<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 30, 1998
BIG CITY RADIO, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-13715 13-3790661
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
11 SKYLINE DRIVE, HAWTHORNE, NEW YORK 10532
(Address of Principal Executive Offices) (Zip Code)
(914) 592-1071
(Registrant's telephone number, include area code)
<PAGE>
BIG CITY RADIO, INC.
Item 2. Acquisition or Disposition of Assets
(a) As Big City Radio, Inc. (the "Company") initially reported in its
Form 10-Q for the fiscal quarter ended June 30, 1998, on July 29, 1998, the
Company completed the acquisition of substantially all of the assets of WCBR-FM,
Arlington Heights, Illinois, a Chicago area radio station (the "Station").
Pursuant to the Asset Purchase Agreement dated April 20, 1998 (the "Purchase
Agreement") by and between Darrel Peters Productions, Inc., an Illinois
corporation ("DPP"), the Company acquired certain assets (the "Purchased
Assets"), consisting primarily of Federal Communications Commission ("FCC")
licenses, permits and authorizations to operate the Station, studio equipment,
transmission equipment, broadcast equipment, translator equipment, satellite
earth station equipment, auxiliary station equipment, towers, antennae, office
and computer equipment and tangible personal property of every kind and
description used in the operation of the Station, and certain related tangible
and intangible assets, including goodwill, used primarily in connection with the
operation by DPP of the Station. The cash purchase price of the Purchased
Assets was $14 million. In addition to the purchase price the Company granted
a credit to DPP for trade services, airtime, or such other valuable
consideration, as set forth in the Trade Agreement executed between the
Company and DPP and attached to the Purchase Agreement as Exhibit 2.1(b)
(the "Trade Agreement"), having value equivalent to $750,000 (the "Trade
Consideration"). The Trade Consideration is to be redeemed by DPP over a
ten (10) year period, in accordance with the Trade Agreement.
The cash purchase price was paid from proceeds of the Company's
private placement of $174.0 million aggregate principal amount at maturity of
111/4% Senior Discount Notes due 2005 (the "Notes") on March 17, 1998, which
generated approximately $125.4 million of gross proceeds for the Company.
(b) DPP is a privately-held company which was the licensee of the
Station and, prior to the sale of the Purchased Assets, owned and operated the
Station and used the Purchased Assets in such capacity. The Company intends to
use these assets in the same capacity.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired (attached).
(b) Pro Forma Financial Information of Business Acquired (attached).
<PAGE>
(c) The following exhibits are attached hereto and filed herewith:
2.1(1) The Asset Purchase Agreement between the Company and
DPP, dated April 20, 1998.
2.2 The Trade Agreement between the Company and DPP, dated
April 20, 1998.
(1) Exhibits to the Asset Purchase Agreement not filed herewith are identified
in the Asset Purchase Agreement. The Company will furnish supplementally
any omitted Exhibit to the Commission upon request.
<PAGE>
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.
Dated: October 14, 1998
BIG CITY RADIO, INC.
By: /s/ Paul R. Thomson
--------------------------------
Paul R. Thomson
Vice President, Chief Financial
Officer & Treasurer
<PAGE>
Item 7. (a) Financial Statements of Business Acquired
<PAGE>
C O N T E N T S
Page
----
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
BALANCE SHEET 1
LOSS AND RETAINED EARNINGS 2
CASH FLOWS 3
NOTES 4-8
SUPPLEMENTARY INFORMATION 9
EXPENSES 10
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Darrel Peters Productions, Inc.
We have audited the accompanying Balance Sheet of Darrel Peters Productions,
Inc. as of December 28, 1997 and December 29, 1996 and the related Statements
of Loss, Retained Earnings and Cash Flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
upon our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as, evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Darrel Peters Productions,
Inc. as of December 28, 1997 and December 29, 1996 and the results of its
operations and its cash flows for the years then ended, in conformity with
generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The information contained on pages 9
and 10 is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has been subjected
to the auditing procedures applied in the audit of the basic financial
statements and, in our opinion, is fairly stated in all material respects in
relation to the basic financial statements taken as a whole.
/s/ Gilson Labus & Silverman
Certified Public Accountants
April 24, 1998
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
BALANCE SHEET
December 28, December 29,
ASSETS 1997 1996
----------- -----------
CURRENT ASSETS
Cash $ 94,234 $ 13,264
Current portion of certificate of deposit 510,000 550,000
Accounts receivable, less allowance
for doubtful accounts of $2,725 for 1997 61,400 109,772
Inventory 12,300 5,350
Other 8,878 10,298
----------- -----------
Total current assets 686,812 688,684
----------- -----------
PROPERTY AND EQUIPMENT
Cost 1,243,316 1,203,284
Accumulated depreciation 1,096,680 1,068,764
----------- -----------
Total property and equipment 146,636 134,520
----------- -----------
OTHER ASSETS
Intangible, net 188,083 195,708
Other 47,398 47,398
----------- -----------
Total other assets 235,481 243,106
----------- -----------
TOTAL ASSETS $ 1,068,929 $ 1,066,310
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Bank loan $ 490,000 $ 530,000
Accounts payable 11,517 33,957
Due to related party 96,000 110,000
Customer deposits 263,372 30,225
Due to stockholder 152,788 130,379
Current portion of long-term debt 11,067 -
Other 4,633 4,368
----------- -----------
Total current liabilities 1,029,377 838,929
----------- -----------
LONG-TERM DEBT 22,135 -
----------- -----------
STOCKHOLDER'S EQUITY
Common stock, no par value, authorized
and outstanding 1,000 shares 1,000 1,000
Retained earnings 16,417 226,381
----------- -----------
Total stockholder's equity 17,417 227,381
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 1,068,929 $ 1,066,310
=========== ===========
The Accompanying Notes Are an Integral Part of This Statement.
1
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
STATEMENTS OF LOSS AND RETAINED EARNINGS
Year Ended
December 28, December 29,
STATEMENT OF LOSS 1997 1996
----------- -----------
FEES $ 1,565,323 $ 1,225,491
EXPENSES 1,743,837 1,294,315
----------- -----------
LOSS FROM OPERATIONS (178,514) (68,824)
----------- -----------
OTHER INCOME (EXPENSE)
Interest income 30,932 33,491
Interest expense (62,382) (61,366)
Other - 14,024
----------- -----------
Total other (expense) (31,450) (13,851)
----------- -----------
NET LOSS $ (209,964) $ (82,675)
=========== ===========
Year Ended
December 28, December 29,
STATEMENT OF RETAINED EARNINGS 1997 1996
----------- -----------
BALANCE, BEGINNING OF YEAR $ 226,381 $ 309,056
----------- -----------
NET LOSS (209,964) (82,675)
BALANCE, END OF YEAR $ 16,417 $ 226,381
=========== ===========
The Accompanying Notes Are an Integral Part of This Statement.
2
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
STATEMENT OF CASH FLOWS
Year Ended
December 28, December 29,
CHANGES IN CASH 1997 1996
----------- -----------
OPERATING ACTIVITIES
Net loss $ (209,964) $ (82,675)
Adjustments to arrive at net cash flows
Depreciation and amortization 35,541 35,950
(Increase) decrease in
Accounts receivable 48,372 (37,356)
Inventory (6,950) (5,350)
Other 1,420 (4,362)
(Decrease) increase in
Accounts payable (22,440) (36,084)
Customer deposits 233,147 12,984
Other 265 462
----------- -----------
Net cash flows from (for)
operating activities 79,391 (116,431)
----------- -----------
INVESTING ACTIVITIES
Purchase of property and equipment (40,032) (23,232)
Redemption of certificate of deposit 40,000 60,000
----------- -----------
Net cash flows (for) from
investing activities (32) 36,768
----------- -----------
FINANCING ACTIVITIES
Advances from stockholder 30,000 50,000
Repayment of advances from stockholder (7,591) (8,500)
Advances from related party - 127,000
Repayment of advances from related party (14,000) (17,000)
Proceeds from auto loan 33,202 -
Principal repayments on equipment loan - (5,301)
Principal repayments on bank loan (40,000) (60,000)
----------- -----------
Net cash flows from financing activities 1,611 86,199
----------- -----------
NET INCREASE IN CASH 80,970 6,536
CASH, BEGINNING OF YEAR 13,264 6,728
----------- -----------
CASH, END OF YEAR $ 94,234 $ 13,264
=========== ===========
The Accompanying Notes Are an Integral Part of This Statement.
3
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
NATURE OF OPERATIONS
The Company owns and operates a licensed radio station WCBR-92.7 FM.
Its primary source of revenue is the sale of advertising. Total revenue
is determined by the number of advertisements aired by the station and
the advertising rates that the station is able to charge. Credit is
granted to substantially all customers.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FIFTY-TWO, FIFTY-THREE WEEK YEAR
The Company's fiscal year ends the last Sunday of December.
BARTER TRANSACTIONS
The Company trades commercial air time for goods and services used
principally for promotional, sales and other business activities. An
asset and a liability are recorded at the fair market value of the goods
or services received. Barter revenue is recorded at the fair market
value of the goods or services received. Barter revenue is recorded and
the liability is relieved when the commercials are broadcast, and barter
expense is recorded and the assets are relieved when the goods or
services are received or used.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT, DEPRECIATION AND AMORTIZATION
Property, and equipment is stated at cost. Depreciation and
amortization is based upon the straight-line or accelerated methods and
the estimated useful lives of the property and equipment.
INTANGIBLE ASSET AND AMORTIZATION
The intangible asset is a broadcast license which is amortized over a 40
year period.
4
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ADVERTISING
The Company records advertising expense as incurred. Advertising
expense for the years December 28, 1997 and December 29, 1996 are
$294,531 and $340,578, respectively.
REVENUE RECOGNITION
Broadcasting revenue is recognized when commercials are aired.
ADDITIONAL CASH FLOW INFORMATION
The aggregate cash payments during the periods for interest without
regard to the periods in which such payments were classified as expenses
in these financial statements were as follows:
December 28, December 29,
1997 1996
----------- -----------
Interest $ 63,674 $ 61,133
=========== ===========
NONCASH INVESTING ACTIVITY
Certificate of deposit maturities were reinvested for December 28, 1997
and December 29, 1996 in the amounts of $510,000 and $550,000,
respectively.
PROPERTY AND EQUIPMENT
Property and equipment is summarized as follows:
December 28, December 29,
1997 1996
----------- -----------
Equipment $ 181,810 $ 181,376
Broadcast equipment 987,231 983,357
Leasehold improvements 9,740 9,740
Automobiles 64,535 28,811
----------- -----------
Total $ 1,243,316 $ 1,203,284
=========== ===========
Depreciation and amortization expense for the years December 28, 1997
and December 29, 1996 are $27,916 and $28,325, respectively.
5
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
INTANGIBLE ASSET
The intangible asset is summarized as follows:
December 28, December 29,
1997 1996
----------- -----------
Broadcast license $ 305,000 $ 305,000
Less: accumulated amortization 116,917 109,292
----------- -----------
Intangible, net $ 188,083 $ 195,708
=========== ===========
Amortization expense is $7,625 for both December 28, 1997 and December
29, 1996.
RELATED PARTY TRANSACTIONS
There were cash advances to and from the stockholder of the Company
included on the Balance Sheet under the caption Due To Stockholder. The
net amount due the stockholder resulting from these transactions at
December 28, 1997 and December 29, 1996 are $152,788 and $130,379,
respectively. Interest at 10% is paid monthly and there are no formal
terms for repayment.
There were cash advances to and from the stockholder's wife included on
the Balance Sheet under the caption Due to Related Party. The net
amount due the related party resulting from these transactions at
December 28, 1997 and December 29, 1996 are $96,000 and $110,000,
respectively. Interest at 10% is paid monthly and there are no formal
terms of repayment.
The Company rents certain office facilities from its stockholder. See
Lease Commitments.
INCOME TAXES
The Company, with the consent of its stockholder, has elected under the
Internal Revenue Code to be an S Corporation. In lieu of federal
corporation income taxes, the stockholder of an S Corporation is taxed
on his/her proportionate share of the Company's taxable income.
Therefore, no provision or liability for federal income taxes has been
included in these financial statements. The Company is subject to state
income taxes. There were no taxes due or paid for years ended December
28, 1997 and December 29, 1996.
6
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
BANK LOAN
The Company has a secured bank line of credit due June 1, 1998 with
interest at 7.827% paid monthly. The loan is secured by a Certificate
of Deposit in the same amount as the loan at time of renewal. The loan
balance was $490,000 and $530,000 at December 28, 1997 and December 29,
1996, respectively.
LONG-TERM DEBT
Long-term debt consists of the following:
Current Non-current Total
---------- ----------- ----------
Automobile loan
Due in monthly installments,
including interest, to
November 14, 2000. The
interest rate is 2.978% $ 11,067 $ 22,135 $ 33,202
========== ========== ==========
LEASE COMMITMENTS
The Company rents its broadcasting facility. The lease expires August
31, 2002 and includes three five-year options, the last two to be
negotiated at the then current market rate.
Future minimum rental payments required are as follows:
Year Amount
---- ----------
1998 $ 82,247
1999 84,715
2000 87,256
2001 89,874
2002 30,252
----------
Total $ 374,344
==========
The Company rents certain office facilities from its stockholder on a
month to month basis.
7
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 28, 1997 AND DECEMBER 29, 1996
LEASE COMMITMENTS (CONTINUED)
Rent expense for the years ended December 28, 1997 and December 29, 1996
consisted of the following:
December 28, December 29,
1997 1996
----------- -----------
Broadcast facility $ 79,069 $ 76,766
Office facility 6,851 13,098
----------- -----------
Total $ 85,920 $ 89,864
=========== ===========
SUBSEQUENT EVENT
On August 14, 1998, Darrel Peters Productions, Inc. sold the Broadcast
license of the Company to Big City Radio, Inc. (formerly Odyssey
Communications, Inc.) for $14,000,000 and certain other consideration.
8
<PAGE>
SUPPLEMENTARY INFORMATION
9
<PAGE>
DARREL PETERS PRODUCTIONS, INC.
EXPENSES INFORMATION
Year Ended
December 28, December 29,
1997 1996
----------- -----------
Salaries $ 310,648 $ 238,418
Payroll taxes 32,286 35,253
Group insurance 30,919 26,009
Advertising 294,531 340,578
Amortization 7,625 7,625
Auto 21,074 27,192
Commissions 360,949 249,394
Depreciation 27,916 28,325
Dues, subscriptions and music fees 39,108 17,314
Entertainment and promotions 13,521 14,919
Insurance 14,423 13,718
News fees 1,971 8,897
Office expense 18,659 25,448
Professional and technical services 48,094 22,982
Promotion 373,587 81,191
Provision for doubtful accounts 25,637 21,500
Rent 85,920 89,864
Repairs and maintenance 7,959 12,458
Telephone 17,346 22,311
Utilities 11,664 10,919
----------- -----------
Total expenses $ 1,743,837 $ 1,294,315
=========== ===========
10
<PAGE>
Item 7. (b) Pro Forma Financial Information of Business Acquired
<PAGE>
BIG CITY RADIO, INC.
UNAUDITED PROFORMA BALANCE SHEET
June 30, 1998
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA PRO
HISTORICAL ADJUSTMENTS FORMA
---------- ----------- -----
<S> <C> <C> <C>
ASSETS
Current assets:
Cash, cash equivalents and marketable securities 83,839 (14,000)(1) 69,839
Accounts receivable, net of allowance for doubtful accounts 2,635 2,635
Other current assets 489 489
-------- -------- --------
Total current assets 86,963 (14,000) 72,963
Property and equipment, net 3,179 75 (2) 3,254
Intangible assets, net 53,282 14,525 (2) 67,807
Deferred financing fees 4,378 4,378
Other assets 2,272 2,272
-------- -------- --------
Total assets 150,074 600 150,674
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities 2,659 100 (3) 2,759
Senior discount notes 129,433 129,433
Long-term debt, and other long-term liabilities 500 (4) 500
Deferred income taxes 887 887
Stockholdeers' Equity 17,095 17,095
-------- -------- --------
150,074 600 150,674
======== ======== ========
</TABLE>
(1) To relect the cash purchase price for the acquisition.
(2) To record the preliminary estimate of the fair value of the assets
acquired, subject to furthet review and appraisal.
(3) To record estimated accrued expenses directly associated with the
acquisition.
(4) To reflect the estimated present value of the non-cash element (the trade
agreement).
<PAGE>
BIG CITY RADIO, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
Six months ended June 30, 1998
(In thousands, except per share data)
<TABLE>
<CAPTION>
ACQUISITION OF PRO FORMA PRO
HISTORICAL WCBR-FM ADJUSTMENTS FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net revenues 5,908 589 (1) 0 6,497
---------- ---------- ---------- ----------
Operating expenses:
Station operating expenses, excluding
depreciation and amortization 8,290 578 8,868
Corporate general and administrative expenses 1,180 1,180
Employment stock incentives 808 808
Depreciation and amortization 1,198 14 173 (2) 1,385
---------- ---------- ---------- ----------
Operating loss (5,568) (3) (173) (5,744)
---------- ---------- ---------- ----------
Other income (loss) (143) (4) (147)
Interest (expense) (3,640) (33) (425)(3) (4,098)
---------- ---------- ---------- ----------
Loss before benefit from income taxes and
extraordinary loss (9,351) (40) (598) (9,989)
Income tax benefit 1,101 70 (4) 1,171
---------- ---------- ---------- ----------
Loss before extraordinary loss (8,250) (40) (528) (8,818)
Extraordinary loss 495 495
---------- ---------- ---------- ----------
Net loss (8,745) (40) (528) (9,313)
========== ========== ========== ==========
Basic and diluted loss per share:
Loss before extraordinary loss (0.63)
Extraordinary item (0.04)
----------
Net loss (0.67)
==========
Weighted average shares outstanding 13,982,253
==========
</TABLE>
(1) Reflects the historical results of operation of WCBR-FM (dba Darrel Peters
Productions, Inc.) for the period from January 1, 1998 to June 30, 1998
which was acquired on August 14, 1998.
(2) Adjustment of historical depreciation and amortization expense of the
acquired business to reflect the new allocation of purchase price to the
assets acquired.
(3) Reflects pro forma adjustment to increase net interest expense for
indebtedness to finance the WCBR-FM acquisition, net of historical interest
expense.
(4) Pro forma adjustment for the tax benefit resulting from the increase in
loss from operations as a result of the acquisition of WCBR-FM.
<PAGE>
BIG CITY RADIO, INC.
UNAUDITED PROFORMA STATEMENT OF OPERATIONS
Year ended December 31, 1997
(In thousands, except per share data)
<TABLE>
<CAPTION>
ACQUISITION OF PRO FORMA PRO
HISTORICAL WCBR-FM ADJUSTMENTS FORMA
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net revenues 10,460 1,565 (1) 0 12,025
---------- ---------- ---------- ----------
Operating expenses:
Station operating expenses, excluding
depreciation and amortization 12,979 1,708 14,687
Corporate general and administrative expenses 1,745 1,745
Employment stock incentives 3,863 3,863
Depreciation and amortization 1,931 36 338 (2) 2,305
---------- ---------- ---------- ----------
Operating loss (10,058) (179) (338) (10,575)
---------- ---------- ---------- ----------
Other income (loss) 101 101
Interest (expense) (4,348) (31) (1,041)(3) (5,420)
---------- ---------- ---------- ----------
Loss before benefit from income taxes and
extraordinary loss (14,305) (210) (1,378) (15,893)
Income tax (loss) benefit (2,300) 200 (4) (2,100)
---------- ---------- ---------- ----------
Loss before extraordinary loss (16,605) (210) (1,178) (17,993)
Extraordinary loss 313 313
---------- ---------- ---------- ----------
Net loss (16,918) (210) (1,178) (18,306
========== ========== ========== ==========
Basic and diluted loss per share:
Loss before extraordinary loss (1.89)
Extraordinary item (0.03)
----------
Net loss (1.92)
==========
Weighted average shares outstanding 9,539,000
==========
</TABLE>
(1) Reflects the historical results of operation of WCBR-FM (dba Darrel Peters
Productions, Inc.) for the period from December 30, 1996 to December 28,
1997 which was acquired on August 14, 1998.
(2) Adjustment of historical depreciation and amortization expense of the
acquired business to reflect the new allocation of purchase price to the
assets acquired.
(3) Reflects pro forma adjustment to increase net interest expense for
indebtedness to finance the WCBR-FM acquisition, net of historical interest
expense.
(4) Pro forma adjustment for the tax benefit resulting from the increase in
loss from operations as a result of the acquisition of WCBR-FM.
<PAGE>
EXHIBIT INDEX
Exhibit No. Description of Exhibits
2.1(1) Asset Purchase Agreement by and between the Company and DPP,
dated April 20, 1998.
2.2 Trade Agreement by and between the Company and DPP, dated
April 20, 1998.
(1) Exhibits to the Asset Purchase Agreement not filed herewith are identified
in the Asset Purchase Agreement. The Company will furnish supplementally
any omitted Exhibit to the Commission upon request.
<PAGE>
Exhibit 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of 20 of April, 1998, by and
between Darrel Peters Productions, Inc., an Illinois corporation ("Seller"), and
Big City Radio, Inc. a Delaware corporation ("Buyer") (The Seller and the Buyer
may hereinafter be referred to together as the "Parties.")
WHEREAS, Seller is the licensee of and owns and operates radio station
operated under the call sign of WCBR(FM), licensed by the Federal Communications
Commission ("FCC") to operate in Arlington Heights, Illinois (the "Station");
WHEREAS, for the consideration and subject to the receipt of the required
consent of the FCC and the satisfaction of the other terms and conditions set
forth herein, Seller desires to sell, and Buyer desires to purchase, certain of
the operating assets of the Station, except as provided in Sections 1.2;
NOW, THEREFORE, upon the terms and subject to the conditions set forth
herein, the Parties hereto hereby agree as follows:
ARTICLE 1
Transfer of Assets
------------------
1.1 Assets being Purchased. Seller agrees to sell, transfer, assign,
convey and deliver, and in the case of the FCC licenses, permits and
authorizations, to assign, to Buyer, and Buyer agrees to purchase, and in the
case of the FCC licenses, permits and authorizations, to accept delivery of, the
following assets owned or leased by Seller other than the "Excluded Assets" as
defined in Section 1.2 (the "Assets"):
(a) The licenses, permits and authorizations issued by the FCC
to Seller for the operation of the Station, including any FM translators,
booster stations, satellite earth stations and auxiliary facilities, and all
applications therefor, together with any renewals, extensions or modifications
thereof and additions thereto (the "FCC Licenses"), and any and all other
licenses, rights, permits and/or authorizations from any and all governmental
authorities issued to Seller now existing or obtained by Seller prior to the
Closing (as defined in Section 3.2 hereof) used or to be used in connection with
the operation of the Station, as set forth on Schedule 1.1(a) other than those
indicated on Schedule 1.1(a) as not being assignable;
(b) All of the studio equipment, transmission equipment,
broadcast equipment, translator equipment, satellite earth station equipment,
auxiliary station equipment, towers, antennae, office and computer equipment and
tangible personal property of every kind and description used in the operation
of the Station, including without limitation those items listed on Schedule
1.1(b) (the "Personal Property"), and
<PAGE>
all, spare parts, tubes, test equipment, and engineering plans, if any, records
and data used in connection with the operation of the Station, except to the
extent such supplies and equipment are consumed in the ordinary course of
business and consistent with past practice, and any additions to or replacements
for such Personal Property acquired by Seller prior to the Closing, and all
computer and electronic data processing software and other material used in the
operation of the Station, business records pertaining to the operation of the
Station except for Seller's corporate minute books and related corporate records
and stationery;
(c) Except as set forth on Schedule 1.1(d) as excluded
contracts and, at the sole election of Buyer, any "Material Contracts" (as
defined herein) which Seller has failed to list on Schedules 1.1(d) and 1.2(i)
("Excluded Contracts"), the contracts, agreements, leases, employment
agreements, and Barter Agreements (as defined in Section 4.15 of this Agreement)
of Seller pertaining to the Station or the Assets, including without limitation
all of those contracts and agreements listed on Schedules 1.1(d) and 1.1(h) and
contracts for the sale of advertising time on the Station entered into in the
ordinary course of business and which are terminable by their respective terms
within sixty (60) days after the Closing Date (as defined in Section 3.2 hereof)
without payment of any premium or penalty by Buyer (collectively the
"Contracts");
(d) All rights to the call letters WCBR(FM) in connection with
the operation of the Station, and the copyrights, trademarks, service marks,
trade names, trade secrets, jingles, computer programs owned by or licensed to
Seller that are used in connection with the operation of the Station, all or as
listed on Schedule 1.1(e) (the "Intellectual Property");
(e) The rights to the Station's publicly-listed current
telephone numbers, to the extent permitted by the applicable telephone company;
(f) The goodwill of the Station and any other intangible
assets used or useful in the operation of the Station except litigation or
claims relating to Seller's accounts receivables; and
(g) All interests in owned or leased real estate, including
without limitation leases, subleases, easements, licenses and business and any
other interest in real estate leased or owned by Seller including without
limitation all real estate listed on Schedule 1.1(h) other than any Excluded
Contracts (collectively, "Real Property").
1.2 Excluded Assets. Notwithstanding the foregoing, the Assets shall
not include the following (herein referred to as the "Excluded Assets"):
(a) All cash and any bank accounts of Seller;
(b) All pre-paid deposits
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(c) All marketable and other investment securities owned,
beneficially or of record, by Seller, including, without limitation, all money
market funds, stocks, bonds, commercial paper, certificates of deposit or other
time deposits of Seller and all dividends, distributions, earnings and profits
related thereto;
(d) All of Seller's claims, rights and interests in and to any
refunds for federal, state or local franchise, income or other taxes or fees of
any nature whatsoever for periods prior to the Closing Date;
(e) Any of Seller's rights, claims or causes of action against
third Parties relating to the assets, properties, business or operations of
Seller arising out of transactions occurring prior to the Closing Date, to the
extent that such claims, rights or interests relate to (i) the Excluded Assets
or (ii) matters in respect of which Seller is required to indemnify Buyer in
accordance with Section 8.1;
(f) All of Seller's bonds held, whether surety, indemnity or
otherwise, and all contracts and policies of insurance and prepaid insurance
with respect to such contracts and policies;
(g) All of Seller's corporate minute books, stock transfer
books, corporate records relating to Seller's incorporation, corporate seal,
corporate tax returns and related documents and supporting work papers and any
other records and returns relating to taxes, assessments or similar governmental
levies;
(h) All account receivables owed to Seller prior to the
Closing Date and all trade receivables pursuant to any Barter Agreement entered
into by Seller prior to the Closing Date;
(i) All records and documents relating to the Excluded Assets
or to the Excluded Liabilities, except to the extent material to the Assets
being transferred or the business or operations of the Station; and
(j) Excluded Contracts as set forth on Schedule 1.2
(k) Those other Excluded Assets as set forth at Schedule 1.2
1.3 Liens. Seller agrees that the Assets, on the Closing Date, shall be
conveyed free and clear of all liens owed to, owed by, accruing to or in favor
of any person or party whatsoever except for Permitted Liens as defined in
Section 12.1 hereof.
1.4 Assumption of Liabilities. (a) On the Closing Date, Buyer shall
deliver to Seller an undertaking and assumption, in the form of Exhibit 1.4,
pursuant to which Buyer shall assume and agree to pay, discharge or perform, the
following liabilities or obligations of Seller (such liabilities and obligations
being referred to herein as
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"Assumed Liabilities"):
(i) all liabilities and obligations arising from and
after Closing pursuant to or in connection with (A) the Assets as disclosed or
referenced on the Schedules (as the same may be updated pursuant Section 7.3
hereof), (B) obligations to supply advertising time on the Station to
advertisers in the ordinary course of Seller's business other than pursuant to
Excluded Contracts or (C) the liabilities described in Sections
1.4(b)(vii),(viii) or (ix) to the extent that such liabilities are subject to
apportionment in favor of Buyer pursuant to Section 2.3; and
(ii) all liabilities and obligations arising from and
after Closing pursuant to any lease, contract or other agreement entered into by
Seller after the date hereof consistent with the terms of this Agreement and
past practice.
(b) Anything to the contrary contained herein notwithstanding,
Buyer shall not assume or be obligated for any liabilities or obligations of
Seller of any type or nature whatsoever, whether known or unknown, matured or
unmatured, absolute or contingent, other than the Assumed Liabilities (all of
such liabilities and obligations not being assumed being herein called the
"Excluded Liabilities"), and the Assumed Liabilities shall not include, without
limitation, the following:
(i) any foreign, federal, state, county or local
income taxes which arise from the operation of the Station or the income taxes
which arise from the operation of the Station or the use or ownership of any
property of any description whether or not in connection with the Station on or
prior to the Closing Date;
(ii) any liabilities and obligations arising pursuant
to any credit agreement or other document to which Seller is a party which
evidences indebtedness for money borrowed by Seller;
(iii) any costs and expenses incurred by Seller
incident to its negotiation and preparation of this Agreement and the other
agreements with Buyer contemplated hereby and its performance and compliance
with the agreements and conditions contained herein or therein;
(iv) any of the Seller's liabilities or obligations
under this Agreement or the other agreements between Seller or any of Seller's
Affiliates and Buyer or any of Buyer's Affiliates contemplated hereby;
(v) any liability of Seller to any Affiliate of
Seller;
(vi) any liabilities of Seller to attorneys, brokers
or accountants for services rendered prior to the Closing Date;
(vii) any liability of Seller for music license fees
or program license fees or rights accrued prior to the Closing Date except to
the extent any such
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liabilities are subject to apportionment in favor of Buyer pursuant to Section
2.3 hereof;
(viii) any liability of Seller for any and all
benefits to its employees except to the extent any such liabilities are subject
to apportionment in favor of Buyer pursuant to Section 2.3 hereof;
(ix) any account payable of Seller;
(x) any liability of Seller for any and all payments
or other obligations pursuant to any Excluded Contracts; and
(xi) any liabilities or obligations for personal
injury, death, property damage, violations of intellectual property or other
rights or breaches of or interference with contractual rights, arising out of
accidents or events occurring prior to the Closing Date.
ARTICLE 2
Purchase Price; Apportionment
-----------------------------
2.1 Amount and Payment of Consideration; Deposit. As consideration for
the Assets to be purchased by Buyer, Buyer shall pay to Seller the sum of
Fourteen Million Dollars ($14,000,000) (the "Purchase Price"). The Purchase
Price shall be payable as follows: Upon execution of this Agreement, Buyer shall
place into an escrow account established between Buyer, Seller and an escrow
agent pursuant to an escrow agreement to be executed between the parties and
attached hereto as Exhibit 2.1(a), the sum of One Million Dollars ($1,000,000)
("Deposit"). Upon Closing, Buyer shall instruct the escrow agent to release the
Deposit to the Seller, and shall pay to Seller the remaining balance of the
Purchase Price ("Closing Purchase Price Payment") via cashier's check or wire
transfer of immediately available funds to an account designated by Seller in
written notice to Buyer at least three (3) business days before the Closing
Date. As additional consideration for the Assets to be purchased by Buyer, Buyer
shall grant a credit to Seller for trade in services, airtime, or such other
valuable consideration, as set forth in a certain Trade Agreement ("Trade
Agreement"), to be executed between the parties as of the same date hereof and
attached hereto as Exhibit 2.1(b), in the value equivalent to Seven Hundred and
Fifty Thousand Dollars ($750,000.00) ("Trade Consideration"), to be redeemed by
Seller over a ten (10) year period, in accordance with the terms and conditions
of the Trade Agreement.
2.2 Allocation of Purchase Price. The Purchase Price shall be allocated
among the Assets in accordance with Schedule 2.2 to be agreed upon by Buyer and
Seller prior to the Closing. Buyer and Seller shall negotiate in good faith the
values of the Assets and the resulting allocation of the Purchase Price among
the various Assets, it being understood that a final determination shall be made
by Seller prior to the Closing. Seller and Buyer shall file all tax returns and
tax reports in accordance with and
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based upon such allocation and shall take no position in any tax return, tax
proceeding or tax audit which is inconsistent with such allocation.
2.3 Apportionment. (a) All expenses of operation of the Station,
including, without limitation, utilities, rents, salaries, vacation benefits and
liabilities in respect of advertisers prepaid or deferred time sales including
trade and barter accounts and/or service agreements, and all income earned and
accrued shall be prorated as of 11:59 p.m. Eastern Time, on the day before the
Closing Date (the "Apportionment Time") such that the Seller is responsible for
such expenses, and is entitled to all income earned or accrued, up to the
Apportionment Time and the Buyer is responsible for such expenses and Assumed
Liabilities, and is entitled to all income earned or accrued, from and after the
Apportionment Time. Items to be apportioned include, but are not limited to, the
following:
(i) advance payments received from advertisers (other
than pursuant to Excluded Contracts) prior to the Closing Date for services to
be rendered in whole or in part on or after the Closing Date;
(ii) prepaid expenses arising from payments made for
goods or services prior to the Closing Date if all or part of the goods or
services have not been received or used prior to the Closing Date (for example,
rents paid in advance for a rental period extending beyond the Closing Date);
(iii) liabilities, customarily accrued, arising from
expenses incurred but unpaid as of the close of business on the day proceeding
the Closing Date, e.g., payroll and payroll taxes, employee compensation, fringe
benefits (including vacation and severance pay), utility services, rent
(including property taxes payable under the Leases), property taxes relating to
real property interests sold or assigned to Buyer, sales commissions, and
various business and professional services;
(iv) personal property taxes and utility charges
related to the Station; and
(v) prepaid fees paid to the FCC or other
governmental agencies.
b) Buyer shall, within ninety (90) days after the Closing Date (the
"Adjustment Date"), determine all apportionments pursuant to Section
2.3(a) and shall deliver a statement of its determinations to Seller
(which statement shall set forth in reasonable detail the basis for
those determinations), and within thirty (30) days thereafter Buyer
shall pay to Seller, or Seller pay to Buyer, as the case may be, the
net amount (the "Apportionment Amount") due as a result of the
apportionments (or, if there is any dispute, the undisputed amount). If
Seller disputes Buyer's determinations, or if at any time within sixty
(60) days after delivery of Buyer's statement of determination (or, if
disputed, within sixty (60) days after the final determination), any
party determines that any item included in
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the apportionments is inaccurate or that an additional item should be
included in the apportionments, the parties shall confer with regard
to the matter and an appropriate adjustment and payment shall be made
as agreed upon by the Parties (or, if they are unable to resolve the
matter, a firm of independent certified public accountants, whose
decision on the matter shall be binding and whose fees and expenses
shall be borne equally by them, shall be designated by agreement
between them; if they fail to agree on a firm, the accountants shall
be a tax firm which is independent of Seller and Buyer.
(c) As of and following Closing, Seller will collect for itself all
accounts receivable with respect to Station which are related to
programming or revenues derived by operation of the Station prior to
Closing. Within sixty (60) days following Closing, Seller shall deliver
to Buyer a complete and detailed statement setting forth all
collections of accounts receivable which are derived from revenues or
operation of the Station after Closing, along with, if applicable, the
cash proceeds of all such accounts receivable collected on behalf of
Buyer. . Buyer shall be entitled, upon reasonable prior written notice
to Seller, to inspect the books and records of Seller solely for the
purpose of verifying the accuracy of Seller's reports to Buyer
hereunder.
(d) At the Closing, Seller shall provide to Buyer a good faith estimate
of all liabilities and obligations of such Seller with respect to the
Station ("Payables"). Seller shall pay such Payables as and when due
and Buyer shall have no obligation to pay such Payables. If Seller
shall fail to pay such Payables when and as due, Buyer shall have the
right after the Closing, in its sole discretion, to pay such Payables
and seek reimbursement from Seller.
2.4 Deferred Transfers. If, on the Closing Date, (i) Seller has not
obtained any authorization, approval, consent or release required to permit or
enable Seller to transfer, assign or novate (a "Transfer") all of Seller's
right, title or interest in or to any Assets and liabilities or obligations
under any of the Assets to be transferred to Buyer as provided in this Agreement
(any such authorization, approval, consent or release being referred to herein
as a "Consent") or if an attempted Transfer of any of the Assets would be
ineffective or would adversely affect Buyer's ability to acquire or Seller's
ability to convey the same and (ii) the conditions precedent to the Closing set
forth in Articles 9 and 10 have otherwise been satisfied, then, at the election
of Buyer, such Assets shall constitute "Deferred Transferred Assets" and shall
not be transferred to Buyer at the Closing. After the Closing (A) Seller and
Buyer will continue to use commercially reasonable efforts to obtain the Consent
and/or to remove any other impediments to the Transfer of each Deferred
Transferred Asset; (B) until the Transfer of any Deferred Transferred Asset,
Seller will cooperate with Buyer in any lawful arrangement to provide that Buyer
shall receive the benefits of such interest to the same extent as if it were
Seller, with all costs and expenses thereof, as well as all gains, income,
losses, taxes or other items generated thereby to be for Buyer's account; (C)
Seller will Transfer each Deferred Transferred Asset to Buyer within five (5)
business days after the receipt of such Consent and/or the removal of such
impediment; and (D) if Buyer shall receive the
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benefits of a Deferred Transferred Asset, such Deferred Transferred Asset will
be deemed to be an Assumed Liability, and Buyer shall perform the obligations of
Seller arising under such Deferred Transferred Asset; provided, however, that if
Buyer is not able to receive the benefits of a Deferred Transferred Asset (for
any reason not directly or indirectly resulting from Buyer's refusal to accept
such benefits), such Deferred Transferred Asset will be deemed to be an Excluded
Liability and Buyer shall not be obligated to perform the obligations of Seller
arising under such Deferred Transferred Asset. The provisions of this Section
2.4 will not apply to the approvals required of the FCC or any "Mandatory
Consents" as set forth in Schedule 7.2.3.
2.5 Further Assurances. Except as otherwise contemplated by Section 2.4
hereof, on the Closing Date and thereafter, Seller shall (a) deliver to Buyer
such other bills of sale, deeds, endorsements, assignments and other good and
sufficient instruments of conveyance and transfer, in form reasonable
satisfactory to Buyer and its counsel, as Buyer may reasonably request to vest
in Buyer all the right, title and interest of Seller in, to or under any or all
of the Assets, and (b) take all steps and action as may be reasonably necessary
to put Buyer in actual possession and operating control of all the Assets.
Subject to the exceptions contained in Section 2.4 hereof, from time to time
following the Closing, Seller shall, without further consideration, execute,
acknowledge, deliver, or cause to be executed, acknowledged and delivered, to
Buyer such other instruments of conveyance and transfer as Buyer may reasonably
request or as may be otherwise reasonably necessary to more effectively convey
and transfer to, and vest in, Buyer title to the Asset and perform or cause to
be performed such other acts as Buyer may reasonably request to put Buyer in
possession of any part of the Assets.
ARTICLE 3
Governmental Consents; Closing
------------------------------
3.1 FCC Application. Within five (5) business days following the
execution of this Agreement by all Parties hereto, Buyer and Seller shall file
with the FCC all requisite applications and other necessary instruments required
to obtain the consent of the FCC to the assignment to Buyer of the FCC Licenses,
and both Parties agree to prosecute said application(s) with all reasonable
diligence and otherwise to cooperate with one another and to use their
reasonable efforts to obtain the requisite consent and approval promptly,
including to provide such additional information as the FCC reasonably may
request in processing said application(s), within the time periods established
by the FCC for responding to such requests or any reasonable and necessary
extension thereof, and to notify the other party hereto promptly upon such party
becoming aware of any other acts, actions, communications or occurrences that
might directly or indirectly affect the Parties' ability to effect prompt FCC
approval of the transactions contemplated by this Agreement. All fees assessed
by the FCC incident to the filing or grant of such applications shall be borne
equally by Buyer and Seller. Consummation of the transactions contemplated
hereby is expressly conditioned upon (i) the FCC (including, but not limited to
the Mass Media Bureau by delegated authority)
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having consented to such assignment (the "FCC Consent") without the imposition
of any conditions materially adverse to Seller or Buyer, and I(ii) following the
FCC Consent, unless waived by Buyer in its sole discretion, upon the expiration
of the time period during which the FCC may reconsider the FCC Consent on its
own motion or any protest, request for stay, petition for rehearing or
reconsideration, application for review or appeal of such FCC Consent and
Renewal may be filed (assuming that no such reconsideration, protest, request
for stay, petition for rehearing or appeal then shall be pending) (such FCC
Consent and Renewal, upon the expiration of such periods, being "Final Orders").
If, by the three hundred sixty fifth (365th) day after the date of this
Agreement (the "Outside Closing Date"), the FCC Consent has not become a Final
Order, and the transactions contemplated hereby have not already been
consummated then either Buyer or Seller, at its respective option, may terminate
this Agreement upon ten (10) days' prior written notice to the other party
hereto provided that such terminating party is not then in default, if such
notice is given prior to the date of at least one of the Final Orders. If the
FCC Consent becomes a Final Order during such 10-day period, the notice of
termination shall be null and void and of no further effect.
3.2 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall occur at the date and time (the "Closing Date")
mutually agreed upon by the Parties hereto; provided, that in the absence of
such agreement the Closing shall take place at 10:00 A.M. five business days
following the later of the occurrence of (i) Final Order or the waiver of the
requirement of Final Order by Buyer and (ii) the satisfaction or waiver of all
conditions to the obligations of Buyer and Seller to close, but in no event
later than the Outside Closing Date. The Closing shall take place at the offices
of Buyer's attorney located in East Rutherford, New Jersey or such other
location within the New York metropolitan area designated by Buyer's attorney.
3.3 Closing Date Deliveries. (a) On the Closing Date, Seller, shall
deliver to Buyer (i) a bill of sale and assignment, in the form of Exhibit
3.3(a)(i), collectively covering all of the Assets (including the leases of real
estate identified in Schedule 1.1(h) but excluding such of the Assets as may
constitute Deferred Transferred Assets), (ii) a bill of assignment, in the form
of Exhibit 3.3(a)(ii), executed by the Seller, covering the FCC Licenses, (iii)
an assignment of leases referred to in Schedule 3.3 hereto ("Owned Real Estate")
and (iv) all of the documents and instruments required to be delivered by Seller
pursuant to Article 9.
(b) On the Closing Date, Buyer shall deliver to Seller (i) the
Purchase Price Payment, (ii) the undertaking and assumption in the form of
Exhibit 1.4 and (iii) all of the documents and instruments required to be
delivered by Buyer pursuant to Article 10.
(c) On the Closing Date Seller and Buyer shall execute and
deliver the Tower Lease License in the form set forth in Exhibit 3.3(e) (the
"Tower Lease"").
ARTICLE 4
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Representations and Warranties of Seller
----------------------------------------
Seller represents and warrants to Buyer that the following
representations and warranties are true and correct on the date of this
Agreement and will be true and correct on the Closing Date except for changes
contemplated or permitted by this Agreement (it being understood that all such
representations and warranties shall survive the Closing as provided in Section
8.1 hereof):
4.1 Organization, Qualification, Power and Action of Seller. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the state of its formation, and has the requisite power to own the
Assets and to carry on its business as it is now being conducted. Seller has the
power and authority to execute and deliver this Agreement and the documents
required or contemplated herein to be executed and delivered by or on behalf of
Seller, to perform its obligations hereunder and to consummate the transactions
contemplated hereby, and has taken all actions required by law or by its
articles of incorporation, by laws, and all other documents and agreements
relating to the organization and governance of Seller (collectively, the
"Organizational Documents") to authorize such execution and delivery. This
Agreement has been duly executed and delivered by Seller and constitutes, and
each of the other documents to be executed by Seller hereunder or prior to or at
the Closing shall constitute, the legal, valid and binding obligation of Seller
enforceable against Seller in accordance with the respective terms thereof.
4.2 Ownership of Assets. Seller owns, and as of the Closing Date will
own and convey to Buyer, (i) good and legal title to the Assets other than the
leased Assets, if any, set forth on Schedule 4.2 (the "Leased Assets"), subject
only to the Permitted Liens including those Liens set forth on Schedule 4.2 and
(ii) has all right, title and interest to the leases pursuant to which the
Leased Assets are leased.
4.3 No Conflict. Other than the consents set forth on Schedule 7.2.3,
the execution and delivery of this Agreement does not, and the consummation of
the transactions contemplated hereby in accordance with the terms set forth
herein will not (i) violate or conflict with any provision of the Organizational
Documents of Seller or (ii) violate any provision of any law, statute,
ordinance, rule, regulation or executive order applicable to Seller or any
judgment, order, decree or ruling of any court or any governmental or
administrative agency or authority to which Seller is a party or by which any of
its property, including the Assets, is bound, or, (iii) with or without the
giving of notice or the lapse of time or both, result in a breach of, or
conflict with any term or provision of, constitute a default or result in the
acceleration of any obligation under, any agreement by which the Seller is bound
or result in the creation of any lien upon any of the Assets, or the loss of any
license, permit or other contractual right, except where such violation,
conflict, breach or default would not preclude the consummation of the
transactions contemplated herein or result in a material breach of any material
term or condition of this Agreement. . Seller has no legal obligation or
arrangement, absolute of contingent, to any other person or entity to sell any
of the Assets or to effect any merger, consolidation, reorganization or other
similar transaction or to enter into any
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agreement with respect thereto.
4.4 Compliance with Applicable Laws. The operation by Seller of the
Station does not violate or infringe in any material way, and to the knowledge
of Seller there is no basis for any claim of violation or infringement of, any
law, statute, ordinance, rule, regulation or executive order currently in effect
that, in any case, reasonably might be expected to prevent the consummation of
the transactions contemplated by this Agreement or to result in a Material
Adverse Effect. Seller has not received any written notice and, to the knowledge
of Seller, Seller has not received any oral notice that any governmental or
administrative agency or authority considers the operation of the Station or the
conduct of any business of the Station to violate any law, statute, ordinance,
rule, regulation or executive order applicable thereto the violation of which
could be reasonably expected to result in a Material Adverse Effect.
4.5 Financial Information. Seller has furnished Buyer with financial
information for the Station for the years 1995, 1996 and 1997 (the "Financial
Information"). The Financial Information fairly and accurately, in all material
respects, reflect the financial results of the operation of the Station for the
periods indicated based upon consistent reporting standards throughout the
periods involved, and as compared with prior periods. Except as reflected in the
Financial Information, no event has occurred since the preparation of the
Financial Information that would make the Financial Information misleading in
any material respect. The Financial Information does not overstate revenues
and/or understate expenses.
4.6 Events Since December 31, 1997. Except as set forth on Schedule
4.6, since December 31, 1997, Seller has operated its business only in the
ordinary course with no change in policies, administration, production or
marketing which would have a Material Adverse Effect..
(a) There has not occurred any damage,
destruction or loss (whether or not
covered by insurance) of the Assets
or change in operations of the
Station which has resulted in a
Material Adverse Effect;
(b) There has not been any material
amendment, modification or
alteration of any material Contract,
which amendment, modification or
alteration is not reflected in the
Schedules other than those items
permitted by the terms of this
Agreement;
(c) There has not been any sale, lease,
mortgage, pledge, encumbrance or
other disposition of an Asset or
Assets with a value in excess of One
Thousand Dollars ($1,000), or a
series of sales leases, mortgages,
pledges, encumbrances or other
dispositions aggregating in excess
of Ten Thousand
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Dollars ($10,000);
(d) There has not been any waiver or
release by Seller of any rights
material to the Station or the
Assets;
4.7 Liabilities. There are no liabilities of any nature, whether
absolute, accrued, contingent or otherwise, known to Seller that would have or
result in a Material Adverse Effect on the Stations or the Assets.
4.8 Litigation, Judgments, Decrees and Orders in Restraint of Business.
Except as set forth on Schedule 4.8, (i) there are no claims, actions, suits or
proceedings pending or threatened, against Seller, or (ii) to the knowledge of
Seller, is there any reasonable basis for any claim, action, suit or proceeding
against Seller, in either event that reasonably could be expected to result in a
Material Adverse Effect on Buyer's operation of Station. Schedule 4.8 contains a
complete and accurate list of all claims, proceedings, inquiries, citations and
any penalties assessed against Seller by any governmental agencies and others
during the twelve (12) months preceding the date of this Agreement.
4.9. Insurance. Seller maintains policies of insurance relating to its
, assets . Schedule 4.9 contains a current and complete list and general
description of all policies of insurance currently maintained by Seller (other
than title insurance and those relating to employee benefits) relating to the
operation of the Stations. Seller is in compliance in all material respects with
the conditions contained in such policies.
4.10 Real Estate and Environmental Matters. Seller is the tenant or the
landlord under certain leases for the Real Property, all of which leases are
listed and described in Schedule 1.1(h) (the "Leases"). True and correct copies
of the Leases, including all amendments and modifications, have been delivered
to Buyer. The Leases are in full force and effect and have not been modified,
amended or supplemented except as set forth in Schedule 1.1(h). Seller is not in
default under any of the Leases, nor has any event occurred or failed to occur
that, with the passage of time or notice or both, would become a default under
any of the Leases which default could reasonably expected to have a Material
Adverse Effect on Buyer's operation of Station. To the knowledge of Seller there
is no default under any of the Leases by the respective landlords or tenants or
subtenants of Seller thereunder except where any such default either indirectly
or all such defaults in the aggregate, could not be reasonably expected to have
a Material Adverse Effect on Buyer's operation of Station. Seller has not placed
nor permitted its agents, employees, invitees or contractors to place, nor, to
the knowledge of Seller has any other person or entity placed, any Hazardous
Substances (as hereinafter defined) on or below the surface of any of the Real
Property where such placement would result in a violation of any Environmental
Law which would be reasonably expected to have a Material Adverse Effect, or
used or permitted its agents, employees, invitees or contractors to use any of
the Real Property, nor to the knowledge of Seller has any other person or entity
used any of the Real Property, for the manufacture, refining,
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treatment, storage, or disposal of any Hazardous Substances in violation of any
Environmental Law which would be reasonably expected to have a Material Adverse
Effect. "Hazardous Substances" means any hazardous substance, hazardous or toxic
waste, hazardous material, pollutant or contaminant, as those or similar terms
are used in the Environmental Laws (as hereinafter defined) and includes without
limitation asbestos, asbestos-related products, oils or petroleum-derived
compounds, polychlorinated biphenyls ("PCB") and pesticides. "Environmental
Laws" means the Resource Conservation Recovery Act, the Comprehensive
Environmental Responsibility Compensation and Liability Act, the Toxic
Substances Control Act, the Hazardous Materials Transportation Act, the Clean
Air Act, the Clean Water Act, the Industrial Site Recovery Act and other similar
federal or state laws, as amended to the date hereof, together with all
regulations issued or promulgated thereunder, relating to pollution or the
protection of the environment. Seller has not been identified as a potentially
responsible party, nor to the knowledge of Seller has any present or former
owner or tenant or user of any of the Real Property been identified as a
potentially responsible party, for clean-up liability with regard to Hazardous
Substances or for any other matter arising under the Environmental Laws in any
litigation, administrative proceeding, finding, order, citation, notice,
investigation or complaint. To the knowledge of Seller, there are no Underground
Storage Tanks (as defined in the regulations promulgated by the federal
Environmental Protection Agency or applicable state laws or regulations as in
effect on the date hereof and/or the Closing Date) used by Seller at any of the
Real Property. Seller has complied with all applicable reporting and record
keeping obligations under the Environmental Laws, and holds all permits,
licenses and authorizations required under the Environmental Laws related to the
Real Property or any other Assets except where the failure to comply could not
be reasonably expected to result in a Material Adverse Effect. The Assets and
operations thereof do not result in exposure of workers or the general public to
levels of radio frequency radiation in excess of the "Radio Frequency Protection
Guides" recommended in "American National Standard Safety Levels With Respect to
Human Exposure to Radio Frequency Electromagnetic Fields, 300 kHz to 100 GHz,"
(ANSI C95.1-1992), issued by the American National Standards Institute, and
renewal of the FCC Licenses will not constitute a "major action" within the
meaning of Section 1.1301, et seq. of the FCC's rules. No applications, notices
or other filings are required under any Environmental Laws in order to transfer
any of the Assets to Buyer.
4.11 Permits, Licenses and Franchises. (a) Seller has all material
permits, licenses, franchises, and other authorizations necessary for, and has
substantially complied with all laws applicable to, the operation of the Station
in the manner in which the Station now is being operated. All such permits,
licenses, franchises and other authorizations are listed on Schedule 1.1(a) and
are valid and in full force and effect through the dates set forth in Schedule
1.1(a). No action or proceeding contemplating the revocation or suspension of
any of the foregoing is pending or to the knowledge of Seller, threatened, and
no circumstances exist or are reasonably expected to arise, that may result in
the (a) denial of an application for renewal, (b) revocation, modification,
non-renewal or suspension of any of the foregoing, (c) the issuance of a
cease-and-desist order, or (d) the imposition of any administrative or judicial
sanction with respect
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to the Station.
(b) There is not now issued or outstanding or to Seller's
knowledge threatened any investigation, proceeding, notice of violation or
material complaint against the Seller at the FCC. The Seller has no knowledge of
any person who has manifested an intention to contest the renewal of any FCC
License for the Station.
(c) The Station, its physical facilities, electrical and
mechanical systems and transmitting and studio equipment (1) are being and have
been operated in compliance with all applicable laws, rules, regulations and
codes, and (2) are in and have been operated in compliance in all material
respects with the rules and regulations of the FCC. Seller has complied with all
material requirements of the FCC and the Federal Aviation Administration with
respect to the construction and/or alteration of Seller's antenna structures,
and "no hazard" determinations for each antenna structure have been obtained,
where required. The Station is operating with the maximum facilities specified
by the FCC Licenses. To Seller's knowledge, the Station is not causing
objectionable interference to the transmissions of or reception by the public of
any other broadcast station or communications facility, or with any other
person's or entity's transmission or reception equipment, nor have the Station
or the Seller received any complaints, notices or communications with respect
thereto. To Seller's knowledge, no other broadcast Station or communications
facility is causing objectionable interference to the respective transmissions
of the Station or the public's reception of such transmissions.
(d) All returns, reports and statements relating to the
Station currently required to be filed by Seller with the FCC or any other
governmental authority, including regulatory fees and regulatory fee statements,
have been filed and complied with and are true, correct and complete in all
material respects. All such reports, returns and statements shall continue to be
filed on a current basis until the Closing Date, and will be true, correct, and
complete in all material respects. All documents required by the FCC's rules to
be placed in the Station's public file have been placed and are being held in
such files. All logs and business records of the Station have been maintained in
all material respects in accordance with the rules and regulations of the FCC
and are in the possession of Seller at the Station.
4.12 Affiliated Transactions. Except as set forth on Schedule 4.12, no
Affiliate of Seller has any interest in any material property, real or personal,
tangible or intangible, including Intellectual Property, used in or pertaining
to the operation of the Station other than agreements relating to employee
benefits.
4.13 Labor Disputes. No work stoppage or other labor dispute affecting
the Station is pending or, to the knowledge of Seller, threatened, and no
application for certification of a collective bargaining agent is pending or, to
the knowledge of Seller, threatened.
4.14 Employees; ERISA. (a) The persons identified on Schedule 4.14(a)
are
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the only persons employed or retained in any capacity by Seller with respect
to the operation of the Station. Schedule 4.14(a) identifies the title, last
review date, salary and other income or benefit (other than those which all
employees are entitled to) of each employee, and is true and complete except as
otherwise permitted by the terms of this Agreement. Except as specifically noted
on Schedule 1.1(d), Seller has no employment contract or other understanding
with any Station employee and is not bound by or a party to any collective
bargaining agreement.
(b) There are no employee benefit plans or arrangements of any
type (including but not limited to plans described in section 3(3) of ERISA)
maintained, sponsored or contributed to by Seller on behalf of any current or
former employee of Seller, other than those set forth on Schedule 4.14(b)
("Benefit Plans"). With respect to each Benefit Plan, Seller has delivered or
made available to Buyer accurate and complete copies of all plan texts and
agreements. Seller has never sponsored, maintained, contributed to, or had an
obligation to contribute to, any "defined benefit plan," "money purchase plan,"
"multi-employer plan" or "multiple employer plan" as such terms are defined in
the Code and ERISA. No Benefit Plan that is a "welfare plan" (as described in
ERISA Section 3(1)) provides medical or death benefits with respect to current
or former employees of Seller beyond their termination of employment (except as
required by the continuation of coverage requirements of Part 6 of Title I of
ERISA). Except as set forth on Schedule 4.14 (a), the consummation of the
transactions contemplated by this Agreement will not entitle any individual to
severance pay, and will not accelerate the time of payment of vesting, or
increase the amount, of compensation due to any individual; provided, however,
that this representation shall not encompass any such entitlement, acceleration
or increased implemented by the Buyer after the Closing or required by law.
4.15 Barter Agreements. As used herein "Barter Agreements" means any
agreements for the sale of air-time on the Station for consideration other than
cash, but excluding so-called "cash exchange" agreements. Except as disclosed on
Schedule 1.1(d), Seller is not a party to or subject to any Barter Agreement
which is a Material Contract. Schedule 1.1(d) contains (a) the term of each such
Barter Agreement which is a Material Contract; (b) the portion of each such
Barter Agreement that is unperformed or partially unperformed by Seller, and (c)
the portion of each such Barter Agreement that is unperformed or partially
unperformed by all Parties other than Seller.
4.16 Contracts. (a) Schedules 1.1(d) and 1.1(h) contain all Material
Contracts, true and complete copies of which have been delivered by Seller to
Buyer.
(b) Except as set forth on Schedules 1.1(d) and 1.1(h):
(i) All contracts and agreements are valid and
binding on Seller and, to the knowledge of Seller, binding on the other parties
thereto in all material respects in accordance with their terms, and are in full
force and effect.
(ii) As of the date hereof, neither Seller nor, to
the knowledge of
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Seller, any other party to any Material Contract is in
default in any material respect under the terms of any
Material Contract. There has not occurred, to the knowledge
of Seller, any event that, with notice of lapse of time or
both, would become a default by Seller, under any Material
Contract.
(c) All contracts entered into by Seller for block programming
or brokered airtime on the Station with any third party prior to the date hereof
shall be terminated or rendered null and void and without effect as of the
Closing Date.
4.17 Tax Matters. There are, and after the date of this Agreement there
will be, no tax deficiencies (including penalties and interest) of any kind
assessed against or relating to Seller with respect to any taxable periods
ending on or before, or including, the Closing Date of a character or nature
that would result in Liens or claims on any of the Assets or on Buyer's title or
use of the Assets or that would result in any claim against Buyer.
4.18 Intellectual Property. Schedule 1.1(e) is a complete and accurate
list of (a) the material Intellectual Property that Seller owns or has a license
to use in connection with the operation of the Station; and (b) all contracts
and other agreements, and identification of all parties thereto, under which
Seller either obtains or grants the right to use any of the material
Intellectual Property. Except as set forth on Schedule 4.5, to the knowledge of
Seller there are no claim, either by Seller against any third party or against
Seller, for infringement or any unfair trade practice with respect to any
Intellectual Property except where such claims would not be reasonably expected
to result in a Material Adverse Effect.
4.19 Personal Property; Assets. Schedule 1.1(b) contains a complete and
accurate list of all tangible personal property material to the operation of the
Station or the Assets that are owned by Seller and used by it in the operation
of the Station. The tangible personal property material to the operation of the
Station, on the date hereof, is in good operating condition and repair (ordinary
wear and tear from the time of original purchase or lease excepted) except for
those items listed in Schedule 1.1(b) as due for repair or used for parts, and
is sufficient to operate and conduct the business of the Station consistent with
past practice and in compliance with the rules and regulations of the FCC.
4.20 No Finder. Neither Seller nor any party acting on behalf of Seller
has paid or become obligated to pay any fee or commission to any broker, finder
or intermediary for or on account of the transactions contemplated by this
Agreement other than to Gary Stevens & Co., agent of Buyer whose fee, to the
extent payable, shall be paid entirely by Buyer.
4.21 Exclusivity Of Representations THE REPRESENTATIONS AND WARRANTIES
MADE BY SELLER IN THIS AGREEMENT ARE IN LIEU OF AND ARE
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EXCLUSIVE OF ALL OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES. SELLER HEREBY DISCLAIMS ANY SUCH OTHER OR
IMPLIED REPRESENTATIONS OR WARRANTIES EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES SET FORTH HEREIN.
ARTICLE 5
Representations and Warranties of Buyer
---------------------------------------
Buyer represents and warrants to Seller that the following
representations and warranties are true and correct on the date of this
Agreement and will be true and correct on the Closing Date, except for changes
contemplated or permitted by this Agreement (it being understood that such
representations and warranties shall survive the Closing as provided in Article
8):
5.1 Organization, Qualification, Power and Action of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the state of its incorporation. Buyer has the power and authority to execute
and deliver this Agreement and the documents required or contemplated herein to
be executed and delivered by or on behalf of Buyer, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, and has taken
all actions required by law or its articles of incorporation or by-laws to
authorize such execution and delivery. This Agreement has been duly executed and
delivered by Buyer and constitutes, and each of the other documents to be
executed by Buyer hereunder or prior to the Closing shall constitute, the legal,
valid and binding obligation of Buyer enforceable against Buyer in accordance
with its terms.
5.2 No Conflict. The execution and delivery of this Agreement does not,
and the consummation of transactions contemplated hereby will not in any
material way, violate or conflict with any provision of the articles of
incorporation or by-laws of Buyer or violate any provision of any law, statute,
ordinance, rule, regulation or executive order applicable to Buyer or any
judgment, order, decree or ruling of any court or any governmental or
administrative agency to which Buyer is a party or by which Buyer is bound.
5.3 Qualification of Buyer. Buyer is qualified legally, financially and
otherwise to obtain all of the governmental licenses, permits and authorizations
of Seller and Buyer knows of no reason why the FCC would not grant its consent
to the assignment of the FCC licenses of Seller to Buyer. There is no action
pending, or to Buyer's knowledge, threatened against Buyer or its affiliates
which would disqualify Buyer from obtaining the FCC licenses of Seller.
5.4 No Finder. Neither Buyer or any party acting on behalf of Buyer
paid or become obligated to pay any fee or commission to any broker, finder or
intermediary for
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or on account of the transactions contemplated by this Agreement other than to
Gary Stevens & Co. whose fee, to the extent payable pursuant to a separate
agreement between Gary Stevens & Co. and Buyer, shall be paid by Buyer.
ARTICLE 6
Investigation
-------------
6.1 Investigation of the Assets by Buyer Seller shall afford to
authorized representatives of Buyer (including, without limitation, independent
public accountants, investment banker, lenders and attorneys) reasonable access
during normal business hours upon reasonable advance notice to its offices,
properties, employees and business and financial records to the extent Buyer
shall reasonably deem necessary or desirable to enable it to consummate the
transactions contemplated by this Agreement and shall promptly furnish Buyer
with one copy of such additional information concerning the Assets, the Station
and the operation of the Station, as may be reasonably requested by Buyer,
including all such information as shall be necessary to enable Buyer or its
representatives to verify the accuracy of Seller's representations and
warranties and to determine whether the conditions set forth in Article 9 have
been satisfied. Buyer agrees that such investigation shall be conducted in such
a manner as not to interfere unreasonably with the operations of Seller or the
Station. Seller shall promptly deliver to Buyer any financial statements of
Seller or of the Station as may be prepared in the ordinary course of business
from the date hereof through the Closing Date.
6.2 Confidential Nature of Information. Each party agrees that it will
treat in confidence all documents, materials and other information which it
shall have obtained regarding any other party during the course of the
negotiations leading to the consummation of the transactions contemplated hereby
(whether obtained before or after the date of the Agreement), the investigation
provided for herein and the preparation of this Agreement and other related
documents, and, in the event the transactions contemplated hereby shall not be
consummated, each party will return to the relevant other party all copies of
non-public documents and materials which have been furnished in connection
therewith except that each party can cause the originals or one copy of such
materials to be retained in the files of such party's attorney. The obligation
of each party to treat such documents, materials and other information in
confidence shall not apply to any information which (a) such party can
demonstrate was already lawfully in its possession prior to the disclosure
thereof by the other party, (b) is known to the public and did not become so
known through any violation of a legal obligation, (c) became known to the
public through no fault of such party or (d) is later lawfully acquired by such
party from other sources.
ARTICLE 7
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Covenants
---------
7.1 Covenants of Both Parties. Buyer and Seller hereby acknowledge and
agree that:
7.1.1 Insurance Coverage. The insurance coverage carried by
Seller with respect to the Station and the Assets shall terminate as of the
Closing Date. Notwithstanding the foregoing, Seller shall refer to its insurance
carrier all claims for Excluded Liabilities which are subject to Seller's
insurance coverage and Seller shall pay or cause to be paid all judgments or
settlements for any Excluded Liabilities, whether or not subject to Seller's
insurance coverage; provided Buyer gives to Seller prompt notice of any such
claim of which Buyer has knowledge.
7.1.2 Reasonable Efforts. Both Parties shall use their
commercially reasonable efforts to consummate the transactions contemplated by
this Agreement.
7.1.3 Preserve the Accuracy of Representations and Warranties.
Each of the Parties hereto shall refrain from taking any action that would
render any of its representations or warranties contained in Article 4 or 5 of
this Agreement, respectively, untrue in any material respect as of the Closing
Date; provided, however, that Seller shall not be prohibited hereby from taking
actions in the ordinary course of the business consistent with past practice
that are in good faith and in furtherance of the business of the Station. In
connection with the foregoing, it is specifically agreed by the Parties hereto
that Seller may, without Buyer's consent, enter into any lease, license,
contract, agreement or understanding which is not a Material Contract.
7.1.4 Interim Litigation. Each party shall promptly notify the
other of any action, suit or proceeding that shall be instituted or threatened
against such party, or any basis therefore which becomes known to such party, to
restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. Upon receiving knowledge thereof, Seller shall
promptly notify Buyer of any lawsuit, claim, complaint, proceeding or
investigation or the basis therefore that may be threatened, brought, asserted
or commenced against Seller which would have been required to be listed in
Schedule 4.8 if such lawsuit, claim, proceeding or investigation had arisen
prior to the date hereof.
7.2 Covenants of Seller.
7.2.1 Operation in Ordinary Course. (a) Subsequent to the date
of this Agreement and prior to the Closing, Seller shall use commercially
reasonable efforts to cause the Station to be operated only in the ordinary
course of its business consistent with past practice.
(b) Prior to the Closing Date, without the prior
written consent of Buyer, except as otherwise required herein, Seller shall not:
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(i) encumber or grant any security interest
in or permit any new lien (other than a Permitted Lien) not existing at the date
hereof upon any of the Assets that is or cannot be terminated on or prior to
Closing;
(ii) enter into any new time sales
agreements for the Stations except in the ordinary course of business in
accordance with normal business practices of the Stations or any new Barter
Agreement without the prior written consent of Buyer;
(iii) modify, amend or voluntarily terminate
any Contract, except in the ordinary course of business; or
(iv) enter into any new Material Contracts
without the prior written consent of Buyer.
(c) Seller shall regularly advise Buyer as to all significant matters
with respect to the Stations or the Assets, and promptly advise Buyer of any
material changes to matters contained in Schedules hereto.
7.2.2 Sale and Maintenance of Assets. Seller shall not sell,
transfer, assign, lease, convey, deliver or otherwise dispose of any Assets,
whether now owned or hereinafter acquired, except for dispositions in connection
with the replacement of such Assets with similar Assets of an equal or greater
value or dispositions of Assets that are not material to the Station that become
unusable through normal wear and tear. Seller shall maintain, and at Closing
deliver to Buyer, the tangible Personal Property and the Improvements in good
operating condition, repair and order, ordinary wear and tear excepted, in
substantial accord with the rules and regulations of the FCC and applicable law,
and Seller shall use its best efforts to keep each Material Contract in full
force and effect and in good standing.
7.2.3 Consents. The Parties agree that Part I of Schedule
7.2.3 contains a true and complete schedule of all consents and approvals of
third parties required for the transfer to Buyer of the Station or any of the
Assets. Seller shall use its commercially reasonable efforts to obtain, at the
earliest practicable date, such consents and approvals by instruments in form
and substance reasonably satisfactory to Buyer and Seller. All "Mandatory
Consents", other than the consent of the FCC, are set forth on Part II of
Schedule 7.2.3. Closing will not occur unless and until all Mandatory Consents
listed in Part II of Schedule 7.2.3 and the FCC consent are obtained.
7.2.4 Employees. (a) Effective as of the Closing Date, Seller
shall pay for all claims made after the Closing Date with respect to claims
incurred prior to the Closing Date by those Station employees employed by Seller
prior to the Closing Date for medical, dental, prescription drug, and short term
disability benefits. From and after
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the Closing, Buyer shall have no liability or obligation arising out of or in
connection with any employee benefit plan providing such benefits and Seller
shall retain all such liabilities and obligations, including, without
limitation, obligations for COBRA Continuation Coverage for Station employees
employed by Buyer after the Closing Date.
(b) Seller shall pay, discharge and otherwise be
solely responsible for any and all severance liability for employers terminated
by Seller Closing . Buyer shall pay, discharge and otherwise be solely
responsible for all severance liability incurred as a result of the termination
by Buyer of any of the Station's employees after the Closing Date.
7.2.5 Interim Reports. Between the date hereof and the Closing, Seller
shall furnish to Buyer such financial statements as are prepared by Buyer
reflecting Station operations for each month. Such statements shall be prepared
in a manner consistent with the manner used for preparing the Station's monthly
financial statements for past periods, and shall fairly and accurately report
the financial position and results of operation of the Station at and for the
periods stated thereon.
7.2.6 Tower Lease. Seller shall negotiate with Buyer in good faith
toward the execution of the Tower Lease, which shall provide for reasonable
rental payments, for rental space on Seller's antenna tower for all of Buyer's
equipment which is necessary for operation of the Station by Buyer.
7.3 Disclosure Supplements. (a) Prior to the Closing, Seller may
supplement or amend the Schedules referred to in Article 4 to include any
information or documents received between the date of this Agreement and the
Closing Date, any changes required or permitted by this Agreement, and any
changes approved by Buyer ("Disclosure Supplement").
(b) If any change made to the Schedules pursuant to this
provision has a Material Adverse Effect, Buyer shall have the right to terminate
this Agreement pursuant to Section 11.1.
7.4 Risk of Loss. The risk of loss, damage or destruction to any of the
Assets to be transferred to Buyer hereunder from fire or other casualty or cause
shall be borne by Seller at all times up to 12:01 a.m. local time on the date of
the Closing Date. It is expressly understood and agreed that, in the event of
any loss or damage to any of the Assets from fire, casualty or other causes
prior to the close of business on the day before the date on which Closing Date
is to occur, Seller shall notify Buyer of the same in writing as promptly as
practicable. Such notice shall specify, with responsible particularity under the
circumstances, the loss or damage incurred, the cause thereof (if known or
readily ascertainable), the insurance coverage and whether Seller elects to cure
any breach caused thereby. Seller may deliver a separate Disclosure Supplement,
as contemplated by Section 7.3, with respect to such event, but if Seller fails
to do so, such notice shall be deemed to be a Disclosure Supplement with respect
to all relevant
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Schedules. In the event that any such loss, damage or destruction shall cause
the conditions to Buyer's obligation to consummate the Closing not to be
satisfied, Buyer at its option: (a) may elect to consummate the Closing and
accept the property in its then condition, in which event Seller shall pay to
Buyer all proceeds of insurance received by Seller and resulting from such loss,
damage or destruction and assign to Buyer Seller's right to any such proceeds
that have not yet been paid; or (b) terminate this Agreement after the earlier
of the 120th day after the date of notification by Seller of such loss or the
Outside Closing Date, if Seller has elected to cure but has not yet done so, or
within ten (10) Business Days after its receipt of Seller's notice, if Seller
has not elected to cure.
ARTICLE 8
Survival of Representations and Warranties; Indemnity.
------------------------------------------------------
8.1 Survival of Representations and Warranties. All representations,
warranties, covenants and agreements contained in this Agreement or in any
documents delivered pursuant hereto or otherwise made in connection with the
transactions contemplated hereby shall survive the execution and delivery of
this Agreement and the Closing hereunder for a period of one (1) year after the
Closing Date or for such longer period as specifically set forth in this
Agreement.
8.2 General Indemnification.
8.2.1 Obligation of Seller to Indemnify. (a) Seller shall
indemnify, defend and hold harmless Buyer (and its stockholders, directors,
officers, employees, successors and assignees) from and against all losses,
liabilities, damages, deficiencies costs or expenses (including interest,
penalties and reasonable attorneys' fees and disbursements) (collectively,
"Losses") based upon, arising out of or as a result of or otherwise with respect
to:
(i) any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement or in any documents delivered pursuant to this Agreement;
(ii) any Excluded Liability;
(iii) any claim, action, writ or proceeding, whether
threatened or commenced, by a third party
arising out of Sections 8.2 1(a)(i) or (ii);
(iv) any claim by any programmer, operator,
brokerage entity or other third party for
damages or as a result of an asserted right
to broadcast or package programming on the
Station whether prior to, as of the date
hereof, or at any time after
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Closing Date.
(b) The Buyer's rights to indemnification under
Section 8.2.1 shall be limited by reducing the amount of any Losses incurred by
Buyer for which Buyer is to be indemnified by Seller by the amount Buyer
recovers (after deducting all attorneys' fees, expenses, and other costs of
recovery) from any insurer or other party liable for such Losses.
8.2.2 Obligation of Buyer to Indemnify. (a) Buyer shall
indemnify, defend and hold harmless Seller (and its stockholders, directors,
officers, employees, successors and assigns) from and against all Losses based
upon, arising out of or otherwise in respect of (i) any inaccuracy in or any
breach of any representation, warranty, covenant or agreement of Buyer contained
in this Agreement or in any documents delivered pursuant to this Agreement; (ii)
any Assumed Liability as provided in Section 1.4; and (iii) any claim, action,
writ or proceeding, whether threatened or commenced, by a third party arising
out of any inaccuracy in or any breach of a representation, warranty, covenant
or agreement of Buyer contained in this Agreement or in any documents delivered
pursuant to this Agreement or any Assumed Liability.
(b) The Seller's rights to indemnification under
Section 8.2.2 shall be limited by reducing the amount of any Losses incurred by
Seller for which Seller is to be indemnified by Buyer by the amount Seller
recovers (after deducting all attorneys' fees, expenses, and other costs of
recovery) from any insurer or other party liable for such Losses.
8.2.3 Notice and Opportunity to Defend. Within ten (10)
business days after receipt by any party hereto (the "Indemnitee") of notice of
any demand, claim or circumstances that, with or without the lapse of time,
would or might reasonably give rise to a claim of the commencement (or
threatened commencement) of any action, proceeding or investigation (an
"Asserted Liability") that might result in a Loss, the Indemnitee shall give
notice thereof (a "Claims Notice") to the party obligated to provide
indemnification pursuant to Section 8.2.1 or Section 8.2.2 (the "Indemnifying
Party"). Any failure to give a Claims Notice within ten (10) business days after
receipt of notice of an Asserted Liability shall reduce the obligation of the
Indemnifying Party to the extent that the indemnifying party be prejudiced by
such failure. Such Claims Notice shall describe the Asserted Liability in
reasonable detail, and shall indicate the amount (estimated, if necessary and to
the extent feasible) as the Loss that has been or may be suffered by the
Indemnitee. The Indemnifying party may elect to compromise or defend against, at
its own expense and by its own counsel, any Asserted Liability. If the
Indemnifying Party elects to compromise or defend
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against such Asserted Liability, it shall within thirty (30) days (or sooner, if
the nature of the Asserted Liability so requires) notify the Indemnitee of its
intent to do so, and the Indemnitee shall cooperate at its sole expense in the
compromise of, or defense against, such Asserted Liability. If the Indemnifying
Party elects not to compromise of defend against the Asserted Liability, fails
to notify the Indemnitee of its election and herein provided or contests its
obligation to indemnify under this Agreement, the Indemnitee may pay, compromise
or defend against such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
claim over the objection of the other; provided, however, that consent to
settlement or compromise shall not be unreasonably withheld. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own respective
expense, in the defense of such Asserted Liability; provided, however, that if
the Indemnifying Party is under an affirmative obligation to defend against the
Asserted Liability and the Indemnitee participates in the defense against the
Asserted Liability due to the Indemnifying Party's failure to fulfill this
obligation, the Indemnifying Party shall be liable for all reasonable expenses
thereby incurred by the Indemnitee. If the Indemnifying Party chooses to defend
any claim, the Indemnitee shall make available to the Indemnifying Party any
books, records or other documents within its control that are necessary or
appropriate for such defense.
8.2.4 Notwithstanding anything to the contrary contained in
this Article 8 (except as set forth in this Section 8.2.4) the obligations of
Buyer and Seller to indemnify the other will cease and expire one (1) year after
the Closing Date, with the exception of any Asserted Liability for which notice
and demand has been made within the foregoing one (1) year period, in which case
the obligation to indemnify shall survive until such Asserted Liability is
resolved and payment in respect thereof, if any is owing, shall be made.
ARTICLE 9
Conditions to the Obligation of Buyer to Close
----------------------------------------------
The obligation of Buyer to consummate the transactions contemplated by
this Agreement is subject to the satisfaction by Seller or waiver by Buyer on or
prior to the Closing Date of the following conditions:
9.1 Performance of Acts and Undertakings by Seller. Each of the acts
and undertakings of Seller to be performed at or prior to the Closing pursuant
to the terms hereof, including, but not limited to the covenants to be performed
by Seller in accordance with Section 7.2 shall have been duly performed in all
material respects; provided that the noncompliance with an obligation at any
time shall not constitute a failure of the condition contained in this Section
9.1 if such noncompliance, both alone and in conjunction with all other
noncompliance, has not had a Material Adverse Effect on Buyer's operation of
Station.
9.2 Due Authorization. The Seller is authorized for the execution and
delivery of this Agreement and the documents being delivered in connection
herewith and authorized the consummation of the transactions contemplated
hereby, and any necessary resolutions authorizing such action shall be in full
force and effect and shall not have been modified, amended or superseded prior
to the Closing. Seller shall have furnished Buyer with a certified copy of such
resolutions, if applicable.
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9.3 Continued Accuracy of Representations and Warranties of Seller. The
representations and warranties of Seller contained in this Agreement and in the
documents being delivered in connection herewith shall be true in every material
respect on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of such date except for
changes contemplated or permitted by this Agreement, and Buyer shall have
received at the Closing a certificate, dated the Closing Date and executed by
Seller, to that effect; provided that the failure of a representation or
warranty to be true and correct at any time shall not constitute a failure of
the condition contained in this Section 9.3 if such failure, both alone and in
conjunction with all other such failures, has not had a Material Adverse Effect.
9.4 Approval from Authorities. The FCC shall have approved the
consummation of the transactions contemplated hereby without the imposition of
conditions materially adverse to Buyer's operation of Station, and a Final Order
shall have been obtained; and all governmental or administrative approvals and
licenses necessary for the transfer of the Assets to Buyer and to enable Buyer
to continue to carry on the Station's business in all material respects as
presently conducted after consummation of this transaction shall have been
obtained, and no such approval or licenses shall have been, or be threatened to
be, withdrawn or suspended.
9.5 Consents. The Mandatory Consents listed in Part II of Schedule
7.2.3 shall have been obtained.
9.6 Leases. Seller shall have provided Buyer with fully executed
assignments of the Leases.
9.7 No Claims. No claims shall be pending before any governmental or
administrative agency or authority to restrain or prohibit, or to obtain
substantial damages of a discovery order in connection herewith or the
consummation of the transactions contemplated hereby, and no restraining order
or injunction issued by any court of competent jurisdiction shall be in effect
prohibiting the consummation of the transactions contemplated hereby.
9.8 Delivery of Documents; Legal Matters. Seller shall have provided
Buyer with all documents required by this Agreement or otherwise reasonably
requested by a party (including, without limitation, customary secretary's
certificates and good standing certificates), and the form and substance of all
legal proceedings and of all documents used or delivered hereunder shall be
reasonably acceptable to counsel for Buyer. In addition, Buyer and Seller shall
have finalized all schedules and exhibits hereto to their mutual agreement and
satisfaction.
9.9
No Material Adverse Change; Condition of Assets. Prior to the Closing,
no event or events shall have occurred that individually or in the aggregate is
or could reasonably
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be expected to result in a Material Adverse Effect. On the Closing Date, the
Station shall be on the air with full operating authority under its present
licenses and permits, all FCC requirements for such authority shall have been
met, there shall be no material uncorrected FCC violations, notices or
unsatisfied FCC inquiries.
ARTICLE 10
Conditions to the Obligation of Seller to Close
-----------------------------------------------
The obligation of Seller to consummate the transactions contemplated by
this Agreement is subject to the satisfaction by Buyer or waiver by Seller on or
prior to the Closing Date of the following conditions:
10.1 Performance of Acts and Undertaking by Buyer. Each of the acts and
undertakings of Buyer to be performed at or prior to the Closing pursuant to the
terms hereof shall have been duly performed in all material respects; provided
that the noncompliance with an obligation at any time shall not constitute a
failure of the condition contained in this Section 10.1 if such noncompliance,
both alone and in conjunction with all other such noncompliance, has not had a
material adverse effect on Seller.
10.2 Due Authorization. The Buyer shall have received all necessary
authorizations and approvals for the execution and delivery of this Agreement
and the documents being delivered in connection herewith and authorized the
consummation of the transactions contemplated hereby, and such resolutions shall
be in full force and effect and shall not have been modified, amended or
superseded prior to the Closing. Buyer shall have furnished Seller with a
certified copy of such resolutions.
10.3 Continued Accuracy of Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in this Agreement and in the
documents being delivered in connection herewith shall be true in every material
respect on and as of the Closing Date with the same effect as though such
representations and warranties had been made on as of such date, and Seller
shall have received at the Closing a certificate, dated the Closing Date and
executed by Buyer, to such effect; provided that the failure of a representation
or warranty to be true and correct at any time shall not constitute a failure of
the condition contained in this Section 10.3 if such failure, both alone and in
conjunction with all other such failures, has not had a material adverse effect
on Seller.
10.4 FCC Approval. The FCC shall have approved the consummation of the
transactions contemplated hereby without the imposition of conditions materially
adverse to Seller.
10.5 No Claims. No claims shall be pending before any governmental or
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administrative agency or authority to restrain or prohibit, or to obtain
substantial damages or a discovery order in respect of, this Agreement or the
documents being delivered in connection herewith or the consummation of the
transactions contemplated hereby, and no restraining order or injunction issued
by any court of competent jurisdiction shall be in effect prohibiting the
consummation of the transactions contemplated hereby.
10.6 Delivery of Documents; Legal Matters. Buyer shall have provided
Seller with all documents as required by this Agreement or otherwise reasonably
requested by Seller (including, without limitation customary secretary's
certificates and good standing certificates), and the form and substance of all
legal proceedings and of all documents used or delivered hereunder shall be
reasonably acceptable to counsel for Seller. In addition, Buyer and Seller shall
have furnished all schedules and exhibits hereto to their mutual agreement and
satisfaction.
ARTICLE 11
Termination of Agreement
------------------------
11.1 Grounds for Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(i) By mutual consent of Buyer and Seller with no liability to
either party;
(ii) By either party, if there has been a material
misrepresentation or breach of a material representation or warranty or of any
material obligation of the other party hereto set forth herein or in any other
agreement or document delivered pursuant hereto;
(iii) By either party, in accordance with Section 3.1 hereof,
with no liability to either party;
(iv) By either party, if the Closing shall not have occurred
by the Outside Closing Date; or
(v) By Buyer, in accordance with Section 7.3(b) or Section 7.4
hereof.
11.2 Survival after Termination. If this Agreement is terminated in
accordance with Section 11.1 hereof, this Agreement shall become void and of no
further force and effect except for the provisions of Article 8, Article 11 and
Sections 12.3 and 12.8 which shall survive such termination as provided herein.
11.3 Retention of Documents in Event of Termination. In the event of
the termination of this Agreement for any reason, Buyer shall deliver to Seller
all copies thereof, whether so obtained before or after execution hereof, and
all information so
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<PAGE>
obtained shall be kept confidential.
11.4 Default and Remedies.
11.4.1 Buyer's Remedies. In the event of a breach by Seller
prior to the Closing of any material representation, warranty or covenant on its
part to be performed hereunder, which material breach is not cured by the
Closing Date after written notice to that effect from Buyer, Buyer shall have
the right, which right shall not be its exclusive remedy, to:
(i) Terminate this Agreement pursuant to Section
11.1;
(ii) Bring an action to enforce the terms of this
Agreement by decree of specific performance, it being agreed that the property
to be transferred hereunder is unique and not readily available in the open
market, and if Buyer prevails, Buyer shall be entitled to receive from Seller
all court costs, attorney's fees, and other out of pocket expenses incurred by
Buyer in enforcing its rights under this provision; or
11.4.2 Remedies. The parties recognizes that if the sale is
not consummated as a result of Buyer's default, Seller would be entitled to
compensation, the extent of which is extremely difficult and impractical to
ascertain. The parties, therefore, agree that if this Agreement is not
consummated due to the default of Buyer, Seller, provided that Seller is not
itself in default and has otherwise complied with its obligations under this
Agreement, shall be entitled to the proceeds of the Escrow Deposit. The parties
agree that this sum shall constitute liquidated damages, and shall be in lieu of
any and all other relief to which Seller might otherwise be entitled due to
Buyer's failure to consummate, or default under, this Agreement.
ARTICLE 12
Miscellaneous
-------------
12.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
(i) "Affiliate" with respect to any Person, means and includes
any Person directly or indirectly controlling, controlled by or under common
control with such Person.
(ii) "business day" means a day other than Saturday, Sunday or
other legal holiday in New York.
(iii) "contracts and other agreements" means and includes all
contracts, indentures, notes, bonds, loans, instruments, leases, mortgages,
franchises, licenses, commitments or binding agreements, express or implied.
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<PAGE>
(iv) "documents" means and includes any document, agreement,
instrument, certificate, notice, consent, affidavit, letter, telegram, telex,
statement, schedule (including any Schedule) or exhibit (including any Exhibit)
whatsoever.
(v) "Exhibit" means any exhibit hereto.
(vi) "operating condition" means, with respect to tangible
Personal Property, operating condition which is of a quality at least as high as
the quality of the operating condition of the tangible Personal Property on the
date of this Agreement.
(vii) "knowledge of Seller" means the actual knowledge after
due inquiry of any of the Guarantors or of any of Seller's stockholders,
directors, officers, employees, attorneys, accountants or other professional
contractors.
(viii) "Lien" or "lien" means and includes any lien, pledge,
mortgage, security interest, claim, lease, charge, option, right of first
refusal, easement, servitude, transfer restriction or encumbrance whatsoever.
(ix) "Material Adverse Effect" means any event, occurrence,
change in facts, conditions or other change or effect materially adverse to the
operation or condition of the Assets or Station by Buyer following Closing.
(x) "Material Contract" means and includes any contract or
agreement, including a binding letter of intent, (i) the Assumed Liability for
which exceeds or would exceed $1,000.00, or which, together with other Material
Contracts, exceeds or would exceed $10,000.00 in the aggregate, or (ii) is not
terminable by its terms within sixty (60) days after the Closing Date without
payment of any premium or penalty by Buyer.
(xi) "Permitted Lien" means the following Liens: (a) Liens
existing on the date of this Agreement and which will remain on Assets as listed
on Schedule 4.2; (b) Liens for taxes, assessments or other governmental charges
or levies not yet due; (c) statutory Liens of landlords or Liens of carriers,
warehousemen, mechanics, materialmen and other Liens for amounts not yet due
which Liens are imposed by law and created in the ordinary course of the
business of Seller consistent with past practice; (d) Liens (other than any Lien
imposed by ERISA) incurred or deposits made in the ordinary course of business
of Seller consistent with past practices in connection with worker's
compensation, unemployment insurance or other types of social security; (e)
minor defects or title, easements, right-of-way, restrictions and other similar
charges or encumbrances not materially detracting from the value of the Assets
or interfering with the ordinary conduct of business of Seller; (f) Liens not
created by Seller which affect the underlying fee interest of any real property
leased by Seller; (g) Liens that individually or in the aggregate would not
preclude the consummation of the transactions contemplated herein or have a
Material Adverse Effect; and (h) Liens created by or through Buyer or any of its
Affiliates.
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(xii) "Person" means any individual, corporation, partnership,
firm, joint venture, association, joint stock company, limited liability
company, unincorporated organization, governmental or regulatory body or other
entity.
(xiii) "property" means real, personal or mixed property,
tangible or intangible.
(xiv) "Schedule" means any schedule set forth in Seller's
Disclosure Schedules hereto.
(xv) "Seller's Disclosure Schedules" means the disclosure
schedules delivered by Seller to Buyer on the date hereof or thereafter as
contemplated by this Agreement.
12.2 Business Day. If the last day any action is required or permitted
to be performed under this Agreement or any of the documents being delivered in
connection herewith is not a business day, such action may be performed on the
business day next succeeding such date.
12.3 Public Announcements. Neither Buyer nor Seller shall make any
public announcement or issue any press release in respect of this Agreement or
the transactions contemplated hereby unless the contents of such announcement
previously shall have been reviewed by the other party.
12.4 Governing Law; Successors and Assigns; Counterparts; Entire
Agreement; Assignment by Buyer. THIS AGREEMENT (a) SHALL BE CONSTRUED UNDER AND
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS
MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE (WITHOUT REGARD TO ITS
CONFLICT OF LAWS RULES); (b) shall be binding upon and shall inure to the
benefit of the Parties hereto and their respective successors and assigns; (c)
may be executed in one or more counterparts, each of which counterparts shall be
deemed an original but all of which counterparts together shall constitute one
and the same instrument, and shall become effective when each party shall have
been delivered a counterpart signed by the other party hereto; (d) embodies the
entire agreement and understanding, and supersedes all prior oral or written
agreements and understandings, between the Parties relating to the subject
matter hereof; and (e) is not assignable except by operation of law or with the
other party's prior written consent. Notwithstanding the foregoing limitation
against assignment by Buyer contained in (e), Buyer may, upon written notice to
Seller, assign this Agreement to an Affiliate which will thereafter be the Buyer
and Buyer or its Affiliate may assign this Agreement at or after the Closing to
any lender to Buyer or its Affiliate; provided, however, that, Big City Radio,
Inc. shall remain and continue to be bound by the provisions of this Agreement.
12.5 Headings. The headings in this Agreement are included for
reference purposes only and shall not in any way affect the interpretation or
construction of any of
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<PAGE>
the provisions hereof.
12.6 Notices. Any notice or other communications required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission with electronic information to sender of receipt or sent
by certified, registered or express mail, postage prepaid and return receipt
requested, or sent by Federal Express or other courier providing written
evidence of delivery addressed as follows:
To Buyer: Big City Radio, Inc.
11 Skyline Drive
Hawthorne, NY 10532
Attn.: Michael Kakoyiannis, President and CEO
Fax: (914) 592-4356
With a copy to: General Counsel
c/o Metromedia Company
One Meadowlands Plaza
East Rutherford, NJ 07073-2137
Fax (201) 531-2803
To Seller: Darrel Peters Productions, Inc.
135 E. County Line Road
Barrington, IL 60010
Attn: Darrel Peters
Tel.: (708) 382-2824
Fax.: (708) ____- _____
With a copy to: Jason L. Shrinsky, Esq.
Kaye, Scholer, Fierman, Hays & Handler, LLP
901 15th Street, N.W.
Suite 1100
Washington, D.C. 20005
Tel.: (202) 682-3506
Fax: (202) 682-3580
or to such other addresses as shall be furnished in writing by either party to
the other party in accordance with this Section 12.6. Any such notice or
communication shall be deemed to have been given as of the date so delivered
personally, one (1) business day after deposit with Federal Express or other
overnight courier service, or, if mailed, five (5) days after the date of
deposit of such notice or communication with the U.S. Postal Service, or if by
facsimile, one (1) business day after the date of electronically confirmed
delivery.
12.7 Waivers and Amendments. This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms and conditions hereof
may
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<PAGE>
be waived, only by a written instrument signed by both of the Parties hereto
or, in the case of a waiver, by the party waiving compliance. No delay on the
part of any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any waiver on the part of any party of
any right, power or privilege hereunder, nor any single or partial exercise of
any right, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder. The
rights and remedies of Seller herein provided are cumulative and are not
exclusive of any rights or remedies that any party may otherwise have at law or
in equity.
12.8 Expenses. All fees, commissions and other expenses incurred by
Buyer, on the one hand, or Seller, on the other hand, in connection with the
negotiation of this Agreement and the other documents delivered in connection
herewith, and in preparing to consummate the transactions contemplated hereby,
including the fees and expenses of their respective counsel, shall be borne by
the party incurring such fee or expense.
12.9 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the identity
of the person or persons referred to thereby may require.
12.10 Exhibits and Schedules. The Exhibits and Schedules referred to in
this Agreement are a part of this Agreement as if set forth in full herein. All
references to this Agreement shall be deemed to include the Exhibits and
Schedules hereto, unless the context otherwise requires.
12.11 Severability. If any provision of this Agreement shall be invalid
or unenforceable, the other provisions of this Agreement shall continue in full
force, and the validity and enforceability thereof shall not be adversely
affected.
12.12 Survival. The provision of Sections 2.2, 2.3, 2.4, 2.5, 7.1.1,
7.2.4, 7.4 and Articles 8, 11 and 12 expressly survive a Closing pursuant to
Article 3.
12.13 Access to Records After Closing. (a) For a period of three (3)
years after the Closing Date, Seller and its representatives shall have
reasonable access to all of the books and records of Seller transferred to Buyer
hereunder to the extent that such access may reasonably be required in
connection with matters relating to or affected by this Agreement or the
operations of Seller prior to the Closing Date. Seller and its representatives
shall be afforded such access for a period of six (6) years after the Closing
Date to the extent that such access may reasonably be required in connection
with any tax audit, litigation or similar matter beyond the sole control of
Seller and its representatives. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours. Seller
shall be solely responsible for any costs or expenses incurred by it pursuant to
this Section 12.13. If Buyer shall desire to dispose of any of such books and
records prior to the expiration of such six-year period, Buyer shall so notify
Seller and shall give Seller the opportunity, for a period of forty-five (45)
days after the date of such notice, at Seller's expense, to
32
<PAGE>
segregate and remove such books and records as Seller may select.
(b) For a period of three (3) years after the Closing Date,
Buyer and its representatives shall have reasonable access to all of the books
and records relating to the Business which Seller or any of its respective
Affiliates may retain after the Closing Date. Buyer and its representatives
shall be afforded such access for a period of six (6) years after the Closing
Date to the extent that such access may reasonably be required in connection
with any tax audit, litigation or similar matter beyond the sole control of
Buyer and its representatives. Such access shall be afforded by Seller and its
Affiliates upon receipt of reasonable advance notice and during normal business
hours. Buyer shall be solely responsible for any costs and expenses incurred by
it pursuant to this Section 12.13. If Seller or any of its Affiliates shall
desire to dispose of any of such books and records prior to the expiration of
such six-year period, Seller shall so notify Buyer and shall give Buyer the
opportunity, for a period of forty-five (45) days after the date of such notice,
at Buyer's expense, to segregate and remove such books and records as Buyer may
select.
12.14 Waivers. Any term or provision of this Agreement may be waived,
or the time for its performance may be extended, by the party entitled to the
benefit thereof. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of such
provision, nor in any way to affect the validity of this Agreement or any part
hereof or the right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be held to constitute
a waiver of any other or subsequent breach.
33
<PAGE>
IN WITNESS WHEREOF, each of Seller and Buyer has caused this Agreement
to be executed on its respective behalf as of the day and year first above
written.
BIG CITY RADIO, INC.
By: /s/ Michael Kakoyiannis
------------------------------------
Name: Michael Kakoyiannis
Title: President and CEO
DARREL PETERS PRODUCTIONS, INC.
By: /s/ Darrel Peters
------------------------------------
Name: Darrel Peters
Title:
34
<PAGE>
Exhibit 2.2
Big City Radio, Inc.
11 Skyline Drive
Hawthorne, New York 10532
April 20, 1998
Mr. Darrel Peters
Darrel Peters Productions, Inc.
135 E. County Line Road
Barrington, IL 60010
Re: Trade Agreement
Dear Mr. Peters:
This letter agreement ("Letter Agreement") will confirm our
understanding regarding the trade relationship by and between Big City Radio,
Inc. ("Big City"), on behalf of its radio operations in Chicago, Illinois, and
Darrel Peters Productions, Inc. ("Darrel Peters"), as referenced in the Asset
Purchase Agreement, dated as of this date, by and between the parties (the
"Asset Purchase Agreement"). Accordingly, the following terms and conditions
shall apply:
1. Term. The term of this Letter Agreement shall commence upon the
Closing Date (as defined in the Asset Purchase Agreement) of the
transaction contemplated by the Asset Purchase Agreement, and shall
stay in effect, unless otherwise earlier terminated in accordance
herein, for a period of ten (10) years thereafter (the "Term").
2. Value.
a) During the Term, Big City agrees to provide you with goods
or services in the aggregate fair market value of Seven
Hundred and Fifty Thousand Dollars ($750,000.00) (the
"Value"), to be delivered at an approximate rate of Two
Hundred and Fifty Thousand Dollars ($250,000.00) during
three (3) successive forty (40) month periods, but at no
more than Seventy-Five Thousand Dollars ($75,000.00) per
twelve (12) month period. Credit against Value shall be
computed at time of order for goods and services by Darrel
Peters. Value not ordered during each forty (40) month
period may not be carried forward into the next forty (40)
month period. Value will be counted, for United States tax
purposes, as capital gains.
b) From time to time throughout the Term, Big City may
accelerate the delivery of the Value, with prior written
approval of Darrel Peters,
<PAGE>
such approval not to be unreasonably withheld. In the
event that acceleration is undertaken in accordance with
this paragraph, the Term shall terminate upon delivery of
the full Value.
c) Only with prior written consent of Darrel Peters, Big City
may employ a bill payer, brokerage house or any other
third party to obtain goods and services on behalf of
Darrel Peters. In such event, Big City shall be credited
against the Value for the actual amount of airtime or
advertising it must expend or convey to obtain the goods
or services.
d) Goods and Services. From time to time throughout the Term,
Darrel Peters may provide Big City with certain accounts
or advertisers which, in exchange for airtime or
advertising on Big City's radio stations, will provide
goods or services to Big City for the benefit of Darrel
Peters; all such account or advertising agreements,
however, will be directly between Big City and the
advertisers. Big City retains the right to accept or
decline the accounts or advertisers provided to it by
Darrel Peters in accordance with this paragraph and, under
no circumstances, shall Big City undertake any arrangement
or agreement on behalf of Darrel Peters which would
violate the rules and regulations of the Federal
Communications Commission, the Communications Act of 1934,
as amended, or the terms and conditions of the its radio
station licenses.
4. Settlement of Disputes.
a) The parties hereto shall endeavor to settle amicably by
mutual discussions any disputes, differences, or claims
whatsoever related to this Letter Agreement.
b) Failing such amicable settlement, any controversy, claim
or dispute arising under or relating to this Letter
Agreement, including the existence, validity,
interpretation, performance, termination or breach
thereof, shall finally be settled by arbitration in
accordance with the International Arbitration Rules of the
American Arbitration Association ("AAA"). There shall be
three (3) arbitrators, the first of which shall be
appointed by the claimant in its notice of arbitration,
the second of which shall be appointed by the respondent
within thirty (30) days of the appointment of the first
arbitrator and the third of which shall be jointly
appointed by the party-appointed arbitrators within thirty
(30) days thereafter. The Arbitrator will not have
authority to award punitive damages to either party. Each
party shall bear its own expenses, but the parties shall
share equally the expenses of the Arbitration Tribunal and
the AAA. This Letter Agreement shall be enforceable, and
any arbitration award shall be final, and judgment
<PAGE>
thereon may be entered in any court of competent
jurisdiction. The arbitration shall be held in Chicago,
IL, USA.
5. Assignment. This Letter Agreement and the benefits or obligations hereunder
may not be assigned without the prior written consent of the non-assigning
party, such consent not to be unreasonably withheld.
6. Indemnification. Darrel Peters shall indemnify or defend Big City, its
affiliates, subsidiaries, directors, officers or employees, against any and
all third party claims arising out of Darrel Peters' use or enjoyment of
the goods and services conveyed pursuant to this Letter Agreement.
<PAGE>
Accordingly, please indicate your agreement and acceptance with the
terms and conditions set forth in this Letter Agreement by signing your name in
the space provided below.
Sincerely yours,
/s/ Michael Kakoyiannis
Michael Kakoyiannis
President & CEO
Agreed and Accepted:
/s/ Darrel Peters
- ------------------------
Darrel Peters
Darrel Peters Productions, Inc.
President
