<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File Number 333-25683
CAPSTAR BROADCASTING PARTNERS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2672663
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
600 CONGRESS AVENUE
SUITE 1400
AUSTIN, TEXAS 78701
(Address of principal executive offices) (Zip Code)
(512) 404-6840
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------- --------
AT MAY 1, 1997, 131,305,432 SHARES OF CLASS A COMMON STOCK, PAR VALUE
$.01 PER SHARE, AND 18,181,818 SHARES OF CLASS B COMMON STOCK, PAR VALUE $.01
PER SHARE, OF THE REGISTRANT WERE OUTSTANDING.
<PAGE> 2
CAPSTAR BROADCASTING PARTNERS, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets........................... 3
Consolidated Statements of Operations................. 4
Condensed Consolidated Statements of Cash Flows....... 5
Consolidated Statement of Stockholders' Equity........ 6
Notes to Consolidated Financial Statements............ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................. 11
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders... 16
Item 6. Exhibits and Reports on Form 8-K...................... 16
</TABLE>
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1997
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and short term cash investments . . . . . . . . . . . . $ 5,028,014 $ 13,024,555
Accounts receivable, net . . . . . . . . . . . . . . . . . . 8,913,390 13,051,132
Note receivable . . . . . . . . . . . . . . . . . . . . . . -- 13,513,179
Prepaid expenses and other current assets . . . . . . . . . 443,900 3,629,218
------------- -------------
Total current assets . . . . . . . . . . . . . . . . . . 14,385,304 43,218,084
Property, plant and equipment, net . . . . . . . . . . . . . . . 15,628,361 41,991,383
FCC licenses and goodwill, net . . . . . . . . . . . . . . . . . 228,332,079 354,799,887
Other intangible assets . . . . . . . . . . . . . . . . . . . . . 3,178,469 1,001,278
Deferred charges, net . . . . . . . . . . . . . . . . . . . . . . 1,800,234 9,711,614
Deposits and other assets . . . . . . . . . . . . . . . . . . . . 931,340 1,943,413
------------- -------------
Total assets . . . . . . . . . . . . . . . . . . . . . . $ 264,255,787 $ 452,665,659
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses . . . . . . . . . . . . $ 3,468,945 $ 11,604,929
Accrued interest . . . . . . . . . . . . . . . . . . . . . . 1,810,292 2,400,228
Accrued income taxes . . . . . . . . . . . . . . . . . . . . -- 1,268,418
Current maturities of capital lease obligations . . . . . . . 16,056 124,056
Current maturities of long-term debt. . . . . . . . . . . . . 3,750,000 --
Due to affiliate . . . . . . . . . . . . . . . . . . . . . . 536,738 92,421
------------- -------------
Total current liabilities . . . . . . . . . . . . . . . . 9,582,031 15,490,052
Long term capital lease obligations . . . . . . . . . . . . . . . 49,629 262,025
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . 131,950,000 229,955,145
Non-current compensation . . . . . . . . . . . . . . . . . . . . . -- 1,022,655
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . 31,531,580 65,037,798
------------- -------------
Total liabilities . . . . . . . . . . . . . . . . . . . . 173,113,240 311,767,675
Stockholders' equity
Preferred Stock, $.01 par value, 10,000,000 shares
authorized, none issued and outstanding . . . . . . . . . . -- --
Class A Common Stock, $.01 par value, 200,000,000
shares authorized, 94,155,000 and 128,578,160 shares issued
and outstanding at December 31, 1996 and March 31, 1997,
respectively . . . . . . . . . . . . . . . . . . . . . . . 941,550 1,285,782
Class B Common Stock, convertible into Class A
Common Stock, $.01 par value, 50,000,000 shares authorized,
none issued and outstanding at December 31, 1996,
18,181,818 issued and outstanding at March 31, 1997 . . . . -- 181,818
Additional paid-in capital. . . . . . . . . . . . . . . . . . 93,957,450 151,254,380
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . (3,756,453) (11,227,632)
------------- -------------
91,142,547 141,494,348
Receivables from stockholders . . . . . . . . . . . . . . . . -- (596,364)
------------- -------------
Total stockholders' equity . . . . . . . . . . . . . . . . 91,142,547 140,897,984
------------- -------------
Total liabilities and stockholders' equity . . . . . . . . $ 264,255,787 $ 452,665,659
============= =============
</TABLE>
See Accompanying Notes.
3
<PAGE> 4
<PAGE> 5
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Predecessor
------------
For the Three Months Ended
----------------------------
MARCH 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
Gross broadcast revenue . . . . . . . . . . . . . . . . . $ 8,047,568 $ 15,149,894
Less: agency commissions . . . . . . . . . . . . . . . . (631,887) (1,042,534)
------------ ------------
Net broadcast revenue . . . . . . . . . . . . . . . . . . 7,415,681 14,107,360
Operating expenses:
Programming, technical and news . . . . . . . . . . 1,513,468 2,533,691
Sales and promotion . . . . . . . . . . . . . . . . 2,421,153 4,015,973
General and administrative . . . . . . . . . . . . . 1,440,612 2,767,300
Direct programmed music and entertainment. . . . . . -- 1,039,250
Corporate expenses . . . . . . . . . . . . . . . . . . . 465,684 1,423,892
Depreciation and amortization . . . . . . . . . . . . . . 480,210 2,389,250
------------ ------------
Operating income (loss) . . . . . . . . . . . . . . . . . 1,094,554 (61,996)
Interest expense, net . . . . . . . . . . . . . . . . . . 2,451,638 6,791,672
Interest income . . . . . . . . . . . . . . . . . . . . . 115,252 127,621
Other expenses, net . . . . . . . . . . . . . . . . . . . 167,594 100,562
------------ ------------
Income (loss) before provision for income
taxes and extraordinary item . . . . . . . . . . . . (1,409,426) (6,826,609)
Provision for income taxes . . . . . . . . . . . . . . . 27,000 46,345
------------ ------------
Net income (loss) before extraordinary item . . . . . . . (1,436,426) (6,872,954)
Extraordinary item, loss on early extinguishment of
debt . . . . . . . . . . . . . . . . . . . . . . . . . -- 598,225
------------ ------------
Net loss . . . . . . . . . . . . . . . . . . . . . . . . $ (1,436,426) $ (7,471,179)
============ ============
</TABLE>
See Accompanying Notes.
4
<PAGE> 6
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Predecessor
-------------
For the Three Months Ended :
-------------------------------
March 31, March 31,
1996 1997
------------- -------------
<S> <C> <C>
Net cash provided by operating activities . . . . . . . . . . . . . . . $ 1,890,560 $ 1,905,152
Cash flows from investing activities
Purchase of property, plant and equipment . . . . . . . . . . . . (124,192) (1,024,350)
Decrease in loan from affiliate . . . . . . . . . . . . . . . . . 447,317
Payments for intangible assets . . . . . . . . . . . . . . . . . . (290,766) (149,975)
Loan to Affiliate . . . . . . . . . . . . . . . . . . . . . . . . -- (13,475,000)
Deposits on acquisitions . . . . . . . . . . . . . . . . . . . . . (915,000) (90,000)
Acquisitions of stations and companies (14,400,000) (115,325,036)
Other investing activities, net . . . . . . . . . . . . . . . . . (68,177) --
------------ -------------
Net cash used in investing activities . . . . . . . . . . . . . . (15,798,135) (129,617,044)
Cash flows from financing activities . . . . . . . . . . . . . . . . .
Repurchase of Common Stock . . . . . . . . . . . . . . . . . . . . (175,000)
Proceeds from common stock . . . . . . . . . . . . . . . . . . . . -- 55,601,616
Proceeds from debt . . . . . . . . . . . . . . . . . . . . . . . 8,500,000 150,283,000
Payment of debt issuance costs . . . . . . . . . . . . . . . . . . (393,734) (10,295,815)
Repayment of amounts borrowed . . . . . . . . . . . . . . . . . . -- (59,700,000)
Principal payments on capital leases . . . . . . . . . . . . . . . (3,455) (5,368)
------------ -------------
Net cash provided by financing activities . . . . . . . . . . . . 8,102,811 135,708,433
------------ -------------
Net increase (decrease) in cash and short term cash investments . . . . (5,804,764) 7,996,541
Cash and short term cash investments, beginning of period . . . . . . . 10,891,489 5,028,014
------------ -------------
Cash and short term cash investments, end of period . . . . . . . . . . $ 5,086,725 $ 13,024,555
============ =============
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . $ 46,738 $ 337,097
Taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . 58,908 164,386
</TABLE>
See Accompanying Notes.
5
<PAGE> 7
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
CLASS A CLASS B ADDITIONAL RECEIVABLES TOTAL
PREFERRED COMMON COMMON PAID-IN ACCUMULATED FROM STOCKHOLDERS'
STOCK STOCK STOCK CAPITAL DEFICIT STOCKHOLDERS EQUITY
--------- ------- ------- ---------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996........... 941,550 93,957,450 (3,756,453) 91,142,547
Repurchase and cancellation of
Class A Common Stock................. (1,750) (173,250) (175,000)
Issuance of Class A Common Stock....... 345,982 37,651,998 (596,364) 37,401,616
Issuance of Class B Common Stock....... 181,818 19,818,182 20,000,000
Net loss............................... (7,471,179) (7,471,179)
--------- --------- ------- ----------- ----------- -------- ----------
Balance at March 31, 1997.............. 1,285,782 181,818 151,254,380 (11,227,632) (596,364) 140,897,984
========= ========= ======= =========== =========== ======== ===========
</TABLE>
See Accompanying Notes.
6
<PAGE> 8
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1997 or for any other interim period. The consolidated
financial statements include the accounts of Capstar Broadcasting Partners, Inc.
and its direct and indirect wholly-owned subsidiaries (the "Company").
2. CONSUMMATED ACQUISITIONS AND DISPOSITION
On February 20, 1997, the Company acquired (the "Osborn Acquisition")
Southern Star Communications, Inc. (formerly named Osborn Communications
Corporation ("Osborn")). The purchase price of the Osborn Acquisition was
$118.8 million payable in cash and Class A Common Stock (as defined). In
connection with the purchase of Osborn, the Company agreed to pay the President
of Osborn a guaranteed monthly bonus over the next five years; accordingly, the
Company has recorded a liability equal to the net present value of these
payments of $1.2 million at the date of purchase. Osborn owned and operated or
provided services to 18 stations upon consummation of the Osborn Acquisition and
had pending (i) the acquisitions of five stations (two FM and three AM) in the
Huntsville and Tuscaloosa, Alabama markets and (ii) the disposition of three
stations (two FM and one AM) in the Ft. Myers, Florida market. Each of the
pending transactions of Osborn has been completed as more fully described
hereinafter.
In April 1997, the Company acquired substantially all of the assets of
Taylor Communications Corporation's two radio stations (one FM and one AM) in
the Tuscaloosa, Alabama market (the "Tuscaloosa Acquisition"). The purchase
price of the acquisition was approximately $1.0 million. Such stations were
managed by Osborn pursuant to an LMA (as defined) since December 1996.
In April 1997, the Company acquired substantially all of the assets of City
Broadcasting Co., Inc. used or useful in the operations of two radio stations
(one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the
"City Acquisition"). The purchase price of the acquisition was approximately
$3.0 million. In April 1997, the Company acquired substantially all of the
assets of EZY Com, Inc. used or useful in the operations of two radio stations
(one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market (the
"EZY Acquisition"). The purchase price of the acquisition was approximately
$5.0 million. In April 1997, the Company acquired substantially all of the
assets of Roper Broadcasting, Inc. used or useful in the operations of one FM
radio station in the Melbourne-Titusville-Cocoa, Florida market (the "Roper
Acquisition" and, collectively with the City Acquisition and the EZY
Acquisition, the "Space Coast Acquisitions"). The purchase price of the
acquisition was approximately $4.0 million.
In April 1997, the Company sold substantially all of the assets of its radio
stations (two FM and one AM) in the Ft. Myers, Florida Market (the "Osborn Ft.
Myers Disposition"). The sale price was $11.0 million.
In May 1997, the Company acquired all of the outstanding capital stock of
Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio
stations (one FM and two AM) in the Huntsville, Alabama market (the "Huntsville
Acquisition"). The purchase price of the acquisition was $24.5 million.
7
<PAGE> 9
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
2. CONSUMMATED ACQUISITIONS AND DISPOSITION (CONTINUED)
Unaudited proforma results of the Company for the aforementioned acquisitions
which were completed during the three month period ended March 31, 1997 and
which were accounted for using the purchase method of accounting, and the
aforementioned disposition as if they were purchased or sold on January 1, 1996
are as follows:
<TABLE>
<CAPTION>
Three Months Ended:
----------------------------
March 31, March 31,
1996 1997
--------- -----------
(dollars in thousands)
<S> <C> <C>
Net revenue $ 16,949 $ 22,451
========= ===========
Loss before extraordinary item $ (9,345) $ (10,295)
========= ===========
Net loss $ (9,943) $ (10,295)
========= ===========
</TABLE>
3. PENDING ACQUISITIONS
Under the terms of several acquisition agreements, each dated December
1996, Benchmark Communications Radio Limited Partnership, L.P. ("Benchmark")
will become an indirect wholly-owned subsidiary of the Company through a series
of mergers and stock purchases (the "Benchmark Acquisition"). The purchase
price of the Benchmark Acquisition will equal approximately $173.4 million.
Benchmark owns and operates 31 radio stations (21 FM and 10 AM). Those stations
are located in 11 markets primarily in the Southeastern United States, including
Dover, Delaware; Salisbury-Ocean City, Maryland; Montgomery, Alabama;
Shreveport, Louisiana; Jackson, Mississippi; Statesville, North Carolina;
Columbia, South Carolina; Greenville, South Carolina; Roanoke, Lynchburg and
Winchester, Virginia. The Company anticipates that the Benchmark Acquisition
will be consummated in July 1997. The obligation of Benchmark to consummate the
Benchmark Acquisition is subject to Federal Communication Commission (" FCC")
approval.
In December 1996, the Company agreed to acquire substantially all of the
assets of Community Pacific Broadcasting Company L.P. ("Community Pacific")
(the "Community Pacific Acquisition"). The purchase price of the Community
Pacific Acquisition will equal approximately $35.0 million payable in cash.
Community Pacific owns and operates 11 radio stations (six FM and five AM) in
four markets located in Anchorage, Alaska, Modesto and Stockton, California and
Des Moines, Iowa. The Company anticipates that the Community Pacific
Acquisition will be consummated in November 1997. The Company entered into an
LMA with Community Pacific on February 28, 1997 to provide services to the
radio stations owned and operated by Community Pacific until the Community
Pacific Acquisition is consummated.
In January 1997, the Company agreed to acquire substantially all of the
assets of The Madison Radio Group ("Madison") (the "Madison Acquisition"). The
purchase price of the Madison Acquisition will equal approximately $38.8 million
payable in cash. Madison owns and operates six radio stations (four FM and two
AM) in Madison, Wisconsin. The Company anticipates that the Madison Acquisition
will be consummated in October 1997.
In January 1997, the Company agreed to acquire substantially all of the
assets of Commonwealth Broadcasting of Arizona, L.L.C. ("Commonwealth") (the
"Commonwealth Acquisition"). The purchase price of the Commonwealth
Acquisition will equal approximately $5.3 million payable in cash.
Commonwealth owns and operates three radio stations (two FM and one AM) in
Yuma, Arizona. The Company anticipates that the Commonwealth Acquisition will
be consummated in October 1997.
In January 1997, the Company agreed to acquire substantially all of the
assets of Cavalier Communications, L.P. ("Cavalier") (the "Cavalier
Acquisition"). The purchase price of the Cavalier Acquisition will equal
approximately $8.3 million payable in cash. Cavalier owns and operates five
radio stations (four FM and one AM) in the Roanoke and Lynchburg, Virginia
markets. FCC approval is pending. The Company anticipates
8
<PAGE> 10
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
3. PENDING ACQUISITIONS (CONTINUED)
that the Cavalier Acquisition will be consummated in October 1997.
In February 1997, the Company agreed to acquire substantially all of the
assets of COMCO Broadcasting, Inc. ("COMCO") (the "COMCO Acquisition"). The
purchase price of the COMCO Acquisition will equal approximately $6.7 million
payable in cash. COMCO owns and operates six radio stations (four FM and two
AM) in the Anchorage and Fairbanks, Alaska markets. FCC approval is pending.
The Company anticipates that the COMCO Acquisition will be consummated in
October 1997.
Upon consummation of the Community Pacific Acquisition and the COMCO
Acquisition, the Company will own and operate seven radio stations (four FM and
three AM) in the Anchorage, Alaska market, which number exceeds the multiple
station ownership limitations under the Communications Act of 1934, as amended
(the "Communications Act"). Accordingly, the Company has sought permission from
the FCC to consummate both the Community Pacific Acquisition and the COMCO
Acquisition provided that the Company agrees to sell radio station KASH-AM in
Anchorage, Alaska within 18 months of the date on which the Community Pacific
Acquisition is consummated. The Company would be in compliance with the
ownership limitations of the Communications Act in the Anchorage, Alaska market
once it disposes of KASH-AM. In May 1997, the Company entered into a nonbinding
letter of intent to sell substantially all of the assets used or useful in the
operations of radio station KASH-AM to Alaska Broadcast Television, Inc. No
assurances can be given that the FCC will grant permission to the Company to
consummate both the Community Pacific Acquisition and the COMCO Acquisition and
dispose of KASH-AM, or if the FCC grants such permission, that the Company will
be able to sell KASH-AM.
In March 1997, the Company agreed to acquire substantially all of the
assets of Emerald City Radio Partners, L.P. ("Emerald City") (the "Emerald City
Acquisition"). The Company has agreed to assign its right to acquire two of
Emerald City's radio stations (WOIC-AM and WMFX-FM) to Clear Channel Radio
Licensing, Inc. on or before the date on which the Company acquires Emerald
City's third radio station (WNOK-FM). The purchase price of the Emerald City
Acquisition will equal approximately $14.9 million payable in cash, of which
approximately $9.5 million has been allocated to radio station WNOK-FM and will
be payable by the Company. Emerald City owns and operates three radio stations
(two FM and one AM) in the Columbia, South Carolina market. FCC approval is
pending. The Company anticipates that the Emerald City Acquisition will be
consummated in July 1997.
In April 1997, the Company agreed to acquire substantially all of the
assets of WRIS, Inc. used or held for use in the operations of radio station
WJLM-FM in the Salem, Virginia market (the "WRIS Acquisition"). The purchase
price of the WRIS Acquisition will equal approximately $3.1 million payable in
cash. FCC approval is pending. The Company anticipates that the WRIS
Acquisition will be consummated in August 1997.
In April 1997, the Company agreed to acquire substantially all of the
assets of Ameron Broadcasting, Inc. used or held for use in the operation of
three radio stations (two FM and one AM) in the Birmingham, Alabama market (the
"Ameron Acquisition"). The purchase price of the Ameron Acquisition will equal
approximately $31.5 million payable in cash. FCC approval is pending. The
Company anticipates that the Ameron Acquisition will be consummated in October
1997.
The Company has entered into nine separate nonbinding letters of intent to
acquire and/or exchange substantially all of the assets of the respective
potential sellers used or useful in the operations of each seller's radio
stations, each of which is subject to various conditions, including the ability
of the Company to enter into a definitive agreement to acquire such assets. No
assurances can be given that definitive agreements will be entered into to
acquire such assets or that such acquisitions will be consummated. As part of
the Company's ongoing acquisition strategy, the Company is continually
evaluating certain other potential acquisition opportunities.
4. STOCKHOLDERS' EQUITY
On February 20, 1997, the Company issued 31,634,527 shares of Class A
Common Stock and 18,181,818 shares of Class B Common Stock (as defined) to
affiliates of Hicks, Muse, Tate & Furst Incorporated ("Hicks Muse") at a
purchase price of $1.10 per share. The proceeds were used in part to fund the
Osborn Acquisition and retire existing indebtedness of Commodore Media, Inc., a
wholly-owned subsidiary of the Company ("Commodore"), and Osborn. In addition,
on February 20, 1997 the Company exchanged 1,636,361 shares of Class A Common
Stock having a deemed value of $1.8 million for shares of common stock of
Osborn as part of the purchase price of the Osborn Acquisition and contributed
its interest in Osborn to Commodore. Additionally, during the three months
ended March 31, 1997, the Company issued 1,327,272 shares of Class A Common
Stock to related parties in exchange for cash and receivables totalling $1.4
million.
9
<PAGE> 11
CAPSTAR BROADCASTING PARTNERS, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
MARCH 31, 1997
(UNAUDITED)
5. EXTRAORDINARY ITEM
On February 20, 1997, in connection with the financing of the Osborn
Acquisition, the Company repaid its outstanding loan balance (including
principal and interest) under the senior credit facility (the "AT&T Credit
Facility") of Commodore with AT&T Commercial Finance Corporation and recognized
an extraordinary loss of $598,000 as a result of a prepayment penalty.
6. NEW CREDIT FACILITY
On February 20, 1997, the Company and Commodore, as borrower, entered into a
credit facility (the "New Credit Facility") with various banks and Bankers Trust
Company, as administrative agent, which consists of a $50.0 million revolving
loan facility. The indebtedness under the New Credit Facility is secured by a
first priority perfected pledge of substantially all of the Company's assets,
including, without limitation, the capital stock of the subsidiaries of the
Company, and is guaranteed by the Company and all of the direct and indirect
subsidiaries of the Company (other than Commodore). Borrowings under the New
Credit Facility bear interest at floating rates and require interest payments on
varying dates depending on the interest rate option selected by the Company.
All loans outstanding under the New Credit Facility will mature in 2002. As of
May 13, 1997, a principal balance of $24.9 million was outstanding under the New
Credit Facility.
7. CREDIT AGREEMENT
In March 1997, the Company entered into a $13.5 million Credit Agreement
with Emerald City (the "Credit Agreement"). In accordance with the Credit
Agreement, the Company loaned Emerald City $13.5 million (the "Loan") which is
to be repaid in two installments. The first installment is to be a payment of
principal of the Loan equal to the purchase price under the asset purchase
agreement for radio station WNOK-FM, together with any accrued and unpaid
interest thereon, with the second installment to consist of the remaining
principal balance of the Loan, together with any accrued and unpaid interest
thereon, due and payable on the Maturity Date (as defined in the Credit
Agreement).
8. SENIOR DISCOUNT NOTES
In connection with the Osborn Acquisition the Company issued $277.0
million in aggregate principal amount at maturity of its 12 3/4% Senior
Discount Notes due 2009 (the "Notes"). The Notes were issued at a substantial
discount from their aggregate principal amount at maturity under an Indenture
dated as of February 20, 1997 (the "Indenture"), between the Company and U.S.
Trust Company of Texas, N.A., as trustee, generating gross proceeds to the
Company of approximately $150.3 million. The notes are general unsecured
senior obligations of the Company, which will mature on February 1, 2009. No
interest will accrue on the Notes prior to February 1, 2002. Thereafter,
interest on the Notes will accrue at an annual rate of 12 3/4% and will be
payable semi-annually in cash on February 1 and August 1 each year, commencing
on August 1, 2002 to holders of record on the immediately preceding January 15
and July 15. The Notes are redeemable at the option of the Company, in whole or
in part, at any time and from time to time on or after February 1, 2002 at the
redemption prices set forth in the Indenture, plus, without duplication,
accrued and unpaid interest to the redemption date. In addition, prior to
February 1, 2001, the Company, at its option, may use the net cash proceeds of
one or more Public Equity Offerings (as defined in the Indenture) or Major
Asset Sales (as defined in the Indenture) to redeem up to 25% of the aggregate
principal amount at maturity of the Notes at a redemption price of 112.75%;
provided, however, that after any such redemption, there is outstanding at
least 75% of the original aggregate principal amount at maturity of the Notes.
10
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
THE COMPANY
As of March 31, 1997, the Company and its predecessor, Commodore, owned
and operated or provided services to 63 radio stations in 16 mid-sized
markets. The following table sets forth the growth in number of radio stations
by market since January 1, 1996:
<TABLE>
<CAPTION>
Number of Acquisition Date or
Market Stations Estimated Acquisition Date
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMODORE:
Huntington WV-
Ashland, KY 7 October 1996(1)
1 LMA
Fairfield, CT
Acquisition 1 2 March 1996(1)
Acquisition 2 2 May 1996
Ft. Pierce-Stuart-
Vero Beach, FL 3 May 1996(1)
Westchester-Putnam
Counties, NY 3 March 1996(1)
OSBORN:
Asheville, NC 2 February 1997
Wheeling, WV 6 February 1997
Wheeling, WV 1 JSA
Jackson, TN 3 February 1997
Tuscaloosa, AL 1 February 1997
Tuscaloosa, AL 2 April 1997(1)
Gadsden, AL 2 February 1997
Huntsville, AL 3 April 1997
COMMUNITY PACIFIC:
Anchorage, AK 3 November 1997(1)
Des Moines, IA 3 November 1997(1)
Modesto, CA 2 November 1997(1)
Stockton, CA 2 November 1997(1)
</TABLE>
- -------------
(1) The Company provided services to these stations pursuant to an LMA
or a JSA (as defined) prior to the date acquired. "JSA" refers to a
joint sales agreement, whereby a station licensee obtains, for a fee, the
right to sell substantially all of the commercial advertising on a
separately-owned and licensed station. JSAs take varying forms. A JSA,
unlike an LMA, normally does not involve programming. "LMA" refers to a
local marketing agreement, whereby a radio station outsources the management
of certain limited functions of its operations. LMAs take varying forms;
however, the FCC requires that, in all cases, the licensee maintain
independent control over the programming and operations of the station.
On February 20, 1997, the Company acquired Osborn. The purchase price of
the Osborn Acquisition was $118.8 million payable in cash and Class A Common
Stock. Osborn owned and operated or provided services to 18 stations upon
consummation of the Osborn Acquisition and had pending (i) the acquisitions of
five stations (two FM and three AM) in the Huntsville and Tuscaloosa, Alabama
markets and (ii) the disposition of three stations (two FM and one AM) in the
Ft. Myers, Florida market. Each of the pending transactions of Osborn has been
completed as more fully described hereinafter.
In April 1997, the Company acquired substantially all of the assets of
Taylor Communications Corporation's two radio stations (one FM and one AM) in
the Tuscaloosa, Alabama market The purchase price of the acquisition
was approximately $1.0 million. Such stations were managed by Osborn pursuant
to an LMA since December 1996.
In April 1997, the Company acquired substantially all of the assets of
City Broadcasting Co., Inc. used or useful in the operations of two radio
stations (one FM and one AM) in the Melbourne-Titusville-Cocoa, Florida market.
The purchase price of the acquisition was approximately $3.0 million. In April
1997, the Company acquired substantially all of the assets of EZY Com, Inc.
used or useful in the operations of two radio stations (one FM and one AM) in
the Melbourne-Titusville-Cocoa, Florida market. The purchase price of the
acquisition was approximately $5.0 million. In April 1997, the Company acquired
substantially all of the assets of Roper Broadcasting, Inc used or useful in
the operations of one FM radio station in the Melbourne-Titusville-Cocoa,
Florida market. The purchase price of the acquisition was approximately
$4.0 million.
In April 1997, the Company sold substantially all of the assets of its
radio stations (two FM and one AM) in the Ft. Myers, Florida Market. The sale
price was $11.0 million.
In May 1997, the Company acquired all of the outstanding capital stock
of Dixie Broadcasting, Inc. and Radio WBHP, Inc., the owners of three radio
stations (one FM and two AM) in the Huntsville, Alabama market. The purchase
price of the acquisition was $24.5 million.
On February 28, 1997, the Company entered into an LMA with Community
Pacific to provide services to the radio stations owned and operated by
Community Pacific until the Community Pacific Acquisition is consummated.
11
<PAGE> 13
RESULTS OF OPERATIONS
The following table sets forth certain consolidated summary data of the
Company (dollars in thousands):
<TABLE>
<CAPTION>
Predecessor
-----------
For the Three Months Ended
--------------------------
March 31, March 31,
1996 1997
----------- ----------
<S> <C> <C>
OPERATING DATA:
Net revenue . . . . . . . . . . . . . . . . . . . $ 7,416 $14,107
Station operating expenses . . . . . . . . . . . 5,375 10,356
Depreciation and amortization . . . . . . . . . . 480 2,389
Corporate expenses . . . . . . . . . . . . . . . 466 1,424
---------- ---------
Operating income (loss) . . . . . . . . . . . . . 1,095 (62)
Interest expense . . . . . . . . . . . . . . . . 2,452 6,792
Other (income)expense . . . . . . . . . . . . . . 79 19
Extraordinary loss on early extinguishment
of debt . . . . . . . . . . . . . . . . . . . . . 598
---------- ---------
Net loss . . . . . . . . . . . . . . . . . . . . $(1,436) $(7,471)
========== =========
OTHER DATA:
Broadcast cash flow (1) . . . . . . . . . . . . . $ 2,041 $ 3,751
Broadcast cash flow margin . . . . . . . . . . . 27.5% 26.6%
EBITDA (2) . . . . . . . . . . . . . . . . . . $ 1,575 $ 2,327
</TABLE>
- ----------------
(1) Broadcast cash flow consists of operating income before depreciation,
amortization, corporate expense and other expense.
(2) EBITDA consists of operating income before depreciation, amortization
and other expense.
12
<PAGE> 14
RESULTS OF OPERATIONS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996
Net Revenue. Net revenue increased $6.7 million or 90.2% to $14.1
million for the three months ended March 31, 1997 from $7.4 million for the
three months ended March 31, 1996. Net revenue included from the operations
purchased in connection with the Osborn Acquisition for the period February 21,
1997 through March 31, 1997 comprised $3.7 million of the increase. The
inclusion of revenue from the acquisitions of radio stations and revenue
generated from LMAs and JSAs provided $2.8 million of the increase. For
stations owned or operated for a comparable period in 1997 and 1996, net revenue
increased approximately $232,000 or 3.2% to $7.4 million for the three months
ended March 31, 1997 from $7.2 million for the same period in 1996.
Station Operating Expenses. Station operating expenses increased
$5.0 million or 92.7% to $10.4 million for the three months ended March 31,
1997 from $5.3 million for the three months ended March 31, 1996. The
increase is primarily attributable to (i) additional operating expenses of the
operations purchased in connection with the Osborn Acquisition of $2.9
million, and (ii) station operating expenses of the radio station acquisitions
and the JSAs and LMAs which contributed $2.2 million of the increase. For
stations owned or operated for a comparable period in 1997 and 1996, station
operating expenses declined approximately $86,000 or 1.7% to $5.1 million in
1997 from $5.2 million in 1996 as a result of efficiencies realized from market
consolidation.
Broadcast Cash Flow. As a result of the factors described above,
broadcast cash flow increased approximately $1.7 million or 83.8% to $3.8
million for the three months ended March 31, 1997 from $2.0 million for the
three months ended March 31, 1996. The broadcast cash flow margin was 26.6% for
the three months ended March 31, 1997 compared to 27.5% for the three months
ended March 31, 1996. The broadcast cash flow provided from the Osborn
Acquisition accounted for approximately $861,000 of the increase; the broadcast
cash flow margin from these operations was 23.0%. The inclusion of broadcast
cash flows from the remaining acquisitions and LMAs accounts for approximately
$531,000 of the increase. Excluding the effects of the acquisitions and LMAs,
broadcast cash flow increased approximately $319,000, or 15.7% to $2.3 million
for the three months ended March 31, 1997 from $2.0 million for the three months
ended March 31, 1996 and the broadcast cash flow margin on a same station basis
increased to 31.4% from 28.0%.
Corporate Expenses. Corporate expenses increased approximately
$958,000 to approximately $1.4 million for the three months ended March 31, 1997
from approximately $466,000 for the three months ended March 31, 1996. This
increase was primarily due to the corporate offices of the Company which opened
in October, 1996 and the additional corporate expense associated with the Osborn
operations.
EBITDA. As a result of the factors described above, EBITDA increased
approximately $752,000 or 47.7% to $2.3 million for the three months ended
March 31, 1997 from $1.6 million for the three months ended March 31, 1996.
The EBITDA margin for the three months ended March 31, 1997 was 16.5% compared
to 21.2% for the three months ended March 31, 1996.
13
<PAGE> 15
RESULTS OF OPERATIONS (CONTINUED)
Other Operating Expenses. Depreciation and amortization increased
$1.9 million to $2.4 million for the three months ended March 31, 1997 from
approximately $480,000 for the three months ended March 31, 1996 primarily due
to the various acquisitions consummated during 1996 and 1997.
Operating Income. As a result of the factors described above, the
Company's results for the three months ended March 31, 1997 reflected an
operating loss of $62,000 compared to an operating income of $1.1 million for
the three months ended March 31, 1996.
Other (Income) Expense. Interest expense increased approximately
$4.3 million to $6.8 million for the three months ended March 31, 1997 from
$2.5 million for the three months ended March 31, 1996. The increase is
attributable to the write-off of $1.0 million of deferred financing costs and
$606,000 of interest associated with the Company's credit facility with
Bankers Trust Company, dated October 16, 1996, which was repaid in full in
connection with the consummation of the Osborn Acquisition (the "Former Term
Loan Facility"); $2.1 million of interest expense related to the Notes; and
interest expense on the AT&T Credit Facility which was repaid in full in
connection with the consummation of the Osborn Acquisition. Interest income
increased 10.7% to $128,000 as a result of the interest accrual on the Loan
under the Credit Agreement with Emerald City. The Company realized an
extraordinary loss on the early retirement of the AT&T Credit Facility during
the three months ended March 31, 1997 related to penalties and fees of
approximately $598,000.
Net Loss. As a result of the factors described above, net loss
increased approximately $6.0 million to $7.5 million for the three months ended
March 31, 1997 from $1.4 million for the three months ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The pursuit by the Company of its acquisition strategy has required a
significant portion of the Company's capital resources. In October 1996, the
Company funded the $213.6 million purchase price (including assumed debt of
$93.7 million) for its first acquisition, the acquisition of Commodore (the
"Commodore Acquisition"), from the proceeds of the sale of $94.0 million of
Class A Common Stock to affiliates of Hicks Muse, R. Steven Hicks, the
President and Chief Executive Officer of the Company, and certain other
investors and with $34.8 million of borrowings under the Former Term Loan
Facility. The Company funded the $118.8 million purchase price (excluding
transaction costs) for the Osborn Acquisition and the retirement of existing
indebtedness of Commodore and Osborn in connection therewith from the proceeds
of the issuance of the Notes, $54.8 million in equity investments by affiliates
of Hicks Muse, the equity investment of $600,000 by certain members of the
Company's management team and the contribution by the President of Osborn of
certain shares of common stock of Osborn to the Company in exchange for shares
of Class A Common Stock having a deemed value of $1.8 million. The Company
funded the purchase price of the Huntsville Acquisition, the Tuscaloosa
Acquisition and the Space Coast Acquisitions through borrowings under the New
Credit Facility in the aggregate principal amount of $35.9 million.
As a result of the financing of its acquisitions, the Company has a
substantial amount of long-term indebtedness, and for the foreseeable future,
payments under the Company's credit agreement, payments under the Company's
outstanding subordinated notes and future acquisitions will be the Company's
principal uses of cash.
In October 1996, the Company assumed the 13 1/4% Senior Subordinated
Notes due 2003 (the "Commodore Notes") of Commodore in connection with the
Commodore Acquisition. The Commodore Notes accrue interest at a stated rate of
13 1/4% per annum of their face value of $76.8 million. The Commodore Notes
require semi-annual cash interest payments on each May 1 and November 1 of
$2.9 million through May 1, 1998 and $5.2 million from November 1, 1998 until
maturity. On February 20, 1997, the Company issued the Notes at a substantial
discount from their principal amount at maturity of $277.0 million in the
aggregate. The Notes generated gross proceeds of approximately $150.3 million
and pay no cash interest until August 1, 2002. Accordingly, the carrying value
will increase through accretion until August 1, 2002. Thereafter, interest will
be payable semi-annually, in cash, on February 1 and August 1 of each year.
Borrowings under the New Credit Facility bear interest at floating rates and
require interest payments on varying dates depending on the interest rate
option selected by the Company. The New Credit Facility consists of the $50.0
million revolver. All loans outstanding under the New Credit Facility will
mature in 2002. As of May 13, 1997, a principal balance of $24.9 million was
outstanding under the New Credit Facility.
14
<PAGE> 16
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
In addition to debt service, the Company's principal liquidity
requirements will be for working capital and general corporate purposes,
including capital expenditures, which are not expected to be material in amount,
and, as appropriate opportunities arise, to acquire additional radio stations.
The Company used the $11.0 million in net proceeds of the Osborn Ft. Myers
Disposition to repay indebtedness under the New Credit Facility. The Company
intends to fund the aggregate purchase price for the pending acquisitions
through a combination of borrowings under the New Credit Facility (as it may be
amended to increase the borrowing limit thereunder) and a combination of
indebtedness of the Company and/or Commodore and/or capital stock of the
Company or its subsidiaries. The Company anticipates that it will fund the
pending acquisitions with indebtedness, rather than capital stock, to the
fullest extent then permitted under the debt incurrence covenants contained in
the New Credit Facility, as it may be amended, the indenture governing the Notes
and the indenture governing the Commodore Notes. The Company has not determined
the terms of any such indebtedness or capital stock. The Company's ability to
make such borrowings and issue such indebtedness and capital stock will depend
upon many factors, including, but not limited to, the Company's success in
operating and integrating its radio stations and the condition of the capital
markets at the times of consummation of the pending acquisitions. No assurances
can be given that such financings can be consummated on terms considered to be
favorable by management or at all.
Management believes that cash from operating activities, together with
available revolving credit borrowings under the New Credit Facility, should be
sufficient to permit the Company to fund its operations and meet its obligations
under the agreements governing the existing indebtedness. The Company may
require financing for additional future acquisitions, if any, and there can be
no assurance that it would be able to obtain such financing on terms considered
to be favorable by management. Management evaluates potential acquisition
opportunities on an on-going basis and has had, and continues to have,
preliminary discussions concerning the purchase of additional stations. The
Company expects that in connection with the financing of future acquisitions, it
may consider disposing of stations in its markets. The Company has no current
plans or arrangements to dispose of any of its stations other than the
disposition of station KASH-AM in Anchorage, Alaska at or after consummation of
the Community Pacific Acquisition and the possible exchange of three stations to
be acquired in the Benchmark Acquisition for three stations owned by SFX
Broadcasting, Inc.
EXTRAORDINARY ITEM
In connection with the Osborn Acquisition, the Company repaid the AT&T
Credit Facility. The repayment of the AT&T Credit Facility resulted in a
prepayment penalty in the amount of $598,000, which was reported as an
extraordinary item. In connection with the Benchmark Acquisition, the Company
will issue $750,000 of capital stock to an affiliate of Hicks Muse in
consideration for its agreement, upon the occurrence of certain events, to
purchase the outstanding indebtedness incurred by such affiliate's subsidiary in
connection with the Benchmark Acquisition. The issuance of capital stock of the
Company for the benefit of Commodore will be reported as an extraordinary item
in the period in which the Company consummates the Benchmark Acquisition. Had
the Benchmark Acquisition been consummated at December 31, 1996, the Company
would have recorded an extraordinary charge of approximately $750,000.
15
<PAGE> 17
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Pursuant to the unanimous written consent of the stockholders of the
Company, dated as of February 13, 1997, the stockholders approved an amendment
to the Company's Certificate of Incorporation pursuant to which (i) the number
of authorized shares of common stock, par value $.01 per share ("Common
Stock"), of the Company was increased to 200,000,000 shares and 10,000,000
shares of preferred stock, par value $.01 per share, of the Company were
authorized and (ii) the number of shares of Common Stock available for issuance
under the Capstar Broadcasting Partners, Inc. 1996 Stock Option Plan was
increased to 9,000,000 shares.
Pursuant to the written consent of the holder of a majority of the
outstanding shares of Common Stock, dated as of February 19, 1997, an amendment
to the Company's Certificate of Incorporation was approved, pursuant to which
each share of Common Stock was reclassified into one share of Class A Common
Stock, par value $.01 per share ("Class A Common Stock"), of the Company and
50,000,000 shares of Class B Common Stock, par value $.01 per share ("Class B
Common Stock"), of the Company were authorized.
Pursuant to the written consent of the holder of a majority of the
outstanding shares of Class A Common Stock and the holder of all of the
outstanding shares of Class B Common Stock, dated as of April 24, 1997, an
amendment to the Company's Certificate of Incorporation was approved, pursuant
to which the right of certain holders of Class B Common Stock to convert such
shares into Class A Common Stock or to transfer such shares was restricted,
subject to certain conditions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
3.1 Certificate of Incorporation of the Company.*
3.2 By-Laws of the Company.*
4.1 Amendment No. 7 to Indenture dated as of April 21, 1995, among
Commodore Media, Inc. ("Commodore"), IBJ Schroder Bank & Trust
Company, as Trustee, and the Guarantors named therein, governing
Commodore's 13 1/4% Senior Subordinated Notes due 2003.(1)
10.1.1 Agreement and Plan of Merger, dated as of December 9, 1996, by
and among Benchmark Communications Radio Limited Partnership,
Benchmark Acquisition, Inc., Benchmark Radio Acquisition Fund I
Limited Partnership, Benchmark Radio Acquisition Fund IV Limited
Partnership, Benchmark Radio Acquisition Fund VII Limited
Partnership, Benchmark Radio Acquisition Fund VIII Limited
Partnership, Joe L. Mathis IV, Bruce R. Spector, the Company and
BCR Holding, Inc. ("Benchmark Merger Agreement").*
10.1.2 Letter Agreement amending Benchmark Merger Agreement, dated
January 9, 1997, by and among Benchmark Communications Radio
Limited Partnership, Benchmark Acquisition, Inc. and the other
signatories listed therein.*
10.1.3 Letter Agreement amending Benchmark Merger Agreement, dated
January 31, 1997, by and among Benchmark Communications Radio
Limited Partnership, Benchmark Acquisition, Inc., BCR Holding,
Inc., the Company, and the other signatories listed therein.*
10.1.4 Letter Agreement amending Benchmark Merger Agreement, dated April
8, 1997, by and among Benchmark Communications Radio Limited
Partnership, Benchmark Acquisition, Inc., BCR Holding, Inc., and
the Company.*
10.2 Asset Purchase Agreement, dated as of December 26, 1996, between
Community Pacific Broadcasting Company L.P. and Community
Acquisition Company, Inc.*
10.3 Asset Purchase Agreement, dated as of January 27, 1997, by and
among Point Communications Limited Partnership, Midcontinent
Broadcasting Co. of Wisconsin, Inc., Madison Radio Group and
Point Madison Acquisition Company, Inc.*
16
<PAGE> 18
10.4.1 Asset Purchase Agreement, dated March 10, 1997, by and between
Emerald City Radio Partners, L.P. and WNOK Acquisition Company,
Inc.(1)
10.4.2 First Amendment to Asset Purchase Agreement, dated as of March
14, 1997, between Emerald City Radio Partners, L.P. and WNOK
Acquisition Company, Inc.(1)
10.5.1 Asset Purchase Agreement dated as of April 24, 1997, between
Ameron Broadcasting, Inc. and Capstar Acquisition Company, Inc.,
a wholly-owned subsidiary of Commodore.(1)
10.5.2 Letter Agreement, dated as of April 25, 1997, between Ameron
Broadcasting, Inc. and Capstar Acquisition Company, Inc.(1)
10.6 Employment Agreement, dated January 1, 1997, between the Company
and Paul D. Stone.*
10.7 Employment Agreement, dated January 1, 1997, between the Company
and William S. Banowsky, Jr.*
10.8 Second Amendment, dated February 20, 1997, to Stockholders
Agreement, dated October 16, 1996, among Capstar, Hicks, Muse,
Tate & Furst Incorporated, R. Steven Hicks and the
securityholders listed therein.*
27.1 Financial Data Schedule.*
- ---------------------
* Filed herewith.
(1) Incorporated by reference to Commodore Media, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, File No. 33-92732.
(b) Reports on Form 8-K
During the quarter ended March 31, 1997, the Company did not file any
reports on Form 8-K.
17
<PAGE> 19
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 thereunto duly authorized.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ William S. Banowsky, Jr.
-----------------------------
Name: William S. Banowsky, Jr.
Title: Vice President
Date: May 15, 1997
By: /s/ Paul D. Stone
------------------
Name: Paul D. Stone
Title: Vice President and Chief
Financial Officer
(principal financial officer)
Date: May 15, 1997
<PAGE> 20
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title Page
--------- ------------- ----
<S> <C> <C>
3.1 Certificate of Incorporation of the Company.*
3.2 By-Laws of the Company.*
4.1 Amendment No. 7 to Indenture dated as of April 21, 1995, among Commodore Media, Inc.
("Commodore"), IBJ Schroder Bank & Trust Company, as Trustee, and the Guarantors named
therein, governing Commodore's 13 1/4% Senior Subordinated Notes due 2003.(1)
10.1.1 Agreement and Plan of Merger, dated as of December 9, 1996, by and among Benchmark
Communications Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio
Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition Fund IV Limited
Partnership, Benchmark Radio Acquisition Fund VII Limited Partnership, Benchmark Radio
Acquisition Fund VIII Limited Partnership, Joe L. Mathis IV, Bruce R. Spector, the
Company and BCR Holding, Inc. ("Benchmark Merger Agreement").*
10.1.2 Letter Agreement amending Benchmark Merger Agreement, dated January 9, 1997, by and
among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc.
and the other signatories listed therein.*
10.1.3 Letter Agreement amending Benchmark Merger Agreement, dated January 31, 1997, by and
among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc.,
BCR Holding, Inc., the Company, and the other signatories listed therein.*
10.1.4 Letter Agreement amending Benchmark Merger Agreement, dated April 8, 1997, by and
among Benchmark Communications Radio Limited Partnership, Benchmark Acquisition, Inc.,
BCR Holding, Inc., and the Company.*
10.2 Asset Purchase Agreement, dated as of December 26, 1996, between Community Pacific
Broadcasting Company L.P. and Community Acquisition Company, Inc.*
10.3 Asset Purchase Agreement, dated as of January 27, 1997, by and among Point
Communications Limited Partnership, Midcontinent Broadcasting Co. of Wisconsin, Inc.,
Madison Radio Group and Point Madison Acquisition Company, Inc.*
10.4.1 Asset Purchase Agreement, dated March 10, 1997, by and between Emerald City Radio
Partners, L.P. and WNOK Acquisition Company, Inc.(1)
10.4.2 First Amendment to Asset Purchase Agreement, dated as of March 14, 1997, between
Emerald City Radio Partners, L.P. and WNOK Acquisition Company, Inc.(1)
10.5.1 Asset Purchase Agreement dated as of April 24, 1997, between Ameron Broadcasting, Inc.
and Capstar Acquisition Company, Inc., a wholly-owned subsidiary of Commodore.(1)
10.5.2 Asset Purchase Agreement dated as of April 24, 1997, between Ameron Broadcasting, Inc.
and Capstar Acquisition Company, Inc., a wholly-owned subsidiary of Commodore.(1)
10.6 Employment Agreement, dated January 1, 1997, between the Company and Paul D. Stone.*
10.7 Employment Agreement, dated January 1, 1997, between the Company and William S.
Banowsky, Jr.*
10.8 Second Amendment, dated February 20, 1997, to Stockholders Agreement, dated October 16,
1996, among Capstar, Hicks, Muse, Tate & Furst Incorporated, R. Steven Hicks and the
securityholders listed therein.*
27.1 Financial Data Schedule.*
- ---------------
</TABLE>
* Filed herewith.
(1) Incorporated by reference to Commodore Media, Inc.'s Quarterly Report on
Form 10-Q for the quarter ended March 31, 1997, File No. 33-92732.
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING PARTNERS, INC.
FIRST: The name of the corporation is Capstar Broadcasting Partners, Inc.
SECOND: The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801 in New
Castle County, Delaware. The name of its registered agent at such address is
The Corporation Trust Company.
THIRD: The nature of the business or purposes to be conducted or promoted
by the corporation is to engage in any lawful act or activity for which
corporations may be organized under the Delaware General Corporation Law.
FOURTH: The total number of shares of all classes of stock which the
corporation shall have authority to issue is Two Hundred Million (200,000,000)
shares of Common Stock of the par value of One Cent ($0.01) per share.
FIFTH: The name of the incorporator is P. Gregory Hidalgo and his mailing
address is c/o Vinson & Elkins L.L.P., 3700 Trammell Crow Center, 2001 Ross
Avenue, Dallas, Texas 75201.
SIXTH: The name and mailing address of each director, who shall serve
until the first annual meeting of stockholders or until their successors are
elected and qualified, are as follows:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
Thomas O. Hicks 200 Crescent Court, Suite 1600
Dallas, Texas 75201
Eric C. Neuman 200 Crescent Court, Suite 1600
Dallas, Texas 75201
R. Steven Hicks 600 Congress, Suite 1270
Austin, Texas 78701
</TABLE>
1
<PAGE> 2
The number of directors of the corporation shall be as specified in, or
determined in the manner provided in, the bylaws. Election of directors need
not be by written ballot.
SEVENTH: In furtherance of, and not in limitation of, the powers conferred
by statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the corporation.
EIGHTH: Whenever a compromise or arrangement is proposed between the
corporation and its creditors or any class of them and/or between the
corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of the corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for the corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or on the
application of trustees in dissolution or of any receiver or receivers
appointed for the corporation under the provisions of Section 279 of Title 8 of
the Delaware Code order a meeting of the creditors or class of creditors,
and/or of the stockholders or class of stockholders of the corporation, as the
case may be, to be summoned in such manner as the said court directs. If a
majority in number representing three-fourths in value of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of the
corporation, as the case may be, agree to any compromise or arrangement and to
any reorganization of the corporation as a consequence of such compromise or
arrangement, the said compromise or arrangement and the said reorganization
shall, if sanctioned by the court to which the said application has been made,
be binding on all the creditors or class of creditors, and/or on all the
stockholders or class of stockholders, of the corporation, as the case may be,
and also on the corporation.
2
<PAGE> 3
NINTH: No director of the corporation shall be liable to the corporation
or its stockholders for monetary damages for breach of fiduciary duty as a
director, except for liability (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit. In addition to the circumstances in which a director of the
corporation is not personally liable as set forth in the preceding sentence, a
director of the corporation shall not be liable to the fullest extent permitted
by any amendment to the Delaware General Corporation Law hereafter enacted that
further limits the liability of a director.
TENTH: The corporation shall have the right, subject to any express
provisions or restrictions contained in this certificate of incorporation or
bylaws of the corporation, from time to time, to amend this certificate of
incorporation or any provision hereof in any manner now or hereafter provided
by law, and all rights and powers of any kind conferred upon a director or
stockholder of this corporation by this certificate of incorporation or any
amendment hereof are subject to such right of the corporation.
I, the undersigned, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the Delaware General Corporation
Law, do make this certificate, hereby declaring that this is my act and deed
and that the facts herein stated are true, and accordingly have hereunto set my
hand this 11th day of October, 1996.
/s/ P. GREGORY HIDALGO
----------------------------------
P. Gregory Hidalgo
3
<PAGE> 4
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING PARTNERS, INC.
(INCORPORATED ON OCTOBER 11, 1996)
(PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE)
- -------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), hereby certifies:
FIRST, that the board of directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of the Corporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
"RESOLVED, that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation of the
Corporation to amend Article FOURTH to read in its entirety as follows:
FOURTH: The total number of shares of all classes of capital
stock which the corporation shall have authority to issue is
210,000,000 shares consisting of (a) 10,000,000 shares of preferred
stock, par value of $.01 per share (the "Preferred Stock"), and (b)
200,000,000 shares of common stock, par value of $.01 per share (the
"Common Stock").
The designations, powers, preferences, rights,
qualifications, limitations, and restrictions of the Preferred Stock
and the Common Stock are as follows:
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to
time in one or more classes or series, the shares of each class or
series to have such designations, powers, preferences and rights and
such qualifications, limitations and restrictions thereof as are
stated and expressed herein and in the resolution or resolutions
providing for the issue of such class or series adopted by the Board
of Directors of the corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and
vested in the Board of Directors to authorize the issuance of the
Preferred Stock from time to time
<PAGE> 5
in one or more classes or series, and with respect to each class or
series of the Preferred Stock, to fix and state by the resolution or
resolutions from time to time adopted providing for the issuance
thereof the following:
(i) whether or not the class or series is
to have voting rights, full, special or limited, or is to be
without voting rights, and whether or not such class or
series is to be entitled to vote as a separate class either
alone or together with the holders of one or more other
classes or series of stock:
(ii) the number of shares to constitute the
class or series and the designations thereof;
(iii) the preferences and relative,
participating, optional or other special rights, if any, and
the qualifications, limitations or restrictions thereof, if
any, with respect to any class or series;
(iv) whether or not the shares of any class
or series shall be redeemable at the option of the
corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price
or prices (which may be payable in the form of cash, notes,
securities or other property) and the time or times at which,
and the terms and conditions upon which, such shares shall be
redeemable and the manner of redemption;
(v) whether or not the shares of a class or
series shall be subject to the operation of retirement or
sinking funds to be applied to the purchase or redemption of
such shares for retirement, and, if such retirement or
sinking fund or funds are to be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(vi) the dividend rate, whether dividends
are payable in cash, securities of the corporation or other
property, the conditions upon which and the times when such
dividends are payable, the preference to or the relation to
the payment of dividends payable on any other class or
classes or series of stock, whether or not such dividends
shall be cumulative or noncumulative and, if cumulative, the
date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the
amounts thereof which the holders of any class or series
thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the
assets of, the corporation;
2
<PAGE> 6
(viii) whether or not the shares of any
class or series, at the option of the corporation or the
holder thereof or upon the happening of any specified event,
shall be convertible into or exchangeable for the shares of
any other class or classes or of any other series of the same
or any other class or classes of stock, securities, or other
property of the corporation and the conversion price or
prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or
resolutions; and
(ix) such other special rights and
protective provisions with respect to any class or series as
may to the Board of Directors seem advisable.
(c) The shares of each class or series of the
Preferred Stock may vary from the shares of any other class or series
thereof in any or all of the foregoing respects. The Board of
Directors may increase the number of shares of the Preferred Stock
designated for any existing class or series by a resolution adding to
such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock
designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares
of the Preferred Stock designated for such existing class or series,
and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) Each share of Common Stock of the corporation
shall have identical rights and privileges in every respect. The
holders of shares of Common Stock shall be entitled to vote upon all
matters submitted to a vote of the stockholders of the corporation and
shall be entitled to one vote for each share of Common Stock held.
(b) Subject to the prior rights and preferences, if
any, applicable to shares of the Preferred Stock or any series
thereof, the holders of shares of the Common Stock shall be entitled
to receive such dividends (payable in cash, stock or otherwise) as may
be declared thereon by the Board of Directors at any time and from
time to time out of any funds of the corporation legally available
therefor.
(c) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of the corporation, after
distribution in full of the preferential amounts, if any, to be
distributed to the holders of shares of the Preferred Stock or any
series thereof, the holders of shares of the Common Stock shall be
entitled to receive all of the remaining assets of the corporation
available for distribution to its stockholders, ratably in proportion
to the number of shares of the
3
<PAGE> 7
Common Stock held by them. A liquidation, dissolution or winding-up of
the corporation, as such terms are used in this subparagraph (c),
shall not be deemed to be occasioned by or to include any merger of
the corporation with or into one or more corporations or other
entities, any acquisition or exchange of the outstanding shares of one
or more classes or series of the corporation or any sale, lease,
exchange or other disposition of all or a part of the assets of the
corporation."
"RESOLVED, that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation of the
Corporation to amend Article ELEVENTH to read in its entirety as follows:
ELEVENTH: The following provisions are included for the
purpose of ensuring that control and management of the corporation
remain with citizens of the United States and corporations formed
under the laws of the Unites States or any of the states of the United
States, as required by the Communications Act of 1934, as the same may
be amended from time to time:
(a) The corporation shall not issue to a) a person
who is a citizen of a country other than the United States; any entity
organized under the laws of a government other than the government of
the United States or any state, territory, or possession of the United
States; a government other than the government of the United States or
of any state, territory, or possession of the United States; or a
representative of, or an individual or entity controlled by, any of
the foregoing (individually, an "Alien"; collectively, "Aliens") any
shares of capital stock of the corporation if such issuance would
result in the total number of shares of such capital stock held or
voted by Aliens (or for or by the account of Aliens) exceeding 25% of
(x) the total equity of the corporation outstanding at any time and
from time to time or (y) the total voting power of all shares of such
capital stock outstanding and entitled to vote at any time and from
time to time and shall nor permit the transfer on the books of the
corporation of any capital stock to any Alien that would result in the
total number of shares of such capital stock held or voted by Aliens
(or for or by the account of Aliens) exceeding such 25% limits.
(b) No Alien or Aliens, individually or
collectively, directly or indirectly, shall be entitled to vote or
direct or control the vote of more than 25% of a. the total equity of
the corporation outstanding at any time and from time to time or the
total voting power of all shares of capital stock of the corporation
outstanding and entitled to vote at any time and from time to time,
and issuances and transfers of capital stock of the corporation in
violation of this subsection (b) shall be prohibited.
(c) The Board of Directors shall have all powers
necessary to implement the provisions of this Article ELEVENTH and to
ensure compliance with the alien ownership restrictions (the "Alien
Ownership Restrictions") of the
4
<PAGE> 8
Communications Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as the same may be amended from time to time
(collectively, the "Communications Act"), including, without
limitation, the power to prohibit the transfer of any shares of
capital stock of the corporation to any Alien and to take or cause to
be taken such action as it deems appropriate to implement such
prohibition, including placing a legend regarding restrictions on
foreign ownership of the capital stock on certificates representing
such stock.
(d) Without limiting the generality of the foregoing
and notwithstanding any other provision of this Restated Certificate
of Incorporation to the contrary, all shares of capital stock of the
corporation determined by the Board of Directors to be owned
beneficially by an Alien or Aliens or an entity directly or indirectly
owned by Aliens in whole or in part shall always be subject to
redemption by the corporation by action of the Board of Directors,
pursuant to Section 151 of the General Corporation Law of the State of
Delaware, or any other applicable provision of law, to the extent
necessary in the judgment of the Board of Directors to comply with the
Alien Ownership Restrictions. The terms and conditions of such
redemption shall be as follows:
(i) the redemption price of the shares to
be redeemed pursuant to this Article ELEVENTH shall be equal
to the lower of a) the fair market value of the shares to be
redeemed, as determined by the Board of Directors in good
faith, and such Alien's purchase price for such shares;
(ii) the redemption price of such shares
may be paid in cash, securities or any combination thereof;
(iii) if less than all the shares held by
Aliens are to be redeemed, the shares to be redeemed shall be
selected in any manner determined by the Board of Directors
to be fair and equitable;
(iv) at least 10 days' written notice of
the redemption date shall be given to the holders of record
of the shares selected to be redeemed (unless waived in
writing by any such holder), provided that the redemption
date may be the date on which written notice shall be given
to holders if the cash or securities necessary to effect the
redemption shall have been deposited in trust for the benefit
of such holders and subject to immediate withdrawal by them
upon surrender of the stock certificates for their shares to
be redeemed duly endorsed in blank or accompanied by duly
executed proper instruments of transfer;
(v) from and after the redemption date,
the shares to be redeemed shall cease to be regarded as
outstanding and any and all rights of
5
<PAGE> 9
the holders in respect of the shares to be redeemed or
attaching to such shares of whatever nature (including
without limitation any rights to vote or participate in
dividends declared on stock of the same class or series as
such shares) shall cease and terminate, and the holders
thereof thereafter shall be entitled only to receive the cash
or securities payable upon redemption; and
(vi) such other terms and conditions as the
Board of Directors shall determine.
For purposes of this Article ELEVENTH, the determination of beneficial
ownership of shares of capital stock of the corporation shall be made
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934,
unless otherwise required by the Alien Ownership Restrictions."
SECOND, that in lieu of a meeting and vote of stockholders, the
stockholders of the Corporation have given written consent to said amendments
in accordance with the provisions of Section 228(a) of the General Corporation
Law of the State of Delaware.
THIRD, that the previously stated amendments to the Certificate of
Incorporation of the Corporation were duly adopted by the stockholders of the
Corporation in accordance with the provisions of Section 242 and of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
13th day of February, 1997.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. STEVEN HICKS
--------------------------------
R. Steven Hicks, President
6
<PAGE> 10
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING PARTNERS, INC.
(INCORPORATED ON OCTOBER 11, 1996)
(PURSUANT TO SECTION 242 OF THE GENERAL CORPORATION
LAW OF THE STATE OF DELAWARE)
- -------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), hereby certifies:
FIRST, that the board of directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of the Corporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
"RESOLVED, that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation of the
Corporation to amend Article FOURTH to read in its entirety as follows:
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
260,000,000 shares consisting of (a) 10,000,000 shares of preferred
stock, par value of One Cent ($.01) per share (the "Preferred Stock"),
(b) 200,000,000 shares of Class A Common Stock, par value of One Cent
($.01) per share (the "Class A Common Stock"), and (c) 50,000,000
shares of Class B Common Stock, par value of One Cent ($.01) per share
(the "Class B Common Stock) (the Class A Common Stock and Class B
Common Stock, collectively, the "Common Stock").
The designations, powers, preferences, rights,
qualifications, limitations, and restrictions of the Preferred Stock
and the Common Stock are as follows:
1. Reclassification of Existing Capital Stock.
(a) Subject to paragraph (b) below, upon the filing
of this Certificate of Amendment to Certificate of Incorporation, each
share of Common Stock, par value of One Cent ($.01) per share, of the
Corporation then outstanding shall be reclassified into one share of
the Class A Common Stock (such reclassification being the
"Reclassification"), and thereupon the authorized capital stock of the
Corporation shall be as provided in the first paragraph of Article
FOURTH above.
<PAGE> 11
(b) After the Reclassification, each holder of the
shares of capital stock of the Corporation being reclassified as
provided herein shall be entitled to receive, upon surrender at the
office of the Corporation or the transfer agent for the Common Stock
of such holder's certificate or certificates representing the shares
being reclassified, duly endorsed in blank or accompanied by duly
executed proper instruments of transfer, as promptly as practicable
after such surrender one or more certificates evidencing the Class A
Common Stock issuable to such holder in respect of the
Reclassification. After the Reclassification, pending the issuance and
delivery of such certificates in accordance herewith, the certificate
or certificates evidencing the shares of capital stock being
reclassified shall be deemed to evidence the shares of Class A Common
Stock issuable upon the Reclassification.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to
time in one or more classes or series, the shares of each class or
series to have such designations, powers, preferences and rights and
such qualifications, limitations and restrictions thereof as are
stated and expressed herein and in the resolution or resolutions
providing for the issue of such class or series adopted by the Board
of Directors of the corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and
vested in the Board of Directors to authorize the issuance of the
Preferred Stock from time to time in one or more classes or series,
and with respect to each class or series of the Preferred Stock, to
fix and state by the resolution or resolutions from time to time
adopted providing for the issuance thereof the following:
(i) whether or not the class or series is
to have voting rights, full, special or limited, or is to be
without voting rights, and whether or not such class or
series is to be entitled to vote as a separate class either
alone or together with the holders of one or more other
classes or series of stock:
(ii) the number of shares to constitute
the class or series and the designations thereof;
(iii) the preferences and relative,
participating, optional or other special rights, if any, and
the qualifications, limitations or restrictions thereof, if
any, with respect to any class or series;
(iv) whether or not the shares of any
class or series shall be redeemable at the option of the
corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price
or prices (which may be payable in the form of cash, notes,
securities or other
2
<PAGE> 12
property) and the time or times at which, and the terms and
conditions upon which, such shares shall be redeemable and
the manner of redemption;
(v) whether or not the shares of a class
or series shall be subject to the operation of retirement or
sinking funds to be applied to the purchase or redemption of
such shares for retirement, and, if such retirement or
sinking fund or funds are to be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(vi) the dividend rate, whether dividends
are payable in cash, securities of the corporation or other
property, the conditions upon which and the times when such
dividends are payable, the preference to or the relation to
the payment of dividends payable on any other class or
classes or series of stock, whether or not such dividends
shall be cumulative or noncumulative and, if cumulative, the
date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the
amounts thereof which the holders of any class or series
thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the
assets of, the corporation;
(viii) whether or not the shares of any
class or series, at the option of the corporation or the
holder thereof or upon the happening of any specified event,
shall be convertible into or exchangeable for the shares of
any other class or classes or of any other series of the same
or any other class or classes of stock, securities, or other
property of the corporation and the conversion price or
prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or
resolutions; and
(ix) such other special rights and
protective provisions with respect to any class or series as
may to the Board of Directors seem advisable.
(c) The shares of each class or series of the
Preferred Stock may vary from the shares of any other class or series
thereof in any or all of the foregoing respects. The Board of
Directors may increase the number of shares of the Preferred Stock
designated for any existing class or series by a resolution adding to
such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock
designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares
of the Preferred
3
<PAGE> 13
Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued and undesignated shares
of the Preferred Stock.
3. Provisions Relating to the Common Stock.
(a) General. Except as otherwise provided herein or as
otherwise provided by applicable law, all shares of Common Stock shall have
identical rights and privileges in every respect.
(b) Dividends. Subject to the prior rights and
preferences, if any, applicable to shares of the Preferred Stock, the holders
of the Common Stock shall be entitled to participate ratably, on a
share-for-share basis as if all shares were of a single class, in such
dividends, whether in cash, stock or otherwise, as may be declared by the Board
of Directors from time to time out of funds of the Corporation legally
available therefor; provided, however, that any dividends payable in shares of
Common Stock (or payable in rights to subscribe for or purchase shares of
Common Stock or securities or indebtedness convertible into shares of Common
Stock) shall be declared and paid at the same rate on each class of Common
Stock and only in shares of Class A Common Stock (or rights to subscribe for or
purchase shares of Class A Common Stock or securities or indebtedness
convertible into shares of Class A Common Stock) to holders of Class A Common
Stock, and in shares of Class B Common Stock (or rights to subscribe for or
purchase shares of Class B Common Stock or securities or indebtedness
convertible into shares of Class B Common Stock) to holders of Class B Common
Stock.
(c) Voting. The holders of Class A Common Stock shall be
entitled to one vote per share with respect to all matters submitted to a vote
of stockholders. The Class B Common Stock shall not be entitled to vote, except
as required by law.
(d) Adjustments for Stock Splits and Stock Dividends. The
Corporation shall treat the shares of Common Stock identically in respect of
any subdivisions or combinations (for example, if the Corporation effects a
two-for-one stock split with respect to the Class A Common Stock, it shall at
the same time effect a two-for-one stock split with respect to the Class B
Common Stock).
(e) Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the Corporation, after
all creditors of the Corporation shall have been paid in full and after payment
of all sums payable in respect of Preferred Stock, if any, the holders of the
Common Stock shall share ratably on a share-for-share basis in all
distributions of assets pursuant to such voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation. For the purposes of this
paragraph (e), neither the merger nor the consolidation of the Corporation into
or with another entity or the merger or consolidation of any other entity into
or with the Corporation, or the sale, transfer, or other disposition of all or
substantially all the assets of the Corporation, shall be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding-up of the
Corporation.
4
<PAGE> 14
(f) Consideration in Substantial Transaction. In any
merger, consolidation or business combination, the per share consideration
received by the holders of the Common Stock must be economically identical,
except that in any such transaction, any capital stock issued to holders of
Common Stock may differ as to rights to the same extent as the rights of the
classes of Common Stock authorized hereby differ.
(g) Conversion. Subject to required consent of the
Federal Communication Commission (the "FCC"), if any, the shares of Class B
Common Stock shall be convertible in whole or in part at any time at the option
of the holder or holders thereof into an equal number of fully paid and
non-assessable shares of Class A Common Stock, for no additional consideration.
At the time of any such conversion or, in the event such conversion requires
the consent of the FCC, at the time the FCC order approving such a conversion
becomes a final order, the holder or holders of Class B Common Stock shall
deliver to the office of the Corporation or any transfer agent for the Common
Stock the certificate or certificates representing the shares of Class B Common
Stock to be converted, duly endorsed in blank or accompanied by duly executed
proper instruments of transfer, and written notice to the Corporation stating
that such holder or holders elect(s) to convert such share or shares and
stating the name and addresses in which each certificate for shares of Class A
Common Stock issued upon such conversion is to be issued. Conversion shall be
deemed to have been effected at the time and date when such delivery is made to
the Corporation or the transfer agent of the shares to be converted, and the
person exercising such voluntary conversion shall be deemed to be the holder of
record of the number of shares of Class A Common Stock issuable upon such
conversion at such time. As promptly as practicable following any holder's
conversion of shares of Class B Common Stock, the Corporation shall issue and
deliver to the converting holder or to such holder's transferee, as the case
may be, one or more certificates (as such holder may request) evidencing the
shares of Class A Common Stock issuable in respect of the applicable conversion
and if the certificates surrendered by the converting holder evidence more
shares of Class B Common Stock than the holder has elected to convert, one or
more certificates (as such holder may request) evidencing the shares of Class B
Common Stock which have not been converted. Pending the issuance and delivery
of the foregoing certificates, the certificate or certificates evidencing the
shares of Class B Common Stock that have been surrendered for conversion shall
be deemed to evidence the shares of Class A Common Stock issuable upon such
conversion. Any dividends declared and not paid on shares of Class B Common
Stock prior to their conversion as provided above shall be paid, on the payment
date, to the holder or holders entitled thereto on the record date for such
dividend payment, notwithstanding such conversion; provided, however, that such
holder or holders shall not be entitled to receive the corresponding dividends
declared but not paid on the shares of Class A Common Stock issuable upon such
conversion. The Corporation shall at all times reserve and keep available out
of its authorized but unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversions provided for herein, such number of shares
of Class A Common Stock as shall from time to time be sufficient to effect the
conversions provided for herein and shall take all such corporate action as may
be necessary to assure that such shares of Class A Common Stock shall be
validly issued, fully paid and non-assessable upon conversion of all of the
outstanding shares of Class B Common Stock; moreover, if at any time the number
of authorized but unissued shares of Class A Common Stock shall not be
5
<PAGE> 15
sufficient to effect the conversions provided for herein, the Corporation shall
take such corporate action as may be necessary to increase its authorized but
unissued shares of Class A Common Stock to such number of shares as shall be
sufficient for such purpose.
SECOND, that in lieu of a meeting and vote of stockholders, the
stockholders of the Corporation have given written consent to said amendments
in accordance with the provisions of Section 228(a) of the General Corporation
Law of the State of Delaware.
THIRD, that the previously stated amendments to the Certificate of
Incorporation of the Corporation were duly adopted by the stockholders of the
Corporation in accordance with the provisions of Section 242 and of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
19th day of February, 1997.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. STEVEN HICKS
-------------------------------
R. Steven Hicks, President
6
<PAGE> 16
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING PARTNERS, INC.
(Incorporated on October 11, 1996)
(Pursuant to Section 242 of the General Corporation
Law of the State of Delaware)
- --------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), hereby certifies:
FIRST, that the board of directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of the Corporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
"RESOLVED, that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation of the
Corporation to amend Article FOURTH to read in its entirety as follows:
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
260,000,000 shares consisting of (a) 10,000,000 shares of preferred
stock, par value of One Cent ($.01) per share (the "Preferred Stock"),
(b) 200,000,000 shares of Class A Common Stock, par value of One Cent
($.01) per share (the "Class A Common Stock"), and (c) 50,000,000
shares of Class B Common Stock, par value of One Cent ($.01) per share
(the "Class B Common Stock) (the Class A Common Stock and Class B
Common Stock, collectively, the "Common Stock").
The designations, powers, preferences, rights, qualifications,
limitations, and restrictions of the Preferred Stock and the Common
Stock are as follows:
1. Reclassification of Existing Capital Stock.
(a) Subject to paragraph (b) below, upon the filing
of this Certificate of Amendment to Certificate of Incorporation, each
share of Common Stock, par value of One Cent ($.01) per share, of the
Corporation then outstanding shall be reclassified into one share of
the Class A Common Stock (such reclassification being the
"Reclassification"), and thereupon the authorized capital stock of the
Corporation shall be as provided in the first paragraph of Article
FOURTH above.
<PAGE> 17
(b) After the Reclassification, each holder of the shares
of capital stock of the Corporation being reclassified as provided herein shall
be entitled to receive, upon surrender at the office of the Corporation or the
transfer agent for the Common Stock of such holder's certificate or
certificates representing the shares being reclassified, duly endorsed in blank
or accompanied by duly executed proper instruments of transfer, as promptly as
practicable after such surrender one or more certificates evidencing the Class
A Common Stock issuable to such holder in respect of the Reclassification.
After the Reclassification, pending the issuance and delivery of such
certificates in accordance herewith, the certificate or certificates evidencing
the shares of capital stock being reclassified shall be deemed to evidence the
shares of Class A Common Stock issuable upon the Reclassification.
2. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to
time in one or more classes or series, the shares of each class or series to
have such designations, powers, preferences and rights and such qualifications,
limitations and restrictions thereof as are stated and expressed herein and in
the resolution or resolutions providing for the issue of such class or series
adopted by the Board of Directors of the corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and
vested in the Board of Directors to authorize the issuance of the Preferred
Stock from time to time in one or more classes or series, and with respect to
each class or series of the Preferred Stock, to fix and state by the resolution
or resolutions from time to time adopted providing for the issuance thereof the
following:
(i) whether or not the class or series is
to have voting rights, full, special or limited, or is to be without
voting rights, and whether or not such class or series is to be
entitled to vote as a separate class either alone or together with the
holders of one or more other classes or series of stock:
(ii) the number of shares to constitute the
class or series and the designations thereof;
(iii) the preferences and relative, participating,
optional or other special rights, if any, and the qualifications,
limitations or restrictions thereof, if any, with respect to any class
or series;
(iv) whether or not the shares of any class or
series shall be redeemable at the option of the corporation or the
holders thereof or upon the happening of any specified event, and, if
redeemable, the redemption price or prices (which may be payable in the
form of cash, notes, securities or other
2
<PAGE> 18
property) and the time or times at which, and the terms and conditions
upon which, such shares shall be redeemable and the manner of
redemption;
(v) whether or not the shares of a class or series
shall be subject to the operation of retirement or sinking funds to be
applied to the purchase or redemption of such shares for retirement,
and, if such retirement or sinking fund or funds are to be established,
the annual amount thereof and the terms and provisions relative to the
operation thereof;
(vi) the dividend rate, whether dividends are
payable in cash, securities of the corporation or other property, the
conditions upon which and the times when such dividends are payable,
the preference to or the relation to the payment of dividends payable
on any other class or classes or series of stock, whether or not such
dividends shall be cumulative or noncumulative and, if cumulative, the
date or dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the amounts
thereof which the holders of any class or series thereof shall be
entitled to receive upon the voluntary or involuntary dissolution of,
or upon any distribution of the assets of, the corporation;
(viii) whether or not the shares of any class or
series, at the option of the corporation or the holder thereof or upon
the happening of any specified event, shall be convertible into or
exchangeable for the shares of any other class or classes or of any
other series of the same or any other class or classes of stock,
securities, or other property of the corporation and the conversion
price or prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall be stated
and expressed or provided for in such resolution or resolutions; and
(ix) such other special rights and protective
provisions with respect to any class or series as may to the Board of
Directors seem advisable.
(c) The shares of each class or series of the Preferred
Stock may vary from the shares of any other class or series thereof in any or
all of the foregoing respects. The Board of Directors may increase the number
of shares of the Preferred Stock designated for any existing class or series by
a resolution adding to such class or series authorized and unissued shares of
the Preferred Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock designated
for any existing class or series by a resolution subtracting from such class or
series authorized and unissued shares of the Preferred
3
<PAGE> 19
Stock designated for such existing class or series, and the shares so
subtracted shall become authorized, unissued and undesignated shares
of the Preferred Stock.
3. Provisions Relating to the Common Stock.
(a) General. Except as otherwise provided
herein or as otherwise provided by applicable law, all shares of Common Stock
shall have identical rights and privileges in every respect.
(b) Dividends. Subject to the prior rights
and preferences, if any, applicable to shares of the Preferred Stock, the
holders of the Common Stock shall be entitled to participate ratably, on a
share-for-share basis as if all shares were of a single class, in such
dividends, whether in cash, stock or otherwise, as may be declared by the Board
of Directors from time to time out of funds of the Corporation legally
available therefor; provided, however, that any dividends payable in shares of
Common Stock (or payable in rights to subscribe for or purchase shares of
Common Stock or securities or indebtedness convertible into shares of Common
Stock) shall be declared and paid at the same rate on each class of Common
Stock and only in shares of Class A Common Stock (or rights to subscribe for or
purchase shares of Class A Common Stock or securities or indebtedness
convertible into shares of Class A Common Stock) to holders of Class A Common
Stock, and in shares of Class B Common Stock (or rights to subscribe for or
purchase shares of Class B Common Stock or securities or indebtedness
convertible into shares of Class B Common Stock) to holders of Class B Common
Stock.
(c) Voting. The holders of Class A Common
Stock shall be entitled to one vote per share with respect to all matters
submitted to a vote of stockholders. The Class B Common Stock shall not be
entitled to vote, except as required by law; provided, however, that the Class
B Common Stock shall not have the right to vote on any matter if such right
would cause the Class B Common Stock to become voting securities within the
meaning of 12 C.F.R. 225.2(p), as that section may be amended from time to
time.
(d) Adjustments for Stock Splits and Stock
Dividends. The Corporation shall treat the shares of Common Stock identically
in respect of any subdivisions or combinations (for example, if the Corporation
effects a two-for-one stock split with respect to the Class A Common Stock, it
shall at the same time effect a two-for-one stock split with respect to the
Class B Common Stock).
(e) Liquidation. In the event of any voluntary
or involuntary liquidation, dissolution, or winding-up of the Corporation,
after all creditors of the Corporation shall have been paid in full and after
payment of all sums payable in respect of Preferred Stock, if any, the holders
of the Common Stock shall share ratably on a share-for-share basis in all
distributions of assets pursuant to such voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation. For the purposes of this
paragraph (e), neither the merger nor the consolidation of the Corporation into
or with another entity or the merger or consolidation of any other entity into
or with the
4
<PAGE> 20
Corporation, or the sale, transfer, or other disposition of all or
substantially all the assets of the Corporation, shall be deemed to be a
voluntary or involuntary liquidation, dissolution, or winding-up of the
Corporation.
(f) Consideration in Substantial Transaction.
In any merger, consolidation or business combination, the per share
consideration received by the holders of the Common Stock must be economically
identical, except that in any such transaction, any capital stock issued to
holders of Common Stock may differ as to rights to the same extent as the
rights of the classes of Common Stock authorized hereby differ.
(g) Conversion. Subject to required consent
of the Federal Communication Commission (the "FCC"), if any, the shares of
Class B Common Stock shall be convertible in whole or in part at any time at
the option of the holder or holders thereof if such holder(s) is not a
Regulated Entity (as defined below) into an equal number of fully paid and
non-assessable shares of Class A Common Stock, for no additional consideration.
"Regulated Entity" means (i) any entity that is a "bank holding company" (as
defined in Section 2(a) of the Bank Holding Company Act of 1956, as amended
(the "BHC Act")) or any non-bank subsidiary of such an entity and (ii) any
entity, that pursuant to Section 8(a) of the International Banking Act of 1978,
as amended, is subject to the provisions of the BHC Act or any non-bank
subsidiary of such an entity. At the time of any such conversion or, in the
event such conversion requires the consent of the FCC, at the time the FCC
order approving such a conversion becomes a final order, the holder or holders
of Class B Common Stock shall deliver to the office of the Corporation or any
transfer agent for the Common Stock the certificate or certificates
representing the shares of Class B Common Stock to be converted, duly endorsed
in blank or accompanied by duly executed proper instruments of transfer, and
written notice to the Corporation stating that such holder or holders elect(s)
to convert such share or shares and stating the name and addresses in which
each certificate for shares of Class A Common Stock issued upon such conversion
is to be issued. Conversion shall be deemed to have been effected at the time
and date when such delivery is made to the Corporation or the transfer agent of
the shares to be converted, and the person exercising such voluntary conversion
shall be deemed to be the holder of record of the number of shares of Class A
Common Stock issuable upon such conversion at such time. As promptly as
practicable following any holder's conversion of shares of Class B Common
Stock, the Corporation shall issue and deliver to the converting holder or to
such holder's transferee, as the case may be, one or more certificates (as such
holder may request) evidencing the shares of Class A Common Stock issuable in
respect of the applicable conversion and if the certificates surrendered by the
converting holder evidence more shares of Class B Common Stock than the holder
has elected to convert, one or more certificates (as such holder may request)
evidencing the shares of Class B Common Stock which have not been converted.
Pending the issuance and delivery of the foregoing certificates, the
certificate or certificates evidencing the shares of Class B Common Stock that
have been surrendered for conversion shall be deemed to evidence the shares of
Class A Common Stock issuable upon such conversion. Any dividends declared and
not paid on shares of Class B Common Stock prior to their conversion as
provided above shall be paid, on the payment date, to the holder or holders
entitled thereto on the record date for such dividend payment, notwithstanding
such conversion; provided,
5
<PAGE> 21
however, that such holder or holders shall not be entitled to receive the
corresponding dividends declared but not paid on the shares of Class A Common
Stock issuable upon such conversion. The Corporation shall at all times reserve
and keep available out of its authorized but unissued shares of Class A Common
Stock, solely for the purpose of effecting the conversions provided for herein,
such number of shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversions provided for herein and shall take all
such corporate action as may be necessary to assure that such shares of Class A
Common Stock shall be validly issued, fully paid and non-assessable upon
conversion of all of the outstanding shares of Class B Common Stock; moreover,
if at any time the number of authorized but unissued shares of Class A Common
Stock shall not be sufficient to effect the conversions provided for herein,
the Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Class A Common Stock to such
number of shares as shall be sufficient for such purpose.
(h) Transferability. Notwithstanding any
other provision contained in this Certificate of Incorporation, if a holder of
the Class B Common Stock is a Regulated Entity, such holder may transfer the
Class B Common Stock only under the following circumstances: (i) in a widely
distributed public offering; (ii) in a transfer pursuant to Rule 144 under the
Securities Act of 1933 or any similar rule then in force; (iii) in a transfer
constituting two percent or less of the outstanding shares of the Class B
Common Stock; (iv) in a transfer to a person if such person already owns or has
negotiated to purchase at least a majority of the Class A Common Stock; (v) in
a transfer to the Corporation; (vi) in a transfer to an affiliate of such
holder or to any other Regulated Entity; or (vii) in any method of transfer
permitted by the Board of Governors of the Federal Reserve System.
SECOND, that in lieu of a meeting and vote of stockholders, the
stockholders of the Corporation have given written consent to said amendments
in accordance with the provisions of Section 228(a) of the General Corporation
Law of the State of Delaware.
THIRD, that the previously stated amendments to the Certificate of
Incorporation of the Corporation were duly adopted by the stockholders of the
Corporation in accordance with the provisions of Section 242 and of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
24th day of April, 1997.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. Steven Hicks
----------------------------------
R. Steven Hicks
President
6
<PAGE> 22
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF AMENDMENT
TO
CERTIFICATE OF INCORPORATION
OF
CAPSTAR BROADCASTING PARTNERS, INC.
(PURSUANT TO SECTION 103(f) OF THE
GENERAL CORPORATION LAW OF THE STATE OF DELAWARE)
- -------------------------------------------------------------------------------
Capstar Broadcasting Partners, Inc., a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "Corporation"), hereby certifies:
That paragraph FIRST of the Certificate of Amendment to Certificate of
Incorporation ("Certificate of Amendment"), filed with the Delaware Secretary
of State on April 25, 1997, incorrectly purported to amend Article FOURTH to
provide for a reclassification of the Corporation's then outstanding Common
Stock into Class A Common Stock when the intent of the Corporation was not to
reclassify its existing Common Stock. Thus, paragraph FIRST of the Certificate
of Amendment in its corrected form should read as follows:
FIRST, that the board of directors of the Corporation duly adopted
resolutions proposing and declaring advisable the following amendments to the
Certificate of Incorporation of the Corporation in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware:
"RESOLVED, that the Board of Directors of the Corporation deems and
declares advisable an amendment to the Certificate of Incorporation of the
Corporation to amend Article FOURTH to read in its entirety as follows:
FOURTH: The total number of shares of all classes of capital
stock which the Corporation shall have authority to issue is
260,000,000 shares consisting of (a) 10,000,000 shares of preferred
stock, par value of One Cent ($.01) per share (the "Preferred Stock"),
(b) 200,000,000 shares of Class A Common Stock, par value of One Cent
($.01) per share (the "Class A Common Stock"), and (c) 50,000,000
shares of Class B Common Stock, par value of One Cent ($.01) per share
(the "Class B Common Stock) (the Class A Common Stock and Class B
Common Stock, collectively, the "Common Stock").
The designations, powers, preferences, rights,
qualifications, limitations, and restrictions of the Preferred Stock
and the Common Stock are as follows:
<PAGE> 23
1. Provisions Relating to the Preferred Stock.
(a) The Preferred Stock may be issued from time to
time in one or more classes or series, the shares of each class or
series to have such designations, powers, preferences and rights and
such qualifications, limitations and restrictions thereof as are
stated and expressed herein and in the resolution or resolutions
providing for the issue of such class or series adopted by the Board
of Directors of the corporation as hereafter prescribed.
(b) Authority is hereby expressly granted to and
vested in the Board of Directors to authorize the issuance of the
Preferred Stock from time to time in one or more classes or series,
and with respect to each class or series of the Preferred Stock, to
fix and state by the resolution or resolutions from time to time
adopted providing for the issuance thereof the following:
(i) whether or not the class or series is
to have voting rights, full, special or limited, or is to be
without voting rights, and whether or not such class or
series is to be entitled to vote as a separate class either
alone or together with the holders of one or more other
classes or series of stock;
(ii) the number of shares to constitute the
class or series and the designations thereof;
(iii)the preferences and relative,
participating, optional or other special rights, if any, and
the qualifications, limitations or restrictions thereof, if
any, with respect to any class or series;
(iv) whether or not the shares of any class
or series shall be redeemable at the option of the
corporation or the holders thereof or upon the happening of
any specified event, and, if redeemable, the redemption price
or prices (which may be payable in the form of cash, notes,
securities or other property) and the time or times at which,
and the terms and conditions upon which, such shares shall be
redeemable and the manner of redemption;
(v) whether or not the shares of a class
or series shall be subject to the operation of retirement or
sinking funds to be applied to the purchase or redemption of
such shares for retirement, and, if such retirement or
sinking fund or funds are to be established, the annual
amount thereof and the terms and provisions relative to the
operation thereof;
(vi) the dividend rate, whether dividends
are payable in cash, securities of the corporation or other
property, the conditions upon which and the times when such
dividends are payable, the preference to or the relation to
the payment of dividends payable on any other class or
classes or
2
<PAGE> 24
series of stock, whether or not such dividends shall be
cumulative or noncumulative and, if cumulative, the date or
dates from which such dividends shall accumulate;
(vii) the preferences, if any, and the
amounts thereof which the holders of any class or series
thereof shall be entitled to receive upon the voluntary or
involuntary dissolution of, or upon any distribution of the
assets of, the corporation;
(viii) whether or not the shares of any
class or series, at the option of the corporation or the
holder thereof or upon the happening of any specified event,
shall be convertible into or exchangeable for the shares of
any other class or classes or of any other series of the same
or any other class or classes of stock, securities, or other
property of the corporation and the conversion price or
prices or ratio or ratios or the rate or rates at which such
exchange may be made, with such adjustments, if any, as shall
be stated and expressed or provided for in such resolution or
resolutions; and
(ix) such other special rights and
protective provisions with respect to any class or series as
may to the Board of Directors seem advisable.
(c) The shares of each class or series of the
Preferred Stock may vary from the shares of any other class or series
thereof in any or all of the foregoing respects. The Board of
Directors may increase the number of shares of the Preferred Stock
designated for any existing class or series by a resolution adding to
such class or series authorized and unissued shares of the Preferred
Stock not designated for any other class or series. The Board of
Directors may decrease the number of shares of the Preferred Stock
designated for any existing class or series by a resolution
subtracting from such class or series authorized and unissued shares
of the Preferred Stock designated for such existing class or series,
and the shares so subtracted shall become authorized, unissued and
undesignated shares of the Preferred Stock.
2. Provisions Relating to the Common Stock.
(a) General. Except as otherwise provided herein or
as otherwise provided by applicable law, all shares of Common Stock
shall have identical rights and privileges in every respect.
(b) Dividends. Subject to the prior rights and
preferences, if any, applicable to shares of the Preferred Stock, the
holders of the Common Stock shall be entitled to participate ratably,
on a share-for-share basis as if all shares were of a single class, in
such dividends, whether in cash, stock or otherwise, as may be
declared by the Board of Directors from time to time out of funds of
the Corporation legally available therefor; provided, however, that
any dividends payable in shares of Common Stock (or payable in rights
to subscribe for or purchase shares of
3
<PAGE> 25
Common Stock or securities or indebtedness convertible into shares of
Common Stock) shall be declared and paid at the same rate on each
class of Common Stock and only in shares of Class A Common Stock (or
rights to subscribe for or purchase shares of Class A Common Stock or
securities or indebtedness convertible into shares of Class A Common
Stock) to holders of Class A Common Stock, and in shares of Class B
Common Stock (or rights to subscribe for or purchase shares of Class B
Common Stock or securities or indebtedness convertible into shares of
Class B Common Stock) to holders of Class B Common Stock.
(c) Voting. The holders of Class A Common Stock
shall be entitled to one vote per share with respect to all matters
submitted to a vote of stockholders. The Class B Common Stock shall
not be entitled to vote, except as required by law; provided, however,
that the Class B Common Stock shall not have the right to vote on any
matter if such right would cause the Class B Common Stock to become
voting securities within the meaning of 12 C.F.R. 225.2(p), as that
section may be amended from time to time.
(d) Adjustments for Stock Splits and Stock
Dividends. The Corporation shall treat the shares of Common Stock
identically in respect of any subdivisions or combinations (for
example, if the Corporation effects a two-for-one stock split with
respect to the Class A Common Stock, it shall at the same time effect
a two-for-one stock split with respect to the Class B Common Stock).
(e) Liquidation. In the event of any voluntary or
involuntary liquidation, dissolution, or winding-up of the
Corporation, after all creditors of the Corporation shall have been
paid in full and after payment of all sums payable in respect of
Preferred Stock, if any, the holders of the Common Stock shall share
ratably on a share-for-share basis in all distributions of assets
pursuant to such voluntary or involuntary liquidation, dissolution, or
winding-up of the Corporation. For the purposes of this paragraph (e),
neither the merger nor the consolidation of the Corporation into or
with another entity or the merger or consolidation of any other entity
into or with the Corporation, or the sale, transfer, or other
disposition of all or substantially all the assets of the Corporation,
shall be deemed to be a voluntary or involuntary liquidation,
dissolution, or winding-up of the Corporation.
(f) Consideration in Substantial Transaction. In any
merger, consolidation or business combination, the per share
consideration received by the holders of the Common Stock must be
economically identical, except that in any such transaction, any
capital stock issued to holders of Common Stock may differ as to
rights to the same extent as the rights of the classes of Common Stock
authorized hereby differ.
(g) Conversion. Subject to required consent of the
Federal Communication Commission (the "FCC"), if any, the shares of
Class B Common Stock shall be convertible in whole or in part at any
time at the option of the holder
4
<PAGE> 26
or holders thereof if such holder(s) is not a Regulated Entity (as
defined below) into an equal number of fully paid and non-assessable
shares of Class A Common Stock, for no additional consideration.
"Regulated Entity" means (i) any entity that is a "bank holding
company" (as defined in Section 2(a) of the Bank Holding Company Act
of 1956, as amended (the "BHC Act")) or any non-bank subsidiary of
such an entity and (ii) any entity, that pursuant to Section 8(a) of
the International Banking Act of 1978, as amended, is subject to the
provisions of the BHC Act or any non-bank subsidiary of such an
entity. At the time of any such conversion or, in the event such
conversion requires the consent of the FCC, at the time the FCC order
approving such a conversion becomes a final order, the holder or
holders of Class B Common Stock shall deliver to the office of the
Corporation or any transfer agent for the Common Stock the certificate
or certificates representing the shares of Class B Common Stock to be
converted, duly endorsed in blank or accompanied by duly executed
proper instruments of transfer, and written notice to the Corporation
stating that such holder or holders elect(s) to convert such share or
shares and stating the name and addresses in which each certificate
for shares of Class A Common Stock issued upon such conversion is to
be issued. Conversion shall be deemed to have been effected at the
time and date when such delivery is made to the Corporation or the
transfer agent of the shares to be converted, and the person
exercising such voluntary conversion shall be deemed to be the holder
of record of the number of shares of Class A Common Stock issuable
upon such conversion at such time. As promptly as practicable
following any holder's conversion of shares of Class B Common Stock,
the Corporation shall issue and deliver to the converting holder or to
such holder's transferee, as the case may be, one or more certificates
(as such holder may request) evidencing the shares of Class A Common
Stock issuable in respect of the applicable conversion and if the
certificates surrendered by the converting holder evidence more shares
of Class B Common Stock than the holder has elected to convert, one or
more certificates (as such holder may request) evidencing the shares
of Class B Common Stock which have not been converted. Pending the
issuance and delivery of the foregoing certificates, the certificate
or certificates evidencing the shares of Class B Common Stock that
have been surrendered for conversion shall be deemed to evidence the
shares of Class A Common Stock issuable upon such conversion. Any
dividends declared and not paid on shares of Class B Common Stock
prior to their conversion as provided above shall be paid, on the
payment date, to the holder or holders entitled thereto on the record
date for such dividend payment, notwithstanding such conversion;
provided, however, that such holder or holders shall not be entitled
to receive the corresponding dividends declared but not paid on the
shares of Class A Common Stock issuable upon such conversion. The
Corporation shall at all times reserve and keep available out of its
authorized but unissued shares of Class A Common Stock, solely for the
purpose of effecting the conversions provided for herein, such number
of shares of Class A Common Stock as shall from time to time be
sufficient to effect the conversions provided for herein and shall
take all such corporate action as may be necessary to assure that such
shares of Class A Common Stock shall be validly issued, fully paid and
non-assessable upon conversion of all of the outstanding shares
5
<PAGE> 27
of Class B Common Stock; moreover, if at any time the number of
authorized but unissued shares of Class A Common Stock shall not be
sufficient to effect the conversions provided for herein, the
Corporation shall take such corporate action as may be necessary to
increase its authorized but unissued shares of Class A Common Stock to
such number of shares as shall be sufficient for such purpose.
(h) Transferability. Notwithstanding any other
provision contained in this Certificate of Incorporation, if a holder
of the Class B Common Stock is a Regulated Entity, such holder may
transfer the Class B Common Stock only under the following
circumstances: (i) in a widely distributed public offering; (ii) in a
transfer pursuant to Rule 144 under the Securities Act of 1933 or any
similar rule then in force; (iii) in a transfer constituting two
percent or less of the outstanding shares of the Class B Common Stock;
(iv) in a transfer to a person if such person already owns or has
negotiated to purchase at least a majority of the Class A Common
Stock; (v) in a transfer to the Corporation; (vi) in a transfer to an
Affiliate of such holder or to any other Regulated Entity; or (vii) in
any method of transfer permitted by the Board of Governors of the
Federal Reserve System.
IN WITNESS WHEREOF, CAPSTAR BROADCASTING PARTNERS, INC. has caused
this Certificate of Correction to be executed by its duly authorized officer
this 6th day of May, 1997.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. STEVEN HICKS
--------------------------------
R. Steven Hicks
President
6
<PAGE> 1
EXHIBIT 3.2
BYLAWS
OF
CAPSTAR BROADCASTING PARTNERS, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the Corporation
required by the General Corporation Law of the State of Delaware to be
maintained in the State of Delaware, shall be the registered office named in
the original Certificate of Incorporation of the Corporation (as the same may
be amended and restated from time to time, the "Certificate of Incorporation"),
or such other office as may be designated from time to time by the Board of
Directors in the manner provided by law. Should the Corporation maintain a
principal office within the State of Delaware such registered office need not
be identical to such principal office of the Corporation.
Section 2. Other Offices. The Corporation may also have offices at
such other places both within and without the State of Delaware as the Board of
Directors may from time to time determine or the business of the Corporation
may require.
ARTICLE II
STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall
be held at the principal office of the Corporation, or at such other place
within or without the State of Delaware as shall be specified or fixed in the
notices or waivers of notice thereof.
Section 2. Quorum; Adjournment of Meetings. Unless otherwise required
by law or provided in the Certificate of Incorporation or these bylaws, the
holders of a majority of the stock issued and outstanding and entitled to vote
thereat, present in person or represented by proxy, shall constitute a quorum
at any meeting of stockholders for the transaction of business and the act of a
majority of such stock so represented at any meeting of stockholders at which a
quorum is present shall constitute the act of the meeting of stockholders. The
stockholders present at a duly organized meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Notwithstanding the other provisions of the Certificate of
Incorporation or these bylaws, the chairman of the meeting or the holders of a
majority of the issued and outstanding stock, present in person or represented
by proxy, at any meeting of stockholders, whether or not a quorum is present,
shall have the power to adjourn such meeting from time to time, without any
notice other than announcement at the meeting of the time and place of the
holding of the adjourned meeting; provided,
<PAGE> 2
however, if the adjournment is for more than thirty (30) days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at such meeting. At any such adjourned meeting at which a quorum shall be
present or represented any business may be transacted which might have been
transacted at the meeting as originally called.
Section 3. Annual Meetings. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, within or without the State of Delaware, on such
date, and at such time as the Board of Directors shall fix and set forth in the
notice of the meeting, which date shall be within thirteen (13) months
subsequent to the later of the date of incorporation or the last annual meeting
of stockholders.
Section 4. Special Meetings. Unless otherwise provided in the
Certificate of Incorporation, special meetings of the stockholders for any
purpose or purposes may be called at any time by the Chairman of the Board (if
any), by the President or by a majority of the Board of Directors, or by a
majority of the executive committee (if any), and shall be called by the
Chairman of the Board (if any), by the President or the Secretary upon the
written request therefor, stating the purpose or purposes of the meeting,
delivered to such officer, signed by the holder(s) of at least ten percent
(l0%) of the issued and outstanding stock entitled to vote at such meeting.
Section 5. Record Date. For the purpose of determining stockholders
entitled to notice of or to vote at any meeting of stockholders, or any
adjournment thereof, or entitled to express consent to corporate action in
writing without a meeting, or entitled to receive payment of any dividend or
other distribution or allotment of any rights, or entitled to exercise any
rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors of the Corporation
may fix, in advance, a date as the record date for any such determination of
stockholders, which date shall not be more than sixty (60) days nor less than
ten (l0) days before the date of such meeting, nor more than sixty (60) days
prior to any other action.
If the Board of Directors does not fix a record date for any meeting
of the stockholders, the record date for determining stockholders entitled to
notice of or to vote at such meeting shall be at the close of business on the
day next preceding the day on which notice is given, or, if in accordance with
Article VIII, Section 3 of these bylaws notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. If, in
accordance with Section 12 of this Article II, corporate action without a
meeting of stockholders is to be taken, the record date for determining
stockholders entitled to express consent to such corporate action in writing,
when no prior action by the Board of Directors is necessary, shall be the day
on which the first written consent is expressed. The record date for
determining stockholders for any other purpose shall be at the close of
business on the day on which the Board of Directors adopts the resolution
relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
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Section 6. Notice of Meetings. Written notice of the place, date and
hour of all meetings, and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be given by or at the direction
of the Chairman of the Board (if any) or the President, the Secretary or the
other person(s) calling the meeting to each stockholder entitled to vote
thereat not less than ten (10) nor more than sixty (60) days before the date of
the meeting. Such notice may be delivered either personally or by mail. If
mailed, notice is given when deposited in the United States mail, postage
prepaid, directed to the stockholder at his address as it appears on the
records of the Corporation.
Section 7. Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in the name of such stockholder, shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten (10) days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or if not so
specified, at the place where the meeting is to be held. The stock list shall
also be produced and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is present.
Section 8. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to a corporate action in writing
without a meeting may authorize another person or persons to act for him by
proxy. Proxies for use at any meeting of stockholders shall be filed with the
Secretary, or such other officer as the Board of Directors may from time to
time determine by resolution, before or at the time of the meeting. All proxies
shall be received and taken charge of and all ballots shall be received and
canvassed by the secretary of the meeting who shall decide all questions
touching upon the qualification of voters, the validity of the proxies, and the
acceptance or rejection of votes, unless an inspector or inspectors shall have
been appointed by the chairman of the meeting, in which event such inspector or
inspectors shall decide all such questions.
No proxy shall be valid after three (3) years from its date, unless
the proxy provides for a longer period. Each proxy shall be revocable unless
expressly provided therein to be irrevocable and coupled with an interest
sufficient in law to support an irrevocable power.
Should a proxy designate two or more persons to act as proxies, unless
such instrument shall provide the contrary, a majority of such persons present
at any meeting at which their powers thereunder are to be exercised shall have
and may exercise all the powers of voting or giving consents thereby conferred,
or if only one be present, then such powers may be exercised by that one; or,
if an even number attend and a majority do not agree on any particular issue,
each proxy so attending shall be entitled to exercise such powers in respect of
the same portion of the shares as he is of the proxies representing such
shares.
Section 9. Voting; Elections; Inspectors. Unless otherwise required by
law or provided in the Certificate of Incorporation, each stockholder shall
have one vote for each share of stock entitled to vote which is registered in
his name on the record date for the meeting. Shares registered in the name of
another corporation, domestic or foreign, may be voted by such officer, agent
or proxy as the bylaw (or comparable instrument) of such corporation may
prescribe, or in the absence of such
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provision, as the Board of Directors (or comparable body) of such corporation
may determine. Shares registered in the name of a deceased person may be voted
by his executor or administrator, either in person or by proxy.
All voting, except as required by the Certificate of Incorporation or
where otherwise required by law, may be by a voice vote; provided, however,
that upon demand therefor by stockholders holding a majority of the issued and
outstanding stock present in person or by proxy at any meeting a stock vote
shall be taken. Every stock vote shall be taken by written ballots, each of
which shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
All elections of directors shall be by ballot, unless otherwise provided in the
Certificate of Incorporation.
At any meeting at which a vote is taken by ballots, the chairman of
the meeting may appoint one or more inspectors, each of whom shall subscribe an
oath or affirmation to execute faithfully the duties of inspector at such
meeting with strict impartiality and according to the best of his ability. Such
inspector shall receive the ballots, count the votes and make and sign a
certificate of the result thereof. The chairman of the meeting may appoint any
person to serve as inspector, except no candidate for the office of director
shall be appointed as an inspector.
Unless otherwise provided in the Certificate of Incorporation,
cumulative voting for the election of directors shall be prohibited.
Section 10. Conduct of Meetings. The meetings of the stockholders
shall be presided over by the Chairman of the Board (if any), or if he is not
present, by the President, or if neither the Chairman of the Board (if any),
nor President is present, by a chairman elected at the meeting. The Secretary
of the Corporation, if present, shall act as secretary of such meetings, or if
he is not present, an Assistant Secretary shall so act; if neither the
Secretary nor an Assistant Secretary is present, then a secretary shall be
appointed by the chairman of the meeting. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order. Unless the chairman of the meeting of
stockholders shall otherwise determine, the order of business shall be as
follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appointment of a secretary if
necessary.
(c) Presentation of proof of the due calling of the meeting.
(d) Presentation and examination of proxies and determination of a
quorum.
(e) Reading and settlement of the minutes of the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual meeting, or a meeting
called for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment.
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Section 11. Treasury Stock. The Corporation shall not vote, directly
or indirectly, shares of its own stock owned by it and such shares shall not be
counted for quorum purposes.
Section 12. Action Without Meeting. Unless otherwise provided in the
Certificate of Incorporation, any action permitted or required by law, the
Certificate of Incorporation or these bylaws to be taken at a meeting of
stockholders, may be taken without a meeting, without prior notice and without
a vote, if a consent in writing, setting forth the action so taken, shall be
signed by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted.
Prompt notice of the taking of the corporate action without a meeting by less
than a unanimous written consent shall be given by the Secretary to those
stockholders who have not consented in writing.
ARTICLE III
BOARD OF DIRECTORS
Section 1. Power; Number; Term of Office. The business and affairs of
the Corporation shall be managed by or under the direction of the Board of
Directors, and subject to the restrictions imposed by law or the Certificate of
Incorporation, they may exercise all the powers of the Corporation.
Unless otherwise provided in the Certificate of Incorporation, the
number of directors that shall constitute the entire Board of Directors shall
be determined from time to time by resolution of the Board of Directors
(provided that no decrease in the number of directors that would have the
effect of shortening the term of an incumbent director may be made by the Board
of Directors). If the Board of Directors makes no such determination, the
number of directors shall be the number set forth in the Certificate of
Incorporation as the number of directors constituting the initial Board of
Directors. Each director shall hold office for the term for which he is elected
and thereafter until his successor shall have been elected and qualified, or
until his earlier death, resignation or removal.
Unless otherwise provided in the Certificate of Incorporation,
directors need not be stockholders nor residents of the State of Delaware.
Section 2. Quorum. Unless otherwise provided in the Certificate of
Incorporation, a majority of the total number of directors shall constitute a
quorum for the transaction of business of the Board of Directors and the vote
of a majority of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors.
Section 3. Place of Meetings; Order of Business. The directors may
hold their meetings and may have an office and keep the books of the
Corporation, except as otherwise provided by law, in such place or places,
within or without the State of Delaware, as the Board of Directors may from
time to time determine by resolution. At all meetings of the Board of Directors
business shall be
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transacted in such order as shall from time to time be determined by the
Chairman of the Board (if any), or in his absence by the President, or by
resolution of the Board of Directors.
Section 4. First Meeting. Each newly elected Board of Directors may
hold its first meeting for the purpose of organization and the transaction of
business, if a quorum is present, immediately after and at the same place as
the annual meeting of the stockholders. Notice of such meeting shall not be
required. At the first meeting of the Board of Directors in each year at which
a quorum shall be present, held next after the annual meeting of stockholders,
the Board of Directors shall proceed to the election of the officers of the
Corporation.
Section 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such times and places as shall be designated from
time to time by resolution of the Board of Directors. Notice of such regular
meetings shall not be required.
Section 6. Special Meetings. Special meetings of the Board of
Directors may be called by the Chairman of the Board (if any), the President
or, on the written request of any two directors, by the Secretary, in each case
on at least twenty-four (24) hours personal, written, telegraphic, cable or
wireless notice to each director. Such notice, or any waiver thereof pursuant
to Article VIII, Section 3 hereof, need not state the purpose or purposes of
such meeting, except as may otherwise be required by law or provided for in the
Certificate of Incorporation or these bylaws.
Section 7. Removal. Any director or the entire Board of Directors may
be removed, with or without cause, by the holders of a majority of the shares
then entitled to vote at an election of directors; provided that, unless the
Certificate of Incorporation otherwise provides, if the Board of Directors is
classified, then the stockholders may effect such removal only for cause; and
provided further that, if the Certificate of Incorporation expressly grants to
stockholders the right to cumulate votes for the election of directors and if
less than the entire board is to be removed, no director may be removed without
cause if the votes cast against his removal would be sufficient to elect him if
then cumulatively voted at an election of the entire Board of Directors, or, if
there be classes of directors, at an election of the class of directors of
which such director is a part.
Section 8. Vacancies; Increases in the Number of Directors. Unless
otherwise provided in the Certificate of Incorporation, vacancies and newly
created directorships resulting from any increase in the authorized number of
directors may be filled by a majority of the directors then in office, although
less than a quorum, or a sole remaining director; and any director so chosen
shall hold office until the next annual election and until his successor shall
be duly elected and shall qualify, unless sooner displaced.
If the directors of the Corporation are divided into classes, any
directors elected to fill vacancies or newly created directorships shall hold
office until the next election of the class for which such directors shall have
been chosen, and until their successors shall be duly elected and shall
qualify.
Section 9. Compensation. Unless otherwise restricted by the
Certificate of Incorporation, the Board of Directors shall have the authority
to fix the compensation of directors.
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Section 10. Action Without a Meeting; Telephone Conference Meeting.
Unless otherwise restricted by the Certificate of Incorporation, any action
required or permitted to be taken at any meeting of the Board of Directors, or
any committee designated by the Board of Directors, may be taken without a
meeting if all members of the Board of Directors or committee, as the case may
be consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board of Directors or committee. Such consent
shall have the same force and effect as a unanimous vote at a meeting, and may
be stated as such in any document or instrument filed with the Secretary of
State of Delaware.
Unless otherwise restricted by the Certificate of Incorporation,
subject to the requirement for notice of meetings, members of the Board of
Directors, or members of any committee designated by the Board of Directors,
may participate in a meeting of such Board of Directors or committee, as the
case may be, by means of a conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in such a meeting shall constitute presence in
person at such meeting, except where a person participates in the meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened.
Section 11. Approval or Ratification of Acts or Contracts by
Stockholders. The Board of Directors in its discretion may submit any act or
contract for approval or ratification at any annual meeting of the
stockholders, or at any special meeting of the stockholders called for the
purpose of considering any such act or contract, and any act or contract that
shall be approved or be ratified by the vote of the stockholders holding a
majority of the issued and outstanding shares of stock of the Corporation
entitled to vote and present in person or by proxy at such meeting (provided
that a quorum is present), shall be as valid and as binding upon the
Corporation and upon all the stockholders as if it has been approved or
ratified by every stockholder of the Corporation. In addition, any such act or
contract may be approved or ratified by the written consent of stockholders
holding a majority of the issued and outstanding shares of capital stock of the
Corporation entitled to vote and such consent shall be as valid and as binding
upon the Corporation and upon all the stockholders as if it had been approved
or ratified by every stockholder of the Corporation.
ARTICLE IV
COMMITTEES
Section 1. Designation; Powers. The Board of Directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, including, if they shall so determine, an executive committee, each
such committee to consist of one or more of the directors of the Corporation.
Any such designated committee shall have and may exercise such of the powers
and authority of the Board of Directors in the management of the business and
affairs of the Corporation as may be provided in such resolution, except that
no such committee shall have the power or authority of the Board of Directors
in reference to amending the Certificate of Incorporation, adopting an
agreement of merger or consolidation, recommending to the stockholders the
sale, lease or exchange of all or substantially all of the Corporation's
property and assets, recommending to the stockholders
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a dissolution of the Corporation or a revocation of a dissolution of the
Corporation, or amending, altering or repealing the bylaws or adopting new
bylaws for the Corporation and, unless such resolution or the Certificate of
Incorporation expressly so provides, no such committee shall have the power or
authority to declare a dividend or to authorize the issuance of stock. Any such
designated committee may authorize the seal of the Corporation to be affixed to
all papers which may require it. In addition to the above such committee or
committees shall have such other powers and limitations of authority as may be
determined from time to time by resolution adopted by the Board of Directors.
Section 2. Procedure; Meetings; Quorum. Any committee designated
pursuant to Section 1 of this Article shall choose its own chairman, shall keep
regular minutes of its proceedings and report the same to the Board of
Directors when requested, shall fix its own rules or procedures, and shall meet
at such times and at such place or places as may be provided by such rules, or
by resolution of such committee or resolution of the Board of Directors. At
every meeting of any such committee, the presence of a majority of all the
members thereof shall constitute a quorum and the affirmative vote of a
majority of the members present shall be necessary for the adoption by it of
any resolution.
Section 3. Substitution of Members. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of such committee. In
the absence or disqualification of a member of a committee, the member or
members present at any meeting and not disqualified from voting, whether or not
constituting a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of the absent or disqualified
member.
ARTICLE V
OFFICERS
Section 1. Number, Titles and Term of Office. The officers of the
Corporation shall be a President, one or more Vice Presidents (any one or more
of whom may be designated Executive Vice President or Senior Vice President), a
Treasurer, a Secretary and, if the Board of Directors so elects, a Chairman of
the Board and such other officers as the Board of Directors may from time to
time elect or appoint. Each officer shall hold office until his successor shall
be duly elected and shall qualify or until his death or until he shall resign
or shall have been removed in the manner hereinafter provided. Any number of
offices may be held by the same person, unless the Certificate of Incorporation
provides otherwise. Except for the Chairman of the Board, if any, no officer
need be a director.
Section 2. Salaries. The salaries or other compensation of the
officers and agents of the Corporation shall be fixed from time to time by the
Board of Directors.
Section 3. Removal. Any officer or agent elected or appointed by the
Board of Directors may be removed, either with or without cause, by the vote of
a majority of the whole Board of Directors at a special meeting called for the
purpose, or at any regular meeting of the Board of Directors, provided the
notice for such meeting shall specify that the matter of any such proposed
removal
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will be considered at the meeting but such removal shall be without prejudice
to the contract rights, if any, of the person so removed. Election or
appointment of an officer or agent shall not of itself create contract rights.
Section 4. Vacancies. Any vacancy occurring in any office of the
Corporation may be filled by the Board of Directors.
Section 5. Powers and Duties of the Chief Executive Officer. The
President shall be the chief executive officer of the Corporation unless the
Board of Directors designates the Chairman of the Board as chief executive
officer. Subject to the control of the Board of Directors and the executive
committee (if any), the chief executive officer shall have general executive
charge, management and control of the properties, business and operations of
the Corporation with all such powers as may be reasonably incident to such
responsibilities; he may agree upon and execute all leases, contracts,
evidences of indebtedness and other obligations in the name of the Corporation
and may sign all certificates for shares of capital stock of the Corporation;
and shall have such other powers and duties as designated in accordance with
these bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 6. Powers and Duties of the Chairman of the Board. If elected,
the Chairman of the Board shall preside at all meetings of the stockholders and
of the Board of Directors; and he shall have such other powers and duties as
designated in these bylaws and as from time to time may be assigned to him by
the Board of Directors.
Section 7. Powers and Duties of the President. Unless the Board of
Directors otherwise determines, the President shall have the authority to agree
upon and execute all leases, contracts, evidences of indebtedness and other
obligations in the name of the Corporation; and, unless the Board of Directors
otherwise determines, he shall, in the absence of the Chairman of the Board or
if there be no Chairman of the Board, preside at all meetings of the
stockholders and (should he be a director) of the Board of Directors; and he
shall have such other powers and duties as designated in accordance with these
bylaws and as from time to time may be assigned to him by the Board of
Directors.
Section 8. Vice Presidents. In the absence of the President, or in the
event of his inability or refusal to act, a Vice President designated by the
Board of Directors shall perform the duties of the President, and when so
acting shall have all the powers of and be subject to all the restrictions upon
the President. In the absence of a designation by the Board of Directors of a
Vice President to perform the duties of the President, or in the event of his
absence or inability or refusal to act, the Vice President who is present and
who is senior in terms of time as a Vice President of the Corporation shall so
act. The Vice Presidents shall perform such other duties and have such other
powers as the Board of Directors may from time to time prescribe.
Section 9. Treasurer. The Treasurer shall have responsibility for the
custody and control of all the funds and securities of the Corporation, and he
shall have such other powers and duties as designated in these bylaws and as
from time to time may be assigned to him by the Board of Directors. He shall
perform all acts incident to the position of Treasurer, subject to the control
of the chief executive officer and the Board of Directors; and he shall, if
required by the Board of Directors, give
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such bond for the faithful discharge of his duties in such form as the Board of
Directors may require.
Section 10. Assistant Treasurers. Each Assistant Treasurer shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Treasurers shall exercise the powers of the Treasurer during that
officer's absence or inability or refusal to act.
Section 11. Secretary. The Secretary shall keep the minutes of all
meetings of the Board of Directors, committees of directors and the
stockholders, in books provided for that purpose; he shall attend to the giving
and serving of all notices; he may in the name of the Corporation affix the
seal of the Corporation to all contracts of the Corporation and attest the
affixation of the seal of the Corpora tion thereto; he may sign with the other
appointed officers all certificates for shares of capital stock of the
Corporation; he shall have charge of the certificate books, transfer books and
stock ledgers, and such other books and papers as the Board of Directors may
direct, all of which shall at all reasonable times be open to inspection of any
director upon application at the office of the Corporation during business
hours; he shall have such other powers and duties as designated in these bylaws
and as from time to time may be assigned to him by the Board of Directors; and
he shall in general perform all acts incident to the office of Secretary,
subject to the control of the chief executive officer and the Board of
Directors.
Section 12. Assistant Secretaries. Each Assistant Secretary shall have
the usual powers and duties pertaining to his office, together with such other
powers and duties as designated in these bylaws and as from time to time may be
assigned to him by the chief executive officer or the Board of Directors. The
Assistant Secretaries shall exercise the powers of the Secretary during that
officer's absence or inability or refusal to act.
Section 13. Action with Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the chief executive
officer shall have power to vote and otherwise act on behalf of the
Corporation, in person or by proxy, at any meeting of security holders of or
with respect to any action of security holders of any other corporation in
which this Corporation may hold securities and otherwise to exercise any and
all rights and powers which this Corporation may possess by reason of its
ownership of securities in such other corporation.
ARTICLE VI
INDEMNIFICATION OF DIRECTORS,
OFFICERS, EMPLOYEES AND AGENTS
Section 1. Right to Indemnification. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he or she or a person
of whom he or she is the legal representative, is or was or has agreed to
become a
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director or officer of the Corporation or is or was serving or has agreed to
serve at the request of the Corporation as a director, officer, employee or
agent of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director or officer or in any other capacity while serving or having agreed to
serve as a director or officer, shall be indemnified and held harmless by the
Corporation to the fullest extent authorized by the Delaware General
Corporation Law, as the same exists or may hereafter be amended, (but, in the
case of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said law permitted
the Corporation to provide prior to such amendment) against all expense,
liability and loss (including without limitation, attorneys' fees, judgments,
fines, ERISA excise taxes or penalties and amounts paid or to be paid in
settlement) reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a person who has ceased
to serve in the capacity which initially entitled such person to indemnity
hereunder and shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that the Corporation shall indemnify any
such person seeking indemnification in connection with a proceeding (or part
thereof), other than a proceeding (or part thereof) brought under Section 3 of
this Article VI, initiated by such person or his or her heirs, executors and
administrators only if such proceeding (or part thereof) was authorized by the
board of directors of the Corporation. The right to indemnification conferred
in this Article VI shall be a contract right and shall include the right to be
paid by the Corporation the expenses incurred in defending any such proceeding
in advance of its final disposition; provided, however, that, if the Delaware
General Corporation Law requires, the payment of such expenses incurred by a
current, former or proposed director or officer in his or her capacity as a
director or officer or proposed director or officer (and not in any other
capacity in which service was or is or has been agreed to be rendered by such
person while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such indemnified person, to repay all amounts so advanced if it shall
ultimately be determined that such indemnified person is not entitled to be
indemnified under this Section or otherwise.
Section 2. Indemnification of Employees and Agents. The Corporation
may, by action of its Board of Directors, provide indemnification to employees
and agents of the Corporation, individually or as a group, with the same scope
and effect as the indemnification of directors and officers provided for in
this Article.
Section 3. Right of Claimant to Bring Suit. If a written claim
received by the Corporation from or on behalf of an indemnified party under
this Article VI is not paid in full by the Corporation within ninety days after
such receipt, the claimant may at any time thereafter bring suit against the
Corporation to recover the unpaid amount of the claim and, if successful in
whole or in part, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any is required, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the Delaware
General Corporation Law for the Corporation to indemnify the claimant for the
amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent
11
<PAGE> 12
legal counsel, or its stockholders) to have made a determination prior to the
commencement of such action that indemnification of the claimant is proper in
the circumstances because he or she has met the applicable standard of conduct
set forth in the Delaware General Corporation Law, nor an actual determination
by the Corporation (including its Board of Directors, independent legal
counsel, or its stockholders) that the claimant has not met such applicable
standard of conduct, shall be a defense to the action or create a presumption
that the claimant has not met the applicable standard of conduct.
Section 4. Nonexclusivity of Rights. The right to indemnification and
the advancement and payment of expenses conferred in this Article VI shall not
be exclusive of any other right which any person may have or hereafter acquire
under any law (common or statutory), provision of the Certi ficate of
Incorporation of the Corporation, bylaw, agreement, vote of stockholders or
disinterested directors or otherwise.
Section 5. Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any person who is or was serving as a director,
officer, employee or agent of the Corporation or is or was serving at the
request of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.
Section 6. Savings Clause. If this Article VI or any portion hereof
shall be invalidated on any ground by any court of competent jurisdiction, then
the Corporation shall nevertheless indemnify and hold harmless each director
and officer of the Corporation, as to costs, charges and expenses (including
attorneys' fees), judgments, fines, and amounts paid in settlement with respect
to any action, suit or proceeding, whether civil, criminal, administrative or
investigative to the full extent permitted by any applicable portion of this
Article VI that shall not have been invalidated and to the fullest extent
permitted by applicable law.
Section 7. Definitions. For purposes of this Article, reference to the
"Corporation" shall include, in addition to the Corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger prior to (or, in the case of an entity specifically
designated in a resolution of the Board of Directors, after) the adoption
hereof and which, if its separate existence had continued, would have had the
power and authority to indemnify its directors, officers and employees or
agents, so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under the provisions of this Article with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.
12
<PAGE> 13
ARTICLE VII
CAPITAL STOCK
Section 1. Certificates of Stock. The certificates for shares of the
capital stock of the Corporation shall be in such form, not inconsistent with
that required by law and the Certificate of Incorporation, as shall be approved
by the Board of Directors. The Chairman of the Board (if any), President or a
Vice President shall cause to be issued to each stockholder one or more
certificates, under the seal of the Corporation or a facsimile thereof if the
Board of Directors shall have provided for such seal, and signed by the
Chairman of the Board (if any), President or a Vice President and the Secretary
or an Assistant Secretary or the Treasurer or an Assistant Treasurer certifying
the number of shares (and, if the stock of the Corporation shall be divided
into classes or series, the class and series of such shares) owned by such
stockholder in the Corporation; provided, however, that any of or all the
signatures on the certificate may be facsimile. The stock record books and the
blank stock certificate books shall be kept by the Secretary, or at the office
of such transfer agent or transfer agents as the Board of Directors may from
time to time by resolution determine. In case any officer, transfer agent or
registrar who shall have signed or whose facsimile signature or signatures
shall have been placed upon any such certificate or certificates shall have
ceased to be such officer, transfer agent or registrar before such certificate
is issued by the Corporation, such certificate may nevertheless be issued by
the Corporation with the same effect as if such person were such officer,
transfer agent or registrar at the date of issue. The stock certificates shall
be consecutively numbered and shall be entered in the books of the Corporation
as they are issued and shall exhibit the holder's name and number of shares.
Section 2. Transfer of Shares. The shares of stock of the Corporation
shall be transferable only on the books of the Corporation by the holders
thereof in person or by their duly authorized attorneys or legal
representatives upon surrender and cancellation of certificates for a like
number of shares. Upon surrender to the Corporation or a transfer agent of the
Corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the Corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Section 3. Ownership of Shares. The Corporation shall be entitled to
treat the holder of record of any share or shares of capital stock of the
Corporation as the holder in fact thereof and, accordingly, shall not be bound
to recognize any equitable or other claim to or interest in such share or
shares on the part of any other person, whether or not it shall have express or
other notice thereof, except as otherwise provided by the laws of the State of
Delaware.
Section 4. Regulations Regarding Certificates. The Board of Directors
shall have the power and authority to make all such rules and regulations as
they may deem expedient concerning the issue, transfer and registration or the
replacement of certificates for shares of capital stock of the Corporation.
Section 5. Lost or Destroyed Certificates. The Board of Directors may
determine the conditions upon which a new certificate of stock may be issued in
place of a certificate which is alleged
13
<PAGE> 14
to have been lost, stolen or destroyed; and may, in their discretion, require
the owner of such certificate or his legal representative to give bond, with
sufficient surety, to indemnify the Corporation and each transfer agent and
registrar against any and all losses or claims which may arise by reason of the
issue of a new certificate in the place of the one so lost, stolen or
destroyed.
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
such as established from time to time by the Board of Directors.
Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation. The Secretary shall have
charge of the seal (if any). If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by the Assistant Secretary or Assistant Treasurer.
Section 3. Notice and Waiver of Notice. Whenever any notice is
required to be given by law, the Certificate of Incorporation or under the
provisions of these bylaws, said notice shall be deemed to be sufficient if
given (i) by telegraphic, cable or wireless transmission or (ii) by deposit of
the same in a post office box in a sealed prepaid wrapper addressed to the
person entitled thereto at his post office address, as it appears on the
records of the Corporation, and such notice shall be deemed to have been given
on the day of such transmission or mailing, as the case may be.
Whenever notice is required to be given by law, the Certificate of
Incorporation or under any of the provisions of these bylaws, a written waiver
thereof, signed by the person entitled to notice, whether before or after the
time stated therein, shall be deemed equivalent to notice. Attendance of a
person at a meeting shall constitute a waiver of notice of such meeting, except
when the person attends a meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business to be
transacted at, nor the purpose of, any regular or special meeting of the
stockholders, directors, or members of a committee of directors need be
specified in any written waiver of notice unless so required by the Certificate
of Incorporation or the bylaws.
Section 4. Resignations. Any director, member of a committee or
officer may resign at any time. Such resignation shall be made in writing and
shall take effect at the time specified therein, or if no time be specified, at
the time of its receipt by the chief executive officer or Secretary. The
acceptance of a resignation shall not be necessary to make it effective, unless
expressly so provided in the resignation.
Section 5. Facsimile Signatures. In addition to the provisions for the
use of facsimile signatures elsewhere specifically authorized in these bylaws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors.
14
<PAGE> 15
Section 6. Reliance upon Books, Reports and Records. Each director and
each member of any committee designated by the Board of Directors shall, in the
performance of his duties, be fully protected in relying in good faith upon the
books of account or reports made to the Corporation by any of its officers, or
by an independent certified public accountant, or by an appraiser selected with
reasonable care by the Board of Directors or by any such committee, or in
relying in good faith upon other records of the Corporation.
ARTICLE IX
AMENDMENTS
If provided in the Certificate of Incorporation of the Corporation,
the Board of Directors shall have the power to adopt, amend and repeal from
time to time bylaws of the Corporation, subject to the right of the
stockholders entitled to vote with respect thereto to amend or repeal such
bylaws as adopted or amended by the Board of Directors.
15
<PAGE> 1
EXHIBIT 10.1.1
AGREEMENT AND PLAN OF MERGER
by and among
BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP,
BENCHMARK ACQUISITION, INC.,
BENCHMARK RADIO ACQUISITION FUND I LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND IV LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND VII LIMITED PARTNERSHIP,
BENCHMARK RADIO ACQUISITION FUND VIII LIMITED PARTNERSHIP,
JOSEPH L. MATHIAS IV,
BRUCE R. SPECTOR,
CAPSTAR BROADCASTING PARTNERS, INC.
and
BCR HOLDING, INC.
dated as of
December 9, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I THE MERGER............................................................................... 2
1.1 The Merger.................................................................................. 2
1.2 Effective Time.............................................................................. 2
1.3 Effect of the Merger........................................................................ 2
1.4 Certificate and Agreement of Limited Partnership............................................ 2
1.5 Merger Consideration; Conversion of Partnership Interests; Total Consideration.............. 3
1.6 Calculation of and Adjustments to Total Consideration....................................... 4
1.7 Dissenting Partnership Interests............................................................ 9
1.8 Payment of Merger Consideration; Deposit of Holdback Funds; and Repayment of Funded Debt....10
1.9 Partnership Books...........................................................................11
1.10 Partner Approval...........................................................................11
1.11 Pre-Closing Escrow Deposit.................................................................12
1.12 Post-Closing Escrow Deposit................................................................14
1.13 Reserve Fund; Post-Closing Adjustment to Total Consideration...............................14
1.14 Dissenting Partner Funds...................................................................15
1.15 Other Benchmark Mergers....................................................................15
1.16 Instructions on Payments...................................................................15
ARTICLE II REPRESENTATIONS AND WARRANTIES .........................................................16
2.1 Representations and Warranties Regarding Benchmark..........................................16
2.2 Representations and Warranties of Mergeco...................................................31
2.3 Representations and Warranties Regarding Fund I, Fund IV, Fund VII and Fund VIII............33
ARTICLE III COVENANTS RELATING TO CONDUCT OF BUSINESS..............................................46
3.1 Covenants of Benchmark......................................................................46
3.2 Negative Trade Balance......................................................................50
</TABLE>
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TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
3.3 Environmental Site Assessments..............................................................50
3.4 Other Benchmark Mergers.....................................................................50
ARTICLE IV ADDITIONAL AGREEMENTS OF BENCHMARK......................................................50
4.1 No Solicitation of Transactions.............................................................50
4.2 Access and Information......................................................................51
4.3 Assistance..................................................................................52
4.4 Compliance With Station Licenses............................................................53
4.5 Notification of Certain Matters.............................................................53
4.6 Third Party Consents........................................................................54
4.7 Section 754 Election........................................................................54
4.8 Limited Partner Consent.....................................................................54
4.9 Consummation of Pending Transactions........................................................54
4.10 Consummation of Other Benchmark Mergers....................................................54
4.11 Withdrawal of Class A General Partners.....................................................55
4.12 Transfer of Partnership Interests..........................................................55
4.13 ERISA......................................................................................55
ARTICLE V COVENANTS OF MERGECO AND PARENT..........................................................55
5.1 Notification of Certain Matters.............................................................55
5.2 Compliance with Communications Act and HSR Act..............................................56
5.3 Station Acquisitions........................................................................56
5.4 Parent Loans................................................................................56
5.5 Benchmark Employment Agreements.............................................................56
5.6 Parent-Radioco III, Inc. Merger............................................................57
5.7 Election of Directors and Officers..........................................................57
ARTICLE VI MUTUAL COVENANTS........................................................................57
</TABLE>
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TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
6.1 Application for Commission Consent..........................................................57
6.2 Control of Stations........................................................................57
6.3 Other Governmental Consents.................................................................57
6.4 Brokers or Finders..........................................................................58
6.5 Additional Agreement........................................................................58
6.6 Execution and Delivery of Transaction.......................................................58
6.7 Certain Events..............................................................................58
6.8 WDHT Budget.................................................................................58
6.9 Purchase Price Allocation...................................................................59
6.10 Richmond Sale..............................................................................59
6.11 Richmond and Norfolk Stations..............................................................59
ARTICLE VII CONDITIONS PRECEDENT...................................................................59
7.1 Conditions to Each Party's Obligations......................................................59
7.2 Conditions to Obligations of Mergeco........................................................60
7.3 Conditions to Obligations of Benchmark......................................................61
ARTICLE VIII CLOSING...............................................................................62
8.1 Closing.....................................................................................62
8.2 Actions to Occur at Closing.................................................................64
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER.......................................................64
9.1 Termination.................................................................................64
9.2 Fees and Expenses...........................................................................68
9.3 Effect of Termination.......................................................................70
ARTICLE X GENERAL PROVISIONS.......................................................................72
10.1 Survival of Representations and Warranties and Covenants; Indemnification..................72
</TABLE>
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<PAGE> 5
TABLE OF CONTENTS (CONT'D)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
10.2 Knowledge..................................................................................83
10.3 Amendment amd Modification.................................................................83
10.4 Waiver of Compliance.......................................................................83
10.5 Severability...............................................................................83
10.6 Expenses and Obligations...................................................................83
10.7 Parties in Interest........................................................................83
10.8 Notices....................................................................................83
10.9 Interpretation.............................................................................84
10.10 Counterparts..............................................................................85
10.11 Entire Agreement..........................................................................85
10.12 Governing Law; Consent to Jurisdiction....................................................85
10.13 Public Announcements......................................................................85
10.14 Assignment................................................................................85
10.15 Further Assurances........................................................................86
10.16 Partner, Director, Officer and Stockholder Liability......................................86
10.17 No Waiver of Fraud........................................................................86
10.18 Specific Performance......................................................................86
10.19 Arbitration...............................................................................86
ARTICLE XI DEFINITIONS.............................................................................87
11.1 Certain Definitions........................................................................87
</TABLE>
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<PAGE> 6
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of December
9, 1996 is entered into by and among Benchmark Acquisition, Inc., a Delaware
corporation ("Mergeco"), Benchmark Communications Radio Limited Partnership, a
Maryland limited partnership (including any successor thereto, "Benchmark"),
Benchmark Radio Acquisition Fund I Limited Partnership, a Maryland limited
partnership (including any successor thereto, "Fund I), Benchmark Radio
Acquisition Fund IV Limited Partnership, a Maryland limited partnership
(including any successor thereto, "Fund IV"), Benchmark Radio Acquisition Fund
VII Limited Partnership, a Maryland limited partnership (including any
successor thereto, "Fund VII"), Benchmark Radio Acquisition Fund VIII Limited
Partnership, a Maryland limited partnership (including any successor thereto,
"Fund VIII"), BCR Holding, Inc., a Delaware corporation which holds all of the
outstanding stock of Mergeco (including any successor thereto, "Parent"),
Capstar Broadcasting Partners, Inc., a Delaware corporation ("Capstar"), Bruce
R. Spector and Joseph L. Mathias IV in their capacities as Partner
Representatives and as General Partners, Grand Slam Radio Limited Partnership,
a Maryland limited partnership and Home Run Radio Limited Partnership, a
Maryland limited partnership. The obligations under this Agreement of each
party hereto shall be limited to obligations specifically applicable to such
party under the express terms of this Agreement.
RECITALS:
WHEREAS, the parties desire to effectuate a series of merger and other
transactions under which Parent (directly or through affiliates) will (i) pay
an aggregate consideration of One Hundred Sixty-Seven Million One Hundred
Thousand Dollars ($167,100,000), plus certain advancements for working capital
and capital expenditures, plus net current assets, less Funded Debt (as defined
herein) and certain acquisition indebtedness advanced to Benchmark and certain
of its subsidiaries by Parent, and subject to a series of additions,
subtractions and adjustments, all as provided in this Agreement, and (ii)
through such transactions, own or control the existing radio stations listed on
Attachment I hereto and certain other radio stations to be acquired by
Benchmark or its subsidiaries (also listed on Attachment I hereto) as
contemplated herein, as provided herein;
WHEREAS, Mergeco, upon the terms and subject to the conditions of this
Agreement and in accordance with the Maryland Revised Uniform Limited
Partnership Act ("Maryland Law") and applicable laws of the State of Delaware
("Delaware Law"), will merge with and into Benchmark (the "Merger");
WHEREAS, Parent, by its execution of this Agreement, has consented to, and
has authorized, approved and adopted, this Agreement and the transactions
contemplated hereby;
WHEREAS, the general partners of Benchmark (the "General Partners") have
determined that the Merger is in the best interests of Benchmark and its
limited partners (the "Limited Partners") and have authorized, adopted and
approved this Agreement and the transactions contemplated hereby;
<PAGE> 7
WHEREAS, simultaneously with the execution of this Agreement, each of Fund
I, Fund IV, Fund VII and Fund VIII has entered into the Fund I Merger
Agreement, the Fund IV Merger Agreement, the Fund VII Merger Agreement and the
Fund VIII Merger Agreement, respectively, with Benchmark Sub I, Inc. ("Sub I"),
Benchmark Sub IV, Inc. ("Sub IV"), Benchmark Sub VII, Inc. ("Sub VII"), and
Benchmark Sub VIII, Inc. ("Sub VIII"), respectively;
WHEREAS, Benchmark has determined that each of the Other Benchmark Mergers
is in the best interests of the Fund I Limited Partners, the Fund IV Limited
Partners, the Fund VII Limited Partners and the Fund VIII Limited Partners
(collectively, the "Fund Limited Partners") and has authorized, adopted and
approved each of the Other Benchmark Merger Agreements and will recommend
approval of this Agreement and the Other Benchmark Mergers by the Fund Limited
Partners;
NOW THEREFORE, in consideration of the foregoing and the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
covenant and agree as follows:
ARTICLE I
THE MERGER
1.1. THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with Maryland Law and Delaware Law,
at the Effective Time (as defined in Section 1.2), Mergeco shall be merged
with and into Benchmark. As a result of the Merger, the separate existence of
Mergeco shall cease and Benchmark shall continue as the surviving partnership
of the Merger (including any successor thereto, the "Surviving Partnership").
The name of the Surviving Partnership shall be "Benchmark Communications Radio
Limited Partnership."
1.2. EFFECTIVE TIME. The Merger shall be consummated, as and when
provided in Section 8.1 hereof, by filing a Certificate of Merger with the
Maryland State Department of Assessments and Taxation and the Secretary of
State of the State of Delaware in such form as is required by, and executed in
accordance with the relevant provisions of, Maryland Law and Delaware Law (the
date and time of the completion of such filings being the "Effective Time").
1.3. EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of Maryland Law and
Delaware law. Without limiting the generality of the foregoing, and subject to
the applicable provisions of Maryland Law and Delaware law, at the Effective
Time, all the property, rights, privileges, powers and franchises of Mergeco
and Benchmark shall vest in the Surviving Partnership, and all debts,
liabilities and duties of Mergeco and Benchmark shall become the debts,
liabilities and duties of the Surviving Partnership.
1.4. CERTIFICATE AND AGREEMENT OF LIMITED PARTNERSHIP. At the
Effective Time, the Amended and Restated Agreement of Limited Partnership of
Benchmark, as in effect immediately prior to the Effective Time, shall (subject
to the changes contemplated by the Merger, including, without limitation, any
amendments necessary to substitute a new single General Partner and to remove
Limited Partners as contemplated by Section 1.5) be the partnership agreement
of the Surviving Partnership, and the Certificate of Limited Partnership of
Benchmark, as in effect
2
<PAGE> 8
immediately prior to the Effective Time, shall be the Certificate of Limited
Partnership of the Surviving Partnership.
1.5. MERGER CONSIDERATION; CONVERSION OF PARTNERSHIP INTERESTS; TOTAL
CONSIDERATION. At the Effective Time, by virtue of the Merger and without any
action on the part of Mergeco, Benchmark or the holders of Partnership
Interests, the following shall occur:
(a) Subject to the other provisions of this Section 1.5, each
Limited Partnership Interest (other than the Class A Limited
Partnership Interests) and each General Partnership Interest
outstanding immediately prior to the Effective Time (other than any
Benchmark Dissenting Partnership Interests (as defined in Section
1.7)) shall, by virtue of the Merger and without any action on the
part of the holder thereof, be converted into the right to receive
the Merger Consideration in the manner contemplated by Section 1.8.
As a result of its conversion, each converted Partnership Interest
(the "Converted Partnership Interests") shall cease to be
outstanding and shall automatically be canceled and retired.
Notwithstanding the foregoing, if between the date of this Agreement
and the Effective Time the outstanding Convertible Partnership
Interests shall have been changed into a different number of
partnership interests or a different class of partnership interests,
by reason of any subdivision, reclassification, recapitalization,
split, combination or exchange of partnership interests, the
allocation of the Merger Consideration among the Converted
Partnership Interests shall be correspondingly adjusted to reflect
such subdivision, reclassification, recapitalization, split,
combination or exchange of partnership interests. A portion of the
Merger Consideration shall be delivered to the holders of Converted
Partnership Interests at the Closing pursuant to Section 1.8. The
remainder of the Merger Consideration shall be delivered to the
holders of Converted Partnership Interests pursuant to the terms of
Section 1.12 and the Post-Closing Escrow Agreement and as
contemplated in Section 1.13 and Section 1.14. The aggregate Merger
Consideration payable to each Partner holding a Converted
Partnership Interest shall be rounded to the nearest penny.
(b) Each Class A Limited Partnership Interest shall remain
outstanding after the Merger and shall be unaffected by the Merger
and, upon consummation of the Merger, such partnership interests
shall constitute 100% of the limited partnership interests in the
Surviving Partnership.
(c) All outstanding shares of common stock, par value $.01 per
share, of Mergeco issued and outstanding immediately prior to the
Effective Time shall be converted into a single general partnership
interest constituting 100% of the general partnership interests of
the Surviving Partnership.
(d) Immediately after the Effective Time, the General Partners
will execute an amendment to the Existing Partnership Agreement to
effectuate the changes contemplated by this Section 1.5.
3
<PAGE> 9
1.6. CALCULATION OF AND ADJUSTMENTS TO TOTAL CONSIDERATION.
(a) Fund I Consideration. The Fund I Consideration shall be
adjusted as described in this Section 1.6(a).
(1) In the event the Fund I Broadcast Cash Flow is less than Nine
Hundred Seventy Thousand Dollars ($970,000), then the Fund I BCF Consideration
shall be reduced by an amount equal to the product of (i) eleven and nine
tenths (11.9) multiplied by (ii) the difference of Nine Hundred Seventy
Thousand Dollars ($970,000) minus the Fund I Broadcast Cash Flow. In the event
the Fund I Broadcast Cash Flow is greater than One Million Thirty Thousand
Dollars ($1,030,000), then the Fund I BCF Consideration shall be increased by
an amount equal to the product of (i) eleven and nine tenths (11.9) multiplied
by (ii) the difference of the Fund I Broadcast Cash Flow minus One Million
Thirty Thousand Dollars ($1,030,000).
(2) The Fund I Consideration shall be reduced by the portion (if
any) of the Fund I Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund I is a positive
number, the Fund I Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund I. If the Adjustment Amount allocable to
Fund I is a negative number, the Fund I Consideration shall be decreased by the
amount of the Adjustment Amount allocable to Fund I.
(4) The Fund I Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(b) Fund IV Consideration. The Fund IV Consideration shall be
adjusted as described in this Section 1.6(b).
(1) In the event the Fund IV Broadcast Cash Flow is less than Two
Million Six Hundred Sixty Seven Thousand Five Hundred Dollars ($2,667,500),
then the Fund IV BCF Consideration shall be reduced by an amount equal to the
product of (i) eleven and nine tenths (11.9) multiplied by (ii) the difference
of Two Million Six Hundred Sixty Seven Thousand Five Hundred Dollars
($2,667,500) minus the Fund IV Broadcast Cash Flow. In the event the Fund IV
Broadcast Cash Flow is greater than Two Million Eight Hundred Thirty Two
Thousand Five Hundred Dollars ($2,832,500), then the Fund IV BCF Consideration
shall be increased by an amount equal to the product of (i) eleven and nine
tenths (11.9) multiplied by (ii) the difference of the Fund IV Broadcast Flow
minus Two Million Eight Hundred Thirty Two Thousand Five Hundred Dollars
($2,832,500).
(2) The Fund IV Consideration shall be reduced by the portion (if
any) of the Fund IV Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund IV is a positive
number, the Fund IV Consideration shall be increased by the amount of the
Adjustment Amount allocable to
4
<PAGE> 10
Fund IV. If the Adjustment Amount allocable to Fund IV is a negative number,
the Fund IV Consideration shall be decreased by the amount of the Adjustment
Amount allocable to Fund IV.
(4) The Fund IV Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(c) Fund VII Consideration. The Fund VII Consideration shall
be adjusted as described in this Section 1.6(c).
(1) The Fund VII Consideration shall be reduced by the portion
(if any) of the Fund VII Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(2) If the Adjustment Amount allocable to Fund VII is a positive
number, the Fund VII Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund VII. If the Adjustment Amount allocable to
Fund VII is a negative number, the Fund VII Consideration shall be decreased by
the Adjustment Amount allocable to Fund VII.
(3) The Fund VII Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(d) Fund VIII Consideration. The Fund VIII Consideration shall
be adjusted as described in this Section 1.6(d).
(1) In the event the Fund VIII Broadcast Cash Flow is less than
Two Million One Hundred Fifty Eight Thousand Two Hundred Fifty Dollars
($2,158,250), then the Fund VIII BCF Consideration shall be reduced by an
amount equal to the product of (i) eleven and nine tenths (11.9) multiplied by
(ii) the difference of Two Million One Hundred Fifty Eight Thousand Two Hundred
Fifty Dollars ($2,158,250) minus the Fund VIII Broadcast Cash Flow. In the
event the Fund VIII Broadcast Cash Flow is greater than Two Million Two Hundred
Ninety One Thousand Seven Hundred Fifty Dollars ($2,291,750), then the Fund
VIII BCF Consideration shall be increased by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of the Fund
VIII Broadcast Cash Flow minus Two Million Two Hundred Ninety One Thousand
Seven Hundred Fifty Dollars ($2,291,750).
(2) The Fund VIII Consideration shall be reduced by the portion
(if any) of the Fund VIII Post-Closing Escrow Deposit to which any Surviving
Partnership Indemnified Party is entitled pursuant to Section 10.1 hereof.
(3) If the Adjustment Amount allocable to Fund VIII is a positive
number, the Fund VIII Consideration shall be increased by the amount of the
Adjustment Amount allocable to Fund VIII. If the Adjustment Amount allocable
to Fund VIII is a negative number, the Fund VIII Consideration shall be
decreased by the amount of the Adjustment Amount allocable to Fund VIII.
(4) The Fund VIII Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
5
<PAGE> 11
(e) Benchmark Consideration. The Benchmark Consideration shall
be adjusted as described in this Section 1.6(e).
(1) In the event the Statesville Broadcast Cash Flow is less than
One Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000), then the
Benchmark Consideration shall be reduced by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One
Million Three Hundred Fifty Eight Thousand Dollars ($1,358,000) minus the
Statesville Broadcast Cash Flow. In the event the Statesville Broadcast Cash
Flow is greater than One Million Four Hundred Forty Two Thousand Dollars
($1,442,000), then the Benchmark Consideration shall be increased by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of the Statesville Broadcast Cash Flow minus One Million Four
Hundred Forty Two Thousand Dollars ($1,442,000).
(2) In the event the Jackson Broadcast Cash Flow is less than One
Million Four Hundred Seventy Nine Thousand Two Hundred Fifty Dollars
($1,479,250), then the Benchmark Consideration shall be reduced by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of One Million Four Hundred Seventy Nine Thousand Two Hundred
Fifty Dollars ($1,479,250) minus the Jackson Broadcast Cash Flow. In the event
the Jackson Broadcast Cash Flow is greater than One Million Five Hundred
Seventy Thousand Seven Hundred Fifty Dollars ($1,570,750), then the Benchmark
Consideration shall be increased by an amount equal to the product of (i)
eleven and nine tenths (11.9) multiplied by (ii) the difference of the Jackson
Broadcast Cash Flow minus One Million Five Hundred Seventy Thousand Seven
Hundred Fifty Dollars ($1,570,750).
(3) In the event the Montgomery Broadcast Cash Flow is less than
One Million Seven Hundred Forty Six Thousand Dollars ($1,746,000), then the
Benchmark Consideration shall be reduced by an amount equal to the product of
(i) eleven and nine tenths (11.9) multiplied by (ii) the difference of One
Million Seven Hundred Forty Six Thousand Dollars ($1,746,000) minus the
Montgomery Broadcast Cash Flow. In the event the Montgomery Broadcast Cash
Flow is greater than One Million Eight Hundred Fifty Four Thousand Dollars
($1,854,000), then the Benchmark Consideration shall be increased by an amount
equal to the product of (i) eleven and nine tenths (11.9) multiplied by (ii)
the difference of the Montgomery Broadcast Cash Flow minus One Million Eight
Hundred Fifty Four Thousand Dollars ($1,854,000).
(4) In the event any Statesville Acquisition Expenses, Jackson
Acquisition Expenses, Montgomery Acquisition Expenses, Fund IV Expenses or Fund
VIII Expenses are paid by Benchmark or any of the New Funds other than with the
proceeds of the Statesville Loan, the Jackson Loan, the Montgomery Loan, the
Fund IV Loan or the Fund VIII Loan, respectively, or other than with cash flow
of Fund IX, Fund X, or Fund XI, respectively, then the Benchmark Consideration
shall be increased by the amount of the expenses so paid to the extent such
expenses are approved by Mergeco or its affiliates, which approval shall not be
unreasonably withheld.
(5) If the Adjustment Amount allocable to Benchmark is a positive
number, the Benchmark Consideration shall be increased by the amount of the
Adjustment Amount allocable to Benchmark. If the Adjustment Amount allocable
to Benchmark is a negative number,
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the Benchmark Consideration shall be decreased by the Adjustment Amount
allocable to Benchmark.
(6) The Benchmark Consideration shall be increased as provided in
the last sentence of Section 8.1, if applicable.
(7) In the event that the Statesville Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $16,660,000; provided that upon
consummation of the Statesville Agreement, the Surviving Partnership shall pay
an amount equal to $7,060,000 to the General Partners or their affiliates,
pursuant to instructions from the General Partners. In the event that the
Statesville Agreement has been terminated prior to the Effective Time for any
reason other than an event described in Section 9.1(d)(ii), the Benchmark
Consideration shall be reduced by an amount equal to $16,660,000.
(8) In the event that the Jackson Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $18,147,500; provided that upon
consummation of the Jackson Agreement, the Surviving Partnership shall pay an
amount equal to $2,897,500 to the General Partners or their affiliates pursuant
to instructions from the General Partners. In the event that the Jackson
Agreement has been terminated prior to the Effective Time for any reason other
than an event described in Section 9.1(d)(ii), the Benchmark Consideration
shall be reduced by an amount equal to $18,147,500.
(9) In the event that the Montgomery Agreement has not been
consummated on or prior to the Effective Time, the Benchmark Consideration
shall be reduced by an amount equal to $21,420,000, provided that upon
consummation of the Montgomery Agreement, the Surviving Partnership shall pay
an amount equal to $3,420,000 to the General Partners or their affiliates
pursuant to instructions from the General Partners. In the event that the
Montgomery Agreement has been terminated prior to the Effective Time for any
reason other than an event described in Section 9.1(d)(ii), the Benchmark
Consideration shall be reduced by an amount equal to $21,420,000.
(10) In the event any of Fund IX, Fund X or Fund XI are in
default under Section 6.10 of the Jackson Loan Agreement, the Statesville Loan
Agreement or the Montgomery Loan Agreement at the Effective Time, then the
Benchmark Consideration shall be reduced by an amount equal to the costs
reasonably incurred and expected to be incurred by Benchmark or its
subsidiaries or the Surviving Partnership in removing the Lien or Liens that
were the cause of any such default.
(f) No later than April 30, 1997, Benchmark shall deliver to
Mergeco a certificate executed by the General Partners of Benchmark,
dated the date of its delivery, setting forth the calculation of
Fund I Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII
Broadcast Cash Flow, Statesville Broadcast Cash Flow, Jackson
Broadcast Cash Flow and Montgomery Broadcast Cash Flow on which the
Fund I BCF Consideration, the Fund IV BCF Consideration, the Fund
VIII BCF Consideration and the Benchmark Consideration will be based
(the "BCF Calculation"). The certificate will state that the BCF
Calculation has been certified
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by Arthur Andersen LLP and is based on the terms of this Agreement and the
appropriate financial statements for the calendar year ending December 31,
1996, which financial statements shall have been audited by Arthur
Andersen LLP. Prior to delivery of the certificate setting forth the BCF
Calculation, Benchmark shall request Arthur Andersen LLP to consult with
Coopers & Lybrand, accountants for Mergeco, regarding the preparation of
the BCF Calculation and to provide Coopers & Lybrand with applicable
documentation setting forth the basis of the BCF Calculation.
(g) No later than five (5) Business Days prior to the scheduled
Closing Date, Benchmark will deliver to Mergeco an initial
consolidated balance sheet for each of Benchmark, Fund I, Fund IV,
Fund VII and Fund VIII, together with their respective subsidiaries,
as of 11:59 p.m. on the date immediately prior to the Closing Date
(but giving effect to the Funded Debt Payoff pursuant to Section
1.8(e)) (the "Initial Closing Balance Sheet"), as well as a
certificate signed by the General Partners setting forth a
calculation of Initial Net Current Assets of Benchmark, Fund I, Fund
IV, Fund VII and Fund VIII and their respective subsidiaries as of
11:59 p.m. on the date immediately prior to the Closing Date (but
giving effect to the Funded Debt Payoff pursuant to Section 1.8(e)),
as determined from the Initial Closing Balance Sheet (such
certificate, the "Initial Closing Certificate"). The Initial
Closing Balance Sheet shall be prepared by Benchmark in consultation
with Arthur Andersen L.L.P. in accordance with GAAP, subject to
adjustments that would be made after audit, except as otherwise
contemplated by this Agreement. Benchmark shall, and Benchmark
shall request Arthur Andersen L.L.P. to, consult with Coopers &
Lybrand, accountants for Mergeco, regarding preparation of the
Initial Closing Balance Sheet. For purposes of this Section 1.6(g),
Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and
their respective subsidiaries shall be deemed not to be subsidiaries
of Benchmark.
(h) No later than 60 days after the Closing Date, the Partner
Representatives shall cause to be prepared and delivered to the
Surviving Partnership (i) a consolidated balance sheet for each of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII, together with
their subsidiaries, as of 11:59 p.m. on the date immediately prior
to the Closing Date (but giving effect to the Funded Debt Payoff
pursuant to Section 1.8(e)) which shall be audited by Arthur
Andersen LLP, together with the related audit report of such firm
(the "Closing Balance Sheet") and (ii) a calculation of Actual Net
Current Assets of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII
and their respective subsidiaries as determined from the Closing
Balance Sheet. The Closing Balance Sheet shall be prepared in
accordance with GAAP, except as otherwise contemplated by this
Agreement, and shall fairly present the financial position of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and their
respective subsidiaries as of 11:59 p.m. on the date immediately
prior to the Closing Date (but giving effect to the Funded Debt
Payoff pursuant to Section 1.8(e)). Benchmark shall request Arthur
Andersen L.L.P. to consult with Coopers & Lybrand, accountants for
Mergeco, regarding preparation of the Closing Balance Sheet. For
purposes of this Section 1.6(h), Fund I, Fund IV, Fund VII, Fund
VIII, each of the
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New Funds and their respective subsidiaries shall be deemed not to
be subsidiaries of Benchmark. Unless otherwise provided in this
Agreement, all Unfunded Debt attributable in accordance with GAAP to
the periods prior to the Closing Date, whether or not invoiced at
that date, will be included in calculating the Initial Closing
Balance Sheet.
(i) In the event Coopers & Lybrand disputes the accuracy of the
BCF Calculation or the Closing Balance Sheet, Mergeco shall promptly
inform Benchmark of the disputed amount of the BCF Calculation or
the Closing Balance Sheet and the basis for Coopers & Lybrand's
dispute in reasonable detail. If Benchmark does not agree to modify
the BCF Calculation or the Closing Balance Sheet, as applicable, in
accordance with Coopers & Lybrand's position regarding such disputed
amount of the BCF Calculation or the Closing Balance Sheet, as
applicable, Mergeco and Benchmark shall have ten (10) days to submit
such dispute to an independent "big six" accounting firm selected
jointly by Coopers & Lybrand and Arthur Andersen (the "Referee") for
arbitration. Mergeco and Benchmark shall use all reasonable efforts
to achieve a decision by such Referee as soon as practicable, and in
any event no later than thirty (30) days from the date such dispute
is submitted. The decision of the Referee shall be final,
conclusive and binding on the parties. Each party shall be
responsible for its own fees and expenses in connection with such
arbitration, and the fees and expenses of the Referee shall be borne
equally by Benchmark and Mergeco; provided, however, that in the
event the Referee determines that one party has not proceeded in
good faith in carrying forward such dispute, the fees and expenses
of the prevailing party and of the Referee shall be borne by the
party deemed not to have proceeded in good faith. In the event the
Closing has occurred, all references to Benchmark in this Section
1.6(i) shall be deemed to be references to Partner Representatives.
(j) In connection with calculating Total Consideration, Merger
Consideration, Benchmark Consideration, Fund I Consideration, Fund
IV Consideration, Fund VII Consideration, Fund VIII Consideration
and all components thereof or adjustments necessary to calculate
such items, including, without limitation, Fund I Broadcast Cash
Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash Flow,
Jackson Broadcast Cash Flow, Statesville Broadcast Cash Flow and
Montgomery Broadcast Cash Flow, if an adjustment would otherwise be
required to be made more than once by such definitions, the parties
agree that such adjustment will be made only once to avoid
double-counting.
1.7. DISSENTING PARTNERSHIP INTERESTS. Notwithstanding anything in this
Agreement to the contrary, Partnership Interests that are outstanding
immediately prior to the Effective Time and that are held by Partners who have
properly and timely exercised appraisal rights with respect thereto under
Section 10-208(f) of the Maryland Law (the "Benchmark Dissenting Partnership
Interests") shall not be converted into the right to receive the Merger
Consideration as provided in Section 1.5(a), but the holders of Benchmark
Dissenting Partnership Interests shall be entitled to receive such payment from
the Benchmark Dissenting Partner Fund and, if applicable, the Dissenting
Partner
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<PAGE> 15
Reserve as shall be determined pursuant to Section 10-208(f) of the Maryland
Law; provided, however, that if any such holder shall have failed to perfect or
shall withdraw or lose the right to appraisal and payment under the Maryland
Law, each such holder's Partnership Interests shall thereupon be deemed to have
been converted as of the Effective Time into the right to receive the Merger
Consideration, without any interest thereon, as provided in Section 1.5(a), and
such Partnership Interests shall no longer be Benchmark Dissenting Partnership
Interests.
1.8. PAYMENT OF MERGER CONSIDERATION; DEPOSIT OF HOLDBACK FUNDS; AND
REPAYMENT OF FUNDED DEBT.
(a) Exchange Fund. At or prior to the Effective Time, Mergeco
shall deposit, or cause to be deposited, with a bank or trust
company designated by Benchmark (such bank or trust company being
referred to as the "Exchange Agent") for the benefit of the holders
of Converted Partnership Interests for payment in accordance with
this Section 1.8(a) through the Exchange Agent, cash in an amount
equal to the aggregate amount of Merger Consideration to be paid to
all holders of Converted Partnership Interests less the amount of
the Benchmark Allocable Portion of the Post-Closing Escrow Deposits,
the Reserve Funds and the Dissenting Partner Reserves. The cash
deposited with the Exchange Agent in accordance with this Subsection
1.8(a) is hereinafter referred to as the "Exchange Fund." Promptly
following the Effective Time, the Exchange Agent shall, pursuant to
irrevocable instructions delivered by Benchmark immediately prior to
the Effective Time, deliver cash equal in aggregate amount to the
Exchange Fund to the holders of the Converted Partnership Interests
as specified by Benchmark in such instructions pursuant to the terms
of this Agreement out of the Exchange Fund.
(b) Post-Closing Escrow Deposits. At or prior to the Effective
Time, Mergeco shall deposit or cause to be deposited the Benchmark
Allocable Portion of the Post-Closing Escrow Deposits with the
Post-Closing Escrow Agent in accordance with Section 1.12 hereof,
and Benchmark shall cause all other portions of the Post-Closing
Escrow Deposits to be deposited in accordance with the terms of the
Other Benchmark Transactions.
(c) Reserve Funds. At or prior to the Effective Time, Mergeco
shall deposit or cause to be deposited the Benchmark Allocable
Portion of the Reserve Funds with the Post-Closing Escrow Agent in
accordance with Section 1.13 hereof, and Benchmark shall cause all
other portions of the Reserve Funds to be deposited in accordance
with the terms of the Other Benchmark Transactions.
(d) Dissenting Partner Funds and Reserves. On or prior to the
Effective Time, Mergeco shall deposit or cause to be deposited the
Benchmark Allocable Portion of the Dissenting Partner Funds and the
Dissenting Partner Reserves in one or more accounts specified by
Partner Representatives.
(e) Funded Debt Payoff. On or before the date that is three
(3) Business Days prior to the date scheduled for the Closing,
Benchmark will provide Mergeco
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<PAGE> 16
with written notice (the "Funded Debt Notice"), which notice shall
set forth the payments necessary to be made in order for the Funded
Debt of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII to be
repaid in full and retired as of the Effective Time of the Merger.
Immediately prior to the Closing of this Agreement and the Other
Benchmark Merger Agreements, Benchmark will, with the proceeds of
the Parent Funded Debt Loan, (i) repay the Funded Debt of Benchmark
identified in the Funded Debt Notice and (ii) contribute to the
capital of Fund I, Fund IV, Fund VII and Fund VIII amounts
sufficient to pay the Funded Debt of Fund I, Fund IV, Fund VII and
Fund VIII, as applicable, identified in the Funded Debt Notice, and
Benchmark shall, and shall cause each of Fund I, Fund IV, Fund VII
and Fund VIII to, repay the Funded Debt of each such Person (the
repayments in clauses (i) and (ii) are collectively referred to as
the "Funded Debt Payoff"). For purposes of this Section 1.8(e),
Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and
their respective subsidiaries shall be deemed not to be subsidiaries
of Benchmark.
1.9. PARTNERSHIP BOOKS. At the Effective Time, the partnership books of
Benchmark shall be closed and there shall be no further registration of
transfers of Partnership Interests on the records of Benchmark.
1.10. PARTNER APPROVAL.
(a) Bruce R. Spector and Joseph L. Mathias IV, in their
capacities as General Partners of Benchmark, by their execution
hereof approve and adopt this Agreement and the transactions
contemplated hereby.
(b) Parent, in its capacity as the sole stockholder of Mergeco,
by its execution hereof approves and adopts this Agreement and the
transactions contemplated hereby.
(c) Benchmark, acting through the General Partners, shall, in
accordance with applicable law and the Existing Fund Partnership
Agreements, solicit the requisite consents from the Fund Limited
Partners to the Merger, this Agreement, the Other Benchmark Mergers
and the Other Benchmark Merger Agreements and use its commercially
reasonable efforts to receive such consents no later than sixteen
(16) business days after the date hereof and, subject to the
fiduciary obligations of Benchmark and the General Partners as
advised by independent legal counsel, include in the consent
solicitation (the "Consent Solicitation") circulated to the Fund
Limited Partners the recommendation of Benchmark and the General
Partners that the Fund Limited Partners approve and adopt this
Agreement and the Other Benchmark Merger Agreements and the
transactions contemplated hereby and thereby, including, without
limitation, the Merger, and use its commercially reasonable efforts
to obtain such approval and adoption and the Other Benchmark
Mergers.
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<PAGE> 17
1.11. PRE-CLOSING ESCROW DEPOSIT.
(a) Concurrently with the execution of this Agreement and as
security for liquidated damages that may be payable by Mergeco to
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII (the "Sellers"),
Mergeco shall deposit, or cause to be deposited, in favor of
Benchmark, as Sellers' Representative (as defined below) (i) an
irrevocable letter of credit issued by Bankers Trust Company
("Bankers Trust") in substantially the form of Exhibit 1 (the
"Letter of Credit") for the sum of Five Million Four Hundred Ninety
Thousand Dollars ($5,490,000) and (ii) Four Hundred Ten Thousand
Dollars ($410,000) in cash (the "Capital Expenditure Deposit") in an
escrow account with Citibank N.A.., a national banking association
(the "Escrow Agent"), to be held in escrow and released therefrom in
accordance with Section 1.11(b) and the terms of the Pre-Closing
Escrow Agreement (herein so called) in substantially the form of
Exhibit 2 attached hereto. The Capital Expenditure Deposit shall be
released, pursuant to joint written instructions of Sellers'
Representative and Mergeco, to fund loans made under the Fund IV
Loan Agreement and the Fund VIII Loan Agreement. Mergeco shall
cause additional letters of credit in favor of Sellers'
Representative (collectively the "Additional Letters of Credit") to
be deposited in escrow with the Escrow Agent on the closing dates of
the Jackson Agreement, the Statesville Agreement and the Montgomery
Agreement. Such Additional Letters of Credit shall conform to the
requirements set forth above and be identical in all material
respects to the Letter of Credit, and shall be for the sums of Seven
Hundred Fifty Thousand Dollars ($750,000) with respect to the
Jackson Agreement (the "Additional Jackson Escrow Deposit"), Five
Hundred Thousand Dollars ($500,000) with respect to the Statesville
Agreement (the "Additional Statesville Escrow Deposit") and One
Million Dollars ($1,000,000) with respect to the Montgomery
Agreement (the "Additional Montgomery Escrow Deposit"). The Letter
of Credit, the Capital Expenditure Deposit (to the extent not
released to fund the Fund IV Loan and the Fund VIII Loan), the
Additional Letters of Credit, the Interest Letters of Credit and any
replacement letters of credit pursuant to the terms of the
Pre-Closing Escrow Agreement deposited in escrow pursuant to this
Section 1.11 are referred to collectively as the "Pre-Closing Escrow
Deposit." Interest earned on any cash portion of the Pre-Closing
Escrow Deposit shall be paid to Mergeco quarterly in accordance with
the Pre-Closing Escrow Agreement; provided, however, that any
interest on any cash in the Pre-Closing Escrow Deposit drawn from
any Interest Letter of Credit deposited shall be distributed
pursuant to Section 1.11(b) of this Agreement.
(b) If this Agreement is terminated and Benchmark, as Sellers'
Representative, seeks liquidated damages on behalf of the Sellers
pursuant to Section 9.3, then (i) if (A) Sellers are otherwise paid
liquidated damages due under Section 9.3, or (B) Benchmark and
Mergeco agree that the Sellers are not entitled to the Pre-Closing
Escrow Deposit as liquidated damages, Benchmark and Mergeco shall
deliver joint written instructions to the Escrow Agent authorizing
the release of the Pre-Closing Escrow Deposit and any interest
earned thereon to Mergeco; (ii) if
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<PAGE> 18
Benchmark and Mergeco agree that Sellers are entitled to the Pre-Closing
Escrow Deposit as liquidated damages, Benchmark and Mergeco shall
deliver joint written instructions to the Escrow Agent authorizing
the Escrow Agent to release the Pre-Closing Escrow Deposit to
Benchmark and any interest earned thereon (other than on cash
drawings on Interest Letters of Credit) to Mergeco; (iii) if a final
decision of an arbitrator under Section 10.19 hereof (a "Final
Determination") establishes the Sellers' right to liquidated damages
pursuant to Section 9.3, Benchmark shall deliver (A) a copy of the
Final Determination to the Escrow Agent authorizing the Escrow Agent
to release the Pre-Closing Escrow Deposit (and any Interest Letters
of Credit or interest earned on cash from drawings thereon) and
interest earned on all other Letters of Credit shall be delivered to
Mergeco, to Benchmark and (B) an opinion of counsel to Benchmark
that the decision of the arbitrator constitutes the Final
Determination under this Agreement; or (iv) if a Final Determination
establishes Mergeco's right to the Pre-Closing Escrow Deposit,
Mergeco shall deliver (A) a copy of the Final Determination to the
Escrow Agent authorizing the release of the Pre-Closing Escrow
Deposit to Mergeco and (B) an opinion of counsel to Mergeco that the
decision of the arbitrator constitutes the Final Determination under
this Agreement. If this Agreement is terminated and the Sellers do
not seek liquidated damages pursuant to Section 9.3 within sixty
(60) days of such termination, Benchmark and Mergeco shall deliver
joint written instructions to the Escrow Agent authorizing the
release of the Pre-Closing Escrow Deposit to Mergeco. Immediately
prior to the Effective Time and upon satisfaction of the conditions
to Mergeco's and Benchmark's obligation to consummate the Merger set
forth in Article VII, Sellers' Representative and Mergeco shall
jointly instruct the Escrow Agent to release and return the
Pre-Closing Escrow Deposit to Mergeco at the Effective Time. The
Capital Expenditure Deposit shall be released, pursuant to joint
written instructions of Sellers' Representative and Mergeco, to fund
loans made under the Fund IV Loan Agreement and the Fund VIII Loan
Agreement. If this Agreement is terminated and Mergeco and Sellers'
Representative are unable to agree on which party is entitled to the
Pre-Closing Escrow Deposit then, on the later of June 30, 1997 or
the date of such termination, and every three (3) months thereafter,
Sellers' Representative and Mergeco shall deposit a letter of credit
(an "Interest Letter of Credit") (in substantially the same form as
the Letter of Credit) in favor of Mergeco or Sellers'
Representative, as applicable, with the Escrow Agent, in face amount
equal to the amount of interest (at an annual interest rate of 8.0%)
that would be earned on the Pre-Closing Escrow Deposit during the
succeeding three (3) month period had the face amounts of the Letter
of Credit and the Additional Letters of Credit been deposited in the
form of cash on June 30, 1997 or such later termination date. In
the event that Mergeco or Sellers' Representative fail to deposit an
Interest Letter of Credit in timely fashion, the non-defaulting
party shall provide written notification to the defaulting party of
such failure and, if the Interest Letter of Credit is not deposited
within five (5) Business Days of the date of such notice, the
non-defaulting party shall be entitled to the Pre-Closing
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<PAGE> 19
Escrow Deposit, and Sellers' Representative and Mergeco shall deliver
joint instructions to the Escrow Agent to deliver the Pre-Closing Escrow
Deposit to the non-defaulting party. The party that is entitled to the
Pre-Closing Escrow Deposit pursuant to a Final Determination shall, at the
time the Pre-Closing Escrow Deposit is released by the Escrow Agent, also
be entitled to all Interest Letter(s) of Credit posted as well as the
return of the Interest Letter(s) of Credit posted by any parties, together
with any cash drawn from any Interest Letter of Credit by the Escrow Agent
and any interest earned on such cash. The parties agree that, unless
otherwise ordered by an arbitrator, they will not, prior to receipt of a
Final Determination from such arbitrator, involve the Escrow Agent in any
matters or disputes with respect to whether liquidated damages are owed.
(c) APPOINTMENT OF SELLERS' REPRESENTATIVES. By the execution
and delivery of this Agreement, Sellers hereby irrevocably
constitute and appoint Benchmark as the true and lawful agents and
attorneys-in-fact (the "Sellers' Representative") of such Sellers
with full power of substitution to act, jointly and severally, in
the name, place and stead of such Sellers with respect to the
performance of the obligations and rights of such Sellers under the
Pre-Closing Escrow Agreement, including, without limitation, the
power to execute the Pre-Closing Escrow Agreement and any amendments
thereto on behalf of such Sellers, to do or refrain from doing all
such further acts and things, and to execute, deliver and receive
all such documents, waivers, extensions and amendments as such
Sellers shall deem necessary or appropriate in their sole discretion
in connection with the administration of the Pre-Closing Escrow
Agreement (and any such actions shall be binding on such Sellers).
1.12. POST-CLOSING ESCROW DEPOSIT. On the Closing Date, Parent, Mergeco
and the Partner Representatives, as representatives of Benchmark, Fund I, Fund
IV, Fund VII, Fund VIII, and the Selling Stockholders shall execute and deliver
an escrow agreement in substantially the form attached as Exhibit 3 hereto (the
"Post-Closing Escrow Agreement") and Mergeco shall deposit or cause to be
deposited in escrow with Mercantile-Safe Deposit & Trust Company or another
banking institution designated by the Partner Representatives and reasonably
acceptable to Mergeco (the "Post-Closing Escrow Agent") the Benchmark Allocable
Portion of the Post-Closing Escrow Deposits to be held and disbursed in
accordance with the terms of the Post-Closing Escrow Agreement and Section 10.1
of this Agreement, and Benchmark shall cause all other portions of the
Post-Closing Escrow Deposits to be deposited in accordance with the terms of
the Other Benchmark Transactions. Benchmark may, at its option, elect to
supplement one or more of the Post-Closing Escrow Deposits after the Closing
Date. All interest earned on the Post-Closing Escrow Deposits shall be held
and distributed to Partner Representatives by the Post-Closing Escrow Agent on
a quarterly basis as set forth in the Post-Closing Escrow Agreement and Section
10.1 of this Agreement.
1.13. RESERVE FUND; POST-CLOSING ADJUSTMENT TO TOTAL CONSIDERATION. On
the Closing Date, Mergeco shall deposit or cause to be deposited in escrow with
the Post-Closing Escrow Agent the Benchmark Allocable Portion of the Reserve
Funds, which shall constitute a portion of the Total Consideration, to be held
and disbursed in accordance with the terms of this Section 1.13 and the
Post-Closing Escrow Agreement, and Benchmark shall cause all other portions
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<PAGE> 20
of the Reserve Fund to be deposited in accordance with the terms of the Other
Benchmark Transactions (all such deposits, the "Reserve Fund Escrow Deposit").
All interest earned on the Reserve Fund Escrow Deposit shall be
held and distributed to Partner Representatives by the Post-Closing Escrow
Agent in accordance with the Post-Closing Escrow Agreement. If the Adjustment
Amount identified in Sections 1.6(a)(3), 1.6(b)(3), 1.6(c)(2), 1.6(d)(3) or
1.6(e)(5) is a negative number, an amount equal to such Adjustment Amount shall
be paid by the Post-Closing Escrow Agent to the Surviving Partnership from the
applicable Reserve Fund pursuant to joint instructions from Partner
Representatives and the Surviving Partnership, provided that if the applicable
Reserve Fund is insufficient to cover such amount payable to the Surviving
Partnership, the Surviving Partnership shall be entitled to recover an amount
equal to the difference of such Adjustment Amount minus the amount of the
applicable Reserve Fund, in accordance with Section 10.1. If such Adjustment
Amount is a positive number, the Surviving Partnership shall pay an amount
equal to such Adjustment Amount to Partner Representatives. Any Benchmark
Allocable Portions of the applicable Reserve Fund remaining after the payments
contemplated by this Section shall be paid by the Post-Closing Escrow Agent to
Partner Representatives pursuant to joint instructions from Partner
Representatives and the Surviving Partnership (and distributed by Partner
Representatives in the manner that such funds would have been distributed had
such amounts been distributed by the Exchange Agent pursuant to Section
1.8(a)). The parties agree to deliver the joint instructions referenced in
this Section 1.13 promptly after determination of the applicable Adjustment
Amounts.
1.14. DISSENTING PARTNER FUNDS. On or prior to the Effective Time,
Mergeco shall deposit or cause to be deposited the Benchmark Allocable Portion
of the Dissenting Partner Reserves, which shall constitute a portion of the
Merger Consideration, and the Dissenting Partner Funds, which shall constitute
a portion of the Total Consideration in one or more accounts specified by
Partner Representatives. The Dissenting Partner Funds and, if necessary, the
Dissenting Partner Reserves, shall be used to cover any costs, expenses or
liabilities that may be incurred with respect to claims (if any) of holders of
Dissenting Partnership Interests (if any) that are made in accordance with
Maryland Law. Any Benchmark Allocable Portions of the applicable Dissenting
Partner Funds or Dissenting Partner Reserves remaining after resolution of any
such claims shall be distributed by Partner Representatives in the same manner
that such amounts would have been distributed had such amounts been distributed
by the Exchange Agent pursuant to Section 1.8(a).
1.15. OTHER BENCHMARK MERGERS. Immediately prior to the Closing of this
Agreement, Benchmark will, with the proceeds of the Parent Merger Loan,
contribute to the capital of Sub I, Sub IV, Sub VII and Sub VIII amounts
sufficient to consummate the Other Benchmark Mergers.
1.16. INSTRUCTIONS ON PAYMENTS. Prior to the Effective Time, Benchmark
shall deliver to Mergeco specific instructions with respect to the amount and
allocation of payments to be made by Mergeco under this Article I, and Mergeco
shall be entitled, without liability, to rely on such written instructions
without being required to determine the correctness of any fact stated therein.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1. REPRESENTATIONS AND WARRANTIES REGARDING BENCHMARK. Benchmark
represents and warrants to Mergeco and Parent as follows (with the understanding
that Mergeco and Parent are relying on such representations and warranties in
entering into and performing this Agreement), provided, however, that for
purposes of this Section 2.1, no representations or warranties (other than the
representations in Section 2.1(u)) are made with respect to the Statesville
Stations, the Jackson Stations, the Montgomery Stations, WSCQ-FM, Columbia,
South Carolina, WJMZ-FM, Anderson, South Carolina, KRMD-AM/FM, Shreveport,
Louisiana and any additional stations acquired prior to the Closing Date except
that, upon consummation of each such acquisition, the representations and
warranties in this Section 2.1 shall apply to the stations acquired and the
liabilities assumed to the extent of events, acts or omissions occurring or
conditions coming into existence on or after the closing of the applicable
acquisition.
(a) Organization, Good Standing, Etc. Each of Benchmark and
its subsidiaries is a partnership or other entity, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite partnership (or
other) power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each state in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the
failure to so qualify or be in good standing does not have and could
not reasonably be expected to have a Material Adverse Effect.
Benchmark has delivered to Mergeco true and complete copies of the
Certificates and Agreements of Limited Partnership (or equivalent
organizational documents) of Benchmark and each of its subsidiaries,
as in effect at the date of this Agreement. Neither Benchmark nor
any subsidiary is in violation of any provisions of its Certificate
and Agreement of Partnership or equivalent organizational documents
in a way that would result in a Material Adverse Effect.
(b) Subsidiaries of Benchmark. Schedule 2.1(b) sets forth a
true and complete list of all of Benchmark's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation
or organization of each subsidiary. Schedule 2.1 also sets forth
the type of equity interest in each subsidiary owned by Benchmark or
another subsidiary of Benchmark and indicates whether any Person
other than Benchmark or a subsidiary of Benchmark owns any equity
interests in any subsidiary of Benchmark. Except as disclosed on
Schedule 2.1(b), Benchmark does not own, directly or indirectly, any
subsidiaries, or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other
similar investment in any corporation, partnership, joint venture,
association, limited liability company, trust or other entity.
(c) Capital Structure. Except as set forth in Schedule
2.1(c), the Existing Partnership Agreement (or, if applicable, the
Existing Fund Partnership Agreements)
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and as contemplated by this Agreement, there are no options, warrants,
calls, rights, commitments or agreements of any character to which
Benchmark or any of its subsidiaries is a party or by which any of them is
bound obligating Benchmark or any of its subsidiaries to issue, deliver or
sell, or cause to be delivered or sold, additional partnership interests
or any equity interests of Benchmark or any of its subsidiaries, or
obligating Benchmark or any of its subsidiaries to grant, extend or enter
into any such option, warrant, call, right, commitment or agreement.
Except as set forth in the Existing Partnership Agreement (or, if
applicable, the Existing Fund Partnership Agreements), there are no
outstanding contractual obligations of Benchmark or any subsidiary to
repurchase, redeem or otherwise acquire any partnership interests of
Benchmark or any partnership interest of, or any equity interest in, any
subsidiary listed on Schedule 2.1(b). There are no bonds, debentures,
notes or other indebtedness issued or outstanding having the right to vote
("Voting Debt") on any matters on which partners or holders of equity
interests in Benchmark or its subsidiaries may vote. All the outstanding
Partnership Interests of Benchmark have been duly authorized and validly
issued, and all capital contributions required to be made with respect to
such Partnership Interests have been made in full. The Partnership
Interests have not been, and as to Partnership Interests in the future,
will not be, issued in violation of any preemptive or similar rights. The
partnership interests in the Surviving Partnership will, when issued, be
duly authorized, validly issued, and (with respect to limited partnership
interests) nonassessable and will not be issued in violation of any
preemptive or similar rights. There are no voting trusts, proxies or
other agreements or understandings to which Benchmark or any of its
subsidiaries is a party or by which Benchmark or any of its subsidiaries
is bound with respect to the voting of any partnership interests of
Benchmark or partnership interests of or equity interests in any of its
subsidiaries. All of the issued and outstanding partnership interests of
or equity interests in each subsidiary of Benchmark are duly authorized,
validly issued, and (with respect to limited partnership interests)
nonassessable, and have not been issued in violation of any preemptive or
similar rights. All capital contributions required to be made by the
partners or stockholders of each such subsidiary have been made in full.
Upon consummation of the Other Benchmark Mergers, Benchmark will own
(either directly or indirectly) 100% of the partnership interests of Fund
I, Fund IV, Fund VII and Fund VIII and 99.99999% of the partnership
interests in Fund IX, Fund X and Fund XI (the remaining partnership
interests in Fund IX, Fund X and Fund XI are held by Bruce R. Spector
whose interests are subject to assignment pursuant to Exhibit 4) free and
clear of all Liens (other than Liens arising under any of the Loan
Agreements and Permitted Liens as defined therein). Upon consummation of
the transactions contemplated by the Transaction Documents, Parent will
own, directly or indirectly, 100% of all of the equity interests in
Benchmark, each of the Funds and each of their respective subsidiaries.
(d) Authority. Benchmark, the Selling Stockholders and each of
the New Funds have, and upon receipt of the requisite consent of the
Fund Limited Partners, each of Fund I, Fund IV, Fund VII, and Fund
VIII shall have, all requisite partnership
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<PAGE> 23
power and authority to enter into this Agreement and any other agreement
executed by the Selling Stockholders, Benchmark or such Funds in
connection with the transactions contemplated by this Agreement including
the Other Benchmark Transactions (collectively, the "Transaction
Documents") and to consummate the transactions contemplated hereby or
thereby. The execution and delivery of the Transaction Documents by
Benchmark, and, if applicable, the Selling Stockholders, Fund IX, Fund X
and Fund XI (and, upon receipt of the requisite consent of the Fund
Limited Partners, by each of Fund I, Fund IV, Fund VII and Fund VIII) and
the consummation by them (or by such Fund) of the transactions
contemplated hereby or thereby have been duly authorized by all necessary
partnership (or other) action on the part of Benchmark (or such Persons).
The Transaction Documents have been duly executed and delivered and
constitute the valid and binding obligations of Benchmark, the Selling
Stockholders and the New Funds and, upon receipt of the requisite consent
of the Fund Limited Partners, will constitute the valid and binding
obligations of each of Fund I, Fund IV, Fund VII and VIII, enforceable
against each such Person in accordance with their terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and
fair dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by Benchmark and its
subsidiaries and, where applicable, the Selling Stockholders, do
not, and the performance by Benchmark and its subsidiaries and,
where applicable, the Selling Stockholders of the transactions
contemplated hereby or thereby will not, subject to (i) with respect
to the Other Benchmark Mergers, the approval of the Other Benchmark
Merger Agreements and the transactions contemplated thereby by the
Fund Limited Partners, (ii) obtaining the consents, approvals,
authorizations and permits and making the filings described in this
Section 2.1(e), and (iii) obtaining any consents required by the
terms of any existing agreements of Benchmark or its subsidiaries
with third parties that are not listed in Schedule 2.1(o) (A)
violate, conflict with or result in any breach of any provision of
the certificates and agreements of limited partnership or equivalent
organizational documents, in each case as amended or restated, of
Benchmark or any of its subsidiaries (or, where applicable, the
Selling Stockholders), (B) violate, conflict with or result in a
violation or breach of, or constitute a default (with or without due
notice or lapse of time or both) under, or permit the termination or
cancellation of or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of Benchmark or
otherwise) any obligation, or result in the loss of any benefit or give
any person the right to require any security to be repurchased, or give
rise to the creation of any lien, charge, security interest or encumbrance
upon any of the properties or assets of Benchmark or any of its
subsidiaries (or, where applicable, the Selling Stockholders) under, any
of the terms, conditions or provisions of any contract, loan or credit
agreement, note, bond,
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<PAGE> 24
mortgage, indenture or deed of trust or any license, lease,
agreement or other instrument, permit, concession, franchise,
license or obligation to which any of them is a party or by which
they or any of their properties or assets may be bound or subjected,
or (C) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation of any federal, state or local court,
administrative agency or commission or other governmental authority
or instrumentality (a "Governmental Entity") applicable to Benchmark
or any of its subsidiaries (or, where applicable, the Selling
Stockholders) or by which or to which any of their respective
properties or assets is bound or subject. No consent, approval,
order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to
Benchmark or any of its subsidiaries (or, where applicable, the
Selling Stockholders) in connection with the execution and delivery
of the Transaction Documents by Benchmark or its subsidiaries (or,
where applicable, the Selling Stockholders) or the consummation of
the transactions contemplated hereby or thereby, except for (1) the
filing of a premerger notification report under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), (2) the consents of the Federal Communications
Commission (the "FCC") to the transfers of control of the Station
Licenses (as defined in Section 2.1(g)(ii) below) as contemplated by
Section 6.1 hereof, (3) the filing of the Certificate of Merger with
the State Department of Assessments and Taxation of Maryland and the
Secretary of State of the State of Delaware, and (4) applicable
requirements, if any, of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, and state
securities or blue sky laws.
(f) Financial Statements; Absence of Certain Changes or
Events.
(i) Benchmark has delivered to Mergeco, if applicable,
copies of audited (if available) or unaudited financial
statements for 1994, 1995 and the nine months ended September
30, 1996 of Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII, accompanied (to the extent audited) by the reports
thereon of Arthur Andersen LLP, independent public accountants
(such audited or unaudited financial statements collectively
being referred to as the "Financial Statements"). The
Financial Statements, including, if applicable, the notes
thereto, were prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby
(except to the extent disclosed therein or required by changes
in GAAP) and, subject to adjustments that would be made after
audit (in the case of any unaudited financial statements),
present fairly in all material respects the financial position
of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and
their subsidiaries as of such dates and for the periods then
ended.
(ii) Except as disclosed in Schedule 2.1(f), as of the
date of this Agreement, there is no liability or obligation of
any kind, whether, accrued, absolute, fixed, contingent or
otherwise, of Benchmark or its subsidiaries which has or could
reasonably be expected to have a Material Adverse Effect
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<PAGE> 25
and that is not reflected or reserved against in the balance
sheets of Benchmark, Fund I, Fund IV, Fund VII or Fund VIII
(the "Balance Sheets") for the period ended September 30, 1996
(the "Balance Sheet Date"), other than (A) liabilities
incurred in the ordinary course of business in a manner
consistent with past practices, or (B) any such liability or
obligation which would not be required to be presented in
financial statements or the notes thereto prepared in
conformity with GAAP applied, in a manner consistent with past
practice, in the preparation of the Financial Statements.
(iii) Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date, Benchmark and its subsidiaries have
conducted their respective businesses only in the ordinary
course consistent with past practice and nothing has occurred
that would have been prevented by Section 3.1 if the terms of
such section had been in effect as of and after the Balance
Sheet Date. Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date and through (and including) the date of
this Agreement there has not occurred any event that has
resulted in or would reasonably be expected to result in
Material Adverse Effect.
(g) Compliance with Applicable Laws; FCC Matters; Station
Licenses.
(i) Except as permitted or contemplated hereby, the
businesses of Benchmark and its subsidiaries have been
conducted in compliance with each applicable law, ordinance,
regulation, judgment, decree, injunction, rule or order of the
FCC or any other Governmental Entity binding on Benchmark or
any of its subsidiaries or their respective properties or
assets, except for such instances of noncompliance that do not
and would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.1(g), no
investigation or review by any Governmental Entity with
respect to Benchmark or any of its subsidiaries is pending or,
to Benchmark's knowledge, threatened, except for such
investigations or reviews as do not and would not reasonably
be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, Benchmark and its
subsidiaries have complied with the Communications Act of
1934, as amended (the "Communications Act"), all rules,
regulations and written policies of the FCC thereunder, all
material obligations with respect to equal opportunity under
applicable law, and all rules and regulations of the Federal
Aviation Administration applicable to the towers used by the
Stations, except, in each case, where the failure to so comply
does not and would not reasonably be expected to result in a
Material Adverse Effect. In addition, Benchmark and its
subsidiaries have duly and timely filed, or caused to be so
filed, with the FCC all material reports, statements,
documents, registrations, filings or submissions with respect
to the operation of the Stations and the ownership thereof,
including, without limitation, applications for renewal of
authority required by applicable law to be filed (except where
the failure to make such
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<PAGE> 26
filings on a timely basis does not have and would not reasonably be
expected to have a Material Adverse Effect). All such FCC filings
complied with all material applicable laws when made and no material
deficiencies have been asserted with respect to any such filings.
The material required by 47 C.F.R. Section 73.3526 to be kept in the
public inspection files of the Stations is materially complete.
(ii) Schedule 2.1(g) lists (A) all licenses, permits and
other authorizations, including the expiration dates thereof,
issued to Benchmark or any of its subsidiaries by the FCC
relating to the Stations and held by them as of the date of
this Agreement and (B) all licenses, permits or authorizations
issued to Benchmark or any of its subsidiaries by any other
Governmental Entities which are material to the operations of
the Stations and held by them as of the date of this
Agreement, the loss of which have or would reasonably be
expected to have a Material Adverse Effect. Such licenses,
permits and authorizations, and all pending applications for
modification, extension or renewal thereof or for new
licenses, permits, permissions or authorizations, are,
together with additional licenses, permits or authorizations
of any additional stations acquired after the date hereof,
collectively referred to herein as the "Station Licenses."
Schedule 2.1(g) lists the legally authorized holder(s) of the
Station Licenses, each of which is in full force and effect.
The Stations have been operated in all material respects in
accordance with the terms of the Station Licenses. There are
no material proceedings pending or, to Benchmark's knowledge,
threatened with respect to Benchmark's or any of its
subsidiaries' ownership or operation of the Stations which
reasonably may be expected to result in the revocation,
material adverse modification, non-renewal or suspension of
any of the Station Licenses, the issuance against Benchmark or
any of its subsidiaries of any cease and desist order, or the
imposition of any administrative actions by the FCC or any
other Governmental Entity with respect to the Station
Licenses, or which reasonably may be expected to adversely
affect the Stations' ability to operate as currently operated
or the Surviving Partnership's ability to obtain control of
the Station Licenses. Except as set forth on Schedule 2.1(g),
to Benchmark's knowledge, no other broadcast station or radio
communications facility is causing interference to the
Stations' transmissions beyond that which is allowed by FCC
rules and regulations. Benchmark has no reason to believe
that the FCC will not renew the Station Licenses issued by the
FCC in the ordinary course of business. Benchmark knows of no
facts relating to Benchmark or its subsidiaries under the
Communications Act or the rules, regulations or written
policies of the FCC in effect on the date of this Agreement
that reasonably may be expected to disqualify Benchmark or its
subsidiaries from transferring control of the Station Licenses
pursuant to the terms of this Agreement or that would prevent
the consummation by them of the transactions contemplated by
this Agreement, provided that Benchmark makes no
representation in this Section 2.1(g) with respect to any
facts or
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circumstances attributable to Mergeco or its affiliates which could
prevent the consummation of the transactions contemplated by this
Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or, to
the knowledge of Benchmark, threatened against Benchmark or any of
its subsidiaries (including, for this purpose any action, suit,
inquiry, judicial or administrative proceeding against Benchmark,
its subsidiaries or the General Partners or its affiliates relating
to the transactions contemplated by this Agreement) or any of their
respective properties or assets by or before any arbitrator or
Governmental Entity, nor to Benchmark's knowledge are there any
investigations relating to Benchmark or any of its subsidiaries or
any of their respective properties or assets pending or threatened
by or before any arbitrator or Governmental Entity. Except as set
forth in Schedule 2.1(h), there is no judgment, decree, injunction,
order, determination, award, finding, or letter of deficiency of any
Governmental Entity or arbitrator outstanding against Benchmark or
any of its subsidiaries or any of their respective properties or
assets which have or would reasonably be expected to have a Material
Adverse Effect.
(i) Insurance. Schedule 2.1(i) sets forth a summary of all
fire, general liability, malpractice liability, theft and other
forms of insurance and all fidelity bonds held by or applicable to
Benchmark or any of its subsidiaries. No event has occurred,
including, without limitation, the failure by Benchmark or any of
its subsidiaries to give any notice or information or the delivery
of any inaccurate or erroneous notice or information, which limits
or impairs the rights of Benchmark or any of its subsidiaries under
any such insurance policies in such a manner that has or would
reasonably be expected to have a Material Adverse Effect. Excluding
insurance policies that have expired and been replaced in the
ordinary course of business, no insurance policy has been canceled
within the last two years prior to the date hereof.
(j) Real Estate. Each of Benchmark and its subsidiaries has
good and marketable title in fee simple to all real properties owned
by it (including owned facilities and improvements thereon, the
"Owned Real Property") and valid leaseholds in each parcel of real
property leased by it (including facilities and improvements thereon
which are leased, the "Leased Real Property"), except to the extent
marketability may be affected by the existence of Permitted Liens
(as defined in Section 2.1(1)). Each lease is valid without default
thereunder by the lessee or, as of the date hereof and to
Benchmark's knowledge, the lessor. Schedule 2.1(j) lists as of the
date hereof (i) the street address and use of each parcel of Owned
Real Property and (ii) the street address and use of each parcel of
Leased Real Property pursuant to which Benchmark or a subsidiary of
Benchmark is a lessee.
(k) Personal Property. Except for property held under capital
leases and the liens of Benchmark's secured creditors (which shall
be paid at Closing or, if both Benchmark and Mergeco elect,
reflected on the Closing Balance Sheet) and Permitted
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<PAGE> 28
Liens, Benchmark or its subsidiaries have good title to all the items of
machinery, equipment, furniture, fixtures, inventory, receivables and other
tangible or intangible personal property reflected on the Balance Sheet and
all such property acquired since the Balance Sheet Date, except for any
such property or assets sold or otherwise disposed of in the ordinary
course of business and consistent with past practices since such date or
where the failure to have good title does not and would not reasonably be
expected to have a Material Adverse Effect. The tangible personal property
and fixtures owned or used by Benchmark or any of its subsidiaries that are
necessary for the operation of the Stations, including all broadcasting
equipment and broadcast towers, are in good operating condition and repair
(subject to normal wear and tear) and permit the conduct of the business of
the Stations in compliance with all material FCC rules and regulations.
Benchmark or any of its subsidiaries owns or holds under valid leases all
of the tangible personal property and fixtures necessary to conduct the
business of the Stations as presently conducted except where the failure to
own or hold under valid lease any tangible property or fixtures does not
and would not reasonably be expected to have a Material Adverse Effect.
(l) Liens and Encumbrances. All properties and assets,
including leases, owned by Benchmark and its subsidiaries are free
and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies and other possessory interests,
conditional sale or other title retention agreements, assessments,
easements, rights of way, covenants, restrictions, rights of first
refusal, defects in title, encroachments and other burdens, options
or encumbrances of any kind (collectively, "Liens"), except (i)
statutory Liens securing payments not yet delinquent or the validity
of which are being contested in good faith by appropriate actions,
(ii) purchase money Liens arising in the ordinary course, (iii)
Liens for taxes not yet delinquent, (iv) Liens reflected in the
Balance Sheet (which have not been discharged) and will not, if
Benchmark and Mergeco elect, be discharged prior to Closing), (v)
Liens which in the aggregate do not materially detract from the
value for use for broadcasting purposes or materially impair the
present and continued use of the properties or assets subject
thereto in the usual and normal conduct of the business of the
Stations, (vi) Liens on leases arising from the provisions of such
leases, (vii) any liens set forth on title reports for certain
parcels of Owned Real Property which Benchmark obtained in
connection with its acquisition of such parcels of Owned Real
Property prior to the date hereof (copies of which reports have been
delivered to Mergeco), (viii) any leases of Owned Real Property and
Leased Real Property listed on Schedule 2.1(j) and (ix) any other
Liens set forth on Schedule 2.1(1) (the Liens referred to in clauses
(i) through (ix) being "Permitted Liens").
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<PAGE> 29
(m) Environmental Matters. Except as set forth on Schedule
2.1(m) and except to the extent any inaccuracy in the
representations and warranties set forth in this Section 2.1(m) does
not and would not reasonably be expected to result in a Material
Adverse Effect:
(i) The Owned Real Property and, to Benchmark's
knowledge, the Leased Real Property and the operations of
Benchmark or its subsidiaries thereon comply in all material
respects with all applicable federal, state and local laws,
statutes, codes, rules, regulations, ordinances, orders,
determinations or rules of common law pertaining to the
environment, natural resources and public or employee health
and safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Clean Air Act, as amended, the Federal Water
Pollution Control Act, as amended, The Oil Pollution Act of 1990, as
amended, the Safe Drinking Water Act, as amended, the Hazardous
Materials Transportation Act as amended, the Toxic Substances Control
Act, as amended, and other environmental conservation or protection
laws ("Environmental Laws");
(ii) No judicial proceedings are pending or, to
Benchmark's knowledge, threatened against Benchmark or its
subsidiaries alleging the violation of any Environmental Laws,
and there are no administrative proceedings pending or, to
Benchmark's knowledge, threatened against Benchmark or its
subsidiaries, alleging the violation of any Environmental Laws
and no notice (in the case of clause (ii)(B), directed to
Benchmark or any of its subsidiaries) from any Governmental
Entity or any person has been received by Benchmark or its
subsidiaries (A) claiming any violation of any Environmental
Laws in connection with any Owned Real Property or Leased Real
Property that has not been complied with or otherwise resolved
or (B) requiring any remediation, clean-up, modification,
repairs, work, construction, alterations or installations on
or in connection with any Owned Real Property or Leased Real
Property that are necessary to comply with any Environmental
Laws;
(iii) All material permits, registrations, licenses,
authorizations, and the like ("Permits") required to be
obtained or filed by each of Benchmark and its subsidiaries
under any Environmental Laws in connection with Benchmark's
and its subsidiaries' operations, including, without
limitation, those activities relating to the generation, use,
storage, treatment, disposal, release or remediation of
Hazardous Substances (as such term is defined in Section
2.1(m)(iv) hereof), have been duly obtained or filed, and each
of Benchmark and its subsidiaries are and have at all times
been in compliance in all material respects with the terms and
conditions of all such Permits;
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(iv) All Hazardous Substances used or generated by
Benchmark or its subsidiaries or, to Benchmark's knowledge, any of
their predecessors, on, in, or under any of the Owned Real Property
or the Leased Real Property are and have at all times been generated,
stored, used, treated, disposed of, and released by such persons or
on their behalf in such manner as not to result, or be reasonably be
expected to result in any material Environmental Costs or Liabilities
(as defined below). "Hazardous Substances" means (A) any hazardous
materials, hazardous wastes, hazardous substances, toxic wastes, and
toxic substances as those or similar terms are defined under any
Environmental Laws; (B) any friable asbestos or any material which
contains any hydrated mineral silicate, including chrysolite,
amosite, crocidolite, tremolite, anthophylite and/or actinolite; (C)
PCB, or PCB-containing materials, or fluids; (D) radon; (E) any
other hazardous, radioactive, toxic or noxious substance, material,
pollutant, contaminant, constituent, or solid, liquid or gaseous
waste regulated under any Environmental Laws; (F) any petroleum,
petroleum hydrocarbons, petroleum products, crude oil and any
fractions or derivatives thereof, any oil or gas exploration or
production waste, and any natural gas, synthetic gas and any mixtures
thereof; (G) any substance that whether by its nature or its use, is
subject to regulation under any Environmental Laws or with respect to
which any Environmental Laws or Governmental Entity requires
environmental investigation, monitoring or remediation; and (H) any
underground storage tanks, dikes, or impoundments as defined under
any Environmental Laws. "Environmental Costs or Liabilities" means
any losses, liabilities, obligations, damages, fines, penalties,
judgments, settlements, actions, claims, costs and expenses
(including, without limitation, reasonable fees, disbursements and
expenses of legal counsel, experts, engineers and consultants, and
the costs of investigation or feasibility studies and performance of
remedial or removal actions and cleanup activities) arising in
connection with (a) any Environmental Laws, (b) any order of or
contract of Benchmark or its subsidiaries with, any Governmental
Entity or any private or public Persons or (c) any exposure of any
Person or property to Hazardous Substances;
(v) There are not now, nor have there been in the past,
on, in or under any Owned Real Property or Leased Real
Property when owned, leased or operated by Benchmark or its
subsidiaries or, to Benchmark's knowledge, when owned, leased
or operated by any of their predecessors, any Hazardous
Substances that are in a condition or location that violates
any Environmental Law in any material respect or that
reasonably could be expected to (a) require remediation under
any Environmental Law or (b) give rise to a claim for damages
or compensation by any affected Person or to any Environmental
Costs or Liabilities; provided that the representation and
warranty of Benchmark in this Section 2.1(m)(v) with respect
to matters or conditions caused by any Person other than
Benchmark on the Leased Real Property is limited to
Benchmark's knowledge.
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(vi) Benchmark and its subsidiaries have not received,
and to the knowledge of Benchmark do not expect to receive,
any notification from any source advising Benchmark or such
subsidiaries that: (A) it is a potentially responsible party
under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated,
or leased, by it is identified or proposed for listing as a
federal National Priorities List ("NPL") (or state-equivalent)
site or a Comprehensive Environmental Response, Compensation
and Liability Information System ("CERCLIS") list (or
state-equivalent) site; and (C) any facility to which it has ever
transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or
state-equivalent) site or CERCLIS (or state-equivalent) site; and
(vii) The Stations' operations do not have a significant
environmental impact as defined by 47 C.F.R. Section 1.1307.
(n) Taxes. Each of Benchmark and its subsidiaries has filed
all tax returns, reports, statements and other documents ("Tax
Returns") required to be filed (except where the failure to file any
such Tax Returns has not and would not reasonably be expected to
result in a Material Adverse Effect), and all such Tax Returns which
have been filed are accurate and complete in all material respects.
Each of Benchmark and its subsidiaries has paid (or there has been
paid on its behalf), or has set up an adequate reserve for the
payment of, all material taxes required to be paid, withheld, or
deducted, or for which any of Benchmark or its subsidiaries are
liable, in respect of the periods covered by such Tax Returns, and
with respect to each tax, from the end of the period covered by the
most recently filed Tax Return to the date hereof, and the Balance
Sheet reflects an adequate reserve for all taxes payable, or
required to be withheld and remitted, by Benchmark or any of its
subsidiaries, or for which Benchmark or any of its subsidiaries are
liable, accrued through the Balance Sheet Date. No material
deficiencies for any taxes have been proposed, asserted or assessed
by taxing authorities with respect to Benchmark or any of its
subsidiaries and are pending, and no requests for waivers of the
time to assess any such taxes are pending. Except as set forth on
Schedule 2.1(n), for each taxable year or period not closed by the
applicable statute of limitations, (i) Benchmark and each subsidiary
are properly classified as partnerships (and not as associations
taxable as corporations) for tax purposes and (ii) Benchmark and its
subsidiaries have withheld all required amounts pursuant to Section
1446 of the Code. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local, foreign and other
income, gross receipts, use, ad valorem, transfer, franchise,
profits, license, payroll, occupation, severance, property, sales,
excise, withholding, unemployment compensation, social security, and
other taxes and charges of any nature whatsoever (including
interest, penalties and additions to tax relating to any of the
specified items).
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(o) Certain Agreements. Except as set forth in Schedule 2.1(o)
and for oral or written agreements, plans or arrangements terminable
without liability or penalty to Benchmark or its subsidiaries upon thirty
days notice, the benefits of which do not exceed $50,000 per year, neither
Benchmark nor any of its subsidiaries is a party to any oral or written
agreement, plan or arrangement with any employee or other station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of Benchmark or its subsidiaries (i) the benefits of which are
contingent, or the terms of which are materially altered, upon, or result
from, the occurrence of a transaction involving Benchmark or its
subsidiaries of the nature of any of the transactions contemplated by this
Agreement, (ii) providing severance benefits longer than forty-five days or
other benefits after the termination of employment or other contractual
relationship regardless of the reason for such termination and regardless
of whether such termination is before or after a change of control, (iii)
under which any person may receive payments subject to the tax imposed by
Section 4999 of the Code or (iv) any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of
any of the transactions contemplated by this Agreement. Schedule 2.1(o)
hereto lists (and, in the case of clause (iv), describes) each oral or
written (i) agreement, contract, indenture or other instrument relating to
the borrowing of money or the guarantee of any obligation for the borrowing
of money, (ii) Employee Benefit Plan, as defined in Section 2.1(p), (iii)
employment or consulting contract which is not terminable without liability
or penalty to Benchmark or any of its subsidiaries on thirty (30) days or
less notice, (iv) covenant, agreement, or arrangement under which
Benchmark's or any of its subsidiary's ability or right to compete with
another Person is restricted or impaired, or (v) contract, agreement or
commitment (except for advertising, trade or barter agreements) under which
any party thereto remains obligated to provide goods or services having a
value, or to make payments aggregating, in excess of $50,000 per year, in
any such case to which Benchmark or any of its subsidiaries is a party or
bound. Each such agreement, contract or obligation described in Schedule
2.1(o) or required to be so described is a valid and binding obligation of
Benchmark or one of its subsidiaries, as the case may be, and is in full
force and effect without amendment, except where not being a valid and
binding obligation or in full force and effect without amendment does not
and would not reasonably be expected to have a Material Adverse Effect.
Benchmark or one of its subsidiaries, as the case may be, has performed the
obligations required to be performed by it under the agreements so
described and is not (with or without lapse of time or the giving of
notice, or both) in breach or default thereunder, except to the extent such
nonperformance, breach or default does not and would not reasonably be
expected to result in a Material Adverse Effect. As of the date hereof,
each of Benchmark and its subsidiaries, and to their knowledge each other
party to such contracts, has performed the obligations required to be
performed by it under the agreements so described and is not (with or
without lapse of time or the giving of notice or both) in breach or default
thereunder, except to the extent such nonperformance, breach or default
does not and would not reasonably be expected to
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<PAGE> 33
result in a Material Adverse Effect. Schedule 2.1(o) identifies, as to each
agreement, contract or obligation listed thereon, whether the consent of
the other party thereto is required in order for such agreement, contract
or obligation to continue in full force and effect upon the consummation of
the transactions contemplated hereby or whether such agreement, contract or
obligation can be canceled by the other party without liability to such
other party due to the consummation of the transactions contemplated
hereby. A copy of each agreement, contract, obligation, plan or
arrangement set forth in Schedule 2.1(o) has been made available to
Mergeco. As of the Closing Date, neither Benchmark nor any of its
subsidiaries shall have any indebtedness for borrowed money that is not
pre-payable (whether with or without penalty).
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested and
unvested) under each "employee pension benefit plan" as such
term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), which
Benchmark or any other trades or businesses under common
control within the meaning of Section 4001(b)(1) of ERISA with
Benchmark or any Fund (collectively, the "ERISA Group")
maintains, or to which Benchmark or any member of the ERISA
Group is obligated to contribute (the "Pension Plan"), did
not, as of the respective last annual valuation dates for such
Pension Plans, exceed the value of the assets of such Pension
Plan allocable to such benefits. None of the Pension Plans
subject to Section 302 of ERISA has incurred any "accumulated
funding deficiency," as such term is defined in Section 302 of
ERISA (whether or not waived), since the effective date of
such Section 302. Neither Benchmark or any member of the
ERISA Group, nor any employee or partner of Benchmark or any
member of the ERISA Group or any of the employee benefit plans
of Benchmark or any member of the ERISA Group which are
subject to ERISA, including the Pension Plans, or any trusts
created thereunder, or any trustee or administrator thereof,
has engaged in a "prohibited transaction" as such term is
described in Section 4975 of the Code, which has subjected or
which could subject Benchmark or any member of the ERISA
Group, any partner or employee of Benchmark or any member of
the ERISA Group or any of such plans or any trust to any
material tax or penalty on prohibited transactions imposed by
such Section 4975. None of such Pension Plans subject to
Title IV of ERISA or any of their related trusts has been
terminated or partially terminated, nor has there been any
unreported "reportable event," as that term is defined in
Section 4043 of ERISA, with respect thereto since the
effective date of such Section 4043 (excluding those events as
to which the thirty day notice period is waived pursuant to
the regulations issued thereunder). Neither Benchmark nor any
member of the ERISA Group has contributed or been obligated to
contribute to any "multiemployer plan" as such term is defined
in Section 3(37) or Section 4001(a)(3) of ERISA . Except as
set forth on Schedule 2.1(p)
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<PAGE> 34
or the other Schedules to this Agreement, there are no "employee
benefit plans" within the meaning of Section 3(3) of ERISA or any
bonus (excluding bonuses granted on an individual basis in the
ordinary course of business), pension, profit sharing, deferred
compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation,
severance, disability, death benefit, hospitalization, insurance or
other plan or arrangement or understanding providing benefits to any
present or former employee or contractor of Benchmark or any member
of the ERISA Group maintained by Benchmark or any member of the ERISA
Group or as to which Benchmark or any member of the ERISA Group has
any material liability or obligation (collectively, "the Employee
Benefit Plans").
(ii) True, correct and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable,
have been furnished or made available to Mergeco, along with
the most recent report filed on Form 5500 and summary plan
description with respect to each Employee Benefit Plan
required to file Form 5500. All reports and disclosures
relating to the Employee Benefit Plans required to be filed
with or furnished to governmental agencies or plan
participants or beneficiaries have been furnished in
accordance with applicable law in a timely manner except where
such failure has not resulted and would not reasonably be
expected to result in a Material Adverse Effect. Each
Employee Benefit Plan has been maintained in compliance in all
material respects with ERISA and the Code, and each Employee
Benefit Plan intended to be qualified under Section 401 of the
Code has received or is awaiting receipt of a favorable
determination letter from the Internal Revenue Service
regarding the qualified status and has not since receipt of
the most recent favorable determination letter been amended
or, to the knowledge of Benchmark and the members of the ERISA
Group, operated in a manner which would adversely affect such
status. There are no actions, suits or claims pending (other
than routine claims for benefits) or, to the knowledge of
Benchmark and the members of the ERISA Group, threatened
against, or with respect to any of the Employee Benefit Plans.
All contributions required to be made to the Employee Benefit
Plans pursuant to their terms have been timely made. Except
as disclosed on Schedule 2.1(p), there is no matter pending
with respect to any of the Employee Benefit Plans before the
Internal Revenue Service, Department of Labor or the Pension
Benefit Guaranty Corporation. Except as required by
applicable law, none of the Employee Benefit Plans provides
medical insurance coverage following retirement. Each
Employee Benefit Plan which is an "employee welfare benefit
plan," as defined in Section 3(l) of ERISA, may be
unilaterally amended or terminated in its entirety without
liability except as to benefits accrued prior to such
amendment or termination.
(iii) Schedule 2.1(p) lists each collective bargaining
agreement to which Benchmark or any of its subsidiaries is a
party. Except for those unions
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<PAGE> 35
which are parties to one or more of the listed collective bargaining
agreements or as otherwise listed on Schedule 2.1(p), neither
Benchmark nor any of its subsidiaries has agreed to recognize any
union or other collective bargaining representative, nor has any
union or other collective bargaining representative been certified
as the exclusive bargaining representative of any of their
employees. Except as set forth on the Schedules to this Agreement,
each of Benchmark and its subsidiaries (A) is, and has been since
June 30, 1993 or the date of its formation, whichever is later, in
substantial compliance with all applicable laws regarding labor,
employment and employment practices, terms and conditions of
employment, affirmative action, wages and hours, plant closing and
mass layoff, occupational safety and health, immunization, and
workers' compensation, (B) is not engaged, nor has it since June 30,
1993 or the date of its formation, whichever is later, engaged, in
any unfair labor practices, and has no, and has not had since June
30, 1993 or the date of its formation, whichever is later, any,
unfair labor practice charges or complaints before the National
Labor Relations Board pending or, to Benchmark's knowledge,
threatened against it, (C) has no, and has not had since June 30,
1993 or the date of its formation, whichever is later, any,
grievances, arbitrations or other proceedings arising or asserted to
arise under any collective bargaining agreement, pending or, to
Benchmark's knowledge, threatened against it and (D) has no, and has
not had since June 30, 1993 or the date of its formation, whichever
is later, any, charges, complaints or proceedings before the Equal
Employment Opportunity Commission, Department of Labor or any other
federal, state or local agency responsible for regulating employment
practices, pending, or, to Benchmark's knowledge, threatened against
it, except, in each case (with respect to clauses (A) through (D)
above) for any violations, practices, complaints, proceedings or
charges that have not resulted and would not reasonably be expected
to result in a Material Adverse Effect. There is no labor strike,
slowdown, work stoppage or lockout pending or, to Benchmark's
knowledge, threatened against or affecting Benchmark or its
subsidiaries, and Benchmark or its subsidiaries has not experienced
any labor strike, slowdown, work stoppage or lockout since June 30,
1993 or the date of its formation, whichever is later. Except as set
forth on Schedule 2.1(p), to Benchmark's knowledge, no union
organizational campaign or representation petition is currently
pending with respect to the employees of Benchmark or its
subsidiaries.
(q) Patents, Trademarks, Etc. There is no material patent,
patent application, trademark, trade name, trade name and trademark
registration, service mark, copyright, and copyright registration
(collectively, "Intellectual Rights") owned by or registered in the
name of Benchmark of any of its subsidiaries, or in which Benchmark
or any of its subsidiaries has any right, license or interest other
than the call signs of each of the Stations and the registered
service mark "Country Heartlines." Benchmark or its subsidiaries
own or have the right to use all such call signs and such service
mark. To the knowledge of Benchmark, neither Benchmark
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<PAGE> 36
nor any of its subsidiaries is infringing any such Intellectual Rights, and
Benchmark is not aware of any infringement by others of any such rights
owned by Benchmark or any of its subsidiaries.
(r) Affiliate Relationships. Except as set forth in the
Existing Partnership Agreement and the Existing Fund Partnership
Agreements, Schedule 2.1(r) sets forth a complete list and summary
description of all contracts or other arrangements involving
Benchmark or any of its subsidiaries in which the General Partner or
any of its affiliates has a financial interest, including
indebtedness to Benchmark or its subsidiaries.
(s) Vote Required. The only votes of the holders of any Partnership
Interests of Benchmark that are necessary to approve the Merger and
adopt this Agreement are the affirmative votes of the General
Partners. The only votes of the holders of any partnership interests
in Fund I, Fund IV, Fund VII and Fund VIII that are necessary to
approve the applicable Other Benchmark Mergers and adopt the
applicable Other Benchmark Merger Agreements are the affirmative votes
of Benchmark and the Fund Limited Partners holding more than fifty
percent (50%) of the applicable aggregate Limited Partner Percentage.
(t) Fairness Opinion. The General Partners have received the
fairness opinion (the "Alex Brown Fairness Opinion") of Alex. Brown
& Sons Incorporated ("Alex. Brown") dated the date hereof, a copy of
which has been provided to Mergeco.
(u) Pending Acquisitions. There has occurred no failure to
comply with, or breach of, any representation or warranty, covenant,
obligation or undertaking made by Benchmark or its affiliates under
the Statesville Agreement, the Jackson Agreement, or the Montgomery
Agreements, and to Benchmark's knowledge, except as set forth in
Schedule 2.1(u), there has occurred no failure to comply with, or
breach of, any representation or warranty, covenant, obligation or
undertaking made by any other party thereto which has or would
reasonably be expected to result in a Material Adverse Effect
(unless Mergeco or its affiliates have been informed of such breach
and have consented to the consummation of the applicable
acquisition).
2.2. REPRESENTATIONS AND WARRANTIES OF MERGECO. Mergeco represents and
warrants to Benchmark as follows (with the understanding that Benchmark is
relying on such representations and warranties in entering into and performing
this Agreement):
(a) Organization Standing and Power. Each of Mergeco and
Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now being conducted.
(b) Authority. Each of Mergeco and Parent has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions
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<PAGE> 37
contemplated hereby. The execution and delivery of this Agreement by
Mergeco and Parent and the consummation by them of the transactions
contemplated hereby have been duly authorized by all necessary
corporate action on the part of Mergeco (including the approval and
adoption of this Agreement and the transactions contemplated hereby by
the Parent) and Parent. This Agreement has been duly executed and
delivered and constitutes the valid and binding obligation of Mergeco
and Parent, enforceable against each of them in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby and compliance
with the provisions hereof will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any material obligation or to a loss of a material
benefit under, any provision of the Articles of Incorporation or
Bylaws of Mergeco or any loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, decree, statute law,
ordinance, rule or regulation applicable to Mergeco or its properties
or assets, except for any such conflicts, violations or defaults or
terminations, cancellations, or accelerations which individually or in
the aggregate do not have a material adverse effect on Mergeco's or
Parent's ability to consummate its obligations hereunder. No consent,
approval, order or authorization of, or registration, declaration or
filing with, any Governmental Entity is required by or with respect to
Mergeco or Parent in connection with the execution and delivery of
this Agreement by Mergeco or Parent or the consummation by it of the
transactions contemplated hereby, except for (i) the filing of a
premerger notification report under the HSR Act, (ii) the filing of
the Certificate of Merger with the Maryland State Department of
Assessments and Taxation and the Secretary of State of the State of
Delaware, (iii) the filing with the FCC and the grant of the consent
of the FCC to the transfer of control of the Station Licenses pursuant
to the terms of this Agreement (as contemplated by Section 6.1), and
(iv) applicable requirements, if any, of the Securities Act and the
Exchange Act and the rules and regulations thereunder and state
securities or blue sky laws. Mergeco and Parent are acquiring the
partnership interests of the Surviving Partnership for investment
purposes and without a view to the distribution thereof in violation
of the Securities Act.
(c) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to
the knowledge of Mergeco, threatened against it relating to the
transactions contemplated by this Agreement.
(d) FCC Matters. Mergeco and Parent are legally and otherwise
qualified under the Communications Act, and the rules, regulations
and policies of the FCC, to
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<PAGE> 38
become the licensee or transferee, as applicable, of the Stations
(including the Jackson Stations, the Montgomery Stations and the
Statesville Stations) and consummate this Agreement and the
transactions contemplated hereby. There are no proceedings,
complaints, notices of forfeiture, claims, investigations pending or,
to the knowledge of Mergeco, threatened against any or in respect of
any of the broadcast stations licensed to Mergeco or its affiliates
that would materially impair the qualifications of Mergeco to take
control of the Stations (including the Jackson Stations, the
Montgomery Stations and the Statesville Stations). Neither Mergeco,
nor any Person in which Mergeco has an interest or which has an
interest in Mergeco, has an interest in any media property that will
prevent or impair Mergeco from obtaining the FCC's consent to all the
transactions contemplated hereby without the need for a waiver of the
FCC's rules as they apply with respect to the transactions
contemplated hereby; provided, however, no representation is made in
this paragraph with respect to any prevention or impairment relating
to or caused by filings and proceedings under the HSR Act.
(e) Media Properties. Schedule 2.2(e) sets forth every media
business (collectively, the "Mergeco Affiliated Businesses") which
will be taken into account in determining what information to
provide in any filing that will be made under the HSR Act by Mergeco
or any of its affiliates with respect to the transactions
contemplated hereby and by the Other Benchmark Transactions.
(f) Real Estate. As of the date hereof, Mergeco does not own
or lease any real property.
(g) Alex. Brown Fee. Prior to the execution hereof, Mergeco or
its affiliates have paid the Alex. Brown Fee to Alex. Brown.
2.3. REPRESENTATIONS AND WARRANTIES REGARDING FUND I, FUND IV, FUND VII
AND FUND VIII. For purposes of Section 10.1 only, each of Fund I, Fund IV,
Fund VII and Fund VIII, with respect to itself and its own subsidiaries,
severally but not jointly, represents and warrants to Mergeco and Parent as
follows:
(a) Organization, Good Standing, Etc. Each of the Fund and its
subsidiaries is a partnership or other entity, duly organized,
validly existing and in good standing under the laws of its
jurisdiction of organization, has all requisite partnership (or
other) power and authority to own, lease and operate its properties
and to carry on its business as now being conducted and is duly
qualified and in good standing to do business in each state in which
the nature of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the
failure to so qualify or be in good standing does not have and could
not reasonably be expected to have a Material Adverse Effect. The
Fund has delivered to Mergeco true and complete copies of the
Certificates and Agreements of Limited Partnership (or equivalent
organizational documents) of the Fund and each of its subsidiaries,
as in effect at the date of this Agreement. Neither the Fund nor
any
33
<PAGE> 39
subsidiary is in violation of any provisions of its Certificate and
Agreement of Partnership or equivalent organizational documents in a way
that would result in a Material Adverse Effect.
(b) Subsidiaries of the Fund. Schedule 2.1(b) sets forth a
true and complete list of all of the Fund's directly or indirectly
owned subsidiaries, together with the jurisdiction of incorporation
or organization of each subsidiary. Schedule 2.1(b) also sets forth
the type of equity interest in each subsidiary owned by the Fund or
another subsidiary of the Fund and indicates whether any Person
other than Benchmark or a subsidiary of Benchmark owns any equity
interest in any subsidiary of the Fund. Except as disclosed on
Schedule 2.1(b), the Fund does not own, directly or indirectly, any
subsidiaries, or have the right, pursuant to a contract or
otherwise, to acquire any capital stock, equity interest or other
similar investment in any corporation, partnership, joint venture,
association, limited liability company, trust or other entity.
(c) Capital Structure. Except as set forth in Schedule 2.1(c),
in the Existing Fund Partnership Agreements and as contemplated by
this Agreement, there are no options, warrants, calls, rights,
commitments or agreements of any character to which the Fund or any
of its subsidiaries is a party or by which any of them is bound
obligating the Fund or any of its subsidiaries to issue, deliver or
sell, or cause to be delivered or sold, additional partnership
interests or any equity interests of the Fund or any of its
subsidiaries, or obligating the Fund or any of its subsidiaries to
grant, extend or enter into any such option, warrant, call, right,
commitment or agreement. Except as set forth in the Existing Fund
Partnership Agreements, there are no outstanding contractual
obligations of the Fund or any subsidiary to repurchase, redeem or
otherwise acquire any partnership interests of the Fund or any
partnership interest of, or any equity interest in, any subsidiary
listed on Schedule 2.1(b). There is no Voting Debt on any matters
on which partners or holders of equity interests in the Fund or its
subsidiaries may vote. All the outstanding partnership interests of
the Fund have been duly authorized and validly issued, and all
capital contributions required to be made with respect to such
partnership interests have been made in full. The partnership
interests of the Fund have not been, and as to partnership interests
in the future, will not be, issued in violation of any preemptive or
similar rights. There are no voting trusts, proxies or other
agreements or understandings to which the Fund or any of its
subsidiaries is a party or by which the Fund or any of its
subsidiaries is bound with respect to the voting of any partnership
interests of or equity interests in the Fund or any of its
subsidiaries. All of the issued and outstanding partnership
interests of or equity interests in the Fund and each of its
subsidiaries are duly authorized, validly issued, and (with respect
to limited partnership interests) nonassessable, and have not been
issued in violation of any preemptive or similar rights. All
capital contributions required to be made by the partners or
stockholders of each such Fund or subsidiary have been made in full.
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<PAGE> 40
(d) Authority. Upon receipt of the requisite consent of the
applicable Fund Limited Partners, the Fund shall have all requisite
partnership power and authority to enter into this Agreement and any
other agreement executed by the Fund in connection with the
transactions contemplated by this Agreement including the
Transaction Documents and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of the
Transaction Documents upon receipt of the requisite consent of the
applicable Fund Limited Partners, by the Fund and the consummation
by it of the transactions contemplated hereby or thereby have been
duly authorized by all necessary partnership action on the part of
the Fund. The Transaction Documents have been duly executed and
delivered by the Fund and, upon receipt of the requisite consent of
the applicable Fund Limited Partners, will constitute the valid and
binding obligations of the Fund, enforceable against the Fund in
accordance with their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and
subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding
at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by the Fund do not, and
the performance by the Fund of the transactions contemplated hereby
or thereby will not, subject to (i) with respect to the applicable
Other Benchmark Merger, the approval of the applicable Other
Benchmark Merger Agreement and the transactions contemplated thereby
by the applicable Fund Limited Partners, (ii) obtaining the
consents, approvals, authorizations and permits and making the
filings described in this Section 2.3(e), and (iii) obtaining any
consents required by the terms of any existing agreements of the
Fund with third parties that are not listed in Schedule 2.1(o) (A)
violate, conflict with or result in any breach of any provision of
the certificates and agreements of limited partnership or equivalent
organizational documents, in each case as amended or restated, of
the Fund or any of its subsidiaries, (B) violate, conflict with or
result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, or permit the
termination or cancellation of or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of
control of the Fund or otherwise) any obligation, or result in the
loss of any benefit or give any person the right to require any
security to be repurchased, or give rise to the creation of any
lien, charge, security interest or encumbrance upon any of the
properties or assets of the Fund or any of its subsidiaries under,
any of the terms, conditions or provisions of any contract, loan or
credit agreement, note, bond, mortgage, indenture or deed of trust
or any license, lease, agreement or other instrument, permit,
concession, franchise, license or obligation to which any of them is
a party or by which they or any of their properties or assets may be
bound or subjected, or (C) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation, of any Governmental
Entity applicable to the Fund or any of its subsidiaries or by which
or to which any of their respective
35
<PAGE> 41
properties or assets is bound or subject. No consent, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to the Fund or any
of its subsidiaries in connection with the execution and delivery of
the Transaction Documents by the Fund or any of its subsidiaries or
the consummation of the transactions contemplated hereby or thereby,
except for (1) the filing of a premerger notification report under the
HSR Act, (2) the consents of the FCC to the transfers of control of
the Station Licenses held by the Fund (the "Fund Station Licenses") as
contemplated by Section 6.1 hereof, (3) the filing of the Certificate
of Merger with the State Department of Assessments and Taxation of
Maryland and the Secretary of State of the State of Delaware, and (4)
applicable requirements, if any, of the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, and
state securities or blue sky laws.
(f) Financial Statements; Absence of Certain Changes or
Events.
(i) The Fund has delivered to Mergeco the Financial
Statements of the Fund. The Financial Statements of the Fund,
including, if applicable, the notes thereto, were prepared in
accordance with GAAP applied on a consistent basis throughout
the periods covered thereby (except to the extent disclosed
therein or required by changes in GAAP) and, subject to
adjustments that would be made after audit (in the case of any
unaudited financial statements), present fairly in all material
respects the financial position of the Fund and its subsidiaries
as of such dates and for the periods then ended.
(ii) Except as disclosed in Schedule 2.1(f), as of the
date of this Agreement, there is no liability or obligation of
any kind, whether, accrued, absolute, fixed, contingent or
otherwise, of the Fund or its subsidiaries which has or could
reasonably be expected to have a Material Adverse Effect and
that is not reflected or reserved against in the Balance Sheet
of the Fund for the period ended September 30, 1996, other
than (A) liabilities incurred in the ordinary course of
business in a manner consistent with past practices, or (B)
any such liability or obligation which would not be required
to be presented in financial statements or the notes thereto
prepared in conformity with GAAP applied, in a manner
consistent with past practice, in the preparation of the
Financial Statements of the Fund.
(iii) Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date, the Fund and its subsidiaries have
conducted their respective businesses only in the ordinary
course consistent with past practice and nothing has occurred
that would have been prevented by Section 3.1 if the terms of
such section had been in effect as of and after the Balance
Sheet Date. Except as disclosed in Schedule 2.1(f), since the
Balance Sheet Date and through (and including) the date of
this Agreement there has not occurred any event that has
resulted in or would reasonably be expected to result in a
Material Adverse Effect.
36
<PAGE> 42
(g) Compliance with Applicable Laws; FCC Matters; Station
Licenses.
(i) Except as permitted or contemplated hereby, the
businesses of the Fund and its subsidiaries have been
conducted in compliance with each applicable law, ordinance,
regulation, judgment, decree, injunction, rule or order of the
FCC or any other Governmental Entity binding on the Fund or
any of its subsidiaries or their respective properties or
assets, except for such instances of noncompliance that do not
and would not reasonably be expected to have a Material
Adverse Effect. Except as set forth on Schedule 2.1(g), no
investigation or review by any Governmental Entity with
respect to the Fund or any of its subsidiaries is pending or,
to the Fund's knowledge, threatened, except for such
investigations or reviews as do not and would not reasonably
be expected to have a Material Adverse Effect. Without
limiting the generality of the foregoing, the Fund and its
subsidiaries have complied with the Communications Act, all
rules, regulations and written policies of the FCC thereunder,
all obligations with respect to equal opportunity under
applicable law, and all rules and regulations of the Federal
Aviation Administration applicable to the towers used by the
Stations, except, in each case, where the failure to so comply
does not and would not reasonably be expected to result in a
Material Adverse Effect. In addition, the Fund and its
subsidiaries have duly and timely filed, or caused to be so
filed, with the FCC all material reports, statements, documents,
registrations, filings or submissions with respect to the
operation of the Stations and the ownership thereof, including,
without limitation, applications for renewal of authority
required by applicable law to be filed (except where the failure
to make such filings on a timely basis does not have or would
not reasonably be expected to have a Material Adverse Effect).
All such FCC filings complied with all material applicable laws
when made and no material deficiencies have been asserted with
respect to any such filings. The material required by 47 C.F.R.
Section 73.3526 to be kept in the public inspection files of
the Stations is materially complete.
(ii) Schedule 2.1(g) lists (A) all licenses, permits and
other authorizations, including the expiration dates thereof,
issued to the Fund or any of its subsidiaries by the FCC
relating to the Stations and held by them as of the date of
this Agreement and (B) all licenses, permits or authorizations
issued to the Fund or any of its subsidiaries by any other
Governmental Entities which are material to the operations of
the Fund Stations and held by them as of the date of this
Agreement, the loss of which have or would reasonably be
expected to have a Material Adverse Effect. The Stations
owned and operated by the Fund or its subsidiaries (the "Fund
Stations") have been operated in all material respects in
accordance with the terms of the Station Licenses held by the
Fund or its subsidiaries (the "Fund Station Licenses"). There
are no material proceedings pending or, to the Fund's
knowledge, threatened with respect to the Fund's or any of its
subsidiaries' ownership or operation of the Fund Stations
which reasonably may be
37
<PAGE> 43
expected to result in the revocation, material adverse modification,
non-renewal or suspension of any of the Fund Station Licenses, the
issuance against the Fund or any of its subsidiaries of any cease and
desist order, or the imposition of any administrative actions by the
FCC or any other Governmental Entity with respect to the Fund Station
Licenses, or which reasonably may be expected to adversely affect the
Fund Stations' ability to operate as currently operated or the
Surviving Partnership's ability to obtain control of the Fund Station
Licenses. Except as set forth on Schedule 2.1(g), to the Fund's
knowledge, no other broadcast station or radio communications
facility is causing interference to the Fund Stations' transmissions
beyond that which is allowed by FCC rules and regulations. The Fund
has no reason to believe that the FCC will not renew the Fund Station
Licenses issued by the FCC in the ordinary course of business. The
Fund knows of no facts relating to the Fund or its subsidiaries under
the Communications Act or the rules, regulations or written policies
of the FCC in effect on the date of this Agreement that reasonably
may be expected to disqualify the Fund or its subsidiaries from
transferring control of the Fund Station Licenses pursuant to the
terms of this Agreement or that would prevent the consummation by
them of the transactions contemplated by this Agreement, provided
that the Fund makes no representation in this Section 2.3(g) with
respect to any facts or circumstances attributable to Mergeco or its
affiliates which could prevent the consummation of the transactions
contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
2.1(h), there is no claim, action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or, to
the knowledge of the Fund, threatened against the Fund or any of its
subsidiaries (including, for this purpose any action, suit, inquiry,
judicial or administrative proceeding against the Fund or its
subsidiaries relating to the transactions contemplated by this
Agreement) or any of their respective properties or assets by or
before any arbitrator or Governmental Entity, nor to the Fund's
knowledge are there any investigations relating to the Fund or any
of its subsidiaries or any of their respective properties or assets
pending or threatened by or before any arbitrator or Governmental
Entity. Except as set forth in Schedule 2.1(h), there is no
judgment, decree, injunction, order, determination, award, finding,
or letter of deficiency of any Governmental Entity or arbitrator
outstanding against the Fund or any of its subsidiaries or any of
their respective properties or assets which have or would reasonably
be expected to have a Material Adverse Effect.
(i) Insurance. Schedule 2.1(i) sets forth a summary of all
fire, general liability, malpractice liability, theft and other
forms of insurance and all fidelity bonds held by or applicable to
the Fund or any of its subsidiaries. No event has occurred,
including, without limitation, the failure by the Fund or any of its
subsidiaries to give any notice or information or the delivery of
any inaccurate or erroneous notice or information, which limits or
impairs the rights of the Fund or any of its subsidiaries under any
such insurance policies in such a manner that has or would
reasonably be
38
<PAGE> 44
expected to have a Material Adverse Effect. Excluding insurance
policies that have expired and been replaced in the ordinary course of
business, no insurance policy has been canceled within the last two
years prior to the date hereof.
(j) Real Estate. Each of the Fund and its subsidiaries has
good and marketable title in fee simple to all Owned Real Property
held by the Fund and valid leaseholds in each parcel of Leased Real
Property leased by the Fund, except to the extent marketability may
be affected by the existence of Permitted Liens. Each lease is
valid without default thereunder by the lessee or, as of the date
hereof and to the Fund's knowledge, the lessor. Schedule 2.1(j)
lists as of the date hereof (i) the street address and use of each
parcel of Owned Real Property held by the Fund and (ii) the street
address and use of each parcel of Leased Real Property pursuant to
which the Fund or any of its subsidiaries is a lessee.
(k) Personal Property. Except for property held under capital
leases and the liens of the Fund's secured creditors (which shall be
paid at Closing or, if both Benchmark and Mergeco elect, reflected
on the Closing Balance Sheet) and Permitted Liens, the Fund or one
of its subsidiaries has good title to all the items of machinery,
equipment, furniture, fixtures, inventory, receivables and other
tangible or intangible personal property reflected on the Balance
Sheet of the Fund and all such property acquired since the Balance
Sheet Date, except for any such property or assets sold or otherwise
disposed of in the ordinary course of business and consistent with
past practices since such date or where the failure to have good title
does not and would not reasonably be expected to have a Material
Adverse Effect. The tangible personal property and fixtures owned or
used by the Fund or any of its subsidiaries that are necessary for the
operation of the Fund Stations, including all broadcasting equipment
and broadcast towers, are in good operating condition and repair
(subject to normal wear and tear) and permit the conduct of the
business of the Fund Stations in compliance with all material FCC
rules and regulations. The Fund or its subsidiaries owns or holds
under valid leases all of the tangible personal property and fixtures
necessary to conduct the business of the Fund Stations as presently
conducted except where the failure to own or hold under valid lease
any tangible property or fixtures does not and would not reasonably be
expected to have a Material Adverse Effect.
(l) Liens and Encumbrances. All properties and assets,
including leases, owned by the Fund and its subsidiaries are free
and clear of all Liens except Permitted Liens.
(m) Environmental Matters. Except as set forth on Schedule
2.1(m) and except to the extent inaccuracy of the representations
and warranties set forth in this Section 2.3(m) does not and would
not reasonably be expected to result in a Material Adverse Effect:
(i) The Fund Owned Real Property and, to the Fund's
knowledge, the Fund Leased Real Property and the operations of
the Fund and its
39
<PAGE> 45
subsidiaries thereon comply in all material respects with all
applicable federal, state and local laws, statutes, codes,
rules, regulations, ordinances, orders, determinations or rules
of common law pertaining to the environment, natural resources
and public or employee health and safety including, without
limitation, the Environmental Laws;
(ii) No judicial proceedings are pending or, to the
Fund's knowledge, threatened against the Fund or its
subsidiaries alleging the violation of any Environmental Laws,
and there are no administrative proceedings pending or, to the
Fund's knowledge, threatened against the Fund or its
subsidiaries, alleging the violation of any Environmental Laws
and no notice (in the case of clause (ii)(B), directed to the
Fund or any of its subsidiaries) from any Governmental Entity
or any person has been received by the Fund or its
subsidiaries (A) claiming any violation of any Environmental
Laws in connection with any Fund Owned Real Property or Fund
Leased Real Property that has not been complied with or
otherwise resolved or (B) requiring any remediation, clean-up,
modification, repairs, work, construction, alterations or
installations on or in connection with any Fund Owned Real
Property or Fund Leased Real Property that are necessary to
comply with any Environmental Laws;
(iii) All Permits, required to be obtained or filed by
each of the Fund and its subsidiaries under any Environmental
Laws in connection with the Fund's and its subsidiaries'
operations, including, without limitation, those activities
relating to the generation, use, storage, treatment, disposal,
release or remediation of Hazardous Substances (as such term
is defined in Section 2.1(m)(iv) hereof), have been duly
obtained or filed, and each of the Fund and its subsidiaries
are and have at all times been in compliance in all material
respects with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by the
Fund or its subsidiaries or, to the Fund's knowledge, any of
their predecessors, on, in, or under any of the Fund Owned
Real Property or the Fund Leased Real Property are and have at
all times been generated, stored, used, treated, disposed of,
and released by such persons or on their behalf in such manner
as not to result, or be reasonably be expected to result in
any material Environmental Costs or Liabilities;
(v) There are not now, nor have there been in the past,
on, in or under any Fund Owned Real Property or Fund Leased
Real Property when owned, leased or operated by the Fund or
its subsidiaries or, to the Fund's knowledge, when owned,
leased or operated by any of their predecessors, any Hazardous
Substances that are in a condition or location that violates
any Environmental Law in any material respect or that
reasonably could be expected to (a) require remediation under
any Environmental Law or (b) give
40
<PAGE> 46
rise to a claim for damages or compensation by any affected
Person or to any Environmental Costs or Liabilities; provided
that the representation and warranty made in this Section (m)(v)
with respect to matters or conditions caused by any Person other
than the Fund on the Leased Real Property is limited to the
Fund's knowledge.
(vi) The Fund and its subsidiaries have not received, and
to the knowledge of the Fund do not expect to receive, any
notification from any source advising the Fund or such
subsidiaries that: (A) it is a potentially responsible party
under CERCLA or any other Environmental Laws; (B) any real
property or facility currently or previously owned, operated,
or leased, by it is identified or proposed for listing as a
federal NPL (or state-equivalent) site or a CERCLIS list (or
state-equivalent) site; and (C) any facility to which it has
ever transported or otherwise arranged for the disposal of
Hazardous Substances is identified or proposed for listing as
an NPL (or state-equivalent) site or CERCLIS (or
state-equivalent) site; and
(vii) The Fund Stations' operations do not have a
significant environmental impact as defined by 47 C.F.R.
Section 1.1307.
(n) Taxes. Each of the Fund and its subsidiaries has filed all
Tax Returns required to be filed (except where the failure to file
any such Tax Returns has not and would not reasonably be expected to
result in a Material Adverse Effect), and all such Tax Returns which
have been filed are accurate and complete in all material respects.
Each of the Fund and its subsidiaries has paid (or there has been
paid on its behalf), or has set up an adequate reserve for the
payment of, all material taxes required to be paid, withheld, or
deducted, or for which any of the Fund and its subsidiaries are
liable, in respect of the periods covered by such Tax Returns, and
with respect to each tax, from the end of the period covered by the
most recently filed Tax Return to the date hereof, and the Balance
Sheet reflects an adequate reserve for all taxes payable, or
required to be withheld and remitted, by the Fund or any of its
subsidiaries, or for which the Fund or any of its subsidiaries are
liable, accrued through the Balance Sheet Date. No material
deficiencies for any taxes have been proposed, asserted or assessed
by taxing authorities with respect to the Fund or any of its
subsidiaries and are pending, and no requests for waivers of the
time to assess any such taxes are pending. Except as set forth on
Schedule 2.1(n), for each taxable year or period not closed by the
applicable statute of limitations, (i) the Fund and each subsidiary
are properly classified as partnerships (and not as associations
taxable as corporations) for tax purposes and (ii) the Fund and its
subsidiaries has withheld all required amounts pursuant to Section
1446 of the Code. For the purposes of this Agreement, the term
"taxes" shall include all federal, state, local, foreign and other
income, gross receipts, use, ad valorem, transfer, franchise,
profits, license, payroll, occupation, severance, property, sales,
excise, withholding, unemployment compensation, social security, and
other taxes and charges of any nature whatsoever (including
interest, penalties and additions to tax relating to any of the
specified items).
41
<PAGE> 47
(o) Certain Agreements. Except as set forth in Schedule 2.1(o)
and for oral or written agreements, plans or arrangements terminable
without liability or penalty to the Fund or its subsidiaries upon
thirty days notice, the benefits of which do not exceed $50,000 per
year, neither the Fund nor any of its subsidiaries is a party to any
oral or written agreement, plan or arrangement with any employee or
other station or broadcast personnel (whether an employee, consultant
or an independent contractor) of the Fund or its subsidiaries (i) the
benefits of which are contingent, or the terms of which are materially
altered, upon, or result from, the occurrence of a transaction
involving the Fund or its subsidiaries of the nature of any of the
transactions contemplated by this Agreement, (ii) providing severance
benefits longer than forty-five days or other benefits after the
termination of employment or other contractual relationship regardless
of the reason for such termination and regardless of whether such
termination is before or after a change of control, (iii) under which
any person may receive payments subject to the tax imposed by Section
4999 of the Code or (iv) any of the benefits of which will be
increased, or the vesting of benefits of which will be accelerated, by
the occurrence of any of the transactions contemplated by this
Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by
this Agreement. Schedule 2.1(o) hereto lists (and, in the case of
clause (iv), describes) each oral or written (i) agreement, contract,
indenture or other instrument relating to the borrowing of money or
the guarantee of any obligation for the borrowing of money, (ii)
Employee Benefit Plan, (iii) employment or consulting contract which
is not terminable without liability or penalty to the Fund or any of
its subsidiaries on thirty (30) days or less notice, (iv) covenant,
agreement, or arrangement under which the Fund's or any of its
subsidiary's ability or right to compete with another Person is
restricted or impaired, or (v) contract, agreement or commitment
(except for advertising, trade or barter agreements) under which any
party thereto remains obligated to provide goods or services having a
value, or to make payments aggregating, in excess of $50,000 per year,
in any such case to which the Fund or any of its subsidiaries is a
party or bound. Each such agreement, contract or obligation described
in Schedule 2.1(o) or required to be so described executed by the Fund
or one of its subsidiaries is a valid and binding obligation of the
Fund or one of its subsidiaries, as the case may be, and is in full
force and effect without amendment, except where not being a valid and
binding obligation or in full force and effect without amendment does
not and would not reasonably be expected to have a Material Adverse
Effect. The Fund or one of its subsidiaries, as the case may be, has
performed the obligations required to be performed by it under the
agreements so described and is not (with or without lapse of time or
the giving of notice, or both) in breach or default thereunder, except
to the extent such nonperformance, breach or default does not and
would not reasonably be expected to result in a Material Adverse
Effect. As of the date hereof, each of the Fund and its subsidiaries,
and to the Fund's knowledge, each other party to such contracts, has
performed the obligations required to be performed by it under the
agreements so described and is not (with or without lapse of time or
the giving of notice or both) in breach or default thereunder, except
to the extent such nonperformance, breach or default does not and
would not reasonably be expected to
42
<PAGE> 48
result in a Material Adverse Effect. Schedule 2.1(o) identifies, as
to each agreement, contract or obligation listed thereon, whether the
consent of the other party thereto is required in order for such
agreement, contract or obligation to continue in full force and effect
upon the consummation of the transactions contemplated hereby or
whether such agreement, contract or obligation can be canceled by the
other party without liability to such other party due to the
consummation of the transactions contemplated hereby. A copy of each
agreement, contract, obligation, plan or arrangement set forth in
Schedule 2.1(o) has been provided to Mergeco. As of the Closing Date,
neither the Fund nor any of its subsidiaries shall have any
indebtedness for borrowed money that is not prepayable (whether with
or without penalty).
(p) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested and
unvested) under each "employee pension benefit plan" as such
term is defined in Section 3(2) of ERISA, which the Fund or
any other trades or businesses under common control within the
meaning of Section 4001(b)(1) of ERISA with the Fund
(collectively, the "Fund ERISA Group") maintains, or to which
the Fund or any member of the ERISA Group is obligated to
contribute (the "Fund Pension Plan"), did not, as of the
respective last annual valuation dates for such
Fund Pension Plans, exceed the value of the assets of such
Fund Pension Plan allocable to such benefits. None of the
Fund Pension Plans subject to Section 302 of ERISA has
incurred any "accumulated funding deficiency," as such term is
defined in Section 302 of ERISA (whether or not waived), since
the effective date of such Section 302. Neither the Fund or
any member of the Fund ERISA Group nor any employee or partner
of the Fund or any member of the Fund ERISA Group or any of
the employee benefit plans of the Fund or any member of the
Fund ERISA Group which are subject to ERISA, including the
Fund Pension Plans, or any trusts created thereunder, or any
trustee or administrator thereof, has engaged in a "prohibited
transaction" as such term is described in Section 4975 of the
Code, which has subjected or which could subject the Fund or
any member of the Fund ERISA Group, any partner or employee of
the Fund or any member of the Fund ERISA Group or any of such
plans or any trust to any material tax or penalty on
prohibited transactions imposed by such Section 4975. None of
such Fund Pension Plans subject to Title IV of ERISA or any of
their related trusts has been terminated or partially
terminated, nor has there been any unreported "reportable
event," as that term is defined in Section 4043 of ERISA, with
respect thereto since the effective date of such Section 4043
(excluding those events as to which the thirty day notice
period is waived pursuant to the regulations issued
thereunder). Neither the Fund nor any member of the Fund
ERISA Group has contributed or been obligated to contribute to
any "multiemployer plan" as such term is defined in Section
3(37) or Section 4001(a)(3) of ERISA. Except as set forth on
Schedule 2.1(p) or the other Schedules to this Agreement,
there are no "employee benefit plans" within the meaning of
Section 3(3) of ERISA
43
<PAGE> 49
or any bonus (excluding bonuses granted on an individual basis
in the ordinary course of business), pension, profit sharing,
deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
insurance or other plan or arrangement or understanding
providing benefits to any present or former employee or
contractor of the Fund or any member of the Fund ERISA Group
maintained by the Fund or any member of the Fund ERISA Group or
as to which the Fund or any member of the Fund ERISA Group has
any material liability or obligation (collectively, "the Fund
Employee Benefit Plans").
(ii) True, correct and complete copies of each of the
Fund Employee Benefit Plans, and related trusts, if
applicable, have been furnished or made available to Mergeco,
along with the most recent report filed on Form 5500 and
summary plan description with respect to each Fund Employee
Benefit Plan required to file Form 5500. All reports and
disclosures relating to the Fund Employee Benefit Plans
required to be filed with or furnished to governmental
agencies or plan participants or beneficiaries have been
furnished in accordance with applicable law in a timely manner
except where such failure has not resulted and would not
reasonably be expected to result in a Material Adverse Effect.
Each Fund Employee Benefit Plan has been maintained in
compliance in all material respects with ERISA and the Code,
and each Fund Employee Benefit Plan intended to be qualified
under Section 401 of the Code has received or is awaiting
receipt of a favorable determination letter from the Internal
Revenue Service regarding the qualified status and has not
since receipt of the most recent favorable determination
letter been amended or, to the knowledge of the Fund and the
members of the Fund ERISA Group, operated in a manner which
would adversely affect such status. There are no actions,
suits or claims pending (other than routine claims for
benefits) or, to the knowledge of the Fund and the members of
the Fund ERISA Group, threatened against, or with respect to
any of the Fund Employee Benefit Plans. All contributions
required to be made to Fund the Employee Benefit Plans
pursuant to their terms have been timely made. Except as
disclosed on Schedule 2.1(p), there is no matter pending with
respect to any of the Fund Employee Benefit Plans before the
Internal Revenue Service, Department of Labor or the Pension
Benefit Guaranty Corporation. Except as required by
applicable law, none of the Fund Employee Benefit Plans
provides medical insurance coverage following retirement.
Each Fund Employee Benefit Plan which is an "employee welfare
benefit plan," as defined in Section 3(l) of ERISA, may be
unilaterally amended or terminated in its entirety without
liability except as to benefits accrued prior to such
amendment or termination.
(iii) Schedule 2.1(p) lists each collective bargaining
agreement to which the Fund or the Fund's subsidiary is a
party. Except for those unions
44
<PAGE> 50
which are parties to one or more of the listed collective
bargaining agreements or as otherwise listed on Schedule 2.1(p),
neither the Fund nor any of its subsidiaries has agreed to
recognize any union or other collective bargaining
representative, nor has any union or other collective bargaining
representative been certified as the exclusive bargaining
representative of any of their employees. Except as set forth
in the Schedules to this Agreement, each of the Fund and its
subsidiaries (A) is, and has been since June 30, 1993 or the
date of its formation, whichever is later, in substantial
compliance with all applicable laws regarding labor, employment
and employment practices, terms and conditions of employment,
affirmative action, wages and hours, plant closing and mass
layoff, occupational safety and health, immunization, and
workers' compensation, (B) is not engaged, nor has it since June
30, 1993 or the date of its formation, whichever is later,
engaged, in any unfair labor practices, and has no, and has not
had since June 30, 1993 or the date of its formation, whichever
is later, any, unfair labor practice charges or complaints
before the National Labor Relations Board pending or, to the
Fund's knowledge, threatened against it, (C) has no, and has not
had since June 30, 1993 or the date of its formation, whichever
is later, any, grievances, arbitrations or other proceedings
arising or asserted to arise under any collective bargaining
agreement, pending or, to the Fund's knowledge, threatened
against it and (D) has no, and has not had since June 30, 1993
or the date of its formation, whichever is later, any, charges,
complaints or proceedings before the Equal Employment
Opportunity Commission, Department of Labor or any other
federal, state or local agency responsible for regulating
employment practices, pending, or, to the Fund's knowledge,
threatened against it, except, in each case (with respect to
clauses (A) through (D) above) for any violations, practices,
complaints, proceedings or charges that have not resulted and
would not reasonably be expected to result in a Material Adverse
Effect. There is no labor strike, slowdown, work stoppage or
lockout pending or, to the Fund's knowledge, threatened against
or affecting the Fund or their subsidiaries, and the Fund or
their subsidiaries have not experienced any labor strike,
slowdown, work stoppage or lockout since June 30, 1993 or the
date of its formation, whichever is later. Except as set forth
on Schedule 2.1(p), to the Fund's knowledge, no union
organizational campaign or representation petition is currently
pending with respect to the employees of the Fund or its
subsidiaries.
(q) Patents, Trademarks, Etc. There are no Intellectual Rights
owned by or registered in the name of the Fund or any of its
subsidiaries, or in which the Fund or any of its subsidiaries has
any right, license or interest other than the call signs of each of
the Fund Stations. The Fund or one of its subsidiaries owns or has
the right to use all such call signs. To the knowledge of the Fund,
neither the Fund nor any of its subsidiaries is infringing any such
Intellectual Rights, and the Fund is not aware of any infringement
by others of any such rights owned by the Fund or any of its
subsidiaries.
45
<PAGE> 51
(r) Affiliate Relationships. Except as set forth in the
applicable Existing Fund Partnership Agreement, Schedule 2.1(r) sets
forth a complete list and summary description of all contracts or
other arrangements involving the Fund or any of its subsidiaries in
which the General Partner or any of its affiliates has a financial
interest, including indebtedness to the Fund or its subsidiaries,
other than such contracts or arrangements which are disclosed on the
Balance Sheet.
(s) Vote Required. The only votes of the holders of any
partnership interests in the Fund that are necessary to approve the
Other Benchmark Merger applicable to the Fund and adopt the Other
Benchmark Merger Agreement to which the Fund is a party are the
affirmative votes of the Fund Limited Partners holding more than
fifty percent (50%) of the aggregate Limited Partner Percentage (as
defined in the applicable Existing Fund Partnership Agreements).
(t) Fairness Opinion. The General Partners have received the
Alex. Brown Fairness Opinion.
ARTICLE III
COVENANTS RELATING TO CONDUCT OF BUSINESS
3.1. COVENANTS OF BENCHMARK. Except as contemplated by this
Agreement or to the extent that Mergeco shall otherwise consent in writing,
from the date of this Agreement until the Effective Time, Benchmark and
each of Fund I, Fund IV, Fund VII and Fund VIII covenants and agrees that
it shall not, and shall not permit any of its subsidiaries to (it being
understood that each of the covenants contained in this Section 3.1 shall
apply to the Statesville Stations, the Jackson Stations, the Montgomery
Stations, WSCQ-FM, WJMZ-FM and KRMD-AM/FM, and any additional stations
acquired prior to the Closing Date only to the extent of events, acts or
omissions occurring or conditions coming into existence after the date such
stations were acquired by Benchmark or its subsidiaries):
(a) conduct its business in any material respect except in the
ordinary course of business consistent with past practice; or
(b) fail to use its commercially reasonable efforts (i) to
preserve intact Benchmark's present business organization and to keep
available the services of its present station managerial personnel
(including the General Manager, General Sales Manager, Programming
Director and Business Manager, or persons performing comparable
duties, of each Station (collectively, the "Station Management")) and
key over-the-air employees or key independent contractors and (ii) to
preserve its relationships with customers, suppliers and others having
business dealings with it. Benchmark and its subsidiaries shall be
deemed to have used commercially reasonable efforts with respect to
the matters set forth in this covenant if they conduct their business
with respect to such matters in a manner that is consistent with their
past practices. The (i) failure to renew an employment agreement
pursuant to Section
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3.1(g) or to agree to an increase in compensation due to a failure by
Mergeco to consent to an increase in compensation or (ii) renewal of
an employment agreement pursuant to Section 3.1(g) with an increase in
compensation thereunder permitted under Section 3.1(g) without the
consent of Mergeco or with respect to which Mergeco has consented, if
required, shall not be deemed to be a violation of this Section
3.1(b); or
(c) other than as previously disclosed in writing on the date
hereof, fail to use its commercially reasonable efforts to maintain
the present format of the Stations and with programming consistent
with past practices; or
(d) except as set forth in Section 4.11, split, combine, divide,
or reclassify any of its partnership interests or make any
distributions or payments of any kind to its partners or affiliates;
provided that nothing herein shall prevent, subject to applicable
provisions of the Fund IV Loan Agreement, the Fund VII Loan Agreement
and the Fund VIII Loan Agreement, (i) Fund I, Fund IV, Fund VII or
Fund VIII from continuing to pay management fees and expenses to
Benchmark in the ordinary course of business consistent with past
practice (it being understood that Benchmark shall earn no management
fees from Fund IX, Fund X or Fund XI or their respective subsidiaries
(if any)) while this Agreement is in effect) or (ii) any of
Benchmark's subsidiaries (other than Fund IX, Fund X or Fund XI or
their respective subsidiaries (if any)) from making distributions to
Benchmark or its subsidiaries or (iii) any of Benchmark or its
subsidiaries (other than Fund IX, Fund X or Fund XI or their
respective subsidiaries (if any)) from making cash distributions to
its partners or (iv) any of Fund IX, Fund X or Fund XI or their
respective subsidiaries (if any) from making distributions permitted
under the terms of the Jackson Loan Agreement, the Montgomery Loan
Agreement and the Statesville Loan Agreement; or
(e) except in connection with this transaction, and except as
provided in Section 4.12, issue, sell, pledge, dispose of, encumber
or deliver (whether through the issuance or granting of any options,
warrants, commitments, subscriptions, rights to purchase or
otherwise) any partnership interests or securities convertible into
or exercisable or exchangeable for partnership interests of any
class; provided that nothing herein shall prevent any Limited
Partners (other than Bruce R. Spector or the Class A Limited
Partners) or Fund Limited Partners from transferring or assigning
their partnership interests to other Persons; or
(f) change or amend its organizational documents or change,
amend or waive any provision of any of the Jackson Agreement, the
Statesville Agreement, or the Montgomery Agreement (except for any
changes, amendments or waivers that the General Partners may deem
advisable in connection with consummation of the transactions
contemplated by this Agreement, the Jackson Agreement, the
Statesville Agreement and the Montgomery Agreement that do not
adversely affect Mergeco or Benchmark in any material respect); or
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(g) except in the ordinary course of business and consistent
with past practice (subject to prior consultation with Mergeco
reasonably in advance thereof), enter into, materially amend,
terminate, fail to use its commercially reasonable efforts to renew,
or waive compliance with any material provision of, any contract or
agreement of the type required to be described in Schedule 2.1(o)
(provided that neither Benchmark nor its subsidiaries shall be
required to renew any material contract on terms that are less
favorable to Benchmark or its subsidiaries) or default in any
material respect (or take or omit to take any action that, with or
without the giving notice or passage of time, would constitute a
material default) under any such contract or enter into any new
contract of the type required to be described in Section 2.1(o) or
increase in any manner (other than increases that are automatic
under existing agreements or as contemplated by Section 3.1(g)(iii))
the compensation or fringe benefits of any employee or other station
and broadcast personnel (whether employees or independent
contractors) or pay any benefit not required by any existing
agreement, except in each case in the ordinary course of business
and consistent with past practices or as required by law; provided
further that Benchmark and its affiliates shall
not, without the prior consent of Mergeco, (i) grant any pay raises
to General Managers, (ii) enter into new on-air talent contracts
(other than replacement contracts with salaries at substantially the
same rates as the rates in the contracts being replaced), (iii)
increase the compensation of any single employee by more than 15%
per year or the aggregate compensation of all employees by more than
3% per year or (iv) amend its existing management agreements (listed
on Schedule 2.1(r)) to increase the management fee payable to
Benchmark or its affiliates from any of the Funds or enter into new
management agreements with any of the Funds or their subsidiaries;
or
(h) except in connection with this transaction and the
transactions contemplated hereby, merge or consolidate with or into
any other legal entity, dissolve or liquidate; or
(i) (a) amend any Employee Benefit Plan, or adopt or amend any
collective bargaining agreement, except, in each case, in the
ordinary course of business and consistent with past practice or as
required by law or (b) adopt any new Employee Benefit Plan except as
required by law; or
(j) except as set forth on Schedule 3.1(j), acquire (including,
without limitation, by merger, consolidation or the acquisition of
any equity interest or assets) or sell (whether by merger,
consolidation or the sale of an equity interest or assets), lease or
dispose of any assets except in the ordinary course of business and
consistent with past practice or, even if in the ordinary course of
business and consistent with past practices (other than sales of
surplus or obsolete equipment), whether in one or more transactions,
in no event having a fair market value in excess of $50,000 with
respect to Benchmark and each Fund and its respective subsidiaries;
provided, however, that nothing herein shall prevent Benchmark from
assigning the Benchmark
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Lease Agreement or from distributing any equipment, furniture,
fixtures or other items located at the Corporate Facilities to either
or both of the General Partners; or
(k) except in connection with this transaction, mortgage,
pledge or subject to any material Lien any of its properties or
assets, tangible or intangible (unless such mortgage, pledge or Lien
will be discharged at Closing), other than in the ordinary course of
business consistent with past practice, or incur or assume any
long-term debt other than (i) pursuant to existing lines of credit,
(ii) pursuant to refinancings of existing long-term debt of
Benchmark, Fund I, Fund IV or Fund VIII that are pre-payable and
(ii) long-term debt incurred by Benchmark, Fund I, Fund IV or Fund
VIII which is pre-payable; or
(l) except as required by GAAP, applicable law or circumstances
which did not exist as of the Balance Sheet Date, change any of the
material accounting principles or practices used by it; or
(m) other than with respect to making initial elections for the
New Funds, change any tax election or tax method of accounting or
make any new tax election or adopt any new tax method of accounting
which method or election is material to Benchmark and its
subsidiaries, taken as a whole; or
(n) pay, discharge or satisfy any material claims, liabilities
or obligations other than in the ordinary course or where such
payment would not adversely affect the Surviving Partnership, or
fail to pay or otherwise satisfy (except if being contested in good
faith) any material accounts payable, claims, liabilities or
obligations on a basis, and within the time, consistent with past
practice; or
(o) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of
the Stations and, except with respect to good faith attempts
consistent with past practice to obtain payment of a past due
receivable or a contested receivable, offer to discount the amount
of any outstanding receivable or extend any other incentive (whether
to the account debtor or any employee or third party responsible for
the collection of receivables) to accelerate the collection thereof,
or change any Station's advertising rates or policies, procedures or
methods in connection with the sale of advertising time in a manner
primarily intended to accelerate the receipt of cash payments (other
than in the ordinary course of business consistent with past
practices) or fail to incur annual advertising and promotional
department aggregate expenses in cash and trade below 90% of that
budgeted for 1996 (as such budget previously has been delivered to
Mergeco); or
(p) except as set forth on Schedule 3.1(p), enter into, or
enter into negotiations or discussions with any person other than
Mergeco with respect to, any local marketing agreement, time
brokerage agreement, joint sales agreement or similar arrangement;
or
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(q) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement; or
(r) to the extent Benchmark or its subsidiaries has the right
under the Statesville Agreement, the Jackson Agreement, or the
Montgomery Agreement to agree to Liens not set forth on the
Schedules to such Agreements, it shall not agree to assume any such
additional Liens or to permit any assets acquired under such
Agreements to be subject to any such additional Liens without the
prior consent of Mergeco.
3.2. NEGATIVE TRADE BALANCE. Benchmark shall use
commercially reasonable efforts to ensure that the Benchmark Negative Trade
Balance (as defined below) of the Stations, taken as a whole, does not
exceed the lesser of 100% of the Benchmark Negative Trade Balance at
December 31, 1996 or Fifty Thousand Dollars ($50,000) in the aggregate at
the Closing Date (it being understood that Benchmark may, if necessary, run
more advertisements than it would run in the ordinary course of business in
order to comply with this covenant). "Benchmark Negative Trade Balance"
means the difference, if negative, of the value of the goods and services
to be received under barter agreements to which any of the Stations is a
party or by which any of them is bound minus the value of time owed under
such agreements.
3.3. ENVIRONMENTAL SITE ASSESSMENTS. If Mergeco desires
Phase I or Phase II environmental site assessments ("ESAs"), Benchmark
covenants and agrees that, upon written notice from Mergeco to Benchmark
identifying the locations at which such ESAs are desired, Benchmark shall
permit Mergeco to perform (at Mergeco's expense) through a nationally
recognized and duly qualified environmental consultant reasonably
acceptable to Mergeco and Benchmark an ESA at each identified transmission
site owned, operated or leased by Benchmark or its subsidiaries and at such
other identified real properties and facilities owned, operated or leased
by Benchmark or its subsidiaries, and Benchmark shall provide access and
cooperate with Mergeco and such environment consultant with respect to such
ESAs. The ESAs which are to be conducted for the benefit of Mergeco shall
be performed in a manner that at a minimum satisfies the requirements of
ASTM Practice E 1527-94, and the costs and expenses thereof shall be borne
by Mergeco.
3.4. OTHER BENCHMARK MERGERS. Benchmark agrees that upon
satisfaction of the conditions set forth in Sections 7.1 and 7.3 (other
than the condition in Section 7.3(d) to the extent such condition relates
to the Other Benchmark Mergers), it shall cause each of the Other Benchmark
Mergers to be consummated.
ARTICLE IV
ADDITIONAL AGREEMENTS OF BENCHMARK
4.1. NO SOLICITATION OF TRANSACTIONS. Benchmark shall not,
nor shall it permit its subsidiaries to, directly or indirectly, through
any general partner, agent or otherwise, solicit, initiate or encourage the
submission of any proposal or offer from any person relating to any
acquisition or purchase of all or any material portion of the assets of, or
any equity interest in, Benchmark or any of
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its subsidiaries or any merger, consolidation, share exchange, business
combination or other similar transaction with Benchmark or any of its
subsidiaries or participate in any negotiations regarding, or furnish to
any other person any information with respect to, or otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any
effort or attempt by any other person to do or seek any of the foregoing;
provided, however, that nothing contained in this Section 4.1 shall
prohibit Benchmark from furnishing information to, or entering into
discussions or negotiations with, any person in connection with an
unsolicited proposal by such person to acquire Benchmark pursuant to a
merger, consolidation, exchange of partnership interest, business
combination or other similar transaction or to acquire all or substantially
all of the assets of Benchmark if, and only to the extent that, (a) the
General Partners determine in good faith that such action is required in
order for the General Partners not to breach their fiduciary duties to
limited partners (including the Fund Limited Partners) imposed by
applicable law, such determination being based on consultations with their
independent legal counsel, and (b) prior to furnishing such information to,
or entering into discussions or negotiations with, such person, Benchmark
(i) gives Mergeco as promptly as practicable prior written notice of
Benchmark's intention to furnish such information or begin such discussions
and (ii) receives from such person an executed confidentiality agreement on
terms no less favorable to Benchmark than those contained in the
Confidentiality Agreement (as defined in Section 4.2). Benchmark shall
promptly communicate to Mergeco the material terms of any such proposal
(and the identity of the party making such proposal) which it may receive.
Benchmark agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which
Benchmark is a party. Benchmark immediately shall cease and cause to be
terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. From and after
the receipt of the requisite consent for approval by the holders of Fund
Limited Partnership Interests of this Agreement, the Other Benchmark Merger
Agreements and the transactions contemplated hereby and thereby, Benchmark
shall not, nor shall it permit its subsidiaries to, directly or indirectly,
through any general partner, agent or otherwise, solicit, initiate or
encourage the submission of any proposal or offer from any person relating
to any acquisition or purchase of all or any material portion of the assets
of, or any equity interest in, Benchmark or any of its subsidiaries or any
merger, consolidation, general partner, business combination or other
similar action with Benchmark or any of its subsidiaries or participate in
any negotiations regarding, or furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing.
4.2. ACCESS AND INFORMATION. (a) Until the Closing, subject
only to applicable rules and regulations of the FCC, Benchmark shall afford
to Mergeco and its representatives (including accountants and counsel)
access, during normal business hours, upon reasonable notice and in such
manner as will not unreasonably interfere with the conduct of the business
of Benchmark or its subsidiaries, to all properties, books, records,
documents and returns of Benchmark and its subsidiaries and all other
information relating to Benchmark and its subsidiaries together with the
opportunity to make copies of such books, records, returns and other
documents and to discuss the business of Benchmark and its subsidiaries
with such officers, station managerial personnel (including the General
Manager, General Sales Manager, Programming Director and Business Manager,
or persons performing comparable duties, of each Station), accountants,
consultants and counsel for Benchmark as Mergeco deems reasonably necessary
or appropriate for the purposes of
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familiarizing itself with Benchmark and the Stations, including, without
limitation, the right to visit each Station at least monthly; provided that
such Station visits shall be scheduled at least five (5) Business Days in
advance and shall be conducted in a manner intended to minimize the
disruption to the operations of the Stations; further provided, that
Mergeco shall not contact any Station personnel without the express prior
consent of the General Partners. In furtherance of the foregoing,
Benchmark shall authorize and instruct Arthur Andersen LLP to meet with
Mergeco and its representatives, including its independent public
accountants, to discuss the business and accounts of Benchmark and to make
available (with the opportunity to make copies) to Mergeco and its
representatives, including its independent public accountants, work papers
prepared by Arthur Andersen LLP and related to their audit of the
consolidated financial statements and tax returns of Benchmark. All
information provided pursuant to this Agreement shall remain subject in all
respects to the Confidentiality Agreement (herein so called) dated
September 10, 1996 between Hicks, Muse, Tate & Furst Incorporated and the
General Partners until such time as the transactions contemplated by this
Agreement have been consummated. Benchmark waives any provisions in the
Confidentiality Agreement that would otherwise prohibit the execution of
this Agreement and the consummation of the transactions contemplated
hereby.
(b) Within thirty (30) days after the end of each calendar
month, Benchmark shall deliver to Mergeco monthly operating
statements for Benchmark and each of the Funds (in a form consistent
with the monthly operating statements previously supplied to
Mergeco) prepared in the ordinary course of business for internal
purposes, including comparisons to comparable prior year periods and
current year budget, as well as monthly statements prepared in the
ordinary course for internal purposes containing the dollar amount
of all trade and barter liabilities of each Station. Benchmark
shall deliver to Mergeco the rating books and such other ratings
information subscribed to by Benchmark including, without
limitation, Arbitrends, Accuratings or any other written information
reflective of the quantitative or qualitative nature of the
audiences of the Stations for each of the Stations, to the extent
subscribed, upon receipt of the same by the General Partners.
Benchmark shall instruct the Station management of each Station to
provide such information and reports to the General Partners
promptly upon receipt by such Station management. In addition, upon
request, as soon as the same are distributed to the General Partners
by each Station, Benchmark will provide Mergeco with copies of each
Station's weekly sales pacing reports, with comparisons to sales
pacing in the corresponding period of the prior year.
(c) Without duplication of Section 4.2(b), at such time as
Benchmark provides the same to its lenders, Benchmark shall provide
Mergeco with copies of the financial statements delivered by
Benchmark or its subsidiaries to their respective lenders.
4.3. ASSISTANCE. If Mergeco requests, Benchmark (a) will
cooperate, at the expense of Mergeco, and will request Arthur Andersen LLP
to cooperate, at the expense of Mergeco, in all reasonable respects with
the efforts of Mergeco to finance the transactions contemplated by this
Agreement, including without limitation, providing assistance in the
preparation of one or more
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registration statements or other offering documents relating to debt and/or
equity financing and any other filings that may be made, (b) will provide
such customary management representation letters as Arthur Andersen LLP may
require of Benchmark as a condition to its execution of any required
accountants' consents necessary in connection with any filing by Mergeco
with the SEC or in connection with the delivery of any "comfort" letters
requested by Mergeco's financing sources, and (c) shall furnish to Mergeco
all financial statements (audited and unaudited) and other information in
the possession of Benchmark or its representatives or agents as Mergeco
shall reasonably determine is necessary or appropriate for the preparation
of such offering documents, registration statements or filings. Mergeco and
Parent will indemnify and hold harmless Benchmark and their respective
partners, employees and controlling persons and their affiliates against
any and all claims, losses, liabilities, damages, costs or expenses
(including reasonable attorneys' fees and expenses) that may arise out of
or with respect to the efforts by Mergeco or Parent or their affiliates to
finance the transactions contemplated hereby, including, without
limitation, any registration statement, prospectus, offering documents and
other filings related thereto; provided, however, that subject to the
limitations and provisions of this Agreement, nothing herein shall prevent
Mergeco from asserting any claim for breach of representation, warranty or
covenant under this Agreement.
4.4. COMPLIANCE WITH STATION LICENSES. Benchmark shall cause
the Stations to be operated in all material respects in accordance with the
Station Licenses and all applicable rules and regulations of the FCC and in
compliance in all material respects with all other applicable laws,
regulations, rules and orders. Benchmark shall use its commercially
reasonable efforts not to cause or permit any of the Station Licenses to
expire or be surrendered, adversely modified or terminated. Benchmark
shall file or cause to be filed with the FCC all applications (including
license renewals) or other documents required to be filed in connection
with the operation of the Stations. Should the FCC institute any
proceedings for the suspension, revocation or adverse modification of any
of the Station Licenses, Benchmark will use its commercially reasonable
efforts to promptly contest such proceedings and to seek to have such
proceedings terminated in a manner that is favorable to the Stations.
Prior to the Closing, Benchmark will use its commercially reasonable
efforts to maintain any FCC construction permits (if any) in effect until
the applicable construction projects are complete and to diligently
prosecute all pending FCC applications. If Benchmark (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or
of any other Governmental Entity, that could affect Benchmark's ability to
consummate the transactions contemplated hereby, or should Benchmark (or
its FCC counsel) become aware of any fact relating to the qualifications of
Benchmark that reasonably could be expected to cause the FCC to withhold
its consent to the transfer of control of the Station Licenses, Benchmark
shall promptly notify Mergeco in writing and use its commercially
reasonable efforts to take steps to remove any such impediment to the
transactions contemplated by this Agreement.
4.5. NOTIFICATION OF CERTAIN MATTERS. Benchmark shall give
prompt written notice to Mergeco of (a) the occurrence, or failure to
occur, of any event of which it becomes aware that has caused or that would
be likely to cause any representation or warranty of Benchmark or its
subsidiaries contained in this Agreement to be untrue or inaccurate (in any
material respect for any representation or warranty not already qualified
for materiality) at any time from the date hereof to the Closing Date, (b)
the failure of Benchmark or its subsidiaries to comply with or satisfy in
any
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material respect any covenant, condition or agreement to be complied with
or satisfied by it hereunder, (c) the occurrence of a Station Event (as
defined in Section 8.1) and (d) the occurrence of any notice by the General
Manager of any Station to resign or otherwise terminate their employment or
independent contractor relationship with Benchmark or its subsidiaries. No
notification pursuant to this Section shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder; provided, however, that in the event any such notification
relates to a matter that would give rise to the right of Mergeco to
terminate this Agreement or that would result in the failure of Benchmark
to satisfy the closing condition in Section 7.2(a), Mergeco shall, if
Benchmark requests, within forty (40) Business Days of receiving such
request, either waive such breach or, subject to Benchmark's right to cure
such breach during such period, elect to terminate this Agreement pursuant
to Section 9.1 (and, in either case, shall notify Benchmark in writing of
its election).
4.6. THIRD PARTY CONSENTS. After the date hereof and prior
to the Closing, Benchmark shall use its commercially reasonable efforts to
obtain the written consent from any party to an agreement or instrument
identified in Schedule 2.1(o) which is required to permit (a) the
consummation of the transactions contemplated hereby and by the Other
Benchmark Transactions and (b) the merger after the Closing Date of
Benchmark and its affiliates into Radioco, III, Inc.; provided that Mergeco
shall reimburse Benchmark for any expenses incurred by it in soliciting the
consents referenced in clause (b) above to the extent that such expenses
would not have otherwise been incurred by Benchmark under clause (a) above.
4.7. SECTION 754 ELECTION. Benchmark and each subsidiary
will timely file an election under Section 754 of the Code with respect to
the taxable year of the Merger to adjust the bases of their assets in the
manner provided in Section 743 of the Code.
4.8. LIMITED PARTNER CONSENT. Benchmark agrees that, subject
to fiduciary obligations, (i) it will use commercially reasonable efforts
to obtain the requisite consents of the Fund Limited Partners to this
Agreement and the Merger and the applicable Other Benchmark Merger
Agreements and Other Benchmark Mergers within sixteen (16) Business Days
after the date of this Agreement, (ii) it shall not withdraw its
recommendation of this Agreement and the Other Benchmark Merger Agreements
and (iii) it will vote in favor of this Agreement and the Other Benchmark
Merger Agreements.
4.9. CONSUMMATION OF PENDING TRANSACTIONS. Benchmark shall
use its commercially reasonable efforts to cause Fund IX, Fund X, and Fund
XI to consummate the acquisitions of the Statesville Stations, the Jackson
Stations, the Montgomery Stations, respectively, in accordance with the
terms of the Statesville Agreement, the Jackson Agreement, and the
Montgomery Agreement, respectively.
4.10. CONSUMMATION OF OTHER BENCHMARK MERGERS. Benchmark
shall, upon satisfaction of the conditions to the obligations of Benchmark
to close this Agreement, use the proceeds of the Parent Merger Loan and the
Parent Funded Debt Loan to cause each of the Benchmark Mergers to be
consummated in accordance with the terms of the Other Benchmark Merger
Agreements.
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4.11. WITHDRAWAL OF CLASS A GENERAL PARTNERS. Immediately
prior to the Effective Time, Bruce R. Spector and Joseph L. Mathias IV
shall withdraw as Class A General Partners of Benchmark, and Radioco I,
Inc., Radioco II, Inc. and Radioco III, Inc. shall be substituted as Class
A Limited Partners with respect to the Class A General Partnership
Interests formerly held by Bruce R. Spector and Joseph L. Mathias IV such
that, upon such substitution, Radioco I, Inc., Radioco II, Inc. and Radioco
III, Inc. shall be the sole Class A Partners of Benchmark.
4.12. TRANSFER OF PARTNERSHIP INTERESTS. The General
Partners agree that except as provided in this Agreement, they will not
transfer, sell or exchange their Partnership Interests to any other Person,
provided that each General Partner shall be permitted to transfer, sell or
exchange Partnership Interests to a General Partner Related Party of such
General Partner so long as, after giving effect to such transfer, sale or
exchange, Bruce R. Spector and Joseph L. Mathias IV remain the sole General
Partners of Benchmark and such General Partner continues to hold fifty
percent (50%) of the economic interest in Benchmark currently held by such
General Partner; further provided that in the event of the death of either
of the General Partners, 100% of the Partnership Interests of such General
Partner may be transferred to a General Partner Related Party.
4.13. ERISA. Within thirty days of the date hereof,
Benchmark agrees to file the Form 5500 for the Benchmark Communications
Disability Income Plan (the "Form 5500") under the Department of Labor's
Delinquent Filer Voluntary Compliance Program (the "DFVC Program") and
incur all costs necessary to complete the filing, including any penalties
and fines associated with the DFVC Program, as well as all costs relating
to the completion of the Form 5500 and the DFVC Program application.
ARTICLE V
COVENANTS OF MERGECO AND PARENT
5.1. NOTIFICATION OF CERTAIN MATTERS. If Mergeco (or its FCC
counsel) receives an administrative or other order or notification relating
to any violation or claimed violation of the rules and regulations of the
FCC, or of any Governmental Entity, that could affect Mergeco's ability to
consummate the transactions contemplated hereby, or should Mergeco (or its
FCC counsel) become aware of any fact relating to the qualifications of
Mergeco that reasonably could be expected to cause the FCC to withhold its
consent to the transfer of control of the Station Licenses, Mergeco shall
promptly notify Benchmark thereof and shall use its commercially reasonable
efforts to take such steps as may be necessary to remove any such
impediment to the transactions contemplated by this Agreement. Nothing in
this Section 5.1 shall be deemed to expand Mergeco's obligations under
Section 5.2 with respect to matters set forth in Section 5.2. In addition,
Mergeco shall give to Benchmark prompt written notice of (a) the
occurrence, or failure to occur, of any event of which it becomes aware
that has caused or that would be likely to cause any representation or
warranty of Mergeco contained in this Agreement to be untrue or inaccurate
at any time from the date hereof to the Closing Date, and (b) the failure
of Mergeco, or any officer, partner, employee or agent thereof, to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it hereunder. No
notification pursuant to this Section shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder; provided, however, that in the event any such notification
relates to a matter that would
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give rise to the right of Benchmark to terminate this Agreement or that
would result in the failure of Mergeco to satisfy the closing condition in
Section 7.3(a), Benchmark shall, if Mergeco requests, within forty (40)
Business Days of receiving such request, either waive such breach or,
subject to Mergeco's right to cure such breach during such period, elect to
terminate this Agreement pursuant to Section 9.1 (and, in either case,
shall notify Mergeco in writing of its election).
5.2. COMPLIANCE WITH COMMUNICATIONS ACT AND HSR ACT. Mergeco
covenants that it will not, and that it will cause any Person that directly
or indirectly controls Mergeco or that will, as of the Effective Time,
directly or indirectly, control Mergeco or the Surviving Partnership, not
to acquire after the date of this Agreement (directly or through a Person
controlled by a Person that controls Mergeco or that will, as of the
Effective Time, control Mergeco or the Surviving Partnership) media
businesses or interests in media businesses that will prevent or impair the
parties from obtaining the Commission Consent by Final Order and a
termination of the waiting period under the HSR Act, in each case, on or
prior to June 30, 1997. For purposes of this section, a Person shall be
deemed not to control a company with publicly traded securities unless such
Person has caused a majority of such company's board of directors to be
elected by such Person. Mergeco covenants to take any necessary
commercially reasonable steps with respect to any media businesses other
than the Mergeco Affiliated Businesses or the Stations located in the same
markets as the Mergeco Affiliated Businesses (including, if required,
divesting itself or causing its affiliates to divest themselves of media
businesses or interests therein) to comply with the Communications Act, the
FCC rules and regulations and the HSR Act so as to permit consummation of
the Merger and the Other Benchmark Transactions on or prior to June 30,
1997.
5.3. STATION ACQUISITIONS. In the event any of the
acquisitions contemplated by the Jackson Agreement, the Statesville
Agreement or the Montgomery Agreement have not been consummated prior to
the Effective Time, Mergeco agrees to use its commercially reasonable
efforts pursuant to the terms of the applicable agreement to cause each
such acquisition to be consummated promptly after the Effective Time, and
upon any such consummation, Mergeco shall make the payments to the General
Partners or their affiliates described in Sections 1.6(e)(7), 1.6(e)(8) and
1.6(e)(9). Nothing herein shall require the Surviving Partnership to waive
any breaches or amend any provisions of the applicable agreements.
5.4. PARENT LOANS. Immediately prior to the Closing, Parent
shall make the Parent Funded Debt Loan and the Parent Merger Loan to
Benchmark and in connection therewith Benchmark shall issue promissory
notes to Parent substantially in the form attached hereto as Exhibit 5.
5.5. BENCHMARK EMPLOYMENT AGREEMENTS. Commencing at the
Effective Time, the Surviving Partnership shall employ each of Robert
Schuler, Catherine Mecchi, Cindy Thayer, Rachel Mack and Maria Weist
(collectively, the "Employees"), if they are employed at the Effective
Time, for a period of at least one year after the Closing Date on
substantially the same salary terms and conditions and benefit terms and
conditions as are currently afforded to such Employees by Benchmark,
provided that the Surviving Partnership shall have the right to terminate
any of the Employees (i) for cause at any time without continuing
obligations to an Employee so terminated or (ii) without cause so long as
the Surviving Partnership continues to pay the salary and provide or pay
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for benefits for the remainder of the one year term. Each of the Employees
shall be deemed a third party beneficiary of this Agreement for purposes of
this Section 5.5.
5.6. PARENT-RADIOCO III, INC. MERGER. Prior to the Effective Time,
Mergeco and Parent shall take all necessary steps to become wholly owned
subsidiaries of Capstar (direct, in the case of Parent, and indirect, in
the case of Mergeco).
5.7. ELECTION OF DIRECTORS AND OFFICERS. Mergeco and Parent shall
cause any successor entity of Parent to (i) elect Bruce R. Spector to the
Board of Directors of such successor entity as Vice Chairman of such Board
of Directors and (ii) elect Joseph L. Mathias, IV as President of such
successor entity.
ARTICLE VI
MUTUAL COVENANTS
6.1. APPLICATION FOR COMMISSION CONSENT. By the tenth Business Day
after the date that the requisite consent of the Fund I Limited Partners,
the Fund IV Limited Partners, the Fund VII Limited Partners and the Fund
VIII Limited Partners to this Merger and each of the Other Benchmark Merger
Agreements is obtained, Benchmark and Mergeco will join and, if required,
cause any of their affiliates to join in one or more applications filed
with the FCC requesting the FCC's written consent to the transfer of
control of the Station Licenses (including, for this purpose, the Jackson
Stations, the Statesville Stations, the Montgomery Stations, WSCQ-FM and
WJMZ-FM) pursuant to this Agreement (the "Applications"). The parties will
take all proper steps reasonably necessary (a) to diligently prosecute the
Applications and (b) to obtain the FCC's determination that the grant of
each Application will serve the public interest, convenience and necessity
(the "Commission Consent"). The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material
breach of this Agreement. Nothing in this Section 6.1 shall be deemed to
expand Mergeco's obligations under Section 5.2 of the Agreement with
respect to the matters set forth in Section 5.2.
6.2. CONTROL OF STATIONS. This Agreement will not be consummated
until after the Commission Consents with respect to the Applications
referred to in Section 6.1 are granted without conditions that are
materially adverse to the Surviving Partnership and not customarily imposed
on the grant of such applications and have become Final Orders. Between
the date of this Agreement and the Closing Date, Mergeco will not directly
or indirectly control, supervise or direct the operation of the Stations.
Further, between the date of this Agreement and the Closing Date, Benchmark
shall supervise and control the operation of the Stations. Such operation
shall be the sole responsibility of Benchmark.
6.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate governmental authorities (other than the FCC) such requests,
reports or notifications as may be required in connection with this
Agreement, and shall diligently and expeditiously prosecute, and shall
cooperate fully with each other in the prosecution of such matters. Without
limiting the foregoing, the parties shall file promptly with the Federal
Trade Commission and the Antitrust Division of the Department of Justice
the notifications and other information (if any) required to be filed under
the
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HSR Act with respect to the transactions contemplated hereby and shall
use their commercially reasonable efforts to cause all applicable waiting
periods under the HSR Act to expire or be terminated as of the earliest
possible date. Nothing in this Section 6.3 shall be deemed to expand the
obligations of Mergeco under Section 5.2 with respect to the matters set
forth in Section 5.2.
6.4. BROKERS OR FINDERS. Other than fees and expenses that
do not reduce the Total Consideration and for which Mergeco or the
Surviving Partnership shall remain responsible, Mergeco represents and
warrants to Benchmark, and other than Americom and Alex. Brown, Benchmark
represents and warrants to Mergeco that no agent, broker, investment banker
or other person is or will be entitled to any broker's, finder's or
advisers' fees or any other commission or similar fee in connection with
any of the transactions contemplated by this Agreement. Benchmark also
represents and warrants that the aggregate fees payable to Americom (the
"Americom Fee") in connection with all of the transactions contemplated by
this Agreement and the Other Benchmark Transactions shall not exceed One
Million Dollars ($1,000,000). The Americom Fee shall be apportioned among
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII and shall be considered
Funded Debt of such Persons that shall be paid as part of the Funded Debt
Payoff.
6.5. ADDITIONAL AGREEMENT. Subject to the terms and
conditions of this Agreement, each of the parties hereto will use its
commercially reasonable efforts to do, or cause to be taken all action and
to do or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
6.6. EXECUTION AND DELIVERY OF TRANSACTION . Upon the
satisfaction of the conditions set forth in Section 7.1 and 7.2, Mergeco
and Parent shall execute and deliver all Transaction Documents to which
they will be a party and which they have not previously executed. Upon the
satisfaction of the conditions set forth in Section 7.1 and Section 7.3,
Sellers, the Selling Stockholders and the General Partners shall execute
and deliver all Transaction Documents to which they will be a party and
which they have not previously executed.
6.7. CERTAIN EVENTS. The parties agree that in the event (i)
that any necessary consents under the HSR Act have not been obtained or
(ii) the waiting period under the HSR Act has not expired on or prior to
June 30, 1997, Benchmark may elect to remove the Fund(s) or Station(s) that
were the cause of the failure to obtain such consents or of the
non-expiration of such waiting period from this transaction. In the event
such Fund or Stations are so removed, the parties agree (i) that this
Agreement and any other applicable Other Benchmark Transaction will be
appropriately amended to reflect the removal of such Fund or Stations from
this transaction and (ii) at the time of such removal, to enter into an
acquisition agreement pursuant to which such Funds(s) or Station(s) would
be acquired from Benchmark or its affiliates by Mergeco or its affiliates
on substantially the same terms and conditions as those contemplated by
this Agreement, which acquisition agreement shall, unless the parties
otherwise agree, terminate if it has not been consummated by September 30,
1997.
6.8. WDHT BUDGET. The parties agree to develop an operating
budget for WDHT-FM, Luverne, Alabama prior to the acquisition of WDHT-FM by
Fund XI. Operating expenses incurred under such budget shall be payable by
Fund XI from the proceeds of the Montgomery Loan or from
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operating revenues of the Montgomery Stations. Benchmark shall use its
commercially reasonable efforts to cause Fund XI to operate within such
budget.
6.9. PURCHASE PRICE ALLOCATION. The parties agree to
allocate the Benchmark Consideration for purposes of Section 751 and 754 of
the Code. In order to allocate the Benchmark Consideration for such
purposes, the parties agree that Bond & Pecaro will appraise the assets of
Benchmark and of each Fund as of the Closing Date. The values set forth in
such appraisal shall determine the value of Benchmark's and each Fund's
section 751 property, as such term is defined in Treas. Reg. Section
1.751-1, and shall be used to adjust the bases of the assets held by
Benchmark and each Fund pursuant to Code Sections 743 and 755, as a result
of the elections made under Section 754 of the Code.
6.10. RICHMOND SALE. The parties acknowledge that Fund III
and the radio stations owned and operated by it are not intended to be
acquired by Mergeco or its affiliates in this transaction. Benchmark
agrees to use its commercially reasonable efforts to consummate the
transactions contemplated by the Richmond Contract or otherwise dispose of
the stations that are the subject of the Richmond Contract prior to the
Closing Date.
6.11. RICHMOND AND NORFOLK STATIONS. The parties agree that
in the event the General Partners have held back a reserve fund from the
proceeds of the sales of Fund IV's Norfolk operations or Fund III's
Richmond operations, they may distribute such reserve funds at any time
prior to Closing, and any Persons who may be entitled to receive the
proceeds of such reserve funds (including, without limitation, Benchmark
and the Class A Limited Partners) may transfer their rights with respect to
such proceeds to any other Person or Persons.
ARTICLE VII
CONDITIONS PRECEDENT
7.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the transactions contemplated hereby
are subject to the satisfaction on or prior to the Closing Date of the
following conditions:
(a) Limited Partner Approval. The Other Benchmark Merger
Agreements and this Agreement and the other transactions
contemplated hereby or thereby shall have been approved and adopted
by the requisite vote or consent of those of the Fund Limited
Partners whose consent is required.
(b) Other Approvals. All authorizations, consents, orders or
approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity required for the
consummation of the transactions contemplated by this Agreement
shall have been filed, occurred or obtained. The Commission
Consents shall have become Final Orders.
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(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions
contemplated hereby shall be in effect.
(d) No Action. No action shall have been taken nor any
statute, rule or regulation shall have been enacted by any
Governmental Entity that makes the consummation of the transactions
contemplated hereby illegal.
7.2. CONDITIONS TO OBLIGATIONS OF MERGECO. The obligations of Mergeco to
effect the Merger and the transactions contemplated hereby are subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Mergeco:
(a) Representations and Warranties. The representations and
warranties of Benchmark set forth in this Agreement shall be true
and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of the Closing Date (unless otherwise
limited to the date of this Agreement) except (i) for any changes
permitted by the terms of this Agreement (including changes in the
operation of Benchmark) and (ii) to the extent that any inaccuracies
in such representations or warranties (without regard to materiality
(including Material Adverse Effect) qualifications) that have not been
waived do not and would not reasonably be expected to have a Material
Adverse Effect on the Surviving Partnership and its subsidiaries taken
as a whole (for purposes of this Section 7.2(a), the representations
and warranties of Benchmark in Sections 2.1(m)(i), (iv) and (v) shall
be deemed to have made without qualifications for knowledge, and the
representations and warranties of Benchmark and the applicable Funds
in Section 2.1(m) shall be deemed to have been made without any of the
exceptions listed on Schedule 2.1(m)). Mergeco shall have received a
certificate signed on behalf of Benchmark by the General Partners to
such effect with respect to Benchmark and its subsidiaries.
(b) Performance of Obligations. Benchmark and its subsidiaries
and its other affiliates shall have performed in all material
respects the obligations required to be performed by them under this
Agreement and the Other Benchmark Transactions prior to the Closing
Date (subject to the right to cure any nonperformance within the
Cure Period), and Mergeco shall have received a certificate signed
on behalf of Benchmark and its subsidiaries by the General Partners
to such effect.
(c) Intentionally Left Blank.
(d) Legal Opinions. Mergeco shall have received from Latham &
Watkins, one or more opinions dated the Closing Date, substantially
in the form of Exhibit 6 hereto. In rendering such opinions, Latham
& Watkins shall be entitled to rely on the opinion of local Maryland
counsel rendered to it with respect to certain matters governed by
Maryland Law.
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(e) Other Benchmark Transactions. Each of the Other Benchmark
Transactions (other than the Parent-Radioco III, Inc. Merger) shall
have been consummated and all of the conditions to closing of the
Parent-Radioco III, Inc. Merger shall have been satisfied, except to
the extent the failure to consummate any such Other Benchmark
Transaction or satisfy such closing conditions was a result of a
breach by Mergeco or Parent.
(f) Reincorporation of Radioco III. Radioco III, Inc. shall
have been reincorporated in the State of Delaware.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Benchmark
pursuant to Section 8.2 shall have been delivered.
7.3. CONDITIONS TO OBLIGATIONS OF BENCHMARK. The obligations of Benchmark
to effect the Merger and the transactions contemplated hereby are subject to
the satisfaction of the following conditions unless waived, in whole or in
part, by Benchmark.
(a) Representations and Warranties. The representations and
warranties of Mergeco set forth in this Agreement shall be true and
correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (unless otherwise
limited to the date of this Agreement) except to the extent that any
inaccuracies in such representations or warranties (without regard
to materiality (including Material Adverse Effect) qualifications)
do not and would not reasonably be expected to, have a Material
Adverse Effect on Benchmark and its subsidiaries taken as a whole.
Benchmark shall have received a certificate signed on behalf of
Mergeco by its President to such effect.
(b) Performance of Obligations of Mergeco. Mergeco and Parent
shall have performed in all material respects the obligations
required to be performed by them under this Agreement (and the Other
Benchmark Transactions) prior to the Closing Date (subject to the
right to cure any nonperformance within the Cure Period), and
Benchmark shall have received a certificate signed on behalf of
Mergeco by its President to such effect.
(c) Legal Opinion. Benchmark shall have received from Vinson &
Elkins, counsel to Mergeco, an opinion dated the Closing Date
substantially in the form of Exhibit 7 hereto. In rendering such
opinions, Vinson & Elkins L.L.P. shall be entitled to rely on the
opinion of local Maryland counsel rendered to it with respect to
certain matters governed by Maryland law.
(d) Other Benchmark Transactions. Each of the Other Benchmark
Transactions shall have been consummated and all of the conditions
to closing of the Parent-Radioco III, Inc. Merger shall have been
satisfied, except to the extent the failure to consummate any such
Other Benchmark Transaction or satisfy such
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conditions was a result of a breach by Benchmark, its subsidiaries or
the Selling Stockholders.
(e) Facilities Reimbursement. Mergeco shall have reimbursed
the General Partners for costs incurred by them in connection with
leasehold improvements, fixtures and furniture at the Corporate
Facilities, which reimbursement shall equal $202,000 pursuant to
instructions from the General Partners.
(f) Benchmark Lease Prepayment. Mergeco shall have made the
Benchmark Lease Prepayment.
(g) Parent Loans. Benchmark shall have received the proceeds
from the Parent Funded Debt Loan and the Parent Merger Loan.
(h) Closing Deliveries. All documents and instruments required
to be delivered by Mergeco pursuant to Section 8.2 shall have been
delivered.
ARTICLE VIII
CLOSING
8.1. CLOSING. Subject to the satisfaction or waiver of the
conditions set forth in Article VII and to the provisions of this Section
8.1, the closing of the Merger (the "Closing") will take place at a
location mutually acceptable to the parties, at 10:00 a.m., local time (or
at such other place and time as Mergeco and Benchmark may agree) on a date
mutually agreeable to the parties which date shall be on or before the
10th Business Day after the later of (i) the day on which the Commission
Consents have been granted by Final Order or (ii) the date on which the
applicable waiting period under the HSR Act has expired or been earlier
terminated without receipt of any objection or the commencement or threat
of any litigation by any Governmental Entity of competent jurisdiction to
restrain the consummation of the Transaction (the "Closing Date");
provided, however, that in no event shall the Closing occur prior to June
30, 1997. Notwithstanding the foregoing:
(a) In the case of a Trading Event, a Banking Event, a Conflict
Event or a Station Event (in each case as defined below) the Closing
Date may be extended as follows: (i) if the Cessation Date (as
defined below) is less than 30 days after the Event Date (as defined
below), Mergeco may extend the Closing Date to a date not later
than the 10th Business Day after the Cessation Date, (ii) if the
Cessation Date is more than 30, but less than 60, days after the
Event Date, Mergeco shall elect on the first to occur of the 10th
Business Day after the Cessation Date or the 60th day (or, if not a
Business Day, the next Business Day) after the Event Date (the
"Election Date") to either (A) close the Merger on the later to
occur of the 5th Business Day after the Election Date or the 60th
day (or, if not a Business Day, the next Business Day) after the
Event Date, or (B) terminate this Agreement and (iii) if the
Cessation Date has not occurred by the 60th day after the Event
Date, then on the 60th day (or, if not a Business Day, the next
Business Day) after the Event Date, Mergeco shall elect to close the
Merger on the 5th Business Day thereafter or terminate this
Agreement;
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provided, however, that Benchmark may postpone the Closing in the
event of a Station Event until the earlier to occur of the Cessation
Date with respect to such Station Event or September 30, 1997 unless
Mergeco has waived the elimination of such Station Event as a
condition to its obligation to close the Merger and any right to
indemnification it may have on account of such Station Event;
(b) If a Cure Period (as defined in Section 9.1(b)(i)) has not
ended on or before the Closing Date, the Closing Date shall be
extended to the end of the Cure Period; and
(c) If the Closing does not occur within 20 days after the date
of the Final Order, the parties shall, if necessary, request
approval from the FCC to extend the Closing so that the Closing
contemplated hereunder will not violate any FCC rules or
regulations.
For purposes of this Agreement, a "Station Event" shall mean any act of
nature, calamity or casualty (including but not limited to fires, floods,
earthquakes and storms) that has caused one or more Stations representing an
aggregate of 3% or more of the consolidated gross revenues of Benchmark, Fund
I, Fund IV, Fund VII, Fund VIII and the New Funds for the 12 calendar months
ending December 31, 1996 not to be operating in material compliance with its or
their respective Station License(s) for a period of 72 consecutive hours or six
days within any 30-day period; a "Trading Event" shall mean that trading
generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America that causes a
disruption of the capital markets of the United States of a magnitude
substantially similar to the disruption that would be caused by a Trading Event
or a Banking Event; an "Event Date" shall mean the date on which a Trading
Event, Banking Event, Conflict Event or Station Event begins; and a "Cessation
Date" shall mean the date on which a Trading Event, Banking Event, Conflict
Event or a Station Event ends. Pro forma adjustments shall be made for
purposes of calculating gross revenues for the 12-month period specified in the
definition of "Station Event" (i) to eliminate revenues of any Station sold
prior to the Closing Date and (ii) with respect to any radio broadcast station
acquired prior to the Closing Date, to assume that such station was acquired at
the beginning of such 12-month period and include the gross revenues of such
station for the full 12-month period.
In the event Mergeco elects to postpone the Closing pursuant to this
Section 8.1 on account of a Trading Event, Banking Event or Conflict Event,
each of the Fund I Consideration, the Fund IV Consideration, the Fund VII
Consideration, the Fund VIII Consideration and the Benchmark Consideration
shall be increased beginning after June 30, 1997, at a rate of fifteen percent
(15%) per annum (it being understood that such adjustment to the Total
Consideration shall not give Mergeco rights to extend the Closing in addition
to those specified in this Section 8.1).
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8.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Mergeco shall deliver to Benchmark the
following:
(i) the certificates in Section 7.3(a) and (b);
(ii) the opinions of counsel in Section 7.3(c);
(iii) an executed copy of the Post-Closing Escrow Agreement;
(iv) an executed copy of the Mathias Employment Agreement;
(v) a certified copy of the resolutions of the Board of
Directors and stockholders of Parent electing Bruce R. Spector
as Vice Chairman of the Board of Directors of Parent;
(vi) an executed copy of the License Agreement.; and
(vii) a certified copy of the resolution of the Board of
Directors of Parent electing Joseph L. Mathias IV as President
of Parent
(b) At the Closing, Benchmark shall deliver to Mergeco the
following:
(i) the certificates described in Section 7.2(a) and (b);
(ii) the opinions of counsel in Section 7.2(d);
(iii) an executed copy of the Post-Closing Escrow Agreement;
(iv) the Mathias Employment Agreement; and
(v) the Assignments of New Fund Limited Partnership
Interests.
(c) At the Closing, Mergeco shall receive from the partners of
Benchmark, Fund I, Fund IV, Fund VII and Fund VIII an affidavit
described in Section 1445(b)(2) of the Code or a statement in
conformance with Treas. Reg. Section 1.1445-11T(d)(2)(i) from the
general partner of Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII.
(d) At the Closing, the Certificate of Merger and the
certificates of merger contemplated by each of the Other Benchmark
Merger Agreements shall be signed by the parties and filed with the
Maryland State Department of Assessments and Taxation and the
Secretary of State of the State of Delaware.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
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(a) by mutual consent of Mergeco and Benchmark;
(b) by either Mergeco or Benchmark:
(i) if there shall have been any breach (which has not
been waived) of one or more representations or warranties (on
the date when any such representation or warranty was made or,
if applicable, on the Closing Date), covenants or agreements
set forth in this Agreement by a party, in each case without
regard to materiality (including Material Adverse Effect)
qualifications, which breach or breaches, when aggregated with
any other such breaches, has or would reasonably be expected
to have a Material Adverse Effect on the Surviving Partnership
and its subsidiaries taken as a whole (in the case of one or
more breaches by Benchmark or its affiliates) or Benchmark and
its subsidiaries taken as a whole (in the case of one or more
breaches by Mergeco or its affiliates) which breach or
breaches shall not have been cured within twenty (20) Business
Days (the "Cure Period") following receipt by the breaching
party of written notice of such breach from the non-breaching
party (for purposes of this Section 9.1(b), the
representations and warranties of Benchmark in Sections
2.1(m)(i), (iv) and (v) shall be deemed to have made without
qualifications for knowledge, and the representations and
warranties of Benchmark in Section 2.1(m) shall be deemed to
have been made without any of the exceptions listed on
Schedule 2.1(m));
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree or
ruling or taken any other action (which order, decree or
ruling the parties hereto shall use their best efforts to
lift), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling or other action
shall have become final and nonappealable;
(iii) if, for any reason, the FCC denies or dismisses any
of the Applications and the time for reconsideration or court
review under the Communications Act with respect to such
denial or dismissal has expired and there is not pending with
respect thereto a timely filed petition for reconsideration or
request for review;
(iv) if, for any reason, any of the Applications is
designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the later
of September 30, 1997, or the date to which the Closing Date
is extended pursuant to Section 8.1;
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(c) by Mergeco:
(i) with respect to a Station Event, Trading Event,
Banking Event or Conflict Event as provided in Section 8.1;
(ii) if the FCC grants any of the Applications with any
conditions that are materially adverse to the Surviving
Partnership and its subsidiaries, taken as a whole, and that
are not generally imposed on grants of such applications, and
the time for reconsideration or court review under the
Communications Act with respect to such material adverse
conditions has expired and there is not pending with respect
thereto a timely filed petition for reconsideration or request
for review;
(iii) if (x) Benchmark or the General Partners withdraw
their recommendations of this Agreement, the Merger or any
Other Benchmark Merger Agreement or Other Benchmark Merger
(whether or not under the circumstances permitted by this
Agreement), (y) Benchmark, Fund I, Fund IV, Fund VII or Fund
VIII shall have entered into a Business Combination
Transaction or (z) the General Partners or Benchmark shall
have recommended to the Limited Partners or any Fund Limited
Partners any Business Combination Transaction, whether or not
in the circumstances under which Benchmark has a right to
terminate this Agreement pursuant to Section 9.1(d)(i) of this
Agreement;
(iv) if Benchmark shall fail to perform its obligations
under Section 8.2;
(v) in the event of an Intentional Benchmark Default;
(vi) in the event the requisite consent or approval by
the Fund Limited Partners of this Agreement and the Other
Benchmark Merger Agreements has not been obtained on or prior
to the date that is sixteen (16) business days after the date
of this Agreement; provided, however, that if such requisite
consent or approval is obtained (and Mergeco is notified
thereof) prior to receipt by Benchmark of notice from Mergeco
that Mergeco intends to terminate this Agreement pursuant to
this Section 9.1(c)(vi), then Mergeco shall not have the right
to terminate this Agreement pursuant to this Section
9.1(c)(vi);
(vii) upon the occurrence of a Credit Agreement Event of
Default by the borrower under the Fund IV Loan Agreement, the
Fund VII Loan Agreement, the Fund VIII Loan Agreement, the
Jackson Loan Agreement, the Montgomery Loan Agreement or the
Statesville Loan Agreement; or
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(viii) if any of the Other Benchmark Transactions are
terminated due to the breach or default of Benchmark or its
affiliates or for any reason other than the breach or default
of Mergeco or Parent; or
(d) by Benchmark:
(i) in the exercise of its good faith judgment (subject
to Section 4.1) as to its fiduciary duties to the Limited
Partners or the Fund Limited Partners under applicable law,
the General Partners determine that such termination is
required by such fiduciary duties by reason of a proposal that
either constitutes a Business Combination Transaction or may
reasonably be expected to lead to a Business Combination
Transaction on terms more favorable to the Limited Partners
(or the Fund Limited Partners) than the Merger (or the Other
Benchmark Mergers) and which has a reasonable prospect of
being consummated in accordance with its terms (such
determination being based on consultations with a financial
consultant and its independent legal counsel) (a "Business
Combination Transaction Proposal"); provided that Benchmark
has provided Mergeco with at least forty-eight (48) hours
prior written notice of its intent to so terminate this
Agreement (together with a summary of the material terms of
such Business Combination Transaction Proposal); further
provided that any termination of this Agreement by Benchmark
pursuant to this Section 9.1(d)(i) shall not become effective
until Benchmark has made payment of the Alternative Proposal
Fee (as hereinafter defined) as required by Section 9.2
hereof; further provided that Benchmark may not terminate this
Agreement pursuant to this Section 9.1(d)(i), if it has
received the requisite vote or consent for approval by the
Limited Partners and the Fund Limited Partners of this
Agreement and the Other Benchmark Merger Agreements and the
transactions contemplated hereby and thereby; or
(ii) in the event Mergeco or its affiliate fails to fund
all or any portion of the Statesville Loan, the Jackson Loan
or the Montgomery Loan when obligated to fund in accordance
with the terms of the Statesville Loan Agreement, the Jackson
Loan Agreement and the Montgomery Loan Agreement,
respectively; or
(iii) if any of the Other Benchmark Transactions are
terminated due to the breach or default of Mergeco or its
affiliates or for any reason other than the breach or default
of Benchmark or its subsidiaries or the Selling Stockholders;
(iv) in the event the requisite consent or approval by
the Fund Limited Partners of this Agreement and the Other
Benchmark Merger Agreements has not been obtained on or prior
to the date that is sixteen (16) business days after the date
of this Agreement, provided that Benchmark shall
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give Mergeco five (5) Business Days prior notice of its
intention to terminate this Agreement pursuant to this clause
9.1(d)(iv); or
(v) if Mergeco shall fail to perform any of its
obligations under Section 8.2.
The right of any party hereto to terminate this Agreement pursuant to this
Section 9.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any person
controlling any such party or any of their respective partners, officers,
directors, employees, accountants, consultants, legal counsel, agents or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is, or
who is affiliated with a party that is, in material breach of this Agreement
shall be entitled to terminate this Agreement except with the consent of the
other parties hereto.
9.2. FEES AND EXPENSES.
(a) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII jointly
and severally agree to pay Mergeco a fee (an "Alternative Proposal
Fee") of Eight Million One Hundred Fifty Thousand Dollars
($8,150,000), subject to the adjustments set forth below, (i) if
this Agreement is terminated pursuant to Section 9.1(c)(iii), (ii)
simultaneously with any termination of this Agreement pursuant to
Section 9.1(d)(i), or (iii) if this Agreement is terminated pursuant
to Section 9.1(c)(vi) or Section 9.1(d)(iv) and Benchmark, Fund I,
Fund IV, Fund VII or Fund VIII enters into an agreement within six
(6) months after the date of termination which, when consummated,
would constitute a Business Combination Transaction or (iv) in the
event each of the events in the following clauses (a), (b) and (c)
occurs: (a) this Agreement is terminated pursuant to Section
9.1(c)(vi) or Section 9.1(d)(iv), (b) prior to the date that is
fifteen Business Days from the date hereof either Alex. Brown
withdraws, rescinds or revokes the fairness opinion described in
Section 2.1(t) or Benchmark receives a Business Combination
Transaction Proposal and (c) Benchmark, Fund I, Fund IV, Fund VII or
Fund VIII enters into an agreement within twelve (12) months after
the date of termination which, when consummated, would constitute a
Business Combination Transaction; provided, however, that if the
Business Combination Transaction giving rise to any fee payable
under this Section 9.2(a) involves the disposition of 35% or more,
but less than 50%, of the assets of Benchmark and its subsidiaries
(on a combined basis), then the fee payable under this Section
9.2(b) shall equal to the percentage of assets being disposed times
the Alternative Proposal Fee (as such fee may be adjusted pursuant
to the following sentence). In the event the Jackson Agreement, the
Montgomery Agreement or the Statesville Agreement has been
terminated for any reason other than a breach of the applicable
agreement by Benchmark or its subsidiaries, then the amount of the
Alternative Proposal Fee shall be reduced by $907,375 (with respect
to a termination of the Jackson Agreement), $1,071,000 (with respect
to a termination of the Montgomery Agreement) and $833,000 (with
respect to a termination of the
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Statesville Agreement); provided, however, that there shall be no
reduction if the applicable agreement was terminated due to a breach
by Benchmark or its subsidiaries (other than a breach of Benchmark and
its subsidiaries resulting from the failure of Mergeco or any of its
affiliates to fund all or any portion of the Statesville Loan, the
Jackson Loan or the Montgomery Loan, respectively, when obligated to
fund in accordance with the terms of the Statesville Loan Agreement,
the Jackson Loan Agreement or the Montgomery Loan Agreement,
respectively),.
(b) Mergeco agrees that in the event (i) (A) the Jackson
Agreement is terminated for any reason other than the breach of
Benchmark or Fund X (other than a default of Benchmark or Fund X
that results from a breach of Parent under the terms of the Jackson
Loan Agreement) and (B) Mergeco or any of its affiliates enters into
an agreement to purchase any of the Jackson Stations within twelve
(12) months of such termination, Mergeco shall pay to Benchmark a
fee of Two Million Eight Hundred Ninety Seven Thousand Five Hundred
Dollars ($2,897,500); (ii) (A) the Statesville Agreement is
terminated for any reason other than the breach of Benchmark or Fund
IX (other than a breach of Benchmark or Fund IX that results from a
breach of Parent under the terms of the Statesville Loan Agreement)
and (B) Mergeco or any of its affiliates enter into an agreement to
purchase any of the Statesville Stations within twelve (12) months
of such termination, Mergeco shall pay to Benchmark a fee of Seven
Million Sixty Thousand Dollars ($7,060,000); and (iii) (A) the
Montgomery Agreement is terminated for any reason other than the
breach of Benchmark or Fund XI (other than a default of Benchmark or
Fund IX that results from a breach of Parent under the terms of the
Montgomery Loan Agreement) and (B) Mergeco or any of its affiliates
enters into agreement to purchase any of the Montgomery Stations
within twelve (12) months of such termination, Mergeco shall pay to
Benchmark a fee of Three Million Four Hundred Twenty Thousand
($3,420,000). Capstar hereby fully, irrevocably and unconditionally
guarantees Mergeco's obligation to pay any or all of the fees
described in this Section 9.2(b).
(c) Benchmark, Fund I, Fund IV, Fund VII and Fund VIII agree to
pay Mergeco a fee in the amount of Three Hundred Thousand Dollars
($300,000), together with interest at the Pass Through Rate which
shall begin to accrue on the date hereof, in the event this
Agreement is terminated due solely to a breach by Benchmark or its
subsidiaries, which fee shall be apportioned among themselves as
follows: 20% to Benchmark 20% to Fund I, 20% to Fund IV, 20% to
Fund VII and 20% to Fund VIII. Benchmark, Fund I, Fund IV, Fund VII
and Fund VIII agree to pay Mergeco a fee in the amount of One
Hundred Thousand Dollars ($100,000), together with interest at the
Pass Through Rate which shall begin to accrue on the date hereof, in
the event this Agreement is terminated for any reason other than a
breach by Benchmark or its subsidiaries or other than due to a
breach solely by Mergeco or its affiliates, apportioned among
themselves as follows: 20% to Benchmark; 20% to Fund I; 20% to Fund
IV; 20% to Fund VII; and 20% to Fund VIII. If this Agreement is
terminated due solely to a breach by Mergeco, Benchmark shall not be
obligated to pay Mergeco any fee under this Section 9.2(c).
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(d) Except as provided in Section 9.2(a)(ii), the fees payable
under this Section 9.2 shall become due five (5) Business Days after
the obligation to pay the applicable fee arises.
9.3. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either
Benchmark or Mergeco as provided in Section 9.1, this Agreement
shall forthwith become void (other than with respect to covenants
that survive the termination of this Agreement), the Merger shall be
abandoned and there shall be no liability on the part of Benchmark,
Mergeco or Parent of any kind whatsoever, except (i) with respect to
Section 9.2 and Article X or as otherwise provided in this Section
9.3 which shall continue to apply in accordance with their terms and
(ii) each party shall remain liable for a breach of this Agreement.
Termination of this Agreement shall have no effect on the rights and
obligations of the parties under the Confidentiality Agreement. In
the event that Benchmark terminates this Agreement under Section
9.1(b)(i), 9.1(d)(ii), Section 9.1(d)(iii), or Section 9.1(d)(v),
the parties agree and acknowledge that the Sellers will suffer
damages that are not practicable to ascertain at the time of
execution of this Agreement. Accordingly, the Sellers and Mergeco
agree that, in such event, the Sellers shall be entitled, in the
aggregate, to the sum of Eight Million One Hundred Fifty Thousand
Dollars ($8,150,000) as liquidated damages, subject to the
adjustments set forth in clause (b). The Sellers and Mergeco agree
that the foregoing liquidated damages will be apportioned as set
forth in clause (b), are reasonable considering all the
circumstances existing as of the date hereof and constitute such
parties' good faith estimate of the actual damages reasonably
expected to result from the termination of this Agreement by
Benchmark pursuant to Section 9.1(b)(i), Section 9.1((d))(ii),
Section 9.1(d)(iii), or Section 9.1(d)(v). The Sellers agree that,
to the fullest extent permitted by law, the right to payment of the
Eight Million One Hundred Fifty Thousand Dollars ($8,150,000) as
liquidated damages subject to the adjustments set forth in clause
(b) under this Section 9.3 shall be their sole and exclusive remedy
if the Closing does not occur with respect to any damages whatsoever
that the Sellers may suffer as a result of any claim or cause of
action asserted by the Sellers relating to or arising from breaches
of the representations, warranties or covenants of Mergeco or Parent
contained in this Agreement, the Loan Agreements or the Transaction
Documents and to be made or performed at or prior to the Closing;
provided that because the Selling Stockholders and the General
Partners will benefit indirectly from the receipt by the Sellers of
liquidated damages, as a condition of payment, and upon receipt of
the liquidated damages under this Section 9.3, the Sellers, the
Selling Stockholders and the General Partners (the "Releasing
Parties") hereby irrevocably and unconditionally release, acquit,
and forever discharge Mergeco, Parent and their respective
successors, assigns, employees, agents, stockholders, partners,
subsidiaries, parent companies and other affiliates (corporate or
otherwise) (the "Released Parties") of and from any and all Released
Claims, including, without limitation, all Released Claims arising
out of, based upon, resulting from or relating to the negotiation,
execution, performance, breach or
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otherwise related to or arising out of the Merger Agreement, the
Transaction Documents, the Loan Agreements or any agreement
entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints,
claims,causes of action, promises, agreements, rights to payment,
rights to any equitable remedy, rights to any equitable
subordination, demands, debts, liabilities, express or implied
contracts, obligations of payment or performance, rights of offset
or recoupment, accounts, damages, costs, losses or expenses
(including attorneys' and other professional fees and expenses) held
by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or
contingent, direct or derivative, provided that this release shall
not release any of the Released Parties from any claims, demands,
causes of action or liabilities arising from any breach of the
Confidentiality Agreement or from any anticompetitive or fraudulent
actions attributable to any such parties (or other unlawful acts of
a similar nature).
(b) Subject to the adjustments set forth in this clause (b),
liquidated damages shall be apportioned among the Sellers as
follows: Benchmark shall be entitled to receive $2,828,050, Fund I
shall be entitled to receive $578,650 Fund IV shall be entitled to
receive $2,078,250, Fund VII shall be entitled to receive $1,230,650
and Fund VIII shall be entitled to receive $1,434,400. In the event
the Jackson Agreement, the Montgomery Agreement or the Statesville
Agreement has been terminated for any reason other than the failure
of Mergeco or any of its affiliates to fund all or any portion of
the Statesville Loan, the Jackson Loan or the Montgomery Loan,
respectively, when required to fund accordance with the terms of the
Statesville Loan Agreement, the Jackson Loan Agreement or the
Montgomery Loan Agreement, respectively, then the amount of
liquidated damages to which Benchmark is entitled to this Agreement
shall be reduced by $907,375 (with respect to a termination of the
Jackson Agreement) (the "Jackson Attributable Liquidated Damages"),
$1,071,000 (with respect to a termination of the Montgomery
Agreement) (the "Montgomery Attributable Liquidated Damages") and
$833,000 (with respect to a termination of the Statesville Loan
Agreement) (the "Statesville Attributable Liquidated Damages").
(c) In the event the liquidated damages are payable to the
Sellers, such liquidated damages shall be payable as follows: (i)
the Pre-Closing Escrow Deposit (including any cash drawn by the
Pre-Closing Escrow Agent from any letters of credit) shall be
released to Sellers' Representative, (ii) in the event the
Additional Statesville Escrow Deposit, the Additional Jackson Escrow
Deposit or the Additional Montgomery Escrow Deposit have not been
placed in escrow, liquidated damages equaling amounts owed by Fund
IX, Fund X or Fund XI, as applicable, under the Statesville Loan
Agreement, the Jackson Loan Agreement or the Montgomery Loan
Agreement, as applicable, shall be recoverable by Benchmark only by
way of offset against amounts owed by Fund IX, Fund X or Fund XI, as
applicable, to Parent under the applicable Loan Agreement and (iii)
in the event the Capital Expenditure Deposit has been released to
fund the Fund IV Loan or the Fund VII Loan, liquidated damages
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equaling the amounts owed by Fund IV or Fund VIII, as applicable, under the
Fund IV Loan Agreement or the Fund VIII Loan Agreement, as applicable,
shall be recoverable by the Sellers' Representative only by way of offset
against the Fund IV Loan or the Fund VII Loan.
ARTICLE X
GENERAL PROVISIONS
10.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND COVENANTS;
INDEMNIFICATION.
(a) SURVIVAL PERIOD. All of the representations and warranties
of Mergeco and Parent shall terminate at the Closing. All of the
representations and warranties of Benchmark and the Funds (other
than the representations and warranties in Section 2.1(m) and
Section 2.3(m), which shall expire at Closing) contained in this
Agreement shall survive the Merger and shall continue in full force
and effect for a period of twelve (12) months thereafter. For
purposes of this Section 10.1 only, each representation and warranty
contained in this Agreement for which indemnification can be or is
sought, or for which the Minimum Damage Amount can be satisfied,
hereunder shall be read (including, without limitation, for purposes
of determining whether a breach of such representation or warranty
has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein.
Notwithstanding any other provision of this Agreement, every
covenant or agreement by a party under this Agreement that is
applicable after the Effective Time shall survive the Closing.
(b) INDEMNIFICATION OF SURVIVING PARTNERSHIP INDEMNIFIED
PARTIES. Subject to the overall limitations, minimum amounts and
time limitations set forth in this Section 10.1 and the limitations
on recourse set forth in this Section 10.1:
(i) Fund I agrees to indemnify and hold harmless Parent,
Mergeco, the Surviving Partnership and each officer, director,
employee, consultant, stockholder and affiliate of the Surviving
Partnership or Parent (collectively, including Benchmark and its
subsidiaries after the Closing, the "Surviving Partnership
Indemnified Parties" and also referred to as the "Indemnified
Parties") from and against any and all damages, losses,
including taxes, claims, deficiencies, liabilities, demands,
charges, suits, penalties, costs and all other expenses
(including court costs and attorneys' fees and expenses incurred
in investigating and preparing for any litigation or proceeding)
(collectively, "Indemnified Costs") which any of the Surviving
Partnership Indemnified Parties may sustain, or to which any of
the Surviving Partnership Indemnified Parties may be subjected,
relating to or arising out of (i) any claim, including direct
claims under Section 10.1(e), action, suit, inquiry, judicial or
administrative proceeding, grievance or arbitration pending or
which may be brought against the Surviving Partnership
Indemnified Parties, or any of their respective properties or
assets, arising out of or as a result of
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any breach of representation or warranty (other than the
representations and warranties in Section 2.1(m) and 2.3(m)) of
Fund I or of Benchmark with respect to Fund I or nonfulfillment
or failure to perform any covenant or agreement on the part of
Fund I or of Benchmark with respect to Fund I under this
Agreement or the Fund I Merger Agreement or (ii) (a) any claim
brought by any Governmental Entity or third party pursuant to
Environmental Laws (including, without limitation, all common
law duties covered by the definition of such term) in effect on
the date of Closing or (b) any Required Remediation, in each
case to the extent such Indemnified Costs are attributable to
conditions that existed at, or releases or exposures that
occurred in connection with, the Owned Real Property or the
Leased Real Property of Fund I or any other activities that
occurred thereon, in each case, prior to the date of Closing and
are not attributable to (i) Mergeco or its affiliates' use
and/or occupancy of Owned Real Property or the Leased Real
Property or (ii) the Surviving Partnership Indemnified Parties'
use and/or occupancy of Owned Real Property or Leased Real
Property after the date of Closing; provided that the obligation
to indemnify the Surviving Partnership Indemnified Parties for
such Indemnified Costs shall not extend to the removal or
abatement of asbestos-containing materials that were not friable
on the date of Closing; and
(ii) Fund IV agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified Parties
may be subjected, relating to or arising out of any claim,
including direct claims under Section 10.1(e), action, suit,
inquiry, judicial or administrative proceeding, grievance or
arbitration pending or which may be brought against the
Surviving Partnership Indemnified Parties, or any of their
respective properties or assets, arising out of or as a result
of (i) any breach of representation or warranty (other than
the representations and warranties in Section 2.1(m) and
2.3(m)) of Fund IV or of Benchmark with respect to Fund IV or
nonfulfillment or failure to perform any covenant or agreement
on the part of Fund IV or of Benchmark with respect to Fund IV
under this Agreement or the Fund IV Merger Agreement or (ii)
(a) any claim brought by any Governmental Entity or third
party pursuant to Environmental Laws (including, without
limitation, all common law duties covered by the definition
of such term) in effect on the date of Closing or (b) any
Required Remediation, in each case to the extent such
Indemnified Costs are attributable to conditions that existed
at, or releases or exposures that occurred in connection with,
Owned Real Property or the Leased Real Property of Fund IV or
any other activities that occurred thereon, in each case,
prior to the date of Closing and are not attributable to (i)
Mergeco or its affiliates' use and/or occupancy of Owned Real
Property or the Leased Real Property or (ii) the Surviving
Partnership Indemnified Parties' use and/or occupancy of Owned
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Real Property or Leased Real Property after the date of
Closing; provided that the obligation to indemnify the
Surviving Partnership Indemnified Parties for such Indemnified
Costs shall not extend to the removal or abatement of
asbestos-containing materials that were not friable on the
date of Closing; and
(iii) Fund VII agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified Parties
may be subjected, relating to or arising out of any claim,
including direct claims under Section 10.1(e), action, suit,
inquiry, judicial or administrative proceeding, grievance or
arbitration pending or which may be brought against the
Surviving Partnership Indemnified Parties, or any of their
respective properties or assets, arising out of or as a result
of (i) any breach of representation or warranty (other than
the representations and warranties in Section 2.1(m) and
2.3(m)) of Fund VII or of Benchmark with respect to Fund VII
or nonfulfillment or failure to perform any covenant or
agreement on the part of Fund VII or of Benchmark with respect
to Fund VII under this Agreement or the Fund VII Merger
Agreement or (ii) (a) any claim brought by any Governmental
Entity or third party pursuant to Environmental Laws
(including, without limitation, all common law duties covered
by the definition of such term) in effect on the date of
Closing or (b) any Required Remediation, in each case to the
extent such Indemnified Costs are attributable to conditions
that existed at, or releases or exposures that occurred in
connection with, Owned Real Property or the Leased Real
Property of Fund VII or any other activities that occurred
thereon, in each case, prior to the date of Closing and are
not attributable to (i) Mergeco or its affiliates' use and/or
occupancy of Owned Real Property or the Leased Real Property
or (ii) the Surviving Partnership Indemnified Parties' use
and/or occupancy of Owned Real Property or Leased Real
Property after the date of Closing; provided that the
obligation to indemnify the Surviving Partnership Indemnified
Parties for such Indemnified Costs shall not extend to the
removal or abatement of asbestos-containing materials that
were not friable on the date of Closing; and
(iv) Fund VIII agrees to indemnify and hold harmless
Parent, Mergeco, the Surviving Partnership Indemnified Parties
from and against any and all Indemnified Costs which any of
the Surviving Partnership Indemnified Parties may sustain, or
to which any of the Surviving Partnership Indemnified
Parties may be subjected, relating to or arising out of any
claim, including any claims arising under Section 10.1(e),
action, suit, inquiry, judicial or administrative proceeding,
grievance or arbitration pending or which may be brought
against the Surviving Partnership Indemnified Parties, or any
of their respective properties or assets, arising out of or as
a result of (i) any breach of representation or warranty
(other than the representations and warranties in Section
2.1(m) and 2.3(m)) of Fund VIII or of Benchmark with respect
to
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Fund VIII or nonfulfillment or failure to perform any covenant
or agreement on the part of Fund VIII or of Benchmark with
respect to Fund VIII under this Agreement or the Fund VIII
Merger Agreement or (ii) (a) any claim brought by any
Governmental Entity or third party pursuant to Environmental
Laws (including, without limitation, all common law duties
covered by the definition of such term) in effect on the date of
Closing or (b) any Required Remediation, in each case to the
extent such Indemnified Costs are attributable to conditions
that existed at, or releases or exposures that occurred in
connection with, Owned Real Property or the Leased Real Property
of Fund VIII or any other activities that occurred thereon, in
each case, prior to the date of Closing and that are not
attributable to (i) Mergeco or its affiliates' use and/or
occupancy of Owned Real Property or the Leased Real Property or
(ii) the Surviving Partnership Indemnified Parties' use and/or
occupancy of Owned Real Property or Leased Real Property after
the date of Closing; provided that the obligation to indemnify
the Surviving Partnership Indemnified Parties for such
Indemnified Costs shall not extend to the removal or abatement
of asbestos-containing materials that were not friable on the
date of Closing; and
(v) The General Partners, jointly and severally, agree to
indemnify and hold harmless the Surviving Partnership
Indemnified Parties from and against any and all Indemnified
Costs which any of the Surviving Partnership Indemnified
Parties may sustain, or to which any of Surviving Partnership
Indemnified Parties may be subjected, relating to or arising
out of any claim, including direct claims under Section
10.1(e), action, suit, inquiry, judicial or administrative
proceeding, grievance or arbitration pending or which may be
brought against the Surviving Partnership Indemnified Parties,
or any of their respective properties or assets, arising out
of or as a result of:
(A) any breach of a representation or warranty of
Benchmark (i) that relates only to Benchmark and does not
relate to any of Fund I, Fund IV, Fund VII or Fund VIII or
their respective subsidiaries or (ii) relating to Fund IX,
Fund X or Fund XI (it being understood that, except with
respect to a breach of the representation and warranty
under Section 2.1(u), no indemnification obligation shall
arise from an event, condition, act or omission relating to
the Statesville Stations, the Jackson Stations or the
Montgomery Stations and existing or occurring prior to the
acquisition of the Statesville Stations, the Jackson
Stations or the Montgomery Stations by Fund IX, Fund X, or
Fund XI, as applicable);
(B) any nonfulfillment or failure to perform any
covenant or agreement on the part of Benchmark (i) that
relates only to Benchmark and does not relate to any of
Fund I, Fund IV, Fund VII or Fund VIII or their respective
subsidiaries or (ii) relating to Fund IX, Fund or Fund XI
(it being understood that, except with respect to a breach
of the representation and
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warranty under Section 2.1(u), no indemnification
obligation shall arise from an event, condition, act or
omission relating to the Statesville Stations, the
Jackson Stations or the Montgomery Stations and
existing or occurring prior to the acquisition of the
Statesville Stations, the Jackson Stations or the
Montgomery Stations by Fund IX, Fund X, or Fund XI, as
applicable);
(C) any failure of a Reserve Fund to cover the full
amount of an applicable Adjustment Amount that is a
negative number calculated pursuant to Section 1.13;
(D) any liability arising from the Richmond Contracts
or the Norfolk Contracts;
(E) any claims arising under Maryland Law from the
exercise of appraisal rights by holders of Dissenting
Partnership Interests; or
(F) any liabilities arising from the matters set forth
in clauses (B)(1), (2), (3), (4) and (5) of the first
sentence of Section 10.1(k).
(c) PARTNER REPRESENTATIVES. After the Effective Time, Partner
Representatives shall, on behalf of the former holders of
partnership interests in Fund I, Fund IV, Fund VII, and Fund VIII,
as applicable, act as the representatives of the Indemnifying
Parties with respect to claims relating to Fund I, Fund IV, Fund
VII, or Fund VIII, respectively, and the General Partners shall act
as the Indemnifying Party with respect to claims relating to
Benchmark or the New Funds. Such representation shall include
receiving any Claim Notices (as defined below).
(d) DEFENSE OF THIRD-PARTY CLAIMS. All claims for
indemnification by any Indemnified Party involving third party
actions, as defined below, shall be asserted and resolved as
follows:
(i) An Indemnified Party shall give prompt written notice
(the "Claim Notice") to any entity or person who is obligated
to provide indemnification hereunder (an "Indemnifying Party")
of the commencement or assertion of any action, proceeding,
demand or claim by a third party (collectively, a "third-party
action") in respect of which such Indemnified Party shall seek
indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party
from any liability that it, he or she may have to such
Indemnified Party under this Article X unless the failure to
give such notice prejudices such Indemnifying Party in any
material respect.
(ii) The Indemnifying Party shall have thirty (30) days
(the "Notice Period") from the delivery of the Claim Notice in
accordance with Section 10.8 to notify the Indemnified Party
(i) whether or not it disputes entitlement
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of the Indemnified Party to indemnification hereunder with
respect such claim or demand, or (ii) whether or not it agrees
to defend the Indemnified Party against such claim or demand;
provided, however, that any Indemnified Party is hereby
authorized prior to and during the Notice Period to file any
motion, answer, or other pleading which it shall deem necessary
or appropriate to protect its interests or those of the
Indemnifying Party and not materially prejudicial to the
Indemnifying Party. In the event that the Indemnifying Party
notifies the Indemnified Party within the Notice Period that it
agrees to defend the Indemnifying Party against such claim or
demand and except as hereinafter provided, the Indemnifying
Party shall have the right to defend by all appropriate
proceedings, which proceedings shall be promptly settled or
prosecuted by it to a final conclusion.
(iii) The Indemnified Party shall be entitled, at his,
her or its own expense, to participate in the defense of such
third-party action (provided, however, that the Indemnifying
Parties shall pay the attorneys' fees of the Indemnified Party
only if (1) the employment of separate counsel shall have been
authorized in writing by any such Indemnifying Parties in
connection with the defense of such third-party action, (2)
the Indemnifying Parties shall not have employed counsel
reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, or (3) the Indemnified
Party's counsel shall have advised the Indemnified Party in
writing, with a copy to the Indemnifying Party, that there is
a conflict of interest that would make it inappropriate under
applicable standards of professional conduct to have common
counsel).
(iv) The Indemnifying Party shall obtain the prior
written approval of the Indemnified Party, which approval
shall not be unreasonably withheld, before entering into or
making any settlement, compromise, admission, or
acknowledgment of the validity of such third-party action or
any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or
acknowledgment, injunctive or other equitable relief would be
imposed against the Indemnified Party.
(v) Without the prior consent of the applicable
Indemnified Party, which shall not be unreasonably withheld,
no Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as
an unconditional term thereof the giving by each claimant or
plaintiff to each Indemnified Party of a release from all
liability in respect of such third-party action.
(vi) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own
expense in the defense of), and the Indemnified Party shall be
entitled to have sole control over, the defense or settlement,
compromise, admission, or acknowledgment of any third-party
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action (A) as to which the Indemnifying Party fails to assume
the defense within a reasonable length of time or (B) to the
extent the third-party action seeks an order, injunction, or
other equitable relief against the Indemnified Party which, if
successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified
Party; provided, however, that the Indemnified Party shall make
no settlement, compromise, admission, or acknowledgment that
would give rise to liability on the part of any Indemnifying
Party without the prior written consent of such Indemnifying
Party, which consent shall not be unreasonably withheld.
(vii) The parties hereto shall extend reasonable
cooperation in connection with the defense of any third-party
action pursuant to this Article X and, if appropriate and
related to the claim in question, in making any counterclaim
against the person asserting the complaint against the
Indemnified Party. In connection therewith, the parties shall
furnish such records, information, and testimony as may be
reasonably requested.
(e) DIRECT CLAIMS. In any case in which an Indemnified Party
seeks indemnification hereunder which is not subject to Section
10.1(d) because no third-party action is involved, the Indemnified
Party shall send a Claim Notice with respect to such Indemnified
Costs, and, if applicable, otherwise comply with the provisions of
the Post-Closing Escrow Agreement and this Section 10.1. If the
Indemnifying Party does not notify the Indemnified Party within the
Notice Period that the Indemnifying Party disputes such claim, the
Indemnified Party shall be conclusively deemed to be entitled to
indemnification in the amount of such claim, subject to the
limitations of Section 10.1(f). The failure of the Indemnified Party
to exercise promptness in such notification shall not amount to a
waiver of such claim unless the resulting delay prejudices the
position of the Indemnifying Party with respect to such claim in any
material respect.
(f) LIMITATIONS. The following provisions of this Section
10.1(f) shall be applicable after the time of the Closing to claims
under Section 10.1:
(i) Minimum Damage Amounts.
(A) Neither Fund I, Fund IV, Fund VII, nor Fund VIII
shall be required to indemnify an Surviving Partnership
Indemnified Party under Section 10.1(b)(i) through (iv), as
applicable, for a breach of any representation, warranty or
covenant or the environmental indemnification except to the
extent that the aggregate amount of Indemnified Costs for
which all of the Surviving Partnership Indemnified Parties
are entitled to indemnification exceeds the amounts set
forth on Schedule 10.1(f) with respect to such Indemnifying
Party (the amounts set forth on Schedule 10.1(f) are
hereinafter referred to as the "Minimum Damage Amounts").
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(B) The General Partners shall not be required to
indemnify an Surviving Partnership Indemnified Party under
this Section 10.1 under Section 10.1(b)(v)(A) or (B), as
applicable, for a breach of any representation or warranty
or covenant, except to the extent that the aggregate amount
of Indemnified Costs for which all of the Surviving
Partnership Indemnified Parties are entitled to
indemnification pursuant to Section 10.1(b)(v)(A) and (B)
exceeds $281,137 (with respect to the General Partners, the
"Minimum Damage Amount"). In the event the Statesville
Agreement, the Jackson Agreement or the Montgomery
Agreement is not consummated or is terminated, the Minimum
Damage Amount with respect to the General Partners shall be
reduced by $83,300, $90,737 and $107,100, respectively;
provided, however, that notwithstanding the foregoing the
Minimum Damage Amount with respect to the General Partners
shall not be reduced below $20,000.
In the event the Indemnified Costs exceed the Minimum Damage Amounts, the
Surviving Partnership Indemnified Party shall be entitled to be paid the excess
of (a) the aggregate amount of such Indemnified Costs over (b) the Minimum
Damage Amounts, subject to the limitations on recovery and recourse set forth
in this Section 10.1(f); provided, however, that (i) the Indemnified Costs
relating to or arising out of any claims under Section 10.1(b)(v)(C) through
(F) shall not be subject to the Minimum Damage Amounts requirement, (ii) any
Indemnified Costs arising from a breach of the representations and warranties
of Benchmark in Section 6.4 and of the agreement of Benchmark in Section 10.6
shall not be subject to the Minimum Damage Amounts and (iii) claims under
Section 10.1(b)(v)(C), Section 10.1(b)(v)(E), and Section 10.1(b)(v)(F)
("Unlimited Claims") shall not be subject to the liability caps referred to in
Section 10.1(f)(iii) or the limitations as to recourse referred to in Section
10.1(f)(iii) below.
(ii) Limitation as to Time. No Indemnifying Party shall
be liable for any Indemnified Costs pursuant to this Section
10.1 unless a written claim for indemnification in accordance
with Section 10.1(d) or 10.1(e) is given by the Surviving
Partnership Indemnified Party to the Indemnifying Party with
respect thereto (i) within twelve (12) months after the
Closing with respect to any claims for Indemnified Costs under
this Section 10.1 other than claims made pursuant to Section
10.1(b)(v)(E) or (F) and (ii) prior to the date that is ten
days after expiration of the applicable statute of limitations
with respect to any claims for Indemnified Costs made pursuant
to Section 10.1(b)(v)(E) or (F).
(iii) Liability Cap. Without limiting any of the
foregoing provisions of this Section 10.1(f), the parties
hereto agree that (a) Fund I's liability for claims under
Section 10.1(b)(i) shall be limited to the amount of the Fund
I Post-Closing Escrow Deposit (excluding interest earned
thereon); (b) Fund IV's liability for claims under Section
10.1(b)(ii) shall be limited to the amount of the Fund IV
Post-Closing Escrow Deposit (excluding interest earned
thereon); (c) Fund VII's liability for claims under Section
10.1(b)(iii)
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shall be limited to the amount of the Fund VII Post-Closing
Escrow Deposit (excluding interest earned thereon); (d) Fund
VIII's liability for claims under Section 10.1(b)(iv) shall be
limited to the amount of the Fund VIII Post-Closing Escrow
Deposit (excluding interest earned thereon); (e) the General
Partners' joint and severally liability for claims under
Sections 10.1(b)(v)(A) together with claims under Section
10.1(b)(v)(B) shall not exceed, in the aggregate $1,546,250 (the
"General Partner Liability Cap"), provided that in the event the
Statesville Agreement, the Jackson Agreement or the Montgomery
Agreement have not been consummated or are terminated, the
General Partner Liability Cap shall be reduced by amounts equal
to $458,150, $499,050 and $589,050, respectively (with respect
to each such termination) further provided, that notwithstanding
the foregoing, the General Partner Liability Cap shall not be
reduced below $100,000; (h) the General Partners' joint and
several liability for claims under Section 10.1(b)(v)(D) shall
not exceed in the aggregate $250,000, and (i) the General
Partners' liability for claims under Section 10.1(b)(v)(C), (E)
and (F) shall be unlimited. The Surviving Partnership
Indemnified Parties shall be entitled to indemnification for the
claims described in clauses (a) through (d) above solely from
the applicable Post-Closing Escrow Deposits.
(g) INSTRUCTIONS TO ESCROW AGENT.
(i) INDIVIDUAL INDEMNIFYING PARTIES. Each Indemnifying
Party hereby covenants and agrees with each Surviving
Partnerships Indemnified Party that, if such Indemnifying
Party is or becomes obligated to indemnify an Surviving
Partnership Indemnified Party for Indemnified Costs under this
Article X, such Indemnifying Party hereby authorizes and
directs the Partner Representatives (hereinafter defined) to,
on behalf of such Indemnifying Party, execute and deliver to
the Escrow Agent written instructions to release to such
Surviving Partnership Indemnified Party such amounts of the
applicable Post-Closing Escrow Deposit as are necessary to
indemnify the Surviving Partnership Indemnified Party for such
Indemnified Costs.
(ii) APPOINTMENT OF PARTNERS REPRESENTATIVES. By the
execution and delivery of this Agreement, each Indemnifying
Party hereby irrevocably constitutes and appoints Bruce R.
Spector and Joseph L. Mathias, IV as the true and lawful
agents and attorneys-in-fact (the "Partner Representatives")
of such Indemnifying Party with full power of substitution to
act, jointly and severally, in the name, place and stead of
such Indemnifying Party with respect to (A) the power to
execute any amendment to this Agreement as such Partner
Representative shall deem necessary or appropriate in his sole
discretion, (B) delivery of the written instructions described
in Section 10.1(g)(i) on behalf of such Indemnifying Party,
and (C) the performance of the obligations and rights of such
Indemnifying Party under the
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Post-Closing Escrow Agreement, including, without limitation,
the power to execute the Post-Closing Escrow Agreement and any
amendments thereto on behalf of such Indemnifying Party, to do
or refrain from doing all such further acts and things, and to
execute, deliver and receive all such documents, waivers,
extensions and amendments as such Partner Representatives shall
deem necessary or appropriate in their sole discretion in
connection with the administration of the Post-Closing Escrow
Agreement (and any such actions shall be binding on such
Indemnifying Party).
Mergeco, the other Surviving Partnership Indemnified Parties, the Escrow
Agent and any other person, may conclusively and absolutely rely, without
inquiry, upon any action of any Partner Representative as the action of each
Indemnifying Party in all matters referred to herein, and each such
Indemnifying Party confirms all that each Partner Representative shall do or
cause to be done by virtue of his appointment as a Partner Representative. All
actions by the Partner Representatives are acknowledged by the parties hereto
to be taken by it solely as agents and attorneys-in-fact for each Indemnifying
Party. By the execution of this Agreement, Bruce R. Spector and Joseph L.
Mathias, IV have accepted their respective appointments as Partner
Representatives and in consideration for their agreement to act as the Partner
Representatives, each Indemnifying Party hereby agrees to indemnify and hold
Bruce R. Spector and Joseph L. Mathias, IV harmless from and against all
damages, losses, liabilities, charges, penalties, costs and expenses (including
court costs and attorneys' fees and expenses, if any) incurred by each of them
in connection with their performance as Partner Representatives, and Partner
Representatives may reserve a portion of the Total Consideration to be paid to
the Partners and Fund Limited Partners for purposes of covering any such
damages, liabilities, charges, penalties, costs and expenses. Each
Indemnifying Party covenants and agrees that he, she or it will not voluntarily
revoke the power of attorney conferred in this Section 10.1(g). If at any time
Bruce R. Spector or Joseph L. Mathias, IV dies or resigns from his position as
a Partner Representative, the remaining Partner Representative (if there is
one) shall serve as the sole Partner Representative, or if there is no
remaining Partner Representative, the other Indemnifying Parties that are not
affiliates of the Surviving Partnership after the Effective Time shall
designate a successor as soon as practicable.
(h) NO CONTRIBUTION. The General Partners may not make any
claim for contribution or indemnification after the Effective Time
from the Surviving Partnership or any of its affiliates for any
claim for which the General Partners are obligated to indemnify the
Surviving Partners under Section 10.1(b)(v). Even though Benchmark
and the Funds will be Surviving Partnership Indemnified Parties
after the Effective Time, the Surviving Partnership Indemnified
Parties shall have such rights to seek indemnification from the
Post-Closing Escrow Deposits as are granted under this Article X.
(i) RELEASE FROM ESCROW. Upon the expiration of twelve (12)
months after the Closing Date, the Surviving Partnership and the
Partner Representatives agree to instruct the Post-Closing Escrow
Agent to release, pursuant to the terms and provisions of the
Post-Closing Escrow Agreement, any amounts remaining in the
Post-Closing Escrow Deposits to the Partner Representatives, subject
to amounts
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retained in such Post-Closing Escrow Deposits for pending claims
pursuant to the terms and provisions of the Post-Closing Escrow
Agreement.
(j) EXCLUSIVE REMEDY FOR BREACH OF REPRESENTATION, WARRANTY OR
COVENANT. Commencing with the Effective Time, subject to Section 10.17,
the rights of the Surviving Partnership Indemnified Parties to
indemnification pursuant to this Section 10.1 shall be the sole and
exclusive remedy of such Surviving Partnership Indemnified Parties for any
breach of a representation, warranty or covenant set forth in this
Agreement, and, except for certain claims against the General Partners
under Section 10.1(b)(v), such recourse shall, in each instance, be limited
to the amounts held pursuant to the Post-Closing Escrow Agreement.
(k) INDEMNIFICATION OF GENERAL PARTNERS. The Surviving
Partnership shall indemnify Bruce R. Spector and Joseph L. Mathias,
IV in respect of, and hold such individuals harmless against, any
and all Indemnified Costs incurred by either or both of them in
connection with any claim, demand, action, suit, proceeding or
investigation relating to Benchmark and its subsidiaries (or any
actions such individuals may have taken in their capacities as
General Partners) and arising out of or pertaining to matters
(including liabilities of Benchmark and its subsidiaries) existing
or occurring at, prior to or after the Effective Time to the extent
such individuals would be entitled to indemnification under the
Existing Partnership Agreement or the Existing Fund Partnership
Agreements had such agreements been in effect at such time;
provided, however, that the Surviving Partnership and Funds shall
have no obligation to indemnify such individuals with respect to,
and Bruce R. Spector and Joseph L. Mathias IV hereby waive any
rights to, indemnification with respect to (A) matters set forth in
Section 10.1(h) or (B) the allocation of (1) any prior property or
cash distributions or the Fund I Consideration among Fund I Limited
Partners, (2) any prior property or cash distributions or the Fund
IV Consideration among Fund IV Limited Partners, (3) any prior
property or cash distributions or the Fund VII Consideration among
Fund VII Limited Partners, (4) any prior property or cash
distributions or the Fund VIII Consideration among Fund VIII Limited
Partners or (5) any prior property or cash distributions or the
Benchmark Consideration among the General Partners and the Limited
Partners. For purposes of the foregoing sentence, allocation shall
include the calculation and disposition of Holdback Funds (to the
extent such Holdback Funds are distributed in accordance with
instructions from Partner Representatives). Nothing in this Section
10.1(k) shall limit the Surviving Partnership from seeking recourse
from the applicable Post-Closing Escrow Deposits in accordance with
the terms of this Agreement for any indemnification obligations it
may incur pursuant to this Section 10.1(k). The procedures relating
to the defense of third party claims set forth in Section 10.1(d)
and direct claims in Section 10.1(e) are incorporated into this
Section 10.1(k) by reference and, for purposes of the implementation
of such procedures, Bruce R. Spector and Joseph L. Mathias shall be
considered the "Indemnified Party" and the Surviving Partnership
shall be considered the "Indemnifying Party."
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10.2. KNOWLEDGE. Wherever reference is made in this Agreement to a
particular statement being "to the knowledge of Benchmark" or "to the knowledge
of a Fund" (or any correlative phrase), such phrase shall be deemed to mean the
actual knowledge of Bruce R. Spector, Joseph L. Mathias IV, Cindy Thayer,
Robert Schuler or Catherine Mecchi.
10.3. AMENDMENT AND MODIFICATION. This Agreement may be amended by the
parties hereto by mutual agreement at any time prior to the Effective Time.
This Agreement may not be amended except by an instrument in writing signed by
the parties hereto.
10.4. WAIVER OF COMPLIANCE. Any failure of any party to comply with any
obligation, covenant, agreement or condition contained herein may be waived
only if set forth in an instrument in writing signed by the party or parties
entitled to rely upon any such obligation, covenant, agreement or condition,
but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any other failure.
10.5. SEVERABILITY. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of applicable law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Merger is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that
the Merger be consummated as originally contemplated to the fullest extent
possible.
10.6. EXPENSES AND OBLIGATIONS. All FCC filing fees, HSR Act filing fees
and fees payable to the Escrow Agent, the Post-Closing Escrow Agent or the
Exchange Agent shall be paid on or prior to Closing, as applicable, one-half by
Mergeco and one-half by Benchmark and its subsidiaries. Except as otherwise
expressly provided in this Agreement or as provided by law, all other costs and
expenses incurred by the parties hereto in connection with the consummation of
the transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. In the event of a dispute between the
parties in connection with this Agreement and the transactions contemplated
hereby, each of the parties hereto hereby agrees that the prevailing party
shall be entitled to reimbursement by the other party of reasonable legal fees
and expenses incurred in connection with any action or proceeding.
10.7. PARTIES IN INTEREST. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement. Any Surviving Partnership Indemnified Parties that are not parties
to this Agreement are intended to be third party beneficiaries of Section 10.1.
10.8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally (which shall include
delivery by facsimile, or by a nationally recognized reputable overnight
courier service that issues a receipt or other confirmation
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of delivery), or three (3) business days after the date mailed by
registered or certified U.S. mail (return receipt requested and postage
prepaid) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) If to Mergeco or Parent, to:
Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas, 25th Floor
New York, NY 10019
Attn: Lawrence D. Stuart, Jr.
Facsimile: (212) 424-1450
with a copy to:
Vinson & Elkins
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas
Attn: Michael D. Wortley, Esq.
Facsimile: (214) 220-7716
(b) If to Benchmark, Fund I, Fund IV, Fund VII, Fund VIII, the
Partner Representatives, or the General Partners:
Benchmark Communications Radio
Limited Partnership
111 South Calvert Street
Suite 2850
Baltimore, Maryland 21202
Attn: Bruce R. Spector
Facsimile: (410) 244-7170
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attn: Eric L. Bernthal
Facsimile: (202) 637-2201
10.9. INTERPRETATION. When a reference is made in this Agreement to
Sections or Exhibits, such reference shall be to a Section or Exhibit to this
Agreement unless otherwise indicated. The table of contents, if any, and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
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Whenever the words "include," "includes," or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
10.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
10.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the Confidentiality Agreement referred to in Section 4.2(a), the
exhibits and schedules hereto, the other certificates, documents and
instruments delivered hereunder and similar operative documents relating to the
Other Benchmark Transactions) constitutes the entire agreement of the parties
hereto and supersedes all prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof. There are
no representations, warranties, agreements or covenants other than those
expressly set forth in this Agreement (as so defined).
10.12. GOVERNING LAW; CONSENT TO JURISDICTION. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
WITHOUT REGARD TO CHOICE OF LAW RULES USED IN THAT JURISDICTION.
10.13. PUBLIC ANNOUNCEMENTS. Mergeco, Parent and Benchmark shall agree
with each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to reaching such agreement, except as required by applicable
laws.
10.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Benchmark and without releasing Mergeco from any of its
obligations or liabilities hereunder, Mergeco may assign or delegate any or all
of its rights or obligations under this Agreement to any affiliate thereof so
long as such assignment would by considered "pro forma" by the FCC, and (b)
nothing in this Agreement shall limit Mergeco's ability to make a collateral
assignment of its rights under this Agreement to any institutional lender that
provides funds to Mergeco without the consent of Benchmark or any party hereto.
Benchmark shall execute an acknowledgment of such assignment(s) and collateral
assignments in such forms as Mergeco or its institutional lenders may from time
to time reasonably request; provided, however, that unless written notice is
given to Benchmark that any such collateral assignment has been foreclosed
upon, Benchmark shall be entitled to deal exclusively with Mergeco as to any
matters arising under this Agreement or any of the other agreements delivered
pursuant hereto. In the event of an assignment permitted by this Section, the
provisions of this Agreement shall inure to the benefit of and be binding on
any Mergeco's assigns. Nothing in this Agreement shall prevent Parent from
assigning its interests in Mergeco to an affiliate of Parent (so long as such
assignment would be considered "pro forma" by the FCC).
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10.15. FURTHER ASSURANCES. At the Closing or from time to time
thereafter, the Surviving Partnership shall execute and deliver such other
instruments of assignment, transfer and delivery and shall take such other
actions as the other reasonably may request in order to consummate,
complete and carry out the transactions contemplated by this Agreement.
10.16. PARTNER, DIRECTOR, OFFICER AND STOCKHOLDER LIABILITY. Except as
otherwise expressly provided in this Agreement, the Loan Agreements, the Other
Loan Documents (as defined in the Loan Agreements) or the other Transaction
Documents, the directors, officers, stockholders and affiliates of Parent and
Mergeco or their affiliates and the partners, officers, employees and
affiliates of Benchmark or its affiliates shall not have any personal liability
for any liabilities arising under this Agreement or in connection with this
transaction.
10.17. NO WAIVER OF FRAUD. Notwithstanding any provision of this
Agreement to the contrary, no party hereto shall be deemed to have waived any
claim of fraud it may have against another party.
10.18. SPECIFIC PERFORMANCE. The parties hereto agree that the Stations
are unique assets which cannot be readily obtained in the open market.
Therefore, Mergeco shall have right to the remedy of specific performance in
addition to any other rights or remedies which may be available to it.
Accordingly, notwithstanding and in addition to any rights and remedies
available hereunder, or under applicable law, Mergeco shall have the right to
specifically enforce the parties' performance under this Agreement and each
such party agrees to waive the defense in any suit that Mergeco has an adequate
remedy at law and to interpose no opposition, legal or otherwise, as to the
propriety of specific performance as a remedy.
10.19. ARBITRATION.
(a) PRE-ARBITRATION MEETING. The parties shall attempt in good
faith to resolve promptly any dispute, controversy or claim under,
arising out of, relating to or in connection with this Agreement by
negotiations between one representative designated by each party.
If any such dispute, controversy or claim should arise, the
designated representatives of the parties shall meet at least once
and will attempt to resolve the matter. Either designated
representative may request the other to meet within 14 days after
delivery of written notice to the other party of any such dispute,
controversy or claim, at a mutually agreed time and place.
(b) ARBITRATION PROCEEDINGS. If the matter has not been
resolved pursuant to the foregoing procedures within 60 days after
the first meeting of the parties' designated representatives (which
period may be extended or shortened by mutual agreement), the matter
shall be settled exclusively by arbitration (except as provided in
Section 10.19(f) herein) conducted in accordance with the provisions
of the Federal Arbitration Act (99 U.S.C. Section Section 1-16),
and in accordance with the Center for Public Resources, Inc.'s Rules
(the "Rules of Arbitration") for Non-Administered Arbitration of
Business Disputes, by three arbitrators, of whom each party shall
appoint one arbitrator, and such appointed arbitrators shall appoint
the third arbitrator. All arbitrators to be selected under this
Section 10.19 shall, unless the parties
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mutually agree otherwise, be persons: (a) who meet the qualifications
set forth in Rule 7 of the Rules of Arbitration; (b) who are attorneys
or retired judges; (c) who are residents of a State other than
Maryland or Texas; and (d) who have past experience in settling
complex litigation involving claims relating to mergers or
acquisitions. The arbitration of such matters, including the
determination of any amount of damages suffered by any party hereto by
reason of the acts or omissions of any party, shall be final and
binding upon the parties to the maximum extent permitted by law. The
parties shall use their best efforts to cause a final decision of the
arbitrators under this Section 10.19 to be issued no later than sixty
(60) days after the date that the dispute is referred to arbitration
and, in any event, with disputes arising prior to Closing, no later
than November 30, 1997. No party shall seek, and no arbitrator shall
be authorized to award, any punitive damages relating to any matter
under, arising out of, in connection with or relating to this
Agreement in the arbitration proceedings set forth herein or in any
other forum. The parties intend that this agreement to arbitrate be
valid, binding, enforceable and irrevocable.
(c) PLACE OF ARBITRATION. Any arbitration proceedings
hereunder shall be conducted in New York, New York or at such other
location as the parties may agree.
(d) JUDGMENTS. Any arbitration award hereunder shall be final
and binding upon the parties, and judgment may be entered thereon,
upon the application of either party, by any court having
jurisdiction.
(e) EXPENSES. Each party shall be entitled to be reimbursed by
the other party for costs and expenses incurred in connection with
commencing any action hereunder, including reasonable attorneys'
fees and arbitrators' fees, if and to the extent determined by the
arbitrator or arbitrators arbitrating any such action.
(f) EQUITABLE REMEDIES. Notwithstanding anything else in this
Section 10.19 to the contrary, each party shall be entitled to seek
any equitable remedies available under applicable law from any court
of competent jurisdiction, and the order or judgment of any such
court shall be binding in any arbitration proceeding pursuant to
this Section 10.19.
ARTICLE XI
DEFINITIONS
11.1. CERTAIN DEFINITIONS. For purposes of this Agreement, the term:
"Accounts Receivable Consideration" allocable to a Person shall be an
amount equal to ninety five percent (95%) of the aggregate dollar amount of
accounts receivable of 120 days or less (and, in the case of agency accounts
receivable, of 180 days or less) of such Person outstanding at the close of
business on the Closing Date.
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"Actual Net Current Assets" of a Person shall be equal to the difference
of Current Assets of such Person (as reflected on the Closing Balance Sheet)
minus Unfunded Debt of such Person (as reflected on the Closing Balance Sheet).
"Additional Letters of Credit" shall have the meaning set forth in Section
1.11.
"Adjustment Amount" means, with respect to any Person, the difference
(whether positive or negative) of Actual Net Current Assets of such Person
minus Initial Net Current Assets of such Person. For purposes of calculating
the Adjustment Amount for Benchmark under this Agreement, Fund I, Fund IV, Fund
VII, Fund VIII, each of the New Funds and each of their respective subsidiaries
shall be deemed not to be subsidiaries of Benchmark.
"Affiliate" of a specified person means a person who, directly or
indirectly, through one or more intermediaries, controls, is controlled by, or
is under common control with, such specified person.
"Alex. Brown" shall have the meaning set forth in Section 2.1(t).
"Alternative Proposal Fee" shall have the meaning set forth in Section
9.2.
"Americom Fee" shall have the meaning set forth in Section 6.4.
"Alex. Brown Fee" shall mean the fee of the Three Hundred Thousand Dollars
($300,000) paid on the date hereof by Mergeco to Alex. Brown in connection with
the Alex. Brown Fairness Opinion.
"Alex. Brown Fairness Opinion" shall have the meaning set forth in Section
2.1(t).
"Applications" shall have the meaning set forth in Section 6.1.
"Assignments of New Fund Partnership Interests" means the Assignments of
Partnership Interest, each in substantially the form of Exhibit 4 hereto,
pursuant to which Bruce R. Spector will assign his limited partnership interest
in each of Fund IX, Fund X and Fund XI to Parent immediately after the
Effective Time.
"Balance Sheet" shall have the meaning set forth in Section 2.1(f)(ii).
"Balance Sheet Date" shall have the meaning set forth in Section
2.1(f)(ii).
"Bankers Trust" shall have the meaning set forth in Section 1.11.
"Banking Event" shall have the meaning set forth in Section 8.1.
"BCF Calculation" shall have the meaning set forth in Section 1.6.
"Benchmark" means Benchmark Communications Radio Limited Partnership.
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"Benchmark Allocable Portion" means, with respect to any Holdback Fund or
the Residual Consideration, the portion of such Holdback Fund or the Residual
Consideration (assuming for this purpose that the Residual Consideration is a
positive number) that the holders of Convertible Partnership Interests would
be entitled to receive pursuant to this Agreement in the event the full amount
of such Holdback Fund or the Residual Consideration had in fact been disbursed
as part of the Merger Consideration by the Exchange Agent on the Closing Date.
"Benchmark Consideration," which shall consist of consideration allocable
to the New Funds and to the goodwill and other assets of Benchmark, means,
subject to the adjustments described in Section 1.6(e) hereof, the sum of (i)
Fifty Six Million Two Hundred Twenty Seven Thousand Five Hundred Dollars
($56,227,500) in cash minus (ii) the Funded Debt of Benchmark, plus (iii) the
Current Assets of Benchmark minus (iv) the Unfunded Debt of Benchmark, minus
(v) the principal amounts drawn under the Jackson Loan, the Statesville Loan
and the Montgomery Loan but only to the extent such amounts were drawn to pay
the Jackson Consideration, the Statesville Consideration and the Montgomery
Consideration minus (vi) the Benchmark Allocable Portion of the Residual
Consideration. For purposes of clauses (ii), (iii) and (iv) of the preceding
sentence, Fund I, Fund IV, Fund VII, Fund VIII, each of the New Funds and each
of their respective subsidiaries shall be deemed not to be subsidiaries of
Benchmark.
"Benchmark Dissenting Partner Fund" means an amount equal to the portion
of the Total Consideration that would have been allocable to the holders of
Benchmark Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Merger with respect to such partnership interests under
Maryland Law.
"Benchmark Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs,
expenses or liabilities that may be incurred with respect to holders of
Benchmark Dissenting Partnership Interests. The Benchmark Dissenting
Partner Reserve shall constitute a portion of the Total Consideration.
"Benchmark Dissenting Partnership Interests" shall have the meaning set
forth in Section 1.7.
"Benchmark Lease Agreement" means the office lease for Suite 2850, 111 S.
Calvert St., Baltimore, MD.
"Benchmark Lease Prepayment" means the prepayment by Mergeco of all
remaining payments, totaling $245,000, owed by the tenant under the Benchmark
Lease Agreement from July 1, 1997 to the end of its term (September 30, 2000).
"Benchmark Negative Trade Balance" shall have the meaning set forth in
Section 3.2.
"Business Combination Transaction" means any lease, sale, transfer or
other disposition (including by way of merger, consolidation, business
combination or sale, issuance or exchange of partnership interests but
excluding any pledge or mortgage) of 35% or more of the assets of or interest
in Benchmark and its subsidiaries (measured on an aggregate basis) in one or
more transactions (whether or not related);
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"Business Combination Transaction Proposal" means a bona fide and written
proposal from a financially qualified third party addressed to Benchmark, the
General Partners, the Limited Partners or the Fund Limited Partners, which
proposal (i) has been communicated (whether or not by the General Partners) to
holders of Fund Limited Partnership Interests who hold a substantial percentage
of voting power (with respect to mergers) of a Fund that fails to approve the
Other Benchmark Merger Agreement to which such Fund is a party, (ii) is a
proposal to acquire Benchmark, its subsidiaries or any of their assets pursuant
to a Business Combination Transaction, and (iii) contains a specific
description of the consideration to be paid in such Business Combination
Transaction; provided that a proposal shall not constitute a Business
Combination Transaction Proposal unless such proposal, if pursued by the
General Partners, would reasonably be expected to result in a Business
Combination Transaction.
"Business Day" means any day on which the principal offices of the SEC in
Washington, DC are open to accept filings, or, in the case of determining a
date when any payment is due, any day on which banks are not required or
authorized to close in New York, New York.
"Capital Expenditure Deposit" shall have the meaning set forth in Section
1.11.
"CERCLA" shall have the meaning set forth in Section 2.1(m).
"CERCLIS" shall have the meaning set forth in Section 2.1(m)(vi).
"Cessation Date" shall have the meaning set forth in Section 8.1.
"Claim Notice" shall have the meaning set forth in Section 10.1(d).
"Class A General Partners" means each of the General Partners of Benchmark
that hold Class A General Partnership Interests.
"Class A General Partnership Interests" means the Partnership Interests of
the Class A General Partners.
"Class A Limited Partners" means each of the Limited Partners of Benchmark
that hold Class A Limited Partnership Interests.
"Class A Limited Partnership Interests" means the Partnership Interests of
the Class A Limited Partners.
"Class A Partners" means the Class A General Partners and the Class A
Limited Partners.
"Closing" shall have the meaning set forth in Section 8.1.
"Closing Balance Sheet" shall have the meaning set forth in Section
1.6(h).
"Closing Date" shall have the meaning set forth in Section 8.1.
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"Code" shall have the meaning set forth in Section 2.1(n).
"Commission Consents" shall have the meaning set forth in Section 6.1.
"Communications Act" shall have the meaning set forth in Section
2.1(g)(i).
"Confidentiality Agreement" shall have the meaning set forth in Section
4.2.
"Conflict Event" shall have the meaning set forth in Section 8.1.
"Consent Solicitation" shall have the meaning set forth in Section
1.10(c).
"control" (including the terms "controlled by" and "under common control
with") means the possession, directly or indirectly or as trustee or executor,
of the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities, as trustee or
executor, by contract or credit arrangement or otherwise.
"Converted Partnership Interest" shall have the meaning set forth in
Section 1.5.
"Convertible Partnership Interests" means the Limited Partnership
Interests (other than the Class A Limited Partnership Interests) and the
General Partnership Interests.
"Corporate Facilities" means the facilities at 111 S. Calvert Street,
Suite 2850, Baltimore, Maryland.
"Credit Agreement Event of Default" means (a) an event described in
Section 6.02 or 6.04 of any of the Loan Agreements, or (b) an event described
in any other Section of Article VI of any of the Loan Agreements to the
extent that such event constitutes (i) an intentional or willful act
voluntarily taken by any party to a Loan Agreement other than the Lender,
the purpose of which act is to materially breach the terms of the Loan
Agreement and to induce Mergeco to exercise its termination rights under
this Agreement, (ii) a material breach or, in the case of Section 5.14 or
6.10 of any of the Loan Agreements, any breach, by any party to a Loan
Agreement other than the Lender of a covenant contained in any Loan
Agreement to which such Person is a party, which breach is (a) capable of
being cured within the Cure Period using commercially reasonable efforts
and (b) is not cured within such Cure Period (which Cure Period shall
commence upon receipt by such party of written notice of such breach from
the Lender), or (iii) a material breach by any party to any Loan Agreement
other than the Lender of a covenant to any Loan Agreement, which breach (a)
is not capable of being cured within the Cure Period using commercially
reasonable efforts and (b) would reasonably be expected to result in a
Material Adverse Effect. For purposes of clause (iii) of this definition,
a Material Adverse Effect shall be deemed to include any material adverse
effect that would result in damages to the Surviving Partnership or its
subsidiaries in excess of the Material Adverse Effect Threshold.
"Cure Period" shall have the meaning set forth in Section 9.1.
"Current Assets" of a Person means the Accounts Receivable Consideration
allocable to such Person and the amount of cash, cash equivalents, prepaid
items, security deposits, other
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receivables not included among the receivables that form the basis of the
calculation of the Accounts Receivable Consideration allocable to such
Person (including employee and affiliate receivables) and other current
assets (other than current assets relating to trade or barter agreements to
which such Person is a party and other than any reserve fund held back by
Benchmark relating to the Norfolk Contracts, the rights to which fund may
be assigned to any other party prior to Closing) of such Person as of 11:59
p.m. on the day immediately preceding the Closing Date.
"Delaware Law" shall have the meaning set forth in the Recitals.
"Dissenting Partner Funds" means the Benchmark Dissenting Partner Fund,
the Fund I Dissenting Partner Fund, the Fund IV Dissenting Partner Fund, the
Fund VII Dissenting Partner Fund and the Fund VIII Dissenting Partner Fund.
"Dissenting Partner Reserves" means the Benchmark Dissenting Partner
Reserve, the Fund I Dissenting Partner Reserve, the Fund IV Dissenting Partner
Reserve, the Fund VII Dissenting Partner Reserve and the Fund VIII Dissenting
Partner Reserve.
"Dissenting Partnership Interests" means, collectively, the Benchmark
Dissenting Partnership Interests, the Fund I Dissenting Partnership Interests,
the Fund IV Dissenting Partnership Interests, the Fund VII Dissenting
Partnership Interests and the Fund VIII Dissenting Partnership Interests.
"Effective Time" shall have the meaning set forth in Section 1.2.
"Election Date" shall have the meaning set forth in Section 8.1.
"Employee Benefit Plans" shall have the meaning set forth in Section
2.1(p)(i).
"Environmental Costs or Liabilities" shall have the meaning set forth in
Section 2.1(m)(iv).
"Environmental Laws" shall have the meaning set forth in Section 2.1(m).
"Environmental Report" means a "Phase I Environmental Site Assessment" or
a "Phase II Environmental Site Assessment" as referred to in the ASTM Standards
on Environmental Site Assessments for Commercial Real Estate, E 1527-94, any
correspondence from a Governmental Entity identifying Hazardous Substance
contamination, or any other similar environmental report.
"ERISA" shall have the meaning set forth in Section 2.1(p)(i).
"ERISA Group" shall have the meaning set forth in Section 2.1(p)(i).
"Event Date" shall have the meaning set forth in Section 8.1.
"ESAs" shall have the meaning set forth in Section 3.3.
"Escrow Agent" shall have the meaning set forth in Section 1.11.
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"Exchange Agent" shall have the meaning set forth in Section 1.8(a).
"Exchange Fund" shall have the meaning set forth in Section 1.8(a).
"Existing Fund Partnership Agreements" means the Amended and Restated
Certificate and Agreement of Limited Partnership of each of Fund I, Fund IV,
Fund VII and Fund VIII, in each case as in effect immediately prior to the
Effective Time.
"Existing Partnership Agreement" means the Third Amended and Restated
Agreement of Limited Partnership (as such agreement may be amended from time to
time) of Benchmark in effect immediately prior to the Effective Time.
"FCC" shall have the meaning set forth in Section 2.1(e).
"Final Determination" shall have the meaning set forth in Section 1.11(b).
"Final Order" means an order, action or decision of the FCC (without the
inclusion of any material adverse conditions not customarily imposed with
respect to such consents) that has not been reversed, stayed, enjoined,
annulled or suspended and as to which (a) no timely request for stay, appeal,
petition for reconsideration, application for review, or reconsideration by the
FCC on its own motion is pending and (b) the time for filing any such request,
appeal, petition or application, or for reconsideration by the FCC on its own
motion has expired.
"Financial Statements" shall have the meaning set forth in Section 2.1(f).
"Fund I" means Benchmark Radio Acquisition Fund I Limited Partnership.
"Fund I BCF Consideration" shall have the meaning set forth in the
definition of Fund I Consideration.
"Fund I Broadcast Cash Flow" means the aggregate revenues of Fund I and
its subsidiaries during 1996 minus the aggregate operating expenses of Fund I
and its subsidiaries during 1996, determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to Benchmark, and (vi) legal fees and expenses allocable to
Fund I incurred in connection with the transactions contemplated by this
Agreement and the Other Benchmark Transactions. In calculating Fund I
Broadcast Cash Flow, the expense of employee health insurance during 1996 shall
be adjusted to reflect the rates in effect under Benchmark's current insurance
program which went into effect on October 1, 1996 (which adjustment is expected
to increase Fund I Broadcast Cash Flow by approximately $3,105). In addition,
in calculating Fund I Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of fixed assets
and revenues and expenses under trade and barter agreements shall be excluded.
"Fund I Consideration" means, subject to the adjustments set forth in
Section 1.6(a), (i) Eleven Million Nine Hundred Thousand Dollars ($11,900,000)
in cash (the "Fund I BCF Consideration"), (ii) minus the Funded Debt of Fund I
paid in accordance with Section 1.8(e), plus
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(iii) the Current Assets of Fund I, minus (iv) the Unfunded Debt of Fund I,
minus (v) the Fund I Limited Partner Allocable Portion of the Residual
Consideration.
"Fund I Dissenting Partner Fund" means an amount equal to the portion of
the Total Consideration that would have been allocable to the holders of Fund I
Dissenting Partnership Interests if such holders had not exercised appraisal
rights in the Fund I Merger with respect to such partnership interests under
Maryland Law.
"Fund I Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund I
Dissenting Partnership Interests.
"Fund I Dissenting Partnership Interests" shall have the meaning assigned
to such term in the Fund I Merger Agreement.
"Fund I Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund I Merger Agreement.
"Fund I Limited Partners" means the limited partners of Fund I.
"Fund I Merger" means the merger contemplated by the Fund I Merger
Agreement.
"Fund I Merger Agreement" means that certain Plan and Agreement of Merger,
dated as of December 9, 1996 by and among Sub I, Fund I, Benchmark and
Benchmark Holdings Co., Inc.
"Fund I Merger Consideration" shall have the meaning assigned to such term
in the Fund I Merger Agreement.
"Fund I Post-Closing Escrow Deposit" means a deposit of Three Hundred
Twenty Seven Thousand Two Hundred Fifty Dollars ($327,250), which shall
constitute a portion of the Fund I Consideration deposited in escrow with the
Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and
Section 1.12.
"Fund III" means Benchmark Radio Acquisition Fund III Limited Partnership.
"Fund IV" means Benchmark Radio Acquisition Fund IV Limited Partnership.
"Fund IV BCF Consideration" shall have the meaning set forth in the
definition of Fund IV Consideration.
"Fund IV BCF Stations" means radio stations WCOS(AM), Columbia, South
Carolina, WCOS(FM), Columbia, South Carolina, WHKZ(FM), Cayce, South Carolina,
WVOC(AM), Columbia, South Carolina and KRMD-AM/FM, Shreveport, Louisiana.
"Fund IV Broadcast Cash Flow" means the aggregate revenues of the Fund IV
BCF Stations during 1996 minus the aggregate operating expenses of the Fund
IV BCF Stations during 1996 (regardless of whether such stations were owned by
Benchmark or its subsidiaries, or any third
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party, during such time period), determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to Benchmark, (vi) total compensation payable to
operations manager Gary Barboza in 1996 (having a base salary of $46,000),
(vii) severance payable to Ron Antill (expected to be approximately
$7,187), former program director at WCOS, (viii) prepaid television
advertisement expenses incurred in 1995 and carried forward to 1996
(approximately $48,825), (ix) compensation paid with respect to John
Crenshaw and the Country Heartlines show, which has been reallocated to
Fund VII (expected to be approximately $7,000), (x) legal fees and expenses
allocable to Fund IV incurred in connection with the transactions
contemplated by this Agreement and the Other Benchmark Transactions, (xi)
legal fees and expenses incurred in connection with the acquisition of
KRMD-FM/AM, Shreveport, Louisiana, (xii) Shreveport Expenses and (xiii)
WSCQ Expenses. In calculating Fund IV Broadcast Cash Flow, the expense of
employee health insurance during 1996 shall be adjusted to reflect the
rates in effect under Benchmark's current insurance program which went into
effect on October 1, 1996 (which adjustment is expected to increase Fund IV
Broadcast Cash Flow by $7,425), and expenses incurred in connection with
Arbitron in the Columbia, South Carolina market shall be adjusted to
reflect the expenses in effect under the current Arbitron agreement for the
Columbia, South Carolina stations which went into effect on April 1, 1996
(which adjustment is expected to increase Fund IV Broadcast Cash Flow by
approximately $7,351). In addition, in calculating Fund IV Broadcast Cash
Flow, extraordinary gains and losses (determined in accordance with GAAP),
gains and losses on sales of fixed assets and revenues and expenses under
trade and barter agreements shall be excluded. In addition, Fund IV
Broadcast Cash Flow shall be increased by approximately $68,700 to reflect
that KRMD AM/FM will receive rental income from tenants at the stations'
studio building at 3109 Alexander Boulevard in Shreveport, Louisiana, will
no longer incur studio/office rental expense at such site and will no
longer incur billboard rental expenses at the station's AM transmitter
site.
"Fund IV Consideration" means, subject to the adjustments described in
Section 1.6(b) hereof, the sum of (i) Forty Million Eight Hundred Ninety Five
Thousand Dollars ($40,895,000) in cash (the "Fund IV BCF Consideration"), (ii)
minus the Funded Debt of Fund IV paid in accordance with Section 1.8(e) plus
(iii) the Current Assets of Fund IV minus (iv) the Unfunded Debt of Fund IV
plus (v) the WSCQ Expenses and the Shreveport Expenses, minus (vi) the Fund IV
Limited Partner Allocable Portion of the Residual Consideration.
"Fund IV Dissenting Partner Fund" means such amount equal the portion of
the Total Consideration that would have been allocable to the holders of Fund
IV Dissenting Partnership Interests if such holders had not exercised appraisal
rights in the Fund IV Merger with respect to such partnership interests under
Maryland Law.
"Fund IV Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund IV
Dissenting Partnership Interests.
"Fund IV Dissenting Partnership Interests" shall have the meaning assigned
to such term in the Fund IV Merger Agreement.
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"Fund IV Expenses" means all expenses and costs incurred by Fund IV prior
to the Closing Date in connection with the move, rebuilding and repair of the
WSCQ-FM studios and offices.
"Fund IV Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund IV Merger Agreement.
"Fund IV Limited Partners" means the limited partners of Fund IV.
"Fund IV Loan" means amounts borrowed under the Fund IV Loan Agreement.
"Fund IV Loan Agreement" means that certain Credit Agreement (Fund IV) to
be entered into between Fund IV and Parent in accordance with the terms of the
side letter relating to such loan dated the date hereof between Parent and
Benchmark.
"Fund IV Merger" means the merger contemplated by the Fund IV Merger
Agreement.
"Fund IV Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub IV, Fund IV, Benchmark
and Benchmark Holdings Co., Inc.
"Fund IV Merger Consideration" shall have the meaning assigned to such
term in the Fund IV Merger Agreement.
"Fund IV Post-Closing Escrow Deposit" means a deposit of One Million One
Hundred Twenty Four Thousand Six Hundred Dollars ($1,124,600), which shall
constitute a portion
of the Fund IV Consideration, deposited in escrow with the Post-Closing Escrow
Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12..
"Fund VII" means Benchmark Radio Acquisition Fund VII Limited
Partnership..
"Fund VII Consideration" means, subject to the adjustments described in
Section 1.6(c) hereof, the sum of (i) Twenty Five Million Dollars ($25,000,000)
in cash minus, (ii) amounts drawn under the Fund VII Loan and accrued and
unpaid interest thereon, provided, that for purposes of this definition,
interest shall be deemed to have accrued on the Fund VII Loan from the date of
funding of the Fund VII Loan to the Closing Date at an annual rate equal to the
Pass Through Rate (as defined in the Fund VII Loan Agreement), (iii) minus the
Funded Debt of Fund VII paid in accordance with Section 1.8(e), plus (iv) the
Current Assets of Fund VII minus (v) the Unfunded Debt of Fund VII, minus (vi)
the Fund VII Limited Partner Allocable Portion of the Residual Consideration.
"Fund VII Dissenting Partner Fund" means an amount equal to the portion of
the Total Consideration that would have been allocable to the holders of Fund
VII Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Fund VII Merger with respect to such partnership
interests under Maryland Law.
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"Fund VII Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund VII
Dissenting Partnership Interests.
"Fund VII Dissenting Partnership Interests" shall have the meaning
assigned to such term in the Fund VII Merger Agreement.
"Fund VII Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund VII Merger Agreement.
"Fund VII Limited Partners" means the limited partners of Fund VII.
"Fund VII Loan" means amounts borrowed by Fund VII under the Fund VII Loan
Agreement.
"Fund VII Loan Agreement" means that certain Credit Agreement (Fund VII)
dated the date hereof between Fund VII and Parent.
"Fund VII Merger" means the merger contemplated by the Fund VII Merger
Agreement.
"Fund VII Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub VII, Fund VII, Benchmark
and Benchmark Holdings Co., Inc.
"Fund VII Merger Consideration" shall have the meaning assigned to such
term in the Fund VII Merger Agreement.
"Fund VII Post-Closing Escrow Deposit" means a deposit of Six Hundred
Eighty Seven Thousand Five Hundred Dollars ($687,500), which shall constitute a
portion of the Fund VII Consideration, deposited in escrow with the
Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement and
Section 1.12.
"Fund VIII" means Benchmark Radio Acquisition Fund VIII Limited
Partnership.
"Fund VIII BCF Calculation" shall have the meaning set forth in the
definition of Fund VIII Broadcast Cash Flow.
"Fund VIII BCF Consideration" shall have the meaning set forth in the
definition of Fund VIII Consideration.
"Fund VIII Broadcast Cash Flow" means the aggregate revenues of Fund VIII
and its subsidiaries (excluding any revenues with respect to WROV-AM/FM serving
Roanoke, Virginia) during 1996 minus the aggregate operating expenses of Fund
VIII and its subsidiaries (excluding any expenses with respect to WROV-AM/FM
serving Roanoke, Virginia) during 1996, determined in accordance with GAAP,
consistently applied, excluding any expenses for (i) depreciation, (ii)
amortization, (iii) interest, (iv) income taxes, (v) management fees and
expenses payable to
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Benchmark, (vi) total compensation of disc jockey Steve Stroud in 1996 (having
a base salary of $17,566), (vii) total compensation payable to Debbie Motley in
1996 (having a base salary of $16,369), (viii) total compensation payable to
local sales manager Jim Colston in 1996 (expected to be approximately $8,000),
(ix) total compensation of engineer Jeff Parker charged to WYYD (expected to be
approximately $3,840), (x) total compensation of business manager Hazel Bryant
charged to WYYD (approximately $13,800), (xi) compensation paid with respect to
John Crenshaw and the Country Heartlines show charged to WYYD (expected to be
approximately $19,750) and (xii) legal fees and expenses allocable to Fund VIII
incurred in connection with the transactions contemplated by this Agreement and
the Other Benchmark Transactions, (xiii) legal fees and expenses incurred in
connection with new offices and studios in the Winchester, Virginia market and
(xiv) legal fees and expenses relating to the operation and acquisition of
WLNI. In calculating Fund VIII Broadcast Cash Flow, the expense of employee
health insurance during 1996 shall be adjusted to reflect the rates in effect
under Benchmark's current insurance program which went into effect on October
1, 1996 (which adjustment is expected to increase Fund VIII Broadcast Cash Flow
by approximately $8,910), and the expense of the Winchester, Virginia
operations relating to the compensation of engineer Jeff Parker shall be
adjusted to reflect that the Winchester, Virginia operations will pay one-third
(rather than 100%) of the total compensation for his services as regional
engineer on a going-forward basis (which adjustment is expected to increase
Fund VIII Broadcast Cash Flow by approximately $12,329). In addition, in
calculating Fund VIII Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of fixed assets
and revenues and expenses under trade agreements shall be excluded.
"Fund VIII Consideration" means, subject to the adjustments described in
Section 1.6(d) hereof, the sum of (i) Twenty Nine Million Four Hundred Seventy
Seven Thousand Five Hundred Dollars ($29,477,500) in cash (the "Fund VIII BCF
Consideration"), (ii) minus the Funded Debt of Fund VIII paid pursuant to
Section 1.8(e) plus (iii) the Current Assets of Fund VIII minus
(iv) the Unfunded Debt of Fund VIII, minus the Fund VIII Limited Partner
Allocable Portion of the Residual Consideration.
"Fund VIII Dissenting Partner Fund" means an amount equal to the portion
of the Total Consideration that would have been allocable to the holders of
Fund VIII Dissenting Partnership Interests if such holders had not exercised
appraisal rights in the Fund VIII Merger with respect to such partnership
interests under Maryland Law.
"Fund VIII Dissenting Partner Reserve" means such amount as the General
Partners shall reasonably determine is appropriate to cover any costs, expenses
or liabilities that may be incurred with respect to holders of Fund VIII
Dissenting Partnership Interests.
"Fund VIII Dissenting Partnership Interests" shall have the meaning
assigned to such term in the Fund VIII Merger Agreement.
"Fund VIII Expenses" means all expenses and costs incurred with respect to
the new offices and studios for the Winchester operations and all expenses and
costs relating to the operation and, if applicable, acquisition of WLNI.
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"Fund VIII Limited Partner Allocable Portion" shall have the meaning set
forth in the Fund VIII Merger Agreement.
"Fund VIII Limited Partners" means the limited partners of Fund VIII.
"Fund VIII Loan" means amounts borrowed by Fund VIII under the Fund VIII
Loan Agreement.
Fund VIII Loan Agreement" means that certain Credit Agreement (Fund VIII)
to be entered into between Fund VIII and Parent in accordance with the terms of
the side letter dated the date hereof relating to such loan between Parent and
Benchmark.
"Fund VIII Merger" means the merger contemplated by the Fund VIII Merger
Agreement.
"Fund VIII Merger Agreement" means that certain Plan and Agreement of
Merger, dated as of December 9, 1996 by and among Sub VIII, Fund VIII,
Benchmark and Benchmark Holdings Co., Inc.
"Fund VIII Merger Consideration" shall have the meaning assigned to such
term in the Fund VIII Merger Agreement.
"Fund VIII Post-Closing Escrow Deposit" means a deposit of Eight Hundred
Ten Thousand Six Hundred Dollars ($810,600) which shall constitute a portion of
the Fund VIII Consideration, deposited in escrow with the Post-Closing Escrow
Agent pursuant to the Post-Closing Escrow Agreement and Section 1.12.
"Fund IX" means Benchmark Radio Acquisition Fund IX Limited Partnership..
"Fund X" means Benchmark Radio Acquisition Fund X Limited Partnership..
"Fund XI" means Benchmark Radio Acquisition Fund XI Limited Partnership..
"Fund Employee Benefit Plans" shall have the meaning set forth in Section
2.3(p).
"Fund ERISA Group" shall have the meaning set forth in Section 2.3(p).
"Fund Limited Partners" shall have the meaning set forth in the Recitals.
"Fund Limited Partnership Interests" means the Fund I Limited Partnership
Interests, Fund IV Limited Partnership Interests, Fund VII Limited Partnership
Interests and Fund VIII Limited Partnership Interests (in each case, as defined
in the Other Benchmark Merger Agreements).
"Fund Pension Plan" shall have the meaning set forth in Section 2.3(p).
"Fund Stations" shall have the meaning set forth in Section 2.3(g).
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"Fund Station License" shall have the meaning set forth in Section 2.3(g).
"Funded Debt, with respect to a Person, means, without duplication, (i)
all obligations of such Person and its subsidiaries for borrowed money,
including, without limitation, all obligations for accrued and unpaid interest
thereon and any pre-payment premiums or penalties (and associated expenses)
with respect thereto, (ii) any capitalized lease obligations of such Person or
any of its subsidiaries, (iii) all obligations of such Person or its
subsidiaries for the payment of brokerage, legal, accounting, advisory and
other similar fees and expenses (excluding the Alex. Brown Fee) arising in
connection with the transactions contemplated hereby, (iv) any obligation of
such Person or its subsidiaries under equity participation agreements or any
similar appreciation or phantom equity plans or rights (including without
limitation, amounts due to Chris Walus in connection with the consummation of
the Merger, as described in Schedule 2.1(o)) and (v) any amounts due by such
Person or its subsidiaries (including to the manager or general partner of such
Person) for unpaid advances and unpaid management fees and expenses.
Obligations of Benchmark under the letter agreement dated December 9, 1996 by
and among Benchmark, Bruce R. Spector, Joseph L. Mathias IV, Venhill Limited
Partnership and certain other parties shall be considered Funded Debt of
Benchmark. For purposes of this definition, obligations of Benchmark (if any),
Fund IV, Fund VII and Fund VIII under the Fund IV Loan Agreement , the Fund VII
Loan Agreement or the Fund VIII Loan Agreement shall not be considered Funded
Debt of Benchmark, Fund IV, Fund VII or Fund VIII, and obligations of Benchmark
under the Parent Funded Debt Loan and the Parent Merger Loan shall not be
considered Funded Debt of Benchmark.
"Funded Debt Notice" shall have the meaning set forth in Section 1.8(d).
"Funded Debt Payoff" shall have the meaning set forth in Section 1.8(d).
"Funds" means Fund I, Fund IV, Fund VII, Fund VIII and the New Funds.
"GAAP" means United States generally accepted accounting principles.
"General Partner Related Party" shall mean (A) the estate or any legatee,
heir or distributee upon death of a General Partner; (B) the spouse of any
General Partner; (C) any parent or grandparent and any lineal descendant
(including any adopted child) of any parent or grandparent of a General Partner
or of such General Partner's spouse; (D) any guardian or custodian (including a
custodian for purposes of the Uniform Gift to Minors Act or Uniform Transfers
to Minors Act) for, or any executor, administrator, conservator or other legal
representative of, a General Partner or any General Partner Related Party; (E)
the trustee of a trust (including a voting trust), and any savings or
retirement account, such as an individual retirement account for purposes of
federal income tax laws, whether or not involving a trust, principally for the
benefit of such General Partner and/or any General Partner Related Party (or
Parties), including any trust in respect of which such General Partner Related
Party or any General Partner Related Party has any general or special
testamentary power of appointment or general or special non-testamentary power
of appointment limited to any General Partner Related Party (or Parties)
thereof; (F) any organization contributions to which are deductible for federal
income, estate or gift tax purposes established by such General Partner and/or
any General Partner Related Party (or Parties); and (G) any corporation,
partnership or other business entity if all the beneficial ownership thereof is
held by a General Partner and/or any General Partner Related Party (or
Parties).
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"General Partners" means each of the general partners of Benchmark.
"General Partnership Interests" means the Partnership Interests of the
General Partners.
"Governmental Entity" shall have the meaning set forth in Section 2.1(e).
"Hazardous Substances" shall have the meaning set forth in Section
2.1(m)(iv).
"Holdback Funds" means the Post-Closing Escrow Deposits, the Reserve
Funds, the Dissenting Partner Funds and the Dissenting Partner Reserves.
"HSR Act" shall have the meaning set forth in Section 2.1(e).
"Indemnified Costs" shall have the meaning set forth in Section
10.1(b)(i).
"Indemnified Parties" shall have the meaning set forth in Section 10.1.
"Indemnifying Party" shall have the meaning set forth in Section 10.1.
"Initial Closing Balance Sheet" shall have the meaning set forth in
section 1.6(f).
"Initial Closing Certificate" shall have the meaning set forth in Section
1.6(g).
"Initial Net Current Assets", with respect to a Person, shall be equal to
the difference of Current Assets (as reflected on the Initial Closing
Certificate) minus Unfunded Debt of such Person (as reflected on the Initial
Closing Certificate).
"Intellectual Rights" shall have the meaning set forth in Section 2.1(q).
"Intentional Benchmark Default" means (i) an intentional or willful act
voluntarily taken by Benchmark, the General Partners or the Funds that gives
rise to a right of Mergeco to terminate this Agreement (other than pursuant to
Section 9.1(c)(v)), the purpose of which act is to materially breach the terms
of this Agreement and to induce Mergeco to exercise its termination rights
under this Agreement, (ii) a material breach by Benchmark, the General Partners
or the Funds of a covenant to this Agreement, which breach is (a) capable of
being cured within the Cure Period with commercially reasonable efforts and (b)
not cured within such Cure Period (which Cure Period shall commence upon
receipt by Benchmark of written notice of such breach from Mergeco), (iii) a
material breach by Benchmark, the General Partners or the Funds of a covenant
to this Agreement, which breach (a) is not capable of being cured within the
Cure Period with commercially reasonable efforts and (b) would reasonably be
expected to result in a Material Adverse Effect, or (iv) prior to the
termination of this Agreement, the withdrawal by the General Partners or
Benchmark of their recommendations of this Agreement or any Other Benchmark
Merger Agreement under circumstances not permitted by this Agreement. For
purposes of clause (iii) of this definition, a Material Adverse Effect shall be
deemed to include any material adverse effect that would result in damages to
the Surviving Partnership or its subsidiaries in excess of the Material Adverse
Effect Threshold.
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"Interest Letter of Credit" shall have the meaning set forth in Section
1.11.
"Jackson Acquisition Expenses" means all expenses incurred by Benchmark or
Fund X in connection with the acquisition of the Jackson Stations other than
(i) expenses incurred on or prior to the execution date of the Jackson
Agreement or (ii) brokerage fees relating to the acquisition of the Jackson
Stations.
"Jackson Attributable Liquidated Damages" shall have the meaning assigned
to such term as Section 9.3(c).
"Jackson Agreement" means that certain Purchase Agreement by and between
CLG Media of Jackson, Inc. (as Seller), Benchmark Radio Acquisition Fund X
Limited Partnership (as Buyer) and Chrysler Capital Corporation (as Seller
Guarantor) dated as of September 9, 1996.
"Jackson Broadcast Cash Flow" means the aggregate revenues of the Jackson
Stations during 1996 minus the aggregate operating expenses of the Jackson
Stations during 1996 (regardless of whether such stations were owned by
Benchmark or its subsidiaries, or any third parties, during such period of
time), determined in accordance with GAAP, consistently applied, excluding any
expenses for (i) depreciation, (ii) amortization, (iii) interest, (iv) income
taxes, (v) management and corporate fees and expenses incurred by the Jackson
Stations prior to the date of acquisition of such stations by Fund X, (vi)
legal fees and other expenses incurred by the seller of the Jackson Stations in
connection with the Jackson Agreement and the transactions contemplated
thereby, and (vii) legal fees and expenses allocable to Benchmark incurred in
connection with the transactions contemplated by this Agreement, the Other
Benchmark Transactions and the Jackson Agreement.
"Jackson Consideration" means an amount equal to the sum of (i) Fourteen
Million Nine Hundred Ninety Seven Thousand Five Hundred Dollars ($14,997,500),
plus (ii) expenses relating to the acquisition of the Jackson Stations incurred
by Benchmark or Fund X prior to the execution of the Jackson Agreement, plus
(iii) any brokerage fee paid by Benchmark or Fund X relating to the acquisition
of the Jackson Stations.
"Jackson Loan" means amounts borrowed by Fund X under the Jackson Loan
Agreement.
"Jackson Loan Agreement" means that certain Credit Agreement (Jackson)
dated the date hereof between Fund X and Parent.
"Jackson Stations" means WJMI-FM, WKXI(AM), WOAD-AM, Jackson, Mississippi,
and WKXI(FM), Magee, Mississippi.
"Leased Real Property" shall have the meaning set forth in Section 2.1(j).
"Letter of Credit" shall have the meaning set forth in Section 1.11.
"License Agreement" means the License Agreement substantially in the form
of Exhibit 9 hereto.
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"Liens" shall have the meaning set forth in Section 2.1(l).
"Limited Partners" shall have the meaning set forth in the Recitals.
"Limited Partners" means each of the limited partners of Benchmark.
"Limited Partner Percentage" shall have the meaning set forth in Section
2.3(s).
"Limited Partnership Interests" means the Partnership Interests of the
Limited Partners.
"Loan Agreements" means the Jackson Loan Agreement, the Statesville Loan
Agreement, the Montgomery Loan Agreement, the Fund IV Loan Agreement, the Fund
VII Loan Agreement and the Fund VIII Loan Agreement.
"Maryland Law" shall have the meaning set forth in the Recitals.
"Material Adverse Effect" shall mean (i) with respect to Benchmark and its
subsidiaries, a material adverse effect on the business, operations,
properties, condition (financial or otherwise), results of operations, assets
or liabilities (other than liabilities that will be repaid in the Funded Debt
Payoff or which will be reflected on the Closing Balance Sheet and result in a
corresponding adjustment to the Total Consideration pursuant to this Agreement)
of Benchmark and its subsidiaries taken as a whole and (ii) with respect to the
Surviving Partnership, a material adverse effect or the business, operations,
properties, condition (financial or otherwise), results of operations, assets
or liabilities (other than liabilities that will be repaid in the Funded Debt
Payoff or which will be reflected on the Closing Balance Sheet and result in a
corresponding adjustment to the Total Consideration pursuant to this Agreement)
of the Surviving Partnership and its subsidiaries taken as whole; provided, in
each case, that effects of any events, circumstances or conditions resulting
from changes, developments or circumstances in worldwide or national conditions
(political, economic, or regulatory) that adversely affect generally the
markets where any of the Stations are operated or
affect generally the broadcasting business, or adversely affect a broad group
of industries generally shall not constitute a Material Adverse Effect.
"Material Adverse Effect Threshold" shall mean an amount equal to the sum
of Four Million Five Hundred Thousand Dollars ($4,500,000) plus any amounts by
which Benchmark or its subsidiaries supplement the Post-Closing Escrow Deposits
pursuant to Section 1.12 after the date hereof.
"Mathias Employment Agreement" means an employment agreement to be entered
into at Closing in the form of Exhibit 10 hereto between Joseph L. Mathias IV
and the Surviving Partnership.
"Mergeco" means Benchmark Acquisition, Inc.
"Mergeco Affiliated Businesses" shall have the meaning set forth in
Section 2.2e.
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"Mergeco Common Stock" shall have the meaning set forth in Section 1.5(c).
"Merger" shall have the meaning set forth in the Recitals.
"Merger Consideration" means, with respect to a holder of a Converted
Partnership Interest, the portion of the Total Consideration that such holder
of a Converted Partnership Interest would have been entitled to receive (as
calculated by the General Partners) pursuant to the Existing Partnership
Agreement in the event: (i) the Benchmark Consideration, the Fund I
Consideration, the Fund IV Consideration, the Fund VII Consideration and the
Fund VIII Consideration had been received by Benchmark, Fund I, Fund IV, Fund
VII and Fund VIII, respectively, in a Sale (as defined in the Existing
Partnership Agreement or the applicable Existing Fund Partnership Agreement) of
all of the assets and liabilities of Benchmark, Fund I, Fund IV, Fund VII, and
Fund VIII, respectively, and (ii) Benchmark, Fund I, Fund IV, Fund VII and Fund
VIII had been liquidated immediately subsequent to such Sale, in each case,
without making a positive capital account adjustment for the contribution by
Benchmark to the capital of Fund I, Fund IV, Fund VII, Fund VIII, Sub I, Sub
IV, Sub VII or Sub VIII, as applicable of the proceeds of the Parent Funded
Debt Loan or the Parent Merger Loan, as applicable. After the Closing, the
aggregate Merger Consideration payable to holders of Converted Partnership
Interests shall be (i) increased by the amount (if any) of the Benchmark
Allocable Portions of the Dissenting Partner Funds not expended in connection
with claims of holders of Dissenting Partnership Interests and (ii) decreased
by the amount (if any) of the Benchmark Allocable Portion of the Dissenting
Partner Reserves expended in connection with claims of holders of Dissenting
Partnership Interests made in accordance with Maryland Law.
"Minimum Damage Amount" shall have the meaning set forth in Section
10.1(f).
"Montgomery Acquisition Expenses" means all expenses incurred by Benchmark
or Fund XI in connection with the acquisition of the Montgomery Stations other
than any such expenses incurred on or before the execution date of the
Montgomery Agreement. Montgomery Acquisition Expenses shall include, without
limitation, all amounts payable, not to exceed One Million Nine
Hundred Thousand Dollars ($1,900,000), under the Montgomery Agreement in
connection with the acquisition of WDHT(FM), Luverne, Alabama.
"Montgomery Agreement" means that certain Purchase Agreement by and
between Capital Communications (as Seller), Benchmark Radio Acquisition Fund XI
Limited Partnership (as Buyer) and Ronald Eubanks (as Guarantor) dated November
4, 1996.
"Montgomery Attributable Liquidated Damages" shall have the meaning
assigned to such term in Section 9.3(b).
"Montgomery Broadcast Cash Flow" means Broadcast Cash Flow (as such term
is defined in the Montgomery Agreement).
"Montgomery Consideration" means an amount equal (i) the product of ten
(10) multiplied by Montgomery Broadcast Cash Flow, plus (ii) expenses relating
to the acquisition of the Montgomery Stations incurred by Benchmark or Fund XI
prior to the execution of the Montgomery
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Agreement, plus (iii) any brokerage fee paid by Benchmark or Fund XI relating
to the acquisition of the Montgomery Stations.
"Montgomery Loan" means amounts borrowed by Fund XI under the Montgomery
Loan Agreement.
"Montgomery Loan Agreement" means that certain Credit Agreement
(Montgomery) dated the date hereof between Fund XI and Parent.
"Montgomery Stations" means WZHT-FM, Troy, Alabama, WMCZ-FM, Millbrook,
Alabama and WDHT-FM, Luverne, Alabama.
"NPL" shall have the meaning set forth in Section 2.1(m)(vi).
"New Funds" means Fund IX, Fund X and Fund XI.
"New Shreveport Station" means the new FM station serving Shreveport,
Louisiana on Channel 275C2.
"Norfolk Contracts" means (i) the Purchase Agreement dated May 13, 1996
among Benchmark Radio Acquisition Fund IV Limited Partnership, WKOC License
Limited Partnership, and Sinclair Telecable d/b/a Sinclair Communications and
(ii) the Purchase Agreement dated as of May 20, 1996 between Benchmark Radio
Acquisition Fund IV Limited Partnership and Susquehanna Radio Corp.
"Notice Period" shall have the meaning set forth in Section 10.1.
"Other Benchmark Mergers" means the mergers contemplated by the Other
Benchmark Merger Agreements.
"Other Benchmark Merger Agreements" means the Fund I Merger Agreement, the
Fund IV Merger Agreement, the Fund VII Merger Agreement and the Fund VIII
Merger Agreement.
"Other Benchmark Transactions" means (i) each of the Other Benchmark
Mergers, (ii) the Stock Purchase Agreements, (iii) the Limited Partnership
Interests Purchase Agreement, (iv) the Parent-Radioco III, Inc. Merger
Agreement, (v) the New Fund Assignments of Partnership and (vi) the Guaranty
Agreement (Individuals) of Bruce R. Spector and Joseph L. Mathias IV in favor
of Mergeco dated the date hereof.
"Owned Real Property" shall have the meaning set forth in Section 2.1(j).
"Parent" shall mean BCR Holding, Inc.
"Parent Funded Debt Loan" means a loan to Benchmark from Parent evidenced
by a promissory note in an amount equal to (i) the Funded Debt of Benchmark,
plus (ii) the Funded Debt
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of Fund I, plus (iii) the Funded Debt of Fund IV, plus (iv) the Funded Debt of
Fund VII, plus (v) the Funded Debt of Fund VIII.
"Parent Merger Loan" means a loan to Benchmark from Parent evidenced by a
promissory note in an amount equal to the sum of (i) the aggregate Fund I
Merger Consideration to be paid to holders of Fund I Converted Partnership
Interests in the Fund I Merger plus (ii) the aggregate Fund IV Merger
Consideration to be paid to holders of Fund IV Converted Partnership Interests
in the Fund IV Merger plus (iii) the aggregate Fund VII Merger Consideration to
be paid to holders of Fund VII Converted Partnership Interests in the Fund VII
Merger plus (iv) the aggregate Fund VIII Merger Consideration to be paid to
holders of Fund VIII Converted Partnership Interests in the Fund VIII Merger
plus (v) the amount of Dissenting Partner Funds (other than the Benchmark
Dissenting Partner Fund).
"Parent-Radioco III, Inc. Merger Agreement" means that certain Agreement
and Plan of Merger dated December 9, 1996 by and among BCR Holding, Inc.,
Radioco III, Inc. and Joseph L. Mathias IV.
"Partner Representatives" shall have the meaning set forth in Section
1.12.
"Partners" means, collectively, the General Partners and the Limited
Partners.
"Partnership Interest" means, with respect to a Partner, the entire
percentage ownership interest of such Partner in Benchmark as set forth on the
books and records of Benchmark (which may be segmented into and/or expressed as
a percentage of various rights and/or liabilities), including the right of such
Partner to any and all benefits to which a Partner may be entitled as provided
in the Existing Partnership Agreement and under Maryland Law, together with the
obligations of such Partner to comply with all the terms and provisions of the
Existing Partnership Agreement and under Maryland Law.
"Pass Through Rate" shall have the meaning assigned to such term in the
Loan Agreements.
"Pension Plan" shall have the meaning set forth in Section 2.1(p).
"Permits" shall have the meaning set forth in Section 2.1(m)(iii).
"Permitted Liens" shall have the meaning set forth in Section 2.1(1).
"Person" means an individual, corporation, limited liability company,
partnership, limited partnership, syndicate, person (including, without
limitation, a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association or other legal entity or government, political subdivision,
agency or instrumentality of a government.
"Post-Closing Escrow Agreement" shall have the meaning set forth in
Section 1.12(a).
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"Post-Closing Escrow Deposits" means the Fund I Post-Closing Escrow
Deposit, the Fund IV Post-Closing Escrow Deposit, the Fund VII Post-Closing
Escrow Deposit, the Fund VIII Post-Closing Escrow Deposit, and, in each case,
any supplemental deposits to such Post-Closing Escrow Deposits made pursuant to
Section 1.12.
"Pre-Closing Escrow Agreement" shall have the meaning set forth in Section
1.11.
"Pre-Closing, Escrow Deposit" shall have the meaning set forth in Section
1.11.
"Referee" shall have the meaning set forth in Section 1.6(i).
"Release" means a release in the form of Exhibit 11 hereto.
"Releasing Parties" shall have the meaning set forth in Section 9.3(a).
"Released Parties" shall have the meaning set forth in Section 9.3.
"Required Remediation" means any response or remedial action required to
be performed by the Surviving Partnership Indemnified Parties under any
applicable Environmental Law that is (i) related to any release of Hazardous
Substances in connection with any activity occurring on the Owned Real Property
or the Leased Real Property owned or leased by the applicable Fund (including
any off-site release resulting from any such activity) and (ii) identified in
an Environmental Report as being so required
"Reserve Fund Escrow Deposit" shall have the meaning set forth in Section
1.13.
"Reserve Funds" means the reserve funds of each of Benchmark, Fund I, Fund
IV, Fund VII and Fund VIII, equaling 75,000 for Fund I, $175,000 for Fund IV,
$75,000 for Fund VII, $175,000 for Fund VIII and $50,000 for Benchmark, which
funds shall be deposited in escrow with the Post-Closing Escrow Agent and
distributed as set forth in Section 1.13. The reserve funds shall constitute a
portion of the Benchmark Consideration, the Fund I Consideration, the Fund IV
Consideration, the Fund VII Consideration and the Fund VIII Consideration, as
applicable.
"Residual Consideration means an amount equal to the amount of the Alex.
Brown Fee minus Two Hundred Fifty Five Thousand Dollars ($255,000) plus the
amount of interest that would have accrued beginning on the date hereof on a
loan of One Hundred Thousand Dollars ($100,000) at the Pass Through Rate (as
defined in the Loan Agreements).
"Richmond Contracts" means the Asset Purchase Agreement dated as of May
31, 1996 by and between Benchmark Radio Acquisition Fund III Limited
Partnership, WVGO License Limited Partnership, WDCK License Limited Partnership
and ABS Communications Incorporated.
"Rules of Arbitration" shall have the meaning set forth in Section
10.19(b).
"Sellers" shall have the meaning set forth in Section 1.11(a).
"Sellers' Representative" shall have the meaning set forth in Section
1.11.
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"Selling Stockholders" means the holders of the capital stock of Radioco
I, Inc., Radioco II, Inc. and Radioco III, Inc.
"Shreveport Expenses" means all expenses and costs incurred by Fund IV
prior to the date of closing, in connection with the acquisition, construction,
development and operation of the New Shreveport Station (including, without
limitation, all payments made by Fund IV pursuant to the Shreveport Master
Agreement, professional fees, pre-acquisition costs, taxes, filing fees, due
diligence costs, moving expenses and other reasonable costs), plus all
operating losses of Fund IV associated with the New Shreveport Station
commencing with the date that Fund IV begins to provide programming to such new
station pursuant to a time brokerage arrangement.
"Shreveport Master Agreement" means the Agreement dated September 19, 1996
by and among Fund IV, Port City Communications, L.P., Caddo Broadcasting
Limited Partnership, Innovative Women's Media Association, NTW, Inc. and Larry
English.
"Statesville Acquisition Expenses" means all expenses incurred by
Benchmark or Fund IX in connection with the acquisition of the Statesville
Stations other than any such expenses incurred on or before the execution date
of the Statesville Agreement.
"Statesville Agreement" means that certain Purchase Agreement by and
between Adventure Communications, Inc. (as Seller), Benchmark Radio Acquisition
Fund IX Limited Partnership (as Buyer), Michael R. Shott (as Seller Guarantor)
and Benchmark Communications Radio Limited Partnership (as Buyer Guarantor)
dated as of May 1, 1996.
"Statesville Attributable Liquidated Damages" shall have the meaning
assigned to such term in Section 9.3(c).
"Statesville Broadcast Cash Flow" means the aggregate revenues of the
Statesville Stations during 1996 minus the aggregate operating expenses of the
Statesville Stations during 1996 (regardless of whether such stations were
owned by Benchmark or its subsidiaries, or any third parties, during such
period of time), determined in accordance with GAAP, consistently applied,
excluding any expenses for (i) depreciation, (ii) amortization, (iii) interest,
(iv) income taxes, (v) management fees and expenses paid to Adventure
Communications or its affiliates and (vi) reimbursements to Adventure
Communications for travel and meal expenses (expected to be
approximately $1,161 at September 30, 1996), (vi) litigation expenses relating
to the WFMX tower and guy wire lease (expected to be approximately $5,063 at
September 30, 1996) and (vii) legal fees and other expenses of the seller of
the Statesville Stations incurred in connection with the Statesville Agreement
and the transactions contemplated thereby and (vi) legal fees and expenses
allocable to Benchmark or Fund IX incurred in connection with the transactions
contemplated by this Agreement and consummation of the transactions
contemplated by the Statesville Agreement.
"Statesville Consideration" means an amount equal (i) Nine Million Six
Hundred Thousand Dollars ($9,600,000), plus (ii) expenses relating to the
acquisition of the Statesville Stations incurred by Benchmark or Fund IX prior
to the execution of the Statesville Agreement plus (iii) any brokerage fees
paid by Benchmark or Fund IX relating to the acquisition of the Statesville
Stations.
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"Statesville Loan" means amounts borrowed by Fund IX under the Statesville
Loan Agreement.
"Statesville Loan Agreement" means that certain Credit Agreement
(Statesville) dated the date hereof between Fund XI and Parent.
"Statesville Stations" means WSIC(AM) and WFMX-FM, serving Statesville,
North Carolina.
"Station Event" shall have the meaning set forth in Section 8.1.
"Station Licenses" shall have the meaning set forth in Section 2.1(g)(ii).
"Station Management" shall have the meaning set forth in Section 3.1(b).
"Stations" means the radio broadcast stations operated by Benchmark and
its subsidiaries on the date hereof and, upon consummation of the acquisition
of any additional stations after the date hereof shall include such additional
stations.
"Stock Purchase Agreements" means that certain Stock Purchase Agreement
dated December 9, 1996 by and among Parent, Home Run Radio Limited Partnership
and Radioco I, Inc. and that certain Stock Purchase Agreement dated December 9,
1996 by and among Parent, Grand Slam Radio Limited Partnership and Radioco II,
Inc.
"subsidiary" or "subsidiaries" of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary) is the direct or
indirect general partner or owns or has rights to acquire, directly or
indirectly, 50% or more of the capital stock or other equity interests the
holders of which are generally entitled to vote for the election of, or are
themselves, the board of directors, general partners or other governing body of
such corporation, partnership or other legal entity. Unless indicated to the
contrary in this Agreement, for purposes of this Agreement, Fund I, Fund IV,
Fund VII, Fund VIII, Fund IX, Fund X and Fund XI and their direct or indirect
subsidiaries shall be considered subsidiaries of Benchmark, and Fund III and
its subsidiaries shall be deemed not to be subsidiaries of Benchmark.
"Sub I" shall have the meaning set forth in the Recitals.
"Sub IV" shall have the meaning set forth in the Recitals.
"Sub VII" shall have the meaning set forth in the Recitals.
"Sub VIII" shall have the meaning set forth in the Recitals.
"Surviving Partnership" shall have the meaning set forth in Section 1.1.
"Surviving Partnership Indemnified Parties" shall have the meaning set
forth in Section 10.1(b).
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"Tax Returns" shall have the meaning set forth in Section 2.1(n).
"third-party action" shall have the meaning set forth in Section 10.1(d).
"Total Consideration" means, subject to the adjustments described in
Section 1.6 hereof, (i) the sum of the Fund I Consideration, the Fund IV
Consideration, the Fund VII Consideration, the Fund VIII Consideration and the
Benchmark Consideration minus the Residual Consideration.
"Trading Event" shall have the meaning set forth in Section 8.1.
"Transaction Documents" shall have the meaning set forth in Section
2.1(d).
"Unfunded Debt" of a Person means the aggregate current liabilities (other
than any liabilities attributable to Funded Debt and any liabilities of such
Person under trade or barter agreements to which such Person is a party) and
the aggregate principal amount of indebtedness (including any pre-payment
premiums or penalties) of such Person and its subsidiaries that remains unpaid
as of 11:59 p.m. on the day immediately preceding the Closing Date (but giving
effect to the Funded Debt Payoff pursuant to Section 1.8(e)). For purposes of
this definition, obligations of Fund IV, Fund VII or Fund VIII under the Fund
IV Loan, the Fund VII Loan and the Fund VIII Loan shall not be considered
Unfunded Debt of Fund IV, Fund VIII or Benchmark, and obligations of Benchmark
under the Parent Funded Debt Loan or the Parent Merger Loan shall not be
considered Unfunded Debt of Benchmark.
"Unlimited Claims" shall have the meaning set forth in Section 10.1.
"Voting Debt" shall have the meaning set forth in Section 2.1(c).
"WSCQ Expenses" means all expenses incurred by Fund IV to the date of
Closing in connection with the acquisition of WSCQ-FM, Columbia, South Carolina
(including, without limitation, professional fees, preacquisition costs, taxes,
filing fees, due diligence costs, moving expenses and other reasonable costs,
but excluding the purchase price for the capital stock of Congaree
Broadcasters, Inc.) plus all operating losses associated with WSCQ-FM incurred
by Fund IV after the date of acquisition.
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IN WITNESS WHEREOF, Mergeco, Benchmark, Fund I, Fund IV, Fund VII, Fund
VIII, Partner Representatives and the General Partners, the Selling
Stockholders, Parent and Capstar have caused this Agreement to be signed, all
as of the date first written above.
MERGECO:
BENCHMARK ACQUISITION, INC.
--------------------------------------------------
By:
----------------------------------------------
Its:
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BENCHMARK:
BENCHMARK COMMUNICATIONS RADIO LIMITED PARTNERSHIP
By:
----------------------------------------------
Its:
----------------------------------------------
FUND I:
BENCHMARK RADIO ACQUISITION FUND I LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
----------------------------------------------
Its:
----------------------------------------------
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FUND IV:
BENCHMARK RADIO ACQUISITION FUND IV LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
FUND VII:
BENCHMARK RADIO ACQUISITION FUND VII LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
FUND VIII:
BENCHMARK RADIO ACQUISITION FUND VIII LIMITED
PARTNERSHIP
By: BENCHMARK COMMUNICATIONS RADIO LIMITED
PARTNERSHIP
By:
---------------------------------------------
Its:
---------------------------------------------
112
<PAGE> 118
PARTNER REPRESENTATIVES AND GENERAL PARTNERS
--------------------------------------------
Bruce R. Spector
--------------------------------------------
Joseph L. Mathias
SELLING STOCKHOLDERS:
HOME RUN RADIO LIMITED PARTNERSHIP
By: HR Radio Corporation
Its: General Partner
By:
------------------------------------
Name: Bruce R. Spector
Its: General Partner
GRAND SLAM RADIO LIMITED PARTNERSHIP
By:
------------------------------------
Name: Michael Mathias
Its: General Partner
113
<PAGE> 119
PARENT:
BCR HOLDING, INC.
By:
---------------------------------------
Its:
---------------------------------------
CAPSTAR:
CAPSTAR BROADCASTING PARTNERS, INC.
By:
---------------------------------------
Its:
---------------------------------------
114
<PAGE> 120
SCHEDULES AND EXHIBITS
Schedule 2.1(b) Benchmark Subsidiaries
Schedule 2.1(c) Capital Structure
Schedule 2.1(f) Financial Statements
Schedule 2.1(g) Station Licenses and FCC Matters
Schedule 2.1(h) Litigation and Pending Investigations
Schedule 2.1(i) Insurance
Schedule 2.1(j) Real Property
Schedule 2.1(l) Liens and Encumbrances
Schedule 2.1(m) Environmental Matters
Schedule 2.1(n) Tax Matters
Schedule 2.1(o) Certain Agreements
Schedule 2.1(p) Employee Benefit Plans
Schedule 2.1(r) Affiliate Relationships
Schedule 2.1(u) Pending Acquisitions
Schedule 2.2(e) Media Properties
Schedule 3.1(j) Permitted Transactions
Schedule 3.1(p) Business Agreements
Schedule 10.1(f) Minimum Damage Amounts
Exhibit 1 Letter of Credit
Exhibit 2 Pre-Closing Escrow Agreement
Exhibit 3 Post-Closing Escrow Agreement
Exhibit 4 New Fund Assignment of Partnership Interests
Exhibit 5 Form of Promissory Note
Exhibit 6 Form of Opinion of Counsel to Benchmark
Exhibit 7 Form of Opinion of Counsel to Mergeco
Exhibit 8 Intentionally Left Blank
Exhibit 9 License Agreement
Exhibit 10 Mathias Employment Agreement
Exhibit 11 Form of Release
<PAGE> 1
EXHIBIT 10.1.2
January 9, 1997
Benchmark Acquisition, Inc.
c/o 1325 Avenue of the Americas, 25th Floor
New York, NY 10019
Attn: Lawrence D. Stuart, Jr.
Re: Agreement and Plan of Merger by and among Benchmark
Communications Radio Limited Partnership, Benchmark Acquisition,
Inc., Benchmark Radio Acquisition Fund I Limited Partnership,
Benchmark Radio Acquisition Fund IV Limited Partnership,
Benchmark Radio Acquisition Fund VII Limited Partnership,
Benchmark Radio Acquisition Fund VIII Limited Partnership,
Joseph L. Mathias, Bruce R. Spector, Capstar Broadcasting
Partners,
Inc. and BCR Holding, Inc. dated as of December 9, 1996.
Dear Larry:
Reference is made to the above-referenced Agreement and Plan of Merger
(the "Merger Agreement"). This letter when signed by each of us and the other
parties to the Merger Agreement will memorialize our agreement with respect to
the matters set forth herein. Capitalized terms used and not defined herein
shall have the meanings assigned to such terms in the Agreement.
To simplify the transactions contemplated by the Merger Agreement, the
parties have agreed that on the Closing Date prior to the Effective Time of the
Merger and the Other Benchmark Mergers, Bruce R. Spector will assign his
limited partnership interest in Fund IX, Fund X and Fund XI to Benchmark
Holdings, Inc., a wholly owned subsidiary of Benchmark pursuant to an
Assignments of Partnership Interest in the form of Exhibit A hereto. As a
result of these assignments, Benchmark will, prior to and at the Effective Time
of the Merger, directly or indirectly be the record holder of 100% of the
partnership interests in each of Fund IX, Fund X and Fund XI.
The parties agree that the definition of Assignment of New Fund
Partnership Interests contained in the Merger Agreement shall mean the above
referenced Assignments of Partnership Interest (rather than the forms of
Assignments of Partnership Interests attached as Exhibit 4 to the Merger
Agreement).
<PAGE> 2
Please countersign this letter below to indicate your agreement with
respect to the matters set forth herein.
BENCHMARK COMMUNICATIONS RADIO
LIMITED PARTNERSHIP
/s/ BRUCE R, SPECTOR
----------------------------------
By: Bruce R. Spector
Its: General Partner
Agreed to and Accepted,
BENCHMARK ACQUISITION, INC.
/s/ PETER BRODSKY
- ---------------------------------
By:
Its:
2
<PAGE> 3
The undersigned parties hereby agree to the terms of this letter
agreement, as of the date first written above.
BENCHMARK RADIO ACQUISITION FUND I
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
---------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND IV
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
---------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VII
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
---------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VIII
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
---------------------------------------
By: Bruce R. Spector
Its: General Partner
/s/ BRUCE R. SPECTOR
---------------------------------------
Bruce R. Spector
/s/ JOSEPH L. MATHIAS
---------------------------------------
Joseph L. Mathias IV
3
<PAGE> 4
HOME RUN RADIO LIMITED PARTNERSHIP
By: HR Radio Corporation
Its: General Partner
/s/ BRUCE R. SPECTOR
---------------------------------------
By: Bruce R. Spector
Its: President
GRAND SLAM RADIO LIMITED PARTNERSHIP
/s/ MICHAEL MATHIAS
---------------------------------------
By: Michael Mathias
Its: General Partner
BCR HOLDING, INC.
/s/ PETER S. BRODSKY
---------------------------------------
By: Peter S. Brodsky
Its:
CAPSTAR BROADCASTING PARTNERS, INC.
/s/ PETER S. BRODSKY
---------------------------------------
By: Peter S. Brodsky
Its:
4
<PAGE> 5
EXHIBIT A
5
<PAGE> 6
ASSIGNMENT OF PARTNERSHIP INTEREST
THIS ASSIGNMENT is made as of _______________, 1997 by BRUCE R.
SPECTOR, (the "Assignor"), in favor of BENCHMARK HOLDINGS CO., INC., a Delaware
corporation (the "Assignee").
RECITALS
WHEREAS, Benchmark Communications Radio Limited Partnership, certain
affiliates thereof, Benchmark Acquisition, Inc., certain affiliates thereof and
Assignor have entered into that certain Agreement and Plan of Merger dated
December 9, 1996 (the "Merger Agreement"); and
WHEREAS, to induce Benchmark Acquisition, Inc. to consummate the
Merger Agreement, Assignor has agreed to assign its Class A Limited Partnership
Interest (the "Assigned Interest") in the Benchmark Radio Acquisition Fund IX
Limited Partnership (the "Partnership") to Benchmark Holdings Co., Inc.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Assignment. Assignor assigns and grants to Assignee all of its
right, title and interest in and to the Assigned Interest.
2. Representations, Warranties and Covenants of Assignee. Assignee
represents, warrants and covenants as follows:
(a) Good Standing. Assignee is a corporation, duly formed, validly
existing and in good standing under the laws of the jurisdiction of its
formation and has the corporate power to own its property and to carry on its
business as now being conducted and is duly qualified to do business and is in
good standing in each jurisdiction in which the character of the properties
owned or leased by it therein or in which the transaction of its business makes
such qualification necessary.
(b) Corporate Authority. Assignee has full power and authority to
enter into and to perform its obligations under this Assignment, all of which
have been duly authorized by all proper and necessary corporate action. No
consent or approval of shareholders of, or lenders to, Assignee and no consent,
approval, filing or registration with or notice to any governmental authority
on the part of the Assignee is required as a condition to the validity of this
Assignment or the performance by the Assignee of their obligations under this
Agreement.
(c) Binding Agreement. This Assignment constitutes the valid and
legally binding agreement of Assignee and is enforceable against Assignee in
accordance with its terms.
(d) No Conflicts. There is no statute, regulation, rule, order or
judgment, no provision of Assignee's articles of incorporation, by-laws or
other governing documents, and no provision of any mortgage, indenture,
contract or other agreement binding on the Assignee or
<PAGE> 7
affecting their properties, which would prohibit, or cause a default under or
in any way prevent the execution, delivery, or performance of the terms of this
Assignment.
(e) Assignee will not encumber the Assigned Interest or execute any
financing statement or security agreement in respect of the Assigned Interest.
(f) Assignee will not sell, assign, contract for sale or otherwise
dispose of any of the Assigned Interest other than to re-assign the Assigned
Interest pursuant hereto, unless the other party to such disposition agrees in
writing to be bond by the terms of this Agreement for the benefit of Assignor.
3. Representations, Warranties and Covenants of Assignor. Assignor
represents and warrants to Assignee as follows:
(a) Partnership Authority. Assignor has full power and authority to
enter into and to perform its obligations under this Assignment. No consent or
approval of lenders to, Assignor and no consent, approval, filing or
registration with or notice to any governmental authority on the part of
Assignor is required as a condition to the validity of this Assignment or the
performance by Assignor of their obligations under this Assignment.
(b) Binding Agreement. This Assignment constitutes the valid and
legally binding agreement of Assignor and is enforceable against Assignor in
accordance with its terms.
(c) No Conflicts. There is no statute, regulation, rule, order or
judgment, no provision of Assignor's partnership agreements or certificates,
and no provision of any mortgage, indenture, contract or other agreement
binding on the Assignor or affecting their properties, which would prohibit, or
cause a default under or in any way prevent the execution, delivery, or
carrying out of the terms of this Assignment.
4. Assignment. No party may assign its rights or obligations
hereunder without the prior written consent of the other party; provided,
however, (a) upon notice to Assignor and without releasing Assignee from any of
its obligations or liabilities hereunder, Assignee may assign or delegate any
or all of its rights or obligations under this Agreement to any affiliate
thereof, and (b) nothing in this Agreement shall limit Assignee's ability to
make a collateral assignment of its rights under this Agreement to any
institutional lender that provides funds to Assignee without the consent of
Assignor. Assignor shall execute an acknowledgment of such assignment(s) and
collateral assignments in such forms as Assignee or its institutional lenders
may from time to time reasonably request; provided, however, that unless
written notice is given to Assignor that any such collateral assignment has
been foreclosed upon, Assignor shall be entitled to deal exclusively with
Assignee as to any matters arising under this Agreement or any of the other
Agreements delivered pursuant thereto. Subject to the foregoing, this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by the
parties hereto and their respective successors and assignees.
5. Consent. Assignor and Benchmark hereby consent to this Assignment
for purposes of Section 6.01(a)(1) of the Partnership Agreement.
2
<PAGE> 8
6. Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and referenced
herein, supersede and terminate any prior agreements between the parties
(written or oral). This Agreement may not be altered or amended except by an
instrument in writing signed by the parties hereto.
7. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures on each such counterpart
were on the same instrument.
8. Construction. The Section headings of this Agreement are for
convenience only and in no way modify, interpret or construe the meaning of
specific provisions of the Agreement.
9. Choice of Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland, without regard to the
choice of law rules utilized in that jurisdiction.
10. Severability. If any one or more of the provisions contained in
this Agreement should be found invalid, illegal or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby. Any
illegal or unenforceable term shall be deemed to be void and of no force and
effect only to the minimum extent necessary to bring such term within the
provisions of applicable law and such term, as so modified, and the balance of
this Agreement shall then be fully enforceable.
3
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been executed by duly authorized
officers or partners of each of the parties hereto as of the day and year above
first written.
BENCHMARK COMMUNICATIONS RADIO
LIMITED PARTNERSHIP (for purposes of Section 5
only)
-----------------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK HOLDING CO., INC.
-----------------------------------------------
By:
Its:
-----------------------------------------------
Bruce R. Spector
4
<PAGE> 1
EXHIBIT 10.1.3
[BENCHMARK COMMUNICATIONS LETTERHEAD]
January 31, 1997
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
c/o Hicks, Muse, Furst & Tate Incorporated
1325 Avenue of the Americas, 25th Floor
New York, NY 10019
Attn: Peter Brodsky
Re: Agreement and Plan of Merger by and among Benchmark Communications
Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark Radio
Acquisition Fund I Limited Partnership, Benchmark Radio Acquisition
Fund IV Limited Partnership, Benchmark Radio Acquisition Fund VII
Limited Partnership, Benchmark Radio Acquisition Fund VIII Limited
Partnership, Joseph L. Mathias, Bruce R. Spector, Capstar Broadcasting
Partners, Inc. and BCR Holding, Inc. dated as of December 9, 1996 (the
"Merger Agreement")
Credit Agreement (Greenville) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund VII Limited
Partnership as Borrower (the "Greenville Credit Agreement")
Credit Agreement (Statesville) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund IX Limited
Partnership as Borrower (the "Statesville Credit Agreement")
Credit Agreement (Jackson) dated as of December 9, 1996 between BCR
Holding, Inc. and Benchmark Radio Acquisition Fund X Limited Partnership
as Borrower (the "Jackson Credit Agreement")
Credit Agreement (Montgomery) dated as of December 9, 1996
between BCR Holding, Inc. and Benchmark Radio Acquisition
Fund XI Limited Partnership as Borrower (the "Montgomery
Credit Agreement" and, together with the Greenville Credit
Agreement, the Statesville Credit Agreement, and the Jackson
Credit Agreement, the "Credit Agreements")
<PAGE> 2
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 2
Side Letter Regarding Capital Expenditure Loans entered into by and
between Benchmark Acquisition, Inc. and Benchmark Communications
Radio Limited Partnership as of December 9, 1996 (the "Capital
Expenditure Side Letter")
Ladies and Gentlemen:
This letter, when signed by each of us and the other parties to the
Merger Agreement and the Credit Agreements, will memorialize the parties'
agreement with respect to the matters set forth herein. Capitalized terms in
paragraphs (1) through (5) and in paragraph (9) below not defined herein shall
have the meanings assigned to such terms in the Merger Agreement. Capitalized
terms in paragraphs (6) through (8) below not defined herein shall have the
meanings assigned to such terms in the Credit Agreements.
The parties hereto agree as follows:
1. Section 1.6(f) of the Merger Agreement is replaced in its entirety
with the following clause (f):
(f) BCF Calculation.
(1) Benchmark will use its commercially reasonable efforts to
close the books of Benchmark, Fund I, Fund IV, Fund VII and Fund VIII by
February 3, 1997 in a manner that will enable Coopers & Lybrand to
conduct an audit (the "Coopers Audit") of Benchmark and each of Fund I,
Fund IV, Fund VII and Fund VIII on a consolidated basis for the fiscal
year ended December 31, 1996. Mergeco shall use commercially reasonably
efforts to cause Coopers & Lybrand to perform the Coopers Audit in the
manner described in this Section 1.6(f)(1) and to take the actions
described in this Section 1.6(f)(1), and Benchmark will permit Coopers &
Lybrand to perform the Coopers Audit subject to the following
conditions:
(A) Benchmark shall be promptly reimbursed by Mergeco for
audit fees not to exceed $20,000 charged by Arthur Andersen LLP in
connection with the audit of Benchmark, Fund I, Fund IV, Fund VII and
Fund VIII for the 1996 fiscal year that was commenced (but not
completed) by Arthur Andersen LLP;
(B) Except to the extent set forth in Section 1.6(f)(2), no
audit other than the Coopers Audit shall be conducted for purposes of
preparing the BCF Calculation;
<PAGE> 3
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 3
(C) Coopers & Lybrand shall promptly make available to
Benchmark any proposed audit adjustments in connection with the
Coopers Audit, and any such adjustments must be approved by
Benchmark;
(D) Coopers & Lybrand shall be responsible for all word
processing in connection with the Coopers Audit, and the financial
statements contained in the Coopers Audit shall be in substantially
the same format as the financial statements contained in the Coopers
& Lybrand audit report relating to Benchmark, Fund I, Fund IV, Fund
VII and Fund VIII for the nine months ended September 30, 1996;
(E) Coopers & Lybrand will conduct its field work at the
Benchmark's offices between February 3, 1997 and February 10, 1997
and will have all field work completed no later than February 15,
1997;
(F) Confirmations for accounts receivable and cash will be
rolled forward from September 30, 1996 and will not be required for
the Coopers Audit unless material variances, in the opinion of
Coopers & Lybrand, exist to warrant such testing;
(G) The field work of Coopers & Lybrand will consist of the
items outlined in the client assistance schedule provided to
Benchmark by Coopers & Lybrand, and such schedule will be modified to
reflect that Item 3F should read "significant accounts greater than
120 days;"
(H) The fixed asset appraisals for stations acquired by
Benchmark or any Fund during 1996 will be set up in summary form and
not entered individually into the fixed asset system;
(I) Coopers & Lybrand shall (i) schedule in the notes to the
report of Coopers & Lybrand relating to the Coopers Audit (the
"Coopers Audit Report") the 1996 income for each of Fund I, Fund IV,
Fund VII and Fund VIII (the format for this schedule will be the same
as the one provided by Benchmark to Coopers & Lybrand in connection
with the September 30, 1996 audit by Coopers & Lybrand and shall
include each Fund's income statement with the appropriate elimination
entry in the format that such items appeared in the workpapers of
Coopers & Lybrand relating to the September 1996 audit), (ii) include
in its work papers relating to the Coopers Audit and the Coopers
Audit Report (the "Coopers Work Papers") the 1996 income for each
individual radio station operated by Fund I, Fund IV, Fund VII and
Fund VIII and (iii) upon receipt of customary releases, make
available no later than February 22, 1997 to Benchmark and Arthur
Andersen LLP the Coopers Audit Report and the Coopers Work Papers;
and
<PAGE> 4
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 4
(J) All inquiries of Coopers & Lybrand to Benchmark regarding
the Coopers Audit shall be made prior to February 15, 1997.
(2) Benchmark shall use its commercially reasonable efforts to
cause Arthur Andersen LLP to, pursuant to certain agreed upon procedures
(the "Agreed Upon Audit Procedures"), perform a limited audit of the
applicable balance sheets and income statements in order to calculate the
Statesville Broadcast Cash Flow, the Jackson Broadcast Cash Flow and the
KRMD-AM/FM Broadcast Cash Flow (which shall constitute a component of the
Fund IV Broadcast Cash Flow). Arthur Andersen will qualify its report
relating to such audit to disclose that a statement of cash flow and
retained earnings and full footnote disclosure has been omitted from such
report.
(3) No later than April 30, 1997, Benchmark shall deliver to
Mergeco a certificate executed by the General Partners of Benchmark, dated
the date of its delivery, setting forth the calculation of Fund I
Broadcast Cash Flow, Fund IV Broadcast Cash Flow, Fund VIII Broadcast Cash
Flow, Statesville Broadcast Cash Flow, Jackson Broadcast Cash Flow and
Montgomery Broadcast Cash Flow on which the Fund I BCF Consideration, the
Fund IV BCF Consideration, the Fund VIII BCF Consideration and the
Benchmark Consideration will be based (the "BCF Calculation"). The
certificate will state that the BCF Calculation has been certified by
Arthur Andersen LLP and is based on (i) the terms of this agreement, (ii)
the Coopers Audit Report and the Coopers Work Papers (with respect to the
Fund I Broadcast Cash Flow, the Fund IV Broadcast Cash Flow and the Fund
VIII Broadcast Cash Flow) and (iii) the Agreed Upon Audit Procedures (with
respect to the Statesville Broadcast Cash Flow, the Jackson Broadcast Cash
Flow and the KRMD-AM/FM Broadcast Cash Flow). The procedures described in
Section 1.6(f)(2) relating to the Agreed Upon Audit Procedures shall be
agreed upon by Mergeco and Benchmark in consultation with Arthur Andersen
and Coopers & Lybrand no later than February 15, 1997. Prior to delivery
of the certificate setting forth the BCF Calculation, Benchmark shall
request Arthur Andersen LLP to consult with Coopers & Lybrand regarding
the preparation of the BCF Calculation and to provide Coopers & Lybrand
with applicable documentation setting forth the basis upon which Arthur
Andersen LLP calculated the Statesville Broadcast Cash Flow, the Jackson
Broadcast Cash Flow and the KRMD-AM/FM Broadcast Cash Flow.
2. The following sentence is inserted at the end of Section 1.6(i)
of the Merger Agreement:
The parties agree that neither Mergeco nor Coopers & Lybrand may
dispute a component of the BCF Calculation to the extent the disputed
component was derived from the Coopers Audit, the Coopers Audit Report
(including the notes thereto) or the Coopers Work Papers and, in the event
any such dispute is raised, the Referee shall resolve such dispute in
favor of Benchmark; provided, however, that
<PAGE> 5
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 5
this shall not limit the right of Coopers & Lybrand to dispute the
methods pursuant to which numbers contained in the Coopers Audit, the
Coopers Audit Report (including the notes thereto) or the Coopers Work
Papers are applied to calculate any disputed components of the BCF
Calculation.
3. Article IV of the Merger Agreement is amended by inserting
the following Section 4.14:
4.14 New Shreveport Station. Benchmark agrees to consult with
Mergeco with respect to the incurrence of additional Shreveport
Expenses; provided that such consultation shall not require Benchmark
not to perform its obligations under the Shreveport Master Agreement
or other agreements relating thereto. Mergeco confirms that
Benchmarks' agreement to so consult shall not change the parties'
obligation to treat all Shreveport Expenses (including those incurred
to date) as a portion of the Fund IV Consideration regardless of
whether the Initial Closing (as defined in the Shreveport Master
Agreement) occurs.
4. The following definition is added to Article XI of the Merger
Agreement:
"KRMD-AM/FM Broadcast Cash Flow" means the aggregate revenues of
KRMD-AM/FM during 1996 minus the aggregate operating expenses of
KRMD-AM/FM during 1996 (regardless of whether such stations were owned
by Benchmark or its subsidiaries, or any third party, during such time
period), determined in accordance with GAAP, consistently applied,
excluding any expenses for (i) depreciation, (ii) amortization, (iii)
interest, (iv) income taxes, (v) management fees and expenses payable
to Benchmark or AmCom General Corporation and its affiliates, (vi)
legal fees and expenses incurred in connection with the sale of
KRMD-AM/FM and the reorganization of AmCom General Corporation and its
affiliates and (vii) Shreveport Expenses. In addition, in calculating
KRMD-AM/FM Broadcast Cash Flow, extraordinary gains and losses
(determined in accordance with GAAP), gains and losses on sales of
fixed assets and revenues and expenses under trade and barter
agreements shall be excluded. In addition, the KRMD-AM/FM Broadcast
Cash Flow shall be increased by approximately $68,700 to reflect that
KRMD-AM/FM will receive rental income from tenants at the stations'
studio building at 3109 Alexander Boulevard in Shreveport, Louisiana,
will no longer incur studio/office rental expense at such site and will
no longer incur billboard rental expenses at the station's AM
transmitter site.
5. Clause (b) of Section 4.2 of the Merger Agreement is amended by
inserting the words "; provided, however that Benchmark shall not be required
to deliver any of the items referenced in this sentence for the months of
January 1997, February 1997 and March 1997 until April 30, 1997" at the end of
the first sentence of such clause.
<PAGE> 6
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 6
6. Clause (a) of Section 5.01 of each Credit Agreement is amended by
replacing the words "as soon as available, but in any event within 90 days
after the end of each calendar year" with the words "beginning with the
calendar year ended December 31, 1997, as soon as available, but in any event
within 120 days after the end of each calendar year."
7. The following proviso is inserted at the end of clause (b) of
Section 5.01 of each Credit Agreement:
; provided, however, that the Borrower shall not be required to
deliver the unaudited consolidated balance sheets of the Borrower and
its Subsidiaries and the related unaudited consolidated statements of
income and of cash flows for the months of January 1997, February 1997
and March 1997 until April 30, 1997.
8. Under the Capital Expenditure Side Letter, the date by which the
parties agree to negotiate in good faith the documentation of the Capital
Expenditure Loans (as defined therein) is hereby extended from thirty days
after the date of the Capital Expenditure Side Letter to February 28, 1997.
9. The parties hereto agree to cooperate in good faith to enable
Coopers & Lybrand to complete the Coopers Audit Report, the Coopers Audit and
the Coopers Work Papers within the time periods specified in paragraph 1 of
this Letter Agreement. The parties recognize, however, that Coopers & Lybrand
(i) are independent public accountants to Mergeco, (ii) are not a party to this
Letter Agreement and (iii) may, in their professional discretion, determine
that they are unable to complete or deliver the Coopers Audit Report, the
Coopers Audit and/or the Coopers Work Papers under the conditions and/or within
the time period specified in paragraph 1 of this Letter Agreement. In the event
the Coopers Audit Report, the Coopers Audit and/or the Coopers Work Papers are
not completed and delivered in the manner and within the time periods specified
in paragraph 1 of this Letter Agreement (regardless of whether Mergeco has used
its commercially reasonable efforts to effect such completion and delivery),
the parties agree that paragraphs 1, 2, and 4 of this Letter Agreement will
terminate and that the original provisions contained in the Merger Agreement to
which such paragraphs relate will remain in full force and effect.
<PAGE> 7
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 7
Please countersign this letter below to indicate your agreement with
respect to the matters set forth herein.
BENCHMARK COMMUNICATIONS RADIO
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
---------------------------------
BY: Bruce R. Spector
Its: General Partner
Agreed to and Accepted,
BENCHMARK ACQUISITION, INC.
/s/ PETER S. BRODSKY
- ---------------------------------
BY: Peter S. Brodsky
Its:
BCR HOLDING, INC.
/s/ PETER S. BRODSKY
- ---------------------------------
By: Peter S. Brodsky
Its:
CAPSTAR BROADCASTING PARTNERS, INC.
/s/ PETER S. BRODSKY
- --------------------------------
By: Peter S. Brodsky
Its:
<PAGE> 8
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 8
The undersigned parties hereby agree to the terms of this letter
agreement, as of the date first written above.
BENCHMARK RADIO ACQUISITION FUND I
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND IV
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VII
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND VIII
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
<PAGE> 9
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 9
BENCHMARK RADIO ACQUISITION FUND IX
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND X
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
BENCHMARK RADIO ACQUISITION FUND XI
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: General Partner
/s/ BRUCE R. SPECTOR
--------------------------------------
Bruce R. Spector
/s/ JOSEPH L. MATHIAS, IV
--------------------------------------
Joseph L. Mathias, IV
<PAGE> 10
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
January 31, 1997
Page 10
HOME RUN RADIO LIMITED PARTNERSHIP
By: HR Radio Corporation
Its: General Partner
/s/ BRUCE R. SPECTOR
--------------------------------------
By: Bruce R. Spector
Its: President
GRAND SLAM RADIO LIMITED PARTNERSHIP
/s/ MICHAEL MATHIAS
--------------------------------------
By: Michael Mathias
Its: General Partner
<PAGE> 1
EXHIBIT 10.1.4
[BENCHMARK COMMUNICATIONS LETTERHEAD]
April 8, 1997
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
c/o Hicks, Muse, Furst & Tate Incorporated
1325 Avenue of the Americas, 25th Floor
New York, NY 10019
Attn: Peter Brodsky
Re: Agreement and Plan of Merger by and among Benchmark Communications
Radio Limited Partnership, Benchmark Acquisition, Inc., Benchmark
Radio Acquisition Fund I Limited Partnership, Benchmark Radio
Acquisition Fund IV Limited Partnership, Benchmark Radio Acquisition
Fund VII Limited Partnership, Benchmark Radio Acquisition Fund VIII
Limited Partnership, Joseph L. Mathias, Bruce R. Spector, Capstar
Broadcasting Partners, Inc. and BCR Holding, Inc. dated as of
December 9, 1996 (the "Merger Agreement")
Ladies and Gentlemen:
This letter, when signed by each of us, will memorialize our agreement
with respect to the matters set forth herein.
Section 4.13 of the Merger Agreement requires Benchmark to file a Form
5500 for the Benchmark Communications Disability Income Plan under the
Department of Labor's Delinquent Filer Voluntary Compliance Program and to
incur all costs relating to such filing. Benchmark represents and warrants to
Mergeco that it is not required to file a Form 5500 with respect to its
Disability Income Plan because (1) less than 100 persons are covered by such
Plan (and less than 100 persons were covered by such Plan at the beginning of
the Plan year) and (2) such Plan is a fully insured welfare benefit plan. Based
upon this representation, Mergeco and its affiliates agree to waive the
provisions of Section 4.13 of the Merger Agreement.
<PAGE> 2
Benchmark Acquisition, Inc.
BCR Holding, Inc.
Capstar Broadcasting Partners, Inc.
April 8, 1997
Page 2
Please countersign this letter below to indicate your agreement with
respect to the matters set forth herein.
BENCHMARK COMMUNICATIONS RADIO
LIMITED PARTNERSHIP
/s/ BRUCE R. SPECTOR
-------------------------------
By: BRUCE R. SPECTOR
Its: General Partner
Agreed to and Accepted,
BENCHMARK ACQUISITION, INC.
/s/ PETER S. BRODSKY
- ------------------------------
By: PETER S. BRODSKY
Its:
BCR HOLDING, INC.
/s/ PETER S. BRODSKY
- ------------------------------
By: PETER S. BRODSKY
Its:
CAPSTAR BROADCASTING PARTNERS, INC.
/s/ PETER S. BRODSKY
- ------------------------------
By: PETER S. BRODSKY
Its:
<PAGE> 1
EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
between
COMMUNITY PACIFIC BROADCASTING COMPANY L.P.
and
COMMUNITY ACQUISITION COMPANY, INC.
dated as of
December 26, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
ARTICLE I
DEFINED TERMS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
-
1.2. References and Titles . . . . . . . . . . . . . . . . . . . . 10
--
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy . . . . . . . . . . . . . . . . . . 10
--
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 11
--
2.3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 12
--
2.4. Adjustments and Prorations . . . . . . . . . . . . . . . . . . 12
--
2.5. Assumption of Liabilities and Obligations . . . . . . . . . . 14
--
2.6. Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . 14
--
2.7. Earnest Money . . . . . . . . . . . . . . . . . . . . . . . . 15
--
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties Regarding Seller. . . . . . . . 15
--
3.2. Representations and Warranties of Buyer . . . . . . . . . . . 26
--
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of Seller . . . . . . . . . . . . . . . . . . . . . 27
--
4.2. Negative Trade Balance . . . . . . . . . . . . . . . . . . . . 29
--
4.3. Environmental Site Assessments . . . . . . . . . . . . . . . . 29
--
</TABLE>
(i)
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. No Solicitation of Transactions . . . . . . . . . . . . . . . 30
--
5.2. Access and Information . . . . . . . . . . . . . . . . . . . . 30
--
5.3. Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . 31
--
5.4. Compliance With Station Licenses . . . . . . . . . . . . . . . 32
--
5.5. Notification of Certain Matters . . . . . . . . . . . . . . . 32
--
5.6. Third Party Consents . . . . . . . . . . . . . . . . . . . . . 32
--
5.7. David Benjamin Employment Agreement . . . . . . . . . . . . . 33
--
ARTICLE VI
COVENANT OF BUYER
6.1. Notification of Certain Matters . . . . . . . . . . . . . . . 33
--
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for FCC Consents . . . . . . . . . . . . . . . . . 33
--
7.2. Control of Stations . . . . . . . . . . . . . . . . . . . . . 34
--
7.3. Other Governmental Consents . . . . . . . . . . . . . . . . . 34
--
7.4. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 34
--
7.5. Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . 35
--
7.6. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . 35
--
7.7. Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . 35
--
7.8. Additional Agreements . . . . . . . . . . . . . . . . . . . . 36
--
7.9. Local Marketing Agreement . . . . . . . . . . . . . . . . . . 36
--
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation . . . . . . . . . . . . 37
--
8.2. Conditions to Obligation of Buyer . . . . . . . . . . . . . . 37
--
8.3. Conditions to Obligations of the Seller . . . . . . . . . . . 39
--
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE IX
CLOSING
9.1. Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
--
9.2. Actions to Occur at Closing . . . . . . . . . . . . . . . . . 41
--
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . 42
--
10.2. Effect of Termination . . . . . . . . . . . . . . . . . . . . 44
--
ARTICLE XII
INDEMNIFICATION
11.1. Indemnification of Buyer . . . . . . . . . . . . . . . . . . . 45
--
11.2. Indemnification of Seller . . . . . . . . . . . . . . . . . . 45
--
11.3. Defense of Third-Party Claims . . . . . . . . . . . . . . . . 45
--
11.4. Direct Claims . . . . . . . . . . . . . . . . . . . . . . . . 46
--
11.5. Escrow . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
--
11.6. Limitations . . . . . . . . . . . . . . . . . . . . . . . . . 47
--
11.7. Recovery against Escrowed Funds . . . . . . . . . . . . . . . 48
--
11.8. Instructions to Escrow Agent . . . . . . . . . . . . . . . . . 48
--
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants . . . . 48
--
12.2. Further Actions . . . . . . . . . . . . . . . . . . . . . . . 49
--
12.3. Amendment and Modification . . . . . . . . . . . . . . . . . . 49
--
12.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . 49
--
12.5. Specific Performance . . . . . . . . . . . . . . . . . . . . . 49
--
12.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 49
--
12.7. Expenses and Obligations . . . . . . . . . . . . . . . . . . . 49
--
12.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . . 50
--
12.9. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
--
12.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 51
--
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
12.11. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . 51
--
12.12. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 51
--
12.13. Public Announcements . . . . . . . . . . . . . . . . . . . . . 51
--
12.14. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 51
--
12.15. Director and Officer Liability . . . . . . . . . . . . . . . . 52
--
12.16. No Reversionary Interest . . . . . . . . . . . . . . . . . . . 52
--
12.17. No Waiver Relating to Claims for Fraud . . . . . . . . . . . . 52
--
</TABLE>
ANNEXES:
Annex A -- The Stations
EXHIBITS:
Exhibit A -- Form of Original Deposit Letter of Credit
Exhibit B -- Deposit Escrow Agreement
Exhibit C -- Form of Non-Competition Agreement
Exhibit D -- Form of Employment Agreement
Exhibit E -- Form of Bill of Sale and Assignment
Exhibit F -- Form of Assumption Agreement
Exhibit G -- Form of Indemnification Escrow Agreement
Exhibit H -- Form of Local Marketing Agreement
Exhibit I -- Form of Opinion of Bullivant, Houser, Bailey, Pendergrass
and Hoffman
Exhibit J -- Form of Opinion of Fisher, Wayland, Cooper, Leader &
Zaragoza L.L.P.
SCHEDULES:
Schedule 2.5(b) -- Trade Deals
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(c) -- List of Partners and Ownership
Schedule 3.1(f) -- Reports; Financial Statements; Absence of Certain
Changes or Events
Schedule 3.1(g) -- Licenses and Permits
Schedule 3.1(h) -- Litigation
Schedule 3.1(i) -- Insurance
Schedule 3.1(j) -- Owned Real Estate
Schedule 3.1(k) -- Leased Real Property
Schedule 3.1(l) -- Personal Property
Schedule 3.1(m) -- Liens and Encumbrances
Schedule 3.1(n) -- Environmental
Schedule 3.1(p) -- Certain Agreements
Schedule 3.1(q) -- Employee Benefit Plans; Labor
Schedule 3.1(r) -- Patents, Trademarks; Etc.
(iv)
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of December 26, 1996, between Community Pacific Broadcasting Company
L.P., a Delaware limited partnership ("Seller"), and Community Acquisition
Company, Inc., a Delaware corporation ("Buyer ").
R E C I T A L S
A. Seller is the licensee of and owns and operates the radio
stations listed on Annex A hereto (each referred to individually as a "Station"
and collectively, the "Stations") pursuant to licenses issued by the Federal
Communications Commission ("FCC").
B. Seller desires to sell and Buyer desires to buy substantially all
the assets used or useful in the operation of each of the Stations and by so
doing to acquire the radio broadcast business presently conducted by each of
the Stations, upon the terms and conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
ARTICLE I
DEFINED TERMS
1.1. DEFINED TERMS. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of Seller to cash payment
for the sale of advertising time by the Stations (a) if the LMA is entered
into, then prior to 11:59 p.m. on the day immediately preceding the LMA
Commencement Date, or (b) if the LMA is not entered into, then prior to 11:59
p.m. on the day prior to the Closing Date.
"Affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
<PAGE> 7
"Agreement of Limited Partnership" means the Amended and Restated
Agreement of Limited Partnership of Seller, dated as of December 1, 1995, as
the Schedule 1 thereto has been amended to reflect additional capital
contributions to Seller.
"Applicable Laws" means all laws, statutes, rules, regulations,
ordinances, judgments, orders, decrees, injunctions, and writs of any
Governmental Authority having jurisdiction over the Assets or the business or
operations of the Stations, as may be in effect on or prior to the Closing.
"Applications" has the meaning set forth in Section 7.1.
"Assets" means all the tangible and intangible assets owned,
leased, or licensed by Seller that are used or held for use in connection with
the business or operations of any of the Stations, whether or not reflected on
the Financial Statements or Balance Sheet of Seller, but specifically excluding
therefrom the Excluded Assets.
"Assumed Contracts" means (a) those Contracts set forth on
Schedule 3.1(p) identified as being assumed by Buyer and all other contracts of
Seller entered into in the ordinary course of business prior to the date of
this Agreement that relate to the Assets or the business or operation of the
Assets or any part thereof, (b) all other non-trade advertising Contracts for
cash entered into by Seller for any of the Stations prior to the date of this
Agreement and which are terminable on not more than 30 days notice, (c) all
Contracts entered into by Seller on or after the date of this Agreement and
before the Closing in accordance with the applicable provisions of Section 4.1,
and (d) Trade Deals described in Section 2.5(b).
"Assumption Agreement" means the Assumption Agreement between
Buyer and Seller substantially in the form of Exhibit F.
"Balance Sheet" has the meaning set forth in Section 3.1(f).
"Balance Sheet Date" has the meaning set forth in Section 3.1(f).
"Banking Event" has the meaning set forth in Section 9.1.
"Bill of Sale and Assignment" means the Bill of Sale and
Assignment between Buyer and Seller substantially in the form of Exhibit E.
"business day" means any other day than (i) a Saturday or Sunday
or (ii) a day on which commercial banks in New York, New York or Dallas, Texas
are authorized or required to be closed.
2
<PAGE> 8
"Buyer" has the meaning set forth in the first paragraph of this
Agreement, and it includes its permitted successors and assigns.
"Buyer Indemnified Costs" shall mean (a) any and all damages,
losses, claims, liabilities (including, without limitation, those liabilities
not expressly assumed by Buyer as provided in Section 2.5), demands, charges,
suits, penalties, costs, and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) which any of the Buyer Indemnified Parties incur and
arise out of any breach or default by Seller of any of the representations,
warranties, covenants, or agreements under this Agreement or any agreement or
document executed by Seller in connection herewith; (b) any and all obligations
or liabilities of Seller relating to the Stations not expressly assumed by
Buyer pursuant to Section 2.5, including without limitation, any such
obligation or liability imposed on Buyer by process of law as a successor to
the business of Seller; (c) any and all losses, liabilities, or damages
resulting from Seller's operation or control of any of the Stations prior to
the Closing Date, including any and all liabilities arising under the Licenses
or the Assumed Contracts which relate to events occurring prior to the Closing
Date; and (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.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, consultant, stockholder, and Affiliate of Buyer.
"Capstar" means Capstar Broadcasting Partners, Inc., a Delaware
corporation and includes its successors and assigns.
"Cessation Date" has the meaning set forth in Section 9.1.
"Choses in Action" means a right to receive or recover property,
debt, or damages on a cause of action, whether pending or not and whether
arising in contract, tort or otherwise. The term shall include rights to
indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions contemplated
by this Agreement in accordance with the provisions of Article IX.
"Closing Date" means the date of the Closing specified in Article
IX.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
3
<PAGE> 9
"Communications Act" has the meaning set forth in Section 3.1(g).
"Company Reports" has the meaning set forth in Section 3.1(f).
"Conflict Event" has the meaning set forth in Section 9.1.
"Consents" means all governmental consents and approvals,
including the FCC Consents, and all consents and approvals of third parties, in
each case that are necessary in order to transfer the Assets to Buyer and
otherwise to consummate the transactions contemplated hereby.
"Contracts" means all agreements, contracts, or other binding
commitments or arrangements, written or oral (including any amendments and
other modifications thereto), to which Seller is a party or is otherwise bound
and which affect or relate to the Assets or the business or operations of each
of the Stations.
"CPA" means KPMG Peat Marwick, the Seller's certified public
accountants.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Seller, Buyer and Escrow Agent, a copy of which is attached hereto as
Exhibit B .
"Deposit Letter of Credit" means (a) during any period in which
the Original Deposit Letter of Credit is held under the Deposit Escrow
Agreement, the Original Deposit Letter of Credit, and (b) during any period in
which the Substitute Deposit Letter of Credit is held under the Deposit Escrow
Agreement, the Substitute Deposit Letter of Credit.
"Employee Benefit Plans" has the meaning set forth in Section
3.1(q).
"Environmental Costs or Liabilities" has the meaning set forth in
Section 3.1(n)(iv).
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act, (42 U.S.C. Section 9601 et seq.) ("CERCLA"),
the Emergency Planning and Community Right to Know Act and the Superfund
Amendments and Reauthorization Act of 1986, the Resource Conservation and
Recovery Act, the Hazardous and Solid Waste Amendments Act of 1984, the Clean
Air Act, the Clean Water Act, the Toxic Substances Control Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act of 1970, the Oil
Pollution Act of 1990, the Hazardous Materials Transportation Act, and any
similar or analogous statutes, regulations and decisional law of any
Governmental Entity, as each of the foregoing may be amended and in effect on
or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
4
<PAGE> 10
"ESA" means Phase I or Phase II environmental site assessments.
"Escrow Agent" means Citibank, N.A. and includes its successors
and assigns.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"FCC" has the meaning set forth in the first recital hereto.
"FCC Consents" means actions by the FCC granting its consent to
the assignment of the FCC Licenses for each of the Stations to Buyer as
contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to Seller and applications of Seller, if any,
to the FCC relating to or used in the business or operations of each of the
Stations, including those listed on Schedule 3.1(g) and any additions thereto
or renewals thereof between the date hereof and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting forth the FCC Consents (without the inclusion of any adverse conditions
affecting Buyer's operation or ownership of the Stations) and (a) which has not
been reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal, or stay, and the time for filing any such
requests and for the FCC to set aside the action on its own motion has expired
or (ii) in the event of review, reconsideration, or appeal, such review,
reconsideration, or appeal has been denied and the time for further review,
reconsideration, or appeal has expired.
"Financial Statements"has the meaning set forth in Section
3.1(f).
"GAAP" means generally accepted accounting principles in the
United States.
"General Partner" means Broadcast Management Corporation, a
Delaware corporation, and its successors and assigns.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section
3.1(n).
5
<PAGE> 11
"Holdback Amount" has the meaning set forth in Section 11.5.
"HSR Act" has the meaning set forth in Section 3.1(e).
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Buyer, and Escrow Agent substantially in the
form attached hereto as Exhibit G.
"Indemnified Costs" means the Buyer Indemnified Costs or the
Seller Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or the
Seller Indemnified Parties, as the case may be.
"Indemnifying Party" means any person who is obligated to provide
indemnification hereunder.
"Intellectual Property" has the meaning set forth in Section
2.1(f).
"Know-how" means all plans, ideas, concepts and data, research
records, all promotional literature, customer and supplier lists and similar
data and information and all other confidential or proprietary technical and
business information.
"Knowledge" means, with respect to a specified party hereto, the
actual knowledge of such party, together with such additional knowledge as
would be acquired by a reasonable person upon conducting reasonable and
diligent inquiry concerning the subject matter in question.
"Leased Real Property" means all of the Seller's leasehold
interests, easements, licenses, rights to access and rights-of-way which are
used in the business and operations of the Stations, including those interests
which are identified and described in Schedule 3.1(k) together with any
addition or permitted deletion thereto between the date hereof and the Closing
Date.
"Licenses" means the FCC Licenses and all other Permits issued by
any Governmental Entity to Seller and that are used in the business and
operations of either Station, including those listed on Schedule 3.1(g) with
any additions thereto and renewals thereof between the date hereof and the
Closing Date.
"Liens" has the meaning set forth in Section 3.1(m).
"LMA" has the meaning set forth in Section 7.9.
6
<PAGE> 12
"LMA Commencement Date" means the Commencement Date referred to
in the LMA.
"Material Adverse Effect" means a material adverse effect on the
business, operations, properties (taken as a whole), condition (financial or
otherwise), results of operations, assets (taken as a whole), liabilities, or
prospects of Seller.
"Non-Competition Agreement" means the Non-Competition Agreement
between Buyer and Seller substantially in the form of Exhibit C.
"Original Deposit Letter of Credit" means the certain original,
irrevocable letter of credit in favor of Seller and the Escrow Agent issued by
Bankers Trust Company for the sum of $1,750,000, substantially in the form of
Exhibit A, and held in accordance with the provisions of the Deposit Escrow
Agreement, and any substitute letter of credit issued in that amount in
accordance with Section 4(b) of the Deposit Escrow Agreement.
"Owned Real Property" means the real property owned in fee by the
Real Property Owners and described in Schedule 3.1(j), and all buildings,
structures, improvements, and fixtures thereon, together with all rights of
way, easements, privileges, and appurtenances pertaining or belonging thereto,
including any right, title, and interest of Seller in and to any street or
other property adjoining any portion of such property.
"Patents" means all patent and patent applications (including all
reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by Seller.
"Permits" has the meaning set forth in Section 3.1(n).
"Permitted Encumbrances" means (a) statutory liens for current
taxes not yet due and payable, (b) in the case of leases of real property,
agreements with, and/or conditions imposed on the issuance of land use permits,
zoning, business licenses, use permits, or other entitlements of various types
issued by, city, county, state, and federal governmental bodies or agencies,
necessary or beneficial to the continued use and occupancy of the Assets or the
continuation of the operation of each of the Stations, (c) mechanics',
carriers', workers', repairers', and other similar liens imposed by law arising
or incurred in the ordinary course of business for obligations not yet due, (d)
in the case of leases of vehicles, rolling stock, and other personal property,
encumbrances, which do not, individually or in the aggregate, materially impair
the operation of the business at the facility at which such leased equipment or
other personal property is located, and (e) other liens, charges or
encumbrances incidental to the operation of the Stations or the ownership of
the Assets which were not incurred in connection with the borrowing of money or
the advance of credit which in the aggregate do not materially detract from the
value of the Assets or materially interfere with the use thereof or the
operation of the Stations.
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"person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, or other
entity.
"Personal Property" means all of the machinery, equipment
(including the transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, furnishings, leasehold
improvements, office equipment, inventories, supplies, plant, spare parts, and
other tangible or intangible personal property which are owned or leased by
Seller for any Station and which are used or held for use in the business or
operations of the Stations, including the personal property which is listed on
Schedule 3.1(l) hereto, together with any additions thereto between the date
hereof and the Closing Date less any dispositions made in accordance with
Section 4.1.
"Purchase Price" means the consideration payable by Buyer to
Seller as provided in Section 2.3 hereof.
"Real Property" means the Leased Real Property and the Owned Real
Property.
"Released Claims" has the meaning set forth in Section 10.2(b).
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of this
Agreement.
"Seller Indemnified Costs" shall mean: (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) which
any of the Seller Indemnified Parties incur and arise out of any breach or
default by Buyer of any of the representations, warranties, covenants, or
agreements under this Agreement or any agreement or document executed in
connection herewith; (b) any and all obligations or liabilities of Seller
relating to the Station expressly assumed by Buyer pursuant to Section 2.5; (c)
any and all losses, liabilities, or damages resulting from Buyer's operation or
control of the Stations on and after the Closing Date, including any and all
liabilities arising under the Licenses or the Assumed Contracts which relate to
events occurring after the Closing Date; and (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.
"Seller Indemnified Parties" shall mean Seller, each partner of
Seller and each officer, director, employee, consultant, stockholder, and
Affiliate of the general partner of Seller.
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"Seller Negative Trade Balance" has the meaning set forth in
Section 4.2.
"Station" has the meaning set forth in the first recital hereto.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section 3.1(g).
"Station Management" has the meaning set forth in Section 4.1(b).
"Substitute Deposit Letter of Credit" means that certain
original, irrevocable letter of credit in favor of Seller and the Escrow Agent
issued by Bankers Trust Company or another lender reasonably acceptable to
Seller for the sum of $2,625,000 and held in accordance with the provisions of
the Deposit Escrow Agreement, and any substitute letter of credit issued in
that amount in accordance with Section 4(b) of the Deposit Escrow Agreement.
An increase in the amount of the Original Deposit Letter of Credit to
$2,625,000 shall constitute the issuance of a Substitute Deposit Letter of
Credit.
"Taxes" means taxes, charges, fees, imposts, levies, interest,
penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Title Commitment" means the commitment to issue an owner's title
policy as provided in Section 8.2(e).
"Title Company" means Chicago Title Insurance Company or such
other title insurance company reasonably acceptable to Buyer and Seller.
"Trade Deals" means the exchanges by a Station of its advertising
time for goods or services, other than in connection with the licensing of
programs and programming material.
"Trademarks" means (a) trademarks, service marks, trade names,
trade dress, labels, logos, and all other names and slogans associated with any
products or embodying the goodwill of
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the business of the Stations, whether or not registered, and any applications
or registrations therefor and (b) any associated goodwill incident thereto
owned by Seller.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section
3.1(d).
"Voting Debt" has the meaning set forth in Section 3.1(c).
"Warranty Deed" means an Iowa general warranty deed in form and
substance reasonably acceptable to the Buyer and the Title Company pursuant to
which Seller conveys to Buyer the Owned Real Property at the Closing.
1.2. REFERENCES AND TITLES. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language contained
therein. The words "this Agreement," "herein," "hereby," "hereunder," " and
"hereof," and words of similar import, refer to this Agreement as a whole and
not to any particular subdivision unless expressly so limited. The words "this
Section" and "this subsection" and words of similar import, refer only to the
Sections or subsections hereof in which such words occur. The word "or" is not
exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender and words, terms, and titles
(including terms defined herein) in the singular form shall be construed to
include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. AGREEMENT TO SELL AND BUY. Subject to the terms and conditions
set forth in this Agreement, Seller shall sell, assign, transfer and deliver to
Buyer on the Closing Date, and Buyer shall purchase on the Closing Date, all of
the Assets, free and clear of any Liens or liabilities (except for Permitted
Encumbrances and liabilities assumed by Buyer in accordance with Section 2.5).
The Assets to be assigned, transferred and delivered by Seller hereunder shall
include the following:
(a) The Personal Property;
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(b) The Leased Real Property;
(c) The Owned Real Property;
(d) The Licenses and Permits;
(e) The Assumed Contracts;
(f) To the extent assignable, all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration,
Patents and all other intellectual property rights whether registered or
not, licensed to or owned by the Seller relating to the business or
operations of each Station, including the call letters of each of the
Stations and the goodwill related to the foregoing (the "Intellectual
Property");
(g) Each of the Station's technical information and data,
machinery and equipment warranties (to the extent such warranties are
assignable), if any, maps, plans, diagrams, blueprints and schematics
relating to such Station, if any, including filings with the FCC which
relate to such Station, and goodwill relating to the foregoing;
(h) All books and records relating to the business and
operation of any of the Stations (excluding those described in Section
2.2(b)), including (i) executed copies of the Assumed Contracts, or if
no executed agreement exists, summaries of such Assumed Contracts
transferred pursuant to clause (e) above and (ii) all records required
by the FCC to be kept by the Stations, subject to the right of Seller to
copy and have such books and records made reasonably available to Seller
for tax and other legitimate partnership or corporate purposes for a
period of six years after the Closing;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to computer
programs and software used in connection with the business or operations
of any of the Stations;
(j) Except for claims relating to Taxes, all rights and claims
of Seller whether mature, contingent or otherwise, against third parties
relating to the Assets (other than the Excluded Assets) or the Stations,
whether in tort, contract, or otherwise, including, without limitation,
causes of action, unliquidated rights and claims under or pursuant to
all warranties, indemnities, representations and guarantees made by
manufacturers, suppliers, vendors, sellers, transferors or predecessors;
and
(k) All intangible assets of Seller relating to any of the
Stations or the business or operation of any Station not specifically
described above, including goodwill, and all other
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assets, other than the Excluded Assets, used or held for use in
connection with the Stations and the business of the Seller.
2.2. EXCLUDED ASSETS. The Excluded Assets shall consist of the
following:
(a) Seller's cash on hand as of the Closing Date and all other
cash in any of Seller's bank or savings accounts; notes receivable,
letters of credit or other similar items of Seller; any stocks, bonds,
certificates of deposit and similar investments of Seller and any other
cash equivalents of Seller;
(b) Seller's partnership books and other books and records
relating solely to internal partnership matters and any other books and
records not related to the Stations or their respective business or
operations;
(c) Any claims, rights and interest of Seller in and to any
(i) refunds of Taxes or fees of any nature whatsoever or (ii) deposits
or utility deposits, in each case which relate solely to the period
prior to the Closing Date;
(d) All insurance contracts, including the cash surrender
value thereof, and all insurance proceeds or claims made by Seller
relating to property or equipment repaired, replaced or restored by
Seller prior to the Closing Date;
(e) All Employee Benefit Plans and all assets or funds held in
trust, or otherwise, associated with or used in connection with the
Employee Benefit Plans;
(f) Except for the Choses in Action included in the Assets
described in Section 2.1, all Choses in Action of Seller which existed
on or prior to the Closing Date and which relate entirely to the period
prior to the Closing Date;
(g) The Accounts Receivable;
(h) All tangible and intangible personal property disposed of
or consumed in the ordinary course of business between the date of this
Agreement and the Closing Date, or as otherwise permitted under the
terms hereof; and
(i) Any collective bargaining agreement, any other Contract
not included in the Assumed Contracts and all Contracts that have
terminated or expired prior to the Closing Date in the ordinary course
of business and as permitted hereunder.
2.3. PURCHASE PRICE. Subject to the adjustments set forth in Section
2.4 and 2.5(b), the Purchase Price for the Assets is Thirty-Five Million
Dollars ($35,000,000).
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2.4. ADJUSTMENTS AND PRORATIONS.
(a) All revenues arising from the operation of the Stations
earned or accrued up until 11:59 p.m. on the day prior to the Closing Date, and
all expenses, costs and liabilities, arising therefrom incurred, accrued or
payable up until such time, including expenses arising under the Assumed
Contracts, tower rentals, business and license fees, utility charges, real and
personal property Taxes levied against the Assets, property and equipment
rentals, applicable copyright or other fees, sales and service charges, other
Taxes, wages, salaries, vacation, sick and employee compensation pay shall be
prorated between Buyer and Seller in accordance with the principle that (i)
Seller shall receive all revenues, refunds and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
incurred, payable or allocable to the conduct of the business and operations of
the Stations for the period ending at 11:59 p.m. on the day prior to the
Closing Date and (ii) Buyer shall receive all revenues earned or accrued and
shall be responsible for all expenses, costs and liabilities incurred, payable
or allocable to the conduct of the business and operations of the Stations for
the period commencing on and continuing after the Closing Date. An adjustment
of the Purchase Price and proration shall be made in favor of Buyer to the
extent that Buyer assumes any liability under any Assumed Contract to refund
(or to credit against payments otherwise due) any security deposit or similar
prepayment paid to Seller by any lessee or other third party which is not
otherwise credited to Buyer. Subject to Buyer's receipt of appropriate
estoppel certificates, an adjustment of the Purchase Price and proration shall
be made in favor of Seller to the extent that Seller has made (A) any security
deposit under any Assumed Contract whether or not there is a proration under
such Assumed Contract or (B) other prepayment under any Assumed Contracts for
which there is a proration. Subject to the terms of the LMA, Seller shall be
liable for all of the costs of employee compensation relating to each of the
Stations properly attributable to or accruable on account of service with the
Seller through 11:59 p.m. on the date prior to the Closing Date, including (1)
all Taxes and related contributions, vacations and sick pay and (2) all group
medical, dental or death benefits for expenses incurred, related to or arising
from, events occurring on or prior to 11:59 p.m. on the date prior to the
Closing Date, or death or disability occurring on or prior to 11:59 p.m. on the
date prior to the Closing Date, whether reported by the Closing Date or
thereafter. Subject to the terms of the LMA, Buyer will be liable for all of
the costs of employee compensation relating to each of the Stations, properly
attributable or accruable on or after the Closing Date on account of service
with Buyer. Except as provided in Section 2.5(b), Trade Deals shall not be
adjusted or pro rated.
(b) Adjustments or prorations pursuant to this Section 2.4
will, insofar as feasible, be determined and paid on the Closing Date based
upon Seller's good faith calculation delivered to Buyer five days prior to the
Closing Date and reasonably approved by Buyer, with final settlement and
payment by the appropriate party occurring no later than 60 days after the
Closing Date. Within 60 days after the Closing Date, Buyer shall submit to
Seller its good faith determination of the adjustments or prorations required
by this Section 2.4. Buyer's determination of the amount of adjustment under
this Section 2.4 shall be made in accordance with GAAP, consistently applied.
If Seller disagrees with the determination made by Buyer of the adjustment,
Seller shall give prompt written notice thereof, but in no event later than 20
days after notice of Buyer's determination,
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specifying in reasonable detail the nature and extent of the disagreement, and
Buyer and Seller shall have a period of 30 days in which to resolve the
disagreement. If the parties are unable to resolve the disagreement within the
30-day period, the matter shall be submitted to Coopers & Lybrand L.L.P., an
independent certified public accounting firm, which accounting firm shall be
directed to submit a final resolution within 30 days. The accounting firm's
determination shall be binding on Buyer and Seller. Each party shall bear the
fees and expenses of its own representatives, including its independent
accountants, if any, and shall share equally the fees and expenses of Coopers &
Lybrand, L.L.P., if engaged, to resolve any disagreement between the parties.
Within five business days following a final determination hereunder, the party
obligated to make payment will make the payments determined to be due and owing
in accordance with this Section 2.4.
2.5. ASSUMPTION OF LIABILITIES AND OBLIGATIONS. (a) Subject to the
provisions of Section 7.9, as of the Closing Date, Buyer shall assume and
undertake to pay, discharge and perform all the obligations and liabilities of
Seller relating to each Station under the Licenses and the Assumed Contracts
assumed by Buyer relating to the time period beginning on or arising out of
events occurring on or after the Closing Date. Subject to the provisions of
the LMA, all other obligations and liabilities of Seller, including (i)
obligations or liabilities under any contract not included in the Assumed
Contracts, (ii) obligations or liabilities under any Assumed Contract for which
a Consent, if required, has not been obtained as of the Closing, (iii) any
obligations and liabilities arising under the Assumed Contracts that relate to
the time period prior to the Closing Date or arise out of events occurring
prior to the Closing Date and (iv) any forfeiture, claim or pending litigation
or proceeding relating to the business or operations of any of the Stations
prior to the Closing Date, shall remain and be the obligation and liability
solely of Seller. Other than as specified in the first sentence of this
Section 2.5, Buyer shall assume no liabilities or obligations of Seller and
shall not be liable therefor.
(b) Schedule 2.5(b) contains a list of all of the Trade Deals
in effect as of October 31, 1996 and correctly sets forth the balance, in
dollar value, of either (i) the Seller's obligations to the other party under
each such Trade Deal (reflected as a negative balance on Schedule 2.5(b)) or
(ii) the amount due (reflected as a positive balance on Schedule 2.5(b)) Seller
under such Trade Deal. On the Closing Date, Buyer shall assume the Trade Deals
listed on Schedule 2.5(b) and Seller's obligations under (A) the Trade Deals
listed on Schedule 2.5(b) to the extent that the goods or services to be
provided by the advertisers pursuant to such Trade Deals are solely used or
useful in connection with the business or operations of any Station and (B) all
Trade Deals entered into by Seller between the date hereof and the Closing Date
with the consent of Buyer; provided, however, if, as of the Closing Date, the
obligation of Seller for air time due another party pursuant to all Trade Deals
to be assumed by Buyer exceeds $100,000 in the aggregate, then the amount of
such excess shall be considered a pre-Closing Date operating expense of Seller
that shall serve as a reduction of the Purchase Price in accordance with
Section 2.4(a). The Trade Deals assumed by Buyer pursuant to the terms of this
Section 2.5(b) shall be considered Assumed Contracts.
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2.6. ALLOCATION. Within 30 days after the Closing Date, Seller and
Buyer shall negotiate in good faith an allocation of the Purchase Price, among
the Assets that complies with Section 1060 of the Code with respect to the
allocation of the Purchase Price (as well as any liabilities assumed by Buyer).
If the allocation is not agreed upon within 30 days after the Closing, then
Buyer and Seller agree that the allocation shall be made and consistently
reported by Buyer and Seller in compliance with Section 1060 based upon an
asset valuation supplied by Broadcast Investment Analysts. The cost of such
appraisal shall be shared equally by Buyer and Seller. Buyer will order such
appraisal from Business Investment Analysts on or after such date as the FCC
Consents have been placed on public notice. The appraisal, if required, shall
be provided to Seller within 45 days after the Closing Date.
2.7. EARNEST MONEY. (a) Concurrently with the execution of this
Agreement, Buyer shall deposit the Original Deposit Letter of Credit in an
escrow account with the Escrow Agent to be held in escrow in accordance with
the Deposit Escrow Agreement.
(b) No later than the earlier of (i) the LMA Commencement Date
or (ii) March 1, 1997, Buyer shall deposit the Substitute Deposit Letter of
Credit in such escrow account with the Escrow Agent to be held in escrow in
accordance with the Deposit Escrow Agreement and, effective upon such deposit,
the Original Deposit Letter of Credit shall be returned to Buyer for
cancellation.
(c) Subject to satisfaction of the conditions to the
obligations set forth in Article VIII, at the Closing, Seller shall instruct
the Escrow Agent to release and return the Deposit Letter of Credit to Buyer
for cancellation.
(d) If this Agreement is terminated as provided in Section
10.1, Buyer and Seller shall instruct the Escrow Agent to release the Deposit
Letter of Credit to Buyer or to Seller, all as provided in Section 10.2.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES REGARDING SELLER. Seller
represents and warrants to Buyer as follows (with the understanding that Buyer
is relying on such representations and warranties in entering into and
performing this Agreement and subject to the provisions of Section 7.9).
(a) Organization, Good Standing, Etc. Seller is a limited
partnership duly organized, validly existing and in good standing under the
laws of the State of Delaware, has all requisite power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted and is duly qualified and in good standing to do business in each
state listed
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on Schedule 3.1(a), which states represent every jurisdiction in which the
nature of its business or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to so qualify or be in good
standing would not have a Material Adverse Effect. Seller has delivered to
Buyer true and complete copies of the Agreement of Limited Partnership of
Seller, as in effect at the date of this Agreement. Seller is not in violation
of any provisions of its Agreement of Limited Partnership.
(b) Subsidiaries of Seller. Seller does not own, directly or
indirectly, any of the capital stock of, or other equity interest in, any other
corporation, partnership, or other person or have the right, pursuant to a
contract or otherwise, to acquire any capital stock, equity interest or other
similar investment in any corporation, partnership, or other person.
(c) Partners. The General Partner is the sole general partner
of Seller and it has the complete right and authority to manage the business
and operations of Seller and to bind Seller subject to the limitations set
forth in the Agreement of Limited Partnership. The equity interests of Seller
consist of the following classes of partnership interests of Seller: General
Partner Interest, Class A Limited Partner Interest, Class B Limited Partner
Interest, Class C Limited Partner Interest, Class D Limited Partner Interest.
Schedule 3.1(c) is a complete and accurate list of each partner of Seller which
accurately sets forth the class of partnership interest owned by such partner.
The percentage interest set forth opposite the name of each partner on Schedule
3.1(c) accurately reflects such partner's interest in Seller. As of the date
hereof, there are no bonds, debentures, notes or other indebtedness issued or
outstanding having the right to vote ("Voting Debt") on any matters on which
the General Partner or holders of limited partner interests of Seller may vote.
All the issued limited partner interests of Seller are duly and validly issued,
are not subject to further capital calls or assessments and have not been
issued in violation of any preemptive or similar rights. Except as set forth
on Schedule 3.1(c), there are no options, warrants, calls, rights, commitments,
or agreements of any character to which Seller is a party or by which Seller is
bound obligating Seller to issue, deliver, or sell, or cause to be, delivered
or sold, additional equity interests in Seller or any Voting Debt of Seller, or
obligating Seller to grant, extend, or enter into any such option, warrant,
call, right, commitment, or agreement. There are no outstanding contractual
obligations of Seller to repurchase, redeem, or otherwise acquire any equity
interests in Seller.
(d) Authority. Seller has all requisite power and authority
to enter into this Agreement, the Deposit Escrow Agreement, the Bill of Sale
and Assignment, the Assumption Agreement, the Indemnification Escrow Agreement,
the Non-Competition Agreement, the LMA Agreement and each other agreement,
document, and instrument required to be executed by Seller in accordance
herewith (collectively, the "Transaction Documents") and to consummate the
transactions contemplated hereby or thereby. The execution and delivery of the
Transaction Documents by Seller and the consummation by Seller of the
transactions contemplated hereby or thereby have been duly authorized by all
necessary action on the part of Seller, including, without limitation, the
approval of the holders of at least a majority of the outstanding Voting
Partnership
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Units (as such term is defined in the Agreement of Limited Partnership). The
Transaction Documents have been, or upon execution and delivery will be, duly
executed and delivered and constitute the valid and binding obligations of
Seller enforceable against it in accordance with their terms, subject as to
enforceability to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) No Conflict; Required Filings and Consents. The execution
and delivery of the Transaction Documents by Seller do not and the performance
by Seller of the transactions contemplated hereby or thereby will not, subject
to obtaining the consents, approvals, authorizations, and permits and making
the filings described in this Section 3.1(e), (A) violate, conflict with, or
result in any breach of any provision of the Agreement of Limited Partnership,
(B) violate, conflict with, or result in a violation or breach of, or
constitute a default (with or without due notice or lapse of time or both)
under, or permit the termination of, or result in the acceleration of, or
entitle any party to accelerate (whether as a result of a change of control of
Seller or otherwise) any obligation, or result in the loss of any benefit, or
give any person the right to require any security to be repurchased, or give
rise to the creation of any lien, charge, security interest, or encumbrance
upon any of the Assets under any of the terms, conditions, or provisions of any
loan or credit agreement, note, bond, mortgage, indenture, or deed of trust, or
any license, lease, agreement, or other instrument or obligation to which
Seller is a party or by which it or any of the Assets may be bound or
subjected, or (C) violate any order, writ, judgment, injunction, decree,
statute, law, rule, or regulation, of any Governmental Entity applicable to
Seller or by which or to which any of the Assets is bound or subject. No
consent, approval, order, or authorization of, or registration, declaration, or
filing with, any Governmental Entity is required by or with respect to Seller
in connection with the execution and delivery of the Transaction Documents by
Seller or the consummation of the transactions contemplated hereby or thereby,
except for (1) the filing of a premerger notification report under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
and (2) the FCC Consents as contemplated by Section 7.1 hereof.
(f) Reports; Financial Statements; Absence of Certain Changes
or Events.
(i) Seller has filed all forms, reports, statements,
and other documents required to be filed with the FCC. Seller has filed
all forms, reports, statements, and other documents required to be filed
with any and all other Governmental Entities, except where the failure
to file any such form, report, statement or other document would not
have a Material Adverse Effect. All such forms, reports, statements and
other documents required to be filed with the FCC or any other
Governmental Entity are referred to herein, collectively, as the
"Company Reports"). The Company Reports were prepared in accordance
with the requirements of applicable law.
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(ii) Seller has delivered to Buyer copies of (A) the
audited balance sheets of Seller as of December 31, 1994 and December
31, 1995, together with the related audited statements of income, cash
flows and changes in partners' equity of Seller for the periods then
ended, and the notes thereto, accompanied by the reports thereon of CPA,
and (B) the unaudited balance sheet of Seller as of September 30, 1995
and September 30, 1996, together with the related unaudited statements
of income, cash flow and changes in partners' equity for the periods
then ended (such audited and unaudited financial statements collectively
being referred to as the "Financial Statements"). The Financial
Statements, including the notes thereto, were prepared in accordance
with GAAP applied on a consistent basis throughout the periods covered
thereby (except to the extent disclosed therein or required by changes
in GAAP) and present fairly the consolidated financial position, results
of operations, and changes in partners' equity and cash flows of Seller
as of such dates and for the periods then ended.
(iii) Except as disclosed in Schedule 3.1(f), there is no
liability or obligation of any kind, whether accrued, absolute, fixed,
contingent, or otherwise, of Seller that is not reflected or reserved
against in the balance sheet for the nine months ended September 30,
1996 (the "Balance Sheet"), other than (A) liabilities incurred in the
ordinary course of business in a manner consistent with past practice
since September 30, 1996 (the "Balance Sheet Date"), or (B) any such
liability or obligation which would not be required to be presented in
financial statements or the notes thereto prepared in conformity with
GAAP applied, in a manner consistent with past practice, in the
preparation of the Financial Statements.
(iv) Except as disclosed in Schedule 3.1(f), since the
Balance Sheet Date, Seller has conducted its business only in the
ordinary course consistent with past practice and nothing has occurred
that would have been prohibited by Section 4.1 if the terms of such
section had been in effect as of and after the Balance Sheet Date. From
September 30, 1996 until the date of this Agreement, there has not
occurred, and Seller has not incurred or suffered, any event,
circumstance, or fact that could result in a Material Adverse Effect.
Additionally, since September 30, 1996, there has not occurred, and
Seller has not incurred or suffered, any event, circumstance, or fact
that materially impairs the physical assets at the Stations. To the
Knowledge of Seller, there are no pending or proposed statutes, rules,
or regulations, nor any current or pending developments or
circumstances, which would have a Material Adverse Effect.
(g) Compliance with Applicable Laws: FCC Matters.
(i) The business of Seller has been conducted in
compliance with each Applicable Law. No investigation or review by any
Governmental Entity with respect to Seller is pending or, to the
Knowledge of Seller, threatened. Without limiting the generality
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of the foregoing, Seller has complied with the Communications Act of
1934, as amended, and all material rules, regulations and written
policies of the FCC thereunder (collectively, the "Communications Act"),
all obligations with respect to equal employment opportunity under
Applicable Law, and all material rules and regulations of the Federal
Aviation Administration applicable to the towers used by the Stations.
In addition, Seller has duly and timely filed, or caused to be so filed,
with the FCC and other appropriate Governmental Entities all reports,
statements, documents, registrations, filings, or submissions with
respect to the operation of the Stations and the ownership thereof,
including, applications for renewal of authority required by Applicable
Law to be filed except, in the case of filings with Governmental
Entities other than the FCC, where the failure to duly or timely file
such reports, statements, documents, registrations, filings, or
submissions would not have a Material Adverse Effect. All such FCC
filings complied with Applicable Laws when made and no deficiencies have
been asserted with respect to any such filings. The material required
by 47 C.F.R. Section 73.3526 to be kept in the public inspection files
of the Stations is in such files.
(ii) Schedule 3.1(g) is a true and complete list of (A)
all of the FCC Licenses, including the expiration dates thereof, as of
the date of this Agreement and (B) all other material licenses, permits,
or authorizations issued to Seller by any other Governmental Entities
and held by them as of the date of this Agreement. Such FCC Licenses,
licenses, permits, and authorizations, and all applications for
modification, extension, or renewal thereof or for new licenses,
permits, permissions, or authorizations, are collectively referred to
herein as the "Station Licenses." Schedule 3.1(g) accurately lists the
legally authorized holder(s) of the Station Licenses. The Station
Licenses constitute all the licenses, permits and authorizations
required for the operation of the Stations and the business of Seller,
and each of the Station Licenses is in full force and effect. The
Stations have been operated in accordance with the terms of the Station
Licenses in all material respects and the Seller is otherwise in
compliance with, and has conducted its business so as to comply with,
the terms of the respective Station Licenses. There are no proceedings
pending or, to the Knowledge of Seller, threatened with respect to
Seller's ownership or operation of the Stations which reasonably may be
expected to result in the revocation, material adverse modification,
non-renewal, or suspension of any of the Station Licenses, the denial of
any pending applications for Station Licenses, the issuance against
Seller of any cease and desist order, or the imposition of any
administrative actions by the FCC or any other Governmental Entity with
respect to the Station Licenses, or which reasonably may be expected to
adversely affect the Stations' ability to operate as currently operated
or Buyer's ability to obtain control of the Station Licenses. To the
Knowledge of Seller, no other broadcast station or radio communications
facility is causing interference to the Stations' transmissions beyond
that which is allowed by FCC rules and regulations. Seller has no
logical reason to believe that the FCC will not renew the Station
Licenses issued by the FCC in the ordinary course of business. To the
Knowledge of Seller, there are no facts relating to Seller under the
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<PAGE> 25
Communications Act that reasonably may be expected to disqualify Seller
from transferring control of the Station Licenses pursuant to the terms
of this Agreement or that would prevent the consummation by Seller of
the transactions contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on Schedule
3.1(h), there is no claim, action, suit, inquiry, judicial, or administrative
proceeding, grievance, or arbitration pending or, to the Knowledge of Seller,
threatened against Seller or any of the Assets by or before any arbitrator or
Governmental Entity, nor are there any pending or unfunded settlements or any
investigations relating to Seller or any of the Assets pending or, to the
Knowledge of Seller, threatened by or before any arbitrator or Governmental
Entity. Except as set forth in Schedule 3.1(h), there is no judgment, decree,
injunction, order, determination, award, finding, or letter of deficiency of
any Governmental Entity or arbitrator outstanding against Seller or any of the
Assets. There is no action, suit, inquiry, judicial, or administrative
proceeding pending or, to the Knowledge of Seller, threatened against Seller
relating to the transactions contemplated by this Agreement.
(i) Insurance. Since its organization on January 1, 1995,
Seller has been insured against such risks as companies engaged in a similar
business would, in accordance with good business practice, customarily be
insured. Schedule 3.1(i) sets forth an accurate summary of all fire, general
liability, errors and omissions liability, theft, and other forms of insurance
and all fidelity bonds held by or applicable to Seller. Except as set forth
on Schedule 3.1(i), the policies of general liability, errors and omissions
liability, fire, theft, and other insurance maintained with respect to the
operations, assets, or business of Seller provided adequate coverage against
loss. To the Knowledge of Seller, no event has occurred, including the failure
by Seller to give any notice or information or the delivery of any inaccurate
or erroneous notice or information, which limits or impairs the rights of
Seller under any such insurance policies in such a manner as could have a
Material Adverse Effect. Excluding insurance policies that have expired and
been replaced in the ordinary course of business, no insurance policy has been
canceled within the last two years prior to the date hereof.
(j) Owned Real Property. Schedule 3.1(j) contains an accurate
description of all the Owned Real Property. Seller has good and marketable,
fee simple, absolute title in and to the Owned Real Property. Seller has
sufficient title to such easements, rights of way and other rights appurtenant
to each of the Owned Real Properties as are necessary to permit ingress and
egress to and from the Owned Real Property to a public way and the improvements
on the Owned Real Property have access to such, sewer, water, gas, electric,
telephone and other utilities as are necessary to allow the business of the
Seller to be operated in the ordinary course. There is no pending condemnation
or similar proceeding affecting the Owned Real Property or any portion thereof,
and to the Knowledge of Seller, no such action is threatened. The improvements
located on the Owned Real Property are in sufficiently good condition (except
for ordinary wear and tear) to allow the business of the Seller to be operated
in the ordinary course and there has been no damage to such improvements that
affects the conduct of such business in any material respect that has not been
repaired or remedied. Except as set forth on Schedule 3.1(j), there are no
lessees or tenants at will in possession of any portion of any of the Owned
Real Property other than Seller, whether as lessees,
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tenants at will, trespassers or otherwise. No zoning, building or other
federal, state or municipal law, ordinance, regulation or restriction is
violated in any material respect by the continued maintenance, operation or use
of the Owned Real Property or any tract or portion thereof or interest therein
in its present manner. The current use of the Owned Real Property and all
parts thereof does not violate any restrictive covenants of record affecting
any of the Owned Real Property. All necessary Licenses by any Governmental
Authority with respect to the Owned Real Property have been obtained, have been
validly issued and are in full force and effect.
(k) Leased Real Property. Schedule 3.1(k) contains an
accurate description of all the leasehold interests relating to the business
and operations of each of the Stations as now conducted. Except as otherwise
disclosed on Schedule 3.1(k) Seller is not, and to the Knowledge of the Seller,
no other party is, in material default under any lease described in Schedule
3.1(k). Subject to obtaining the Consents disclosed in Schedule 3.1(k), Seller
has the full legal power and authority to assign its rights under the leases
listed in Schedule 3.1(k) to Buyer. All leasehold interests listed in Schedule
3.1(k) (including the improvements thereon) are available for immediate use in
the conduct of the business and operations of each of the Stations as currently
conducted.
(l) Personal Property. Schedule 3.1(l) contains a description
of the items of Personal Property (having a replacement cost of not less than
$10,000 for each item) which comprise all Personal Property used or held for
use in connection with the business and operations of the Stations or which
permits the operation of the Stations as now conducted. Except as set forth on
Schedule 3.1(l), Seller has good title to, or a valid leasehold or license
interest in, all Personal Property and none of the Personal Property is subject
to any Lien or other encumbrances, except for Permitted Encumbrances. Seller
is not, and to the Knowledge of the Seller, no other party is, in material
default under any of the leases, licenses and other Contracts relating to the
Personal Property. Except as otherwise disclosed in Schedule 3.1(l), the
Personal Property (i) is in good operating condition and repair (ordinary wear
and tear excepted), (ii) is available for immediate use in the business and
operation of each of the Stations as currently conducted, and (iii) permits
each of the Stations to operate in accordance with the terms of their
respective FCC Licenses, and the rules and regulations of the FCC, and with
all other applicable federal, state and local statutes, ordinances, rules and
regulations.
(m) Liens and Encumbrances. Except as set forth on Schedule
3.1(m), all of the Assets, including leases, are free and clear of all liens,
pledges, claims, security interests, restrictions, mortgages, tenancies, and
other possessory interests, conditional sale or other title retention
agreements, assessments, easements, rights of way, covenants, restrictions,
rights of first refusal, defects in title, encroachments, and other burdens,
options or encumbrances of any kind (collectively, "Liens") except (i)
statutory Liens securing payments not yet delinquent or the validity of which
are being contested in good faith by appropriate actions, (ii) Liens for taxes
not yet delinquent, (iii) Liens reflected in the Balance Sheet (which have not
been discharged), (iv) Liens
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which in the aggregate do not materially detract from the value for use for
broadcasting purposes or materially impair the present and continued use of the
properties or assets subject thereto in the usual and normal conduct of the
business of the Stations, and (v) Liens on leases arising from the provisions
of such leases.
(n) Environmental Matters. Except as set forth on Schedule
3.1(n) or as described in any ESA listed thereon and delivered to Buyer with
enough specificity that a reasonable person reading such description would
understand that the matter described was contrary to the following
representations and warranties:
(i) The real property and facilities owned, operated,
and leased by Seller and the operations of Seller thereon comply and
have at all times complied with all Applicable Laws and rules of common
law pertaining to the environment, natural resources, and public or
employee health and safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to the
Knowledge of Seller, threatened against Seller alleging the violation of
any Environmental Laws, and there are no administrative proceedings
pending or, to the Knowledge of Seller, threatened against Seller,
alleging the violation of any Environmental Laws and no notice from any
Governmental Entity or any private or public person has been received by
Seller claiming any violation of any Environmental Laws in connection
with any real property or facility owned, operated or leased by Seller,
or requiring any remediation, clean-up, modification, repairs, work,
construction, alterations, or installations on or in connection with any
real property or facility owned, operated or leased by Seller that are
necessary to comply with any Environmental Laws and that have not been
complied with or otherwise resolved to the satisfaction of the party
giving notice;
(iii) All permits, registrations, licenses, approvals,
authorizations, and the like ("Permits") required to be obtained or
filed by Seller under any Environmental Laws in connection with Seller's
operations, including, those activities relating to the generation, use,
storage, treatment, disposal, release, or remediation of Hazardous
Substances (as such term is defined in Section 3.1(n)(iv) hereof), have
been duly obtained or filed, and Seller is and has at all times been in
full compliance with the terms and conditions of all such Permits;
(iv) All Hazardous Substances used or generated by
Seller or any of its predecessors on, in, or under any of the owned,
operated, or leased real property or facilities are and have at all
times been generated, stored, used, treated, disposed of, and released
by such persons or on their behalf in such manner as not to result in
any Environmental Costs or Liabilities. "Hazardous Substances" means
(A) any hazardous materials, hazardous wastes, hazardous substances,
toxic wastes, and toxic substances as those or similar terms are defined
under any Environmental Laws; (B) any asbestos or any material which
contains
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any hydrated mineral silicate, including chrysolite, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether friable
or non-friable; (C) PCBs, or PCB-containing materials, or fluids; (D)
radon; (E) any other hazardous, radioactive, toxic or noxious substance,
material, pollutant, contaminant, constituent, or solid, liquid or
gaseous waste; (F) any petroleum, petroleum hydrocarbons, petroleum
products, crude oil and any fractions or derivatives thereof, any oil or
gas exploration or production waste, and any natural gas, synthetic gas
and any mixtures thereof; (G) any substance that, whether by its nature
or its use, is subject to regulation under any Environmental Laws or
with respect to which any Environmental Laws or Governmental Entity
requires environmental investigation, monitoring or remediation; and (H)
any underground storage tanks, dikes, or impoundments as defined under
any Environmental Laws. "Environmental Costs or Liabilities" means any
losses, liabilities, obligations, damages, fines, penalties, judgments,
settlements, actions, claims, costs and expenses (including, without
limitation, reasonable fees, disbursements and expenses of legal
counsel, experts, engineers and consultants, and the costs of
investigation or feasibility studies and performance of remedial or
removal actions and cleanup activities) in connection with (1) any
Environmental Laws, (2) order of, or contract of Seller with, any
Governmental Entity or any private or public persons, or (3) any
exposure of any person or property to Hazardous Substances;
(v) There are not now, nor have there been in the past,
on, in or under any property or facilities when owned, leased, or
operated by Seller or when owned, leased, or operated by any of its
predecessors, any Hazardous Substances that are in a condition or
location that violates any Environmental Law or that reasonably could be
expected to require remediation under any Environmental Laws or give
rise to claim for damages or compensation by any affected Person or to
any Environmental Costs or Liabilities; and
(vi) Seller has not received, and to the Knowledge of
Seller, does not expect to receive, any notification from any source
advising Seller that: (A) it is a potentially responsible party under
CERCLA or any other Environmental Laws; (B) any real property or
facility currently or previously owned, operated, or leased by it is
identified or proposed for listing as a federal National Priorities List
("NPL") (or state-equivalent) site or a Comprehensive Environmental
Response, Compensation and Liability Information System ("CERCLIS") list
(or state-equivalent) site; and (C) any facility to which it has ever
transported or otherwise arranged for the disposal of Hazardous
Substances is identified or proposed for listing as an NPL (or state-
equivalent) site or CERCLIS (or state-equivalent) site.
(o) Taxes. Seller has filed or caused to be filed all Tax
Returns affecting the Stations or the Assets which are required to be filed by
Seller, all such Tax Returns which have been filed are accurate and complete in
all material respects, and Seller has timely paid all Taxes shown on such
returns or on any Tax assessment received by Seller to the extent that such
Taxes have
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become due. There are no Liens for Taxes upon the Stations or the Assets.
Seller has not received notice of any Tax deficiency or delinquency. No
Internal Revenue Service audit of Seller is pending or, to the Knowledge of
Seller, threatened, and the results of any completed audits are properly
reflected in the Financial Statements. All monies required to be withheld by
Seller from employees or collected from customers for Taxes and the portion of
any Taxes to be paid by Seller to governmental agencies or set aside in
accounts for such purposes have been so paid or set aside, or such monies have
been reserved against and entered upon the books and are reflected in the
Financial Statements and Balance Sheet. For each taxable year or period not
closed by the applicable statute of limitations, (i) Seller is properly
classified as a partnership (and not as an association taxable as a
corporation) for tax purposes, (ii) other than Assu Venture, FCPR and Natio Vie
Developpement II, FCPR, Seller does not have a partner that is a "foreign
partner" within the meaning of Section 1446(e) of the Code, and (iii) no
partner of Seller, other than Assu Venture, FCPR and Natio Vie Developpement
II, FCPR, is a "foreign person" within the meaning of Section 1445(f)(3) of the
Code. There is no legal, administrative, or tax proceedings pursuant to which
Seller is or could be made liable for any taxes, penalties, interest, or other
charges, the liability for which could extend to Buyer as transferee of the
business of the Stations.
(p) Certain Agreements.
(i) Schedule 3.1(p) hereto lists each (A) employment or
consulting Contract which is not terminable without liability or penalty
on 30 days or less notice, (B) Contract under which any party thereto
remains obligated to provide goods or services having a value, or to
make payments aggregating, in excess of $50,000 per year, and (C) other
Contract that is material to the operation of the Stations or to the
Seller's business, in any such case to which Seller is a party or Seller
or the Assets is bound. Each such Contract described in Schedule 3.1(p)
or required to be so described is a valid and binding obligation of
Seller and is in full force and effect without amendment. Seller and,
to the Knowledge of Seller, each other party to such Contracts, has
performed in all material respects the obligations required to be
performed by it under such Contracts and is not (with or without lapse
of time or the giving of notice, or both) in material breach or default
thereunder. Schedule 3.1(p) identifies, as to each such Contract listed
thereon, whether the consent of the other party thereto is required in
order for such Contract to continue in full force and effect upon the
consummation of the transactions contemplated hereby or whether such
Contract can be canceled by the other party without liability to such
other party due to the consummation of the transactions contemplated
hereby. A complete copy of each written Contract and a description of
each oral Contract set forth in Schedule 3.1(p) has been provided to
Buyer.
(ii) Seller is not a party to any oral or written
agreement, plan or arrangement with any employee or other station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of Seller (A) the benefits of which are
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contingent, or the terms of which are materially altered, upon, or
result from, the occurrence of a transaction involving Seller of the
nature of any of the transactions contemplated by this Agreement, (B)
providing severance benefits longer than forty-five days or other
benefits after the termination of employment or other contractual
relationship regardless of the reason for such termination and
regardless of whether such termination is before or after a change of
control, (C) under which any person may receive payments subject to the
tax imposed by Section 4999 of the Code or (D) any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
(q) ERISA Compliance; Labor.
(i) The present value of all accrued benefits (vested
and unvested) under all the "employee pension benefit plans" as such
term is defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), which Seller or any other
trades or businesses under common control within the meaning of Section
4001(b)(1) of ERISA with Seller (collectively, the "ERISA Group")
maintains, or to which Seller or any member of the ERISA Group is or has
been obligated to contribute (the "Pension Plans"), did not, as of the
respective last annual valuation dates for such Pension Plans, exceed
the value of the assets of such Pension Plan allocable to such benefits.
None of such Pension Plans subject to Title IV of ERISA or any of their
related trusts has been terminated or partially terminated. Neither
Seller or any member of the ERISA Group has contributed or been
obligated to contribute to any "multiemployer plan" as such term is
defined in Section 3(37) or Section 4001(a)(3) of ERISA. Except as set
forth on Schedule 3.1(q), there are no "employee benefit plans" within
the meaning of Section 3(3) of ERISA or any bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock, vacation, severance, disability, death
benefit, hospitalization, insurance, or other plan or arrangement or
understanding providing benefits to any present or former employee or
contractor of Seller or any member of the ERISA Group maintained by
Seller or any member of the ERISA Group or as to which Seller or any
member of the ERISA Group has any liability or obligation (collectively,
"Employee Benefit Plans").
(ii) True, correct, and complete copies of each of the
Employee Benefit Plans, and related trusts, if applicable, have been
furnished to Buyer, along with the most recent report filed on Form 5500
and summary plan description with respect to each Employee Benefit Plan
required to file Form 5500.
(iii) Seller is not a party to any collective bargaining
agreement. Seller has not agreed to recognize any union or other
collective bargaining representative, nor has any
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union or other collective bargaining representative been certified as
the exclusive bargaining representative of any of its employees. Seller
(A) is, and has been since January 1, 1995, in substantial compliance
with all applicable laws regarding labor and employment, including laws
regarding employment practices, terms and conditions of employment,
equal employment opportunity, employee benefits, affirmative action,
wages and hours, plant closing and mass layoff, occupational safety and
health, immigration, and workers' compensation, (B) is not engaged, nor
has it since January 1, 1995, engaged, in any unfair labor practices,
and has no, and has not had since January 1, 1995, any, unfair labor
practice charges or complaints before the National Labor Relations Board
pending or, to the Knowledge of Seller threatened against it, (C) has
no, and has not had since January 1, 1995, any, grievances,
arbitrations, or other proceedings arising or asserted to arise under
any collective bargaining agreement, pending or, to the Knowledge of
Seller threatened, against it and (D) has no, and has not had since
January 1, 1995, any, charges, complaints, or proceedings before the
Equal Employment Opportunity Commission, Department of Labor or any
other Governmental Entity responsible for regulating employment
practices, pending, or, to Seller's Knowledge, threatened against it
other than those listed in Schedule 3.1(q). There is no labor strike,
slowdown, work stoppage or lockout pending or, to the Knowledge of
Seller, threatened against or affecting Seller, and Seller has not
experienced any labor strike, slowdown, work stoppage or lockout since
January 1, 1995. To the Knowledge of Seller no union organizational
campaign or representation petition is currently pending with respect to
any of the employees of Seller.
(r) Patents, Trademarks, Etc. Schedule 3.1(r) is a true and
complete list of all of the Intellectual Property. Except as set forth on
Schedule 3.1(r), Seller owns or has the unencumbered right to use pursuant to a
valid, binding, and enforceable license agreement or other contract or
arrangement all such Intellectual Property. To the Knowledge of Seller, Seller
is not infringing any such Intellectual Property, and Seller is not aware of
any infringement by others of any of the Intellectual Property owned by Seller.
(s) Affiliate Relationships. There are no contracts or other
arrangements involving Seller in which any partner or Affiliate of Seller, or
any officer, director, stockholder, or Affiliates of a partner, has a financial
interest, including indebtedness to Seller.
(t) Assets. The Assets and the Excluded Assets include all
assets used or held for use in connection with the business and operations of
the Stations as currently conducted.
(u) No Dispositions. Since the Balance Sheet Date, there has
not occurred any sale, lease, transfer, assignment, abandonment or other
disposition of any of the assets of any Station other than any disposition of
(i) obsolete property, (ii) property in connection with the acquisition of
replacement property of equal value, or (iii) assets having, in the aggregate,
a value of less than $50,000 disposed of in the ordinary course of business and
consistent with past practices.
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(v) Disclosure. No representation or warranty by Seller
contained in this Agreement or in any certificate furnished pursuant to this
Agreement contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact necessary, in light of the
circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
3.2. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and
warrants to Seller as follows (with the understanding that Seller is relying on
such representations and warranties in entering into and performing this
Agreement):
(a) Organization Standing and Power. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to own,
lease, and operate its properties and to carry on its business as now being
conducted.
(b) Authority. Buyer has all requisite corporate power and
authority to enter into this Agreement and any other agreements required to be
entered into in connection herewith and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
by Buyer and the consummation by it of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of
Buyer. This Agreement has been duly executed and delivered and constitutes the
valid and binding obligation of Buyer, enforceable against it in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity). The execution, delivery and performance by
Buyer of this Agreement and such other agreements and instruments contemplated
hereby (with or without the giving of notice, the lapse of time, or both) does
not (i) conflict with the Certificate of Incorporation or By-Laws of Buyer;
(ii) except for the necessity of obtaining applicable Consents, conflict with,
result in a breach of, or constitute a default under any Applicable Law Known
to Buyer or (iii) except for the necessity of obtaining applicable Consents,
conflict with, result in a breach of, constitute a default under, permit any
party to terminate, modify, accelerate the performance of or cancel the terms
of, any material agreement, lease, instrument of indebtedness, or license to
which Buyer is a party, or by which Buyer is bound, such that Buyer could not
acquire or operate the Assets. No consent, approval, order, or authorization
of, or registration, declaration or filing with, any Governmental Entity is
required by or with respect to Buyer in connection with the execution and
delivery of this Agreement by Buyer or the consummation by it of the
transactions contemplated hereby, except for (A) the filing of a premerger
notification report under the HSR Act, (B) the consent of the FCC to the
transfer of control of the Station Licenses pursuant to the terms of this
Agreement (as contemplated by Section 7.1), and (C) applicable requirements, if
any, of the Securities Act and the Exchange Act and the rules and regulations
thereunder and state securities or blue sky laws.
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(c) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement.
(d) FCC Matters. Buyer knows of no facts relating to it under
the Communications Act that reasonably may be expected to disqualify it from
obtaining control of the Station Licenses or that would prevent it from
consummating the transactions contemplated by this Agreement. Buyer is able to
certify on an FCC Form 315 that it is financially qualified.
(e) Disclosure. No representation or warranty made by Buyer
contained in this Agreement or in any certificate furnished by Buyer pursuant
to this Agreement contains or will contain an untrue statement of material
fact, or omits or will omit to state a material fact necessary, in the light of
the circumstances under which it was or will be made, in order to make the
statements herein or therein not misleading.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF SELLER. Except as contemplated by this Agreement or
to the extent that Buyer shall otherwise consent in writing and subject to the
provisions of Section 7.9, from the date of this Agreement until the Closing,
Seller covenants and agrees that Seller shall not:
(a) conduct its business in any manner except in the ordinary
course consistent with past practice; or
(b) fail to use all commercially reasonable efforts to
preserve intact Seller's present business organization and to keep available
the services of its present officers, station managerial personnel (including
the General Manager, Station Manager, General Sales Manager, Local Sales
Manager, Programming Director, and Business Manager, or persons performing
comparable duties, of each Station (collectively, the "Station Management"))
and over-the-air employees or independent contractors and preserve its
relationships with customers, suppliers and others having business dealings
with it; or
(c) fail to maintain the Assets in their current condition,
except for ordinary wear and tear and damage by casualty governed by Section
7.7; or
(d) fail to use all commercially reasonable efforts to
maintain the present format of the Stations and with programming consistent
with past practices; or
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(e) except for amendments, terminations (without payment of
penalty or damages), renewals, or failures to renew (without payment of penalty
or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Buyer reasonably in advance thereof), materially amend,
terminate, or fail to use all commercially reasonable efforts to renew any
material Contract (i.e., a contract or agreement of the type required to be
described in Schedule 3.1(p)) (provided that Seller shall not be required to
renew any material Contract on terms that are less favorable to Seller), or
default in any material respect (or take or omit to take any action that, with
or without the giving notice or passage of time, would constitute a material
default) under any material Contract or enter into any new material Contract or
amend the Agreement of Limited Partnership; or
(f) merge or consolidate with or into any other legal entity,
dissolve, or liquidate; or
(g) adopt or amend any Employee Benefit Plan or collective
bargaining agreement, or increase in any manner the compensation or fringe
benefits of any Station Manager, officer, or employee or other station and
broadcast personnel (whether employees or independent contractors), except as
required by law; or
(h) terminate any employee of any of the Stations (other than
administrative personnel) without prior consultation with Buyer regarding the
basis for such termination; or
(i) acquire (including, without limitation, by merger,
consolidation, or the acquisition of any equity interest or assets) or sell
(whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any Assets except in the ordinary course of
business and consistent with past practice or, even if in the ordinary course
of business and consistent with past practices (other than sales of surplus or
obsolete equipment), whether in one or more transactions, in no event involving
an Asset or Assets having an aggregate fair market value in excess of $50,000;
or
(j) mortgage, pledge, or subject to any Lien, other than
Permitted Encumbrances, any of the Assets; or
(k) except as required by GAAP, applicable law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(l) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of the
Stations and, except with respect to good faith attempts consistent with past
practice to obtain payment of a past due receivable, or except in accordance
with existing practices, a contested receivable, offer to discount the amount
of any
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outstanding receivable or extend any other incentive (whether to the account
debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; or
(m) change any Station's advertising rates or policies,
procedures or methods in connection with the sale of advertising time in a
manner expected to accelerate the receipt of cash payments or fail to incur
annual advertising and promotional department expenses in cash and trade other
than as budgeted for 1997; or
(n) enter into, or enter into negotiations or discussions with
any person other than Buyer with respect to any local marketing agreement, time
brokerage agreement, joint sales agreement, or any other similar agreement; or
(o) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement.
4.2. NEGATIVE TRADE BALANCE. Seller shall use commercially reasonable
efforts to ensure that the Seller Negative Trade Balance, as defined below, of
the Stations, taken as a whole, does not exceed $100,000 in the aggregate at
the Closing Date. "Seller Negative Trade Balance" means the difference, if
negative, between the value of time owed under barter agreements to which any
of the Stations is a party or by which any of them is bound and the value of
the goods and services to be received under such agreements.
4.3. ENVIRONMENTAL SITE ASSESSMENTS. If Buyer or its lenders or other
financing sources require Phase I or Phase II ESAs, Seller covenants and agrees
that, upon written notice from Buyer to Seller identifying the locations at
which such ESAs are required, Seller shall cause to be performed by a
nationally recognized and duly qualified environmental consultant reasonably
acceptable to Buyer and Seller an ESA at each identified transmission site
owned, operated, or leased by Seller and at such other identified real
properties and facilities owned, operated, or leased by Seller. The ESAs which
are to be conducted for the benefit of Buyer shall be performed in a manner
that at a minimum satisfies the requirements of ASTM Practice E 1527-94.
Seller covenants and agrees that, upon receipt of the notice referred to above,
it shall diligently pursue the performance of the requisite ESAs to their
completion, with final copies of the Phase I environmental site assessment
reports (and, if applicable, Phase II ESA reports) made available to Buyer by
no later than 45 days following the date on which Seller receives the notice
referred to above. The cost of any Phase I ESA shall be borne by Seller and
the Seller and Buyer shall each bear one-half of the cost of any Phase II ESA.
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ARTICLE V
ADDITIONAL AGREEMENTS OF SELLER
5.1. NO SOLICITATION OF TRANSACTIONS. Seller shall not, directly or
indirectly, through any officer, director, partner, employee, agent, financial
advisor, banker or other representative, or otherwise, solicit, initiate, or
encourage the submission of any proposal or offer from any person relating to
any acquisition or purchase of all or any material portion of the Assets or any
equity interest in Seller or any merger, consolidation, share exchange,
business combination, or other similar transaction with Seller or participate
in any negotiations regarding, or furnish to any other person any information
with respect to, or otherwise cooperate in any way with, or assist or
participate in, facilitate, or encourage, any effort or attempt by any other
person to do or seek any of the foregoing. Seller shall immediately
communicate to Buyer the material terms of any such proposal (and the identity
of the party making such proposal) which it may receive and, if such proposal
is in writing, the Seller shall promptly deliver a copy of such proposal to
Buyer. Seller agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which Seller is a
party. Seller immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. ACCESS AND INFORMATION. (a) Until the Closing, subject only to
applicable rules and regulations of the FCC, Seller shall afford to Buyer and
its representatives (including accountants and counsel) full access, during
normal business hours, upon reasonable notice and in such manner as will not
unreasonably interfere with the conduct of the business of Seller, to all
properties, books, records, and Tax Returns of Seller and all other information
with respect to its business, together with the opportunity to make copies of
such books, records, and other documents and to discuss the business of Seller
with such corporate officers, station managerial personnel (including the
Station Management of each Station), accountants, consultants, and counsel for
Seller as Buyer deems reasonably necessary or appropriate for the purposes of
familiarizing itself with Seller and the Stations, including the right to visit
the Stations. In furtherance of the foregoing, Seller shall authorize and
instruct CPA to meet with Buyer and its representatives, including Buyer's
independent public accountants, to discuss the business and accounts of Seller
and to make available (with the opportunity to make copies) to Buyer and its
representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the consolidated financial
statements and Tax Returns of Seller.
(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer, for each of the Stations, and for Seller as a
whole, monthly operating statements (in a form consistent with the monthly
operating statements previously supplied to Buyer) prepared in the ordinary
course of business for internal purposes, including comparisons to comparable
prior year periods and current year budget. In addition, within 45 days after
the end of each calendar quarter,
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Seller shall deliver to Buyer, for each of the Stations, quarterly statements
prepared in the ordinary course for internal purposes containing a detailed
listing of all trade and barter agreements of each Station showing the status
of all such agreements as of the end of the quarter. Further, within 90 days
after December 31, 1996, Seller shall deliver to Buyer copies of its audited
balance sheet as of such date, together with the related audited statements of
income, cash flows and changes in partners' equity of Seller for the period
then ended. Seller shall deliver to Buyer the rating books and such other
ratings information subscribed to by Seller including, without limitation,
Arbitrends, Accuratings or any other written information reflective of the
quantitative or qualitative nature of the audiences of the Stations for each of
the Stations upon receipt of the same by any officer of the General Partner.
Seller shall instruct the Station Management of each Station to provide such
information and reports to Buyer's corporate officers promptly upon receipt by
such Station Management. In addition, as soon as the same are distributed to
Seller's corporate officers by each Station, Seller will provide Buyer with
copies of each Station's weekly sales pacing reports, with comparisons to sales
pacing in the corresponding period of the prior year.
(c) Without duplication of Section 5.2(b), at such time as
Seller provides the same to its lenders, Seller shall provide Buyer with copies
of the financial statements and other information delivered by Seller to such
lenders.
5.3. ASSISTANCE. If Buyer requests, Seller will cooperate, and will
cause its accountants to cooperate, in all reasonable respects with the efforts
of Buyer to finance the transactions contemplated by this Agreement, all at the
sole expense of Buyer. Seller (a) shall furnish to its accountants as
independent accountants to Seller, such customary management representation
letters as its accountants may require of Seller as a condition to its
execution of any required accountants' consents necessary in connection with
the delivery of any "comfort" letters requested by Buyer's financing sources
and (b) shall furnish to Buyer all financial statements (audited and unaudited)
and other information in the possession of Seller or its representatives or
agents as Buyer shall reasonably determine is necessary or appropriate in
connection with such financing. Buyer will indemnify and hold harmless Seller
and its officers, directors, and controlling persons against any and all
claims, losses, liabilities, damages, costs, or expenses (including reasonable
attorneys' fees and expenses) that may arise out of or with respect to the
efforts by Buyer to finance the transactions contemplated hereby, including
offering documents, and other filings related thereto; provided, however, that
subject to the limitations and provisions of this Agreement, nothing herein
shall prevent Buyer from asserting any claim for breach of representation or
warranty under this Agreement.
5.4. COMPLIANCE WITH STATION LICENSES. Seller shall cause the
Stations to be operated in accordance with the Station Licenses and all
applicable rules and regulations of the FCC and in compliance with all other
applicable laws, regulations, rules, and orders. Seller shall use all
commercially reasonable efforts not to cause or permit any of the Station
Licenses to expire or be surrendered, adversely modified, or terminated.
Seller shall file or cause to be filed with the FCC
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all applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. In addition, if
requested by Buyer and at Buyer's sole expense, Seller shall file or cause to
be filed with the FCC applications for new, specifically identified frequencies
that may be useful in connection with the operation of the Stations. Should
the FCC institute any proceedings for the suspension, revocation or adverse
modification of any of the Station Licenses, Seller will use all commercially
reasonable efforts to promptly contest such proceedings and to seek to have
such proceedings terminated in a manner that is favorable to the Stations.
Seller will use all commercially reasonable efforts to maintain the FCC
construction permits (if any) listed in Schedule 3.1(g) in effect until the
applicable construction projects are complete and to diligently prosecute all
pending FCC applications listed in Schedule 3.1(g). If Seller (or its FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any other Governmental Entity, that could affect Seller's ability to
consummate the transactions contemplated hereby, or should Seller (or its FCC
counsel) become aware of any fact relating to the qualifications of Buyer that
reasonably could be expected to cause the FCC to withhold its consent to the
transfer of control of the Station Licenses, Seller shall promptly notify Buyer
in writing and use its commercially reasonable efforts to take such steps as
may be necessary to remove any such impediment to the transactions contemplated
by this Agreement.
5.5. NOTIFICATION OF CERTAIN MATTERS. Seller shall give prompt
written notice to Buyer of (a) the occurrence, or failure to occur, of any
event of which it becomes aware that has caused or that would be likely to
cause any representation or warranty of Seller contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Closing Date, (b) the failure of Seller, or any officer,
director, employee, or agent of Seller, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder, (c) the occurrence of a Station Event (as defined in
Section 9.1), and (d) the occurrence of any threat made to Seller by any
officer of Seller or any General Manager, Station Manager, General Sales
Manager or Programming Director of a Station to resign or otherwise terminate
their employment or independent contractor relationship with Seller. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
5.6. THIRD PARTY CONSENTS. After the date hereof and prior to the
Closing, Seller shall use all commercially reasonable efforts to obtain the
written consent from any party to an agreement or instrument identified in
Schedule 3.1(p) or any other Assumed Contract which is required to permit the
consummation of the transactions contemplated hereby.
5.7. DAVID BENJAMIN EMPLOYMENT AGREEMENT. Subject to the terms and
conditions hereof, Buyer agrees to cause Capstar, and Seller agrees to cause
David J. Benjamin, III, to execute and deliver an employment agreement in
substantially the form of Exhibit D attached hereto at the Closing.
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ARTICLE VI
COVENANT OF BUYER
6.1. NOTIFICATION OF CERTAIN MATTERS. If Buyer (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any Governmental Entity, that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the transfer of control
of the Station Licenses, Buyer shall promptly notify Seller thereof and shall
use its commercially reasonable efforts to take such steps as may be necessary
to remove any such impediment to the transactions contemplated by this
Agreement. In addition, Buyer shall give to Seller prompt written notice of
(a) the occurrence, or failure to occur, of any event of which it becomes aware
that has caused or that would be likely to cause any representation or warranty
of Buyer contained in this Agreement to be untrue or inaccurate at any time
from the date hereof to the Closing Date, and (b) the failure of Buyer, or any
officer, director, employee, or agent thereof, to comply with or satisfy in any
material respect any covenant, condition, or agreement to be complied with or
satisfied by it hereunder. No such notification shall affect the
representations or warranties of the parties or the conditions to their
respective obligations hereunder.
ARTICLE VII
MUTUAL COVENANTS
7.1. APPLICATION FOR FCC CONSENTS. By the 15th business day after the
date hereof, Seller and Buyer will, and will cause all necessary persons or
entities to join in one or more applications filed with the FCC requesting the
FCC's written consent to the transfer of control of the FCC Licenses pursuant
to this Agreement (the "Applications"). The parties will take all proper steps
reasonably necessary (a) to diligently prosecute the Applications and (b) to
obtain the FCC Consents. The failure by either party to timely file or
diligently prosecute its portion of any Application shall be a material breach
of this Agreement.
7.2. CONTROL OF STATIONS. This Agreement shall not be consummated
until after the FCC Consents with respect to the Applications referred to in
Section 7.1 are granted and have become Final Orders. Between the date of this
Agreement and the Closing Date and subject to the provisions of the LMA, Buyer
will not directly or indirectly control, supervise or direct the operation of
the Stations. Such operation and control shall be the sole responsibility of
Seller.
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7.3. OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of
this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with the consummation of the
transactions contemplated by this Agreement, and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such matters. Without limiting the foregoing, the parties
shall file promptly with the Federal Trade Commission and the Antitrust
Division of the Department of Justice the notifications and other information
(if any) required to be filed under the HSR Act with respect to the
transactions contemplated hereby and shall use their commercially reasonable
efforts to cause all applicable waiting periods under the HSR Act to expire or
be terminated as of the earliest possible date.
7.4. ACCOUNTS RECEIVABLE. All Accounts Receivable shall remain the
property of Seller. Seller hereby authorizes Buyer, however, to collect such
receivables for a period of 180 days after the Closing. Seller shall deliver
to Buyer a complete and detailed statement of each account within three days
after Closing and Buyer shall use its reasonable efforts, consistent with its
customary collection practices for its own accounts receivable, without
compensation, to collect each Account Receivable during such 180 days. During
that period Buyer shall provide to Seller a detailed bi-monthly statement of
the Accounts Receivable showing amounts collected to the date, and amounts
outstanding as of the same date, and, within 15 days of the end of the period
covered by such statement, deliver to Seller the Accounts Receivable report and
a check for the amounts collected during such period. All payments received by
Buyer during the 180-day period following the Closing Date from a person
obligated with respect to an Account Receivable shall be applied first to
Seller's account and only after full satisfaction thereof to Buyer's account;
provided, however, that if such person has, in the reasonable opinion of Buyer,
a legitimate dispute with respect to such Account Receivable and Buyer also has
an account receivable from such person, all payments received by Buyer during
the 180-day period following the Closing Date from such person shall be applied
first to Buyer's account and only after the earlier to occur of full
satisfaction of Buyer's account or resolution of such dispute, to Seller's
account. Buyer shall not be required to refer any Account Receivable to a
collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any Account Receivable having a value in excess of $5,000
without receiving the approval of Seller. Seller shall take no action with
respect to the Accounts Receivable, such as litigation, until the expiration of
such 180-day period. Following the expiration of said 180-day period, Seller
shall be free to take such action as Seller may in its sole discretion
determine to collect any Accounts Receivable then outstanding.
7.5. BROKERS OR FINDERS. Buyer represents and warrants to Seller, and
Seller represents and warrants to Buyer, that other than the previously
disclosed fee payable to Media Venture Partners, which fee shall be paid in
accordance with the provisions of Section 12.7, no agent, broker, investment
banker, or other or person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee payable by Buyer or Seller in
connection with any of the transactions contemplated by this Agreement.
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7.6. BULK SALES LAW. The parties do not believe that any bulk sales
or fraudulent conveyance statute applies to the transactions contemplated by
this Agreement. Buyer therefore waives compliance by Seller with the
requirements of any such statutes, and Seller agrees to indemnify and hold
Buyer harmless against any claim made against Buyer by any creditor of Seller
as a result of a failure to comply with any such statute.
7.7. RISK OF LOSS.
(a) The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the Closing. In the event of any such loss,
damage, impairment, confiscation, or condemnation, whether or not covered by
insurance, Seller shall promptly notify Buyer of such loss, damage, impairment,
confiscation, or condemnation.
(b) If Seller, at its expense, repairs, replaces, or restores
such Assets to their prior condition to the satisfaction of Buyer before the
Closing, Seller shall be entitled to all insurance proceeds and condemnation
awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets having a replacement cost in
excess of $250,000 in the aggregate or informs Buyer that it does not intend to
restore or replace such Assets, Buyer may at its option:
(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement without
Seller completing the restoration and replacement of such Assets,
provided that Seller shall assign all rights under applicable insurance
policies and condemnation awards, if any, to Buyer; and in such event,
Seller shall have no further liability with respect to the condition of
the Assets directly attributable to the loss, damage, impairment,
confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the options
described in Section 7.7(c)(i) or (ii) above within ten business days after
Seller's notice to Buyer of the damage or destruction of Assets and the
estimate of the costs to repair or replace; provided, however, that if Seller
states that it intends to restore the damaged Assets and if Seller has not
restored such damaged Assets immediately prior to the Closing Date,
notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this
Section 7.7(d), Buyer shall have the right to either postpone the Closing or
terminate this Agreement by notice forthwith.
7.8. ADDITIONAL AGREEMENTS. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to do, or cause to be taken all action
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and to do, or cause to be done, all things necessary, proper, or advisable
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement. If at any time after the Closing
Date, any further action is necessary or desirable to carry out the purposes of
this Agreement, the parties to this Agreement and their duly authorized
representatives shall take all such action. Without limiting the generality of
the foregoing, if, after the Closing Date, Buyer seeks indemnification or
recovery from one or more other parties to an Assumed Contract or otherwise
seeks to enforce such Assumed Contract and, in order to obtain such
indemnification, recovery or enforcement, it is necessary for Seller to
initiate a suit, participate in any enforcement proceeding or otherwise provide
assistance to Buyer, then, at the request and the sole expense of Buyer, Seller
shall take such action as Buyer may reasonable request in connection with
Buyer's efforts to obtain such indemnification, recovery or enforcement.
7.9. LOCAL MARKETING AGREEMENT. No later than the first day or 15th
day (whichever occurs first after the occurrence of the event specified in the
succeeding clause (a) or (b)) of the month following the earlier of (a) the
termination of the applicable waiting period under the HSR Act or (b) the
issuance of a notification, either in writing or orally, by the U.S. Department
of Justice or the Federal Trade Commission of an early termination of such
waiting period, Buyer and Seller shall enter into a Local Marketing Agreement
substantially in the form of Exhibit H (with the exhibits to such form
appropriately completed) pursuant to which Seller shall make the Stations'
broadcasting facilities available to Buyer prior to the Closing (the "LMA").
If the LMA is entered into, then, notwithstanding any other provision of this
Agreement: (i) Seller shall not be liable for the breach of a representation or
warranty of Seller contained in Section 3.1 of this Agreement (other than
subsections (a), (b), (c) or (d) thereof) if the fact, event or circumstance
that gave rise to such breach occurs after the LMA Commencement Date and was
caused by a failure by Buyer to perform its obligations under the LMA; (ii)
Seller shall not be liable for the failure to perform or observe any covenant
contained in Sections 4.1, 4.2, 5.2(b) or 5.4 if such failure was caused by a
failure of Buyer to perform its obligations under the LMA; and (iii) Buyer
shall not be entitled to fail to consummate the transactions contemplated by
this Agreement pursuant to the provisions of Section 8.2(a) or 8.2(b) or to
terminate this Agreement pursuant to the provisions of Section 10.1(b)(i) as a
result of such breach of any such representation, warranty or covenant caused
by the failure of Buyer to perform its obligations under the LMA.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. CONDITIONS TO EACH PARTY'S OBLIGATION. The respective
obligations of Buyer and Seller to effect the transactions contemplated hereby
are subject to the satisfaction (or, in the case of the condition specified in
the last sentence of Section 8.l(a), the waiver by Buyer) on or prior to the
Closing Date of the following conditions:
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(a) Consents and Approvals. All authorizations, consents,
orders, or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall have been
filed, occurred, or been obtained. The FCC Consents shall have become Final
Orders and shall be in form and substance satisfactory to Buyer.
(b) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction, or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the transactions contemplated hereby shall be in effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2. CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations and
warranties of Seller set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of Seller
contained herein that is qualified by a materiality standard shall not be
further qualified hereby and that this Section 8.2(a) is subject to the
provisions of Section 7.9) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Buyer shall have
received a certificate to such effect signed on behalf of Seller by the chief
executive officer or by the chief financial officer of the General Partner of
Seller.
(b) Performance of Obligations. Subject to the provisions of
Section 7.9, Seller shall have performed in all material respects all
obligations required to be performed by it under this Agreement prior to the
Closing Date, and Buyer shall have received a certificate to such effect signed
on behalf of Seller by the chief executive officer or by the chief financial
officer of the General Partner of Seller.
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each person that is a party to a Contract identified in Schedule
3.1(p) whose consent or approval shall be required in order to permit the
consummation of the transactions contemplated hereby and such consent or
approval shall be in form and substance satisfactory to Buyer.
(d) Legal Opinions. Buyer shall have received from (i)
Bullivant, Houser, Bailey, Pendergrass and Hoffman, counsel to Seller, and (ii)
Fisher, Wayland, Cooper, Leader & Zaragoza
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L.L.P., special FCC counsel to Seller, one or more opinions, dated the Closing
Date, in substantially the forms attached as Exhibits I and J hereto.
(e) Real Estate Title Commitment. Within 60 days after the
date of this Agreement, Seller, at its sole cost and expense, shall have
obtained a preliminary report on title to the Owned Real Property covering a
date subsequent to the date of this Agreement, issued by the Title Company,
which preliminary report shall contain a commitment (the "Title Commitment") of
the Title Company to issue an owner's title insurance policy at Seller's cost
as Buyer may reasonably require (the "Title Policy") insuring the fee simple
absolute interest of Seller in the Owned Real Property. The Title Commitment
shall be in such amount as Buyer may reasonably determine to be the fair market
value of the Owned Real Property (including all improvements located thereon)
and shall be subject only to the standard printed exceptions and: (i) liens of
current state and local property taxes which are not delinquent or subject to
penalty; (ii) unviolated zoning regulations and restrictive covenants and
easements of record which do not detract from the value of the Owned Real
Property and do not materially and adversely affect, impair or interfere with
the use of any property affected thereby as heretofore used by Seller or the
Stations;(iii) public utility easements of record, in customary form, to serve
the Owned Real Property; and (iv) Permitted Encumbrances.
(f) Survey. If requested by Buyer, Seller, at its sole cost
and expense, shall have obtained a survey of the Owned Real Property as of a
date subsequent to the date hereof which shall: (i) be prepared by a
registered land surveyor reasonably acceptable to Buyer; (ii) be certified to
the Title Company and to Buyer; and (iii) show with respect to the Owned Real
Property: (A) the legal description of the Owned Real Property (which shall be
the same as the Title Policy pertaining thereto); (B) all buildings, structures
and improvements thereon and all restrictions of record and other restrictions
that have been established by an applicable zoning or building code or
ordinance and all easements or rights of way across or serving the Owned Real
Property (including any off-site easements affecting or appurtenant thereto);
(C) no encroachments upon the Owned Real Property or adjoining parcels by
buildings, structures or improvements and no other survey defects; (D) access
to such parcel from a public street; and (E) provide a flood certification
reasonably satisfactory to Buyer to the effect that no portion of the Owned
Real Property necessary for the operation of the Stations is located within a
flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Seller or David J.
Benjamin, III pursuant to Section 9.2 shall have been delivered.
8.3. CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
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(a) Representations and Warranties. The representations and
warranties of Buyer set forth in this Agreement shall be true and correct in
all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to such effect signed on behalf of Buyer by the
chief executive officer or by the chief financial officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall have
performed in all material respects the obligations required to be performed by
it under this Agreement prior to the Closing Date, and Seller shall have
received a certificate to such effect signed on behalf of Buyer by the chief
executive officer or by the chief financial officer of Buyer.
(c) Closing, Deliveries. All documents and instruments
required to be delivered by Buyer or Capstar pursuant to Section 9.2 shall have
been delivered.
ARTICLE IX
CLOSING
9.1. CLOSING. Subject to the satisfaction or waiver of the conditions
set forth in Article VIII and to the next succeeding sentence, the Closing will
take place at the offices of Vinson & Elkins L.L.P., Dallas, Texas, at 10:00
a.m., local time (or at such other place and time as Buyer and Seller may
agree) on a date selected by Buyer on five business days notice to Seller which
date shall be on or before the later of October 31, 1997 or the 10th business
day after the day on which the FCC Consents have been granted by Final Order
(the "Closing Date"). Notwithstanding the foregoing:
(a) In the case of a Station Event (as defined below), (i) if
the Cessation Date (as defined below) is less than 60 days after the date that
the Station Event occurs, Buyer, in its discretion, may extend the Closing Date
to a date not later than the 30th day after the Cessation Date, (ii) if the
Cessation Date is more than 60, but less than 90, days after the date that the
Station Event occurs, Buyer, in its discretion, shall elect on the first to
occur of the 10th business day after the Cessation Date or the 90th day (or, if
not a business day, the next business day) after the date that the Station
Event occurs (the "Election Date") to either (A) close the transactions
contemplated by this Agreement on the later to occur of the fifth business day
after the Election Date or the 90th day (or, if not a business day, the next
business day) after the date that the Station Event occurs, or (B) terminate
this Agreement, and (iii) if the Cessation Date has not occurred by the 90th
day after the date that the Station Event occurs (or, if not a business day,
the next business day), Buyer shall elect, not later than the 95th day after
the date of the Station Event (or if not a business day, the next business
day), either to terminate this Agreement or close the transactions contemplated
by this Agreement on the fifth business day after the date of such election;
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(b) In the case of a Conflict Event, a Trading Event or a
Banking Event (in each case, as defined below), Buyer, in its discretion, may
extend the Closing Date to a date not to exceed the 90th day after the Event
Date;
(c) If a Cure Period (as defined in Section 10.1(b)(i)) has
not ended on or before the Closing Date, the Closing Date shall be extended to
the earlier to occur of five business days after the cure or waiver of the
breach giving rise to the Cure Period or the end of the Cure Period; and
(d) If the Closing does not occur within 20 days after the
date of the Final Order, the parties shall request approval from the FCC to
extend the Closing so that the Closing contemplated hereunder will not violate
any FCC rules or regulations.
For purposes of this Agreement, a "Trading Event" shall mean that
trading generally in securities on the New York Stock Exchange shall have been
suspended or materially limited; a "Banking Event" shall mean that a general
moratorium on commercial banking activities in New York, New York shall have
been declared by any federal or state authority; a "Conflict Event" shall mean
the occurrence of any major armed conflict involving a substantial
participation by the armed forces of the United States of America; a "Station
Event" shall mean any act of nature (including fires, floods, earthquakes, and
storms), calamity, casualty or condemnation or the act or omission to act of
any state or federal regulatory agency having jurisdiction over the Stations
that has caused one or more Stations representing an aggregate of 3% of the
consolidated gross revenues of Seller for the last full 12 calendar months
prior to the Station Event not to be operating in a manner substantially
consistent with the operations conducted before such act, calamity, casualty,
condemnation or agency action or omission occurred or not in compliance with
its or their respective Station License(s); an "Event Date" shall mean the date
on which a Trading Event, Banking Event or a Conflict Event occurs; and a
"Cessation Date" shall mean the date on which a Station Event ends. Pro forma
adjustments shall be made for purposes of calculating gross revenues for the
12-month period specified in the definition of "Station Event" with respect to
any radio broadcast station acquired during such 12-month period, to assume
that such station was acquired at the beginning of such 12-month period and
include the gross revenues of such station for the full 12-month period.
9.2. ACTIONS TO OCCUR AT CLOSING.
(a) At the Closing, Buyer shall deliver to Seller the
following:
(i) Purchase Price The Purchase Price by wire transfer
of immediately available funds (less the Holdback Amount).
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(ii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
(iii) Indemnification Escrow Agreement. A counterpart of
the Indemnification Escrow Agreement executed by Buyer;
(iv) Certificates The certificates referred to in
Section 8.3(a) and (b); and
(b) At the Closing, Seller shall deliver to Buyer the
following:
(i) Certificates. The certificates described in
Section 8.2(a) and (b);
(ii) Legal Opinions. The opinions of counsel referred
to in Section 8.2(d);
(iii) Transfer Documents. The duly executed Bill of Sale
and Assignment, together with any other assignments and other transfer
documents as requested by Buyer;
(iv) Consents; Acknowledgments. The original of each
Consent;
(v) Estoppel Certificates. An estoppel certificate
from the lessor(s) of the Leased Real Property;
(vi) Licenses, Contracts, Business Records, Etc. To the
extent they are in possession of Seller, copies of all Licenses, Assumed
Contracts, blueprints, schematics, working drawings, plans, projections,
statistics, engineering records and all files and records used by Seller in
connection with the Stations' business and operations, which copies shall be
available at the Closing or at the Stations' principal business offices;
(vii) Indemnification Escrow Agreement. A counterpart of
the Indemnification Escrow Agreement executed by Seller;
(viii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Seller;
(ix) Non-Competition Agreement. A counterpart of the
Non-Competition Agreement executed by Seller;
(x) Warranty Deed. A statutory Warranty Deed conveying
fee simple title to the Owned Real Property to Buyer, subject only to the
Permitted Encumbrances, in proper statutory form for recording together with
documentary stamps affixed thereto;
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(xi) No-Lien Affidavit. A standard No-Lien Affidavit
executed by Seller which shall be in the recordable form and otherwise
satisfactory to the Title Company in order to delete the standard printed
exceptions relating to mechanics' liens and parties-in-possession;
(xii) GAP Affidavit. An affidavit, if requested by the
Title Company, as may be necessary to insure the gap between the effective date
of the Title Commitment to and through the date of the recordation of the deed
to the Owned Real Property; and
(xiii) Title Requirements. Such other documents as shall
be reasonably required by the Title Company as called for or required under the
terms of any title policy obtained or issued to Buyer.
(c) At the Closing, Seller and Buyer shall instruct the Escrow
Agent to deliver, and it shall deliver, the Deposit Letter of Credit to Buyer.
(d) At the Closing, Buyer shall receive a statement in
conformance with Treas. Reg. Section 1.1445-11T(d)(2)(i) from the General
Partner of Seller.
(e) At the Closing, Capstar and David J. Benjamin, III shall
deliver a fully executed counterpart of the employment agreement referred to in
Section 5.7.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. TERMINATION. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) if there shall have been any material breach of any
representation, warranty, covenant, or agreement, on the part of Buyer, on the
one hand, or Seller, on the other hand, set forth in this Agreement which
breach shall not have been cured within 20 days (the "Cure Period") following
receipt by the breaching party of written notice of such breach;
(ii) if a court of competent jurisdiction or other
Governmental Entity shall have issued an order, decree, or ruling or taken any
other action (which order, decree or ruling the parties hereto shall use their
best efforts to lift), in each case permanently restraining, enjoining, or
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otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling, or other action shall have become final and
nonappealable;
(iii) if, for any reason, the FCC denies or dismisses any
of the Applications and the time for reconsideration or court review under the
Communications Act with respect to such denial or dismissal has expired and
there is not pending with respect thereto a timely filed petition for
reconsideration or request for review;
(iv) if, for any reason, any of the Applications is
designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by the later
of October 31, 1997 or the date to which the Closing Date is extended pursuant
to the second sentence of Section 9.1; provided, however, that the right to
terminate this Agreement under this clause (v) shall not be available to any
party whose breach of this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before such date; or
(c) by Buyer:
(i) pursuant to the provisions of Section 7.7;
(ii) with respect to a Station Event, at its option, as
provided in the second sentence of Section 9.1; or
(iii) if the FCC grants any of the Applications with any
adverse conditions not generally imposed on grants of such applications and the
time for reconsideration or court review under the Communications Act with
respect to such adverse conditions has expired and there is not pending with
respect thereto a timely filed petition for reconsideration or request for
review.
The right of any party hereto to terminate this Agreement pursuant to
this Section 10.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers,
directors, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other party.
10.2. EFFECT OF TERMINATION.
(a) In the event of a termination of this Agreement by either
Seller or Buyer as provided above, there shall be no liability on the part of
either Buyer or Seller, except for liability
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arising out of a breach of this Agreement. If this Agreement is terminated by
Seller pursuant to Section 10.1(b)(i) or if this Agreement is terminated by
Seller pursuant to Section 10.1(b)(v) and the failure to close by the date
specified in such Section was a result of a breach of any representation,
warranty, covenant or agreement on the part of Buyer, the parties agree and
acknowledge that Seller will suffer damages that are not practicable to
ascertain. Accordingly, in such event and if within 10 business days after
termination of this Agreement Seller delivers to Buyer a written demand for
liquidated damages, Seller shall be entitled to receive, as liquidated damages,
the sum of (i) $1,750,000 if such termination occurs on or prior to the earlier
of the LMA Commencement Date or March 1, 1997, or (ii) $2,625,000 if such
termination occurs after the earlier of the LMA Commencement Date or March 1,
1997. Such sum shall be payable by Buyer within 10 business days after receipt
of Seller's written demand and in accordance with the provisions of the Deposit
Escrow Agreement, including receipt by Buyer of a general release as provided
in the Deposit Escrow Agreement. As security for payment thereof, Buyer has,
concurrently with the execution of this Agreement, entered into the Deposit
Escrow Agreement with Seller and the Escrow Agent as provided in Section 2.7.
The parties agree that the foregoing liquidated damages are reasonable
considering all the circumstances existing as of the date hereof and constitute
the parties' good faith estimate of the actual damages reasonably expected to
result from the termination of this Agreement by Seller pursuant to Section
10.1(b)(i). Seller agrees that, to the fullest extent permitted by law,
Seller's right to payment of the $1,750,000 or $2,625,000, whichever is
applicable depending on the date of termination of this Agreement, as
liquidated damages as provided in this Section 10.2 shall be its sole and
exclusive remedy if the Closing does not occur with respect to any damages
whatsoever that the Seller may suffer or allege to suffer as a result of any
claim or cause of action asserted by the Seller relating to or arising from
breaches of the representations, warranties or covenants of Buyer contained in
this Agreement and to be made or performed at or prior to the Closing. If this
Agreement is terminated by Seller pursuant to Section 10.1(b)(i) or if this
Agreement is terminated pursuant to Section 10.1(b)(v) and the failure to close
by the date specified in Section 10.1(b)(v) is a result of a breach of any
representation, warranty, covenant or agreement on the part of Buyer, Buyer and
Seller shall instruct the Escrow Agent to release the Deposit Letter of Credit
to Seller. If this Agreement is terminated (i) by Buyer and Seller pursuant to
the provisions of Section 10.1(a), (ii) by either party pursuant to any
provision of Section 10.1(b)(ii), (iii), or (iv), (iii) pursuant to the
provisions of Section 10.1(b)(v) and the failure to close by the date specified
in Section 10.1(b)(v) is not a result of a breach of any representation,
warranty, covenant or agreement on the part of Buyer, or (iv) or by Buyer
pursuant to the provisions of Section 10.1(c), Buyer and Seller shall instruct
the Escrow Agent to release the Deposit Letter of Credit to Buyer.
(b) As a condition of payment, and upon receipt of the
appropriate sum of liquidated damages under this Section 10.2, Seller shall
irrevocably and unconditionally release, acquit, and forever discharge Buyer
and its successors, assigns, employees, agents, stockholders, partners,
subsidiaries, parent companies and other Affiliates (corporate or otherwise) of
and from any and all Released Claims, including, without limitation, all
Released Claims arising out of, based upon, resulting from or relating to the
negotiation, execution, performance, breach or otherwise
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related to or arising out of this Agreement, the Transaction Documents, or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative.
ARTICLE XI
INDEMNIFICATION
11.1. INDEMNIFICATION OF BUYER. Subject to the provisions of this
Article XI, Seller agrees to indemnify and hold harmless the Buyer Indemnified
Parties from and against any and all Buyer Indemnified Costs.
11.2. INDEMNIFICATION OF SELLER. Subject to the provisions of this
Article XI, Buyer agrees to indemnify and hold harmless the Seller Indemnified
Parties from and against any and all Seller Indemnified Costs.
11.3. DEFENSE OF THIRD-PARTY CLAIMS. An Indemnified Party shall give
prompt written notice to any entity or person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article XI
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at his, her, or
its own expense, to participate in the defense of such third-party action
(provided, however, that the Indemnifying Parties shall pay the attorneys' fees
of the Indemnified Party if (i) the employment of separate counsel shall have
been authorized in writing by any such Indemnifying Party in connection with
the defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel reasonably satisfactory to the Indemnified Party to have
charge of such third-party action, (iii) the Indemnified Party shall have
reasonably concluded that there may be defenses available to such Indemnified
Party that are different from or additional to those available to the
Indemnifying Party, or (iv) the Indemnified Party's counsel shall have advised
the Indemnified Party in writing, with a
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copy to the Indemnifying Party, that there is a conflict of interest that could
make it inappropriate under applicable standards of professional conduct to
have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have an adverse effect on its business or,
in the case of an Indemnified Party who is a natural person, on his or her
assets or interests;
(c) No Indemnifying Party shall consent to the entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each Indemnified Party
of a release from all liability in respect of such third-party action; and
(d) The Indemnifying Party shall not be entitled to control
(but shall be entitled to participate at their own expense in the defense of),
and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any third-
party action (i) as to which the Indemnifying Party fails to assume the defense
within a reasonable length of time or (ii) to the extent the third-party action
seeks an order, injunction, or other equitable relief against the Indemnified
Party which, if successful, would materially adversely affect the business,
operations, assets, or financial condition of the Indemnified Party; provided,
however, that the Indemnified Party shall make no settlement, compromise,
admission, or acknowledgment that would give rise to liability on the part of
any Indemnifying Party without the prior written consent of such Indemnifying
Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The
failure of the Indemnified Party to exercise promptness in such notification
shall not amount to a waiver of such claim unless the resulting delay
materially prejudices the position of the Indemnifying Party with respect to
such claim.
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11.5. ESCROW. On the Closing Date, Buyer and Seller will enter into the
Indemnification Escrow Agreement in accordance with which Buyer shall, at
Closing, deposit $700,000 (the "Holdback Amount") with the Escrow Agent.
11.6. LIMITATIONS. Subject to Section 11.7 and Section 12.17 hereof,
the following provisions of this Section 11.6 shall be applicable after the
time of the Closing:
(a) Minimum Loss. Subject to the provisions of Section 12.17,
no Indemnifying Party shall be required to indemnify an Indemnified Party for a
breach of a representation or warranty unless and until the aggregate amount of
Indemnified Costs for which the Indemnified Party is otherwise entitled to
indemnification for one or more breaches of representations and warranties
pursuant to this Article XI exceeds $100,000 (the "Minimum Loss"). There is no
minimum loss threshold with respect to breaches of covenants. If an
Indemnifying Party breaches a covenant, the Indemnified Party shall be entitled
to the entire amount of its Indemnified Costs, subject to the limitations on
recovery and recourse set forth in Sections 11.6 and 11.7 below. If an
Indemnified Party breaches a representation or warranty, then after the Minimum
Loss with respect to breaches of representations or warranties is exceeded, the
Indemnified Party shall be entitled to be paid the entire amount of its
Indemnified Costs in excess of (but not including) the Minimum Loss, subject to
the limitations on recovery and recourse set forth in this Section 11.6 and in
Section 11.7 below and subject to the exception contained in Section 12.17.
For purposes of determining the aggregate amount of Minimum Loss suffered by an
Indemnified Party, each representation and warranty contained in this Agreement
for which indemnification can be or is sought hereunder shall be read
(including, without limitation, for purposes of determining whether a breach of
such representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein. In addition, in determining whether an Indemnifying Party shall be
required to indemnify an Indemnified Party under this Article XI, once the
Minimum Loss requirement set forth in this clause (a) has been satisfied, each
representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including, without
limitation for purposes of determining whether a breach of such representation
or warranty has occurred) without regard to materiality (including Material
Adverse Effect) qualifications that may be contained therein. As used in the
foregoing provisions of this Section 11.6, an "Indemnified Party" refers to all
of the Buyer Indemnified Parties on the one hand and all of the Seller
Indemnified Parties on the other hand, and an "Indemnifying Party" refers to
the Buyer on the one hand and the Seller on the other hand.
(b) Minimum Claim. Notwithstanding anything to the contrary
stated herein, if any third-party action or direct claim results in any
damages, losses, liabilities, charges, penalties, costs and expenses (including
court costs and attorneys' fees and expenses incurred in investigating and
preparing for any litigation or proceeding) which do not in the aggregate
exceed $500, such damages, losses, liabilities, charges, penalties, costs and
expenses shall not be deemed to be Indemnified Costs.
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(c) Limitation as to Time. No Indemnifying Party shall be
liable for any Indemnified Costs pursuant to this Article XI unless a written
claim for indemnification in accordance with Section 11.3 or 11.4 is given by
the Indemnified Party to the Indemnifying Party with respect thereto on or
before the later of (i) 450 days after the Closing Date or (ii) October 31,
1998, except that this time limitation shall not apply to any claims
contemplated by Section 12.17.
11.7. RECOVERY AGAINST ESCROWED FUNDS. Subject to Section 12.17
hereof, the following provisions of this Section 11.7 shall be applicable after
the time of the Closing:
(a) With respect to any claim by a Buyer Indemnified Party
against Seller for Buyer Indemnified Costs payable under this Article XI, the
Buyer Indemnified Party shall be entitled to payment only out of the Holdback
Amount pursuant to the terms of this Article XI and the Indemnification Escrow
Agreement for all amounts due to the Buyer Indemnified Party with respect to
such claim.
(b) Upon receipt of the Holdback Amount under this Section
11.7, Buyer shall irrevocably and unconditionally release, acquit and forever
discharge Seller and its successors, assigns, employees, agents, stockholders,
partners, subsidiaries, parent companies and other affiliates (corporate or
otherwise) of and from any and all Released Claims with respect to Buyer
Indemnified Costs in excess of the Holdback Amount other than claims specified
in Section 12.17.
11.8. INSTRUCTIONS TO ESCROW AGENT. Seller hereby covenants and agrees
that at any time Seller is or becomes obligated to indemnify a Buyer
Indemnified Party for Buyer Indemnified Costs under this Article XI, Seller
will execute and deliver to the Escrow Agent written instructions to release to
the Buyer Indemnified Party such portion of the Holdback Amount as is necessary
to indemnify the Buyer Indemnified Party for such Buyer Indemnified Costs.
ARTICLE XII
GENERAL PROVISIONS
12.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AND COVENANTS.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations,
warranties and covenants set forth in this Agreement shall terminate on the
later of (a) the 450th day following the Closing Date, and (b) October 31,
1998. Following the date of termination of a representation, warranty or
covenant, no claim can be brought with respect to a breach of such
representation, warranty or covenant, but no such termination shall not affect
any claim for a breach of a representation,
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warranty or covenant that was asserted before the date of termination. The
covenants and agreements contained in this Article XII shall survive the
Closing indefinitely.
12.2. FURTHER ACTIONS. After the Closing Date, Seller shall execute
and deliver such other certificates, agreements, conveyances, and other
documents, and take such other action, as may be reasonably requested by Buyer
in order to transfer and assign to, and vest in, Buyer the Assets pursuant to
the terms of this Agreement.
12.3. AMENDMENT AND MODIFICATION. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
12.4. WAIVER OF COMPLIANCE. Any failure of Buyer on the one hand, or
Seller, on the other hand, to comply with any obligation, covenant, agreement,
or condition contained herein may be waived only if set forth in an instrument
in writing signed by the party or parties to be bound thereby, but such waiver
or failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any other failure.
12.5. SPECIFIC PERFORMANCE. The parties recognize that in the event
Seller should refuse to perform under the provisions of this Agreement,
monetary damages alone will not be adequate. Buyer shall therefore be
entitled, in addition to any other remedies which may be available, including
money damages, to obtain specific performance of the terms of this Agreement.
In the event of any action to enforce this Agreement specifically, Seller
hereby waive the defense that there is an adequate remedy at law.
12.6. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal, or incapable of being enforced by any rule of applicable
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated herein are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the transactions contemplated herein are
consummated as originally contemplated to the fullest extent possible.
12.7. EXPENSES AND OBLIGATIONS. Except as otherwise expressly provided
in this Agreement or as provided by law, all costs and expenses incurred by the
parties hereto in connection with the consummation of the transactions
contemplated hereby shall be borne solely and entirely by the party which has
incurred such expenses. Notwithstanding the foregoing, (a) the filing fees
incurred in connection with the filings made pursuant to the HSR Act shall be
borne equally by Seller and Buyer, (b) the fee payable to the Escrow Agent
shall be borne as provided in the Indemnification Escrow Agreement and the
Deposit Escrow Agreement, (c) the brokerage fees
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payable to Media Venture Partners shall be borne by Buyer, and (d) all sales
taxes arising out of the transactions contemplated by this Agreement shall be
paid by Seller. In the event of a dispute between the parties in connection
with this Agreement and the transactions contemplated hereby, each of the
parties hereto hereby agrees that the prevailing party shall be entitled to
reimbursement by the other party of reasonable legal fees and expenses incurred
in connection with any action or proceeding.
12.8. PARTIES IN INTEREST. This Agreement shall be binding upon and,
except as provided below, inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other person
(other than the Indemnified Parties as provided in Article XI) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9. NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to
Community Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
with a copy to
Vinson & Elkins L.L.P.
3700 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Attn: Michael D. Wortley
Facsimile: (214) 220-7716
51
<PAGE> 57
(b) If to Seller, to
Community Pacific Broadcasting Company L.P.
P.O. Box 871
Monterey, California 93942
Attn: David J. Benjamin, III
Facsimile: (408) 655-6355
with a copy to
Bullivant, Houser, Bailey, Pendergrass and Hoffman
300 Pioneer Tower
888 SW 5th Avenue
Portland, Oregon 97204
Attn: Kimball H. Ferris
Facsimile: (503) 295-0915
12.10. COUNTERPARTS. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11. ENTIRE AGREEMENT. This Agreement (which term shall be deemed to
include the exhibits and schedules hereto and the other certificates, documents
and instruments delivered hereunder) constitutes the entire agreement of the
parties hereto and supersedes all prior agreements, letters of intent and
understandings, both written and oral, among the parties with respect to the
subject matter hereof. There are no representations or warranties, agreements,
or covenants other than those expressly set forth in this Agreement.
12.12. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE. ANY SUIT OR PROCEEDING
BROUGHT HEREUNDER SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
LOCATED IN DELAWARE.
12.13. PUBLIC ANNOUNCEMENTS. Seller and Buyer shall consult with each
other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation. Prior to the Closing, Seller will not
issue any other press release or otherwise make any public statements regarding
its business, except as may be required by applicable law.
52
<PAGE> 58
12.14. ASSIGNMENT. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Seller and without releasing Buyer from any of its obligations
or liabilities hereunder, Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any Affiliate thereof, and (b) nothing
in this Agreement shall limit Buyer's ability to make a collateral assignment
of its rights under this Agreement to any institutional lender that provides
funds to Buyer without the consent of Seller. Seller shall execute an
acknowledgment of such assignment(s) and collateral assignments in such forms
as Buyer or its institutional lenders may from time to time reasonably
request; provided, however, that unless written notice is given to Seller that
any such collateral assignment has been foreclosed upon, Seller shall be
entitled to deal exclusively with Buyer as to any matters arising under this
Agreement or any of the other agreements delivered pursuant hereto. In the
event of such an assignment, the provisions of this Agreement shall inure to
the benefit of and be binding on Buyer's assigns.
12.15. DIRECTOR AND OFFICER LIABILITY. The directors, officers, and
stockholders of Buyer and its affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that Seller
may assert) other than as an assignee of this Agreement.
12.16. NO REVERSIONARY INTEREST. The parties expressly agree, pursuant
to Section 73.1150 of the FCC's rules, that Seller does not retain any right to
reassignment of any of the FCC Licenses in the future, or to operate or use the
facilities of the Stations for any period beyond the Closing Date.
12.17. NO WAIVER RELATING TO CLAIMS FOR FRAUD. The liability of any
party under Article XI shall be in addition to, and not exclusive of any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including but not limited to the provisions set forth in Section
11.6(a) (relating to Minimum Loss), 11.6(b) (relating to minimum claims),
11.6(c) (relating to limitations on the period of time during which a claim for
indemnification may be brought), 11.7 (relating to recourse against escrowed
funds), or 12.1 (relating to survival periods), shall be deemed a waiver by any
party to this Agreement of any right or remedy which such party may have at law
or equity based on any other party's fraudulent acts or omissions, nor shall
any such provisions limit, or be deemed to limit, (i) the amounts of recovery
sought or awarded in any such claim for fraud, (ii) the time period during
which a claim for fraud may be brought, or (iii) the recourse which any such
party may seek against another party with respect to a claim for fraud;
provided, that with respect to such rights and remedies at law or equity, the
parties further acknowledge and agree that none of the provisions of this
Section 12.17, nor any reference to this Section 12.17 throughout this
Agreement, shall be deemed a waiver of any defenses which may be available in
respect of actions or claims for fraud, including but not limited to, defenses
of statutes of limitations or limitations of damages.
53
<PAGE> 59
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
signed, all as of the date first written above.
SELLER:
COMMUNITY PACIFIC BROADCASTING
COMPANY L.P.
By: Broadcast Management Corporation,
its general partner
/s/ DAVID J. BENJAMIN
------------------------------
By: David J. Benjamin, III
Its: President
BUYER:
COMMUNITY ACQUISITION COMPANY, INC.
/s/ ERIC C. NEUMAN
------------------------------
By: Eric C. Neuman
Its: Vice President
<PAGE> 60
ANNEX A
THE STATIONS
KASH AM-FM Anchorage, Alaska
KBFX - FM Anchorage, Alaska
KENI - AM Anchorage, Alaska
KJSN - FM Modesto, California
KVFX - FM Manteca, California
KFIV - AM Modesto, California
KJAX - AM Stockton, California
KGGO - FM Des Moines, Iowa
KHKI - FM Des Moines, Iowa
KDMI - AM Des Moines, Iowa
<PAGE> 1
EXHIBIT 10.3
ASSET PURCHASE AGREEMENT
by and among
POINT COMMUNICATIONS LIMITED PARTNERSHIP
MIDCONTINENT BROADCASTING CO. OF WISCONSIN, INC.
MADISON RADIO GROUP
AND
POINT MADISON ACQUISITION COMPANY, INC.,
dated as of
January 27, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
ARTICLE I
DEFINED TERMS
<S> <C> <C>
1.1. Defined Terms.............................................. 2
1.2. References and Titles......................................11
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy..................................12
2.2. Excluded Assets............................................13
2.3. Purchase Price.............................................14
2.4. Adjustments and Prorations.................................14
2.5. Assumption of Liabilities and Obligations..................15
2.6. Allocation.................................................16
2.7. Earnest Money..............................................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
3.1. Representations and Warranties Regarding Seller............16
3.2. Representations and Warranties of Buyer....................27
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of the Selling Group.............................28
4.2. Negative Trade Balance.....................................30
4.3. Environmental Site Assessments.............................30
4.4 Relocation of Operations...................................30
ARTICLE V
ADDITIONAL AGREEMENTS OF THE SELLING GROUP
5.1. No Solicitation of Transactions............................31
5.2. Access and Information.....................................31
5.3. Assistance.................................................32
5.4. Compliance With Station Licenses...........................33
5.5. Notification of Certain Matters............................33
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
<S> <C> <C>
5.6. Third Party Consents.......................................34
5.7. Richard P. Verne Consulting Agreement......................34
5.8. Confidential Information...................................34
ARTICLE VI
COVENANTS OF BUYER
6.1. Notification of Certain Matters............................34
6.2. Employee Matters...........................................35
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for FCC Consents...............................35
7.2. Control of Stations........................................35
7.3. Other Governmental Consents................................35
7.4. Accounts Receivable........................................36
7.5. Brokers or Finders.........................................36
7.6. Bulk Sales Law.............................................36
7.7. Risk of Loss...............................................37
7.8. Additional Agreements......................................37
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation......................38
8.2. Conditions to Obligation of Buyer..........................38
8.3. Conditions to Obligations of the Seller....................39
ARTICLE IX
CLOSING
9.1. Closing....................................................40
9.2. Actions to Occur at Closing................................41
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination................................................44
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
<S> <C> <C>
10.2. Effect of Termination......................................45
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification of Buyer...................................46
11.2. Indemnification of the Selling Group and the Shareholders..46
11.3. Defense of Third-Party Claims..............................46
11.4. Direct Claims..............................................47
11.5. Escrow.....................................................47
11.6. Limitations on Indemnified Representation Costs............48
11.7. Instructions to Escrow Agent...............................48
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants.....49
12.2. Further Actions............................................49
12.3. Amendment and Modification.................................49
12.4. Waiver of Compliance.......................................49
12.5. Specific Performance.......................................49
12.6. Severability...............................................49
12.7. Expenses and Obligations...................................50
12.8. Parties in Interest........................................50
12.9. Notices....................................................50
12.10. Counterparts...............................................52
12.11. Entire Agreement...........................................52
12.12. Governing Law..............................................52
12.13. Public Announcements.......................................52
12.14. Assignment.................................................52
12.15. Director and Officer Liability.............................53
12.16. No Reversionary Interest...................................53
12.17. No Waiver Relating to Claims for Fraud.....................53
</TABLE>
iii
<PAGE> 5
EXHIBITS:
Exhibit A -- Deposit Escrow Agreement
Exhibit B -- Form of Consulting Agreement
Exhibit C -- Form of Indemnification Escrow Agreement
Exhibit D -- Form of Bill of Sale and Assignment
Exhibit E -- Form of Assumption Agreement
Exhibit F -- Form of Opinion of Vinson & Elkins L.L.P.
Exhibit G -- Form of Opinion of Stroock & Stroock & Lavan
Exhibit H -- Form of Opinion of Schwartz, Woods & Miller
Exhibit I -- Form of Opinion of Leonard, Street and Deinard
Exhibit J -- Form of Non-Competition Agreement
Exhibit K -- Form of Release of Claims
SCHEDULES:
Schedule 2.1(j) -- Choses in Action
Schedule 2.2(h) -- Excluded Assets
Schedule 2.5(b) -- Trade Deals
Schedule 3.1(a) -- Qualification to do Business and Good Standing
Schedule 3.1(f) -- Unrecorded Liabilities and Conduct of Business
Schedule 3.1(g) -- Licenses and Permits
Schedule 3.1(h) -- Litigation
Schedule 3.1(i) -- Insurance
Schedule 3.1(j) -- Real Estate
Schedule 3.1(k) -- Personal Property
Schedule 3.1(m) -- Environmental Matters
Schedule 3.1(o) -- Certain Agreements
Schedule 3.1(p) -- Employee Benefit Plans; Labor
Schedule 3.1(q) -- Intellectual Property
Schedule 3.1(r) -- Affiliate Relationships
Schedule 4.1(c) -- Change of Format
iv
<PAGE> 6
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of January 27, 1997, by and among Point Communications Limited
Partnership, a Delaware limited partnership ("Point"), Midcontinent
Broadcasting Co. of Wisconsin, Inc., a Wisconsin corporation ("Midcontinent"),
Madison Radio Group, a Wisconsin general partnership whose partners are Point
and Midcontinent ("Seller"), and Point Madison Acquisition Company, Inc., a
Delaware corporation ("Buyer").
R E C I T A L S
A. Seller is the current licensee of and currently owns and
operates radio stations WIBA-AM and WIBA-FM located in Madison, Wisconsin and
WMAD-FM located in Sun Prairie, Wisconsin (collectively, the "Point Stations")
pursuant to licenses issued by the Federal Communication Commission (the
"FCC"). Seller is also the licensee of and owns and operates radio stations
WTSO-AM and WZEE-FM located in Madison, Wisconsin and WMLI-FM located in Sauk
City, Wisconsin (collectively, the "Midcontinent Stations") pursuant to
licenses issued by the FCC. Each of the Point Stations and the Midcontinent
Stations is referred to individually herein as a "Station" and collectively as
the "Stations".
B. Point and Midcontinent have organized Seller for purposes of
holding all of the assets and liabilities related to the Stations.
C. Prior to January 2, 1997, Point and Midcontinent were the
respective licensee, owner and operator of the Point Stations and the
Midcontinent Stations.
D. On January 2, 1977, Point and Midcontinent contributed
substantially all of the assets and liabilities related to each of the Stations
to Seller in exchange for their respective partnership interests therein.
E. Point and Midcontinent desire Seller to sell and Buyer desires
to buy substantially all the assets used or held for use in the operation of
each of the Stations, both tangible and intangible, excluding the Excluded
Assets (as hereinafter defined), and by so doing to acquire the radio broadcast
business presently conducted by each of the Stations, upon the terms and
conditions hereinafter set forth.
A G R E E M E N T S
NOW, THEREFORE, in consideration of the respective representations,
warranties, agreements, and conditions hereinafter set forth, and other good
and valuable consideration, the sufficiency of which is hereby acknowledged,
the parties hereto hereby agree as follows:
1
<PAGE> 7
ARTICLE I
DEFINED TERMS
1.1. Defined Terms. The following terms shall have the following
meanings in this Agreement:
"Accounts Receivable" means the rights of any member of the
Selling Group to cash payment for the sale of advertising time by each Station
prior to 11:59 p.m. on the day prior to the Closing Date.
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with such person. For
purposes of this definition and this Agreement, the term "control" (and
correlative terms) means the power, whether by contract, equity ownership or
otherwise, to direct the policies or management of a person.
"Applicable Laws" means all laws, statutes, rules,
regulations, ordinances, judgments, orders, decrees, injunctions, and writs of
any Governmental Entity having jurisdiction over any of the Assets or the
business or operations of any Station, as may be in effect on or prior to the
Closing.
"Applications" has the meaning set forth in Section 7.1.
"Assets" means all the tangible and intangible assets owned,
leased, or licensed by any member of the Selling Group that are used or held
for use in connection with the business or operations of any of the Stations,
whether or not reflected on the Financial Statements or Balance Sheet of any
member of the Selling Group, but specifically excluding therefrom the Excluded
Assets.
"Assumed Contracts" means (a) those Contracts set forth on
Schedule 3.1(o) identified as being assumed by Buyer, (b) all other non-trade
advertising Contracts for cash entered into by Seller for any of the Stations
prior to the date of this Agreement and which are terminable on not more than
30 days notice, (c) all Contracts entered into by Seller on or after the date
of this Agreement and before the Closing not in contravention of the applicable
provisions of Section 4.1, and (d) Trade Deals described in Section 2.5(b).
"Assumption Agreement" means the Assumption Agreement between
Buyer and Seller substantially in the form of Exhibit E.
"Balance Sheets" has the meaning set forth in Section 3.1(f).
"Balance Sheet Date" has the meaning set forth in Section
3.1(f).
"Banking Event" has the meaning set forth in Section 9.1.
2
<PAGE> 8
"Bill of Sale and Assignment" means the Bill of Sale and
Assignment between Buyer and Seller substantially in the form of Exhibit D.
"Business Day" means any other day than (i) a Saturday or
Sunday or (ii) a day on which commercial banks in New York, New York or Dallas,
Texas are authorized or required to be closed.
"Buyer" has the meaning set forth in the first paragraph of
this Agreement, and it includes its permitted successors and assigns.
"Buyer Indemnified Costs" means (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding) that
any of the Buyer Indemnified Parties incur and that arise out of any breach or
default by any member of the Selling Group of (i) any of the representations or
warranties under this Agreement or any agreement or document executed in
connection herewith (collectively, "Buyer Indemnified Representation Costs") or
(ii) any covenant or agreement under this Agreement or any agreement or
document executed in connection herewith; (b) any and all obligations or
liabilities of any member of the Selling Group not expressly assumed by Buyer
pursuant to the terms hereof; (c) any and all losses, liabilities, or damages
incurred by any of the Buyer Indemnified Parties resulting from operation or
control of any of the Stations prior to the Closing Date, including any and all
liabilities arising under the Licenses or the Assumed Contracts which relate to
events occurring prior to the Closing Date; (d) the items indemnified against
pursuant to Section 7.6; and (e) 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.
"Buyer Indemnified Parties" means Buyer and each officer,
director, employee, consultant, stockholder, and Affiliate of Buyer.
"CERCLA" has the meaning set forth in the definition of
Environmental Laws contained in this Section 1.1
"CERCLIS" has the meaning set forth in Section 3.1(m).
"Cessation Date" has the meaning set forth in Section 9.1.
"Choses in Action" means a right to receive or recover
property, debt, or damages on a cause of action, whether pending or not and
whether arising in contract, tort or otherwise. The term shall include rights
to indemnification, damages for breach of warranty or any other event or
circumstance, judgments, settlements, and proceeds from judgments or
settlements.
"Closing" means the consummation of the transactions
contemplated by this Agreement in accordance with the provisions of Article IX.
3
<PAGE> 9
"Closing Date" means the date of the Closing.
"Code" shall mean the United States Internal Revenue Code of
1986, as amended. All references to the Code, U.S. Treasury regulations or
other governmental pronouncements shall be deemed to include references to any
applicable successor regulations or amending pronouncement.
"Commencement Date" has the meaning set forth in Section
3.1(m).
"Communications Act" has the meaning set forth in Section
3.1(g).
"Company Reports" has the meaning set forth in Section 3.1(f).
"Confidential Information" has the meaning set forth in
Section 5.8.
"Conflict Event" has the meaning set forth in Section 9.1.
"Consents" means (a) all consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
Governmental Entity, including the FCC Consents, and (b) all consents and
approvals of third parties, in each case that are necessary in order to
transfer the Assets to Buyer and otherwise to consummate the transactions
contemplated hereby.
"Consulting Agreement" means the Consulting Agreement between
Buyer and Richard P. Verne substantially in the form attached hereto as Exhibit
B.
"Contracts" means all agreements, contracts or other binding
arrangements, written or oral (including any amendments and other modifications
thereto), to which any member of the Selling Group is a party or is otherwise
bound and which affect or relate to the Assets or the business or operations of
any of the Stations.
"Cure Period" has the meaning set forth in Section 10.1(b).
"Deferral Notice" has the meaning set forth in Section 9.1.
"Deposit Escrow Agreement" means the Deposit Escrow Agreement
among Seller, Buyer and Escrow Agent, a copy of which is attached hereto as
Exhibit A .
"Deposit Letter of Credit" means (a) during any period in
which the Original Deposit Letter of Credit is held under the Deposit Escrow
Agreement, the Original Deposit Letter of Credit, and (b) during any period in
which the Substitute Deposit Letter of Credit is held under the Deposit Escrow
Agreement, the Substitute Deposit Letter of Credit.
"Election Date" has the meaning set forth in Section 9.1.
4
<PAGE> 10
"Employee Benefit Plans" means any "employee benefit plan"
within the meaning of Section 3(3) of ERISA and any bonus, deferred
compensation, incentive compensation, stock ownership, stock purchase, stock
option, phantom stock, vacation, severance, disability, death
benefit, hospitalization or insurance plan providing benefits to any present or
former employee or contractor of Seller or any member of the ERISA Group
maintained by any such entity or as to which any such entity has any liability
or obligation.
"Employee Pension Benefit Plans" has the meaning set forth in
Section 3(2)of ERISA.
"Environmental Costs or Liabilities" means any losses,
liabilities, obligations, damages, fines, penalties, judgments, settlements,
actions, claims, costs and expenses (including reasonable fees, disbursements
and expenses of legal counsel, experts, engineers and consultants, and the
costs of investigation or feasibility studies and the performance of remedial
or removal actions and cleanup activities) in connection with (1) Environmental
Laws, (2) any order of, or contract of any member of the Selling Group with,
any Governmental Entity or any private or public persons relating to or arising
from Environmental Laws, or (3) any exposure of any person or property to
Hazardous Substances
"Environmental Laws" means all Applicable Laws and rules of
common law pertaining to the environment, natural resources, and public or
employee health and safety including the Comprehensive Environmental Response
Compensation and Liability Act (42 U.S.C. ss. 9601 et seq.) ("CERCLA"), the
Emergency Planning and Community Right to Know Act, the Superfund Amendments
and Reauthorization Act of 1986, the Resource Conservation and Recovery Act,
the Hazardous and Solid Waste Amendments Act of 1984, the Clean Air Act, the
Clean Water Act, the Toxic Substances Control Act, the Safe Drinking Water Act,
the Occupational Safety and Health Act of 1970, the Oil Pollution Act of 1990,
the Hazardous Materials Transportation Act, and any similar or analogous
statutes, regulations and decisional law of any Governmental Entity, as each of
the foregoing may be amended and in effect on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Group" means any member of the Selling Group and any
other trades or businesses under common control within the meaning of Section
4001(b)(i) of ERISA with any member of the Selling Group.
"ESA" has the meaning set forth in Section 4.3.
"Escrow Agent" means Citibank, N.A. and includes its
successors and assigns.
"Event Date" has the meaning set forth in Section 9.1.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
5
<PAGE> 11
"Excluded Assets" has the meaning set forth in Section 2.2.
"FCC" has the meaning set forth in the first recital hereto.
"FCC Consents" means actions by the FCC granting its consent
to the assignment of the FCC Licenses for each of the Stations to Buyer as
contemplated by this Agreement.
"FCC Licenses" means all of the licenses, permits, and other
authorizations issued by the FCC to any member of the Selling Group and
applications of any member of the Selling Group, if any, to the FCC relating to
or used in the business or operations of any of the Stations, including those
listed on Schedule 3.1(g), with any additions thereto between the date hereof
and the Closing Date.
"Final Order" means written action or order issued by the FCC
setting forth the FCC Consents (without the inclusion of any adverse conditions
affecting Buyer's operation or ownership of any Station) and (a) which has not
been reversed, stayed, enjoined, set aside, annulled, or suspended and (b) with
respect to which (i) no requests have been filed for administrative or judicial
review, reconsideration, appeal, or stay, and the time for filing any such
requests and for the FCC to set aside the action on its own motion has expired
or (ii) in the event of review, reconsideration, or appeal, such review,
reconsideration, or appeal has been denied and the time for further review,
reconsideration, or appeal has expired.
"Financial Statements"has the meaning set forth in Section
3.1(f).
"GAAP" means generally accepted accounting principles in the
United States.
"Governmental Entity" means any governmental department,
commission, board, bureau, agency, court or other instrumentality of the United
States or any state, county, parish or municipality, jurisdiction, or other
political subdivision thereof.
"Hazardous Substances" has the meaning set forth in Section
3.1(m).
"Holdback Amount" has the meaning set forth in Section 11.5.
"HSR Act" has the meaning set forth in Section 3.1(e).
"Indemnification Escrow Agreement" means the Indemnification
Escrow Agreement among Seller, Buyer, and Escrow Agent substantially in the
form attached hereto as Exhibit C.
"Indemnified Costs" means the Buyer Indemnified Costs or the
Seller Indemnified Costs, as the case may be.
"Indemnified Parties" means the Buyer Indemnified Parties or
the Seller Indemnified Parties, as the case may be.
6
<PAGE> 12
"Indemnified Representation Costs" means the Buyer
Indemnified Representation Costs or the Seller Indemnified Representation
Costs, as the case may be.
"Indemnifying Party" means any person who is obligated to
provide indemnification hereunder.
"Intellectual Property" means all Trademarks, Know-how,
copyrights, copyright registrations and applications for registration, Patents
and all other intellectual property rights whether registered or not, licensed
to or owned by any member of the Selling Group relating to the business or
operations of any Station, including the call letters of each of the Stations
and the goodwill related to the foregoing.
"Know-how" means all plans, ideas, concepts and data,
research records, all promotional literature, customer and supplier lists and
similar data and information, and all other confidential or proprietary
technical and business information.
"Knowledge" means, with respect to a specified party hereto,
the actual knowledge of such party, together with such additional knowledge as
would be gained by a reasonable person upon conducting reasonable and diligent
inquiry concerning the subject matter in question. "Knowledge of the Selling
Group" means the collective Knowledge of all the members of the Selling Group.
"Leased Real Property" means all of any member of the Selling
Group's leasehold interests, easements, licenses, rights to access and
rights-of-way which are used or held for use in the business and operations of
any Station, including those interests which are identified and described in
Schedule 3.1(j), as modified by any addition or permitted deletion thereto
between the date hereof and the Closing Date.
"Licenses" means the FCC Licenses and all other Permits
issued by any Governmental Entity to any member of the Selling Group relating
to or used or held for use in the business and operations of any Station,
including those listed on Schedule 3.1(g), with any additions thereto between
the date hereof and the Closing Date.
"Liens" has the meaning set forth in Section 3.1(l).
"Material Adverse Effect" means a material adverse effect on
the business, operations, properties, condition (financial or otherwise),
results of operations, assets, liabilities, or prospects of Seller other than
effects attributable to general or industry-wide economic, financial or
political conditions.
"Midcontinent" has the meaning set forth in the first
paragraph of this Agreement.
"Midcontinent Balance Sheet" has the meaning set forth in
Section 3.1(f).
7
<PAGE> 13
"Midcontinent Stations" has the meaning set forth in the
first recital hereto.
"Minimum Loss" has the meaning set forth in Section 11.6(a).
"Multiemployer Plan" has the meaning set forth in Section
3(37) or Section 4001(a)(3) of ERISA.
"Non-Competition Agreement" means the Non-Competition
Agreement between Point, Mid Continent, Buyer and Seller substantially in the
form of Exhibit J.
"NPL" has the meaning set forth in Section 3.1(m).
"Organizational Documents" has the meaning set forth in
Section 3.1(a).
"Original Deposit Letter of Credit" means the certain
original, irrevocable letter of credit in favor of Seller and the Escrow Agent
issued by Bankers Trust Company for the sum of $1,900,000, and held in
accordance with the provisions of the Deposit Escrow Agreement, and any
substitute letter of credit issued in that amount in accordance with Section 4
of the Deposit Escrow Agreement.
"Owned Real Property" means certain parcels of real property
owned in fee and used or held for use by any member of the Selling Group as
described in Schedule 3.1(j), and all buildings, structures, improvements, and
fixtures thereon, together with all rights of way, easements, privileges, and
appurtenances pertaining or belonging thereto, including any right, title, and
interest of any member of the Selling Group in and to any street adjoining any
portion of such property.
"Patents" means all patent and patent applications (including
all reissues, divisions, continuations, continuations-in-part, renewals, and
extensions of the foregoing) owned by any member of the Selling Group.
"Permits" has the meaning set forth in Section 3.1(m).
"Permitted Encumbrances" means (a) statutory liens for
current Taxes not yet due and payable, (b) in the case of leases of real
property, agreements with, and/or conditions imposed on the issuance of land
use permits, zoning, business licenses, use permits, or other entitlements of
various types issued by, any Governmental Entity, necessary or beneficial to
the continued use and occupancy of the Assets or the continuation of the
operation of any Station, (c) mechanics', carriers', workers', repairers', and
other similar liens imposed by law arising or incurred in the ordinary course
of business for obligations not yet due, (d) in the case of leases of vehicles,
rolling stock, and other personal property, encumbrances, which do not,
individually or in the aggregate, materially impair the operation of the
business at the facility at which such leased equipment or other personal
property is located, (e) purchase money liens arising in the ordinary course of
business and (f) other liens, charges or encumbrances incidental to the
operation of the Stations or the ownership of the Assets which were not
incurred in connection with the borrowing of money or the advance of credit
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and which, in the aggregate, do not materially detract from the value of the
Assets or materially interfere with the use thereof or the operation of the
Stations.
"Permitted Liens" has the meaning set forth in Section
3.1(l).
"Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, or other entity.
"Personal Property" means all of the machinery, equipment
(including transmitter and studio equipment), computer programs, computer
software, tools, motor vehicles, furniture, leasehold improvements, office
equipment, inventories, supplies, plant, spare parts, and other tangible or
intangible personal property which are owned or leased by any member of the
Selling Group for any Station and which are used or held for use in the
business or operations of any Station, including the personal property which is
listed on Schedule 3.1(k) hereto, together with any additions thereto between
the date hereof and the Closing Date less any dispositions made in accordance
with Section 4.1. The term Personal Property shall not include any of the
Excluded Assets.
"Point" has the meaning set forth in the first paragraph of
this Agreement.
"Point Balance Sheet" has the meaning set forth in Section
3.1(f).
"Point Stations" has the meaning set forth in the first
recital hereto.
"Purchase Price" means the consideration payable by Buyer to
Seller as provided in Section 2.3 hereof.
"Real Property" means the Leased Real Property and the Owned
Real Property.
"Release" means the Release of Claims among Buyer and the
Selling Group substantially in the form of Exhibit K.
"Released Claims" has the meaning set forth in Section
10.2(b).
"Released Parties" has the meaning set forth in Section
10.2(b).
"Schedules" means the Schedules attached hereto.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Seller" has the meaning set forth in the first paragraph of
this Agreement.
"Seller Indemnified Costs" means: (a) any and all damages,
losses, claims, liabilities, demands, charges, suits, penalties, costs, and
expenses (including court costs and reasonable
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attorneys' fees and expenses incurred in investigating and preparing for any
litigation or proceeding) which any of the Seller Indemnified Parties incur and
which arise out of any breach or default by Buyer of (i) any of the
representations or warranties under this Agreement or any agreement or document
executed in connection herewith (collectively, "Seller Indemnified
Representation Costs") or (ii) any covenant or agreement under this Agreement
or any agreement or document executed in connection herewith; (b) any and all
losses, liabilities, or damages incurred by any of the Seller Indemnified
Parties resulting from Buyer's operation or control of the Stations on and
after the Closing Date, including any and all liabilities arising under the
Licenses or the Assumed Contracts which relate to events occurring after the
Closing Date; (c) the items indemnified against pursuant to Section 5.3; and
(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.
"Seller Indemnified Parties" shall mean each member of the
Selling Group and each officer, director, employee, consultant, partner, and
Affiliate of each member of the Selling Group.
"Seller Negative Trade Balance" has the meaning set forth in
Section 4.2.
"Selling Group" shall mean Point, Midcontinent and Seller.
"Sites" has the meaning set forth in Section 3.1(m).
"Station or Stations" has the meaning set forth in the first
recital hereto.
"Station Event" has the meaning set forth in Section 9.1.
"Station Licenses" has the meaning set forth in Section
3.1(g).
"Station Management" has the meaning set forth in Section
4.1(b).
"Substitute Deposit Letter of Credit" means that certain
original, irrevocable letter of credit in favor of Seller and the Escrow Agent
issued by Bankers Trust Company or another lender reasonably acceptable to
Seller for the sum of $3,150,000 and held in accordance with the provisions of
the Deposit Escrow Agreement, and any substitute letter of credit issued in
that amount in accordance with Section 4 of the Deposit Escrow Agreement. An
increase in the amount of the Original Deposit Letter of Credit to $3,150,000
shall constitute the issuance of a Substitute Deposit Letter of Credit.
"Target Closing Date" has the meaning set forth in Section
9.1.
"Taxes" means taxes, charges, fees, imposts, levies,
interest, penalties, additions to tax or other assessments or fees of any kind,
including, but not limited to, income, corporate, capital, excise, property,
sales, use, turnover, value added and franchise taxes, deductions, withholdings
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and customs duties, imposed by any Governmental Entity and any payments with
respect thereto required under any tax-sharing agreement.
"Tax Returns" means any return, report, information return or
other document (including any related or supporting information) filed or
required to be filed with any Governmental Entity in connection with the
determination, assessment, collection or administration of any Taxes or the
administration of any laws, regulations or administrative requirements relating
to any Taxes.
"Title Commitment" means the commitment to issue an owner's
title policy as provided in Section 8.2(e).
"Title Company" means First American Title Insurance Company
or such other title insurance company reasonably acceptable to Buyer.
"Title Policy" has the meaning set forth in Section 8.2(e).
"Trade Deals" means the exchanges by a Station of its
advertising time for goods or services, other than in connection with the
licensing of programs and programming material.
"Trademarks" means (a) trademarks, service marks, trade
names, trade dress, labels, logos, and all other names and slogans associated
with any products or embodying the goodwill of the business of any Station,
whether or not registered, and any applications or registrations therefor
(excluding marks, registered or unregistered, bearing the name "Midcontinent,"
"Midco," "M," "Point," "Point Communications" or marks of similar import) and
(b) any associated goodwill incident thereto owned by any member of the Selling
Group.
"Trading Event" has the meaning set forth in Section 9.1.
"Transaction Documents" has the meaning set forth in Section
3.1(d).
"Voting Debt" has the meaning set forth in Section 3.1(c).
"Warranty Deed" means a Wisconsin general warranty deed in
form and substance acceptable to the Buyer and the Title Company pursuant to
which Seller conveys to Buyer the Owned Real Property at the Closing.
"WIBA Building" has the meaning set forth in Section 4.4.
1.2. References and Titles. All references in this Agreement to
Exhibits, Schedules, Articles, Sections, subsections, and other subdivisions
refer to the corresponding Exhibits, Schedules, Articles, Sections,
subsections, and other subdivisions of this Agreement unless expressly provided
otherwise. Titles appearing at the beginning of any Articles, Sections,
subsections, or other subdivisions of this Agreement are for convenience only,
do not constitute any part of such Articles, Sections, subsections or other
subdivisions, and shall be disregarded in construing the language
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contained therein. The words "this Agreement," "herein," "hereby," "hereunder,"
and "hereof," and words of similar import, refer to this Agreement as a whole
and not to any particular subdivision unless expressly so limited. The words
"this Section," "this subsection," and words of similar import, refer only to
the Sections or subsections hereof in which such words occur. The word "or" is
not exclusive, and the word "including" (in its various forms) means "including
without limitation." Pronouns in masculine, feminine, or neuter genders shall
be construed to state and include any other gender, and words, terms, and
titles (including terms defined herein) in the singular form shall be construed
to include the plural and vice versa, unless the context otherwise expressly
requires. Unless the context otherwise requires, all defined terms contained
herein shall include the singular and plural and the conjunctive and
disjunctive forms of such defined terms.
ARTICLE II
SALE AND PURCHASE OF ASSETS
2.1. Agreement to Sell and Buy. Subject to the terms and
conditions set forth in this Agreement, Seller shall sell, assign, transfer and
deliver to Buyer on the Closing Date, and Buyer shall purchase on the Closing
Date, all of the Assets, free and clear of any Liens or liabilities (except for
Permitted Encumbrances and liabilities assumed by Buyer in accordance with
Section 2.5). The Assets to be assigned, transferred and delivered by Seller
hereunder shall include the following:
(a) All Personal Property;
(b) All Leased Real Property;
(c) All Owned Real Property;
(d) All Licenses;
(e) All Assumed Contracts;
(f) All Intellectual Property;
(g) To the extent that they are in the possession or
control of any member of the Selling Group, each of the Station's
technical information and data, machinery and equipment warranties (to
the extent such warranties are assignable), if any, maps, plans,
diagrams, blueprints and schematics relating to such Station, if any,
including filings with the FCC which relate to such Station, and
goodwill relating to the foregoing;
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(h) To the extent that they are in the possession or
control of any member of the Selling Group, all books and records
relating to the business and operation of any of the Stations
(excluding those described in Section 2.2), including (i) executed
copies of the Assumed Contracts, or if no executed agreement exists,
summaries of each Assumed Contracts transferred pursuant to clause (e)
above and (ii) all records required by the FCC to be kept by each
Station, subject to the right of Seller to have such books and records
made reasonably available to Seller for tax and other legitimate
partnership purposes for a period of six years after the Closing;
(i) To the extent assignable, all computer programs and
software, and all rights and interests of Seller in and to computer
programs and software used or held for use in connection with the
business or operations of any Station;
(j) Except for claims relating to Taxes and Choses in
Action, if any, of any member of the Selling Group described on
Schedule 2.1(j), all Choses in Action of Seller; and
(k) All intangible assets of Seller relating to any
Station or the business or operation of any Station not specifically
described above, including goodwill and all other assets, other than
the Excluded Assets, used or held for use in connection with Station
or the business of the Seller.
2.2. Excluded Assets. The Excluded Assets shall consist of the
following:
(a) In each case determined as of 11:59 p.m. on the day
prior to the Closing Date, the cash on hand of any member of the
Selling Group and all other cash in any of the bank or savings
accounts of any member of the Selling Group; notes receivable, letters
of credit or other similar items of any member of the Selling Group;
any stocks, bonds, certificates of deposit and similar investments of
any member of the Selling Group; and any other cash equivalents of any
member of the Selling Group;
(b) Partnership or corporate books and other books and
records of any member of the Selling Group relating solely to internal
partnership or corporate matters and any other books and records not
related to any Station or the business or operations of any Station;
(c) Any claims, rights and interest of any member of the
Selling Group in and to any (i) refunds of Taxes or fees of any nature
whatsoever or (ii) deposits or utility deposits, which in each case
relate solely to the period prior to the Closing Date;
(d) All insurance contracts, including the cash
surrender value thereof, and all insurance proceeds or claims made by
any member of the Selling Group relating to property or equipment
repaired, replaced or restored by Seller prior to the Closing Date;
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(e) All Employee Benefit Plans and all assets or funds
held in trust, or otherwise, associated with or used in connection
with the Employee Benefit Plans;
(f) All Choses in Action, if any, of any member of the
Selling Group excluded from Section 2.1(j);
(g) All Accounts Receivable;
(h) The assets, if any, described on Schedule 2.2(h);
(i) All tangible and intangible personal property
disposed of or consumed in the ordinary course of business between the
date of this Agreement and the Closing Date, or as otherwise permitted
under the terms hereof; and
(j) Any Contracts not included in the Assumed Contracts
and all Contracts that have terminated or expired prior to the Closing
Date.
2.3. Purchase Price. Subject to the adjustments set forth in
Sections 2.4, 2.5(b), 4.4, and 9.1, the Purchase Price for the Assets is Thirty-
Eight Million Five Hundred Thousand Dollars ($38,500,000).
2.4. Adjustments and Prorations.
(a) All revenues arising from the operation of the
Stations earned or accrued up until 11:59 p.m. on the day prior to the Closing
Date and all expenses, costs and liabilities, arising therefrom incurred,
accrued or payable up until such time, including expenses arising under the
Assumed Contracts, tower rentals, business and license fees, utility charges,
real and personal property Taxes levied against the Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, other Taxes, wages, salaries, vacation and sick and employee
compensation pay, shall be prorated between Buyer and Seller in accordance with
the principle that (i) Seller shall receive all earned or accrued revenues,
refunds and deposits of Seller held by third parties, and shall be responsible
for all expenses, costs and liabilities incurred, payable or allocable to the
conduct of the business and operations of each Station for the period ending at
11:59 p.m. on the day prior to the Closing Date and (ii) Buyer shall receive
all revenues earned or accrued and shall be responsible for all expenses, costs
and liabilities incurred, payable or allocable to the conduct of the business
and operations of each Station for the period commencing on and continuing
after the Closing Date. An adjustment of the Purchase Price and proration shall
be made in favor of Buyer to the extent that Buyer assumes any liability under
any Assumed Contract to refund (or to credit against payments otherwise due)
any security deposit or similar prepayment paid to Seller by any lessee or
other third party which is not otherwise credited to Buyer. Subject to Buyer's
receipt of appropriate estoppel certificates, an adjustment of the Purchase
Price and proration shall be made in favor of Seller to the extent that Seller
has made (A) any security deposit under any Assumed Contract whether or not
there is a proration under such Assumed Contract or (B) other prepayment under
any Assumed Contracts for which there is a proration. Seller shall be liable
for all of the costs
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of employee compensation relating to each of the Stations properly attributable
to or accruable on account of service with the Seller through 11:59 p.m. on the
date prior to the Closing Date, including (1) all Taxes and related
contributions, vacations and sick pay and (2) all group medical, dental or
death benefits for claims incurred, related to or arising from, events
occurring on or prior to 11:59 p.m. on the date prior to the Closing Date, or
death or disability occurring on or prior to 11:59 p.m. on the date prior to
the Closing Date, whether reported by the Closing Date or thereafter; Buyer
shall be liable for all of the costs of employee compensation relating to each
of the Stations properly attributable or accruable thereafter on account of
service with Buyer. Except as provided in Section 2.5(b), Trade Deals shall not
be adjusted or prorated.
(b) Adjustments or prorations pursuant to this Section
2.4 will, insofar as feasible, be determined and paid on the Closing Date based
upon Seller's good faith calculation delivered to Buyer five days prior to the
Closing Date and reasonably approved by Buyer, with final settlement and
payment by the appropriate party occurring no later than 60 days after the
Closing Date. Within 60 days after the Closing Date, Buyer shall submit to
Seller its good faith determination of the adjustments or prorations required
by this Section 2.4. Buyer's determination of the amount of adjustment under
this Section 2.4 shall be made in accordance with GAAP, consistently applied.
If Seller disagrees with the determination made by Buyer of the adjustment,
Seller shall give prompt written notice thereof, but in no event later than 20
days after notice of Buyer's determination, specifying in reasonable detail the
nature and extent of the disagreement, and Buyer and Seller shall have a period
of 30 days in which to resolve the disagreement. If the parties are unable to
resolve the disagreement within the 30-day period, the matter shall be
submitted to Coopers & Lybrand L.L.P., an independent certified public
accounting firm, which accounting firm shall be directed to submit a final
resolution within 30 days. The accounting firm's determination shall be binding
on Buyer and Seller. Each party shall bear the fees and expenses of its own
representatives, including its independent accountants, if any, and shall share
equally the fees and expenses of Coopers & Lybrand, L.L.P., if engaged, to
resolve any disagreement between the parties. Within five Business Days
following a final determination hereunder, the party obligated to make payment
will make the payments determined to be due and owing in accordance with this
Section 2.4.
2.5. Assumption of Liabilities and Obligations. (a) As of the
Closing Date, Buyer shall assume and undertake to pay, discharge and perform
all the obligations and liabilities of Seller relating to each Station under
the Licenses and the Assumed Contracts assumed by Buyer relating to the time
period beginning on or arising out of events occurring on or after the Closing
Date. All other obligations and liabilities of Seller, including (i)
obligations or liabilities under any contract not included in the Assumed
Contracts, (ii) obligations or liabilities under any Assumed Contract for which
a Consent, if required, has not been obtained as of the Closing, (iii) any
obligations and liabilities arising under the Assumed Contracts that relate to
the time period prior to the Closing Date or arise out of events occurring
prior to the Closing Date and (iv) any forfeiture, claim or pending litigation
or proceeding relating to the business or operations of any Station, prior to
the Closing Date, shall remain and be the obligation and liability solely of
Seller. Other than as specified herein, Buyer, directly or indirectly, shall
assume no liabilities or obligations of any member of the Selling Group.
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(b) Schedule 2.5(b) contains a list of all of the Trade
Deals in effect as of December 31, 1996 and correctly sets forth under the
column entitled "balance" the balance, in dollar value, of either (i) the
Seller's obligations to the other party under each such Trade Deal (denoted by
a minus on Schedule 2.5(b)) or (ii) the amount due (reflected as a positive
number on Schedule 2.5(b)) Seller under such Trade Deal. On the Closing Date,
Buyer shall assume Seller's obligations under (i) the Trade Deals listed on
Schedule 2.5(b) to the extent that the goods or services to be provided by the
advertisers pursuant to such Trade Deals are used or useful in connection with
the business or operations of any Station and (ii) all Trade Deals entered into
by Seller between the date hereof and the Closing Date with the consent of
Buyer; provided, however, if, as of the Closing Date, the obligation of Seller
for air time due another party pursuant to all (x) Trade Deals (other than
Trade Deals involving media trades with television stations) to be assumed by
Buyer exceeds $5,000 in the aggregate or (y) Trade Deals involving media trades
with television stations to be assumed by Buyer exceeds $45,000 in the
aggregate, then in each case the amount of the applicable excess shall be
considered a pre-Closing Date operating expense of Seller to be prorated in
accordance with Section 2.4(a). The Trade Deals assumed by Buyer pursuant to
the terms of this Section 2.5(b) shall be considered Assumed Contracts.
2.6. Allocation. Within 30 days after the Closing Date, Seller and
Buyer shall negotiate in good faith an allocation of the Purchase Price among
the Assets that complies with Section 1060 of the Code with respect to the
allocation of the Purchase Price (as well as any liabilities assumed by Buyer).
If the allocation is not agreed upon within 30 days after the Closing, then
Buyer and Seller agree that the allocation shall be made and consistently
reported by Buyer and Seller in compliance with Section 1060 based upon an
asset valuation supplied by Broadcast Investment Analysts. The cost of such
appraisal shall be shared equally by Buyer and Seller. Buyer will order such
appraisal from Broadcast Investment Analysts on or after such date as the FCC
Consents have been placed on public notice. The appraisal, if required, shall
be provided to Seller within 45 days after the Closing Date.
2.7. Earnest Money. (a) Concurrently with the execution of this
Agreement, Buyer shall deposit the Original Deposit Letter of Credit with the
Escrow Agent to be held in escrow in accordance with the Deposit Escrow
Agreement in the form of Exhibit A.
(b) Concurrently with the giving of a Deferral Notice,
Buyer shall deposit the Substitute Deposit Letter of Credit with the Escrow
Agent to be held in escrow in accordance with the Deposit Escrow Agreement and,
effective upon such deposit, Buyer and Seller shall instruct the Escrow Agent
to release the Original Deposit Letter of Credit to Buyer for cancellation
unless Buyer increases the amount of the Original Letter of Credit to
$3,150,000 so as to constitute the issuance of a Substitute Letter of Credit.
(c) Subject to satisfaction of the conditions to the
obligations set forth in Article VIII, at the Closing, Seller shall instruct
the Escrow Agent to release and return the Deposit Letter of Credit to Buyer
for cancellation.
(d) If this Agreement is terminated as provided in
Section 10.1, Buyer and Seller shall instruct the Escrow Agent to release the
Deposit Letter of Credit to Buyer or to Seller, all as provided in Section
10.2.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES REGARDING SELLER
3.1. Representations and Warranties Regarding Seller. Each member
of the Selling Group, jointly and severally, represents and warrants to Buyer
as follows (with the understanding that Buyer is relying on such
representations and warranties in entering into and performing this Agreement).
(a) Organization, Good Standing, Etc. Each of Point and
Midcontinent is duly organized and validly existing (and, as to Midcontinent
only, is in good standing) under the laws of its jurisdiction of organization
or incorporation, as applicable, and has all requisite partnership or
corporate, as applicable, power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Seller is duly
organized and validly existing under the laws of the State of Wisconsin and has
all requisite partnership power and authority to own, lease and operate its
properties and to carry on the business of the Stations as now being conducted
and is duly qualified to do business in each State listed on Schedule 3.1(a),
which States will represent every jurisdiction in which the nature of its
business or the ownership or leasing of the Assets makes such qualification
necessary, except where the failure to so qualify could not have a Material
Adverse Effect. Point and Midcontinent have delivered to Buyer true and
complete copies of the Agreement of Limited Partnership of Point, the Articles
of Incorporation and Bylaws of Midcontinent and the Partnership Agreement (or
equivalent organizational documents) of Seller (such documents being referred
to collectively herein as the "Organizational Documents"), as in effect at the
date of this Agreement. No member of the Selling Group is in violation of any
provisions of its Organizational Documents.
(b) Subsidiaries of Seller. Seller does not own,
directly or indirectly, any of the capital stock of, or other equity interest
in, any other Person or have the right, pursuant to a contract or otherwise, to
acquire any capital stock, equity interest or other similar investment in any
other Person.
(c) Capital Structure. Point and Midcontinent own all
of the outstanding equity interests in Seller, and will continue to be the sole
owners of equity interests in Seller on the Closing Date. No partnership
interests in Seller are reserved for issuance for any purpose and none will be
issued after the date hereof and prior to the Closing Date. As of the date
hereof, there are no bonds, debentures, notes or other indebtedness issued or
outstanding having the right to vote ("Voting Debt") on any matters on which
the partners of Seller may vote. All the issued and outstanding partnership
interests of Seller are duly and validly issued, are not subject to further
capital calls or assessments except as contemplated by the Partnership
Agreement of Seller, and have not been issued in violation of any preemptive or
similar rights. There are no options, warrants, calls, rights, commitments, or
agreements of any character to which Seller is a party or by which Seller is
bound obligating Seller to issue, deliver, or sell, or cause to be delivered or
sold, any additional equity interests or Voting Debt in Seller, or obligating
Seller to grant, extend, or enter into any such option, warrant, call, right,
commitment, or agreement. There are no outstanding contractual obligations of
Seller to repurchase, redeem, or otherwise acquire any equity interests in
Seller.
(d) Authority. To the extent that they are a party
thereto, each member of the Selling Group has all requisite partnership or
corporate, as applicable, power and authority to enter into this Agreement, the
Deposit Escrow Agreement, the Bill of Sale and Assignment, the Assumption
Agreement, the Indemnification Escrow Agreement, the Non-Competition Agreement
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and each other agreement, document, and instrument required to be executed by
any member of the Selling Group in accordance herewith or therewith
(collectively, the "Transaction Documents") and to consummate the transactions
contemplated hereby or thereby. The execution and delivery of the Transaction
Documents by each member of the Selling Group, to the extent that they are a
party thereto, and the consummation by each member of the Selling Group of the
transactions contemplated hereby or thereby, to the extent that they are a
party thereto, have been duly authorized by all necessary partnership or
corporate, as applicable, action on the part of each member of the Selling
Group. Each Transaction Document has been, or upon execution and delivery will
be, duly executed and delivered and constitutes the valid and binding
obligations of each member of the Selling Group that is a party thereto and is
enforceable against each of them to the extent that they are a party thereto in
accordance with their respective terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) No Conflict; Required Filings and Consents. The
execution and delivery of the Transaction Documents by each member of the
Selling Group that is a party thereto does not, and the performance by each
member of the Selling Group that is a party thereto of the transactions
contemplated hereby or thereby to the extent that they are a party thereto will
not, subject to obtaining the consents, approvals, authorizations, and permits
and making the filings described in this Section 3.1(e) and obtaining any
required consents under Assumed Contracts, (A) violate, conflict with, or
result in any breach of any provision of any Organizational Documents, (B)
violate, conflict with, or result in a violation or breach of, or constitute a
default (with or without due notice or lapse of time or both) under, or permit
the termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change of control of any member of the
Selling Group or otherwise) any obligation, or result in the loss of any
benefit, or give any Person the right to require any security to be
repurchased, or give rise to the creation of any Lien, charge, security
interest, or encumbrance upon any of the Assets under any of the terms,
conditions, or provisions of any loan or credit agreement, note, bond,
mortgage, indenture, or deed of trust, or any license, lease, agreement, or
other instrument or obligation to which any member of the Selling Group is a
party or by which any member of the Selling Group or any of the Assets may be
bound or subjected, or (C) violate any order, writ, judgment, injunction,
decree, statute, rule, or regulation of any Governmental Entity applicable to
any member of the Selling Group or by which or to which any of the Assets is
bound or subject. No Consent of any Governmental Entity is required by or with
respect to any member of the Selling Group in connection with the execution and
delivery of any Transaction Documents by any member of the Selling Group or the
consummation of the transactions contemplated hereby or thereby, except for (1)
the filing of a premerger notification report under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act") and (2) the FCC
Consents (as contemplated by Section 7.1 hereof).
(f) Reports; Financial Statements; Absence of Certain
Changes or Events.
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<PAGE> 24
(i) Each member of the Selling Group has filed
all forms, reports, statements, and other documents required to be
filed with any and all Governmental Entities, including the FCC (all
such forms, reports, statements and other documents being referred to
herein, collectively, as the "Company Reports"). The Company Reports
were prepared in all material respects in accordance with the
requirements of applicable law.
(ii) The Selling Group has delivered to Buyer
copies of (i) the audited balance sheet as of December 31, 1995,
together with the related audited statements of operations, partner's
capital and cash flows, of Point for the four month period then ended,
and the notes thereto, accompanied by the report thereon of Coopers &
Lybrand L.L.P., independent public accountants, (ii) the unaudited
WIBA and WMAD combined statement of operations for the nine month
periods ended September 30, 1996 and September 30, 1995, (iii) the
unaudited WIBA and WMAD combined statement of operations for the
twelve month periods ending December 31, 1995 and December 31, 1994,
(iv) the unaudited balance sheet of Point as of August 31, 1996 (the
"Point Balance Sheet"), (v) the unaudited income statement of
Midcontinent for the nine month period ended September 30, 1996
together with detailed profit and loss statements for the month of
September 1996 and the nine month period ended September 30, 1996,
(vi) the unaudited balance sheet as of August 31, 1996 of Midcontinent
(the "Midcontinent Balance Sheet"), and (vii) the unaudited income
statement of Midcontinent for the year ended December 31, 1995
together with a detailed profit and loss statement for such year. All
of the foregoing financial statements are collectively referred to
herein as the "Financial Statements". The Financial Statements,
including the notes thereto, were prepared in accordance with GAAP
applied on a consistent basis throughout the periods covered thereby
(except to the extent disclosed therein or in Schedule 3.1(f) or
required by changes in GAAP) and present accurately in all material
respects the information purported to be presented therein as of such
dates and for the periods then ended.
(iii) The Selling Group has delivered to Buyer
copies of all financial statements of WIBA and WMAD as of dates prior
to September 1, 1995, which were delivered by the previous owners of
such Stations to Point in connection with Point's acquisition of such
Stations from such previous owners. No member of the Selling Group has
reason to believe that such financial statements were not prepared in
accordance with GAAP applied on a consistent basis throughout the
periods covered thereby (except to the extent disclosed therein or in
Schedule 3.1(f) or required by changes in GAAP) or that such financial
statements do not present accurately in all material respects the
information purported to be presented therein as of such dates and for
the periods then ended.
(iv) Except as disclosed in Schedule 3.1(f), there
is no liability or obligation of any kind, whether accrued, absolute,
fixed, contingent, or otherwise, of Point, Midcontinent or Seller, as
applicable, that is not reflected or reserved against in the Point
Balance Sheet or the Midcontinent Balance Sheet, as applicable
(collectively, the "Balance Sheets"), other than (A) liabilities and
obligations incurred in the ordinary course of business in a manner
consistent with past practice since August 31, 1996 (the "Balance
Sheet Date"),
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<PAGE> 25
or (B) any such liability or obligation which would not be required to
be presented in financial statements or the notes thereto prepared in
conformity with GAAP applied, in a manner consistent with past
practice, in the preparation of the Financial Statements.
(v) Except as disclosed in Schedule 3.1(f),
since the Balance Sheet Date, each member of the Selling Group has
conducted its respective business only in the ordinary course
consistent with past practice and nothing has occurred that would have
been prevented by Section 4.1 if the terms of such section had been in
effect as of and after the Balance Sheet Date. Since the Balance Sheet
Date, there has not occurred, and no member of the Selling Group has
incurred or suffered, any event, circumstance, or fact that would
result in a Material Adverse Effect. Additionally, since August 31,
1996, there has not occurred any event, circumstance, or fact that
materially impairs the physical assets at any Station.
(g) Compliance with Applicable Laws: FCC Matters.
(i) The respective business of each member of the
Selling Group has been conducted in compliance in all material
respects with each Applicable Law. No investigation or review by any
Governmental Entity with respect to any member of the Selling Group is
pending or, to the Knowledge of the Selling Group, threatened. Without
limiting the generality of the foregoing, each member of the Selling
Group has complied in all material respects with the Communications
Act of 1934, as amended, and all rules, regulations and written
policies of the FCC thereunder (collectively, the "Communications
Act"), all obligations with respect to equal opportunity under
Applicable Law, and all rules and regulations of the Federal Aviation
Administration applicable to each of the towers used or held for use
by each Station. In addition, in all material respects each member of
the Selling Group has duly and timely filed, or caused to be so filed,
with the FCC and other appropriate Governmental Entities all reports,
statements, documents, registrations, filings, or submissions with
respect to the operation of each Station and the ownership thereof,
including applications for renewal of authority required by Applicable
Law to be filed. All such FCC filings complied in all material
respects with Applicable Laws when made, and no deficiencies have been
asserted with respect to any such filings. The material required by 47
C.F.R. ss. 73.3526 to be kept in the public inspection files of each
Station is in such files.
(ii) Schedule 3.1(g) is a true and complete list
of (A) all of the FCC Licenses, including the expiration dates
thereof, as of the date of this Agreement and (B) all other material
licenses, permits, or authorizations issued to any member of the
Selling Group by any other Governmental Entities and held by any of
them as of the date of this Agreement. Such FCC Licenses, licenses,
permits, and authorizations, and all pending applications for
modification, extension, or renewal thereof or for new licenses,
permits, permissions, or authorizations, are collectively referred to
herein as the "Station Licenses." Seller is the legally authorized
holder of each of the Station Licenses. The Station Licenses
constitute all the licenses, permits and authorizations required for
the operation of the Stations and the business of Seller, and each of
the Station Licenses is in full force and
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<PAGE> 26
effect. Each of the Stations has been operated in all material
respects in accordance with the terms of the applicable Station
Licenses, and Seller is otherwise in compliance with, and has
conducted its business so as to comply with, the terms of the
respective Station Licenses. There are no proceedings pending or, to
the Knowledge of the Selling Group, threatened with respect to the
ownership or operation of any Station which reasonably may be expected
to result in the revocation, material adverse modification,
non-renewal, or suspension of any Station Licenses, the denial of any
pending applications for Station Licenses, the issuance against the
Seller of any cease and desist order, or the imposition of any
administrative actions by the FCC or any other Governmental Entity
with respect to any of the Station Licenses, or which reasonably may
be expected to materially and adversely affect any Station's ability
to operate as currently operated or Buyer's ability to obtain control
of any Station Licenses or operate any Station. To the Knowledge of
the Selling Group, no other broadcast station or radio communications
facility is causing interference to any Station's transmissions beyond
that which is allowed by FCC rules and regulations and no Station is
causing interference to any other broadcast station or radio
communications facilities' transmissions beyond that which is allowed
by the FCC rules and regulations. Each member of the Selling Group has
no reason to believe that the FCC will not renew any of the Station
Licenses issued by the FCC in the ordinary course of business. To the
Knowledge of the Selling Group, there are no facts relating to any
member of the Selling Group under the Communications Act that
reasonably may be expected to disqualify Seller from transferring
control of the Station Licenses pursuant to the terms of this
Agreement or that would prevent the consummation by any of them of the
transactions contemplated by this Agreement.
(h) Absence of Litigation. Except as set forth on
Schedule 3.1(h), there is no claim, action, suit, inquiry, judicial, or
administrative proceeding, grievance, or arbitration pending or, to the
Knowledge of the Selling Group, threatened against any member of the Selling
Group or any of the Assets by or before any arbitrator or Governmental Entity,
nor to the Knowledge of the Selling Group are there any investigations relating
to any member of the Selling Group or any of the Assets pending or threatened
by or before any arbitrator or Governmental Entity. Except as set forth in
Schedule 3.1(h), there is no judgment, decree, injunction, order,
determination, award, finding, or letter of deficiency of any Governmental
Entity or arbitrator outstanding against any member of the Selling Group or any
of the Assets. There is no action, suit, inquiry, judicial, or administrative
proceeding pending or, to the Knowledge of the Selling Group, threatened
against any member of the Selling Group relating to the transactions
contemplated by this Agreement.
(i) Insurance. Since the date that Point acquired the
Point Stations and since January 1, 1992, in the case of the Midcontinent
Stations, each of Point and Midcontinent has been insured and as of the date
hereof the Seller is insured against such risks as companies engaged in a
similar business would, in accordance with good business practice, customarily
be insured. Schedule 3.1(i) sets forth an accurate summary of all fire, general
liability, malpractice liability, theft, and other forms of insurance and all
fidelity bonds held by or applicable to Seller. Excluding insurance policies
that have expired and been replaced in the ordinary course of business, no
insurance policy held by any member of the Selling Group has been canceled
within the last two years prior to the date hereof.
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<PAGE> 27
(j) Real Property. (i) Schedule 3.1(j) contains an
accurate description of all the Owned Real Property. Seller has good and
marketable, fee simple, absolute title in and to the Owned Real Property.
Seller has sufficient title to such easements, rights of way and other rights
appurtenant to each of the Owned Real Properties as are necessary to permit
ingress and egress to and from the Owned Real Property to a public way and,
except as set forth on Schedule 3.1(j), the improvements on the Owned Real
Property have access to such sewer, water, gas, electric, telephone and other
utilities as are necessary to allow the business of the Seller to be operated
in the ordinary course. There is no pending condemnation or similar proceeding
affecting the Owned Real Property or any portion thereof, and to the Knowledge
of the Selling Group, no such action is threatened. The improvements on the
Owned Real Property used in connection with the present day-to-day operation of
the Stations are in operating condition and repair (ordinary wear and tear
excepted), fit for the purposes for which they are being utilized, and there
has been no damage to such improvements that affects the conduct of such
business in any material respect that has not been repaired or remedied. Except
as set forth on Schedule 3.1(j), there are no lessees or tenants at will in
possession of any portion of any of the Owned Real Property other than Seller,
whether as lessees, tenants at will, trespassers or otherwise. No zoning,
building or other federal, state or municipal law, ordinance, regulation or
restriction is violated in any material respect by the continued maintenance,
operation or use of the Owned Real Property or any tract or portion thereof or
interest therein in its present manner. The current use of the Owned Real
Property and all parts thereof does not violate any restrictive covenants of
record affecting any of the Owned Real Property. All necessary Licenses by any
Governmental Entity with respect to the Owned Real Property have been obtained,
have been validly issued, and are in full force and effect.
(ii) Schedule 3.1(j) contains an accurate
descriptions of all the leasehold interests relating to the business and
operations of each of the Stations as now conducted. Each lease described in
Schedule 3.1(j) is a valid and binding obligation of Seller and is in full
force and effect without amendment other than as described in Schedule 3.1(j).
Except as otherwise disclosed on Schedule 3.1(j) Seller is not, and to the
Knowledge of the Selling Group, no other party is, in material default under
any lease described in Schedule 3.1(j). Subject to obtaining the Consents
disclosed in Schedule 3.1(j), Seller has the full legal power and authority to
assign its rights under the leases listed in Schedule 3.1(j) to Buyer. All
leasehold interests listed in Schedule 3.1(j) (including the improvements
thereon) are available for immediate use in the conduct of the business and
operations of each of the Stations as currently conducted.
(k) Personal Property. Schedule 3.1(k) contains a
description of the items of Personal Property (having a historical cost of not
less than $10,000 for each item) which comprise all such Personal Property used
or held for use in connection with the business and operations of any Station
or which permits the operation of any Station as now conducted. Except as set
forth on Schedule 3.1(k), Seller has good title to, or a valid leasehold or
license interest in, all Personal Property, and none of the Personal Property
is subject to any Lien or other encumbrances, except for Permitted
Encumbrances. No member of the Selling Group is, and to the Knowledge of the
Selling Group, no other party is, in material default under any of the leases,
licenses and other Contracts relating to the Personal Property. Except as
otherwise disclosed in Schedule 3.1(k), the Personal Property (i) is in
operating condition and repair (ordinary wear and tear excepted) and not in
need
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<PAGE> 28
of material repair or replacement, (ii) is available for immediate use in the
business and operation of each of the Stations as currently conducted, and
(iii) permits each of the Stations to operate in accordance with the terms of
their respective FCC Licenses and the rules and regulations of the FCC and with
all other applicable federal, state and local statutes, ordinances, rules and
regulations.
(l) Liens and Encumbrances. All of the Assets, including
leases, are free and clear of all liens, pledges, claims, security interests,
restrictions, mortgages, tenancies, and other possessory interests, conditional
sale or other title retention agreements, assessments, easements, rights of
way, covenants, restrictions, rights of first refusal, defects in title,
encroachments, and other
burdens, options or encumbrances of any kind (collectively, "Liens") except (i)
Permitted Encumbrances and (ii) Liens in favor of Finova Capital Corporation
securing that certain $13,500,000 loan from Finova Capital Corporation to
Seller (the Liens referred to in clauses (i) and (ii) being "Permitted Liens").
At the Closing, all of the Assets shall be free and clear of all Liens other
than Permitted Encumbrances.
(m) Environmental Matters.
(i) Schedule 3.1(m) sets forth each piece of
real property owned, operated or leased by Seller with respect to the
Stations (the "Sites") and the date that Point, Midcontinent or Seller
purchased or commenced operating or leasing each site (the
"Commencement Date"). With respect to each Site, since the
Commencement Date, the operations of each member of the Selling Group
on the Sites have complied and continue to comply in all material
respects with all Applicable Laws and rules of common law pertaining
to the environment, natural resources, and public or employee health
and safety, including all Environmental Laws;
(ii) No judicial proceedings are pending or, to
the Knowledge of the Selling Group, threatened against any member of
the Selling Group alleging the violation of any Environmental Laws, and
there are no administrative proceedings pending or, to the Knowledge
of the Selling Group, threatened against any member of the Selling
Group, alleging the violation of any Environmental Laws, and no
written notice from any Governmental Entity or any private or public
Person has been received by any member of the Selling Group claiming
any violation of any Environmental Laws in connection with any Site or
requiring any remediation, clean-up, modification, repairs, work,
construction, alterations, or installations on or in connection with
any Site that are necessary to comply with any Environmental Laws and
that have not been complied with or otherwise resolved to the
satisfaction of the party giving notice;
(iii) All permits, registrations, licenses,
authorizations, and the like ("Permits") required to be obtained or
filed by any member of the Selling Group under any Environmental Laws
in connection with their respective operations at the Sites, including
those activities relating to the generation, use, storage, treatment,
disposal, release, or remediation of Hazardous Substances (as such
term is defined in Section 3.1(m)(iv) hereof), have been duly obtained
or filed, and each member of the Selling Group is and has at all
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<PAGE> 29
times been in full compliance in all material respects with the terms
and conditions of all such Permits;
(iv) Except as set forth on Schedule 3.1(m),
all Hazardous Substances used or generated by each member of the
Selling Group or any of their respective predecessors on, in, or under
any Site are and have at all times been generated, stored, used,
treated, disposed of, and released by such Persons or on their behalf
in such manner as not to result in any Environmental Costs or
Liabilities. "Hazardous Substances" means (A) any hazardous materials,
hazardous wastes, hazardous substances, toxic wastes, and toxic
substances as those terms are defined under any Environmental Laws;
(B) any asbestos or any material which contains any hydrated mineral
silicate, including chrysolite, amosite, crocidolite, tremolite,
anthophylite and/or actinolite, whether friable or non-friable; (C)
PCBs, or PCB- containing materials, or fluids; (D) radon; (E) any
other hazardous, radioactive, toxic or noxious substance, material,
pollutant, contaminant, constituent, or solid, liquid or gaseous
waste; (F) any petroleum, petroleum hydrocarbons, petroleum products,
crude oil and any fractions or derivatives thereof, any oil or gas
exploration or production waste, and any natural gas, synthetic gas
and any mixtures thereof; (G) any substance that, whether by its
nature or its use, is subject to regulation under any Environmental
Laws or with respect to which any Environmental Laws or Governmental
Entity requires environmental investigation, monitoring or
remediation; and (H) any underground storage tanks, dikes, or
impoundments as defined under any Environmental Laws;
(v) There are not now, nor have there been in
the past, on, in or under any Site when owned, leased, or operated by
any member of the Selling Group or when owned, leased, or operated by
any of their respective predecessors, any Hazardous Substances that
are in a condition or location that violates any Environmental Law or
that reasonably could be expected to require remediation under any
Environmental Laws or give rise to claim for damages or compensation
by any affected Person or to any Environmental Costs or Liabilities;
(vi) No member of the Selling Group has
received and, to the Knowledge of the Selling Group, does not expect
to receive, any notification from any source advising any member of
the Selling Group that: (A) because of its operations at the Sites, it
is a potentially responsible party under CERCLA or any other
Environmental Laws; (B) any Site is identified or proposed for listing
as a federal National Priorities List ("NPL") (or state- equivalent)
site or a Comprehensive Environmental Response, Compensation and
Liability Information System ("CERCLIS") list (or state-equivalent)
site; or (C) any facility to which it has ever transported or
otherwise arranged for the disposal of Hazardous Substances is
identified or proposed for listing as an NPL (or state equivalent)
site or CERCLIS (or state- equivalent) site; and
(vii) No Station's operations has a significant
environmental impact, as defined by 47 C.F.R. ss. 1.1307.
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(n) Taxes. Since January 1, 1992, each member of the Selling
Group has filed or caused to be filed all Tax returns affecting a Station or
any of the Assets which are required to be filed by it, and all such Tax
Returns which have been filed are accurate and complete in all material
respects, and each member of the Selling Group has timely paid all Taxes shown
on such returns or on any Tax assessment received by any of them to the extent
that such Taxes have become due. There are no Liens for Taxes that have become
due upon any of the Stations or any of the Assets. No member of the Selling
Group has received notice of any Tax deficiency or delinquency. No Internal
Revenue Service audit of any member of the Selling Group is pending (except a
pending audit of the parent of Midcontinent) or, to the Knowledge of the
Selling Group, threatened, and the results of any completed audits are properly
reflected in the Financial Statements. All monies required to be withheld by
each member of the Selling Group from employees or collected from customers for
Taxes and the portion of any Taxes to be paid by any member of the Selling
Group to any Governmental Entity or set aside in accounts for such purposes
have been so paid or set aside, or such monies have been reserved against and
are reflected in the Financial Statements and Balance Sheets. For each taxable
year or period not closed by the applicable statute of limitations, (i) Seller
and Point are each properly classified as a partnership (and not as an
association taxable as a corporation) for tax purposes, (ii) neither Seller nor
Point has a partner that is a "foreign partner" within the meaning of Section
1446(e) of the Code, and (iii) no partner of either Seller or Point is a
"foreign Person" within the meaning of Section 1445(f)(3) of the Code. There is
no legal, administrative, or Tax proceeding pending pursuant to which any
member of the Selling Group is or could be made liable for any Taxes,
penalties, interest, or other charges, the liability for which could extend to
Buyer as transferee of the business of the Stations.
(o) Certain Agreements.
(i) Schedule 3.1(o) hereto lists each oral or
written (A) employment or consulting Contract that is not terminable
without liability or penalty on 30 days or less notice and (B)
contract, agreement or commitment under which any party thereto
remains obligated to provide goods or services having a value, or to
make payments aggregating, in excess of $50,000 per year, in any such
case to which any member of the Selling Group is a party or bound.
Each such agreement, contract, or obligation described in Schedule
3.1(o) or required to be so described is a valid and binding
obligation of Seller and is in full force and effect without amendment
other than as described in Schedule 3.1(o). Each member of the Selling
Group and, to the Knowledge of the Selling Group, each other party to
such contracts, has performed the material obligations required to be
performed by it under the agreements so described and is not (with or
without lapse of time or the giving of notice, or both) in material
breach or default thereunder. Schedule 3.1(o) identifies, as to each
agreement, contract, or obligation listed thereon, whether the consent
of the other party thereto is required in order for such agreement,
contract, or obligation to continue in full force and effect upon the
consummation of the transactions contemplated hereby or whether such
agreement, contract, or obligation can be canceled by the other party
without liability to such other party due to the consummation of the
transactions contemplated hereby. A copy of each written agreement,
contract, obligation, plan, or arrangement and a description
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<PAGE> 31
of each oral agreement, contract, obligation, plan, or arrangement set
forth in Schedule 3.1(o) has been provided to Buyer.
(ii) Except as described in Schedule 3.1(o), no
member of the Selling Group is a party to any oral or written
agreement, plan or arrangement with any employee or other Station or
broadcast personnel (whether an employee, consultant or an independent
contractor) of any member of the Selling Group (A) the benefits of
which are contingent, or the terms of which are materially altered,
upon, or result from, the occurrence of a transaction involving Seller
of the nature of any of the transactions contemplated by this
Agreement, (B) providing severance benefits longer than forty-five days
or other benefits after the termination of employment or other
contractual relationship regardless of the reason for such termination
and regardless of whether such termination is before or after a change
of control, (C) under which any Person may receive payments subject to
the tax imposed by Section 4999 of the Code or (D) any of the benefits
of which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
(p) ERISA Compliance; Labor.
(i) Neither Seller nor any other trades or
businesses under common control within the meaning of Section
4001(b)(1) of ERISA with the Seller maintains or has contributed or
been obligated to contribute to any Employee Pension Benefit Plan or
to any Multiemployer Plan.
(ii) True, correct, and complete copies of each of
the Employee Benefit Plans maintained or contributed to by the Seller,
and related trusts, if applicable, have been furnished to Buyer, along
with the most recent report filed on Form 5500 and summary plan
description with respect to each Employee Benefit Plan required to
file Form 5500.
(iii) Schedule 3.1(p) is a true and complete list of
each collective bargaining agreement to which any member of the
Selling Group is a party. Except for those unions which are parties to
one or more of the listed collective bargaining agreements or as
otherwise listed on Schedule 3.1(p), no member of the Selling Group
has agreed to recognize any union or other collective bargaining
representative, nor has any union or other collective bargaining
representative been certified as the exclusive bargaining
representative of any of its employees. Each member of the Selling
Group (A) is, and has been since January 1, 1993, in substantial
compliance with all applicable laws regarding labor and employment
including laws regarding employment practices, terms and conditions of
employment, equal employment opportunity, employee benefits,
affirmative action, wages and hours, plant closing and mass layoff,
occupational safety and health, immigration, and workers'
compensation, (B) is not engaged, nor has it since January 1, 1993,
engaged, in any unfair labor practices, and has no, and has not had
since January 1, 1993, any, unfair labor practice charges or
complaints before the National Labor Relations Board pending or, to
the
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<PAGE> 32
Knowledge of the Selling Group, threatened against it, (C) has no, and
has not had since January 1, 1993, any, grievances, arbitrations, or
other proceedings arising or asserted to arise under any collective
bargaining agreement, pending or, to the Knowledge of the Selling
Group, threatened against it and (D) has no, and has not had since
January 1, 1993, any, charges, complaints, or proceedings commenced
before the Equal Employment Opportunity Commission, Department of
Labor or any other Governmental Entity responsible for regulating
employment practices, pending, or, to the Knowledge of the Selling
Group, threatened against it. There is no labor strike, slowdown, work
stoppage or lockout pending or, to the Knowledge of the Selling Group,
threatened against or affecting any member of the Selling Group, and
no member of the Selling Group has experienced any labor strike,
slowdown, work stoppage or lockout since January 1, 1993. Except as
set forth on Schedule 3.1(p), to the Knowledge of the Selling Group no
union organizational campaign or representation petition is currently
pending with respect to any of the employees of any member of the
Selling Group.
(q) Patents, Trademarks, Etc. Schedule 3.1(q) is a true and
complete list of all of the Intellectual Property. Seller owns or has the
unencumbered right to use pursuant to a valid, binding, and enforceable license
agreement or other contract or arrangement all such Intellectual Property. To
the Knowledge of the Selling Group, Seller is not infringing any such
Intellectual Property, and no member of the Selling Group is aware of any
infringement by others of any of the Intellectual Property owned by Seller.
(r) Affiliate Relationships. Schedule 3.1(r) sets forth a
true and complete list of all contracts or other arrangements involving Seller
in which any partner, officer, director, or any of its Affiliates has a
financial interest, including indebtedness to Seller.
(s) Assets. Except for the Excluded Assets, the Assets to be
assigned and transferred pursuant to Section 2.1 include all assets used or
held for use in connection with the business and operations of the Stations as
currently conducted. Prior to the date of this Agreement, Point and
Midcontinent have respectively assigned and transferred to Seller the Assets
respectively owned by each of them.
(t) No Dispositions. Except for the assignment and transfer
made by Point and Midcontinent to Seller and the sale of WMAD-AM, since the
Balance Sheet Date there has not occurred any sale, lease, transfer,
assignment, abandonment or other disposition of any of the Assets other than
any disposition of (i) obsolete property or (ii) property in connection with
the acquisition of replacement property of equal value.
(u) Disclosure. No representation or warranty by any member
of the Selling Group contained in this Agreement or in any certificate
furnished pursuant to this Agreement contains or will contain any untrue
statement of a material fact.
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<PAGE> 33
3.2. Representations and Warranties of Buyer. Buyer represents
and warrants to the Selling Group as follows (with the understanding that the
Selling Group is relying on such representations and warranties in entering
into and performing this Agreement):
(a) Organization Standing and Power. Buyer is a corporation
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(b) Authority. To the extent that Buyer is a party thereto,
Buyer has all requisite corporate power and authority to enter into the
Transaction Documents and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of the Transaction Documents by Buyer
and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary corporate action on the part of
Buyer. The Transaction Documents have been, or upon execution and delivery will
be, duly executed and delivered and constitute the valid and binding
obligations of Buyer, enforceable against it in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith, and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(c) No Conflict; Required Filings and Consents. The
execution, delivery and performance by Buyer of the Transaction Documents (with
or without the giving of notice, the lapse of time, or both) does not (i)
conflict with the Certificate of Incorporation or By-Laws of Buyer; (ii) except
for the necessity of obtaining applicable Consents, conflict with, result in a
breach of, or constitute a default under any Applicable Law known to Buyer; or
(iii) except for the necessity of obtaining applicable Consents, conflict with,
result in a breach of, constitute a default under, permit any party to
terminate, modify, accelerate the performance of or cancel the terms of, any
material agreement, lease, instrument of indebtedness, or license to which
Buyer is a party, or by which Buyer is bound, such that Buyer could not acquire
or operate the Assets. No Consent of any Governmental Entity is required by or
with respect to Buyer in connection with the execution and delivery of any
Transaction Documents by Buyer or the consummation by it of the transactions
contemplated hereby or thereby, except for (A) the filing of a premerger
notification report under the HSR Act, (B) the FCC Consents (as contemplated by
Section 7.1), and (C) applicable requirements, if any, of the Securities Act
and the Exchange Act and the rules and regulations thereunder and state
securities or blue sky laws.
(d) Litigation. As of the date hereof, there is no action,
suit, inquiry, judicial or administrative proceeding pending or, to the
Knowledge of Buyer, threatened against it relating to the transactions
contemplated by this Agreement.
(e) FCC Matters. Buyer Knows of no facts relating to it under
the Communications Act that reasonably may be expected to disqualify it from
qualifying as an assignee
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of the Station Licenses or that would prevent it from consummating the
transactions contemplated by this Agreement. Buyer is able to certify on an FCC
Form 314 that it is financially qualified and on the Closing Date shall be able
to so certify.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. Covenants of the Selling Group. Except as contemplated by this
Agreement or to the extent that Buyer shall otherwise consent in writing, from
the date of this Agreement until the Closing, each member of the Selling Group,
jointly and severally, covenants and agrees that Seller shall not:
(a) except for the sale of Excluded Assets, conduct its
business in any manner except in the ordinary course consistent with past
practice; or
(b) fail to use commercially reasonable efforts to preserve
intact its present business organization and to keep available the services of
its present officers, Station managerial personnel (including the General
Manager, Station Manager, General Sales Manager, Local Sales
Manager, Programming Director, and Business Manager, or Persons performing
comparable duties, of each Station (collectively, the "Station Management"))
and over-the-air personnel or independent contractors and to preserve its
relationships with customers, suppliers and others having business dealings
with it; or
(c) except as described in Schedule 4.1(c), fail to use
commercially reasonable efforts to maintain the present format of the Stations
and with programming consistent with past practices; or
(d) except for amendments, terminations (without payment of
penalty or damages), renewals, or failures to renew (without payment of penalty
or damages) of employment agreements with over-the-air personnel in the
ordinary course of business and consistent with past practice (subject to prior
consultation with Buyer reasonably in advance thereof), enter into, materially
amend, terminate, or fail to use commercially reasonable efforts to renew any
material Contract (i.e., a contract or agreement of the type required to be
described in Schedule 3.1(o)) (provided that Seller shall not be required to
renew any material Contract on terms that are less favorable to Seller);
default in any material respect (or take or omit to take any action that, with
or without the giving of notice or passage of time, would constitute a material
default) under any material Contract; or enter into any new material Contract;
or
(e) merge or consolidate with or into any other legal entity,
dissolve or liquidate; or
(f) adopt or amend any Employee Benefit Plan or collective
bargaining agreement or increase in any manner the compensation or fringe
benefits of any director, officer, or
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employee or other Station and broadcast personnel (whether employees or
independent contractors), except as required by law; or
(g) terminate any employee of any of the Stations (other than
administrative personnel) without prior consultation with Buyer regarding the
basis for such termination; or
(h) except as contemplated by Section 4.4, acquire (including
by merger, consolidation, or the acquisition of any equity interest or assets),
sell (whether by merger, consolidation, or the sale of an equity interest or
assets), lease, or dispose of any Assets other than Excluded Assets except in
the ordinary course of business and consistent with past practice or, even if
in the ordinary course of business and consistent with past practices (other
than sales of surplus or obsolete equipment), whether in one or more
transactions, acquire, sell, lease, or dispose of an Asset or Assets having an
aggregate fair market value in excess of $50,000; or
(i) mortgage, pledge, or subject to any Lien, other than
Permitted Liens, any of the Assets; or
(j) except as required by GAAP, applicable law, or
circumstances which did not exist as of the Balance Sheet Date, change any of
the material accounting principles or practices used by it; or
(k) change in any material respect its existing practices and
procedures with respect to the collection of accounts receivable of any Station
or, except with respect to good faith attempts consistent with past practice to
obtain payment of a past due receivable or except in accordance with existing
practices, a contested receivable of any Station; offer to discount the amount
of any outstanding receivable or extend any other incentive (whether to the
account debtor or any employee or third party responsible for the collection of
receivables) to accelerate the collection thereof; change any Station's
advertising rates or policies, procedures or methods in connection with the
sale of advertising time in a manner expected to accelerate the receipt of cash
payments; or fail to incur annual advertising and promotional department
expenses in cash and trade below 90% of that budgeted for 1997 (as such budget
previously has been delivered to Buyer); or
(l) enter into, or enter into negotiations or discussions
with any Person other than Buyer with respect to, any local marketing
agreement, time brokerage agreement, joint sales agreement, or any other
similar agreement; or
(m) agree to or make any commitment, orally or in writing, to
take any actions prohibited by this Agreement.
4.2. Negative Trade Balance. Each member of the Selling Group shall
use commercially reasonable efforts to ensure that as of the Closing Date the
Seller Negative Trade Balance, as defined below, of the Stations, taken as a
whole, does not in the aggregate exceed (x) $5,000 in the case of all Trade
Deals (other than Trade Deals involving media trades with television stations)
or (y) $45,000 in the case of Trade Deals involving media trades with
television stations, provided that
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in each case such excess shall be an adjustment to the Purchase Price as
provided in Section 2.5(b). "Seller Negative Trade Balance" means the
difference, if negative, between the value of time owed under the applicable
barter agreements to which any of the Stations is a party or by which any of
them is bound and the value of the goods and services to be received under such
agreements.
4.3. Environmental Site Assessments. Buyer, at its sole costs and
expenses, for itself or on behalf of its lenders or other financing sources
shall have the right to have Phase I or Phase II environmental site assessments
("ESAs") performed by a nationally recognized and duly qualified environmental
consultant at each identified transmission site owned, operated, or leased by
Seller and at such other identified real properties and facilities owned,
operated, or leased by Seller. Each member of the Selling Group covenants and
agrees that they shall cooperate with Buyer and its representatives in the
performance of such ESAs to their completion.
4.4 Relocation of Operations. Buyer acknowledges that Seller
intends to relocate all operations of the Stations to the building now occupied
by WIBA-FM and WIBA-AM, located at 2651 South Fish Hatchery Road, Madison,
Wisconsin (the "WIBA Building"), subject to the construction of additional
space to the WIBA Building and the purchase and installment of necessary
equipment for such relocation. Provided that the transactions contemplated
hereunder are consummated, Buyer shall bear all costs of such construction and
equipment that are approved in writing by Buyer in advance. In any event,
Seller shall bear all such costs that are not so approved by Buyer. Any amounts
so approved by Buyer and paid by Seller prior to the Closing shall be added to
the Purchase Price hereunder and paid by Buyer to Seller at the Closing. Seller
shall deliver to Buyer reasonably detailed information on all proposed
construction and equipment expenditures at least ten days before the date on
which Seller proposes to become contractually obligated with respect thereto.
If Buyer does not object in writing to any of such expenditures prior to the
expiration of such ten day period, Buyer will be deemed to have approved such
expenditures.
ARTICLE V
ADDITIONAL AGREEMENTS OF THE SELLING GROUP
5.1. No Solicitation of Transactions. No member of the Selling
Group shall, directly or indirectly, through any partner, officer, director,
agent, or otherwise, solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to any acquisition or purchase of
all or any material portion of the Assets or any equity interest in any member
of the Selling Group or any merger, consolidation, share exchange, business
combination, or other similar transaction with any member of the Selling Group
or participate in any negotiations regarding, or furnish to any other Person
any information with respect to, or otherwise cooperate in any way with, or
assist or participate in, facilitate, or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing. The Selling Group shall
promptly communicate to Buyer the material terms of any such proposal (and the
identity of the party making such proposal) that it may receive. Each member of
the Selling Group agrees not to release any third party from, or waive any
provision of, any confidentiality or standstill agreement to which any member
of the Selling Group is a party. The
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Selling Group immediately shall cease and cause to be terminated all existing
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.
5.2. Access and Information. (a) Until the Closing, subject only
to applicable rules and regulations of the FCC, each member of the Selling
Group shall afford to Buyer and its representatives (including accountants and
counsel) full access, during normal business hours, upon reasonable notice and
in such manner as will not unreasonably interfere with the conduct of the
business of Seller, to all properties, books, records, and Tax Returns of each
member of the Selling Group and all other information with respect to their
respective businesses, together with the opportunity to make copies of such
books, records, and other documents and to discuss the business of any member
of the Selling Group with such directors, corporate officers, partners, Station
managerial personnel (including the Station Management of each Station),
accountants, consultants, and counsel for each member of the Selling Group as
Buyer deems reasonably necessary or appropriate for the purposes of
familiarizing itself with each member of the Selling Group and each of the
Stations, including the right to visit each Station; provided that such Station
visits shall be conducted in a manner intended to minimize the disruption to
the operations of the Station. In furtherance of the foregoing, each member of
the Selling Group shall authorize and instruct their respective accountants to
meet with Buyer and its representatives, including its independent public
accountants, to discuss the business and accounts of each member of the Selling
Group and to make available (with the opportunity to make copies) to Buyer and
its representatives, including its independent public accountants, all the work
papers of its accountants related to their audit of the consolidated financial
statements and Tax Returns of each member of the Selling Group.
(b) Within 30 days after the end of each calendar month,
Seller shall deliver to Buyer, for each of the Stations and for Seller, monthly
operating statements (in a form consistent with the monthly operating
statements previously supplied to Buyer) prepared in the ordinary course of
business for internal purposes, including comparisons to comparable prior year
periods and the current year budget. In addition, within 45 days after the end
of each calendar quarter, Seller shall deliver to Buyer, for each of the
Stations, quarterly statements prepared in the ordinary course for internal
purposes containing a detailed listing of all trade and barter agreements of
each Station showing the status of all such agreements as of the end of the
quarter. Further, Point, at its sole costs and expenses, on or before February
10, 1997, shall deliver to Buyer copies of its audited balance sheet as of
December 31, 1996, together with the related audited statements of income, cash
flows and changes in partners' equity of Point for the period then ended.
Seller shall deliver to Buyer the current rating books and such other ratings
information subscribed to by it, including Arbitrends, Accuratings or any other
written information reflective of the quantitative or qualitative nature of the
audiences of each Station, upon receipt of the same by Seller. Seller shall
instruct the Station Management of each Station to provide such information and
reports to Buyer's corporate officers promptly upon receipt by such Station
Management. In addition, Seller will provide Buyer with copies of each
Station's weekly sales pacing reports, with comparisons to sales pacing in the
corresponding period of the prior year, as soon as the same become available.
(c) Without duplication of Section 5.2(b), at such time as
any member of the Selling Group provides the same to their respective lenders,
such member of the Selling Group shall
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provide Buyer with copies of the financial statements and other information
delivered by it to its lenders.
5.3. Assistance. If Buyer requests, each member of the Selling
Group will cooperate, and will cause their accountants to cooperate, in all
reasonable respects with any financing efforts of Buyer or its Affiliate,
including providing assistance in the preparation of one or more registration
statements or other offering documents relating to debt and/or equity financing
and any other filings that may be made by Buyer or its Affiliate with the SEC,
all at the sole expense of Buyer. Midcontinent shall allow Buyer's independent
public accountants to conduct an audit of the books and records of Midcontinent
for purposes of preparing an audited balance sheet for the twelve month period
ended December 31, 1996 for the Midcontinent Stations, together with related
audited statements of income, cash flows and changes in stockholder's equity
for such period. The costs and expenses of such independent public accountants
incurred in connection with such audit shall be borne by Buyer. Midcontinent
shall cooperate with Buyer's independent public accountants in the conduct of
the above described audit to the extent that may be necessary so as to allow
such audit to be completed on or before February 10, 1997. In addition, each
member of the Selling Group (a) shall furnish to their respective independent
accountants (or, if requested by Buyer, to Buyer's independent public
accountants) such customary management representation letters as such
accountants may require as a condition to their execution of any required
accountants' consents necessary in connection with the delivery of any
"comfort" letters requested by financing sources of Buyer or its Affiliates and
(b) shall furnish to Buyer all financial statements (audited and unaudited) and
other information in the possession of any member of the Selling Group or their
respective representatives or agents as Buyer shall reasonably determine is
necessary or appropriate for the preparation of such offering documents,
registration statements or filings. In accordance with Article XI, Buyer will
indemnify and hold harmless each member of the Selling Group and their
officers, directors, and controlling Persons against any and all claims,
losses, liabilities, damages, costs, or expenses (including reasonable
attorneys' fees and expenses) that may arise out of or with respect to the
financing efforts of Buyer or its Affiliates, including any registration
statement, prospectus, offering documents, and other filings related thereto;
provided, however, that subject to the limitations and provisions of this
Agreement, nothing herein shall prevent Buyer from asserting any claim for
breach of representation or warranty under this Agreement.
5.4. Compliance With Station Licenses. Each member of the Selling
Group shall cause each of the Stations to be operated in accordance with the
applicable Station Licenses and all applicable rules and regulations of the FCC
and in compliance in all material respects with all other applicable laws,
regulations, rules, and orders. Each member of the Selling Group shall use
commercially reasonable efforts to not cause or permit any of the Station
Licenses to expire or be surrendered, adversely modified, or terminated. Each
member of the Selling Group shall file or cause to be filed with the FCC all
applications (including license renewals) or other documents required to be
filed in connection with the operation of the Stations. In addition, if
requested by Buyer and at Buyer's expense, each member of the Selling Group
shall file or cause to be filed with the FCC applications for new, specifically
identified frequencies that may be useful in connection with the operation of
the Stations. Should the FCC institute any proceedings for the suspension,
revocation or adverse modification of any of the Station Licenses, each member
of the Selling Group
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will use commercially reasonable efforts to promptly contest such proceedings
and to seek to have such proceedings terminated in a manner that is favorable
to the Stations. Each member of the Selling Group will use commercially
reasonable efforts to maintain the FCC construction permits (if any) listed in
Schedule 3.1(g) in effect until the applicable construction projects are
complete and to diligently prosecute all pending FCC applications listed in
Schedule 3.1(g). If any member of the Selling Group (or their respective FCC
counsel) receives an administrative or other order or notification relating to
any violation or claimed violation of the rules and regulations of the FCC, or
of any other Governmental Entity, that could affect the ability of any member
of the Selling Group to consummate the transactions contemplated hereby, or
should any member of the Selling Group (or their respective FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, the member shall promptly notify Buyer in writing and use
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement.
5.5. Notification of Certain Matters. Each member of the Selling
Group shall give prompt written notice to Buyer of (a) the occurrence, or
failure to occur, of any event of which any member of the Selling Group becomes
aware that has caused or that would be likely to cause any representation or
warranty of any member of the Selling Group contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof
to the Closing Date, (b) the failure of any member of the Selling Group, or any
officer, director, partner, employee, or agent thereof, to comply with or
satisfy in any material respect any covenant, condition, or agreement to be
complied with or satisfied by it hereunder, (c) the occurrence of a Station
Event (as defined in Section 9.1), and (d) the occurrence of any threat by any
officer of any member of the Selling Group or any General Manager, Station
Manager, General Sales Manager or Programming Director of a Station to resign
or otherwise terminate his employment or independent contractor relationship
with Seller. No such notification shall affect the representations or
warranties of the parties or the conditions to their respective obligations
hereunder.
5.6. Third Party Consents. After the date hereof and prior to the
Closing, each member of the Selling Group shall use commercially reasonable
efforts to obtain the written Consent from any party to an agreement or
instrument identified in Schedule 3.1(o) or any other Assumed Contract which is
required to permit the consummation of the transactions contemplated hereby.
5.7. Richard P. Verne Consulting Agreement. At the Closing, Buyer
shall, and the Selling Group shall cause Richard P. Verne to, execute and
deliver the Consulting Agreement.
5.8. Confidential Information. Each member of the Selling Group
acknowledges that, following the Closing, the confidential information and data
obtained or possessed by such member concerning the business affairs of the
Stations (the "Confidential Information") will be the property of Buyer and not
the Selling Group. Therefore, each such member agrees that it will not disclose
to any Person or use for its own account or the account of any other Person any
of the Confidential Information unless and to the extent that such Confidential
Information is (a) required to be disclosed by law or pursuant to a judicial
order or decree or (b) becomes generally known to and
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available for use by the public otherwise than as a result of any such member's
act or omission to act. Each such member further agrees to deliver to Buyer, at
any time Buyer may request within six years after the Closing Date, all
memoranda, notes, plans, records, reports, and other documents (and copies
thereof) relating to the conduct of the Stations which such member may then
possess or control.
ARTICLE VI
COVENANTS OF BUYER
6.1. Notification of Certain Matters. If Buyer (or its FCC counsel)
receives an administrative or other order or notification relating to any
violation or claimed violation of the rules and regulations of the FCC, or of
any Governmental Entity, that could affect Buyer's ability to consummate the
transactions contemplated hereby, or should Buyer (or its FCC counsel) become
aware of any fact relating to the qualifications of Buyer that reasonably could
be expected to cause the FCC to withhold its consent to the assignment of the
Station Licenses, Buyer shall promptly notify Seller thereof and shall use
commercially reasonable efforts to take such steps as may be necessary to
remove any such impediment to the transactions contemplated by this Agreement;
provided that Buyer shall not be required pursuant to this Section 6.1 to
divest itself or cause any Affiliate thereof to divest itself of any media
business or interest therein. In addition, Buyer shall give to Seller prompt
written notice of (a) the occurrence, or failure to occur, of any event of
which it becomes aware that has caused or that would be likely to cause any
representation or warranty of Buyer contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Closing Date and (b) the
failure of Buyer, or any officer, director, employee, or agent thereof, to
comply with or satisfy in any material respect any covenant, condition, or
agreement to be complied with or satisfied by it hereunder. No such
notification shall affect the representations or warranties of the parties or
the conditions to their respective obligations hereunder.
6.2. Employee Matters. Buyer will use its reasonable efforts to
determine at least ten days prior to the Closing Date those employees of Seller
whom it desires to extend offers of employment. Any offers so extended by Buyer
shall be on such terms and conditions that Buyer shall determine in its sole
discretion. Buyer will give Seller prompt notice of the names of any employee
of Seller who Buyer has determined not to extend an offer of employment. Seller
waives any claims against Buyer and any of Seller's employees who are extended
an offer of employment by Buyer arising under any employment agreement or
noncompete agreement between such person and Seller.
ARTICLE VII
MUTUAL COVENANTS
7.1. Application for FCC Consents. On or before February 13, 1997,
Buyer and Seller (and if necessary, Point and Midcontinent and any of their
respective Affiliates) will join in one or more applications filed with the FCC
requesting the FCC's written consent to the assignment of the FCC Licenses
pursuant to this Agreement (the "Applications"). The parties will take all
proper steps
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reasonably necessary (a) to diligently prosecute the Applications
and (b) to obtain the FCC Consents; provided that Buyer shall not be required
pursuant to this Section 6.1 to divest itself or cause any Affiliates thereof
to divest itself of any media business or interest therein. The failure by
either party to timely file or diligently prosecute its portion of any
Application shall be a material breach of this Agreement.
7.2. Control of Stations. This Agreement will not be consummated
until after the FCC Consents with respect to the Applications referred to in
Section 7.1 are granted and, unless waived by Buyer, have become Final Orders.
Between the date of this Agreement and the Closing Date, Buyer will not
directly or indirectly control, supervise or direct the operation of the
Stations. Further, between the date of this Agreement and the Closing Date,
Seller shall, directly or indirectly, supervise or control the operation of the
Stations. Such operation shall be the sole responsibility of Seller.
7.3. Other Governmental Consents. Promptly following the execution
of this Agreement, the parties shall proceed to prepare and file with the
appropriate Governmental Entities (other than the FCC) such requests, reports,
or notifications as may be required in connection with this Agreement and shall
diligently and expeditiously prosecute, and shall cooperate fully with each
other in the prosecution of, such matters. Without limiting the foregoing,
promptly following the execution of this Agreement, the parties shall (a) file
with the Federal Trade Commission and the Antitrust Division of the Department
of Justice the notifications and other information (if any) required to be
filed under the HSR Act with respect to the transactions contemplated hereby
and shall use their commercially reasonable efforts to cause all applicable
waiting periods under the HSR Act to expire or be terminated as of the earliest
possible date and (b) make all necessary filings and, thereafter, make any
other required submissions with respect to the transactions contemplated hereby
under the Securities Act and the rules and regulations thereunder and any other
applicable federal or state securities laws. Nothing in this Section 7.3 shall
require Buyer to divest itself or to cause any Affiliate thereof to divest
itself of any media business or interest therein.
7.4. Accounts Receivable. All Accounts Receivable shall remain the
property of Seller. Seller hereby authorizes Buyer, however, for purposes of
collection only, to collect such receivables for a period of 180 days after the
Closing. Seller shall deliver to Buyer a complete and detailed statement of
each account within three days after Closing, and Buyer shall use its
reasonable efforts, consistent with its customary collection practices for its
own accounts receivable, without compensation, to collect each Account
Receivable during said 180 days. During that period, Buyer shall provide to
Seller a detailed monthly statement of the Accounts Receivable showing amounts
collected to date and amounts outstanding as of the same date and, within 20
days after the end of each month, shall deliver to Seller the Accounts
Receivable report and a check for the amounts collected during the prior month.
All payments received by Buyer during the 180-day period following the Closing
Date from a Person obligated with respect to an Account Receivable shall be
applied first to Seller's account and only after full satisfaction thereof to
Buyer's account; provided, however, that if such Person has, in the reasonable
opinion of Buyer, a legitimate dispute with respect to such Account Receivable
and Buyer also has an account receivable from such Person, all payments
received by Buyer during the 180-day period following the Closing Date from
such Person
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shall be applied first to Buyer's account and only after the earlier to occur
of full satisfaction of Buyer's account or resolution of such dispute, to
Seller's account. Buyer shall not be required to refer any Account Receivable
to a collection agency or an attorney for collection, nor shall it compromise,
settle, or adjust any Account Receivable having a value in excess of $5,000
without receiving the approval of Seller. Seller shall take no action with
respect to the Accounts Receivable, such as litigation, until the expiration of
said 180-day period. Following the expiration of said 180- day period, Seller
shall be free to take such action as Seller may in its sole discretion
determine to collect any Accounts Receivable then outstanding.
7.5. Brokers or Finders. The Selling Group represents and warrants
to Buyer that, other than the previously disclosed fee payable to Americom,
which fee shall be paid in accordance with the provisions of Section 12.7, no
agent, broker, investment banker, or other Person engaged by Seller is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee payable by Buyer or Seller in connection with any of the transactions
contemplated by this Agreement. Buyer represents and warrants to the Selling
Group that Buyer has not engaged any broker, investment banker or other Person
that will be entitled to any broker's or finder's fee or any other commissions
or similar fee from Seller in connection with any of the transactions
contemplated by this Agreement.
7.6. Bulk Sales Law. The parties do not believe that any bulk sales
or fraudulent conveyance statute applies to the transactions contemplated by
this Agreement. Buyer therefore waives compliance by the Selling Group with the
requirements of any such statutes and, in accordance with Article XI, each
member of the Selling Group agrees to indemnify and hold Buyer harmless against
any claim made against Buyer by any creditor of any member of the Selling Group
as a result of a failure to comply with any such statute and all losses,
liabilities, damages, costs, or expenses (including reasonable attorney's fees
and expenses) arising out of any such claim.
7.7. Risk of Loss.
(a) The risk of any loss, damage, impairment, confiscation,
or condemnation of any of the Assets from any cause whatsoever shall be borne
by Seller at all times prior to the Closing. In the event of any such loss,
damage, impairment, confiscation, or condemnation, whether or not covered by
insurance, Seller shall promptly notify Buyer of such loss, damage, impairment,
confiscation, or condemnation.
(b) If Seller, at its expense, repairs, replaces, or restores
such Assets to their prior condition to the satisfaction of Buyer before the
Closing, Seller shall be entitled to all insurance proceeds and condemnation
awards, if any, by reason of such award or loss.
(c) If Seller does not or cannot restore or replace lost,
damaged, impaired, confiscated or condemned Assets having a replacement cost in
excess of $250,000 in the aggregate or informs Buyer that it does not intend to
restore or replace such Assets, Buyer may at its option:
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(i) terminate this Agreement by notice forthwith
without any further obligation hereunder; or
(ii) proceed to the Closing of this Agreement
without Seller completing the restoration and replacement of such
Assets, provided that Seller shall assign all rights under applicable
insurance policies and condemnation awards, if any, to Buyer; and in
such event, Seller shall have no further liability with respect to the
condition of the Assets directly attributable to the loss, damage,
impairment, confiscation, or condemnation.
(d) Buyer will notify Seller of a decision under the
options described in Section 7.7(c)(i) or (ii) above within ten Business Days
after Seller's notice to Buyer of the damage or destruction of Assets and the
estimate of the costs to repair or replace the Assets; provided, however, that
if Seller states that it intends to restore the damaged Assets and if Seller
has not restored such damaged Assets immediately prior to the Closing Date,
notwithstanding Buyer's prior delivery of a notice to proceed pursuant to this
Section 7.7(d), Buyer shall have the right to either postpone the Closing or
terminate this Agreement by notice forthwith.
7.8. Additional Agreements. Subject to the terms and conditions of
this Agreement, each of the parties hereto will use its commercially reasonable
efforts to take or cause to be taken all action, and to do or cause to be done
all things, necessary, proper, or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement. If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this Agreement, the parties
to this Agreement and their duly authorized representatives shall take all such
action. Without limiting the generality of the foregoing, if, after the Closing
Date, Buyer seeks indemnification or recovery from one or more other parties to
an Assumed Contract or otherwise seeks to enforce such Assumed Contract and, in
order to obtain such indemnification, recovery or enforcement, it is necessary
for any member of the Selling Group to initiate a suit, participate in any
enforcement proceeding or otherwise provide assistance to Buyer, then, at the
request and the sole expense of Buyer, such member shall take such action as
Buyer may reasonable request in connection with Buyer's efforts to obtain such
indemnification, recovery or enforcement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1. Conditions to Each Party's Obligation. The respective
obligations of Buyer and of each member of the Selling Group to effect the
transactions contemplated hereby are subject to the satisfaction (or, in the
case of the condition specified in the last sentence of Section 8.l(a), the
waiver by Buyer) on or prior to the Closing Date of the following conditions:
(a) Consents and Approvals. All authorizations, consents,
orders, or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity necessary for the
consummation of the transactions contemplated by this Agreement shall
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have been filed, occurred, or been obtained. The FCC Consents shall have become
Final Orders and shall be in form and substance reasonably satisfactory to
Buyer.
(b) No Injunctions or Restraints. No temporary
restraining order, preliminary or permanent injunction, or other order issued
by any court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the transactions contemplated hereby shall be in
effect.
(c) No Action. No action shall have been taken nor any
statute, rule, or regulation shall have been enacted by any Governmental Entity
that makes the consummation of the transactions contemplated hereby illegal.
8.2. Conditions to Obligation of Buyer. The obligation of Buyer to
effect the transactions contemplated hereby is subject to the satisfaction of
the following conditions unless waived, in whole or in part, by Buyer:
(a) Representations and Warranties. The representations
and warranties of each member of the Selling Group set forth in this Agreement
shall be true and correct in all material respects (provided that any
representation or warranty of any member of the Selling Group contained herein
that is qualified by a materiality standard or a Material Adverse Effect
qualification shall not be further qualified hereby) as of the date of this
Agreement and as of the Closing Date as though made on and as of the Closing
Date, and Buyer shall have received a certificate to such effect signed on
behalf of each member of the Selling Group by the chief executive officer or by
the chief financial officer of each entity (or in the case of each of Point and
Seller, by the chief executive officer or chief financial officer of the
general partner(s) thereof acting in such capacity).
(b) Performance of Obligations. Each member of the
Selling Group shall have performed in all material respects all obligations
required to be performed by it under this Agreement prior to the Closing Date,
and Buyer shall have received a certificate to such effect signed on behalf of
each member of the Selling Group by the chief executive officer or by the chief
financial officer of each entity (or in the case of each of Point and Seller,
by the chief executive officer or chief financial officer of the general
partner(s) thereof acting in such capacity).
(c) Consents Under Agreements. Buyer shall have been
furnished with evidence reasonably satisfactory to it of the consent or
approval of each Person that is a party to a Contract identified in Schedule
3.1(o) whose consent or approval shall be required in order to permit the
consummation of the transactions contemplated hereby, and such consent or
approval shall be in form and substance satisfactory to Buyer.
(d) Legal Opinions. Buyer shall have received from (i)
Stroock & Stroock & Lavan, counsel to Point and Seller, (ii) Schwartz, Woods &
Miller, special FCC counsel to Seller and (iii) Leonard, Street and Deinard,
counsel to Midcontinent, one or more opinions dated the Closing Date, in
substantially the forms attached as Exhibits G, H and I, hereto, respectively,
which
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opinions shall expressly provide that they may be relied upon by Buyer's
lenders, underwriters, or other sources of financing with respect to the
transactions contemplated hereby.
(e) Real Estate Title Commitment. Within 60 days after
the date of this Agreement, Seller, at its sole cost and expense, shall have
provided Buyer with a preliminary report on title to the Owned Real Property
covering a date not earlier than January 2, 1997, issued by the Title Company,
which preliminary report shall contain a commitment (the "Title Commitment") of
the Title Company to issue an owner's title insurance policy at Seller's cost
as Buyer may reasonably require (the "Title Policy") insuring the fee simple
absolute interest of Seller in the Owned Real Property. The Title Commitment
shall be in such amount as set forth in the Title Policy issued by the Title
Company on January 2, 1997, with respect to the Owned Real Property.
(f) Survey. If requested by Buyer, Seller, at its sole
cost and expense, shall have obtained a recent survey of the Owned Real
Property which shall: (i) be prepared by a registered land surveyor reasonably
acceptable to Buyer; (ii) be certified to the Title Company and to Buyer; and
(iii) show with respect to the Owned Real Property: (A) the legal description
of the Owned Real Property (which shall be the same as the Title Policy
pertaining thereto); (B) all buildings, structures and improvements thereon and
all restrictions of record and other restrictions that have been established by
an applicable zoning or building code or ordinance and all easements or rights
of way across or serving the Owned Real Property (including any off-site
easements affecting or appurtenant thereto); (C) no encroachments upon the
Owned Real Property or adjoining parcels by buildings, structures or
improvements and no other survey defects; (D) access to such parcel from a
public street; and (E) a flood certification reasonably satisfactory to Buyer
to the effect that no portion of the Owned Real Property is located within a
flood hazard area.
(g) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by any member of the
Selling Group and Richard P. Verne, as applicable, pursuant to Section 9.2
shall have been delivered.
8.3. Conditions to Obligations of the Seller. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction of the following conditions unless waived, in whole or in part, by
Seller.
(a) Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true and correct
in all material respects (provided that any representation or warranty of Buyer
contained herein that is qualified by a materiality standard shall not be
further qualified hereby) as of the date of this Agreement and as of the
Closing Date as though made on and as of the Closing Date, and Seller shall
have received a certificate to such effect signed on behalf of Buyer by the
chief executive officer or by the chief financial officer of Buyer.
(b) Performance of Obligations of Buyer. Buyer shall
have performed in all material respects the obligations required to be
performed by it under this Agreement prior to the Closing Date, and Seller
shall have received a certificate to such effect signed on behalf of Buyer by
the chief executive officer or by the chief financial officer of Buyer.
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(c) Legal Opinions. Seller shall have received from
Vinson & Elkins L.L.P., counsel to Buyer, an opinion dated the Closing Date in
substantially the form attached as Exhibit F.
(d) Closing Deliveries. All documents, instruments,
certificates or other items required to be delivered by Buyer pursuant to
Section 9.2 shall have been delivered.
ARTICLE IX
CLOSING
9.1. Closing. Subject to the right of Buyer to defer the Closing as
provided in this Section 9.1 and subject to the satisfaction or waiver of the
conditions set forth in Article VIII, or at such other place and time as Buyer
and Seller may agree, the Closing will take place at the offices of Vinson &
Elkins L.L.P., Dallas, Texas, at 10:00 a.m., local time, on a date selected by
Buyer on five Business Days notice to Seller, which date shall be on or before
the later of July 15, 1997 or the 10th Business Day after the day on which the
FCC Consents have been granted by Final Order, (the "Target Closing Date").
Notwithstanding the foregoing, Buyer may, at its option, defer the Closing Date
to a date no later than October 31, 1997 by giving Seller notice of such
deferral (a "Deferral Notice") at any time prior to the Target Closing Date. At
any time after the giving of a Deferral Notice, the Buyer may withdraw the
Deferral Notice by giving Seller notice of such withdrawal and subject to the
satisfaction or waiver of the conditions set forth in Article VIII, the Closing
shall take place at the place and time provided above on the fifth Business Day
after the giving of such notice of withdrawal. Upon the giving of a Deferral
Notice, the Purchase Price shall be automatically increased by an amount equal
to $2,777 per day for each day calculated to and including the day immediately
prior to the Closing Date that the Closing Date is delayed from July 15, 1997
by reason of Buyer's deferral of the Closing pursuant to such Deferral Notice.
Notwithstanding the foregoing:
(a) In the case of a Trading Event, a Banking Event or a
Station Event, (i) if the Cessation Date is less than 60 days after
the Event Date, then Buyer, in its discretion, may extend the Closing
Date to a date not later than the 30th day after the Cessation Date,
(ii) if the Cessation Date is more than 60, but less than 90, days
after the Event Date, then Buyer, in its discretion, shall elect on
the first to occur of the 10th Business Day after the Cessation Date
or the 90th day (or, if not a Business Day, the next Business Day)
after the Event Date (the "Election Date") to either (A) close the
transactions contemplated by this Agreement on the later to occur of
the fifth Business Day after the Election Date or the 90th day (or, if
not a Business Day, the next Business Day) after the Event Date or (B)
terminate this Agreement, and (iii) if the Cessation Date has not
occurred by the 90th day after the Event Date (or, if not a Business
Day, the next Business Day), then Buyer, in its discretion, shall
elect, not later than the 95th day after the Event Date (or if not a
Business Day, the next Business Day), either to (1) terminate this
Agreement or (2) close the transactions contemplated by this Agreement
on the fifth Business Day after the date of such election;
(b) In the case of a Conflict Event, Buyer, in its
discretion, may extend the Closing Date to a date not to exceed the
90th day after the Event Date;
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(c) If a Cure Period has not ended on or before the
Closing Date, the Closing Date shall be extended to the earlier to
occur of five Business Days after the cure or waiver of the breach
giving rise to the Cure Period or the end of the Cure Period; and
(d) If the Closing does not occur within 20 days after
the date of the Final Order, the parties shall request approval from
the FCC to extend the Closing so that the Closing contemplated
hereunder will not violate any FCC rules or regulations.
For purposes of this Agreement, a "Trading Event" shall mean
that trading generally in securities on the New York Stock Exchange
shall have been suspended or materially limited; a "Banking Event"
shall mean that a general moratorium on commercial banking activities
in New York, New York shall have been declared by any federal or state
authority; a "Conflict Event" shall mean the occurrence of any major
armed conflict involving a substantial participation by the armed
forces of the United States of America that has an adverse affect on
the availability or cost of either private or public debt or equity
financing; a "Station Event" shall mean any act of nature (including
fires, floods, earthquakes, and storms), calamity, casualty,
condemnation, or the act or omission to act of any state or federal
regulatory agency having jurisdiction over a Station that has caused
one or more Stations representing an aggregate of at least 3% of the
consolidated gross revenues of the Selling Group for the last full 12
calendar months prior to the Station Event not to be operating in a
manner substantially consistent with the operations conducted before
such act of nature, calamity, casualty, condemnation, or agency action
or omission occurred or not to be in compliance in all material
respects with its or their respective Station License(s); an "Event
Date" shall mean the date on which a Trading Event, Banking Event,
Conflict Event, or a Station Event occurs; and a "Cessation Date"
shall mean the date on which a Trading Event, Banking Event, Conflict
Event, or a Station Event ends. Pro forma adjustments shall be made,
for purposes of calculating gross revenues for the 12-month period
specified in the definition of "Station Event" with respect to any
radio broadcast station acquired during such 12-month period, assuming
that such station was acquired at the beginning of such 12-month
period and shall include the gross revenues of such station for the
full 12-month period.
9.2. Actions to Occur at Closing.
(a) At the Closing, Buyer shall deliver to Seller (or to
the Escrow Agent, as indicated) the following:
(i) Purchase Price. The Purchase Price by wire
transfer of immediately available funds (less the Holdback Amount);
(ii) Holdback Amount. The Holdback Amount to
the Escrow Agent by wire transfer of immediately available funds.
(iii) Certificates. The certificates referred to
in Section 8.3(a) and (b);
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(iv) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Buyer;
(v) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by Buyer;
(vi) Consulting Agreement. A counterpart of the
Consulting Agreement executed by Buyer; and
(vii) Non-Competition Agreement. A counterpart
of the Non-Competition Agreement executed by Buyer.
(viii) Legal Opinion. The opinion of counsel
referred to in Section 8.3(c).
(b) At the Closing, Seller and the other members of the
Selling Group shall deliver to Buyer the following:
(i) Certificates. The certificates described
in Section 8.2(a) and (b);
(ii) Assumption Agreement. A counterpart of the
Assumption Agreement executed by Seller;
(iii) Indemnification Escrow Agreement. A
counterpart of the Indemnification Escrow Agreement executed by Seller;
(iv) Non-Competition Agreement. A counterpart
of the Non-Competition Agreement executed by each member of the Selling Group;
(v) Legal Opinions. The opinions of counsel
referred to in Section 8.2(d);
(vi) Transfer Documents. The duly executed Bill
of Sale and Assignment, together with any other assignments and other transfer
documents as requested by Buyer;
(vii) Consents; Acknowledgments. The original of
each Consent;
(viii) Estoppel Certificates. Estoppel
certificates from the lessor(s) of the Leased Real Property in a form and
substance satisfactory to Buyer and its lenders;
(ix) Licenses, Contracts, Business Records, Etc.
To the extent they are in the possession of any member of the Selling Group,
copies of all Licenses, Assumed Contracts, blueprints, schematics, working
drawings, plans, projections, statistics, engineering records and all files and
records used by any member of the Selling Group in connection with a Station's
business and operations, which copies shall be available at the Closing or at
the applicable Station's principal business offices;
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(x) Warranty Deed. A Warranty Deed executed by
Seller conveying fee simple title to the Owned Real Property to Buyer, subject
only to the Permitted Encumbrances, in proper statutory form for recording
together with documentary stamps affixed thereto;
(xi) No-Lien Affidavit. A standard "No-Lien
Affidavit" executed by Seller, which shall be in the recordable form and
otherwise satisfactory to the Title Company in order to delete the standard
printed exceptions relating to mechanics' liens and parties-in-possession;
(xii) GAP Affidavit. An affidavit, if requested
by the Title Company, as may be necessary to insure the gap between the
effective date of the Title Commitment to and through the date of the
recordation of the deed to the Owned Real Property; and
(xiii) Title Requirements. Such other documents
as shall be reasonably required by the Title Company as called for or required
under the terms of any title policy obtained or issued to Buyer.
(c) At the Closing, Seller and Buyer shall instruct the
Escrow Agent to deliver, and it shall deliver, the Deposit Letter of Credit to
Buyer.
(d) At the Closing, Buyer shall receive (i) from each member
of the Selling Group a non-foreign affidavit within the meaning of section
1445(b)(2) of the Code or (ii) a statement in conformance with Treas. Reg.
ss.1.445-11T(d)(2)(i) from (A) Point and Midcontinent in their respective
capacity as a general partner of Seller and (B) the general partner of Point.
(e) At the Closing, Richard P. Verne shall deliver a
fully executed counterpart of the Consulting Agreement.
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ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
10.1. Termination. This Agreement may be terminated prior to the
Closing:
(a) by mutual consent of Buyer and Seller;
(b) by either Seller or Buyer;
(i) if there shall have been any material
breach (provided that any representation or warranty of a party contained
herein that is qualified by a materiality standard of a Material Adverse Effect
qualification shall not be further qualified hereby) of any representation,
warranty, covenant, or agreement, on the part of Buyer, on the one hand, or of
any member of the Selling Group, on the other hand, set forth in this
Agreement, which breach shall not have been cured within 20 days (the "Cure
Period") following receipt by the breaching party of written notice of such
breach;
(ii) if a court of competent jurisdiction or
other Governmental Entity shall have issued an order, decree, or ruling or
taken any other action (which order, decree or ruling the parties hereto shall
use their best efforts to lift), in each case permanently restraining,
enjoining, or otherwise prohibiting the transactions contemplated by this
Agreement, and such order, decree, ruling, or other action shall have become
final and nonappealable;
(iii) if, for any reason, the FCC denies or
dismisses any of the Applications and the time for reconsideration or court
review under the Communications Act with respect to such denial or dismissal
has expired and there is not pending with respect thereto a timely filed
petition for reconsideration or request for review;
(iv) if, for any reason, any of the Applications
is designated for an evidentiary hearing by the FCC; or
(v) if the Closing shall not have occurred by
October 31, 1997; provided, however, that the right to terminate this Agreement
under this clause (v) shall not be available to any party whose breach of this
Agreement has been the cause of, or resulted in, the failure of the Closing to
occur on or before such date; or
(c) by Buyer:
(i) pursuant to the provisions of Section 7.7;
(ii) pursuant to the provisions of Section 9.1;
or
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(iii) if the FCC grants any of the Applications
with any adverse conditions not generally imposed on grants of such
applications and the time for reconsideration or court review
under the Communications Act with respect to such adverse conditions has
expired and there is not pending with respect thereto a timely filed petition
for reconsideration or request for review.
The right of any party hereto to terminate this Agreement pursuant to this
Section 10.1 shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of any party hereto, any Person
controlling any such party or any of their respective officers, directors,
partners, employees, accountants, consultants, legal counsel, agents, or other
representatives whether prior to or after the execution of this Agreement.
Notwithstanding anything in the foregoing to the contrary, no party that is in
material breach of this Agreement shall be entitled to terminate this Agreement
except with the consent of the other parties hereto.
10.2. Effect of Termination.
(a) In the event of a termination of this Agreement by
either Seller or Buyer as provided above, there shall be no liability on the
part of either Buyer or any member of the Selling Group, except for liability
arising out of a breach of this Agreement. If this Agreement is terminated by
Seller pursuant to Section 10.1(b)(i), the parties agree and acknowledge that
Seller will suffer damages that are not practicable to ascertain. Accordingly,
in such event and if within ten Business Days after termination of this
Agreement Seller delivers to Buyer a written demand for liquidated damages,
subject to Buyer's receipt of a counterpart of the Release executed by each
member of the Selling Group, Seller shall be entitled to the sum of $1,900,000
(or $3,150,000, if Buyer has given a Deferral Notice pursuant to Section 9.1)
as liquidated damages payable by Buyer within ten Business Days after receipt
of Seller's written demand and payable in accordance with the provisions of the
Deposit Escrow Agreement. As security for payment thereof, Buyer has,
concurrently with the execution of this Agreement, entered into the Deposit
Escrow Agreement with Seller and the Escrow Agent as provided in Section 2.7.
The parties agree that the foregoing liquidated damages are reasonable
considering all the circumstances existing as of the date hereof and constitute
the parties' good faith estimate of the actual damages reasonably expected to
result from the termination of this Agreement by Seller pursuant to Section
10.1(b)(i). The members of the Selling Group agree that, to the fullest extent
permitted by law, Seller's right to payment of such liquidated damages as
provided in this Section 10.2 shall be their sole and exclusive remedy if the
Closing does not occur with respect to any damages whatsoever that any members
of the Selling Group may suffer or allege to suffer as a result of any claim or
cause of action asserted by any members of the Selling Group relating to or
arising from breaches of the representations, warranties or covenants of Buyer
contained in this Agreement and to be made or performed at or prior to the
Closing. If this Agreement is terminated by Seller pursuant to Section
10.1(b)(i), upon Buyer's receipt of a counterpart of the Release executed by
each member of the Selling Group, Buyer and Seller shall instruct the Escrow
Agent to release the Deposit Letter of Credit to Seller. If this Agreement is
terminated either by Buyer or Seller pursuant to any provision of Section 10.1
other than a termination by Seller pursuant to Section 10.1(b)(i), then upon
Buyer's receipt of a counterpart of the Release, Buyer and Seller shall
instruct the Escrow Agent to release the Deposit Letter of Credit to Buyer.
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(b) As a condition of payment, and upon receipt of the
liquidated damages under this Section 10.2, each member of the Selling Group
hereby irrevocably and unconditionally releases, acquits, and forever
discharges Buyer and its successors, assigns, employees, agents, stockholders,
partners, subsidiaries, parent companies and other affiliates (corporate or
otherwise) (the "Released Parties") of and from any and all Released Claims,
including, without limitation, all Released Claims arising out of, based upon,
resulting from or relating to the negotiation, execution, performance, breach
or otherwise related to or arising out of the Transaction Documents or any
agreement entered into in connection therewith or related thereto. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses
or expenses (including attorneys' and other professional fees and expenses)
held by any party hereto, whether known or unknown, matured or unmatured,
suspected or unsuspected, liquidated or unliquidated, absolute or contingent,
direct or derivative.
ARTICLE XI
INDEMNIFICATION
11.1. Indemnification of Buyer. Each of the members of the Selling
Group jointly and severally agree to indemnify and hold harmless the Buyer
Indemnified Parties from and against any and all Buyer Indemnified Costs.
11.2. Indemnification of the Selling Group and the Shareholders.
Buyer agrees to indemnify and hold harmless the Seller Indemnified Parties from
and against any and all Seller Indemnified Costs.
11.3. Defense of Third-Party Claims. An Indemnified Party shall
give prompt written notice to any entity or Person who is obligated to provide
indemnification hereunder (an "Indemnifying Party") of the commencement or
assertion of any action, proceeding, demand, or claim by a third party
(collectively, a "third-party action") in respect of which such Indemnified
Party shall seek indemnification hereunder. Any failure so to notify an
Indemnifying Party shall not relieve such Indemnifying Party from any liability
that it, he, or she may have to such Indemnified Party under this Article XI
unless the failure to give such notice materially and adversely prejudices such
Indemnifying Party. The Indemnifying Party shall have the right to assume
control of the defense of, settle, or otherwise dispose of such third-party
action on such terms as they deem appropriate; provided, however, that:
(a) The Indemnified Party shall be entitled, at his, her,
or its own expense, to participate in the defense of such third-party action
(provided, however, that the Indemnifying Parties shall pay the attorneys' fees
of the Indemnified Party if (i) the employment of separate counsel shall have
been authorized in writing by any such Indemnifying Party in connection with
the defense of such third-party action, (ii) the Indemnifying Parties shall not
have employed counsel
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reasonably satisfactory to the Indemnified Party to have charge of such
third-party action, (iii) the Indemnified Party shall have reasonably concluded
that there may be defenses available to such Indemnified Party that are
different from or additional to those available to the Indemnifying Party, or
(iv) the Indemnified Party's counsel shall have advised the Indemnified Party
in writing, with a copy to the Indemnifying Party, that there is a conflict of
interest that could make it inappropriate under applicable standards of
professional conduct to have common counsel);
(b) The Indemnifying Party shall obtain the prior written
approval of the Indemnified Party before entering into or making any
settlement, compromise, admission, or acknowledgment of the validity of such
third-party action or any liability in respect thereof if, pursuant to or as a
result of such settlement, compromise, admission, or acknowledgment, injunctive
or other equitable relief would be imposed against the Indemnified Party or if,
in the opinion of the Indemnified Party, such settlement, compromise,
admission, or acknowledgment could have an adverse effect on its business or,
in the case of an Indemnified Party who is a natural Person, on his or her
assets or interests;
(c) No Indemnifying Party shall consent to the entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by each claimant or plaintiff to each
Indemnified Party of a release from all liability in respect of such
third-party action; and
(d) The Indemnifying Party shall not be entitled to
control (but shall be entitled to participate at its own expense in the defense
of), and the Indemnified Party shall be entitled to have sole control over, the
defense or settlement, compromise, admission, or acknowledgment of any
third-party action (i) as to which the Indemnifying Party fails to assume the
defense within a reasonable length of time or (ii) to the extent the
third-party action seeks an order, injunction, or other equitable relief
against the Indemnified Party which, if successful, would materially adversely
affect the business, operations, assets, or financial condition of the
Indemnified Party; provided, however, that the Indemnified Party shall make no
settlement, compromise, admission, or acknowledgment that would give rise to
liability on the part of any Indemnifying Party without the prior written
consent of such Indemnifying Party.
The parties hereto shall extend reasonable cooperation in connection with the
defense of any third-party action pursuant to this Article XI and, in
connection therewith, shall furnish such records, information, and testimony
and attend such conferences, discovery proceedings, hearings, trials, and
appeals as may be reasonably requested.
11.4. Direct Claims. In any case in which an Indemnified Party seeks
indemnification hereunder that is not subject to Section 11.3 because no
third-party action is involved, the Indemnified Party shall notify the
Indemnifying Party in writing of any Indemnified Costs which such Indemnified
Party claims are subject to indemnification under the terms hereof. The failure
of the Indemnified Party to exercise promptness in such notification shall not
constitute a waiver of such claim unless the resulting delay materially
prejudices the position of the Indemnifying Party with respect to such claim.
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11.5. Escrow. On the Closing Date, Buyer and Seller will enter into
the Indemnification Escrow Agreement in accordance with which Buyer shall, at
Closing, deposit from the Purchase Price an amount equal to $1,000,000 (the
"Holdback Amount") with the Escrow Agent.
11.6. Limitations on Indemnified Representation Costs. Subject to
Section 11.7 and Section 12.17 hereof, the following provisions of this Section
11.6 shall be applicable after the time of the Closing:
(a) Minimum Loss. No Indemnifying Party shall be required
to indemnify an Indemnified Party for Indemnified Representation Costs unless
and until the aggregate amount of such Indemnified Representation Costs for
which the Indemnified Party is otherwise entitled to indemnification pursuant
to this Article XI exceeds $100,000 (the "Minimum Loss"). After the Minimum
Loss is exceeded, the Indemnified Party shall be entitled to be paid the entire
amount of its Indemnified Representation Costs in excess of (but not including)
the Minimum Loss, subject to the limitations on recovery and recourse set forth
in this Section 11.6 and in Section 11.7 below and subject to the exception
contained in Section 12.17. For purposes of determining the aggregate amount of
Minimum Loss suffered by an Indemnified Party, each representation and warranty
contained in this Agreement for which indemnification can be or is sought
hereunder shall be read (including for purposes of determining whether a breach
of such representation or warranty has occurred) without regard to materiality
(including Material Adverse Effect) qualifications that may be contained
therein. In addition, in determining whether an Indemnifying Party shall be
required to indemnify an Indemnified Party under this Article XI, once the
Minimum Loss requirement set forth in this clause (a) has been satisfied, each
representation and warranty contained in this Agreement for which
indemnification can be or is sought hereunder shall be read (including, for
purposes of determining whether a breach of such representation or warranty has
occurred) without regard to materiality (including Material Adverse Effect)
qualifications that may be contained therein.
(b) Limitation as to Time. No Indemnifying Party shall be
liable for any Indemnified Representation Costs pursuant to this Article XI
unless a written claim for indemnification in accordance with Section 11.3 or
11.4 is given by the Indemnified Party to the Indemnifying Party with respect
thereto on or before the later of (i) 460 days after the Closing Date or (ii)
October 31, 1998, except that this time limitation shall not apply to any
claims contemplated by Section 12.17.
(c) Recovery against Escrowed Funds. Subject to Section
12.17 hereof, a Buyer Indemnified Party shall be entitled to payment only out
of the Holdback Amount pursuant to the terms of this Article XI and the
Indemnification Escrow Agreement for all amounts due to a Buyer Indemnified
Party with respect to any claim by a Buyer Indemnified Party against any member
of the Selling Group for Buyer Indemnified Representation Costs payable under
this Article XI.
(d) Other Indemnified Costs. The provisions of this
Section 11.6 shall only be applicable to Indemnified Representation Costs and
shall not be applicable to any other Indemnified Costs.
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11.7. Instructions to Escrow Agent. Each member of the Selling Group
hereby covenants and agrees that at any time any member of the Selling Group is
or becomes obligated to indemnify a Buyer Indemnified Party for Buyer
Indemnified Costs under this Article XI, Seller will execute and deliver to the
Escrow Agent written instructions to release to the Buyer Indemnified Party
such portion of the Holdback Amount as is necessary to indemnify the Buyer
Indemnified Party for such Buyer Indemnified Costs.
ARTICLE XII
GENERAL PROVISIONS
12.1. Survival of Representations, Warranties, and Covenants.
Regardless of any investigation at any time made by or on behalf of any party
hereto or of any information any party may have in respect thereof, each of the
representations and warranties made hereunder or pursuant hereto or in
connection with the transactions contemplated hereby shall survive the Closing.
Except as otherwise provided in the next two sentences, the representations and
warranties set forth in this Agreement shall terminate on the later of (a) the
460th day following the Closing Date, and (b) October 31, 1998. Following the
date of termination of a representation or warranty, no claim can be brought
with respect to a breach of such representation or warranty, but no such
termination shall affect any claim for a breach of a representation or warranty
that was asserted before the date of termination. To the extent that such are
performable after the Closing, each of the covenants and agreements contained
in each of the Transaction Documents shall survive the Closing indefinitely.
12.2. Further Actions. After the Closing Date, each member of the
Selling Group shall execute and deliver such other certificates, agreements,
conveyances, and other documents and take such other action as may be
reasonably requested by Buyer in order to transfer and assign to, and vest in,
Buyer the Assets pursuant to the terms of this Agreement.
12.3. Amendment and Modification. This Agreement may not be amended
except by an instrument in writing signed by the parties hereto.
12.4. Waiver of Compliance. Any failure of Buyer on the one hand,
or any member of the Selling Group, on the other hand, to comply with any
obligation, covenant, agreement, or condition contained herein may be waived
only if set forth in an instrument in writing signed by the party or parties to
be bound thereby, but such waiver or failure to insist upon strict compliance
with such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any other failure.
12.5. Specific Performance. The parties recognize that, in the
event Seller or any other member of the Selling Group should refuse to perform
under the provisions of this Agreement, monetary damages alone will not be
adequate. Buyer shall therefore be entitled, in addition to any other remedies
which may be available, including money damages, to obtain specific performance
of the terms of this Agreement. In the event of any action to enforce this
Agreement specifically, the members of the Selling Group hereby waive the
defense that there is an adequate remedy at law.
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<PAGE> 56
12.6. Severability. If any term or other provision of this
Agreement is invalid, illegal, or incapable of being enforced by any rule of
applicable law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated herein are not
affected in any manner materially adverse to any party. Upon such determination
that any term or other provision is invalid, illegal, or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated herein are consummated as originally contemplated to the fullest
extent possible.
12.7. Expenses and Obligations. Except as otherwise expressly
provided in this Agreement or as provided by law, all costs and expenses
incurred by the parties hereto in connection with the consummation of the
transactions contemplated hereby shall be borne solely and entirely by the
party which has incurred such expenses. Notwithstanding the foregoing, (a) the
filing fees incurred in connection with the filings made pursuant to the HSR
Act shall be borne equally by Seller and Buyer, (b) the fee payable to the
Escrow Agent shall be borne as provided in the Indemnification Escrow Agreement
and the Deposit Escrow Agreement, (c) the brokerage fees payable to Americom
shall be borne equally by Seller and Buyer, provided neither Seller nor Buyer
shall be obligated for more than $200,000 of such brokerage fees, and (d) all
sales taxes arising out of the transactions contemplated by this Agreement
shall be paid by Seller. In the event of a dispute between the parties in
connection with this Agreement and the transactions contemplated hereby, each
of the parties hereto hereby agrees that the prevailing party shall be entitled
to reimbursement by the other party of reasonable legal fees and expenses
incurred in connection with any action or proceeding.
12.8. Parties in Interest. This Agreement shall be binding upon
and, except as provided below, inure solely to the benefit of each party hereto
and their successors and assigns, and nothing in this Agreement, except as set
forth below, express or implied, is intended to confer upon any other Person
(other than the Indemnified Parties as provided in Article XI) any rights or
remedies of any nature whatsoever under or by reason of this Agreement.
12.9. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested) or sent by facsimile
transmission (with electronic confirmation of receipt) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) If to Buyer, to
Point Madison Acquisition Company, Inc.
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart, Jr.
Facsimile: (214) 740-7313
51
<PAGE> 57
with a copy to
Capstar Broadcasting Partners
600 Congress Avenue
Suite 1400
Austin, Texas 78701
Attn: William S. Banowsky, Jr.
Facsimile: (512) 404-6850
Vinson & Elkins L.L.P.
2001 Ross Avenue
3700 Trammell Crow Center
Dallas, Texas 75201-2975
Attn: A. Winston Oxley
Facsimile: (214) 999-7891
(b) If to Seller or Point, to
c/o Point Communications Inc.
27 South Davis Avenue
P. O. Box 1094
Montauk, New York 11954
Attn: Richard P. Verne
Facsimile: (516) 668-4611
with a copy to
Melvin Epstein, Esq.
Stroock & Stroock & Lavan
180 Maiden Lane
New York, New York 10038
Facsimile: (212) 806-6006
(c) If to Midcontinent, to
Mark Niblick, Esq.
Executive Vice President and General Counsel
Midcontinent Media, Inc.
7900 Xerxes Avenue, South, Suite 110
Minneapolis, Minnesota 55431
52
<PAGE> 58
with a copy to
George Reilly, Esq.
Leonard, Street and Deinard
150 South Fifth Street, Suite 2300
Minneapolis, Minnesota 55402
Facsimile: (612) 335-1657
12.10. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
12.11. Entire Agreement. This Agreement (which term shall be deemed
to include the Exhibits and Schedules hereto and the other certificates,
documents and instruments delivered hereunder) constitutes the entire agreement
of the parties hereto and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof. There are no representations or warranties, agreements, or covenants
other than those expressly set forth in this Agreement.
12.12. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WISCONSIN. ANY
SUIT OR PROCEEDING BROUGHT HEREUNDER SHALL BE SUBJECT TO THE
EXCLUSIVE JURISDICTION OF THE COURTS LOCATED IN WISCONSIN.
12.13. Public Announcements. Seller and Buyer shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to this Agreement or the transactions contemplated
hereby and shall not issue any such press release or make any such public
statement prior to such consultation. Prior to the Closing, neither Seller nor
any other member of the Selling Group will issue any other press release or
otherwise make any public statements (other than in connection with FCC
filings) regarding this transaction, except as may be required by applicable
law.
12.14. Assignment. Neither this Agreement nor any of the rights,
interests, or obligations hereunder shall be assigned by any of the parties
hereto, whether by operation of law or otherwise; provided, however, that (a)
upon notice to Seller and without releasing Buyer from any of its obligations
or liabilities hereunder, Buyer may assign or delegate any or all of its rights
or obligations under this Agreement to any Affiliate thereof and (b) nothing in
this Agreement shall limit Buyer's ability to make a collateral assignment of
its rights under this Agreement to any institutional lender that provides funds
to Buyer without the consent of Seller. Seller shall execute on behalf of the
Selling Group an acknowledgment of such assignment(s) and/or collateral
53
<PAGE> 59
assignment(s) in such forms as Buyer or its institutional lenders may from time
to time reasonably request; provided, however, that unless written notice is
given to Seller that any such collateral assignment has been foreclosed upon,
Seller shall be entitled to deal exclusively with Buyer as to any matters
arising under this Agreement or any of the other agreements delivered pursuant
hereto. In the event of such an assignment, the provisions of this Agreement
shall inure to the benefit of and be binding on Buyer's assigns.
12.15. Director and Officer Liability. The directors, officers, and
stockholders of Buyer and its Affiliates shall not have any personal liability
or obligation arising under this Agreement (including any claims that any
member of the Selling Group may assert) other than as an assignee of this
Agreement. The directors, officers, stockholders and partners of Point and
Midcontinent shall not have any personal liability or obligation arising under
this Agreement (including any claims that Buyer may assert).
12.16. No Reversionary Interest. The parties expressly agree,
pursuant to Section 73.1150 of the FCC's rules, that no member of the Selling
Group retains either the right to reassignment of any of the FCC Licenses in
the future or the right to operate or use the facilities of the Stations for
any period beyond the Closing Date.
12.17. No Waiver Relating to Claims for Fraud. The liability of any
party under Article XI shall be in addition to, and not exclusive of, any other
liability that such party may have at law or equity based on such party's
fraudulent acts or omissions. None of the provisions set forth in this
Agreement, including the provisions set forth in Section 11.6 or Section 11.7,
shall be deemed a waiver by any party to this Agreement of any right or remedy
that such party may have at law or equity based on any other party's fraudulent
acts or omissions, nor shall any such provisions limit, or be deemed to limit
(i) the amounts of recovery sought or awarded in any such claim for fraud, (ii)
the time period during which a claim for fraud may be brought, or (iii) the
recourse that any such party may seek against another party with respect to a
claim for fraud; provided, that with respect to such rights and remedies at law
or equity, the parties further acknowledge and agree that none of the
provisions of this Section 12.17, nor any reference to this Section 12.17
throughout this Agreement, shall be deemed a waiver of any defenses that may be
available in respect of actions or claims for fraud, including but not limited
to, defenses of statutes of limitations or limitations of damages. The
prevailing party in any cause of action brought by a party seeking remedies at
law or equity based upon a party's fraudulent acts or omissions shall be
entitled to recover from the non-prevailing party all attorney's fees and
expenses incurred by the prevailing party in connection with such cause of
action.
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<PAGE> 60
IN WITNESS WHEREOF, Buyer and the members of the Selling Group have
caused this Agreement to be signed, all as of the date first written above.
BUYER:
POINT MADISON ACQUISITION COMPANY, INC.
-------------------------------------------------
By: Eric C. Neuman, President
SELLING GROUP:
MADISON RADIO GROUP
By: POINT COMMUNICATIONS LIMITED PARTNERSHIP,
Its General Partner
By: POINT COMMUNICATIONS, INC.,
Its General Partner
By:
------------------------------------
Richard P. Verne, President
AND
By: MIDCONTINENT BROADCASTING CO.
OF WISCONSIN, INC., Its General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
55
<PAGE> 61
POINT COMMUNICATIONS LIMITED PARTNERSHIP
By: POINT COMMUNICATIONS, INC.,
Its General Partner
By:
--------------------------------------
Richard P. Verne, President
MIDCONTINENT BROADCASTING CO. OF
WISCONSIN, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
56
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into effective
as of the 1st day of January, 1997, by and between PAUL D. STONE, an individual
("EXECUTIVE"), and CAPSTAR BROADCASTING PARTNERS, INC. (the "COMPANY").
In consideration of the covenants and conditions contained herein, the
Company and Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts such employment. During the term of this Agreement, Executive
shall serve as Chief Financial Officer and Executive Vice President of the
Company. Executive shall serve under the direction of the Company's Chairman of
the Board (the "CHAIRMAN") and Board of Directors (the "BOARD"), devoting his
full working time and attention to performing such duties as the Chairman of
the Board may specify, working diligently, faithfully, loyally, and to the best
of his ability, experience and talent, to help accomplish the goals of the
Company, as set forth by the Chairman and the Board.
2. TERM OF AGREEMENT. The term of this Agreement shall commence on
January 1, 1997 and continue until December 31, 2001, unless sooner terminated
or renewed in accordance with this Agreement. This Agreement shall
automatically renew for successive one (1) year terms unless either party gives
the other written notice of its intention not to so renew at least ninety (90)
days prior to the date this Agreement would otherwise expire.
3. LOCATION OF SERVICES. Executive's services under this Agreement
shall be performed primarily at the Company's headquarters in Austin, Texas.
4. COMPENSATION.
4.1 BASE SALARY. The Company shall pay Executive an annual Base
Salary (herein so called) of $200,000. The Base Salary shall be paid bi-monthly
in accordance with the customary payroll practices of the Company from time to
time in effect. No less frequently than annually, the Board shall review
Executive's Base Salary and increase it as it deems appropriate. However, the
Company agrees that, at a minimum, the Base Salary will be increased annually
by an amount equal to the percentage increase, if any, in the Consumer Price
Index (as published by the United States Department of Labor with respect to
the Austin, Texas metropolitan area) during the preceding calendar year.
4.2 BONUS. Executive shall be entitled to receive such annual cash
bonuses as the Board may determine. The extent to which Executive will be
entitled to an annual cash bonus will be based upon two factors: first, and
most importantly, individual job performance; and secondly, the attainment by
the Company of reasonable broadcast cash flow projections established annually
by the Board.
<PAGE> 2
5. BENEFITS.
5.1 GENERAL. Executive shall be entitled to all fringe benefits and
perquisites that the Company may make available from time to time for all
senior executive employees. Without limitation, such fringe benefits and
perquisites shall include those available under any health and benefits
package, life insurance and disability programs, and participation in any
incentive, stock option and employee benefits plan or program designed for
senior executive employees. Executive shall be entitled to paid vacation in
accordance with the Company's standard employment policies and practices for
senior executive employees. Executive shall receive such additional fringe
benefits, if any, as the Board shall determine.
5.2 BUSINESS EXPENSES. The Company shall reimburse Executive for
all reasonable expenses incurred by Executive in the performance of Executive's
duties, subject to compliance with the expense reimbursement policies
established by the Company.
5.3 AUTOMOBILE ALLOWANCE. Executive shall furnish his own
automobile in the performance of services required by him under this Agreement,
and the Company shall pay Executive $850 per month as an automobile allowance.
5.4 RELOCATION EXPENSES. The Company shall pay the reasonable
expenses incurred by Executive in (a) commuting from Dallas to Austin until the
earlier of (i) December 31, 1997, or (ii) the date on which Executive relocates
his family to Austin, and (b) relocating his family from Dallas to Austin.
5.5 COUNTRY CLUB. The Company shall pay (a) the initiation fee (up
to $15,000) for Executive to join a country club in the Austin, Texas area, and
(b) Executive's regular monthly dues at such club.
5.6 STOCK OPTIONS. The Company will grant to Executive tax
qualified incentive stock options to purchase that number of shares of common
stock of the Company which is equal to or greater than 60% of the total number
of shares covered by options issued to its Chairman, R. Steven Hicks, under the
Company's initial stock option plan.
5.7 TERMINATION OF BENEFITS. Except as may be provided in any
separate agreement between the Company and Executive, all unvested benefits
provided under this Section 5 shall terminate concurrently with termination of
Executive's employment hereunder for any reason whatsoever. Nothing herein
shall vest any rights in any profit sharing or bonus plans, general expense or
automotive reimbursements, and similar fringe benefits which the Company may
provide, if any, beyond the date on which Executive's employment is terminated
for any reason.
2
<PAGE> 3
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION FOR CAUSE. Notwithstanding any other provision of
this Agreement, Executive's employment with the Company may be terminated for
cause at any time by the Company, upon reasonable notice to Executive. For
purposes of this Agreement, "cause" shall mean Executive's (a) gross or
habitual failure to perform Executive's obligations pursuant to the terms of
this Agreement and such performance failure is not corrected within thirty (30)
days after written notice thereof by the Board to Executive; or (b) conduct
amounting to fraud or dishonesty against the Company; or (c) a conviction or
plea of guilty or nolo contendere to a felony or a crime involving dishonesty
against the Company.
6.2 TERMINATION WITHOUT CAUSE. The Company may terminate
Executive's employment under this Agreement without cause at any time upon
written notice to Executive.
6.3 TERMINATION FOR DEATH OR DISABILITY. Employment hereunder shall
automatically terminate upon Executive's death or disability. Disability, for
purposes of this Agreement, shall mean a physical or mental disability that
renders it impossible or impracticable for Executive to perform his duties
under this Agreement at the level he is capable of performing them at the date
of this Agreement for a continuous period of ninety (90) days or more.
6.4 VOLUNTARY TERMINATION. Executive may terminate this Agreement
upon thirty (30) days' written notice to the Company; provided, however, that
if prior notice is given, the Company may, at its sole discretion upon receipt
of such notice, require Executive to terminate at any time in advance of the
proposed termination date so long as the Company pays Executive salary for at
least one (1) month after such termination notice by Executive is received by
the Company.
7. POST-TERMINATION COMPENSATION.
7.1 TERMINATION BY THE COMPANY FOR CAUSE. Notwithstanding any other
provision of this Agreement to the contrary, if Executive's employment is
terminated for cause pursuant to Section 6.1, the Company shall make no further
salary payments except those earned prior to the date of termination and shall
make no further bonus payments.
7.2 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company
terminates this Agreement without cause as defined in Section 6.2 hereof, then
(a) all of Executive's stock options shall immediately vest, and (b) the
Company shall pay Executive severance pay equal to twenty-four (24) months'
Base Salary. The payment described in this Section 7.2 shall be made to the
Executive in a lump sum within thirty (30) days after such termination without
any obligation on Executive's part to render services and without regard to
whether he receives compensation from any other source after the effective date
of the termination of Executive's employment, and such payment is in full
settlement of all of the obligations of the Company hereunder.
3
<PAGE> 4
7.3 TERMINATION BY EXECUTIVE'S DEATH OR DISABILITY. If employment
shall terminate by reason of Executive's death or disability, the Company shall
pay Executive or Executive's estate severance equal to twelve (12) months' Base
Salary, payable in a lump sum within thirty (30) days after such termination.
7.4 VOLUNTARY TERMINATION. If Executive terminates this Agreement,
the Company shall make no further salary payments except those earned prior to
the date of termination and shall make no further bonus payments.
8. NONCOMPETITION. Until one (1) year after termination of Executive's
employment with the Company, Executive shall not (a) either directly or
indirectly, carry on, engage in or have any interest in any business that
competes with the Company, excepting ownership by Executive of no more than one
percent (1%) of the publicly traded common stock of any corporation, (b)
without the express written consent of the Company, accept employment with, or
in any other manner agree to provide, for compensation, services for any other
person or entity that competes with the Company, or (c) materially disrupt,
damage, impair or interfere with the business of the Company, whether by way of
interfering with or soliciting its employees, disrupting its relationship with
customers, agents, representatives or vendors, or otherwise. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of
this Section 8 will be adequate and that the Company, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage.
9. CONFIDENTIALITY. Executive agrees that he shall not, during his
employment with the Company or any time after the termination of this
employment with the Company, use or disclose to any third party, other than
during the proper performance of this duties hereunder, any of the trade
secrets, confidential dealings, or other confidential information concerning
the business, finances, transactions, or affairs of the Company.
10. INDEMNIFICATION. The Company will indemnify, defend and hold
Executive harmless from and against any and all loss, liability, cost and
expense (including attorneys' fees and court costs) arising out of or relating
to activities of Executive performed within the scope of Executive's employment
hereunder, excluding Executive's gross negligence or willful misconduct.
11. ARBITRATION. Either the Company or Executive may require that any
dispute under this Agreement be submitted to arbitration pursuant to this
Section 11. To the extent the provisions of this Section 11 vary from or are
inconsistent with the Commercial Arbitration Rules of the American Arbitration
Association or any other arbitration tribunal, the provisions of this Section
11 shall govern. All arbitrations shall occur at a location in Austin, Texas
chosen by the arbitrators and shall be conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association (or any successor
organization, of if no such successor organization exists, then from an
organization composed of persons of similar professional qualifications). The
party desiring arbitration shall give notice that effect to the other party and
simultaneously therewith also shall give notice to the director of the Dallas,
Texas regional office of the American Arbitration Association
4
<PAGE> 5
(or any successor organization, or if no such successor organization exists,
then to an organization composed of persons of similar professional
qualifications), requesting such organization to select, as soon as possible
but in any event within the next thirty (30) days, three (3) arbitrators with,
if reasonably possible, recognized expertise in the subject matter of the
arbitration. At the request of either party, the arbitrators shall authorize
the service of subpoenas for the production of documents or attendance of
witnesses. Within thirty (30) days after their appointment, the arbitrators so
chosen shall hold a hearing at which each party may submit evidence, be heard
and cross-examine witnesses, with each party having at least ten (10) days
advance notice of the hearing. The hearing shall be conducted such that each of
the Company and Executive shall have reasonably adequate time to present oral
evidence or argument, but either party may present whatever written evidence it
deems appropriate prior to the hearing (with copies of any such written
evidence being sent to the other party). In the event of the failure, refusal
or inability of any arbitrator to act, a new arbitrator shall be appointed in
his stead, which appointment shall be made in the same manner as hereinbefore
provided. The decision of the arbitrators so chosen shall be given within a
period of thirty (30) days after the conclusion of such hearing, and shall be
accompanied by conclusions of law and findings of fact. The decision in which
any two arbitrators so appointed and acting hereunder concur shall in all cases
be binding and conclusive upon the parties and shall be the basis for a
judgment entered in any court of competent jurisdiction. The fees and expenses
of arbitration under this Section 11 shall be apportioned to the Company and
Executive in such a manner as decided by the arbitrators. The Company and
Executive may at any time by mutual written agreement discontinue arbitration
proceedings and themselves agree upon any such matter submitted to arbitration.
12. POWER AND AUTHORITY. Each party executing this Agreement hereby
covenants, represents and warrants that such party has full power and authority
to execute this Agreement, that no other consents or approvals of any other
third parties are required or necessary for this Agreement to be so binding and
that this Agreement shall be fully enforceable in accordance with its terms.
13. HEIRS, ADMINISTRATORS AND SUCCESSORS. Except as otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon, the
heirs, administrators and successors of each of the parties hereto.
14. NONASSIGNABILITY. The Company may assign the benefit of this
Agreement to any successor in interest that results from a merger,
reorganization or acquisition. Otherwise, no party to this Agreement may assign
any right hereunder or delegate any duty hereunder without the written consent
of the other party affected by such assignment or delegation.
15. NO ORAL MODIFICATION. This Agreement may only be changed or
modified and any provisions hereof may only be waived in or by a writing signed
by a party against whom enforcement of any waiver, change or modification is
sought.
16. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the State of
Texas.
5
<PAGE> 6
17. SEVERABILITY. If any portion of this Agreement shall be held
illegal, unenforceable, void or voidable by any court, each of the remaining
terms hereof shall nevertheless remain in full force and effect as a separate
contract.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties pertaining to the matters set forth herein,
and all prior agreements, understandings or representations are hereby
terminated and canceled in their entirety and are of no further force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above indicated.
COMPANY:
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. STEVEN HICKS
-----------------------------------
R. Steven Hicks
Chairman/CEO
EXECUTIVE:
/s/ PAUL D. STONE
-----------------------------------
Paul D. Stone
Address: 1002 Forestwood Lane
Coppell, Texas 75019
6
<PAGE> 1
EXHIBIT 10.7
EMPLOYMENT AGREEMENT
This EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into effective
as of the 1st day of January, 1997, by and between WILLIAM S. BANOWSKY, JR., an
individual ("EXECUTIVE"), and CAPSTAR BROADCASTING PARTNERS, INC. (the
"COMPANY").
In consideration of the covenants and conditions contained herein, the
Company and Executive agree as follows:
1. EMPLOYMENT. The Company hereby employs Executive, and Executive
hereby accepts such employment. During the term of this Agreement, Executive
shall serve as General Counsel and Executive Vice President of the Company.
Executive shall serve under the direction of the Company's Chairman of the
Board (the "CHAIRMAN") and Board of Directors (the "BOARD"), devoting his full
working time and attention to performing such duties as the Chairman of the
Board may specify, working diligently, faithfully, loyally, and to the best of
his ability, experience and talent, to help accomplish the goals of the
Company, as set forth by the Chairman and the Board.
2. TERM OF AGREEMENT. The term of this Agreement shall commence on
January 1, 1997 and continue until December 31, 2001, unless sooner terminated
or renewed in accordance with this Agreement. This Agreement shall
automatically renew for successive one (1) year terms unless either party gives
the other written notice of its intention not to so renew at least ninety (90)
days prior to the date this Agreement would otherwise expire.
3. LOCATION OF SERVICES. Executive's services under this Agreement
shall be performed primarily at the Company's headquarters in Austin, Texas.
4. COMPENSATION.
4.1 BASE SALARY. The Company shall pay Executive an annual Base
Salary (herein so called) of $200,000. The Base Salary shall be paid bi-monthly
in accordance with the customary payroll practices of the Company from time to
time in effect. No less frequently than annually, the Board shall review
Executive's Base Salary and increase it as it deems appropriate. However, the
Company agrees that, at a minimum, the Base Salary will be increased annually
by an amount equal to the percentage increase, if any, in the Consumer Price
Index (as published by the United States Department of Labor with respect to
the Austin, Texas metropolitan area) during the preceding calendar year.
4.2 BONUS. Executive shall be entitled to receive such annual cash
bonuses as the Board may determine. The extent to which Executive will be
entitled to an annual cash bonus will be based upon two factors: first, and
most importantly, individual job performance; and secondly, the attainment by
the Company of reasonable broadcast cash flow projections established annually
by the Board.
1
<PAGE> 2
5. BENEFITS.
5.1 GENERAL. Executive shall be entitled to all fringe benefits and
perquisites that the Company may make available from time to time for all
senior executive employees. Without limitation, such fringe benefits and
perquisites shall include those available under any health and benefits
package, life insurance and disability programs, and participation in any
incentive, stock option and employee benefits plan or program designed for
senior executive employees. Executive shall be entitled to paid vacation in
accordance with the Company's standard employment policies and practices for
senior executive employees. Executive shall receive such additional fringe
benefits, if any, as the Board shall determine.
5.2 BUSINESS EXPENSES. The Company shall reimburse Executive for
all reasonable expenses incurred by Executive in the performance of Executive's
duties, subject to compliance with the expense reimbursement policies
established by the Company.
5.3 AUTOMOBILE ALLOWANCE. Executive shall furnish his own
automobile in the performance of services required by him under this Agreement,
and the Company shall pay Executive $850 per month as an automobile allowance.
5.4 RELOCATION EXPENSES. The Company shall pay the reasonable
expenses incurred by Executive in (a) commuting from Dallas to Austin until the
earlier of (i) December 31, 1997, or (ii) the date on which Executive relocates
his family to Austin, and (b) relocating his family from Dallas to Austin.
5.5 COUNTRY CLUB. The Company shall pay (a) the initiation fee (up
to $15,000) for Executive to join a country club in the Austin, Texas area, and
(b) Executive's regular monthly dues at such club.
5.6 STOCK OPTIONS. The Company will grant to Executive tax
qualified incentive stock options to purchase that number of shares of common
stock of the Company which is equal to or greater than 60% of the total number
of shares covered by options issued to its Chairman, R. Steven Hicks, under the
Company's initial stock option plan.
5.7 TERMINATION OF BENEFITS. Except as may be provided in any
separate agreement between the Company and Executive, all unvested benefits
provided under this Section 5 shall terminate concurrently with termination of
Executive's employment hereunder for any reason whatsoever. Nothing herein
shall vest any rights in any profit sharing or bonus plans, general expense or
automotive reimbursements, and similar fringe benefits which the Company may
provide, if any, beyond the date on which Executive's employment is terminated
for any reason.
2
<PAGE> 3
6. TERMINATION OF EMPLOYMENT.
6.1 TERMINATION FOR CAUSE. Notwithstanding any other provision of
this Agreement, Executive's employment with the Company may be terminated for
cause at any time by the Company, upon reasonable notice to Executive. For
purposes of this Agreement, "cause" shall mean Executive's (a) gross or
habitual failure to perform Executive's obligations pursuant to the terms of
this Agreement and such performance failure is not corrected within thirty (30)
days after written notice thereof by the Board to Executive; or (b) conduct
amounting to fraud or dishonesty against the Company; or (c) a conviction or
plea of guilty or nolo contendere to a felony or a crime involving dishonesty
against the Company.
6.2 TERMINATION WITHOUT CAUSE. The Company may terminate
Executive's employment under this Agreement without cause at any time upon
written notice to Executive.
6.3 TERMINATION FOR DEATH OR DISABILITY. Employment hereunder shall
automatically terminate upon Executive's death or disability. Disability, for
purposes of this Agreement, shall mean a physical or mental disability that
renders it impossible or impracticable for Executive to perform his duties
under this Agreement at the level he is capable of performing them at the date
of this Agreement for a continuous period of ninety (90) days or more.
6.4 VOLUNTARY TERMINATION. Executive may terminate this Agreement
upon thirty (30) days' written notice to the Company; provided, however, that
if prior notice is given, the Company may, at its sole discretion upon receipt
of such notice, require Executive to terminate at any time in advance of the
proposed termination date so long as the Company pays Executive salary for at
least one (1) month after such termination notice by Executive is received by
the Company.
7. POST-TERMINATION COMPENSATION.
7.1 TERMINATION BY THE COMPANY FOR CAUSE. Notwithstanding any other
provision of this Agreement to the contrary, if Executive's employment is
terminated for cause pursuant to Section 6.1, the Company shall make no further
salary payments except those earned prior to the date of termination and shall
make no further bonus payments.
7.2 TERMINATION BY THE COMPANY WITHOUT CAUSE. If the Company
terminates this Agreement without cause as defined in Section 6.2 hereof, then
(a) all of Executive's stock options shall immediately vest, and (b) the
Company shall pay Executive severance pay equal to twenty-four (24) months'
Base Salary. The payment described in this Section 7.2 shall be made to the
Executive in a lump sum within thirty (30) days after such termination without
any obligation on Executive's part to render services and without regard to
whether he receives compensation from any other source after the effective date
of the termination of Executive's employment, and such payment is in full
settlement of all of the obligations of the Company hereunder.
3
<PAGE> 4
7.3 TERMINATION BY EXECUTIVE'S DEATH OR DISABILITY. If employment
shall terminate by reason of Executive's death or disability, the Company shall
pay Executive or Executive's estate severance equal to twelve (12) months' Base
Salary, payable in a lump sum within thirty (30) days after such termination.
7.4 VOLUNTARY TERMINATION. If Executive terminates this Agreement,
the Company shall make no further salary payments except those earned prior to
the date of termination and shall make no further bonus payments.
8. NONCOMPETITION. Until one (1) year after termination of Executive's
employment with the Company, Executive shall not (a) either directly or
indirectly, carry on, engage in or have any interest in any business that
competes with the Company, excepting ownership by Executive of no more than one
percent (1%) of the publicly traded common stock of any corporation, (b)
without the express written consent of the Company, accept employment with, or
in any other manner agree to provide, for compensation, services for any other
person or entity that competes with the Company, or (c) materially disrupt,
damage, impair or interfere with the business of the Company, whether by way of
interfering with or soliciting its employees, disrupting its relationship with
customers, agents, representatives or vendors, or otherwise. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of
this Section 8 will be adequate and that the Company, in addition to any other
relief available to it, shall be entitled to temporary and permanent injunctive
relief without the necessity of proving actual damage.
9. CONFIDENTIALITY. Executive agrees that he shall not, during his
employment with the Company or any time after the termination of this
employment with the Company, use or disclose to any third party, other than
during the proper performance of this duties hereunder, any of the trade
secrets, confidential dealings, or other confidential information concerning
the business, finances, transactions, or affairs of the Company.
10. INDEMNIFICATION. The Company will indemnify, defend and hold
Executive harmless from and against any and all loss, liability, cost and
expense (including attorneys' fees and court costs) arising out of or relating
to activities of Executive performed within the scope of Executive's employment
hereunder, excluding Executive's gross negligence or willful misconduct.
11. ARBITRATION. Either the Company or Executive may require that any
dispute under this Agreement be submitted to arbitration pursuant to this
Section 11. To the extent the provisions of this Section 11 vary from or are
inconsistent with the Commercial Arbitration Rules of the American Arbitration
Association or any other arbitration tribunal, the provisions of this Section
11 shall govern. All arbitrations shall occur at a location in Austin, Texas
chosen by the arbitrators and shall be conducted pursuant to the Commercial
Arbitration Rules of the American Arbitration Association (or any successor
organization, of if no such successor organization exists, then from an
organization composed of persons of similar professional qualifications). The
party desiring arbitration shall give notice that effect to the other party and
simultaneously therewith also shall give notice to the director of the Dallas,
Texas regional office of the American Arbitration Association
4
<PAGE> 5
(or any successor organization, or if no such successor organization exists,
then to an organization composed of persons of similar professional
qualifications), requesting such organization to select, as soon as possible
but in any event within the next thirty (30) days, three (3) arbitrators with,
if reasonably possible, recognized expertise in the subject matter of the
arbitration. At the request of either party, the arbitrators shall authorize
the service of subpoenas for the production of documents or attendance of
witnesses. Within thirty (30) days after their appointment, the arbitrators so
chosen shall hold a hearing at which each party may submit evidence, be heard
and cross-examine witnesses, with each party having at least ten (10) days
advance notice of the hearing. The hearing shall be conducted such that each of
the Company and Executive shall have reasonably adequate time to present oral
evidence or argument, but either party may present whatever written evidence it
deems appropriate prior to the hearing (with copies of any such written
evidence being sent to the other party). In the event of the failure, refusal
or inability of any arbitrator to act, a new arbitrator shall be appointed in
his stead, which appointment shall be made in the same manner as hereinbefore
provided. The decision of the arbitrators so chosen shall be given within a
period of thirty (30) days after the conclusion of such hearing, and shall be
accompanied by conclusions of law and findings of fact. The decision in which
any two arbitrators so appointed and acting hereunder concur shall in all cases
be binding and conclusive upon the parties and shall be the basis for a
judgment entered in any court of competent jurisdiction. The fees and expenses
of arbitration under this Section 11 shall be apportioned to the Company and
Executive in such a manner as decided by the arbitrators. The Company and
Executive may at any time by mutual written agreement discontinue arbitration
proceedings and themselves agree upon any such matter submitted to arbitration.
12. POWER AND AUTHORITY. Each party executing this Agreement hereby
covenants, represents and warrants that such party has full power and authority
to execute this Agreement, that no other consents or approvals of any other
third parties are required or necessary for this Agreement to be so binding and
that this Agreement shall be fully enforceable in accordance with its terms.
13. HEIRS, ADMINISTRATORS AND SUCCESSORS. Except as otherwise provided
herein, this Agreement shall inure to the benefit of and be binding upon, the
heirs, administrators and successors of each of the parties hereto.
14. NONASSIGNABILITY. The Company may assign the benefit of this
Agreement to any successor in interest that results from a merger,
reorganization or acquisition. Otherwise, no party to this Agreement may assign
any right hereunder or delegate any duty hereunder without the written consent
of the other party affected by such assignment or delegation.
15. NO ORAL MODIFICATION. This Agreement may only be changed or
modified and any provisions hereof may only be waived in or by a writing signed
by a party against whom enforcement of any waiver, change or modification is
sought.
16. GOVERNING LAW. This Agreement shall be deemed to be a contract
made under, and shall be construed in accordance with, the laws of the State of
Texas.
5
<PAGE> 6
17. SEVERABILITY. If any portion of this Agreement shall be held
illegal, unenforceable, void or voidable by any court, each of the remaining
terms hereof shall nevertheless remain in full force and effect as a separate
contract.
18. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
19. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties pertaining to the matters set forth herein,
and all prior agreements, understandings or representations are hereby
terminated and canceled in their entirety and are of no further force and
effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above indicated.
COMPANY:
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ R. STEVEN HICKS
--------------------------------
R. Steven Hicks
Chairman/CEO
EXECUTIVE:
/s/ WILLIAM S. BANOWSKY, JR.
------------------------------------
William S. Banoowsky, Jr.
Address: 3033 Westminister
Dallas, Texas 75205
6
<PAGE> 1
EXHIBIT 10.8
SECOND AMENDMENT
TO
STOCKHOLDERS AGREEMENT
This SECOND AMENDMENT TO STOCKHOLDERS AGREEMENT ("Amendment") dated as
of February 20, 1997, is entered into by and among Capstar Broadcasting
Partners, Inc., a Delaware corporation (the "Company"), Capstar Broadcasting
Partners, L.P., a Delaware limited partnership ("Capstar L.P."), Capstar BT
Partners, L.P., a Delaware limited partnership (the "New BT Holder"), Capstar
Boston Partners, L.L.C., a Delaware limited liability company (the "New Putnam
Holder") and the Required Holders and other parties named on the signature
pages hereto.
WHEREAS, the parties hereto, other than the New BT Holder and the New
Putnam Holder (collectively, the "New Holders"), are parties to that certain
Stockholders Agreement dated as of October 16, 1996, as previously amended,
(the "Agreement"). A copy of the Agreement is attached hereto as Annex "A".
WHEREAS, the parties hereto desire to amend the Agreement so as to add
the New Holders as a party to the Agreement and to amend certain terms and
provisions of the Agreement as provided in this Amendment.
In consideration of the premises, mutual covenants and agreements
hereinafter contained and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto agree
as follows:
1. By its execution and delivery of this Amendment, each New Holder
shall become a Holder (and shall have all rights of a Holder, including a
Non-HMC Group Holder) under the terms and provisions of the Agreement and shall
also be treated as a member of the HMC Group for all purposes of the Agreement;
provided that for the purposes of Article 2, Article 7 and Article 8 of the
Agreement each New Holder shall not be a member of the HMC Group.
2. For purposes of Article 8 the definition of HMC Group shall be
deemed to include R. Steven Hicks but shall exclude any other officers,
directors, and employees of HMTF or its Affiliates.
3. The rights and obligations of each New Holder arising under the
Agreement are personal in nature and shall not be transferable or assignable to
any other Person and shall not be enforceable by or binding upon any Person who
receives or acquires from a New Holder any shares of Common Stock.
4. The definition of "Common Stock" is hereby amended and restated
to read as follows:
<PAGE> 2
"Common Stock" means (a) shares of Class A Common Stock, $0.01
par value per share, of the Company, (b) shares of Class B Common
Stock, $0.01 par value per share, of the Company, and (c) any
capital stock into which any such shares of common stock
thereafter may be changed.
5. The term Rights Holder is hereby amended to refer to each of R.
Steven Hicks and the New BT Holder and each reference to Rights Holder in
Article 7 shall be deemed to refer to each of them severally (and not jointly).
6. Except as expressly amended hereby, the terms and provisions of
the Agreement remain in force and effect and by reference are incorporated
herein and made a part hereof.
7. Defined terms used herein but not defined herein shall have the
meaning given such term in the Agreement.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
2
<PAGE> 3
IN WITNESS WHEREOF, the parties below have caused this Amendment to be
duly executed, all as of the date first written above.
CAPSTAR BROADCASTING PARTNERS, INC.
By: /s/ WILLIAM S. BANOWSKY, JR.
----------------------------------
Name:
--------------------------------
Its:
---------------------------------
HICKS, MUSE, TATE & FURST
INCORPORATED
By: /s/ MICHAEL D. SALIM
----------------------------------
Name:
--------------------------------
Its:
---------------------------------
HOLDERS:
CAPSTAR BROADCASTING PARTNERS, L.P.
By: HM3/Capstar Partners,
L.P.,
its General Partner
By: HM3/Capstar, Inc.
its General Partner
By: /s/ MICHAEL D. SALIM
----------------------
Name:
--------------------
Its:
---------------------
/s/ R. STEVEN HICKS
-------------------------------------
R. Steven Hicks
3
<PAGE> 4
/s/ JASON MABRY
-------------------------------------
Name: Jason Mabry
Address:
-----------------------
-----------------------
-----------------------
/s/ KRISTEN LEA HICKS
-------------------------------------
Name: Kristen Lea Hicks
Address:
-----------------------
-----------------------
-----------------------
/s/ SHELLY MABRY ELLARD
-------------------------------------
Name: Shelly Mabry Ellard
Address:
-----------------------
-----------------------
-----------------------
/s/ LARRY TAYLOR
-------------------------------------
Name: Larry Taylor as Custodian for
Robert S. Hicks, Jr. under the
Texas Uniform Gifts to Minors
Act
Address:
-----------------------
-----------------------
-----------------------
/s/ LARRY TAYLOR
-------------------------------------
Name: Larry Taylor as Custodian for
Brandon Vaughan Hicks under
the Texas Uniform Gifts to
Minors Act
Address:
-----------------------
-----------------------
-----------------------
4
<PAGE> 5
NEW BT HOLDER:
CAPSTAR BT PARTNERS, L.P.
By: HM3/GP Partners, L.P.,
its General Partner
By: Hicks, Muse GP Partners III,
G.P.,
its General Partner
By: Hicks, Muse Fund III
Incorporated,
its General Partner
By: /s/ MICHAEL D. SALIM
---------------------------
Name:
-------------------------
Title:
------------------------
Address:
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Attn: Lawrence D. Stuart, Jr.
Telecopier No.: (214) 740-7355
5
<PAGE> 6
IN WITNESS WHEREOF the New Putnam Holder has caused this Amendment to be
duly executed as of April 10, 1997.
CAPSTAR BOSTON PARTNERS, L.L.C.
By: HM3/GP Partners, L.P.,
its Manager
By: Hicks, Muse GP Partners III,
G.P.,
its General Partner
By: Hicks, Muse Fund III
Incorporated,
its General Partner
By: /s/ MICHAEL D. SALIM
---------------------------
Name:
-------------------------
Title:
------------------------
Address:
Hicks, Muse, Tate & Furst
Incorporated
200 Crescent Court, Suite 1600
Dallas, TX 75201
Attn: Lawrence D. Stuart, Jr.
Telecopier No.: (214) 740-7355
6
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<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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