87193 of Cox Radio, Inc. on Form S-8 of our report dated March
31, 2000 (relating to the combined statements of revenues and direct operating
expenses of WEDR-FM Miami, Florida; WFOX-FM Atlanta, Georgia;
WAPE-FM-Jacksonville, Florida: WMXQ-FM Jacksonville, Florida; WOKV-AM
Jacksonville, Florida; WBWL-AM Jacksonville, Florida; WPLR-FM New Haven,
Connecticut; WKHL-FM Stamford-Norwalk, Connecticut, WSTC-AM Stamford-Norwalk,
Connecticut; WEFX-FM Stamford-Norwalk, Connecticut; and WNLK-AM
Stamford-Norwalk, Connecticut (while under ownership of Capstar Broadcasting
Corporation) appearing in the Current Report on Form 8-K of Cox Radio, Inc.
dated August 30, 1999.
/s/ Deloitte & Touche LLP
Atlanta, Georgia
April 18, 2000
<PAGE> 1
EXHIBIT 23.3
Consent of Independent Auditors
We consent to the incorporation by reference in Registration Statement Nos.
333-13281 and 333-87193 on Form S-8 of Cox Radio, Inc. of our report dated March
16, 2000, with respect to the consolidated financial statements of Marlin
Broadcasting, Inc. as of and for the years ended December 31, 1999 and 1998
included in the Current Report on Form 8-K of Cox Radio, Inc., dated August 30,
1999 and filed April 19, 2000 with the Securities and Exchange Commission.
/s/ Ernst & Young LLP
Hartford, Connecticut
April 19, 2000
