<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 29, 1998
REGISTRATION NO. 333-41733
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
SALEM COMMUNICATIONS CORPORATION
AND OTHER REGISTRANTS*
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 4832,4899 77-0121400
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
4880 SANTA ROSA ROAD
SUITE 300
CAMARILLO, CALIFORNIA 93012
(805) 987-0400
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S AND CO-REGISTRANT'S PRINCIPAL EXECUTIVE
OFFICES)
JONATHAN L. BLOCK, ESQ.
SALEM COMMUNICATIONS CORPORATION
4880 SANTA ROSA ROAD
SUITE 300
CAMARILLO, CALIFORNIA 93012
(805) 987-0400
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
WITH COPIES TO:
ERIC H. HALVORSON, ESQ. THOMAS D. MAGILL, ESQ.
SALEM COMMUNICATIONS CORPORATION GIBSON, DUNN & CRUTCHER LLP
4880 SANTA ROSA ROAD, SUITE 300 4 PARK PLAZA, SUITE 1400
CAMARILLO, CALIFORNIA 93012 IRVINE, CALIFORNIA 92614
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
---------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box. [_]
---------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1) PRICE(1) FEE
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 1/2% Series B Senior Subordinated
Notes Due 2007 (the "Notes")...... $150,000,000 100% $150,000,000 $44,250
- ------------------------------------------------------------------------------------------
Guarantees of the Notes*........... $150,000,000 (2) (2) (2)
- ------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for the purposes of computing the
registration fee.
(2)No separate consideration will be received for the Guarantees.
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
(Continued on next page)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
(Continued from previous page)
*OTHER REGISTRANTS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRIMARY
STATE OR OTHER STANDARD I.R.S.
JURISDICTION OF INDUSTRIAL EMPLOYER
EXACT NAME OF REGISTRANT INCORPORATION OR CLASSIFICATION IDENTIFICATION
AS SPECIFIED IN ITS CHARTER ORGANIZATION CODE NUMBERS NUMBER
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
ATEP Radio, Inc. .............. California 4832 77-0132973
Beltway Media Partners......... Virginia 4832 77-0293196
Bison Media, Inc. ............. Colorado 4832 77-0434654
Caron Broadcasting, Inc. ...... Ohio 4832 77-0439370
Common Ground Broadcasting,
Inc. ......................... Oregon 4832 93-1079989
Golden Gate Broadcasting
Company, Inc. ................ California 4832 94-3082936
Inland Radio, Inc. ............ California 4832 77-0114987
Inspiration Media, Inc. ....... Washington 4832 77-0132974
Inspiration Media of Texas,
Inc. ......................... Texas 4832 75-2615876
New England Continental Media,
Inc. ......................... Massachusetts 4832 04-2625658
New Inspiration Broadcasting
Company, Inc. ................ California 4832 95-3356921
Oasis Radio, Inc. ............. California 4832 77-0061780
Pennsylvania Media Associates,
Inc. ......................... Pennsylvania 4832 94-3134636
Radio 1210, Inc. .............. California 4832 77-0052616
Salem Communications
Corporation................... Delaware 4832, 4899 77-0363592
Salem Media Corporation........ New York 4832 95-3482072
Salem Media of California,
Inc. ......................... California 4832 95-1581210
Salem Media of Colorado, Inc. . Colorado 4832 84-1239646
Salem Media of Louisiana,
Inc. ......................... Louisiana 4832 77-0114983
Salem Media of Ohio, Inc. ..... Ohio 4832 95-3690954
Salem Media of Oregon, Inc. ... Oregon 4832 77-0114986
Salem Media of Pennsylvania,
Inc. ......................... Pennsylvania 4832 77-0237182
Salem Media of Texas, Inc. .... Texas 4832 77-0379125
Salem Music Network, Inc. ..... Texas 4899 77-0434655
Salem Radio Network
Incorporated.................. Delaware 4899 77-0305542
Salem Radio Representatives,
Inc. ......................... Texas 4899 77-0281576
South Texas Broadcasting,
Inc. ......................... Texas 4832 77-0388924
SRN News Network, Inc. ........ Texas 4899 77-0426090
Vista Broadcasting, Inc. ...... California 4832 77-0389639
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 29, 1998
PROSPECTUS
[LOGO OF SALEM COMMUNICATIONS CORPORATION]
$150,000,000
SALEM COMMUNICATIONS CORPORATION
OFFER FOR OUTSTANDING 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR 9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
--------------
Salem Communications Corporation, a California corporation (the "Company")
hereby offers (the "Exchange Offer"), upon the terms and subject to the
conditions set forth herein and in the related Letter of Transmittal, to
exchange up to $150,000,000 aggregate principal amount of its 9 1/2% Series B
Senior Subordinated Notes due 2007 (the "Notes") of the Company for a like
amount of the privately placed 9 1/2% Series A Senior Subordinated Notes Due
2007 (the "Old Notes") of the Company issued on September 25, 1997, from the
holders thereof.
The Notes are being offered hereunder in order to satisfy the obligations of
the Company under a Registration Rights Agreement dated September 17, 1997 (the
"Registration Rights Agreement") by and among the Company, the Guarantors (as
defined herein), and Furman Selz LLC, Smith Barney Inc., BancBoston Securities,
Inc., and BNY Capital Markets, Inc. (the "Initial Purchasers"). The Exchange
Offer is designed to provide to holders an opportunity to acquire the Notes
which, unlike the Old Notes, are expected to be freely transferable at all
times, subject to state "blue sky" law restrictions, provided that the holder
is not an "affiliate" of the Company within the meaning of the Securities Act
of 1933, as amended (the "Securities Act"), and represents that the Notes are
being acquired in the ordinary course of such holder's business and the holder,
if not a broker-dealer, is not engaged in, and does not intend to engage in, a
distribution of the Notes. With the exception of the freely transferable nature
of the Notes, the Notes are substantially identical to the Old Notes. See "The
Exchange Offer--Purpose of the Exchange Offer."
The Company will accept for exchange any and all validly tendered Old Notes
on or prior to 5:00 P.M., New York time, on , 1998, unless extended (the
"Expiration Date"). Tenders of Old Notes made pursuant to the Exchange Offer
may be withdrawn at any time prior to the Expiration Date. In the event the
Company terminates the Exchange Offer and does not accept any Old Notes with
respect to the Exchange Offer, the Company will promptly return such Old Notes
to the holders thereof. The Company will not receive any proceeds from the
Exchange Offer.
Interest on the Notes will accrue from the date of issuance and will be
payable semi-annually on each April 1 and October 1, commencing April 1, 1998.
The Notes will mature on October 1, 2007. The Notes are redeemable at the
option of the Company, in whole or in part, at any time on or after October 1,
2002, at the redemption prices set forth herein, plus accrued and unpaid
interest to the redemption date. In addition, the Company, at its option, may
redeem up to $50.0 million in aggregate principal amount of the Notes at any
time on or prior to October 1, 2000 at 109.50% of the aggregate principal
amount so redeemed, plus accrued and unpaid interest thereon to the redemption
date, with the proceeds of one or more Public Equity Offerings (as defined
herein), provided that at least $100.0 million in aggregate principal amount of
the Notes remain outstanding immediately after the occurrence of any such
redemption. See "Description of the Notes--Optional Redemption." Upon a Change
of Control (as defined herein), each holder of the Notes will be entitled to
require the Company to purchase such holder's Notes at 101% of the principal
amount thereof, plus accrued and unpaid interest to the purchase date. There
can be no assurance that the Company will have sufficient funds to repurchase
the Notes upon a Change of Control. See "Description of the Notes--Certain
Covenants--Purchase of Notes Upon a Change of Control."
The Notes will be general unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness (as defined
herein), including the Company's obligations under the Credit Agreement (as
defined herein), and senior in right of payment to all existing and future
Subordinated Indebtedness (as defined herein) of the Company. See "Description
of Certain Indebtedness" and "Description of the Notes--Subordination." The
Notes will be guaranteed, jointly and severally (the "Guarantees"), on a senior
subordinated basis by all of the Company's current subsidiaries (the
"Guarantors"). See "Description of the Notes--Guarantees." The Guarantees will
be general unsecured obligations of the Guarantors, subordinated in right of
payment to all Guarantor Senior Indebtedness (as defined herein), including any
guarantees by Guarantors of the Company's obligations under the Credit
Agreement and senior in right of payment to any Subordinated Indebtedness of
the Guarantors. As of September 30, 1997, the Company and the Guarantors had an
aggregate of approximately $10.1 million of Senior Indebtedness outstanding
under the Credit Agreement and no other Indebtedness (as defined herein)
outstanding other than the Notes.
(Continued on following page)
--------------
SEE "RISK FACTORS" BEGINNING ON PAGE 14 HEREIN FOR A DISCUSSION OF CERTAIN
RISKS THAT HOLDERS OF OLD NOTES SHOULD CONSIDER IN CONNECTION WITH THE EXCHANGE
OFFER.
--------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is , 1998.
<PAGE>
The Old Notes were sold by the Company on September 25, 1997 to the Initial
Purchasers in a transaction not registered under the Securities Act in
reliance upon an exemption under the Securities Act. The Initial Purchasers
subsequently placed the Old Notes with qualified institutional buyers in
reliance upon Rule 144A under the Securities Act. The Old Notes may not be
reoffered, resold or otherwise transferred in the United States unless
registered under the Securities Act or unless an applicable exemption from the
registration requirements of the Securities Act is available.
Based on the interpretive letters Exxon Capital Holdings Corporation (May
13, 1998), Morgan Stanley & Co., Incorporated (June 5, 1991) and Shearman &
Sterling (July 2, 1993) issued by the staff of the Securities and Exchange
Commission (the "Commission"), the Company believes that a holder of Notes
(other than (i) a broker-dealer who purchases such Notes directly from the
Company to resell pursuant to Rule 144A or any other available exemption under
the Securities Act or (ii) a person who is an affiliate of the Company within
the meaning of Rule 405 under the Securities Act) who exchanges Old Notes for
Notes in the ordinary course of business and who is not participating, does
not intend to participate, and has no arrangement or understanding with any
person to participate, in the distribution of the Notes, will be allowed to
resell the Notes to the public without further registration under the
Securities Act and without delivering to the purchasers of the Notes a
prospectus that satisfies the requirements of the Securities Act. See "The
Exchange Offer--Purpose of the Exchange Offer" and "Resales of Notes."
However, a broker-dealer that acquires Notes for its own account in the
Exchange Offer in exchange for Old Notes that were acquired for its own
account as a result of market-making or other trading activities may be deemed
to be an "underwriter" within the meaning of the Securities Act and must,
therefore, deliver in any resale of the Notes a prospectus meeting the
requirements of the Securities Act. For a period of 180 days from the
Expiration Date, the Company will make copies of this Prospectus, as amended
or supplemented, available to any broker-dealer that receives Notes for its
own account in the Exchange Offer in exchange for Old Notes that were acquired
by the broker-dealer as a result of the market-making or other trading
activities for use in connection with any such resale. See "Plan of
Distribution." If any other holder is deemed to be an "underwriter" within the
meaning of the Securities Act or acquires Notes in the Exchange Offer for the
purpose of distributing or participating in a distribution of the Notes, such
holder may not rely on the positions of the Commission's staff enunciated in
Exxon Capital, Morgan Stanley and Shearman & Sterling and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction, unless an exemption from
registration is otherwise available.
If a holder of Old Notes does not exchange such Old Notes for Notes pursuant
to the Exchange Offer, such Old Notes will continue to be subject to the
restrictions on transfer contained in the legend thereon. In general, the Old
Notes may not be offered or sold, unless registered under the Securities Act,
except pursuant to an exemption from, or in a transaction not subject to, the
Securities Act and applicable state securities laws.
The Old Notes are currently eligible for trading in the Private Offerings,
Resales and Trading through Automated Linkages ("PORTAL") market. Following
commencement of the Exchange Offer but prior to its consummation, the Old
Notes may continue to be traded in the PORTAL market. Following consummation
of the Exchange Offer, the Notes will not be eligible for PORTAL trading.
It is not currently anticipated that an active public market for the Notes
will develop. The Company currently does not intend to apply for the listing
of the Notes on any securities exchange or to seek approval for quotation
through any automated quotation system. No assurance can be given as to the
liquidity of the trading market for the Notes.
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange. However, the Exchange Offer is subject
to certain customary conditions. See "The Exchange Offer--Conditions to the
Exchange Offer." Old Notes may be tendered only in integral multiples of
$1,000.
<PAGE>
AVAILABLE INFORMATION AND INCORPORATION BY REFERENCE
The Company and the Guarantors have filed with the Securities and Exchange
Commission (the "Commission") a registration statement relating to the Notes
offered hereby (herein, together with all amendments and exhibits, referred to
as the "Registration Statement") under the Securities Act. This Prospectus,
which constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement. Statements made in this Prospectus as to the contents
of any contract, agreement or other document referred to are not necessarily
complete. With respect to each such contract, agreement or other document
filed as an exhibit to the Registration Statement, reference is made to such
exhibit for a more complete description thereof, and each such statement shall
be deemed qualified by such reference.
Upon effectiveness of the Registration Statement, the Company and the
Guarantors will be subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith must file periodic reports and other information with the
Commission, unless granted relief from such requirements.
The Registration Statement and the exhibits and schedules thereto and any
periodic reports or other information filed pursuant to the Exchange Act may
be inspected without charge and copies at prescribed rates at the Public
Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at 7 World
Trade Center, Suite 1300, New York, New York 10048, and Northwestern Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. The
Commission maintains a website that contains reports, proxy and information
statements and other information filed electronically with the Commission at
http://www.sec.gov.
The Company and the Guarantors have agreed to furnish to holders of the
Notes and Old Notes and prospective purchasers and securities analysts, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
1
<PAGE>
NOTICE TO NEW HAMPSHIRE RESIDENTS ONLY
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A
LICENSE HAS BEEN FILED UNDER CHAPTER 421-B OF THE NEW HAMPSHIRE REVISED
STATUTES WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS
EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE
CONSTITUTES A FINDING BY THE ATTORNEY GENERAL OR THE SECRETARY OF STATE THAT
ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING.
NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE
FOR A SECURITY OR A TRANSACTION MEANS THAT THE ATTORNEY GENERAL OR THE
SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF,
OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY OR TRANSACTION. IT
IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS
PARAGRAPH.
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus contains forward-looking statements, including statements
regarding, among other items, (i) the realization of the Company's business
strategy, (ii) the sufficiency of cash flow to fund the Company's debt service
requirements and working capital needs and (iii) the anticipated trends in the
radio broadcasting industry. Forward-looking statements are typically
identified by the words "believe," "expect," "anticipate," "intend,"
"estimate" and similar expressions. These forward-looking statements are
subject to a number of risks and uncertainties, many of which are beyond the
Company's control. Actual results could differ materially from those
contemplated by these forward-looking statements. There can be no assurance
that the results and events contemplated by the forward-looking information
contained in this Prospectus will in fact transpire. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only
as of their dates. The Company does not undertake any obligation to update or
revise any forward-looking statements.
The safeharbor under the Securities Act and the Exchange Act for certain
"forward-looking statements" within the meaning of such Acts does not apply to
initial public offerings.
MARKET DATA SOURCES
All metropolitan statistical area ("MSA") rank information set forth in this
Prospectus has been obtained from the Spring 1997 Radio Market Survey Schedule
& Population Ranking published by The Arbitron Company. According to the
Survey, the population estimates used were based upon 1990 U.S. Bureau Census
estimates updated and projected to January 1, 1997 by Market Statistics, based
on the data from Sales & Marketing Management's 1996 Survey of Buying Power.
Information regarding the number of radio stations in the United States
featuring religious talk and music formats, including formats identified as
Religious, Gospel, Christian, Inspirational or Sacred, the growth in the
number of stations featuring religious formats from 1989 to 1997, the
religious format as the third largest radio format in the United States, the
size of the listening audience for religious programming and the number of
stations owned and/or operated in the top 25 radio markets by competitors of
the Company have been obtained from the 1997 Broadcasting & Cable Yearbook,
The M Street Journal (November 26, 1997), Religion & Media Quarterly (July
1997) and the 1998 Directory of Religious Media.
2
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified by, and should be read in conjunction
with, the more detailed information and financial statements and notes thereto
appearing elsewhere in this Prospectus. As used in this Prospectus, the term
the "Company" refers to Salem Communications Corporation and its subsidiaries,
unless the context otherwise requires. Edward G. Atsinger III and Stuart W
Epperson are referred to herein as the "Principal Shareholders" and together
with Nancy A. Epperson, the wife of Mr. Epperson and the sister of
Mr. Atsinger, as the "Shareholders." The Shareholders reorganized the Company
in August 1997 such that certain entities owned by the Shareholders became
wholly owned by the Company. In addition to the historical information
contained herein, this Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from those discussed herein. Factors that might cause such a
difference include, but are not limited to, those discussed under the captions
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" as well as those discussed elsewhere in this
Prospectus. See "Special Cautionary Notice Regarding Forward-Looking
Statements."
THE COMPANY
Salem Communications Corporation is the leading radio broadcast company in
the United States, measured by number of stations owned and audience coverage,
that focuses on serving the religious/conservative listening audience. The
Company's two primary businesses include the ownership and operation of
religious format radio stations and the development and expansion of a national
radio network (the "Network") offering talk programming, news and music to
affiliated stations. The Company owns and/or operates 43 radio stations
concentrated in 28 geographically diverse markets across the United States.
The Company offers a variety of specialized talk programming emphasizing
Bible study and Judeo-Christian values applied to family and community issues
as well as contemporary and traditional religious music. The 1997 Broadcasting
& Cable Yearbook identifies over 1,800 radio stations throughout the United
States that feature religious talk and music formats, including formats
identified as Religious, Gospel, Christian, Inspirational or Sacred. According
to statistics appearing in The M Street Journal, a broadcast industry
newsletter, the number of radio stations featuring religious formats has grown
approximately 69% between 1989 and 1997 and the religious format is the third
largest radio format in the United States after country and news/talk.
According to Religion & Media Quarterly, religious format radio stations have
an audience of approximately 20.6 million listeners.
The Company focuses on serving the top 25 markets in terms of audience size
in the United States and has radio stations in nine of the top ten and 19 of
the top 25 of those markets. The Company is also interested in serving certain
mid-sized markets, which the Company considers to be markets that are among the
26th through 50th largest radio markets in the United States in terms of
audience size. Since January 1, 1992, the Company has grown significantly by
acquiring ownership of, or operating rights to, 29 radio stations in 20
markets, including 17 stations in 14 markets since January 1, 1996. Many of
these recently acquired radio stations were previously broadcasting in non-
religious formats and have been re-formatted by the Company. The Company's
experience has been that changing the format of an acquired station typically
requires a transition period during which the Company develops its program
customer and listener base. During such transition period, these stations
typically do not generate significant cash flow from operations. The Company's
total gross revenue, broadcast cash flow and EBITDA (as defined herein) were
$65.1 million, $25.5 million and $20.9 million, respectively, for the year
ended December 31, 1996 and were $54.5 million, $20.7 million and $15 million,
respectively, for the nine months ended September 30, 1997. The Company's
results of operations for the year ended December 31, 1996 and the nine months
ended September 30, 1997 include the results of many stations in transition
periods, which have not generated significant cash flow from operations in the
aggregate.
3
<PAGE>
Owned and/or Operated Stations. The following table sets forth information
about the number of radio stations owned and/or operated by the Company and the
markets served in order of market size:
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
STATIONS STATIONS
--------- ------------
MARKET(1): MSA RANK(2) FM AM MARKET(1): MSA RANK(2) FM AM
---------- ----------- ---- ---- ---------- ----------- ---- ----
<C> <C> <C> <C> <S> <C> <C> <C>
New York, NY............ 1 0 2 Pittsburgh, PA.......... 20 1 1
Los Angeles, CA......... 2 2 1 Cleveland, OH........... 22 0 2
Chicago, IL............. 3 1 0 Denver-Boulder, CO...... 23 1 2
San Francisco, CA....... 4 0 1 Portland, OR............ 24 1 1
Philadelphia, PA........ 5 0 2 Cincinnati, OH.......... 25 0 1
Riverside-San
Dallas-Ft. Worth, TX.... 7 1 0 Bernardino, CA.......... 26 0 1(5)
Washington, D.C. ....... 8 1 0 Sacramento, CA.......... 28 0 2
Houston-Galveston, TX... 9 1 1 Columbus, OH............ 32 0 1
Boston, MA.............. 10 0 1 San Antonio, TX......... 34 0 1
Seattle-Tacoma, WA...... 13 0 3(3) Akron, OH............... 67 0 1
San Diego, CA........... 14 0 1 Spokane, WA............. 87 1 0
Minneapolis-St. Paul, MN
........................ 16 0 1 Colorado Springs, CO.... 95 3 0
Phoenix, AZ............. 18 0 1 Oxnard, CA.............. 109 1 0
Baltimore, MD........... 19 0 1(4) Canton, OH.............. 120 1(6) 0
---- ----
TOTAL.............................. 15 28
==== ====
</TABLE>
- --------------------
(1) Actual city of license may differ from metropolitan market served.
(2) "MSA" means metropolitan statistical area.
(3) The Company operates one of the stations, which is licensed to a
corporation owned by the Principal Shareholders of the Company, under the
terms of a local marketing agreement. See "Federal Regulation of Radio
Broadcasting--Local Marketing Agreements" and "Certain Transactions."
(4) The station is simulcast with WAVA-FM, Washington, D.C.
(5) The station is simulcast with KKLA-FM, Los Angeles.
(6) The station is simulcast with WHK-AM, Cleveland.
For the year ended December 31, 1996 and the nine months ended September 30,
1997, the Company derived 57.5% and 53.4% of its gross revenue, or $37.5
million and $29.1 million, respectively, from the sale of nationally syndicated
and local block program time. The Company believes that sales of block program
time lessen its exposure to swings in general economic activity and thus make
its revenue stream less volatile. The Company derives its nationally syndicated
program revenue from a programming customer base consisting primarily of
geographically diverse, well-established non-profit religious and educational
organizations that purchase time on stations in a large number of markets in
the United States. These nationally syndicated program producers typically
purchase 13, 26 or 52 minute blocks on a Monday through Friday basis and may
offer supplemental programming for weekend release. The recognized leading
daily radio program featured on religious talk format stations is Focus on the
Family, which according to the 1997 Directory of Religious Media is syndicated
on 943 radio stations in the United States, including 35 Company stations as of
November 1997. Other leading radio programs currently include Insight for
Living (590 stations, including 26 Company stations), In Touch (490 stations,
including 27 Company stations) and Grace to You (294 stations, including 22
Company stations).
For the year ended December 31, 1996 and the nine months ended September 30,
1997, the Company derived 26.7% and 27.6% of its gross revenue, or $17.4
million and $15.0 million, respectively, from the sale of local spot
advertising and 6.3% and 9.4% of its gross revenue, or $4.1 million and $5.1
million (including $2.7 million of reclassified infomercial advertising
revenue), respectively, from the sale of national spot advertising. The Company
in recent years has begun to place greater emphasis on the development of local
spot sales in all of its markets. The Company believes that the listening
audience for its radio stations is responsive to
4
<PAGE>
affinity advertisers that promote products targeted to the
religious/conservative audience and is receptive to direct response appeals
such as those offered through infomercials. The Company's stations all have
affinity advertising customers in their respective markets. The Company also
generates spot advertising revenue from general market retailers, including
automobile dealers and grocery store chains, in many of its markets. Because
the Company does not sell advertising based on market share, it does not
subscribe to traditional audience measuring services, but instead sells
advertising based upon the proven success of its other advertising customers.
The Company's radio stations also receive revenue from national advertisers
desiring to include selected Company stations in national buys covering
multiple markets. These national advertising buys are placed through Salem
Radio Representatives ("SRR"), a wholly owned subsidiary of the Company, which
sells all national commercial advertising placed on the Network's commercial
affiliate radio stations.
The Network. In 1993, the Company established the Network in connection with
its acquisition of certain assets of the former CBN Radio Network.
Establishment of the Network was a part of the Company's overall business
strategy to develop a national network of affiliated radio stations anchored by
the Company's owned and operated radio stations in major markets. The Network,
which is headquartered in Dallas, is focused on the development, production and
syndication of a broad range of programming specifically targeted to religious
talk and music stations as well as general market news/talk stations.
Currently, the Company has rights to six full-time satellite channels and all
Network product is delivered to affiliates via satellite.
As of November 30, 1997, the Network had approximately 750 affiliate
stations, including the Company's owned and operated stations, that broadcast
one or more of the offered programming options. These programming options
feature talk shows, such as The Oliver North Show and The Alan Keyes Show, news
and music. Network operations also include commission revenue of SRR from
unaffiliated customers and an allocation of operating expenses estimated to
relate to such commission revenue. The Network's gross revenue for the year
ended December 31, 1996 and the nine months ended September 30, 1997 were $5.3
million and $4.5 million, respectively. While the Network earned net operating
income of $274,000 for the year ended December 31, 1996, it incurred a net
operating loss of $542,000 for the nine months ended September 30, 1997, due
primarily to continued costs associated with the development of a news
programming production and distribution capability and reduced advertising
revenue associated with syndicated talk programming.
The Company is a California corporation. Its principal offices are located at
4880 Santa Rosa Road, Suite 300, Camarillo, California 93012 and its telephone
number is (805) 987-0400.
OPERATING STRATEGY
Maintain and Enhance Leadership Position in Religious Talk Format. The
Company believes that an important factor in its ability to attract and retain
quality programming customers is its demonstrated long-term commitment to the
religious talk format. Program customers tend to be sophisticated purchasers of
air time that recognize that building a listener base capable of generating
revenue sufficient to cover programming costs may take several years. The
Company's experience has been that such programmers are accordingly reluctant
to make the commitment to building a new listener base unless they have a
reasonable expectation that the format will remain in place. Management of the
Company therefore intends to continue its long-term commitment to the religious
talk format. Management believes its commitment to growing the religious talk
format, increasing the number of owned and operated stations and developing
network operations and national sales activities allows for future growth
opportunities for the Company.
Identify and Develop New Program Producers. The Company recognizes that the
ongoing success of its religious talk format is largely dependent on the
continued availability of quality programs. Management of the Company is
committed to assisting promising new program producers with advice on content
and structuring of programs in addition to advice on levels of support
staffing, engineering and programming delivery options. Station managers are
encouraged to evaluate local talk programs with a view toward expansion of
promising
5
<PAGE>
programs into national syndication. The Company continues to emphasize this
important development area with the goal of maintaining a backlog of quality
programs available for placement in new markets and existing markets where the
Company may add additional stations.
Emphasize Signal Quality and Market Coverage. The Company is committed to the
ongoing evaluation and improvement of its technical facilities, including power
increases, tower/antenna relocations and investment in state of the art
equipment. The Company believes that its success is attributable in part to its
ownership of broadcast facilities that provide broad signal coverage in its
markets.
Build Station Identity Through Development of Strong Production Values. The
Company believes that an important element in retaining and increasing the
listening audience and expanding the base of potential advertisers for its
stations is the development of local station identity. The Company believes
that its emphasis on development of a station's identity during those times
when the Company is not broadcasting its customers' block programming will
allow it to compete with general format stations for listening audience and
advertising customers. Station employees with responsibility for programming
are encouraged to build identity through continual improvement of production
values and to share their ideas with other Company stations. The Company
assists local personnel and coordinates development of increased production
values through its director of programming located at the corporate
headquarters. Certain of the Company's stations have successfully adopted
techniques that have built identity through the development of local on-air
personalities associated with segments of the broadcast day, and these
techniques are being implemented at other Company stations.
Expand and Diversify National Network. The Company is committed to expanding
the Network by adding to its menu of Network product offerings and by actively
promoting these products to Network affiliates. The Company believes that by
continually increasing the quality of its Network product it will add to its
affiliate base, thereby providing more audience reach that will attract more
national advertising customers and potentially generate business from national
advertising agencies. The Company competes aggressively for talk show talent it
believes will be attractive to existing and potential affiliates, refines
existing music formats and develops political commentary and public affairs
programming that are complementary to the product offerings of the Network. The
Company will continue to explore ways to better serve its customers and the
religious/conservative listening audience by using the combined resources of
its owned and operated stations and the Network. For example, unused Network
inventory can be used as an incentive to potential or existing program
producers to purchase block program time on the Company's radio stations. The
Company has successfully implemented this strategy in the past and will
continue to devote significant time and resources to find additional
synergistic uses of its radio stations and the Network.
ACQUISITION STRATEGY
Expand Into New Markets. The Company continues to pursue an acquisition
strategy of acquiring radio stations in the top 25 markets in which it
currently does not have a presence and acquiring selected stations in mid-sized
markets. The Company considers mid-sized markets to be the 26th through 50th
largest radio markets in the United States in terms of audience size. In the
early years of the Company's operations, and from time to time more recently,
it has acquired radio stations in markets smaller than mid-sized markets.
Generally, any recent acquisition of a station in a smaller market was
undertaken (i) to access an audience that the Company believed would be
particularly receptive to its format, such as the market in Colorado Springs,
Colorado, where the headquarters of a number of religious organizations are
located, or (ii) as part of an acquisition in which the Company was pursuing
its strategy of acquiring a station in a major or mid-sized market but was
required to acquire the smaller market station as part of a multiple station
transaction.
The Company believes that its presence in large markets makes it attractive
to national program syndicators and national advertisers. In addition, the
geographic diversity of the Company's markets reduces its dependence on any
single local economy. Over the past 20 years, the Company has developed and
implemented a model for evaluating the desirability of entering a new market.
Management considers the number of stations already serving the target market
with religious formats, the programming within that format (music or talk), the
quality
6
<PAGE>
of talk programs offered and the signal strength of the competing stations. The
signal strength of any station that becomes available for purchase is a
critical factor in the evaluation process.
Expand in Existing Markets. The Company pursues the acquisition of additional
stations in markets in which it already has a presence. The experience of the
Company with existing duopolies and triopolies has been positive. Multiple
stations making use of one general manager and sales staff and one broadcast
facility have resulted in operational efficiencies in certain markets. In
addition, the Company intends to develop more talk and music product at the
Network level that will be available for use on additional stations in a
market. The Company believes new religious music formats are gaining increased
popularity and are complementary to the Company's religious talk format. Three
separate music formats are produced by the Network and are available for use by
Company stations. This strategy has been implemented successfully in Colorado
Springs, where the Company owns three FM stations, two of which offer religious
music formats and one of which features a religious talk format.
Upgrades in Existing Markets. The Company is continually looking for upgrade
opportunities in existing markets to expand its audience reach. This strategy
of acquiring upgraded facilities in existing markets has been an area of
emphasis for senior management for many years and has been successfully
demonstrated in such markets as Seattle and New York in prior years. More
recently, the Company has significantly improved its position in Boston and
Dallas through the acquisition of more powerful stations that have allowed the
Company to continue its business strategy of operating stations that provide
broad signal coverage in its markets.
Acquisition Financing. In the past, the Company has principally financed
acquisitions of radio stations through borrowings, including borrowings under
credit agreements with banks and, to a lesser extent, from cash flow from
operations and selected asset dispositions. Taking into account certain
restrictions under the Credit Agreement, however, the Company is not currently
able to borrow for acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
RECENT DEVELOPMENTS
The Company has completed the purchase of the following radio stations in
1997:
<TABLE>
<CAPTION>
DATE MARKET STATION MSA RANK PURCHASE PRICE
---- ------ ------- -------- --------------
<S> <C> <C> <C> <C>
January 1997................ Dallas, TX KWRD-FM 7 $40,100,000(1)
January 1997................ Cleveland, OH WHK-AM 22 6,220,000
February 1997............... Canton, OH WHK-FM 120 5,903,000
February 1997............... Akron, OH WHLO-AM 67 1,995,000
February 1997............... Boston, MA WEZE-AM 10 7,030,000
April 1997.................. Sacramento, CA KTKZ-AM 28 1,485,000
July 1997................... Baltimore, MD WITH-AM 19 1,114,000
July 1997................... Cincinnati, OH WTSJ-AM 25 1,114,000
October 1997................ Cleveland, OH WCCD-AM 22 700,000
</TABLE>
- --------------------
(1) This acquisition was consummated on December 30, 1996, but operational
control was not transferred until January 1997.
In November 1997, the Company sold substantially all of the assets of radio
station WPZE-AM, Boston, Massachusetts, for $5 million. Proceeds from the sale
are being held by a qualified intermediary under a like-kind exchange agreement
to preserve the Company's ability to effect a tax-deferred exchange. If the
Company does not identify replacement property it will use the proceeds to
reduce outstanding borrowings under the Credit Agreement.
7
<PAGE>
THE EXCHANGE OFFER
<TABLE>
<C> <S>
Securities Offered......................... Up to $150,000,000 aggregate
principal amount of 9 1/2% Series
B Senior Subordinated Notes due
2007.
The Exchange Offer......................... The Notes are being offered in
exchange for a like principal
amount of the Company's Old
Notes. Old Notes may be exchanged
only in integral multiples of
$1,000. The issuance of the Notes
is intended to satisfy the
obligations of the Company under
the terms of the Registration
Rights Agreement.
Tenders; Expiration Date; Withdrawal....... The Exchange Offer will expire at
5:00 P.M., New York City time on
, 1998, or such later date
and time to which it is extended
by the Company (the "Expiration
Date"). Tenders of Old Notes
pursuant to the Exchange Offer
may be withdrawn at any time
prior to the Expiration Date. In
the event the Company terminates
the Exchange Offer and does not
accept for exchange any Old Notes
pursuant to the Exchange Offer,
the Company will promptly return
such Old Notes to the Holders
thereof.
Accrued Interest on the Notes.............. The Notes will bear interest from
and including the date of
issuance of the Old Notes.
Accordingly, Holders who receive
Notes in exchange for Old Notes
will forego accrued but unpaid
interest on their exchanged Old
Notes for the period from and
including the date of issuance of
the Old Notes to the date of
exchange, but will be entitled to
such interest under the Notes.
Conditions of the Exchange Offer........... The Exchange Offer is subject to
certain customary conditions, any
or all of which may be waived by
the Company. The Company
currently expects that each of
the conditions will be satisfied
and that no waivers will be
necessary. See "The Exchange
Offer--Conditions to the Exchange
Offer."
Procedures for Tendering Old Notes......... Each Holder wishing to accept the
Exchange Offer must complete and
sign the Letter of Transmittal,
in accordance with the
instructions contained therein,
and submit the Letter of
Transmittal to the Exchange Agent
identified below. In addition,
either (i) certificates for such
Old Notes must be received by the
Exchange Agent along with the
Letter of Transmittal, (ii) a
timely confirmation of a book-
entry transfer (by generating an
"agent message" via the Automated
Tender Offer Program System of
The Depository Trust Company (the
"DTC")) of such Old Notes, if
such procedure is available, into
the Exchange Agent's account at
the DTC pursuant to the procedure
of book-entry transfer described
herein, must be received by the
Exchange Agent on or prior to the
Expiration Date or (iii) the
holder must comply with the
guaranteed delivery procedures
described herein. See "The
Exchange Offer--Procedures for
Tendering."
</TABLE>
8
<PAGE>
<TABLE>
<C> <S>
Guaranteed Delivery Procedures............. Holders of Old Notes who wish to
tender their Old Notes and whose
Old Notes are not immediately
available or who cannot deliver
their Old Notes and the Letter of
Transmittal and any other
documents required by the Letter
of Transmittal to the Exchange
Agent prior to the Expiration
Date, must tender their Old Notes
according to the guaranteed
delivery procedures set forth in
"The Exchange Offer--Guaranteed
Delivery Procedures."
Acceptance of Old Notes and Delivery of
Notes..................................... The Company will accept for
exchange any and all Old Notes
which are properly tendered in
the Exchange Offer prior to 5:00
P.M., New York City time, on the
Expiration Date. See "The
Exchange Offer--Acceptance of Old
Notes for Exchange; Delivery of
Notes."
Rights of Dissenting Holders............... Holders of Old Notes do not have
any appraisal or dissenters'
rights under the California
General Corporation Law in
connection with the Exchange
Offer.
Exchange Agent............................. The Bank of New York; telephone
(212) 815-[TBD]. See "The
Exchange Offer--Exchange Agent."
</TABLE>
9
<PAGE>
TERMS OF THE NOTES
The terms of the Notes are identical in all material respects to the terms of
the Old Notes, except that the Notes are generally expected to be freely
transferable as described under "The Exchange Offer--Resales of Notes."
<TABLE>
<C> <S>
Maturity Date.............................. October 1, 2007.
Interest Payment Dates..................... April 1 and October 1 of each
year, commencing April 1, 1998.
Optional Redemption........................ The Notes are redeemable at the
option of the Company, in whole
or in part, at any time on or
after October 1, 2002, at the
redemption prices set forth
herein, plus accrued and unpaid
interest to the redemption date.
In addition, the Company, at its
option, may redeem up to $50.0
million in aggregate principal
amount of the Notes at any time
on or prior to October 1, 2000 at
109.50% of the aggregate
principal amount so redeemed,
plus accrued and unpaid interest
thereon to the redemption date,
with the proceeds of one or more
Public Equity Offerings, provided
that at least $100.0 million in
aggregate principal amount of the
Notes remain outstanding
immediately after the occurrence
of any such redemption. See
"Description of the Notes--
Optional Redemption."
Change of Control.......................... Upon a Change of Control, each
holder of the Notes will be
entitled to require the Company
to purchase such holder's Notes
at 101% of the principal amount
thereof, plus accrued and unpaid
interest to the purchase date.
See "Description of the Notes--
Certain Covenants--Purchase of
Notes Upon a Change of Control."
Guarantees................................. The Notes will be guaranteed,
jointly and severally, on a
senior subordinated basis by the
Guarantors. The Guarantees will
be general unsecured obligations
of the Guarantors, subordinated
in right of payment to all
Guarantor Senior Indebtedness,
including any guarantees by
Guarantors of the Company's
obligations under the Credit
Agreement, and senior in right of
payment to any Subordinated
Indebtedness of the Guarantors.
See "Description of Notes--
Guarantees."
Subordination.............................. The Notes will be general
unsecured obligations of the
Company, subordinated in right of
payment to all existing and
future Senior Indebtedness,
including the Company's
obligations under the Credit
Agreement, and senior in right of
payment to any Subordinated
Indebtedness of the Company. See
"Description of Notes--
Subordination."
Certain Covenants.......................... The Indenture under which the Old
Notes were and the Notes will be
issued contains certain covenants
that, among other things, limits
the incurrence of additional
indebtedness by the Company and
Restricted Subsidiaries
</TABLE>
10
<PAGE>
<TABLE>
<C> <S>
(as defined herein), the payment
of dividends, the use of proceeds
of certain asset sales and
certain transactions with
affiliates and contains certain
other restrictive covenants
affecting the Company and
Restricted Subsidiaries. See
"Description of Notes--Certain
Covenants."
Absence of a Public Market for the Notes... There has been no public market
for the Old Notes and it is not
currently anticipated that an
active public market for the
Notes will develop. No assurance
can be given as to the liquidity
of the trading market for the
Notes following the Exchange
Offer.
</TABLE>
11
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY
The summary consolidated financial information below should be read in
conjunction with, and is qualified by reference to, the Company's consolidated
financial statements and related notes, "Selected Consolidated Financial
Information of the Company" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included elsewhere in this
Prospectus. The financial results of the Company are not comparable from year
to year because of the acquisition and disposition of various radio stations
and radio networks by the Company.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $ 28,532 $ 32,423 $ 38,575 $ 48,168 $ 59,010 $ 42,465 $ 49,449
Operating expenses:
Station operating
expenses.............. 14,922 17,011 22,179 27,527 33,463 23,907 28,793
Corporate expenses..... 2,647 3,193 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to
S corporation
shareholders.......... 1,029 1,311 977 2,057 2,038 1,529 1,780
Depreciation and
amortization.......... 6,441 6,601 7,633 7,884 8,394 6,148 9,382
-------- -------- -------- -------- -------- -------- --------
Operating expenses...... 25,039 28,116 34,081 41,267 48,558 34,997 44,953
-------- -------- -------- -------- -------- -------- --------
Net operating income... 3,493 4,307 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest
income/expense, net... (2,516) (2,349) (3,438) (6,327) (6,838) (5,198) (8,392)
Gain (loss) on disposal
of assets............. (1,044) 1,603 (482) (7) 16,064 12,659 (190)
Other income (expense). (393) 2 (135) (255) (270) (209) (288)
-------- -------- -------- -------- -------- -------- --------
Total other income
(expense).............. (3,953) (744) (4,055) (6,589) 8,956 7,252 (8,870)
Income (loss) before
income taxes and
extraordinary item..... (460) 3,563 439 312 19,408 14,720 (4,374)
Provision (benefit) for
income taxes........... (415) 1,437 (247) (204) 6,655 5,046 (1,790)
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary item..... (45) 2,126 686 516 12,753 9,674 (2,584)
Extraordinary gain
(loss)(1).............. 921 -- -- (394) -- -- (1,090)
-------- -------- -------- -------- -------- -------- --------
Net income (loss)....... $ 876 $ 2,126 $ 686 $ 122 $ 12,753 $ 9,674 $ (3,674)
======== ======== ======== ======== ======== ======== ========
Pro forma net income
(loss)(2).............. $ 1,262 $ 2,917 $ 848 $ 1,024 $ 12,838 $ 9,727 $ (2,651)
======== ======== ======== ======== ======== ======== ========
OTHER DATA:
Cash flows provided by
operating activities... $ 6,030 $ 6,879 $ 7,482 $ 7,681 $ 10,495 $ 9,261 $ 1,928
Cash flows used in
investing activities... $(19,301) $(11,693) $(18,806) $(27,681) $(18,923) $(13,250) $(26,592)
Cash flows provided by
financing activities... $ 15,453 $ 3,612 $ 11,827 $ 19,227 $ 9,383 $ 3,332 $ 24,805
Broadcast cash flow(3).. $ 13,610 $ 15,412 $ 16,396 $ 20,641 $ 25,547 $ 18,558 $ 20,656
Broadcast cash flow
margin(4).............. 47.7% 47.5% 42.5% 42.9% 43.3% 43.7% 41.8%
EBITDA (excludes all
other income items)(3). $ 10,963 $ 12,219 $ 13,104 $ 16,842 $ 20,884 $ 15,145 $ 15,658
Capital expenditures.... $ 1,691 $ 912 $ 2,441 $ 3,040 $ 6,982 $ 4,119 $ 5,502
Purchase price of radio
stations............... $ 20,000 $ 15,500 $ 14,935 $ 24,550 $ 59,621 $ 8,302 $ 24,861
Earnings to fixed
charges ratio(5)....... 0.9x 2.1x 1.1x 1.0x 3.2x .5x
PRO FORMA RATIO:
Pro forma earnings to
fixed charges ratio(5). 1.7x .4x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
----------------------------------------- SEPTEMBER 30
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,479 $ 1,277 $ 1,780 $ 1,007 $ 1,962 $ 2,103
Working capital......... 322 5,836 1,852 1,088 8,258 17,573
Intangible assets, net.. 32,146 39,296 46,748 61,923 106,781 121,833
Total assets............ 62,106 69,656 82,041 104,817 159,185 184,133
Long-term debt
(including current
portion)............... 44,915 48,656 60,656 81,020 121,790 160,100
Shareholders' equity.... 10,348 12,474 13,160 13,282 20,354 9,386
</TABLE>
12
<PAGE>
- --------------------
(1) The extraordinary gain in 1992 represents a gain on early extinguishment of
a private annuity agreement. The extraordinary loss in 1995 and 1997
relates to the write-off of loan and related fees related to the repayment
of long-term debt. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 4 of the Notes to
Consolidated Financial Statements.
(2) The Company's consolidated financial data for the periods presented include
the results of operations, assets and liabilities of New Inspiration
Broadcasting Company, Inc. ("New Inspiration") and Golden Gate Broadcasting
Company, Inc. ("Golden Gate"), which were both S corporations under common
ownership and control with the Company prior to the Reorganization (as
defined herein). Federal and state income taxes (except for a 1.5% state
franchise tax) are not provided for New Inspiration and Golden Gate in the
consolidated statements of operations of the Company for the periods
presented because the tax attributes of S corporations are passed through
to their shareholders. Prior to the Reorganization, New Inspiration and
Golden Gate reimbursed the S corporation shareholders for their individual
income tax liabilities on the earnings of the S corporations. These tax
reimbursements to S corporation shareholders are reflected as an operating
expense in the Company's consolidated financial statements.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which the S corporations became wholly owned by
the Company. The S corporation status of New Inspiration and Golden Gate was
terminated in the Reorganization. To give effect to the Reorganization,
including the termination of the S corporation status of New Inspiration and
Golden Gate, pro forma net income excludes the tax reimbursements to S
corporation shareholders (because such amounts would not have been paid had
New Inspiration and Golden Gate been subject to income taxes) and includes a
pro forma tax provision at an estimated combined federal and state income tax
rate of approximately 40% (to reflect an estimated income tax provision
(benefit) of the Company) as if the Reorganization had occurred at the
beginning of each period presented in the Company's consolidated financial
data. See "Business--Corporate Structure and Reorganization."
The following table reflects the pro forma adjustments to historical net
income:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Information:
Income (loss) before
income taxes and
extraordinary
item as reported
above............... $ (460) $3,563 $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax
reimbursements to
S corporation
shareholders........ 1,029 1,311 977 2,057 2,038 1,529 1,780
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before income
taxes and
extraordinary item . 569 4,874 1,416 2,369 21,446 16,249 (2,594)
Pro forma income tax
provision (benefit). 228 1,957 568 951 8,608 6,522 (1,033)
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before
extraordinary item.. 341 2,917 848 1,418 12,838 9,727 (1,561)
Extraordinary gain
(loss).............. 921 -- -- (394) -- -- (1,090)
------ ------ ------ ------ ------- ------- -------
Pro forma net income
(loss).............. $1,262 $2,917 $ 848 $1,024 $12,838 $ 9,727 $(2,651)
====== ====== ====== ====== ======= ======= =======
</TABLE>
(3) "Broadcast cash flow" consists of net operating income before tax
reimbursements to S corporation shareholders, depreciation and amortization
and corporate expenses. "EBITDA" consists of net operating income before
tax reimbursements to S corporation shareholders and depreciation and
amortization. Although broadcast cash flow and EBITDA are not measures of
performance calculated in accordance with GAAP, management believes that
they are useful to an investor in evaluating the Company because they are
measures widely used in the broadcast industry to evaluate a radio
company's operating performance. However, broadcast cash flow and EBITDA
should not be considered in isolation or as substitutes for net income,
cash flows from operating activities and other income or cash flow
statement data prepared in accordance with GAAP as a measure of liquidity
or profitability.
(4) Broadcast cash flow margin is broadcast cash flow as a percentage of net
revenue.
(5) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income from operations before income taxes plus fixed
charges, and "fixed charges" consist of interest expense plus an allocation
of a portion of rent expense representing interest. The pro forma earnings
to fixed charges ratio assumes the issuance of the Notes and the repayment
in full of the Company's outstanding indebtedness under the Company's prior
credit agreement which was repaid in full upon issuance of the Old Notes on
September 25, 1997 as if each occurred at the beginning of each period
presented. For the years ended December 31, 1992 and 1995, and for the nine
months ended September 30, 1997, the Company's earnings were inadequate to
cover fixed charges; the coverage deficiency for the years ended
December 31, 1992 and 1995 was $460,000 and $313,000, respectively, and for
the nine months ended September 30, 1997 was $4.4 million (actual) and $7.2
million (pro forma).
13
<PAGE>
RISK FACTORS
In addition to the other information set forth elsewhere in this Prospectus,
the following risk factors should be carefully considered before making an
investment in the Notes offered hereby.
SUBSTANTIAL LEVERAGE; SUBORDINATION; RESTRICTIONS IMPOSED BY CREDIT AGREEMENT;
ASSET ENCUMBRANCE
The Company is highly leveraged with approximately $160.1 million of total
Indebtedness outstanding and approximately $9.4 million of shareholders'
equity. The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) the
Company's ability to obtain additional financing for working capital, capital
expenditures, acquisitions or general corporate purposes may be impaired; (ii)
the Company must pay interest on the Notes and interest and principal on its
other indebtedness, leaving less funds for other purposes, (iii) the Company
may be at a competitive disadvantage to its less leveraged competitors; and
(iv) the Company could be more vulnerable to a downturn in general economic
conditions.
The Notes are unsecured and thus, in effect, will rank junior to any secured
indebtedness of the Company and the Guarantors. The payment of any amount
owing in respect of the Notes will be subordinated to the prior payment in
full of all existing and future Senior Indebtedness of the Company, including
all amounts owing under the Credit Agreement. In addition, the Guarantees of
the Notes will be subordinated to the prior payment in full of all existing
and future Guarantor Senior Indebtedness of the Guarantors. Consequently, in
the event of the liquidation, dissolution, reorganization or similar
proceeding with respect to the Company or the Guarantors, assets of the
Company and the Guarantors will be available to pay obligations on the Notes
only after all Senior Indebtedness or Guarantor Senior Indebtedness, as
applicable, has been paid in full, and there can be no assurance that
sufficient assets to pay amounts due on all or any of the Notes will remain.
See "Description of the Notes--Subordination." As of September 30, 1997, the
Company and the Guarantors had an aggregate of $10.1 million of Senior
Indebtedness outstanding under the Company's $75.0 million senior secured
reducing revolving credit facility (the "Credit Agreement") and no other
Indebtedness outstanding other than the Notes. Subject to restrictions in the
Indenture and the Credit Agreement, the Company will be able to incur
additional Senior Indebtedness, including indebtedness under the Credit
Agreement.
The indebtedness outstanding under the Credit Agreement is secured by liens
on substantially all of the assets of the Company and the Guarantors,
constitutes Senior Indebtedness and will come due prior to the maturity of the
Notes. Indebtedness under the Credit Agreement is at variable rates of
interest, which will cause the Company to be vulnerable to increases in
interest rates (except to the extent the Company has entered into certain
Interest Rate Agreements (as defined herein) with respect thereto). The Credit
Agreement includes certain restrictive covenants that, among other things and
with certain exceptions, limit the Company's ability to incur additional
indebtedness, enter into affiliate transactions, pay dividends, consolidate,
merge or effect certain asset sales, make certain investments or loans and
change the nature of its business. The Credit Agreement also requires
satisfaction by the Company of certain financial covenants, which will require
maintenance of specified financial ratios and compliance with certain
financial tests, including ratios for maximum leverage, minimum interest
coverage, minimum debt service coverage and minimum fixed charge coverage. The
ability of the Company to comply with these and other provisions of the Credit
Agreement may be affected by events beyond the Company's control. The breach
of any of these covenants could result in a default under the Credit
Agreement, in which case, depending on the actions taken by the lenders
thereunder or their successors in interest, such lenders would be entitled to
declare all amounts borrowed under the Credit Agreement, together with accrued
interest, to be due and payable. If the Company were unable to repay such
borrowings, such lenders could proceed against their collateral. See
"Description of Certain Indebtedness--Credit Agreement." If the indebtedness
under the Credit Agreement were accelerated, there can be no assurance that
the assets of the Company would be sufficient to repay in full such
indebtedness and the other indebtedness of the Company, including the Notes.
See "Description of the Notes."
OPERATING AND GROWTH STRATEGY
Because the Company maintains a religious format at nearly all its owned and
operated radio stations and offers religious programming options through the
Network, the success of the Company is dependent upon the
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popularity of religious formats, the financial success of the organizations
purchasing block program time and spot advertising on the Company's stations
and the financial success of religious format radio stations that purchase
programming through the Network. The Company recognizes that this commitment
may result in the foregoing of certain opportunities, such as switching to
non-religious formats in certain markets that appear, or may appear in the
future, to offer better profit opportunities. The Company believes, however,
that this commitment is necessary in order to continue to obtain commitments
from those quality program producers whose presence on the Company's stations
will attract and retain the religious/conservative listening audience. While
the Company has been successful in the past with the religious formats of its
stations and Network programming, no assurance can be given that this format
will be successful in the future.
Since January 1, 1992, the Company has grown significantly by acquiring
ownership of, or operating rights to, 29 radio stations in 20 markets, nine of
which were acquired after January 1, 1997. Typically the Company has acquired
radio stations that operate under a different format than the religious/talk
format the Company employs. The Company is committed to the religious/talk
format and considers its commitment to have brought it success by allowing
quality programmers to commit their resources to development of their
programming based on the comfort that the format will exist long enough for
such programmers to succeed in building an audience on the Company's stations.
The Company intends to continue its growth and operating strategies through
continued acquisitions of radio station groups and individual radio stations
in selected markets and expects that, consistent with past practices, it will
reformat most of these radio stations. See "Business--Acquisition Strategy."
The Company's growth and operating strategy has a number of inherent risks
including: (i) the Company may be unable to generate cash flow in reformatted
stations as effectively as it has in the past, (ii) the Company's management
team may be unable to manage a larger organization or may be unable to
integrate newly acquired stations into its management structure as effectively
as when it had fewer stations to manage, (iii) the acquisitions that the
Company makes may not benefit the Company as expected, (iv) the Company may be
unable to locate attractive acquisition opportunities or may be forced to pay
higher prices due to increased competition for such radio stations and (v) to
continue its acquisition strategy, the Company may need and be unable to
obtain additional financing on terms acceptable to its management and in
compliance with the Indenture and the Credit Agreement or at all. Taking into
account certain restrictions under the Credit Agreement, the Company is not
currently able to borrow for acquisitions. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources." The Company currently is evaluating certain acquisitions
but has no binding acquisition commitments other than as described in
"Summary--Recent Developments."
DEPENDENCE ON KEY CUSTOMERS AND KEY MARKETS; MARKET GROWTH CONSTRAINTS
A substantial portion of the Company's historical revenue has been realized
from the sale of block program time to independent producers of religious
programming. While no single programming customer represented more than 7.5%
of total program revenue for the year ended December 31, 1996 or the six
months ended June 30, 1997, the top five revenue-producing program customers
accounted for 20.7% and 22.2%, respectively, of gross program revenue and
11.9% of gross revenue for such periods. These top programmers purchase block
program time on many of the Company's stations. The Company's contracts with
program providers are not exclusive and, with limited exceptions, may be
terminated by either party on 30 days' notice. The Company's operating results
and business could be materially and adversely affected should any of its
significant programmers experience financial difficulties or determine to move
their programs to other radio broadcasters or media.
A substantial portion of the Company's historical revenue has been realized
from the results of operations of several of its radio stations in certain key
markets. The Company's top four revenue-producing stations accounted for 38.3%
and 36.1%, respectively, of the Company's net revenue for the year ended
December 31, 1996 and the nine months ended September 30, 1997 and 59.5% and
59.7%, respectively, of the Company's EBITDA for the same periods. A
significant decline in net revenue from the Company's stations in these
markets could have a material adverse effect on the Company's financial
position and results of operations.
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In addition, the Company's ability to enter new markets has been dependent
to a significant degree upon the willingness of its core group of national
programming customers to purchase air time in these new markets and thus
expand the distribution of their programs. There can be no assurance that such
core group will continue to support the Company's further expansion into new
markets. Because of the substantial investment required to purchase block
program time in new markets and the significant time lag involved in creating
a listener base capable of generating revenue sufficient to cover these
programming costs, these programming customers may not be willing to make the
financial commitment associated with expanding into new markets, which may in
turn affect the Company's ability to expand into new markets. In addition, the
Company's ability to expand into new markets could be limited by programming
customers having pre-existing relationships with other stations in such
markets.
HOLDING COMPANY STRUCTURE; POSSIBLE UNENFORCEABILITY OF GUARANTEES; FRAUDULENT
CONVEYANCES AND PREFERENTIAL TRANSFERS
The Company is a holding company that derives substantially all of its
operating income from the Guarantors, including income used for the payment of
principal of and interest on the Notes. The ability of the Guarantors to make
such payments is restricted by, among other things, applicable state corporate
laws, other laws and regulations or terms of agreements to which they may
become party.
The Guarantees provided by the Guarantors may be subject to legal challenge
in the event of the bankruptcy of a Guarantor. To the extent that the
Guarantees are not enforceable, the rights of holders of the Notes to
participate in any distribution of assets of any Guarantor upon liquidation,
bankruptcy, reorganization or otherwise may, as is the case with other
unsecured creditors of the Company, be subject to prior claims of creditors of
the Guarantor.
Enforcement of the Guarantees may be limited by certain fraudulent
conveyance laws. Various fraudulent conveyance and similar laws have been
enacted for the protection of creditors and may be utilized by a court of
competent jurisdiction to avoid the Guarantees. The requirements for
establishing a fraudulent conveyance vary depending on the law of the
jurisdiction that is being applied. Generally, if in a bankruptcy,
reorganization, rehabilitation or similar proceeding in respect to the Company
or a Guarantor, or in a lawsuit by or on behalf of creditors against the
Company or a Guarantor, a court were to find that (i) the Company or a
Guarantor, as the case may be, incurred indebtedness in connection with the
Notes (including the Guarantees) with the intent of hindering, delaying or
defrauding current or future creditors of the Company or the Guarantor, as the
case may be, or (ii) the Company or a Guarantor, as the case may be, received
less than reasonably equivalent value or fair consideration for incurring such
indebtedness (including the Guarantees), as the case may be, and either
(a) was insolvent at the time of the incurrence of such indebtedness
(including the Guarantees), (b) was rendered insolvent by reason of incurring
such indebtedness (including the Guarantees), (c) was at such time engaged or
about to engage in a business or transaction for which its assets constituted
unreasonably small capital or (d) intended to incur, or believed that it would
incur, debts beyond its ability to pay such debts as they matured, such court
could, with respect to the Company or the Guarantor, as the case may be,
declare void in whole or in part the obligations of the Company or such
Guarantor in connection with the Notes (including the Guarantees). Generally,
an entity will be considered insolvent if the sum of its respective debts was
greater than the fair saleable value of all of its property at a fair
valuation or if the present fair saleable value of its assets is less than the
amount that will be required to pay its probable liability on its existing
debts, as they become absolute and mature.
Additionally, under federal bankruptcy or applicable state insolvency law,
if certain bankruptcy or insolvency proceedings were initiated by or against
the Company or any Guarantor within 90 days after any payment by the Company
or such Guarantor with respect to the Notes or a Guarantee, respectively, or
if the Company or such Guarantor anticipated becoming insolvent, all or a
portion of such payment could be avoided as a preferential transfer and the
recipient of such payment could be required to return such payment.
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DEPENDENCE ON KEY PERSONNEL; CONTROL OF COMPANY
The Company's business is dependent upon the performance of certain key
individuals, particularly Edward G. Atsinger III, the President, Chief
Executive Officer and a director, and Stuart W. Epperson, the Chairman of the
Board. The loss of the services of either Mr. Atsinger or Mr. Epperson, each
of whom has been involved in the radio broadcasting industry for more than 25
years, could have a material adverse effect upon the Company. The Company has
entered into Employment Agreements with Mr. Atsinger and Mr. Epperson which
expire July 31, 2000. See "Management--Employment Agreements." In addition,
the Company has purchased key-man life insurance covering Mr. Atsinger and Mr.
Epperson in the amount of $5.0 million each.
The Principal Shareholders hold 86.8% of the outstanding common stock of the
Company. See "Securities Ownership of Certain Beneficial Owners." As a result,
the Principal Shareholders are effectively able to elect all of the members of
the Board of Directors of the Company and therefore direct the management and
policies of the Company. The Principal Shareholders may have interests
different from those of holders of the Notes.
COMPETITION
The radio broadcasting industry, including the religious format segment of
this industry, is a highly competitive business. The financial success of each
of the Company's radio stations that features talk programming is dependent,
to a significant degree, upon its ability to generate revenue from the sale of
block program time to national and local religious and educational
organizations. The Company competes for this program revenue with a number of
different commercial and noncommercial radio station licensees. While no group
owner specializing in the religious format approaches the Company in size of
potential listening audience and presence in major markets, religious format
stations exist and enjoy varying degrees of prominence and success in all
markets. The Company owns and/or operates 30 radio stations in 19 of the top
25 radio markets in terms of audience size. Two competitors of the Company
with the next highest presence in the top 25 markets own and/or operate only
15 stations in 7 of such major markets and 10 stations in 10 of such markets,
respectively. While management believes that its commitment to acquiring full
market coverage facilities, its reputation for quality programming and its
relationships with key customers position it well for continued growth and
stability of program revenue, there can be no assurance that the Company will
be able to maintain or increase its current program revenue.
The Company also competes for revenue in the spot advertising market with
other commercial religious format and general format radio station licensees.
There can be no assurance that the Company will be able to maintain or
increase its current advertising revenue. The Company competes in the spot
advertising market with other media as well, including broadcast television,
cable television, newspapers, magazines, direct mail coupons and billboard
advertising. Competition may also come from new media technologies currently
being developed or introduced, such as the delivery of audio programming by
cable television systems, by satellite and by digital audio broadcasting
("DAB"). DAB may deliver by satellite to national and regional audiences,
multi-channel, multiformat digital radio services with quality equivalent to
compact discs. The delivery of information through the Internet also could
create new competition. The Federal Communications Commission (the "FCC") has
recently authorized spectrum for the use of a new technology, satellite
digital audio radio services ("DARS"), to deliver audio programming. DARS may
provide a medium for the delivery by satellite or terrestrial means of
multiple new audio programming formats to local and national audiences. The
Company cannot predict at this time the effect, if any, that any such new
technologies may have on the radio broadcasting industry.
The Network also faces competition. The Network competes with other
commercial radio networks that offer news and talk programming to religious
format stations and two noncommercial networks that offer religious music
formats. The Network also competes with other radio networks for the services
of talk show personalities. While management believes that the variety of
products offered by the Network and its presence in major markets through
affiliation with Company owned and operated stations gives the Network a
strong competitive position, there can be no assurance that existing and new
competitors will not adversely affect the Network's growth potential and
profitability.
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REGULATORY MATTERS
Each of the Company's radio stations operates pursuant to one or more
licenses issued by the FCC that expire at different times. Although the
Company can and intends to apply to renew these licenses, third parties may
challenge the Company's renewal applications. There can be no assurance that
the Company's licenses to operate its radio stations will be renewed.
The radio broadcasting industry is subject to extensive and changing
regulation. Among other things, the Communications Act of 1934 (the
"Communications Act") and FCC rules and policies require FCC approval for
transfers of control of FCC licenses and assignments of FCC licenses. The
filing of complaints against the Company or other FCC licensees could result
in the FCC's delaying the grant of, or refusing to grant, its consent to the
assignment of licenses to or from an FCC licensee against whom a complaint is
pending. See "Business--Federal Regulation of Radio Broadcasting."
Further, in addition to the other risks associated with the acquisition of
radio stations, the Company also is aware that the FCC and the Department of
Justice (the "DOJ"), which evaluate transactions to determine whether those
transactions should be challenged under the federal antitrust laws, have
recently been increasingly active in their review of radio station
acquisitions, particularly where an operator proposes to acquire additional
stations in its existing markets. There can be no assurance that the DOJ or
the Federal Trade Commission ("FTC") will not require the restructuring of
future acquisitions. See "Business--Federal Regulation of Radio Broadcasting."
POTENTIAL INABILITY TO PURCHASE TENDERED NOTES UPON A CHANGE OF CONTROL
Each holder has the option to cause the Company to purchase its Notes, in
whole or in part, at a purchase price equal to 101% of the principal amount
thereof, plus accrued and unpaid interest thereon through the date of
repurchase, following a Change of Control (as defined herein). In addition, a
Change of Control would be an event of default under the Credit Agreement. The
Company currently does not have sufficient funds available to it to purchase
all of the outstanding Notes were they to be tendered in the event of a Change
of Control. There can be no assurance that the Company will be able to repay
all outstanding Senior Indebtedness and repurchase the Notes in the future
upon a Change of Control. See "Description of the Notes--Certain Covenants--
Purchase of Notes Upon a Change of Control."
LACK OF PUBLIC MARKET; RESTRICTIONS ON RESALE
The Notes are new securities for which there is currently no market. The Old
Notes are currently eligible for trading by qualified buyers in the PORTAL
market. Following commencement of the Exchange Offer but prior to its
consummation, the Old Notes may continue to be traded in the PORTAL market.
Following consummation of the Exchange Offer, the Notes will not be eligible
for PORTAL trading. Although the Initial Purchasers have informed the Company
that they currently intend to make a market for the Notes, they are not
obligated to do so and any such market may be discontinued at any time without
notice. There can be no assurance that an active public market for the Notes
will develop or, if developed, will continue to exist. If a public trading
market for the Notes develops, future trading prices will depend on many
factors, including, among other things, general market conditions, prevailing
interest rates, the Company's results of operations and the market for similar
securities. Depending upon such factors, the Notes may trade at a discount
from their original issue price. Further, in the case of non-tendering holders
of Old Notes, no assurance can be given as to the liquidity of the trading
market for the Old Notes following the Exchange Offer.
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USE OF PROCEEDS
The Company will receive no proceeds from the exchange of the Notes for the
Old Notes pursuant to the Exchange Offer. The net proceeds to the Company from
the private placement of the Old Notes were approximately $145.4 million
(after deduction of the Initial Purchasers' discount and expenses of the
Offering). The Company used the net proceeds from the sale of the Old Notes to
repay substantially all of its outstanding indebtedness under the Old Credit
Agreement (as defined herein). During the one-year period ended just prior to
the Offering the Company had borrowed approximately $60.7 million under the
Old Credit Agreement. The Company used the proceeds from borrowings under the
Old Credit Agreement of approximately $60.7 million to purchase radio stations
(approximately $49.3 million), to pay bank loan fees (approximately $0.7
million), and for general corporate purposes (approximately $10.7 million),
including capital expenditures and payment of interest expenses.
THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is designed to provide holders of the Old Notes with an
opportunity to acquire Notes which, unlike the Old Notes, will be freely
tradable at all times, subject to any restrictions on transfer imposed by
state "blue sky" laws and provided that the holder is not an affiliate of the
Company within the meaning of the Securities Act and represents that the Notes
are being acquired in the ordinary course of such holder's business and the
holder is not engaged in, and does not intend to engage in a distribution of
the Notes. The outstanding Old Notes in the aggregate principal amount at
maturity of $150.0 million were originally issued and sold on September 25,
1997 (the "Original Issue Date") in order to repay outstanding indebtedness.
The original sale to the Initial Purchasers was not registered under the
Securities Act in reliance upon the exemption provided by Section 4(2) of the
Securities Act and the concurrent resale of the Old Notes to investors was not
registered under the Securities Act in reliance upon the exemption provided by
Rule 144A promulgated under the Securities Act. The Old Notes may not be
reoffered, resold or transferred other than pursuant to a registration
statement filed pursuant to the Securities Act or unless an exemption from the
registration requirements of the Securities Act is available. Pursuant to Rule
144, Old Notes may generally be resold (a) commencing one year after the
Original Issue Date, in an amount up to, for any three-month period, the
greater of 1% of the Old Notes then outstanding or the average weekly trading
volume of the Old Notes during the four calendar weeks immediately preceding
the filing of the required notice of sale with the Commission and (b)
commencing two years after the Original Issue Date, in any amount and
otherwise without restriction by a holder who is not, and has not been for the
preceding 90 days, an affiliate of the Company. The Old Notes are eligible for
trading in the PORTAL Market, and may be resold to certain qualified
institutional buyers pursuant to Rule 144A. Certain other exemptions may also
be available under other provisions of the federal securities laws for the
resale of the Old Notes.
In connection with the original issue and sale of the Old Notes, the Company
and the Guarantors entered into a Registration Rights Agreement, pursuant to
which they agreed to use their best efforts to file with the Commission and
cause to become effective a registration statement covering the exchange of
the Notes for the Old Notes (the "Exchange Offer Registration Statement").
In the event that (i) due to a change in applicable law or current
interpretations by the Commission, the Company and the Guarantors are not
permitted to effect the Exchange Offer for all of the Old Notes, (ii) the
Exchange Offer is not for any other reason consummated within 180 days after
the Original Issuance Date of the Old Notes, (iii) any holder of the Old Notes
shall, within 30 days after commencement of the Exchange Offer, notify the
Company that such holder (x) is prohibited by applicable law or Commission
policy from participating in the Exchange Offer, (y) may not resell Notes
acquired by it in the Exchange Offer to the public without delivering a
prospectus and that the prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by
such holder or (z) is a broker-dealer and holds Old Notes acquired directly
from the Company or any Guarantor or an "affiliate" of the Company or any
Guarantor, then in addition
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to or in lieu of conducting the Exchange Offer, or (iv) at the request of any
of the Initial Purchasers, the Company and the Guarantors will be required to
file a registration statement (a "Shelf Registration Statement") covering
resales (a) by the holders of the Old Notes in the event the Company and the
Guarantors are not permitted to effect the Exchange Offer pursuant to the
foregoing clause (i) or the Exchange Offer is not consummated within 180 days
after the Original Issuance Date of the Old Notes, pursuant to the foregoing
clause (i) or (ii) or (b) by the holders of Old Notes with respect to which
the Company receives notice pursuant to the foregoing clauses (iii) or (iv),
and will use its best efforts to cause any such Shelf Registration Statement
to become effective and to keep such Shelf Registration Statement continuously
effective for two years from the effective date thereof or such shorter period
that will terminate when all of the Notes covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement. The
Company and the Guarantors shall, if they file a Shelf Registration Statement,
provide to each holder of the Old Notes copies of the related prospectus and
notify each such holder when the Shelf Registration Statement has become
effective. A holder that sells Old Notes pursuant to a Shelf Registration
Statement generally will be required to be named as a selling securityholder
in the related prospectus and to deliver a current prospectus to purchasers,
and will be subject to certain of the civil liability provisions under the
Securities Act in connection with such sales.
Under the Registration Rights Agreement, the Company and the Guarantors have
agreed to use their best efforts to: (i) file the Exchange Offer Registration
Statement or a Shelf Registration Statement with the Commission as soon as
practicable after the Original Issuance Date of the Old Notes or notice from
holders in the event of clauses (iii) or (iv) of the prior paragraph, (ii)
have such Exchange Offer Registration Statement or Shelf Registration
Statement declared effective by the Commission as soon as practicable after
the filing thereof, and (iii) commence the Exchange Offer and issue the
Exchange Notes in exchange for all Old Notes validly tendered in accordance
with the terms of the Exchange Offer prior to the close of the Exchange Offer,
or, in addition or in the alternative, cause such Shelf Registration Statement
to remain continuously effective for two years from the effective date thereof
or such shorter period that will terminate when all of the Old Notes covered
by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement. Each holder of the Old Notes is bound by the
provisions of the Registration Rights Agreement which may require the holder
to furnish notice or other information to the Company as a condition to
certain obligations of the Company and the Guarantors to file a Shelf
Registration Statement by a particular date or to maintain its effectiveness
for the prescribed two-year period.
If the Company or the Guarantors fail to comply with the above provisions,
the Company and the Guarantors agree to pay liquidated damages to each holder
of Old Notes or Notes as follows:
(i) (A) if an Exchange Offer Registration Statement (or, in the event of
a change in applicable law or due to current interpretations by the
Commission, the Company and the Guarantors are not permitted to effect the
Exchange Offer, a Shelf Registration Statement) is not filed within 75 days
following the Original Issuance Date of the Old Notes, (B) in the event
that within the 30 days after commencement of the Exchange Offer, any
holder of Old Notes shall notify the Company that such holder (x) is
prohibited by applicable law or Commission policy from participating in the
Exchange Offer, (y) may not resell Exchange Notes acquired by it in the
Exchange Offer to the public without delivering a prospectus and that the
prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such holder or (z) is a
broker-dealer and holds Old Notes acquired directly from the Company or any
Guarantor or an "affiliate" of the Company or any Guarantor and a Shelf
Registration Statement is not filed within 75 days after such notice, or
(C) upon the request of an Initial Purchaser, a Shelf Registration
Statement is not filed within 75 days after such request, then commencing
on either the 76th day after the Original Issuance Date of the Old Notes or
the expiration of the 75-day time periods set forth in clauses (B) and (C)
above (either a "Prescribed Time Period"), as the case may be, penalty
amounts shall be accrued on the Old Notes over and above the stated payment
rates thereon at a rate of 0.25% per annum for the first 90 days
immediately following the 76th day after either the Closing Date or the
expiration of the Prescribed Time Period, as the case may be (the "Penalty
Amounts"), such Penalty Amount rate increasing by an additional 0.25% per
annum at the beginning of each subsequent 90-day period;
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(ii) if an Exchange Offer Registration Statement or a Shelf Registration
Statement is filed pursuant to clause (i) above and is not declared
effective within either 150 days following the Original Issuance Date of
the Old Notes or 75 days following the expiration of the Prescribed Time
Period, as the case may be, then commencing on the 151st day after the
Original Issuance Date or the 76th day following the expiration of the
Prescribed Time Period, as the case may be, Penalty Amounts shall be
accrued on the Old Notes over and above the accrued stated payment rates
thereon at a rate of 0.25% per annum for the first 90 days immediately
following the 151st day after the Closing Date or the 76th day after the
expiration of the Prescribed Time Period, as the case may be, such Penalty
Amounts rate increasing by an additional 0.25% per annum at the beginning
of each subsequent 90-day period; and
(iii) if either (A) the Company and the Guarantors have not exchanged
Exchange Notes for all Old Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to 180 days after the Original
Issuance Date or (B) if applicable, a Shelf Registration Statement has been
declared effective and such Shelf Registration Statement ceases to be
effective prior to two years from its original effective date or such
shorter period that will terminate when all of the Old Notes covered by the
Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement, then, subject to certain exceptions, Penalty
Amounts shall be accrued on the Old Notes over and above the stated payment
rates at a rate of 0.25% per annum for the first 90 days immediately
following (x) the 181st day after the Original Issuance Date in the case of
(A) above, or (y) the day such Shelf Registration Statement ceases to be
effective in the case of (B) above, such Penalty Amounts rate increasing by
an additional 0.25% per annum at the beginning of each subsequent 90-day
period; provided, however, that the Penalty Amounts rate on the applicable
Old Notes may not exceed 1.0% per annum; and provided further that (1) upon
the filing of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of (i) above), (2) upon the
effectiveness of the Exchange Offer Registration Statement or a Shelf
Registration Statement (in the case of (ii) above), or (3) upon the
exchange of Notes for all Old Notes tendered in the Exchange Offer or upon
the effectiveness of the Shelf Registration Statement which had ceased to
remain effective prior to two years from its original effective date (in
the case of (iii) above), Penalty Amounts as a result of such
clause (i), (ii) or (iii) shall cease to accrue.
Any Penalty Amounts due pursuant to clause (i), (ii) or (iii) above will be
payable in cash on the various payment dates related to the Old Notes. The
Penalty Amounts will be determined by multiplying the applicable Penalty
Amounts rate by the principal amount of the Old Notes, multiplied by a
fraction, the numerator of which is the number of days such Penalty Amount
rate was applicable during such period, and the denominator of which is 360.
The foregoing summary of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified
by reference to, the provisions of the Registration Rights Agreement filed as
an exhibit to the Registration Rights Agreement. Copies of the Registration
Rights Agreement are available from the Company or the Initial Purchasers upon
request.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth herein and in the
accompanying Letter of Transmittal, the Company will exchange $1,000 principal
amount of Notes for each $1,000 principal amount of its outstanding Old Notes.
Notes will be issued only in integral multiplies of $1,000 to each tendering
holder of Old Notes whose Old Notes are accepted in the Exchange Offer.
The Notes will bear interest from and including the Original Issue Date.
Accordingly, holders who receive Notes in exchange for Old Notes will forego
accrued but unpaid interest on their exchanged Old Notes for the period from
and including the Original Issue Date to the date of exchange, but will be
entitled to such interest under the Notes.
As of , 1998, $150.0 million aggregate principal amount at maturity of
Old Notes were outstanding. This Prospectus, the Letter of Transmittal and
Notice of Guaranteed Delivery are being sent to all
21
<PAGE>
registered holders of Old Notes as of that date. Tendering holders will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Letter of Transmittal, transfer taxes with respect to the exchange of
Old Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses, other than certain transfer taxes which may be imposed, in
connection with the Exchange Offer. See "--Payment of Expenses."
Holders of Old Notes do not have any appraisal or dissenters' rights under
the California General Corporation Law in connection with the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; TERMINATION
The Exchange Offer will expire at 5:00 P.M., New York City time, on ,
1998, subject to extension by the Company by notice to the Exchange Agent as
herein provided. The Company reserves the right to extend the Exchange Offer
at its discretion, in which event the term "Expiration Date" shall mean the
time and date on which the Exchange Offer as so extended shall expire. The
Company shall notify the Exchange Agent of any extension by oral or written
notice and shall mail to the registered holders of Old Notes an announcement
thereof, each prior to 9:00 A.M., New York City time, on the next business day
after the previously scheduled Expiration Date.
The Company reserves the right to extend or terminate the Exchange Offer and
not accept for exchange any Old Notes if any of the events set forth below
under "--Conditions to the Exchange Offer" occur and are not waived by the
Company, by giving oral or written notice of such delay or termination to the
Exchange Agent. See "--Conditions to the Exchange Offer." The rights reserved
by the Company in this paragraph are in addition to the Company's rights set
forth below under the caption "--Conditions to the Exchange Offer."
PROCEDURES FOR TENDERING
The tender to the Company of Old Notes by a holder thereof pursuant to one
of the procedures set forth below and the acceptance thereof by the Company
will constitute an agreement between such holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the
Letter of Transmittal.
Except as set forth below, a holder who wishes to tender Old Notes for
exchange pursuant to the Exchange Offer must transmit a properly completed and
duly executed Letter of Transmittal, including all other documents required by
such Letter of Transmittal, to the Exchange Agent at the address set forth
below under "Exchange Agent" on or prior to the Expiration Date. In addition,
either (i) certificates for such Old Notes must be received by the Exchange
Agent along with the Letter of Transmittal, (ii) a timely confirmation of a
book-entry transfer by generating an "agent message" via the Automated Tender
Offer Program ("ATOP") System of the DTC (a "Book-Entry Confirmation") of such
Old Notes, if such procedure is available, into the Exchange Agent's account
at the DTC pursuant to the procedure of book-entry transfer described below,
must be received by the Exchange Agent on or prior to the Expiration Date, or
(iii) the holder must comply with the guaranteed delivery procedures described
below. LETTERS OF TRANSMITTAL AND OLD NOTES SHOULD NOT BE SENT TO THE COMPANY.
Signatures on a Letter of Transmittal must be guaranteed unless the Old
Notes tendered pursuant thereto are tendered (i) by a registered holder of Old
Notes who has not completed the box entitled "Special Issuance and Delivery
Instructions" on the Letter of Transmittal or (ii) for the account of any firm
that is a member of a registered national securities exchange or a member of
the National Association of Securities Dealers, Inc. (the "NASD") or a
commercial bank or trust company having an office in the United States (an
"Eligible Institution"). In the event that signatures on a Letter of
Transmittal are required to be guaranteed, such guarantee must be by an
Eligible Institution.
The method of delivery of Old Notes and other documents to the Exchange
Agent is at the election and risk of the holder, but if delivery is by mail it
is suggested that the mailing be made sufficiently in advance of the
Expiration Date to permit delivery to the Exchange Agent before the Expiration
Date.
22
<PAGE>
If the Letter of Transmittal is signed by a person other than a registered
holder of any Old Note tendered therewith, such Old Note must be endorsed or
accompanied by appropriate bond powers, in either case signed exactly as the
name of the registered holder appears on the Old Note.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Old Notes will be resolved by the Company,
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders that are not in proper form or the
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Exchange Offer (including the instructions
in the Letter of Transmittal) will be final and binding. Unless waived, any
irregularities in connection with tenders must be cured within such time as
the Company shall determine. Neither the Company nor the Exchange Agent shall
be under any duty to give notification of defects in such tenders or shall
incur liabilities for failure to give such notification. Tenders of Old Notes
will not be deemed to have been made until such irregularities have been cured
or waived. Any Old Notes received by the Exchange Agent that are not properly
tendered and as to which the irregularities have not been cured or waived will
be returned by the Exchange Agent to the tendering holder, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
The Company's acceptance for exchange of Old Notes tendered pursuant to the
Exchange Offer will constitute a binding agreement between the tendering
person and the Company upon the terms and subject to the conditions of the
Exchange Offer.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the DTC for purposes of the Exchange Offer within two
business days after the date of this Prospectus, and any financial institution
that is a participant in the DTC's systems may make book-entry delivery of Old
Notes by causing the DTC to transfer such Old Notes into the Exchange Agent's
account at the DTC in accordance with such DTC's procedures for transfer.
However, although delivery of Old Notes may be effected through book-entry
transfer at the DTC, the Letter of Transmittal or facsimile thereof with any
required signature guarantees and any other required documents must, in any
case, be transmitted to and received by the Exchange Agent at one of the
addresses set forth below under the caption "--Exchange Agent" on or prior to
the Expiration Date or the guaranteed delivery procedures described below must
be complied with.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, or (ii) who cannot deliver their Old Notes, the Letter
of Transmittal or any other required documents to the Exchange Agent prior to
the Expiration Date, or (iii) who cannot complete the procedures for delivery
by book entry transfer on a timely basis, may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) On or prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
substantially in the form made available by the Company; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer, or a Book-Entry Confirmation, as the
case may be, and all other documents required by the Letter of Transmittal
are received by the Exchange Agent within three New York Stock Exchange
trading days after the Expiration Date.
23
<PAGE>
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery (as well
as a copy of this Prospectus and the Letter of Transmittal) will be sent to
holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company shall
not be required to accept for exchange, or to issue Notes in exchange for, any
Old Notes and may terminate or amend the Exchange Offer if at any time before
the acceptance of such Old Notes for exchange or the exchange of the Notes for
such Old Notes, the Company determines that the Exchange Offer violates
applicable law, and applicable interpretation of the staff of the Commission
or any order of any governmental agency or court of competent jurisdiction.
The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any
such condition or may be waived by the Company in whole or in part at any time
and from time to time in its reasonable discretion. The failure by the Company
at any time to exercise any of the foregoing rights shall not be deemed a
waiver of any such right and each such right shall be deemed an ongoing right
which may be asserted at any time and from time to time.
In addition, the Company will not accept for exchange any Old Notes
tendered, and no Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to
the Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939. In any
such event, the Company is required to use its reasonable best efforts to
obtain the withdrawal of any stop order at the earliest possible time.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NOTES
Upon the terms and subject to the conditions of the Exchange Offer, the
Company will accept all Old Notes validly tendered prior to 5:00 P.M., New
York City time, on the Expiration Date. The Company will deliver Notes in
exchange for Old Notes promptly following the Expiration Date.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Old Notes when, as and if the Company has given oral
or written notice thereof to the Exchange Agent. The Exchange Agent will act
as agent for the tendering holders for the purpose of receiving the Notes.
Under no circumstances will interest be paid by the Company or the Exchange
Agent by reason of any delay in making such payment or delivery.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, any such unaccepted Old Notes will be returned, at the Company's
expense, to the tendering holder thereof as promptly as practicable after the
expiration or termination of the Exchange Offer.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at the address set forth below under "--
Exchange Agent." Any such notice of withdrawal must specify the name of the
person or, if submitted via ATOP, the entity name and DTC participant number,
having tendered the Old Notes to be withdrawn, identify the Old Notes to be
withdrawn (including the principal amount of such Old Notes), and (where
certificates for Old Notes have been transmitted) specify the name in which
such Old Notes are registered, if different from that of the withdrawing
holder. If certificates for Old Notes have been delivered or otherwise
identified to the Exchange Agent, then, prior to the release of such
certificates the withdrawing holder must also submit the serial numbers of the
particular certificates to be withdrawn and a signed notice of withdrawal with
signatures guaranteed by an Eligible Institution unless such holder is an
Eligible Institution. If
24
<PAGE>
Old Notes have been tendered to the procedure for book-entry transfer
described above, any notice of withdrawal must specify the name and number of
the account at the DTC to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of such facility. All questions as to the
validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company, whose determination shall be final and
binding on all parties. Any Old Notes so withdrawn will be deemed not to have
been validly tendered for exchange for purposes of the Exchange Offer. Any Old
Notes which have been tendered for exchange but which are not exchanged for
any reason will be returned to the holder thereof without cost to such holder
(or, in the case of Old Notes tendered by book-entry transfer into the
Exchange Agent's account at the DTC pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account
maintained with the DTC for the Old Notes) as soon as practicable after
withdrawal, rejection of tender or termination of the Exchange Offer. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described under "--Procedures for Tendering" above at any time on or prior to
the Expiration Date.
EXCHANGE AGENT
The Bank of New York has been appointed as Exchange Agent for the Exchange
Offer. All correspondence in connection with the Exchange Offer and the Letter
of Transmittal should be addressed to the Exchange Agent as follows:
BY REGISTERED OR CERTIFIED MAIL: BY HAND DELIVERY OR OVERNIGHT COURIER:
The Bank of New York The Bank of New York
101 Barclay Street - Floor 7E 101 Barclay Street - Ground Level
New York, NY 10286 Corporate Trust Services Window
Attn: Reorganization Section New York, NY 10286
Attn: Reorganization Section
FACSIMILE TRANSMISSION:
(212) 815-6339
CONFIRM BY TELEPHONE:
(212) 815-[ TBD ]
Requests for additional copies of the Prospectus or the Letter of
Transmittal should be directed to the Exchange Agent.
PAYMENT OF EXPENSES
The Company has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer. The
Company, however, will pay reasonable and customary fees and reasonable out-
of-pocket expenses to the Exchange Agent in connection therewith. The Company
will also pay the cash expenses to be incurred in connection with the Exchange
Offer, including accounting, legal, printing, and related fees and expenses.
ACCOUNTING TREATMENT
The Notes will be recorded at the same carrying value as the Old Notes, as
reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss for accounting purposes will be recognized.
RESALES OF NOTES
The staff of the Commission has issued the interpretive letters Exxon
Capital Holdings Corporation (May 13, 1988), Morgan Stanley & Co.,
Incorporated (June 5, 1991) and Shearman & Sterling (July 2, 1993)
25
<PAGE>
that conclude, in circumstances similar to those contemplated by the Exchange
Offer, that new debt securities issued in a registered exchange for
outstanding debt securities, which new securities are intended to be
substantially identical to the securities for which they are exchanged, may be
offered for resale, resold and otherwise transferred by a holder thereof
(other than (i) a broker-dealer who purchases such securities from the issuer
to resell pursuant to Rule 144A or any other available exemption under the
Securities Act or (ii) a person who is an affiliate of the issuer within the
meaning of Rule 405 under the Securities Act) without compliance with the
registration and prospectus delivery provision of the Securities Act, provided
that the new securities are acquired in the ordinary course of such holder's
business and such holder, if not a broker-dealer, has no arrangement with any
person to participate in the distribution of the new securities. A broker-
dealer who holds outstanding debt securities that were acquired for its own
account as a result of market-making or other trading activities may, however,
be deemed to be an "underwriter" within the meaning of the Securities Act and
must, therefore, deliver a prospectus meeting the requirements of the
Securities Act in connection with any resales of the new securities received
by the broker-dealer in any such exchange. For a period of 180 days from the
Expiration Date, the Company will make a reasonable number of additional
copies of this Prospectus, as amended or supplemented, available to any such
broker-dealer for use in connection with any such resale.
The Company has not requested or obtained an interpretive letter from the
Commission staff with respect to this Exchange Offer, and the Company and the
holders are not entitled to rely on interpretive advice provided by the staff
to other persons, which advice was based on the facts and conditions
represented in such letters. However, the Exchange Offer is being conducted in
a manner intended to be consistent with the facts and conditions represented
in the Exxon Capital, Morgan Stanley and Shearman & Sterling letters. If any
holder has any arrangement or understanding with respect to the distribution
of the Notes to be acquired pursuant to the Exchange Offer, such holder (i)
could not rely on the applicable interpretations of the staff of the
Commission the Exxon Capital, Morgan Stanley and Shearman & Sterling letters
and (ii) must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with any resale transaction.
In addition, based upon the Shearman & Sterling letter each broker-dealer that
receives Notes for its own account in exchange for the Old Notes, where such
Old Notes were acquired by such broker-dealers as a result of market-making
activities or other trading activities, must acknowledge that it will deliver
a prospectus in connection with any resale of such Notes. See "Plan of
Distribution." By delivering the Letter of Transmittal, a holder tendering Old
Notes for exchange will be required to make certain representations, including
among others, (i) that such holder is not an "affiliate" of the Company or any
Guarantor within the meaning of Rule 405 under the Securities Act, (ii) that
the Notes being acquired pursuant to the Exchange Offer are being obtained in
the ordinary course of business of the person receiving such Notes and (iii)
that the holder, if not a broker-dealer, has no arrangement or understanding
with any Person to participate in the distribution of the Notes. Holders who
do not exchange their Old Notes pursuant to the Exchange Offer will continue
to hold Old Notes that are subject to restrictions on transfer.
In addition, to comply with the securities laws of certain jurisdictions, if
applicable, the Notes may not be offered or sold unless they have been
registered or qualified for sale in such jurisdiction or an exemption from
registration or qualification is available and the conditions thereto have
been met. The Company has agreed, pursuant to the Registration Rights
Agreement and subject to certain specified limitations therein, to register or
qualify the Notes for offer or sale under the securities or blue sky laws of
such jurisdictions as any holder of the Notes or the Old Notes reasonably
requests in writing.
26
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION OF THE COMPANY
The selected consolidated financial information of the Company presented
below as of and for the years ended December 31, 1992, 1993, 1994, 1995, and
1996 is derived from the consolidated financial statements of the Company,
which consolidated financial statements have been audited by Ernst & Young
LLP, independent certified public accountants. The selected consolidated
financial information of the Company presented below as of September 30, 1997,
and for the nine months ended September 30, 1996 and 1997, is derived from
unaudited consolidated financial statements of the Company which, in the
opinion of management, contain all necessary adjustments of a normal recurring
nature to present the financial statements in conformity with generally
accepted accounting principles ("GAAP"). The consolidated financial statements
of the Company as of December 31, 1995 and 1996 and for each of the years in
the three-year period ended December 31, 1996, and the independent auditors'
report thereon, as well as the unaudited consolidated financial statements of
the Company as of September 30, 1997, and for the nine months ended September
30, 1996 and 1997, are included elsewhere in this Prospectus. The financial
results of the Company are not comparable from year to year because of the
acquisition and disposition of various radio stations and radio networks by
the Company. The selected consolidated financial information below should be
read in conjunction with, and is qualified by reference to, the Company's
consolidated financial statements and related notes, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30
------------------------------------------- ----------------
1992 1993 1994 1995 1996 1996 1997
------- ------- ------- ------- ------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net revenue............. $28,532 $32,423 $38,575 $48,168 $59,010 $42,465 $49,449
Operating expenses:
Station operating
expenses.............. 14,922 17,011 22,179 27,527 33,463 23,907 28,793
Corporate expenses..... 2,647 3,193 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to
S corporation
shareholders.......... 1,029 1,311 977 2,057 2,038 1,529 1,780
Depreciation and
amortization.......... 6,441 6,601 7,633 7,884 8,394 6,148 9,382
------- ------- ------- ------- ------- ------- -------
Operating expenses...... 25,039 28,116 34,081 41,267 48,558 34,997 44,953
------- ------- ------- ------- ------- ------- -------
Net operating income... 3,493 4,307 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest
income/expense, net... (2,516) (2,349) (3,438) (6,327) (6,838) (5,198) (8,392)
Gain (loss) on disposal
of assets............. (1,044) 1,603 (482) (7) 16,064 12,659 (190)
Other income (expense). (393) 2 (135) (255) (270) (209) (288)
------- ------- ------- ------- ------- ------- -------
Total other income
(expense).............. (3,953) (744) (4,055) (6,589) 8,956 7,252 (8,870)
Income (loss) before
income taxes and
extraordinary item..... (460) 3,563 439 312 19,408 14,720 (4,374)
Provision (benefit) for
income taxes........... (415) 1,437 (247) (204) 6,655 5,046 (1,790)
------- ------- ------- ------- ------- ------- -------
Income (loss) before
extraordinary item..... (45) 2,126 686 516 12,753 9,674 (2,584)
Extraordinary gain
(loss)(1).............. 921 -- -- (394) -- -- (1,090)
------- ------- ------- ------- ------- ------- -------
Net income (loss)....... $ 876 $ 2,126 $ 686 $ 122 $12,753 $ 9,674 $(3,674)
======= ======= ======= ======= ======= ======= =======
Pro forma net income
(loss)(2).............. $ 1,262 $ 2,917 $ 848 $ 1,024 $12,838 $ 9,727 $(2,651)
======= ======= ======= ======= ======= ======= =======
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
------------------------------------------------ ------------------
1992 1993 1994 1995 1996 1996 1997
-------- -------- -------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER DATA:
Cash flows provided by
operating activities... $ 6,030 $ 6,879 $ 7,482 $ 7,681 $ 10,495 $ 9,261 $ 1,928
Cash flows used in
investing activities... $(19,301) $(11,693) $(18,806) $(27,681) $(18,923) $(13,250) $(26,592)
Cash flows provided by
financing activities... $ 15,453 $ 3,612 $ 11,827 $ 19,227 $ 9,383 $ 3,332 $ 24,805
Broadcast cash flow(3).. $ 13,610 $ 15,412 $ 16,396 $ 20,641 $ 25,547 $ 18,558 $ 20,656
Broadcast cash flow
margin(4).............. 47.7% 47.5% 42.5% 42.9% 43.3% 43.7% 41.8%
EBITDA (excludes all
other income items)(3). $ 10,963 $ 12,219 $ 13,104 $ 16,842 $ 20,884 $ 15,145 $ 15,658
Capital expenditures.... $ 1,691 $ 912 $ 2,441 $ 3,040 $ 6,982 $ 4,119 $ 5,502
Purchase price of radio
stations............... $ 20,000 $ 15,500 $ 14,935 $ 24,550 $ 59,621 $ 8,302 $ 24,861
Earnings to fixed
charges ratio(5)....... 0.9x 2.1x 1.1x 1.0x 3.2x 0.5x
PRO FORMA RATIO:
Pro forma earnings to
fixed charges ratio(5). 1.7x 0.4x
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------------------------
SEPTEMBER 30
1992 1993 1994 1995 1996 1997
------- ------- ------- -------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............ $ 2,479 $ 1,277 $ 1,780 $ 1,007 $ 1,962 $ 2,103
Working capital......... 322 5,836 1,852 1,088 8,258 17,573
Intangible assets, net.. 32,146 39,296 46,748 61,923 106,781 121,833
Total assets............ 62,106 69,656 82,041 104,817 159,185 184,133
Long-term debt
(including current
portion)............... 44,915 48,656 60,656 81,020 121,790 160,100
Shareholders' equity.... 10,348 12,474 13,160 13,282 20,534 9,386
</TABLE>
- ---------------------
(1) The extraordinary gain in 1992 represents a gain on early extinguishment
of a private annuity agreement. The extraordinary loss in 1995 and 1997
relates to the write-off of loan and related fees related to the repayment
of long-term debt. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and Note 4 of the Notes to
Consolidated Financial Statements.
(2) The Company's consolidated financial data for the periods presented
include the results of operations, assets and liabilities of New
Inspiration and Golden Gate, which were both S corporations under common
ownership and control with the Company prior to the Reorganization. The S
corporation status of New Inspiration and Golden Gate was terminated in
the Reorganization. Federal and state income taxes (except for a 1.5%
state franchise tax) are not provided for New Inspiration and Golden Gate
in the consolidated statements of operations of the Company for the
periods presented because the tax attributes of S corporations are passed
through to their shareholders. Prior to the Reorganization, New
Inspiration and Golden Gate reimbursed the S corporation shareholders for
their individual income tax liabilities on the earnings of the S
corporations. These tax reimbursements to S corporation shareholders are
reflected as an operating expense in the Company's consolidated financial
statements.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which the S corporations became wholly owned by
the Company. To give effect to the Reorganization, including the
termination of the S corporation status of New Inspiration and Golden Gate,
pro forma net income excludes the tax reimbursements to S corporation
shareholders (because such amounts would not have been paid had New
Inspiration and Golden Gate been subject to income taxes) and includes a
pro forma tax provision at an estimated combined federal and state income
tax rate of approximately 40% (to reflect an estimated income tax provision
(benefit) of the Company) as if the Reorganization had occurred at the
beginning of each period presented in the Company's consolidated financial
data. See "Business--Corporate Structure and Reorganization."
28
<PAGE>
The following table reflects the pro forma adjustments to historical net
income:
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30,
------------------------------------- ---------------
1992 1993 1994 1995 1996 1996 1997
------ ------ ------ ------ ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Pro Forma Information:
Income (loss) before
income taxes and
extraordinary
item as reported
above............... $ (460) $3,563 $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax
reimbursements to S
corporation
shareholders........ 1,029 1,311 977 2,057 2,038 1,529 1,780
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before income
taxes and
extraordinary item.. 569 4,874 1,416 2,369 21,446 16,249 (2,594)
Pro forma income tax
provision
(benefit)........... 228 1,957 568 951 8,608 6,522 (1,033)
------ ------ ------ ------ ------- ------- -------
Pro forma income
(loss) before
extraordinary item.. 341 2,917 848 1,418 12,838 9,727 (1,561)
Extraordinary gain
(loss).............. 921 -- -- (394) -- -- (1,090)
------ ------ ------ ------ ------- ------- -------
Pro forma net income
(loss).............. $1,262 $2,917 $ 848 $1,024 $12,838 $ 9,727 $(2,651)
====== ====== ====== ====== ======= ======= =======
</TABLE>
(3) "Broadcast cash flow" consists of net operating income before tax
reimbursements to S corporation shareholders, depreciation and
amortization and corporate expenses. "EBITDA" consists of net operating
income before tax reimbursements to S corporation shareholders and
depreciation and amortization. Although broadcast cash flow and EBITDA are
not measures of performance calculated in accordance with GAAP, management
believes that they are useful to an investor in evaluating the Company
because they are measures widely used in the broadcast industry to
evaluate a radio company's operating performance. However, broadcast cash
flow and EBITDA should not be considered in isolation or as substitutes
for net income, cash flows from operating activities and other income or
cash flow statement data prepared in accordance with GAAP as a measure of
liquidity or profitability.
(4) Broadcast cash flow margin is broadcast cash flow as a percentage of net
revenue.
(5) For purposes of computing the ratio of earnings to fixed charges,
"earnings" consist of income from operations before income taxes plus
fixed charges, and "fixed charges" consist of interest expense plus an
allocation of a portion of rent expense representing interest. The pro
forma earnings to fixed charges ratio assumes the issuance of the Notes
and the repayment in full of the Company's outstanding indebtedness under
the Company's prior credit agreement which was repaid in full upon
issuance of the Old Notes on September 25, 1997 as if each occurred at the
beginning of each period presented. For the years ended December 31, 1992
and 1995, and for the nine months ended September 30, 1997, the Company's
earnings were inadequate to cover fixed charges; the coverage deficiency
for the years ended December 31, 1992 and 1995 was $460,000 and $313,000,
respectively, and for the nine months ended September 30, 1997 was $4.4
million (actual) and $7.2 million (pro forma).
29
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the Company's
consolidated financial statements and notes thereto included elsewhere in this
Prospectus.
The principal sources of the Company's revenue are (i) the sale of block
program time, both to national and local program producers, (ii) the sale of
broadcast time on its radio stations for advertising, both to national and
local advertisers, and (iii) the sale of broadcast time on the Network for
advertising. The following table shows gross revenue and the percentage of
gross revenue for each revenue source.
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED DECEMBER 31 ENDED
------------------------------------------- SEPTEMBER 30,
1994 1995 1996 1997
------------- ------------- ------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Block program time:
National.............. $19,182 45.0% $23,390 43.9% $26,610 40.8% $20,557 37.8%
Local................. 5,409 12.7 8,219 15.4 10,869 16.7 8,516 15.6
------- ----- ------- ----- ------- ----- ------- -----
24,591 57.7 31,609 59.3 37,479 57.5 29,073 53.4
Advertising:
National.............. 2,460 5.8 3,165 5.9 4,088 6.3 5,128 9.4
Local................. 12,154 28.5 14,072 26.4 17,416 26.7 15,014 27.6
------- ----- ------- ----- ------- ----- ------- -----
14,614 34.3 17,237 32.3 21,504 33.0 20,142 37.0
Network................. 2,619 6.1 3,423 6.4 5,270 8.1 4,486 8.2
Other................... 767 1.9 1,034 2.0 888 1.4 770 1.4
------- ----- ------- ----- ------- ----- ------- -----
Gross revenue........... 42,591 100.0% 53,303 100.0% 65,141 100.0% 54,471 100.0%
===== ===== ===== =====
Less agency commissions. 4,016 5,135 6,131 5,022
------- ------- ------- -------
Net revenue............. $38,575 $48,168 $59,010 $49,449
======= ======= ======= =======
</TABLE>
The Company's revenue is affected primarily by the program and advertising
rates its radio stations and the Network charge. Correspondingly, the rates
for block program time are based upon the stations' ability to attract
audiences that will support the program producers through contributions and
purchases of their products. Advertising rates are based upon the demand for
on-air inventory, which in turn is based on the stations' and the Network's
ability to produce results for its advertisers. Each of the Company's stations
and the Network have a general pre-determined level of on-air inventory that
it makes available for block programs and advertising, which may vary at
different times of the day and tends to remain stable over time. Much of the
Company's selling activity is based on demand for its radio stations' and the
Network's on-air inventory.
The Company's revenue and cash flow are also affected by the transition
period experienced by stations acquired by the Company that previously
operated with formats other than religious formats. During the transition
period when the Company develops its program customer and listener base, such
stations typically do not generate significant cash flow from operations. The
Company's quarterly revenue varies throughout the year, as is typical in the
radio broadcasting industry. Quarterly revenue from the sale of block program
time does not tend to vary, however, since program rates are generally set
annually.
In the broadcasting industry, radio stations often utilize trade (or barter)
agreements to exchange advertising time for goods or services (such as other
media advertising, travel or lodging), in lieu of cash. In order to preserve
most of its on-air inventory for cash advertising, the Company generally
enters into trade agreements only if the goods or services bartered to the
Company will be used in the Company's business. The Company has minimized its
use of trade agreements and has generally sold over 90% of its advertising
time for cash. In addition, it is the Company's general policy not to preempt
advertising spots paid for in cash with advertising spots paid for in trade.
30
<PAGE>
The primary operating expenses incurred in the ownership and operation of
the Company's radio stations include employee salaries and commissions, and
facility expenses (e.g., rent and utilities). The Company also incurs and will
continue to incur significant depreciation, amortization and interest expense
as a result of completed and future acquisitions of stations, and due to
existing borrowings and future borrowings, including the Offering and
borrowings under the Credit Agreement. The Company's consolidated financial
statements tend not to be directly comparable from period to period due to the
Company's acquisition activity.
The consolidated statements of operations of the Company include an
operating expense called "tax reimbursements to S corporation shareholders."
These amounts represent the income tax liability of the Shareholders created
by the income of New Inspiration and Golden Gate, which prior to the recent
Reorganization were each S corporations. See "Business--Corporate Structure
and Reorganization." Management considers the nature of this operating expense
to be essentially equivalent to an income tax provision and has excluded this
expense from the calculation of broadcast cash flow and EBITDA. Commencing
1997, pretax income of New Inspiration and Golden Gate will be included in the
Company's consolidated income tax return and in the Company's computation of
the income tax provision included in its consolidated statement of operations.
The Company anticipates a net loss for the fourth quarter of 1997 in an
amount substantially similar to the amount of net loss experienced in the
third quarter of 1997 of $1.2 million.
PRO FORMA INFORMATION
To give effect to the private placement of the Old Notes, pro forma interest
expense assumes issuance of the Old Notes on January 1, 1996, that amounts
owing to the banks under the Credit Agreement as of September 30, 1997 had
been outstanding since September 25, 1997, an interest rate on both the Old
Notes and borrowings under the Credit Agreement of 9 1/2%, and the
amortization over 10 years of costs incurred to issue the Old Notes. Pro forma
net income (loss) gives effect to pro forma interest expense, net of income
taxes at a combined federal and state tax rate of 40%. Pro forma interest
expense for the year ended December 31, 1996 and for the nine months ended
September 30, 1997 are approximately $14.7 million and $11.1 million,
respectively. Pro forma net income (loss) for the year ended December 31, 1996
and for the nine months ended September 30, 1997 are approximately $8,341,000
and $(5,176,000), respectively.
RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996
Net Revenue. Net revenue increased approximately $6.9 million or 16.2% to
$49.4 million for the nine months ended September 30, 1997 from $42.5 million
for the nine months ended September 30, 1996. The inclusion of revenue from
the acquisitions of radio stations and networks and revenue generated from the
local marketing agreements ("LMAs"), see "Business--Federal Regulation of
Radio Broadcasting--Local Marketing Agreements," entered into during 1996 and
1997 provided approximately $4.3 million of the increase. For stations and
networks owned and operated over the comparable period in 1996 and 1997, net
revenue improved approximately $2.6 million or 6.3% to $43.9 million in 1997
from $41.3 million in 1996 due primarily to program rate increases and to a
lesser extent to increases in on-air inventory and improved selling efforts.
Station Operating Expenses. Station operating expenses increased
approximately $4.9 million or 20.5% to $28.8 million for the nine months ended
September 30, 1997 from $23.9 million for the nine months ended September 30,
1996. Approximately $4.1 million of such increase was due to the inclusion of
expenses from the acquisitions of radio stations and networks and expenses
incurred for LMAs entered into during 1996 and 1997. For stations and networks
owned and/or operated over the comparable periods in 1996 and 1997, station
operating expenses increased approximately $0.8 million or 3.6% to $23.1
million in 1997 from $22.3 million in 1996 primarily due to expenses incurred
to produce the increased revenue in the periods, as described above.
Broadcast Cash Flow. Broadcast cash flow increased approximately $2.1
million or 11.3% to $20.7 million for the nine months ended September 30, 1997
from $18.6 million for the nine months ended
31
<PAGE>
September 30, 1996. As a percentage of net revenue, broadcast cash flow
decreased to 41.8% for the nine months ended September 30, 1997 from 43.7% for
the nine months ended September 30, 1996. The decrease is primarily
attributable to lower margins achieved during the transition period of the
stations and networks acquired in 1996 and 1997 that previously operated with
formats other than religious formats.
Corporate Expenses. Corporate expenses increased approximately $1.6 million
or 47.1% to $5.0 million for the nine months ended September 30, 1997 from
$3.4 million for the nine months ended September 30, 1996, primarily due to
additional personnel and overhead costs associated with station and network
acquisitions in 1996 and 1997 (approximately $611,000 of the increase),
bonuses paid to corporate officers in 1997 (approximately $155,000 of the
increase), the write-off of costs incurred for potential station acquisitions
which were abandoned (approximately $292,000 of the increase), and expenses
incurred for officers' life insurance (approximately $277,000 of the
increase), in 1997.
EBITDA. EBITDA increased approximately $0.5 million or 3.3% to $15.7 million
for the nine months ended September 30, 1997 from $15.2 million for the nine
months ended September 30, 1996.
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders increased approximately $0.3 million or 20.0% to $1.8
million for the nine months ended September 30, 1997 from $1.5 million for the
nine months ended September 30, 1996, primarily due to increased taxable
income of the S corporations.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $3.3 million or 54.1% to $9.4 million for the nine
months ended September 30, 1997 from $6.1 million for the nine months ended
September 30, 1996, primarily due to radio station and network acquisitions
consummated during 1996 and 1997.
Other Income (Expense). Interest income decreased $156,000 to $156,000 for
the nine months ended September 30, 1997 from $312,000 for the nine months
ended September 30, 1996, primarily due to interest income earned in 1996 on a
$14.0 million deposit from the sale of KDBX-FM, Portland. Gain (loss) on
disposal of assets decreased $12.8 million from $12.7 million for the nine
months ended September 30, 1996 to ($190,000) for the nine months ended
September 30, 1997. The gain in 1996 was primarily due to the sale of KDBX-FM,
Portland and WTJY-FM, Columbus. Interest expense increased approximately $3.0
million or 54.5% to $8.5 million for the nine months ended September 30, 1997
from $5.5 million for the nine months ended September 30, 1996, primarily due
to interest expense associated with additional borrowings to fund acquisitions
consummated during 1996 and 1997. Other expense was essentially unchanged for
the 1997 period compared to the 1996 period.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was
(40.9)% for the nine months ended September 30, 1997 and 34.3% for the nine
months ended September 30, 1996. The effective tax rates may differ from the
federal statutory income tax rate of 34.0% because of the effect of state
income taxes and the exclusion of federal income taxes relating to the
S corporations. The decrease in the effective tax rate for the nine months
ended September 30, 1997 as compared to the nine months ended September 30,
1996 is due to losses generated by the non-S corporation entities.
Net Income (Loss). The Company recognized a net loss of approximately ($3.7)
million for the nine months ended September 30, 1997, compared to net income
of $9.7 million for the nine months ended September 30, 1996. Included in net
loss for 1997 is a $1.1 million extraordinary loss for the write off of
deferred financing costs and termination fees related to the repayment of the
Company's prior credit agreement (the "Old Credit Agreement") which was repaid
in full upon issuance of the Old Notes on September 25, 1997.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Net Revenue. Net revenue increased approximately $10.8 million or 22.4% to
$59.0 million in 1996 from $48.2 million in 1995. The inclusion of revenue
from the acquisitions of radio stations and networks and revenue
32
<PAGE>
generated from LMAs entered into during 1996 and 1995 provided approximately
$5.2 million of the increase. For stations and networks owned and operated
over the comparable period in 1995 and 1996, net revenue improved
approximately $5.6 million or 12.3% to $51.1 million in 1996 from $45.5
million in 1995 due primarily to program rate increases and to a lesser extent
to increases in on-air inventory and improved selling efforts at both the
national and local level.
Station Operating Expenses. Station operating expenses increased
approximately $6.0 million or 21.8% to $33.5 million in 1996 from $27.5
million in 1995. Approximately $4.6 million of such increase was due to the
inclusion of expenses from the acquisitions of radio stations and networks and
expenses incurred for LMAs entered into during 1996 and 1995. For stations and
networks owned and/or operated over the comparable periods in 1996 and 1995,
station operating expenses increased approximately $1.4 million or 5.7% to
$26.1 million in 1996 from $24.7 million in 1995 primarily due to expenses
incurred to produce the increased revenue in the periods, as described above.
Broadcast Cash Flow. Broadcast cash flow increased approximately $4.9
million or 23.8% to $25.5 million in 1996 from $20.6 million in 1995. As a
percentage of net revenue, broadcast cash flow increased to 43.3% in 1996 from
42.9% in 1995.
Corporate Expenses. Corporate expenses increased approximately $0.9 million
or 23.7% to $4.7 million in 1996 from $3.8 million in 1995, primarily due to
additional personnel and overhead costs associated with station and network
acquisitions in 1996.
EBITDA. EBITDA increased approximately $4.1 million or 24.4% to $20.9
million in 1996 from $16.8 million in 1995.
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders was essentially unchanged for the year ended December
31, 1996 compared to 1995.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.5 million or 6.3% to $8.4 million in 1996 from $7.9
million in 1995, primarily due to radio station and network acquisitions
consummated during 1996 and 1995.
Other Income (Expense). Interest income increased $204,000 to $523,000 in
1996 from $319,000 in 1995, primarily due to interest income earned on a $14.0
million deposit from the sale of KDBX-FM, Portland. Gain (loss) on disposal of
assets increased $16.1 million from ($7,000) in 1995 to $16.1 million in 1996.
The gain in 1996 was primarily due to the sales of KDBX-FM, Portland, KDFX-AM,
Dallas and WTJY-FM, Columbus. Interest expense increased approximately $0.8
million or 12.1% to $7.4 million in 1996 from $6.6 million in 1995, primarily
due to interest expense associated with additional borrowings to fund
acquisitions consummated during 1996 and 1995. Other expense was essentially
unchanged for the year ended December 31, 1996 compared to 1995.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was 34.3%
for 1996 and (65.4%) for 1995. The effective tax rates may differ from the
federal statutory income tax rate of 34.0% because of the effect of state
income taxes and the exclusion of federal income taxes relating to the S
corporations. The increase in the effective tax rate for 1996 as compared to
1995 is primarily due to the increase in income of the non-S corporation
entities, including gains recognized on the sale of radio stations during
1996. In connection with the Reorganization of the Company, which resulted in
the termination of the S corporation status of New Inspiration and Golden
Gate, the Company will record a deferred tax liability and provision of
approximately $600,000.
Net Income. The Company recognized net income of approximately $12.8 million
in 1996, compared to net income of $122,000 in 1995. Included in net income
for 1995 is a $394,000 extraordinary loss for the write off of deferred
financing costs related to the repayment in March 1995 of outstanding
indebtedness under certain credit agreements with banks, including the Old
Credit Agreement, and a make-whole premium in connection with the repayment of
certain senior subordinated notes to insurance companies.
33
<PAGE>
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Net Revenue. Net revenue increased approximately $9.6 million or 24.9% to
$48.2 million in 1995 from $38.6 million in 1994 primarily due to the
inclusion of revenue from the acquisitions of radio stations during 1995 and
1994 (approximately $6.2 million of the increase), and to a lesser extent, to
program rate increases, and improved selling efforts at both the national and
local level (approximately $3.4 million of the increase).
Station Operating Expenses. Station operating expenses increased
approximately $5.3 million or 23.9% to $27.5 million in 1995 from $22.2
million in 1994, primarily due to the inclusion of operating expenses of the
station acquisitions during 1995 and 1994 (approximately $4.3 million of the
increase), and to a lesser extent, to expenses incurred to produce the
increased revenue described above (approximately $1.0 million of the
increase).
Broadcast Cash Flow. Broadcast cash flow increased approximately $4.2
million or 25.6% to $20.6 million in 1995 from $16.4 million in 1994. As a
percentage of net revenue, broadcast cash flow increased to 42.9% in 1995 from
42.5% in 1994.
Corporate Expenses. Corporate expenses increased approximately $0.5 million
or 15.2% to $3.8 million in 1995 from $3.3 million in 1994, primarily due to
additional personnel and overhead costs associated with station acquisitions
in 1995.
EBITDA. EBITDA increased approximately $3.7 million or 28.2% to $16.8
million in 1995 from $13.1 million in 1994.
Tax Reimbursements to S Corporation Shareholders. Tax reimbursements to S
corporation shareholders increased approximately $1.1 million or 110.0% to
$2.1 million in 1995 from $1.0 million in 1994, primarily due to increased
taxable income of the S corporations.
Depreciation and Amortization. Depreciation and amortization expense
increased approximately $0.3 million or 3.9% to $7.9 million in 1995 from $7.6
million in 1994, primarily due to radio station acquisitions consummated
during 1995 and 1994.
Other Income (Expense). Interest income increased $89,000 to $319,000 in
1995 from $230,000 in 1994. Loss on disposal of assets decreased $475,000 from
$482,000 in 1994 to $7,000 in 1995, primarily due to the write-off of
leasehold improvements at abandoned office/studio locations in 1994. Interest
expense increased approximately $2.9 million or 78.4% to $6.6 million in 1995
from $3.7 million in 1994, primarily due to interest expense associated with
additional borrowings to fund acquisitions consummated during 1995 and 1994,
and increases in interest rates. Other expense increased $120,000 to $255,000
in 1995 from $135,000 in 1994, primarily due to increased expenses related to
bank loan fees in 1995.
Provision (Benefit) for Income Taxes. Income tax provision (benefit) as a
percentage of income before income taxes (i.e., effective tax rate) was
(135.4%) for 1995 and (56.3%) for 1994. The effective tax rates may differ
from the federal statutory income tax rate of 34.0% because of the effect of
state income taxes and the exclusion of federal income taxes relating to the S
corporations. The decrease in the effective tax rate for 1995 as compared to
1994 is primarily due to losses of the non-S corporation entities, including
an increase in interest expense in 1995.
Net Income. The Company recognized net income of approximately $122,000 in
1995, compared to net income of $686,000 in 1994. Included in net income for
1995 is a $394,000 extraordinary loss for the write off of deferred financing
costs related to the repayment in March 1995 of outstanding indebtedness under
certain credit agreements with banks, including the Old Credit Agreement, and
a make-whole premium in connection with the repayment of certain senior
subordinated notes to insurance companies.
LIQUIDITY AND CAPITAL RESOURCES
In the past, the Company principally financed acquisitions of radio stations
through borrowings, including borrowings under credit agreements with banks,
and, to a lesser extent, from cash flow from operations and
34
<PAGE>
selected asset dispositions. The Company used the net proceeds from the sale
of the Notes to repay substantially all of its outstanding indebtedness under
a line of credit agreement, at which time such facility was canceled and the
Company entered into the current Credit Agreement.
The Company anticipates funding future acquisitions from operating cash flow
and borrowings, including borrowings under the Credit Agreement. At September
30, 1997, $10.1 million was outstanding under the Company's Credit Agreement.
The maximum amount that the Company may borrow under the Credit Agreement is
limited by the Company's debt to cash flow ratio, adjusted for recent radio
station acquisitions as defined in the Credit Agreement (the "Adjusted Debt to
Cash Flow Ratio"). At September 30, 1997, the maximum Adjusted Debt to Cash
Flow Ratio allowed under the Credit Agreement was 7.0 to 1. The Company's
ability to borrow for the purpose of acquiring a radio station is further
limited by the Credit Agreement in that the Company may not borrow for an
acquisition if the Adjusted Debt to Cash Flow Ratio is greater than 6.0 to 1.
At September 30, 1997, the Adjusted Debt to Cash Flow Ratio was 6.07 to 1,
resulting in total borrowing availability of approximately $19.9 million, none
of which can currently be used for radio station acquisitions. In addition to
debt service requirements under the Credit Agreement, the Company will be
required to pay $14.3 million per annum in interest on the Notes. Management
believes that cash flow from operations and borrowings under the Credit
Agreement should be sufficient to permit the Company to meet its financial
obligations and to fund its operations for at least the next twelve months.
The Credit Agreement contains certain additional restrictive covenants
customary for credit facilities of the size, type and purpose contemplated
which, among other things, and with certain exceptions, limits the Company's
ability to enter into affiliate transactions, pay dividends, consolidate,
merge or effect certain asset sales, make certain investments or loans and
change the nature of its business. The Credit Agreement also requires the
satisfaction by the Company of certain financial covenants, which will require
the maintenance of specified financial ratios and compliance with certain
financial tests, including ratios for maximum leverage as described above (not
greater than 7.0 to 1 at September 30, 1997), minimum interest coverage (not
less than 1.25 to 1 at September 30, 1997), minimum debt service coverage (a
static ratio of not less than 1.1 to 1) and minimum fixed charge coverage (a
static ratio of not less than 1.1 to 1). See "Description of Other
Indebtedness."
For the nine months ended September 30, 1997, net cash provided by
operations decreased to $1.9 million, compared to $9.3 million for the 1996
period due to the Company recording a net loss in the 1997 period primarily as
a result of higher interest expense and changes in working capital items in
1997. Net cash provided by operations increased to $10.5 million for the year
ended December 31, 1996, compared to $7.7 million in 1995 due primarily to
increased net operating income in 1996. Net cash provided by operations was
essentially unchanged for the year ended December 31, 1995 compared to 1994.
For the nine months ended September 30, 1997, net cash used in investing
activities increased $13.3 million to $26.6 million from $13.3 million for the
1996 period due to radio station acquisitions (seven stations purchased for
$18.8 million in the first nine months of 1997 compared to seven stations
purchased for $8.3 million in the first nine months of 1996), and expenditures
for a tower construction project held for sale, in 1997. Net cash used in
investing activities decreased to $18.9 million for the year ended December
31, 1996, compared to $27.7 million for 1995 primarily due to the sale of
KDBX-FM, Portland and KDFX-AM, Dallas in 1996. The sale of these two radio
stations provided $15.9 million of cash, which offset the cash used by the
Company to purchase radio stations in 1996. Net cash used in investing
activities increased to $27.7 million for the year ended December 31, 1995,
compared to $18.8 million for 1994 primarily due to the acquisition of higher
priced radio stations in 1995 compared to 1994.
For the nine months ended September 30, 1997, net cash provided by financing
activities increased $21.5 million to $24.8 million from $3.3 million for the
1996 period primarily from proceeds from long-term debt incurred in 1997,
offset by the $30.5 million payment of the note payable associated with the
acquisition of KWRD-FM, Dallas. Net cash provided by financing activities was
$9.4 million for the year ended December 31, 1996, $19.2 million for 1995, and
$11.8 million for 1994, primarily due to increased long-term debt borrowings
for the higher priced radio stations acquired in 1995.
35
<PAGE>
BUSINESS
GENERAL
Salem Communications Corporation is the leading radio broadcast company in
the United States, measured by number of stations owned and audience coverage,
that focuses on serving the religious/conservative listening audience. The
Company's two primary businesses include the ownership and operation of
religious format radio stations and the development and expansion of its
national Network offering talk programming, news and music to affiliated
stations. The Company owns and/or operates 43 radio stations concentrated in
28 geographically diverse markets across the United States. The Company offers
a variety of specialized talk programming emphasizing Bible study and Judeo-
Christian values applied to family and community issues as well as
contemporary and traditional religious music.
The Company focuses on serving the top 25 markets in terms of audience size
in the United States and has stations in nine of the top ten and 19 of the top
25 of those markets. The Company is also interested in serving certain mid-
sized markets, which the Company considers to be markets that are among the
26th through 50th largest radio markets in the United States in terms of
audience size. Since January 1, 1992, the Company has grown significantly by
acquiring ownership of, or operating rights to, 29 radio stations in 20
markets, including 17 stations in 14 markets since January 1, 1996. Most of
these recently acquired radio stations were previously broadcasting in non-
religious formats and have been re-formatted by the Company. The Company's
experience has been that changing the format of an acquired station typically
requires a transition period during which the Company develops its program
customer and listener base. During such transition period, these stations
typically do not generate significant cash flow from operations. The Company's
total gross revenue, broadcast cash flow and EBITDA were $65.1 million,
$25.5 million and $20.9 million, respectively, for the year ended December 31,
1996 and were $54.5 million, $20.7 million and $15.7 million, respectively,
for the nine months ended September 30, 1997.
The following table sets forth information about each radio station owned
and/or operated by the Company in order of market size:
<TABLE>
<CAPTION>
MARKET(1) MSA RANK STATION CALL LETTERS YEAR ACQUIRED
--------- -------- -------------------- -------------
<S> <C> <C> <C>
New York, NY................... 1 WMCA-AM; WWDJ-AM 1989; 1994
Los Angeles, CA................ 2 KKLA-FM; KLTX-AM; KAVC-FM 1985; 1986; 1983
Chicago, IL.................... 3 WYLL-FM 1990
San Francisco, CA.............. 4 KFAX-AM 1984
Philadelphia, PA............... 5 WFIL-AM; WZZD-AM 1993; 1994
Dallas-Ft. Worth, TX........... 7 KWRD-FM 1996
Washington, D.C. .............. 8 WAVA-FM 1992
Houston-Galveston, TX.......... 9 KKHT-FM; KENR-AM 1995; 1995
Boston, MA..................... 10 WEZE-AM 1997
Seattle-Tacoma, WA............. 13 KGNW-AM; KLFE-AM; KKOL-AM 1985; 1994; (2)
San Diego, CA.................. 14 KPRZ-AM 1986
Minneapolis-St. Paul, MN....... 16 KKMS-AM 1996
Phoenix, AZ.................... 18 KPXQ-AM 1996
Baltimore, MD.................. 19 WITH-AM(3) 1997
Pittsburgh, PA................. 20 WORD-FM; WPIT-AM 1989; 1993
Cleveland, OH.................. 22 WHK-AM; WCCD-AM 1997
Denver-Boulder, CO............. 23 KRKS-FM; KRKS-AM; KNUS-AM 1993; 1994; 1996
Portland, OR................... 24 KPDQ-FM; KPDQ-AM 1986; 1986
Cincinnati, OH................. 25 WTSJ-AM 1997
Riverside-San Bernardino, CA... 26 KKLA-AM(4) 1986
Sacramento, CA................. 28 KFIA-AM; KTKZ-AM 1995; 1997
Columbus, OH................... 32 WRFD-AM 1982
San Antonio, TX................ 34 KSLR-AM 1994
Akron, OH...................... 67 WHLO-AM 1997
Spokane, WA.................... 87 KTSL-FM 1996
Colorado Springs, CO........... 95 KGFT-FM; KBIQ-FM; KPRZ-FM 1996; 1996; 1996
Oxnard, CA..................... 109 KDAR-FM 1974
Canton, OH..................... 120 WHK-FM(5) 1997
</TABLE>
36
<PAGE>
- ---------------------
(1) Actual city of license may differ from metropolitan market served.
(2) The Company operates the station, which is licensed to a corporation owned
by the Principal Shareholders of the Company, under the terms of a local
marketing agreement. The Principal Shareholders and the Company are
parties to an Option to Purchase Agreement whereunder the Company has been
granted an option to purchase KKOL-AM from the Principal Shareholders at
any time on or before December 31, 1999. See "Federal Regulation of Radio
Broadcasting--Local Marketing Agreements" and "Certain Transactions."
(3) The station is simulcast with WAVA-FM, Washington, D.C.
(4) The station is simulcast with KKLA-FM, Los Angeles.
(5) The station is simulcast with WHK-AM, Cleveland.
CORPORATE STRUCTURE AND REORGANIZATION
The Company was incorporated in California in 1986 in connection with a
combination of most of the radio station holdings of the Principal
Shareholders. Each of the Principal Shareholders owned 50% of the Company's
outstanding common stock. New Inspiration, the licensee of KKLA-FM, Los
Angeles, and Golden Gate, the licensee of KFAX-AM, San Francisco, were owned
by the Shareholders. New Inspiration and Golden Gate were both "S
corporations," as that term is defined in the Internal Revenue Code. The
Company, New Inspiration and Golden Gate are the general partners of Beltway
Media Partners ("Beltway"), the licensee of WAVA-FM, Washington, D.C.
On August 13, 1997, the Company, New Inspiration and Golden Gate effected a
reorganization (including the Shareholder Notes as defined below, the
"Reorganization") pursuant to which New Inspiration and Golden Gate became
wholly owned subsidiaries of the Company, with Beltway remaining a partnership
owned by the Company, New Inspiration and Golden Gate. The S corporation
status of New Inspiration and Golden Gate was terminated in the
Reorganization. Prior to the Reorganization, New Inspiration and Golden Gate
made distributions of cash and promissory notes to their respective
shareholders in the aggregate amount of $8.5 million. Of such amount, $1.8
million, equal to the estimated federal and state income tax liability of the
shareholders on the earnings of New Inspiration and Golden Gate, was paid by
New Inspiration and Golden Gate in cash. The remainder, $6.7 million, the
balance of the net income of New Inspiration and Golden Gate that had
previously been taxed but not distributed to the shareholders, was distributed
in the form of promissory notes to be paid to the shareholders immediately
following the closing of the offering (the "Shareholder Notes"). The Company
borrowed $6.7 million under the Credit Agreement and applied this amount to
the payment of certain indebtedness owed to New Inspiration and Golden Gate by
the Company. The cash made available to New Inspiration and Golden Gate from
the repayment of such loans was then used by New Inspiration and Golden Gate
to pay the Shareholder Notes. See "Certain Transactions" and "Description of
Certain Indebtedness--Shareholder Notes."
To effect the Reorganization, the Shareholders contributed their shares of
stock in New Inspiration and Golden Gate to the Company (which in turn
effected the contribution to the Company of the Shareholders' interests in
Beltway) in exchange for the new shares in the Company. The share conversion
factors were based on the ratio of asset values of the Company, New
Inspiration and Golden Gate to the combined asset value of such entities. The
asset values were determined by an independent radio station broker. Following
the Reorganization, Mrs. Epperson, who had been a 50% owner of New
Inspiration, became a shareholder of the Company. All of the outstanding stock
of the Company is currently owned by Mr. Atsinger (50%), Mr. Epperson (36.8%)
and Mrs. Epperson (13.2%). See "Securities Ownership of Certain Beneficial
Owners."
RELIGIOUS FORMAT OVERVIEW
The 1997 Broadcasting & Cable Yearbook identifies over 1,800 radio stations
throughout the United States that feature religious talk and music formats,
including formats identified as Religious, Gospel, Christian, Inspirational or
Sacred. Approximately two-thirds of these stations are for-profit businesses.
The balance of these stations broadcast from the noncommercial educational
band (88.1MHz-91.9MHz) and are licensed to non-profit organizations.
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Contrary to many mainstream formats which have experienced a decline in
popularity in recent years, religious formats have experienced significant
growth. According to statistics appearing in The M Street Journal, a broadcast
industry newsletter, the number of radio stations featuring religious formats
has grown approximately 69% between 1989 and 1997 and the religious format is
the third largest radio format in the United States after country and
news/talk. According to Religion & Media Quarterly, religious format radio
stations have an audience of approximately 20.6 million listeners.
While a variety of music formats, including Southern Gospel, Black Gospel,
Praise and Worship, and Contemporary Christian, are offered on religious
format stations, the largest single category of religious format is talk
programming emphasizing Bible preaching and teaching and other programming
addressing family and community issues. Music and talk formats can be found on
both commercial and noncommercial stations. Commercial stations that feature
religious music formats generate nearly all of their revenue from the sale of
advertising time to local and national spot advertisers and national network
advertisers. Commercial stations that specialize in talk programming,
including substantially all of the Company's stations, generate the majority
of their revenue from the sale of block program time to national and local
program producers. Noncommercial stations typically obtain revenue through
tax-deductible contributions from listeners, the sale of block program time to
national and local program producers and grants or sponsorships of specific
programming that allow the sponsor's name to be featured. Sale of spot
advertising is prohibited on noncommercial stations.
OPERATING STRATEGY
Maintain and Enhance Leadership Position in Religious Talk Format. The
Company believes that an important factor in its ability to attract and retain
quality programming customers is its demonstrated long-term commitment to
religious talk formats. Program customers tend to be sophisticated purchasers
of air time that recognize that building a listener base capable of generating
revenue sufficient to cover programming costs may take several years. The
Company's experience has been that such programmers are accordingly reluctant
to make the commitment to building a new listener base unless they have a
reasonable expectation that the format will remain in place. Management of the
Company therefore intends to continue its long-term commitment to the
religious talk format. Management believes its commitment to growing the
religious talk format, increasing the number of owned and operated stations
and developing network operations and national sales activities allows for
future growth opportunities for the Company.
Identify and Develop New Program Producers. The Company recognizes that the
ongoing success of its religious talk format is largely dependent on the
continued availability of quality programs. Management of the Company is
committed to assisting promising new program producers with advice on content
and structuring of programs in addition to advice on levels of support
staffing, engineering and programming delivery options. Station managers are
encouraged to evaluate local talk programs with a view toward expansion of
promising programs into national syndication. The Company continues to
emphasize this important development area with the goal of maintaining a
backlog of quality programs available for placement in new markets and
existing markets where the Company may add additional stations.
Emphasize Signal Quality and Market Coverage. The Company is committed to
the ongoing evaluation and improvement of its technical facilities, including
power increases, tower/antenna relocations and investment in state of the art
equipment. The Company believes that its success is attributable in part to
its ownership of broadcast facilities that provide broad signal coverage in
its markets.
Build Station Identity Through Development of Strong Production Values. The
Company believes that an important element in retaining and increasing the
listening audience and expanding the base of potential advertisers for its
stations is the development of local station identity. The Company believes
that its emphasis on development of a station's identity during those times
when the Company is not broadcasting its customers' block programming will
allow it to compete with general format stations for listening audience and
advertising customers. Station employees with responsibility for programming
are encouraged to build identity through continual improvement of production
values and to share their ideas with other Company stations. The Company
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assists local personnel and coordinates development of increased production
values through its director of programming located at the corporate
headquarters. Certain of the Company's stations have successfully adopted
techniques that have built identity through the development of local on-air
personalities associated with segments of the broadcast day, and these
techniques are being implemented at other Company stations.
Expand and Diversify National Network. The Company is committed to expanding
the Network by adding to its menu of Network product offerings and by actively
promoting these products to Network affiliates. The Company believes that by
continually increasing the quality of its Network product it will add to its
affiliate base, thereby providing more audience reach that will attract more
national advertising customers and potentially generate business from national
advertising agencies. The Company competes aggressively for talk show talent
it believes will be attractive to existing and potential affiliates, refines
existing music formats and develops political commentary and public affairs
programming that are complementary to the product offerings of the Network.
The Company will continue to explore ways to better serve its customers and
the religious/conservative listening audience by using the combined resources
of its owned and operated stations and the Network. For example, unused
Network inventory can be used as an incentive to potential or existing program
producers to purchase block program time on the Company's radio stations. The
Company has successfully implemented this strategy in the past and will
continue to devote significant time and resources to find additional
synergistic uses of its radio stations and the Network.
ACQUISITION STRATEGY
Expand Into New Markets. The Company continues to pursue an acquisition
strategy of acquiring radio stations in the top 25 markets in which it
currently does not have a presence and acquiring selected stations in mid-
sized markets. The Company considers mid-sized markets to be the 26th through
50th largest radio markets in the United States in terms of audience size. In
the early years of the Company's operations, and from time to time more
recently, it has acquired radio stations in markets smaller than mid-sized
markets. Generally, any recent acquisition of a station in a smaller market
was undertaken (i) to access an audience that the Company believed would be
particularly receptive to its format, such as the market in Colorado Springs,
Colorado, where the headquarters of a number of religious organizations are
located, or (ii) as part of an acquisition in which the Company was pursuing
its strategy of acquiring a station in a major or mid-sized market but was
required to acquire the smaller market station as part of a multiple station
transaction.
The Company believes that its presence in large markets makes it attractive
to national program syndicators and national advertisers. In addition, the
geographic diversity of the Company's markets reduces its dependence on any
single local economy. Over the past 20 years, the Company has developed and
implemented a model for evaluating the desirability of entering a new market.
Management considers the number of stations already serving the target market
with religious formats, the programming within that format (music or talk),
the quality of talk programs offered and the signal strength of the competing
stations. The signal strength of any station that becomes available for
purchase is a critical factor in the evaluation process.
Expand in Existing Markets. The Company pursues the acquisition of
additional stations in markets in which it already has a presence. The
experience of the Company with existing duopolies and triopolies has been
positive. Multiple stations making use of one general manager and sales staff
and one broadcast facility have resulted in operational efficiencies in
certain markets. In addition, the Company intends to develop more talk and
music product at the Network level that will be available for use on
additional stations in a market. The Company believes new religious music
formats are gaining increased popularity and are complementary to the
Company's religious talk format. Three separate music formats are produced by
the Network and are available for use by Company stations. This strategy has
been implemented successfully in Colorado Springs, where the Company owns
three FM stations, two of which offer religious music formats and one of which
features a religious talk format.
Upgrades in Existing Markets. The Company is continually looking for upgrade
opportunities in existing markets to expand its audience reach. This strategy
of acquiring upgraded facilities in existing markets has been an area of
emphasis for senior management for many years and has been successfully
demonstrated in such markets as Seattle and New York in prior years. More
recently, the Company has significantly improved its
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position in Boston and Dallas through the acquisition of more powerful
stations that have allowed the Company to continue its business strategy of
operating stations that provide broad signal coverage in its markets.
Acquisition Financing. In the past, the Company has principally financed
acquisitions of radio stations through borrowings, including borrowings under
credit agreements with banks and, to a lesser extent, from cash flow from
operations and selected asset dispositions. Taking into account certain
restrictions under the Credit Agreement, however, the Company is not currently
able to borrow for acquisitions. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources."
OWNED AND/OR OPERATED RADIO STATIONS
Program Revenue. For the year ended December 31, 1996 and the nine months
ended September 30, 1997, the Company derived 57.5% and 53.4% of its gross
revenue, or $37.5 million and $29.1 million, respectively, from the sale of
nationally syndicated and local block program time. The Company derives its
nationally syndicated program revenue from a programming customer base
consisting primarily of geographically diverse, well-established non-profit
religious and educational organizations that purchase time on stations in a
large number of markets in the United States. These nationally syndicated
program producers typically purchase 13, 26 or 52 minute blocks on a Monday
through Friday basis and may offer supplemental programming for weekend
release. The recognized leading daily radio program featured on religious talk
format stations is Focus on the Family, which according to the 1997 Directory
of Religious Media is syndicated on 943 radio stations in the United States,
including 35 Company stations as of November 1997. Other leading radio
programs currently include Insight for Living (590 stations, including 26
Company stations), In Touch (490 stations, including 27 Company stations), and
Grace to You (294 stations, including 22 Company stations). Local program
revenue is obtained from community organizations and churches that typically
purchase time primarily for weekend release and from local speakers who
purchase daily releases. The Company has been successful in assisting quality
local programs to expand into national syndication.
Purchasers of block program time derive their income from two primary
sources: (i) listener contributions, and (ii) product sales, including sales
of inspirational material such as printed literature and periodicals, audio
and video tapes and other miscellaneous items. Revenue from these sources is
used in part to pay for the air time purchased from the Company. The
nationally syndicated program producers carefully track the source of their
donations and product sales and use this information to measure the return on
their air time investment at each station. The Company's top five revenue-
producing program customers accounted for $7.8 million of gross revenue for
the year ended December 31, 1996 and $4.3 million of gross revenue for the six
months ended June 30, 1997. These amounts represented 20.7% and 22.2%,
respectively, of the Company's gross program revenue and 11.9% of the
Company's gross revenue for such periods.
The Company's stations have enjoyed long-standing relationships with key
customers. Focus on the Family and Insight for Living have been ongoing
customers of the Company since 1977. Management attributes this continuity to
the recognized commitment of the Company to concentrate its efforts in
religious talk format stations and not to change formats or exit markets where
it has acquired stations. Management believes that its key customers are
willing to make the long-term commitment to build a base of support in Company
markets largely because of the Company's commitment to build a religious talk
format for its radio stations. As is typical in the radio industry, contracts
may generally be canceled by either the station or the program producer on one
month's notice. New program producers, however, are occasionally required to
sign one-year contracts to demonstrate a commitment of resources to the
program. Rate increases are typically negotiated on an annual basis.
The Company believes that sales of block program time lessen its exposure to
swings in general economic activity and thus make its revenue stream less
volatile. Because program customers derive their income primarily from various
forms of listener support, and given the time period usually required for a
program to obtain and develop an audience, management believes that program
customers have generally found it to be in their best interest to retain a
specific time slot on a long-term basis notwithstanding short-term financial
results or economic conditions.
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Advertising Revenue. For the year ended December 31, 1996, and the nine
months ended September 30, 1997, the Company derived 26.7% and 27.5% of its
gross revenue, or $17.4 million and $15.0 million, respectively, from the sale
of local spot advertising and 6.3% and 9.4% of its gross revenue, or $4.1
million and $5.1 million (including $2.7 million of reclassified infomercial
advertising revenue), respectively, from the sale of national spot
advertising. Prior to 1997, classification of revenue (i.e. national program,
national advertising, local program or local advertising) from infomercials
was determined at the discretion of local station general managers. In 1997,
the Company began including revenue from infomercials in the national
advertising category in order to establish uniformity of classification of
revenue. The Company in recent years has begun to place greater emphasis on
the development of local spot sales in all of its markets. General managers
and sales managers are encouraged to create more spot inventory for sale.
Additional spot inventory can be created in a variety of ways, such as
removing programming which generates marginal audience response and adjusting
the start time of programs to add inventory in more desirable dayparts.
The Company believes that the listening audience for its radio stations,
which provides the financial support for program producers purchasing time on
these stations, is responsive to affinity advertisers that promote products
targeted to the religious/conservative audience and is receptive to direct
response appeals such as those offered through infomercials. The Company's
stations all have affinity advertising customers in their respective markets.
Local church groups and many community organizations such as rescue missions
and family crisis support services can often effectively reach their natural
constituencies by advertising on religious format stations. Significant
advertising is also purchased by local and nationally affiliated religious
bookstores, publishers specializing in inspirational and religious literature
and other businesses that desire to specifically target the conservative adult
religious community. The Company also generates spot advertising revenue from
general market retailers, including automobile dealers and grocery store
chains, in many of its markets. Management believes these results are
consistent with an increased openness to the use of niche radio formats by
general market retailers.
Because the Company does not sell advertising based on market share, it does
not subscribe to traditional audience measuring services, but instead sells
advertising based upon the proven success of its other advertising customers.
A majority of advertisers on Company radio stations are "direct-response"
advertisers (i.e., advertisers that solicit some type of response, typically
the calling of a toll-free telephone number to purchase a product or service
advertised). The typical advertiser on a Company radio station measures the
effectiveness of its advertising on Company stations in terms of (a) the
number of inquiries to the advertiser in which the caller reports having heard
the advertiser's commercial on a Company radio station, (b) whether a
sufficient volume of new customers for the advertiser is generated given a
designated inquiry level (e.g., the advertiser may require that it experience
a conversion rate of four new customers for every 10 inquiries), or (c)
revenues attributable to sales by the advertiser that are identified as
generated by the advertiser's commercial aired on Company stations. The sales
staffs of the Company's radio stations obtain information from existing
advertisers regarding the advertisers' level of satisfaction with the results
generated by the advertisers' commercials aired on Company radio stations. The
Company's sales staffs communicate such information, as well as information
regarding the volume of existing advertisers' repeat advertising on Company
stations, to prospective advertisers in marketing the Company's radio
stations.
The Company's radio stations also receive revenue from national advertisers
desiring to include selected Company stations in national buys covering
multiple markets. These national advertising buys are placed through SRR,
which receives a commission based on the gross dollar amount of all orders
generated. Infomercials run regularly on Company stations, generally on
weekends. In reviewing proposed purchases of air time by advertisers and
infomercial producers, the Company considers the suitability of the content of
the advertising and infomercials for its audience.
Operations. Each of the radio markets in which the Company has a presence
has a general manager who is responsible for day-to-day operations, local spot
advertising sales and, where applicable, local program sales for all Company
stations in the market. General managers earn a base salary plus a percentage
of the respective
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station's net operating income. Each station also has a staff of full and
part-time engineering, programming and sales personnel. Sales staffs are paid
on a commission basis.
The Company has decentralized its operations in response to the rapid growth
it has experienced in recent years. Operations vice presidents of the Company,
some of whom are also station general managers, oversee several markets on a
regional basis. The operations vice presidents are experienced radio
broadcasters with expertise in sales, programming and production. The Company
will continue to rely on this strategy of decentralization and encourage
operations vice presidents to apply innovative techniques to the operations
they oversee which, if successful, can be implemented in other Company
stations.
Corporate headquarters personnel oversee the placement and rate negotiation
for all nationally syndicated programs. Centralized oversight of this most
critical component of Company revenue is necessary because the Company's key
program customers purchase time on many of the Company's markets. Corporate
headquarters personnel also are responsible for centralized reporting and
financial functions, benefits administration, engineering oversight and other
support functions designed to provide resources to local management.
NATIONAL NETWORK OPERATIONS
In 1993, the Company established the Network in connection with its
acquisition of certain assets of the former CBN Radio Network. Establishment
of the Network was a part of the Company's overall business strategy to
develop a national network of affiliated radio stations anchored by the
Company's owned and operated radio stations in major markets. The Network,
which is headquartered in Dallas, is focused on the development, production
and syndication of a broad range of programming specifically targeted to
religious talk and music stations as well as general market news/talk
stations. Currently, the Company has rights to six full-time satellite
channels and all Network product is delivered to affiliates via satellite.
As of November 30, 1997, the Network had approximately 750 affiliate
stations, including the Company's owned and operated stations, that broadcast
one or more of the offered programming options. These programming options
feature talk shows, news and music. Network operations also include commission
revenue of SRR from unaffiliated customers and an allocation of operating
expenses estimated to relate to such commissions. SRR is a wholly owned
subsidiary of the Company, which sells all national commercial advertising
placed on the Network's commercial affiliate radio stations. The Network's
gross revenue for the year ended December 31, 1996 and the nine months ended
September 30, 1997 was $5.3 million and $4.5 million, respectively. While the
Network earned net operating income of $274,000 for the year ended December
31, 1996, it incurred a net operating loss of $542,000 for the nine months
ended September 30, 1997, due primarily to continued costs associated with the
development of a news programming production and distribution capability, and
reduced advertising revenue associated with syndicated talk programming.
Talk Programming. The Network offers talk programming designed to attract
listeners to affiliate stations by addressing current national issues from a
religious/conservative perspective. The Network currently produces 20 daily
and weekly long-form and short-form programs including The Oliver North Show,
The Alan Keyes Show, The Dick Staub Show, Janet Parshall's America and a
sports talk program titled Sharing the Victory. As of November 30, 1997,
approximately 260 affiliate radio stations carried some form of Network talk
programming.
Station affiliations for talk programming are non-exclusive, allowing a
station to select specific Network programs it wishes to carry. Commercial
affiliates are required to air five Network spots during each hour of Network
programming carried. The Network affiliation contract generally provides a 90-
day termination option for both parties.
News. The Network began the production and distribution of news in 1996 with
the purchase of StandardNews. The name was subsequently changed to SRN News
and the news product was repositioned to offer affiliates a family-focused
news service, delivered three times each hour, providing coverage of national
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and international news. SRN News began operating from a new, fully-digital
headquarters located in the Washington, D.C. area in early 1997. SRN News has
fully-equipped broadcast facilities at the White House, United States House of
Representatives and United States Senate that are staffed by full-time
correspondents. As of November 30, 1997, the Network provided SRN News to
approximately 295 affiliate radio stations, compared with the 167 affiliates
existing at the time the news service was acquired in 1996.
Commercial radio stations that affiliate with SRN News are required to air
12 Network spots between the hours of 6 AM and 11 PM daily. Because they are
unable to clear commercial advertisements, noncommercial radio stations that
affiliate with SRN News pay a monthly access fee. Affiliation agreements for
the news service are two years in length.
Music. The Network offers three syndicated religious music formats. The
Morningstar format, which originates from studios in Nashville, features adult
contemporary Christian music targeted to the mainstream 25-to-54 year old
audience. The Network also offers a contemporary Christian music format, The
Word in Music, targeted to a younger audience, and a more traditional praise
and worship format, The Word in Praise. Both of these formats originate from
two of the Company's owned and operated stations in Colorado Springs. All
music formats are available to affiliate stations on a 24-hour basis or in
selected dayparts. As of November 30, 1997, the Morningstar format and The
Word in Music format had 127 and 22 affiliates, respectively. As of the same
date, The Word in Praise, established in the first quarter of 1997, had eight
affiliates.
Each music network requires affiliates to air a minimum number of minutes
per hour for network spots. In addition, fixed monthly affiliation fees are
charged to both commercial and non-commercial stations which affiliate with
the Morningstar format and non-commercial stations which affiliate with The
Word in Music and The Word in Praise. In addition to these three 24-hour music
formats, the Network provides weekly music programs, including CCM Countdown
with Gary Chapman, CCM Radio Magazine and Rock Alive, to approximately 310
affiliate stations.
Salem Radio Representatives. The Company established SRR in 1992 as a sales
representation company specializing in placing national advertising on
religious format radio stations. The Network has an exclusive relationship
with SRR, a wholly owned subsidiary of the Company, for the sale of available
Network spot advertising. SRR receives a commission on all Network sales. SRR
also contracts with individual radio stations to sell air time to national
advertisers desiring to include selected Company stations in national buys
covering multiple markets. See "--Owned and/or Operated Radio Stations--
Advertising Revenue." SRR administrative offices are located in Dallas, and
its 12 commissioned sales personnel are located in field offices in
Washington, D.C., Chicago, Nashville, Dallas, Seattle and Los Angeles.
COMPETITION
The radio broadcasting industry, including the religious format segment of
this industry, is a highly competitive business. The financial success of each
of the Company's radio stations that features talk programming is dependent,
to a significant degree, upon its ability to generate revenue from the sale of
block program time to national and local religious and educational
organizations. The Company competes for this program revenue with a number of
different commercial and noncommercial radio station licensees. While no group
owner in the United States specializing in the religious format approaches the
Company in size of potential listening audience and presence in major markets,
religious format stations exist and enjoy varying degrees of prominence and
success in all markets. The Company owns and/or operates 30 radio stations in
19 of the top 25 radio markets in terms of audience size. Two competitors of
the Company with the next highest presence in the top 25 markets own and/or
operate only 15 stations in 7 of such major markets and 10 stations in 10 of
such markets, respectively.
The Company also competes for revenue in the spot advertising market with
other commercial religious format and general format radio station licensees.
The Company competes in the spot advertising market with
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other media as well, including broadcast television, cable television,
newspapers, magazines, direct mail coupons and billboard advertising.
Competition may also come from new media technologies currently being
developed or introduced, such as the delivery of audio programming by cable
television systems, by satellite and by DAB. DAB may deliver by satellite to
national and regional audiences, multi-channel, multiformat digital radio
services with quality equivalent to compact discs. The delivery of information
through the Internet also could create new competition. The FCC has recently
authorized spectrum for the use of a new technology, satellite DARS, to
deliver audio programming. DARS may provide a medium for the delivery by
satellite or terrestrial means of multiple new audio programming formats to
local and national audiences.
The Network competes with other commercial radio networks that offer news
and talk programming to religious format stations and two noncommercial
networks that offer religious music formats. The Network also competes with
other radio networks for the services of talk show personalities.
SERVICEMARKS
The Company owns the federally registered service marks "Salem
Communications Corporation" and "Salem Radio Network" and the related Salem
Communications Corporation and Salem Radio Network logos. The Company
considers these service marks to be important to its business.
EMPLOYEES
At November 30, 1997, the Company employed 513 full-time and 309 part-time
employees. None of the Company's employees are covered by collective
bargaining agreements, and the Company considers its relations with its
employees to be good.
In certain of its larger markets, the Company employs on-air personalities
with loyal audiences in their respective markets. The loss of one of these
personalities could result in a short-term loss of audience share, but the
Company does not believe that any such loss would have a material adverse
effect on the Company's financial condition or results of operations.
FEDERAL REGULATION OF RADIO BROADCASTING
Introduction. The ownership, operation and sale of broadcast stations,
including those licensed to the Company, are subject to the jurisdiction of
the FCC, which acts under authority derived from the Communications Act. The
Communications Act was amended by the Telecommunications Act of 1996 (the
"Telecommunications Act") to make changes in several broadcast laws. Among
other things, the FCC assigns frequency bands for broadcasting; determines
whether to approve changes in ownership or control of station licenses;
regulates equipment used by stations; adopts and implements regulations and
policies that directly or indirectly affect the ownership, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules under the Communications Act.
The following is a brief summary of certain provisions of the Communications
Act and of specific FCC regulations and policies. Failure to observe these or
other rules and policies can result in the imposition of various sanctions,
including monetary forfeitures, the grant of "short" (less than the maximum)
license renewal terms or, for particularly egregious violations, the denial of
a license renewal application, the revocation of a license or the denial of
FCC consent to acquire additional broadcast properties. Reference should be
made to the Communications Act, FCC rules and the public notices and rulings
of the FCC for further information concerning the nature and extent of federal
regulation of broadcast stations.
License Grant and Renewal. Radio broadcast licenses are granted for maximum
terms of eight years. Licenses may be renewed through an application to the
FCC. Prior to the Telecommunications Act, during certain periods when a
renewal application was pending, competing applicants could file for the radio
frequency
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being used by the renewal applicant. The Telecommunications Act prohibits the
FCC from considering such competing applications if the FCC finds that the
station has served the public interest, convenience and necessity, that there
have been no serious violations by the licensee of the Communications Act or
the rules and regulations of the FCC, and that there have been no other
violations by the licensee of the Communications Act or the rules and
regulations of the FCC that, when taken together, would constitute a pattern
of abuse.
Petitions to deny license renewals can be filed by interested parties,
including members of the public. Such petitions may raise various issues
before the FCC. The FCC is required to hold hearings on renewal applications
if the FCC is unable to determine that renewal of a license would serve the
public interest, convenience and necessity, or if a petition to deny raises a
"substantial and material question of fact" as to whether the grant of the
renewal application would be prima facie inconsistent with the public
interest, convenience and necessity. Also, during certain periods when a
renewal application is pending, the transferability of the applicant's license
is restricted. The Company is not currently aware of any facts that would
prevent the timely renewal of its licenses to operate its radio stations,
although there can be no assurance that the Company's licenses will be
renewed.
The FCC classifies each AM and FM station. An AM station operates on either
a clear channel, regional channel or local channel. A clear channel is one on
which AM stations are assigned to serve wide areas. Clear channel AM stations
are classified as either: Class A stations, which operate on an unlimited time
basis and are designated to render primary and secondary service over an
extended area; Class B stations, which operate on an unlimited time basis and
are designed to render service only over a primary service area; and Class D
stations, which operate either during daytime hours only, during limited times
only or on an unlimited time basis with low nighttime power. A regional
channel is one on which Class B and Class D AM stations may operate and serve
primarily a principal center of population and the rural areas contiguous to
it. A local channel is one on which AM stations operate on an unlimited time
basis and serve primarily a community and the suburban and rural areas
immediately contiguous thereto. Class C AM stations operate on a local channel
and are designed to render service only over a primary service area that may
be reduced as a consequence of interference.
The minimum and maximum facilities requirements for an FM station are
determined by its class. FM class designations depend upon the geographic zone
in which the transmitter of the FM station is located. In general, commercial
FM stations are classified as follows, in order of increasing power and
antenna height: Class A, B1, C3, B, C2, C1 and C.
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The following table sets forth in order of market size the market, call
letters, FCC license classification, antenna height above average terrain
(HAAT), power and frequency of each of the stations owned or operated by the
Company and the date on which each station's FCC license expires.
<TABLE>
<CAPTION>
STATION EXPIRATION
CALL FCC HAAT POWER IN DATE OF
MARKET(1) LETTERS CLASS IN METERS KILOWATTS(2) FREQUENCY LICENSE
--------- ------- ----- --------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
New York, NY............ WMCA-AM B NA 5.0/5.0 570 kHz 6/1/1998
WWDJ-AM B NA 5.0/5.0 970 kHz 6/1/1998
Los Angeles, CA......... KKLA-FM B 878 10.5 99.5 MHz 12/1/2005
KAVC-FM A 94 2.9 105.5 MHz 12/1/2005
KLTX-AM B NA 5.0/3.6 1390 kHz 12/1/2005
Chicago, IL............. WYLL-FM B 91 50 106.7 MHz 12/1/2004
San Francisco, CA....... KFAX-AM B NA 50/50 1100 kHz 12/1/2005
Philadelphia, PA........ WFIL-AM B NA 5.0/5.0 560 kHz 8/1/1998
WZZD-AM B NA 50.0/10.0 990 kHz 8/1/1998
Dallas-Ft. Worth, TX.... KWRD-FM C 460 100 94.9 MHz 8/1/2005
Washington, D.C. ....... WAVA-FM B 131 50 105.1 MHz 10/1/2003
Houston-Galveston, TX... KENR-AM B NA 10.0/5.0 1070 kHz 8/1/2005
KKHT-FM C 344 100 106.9 MHz 8/1/2005
Boston, MA.............. WEZE-AM B NA 5.0/5.0 590 kHz (3)
Seattle-Tacoma, WA...... KGNW-AM B NA 50.0/5.0 820 kHz (3)
KLFE-AM B NA 5.0/5.0 1590 kHz (3)
KKOL-AM(4) B NA 5.0/5.0 1300 kHz (3)
San Diego, CA........... KPRZ-AM B NA 20.0/5.0 1210 kHz 12/1/2005
Minneapolis-St. Paul,
MN..................... KKMS-AM B NA 5.0/5.0 980 kHz 4/1/2004
Phoenix, AZ............. KPXQ-AM B NA 5.0/5.0 960 kHz 10/1/2005
Baltimore, MD........... WITH-AM C NA 1.0/1.0 1230 kHz 10/1/2003
Pittsburgh, PA.......... WORD-FM B 154 48 101.5 Mhz 8/1/1998
WPIT-AM D NA 5.0/0.024 730 kHz 8/1/1998
Cleveland, OH........... WCCD-AM D NA 0.5/0 1000 kHz 10/1/2004
WHK-AM B NA 5.0/5.0 1420 kHz 10/1/2004
Denver-Boulder, CO...... KNUS-AM B NA 5.0/5.0 710 kHz 4/1/2005
KRKS-AM B NA 5.0/0.39 990 kHz 4/1/2005
KRKS-FM C 387 100 94.7 MHz 4/1/2005
Portland, OR............ KPDQ-AM B NA 1.0/0.51 800 kHz (3)
KPDQ-FM C 387 100 93.7 MHz (3)
Cincinnati, OH.......... WTSJ-AM B NA 1.0/0.28 1050 kHz 10/1/2004
Riverside-San
Bernardino, CA......... KKLA-AM C NA 1.0/1.0 1240 kHz 12/1/2005
Sacramento, CA.......... KFIA-AM B NA 25.0/1.0 710 kHz 12/1/2005
KTKZ-AM B NA 5.0/5.0 1380 kHz 12/1/2005
Columbus, OH............ WRFD-AM D NA 23.0/6.1/0(5) 880 kHz 10/1/2004
San Antonio, TX......... KSLR-AM B NA 5.0/4.3 630 kHz 8/1/2005
Akron/Canton, OH........ WHLO-AM B NA 5.4/0.54 640 kHz 10/1/2004
Spokane, WA............. KTSL-FM C3 198 28.5 101.9 MHz (3)
Colorado Springs, CO.... KBIQ-FM C 695 57.0 102.7 MHz 4/1/2005
KGFT-FM C1 647 13 100.7 MHz 4/1/2005
KPRZ-FM C3 614 0.51 96.1 MHz 4/1/2005
Oxnard, CA.............. KDAR-FM B1 393 1.5 98.3 MHz 12/1/2005
Canton, OH.............. WHK-FM B 175 36 98.1 MHz 10/1/2004
</TABLE>
- ---------------------
(1) Actual city of license may be different form the metropolitan market
served.
(2) Pursuant to FCC rules and regulations, many AM radio stations are licensed
to operate at a reduced power during nighttime broadcasting hours, which
results in reducing the radio station's coverage during those hours of
operation. Both power ratings are shown, where applicable.
(3) Indicates pending renewal application.
(4) The Company operates this station, which is licensed to a corporation
owned by the Principal Shareholders, under the terms of a local marketing
agreement. See "--Local Marketing Agreements" and "Certain Transactions."
(5) Pursuant to FCC rules and regulations, many AM radio stations are licensed
to operate at a reduced power during critical hours, the two-hour periods
immediately following sunrise and preceding sunset. Both daytime power
ratings are shown. WRFD-AM does not operate during nightime hours.
46
<PAGE>
Ownership Matters. The Communications Act prohibits the assignment of a
broadcast license or the transfer of control of a broadcast license without
the prior approval of the FCC. In determining whether to assign, transfer,
grant or renew a broadcast license, the FCC considers a number of factors
pertaining to the licensee, including compliance with various rules limiting
common ownership of media properties, the "character" of the licensee and
those persons holding "attributable" interests therein, and compliance with
the Communications Act's limitation on alien ownership, as well as compliance
with other FCC policies, including equal employment opportunity requirements.
Once a station purchase agreement has been signed, an application for FCC
consent to assignment of license or transfer of control (depending upon
whether the underlying transaction is an asset purchase or stock acquisition)
is filed with the FCC. Approximately 10 to 15 days after this filing, the FCC
publishes a notice assigning a file number to the application and advising
that the application has been "accepted for filing." This begins a 30-day
statutory public notice period during which third parties have the opportunity
to file formal petitions to deny the proposed transaction. Informal objections
to the transaction may be filed at any time prior to the grant of an
application. During this 30-day period, the FCC staff generally begins its
review of the application and may request additional information from the
applicants in response to any questions the staff may have.
Assuming that no petitions are filed during the public notice period and
that the proposed transaction poses no issues requiring higher level consent,
the FCC staff often grants the application by delegated authority
approximately 10 days after the end of the public notice period. If there is a
back log of applications or the transaction proposes an issue requiring higher
level consent, the 10-day period can extend to 30 days or more. The parties to
the application are legally authorized to close on the transaction at any time
after the application is granted. At this point, however, the grant is not a
"final order."
Public notice of the FCC staff grant of an application is usually issued
within seven days of the date on which the application is granted. For a
period of 30 days following the date of this public notice interested parties
may file petitions seeking staff reconsideration or full FCC review of the
staff action. In addition, for a period of 40 days following the date of the
public notice, the FCC, on its own, can review and reconsider the grant. In
the event that review by the FCC is made, judicial review of the FCC action
may be sought in the United States Court of Appeals for the District of
Columbia within 30 days of the public notice of the FCC's action. In the event
the court affirms the FCC's action, further judicial review may be sought by
seeking rehearing en banc from the Court of Appeals or by certiorari from the
United States Supreme Court.
Assuming that no petitions are filed by third parties and no action staying
or reversing the grant is made by the FCC, then the grant will become a final
order by operation of law at the close of business on the 40th day following
the public notice of the grant. Upon a grant becoming a final order, counsel
is able to deliver an opinion that the grant is no longer subject to
administrative or judicial review, although such actions can nevertheless be
set aside in rare circumstances (e.g., fraud on the agency by a party to the
application).
The FCC will not issue an unconditional assignment or transfer grant if an
application for renewal of license for the station is pending. Thus, the
foregoing timetables will be altered in the event an application for
assignment or transfer is filed while a license renewal application is
pending.
Under the Communications Act, a broadcast license may not be granted to or
held by a corporation that has more than one-fifth of its capital stock owned
or voted by aliens or their representatives, by foreign governments or their
representatives, or by non-U.S. corporations. Under the Communications Act, a
broadcast license also may not be granted to or held by any corporation that
is controlled, directly or indirectly, by any other corporation more than one-
fourth of whose capital stock is owned or voted by aliens or their
representatives, by foreign governments or their representatives, or by non-
U.S. corporations. These restrictions apply in modified form to other forms of
business organizations, including partnerships. The Company therefore may be
restricted from having more than one-fourth of its stock owned or voted by
aliens, foreign governments or non-U.S. corporations.
47
<PAGE>
The Communications Act and FCC rules also generally restrict the common
ownership, operation or control of radio broadcast stations serving the same
local market, of a radio broadcast station and a television broadcast station
serving the same local market, and of a radio broadcast station and a daily
newspaper serving the same local market. Under these "cross-ownership" rules,
absent waivers, the Company would not be permitted to acquire any daily
newspaper or television broadcast station (other than low power television) in
a local market where it then owned any radio broadcast station. The FCC's
rules provide for the liberal grant of a waiver of the rule prohibiting common
ownership of radio and television stations in the same geographic market in
the top 25 television markets if certain conditions are satisfied. The
Telecommunications Act extends this waiver policy to stations in the top 50
television markets, although the FCC has not yet implemented this change.
In response to the Telecommunications Act, the FCC amended its multiple
ownership rules to eliminate the national limits on ownership of AM and FM
stations. The FCC's broadcast multiple ownership rules restrict the number of
radio stations one person or entity may own, operate or control on a local
level. These limits are:
(i) in a market with 45 or more commercial radio stations, an entity may
own up to eight commercial radio stations, not more than five of which are
in the same service (FM or AM);
(ii) in a market with between 30 and 44 (inclusive) commercial radio
stations, an entity may own up to seven commercial radio stations, not more
than four of which are in the same service;
(iii) in a market with between 15 and 29 (inclusive) commercial radio
stations, an entity may own up to six commercial radio stations, not more
than four of which are in the same service;
(iv) in a market with 14 or fewer commercial radio stations, an entity
may own up to five commercial radio stations, not more than three of which
are in the same service, except that an entity may not own more than 50% of
the stations in such market.
None of these multiple ownership rules requires any change in the Company's
current ownership of radio broadcast stations; however, these rules will limit
the number of additional stations that the Company may acquire in the future
in certain of its markets.
Because of these multiple and cross-ownership rules, a purchaser of voting
stock of the Company that acquires an "attributable" interest in the Company
may violate the FCC's rule if it also has an attributable interest in other
television or radio stations, or in daily newspapers, depending on the number
and location of those radio or television stations or daily newspapers. Such a
purchaser also may be restricted in the companies in which it may invest, to
the extent that these investments give rise to an attributable interest. If an
attributable shareholder of the Company violates any of these ownership rules,
the Company may be unable to obtain from the FCC one or more authorizations
needed to conduct its radio station business and may be unable to obtain FCC
consents for certain future acquisitions.
The FCC generally applies its television/radio/newspaper cross-ownership
rules and its broadcast multiple ownership rules by considering the
"attributable," or cognizable interests held by a person or entity. A person
or entity can have an interest in a radio station, television station or daily
newspaper by being an officer, director, partner or shareholder of a company
that owns that station or newspaper. Whether that interest is cognizable under
the FCC's ownership rules is determined by the FCC's attribution rules. If an
interest is attributable, the FCC treats the person or entity who holds that
interest as an "owner" of the radio station, television station or daily
newspaper in question, and therefore subject to the FCC's ownership rules.
With respect to a corporation, officers and directors and persons or
entities that directly or indirectly can vote 5% or more of the corporation's
stock (10% or more of such stock in the case of insurance companies,
investment companies, bank trust departments and certain other "passive
investors" that hold such stock for investment purposes only) generally are
attributed with an ownership interest in whatever radio stations, television
stations and daily newspapers the corporation owns.
48
<PAGE>
With respect to a partnership, the interest of a general partner is
attributable, as is the interest of any limited partner who is "materially
involved" in the media-related activities of the partnership. Debt
instruments, nonvoting stock, options and warrants for voting stock that have
not yet been exercised, limited partnership interests where the limited
partner is not "materially involved" in the media-related activities of the
partnership, and minority (under 5%) voting stock, generally do not subject
their holders to attribution.
The FCC has issued a Notice of Proposed Rulemaking (the "NPRM") that
contemplates tightening attribution standards where parties have multiple
nonattributable interests in and relationships with stations that would be
prohibited by the FCC's cross-interest rules, if the interest/relationships
were attributable. The NPRM contemplates that this change in attribution will
apply only to persons holding debt or equity interests that exceed certain
benchmarks. For further information, see "--Proposed Changes" below.
In addition, the FCC has a "cross-interest" policy that under certain
circumstances could prohibit a person or entity with an attributable interest
in a broadcast station or daily newspaper from having a "meaningful"
nonattributable interest in another broadcast station or daily newspaper in
the same local market. Among other things, "meaningful" interests could
include significant equity interests (including nonvoting stock, voting stock
and limited partnership interests) and significant employment positions. This
policy may limit the permissible investments a purchaser of the Company's
voting stock may make or hold.
Programming and Operation. The Communications Act requires broadcasters to
serve the "public interest." The FCC has gradually relaxed or eliminated many
of the more formalized procedures it had developed in the past to promote the
broadcast of certain types of programming responsive to the needs of a
station's community of license. Licensees continue to be required, however, to
present programming that is responsive to community problems, needs and
interests and to maintain certain records demonstrating such responsiveness.
Complaints from listeners concerning a station's programming will be
considered by the FCC when it evaluates the licensee's renewal application,
but such complaints may be filed and considered at any time.
Stations also must pay regulatory and application fees and follow various
FCC rules that regulate, among other things, political advertising, the
broadcast of obscene or indecent programming, sponsorship identification and
technical operations (including limits on radio frequency radiation). In
addition, licensees must develop and implement programs designed to promote
equal employment opportunities and must submit reports to the FCC on these
matters annually and in connection with a renewal application. The broadcast
of contests and lotteries is regulated by FCC rules.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the maximum) renewal terms or, for particularly egregious
violations, the denial of a license renewal application or the revocation of a
license.
In 1985, the FCC adopted rules regarding human exposures to levels of radio
frequency ("RF") radiation. These rules require applicants for new broadcast
stations, renewals of broadcast licenses or modifications of existing licenses
to inform the FCC at the time of filing such applications whether a new or
existing broadcast facility would expose people to RF radiation in excess of
certain guidelines. In August 1996, the FCC adopted more restrictive radiation
limits. These limits will become effective on September 1, 1997 and will
govern applications filed after that date. The Company anticipates that such
regulations will not have a material effect on its business.
Local Marketing Agreements. Over the past five years, a number of radio
stations, including certain of the Company's stations, have entered into what
commonly are referred to as "local marketing agreements" ("LMAs") or "time
brokerage agreements." These agreements take various forms. Separately-owned
and licensed stations may agree to function cooperatively in terms of
programming, advertising sales and other matters, subject to compliance with
the antitrust laws and the FCC's rules and policies, including the requirement
that the licensee of each station maintains independent control over the
programming and other operations of its own station. The FCC has held that
such agreements do not violate the Communications Act as long as the
49
<PAGE>
licensee of the station that is being substantially programmed by another
entity maintains complete responsibility for, and control over, operations of
its broadcast stations and otherwise ensures compliance with applicable FCC
rules and policies.
A station that brokers substantial time on another station in its market or
engages in an LMA with a station in the same market will be considered to have
an attributable ownership interest in the brokered station for purposes of the
FCC's ownership rules. As a result, a broadcast station may not enter into an
LMA that allows it to program more than 15% of the broadcast time, on a weekly
basis, of another local station that it could not own under the FCC's local
multiple ownership rules. FCC rules also prohibit the broadcast licensee from
simulcasting more than 25% of its programming on another station in the same
broadcast service (i.e., AM-AM or FM-FM) where the two stations serve
substantially the same geographic area, whether the licensee owns the stations
or owns one and programs the other through an LMA arrangement.
Proposed Changes. In December, 1994, the FCC initiated a proceeding to
solicit comment on whether it should revise its radio and television ownership
"attribution" rules by among other proposals (i) raising the basic benchmark
for attributing ownership in a corporate licensee from 5% to 10% of the
licensee's voting stock, (ii) increasing from 10% to 20% of the licensee's
voting stock the attribution benchmark for "passive investors" in corporate
licensees, (iii) restricting the availability of the attribution exemption
when a single party controls more than 50% of the voting stock; and (iv)
considering LMAs, joint sales agreements, debt and non-voting stock interests
to be attributable under certain circumstances. No decision has been made by
the FCC in these matters. At this time, no determination can be made as to
what effect, if any, this proposed rulemaking will have on the Company.
The Congress and the FCC from time to time have under consideration, and may
in the future consider and adopt, new laws, regulations and policies regarding
a wide variety of matters that could, directly or indirectly, affect the
operation, ownership and profitability of the Company's radio stations, result
in the loss of audience share and revenue for the Company's radio stations,
and affect the ability of the Company to acquire additional radio stations or
finance such acquisitions. Such matters include: (i) proposals to impose
spectrum use or other fees on FCC licensees; (ii) the FCC's equal employment
opportunity rules and matters relating to political broadcasting; (iii)
technical and frequency allocation matters; (iv) changes in the FCC's cross
interest, multiple ownership and cross-ownership policies; (v) changes to
broadcast technical requirements; (vi) proposals to allow telephone or cable
television companies to deliver audio and video programming to the home
through existing phone lines; (vii) proposals to limit the tax deductibility
of advertising expenses by advertisers; and (viii) proposals to auction the
right to use the radio broadcast spectrum to the highest bidder, instead of
granting FCC licenses and subsequent license renewals without such bidding.
The Balanced Budget Act of 1997, enacted August 5, 1997, requires the FCC to
resolve mutually-exclusive requests for use of the commercial radio broadcast
spectrum by auction under most circumstances. On November 25, 1997, the FCC
adopted a Notice of Proposed Rulemaking (the "November 25, 1997 NPRM") seeking
to implement its statutory auction authority. The Balanced Budget Act of 1997
requires the use of auctions to resolve mutually-exclusive requests for new
stations or major changes in the facilities of existing stations filed after
June 30, 1997, where the stations propose to use the commercial radio
broadcast spectrum. The FCC may use auctions to resolve such mutually-
exclusive requests filed before July 1, 1997, which remain pending after a
mandated period ending February 1, 1998, in which the applicants may enter
into settlement agreements to resolve the mutual exclusivity of their
applications. In connection with the November 25, 1997 NPRM, the FCC has
imposed a temporary freeze on the filing of most requests for new commercial
broadcast stations or for major changes of existing commercial broadcast
facilities until it adopts auction rules.
The Company cannot predict whether any proposed changes will be adopted or
what other matters might be considered in the future, nor can it judge in
advance what impact, if any, the implementation of any of these proposals or
changes might have on its business.
50
<PAGE>
The FCC, on April 2, 1997, awarded two licenses for the provision of
satellite DARS. Under rules adopted for this service, licensees must begin
construction of their space stations within one year, begin operating within
four years, and be operating their entire system within six years. The Company
cannot predict whether the service will be subscription or advertiser
supported. Digital technology also may be used in the future by terrestrial
radio broadcast stations either on existing or alternate broadcasting
frequencies, and the FCC has stated that it will consider making changes to
its rules to permit AM and FM radio stations to offer digital sound following
industry analysis of technical standards. In addition, the FCC has authorized
an additional 100 kHz of bandwidth for the AM band and on March 17, 1997,
adopted an allotment plan for the expanded band that identified the 88 AM
radio stations selected to move into the band. At the end of a five-year
transition period, those licensees will be required to return to the FCC
either the license for their existing AM band station or the license for the
expanded AM band station.
The foregoing summary of certain provisions of the Communications Act and of
specific FCC rules and policies does not purport to be comprehensive.
Reference should be made to the Communications Act, the FCC's rules and the
public notices and rulings of the FCC for further information concerning the
nature and extent of federal regulation of radio broadcast stations.
Federal Antitrust Considerations. The FTC and the DOJ, which evaluate
transactions to determine whether those transactions should be challenged
under the federal antitrust laws, have been increasingly active recently in
their review of radio station acquisitions, particularly where an operator
proposes to acquire additional stations in its existing markets.
For an acquisition meeting certain size thresholds, the Hart-Scott-Rodino
Improvements Act ("HSR Act") and the rules promulgated thereunder require the
parties to file Notification and Report Forms with the FTC and the DOJ and to
observe specified waiting period requirements before consummating the
acquisition. At any time before or after the consummation of a proposed
acquisition, the FTC or the DOJ could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking to enjoin the acquisition or seeking divestiture of the business
acquired or other assets of the Company. Acquisitions that are not required to
be reported under the HSR Act may be investigated by the FTC or the DOJ under
the antitrust laws before or after consummation. In addition, private parties
may under certain circumstances bring legal action to challenge an acquisition
under the antitrust laws.
As part of its increased scrutiny of radio station acquisitions, the DOJ has
stated publicly that it believes that LMAs and other similar agreements
customarily entered into in connection with radio station transfers prior to
the expiration of the waiting period under the HSR Act could violate the HSR
Act.
Although the Company does not believe that its acquisition strategy as a
whole will be adversely affected in any material respect by antitrust review,
there can be no assurance that this will be the case.
PROPERTIES AND FACILITIES
The types of properties required to support the Company's radio stations
include offices, studios and tower and antenna sites. A station's studios are
generally housed with its office in a downtown or business district. The
Company's tower and antenna sites are generally selected to provide maximum
market coverage. The Network operations are supported by offices and studios
from which Network programming is originated or relayed from a remote point of
origination.
The studios and offices of the Company's stations, its Network operations
and its corporate headquarters are located in leased facilities. The Network
leases satellite transponders used for delivery of its programming. The
Company either owns or leases its radio station tower and antenna sites. The
Company does not anticipate difficulties in renewing those leases that expire
within the next several years or in obtaining other lease arrangements, if
necessary.
51
<PAGE>
The Company leases certain property from the Principal Shareholders or
trusts and partnerships created for the benefit of the Principal Shareholders
and their families. See "Certain Transactions." All such leases have cost of
living adjustments. Based upon management's assessment and analysis of local
market conditions for comparable properties, the Company believes such leases
do not have terms that vary materially from those that would have been
available from unaffiliated parties.
No one property is material to the Company's overall operations. The Company
believes that its properties are in good condition and suitable for its
operations; however, the Company continually evaluates opportunities to
upgrade its properties. The Company owns substantially all of its equipment,
consisting principally of transmitting antennae, transmitters, studio
equipment and general office equipment.
LITIGATION
Neither the Company nor any of its subsidiaries are parties to any material
pending legal proceedings, other than ordinary routine litigation incidental
to their consolidated business operations.
52
<PAGE>
MANAGEMENT
EXECUTIVE AND OTHER KEY OFFICERS AND DIRECTORS
The executive and other key officers and directors of the Company are as
follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<C> <C> <S>
President, Chief Executive Officer and
Edward G. Atsinger III...... 58 Director
Stuart W. Epperson.......... 61 Chairman of the Board
Eric H. Halvorson........... 48 Executive Vice President, Chief Operating
Officer, General Counsel and Director
Greg R. Anderson............ 50 President, Salem Radio Network
Dirk Gastaldo............... 42 Vice President and Chief Financial Officer
Kenneth L. Gaines........... 59 Vice President-Operations
Dave Armstrong.............. 52 Vice President-Operations and General
Manager/KKLA-FM/AM
Joe D. Davis................ 53 Vice President-Operations and General
Manager/WMCA-AM and WWDJ-AM
Kenneth W. Sasso............ 51 Vice President-Operations
Donald V. Cartmell.......... 67 Vice President-National Programming and
Ministry Relations
Richard A. Riddle........... 53 Director
Roland S. Hinz.............. 58 Director
</TABLE>
All directors hold office until the next annual meeting of shareholders
following their election, or until their successors are elected and qualified.
Officers are elected annually by the Board of Directors and serve at the
discretion of the Board.
Mr. Atsinger has been President, Chief Executive Officer and a Director of
the Company since its inception. He has been engaged in the ownership and
operation of radio stations since 1969 and is a member of the Board of
Directors of the National Religious Broadcasters.
Mr. Epperson has been Chairman of the Company since its inception. Mr.
Epperson has been engaged in the ownership and operation of radio stations
since 1961. In addition, he is a member of the Board of Directors of the
National Religious Broadcasters. Mr. Epperson is married to Nancy A. Epperson
who is Mr. Atsinger's sister.
Mr. Halvorson has been Chief Operating Officer of the Company since 1995,
Executive Vice President of the Company since 1991 and a Director of the
Company since 1988. From 1991 to the present, Mr. Halvorson has also served as
the General Counsel of the Company. Mr. Halvorson was the managing partner of
the law firm of Godfrey & Kahn, S.C.-Green Bay from 1988 until 1991. From 1985
to 1988, he was Vice President and General Counsel of the Company. From 1976
until 1985, he was an associate and then a partner of Godfrey & Kahn, S.C.-
Milwaukee. Mr. Halvorson was a Certified Public Accountant with Arthur
Andersen & Co. from 1971 to 1973.
Mr. Anderson has been President of the Network since 1994. From 1993 to
1994, Mr. Anderson was the Vice President-General Manager of the Network. Mr.
Anderson was employed by Multimedia, Inc. from 1980 to 1993. After serving as
program director and general manager at Multimedia stations in Greenville,
Shreveport and Milwaukee, he was named Vice President, Operations, of the
Multimedia radio division in 1987 and was subsequently appointed as Executive
Vice President and group head of Multimedia's radio division.
Mr. Gastaldo has been Chief Financial Officer of the Company since 1993, and
a Vice President of the Company since 1992. From 1992 to 1993, Mr. Gastaldo
was Vice President-Administration of the Company, and from 1989 to 1991 he was
Manager-Internal Audit of the Company. He was a Certified Public Accountant
with Ernst & Young from 1978 to 1989.
53
<PAGE>
Mr. Gaines has been Vice President-Operations of the Company since 1994.
Prior to that time, he served as General Manager of KKLA-FM from 1992 to 1994
and General Manager of WYLL-FM from 1990 to 1992. Mr. Gaines has been involved
in the management of radio stations since 1964. He served as Executive Vice
President of Commonwealth Communications from 1988 to 1990, Vice President of
Penn Communications from 1985 to 1988, Executive Vice President of Broadstreet
Communications from 1974 to 1985 and Vice President and General Manager of
Metromedia from 1964 to 1974.
Mr. Armstrong has been Vice President-Operations of the Company since 1996
and General Manager of KKLA-FM/AM since 1994. He has also supervised
operations of KLTX-AM since January 1997. Mr. Armstrong has 28 years of radio
broadcast experience and has been general manager of stations in Santa Ana and
Orange, California.
Mr. Davis has been Vice President-Operations of the Company since 1996 and
General Manager of WMCA-AM since 1989. He has also been the General Manager of
WWDJ-AM since 1994. He has previously served as Vice President and Executive
Director of Christian Fund for the Disabled as well as President of Practice
Resources, Inc., Davis Eaton Corporation and Vintage Specialty Advertising
Company.
Mr. Sasso has been Vice President-Operations of the Company since 1996.
Prior to that time, he served as General Manager of the Company's Colorado
Springs stations from 1994 to present and General Manager of the Company's
Denver stations from 1995 to 1996. Mr. Sasso is the former owner of eight
radio stations in Florida, Mississippi and Louisiana which were sold in 1989.
From 1969 to 1979 he served in various radio management capacities for King
Broadcasting and The American Broadcasting Companies.
Mr. Cartmell has been Vice President-National Programming and Ministry
Relations of the Company since 1996. He served as Vice President-Operations of
the Company from 1988 to 1996 and as General Manager of KLTX-AM from 1987 to
1988. Prior to joining the Company, Mr. Cartmell was Vice President and
Director of Marketing of Interstate Broadcasting Company.
Mr. Riddle has been a Director of the Company since September, 1997. Mr.
Riddle is an independent businessman specializing in providing financial
assistance and consulting to manufacturing companies. He was President and
majority shareholder of I. L. Walker Company from 1988 to 1997 when the
company was sold. He also was Chief Operating Officer and majority shareholder
of Richter Manufacturing from 1970 to 1987.
Mr. Hinz has been a Director of the Company since September, 1997. Mr. Hinz
has been the owner and President of Hi-Torque Publishing Company, a publisher
of magazines covering the motorcycling and biking industries, since 1981. He
is active in a number of non-profit organizations and serves as Chairman of
the Fund Development Committee of English Language Institute China. Mr. Hinz
also serves on the Board of Directors of Gordon Conwell Seminary.
54
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth all compensation paid by the Company for the
fiscal year ended December 31, 1997 to the Company's Chief Executive Officer
and the four highest paid executive officers of the Company.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
1997 ANNUAL COMPENSATION
----------------------------------
OTHER ANNUAL
COMPENSATION
-----------------
NAME AND PRINCIPAL POSITIONS SALARY BONUS 401(K) OTHER
---------------------------- -------- ------- ------ --------
<S> <C> <C> <C> <C>
Edward G. Atsinger III, President,
Chief Executive Officer and
Director............................ $400,000 $ -- $ -- $890,192(1)
Stuart W. Epperson, Chairman of the
Board............................... 400,000 -- -- 890,192(1)
Eric H. Halvorson, Executive Vice
President,
Chief Operating Officer and
Director............................ 270,000 12,500 950(2) --
Dave Armstrong, Vice President-
Operations.......................... 163,683 -- 19(2) --
Greg R. Anderson, Vice President;
President, the Network.............. 162,300 -- 950(2) --
</TABLE>
- ---------------------
(1) Tax reimbursement payments made to satisfy individual federal and state
income tax liabilities generated by New Inspiration and Golden Gate as a
result of their S corporation status. See "Business--Corporate Structure
and Reorganization."
(2) Represents employer matching contributions to individuals' 401(k)
accounts.
EMPLOYMENT AGREEMENTS
Edward G. Atsinger III entered into an employment agreement with the Company
effective as of August 1, 1997, pursuant to which he will serve as President
and Chief Executive Officer of the Company for an annual salary of $400,000
and an annual bonus determined at the discretion of the Board of Directors,
for an initial period of three years. The employment agreement with Mr.
Atsinger provides the Company with a right of first refusal on corporate
opportunities, which might include acquisitions of radio stations in any
market in which the Company is interested, and includes a noncompete provision
for a period of two years from the cessation of Mr. Atsinger's employment with
the Company and a nondisclosure provision which is effective for the term of
the employment agreement and indefinitely thereafter. In addition to the
requirements of his employment agreement, since the inception of the Company
Mr. Atsinger has been obligated under applicable state law to first present
corporate opportunities to the Company before pursuing any such opportunity
himself. Under the terms of his employment agreement, Mr. Atsinger is also
entitled to participate in any benefit plans provided by the Company to its
employees.
Stuart W. Epperson entered into an employment agreement with the Company
effective as of August 1, 1997, pursuant to which he will serve as Chairman of
the Company for an annual salary of $400,000 and an annual bonus determined at
the discretion of the Board of Directors, for an initial period of three
years. The employment agreement with Mr. Epperson provides the Company with a
right of first refusal on corporate opportunities, which might include
acquisitions of radio stations in any market in which the Company is
interested, and includes a noncompete provision for a period of two years from
the cessation of Mr. Epperson's employment with the Company and a
nondisclosure provision which is effective for the term of the employment
agreement and indefinitely thereafter. In addition to the requirements of his
employment agreement, since the inception of the Company Mr. Epperson has been
obligated under applicable state law to first present corporate opportunities
to the Company before pursuing any such opportunity himself. Under the terms
of his employment agreement, Mr. Epperson is also entitled to participate in
any benefit plans provided by the Company to its employees.
Eric H. Halvorson entered into an employment agreement with the Company
effective as of November 1991, pursuant to which he serves as Executive Vice
President of the Company at an annual salary starting at
55
<PAGE>
$175,000, with annual increases of $11,000 to $14,000, for a period of seven
years. The agreement was subsequently amended in April 1996 to extend the term
for one additional year and increase the base salary to $255,000, $270,000 and
$285,000 for 1996, 1997 and 1998, respectively, and was again amended in July
1997 to extend the term through December 2003 at a base salary of $300,000 for
each year after 1998. The employment agreement provides that Mr. Halvorson may
participate in any benefit plans provided by the Company to its employees. Mr.
Halvorson also entered into a deferred compensation agreement with the Company
effective as of November 1991, pursuant to which Mr. Halvorson will receive
(i) 50% of the average of his three highest years of compensation, payable for
a period of ten consecutive years, if he remains employed by the Company until
age 60, or (ii) a discounted amount, based upon the compensation he would have
received if he had remained employed until age 60, if his employment
terminates before he reaches age 60 by reason of death, disability or
termination by the Company without cause.
Greg R. Anderson entered into an employment agreement with SRN effective as
of October 1994, pursuant to which he serves as President of SRN for a period
of three years at an annual salary of $120,000, $126,000 and $132,300 for each
year during the term of the agreement, respectively. The agreement was
subsequently amended in December 1995 to increase Mr. Anderson's base salary
to $162,300 and was amended again in August 1997 to extend the term for three
additional years. Mr. Anderson is also entitled to participate in any benefit
plans provided by SRN to its employees.
401(K) PLAN
The Company adopted a 401(k) Savings Plan ("Retirement Plan") in 1993 for
the purpose of providing, at the option of the employee, retirement benefits
to full-time employees of the Company and its subsidiaries. Contributions to
the Retirement Plan are made by the employee and, on a voluntary basis, by the
Company. The Company currently matches 10% of the employee's contributions to
the Retirement Plan which do not exceed 10% of the employee's annual
compensation. The Company made a contribution of $80,357 to the Retirement
Plan during the year ended December 31, 1997.
CERTAIN TRANSACTIONS
REORGANIZATION
To effect the Reorganization, the Shareholders contributed their shares of
stock in New Inspiration and Golden Gate to the Company (which in turn
effected the contribution to the Company of the Shareholders' interests in
Beltway) in exchange for new shares in the Company. The share conversion
factors were based on the ratio of asset values of the Company, New
Inspiration and Golden Gate to the combined asset value of such entities. The
asset values were determined by an independent radio station broker. Following
the Reorganization, Mrs. Epperson, who had been a 50% owner of New
Inspiration, became a shareholder of the Company. All of the outstanding stock
of the Company is currently owned by Mr. Atsinger (50%), Mr. Epperson (36.8%)
and Mrs. Epperson (13.2%). See "Securities Ownership of Certain Beneficial
Owners." See "Business--Corporate Structure and Reorganization."
DISTRIBUTIONS TO SHAREHOLDERS
In connection with the recent Reorganization, New Inspiration and Golden
Gate, which were each S corporations prior to the Reorganization, distributed
cash and promissory notes to their respective shareholders in the aggregate
amount of $8.5 million. Of such amount, $1.8 million, equal to the estimated
federal and state income tax liability of the shareholders on the earnings of
New Inspiration and Golden Gate, was paid by New Inspiration and Golden Gate
in cash. The remainder, $6.7 million, was paid in the form of promissory notes
payable to the shareholders (the "Shareholder Notes") immediately following
the closing of the Offering. After the closing of the Offering, the Company
borrowed $6.7 million under the Credit Agreement and applied this amount to
the payment of certain indebtedness owed to New Inspiration and Golden Gate by
the Company. The cash made available from the repayment of such loans was then
used by New Inspiration and Golden Gate to pay the Shareholder Notes. See
"Business--Corporate Structure and Reorganization."
56
<PAGE>
CERTAIN LOAN TRANSACTIONS
In December 1996, the Principal Shareholders repaid certain promissory notes
and accrued interest owed to the Company in the approximate amount of $4.8
million (approximately $3.4 million principal and $1.4 million accrued
interest). The Company had made these loans (approximately $1.7 million each
to Messrs. Atsinger and Epperson) to the Principal Shareholders in 1991 to
facilitate the repayment of personal indebtedness they had incurred in
connection with prior radio station acquisitions. The notes bore interest at
the Applicable Federal Rate. The repayments were made with the proceeds of a
distribution to the Principal Shareholders from Golden Gate and New
Inspiration of previously taxed S corporation income. Principal and accrued
interest, divided equally between Messrs. Atsinger and Epperson, amounted to
approximately $4.6 million at December 31, 1995. Interest earned on these
notes in 1996, 1995 and 1994 was $188,687, $213,003 and $174,452,
respectively.
In December 1996, the Company borrowed $1.9 million from Mr. Atsinger, who
owns 50% of the outstanding stock of the Company. The note was repaid,
including interest at 9 1/4%, in January 1997, with proceeds from a borrowing
under the Credit Agreement.
In July 1997, the Company canceled certain indebtedness owed to the Company
by Eric H. Halvorson, an executive officer and director of the Company, in the
amount of $25,000 plus accrued interest calculated at the Applicable Federal
Rate. The Company also made a distribution to Mr. Halvorson in an amount equal
to the tax liability he incurred as a result of the cancellation of this debt.
In December 1997, the Company borrowed $2.0 million from Mr. Atsinger
pursuant to a promissory note with a revolving principal amount of up to $2.5
million. The note is a demand note which bears interest at a floating rate
that is currently 9%. During the term of the note, the interest rate will at
all times be 1% lower than the rate for base rate borrowings under the
Company's Credit Agreement. The Company will borrow under the Credit Agreement
when Mr. Atsinger demands repayment. The note is outstanding as of the date
hereof.
In January 1998, the Company borrowed $1.5 million from Mr. Epperson
pursuant to a promissory note with a revolving principal amount of up to $2.5
million. The note is a demand note which bears interest at floating rate that
is currently 9%. During the term of the note, the interest rate will at all
times be 1% lower than the rate for base rate borrowings under the Company's
Credit Agreement. The Company will borrow under the Credit Agreement when Mr.
Epperson demands repayment. The note is outstanding as of the date hereof.
57
<PAGE>
LEASES WITH PRINCIPAL SHAREHOLDERS
The Company leases the studios and tower and antenna sites described in the
table below from the Principal Shareholders or trusts and partnerships created
for the benefit of the Principal Shareholders and their families. All such
leases have cost of living adjustments. Based upon management's assessment and
analysis of local market conditions for comparable properties, the Company
believes that such leases do not have terms that vary materially from those
that would have been available from unaffiliated parties.
<TABLE>
<CAPTION>
STATION
CALL CURRENT ANNUAL EXPIRATION
MARKET LETTERS FACILITIES LEASED RENTAL DATE(1)
------ ------- ----------------- -------------- ----------
<S> <C> <C> <C> <C>
Leases with both
Principal Shareholders:
Philadelphia, PA...... WFIL-AM/ Antenna/Tower/Studios $ 110,520 2004
WZZD-AM
Pittsburgh, PA........ WORD-FM/ Antenna/Tower 26,772 2003
WPIT-AM
Columbus, OH.......... WRFD-AM Antenna/Tower 44,220 2002
Chicago, IL........... WYLL-FM Antenna/Tower 41,460 2002
Denver-Boulder, CO.... KNUS-AM Antenna/Tower 18,480 2006
Houston-Galveston, TX. KKHT-FM/ Antenna/Tower 50,772 2005
KENR-AM
San Antonio, TX....... KSLR-AM Antenna/Tower 30,705 2007
Seattle-Tacoma, WA.... KGNW-AM Antenna/Tower 35,928 2002
KLFE-AM Antenna/Tower 26,112 2004
Portland, OR.......... KPDQ-AM/FM Studios 60,804 2002
Antenna/Tower 13,824 2002
Sacramento, CA........ KFIA-AM Antenna/Tower 79,764 2006
Los Angeles, CA....... KKLA-AM Studios 22,800 2002
Antenna/Tower 22,800 2002
KLTX-AM Antenna/Tower 138,130 2002
San Francisco, CA..... KFAX-AM Antenna/Tower 143,604 2003
Minneapolis, MN....... KKMS-AM Studios 66,000 2006
Tower/Antenna 66,000 2006
Cleveland, OH......... WHK-AM Antenna/Tower 33,600 2008
Akron, OH............. WHLO-AM Antenna/Tower 12,000 2007
Cincinnati, OH........ WTSJ-AM Antenna/Tower/Studios 24,000 2007
Canton, OH............ WHK-FM Antenna/Tower 12,000 2007
----------
1,080,345
----------
Leases with Mr.
Atsinger:
Los Angeles, CA....... KAVC-FM Antenna/Tower 12,348 2002
San Diego, CA......... KPRZ-FM Antenna/Tower 45,576 2002
----------
57,924
----------
$1,138,269
==========
</TABLE>
- ---------------------
(1) The expiration date reported for certain facilities represents the
expiration date assuming exercise of lease term extensions at the Company's
option.
Rental expense paid by the Company to the Principal Shareholders or trusts or
partnerships created for the benefit of their families for 1996, 1995 and 1994
amounted to approximately $827,000, $690,000 and $574,000, respectively. Rental
expense paid by the Company to Mr. Atsinger or trusts created for the benefit
of his family for 1996, 1995 and 1994 amounted to approximately $57,000,
$56,000 and $67,000, respectively.
58
<PAGE>
MANAGEMENT SERVICES CONTRACT
The Company provides management services for Sonsinger, Inc. ("Sonsinger")
which is the licensee of KKOL-AM, Seattle. The Principal Shareholders are the
owners of 100% of the outstanding shares of Sonsinger. The Principal
Shareholders and the Company are parties to an Option to Purchase Agreement
whereunder the Company has been granted an option to purchase KKOL-AM from the
Principal Shareholders at any time on or before December 31, 1999 at a price
equal to the lower of the cost of the station to the Principal Shareholders,
$1.4 million, or its fair market value as determined by an independent
appraisal. Pursuant to an LMA with Sonsinger, entered into June 13, 1997, the
Company programs KKOL-AM and sells all the airtime. The Company retains all of
the revenue (approximately $20,400 from June 13, 1997 through December 31,
1997) and incurs all of the expenses (approximately $56,500 for the same
period) related to the operation of KKOL-AM and pays no fees or rent under the
LMA.
TOWER CONSTRUCTION CONTRACT
In October 1997, in order to reduce the indebtedness under the Credit
Agreement, the Company assigned its contract with a tower construction company
to build a broadcast tower in Houston to the Principal Shareholders, subject
to the Principal Shareholders obtaining financing. The Principal Shareholders
will reimburse the Company for its costs and expenses, which amounted to
approximately $2.9 million as of September 30, 1997. The antenna for the
Company's station in Houston, KKHT-FM, will be located on the tower and the
Company will pay rent to the Principal Shareholders. The Company and the
Principal Shareholders have not agreed upon the rental rate. The Company
intends to agree upon a rate based on management's assessment and analysis of
local market conditions for comparable properties, such rate to be no less
favorable to the Company than would be available in a comparable transaction
with an unaffiliated party. Such agreement is subject to approval of a
majority of the disinterested members of the Board of Directors.
RADIO STATIONS OWNED BY THE EPPERSONS
Mrs. Epperson has personally acquired a radio station in a small market in
Virginia and has applied to the FCC for authorization to acquire a second
station in that market. Additionally, Mr. Epperson has personally acquired
certain radio stations in small markets in North Carolina. These Virginia and
North Carolina markets are not currently served by stations owned and operated
by the Company. Acquisitions in such markets are not part of the Company's
current business and acquisition strategies.
59
<PAGE>
SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information regarding the ownership
of the Company's common stock by each of the Shareholders, who currently own
all the outstanding common stock of the Company.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF SHARES
NAME OF INDIVIDUAL OR ENTITY(1) BENEFICIALLY OWNED OUTSTANDING
------------------------------- ------------------ --------------------
<S> <C> <C>
Edward G. Atsinger III.............. 40,836 50.00%
Stuart W. Epperson(2)............... 30,092 36.80%
Nancy A. Epperson(2)................ 10,744 13.20%
------ ------
81,672 100.00%
====== ======
</TABLE>
- ---------------------
(1) The address of each of Mr. Atsinger and Mr. and Mrs. Epperson is 4880
Santa Rosa Road, Suite 300, Camarillo, California 93012.
(2) Stuart and Nancy Epperson are husband and wife.
DESCRIPTION OF CERTAIN INDEBTEDNESS
As of September 25, 1997, the Company entered into a credit agreement with
The Bank of New York (the "Bank") as the administrative agent for the $75.0
million senior secured reducing revolving credit facility (the "Credit
Agreement"). At September 30, 1997, taking into account the leverage ratio
requirement in the Credit Agreement, the Company had approximately $19.9
million available to it under the Credit Agreement. Taking into account
certain restrictions under the Credit Agreement, the Company is not currently
able to borrow for acquisitions.
Revolving Credit Commitment. The Company is, subject to certain conditions,
able to draw upon the revolving credit available under the Credit Agreement
for Permitted Acquisitions (as defined in the Credit Agreement), working
capital and other permitted uses. The commitments under the Credit Agreement
are to be reduced by $10.0 million in each of the years 1999 through 2003 and
by $25.0 million in 2004. Any remaining principal balance will be due in
August, 2004. At the Company's election, any portion of revolving loans which
have been prepaid or repaid may be reborrowed up to the current commitment
amount, and the commitment may be permanently reduced in whole or in part.
Prepayments. Mandatory reductions in the credit facility established by the
Credit Agreement are required under certain circumstances. Commitments will be
permanently reduced by the following amounts: (i) 100% of the net cash
proceeds in excess of $1.0 million received from station sales or exchanges
which are not reinvested within 360 days, (ii) to the extent that commitments
under the Credit Agreement are at least $50.0 million, 100% of the net cash
proceeds received from the issuance of equity when the Company's Total
Leverage Ratio (as defined in the Credit Agreement) is greater than 6.0 to 1,
and 50% of the net cash proceeds received from the issuance of equity when the
Company's Total Leverage Ratio is greater than 4.5 to 1 but less than 6.0 to
1, (iii) 50% of Excess Cash Flow (as defined in the Credit Agreement)
calculated for each fiscal year of the Company when the Total Leverage Ratio
is greater than or equal to 3.5 to 1, (iv) 100% of all insurance or
condemnation recoveries in excess of amounts used to replace or restore any
properties or which are not used to replace or restore properties within one
year after any casualty, and (v) in the event a radio station ceases operation
for a period of more than 30 days by reason of FCC action, an amount equal to
the Total Leverage Ratio (up to a ratio of 6.0 to 1) multiplied by the
Operating Cash Flow (as defined in the Credit Agreement) of the station in
question, unless such station was acquired within the preceding 18-month
period in which case such amount will equal the purchase price of such
station. Mandatory reductions will be applied among the remaining scheduled
commitment reductions in inverse order. Loans shall be prepaid to the extent
necessary to assure outstanding loans do not exceed the reduced commitment.
60
<PAGE>
Interest Rates. The Credit Agreement gives the Company the option to borrow
at either the Alternate Base Rate, defined as the higher of the Bank's Prime
Rate and the Federal Funds Rate plus 0.5%, or the LIBOR Rate, in each case
plus the Applicable Margin. The Applicable Margins for the Credit Agreement
will range between 0% and 1.75% for the Alternate Base Rate and 1.00% and
3.00% for the LIBOR Rate, depending on the Total Leverage Ratio from time to
time.
Fees. The Company is required to pay an annual fee, payable quarterly, on
the unused portion of the facility at the annual rate of 0.50% (if the Total
Leverage Ratio is greater than or equal to 4.5 to 1) or 0.375% (if the Total
Leverage Ratio is less than 4.5 to 1).
Guaranty and Security. The Credit Agreement is guaranteed by each of the
Company's present and future direct and indirect subsidiaries. Subject only to
certain permitted liens incurred in the ordinary course of business, the
Credit Agreement is secured by (i) a pledge of all of the capital stock of the
Company's present and future direct and indirect subsidiaries, (ii) a pledge
of all of the assets of the Company and its present and future direct and
indirect subsidiaries and (iii) all proceeds of the foregoing.
Change of Control. A change in control or ownership is an event of default
under the Credit Agreement. Under the Credit Agreement, a change in control or
ownership occurs if (i) Mr. Epperson and/or Mr. Atsinger do not control in the
aggregate at least 75% of the total voting power of all classes of capital
stock of the Company, (ii) neither Mr. Epperson nor Mr. Atsinger is Chief
Executive Officer of the Company or (iii) a Change of Control (as defined in
the Indenture for the Notes) occurs.
Covenants. The Credit Agreement contains certain restrictive covenants
customary for credit facilities of the size, type and purpose contemplated
which, among other things, and with certain exceptions, limits the Company's
ability to incur additional indebtedness, enter into affiliate transactions,
pay dividends, consolidate, merge or effect certain asset sales, make certain
investments or loans and change the nature of its business. The Credit
Agreement also requires the satisfaction by the Company of certain financial
covenants, which will require the maintenance of specified financial ratios
and compliance with certain financial tests, including ratios for maximum
leverage, minimum interest coverage, minimum debt service coverage and minimum
fixed charge coverage.
Events of Default. The Credit Agreement contains certain events of default
customary for credit facilities of the size, type and purpose contemplated,
including without limitation: (i) failure to pay, when and as required to be
paid, principal, interest or any other amount payable; (ii) failure to perform
or observe any covenant; (iii) material inaccuracy with respect to certain
representations made in or in connection with the Credit Agreement; (iv)
insolvency or bankruptcy proceedings; (v) change of control; (vi) revocation
or failure to renew any license material to the Company's business; and (vii)
defaults under other outstanding indebtedness of the Company. Upon the
occurrence of an event of default, subject to certain limitations, the
Company's obligations under the Credit Agreement which are at that time
outstanding may be automatically accelerated.
61
<PAGE>
DESCRIPTION OF THE NOTES
The terms of the Notes are identical in all material respects to the Old
Notes, except for certain transfer restrictions and registration rights
relating to the Old Notes. The description of the Notes contained herein
assumes that all Old Notes are exchanged for Notes in the Exchange Offer. To
the extent that Old Notes remain outstanding after the consummation of the
Exchange Offer, Old Notes and Notes will be redeemed or repurchased pro rata
pursuant to the provisions contained herein. In addition, as the Old Notes
were, and the Notes will be, issued under the Indenture, to the extent that
Old Notes remain outstanding after consummation of the Exchange Offer, any
action described herein as permitted or required to be taken thereunder by a
specified portion of the holders of the Notes may only be taken by such
portion of the holders of the Old Notes and the Notes, counted as a single
series.
The definitions of certain terms used in the following summary are set forth
below under "--Certain Definitions." For purposes of this summary, the term
"Company" refers only to Salem Communications Corporation and not to any of
its Subsidiaries.
The Notes offered hereby will be issued under an Indenture dated as of
September 25, 1997 among the Company, the Guarantors and The Bank, as trustee
(the "Trustee"). The following summary of the material provisions of the
Indenture does not purport to be complete, and where reference is made to
particular provisions of the Indenture, such provisions, including the
definitions of certain terms, are qualified by reference to all of the
provisions of the Indenture filed as an exhibit to the Registration Statement
and those terms made a part of the Indenture by reference to the Trust
Indenture Act. For definitions of certain capitalized terms used in the
following summary, see "--Certain Definitions." A copy of the Indenture may be
obtained from the Company or the Initial Purchasers.
GENERAL
The Notes will mature on October 1, 2007, will be limited to $150.0 million
aggregate principal amount, and will be unsecured senior subordinated
obligations of the Company. Each Note will bear interest at the rate set forth
on the cover page hereof from the issue date or from the most recent interest
payment date to which interest has been paid, payable semiannually on April 1
and October 1 each year, commencing April 1, 1998, to the Person in whose name
the Note (or any predecessor Note) is registered at the close of business on
the March 15 or September 15 next preceding such interest payment date.
Payment of the Notes is guaranteed by the Guarantors, jointly and severally,
on a senior subordinated basis. The Guarantors are comprised of all of the
Subsidiaries of the Company. See "--Guarantees."
Principal of, premium, if any, and interest on the Notes will be payable,
and the Notes will be exchangeable and transferable (subject to compliance
with transfer restrictions imposed by applicable securities laws for so long
as the Notes are not registered for resale under the Securities Act), at the
office or agency of the Company maintained for such purposes (which initially
will be the Trustee); provided, however, that payment of interest may be made
at the option of the Company by check mailed to the Person entitled thereto as
shown on the security register. The Notes will be issued only in fully
registered form without coupons, in denominations of $1,000 and any integral
multiple thereof. No service charge will be made for any registration of
transfer, exchange or redemption of Notes, except in certain circumstances for
any tax or other governmental charge that may be imposed in connection
therewith.
OPTIONAL REDEMPTION
The Notes will be subject to redemption at any time on or after October 1,
2002, at the option of the Company, in whole or in part, on not less than 30
nor more than 60 days' prior notice by first-class mail in amounts of $1,000
or an integral multiple thereof at the following redemption prices (expressed
as percentages
62
<PAGE>
of the principal amount), if redeemed during the 12-month period beginning
October 1 of the years indicated below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR PRICE
---- ----------
<S> <C>
2002.......................................................... 104.75%
2003.......................................................... 103.17%
2004.......................................................... 101.59%
2005 and thereafter........................................... 100.00%
</TABLE>
in each case together with accrued and unpaid interest, if any, to the
redemption date (subject to the right of holders of record on relevant record
dates to receive interest due on an interest payment date).
In addition, at any time on or prior to October 1, 2000, the Company may
redeem up to $50.0 million aggregate principal amount of Notes with the net
proceeds of a Public Equity Offering of the Company at a redemption price
equal to 109.50% of the aggregate principal amount thereof, together with
accrued and unpaid interest, if any, to the redemption date (subject to the
right of holders of record on relevant record dates to receive interest due on
an interest payment date); provided that not less than $100.0 million
aggregate principal amount of Notes remains outstanding immediately after the
occurrence of such redemption.
If less than all of the Notes are to be redeemed, the Trustee shall select
the Notes or portions thereof to be redeemed pro rata, by lot or by any other
method the Trustee shall deem fair and reasonable.
SINKING FUND
There will be no sinking fund.
SUBORDINATION
The payment of the principal of, premium, if any, and interest on, the Notes
will be subordinated, as set forth in the Indenture, in right of payment to
the prior payment in full of all Senior Indebtedness in cash or cash
equivalents or in any other form as acceptable to the holders of Senior
Indebtedness. The Notes will be senior subordinated indebtedness of the
Company ranking pari passu with all other existing and future senior
subordinated indebtedness of the Company and senior to all existing and future
Subordinated Indebtedness of the Company.
During the continuance of any default in the payment of any Designated
Senior Indebtedness, no payment (other than payments previously made pursuant
to the provisions described under "--Defeasance or Covenant Defeasance of
Indenture") or distribution of any assets of the Company of any kind or
character (excluding certain permitted equity interests or subordinated
securities) shall be made on account of the principal of, premium, if any, or
interest on, the Notes or any other indenture obligation or on account of the
purchase, redemption, defeasance or other acquisition of, the Notes unless and
until such default has been cured, waived or has ceased to exist or such
Designated Senior Indebtedness shall have been discharged or paid in full in
cash or cash equivalents or in any other form as acceptable to the holders of
such Designated Senior Indebtedness.
During the continuance of any non-payment default with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated (a "Non-payment Default") and after the receipt by the Trustee
from a representative of the holder of any Designated Senior Indebtedness of a
written notice of such default, no payment (other than payments previously
made pursuant to the provisions described under "--Defeasance or Covenant
Defeasance of Indenture") or distribution of any assets of the Company of any
kind or character (excluding certain permitted equity or subordinated
securities) may be made by the Company on account of the principal of,
premium, if any, or interest on, the Notes or any other indenture obligation
or on account of the purchase, redemption, defeasance or other acquisition of,
the Notes for the period specified below (the "Payment Blockage Period").
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The Payment Blockage Period shall commence upon the receipt of notice of the
Non-payment Default by the Trustee from a representative of the holder of any
Designated Senior Indebtedness and shall end on the earliest of (i) the first
date on which more than 179 days shall have elapsed since the receipt of such
written notice (provided such Designated Senior Indebtedness as to which
notice was given shall not theretofore have been accelerated), (ii) the date
on which such Non-payment Default (and all Non-payment Defaults as to which
notice is given after such Payment Blockage Period is initiated) are cured,
waived or ceased to exist or on which such Designated Senior Indebtedness is
discharged or paid in full in cash or cash equivalents or in any other form as
acceptable to the holders of Designated Senior Indebtedness or (iii) the date
on which such Payment Blockage Period (and all Non-payment Defaults as to
which notice is given after such Payment Blockage Period is initiated) shall
have been terminated by written notice to the Trustee from the representatives
of holders of Designated Senior Indebtedness initiating such Payment Blockage
Period, after which, in the case of clauses (i), (ii) and (iii), the Company
shall promptly resume making any and all required payments in respect of the
Notes, including any missed payments. In no event will a Payment Blockage
Period extend beyond 179 days from the date of the receipt by the Trustee of
the notice initiating such Payment Blockage Period (such 179-day period
referred to as the "Initial Period"). Any number of notices of Non-payment
Defaults may be given during the Initial Period; provided that during any 365-
day consecutive period only one Payment Blockage Period during which payment
of principal of, or interest on, the Notes may not be made may commence and
the duration of the Payment Blockage Period may not exceed 179 days. No Non-
payment Default with respect to Designated Senior Indebtedness which existed
or was continuing on the date of the commencement of any Payment Blockage
Period will be, or can be, made the basis for the commencement of a second
Payment Blockage Period, whether or not within a period of 365 consecutive
days, unless such default has been cured or waived for a period of not less
than 90 consecutive days.
If the Company fails to make any payment on the Notes when due or within any
applicable grace period, whether or not on account of the payment blockage
provisions referred to above, such failure would constitute an Event of
Default under the Indenture and would enable the holders of the Notes to
accelerate the maturity thereof. See "--Events of Default."
The Indenture provides that in the event of any insolvency or bankruptcy
case or proceeding, or any receivership, liquidation, reorganization or other
similar case or proceeding in connection therewith, relative to the Company or
to its creditors, as such, or its assets, or any liquidation, dissolution or
other winding up of the Company, whether voluntary or involuntary and whether
or not involving insolvency or bankruptcy, or any assignment for the benefit
of creditors or any other marshalling of assets or liabilities of the Company,
all Senior Indebtedness must be paid in full in cash or cash equivalents or in
any other manner acceptable to the holders of Senior Indebtedness, or
provision made for such payment, before any payment or distribution (excluding
distributions of certain permitted equity or subordinated securities) is made
on account of the principal of, premium, if any, or interest on the Notes.
By reason of such subordination, in the event of liquidation or insolvency,
creditors of the Company who are holders of Senior Indebtedness may recover
more, ratably, than the holders of the Notes, and funds which would be
otherwise payable to the holders of the Notes will be paid to the holders of
the Senior Indebtedness to the extent necessary to pay the Senior Indebtedness
in full in cash or cash equivalents or in any other manner acceptable to the
holders of Senior Indebtedness, and the Company may be unable to meet its
obligations fully with respect to the Notes.
Each Guarantee of a Guarantor will be an unsecured senior subordinated
obligation of such Guarantor, ranking pari passu with, or senior in right of
payment to, all other existing and future Indebtedness of such Guarantor that
is expressly subordinated to Guarantor Senior Indebtedness. The Indebtedness
evidenced by the Guarantees will be subordinated to Guarantor Senior
Indebtedness to the same extent as the Notes are subordinated to Senior
Indebtedness and during any period when payment on the Notes is blocked by
Designated Senior Indebtedness, payment on the Guarantees is similarly
blocked.
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"Senior Indebtedness" is defined as the principal of, premium, if any, and
interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy law
whether or not allowable as a claim in such proceeding) on any Indebtedness of
the Company (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or on a contingent basis,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall not be senior in right of payment to the
Notes. Without limiting the generality of the foregoing, "Senior Indebtedness"
shall include (i) the principal of, premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding
under any state, federal or foreign bankruptcy law whether or not allowable as
a claim in such proceeding) and all other obligations of every nature of the
Company from time to time owed to the lenders (or their agent) under the Bank
Credit Agreement (provided, however, that any Indebtedness under any
refinancing, refunding or replacement of the Bank Credit Agreement shall not
constitute Senior Indebtedness to the extent that the Indebtedness thereunder
is by its express terms subordinate to any other Indebtedness of the Company)
and (ii) Indebtedness under Interest Rate Agreements. Notwithstanding the
foregoing, "Senior Indebtedness" shall not include (i) Indebtedness evidenced
by the Notes, (ii) Indebtedness that is subordinate or junior in right of
payment, by contract or otherwise, to any Indebtedness of the Company (iii)
Indebtedness which when incurred and without respect to any election under
Section 1111(b) of Title 11 United States Code, is without recourse to the
Company, (iv) Indebtedness which is represented by Disqualified Equity
Interests, (v) any liability for foreign, federal, state, local or other taxes
owed or owing by the Company, (vi) Indebtedness of the Company to a Subsidiary
or any other Affiliate of the Company or any of such Affiliate's subsidiaries,
(vii) that portion of any Indebtedness which at the time of issuance is issued
in violation of the Indenture, (viii) Indebtedness evidenced by a guarantee of
any Subordinated Indebtedness or Pari Passu Indebtedness and (ix) Indebtedness
owed by the Company for compensation to employees or for services rendered by
employees.
"Guarantor Senior Indebtedness" is defined as the principal of, premium, if
any, and interest (including interest accruing after the filing of a petition
initiating any proceeding under any state, federal or foreign bankruptcy laws
whether or not allowable as a claim in such proceeding) on any Indebtedness of
any Guarantor (other than as otherwise provided in this definition), whether
outstanding on the date of the Indenture or thereafter created, incurred or
assumed, and whether at any time owing, actually or contingent, unless, in the
case of any particular Indebtedness, the instrument creating or evidencing the
same or pursuant to which the same is outstanding expressly provides that such
Indebtedness shall not be senior in right of payment to any Guarantor. Without
limiting the generality of the foregoing, "Guarantor Senior Indebtedness"
shall include (i) the principal of, premium, if any, and interest (including
interest accruing after the filing of a petition initiating any proceeding
under any state, federal or foreign bankruptcy law whether or not allowable as
a claim in such proceeding) and all other obligations of every nature of any
Guarantor from time to time owed to the lenders (or their agent) under the
Bank Credit Agreement; provided, however, that any Indebtedness under any
refinancing, refunding, or replacement of the Bank Credit Agreement shall not
constitute Guarantor Senior Indebtedness to the extent that the Indebtedness
thereunder is by its express terms subordinate to any other Indebtedness of
any Guarantor and (ii) Indebtedness under Interest Rate Agreements.
Notwithstanding the foregoing, "Guarantor Senior Indebtedness" shall not
include (i) Indebtedness evidenced by the Guarantees, (ii) Indebtedness that
is subordinate or junior in right of payment, by contract or otherwise, to any
Indebtedness of any Guarantor, (iii) Indebtedness which when incurred and
without respect to any election under Section 1111(b) of Title 11 United
States Code, is without recourse to any Guarantor, (iv) Indebtedness which is
represented by Disqualified Equity Interests, (v) any liability for foreign,
federal, state, local or other taxes owed or owing by any Guarantor to the
extent such liability constitutes Indebtedness, (vi) Indebtedness of any
Guarantor to a Subsidiary or any other Affiliate of the Company or any of such
Affiliate's subsidiaries, (vii) Indebtedness evidenced by any guarantee of any
Subordinated Indebtedness or Pari Passu Indebtedness, (viii) that portion of
any Indebtedness which at the time of issuance is issued in violation of the
Indenture and (ix) Indebtedness owed by any Guarantor for compensation to
employees or for services rendered by employees.
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"Designated Senior Indebtedness" is defined as (i) all Senior Indebtedness
outstanding under the Bank Credit Agreement and (ii) any other Senior
Indebtedness which is incurred pursuant to an agreement (or series of related
agreements) simultaneously entered into providing for indebtedness, or
commitments to lend, of at least $25.0 million at the time of determination
and is specifically designated in the instrument evidencing such Senior
Indebtedness or the agreement under which such Senior Indebtedness arises as
"Designated Senior Indebtedness" by the Company.
As of September 30, 1997, the aggregate amount of Senior Indebtedness that
ranked senior in right of payment to the Notes was $10.1 million. The
Company's and its Subsidiaries' ability to incur additional Indebtedness is
restricted as set forth under "--Certain Covenants--Limitation on
Indebtedness." Any Indebtedness which can be incurred may constitute
additional Senior Indebtedness or Guarantor Senior Indebtedness. See "Risk
Factors--Substantial Leverage; Subordination; Restrictions Imposed by Credit
Agreement; Asset Encumbrance."
GUARANTEES
The Guarantors will, jointly and severally, fully and unconditionally
guarantee the due and punctual payment of principal of, premium, if any, and
interest on, the Notes. Such guarantees will be subordinated to the Guarantor
Senior Indebtedness. See "--Subordination." As of September 30, 1997, the
aggregate amount of Guarantor Senior Indebtedness that ranked senior in right
of payment to the Guarantees was $10.1 million, all of which constitutes
outstanding indebtedness representing guarantees of Senior Indebtedness. In
addition, under certain circumstances described under "--Certain Covenants--
Limitations on Issuances of Guarantees of and Pledges for Indebtedness," the
Company is required to cause the execution and delivery of additional
Guarantees by Restricted Subsidiaries.
In addition, upon any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all
or substantially all of the assets of, any Guarantor, which is in compliance
with the Indenture, such Guarantor shall be released from all its obligations
under its Guarantee.
The Guarantors consist of all of the Company's existing Subsidiaries.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Indebtedness. The Company will not, and will not permit any
Restricted Subsidiary to, create, incur, assume or directly or indirectly
guarantee or in any other manner become directly or indirectly liable for
("incur") any Indebtedness (including Acquired Indebtedness), except that the
Company may incur Indebtedness and a Guarantor may incur Permitted Subsidiary
Indebtedness if, in each case, the Debt to Operating Cash Flow Ratio of the
Company and its Restricted Subsidiaries at the time of the incurrence of such
Indebtedness, after giving pro forma effect thereto, is 7.0 to 1 or less.
The foregoing limitation will not apply to the incurrence of any of the
following (collectively, "Permitted Indebtedness"):
(i) Indebtedness of the Company under the Bank Credit Agreement in an
aggregate principal amount at any one time outstanding not to exceed $75.0
million;
(ii) Indebtedness of the Company pursuant to the Notes and Indebtedness
of any Guarantor pursuant to a Guarantee;
(iii) Indebtedness of any Guarantor consisting of a guarantee of the
Company's Indebtedness under the Bank Credit Agreement;
(iv) Indebtedness of the Company or any Restricted Subsidiary outstanding
on the date of the Indenture and listed on Schedule I thereto;
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(v) Indebtedness of the Company owing to a Restricted Subsidiary,
provided that any Indebtedness of the Company owing to a Restricted
Subsidiary that is not a Guarantor is made pursuant to an intercompany note
in the form attached to the Indenture and is subordinated in right of
payment from and after such time as the Notes shall become due and payable
(whether at Stated Maturity, by acceleration or otherwise) to the payment
and performance of the Company's obligations under the Notes; provided
further, that any disposition, pledge or transfer of any such Indebtedness
to a Person (other than a disposition, pledge or transfer to a Wholly Owned
Restricted Subsidiary or a pledge to or for the benefit of the lenders
under the Bank Credit Agreement) shall be deemed to be an incurrence of
such Indebtedness by the obligor not permitted by this clause (v);
(vi) Indebtedness of a Wholly Owned Restricted Subsidiary owing to the
Company or another Wholly Owned Restricted Subsidiary; provided that, with
respect to Indebtedness owing to a Wholly Owned Restricted Subsidiary that
is not a Guarantor, (x) any such Indebtedness is made pursuant to an
intercompany note in the form attached to the Indenture and (y) any such
Indebtedness shall be subordinated in right of payment from and after such
time as the obligations under the Guarantee, if any, by such Wholly Owned
Restricted Subsidiary shall become due and payable to the payment and
performance of such Wholly Owned Restricted Subsidiary's obligations under
its Guarantee; provided, further, that (a) any disposition, pledge or
transfer of any such Indebtedness to a Person (other than a disposition,
pledge or transfer to the Company or a Wholly Owned Restricted Subsidiary
or pledge to or for the benefit of the lenders under the Bank Credit
Agreement) shall be deemed to be an incurrence of such Indebtedness by the
obligor not permitted by this clause (vi) and (b) any transaction pursuant
to which any Wholly Owned Restricted Subsidiary, which has Indebtedness
owing to the Company or any other Wholly Owned Restricted Subsidiary,
ceases to be a Wholly Owned Restricted Subsidiary shall be deemed to be the
incurrence of Indebtedness by such Wholly Owned Restricted Subsidiary that
is not permitted by this clause (vi);
(vii) guarantees of any Restricted Subsidiary made in accordance with the
provisions of "--Limitation on Issuances of Guarantees of and Pledges for
Indebtedness;"
(viii) obligations of the Company entered into in the ordinary course of
business pursuant to Interest Rate Agreements designed to protect the
Company against fluctuations in interest rates in respect of Indebtedness
of the Company as long as such obligations at the time incurred do not
exceed the aggregate principal amount of such Indebtedness then outstanding
or in good faith anticipated to be outstanding within 90 days of such
occurrence;
(ix) any renewals, extensions, substitutions, refundings, refinancings or
replacements (collectively, a "refinancing") of any Indebtedness described
in clauses (ii), (iii), (iv) and (v) above, including any successive
refinancings so long as the aggregate principal amount of Indebtedness
represented thereby is not increased by such refinancing (except, in the
case of Guarantees under clause (iii), which Guarantees do not exceed the
aggregate principal amount of the Bank Credit Agreement) plus the lesser of
(I) the stated amount of any premium or other payment required to be paid
in connection with such a refinancing pursuant to the terms of the
Indebtedness being refinanced or (II) the amount of premium or other
payment actually paid at such time to refinance the Indebtedness, plus, in
either case, the amount of expenses of the Company incurred in connection
with such refinancing and, in the case of Pari Passu Indebtedness or
Subordinated Indebtedness, such refinancing does not reduce the Average
Life to Stated Maturity or the Stated Maturity of such Indebtedness; and
(x) Indebtedness of the Company in addition to that described in clauses
(i) through (ix) above, and any renewals, extensions, substitutions,
refinancings, or replacements of such Indebtedness, so long as the
aggregate principal amount of all such Indebtedness shall not exceed $5.0
million.
Limitation on Restricted Payments. (a) The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly:
(i) declare or pay any dividend on, or make any distribution to holders
of, any of the Company's Equity Interests (other than dividends or
distributions payable solely in its Qualified Equity Interests);
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(ii) purchase, redeem or otherwise acquire or retire for value, directly
or indirectly, any Equity Interest of the Company or any Affiliate thereof
(except Equity Interests held by the Company or a Wholly Owned Restricted
Subsidiary);
(iii) make any principal payment on, or repurchase, redeem, defease,
retire or otherwise acquire for value, prior to any scheduled principal
payment, sinking fund or maturity, any Subordinated Indebtedness;
(iv) declare or pay any dividend or distribution on any Equity Interests
of any Subsidiary to any Person (other than the Company or any of its
Wholly Owned Restricted Subsidiaries);
(v) incur, create or assume any guarantee of Indebtedness of any
Affiliate (other than a Wholly Owned Restricted Subsidiary of the Company);
or
(vi) make any Investment in any Person (other than any Permitted
Investments) (any of the foregoing payments described in clauses (i)
through (vi), other than any such action that is a Permitted Payment,
collectively, "Restricted Payments") unless after giving effect to the
proposed Restricted Payment (the amount of any such Restricted Payment, if
other than cash, as determined by the Board of Directors of the Company,
whose determination shall be conclusive and evidenced by a board
resolution), (1) no Default or Event of Default shall have occurred and be
continuing and such Restricted Payment shall not be an event which is, or
after notice or lapse of time or both, would be, an "event of default"
under the terms of any Indebtedness of the Company or its Restricted
Subsidiaries; and (2) the aggregate amount of all such Restricted Payments
declared or made after the date of the Indenture does not exceed the sum
of:
(A) an amount equal to the Company's Cumulative Operating Cash Flow
less 1.4 times the Company's Cumulative Consolidated Interest Expense;
and
(B) the aggregate Net Cash Proceeds received after the date of the
Indenture by the Company from capital contributions (other than from a
Subsidiary) or from the issuance or sale (other than to any of its
Subsidiaries) of its Qualified Equity Interests (except, in each case,
to the extent such proceeds are used to purchase, redeem or otherwise
retire Equity Interests or Subordinated Indebtedness as set forth
below).
(b) Notwithstanding the foregoing, and in the case of clauses (ii) through
(vi) below, so long as there is no Default or Event of Default continuing, the
foregoing provisions shall not prohibit the following actions (clauses (i)
through (vi) being referred to as "Permitted Payments"):
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would be
permitted by the provisions of paragraph (a) of this Section and such
payment shall be deemed to have been paid on such date of declaration for
purposes of the calculation required by paragraph (a) of this Section;
(ii) any transaction with an officer or director of the Company entered
into in the ordinary course of business (including compensation or employee
benefit arrangements with any officer or director of the Company);
(iii) the repurchase, redemption, or other acquisition or retirement of
any Equity Interests of the Company in exchange for (including any such
exchange pursuant to the exercise of a conversion right or privilege
pursuant to which cash is paid in lieu of the issuance of fractional shares
or scrip), or out of the Net Cash Proceeds of, a substantially concurrent
issuance and sale for cash (other than to a Subsidiary) of other Qualified
Equity Interests of the Company; provided that the Net Cash Proceeds from
the issuance of such Qualified Equity Interests are excluded from clause
(2)(B) of paragraph (a) of this Section;
(iv) any repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness in exchange for, or out of the Net Cash Proceeds of, a
substantially concurrent issuance and sale for cash (other than to any
Subsidiary of the Company) of any Qualified Equity Interests of the
Company; provided that the Net Cash Proceeds from the issuance of such
shares of Qualified Equity Interests are excluded from clause (2)(B) of
paragraph (a) of this Section;
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(v) the repurchase, redemption, defeasance, retirement, refinancing or
acquisition for value or payment of principal of any Subordinated
Indebtedness (other than Disqualified Equity Interests) (a "refinancing")
through the issuance of new Subordinated Indebtedness of the Company, as
the case may be; provided that any such new Indebtedness (1) shall be in a
principal amount that does not exceed the principal amount so refinanced
or, if such Subordinated Indebtedness provides for an amount less than the
principal amount thereof to be due and payable upon a declaration or
acceleration thereof, then such lesser amount as of the date of
determination), plus the lesser of (I) the stated amount of any premium,
interest or other payment required to be paid in connection with such a
refinancing pursuant to the terms of the Indebtedness being refinanced or
(II) the amount of premium, interest or other payment actually paid at such
time to refinance the Indebtedness, plus, in either case, the amount of
expenses of the Company incurred in connection with such refinancing; (2)
has an Average Life to Stated Maturity greater than the remaining Average
Life to Stated Maturity of the Notes; (3) has a Stated Maturity for its
final scheduled principal payment later than the Stated Maturity for the
final scheduled principal payment of the Notes; and (4) is expressly
subordinated in right of payment to the Notes at least to the same extent
as the Indebtedness to be refinanced; and
(vi) the payment prior to maturity of Indebtedness outstanding on the
date of the Indenture evidenced by those certain Promissory Notes dated
March 1, 1994 by the Company to New Inspiration and by the Company to
Golden Gate, in each case, in connection with the payment prior to maturity
(which payment shall also be permitted under this clause (vi)) of
Indebtedness outstanding on the date of the Indenture evidenced by those
certain Promissory Notes dated August 12, 1997 by Golden Gate to Mr.
Atsinger and Mr. Epperson in the principal amount, in each case, of $1.23
million and by New Inspiration to Mr. Atsinger and Mrs. Epperson in the
principal amount, in each case, of $2.12 million.
Limitation on Transactions with Affiliates. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or suffer to exist any transaction or series of related
transactions (including, without limitation, the sale, purchase, exchange or
lease of assets, property or services) with any Affiliate of the Company
(other than the Company or a Wholly Owned Restricted Subsidiary) unless (a)
such transaction or series of transactions is in writing on terms that are no
less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable transaction in arm's-length
dealings with an unrelated third party and (b)(i) with respect to any
transaction or series of transactions involving aggregate payments in excess
of $1.0 million the Company delivers an officers' certificate to the Trustee
certifying that such transaction or series of related transactions complies
with clause (a) above and such transaction or series of related transactions
has been approved by a majority of the members of the Board of Directors of
the Company (and approved by a majority of Independent Directors or, in the
event there is only one Independent Director, by such Independent Director)
and (ii) with respect to any transaction or series of transactions involving
aggregate payments in excess of $5.0 million, an opinion as to the fairness to
the Company or such Restricted Subsidiary from a financial point of view
issued by an investment banking firm of national standing. Notwithstanding the
foregoing, this provision will not apply to (A) any transaction with an
officer or director of the Company entered into in the ordinary course of
business (including compensation or employee benefit arrangements with any
officer or director of the Company), (B) any transaction entered into by the
Company or one of its Wholly Owned Restricted Subsidiaries with a Wholly Owned
Restricted Subsidiary of the Company, and (C) transactions in existence on the
date of the Indenture and any renewal, replacement or extension thereof on
substantially similar terms.
Limitation on Senior Subordinated Indebtedness. The Company will not, and
will not permit any Guarantor to, directly or indirectly, create, incur,
issue, assume, guarantee or otherwise in any manner become directly or
indirectly liable for or with respect to or otherwise permit to exist any
Indebtedness that is subordinate in right of payment, by contract or
otherwise, to any Indebtedness of the Company or such Guarantor, as the case
may be, unless such Indebtedness is also pari passu with the Notes or the
Guarantee of such Guarantor, or subordinate in right of payment to the Notes
or such Guarantee to at least the same extent as the Notes or such Guarantee
are subordinate in right of payment to Senior Indebtedness or Guarantor Senior
Indebtedness, as the case may be, as set forth in the Indenture.
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Limitation on Liens. The Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, affirm or
suffer to exist any Lien of any kind upon any of its property or assets
(including any intercompany notes), now owned or acquired after the date of
the Indenture, or any income or profits therefrom, except if the Notes are
directly secured equally and ratably with (or prior to in the case of Liens
with respect to Subordinated Indebtedness) the obligation or liability secured
by such Lien, excluding, however, from the operation of the foregoing any of
the following:
(a) any Lien existing as of the date of the Indenture and listed on a
schedule thereto;
(b) any Lien arising by reason of (1) any judgment, decree or order of
any court, so long as such Lien is adequately bonded and any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or order shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have
expired; (2) taxes not yet delinquent or which are being contested in good
faith; (3) security for payment of workers' compensation or other
insurance; (4) good faith deposits in connection with tenders, leases,
contracts (other than contracts for the payment of money); (5) zoning
restrictions, easements, licenses, reservations, provisions, covenants,
conditions, waivers, restrictions on the use of property or minor
irregularities of title (and with respect to leasehold interests,
mortgages, obligations, liens and other encumbrances incurred, created,
assumed or permitted to exist and arising by, through or under a landlord
or owner of the leased property, with or without consent of the lessee),
none of which materially impairs the use of any parcel of property material
to the operation of the business of the Company or any Subsidiary or the
value of such property for the purpose of such business; (6) deposits to
secure public or statutory obligations, or in lieu of surety or appeal
bonds; (7) certain surveys, exceptions, title defects, encumbrances,
easements, reservations of, or rights of others for, rights of way, sewers,
electric lines, telegraph or telephone lines and other similar purposes or
zoning or other restrictions as to the use of real property not interfering
with the ordinary conduct of the business of the Company or any of its
Subsidiaries; or (8) operation of law in favor of mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of
business for sums which are not yet delinquent or are being contested in
good faith by negotiations or by appropriate proceedings which suspend the
collection thereof;
(c) any Lien now or hereafter existing on property of the Company or any
of its Restricted Subsidiaries securing Senior Indebtedness or Guarantor
Senior Indebtedness, in each case which Indebtedness is permitted under the
provisions of "Limitation on Indebtedness" and provided that the provisions
described under "Limitation on Issuances of Guarantees of and Pledges for
Indebtedness" are complied with;
(d) any Lien securing Acquired Indebtedness created prior to (and not
created in connection with, or in contemplation of) the incurrence of such
Indebtedness by the Company or any Subsidiary, in each case which
Indebtedness is permitted under the provisions of "Limitation on
Indebtedness"; provided that any such Lien only extends to the assets that
were subject to such Lien securing such Acquired Indebtedness prior to the
related transaction by the Company or its Subsidiaries;
(e) any Lien securing Permitted Subsidiary Indebtedness; and
(f) any extension, renewal, refinancing or replacement, in whole or in
part, of any Lien described in the foregoing clauses (a) through (e) so
long as the amount of security is not increased thereby.
Limitation on Sale of Assets. (a) The Company will not, and will not permit
any of its Restricted Subsidiaries to, directly or indirectly, consummate an
Asset Sale unless (i) at least 80% of the consideration from such Asset Sale
is received in cash and (ii) the Company or such Restricted Subsidiary
receives consideration at the time of such Asset Sale at least equal to the
Fair Market Value of the shares or assets sold (other than in the case of an
involuntary Asset Sale, as determined by the Board of Directors of the Company
and evidenced in a board resolution).
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(b) If all or a portion of the Net Cash Proceeds of any Asset Sale are not
required to be applied to repay permanently any Senior Indebtedness then
outstanding as required by the terms thereof, or the Company determines not to
apply such Net Cash Proceeds to the permanent prepayment of such Senior
Indebtedness or if no such Senior Indebtedness is then outstanding, then the
Company may within 12 months of the Asset Sale, invest the Net Cash Proceeds
in properties and assets that (as determined by the Board of Directors)
replace the properties and assets that were the subject of the Asset Sale or
in properties and assets that will be used in the businesses of the Company or
its Restricted Subsidiaries existing on the date of the Indenture or
reasonably related thereto. The amount of such Net Cash Proceeds neither used
to permanently repay or prepay Senior Indebtedness nor used or invested as set
forth in this paragraph constitutes "Excess Proceeds."
(c) When the aggregate amount of Excess Proceeds equals $5.0 million or
more, the Company shall apply the Excess Proceeds to the repayment of the
Notes and any Pari Passu Indebtedness required to be repurchased under the
instrument governing such Pari Passu Indebtedness as follows: (a) the Company
shall make an offer to purchase (an "Offer") from all holders of the Notes in
accordance with the procedures set forth in the Indenture in the maximum
principal amount (expressed as a multiple of $1,000) of Notes that may be
purchased out of an amount (the "Note Amount") equal to the product of such
Excess Proceeds multiplied by a fraction, the numerator of which is the
outstanding principal amount of the Notes, and the denominator of which is the
sum of the outstanding principal amount of the Notes and such Pari Passu
Indebtedness (subject to proration in the event such amount is less than the
aggregate Offered Price of all Notes tendered) and (b) to the extent required
by such Pari Passu Indebtedness to permanently reduce the principal amount of
such Pari Passu Indebtedness, the Company shall make an offer to purchase or
otherwise repurchase or redeem Pari Passu Indebtedness (a "Pari Passu Offer")
in an amount (the "Pari Passu Debt Amount") equal to the excess of the Excess
Proceeds over the Note Amount, provided that in no event shall the Pari Passu
Debt Amount exceed the principal amount of such Pari Passu Indebtedness plus
the amount of any premium required to be paid to repurchase such Pari Passu
Indebtedness. The offer price shall be payable in cash in an amount equal to
100% of the principal amount of the Notes plus accrued and unpaid interest, if
any, to the date (the "Offer Date") such Offer is consummated (the "Offered
Price"), in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate Offered Price of the Notes tendered pursuant to the
Offer is less than the Note Amount relating thereto or the aggregate amount of
Pari Passu Indebtedness that is purchased is less than the Pari Passu Debt
Amount (the amount of such shortfall, if any, constituting a "Deficiency"),
the Company shall use such Deficiency in the business of the Company and its
Restricted Subsidiaries. Upon completion of the purchase of all the Notes
tendered pursuant to an Offer and repurchase of the Pari Passu Indebtedness
pursuant to a Pari Passu Offer, the amount of Excess Proceeds, if any, shall
be reset at zero.
(d) Whenever the Excess Proceeds received by the Company exceed $5.0 million
such Excess Proceeds shall be set aside by the Company in a separate account
pending (i) deposit with the depositary or a paying agent of the amount
required to purchase the Notes or Pari Passu Indebtedness tendered in an Offer
or a Pari Passu Offer, (ii) delivery by the Company of the Offered Price to
the holders of the Notes or Pari Passu Indebtedness tendered in an Offer or a
Pari Passu Offer and (iii) application, as set forth above, of Excess Proceeds
in the business of the Company and its Restricted Subsidiaries. Such Excess
Proceeds may be invested in Temporary Cash Investments; provided that the
maturity date of any such investment made after the amount of Excess Proceeds
exceeds $5.0 million shall not be later than the Offer Date. The Company shall
be entitled to any interest or dividends accrued, earned or paid on such
Temporary Cash Investments; provided that the Company shall not withdraw such
interest from the separate account if an Event of Default has occurred and is
continuing.
(e) If the Company becomes obligated to make an Offer pursuant to clause (c)
above, the Notes shall be purchased by the Company, at the option of the
holder thereof, in whole or in part, in integral multiples of $1,000, on a
date that is not earlier than 45 days and not later than 60 days from the date
the notice is given to holders, or such later date as may be necessary for the
Company to comply with the requirements under the Exchange Act, subject to
proration in the event the Note Amount is less than the aggregate Offered
Price of all Notes tendered.
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(f) The Company shall comply with the applicable tender offer rules,
including Rule 14e-1 under the Exchange Act, and any other applicable
securities laws or regulations in connection with an Offer.
(g) The Company will not, and will not permit any Restricted Subsidiary to,
create or permit to exist or become effective any restriction (other than
restrictions existing under (i) Indebtedness as in effect on the date of the
Indenture listed on a schedule thereto as such Indebtedness may be refinanced
from time to time, provided that such restrictions are no less favorable to
the holders of the Notes than those existing on the date of the Indenture or
(ii) any Senior Indebtedness and any Guarantor Senior Indebtedness) that would
materially impair the ability of the Company to make an Offer to purchase the
Notes or, if such Offer is made, to pay for the Notes tendered for purchase.
Limitation on Asset Swaps. The Company will not, and will not permit any
Restricted Subsidiary to, engage in Asset Swaps, unless: (i) at the time of
entering into such Asset Swap, and immediately after giving effect to such
Asset Swap, no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and (ii) the Company or
such Restricted Subsidiary receives consideration at the time of such Asset
Swap at least equal to the Fair Market Value of the properties or assets
exchanged as determined in writing by a nationally recognized investment
banking or appraisal firm.
Limitation on Issuances of Guarantees of and Pledges for
Indebtedness. (a) The Company will not permit any Restricted Subsidiary, other
than the Guarantors, directly or indirectly, to secure the payment of any
Senior Indebtedness of the Company and the Company will not, and will not
permit any Restricted Subsidiary to, pledge any intercompany notes
representing obligations of any Restricted Subsidiary (other than the
Guarantors) to secure the payment of any Senior Indebtedness unless in each
case such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to the Indenture providing for a guarantee of payment
of the Notes by such Restricted Subsidiary, which guarantee shall be on the
same terms as the guarantee of the Senior Indebtedness (if a guarantee of
Senior Indebtedness is granted by any such Restricted Subsidiary) except that
the guarantee of the Notes need not be secured and shall be subordinated to
the claims against such Restricted Subsidiary in respect of Senior
Indebtedness to the same extent as the Notes are subordinated to Senior
Indebtedness of the Company under the Indenture.
(b) The Company will not permit any Restricted Subsidiary, other than the
Guarantors, directly or indirectly, to guarantee, assume or in any other
manner become liable with respect to any Indebtedness of the Company (other
than guarantees in existence on the date of the Indenture) unless such
Restricted Subsidiary simultaneously executes and delivers a supplemental
indenture to the Indenture providing for a guarantee of the Notes on the same
terms as the guarantee of such Indebtedness except that if the Notes are
subordinated in right of payment to such Indebtedness, the guarantee under the
supplemental indenture shall be subordinated to the guarantee of such
Indebtedness to the same extent as the Notes are subordinated to such
Indebtedness under the Indenture.
(c) Each guarantee created pursuant to the provisions described in the
foregoing paragraph is referred to as a "Guarantee" and the issuer of each
such Guarantee is referred to as a "Guarantor." Notwithstanding the foregoing,
any Guarantee by a Restricted Subsidiary of the Notes shall provide by its
terms that it shall be automatically and unconditionally released and
discharged upon (i) any sale, exchange or transfer, to any Person not an
Affiliate of the Company, of all of the Company's Equity Interest in, or all
or substantially all the assets of, such Restricted Subsidiary, which is in
compliance with the Indenture or (ii) (with respect to any Guarantees created
after the date of the Indenture) the release by the holders of the
Indebtedness of the Company described in clauses (a) and (b) above of their
security interest or their guarantee by such Restricted Subsidiary (including
any deemed release upon payment in full of all obligations under such
Indebtedness), at a time when (A) no other Indebtedness of the Company has
been secured or guaranteed by such Restricted Subsidiary, as the case may be,
or (B) the holders of all such other Indebtedness which is secured or
guaranteed by such Restricted Subsidiary also release their security interest
in, or guarantee by, such Restricted Subsidiary (including any deemed release
upon payment in full of all obligations under such Indebtedness).
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Restriction on Transfer of Assets. The Company and the Guarantors will not
sell, convey, transfer or otherwise dispose of their respective assets or
property to any of the Company's Restricted Subsidiaries (other than any
Guarantor), except for sales, conveyances, transfers or other dispositions
made in the ordinary course of business. For purposes of this provision, any
sale, conveyance, transfer, lease or other disposition of property or assets,
having a Fair Market Value in excess of (a) $1.0 million for any sale,
conveyance, transfer, leases or dispositions or series of related sales,
conveyances, transfers, leases and dispositions and (b) $5.0 million in the
aggregate for all such sales, conveyances, transfers, leases or dispositions
in any fiscal year of the Company shall not be considered "in the ordinary
course of business"; provided that sales by the Company of block program time
and spot advertising time shall not be deemed not to be "in the ordinary
course of business" solely because of the dollar volume of such sales.
Purchase of Notes Upon a Change of Control. If a Change of Control shall
occur at any time, then each holder of Notes shall have the right to require
that the Company purchase such holder's Notes in whole or in part in integral
multiples of $1,000, at a purchase price (the "Change of Control Purchase
Price") in cash in an amount equal to 101% of the principal amount of such
Notes, plus accrued and unpaid interest, if any, to the date of purchase (the
"Change of Control Purchase Date"), pursuant to the offer described below (the
"Change of Control Offer") and the other procedures set forth in the
Indenture.
Within 30 days following any Change of Control, the Company shall notify the
Trustee thereof and give written notice of such Change of Control to each
holder of Notes, by first-class mail, postage prepaid, at his address
appearing in the security register, stating, among other things, the purchase
price and that the purchase date shall be a business day no earlier than 30
days nor later than 60 days from the date such notice is mailed, or such later
date as is necessary to comply with requirements under the Exchange Act; that
any Note not tendered will continue to accrue interest; that, unless the
Company defaults in the payment of the purchase price, any Notes accepted for
payment pursuant to the Change of Control Offer shall cease to accrue interest
after the Change of Control Purchase Date; and certain other procedures that a
holder of Notes must follow to accept a Change of Control Offer or to withdraw
such acceptance.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the Change of Control
Purchase Price for all of the Notes that might be delivered by holders of the
Notes seeking to accept the Change of Control Offer. A Change of Control will
also result in an event of default under the Bank Credit Agreement and could
result in the acceleration of all indebtedness under the Bank Credit
Agreement. See "Description of Certain Indebtedness--Credit Agreement--Change
of Control." The failure of the Company to make or consummate the Change of
Control Offer or pay the Change of Control Purchase Price when due will result
in an Event of Default under the Indenture.
The term "all or substantially all" as used in the definition of "Change of
Control" has not been interpreted under New York law (which is the governing
law of the Indenture) to represent a specific quantitative test. As a
consequence, in the event the holders of the Notes elected to exercise their
rights under the Indenture and the Company elected to contest such election,
there could be no assurance as to how a court interpreting New York law would
interpret the phrase.
The existence of a holder's right to require the Company to repurchase such
holder's Notes upon a Change of Control may deter a third party from acquiring
the Company in a transaction which constitutes a Change of Control.
"Change of Control" means the occurrence of any of the following events: (i)
any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of
the Exchange Act), other than Permitted Holders, is or becomes the "beneficial
owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except
that a Person shall be deemed to have beneficial ownership of all shares that
such Person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of
more than 40% of the total outstanding Voting Stock of the Company, provided
that the Permitted Holders "beneficially own" (as so defined) a lesser
percentage of such Voting Stock than such other Person and do not
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have the right or ability by voting power, contract or otherwise to elect or
designate for election a majority of the Board of Directors of the Company,
(ii) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election to such Board or whose
nomination for election by the shareholders of the Company, was approved by a
vote of 66% of the directors then still in office who were either directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of such
Board of Directors then in office; (iii) the Company consolidates with or
merges with or into any Person or conveys, transfers or leases all or
substantially all of its assets to any Person, or any corporation consolidates
with or merges into or with the Company, in any such event pursuant to a
transaction in which the outstanding Voting Stock of the Company is changed
into or exchanged for cash, securities or other property, other than any such
transaction in which the outstanding Voting Stock of the Company is not
changed or exchanged at all (except to the extent necessary to reflect a
change in the jurisdiction of incorporation of the Company) or in which (A)
the outstanding Voting Stock of the Company is changed into or exchanged for
(x) Voting Stock of the surviving corporation which is not Disqualified Equity
Interests or (y) cash, securities and other property (other than Equity
Interests of the surviving corporation) in an amount which could be paid by
the Company as a Restricted Payment as described under "--Limitation on
Restricted Payments" (and such amount shall be treated as a Restricted Payment
subject to the provisions in the Indenture described under "--Limitation on
Restricted Payments") and (B) no "person" or "group" other than Permitted
Holders owns immediately after such transaction, directly or indirectly, more
than the greater of (1) 40% of the total outstanding Voting Stock of the
surviving corporation and (2) the percentage of the outstanding Voting Stock
of the surviving corporation owned, directly or indirectly, by Permitted
Holders immediately after such transaction; or (iv) the Company is liquidated
or dissolved or adopts a plan of liquidation or dissolution other than in a
transaction which complies with the provisions described under "--
Consolidation, Merger, Sale of Assets."
"Permitted Holders" means as of the date of determination (i) any of Stuart
W. Epperson and Edward G. Atsinger III; (ii) family members or the relatives
of the Persons described in clause (i); (iii) any trusts created for the
benefit of the Persons described in clauses (i), (ii) or (iv) or any trust for
the benefit of any such trust; or (iv) in the event of the incompetence or
death of any of the Persons described in clauses (i) and (ii), such Person's
estate, executor, administrator, committee or other personal representative or
beneficiaries, in each case who at any particular date shall beneficially own
or have the right to acquire, directly or indirectly, Equity Interests of the
Company.
The Company will comply with the applicable tender offer rules, including
Rule 14e-1 under the Exchange Act, and any other applicable securities laws or
regulations in connection with a Change of Control Offer.
The Company will not, and will not permit any Subsidiary to, create or
permit to exist or become effective any restriction (other than restrictions
existing under Indebtedness as in effect on the date of the Indenture) that
would materially impair the ability of the Company to make a Change of Control
Offer to purchase the Notes or, if such Change of Control Offer is made, to
pay for the Notes tendered for purchase.
Limitation on Subsidiary Equity Interests. The Company will not permit any
Restricted Subsidiary of the Company to issue any Equity Interests, except for
(i) Equity Interests issued to and held by the Company or a Wholly Owned
Restricted Subsidiary, and (ii) Equity Interests issued by a Person prior to
the time (A) such Person becomes a Restricted Subsidiary, (B) such Person
merges with or into a Restricted Subsidiary or (C) a Restricted Subsidiary
merges with or into such Person; provided that such Equity Interests were not
issued or incurred by such Person in anticipation of the type of transaction
contemplated by subclause (A), (B) or (C).
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any Restricted Subsidiary of the Company to (i) pay dividends or make any
other distribution on its Equity Interests, (ii) pay any Indebtedness owed to
the Company or a Restricted Subsidiary of the Company, (iii) make any
Investment in the Company or a Restricted Subsidiary of the Company or (iv)
transfer any of its properties or assets to the Company or any
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Restricted Subsidiary, except (a) any encumbrance or restriction pursuant to
an agreement in effect on the date of the Indenture and listed as a schedule
thereto, (b) any encumbrance or restriction, with respect to a Restricted
Subsidiary that is not a Subsidiary of the Company on the date of the
Indenture, in existence at the time such Person becomes a Restricted
Subsidiary of the Company and not incurred in connection with, or in
contemplation of, such Person becoming a Restricted Subsidiary; (c) any
encumbrance or restriction existing under any agreement that extends, renews,
refinances or replaces the agreements containing the encumbrances or
restrictions in the foregoing clauses (a) and (b), or in this clause (c),
provided that the terms and conditions of any such encumbrances or
restrictions are not materially less favorable to the holders of the Notes
than those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced or are not more restrictive than
those set forth in the Indenture; and (d) any encumbrance or restriction
created pursuant to an asset sale agreement, stock sale agreement or similar
instrument pursuant to which an Asset Sale permitted under "--Limitations on
Sale of Assets" is to be consummated, so long as such restriction or
encumbrance shall be effective only for a period from the execution and
delivery of such agreement or instrument through a termination date not later
than 270 days after such execution and delivery.
Limitation on Unrestricted Subsidiaries. The Company will not make, and will
not permit any of its Restricted Subsidiaries to make, any Investments in
Unrestricted Subsidiaries if, at the time thereof, the aggregate amount of
such Investments would exceed the amount of Restricted Payments then permitted
to be made pursuant to the "Limitation on Restricted Payments" covenant. Any
Investments in Unrestricted Subsidiaries permitted to be made pursuant to this
covenant (i) will be treated as the payment of a Restricted Payment in
calculating the amount of Restricted Payments made by the Company and (ii) may
be made in cash or property.
Provision of Financial Statements. The Indenture provides that, whether or
not the Company is subject to Section 13(a) or 15(d) of the Exchange Act, the
Company will, to the extent permitted under the Exchange Act, file with the
Commission the annual reports, quarterly reports and other documents which the
Company would have been required to file with the Commission pursuant to such
Section 13(a) or 15(d) if the Company were so subject, such documents to be
filed with the Commission on or prior to the respective dates (the "Required
Filing Dates") by which the Company would have been required so to file such
documents if the Company were so subject. The Company will also in any event
(x) within 15 days of each Required Filing Date (i) transmit by mail to all
holders, as their names and addresses appear in the Note register, without
cost to such holders and (ii) file with the Trustee copies of the annual
reports, quarterly reports and other documents which the Company would have
been required to file with the Commission pursuant to Section 13(a) or 15(d)
of the Exchange Act if the Company were subject to such Sections and (y) if
filing such documents by the Company with the Commission is not permitted
under the Exchange Act, promptly upon written request and payment of the
reasonable cost of duplication and delivery, supply copies of such documents
to any prospective holder at the Company's cost.
Additional Covenants. The Indenture also contains covenants with respect to
the following matters: (i) payment of principal, premium and interest; (ii)
maintenance of an office or agency; (iii) arrangements regarding the handling
of money held in trust; (iv) maintenance of corporate existence; (v) payment
of taxes and other claims; (vi) maintenance of properties; and (vii)
maintenance of insurance.
CONSOLIDATION, MERGER, SALE OF ASSETS
The Company shall not, in a single transaction or a series of related
transactions, consolidate with or merge with or into any other Person or sell
assign, convey, transfer, lease or otherwise dispose of all or substantially
all of its properties and assets to any Person or group of affiliated Persons,
or permit any of its Subsidiaries to enter into any such transaction or
transactions if such transaction or transactions, in the aggregate, would
result in a sale, assignment, conveyance, transfer, lease or disposition of
all or substantially all of the properties and assets of the Company and its
Subsidiaries on a Consolidated basis to any other Person or group of
affiliated Persons, unless at the time and after giving effect thereto: (i)
either (1) the Company shall be the continuing corporation or (2) the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or the Person which acquires by sale, assignment,
conveyance, transfer, lease or disposition of all or substantially
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all of the properties and assets of the Company and its Subsidiaries on a
Consolidated basis (the "Surviving Entity") shall be a corporation duly
organized and validly existing under the laws of the United States of America,
any state thereof or the District of Columbia and such Person assumes, by a
supplemental indenture in a form reasonably satisfactory to the Trustee, all
the obligations of the Company under the Notes and the Indenture, and the
Indenture shall remain in full force and effect; (ii) immediately before and
immediately after giving effect to such transaction, no Default or Event of
Default shall have occurred and be continuing; (iii) immediately after giving
effect to such transaction on a pro forma basis, the Consolidated Net Worth of
the Company (or the Surviving Entity if the Company is not the continuing
obligor under the Indenture) is equal to or greater than the Consolidated Net
Worth of the Company immediately prior to such transaction; (iv) immediately
before and immediately after giving effect to such transaction on a pro forma
basis (on the assumption that the transaction occurred on the first day of the
four-quarter period immediately prior to the consummation of such transaction
with the appropriate adjustments with respect to the transaction being
included in such pro forma calculation), the Company (or the Surviving Entity
if the Company is not the continuing obligor under the Indenture) could incur
$1.00 of additional Indebtedness under the provisions of "--Certain
Covenants--Limitation on Indebtedness" (other than Permitted Indebtedness);
(v) each Guarantor, if any, unless it is the other party to the transactions
described above, shall have by supplemental indenture confirmed that its
Guarantee shall apply to such Person's obligations under the Indenture and the
Notes; (vi) if any of the property or assets of the Company or any of its
Subsidiaries would thereupon become subject to any Lien, the provisions of "--
Certain Covenants--Limitation on Liens" are complied with; and (vii) the
Company or the Surviving Entity shall have delivered, or caused to be
delivered, to the Trustee, in form and substance reasonably satisfactory to
the Trustee, an officers' certificate and an opinion of counsel, each to the
effect that such consolidation, merger, transfer, sale, assignment, lease or
other transaction and the supplemental indenture in respect thereto comply
with the provisions of the Indenture and that all conditions precedent
provided for in the Indenture relating to such transaction have been complied
with.
Each Guarantor will not, and the Company will not permit a Guarantor to, in
a single transaction or series of related transactions merge or consolidate
with or into any other corporation (other than the Company or any other
Guarantor) or other entity, or sell, assign, convey, transfer, lease or
otherwise dispose of all or substantially all of its properties and assets on
a Consolidated basis to any entity (other than the Company or any other
Guarantor) unless at the time and after giving effect thereto: (i) either (1)
such Guarantor shall be the continuing corporation or (2) the entity (if other
than such Guarantor) formed by such consolidation or into which such Guarantor
is merged or the entity which acquires by sale, assignment, conveyance,
transfer, lease or disposition the properties and assets of such Guarantor
shall be a corporation duly organized and validly existing under the laws of
the United States, any state thereof or the District of Columbia and shall
expressly assume by a supplemental indenture, executed and delivered to the
Trustee, in a form reasonably satisfactory to the Trustee, all the obligations
of such Guarantor under its Guarantee and the Indenture; (ii) immediately
before and immediately after giving effect to such transaction, no Default or
Event of Default shall have occurred and be continuing, and (iii) such
Guarantor shall have delivered to the Trustee, in form and substance
reasonably satisfactory to the Trustee, an officers' certificate and an
opinion of counsel, each stating that such consolidation, merger, sale,
assignment, conveyance, transfer, lease or disposition and such supplemental
indenture comply with the Indenture, and thereafter all obligations of the
predecessor shall terminate. The provisions of this paragraph shall not apply
to any transaction (including an Asset Sale made in accordance with "--Certain
Covenants--Limitations on Sale of Assets" ) with respect to any Guarantor if
the Guarantee of such Guarantor is released in connection with such
transaction in accordance with paragraph (c) of "--Certain Covenants--
Limitations on Issuances of Guarantees of and Pledges for Indebtedness."
In the event of any transaction described in and complying with the
conditions listed in the immediately preceding paragraphs in which the Company
or any Guarantor is not the continuing corporation, the successor Person
formed or remaining shall succeed to, and be substituted for, and may exercise
every right and power of, the Company or such Guarantor, as the case may be,
and the Company or such Guarantor, as the case may be, would be discharged
from its obligations under the Indenture, the Notes or its Guarantee, as the
case may be.
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EVENTS OF DEFAULT
An Event of Default will occur under the Indenture if:
(i) there shall be a default in the payment of any interest on any Note
(including any Penalty Amounts) when it becomes due and payable, and such
default shall continue for a period of 30 days;
(ii) there shall be a default in the payment of the principal of (or
premium, if any, on) any Note at its Maturity (upon acceleration, optional
or mandatory redemption, required repurchase or otherwise);
(iii) (a) there shall be a default in the performance, or breach, of any
covenant or agreement of the Company or any Guarantor under the Indenture
(other than a default in the performance, or breach, of a covenant or
agreement which is specifically dealt with in clause (i) or (ii) or in
clause (b), (c) or (d) of this clause (iii)) and such default or breach
shall continue for a period of 30 days after written notice has been given,
by certified mail, (x) to the Company by the Trustee or (y) to the Company
and the Trustee by the holders of at least 25% in aggregate principal
amount of the outstanding Notes; (b) there shall be a default in the
performance or breach of the provisions described in "--Consolidation,
Merger, Sale of Assets;" (c) the Company shall have failed to make or
consummate an Offer in accordance with the provisions of "--Certain
Covenants--Limitation on Sale of Assets;" or (d) the Company shall have
failed to make or consummate a Change of Control Offer in accordance with
the provisions of "--Certain Covenants--Purchase of Notes Upon a Change of
Control;"
(iv) one or more defaults shall have occurred under any agreements,
indentures or instruments under which the Company, any Guarantor or any
Restricted Subsidiary then has outstanding Indebtedness in excess of $5.0
million in the aggregate and, if not already matured at its final maturity
in accordance with its terms, such Indebtedness shall have been
accelerated;
(v) any Guarantee shall for any reason cease to be, or be asserted in
writing by any Guarantor or the Company not to be, in full force and
effect, enforceable in accordance with its terms, except to the extent
contemplated by the Indenture and any such Guarantee;
(vi) one or more judgments, orders or decrees for the payment of money in
excess of $5.0 million, either individually or in the aggregate (net of
amounts covered by insurance, bond, surety or similar instrument) shall be
entered against the Company, any Guarantor or any Restricted Subsidiary or
any of their respective properties and shall not be discharged and either
(a) any creditor shall have commenced an enforcement proceeding upon such
judgment, order or decree or (b) there shall have been a period of 60
consecutive days during which a stay of enforcement of such judgment or
order, by reason of an appeal or otherwise, shall not be in effect;
(vii) any holder or holders of at least $5.0 million in aggregate
principal amount of Indebtedness of the Company, any Guarantor or any
Restricted Subsidiary after a default under such Indebtedness shall notify
the Trustee of the intended sale or disposition of any assets of the
Company, any Guarantor or any Restricted Subsidiary that have been pledged
to or for the benefit of such holder or holders to secure such Indebtedness
or shall commence proceedings, or take any action (including by way of set-
off), to retain in satisfaction of such Indebtedness or to collect on,
seize, dispose of or apply in satisfaction of Indebtedness, assets of the
Company or any Restricted Subsidiary (including funds on deposit or held
pursuant to lock-box and other similar arrangements);
(viii) there shall have been the entry by a court of competent
jurisdiction of (a) a decree or order for relief in respect of the Company,
any Guarantor or any Restricted Subsidiary in an involuntary case or
proceeding under any applicable Bankruptcy Law or (b) a decree or order
adjudging the Company, any Guarantor or any Restricted Subsidiary bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company, any Guarantor or any
Restricted Subsidiary under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Company, any Guarantor or
any Restricted Subsidiary or of any substantial part of their respective
properties, or ordering the winding up or liquidation of their affairs,
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and any such decree or order for relief shall continue to be in effect, or
any such other decree or order shall be unstayed and in effect, for a
period of 60 consecutive days; or
(ix) (a) the Company, any Guarantor or any Restricted Subsidiary
commences a voluntary case or proceeding under any applicable Bankruptcy
Law or any other case or proceeding to be adjudicated bankrupt or
insolvent, (b) the Company, any Guarantor or any Restricted Subsidiary
consents to the entry of a decree or order for relief in respect of the
Company, any Guarantor or such Restricted Subsidiary in an involuntary case
or proceeding under any applicable Bankruptcy Law or to the commencement of
any bankruptcy or insolvency case or proceeding against it, (c) the
Company, any Guarantor or any Restricted Subsidiary files a petition or
answer or consent seeking reorganization or relief under any applicable
federal or state law, (d) the Company, any Guarantor or any Restricted
Subsidiary (x) consents to the filing of such petition or the appointment
of, or taking possession by, a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official, of the Company, any
Guarantor or such Restricted Subsidiary or of any substantial part of their
respective property, (y) makes an assignment for the benefit of creditors
or (z) admits in writing its inability to pay its debts generally as they
become due or (e) the Company, any Guarantor or any Restricted Subsidiary
takes any corporate action in furtherance of any such actions in this
paragraph (ix).
If an Event of Default (other than as specified in clauses (viii) and (ix)
of the prior paragraph) shall occur and be continuing, the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes
outstanding may, and the Trustee at the request of such holders shall, declare
all unpaid principal of, premium, if any, and accrued interest on, all the
Notes to be due and payable immediately by a notice in writing to the Company
(and to the Trustee if given by the holders of the Notes), provided that so
long as the Bank Credit Agreement is in effect, such declaration shall not
become effective until the earlier of (a) five business days after receipt of
such notice of acceleration from the holders or the Trustee by the agent under
the Bank Credit Agreement or (b) acceleration of the Indebtedness under the
Bank Credit Agreement. Thereupon the Trustee may, at its discretion, proceed
to protect and enforce the rights of the holders of Notes by appropriate
judicial proceedings. If an Event of Default specified in clause (viii) or
(ix) of the prior paragraph occurs and is continuing, then all the Notes shall
ipso facto become and be immediately due and payable, in an amount equal to
the principal amount of the Notes, together with accrued and unpaid interest,
if any, to the date the Notes become due and payable, without any declaration
or other act on the part of the Trustee or any holder. The Trustee or, if
notice of acceleration is given by the holders of the Notes, the holders of
the Notes shall give notice to the agent under the Bank Credit Agreement of
such acceleration.
After a declaration of acceleration, but before a judgment or decree for
payment of the money due has been obtained by the Trustee, the holders of a
majority in aggregate principal amount of Notes outstanding, by written notice
to the Company and the Trustee, may rescind and annul such declaration if (a)
the Company has paid or deposited with the Trustee a sum sufficient to pay (i)
all sums paid or advanced by the Trustee under the Indenture and the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, (ii) all overdue interest on all Notes, (iii) the
principal of and premium, if any, on any Notes which have become due otherwise
than by such declaration of acceleration and interest thereon at a rate borne
by the Notes and (iv) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes; and (b) all
Events of Default, other than the non-payment of principal of the Notes which
have become due solely by such declaration of acceleration, have been cured or
waived.
The holders of not less than a majority in aggregate principal amount of the
Notes outstanding may on behalf of the holders of all the Notes waive any past
default under the Indenture and its consequences, except a default in the
payment of the principal of, premium, if any, or interest on any Note, or in
respect of a covenant or provision which under the Indenture cannot be
modified or amended without the consent of the holder of each Note
outstanding.
The Company is also required to notify the Trustee within five business days
of the occurrence of any Default. The Company is required to deliver to the
Trustee, on or before a date not more than 60 days after the
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end of each quarter and not more than 120 days after the end of each fiscal
year, a written statement as to compliance with the Indenture, including
whether or not any default has occurred. The Trustee is under no obligation to
exercise any of the rights or powers vested in it by the Indenture at the
request or direction of any of the holders of the Notes unless such holders
offer to the Trustee security or indemnity satisfactory to the Trustee against
the costs, expenses and liabilities which might be incurred thereby.
The Trust Indenture Act contains limitations on the rights of the Trustee,
should it become a creditor of the Company or any Guarantor, to obtain payment
of claims in certain cases or to realize on certain property received by it in
respect of any such claims, as security or otherwise. The Trustee is permitted
to engage in other transactions, provided that if it acquires any conflicting
interest it must eliminate such conflict upon the occurrence of an Event of
Default or else resign.
DEFEASANCE OR COVENANT DEFEASANCE OF INDENTURE
The Company may, at its option, at any time, elect to have the obligations
of the Company, each of the Guarantors and any other obligor upon the Notes
discharged with respect to the outstanding Notes ("defeasance"). Such
defeasance means that the Company, each of the Guarantors and any other
obligor under the Indenture shall be deemed to have paid and discharged the
entire Indebtedness represented by the outstanding Notes, except for (i) the
rights of holders of outstanding Notes to receive payments in respect of the
principal of, premium, if any, and interest on such Notes when such payments
are due, (ii) the Company's obligations with respect to the Notes concerning
issuing temporary Notes, registration of Notes, mutilated, destroyed, lost or
stolen Notes, and the maintenance of an office or agency for payment and money
for security payments held in trust, (iii) the rights, powers, trusts, duties
and immunities of the Trustee, and (iv) the defeasance provisions of the
Indenture. In addition, the Company may, at its option and at any time, elect
to have the obligations of the Company and any Guarantor released with respect
to certain covenants that are described in the Indenture ("covenant
defeasance") and any omission to comply with such obligations shall not
constitute a Default or an Event of Default with respect to the Notes. In the
event covenant defeasance occurs, certain events (not including non-payment,
enforceability of any Guarantee, bankruptcy and insolvency events) described
under "--Events of Default" will no longer constitute an Event of Default with
respect to the Notes.
In order to exercise either defeasance or covenant defeasance, (i) the
Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the Notes, cash in United States dollars, U.S. Government
Obligations (as defined in the Indenture), or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm
of independent public accountants or a nationally recognized investment
banking firm expressed in a written certification thereof delivered to the
Trustee, to pay and discharge the principal of, premium, if any, and interest
on the outstanding Notes on the Stated Maturity of such principal or
installment of principal or interest (or on any date after October 1, 2002
(such date being referred to as the "Defeasance Redemption Date"), if when
exercising either defeasance or covenant defeasance, the Company has delivered
to the Trustee an irrevocable notice to redeem all of the outstanding Notes on
the Defeasance Redemption Date); (ii) in the case of defeasance, the Company
shall have delivered to the Trustee an opinion of independent counsel in the
United States stating that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of the Indenture, there has been a change in the applicable federal income tax
law, in either case to the effect that, and based thereon such opinion of
independent counsel in the United States shall confirm that, the holders of
the outstanding Notes will not recognize income, gain or loss for federal
income tax purposes as a result of such defeasance and will be subject to
federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such defeasance had not occurred; (iii)
in the case of covenant defeasance, the Company shall have delivered to the
Trustee an opinion of independent counsel in the United States to the effect
that the holders of the outstanding Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such covenant defeasance
and will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred; (iv) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar as clause
(viii) or
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(ix) under the first paragraph under "--Events of Default" are concerned, at
any time during the period ending on the 91st day after the date of deposit;
(v) such defeasance or covenant defeasance shall not cause the Trustee for the
Notes to have a conflicting interest with respect to any securities of the
Company or any Guarantor; (vi) such defeasance or covenant defeasance shall
not result in a breach or violation of, or constitute a Default under, the
Indenture or any other material agreement or instrument to which the Company
or any Guarantor is a party or by which it is bound, (vii) the Company shall
have delivered to the Trustee an opinion of independent counsel to the effect
that (A) the trust funds will not be subject to any rights of holders of
Senior Indebtedness or Guarantor Senior Indebtedness, including, without
limitation, those arising under the Indenture and (B) after the 91st day
following the deposit, the trust funds will not be subject to the effect of
any applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally; (viii) the Company shall have delivered
to the Trustee an officers' certificate stating that the deposit was not made
by the Company with the intent of preferring the holders of the Notes or any
Guarantee over the other creditors of the Company or any Guarantor with the
intent of defeating, hindering, delaying or defrauding creditors of the
Company, any Guarantor or others; (ix) no event or condition shall exist that
would prevent the Company from making payments of the principal of, premium,
if any, and interest on the Notes on the date of such deposit or at any time
ending on the 91st day after the date of such deposit; and (x) the Company
shall have delivered to the Trustee an officers' certificate and an opinion of
independent counsel, each stating that all conditions precedent provided for
relating to either the defeasance or the covenant defeasance, as the case may
be, have been complied with.
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect (except as to surviving
rights of registration of transfer or exchange of Notes, and certain other
rights as expressly provided for in the Indenture) as to all outstanding Notes
when (a) either (i) all the Notes theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid) have
been delivered to the Trustee for cancellation or (ii) all Notes not
theretofore delivered to the Trustee for cancellation (x) have become due and
payable, or (y) will become due and payable at their Stated Maturity within
one year, or (z) are to be called for redemption within one year under
arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company and
the Company or any Guarantor has irrevocably deposited or caused to be
deposited with the Trustee funds in an amount sufficient to pay and discharge
the entire indebtedness on the Notes not theretofore delivered to the Trustee
for cancellation, including principal of, premium, if any, and accrued
interest at such Stated Maturity or redemption date, (b) the Company or any
Guarantor has paid or caused to be paid all other sums payable under the
Indenture by the Company or any Guarantor, and (c) the Company has delivered
to the Trustee an officers' certificate and an opinion of counsel stating that
(i) all conditions precedent under the Indenture relating to the satisfaction
and discharge of the Indenture have been complied with and (B) such
satisfaction and discharge will not result in a breach or violation of, or
constitute a default under, the Indenture or any other material agreement or
instrument to which the Company or any Guarantor is a party or by which the
Company or any Guarantor is bound.
MODIFICATIONS AND AMENDMENTS
Modifications and amendments of the Indenture may be made by the Company,
any Guarantor and the Trustee with the consent of the holders of not less than
a majority in aggregate principal amount of the outstanding Notes; provided,
however, that no such modification or amendment may, without the consent of
the holder of each outstanding Note affected thereby: (i) change the Stated
Maturity of the principal of, or any installment of interest on, any Note or
reduce the principal amount thereof or the rate of interest thereon or any
premium payable upon the redemption thereof, or change the coin or currency in
which the principal of any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any such
payment after the Stated Maturity thereof (or in the case of redemption, on or
after the redemption date); (ii) amend, change or modify the obligation of the
Company to make and consummate an Offer with respect to any Asset Sale or
Asset Sales in accordance with "--Certain Covenants--Limitation on Sale of
Assets" or the
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obligation of the Company to make and consummate a Change of Control Offer in
the event of a Change of Control in accordance with "--Certain Covenants--
Purchase of Notes Upon a Change of Control," including amending, changing or
modifying any deletions with respect thereto; (iii) reduce the percentage in
principal amount of outstanding Notes, the consent of whose holders is
required for any such supplemental indenture, or the consent of whose holders
is required for any waiver or compliance with certain provisions of the
Indenture or certain defaults or with respect to any Guarantee; (iv) modify
any of the provisions relating to supplemental indentures requiring the
consent of holders or relating to the waiver of past defaults or relating to
the waiver of certain covenants, except to increase the percentage of
outstanding Notes required for such actions or to provide that certain other
provisions of the Indenture cannot be modified or waived without the consent
of the holder of each Note affected thereby; (v) except as otherwise permitted
under "--Consolidation, Merger, Sale of Assets," consent to the assignment or
transfer by the Company or any Guarantor of any of its rights and obligations
under the Indenture; or (vi) amend or modify any of the provisions of the
Indenture relating to the subordination of the Notes or any Guarantee in any
manner adverse to the holders of the Notes or any Guarantee.
The holders of a majority in aggregate principal amount of the Notes
outstanding may waive compliance with certain restrictive covenants and
provisions of the Indenture.
GOVERNING LAW
The Indenture, the Notes and the Guarantees will be governed by, and
construed in accordance with the laws of the State of New York, without giving
effect to the conflicts of law principles thereof.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness of a Person (i) existing at the
time such Person becomes a Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case, other than Indebtedness
incurred in connection with, or in contemplation of, such Person becoming a
Subsidiary or such acquisition. Acquired Indebtedness shall be deemed to be
incurred on the date of the related acquisition of assets from any Person or
the date the acquired Person becomes a Subsidiary.
"Affiliate" means, with respect to any specified Person, (i) any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person, (ii) any other Person that
owns, directly or indirectly, 5% or more of such Person's Equity Interests or
any officer or director of any such Person or other Person or, with respect to
any natural Person, any person having a relationship with such Person or other
Person by blood, marriage or adoption not more remote than first cousin or
(iii) any other Person 10% or more of the voting Equity Interests of which are
beneficially owned or held directly or indirectly by such specified person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person directly or indirectly, whether through ownership of voting securities,
by contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition (including, without limitation, by way of merger, consolidation or
Sale and Leaseback Transaction) (collectively, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (i) any Equity
Interest of any Restricted Subsidiary; (ii) all or substantially all of the
properties and assets of any division or line of business of the Company or
its Restricted Subsidiaries; or (iii) any other properties or assets of the
Company or any Restricted Subsidiary, other than in the ordinary course of
business. For the purposes of this definition, the term "Asset Sale" shall not
include any transfer of properties and assets (A) that is governed by the
provisions described under " --Consolidation, Merger, Sale of Assets" or
"Limitations on Asset Swaps," (B) that is by the Company to any Wholly Owned
Restricted Subsidiary, or by any Restricted Subsidiary to the Company or any
Wholly Owned Restricted Subsidiary in accordance with the terms of the
Indenture or (C) that aggregates not more than $1.0 million in gross proceeds.
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"Asset Swap" means an Asset Sale by the Company or any Restricted Subsidiary
in exchange for properties or assets that will be used in the business of the
Company and its Restricted Subsidiaries existing on the date of the Indenture
or reasonably related thereto.
"Average Life to Stated Maturity" means, as of the date of determination
with respect to any Indebtedness, the quotient obtained by dividing (i) the
sum of the products of (a) the number of years from the date of determination
to the date or dates of each successive scheduled principal payment of such
Indebtedness multiplied by (b) the amount of each such principal payment by
(ii) the sum of all such principal payments.
"Bank Credit Agreement" means the Credit Agreement dated as of September 25,
1997 among the Company, the lenders named therein and The Bank of New York as
agent, as such agreement may be amended, renewed, extended, substituted,
refinanced, restructured, replaced, supplemented or otherwise modified from
time to time (including, without limitation, any successive renewals,
extensions substitutions, refinancings, restructurings, replacements,
supplementations or other modifications of the foregoing). For all purposes
under the Indenture, "Bank Credit Agreement" shall include any amendments,
renewals, extensions, substitutions, refinancings, restructurings,
replacements, supplements or any other modifications that increase the
principal amount of the Indebtedness or the commitments to lend thereunder and
have been made in compliance with "--Certain Covenants--Limitation on
Indebtedness;" provided that, for purposes of the definition of "Permitted
Indebtedness," no such increase may result in the principal amount of
Indebtedness of the Company under the Bank Credit Agreement exceeding the
amount permitted by clause (i) of the definition of "Permitted Indebtedness."
"Bankruptcy Law" means Title 11, United States Bankruptcy Code of 1978, as
amended, or any similar United States federal or state law relating to
bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization
or relief of debtors or any amendment to, succession to or change in any such
law.
"Capital Lease Obligation" means any obligation of the Company and its
Restricted Subsidiaries on a Consolidated basis under any capital lease of
real or personal property which, in accordance with GAAP, has been recorded as
a capitalized lease obligation.
"Commission" means the Securities and Exchange Commission, as from time to
time constituted, created under the Exchange Act, or if at any time after the
execution of the Indenture such Commission is not existing and performing the
duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
"Company" means Salem Communications Corporation, a corporation incorporated
under the laws of California, until a successor Person shall have become such
pursuant to the applicable provisions of the Indenture, and thereafter
"Company" shall mean such successor Person.
"Consolidated Interest Expense" means, without duplication, for any period,
the sum of (a) the interest expense of the Company and its Consolidated
Restricted Subsidiaries for such period, on a Consolidated basis, including,
without limitation, (i) amortization of debt discount, (ii) the net cost under
Interest Rate Agreements (including amortization of discounts), (iii) the
interest portion of any deferred payment obligation and (iv) accrued interest,
plus (b) the interest component of the Capital Lease Obligations paid, accrued
and/or scheduled to be paid or accrued by the Company during such period, and
all capitalized interest of the Company and its Consolidated Restricted
Subsidiaries, in each case as determined in accordance with GAAP consistently
applied.
"Consolidated Net Income" means, for any period, the Consolidated net income
(or loss) of the Company and its Consolidated Restricted Subsidiaries for such
period as determined in accordance with GAAP consistently applied, adjusted,
to the extent included in calculating such net income (or loss), by excluding,
without duplication, (i) all extraordinary gains but not losses (less all fees
and expenses relating thereto), (ii) the portion of net income (or loss) of
the Company and its Consolidated Restricted Subsidiaries allocable to
interests in
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unconsolidated Persons or Unrestricted Subsidiaries, except to the extent of
the amount of dividends or distributions actually paid to the Company or its
Consolidated Restricted Subsidiaries by such other Person during such period,
(iii) net income (or loss) of any Person combined with the Company or any of
its Restricted Subsidiaries on a "pooling of interests" basis attributable to
any period prior to the date of combination, (iv) any gain or loss, net of
taxes, realized upon the termination of any employee pension benefit plan, (v)
net gains but not losses (less all fees and expenses relating thereto) in
respect of dispositions of assets other than in the ordinary course of
business, or (vi) the net income of any Restricted Subsidiary to the extent
that the declaration of dividends or similar distributions by that Restricted
Subsidiary of that income is not at the time permitted, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Restricted Subsidiary or its shareholders.
"Consolidated Net Worth" means the Consolidated equity of the holders of
Equity Interests (excluding Disqualified Equity Interests) of the Company and
its Restricted Subsidiaries, as determined in accordance with GAAP
consistently applied.
"Consolidation" means, with respect to any Person, the consolidation of the
accounts of such Person and each of its subsidiaries (other than any
Unrestricted Subsidiaries) if and to the extent the accounts of such Person
and each of its subsidiaries (other than any Unrestricted Subsidiaries) would
normally be consolidated with those of such Person, all in accordance with
GAAP consistently applied. The term "Consolidated" shall have a similar
meaning.
"Cumulative Consolidated Interest Expense" means, as of any date of
determination, Consolidated Interest Expense from the date of the Indenture to
the end of the Company's most recently ended full fiscal quarter prior to such
date, taken as a single accounting period.
"Cumulative Operating Cash Flow" means, as of any date of determination,
Operating Cash Flow from the date of the Indenture to the end of the Company's
most recently ended full fiscal quarter prior to such date, taken as a single
accounting period.
"Debt to Operating Cash Flow Ratio" means, as of any date of determination,
the ratio of (a) the aggregate principal amount of all outstanding
Indebtedness of the Company and its Restricted Subsidiaries as of such date on
a Consolidated basis plus the aggregate liquidation preference or redemption
amount of all Disqualified Equity Interests of the Company (excluding any such
Disqualified Equity Interests held by the Company or a Wholly Owned Restricted
Subsidiary of the Company), to (b) Operating Cash Flow of the Company and its
Restricted Subsidiaries on a Consolidated basis for the four most recent full
quarters ending immediately prior to such date, determined on a pro forma
basis (and after giving pro forma effect to (i) the incurrence of such
Indebtedness and (if applicable) the application of the net proceeds
therefrom, including to refinance other Indebtedness, as if such Indebtedness
was incurred, and the application of such proceeds occurred, at the beginning
of such four-quarter period; (ii) the incurrence, repayment or retirement of
any other Indebtedness by the Company and its Restricted Subsidiaries since
the first day of such four-quarter period as if such Indebtedness was
incurred, repaid or retired at the beginning of such four-quarter period
(except that, in making such computation, the amount of Indebtedness under any
revolving credit facility shall be computed based upon the average balance of
such Indebtedness at the end of each month during such four-quarter period);
(iii) in the case of Acquired Indebtedness, the related acquisition, as if
such acquisition had occurred at the beginning of such four-quarter period;
and (iv) any acquisition or disposition by the Company and its Restricted
Subsidiaries of any company or any business or any assets out of the ordinary
course of business, or any related repayment of Indebtedness, in each case
since the first day of such four-quarter period, assuming such acquisition or
disposition had been consummated on the first day of such four-quarter
period).
"Default" means any event which is, or after notice or passage of any time
or both would be, an Event of Default.
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"Disqualified Equity Interests" means any Equity Interests that, either by
their terms or by the terms of any security into which they are convertible or
exchangeable or otherwise, are or upon the happening of an event or passage of
time would be required to be redeemed prior to any Stated Maturity of the
principal of the Notes or are redeemable at the option of the holder thereof
at any time prior to any such Stated Maturity, or are convertible into or
exchangeable for debt securities at any time prior to any such Stated Maturity
at the option of the holder thereof.
"Equity Interest" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) corporate stock or other equity
participations, including partnership interests, whether general or limited,
and limited liability company interests of such Person, including any
Preferred Equity Interests.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, with respect to any asset or property, the sale
value that would be obtained in an arm's-length transaction between an
informed and willing seller under no compulsion to sell and an informed and
willing buyer under no compulsion to buy.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles in the United States, consistently applied,
which are in effect on the date of the Indenture.
"Guarantee" means the guarantee by any Guarantor of the Company's Indenture
Obligations pursuant to a guarantee given in accordance with the Indenture.
"Guaranteed Debt" of any Person means, without duplication, all Indebtedness
of any other Person referred to in the definition of Indebtedness guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such Person through an agreement (i) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose
of enabling the debtor to make payment of such Indebtedness or to assure the
holder of such Indebtedness against loss, (iii) to supply funds to, or in any
other manner invest in, the debtor (including any agreement to pay for
property or services without requiring that such property be received or such
services be rendered), (iv) to maintain working capital or equity capital of
the debtor, or otherwise to maintain the net worth, solvency or other
financial condition of the debtor or (v) otherwise to assure a creditor
against loss; provided that the term "guarantee" shall not include
endorsements for collection or deposit, in either case in the ordinary course
of business.
"Guarantor" means the Subsidiaries listed as guarantors in the Indenture or
any other guarantor of the Indenture Obligations. The Guarantors currently
consist of all the Company's Subsidiaries.
"Indebtedness" means, with respect to any Person, without duplication, (i)
all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services, excluding any trade payables and other
accrued current liabilities arising in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of
such Person in connection with any letters of credit issued under letter of
credit facilities, acceptance facilities or other similar facilities and in
connection with any agreement to purchase, redeem, exchange, convert or
otherwise acquire for value any Equity Interests of such Person, or any
warrants, rights or options to acquire such Equity Interests, now or hereafter
outstanding, (ii) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, (iii) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies
of the seller or lender under such agreement in the event of default are
limited to repossession or sale of such property), but excluding trade
payables arising in the ordinary course of business, (iv) all obligations
under Interest Rate Agreements of such Person, (v) all Capital Lease
Obligations of such Person, (vi) all Indebtedness referred to in clauses (i)
through (v) above of other Persons and all dividends of other Persons, the
payment of which is secured by (or for which the holder of such Indebtedness
has an existing
84
<PAGE>
right, contingent or otherwise, to be secured by) any Lien, upon or with
respect to property (including, without limitation, accounts and contract
rights) owned by such Person, even though such Person has not assumed or
become liable for the payment of such Indebtedness, (vii) all Guaranteed Debt
of such Person, (viii) all Disqualified Equity Interests valued at the greater
of their voluntary or involuntary maximum fixed repurchase price plus accrued
and unpaid dividends, and (ix) any amendment, supplement, modification,
deferral, renewal, extension, refunding or refinancing of any liability of the
types referred to in clauses (i) through (viii) above. The amount of
Indebtedness of any Person at any date shall be, without duplication, the
principal amount that would be shown on a balance sheet of such Person
prepared as of such date in accordance with GAAP and the maximum determinable
liability of any Guaranteed Debt referred to in clause (vii) above at such
date. The Indebtedness of the Company and its Restricted Subsidiaries shall
not include any Indebtedness of Unrestricted Subsidiaries so long as such
Indebtedness is non-recourse to the Company and the Restricted Subsidiaries.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Equity Interests which do not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Equity Interests
as if such Disqualified Equity Interests were purchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture, and
if such price is based upon, or measured by, the Fair Market Value of such
Disqualified Equity Interests, such Fair Market Value to be determined in good
faith by the Board of Directors of the issuer of such Disqualified Equity
Interests.
"Indenture Obligations" means the obligations of the Company and any other
obligor under the Indenture or under the Notes, including any Guarantor, to
pay principal, premium, if any, and interest when due and payable, and all
other amounts due or to become due under or in connection with the Indenture,
the Notes and the performance of all other obligations to the Trustee and the
holders under the Indenture and the Notes, according to the terms thereof.
"Independent Director" means a director of the Company other than a director
(i) who (apart from being a director of the Company or any Subsidiary) is an
employee, insider, associate or Affiliate of the Company or a Subsidiary or
has held any such position during the previous five years or (ii) who is a
director, an employee, insider, associate or Affiliate of another party to the
transaction in question.
"Interest Rate Agreements" means one or more of the following agreements
which shall be entered into by one or more financial institutions: interest
rate protection agreements (including, without limitation, interest rate
swaps, caps, floors, collars and similar agreements) and/or other types of
interest rate hedging agreements from time to time.
"Investments" means, with respect to any Person, directly or indirectly, any
advance, loan (including guarantees), or other extension of credit or capital
contribution to (by means of any transfer of cash or other property to others
or any payment for property or services for the account or use of others), or
any purchase, acquisition or ownership by such Person of any Equity Interests,
bonds, notes, debentures or other securities or assets issued or owned by any
other Person and all other items that would be classified as investments on a
balance sheet prepared in accordance with GAAP.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind (including any conditional sale or other
title retention agreement, any leases in the nature thereof, and any agreement
to give any security interest), real or personal, movable or immovable, now
owned or hereafter acquired.
"Maturity," when used with respect to any Note, means the date on which the
principal of such Note becomes due and payable as provided in the Note or as
provided in the Indenture, whether at Stated Maturity, the offer date, or the
redemption date and whether by declaration of acceleration, Offer in respect
of Excess Proceeds, Change of Control, call for redemption or otherwise.
"Net Cash Proceeds" means (a) with respect to any Asset Sale by any Person,
the proceeds thereof in the form of cash or Temporary Cash Investments
including payments in respect of deferred payment obligations
85
<PAGE>
when received in the form of, or stock or other assets when disposed of for,
cash or Temporary Cash Investments (except to the extent that such obligations
are financed or sold with recourse to the Company or any Restricted
Subsidiary) net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale, (ii) provisions for all taxes payable as a result
of such Asset Sale, (iii) payments made to retire Indebtedness where payment
of such Indebtedness is secured by the assets or properties the subject of
such Asset Sale or would cause a required repayment under the Bank Credit
Agreement, (iv) amounts required to be paid to any Person (other than the
Company or any Restricted Subsidiary) owning a beneficial interest in the
assets subject to the Asset Sale and (v) appropriate amounts to be provided by
the Company or any Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any liabilities associated with such Asset Sale
and retained by the Company or any Restricted Subsidiary, as the case may be,
after such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters
and liabilities under any indemnification obligations associated with such
Asset Sale, all as reflected in an officers' certificate delivered to the
Trustee and (b) with respect to any issuance or sale of Equity Interests, or
debt securities or Equity Interests that have been converted into or exchanged
for Equity Interests, as referred to under "--Certain Covenants--Limitation on
Restricted Payments," the proceeds of such issuance or sale in the form of
cash or Temporary Cash Investments, including payments in respect of deferred
payment obligations when received in the form of, or stock or other assets
when disposed for, cash or Temporary Cash Investments (except to the extent
that such obligations are financed or sold with recourse to the Company or any
Restricted Subsidiary), net of attorney's fees, accountant's fees and
brokerage, consultation, underwriting and other fees and expenses actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Operating Cash Flow" means, for any period, the Consolidated Net Income of
the Company and its Restricted Subsidiaries for such period, plus (a)
extraordinary net losses and net losses on sales of assets outside the
ordinary course of business during such period, to the extent such losses were
deducted in computing Consolidated Net Income, plus (b) provision for taxes
based on income or profits, to the extent such provision for taxes was
included in computing such Consolidated Net Income, and any provision for
taxes utilized in computing the net losses under clause (a) hereof, plus (c)
Consolidated Interest Expense of the Company and its Restricted Subsidiaries
for such period, plus (d) depreciation, amortization and all other non-cash
charges, to the extent such depreciation, amortization and other non-cash
charges were deducted in computing such Consolidated Net Income (including
amortization of goodwill and other intangibles).
"Pari Passu Indebtedness" means any Indebtedness of the Company or any
Guarantor that is pari passu in right of payment to the Notes or any
Guarantee, as the case may be.
"Permitted Investments" means any of the following:
(i) Temporary Cash Investments;
(ii) Investments by the Company or any of its Restricted Subsidiaries in
a Guarantor and Investments by any Restricted Subsidiary in the Company;
(iii) Investments by the Company or any of its Restricted Subsidiaries in
another Person, if as a result of such Investment (a) such other Person
becomes a Restricted Subsidiary that is or would be a Guarantor or (b) such
other Person is merged or consolidated with or into, or transfers or
conveys all or substantially all of its assets to, the Company or a
Restricted Subsidiary that is or would be a Guarantor;
(iv) Promissory notes received as a result of Asset Sales permitted under
the provisions of "Limitation on Sales of Assets."
(v) Investments in assets owned or used in the ordinary course of
business;
(vi) Investments in existence on the date of the Indenture;
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<PAGE>
(vii) Direct or indirect loans to employees, or to a trustee for the
benefit of such employees, of the Company or any of its Restricted
Subsidiaries in an aggregate amount outstanding at any time not exceeding
$1.0 million;
(viii) Permitted Non-Commercial Educational Station Investments; provided
that immediately after giving effect to any such Investment, the Company
could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to the restrictions under the "--Certain Covenants--
Limitation on Indebtedness" covenant; and
(ix) Other Investments that do not exceed $5.0 million at any one time
outstanding.
"Permitted Non-Commercial Educational Station Investment" means a loan made
by the Company or a Restricted Subsidiary to a non-profit entity, the proceeds
of which are used to acquire assets used in the operation of a radio station;
provided that so long as any such Investment remains outstanding (i) such loan
shall be evidenced by a promissory note and shall not be subordinated to any
other Indebtedness of such non-profit entity; (ii) at least 40% of the board
seats (or other comparable governing body) of such non-profit entity shall be
held by executive officers of the Company, and (iii) a technical and
professional services agreement shall be in full force and effect between such
non-profit entity and the Company pursuant to which the Company shall be
compensated for providing engineering, accounting, legal and other assistance
in connection with the operation of the station licensed to such non-profit
entity (which agreement shall contain customary terms and conditions for
technical and professional services agreements in the radio broadcasting
industry generally).
"Permitted Subsidiary Indebtedness" means:
(i) Indebtedness of any Guarantor under Capital Lease Obligations
incurred in the ordinary course of business; and
(ii) Indebtedness of any Guarantor (a) issued to finance or refinance the
purchase or construction of any assets of such Guarantor or (b) secured by
a Lien on any assets of such Guarantor where the lender's sole recourse is
to the assets so encumbered, in either case (x) to the extent the purchase
or construction prices for such assets are or should be included in
"property and equipment" in accordance with GAAP and (y) if the purchase or
construction of such assets is not part of any acquisition of a Person or
business unit.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivisions thereof.
"Preferred Equity Interest," as applied to the Equity Interest of any
Person, means an Equity Interest of any class or classes (however designated)
which is preferred as to the payment of dividends or distributions, or as to
the distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over Equity Interests of any other class of such
Person.
"Public Equity Offering" means, with respect to any Person, an underwritten
public offering by such Person of some or all of its Equity Interests (other
than Disqualified Equity Interests), the net proceeds of which (after
deducting any underwriting discounts and commissions) exceed $10.0 million.
"Qualified Equity Interests" of any Person means any and all Equity
Interests of such Person other than Disqualified Equity Interests.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary.
"Sale and Leaseback Transaction" means any transaction or series of related
transactions pursuant to which the Company or a Restricted Subsidiary sells or
transfers any property or asset in connection with the leasing, or the resale
against installment payments, of such property or asset to the seller or
transferor.
"Securities Act" means the Securities Act of 1933, as amended.
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<PAGE>
"Stated Maturity," when used with respect to any Indebtedness or any
installment of interest thereon, means the date specified in such Indebtedness
as the fixed date on which the principal of such Indebtedness or such
installment of interest is due and payable.
"Subordinated Indebtedness" means Indebtedness of the Company or any
Guarantor subordinated in right of payment to the Notes or any Guarantee, as
the case may be.
"Subsidiary" means any Person a majority of the equity ownership or the
Voting Stock of which is at the time owned, directly or indirectly, by the
Company or by one or more other Subsidiaries, or by the Company and one or
more other Subsidiaries.
"Temporary Cash Investments" means (i) any evidence of Indebtedness,
maturing not more than one year after the date of acquisition, issued by the
United States of America, or an instrumentality or agency thereof and
guaranteed fully as to principal, premium, if any, and interest by the United
States of America, (ii) any certificate of deposit, maturing not more than one
year after the date of acquisition, issued by, or time deposit of, a
commercial banking institution (including the Trustee) that is a member of the
Federal Reserve System and that has combined capital and surplus and undivided
profits of not less than $500.0 million, whose debt has a rating, at the time
as of which any investment therein is made, of "P-1" (or higher) according to
Moody's Investors Service, Inc. ("Moody's") or any successor rating agency or
"A-1" (or higher) according to Standard & Poor's Corporation ("S&P") or any
successor rating agency, (iii) commercial paper, maturing not more than one
year after the date of acquisition, issued by a corporation (other than an
Affiliate or Subsidiary of the Company, but including the Trustee) organized
and existing under the laws of the United States of America with a rating, at
the time as of which any investment therein is made, of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P and (iv) any money
market deposit accounts issued or offered by a domestic commercial bank having
capital and surplus in excess of $500.0 million.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at
the time of determination shall be an Unrestricted Subsidiary (as designated
by the Board of Directors of the Company, as provided below) and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company (including any newly
acquired or newly formed Subsidiary) to be an Unrestricted Subsidiary if all
of the following conditions apply: (a) such Subsidiary is not liable, directly
or indirectly, with respect to any Indebtedness other than Unrestricted
Subsidiary Indebtedness and (b) any Investment in such Subsidiary made as a
result of designating such Subsidiary an Unrestricted Subsidiary shall not
violate the provisions of the "--Certain Covenants--Limitation on Unrestricted
Subsidiaries" covenant. Any such designation by the Board of Directors of the
Company shall be evidenced to the Trustee by filing with the Trustee a board
resolution giving effect to such designation and an officers' certificate
certifying that such designation complies with the foregoing conditions. The
Board of Directors of the Company may designate any Unrestricted Subsidiary as
a Restricted Subsidiary; provided that immediately after giving effect to such
designation, the Company could incur $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to the restrictions under the "--Certain
Covenants--Limitation on Indebtedness" covenant.
"Unrestricted Subsidiary Indebtedness" of any Unrestricted Subsidiary means
Indebtedness of such Unrestricted Subsidiary (i) as to which neither the
Company nor any Restricted Subsidiary is directly or indirectly liable (by
virtue of the Company or any such Restricted Subsidiary being the primary
obligor on, guarantor of, or otherwise liable in any respect to, such
Indebtedness), except Guaranteed Debt of the Company or any Restricted
Subsidiary to any Affiliate, in which case (unless the incurrence of such
Guaranteed Debt resulted in a Restricted Payment at the time of incurrence)
the Company shall be deemed to have made a Restricted Payment equal to the
principal amount of any such Indebtedness to the extent guaranteed at the time
such Affiliate is designated an Unrestricted Subsidiary and (ii) which, upon
the occurrence of a default with respect thereto, does not result in, or
permit any holder of any Indebtedness of the Company or any Restricted
88
<PAGE>
Subsidiary to declare, a default on such Indebtedness of the Company or any
Restricted Subsidiary or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity.
"Voting Stock" means stock of the class or classes pursuant to which the
holders thereof have the general voting power under ordinary circumstances to
elect at least a majority of the board of directors, managers or trustees of a
corporation (irrespective of whether or not at the time stock of any other
class or classes shall have or might have voting power by reason of the
happening of any contingency).
"Wholly Owned Restricted Subsidiary" means a Restricted Subsidiary all the
Equity Interests of which are owned by the Company or another Wholly Owned
Restricted Subsidiary. The Wholly Owned Restricted Subsidiaries of the Company
currently consist of all the Company's Subsidiaries.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the material United States federal income tax
consequences of the Exchange Offer is for general information only. It is
based on the Internal Revenue Code of 1986, as amended to the date hereof (the
"Code"), existing and proposed Treasury regulations, and judicial and
administrative determinations, all of which are subject to change at any time,
possibly on a retroactive basis. The following relates only to Old Notes, and
Notes received therefor, that are held as "capital assets" within the meaning
of Section 1221 of the Code by persons who are citizens or residents of the
United States. It does not discuss state, local, or foreign tax consequences,
nor does it discuss tax consequences to categories of holders that are subject
to special rules, such as foreign persons, tax-exempt organizations, insurance
companies, banks, and dealers in stocks and securities. Tax consequences may
vary depending on the particular status of an investor. No rulings will be
sought from the Internal Revenue Service ("IRS") with respect to the federal
income tax consequences of the Exchange Offer.
THIS SECTION DOES NOT PURPORT TO DEAL WITH ALL ASPECTS OF FEDERAL INCOME
TAXATION THAT MAY BE RELEVANT TO A HOLDER'S DECISION TO PARTICIPATE IN THE
EXCHANGE OFFER. EACH HOLDER SHOULD CONSULT WITH ITS OWN TAX ADVISOR CONCERNING
THE APPLICATION OF THE FEDERAL INCOME TAX LAWS AND OTHER TAX LAWS TO ITS
PARTICULAR SITUATION BEFORE DETERMINING WHETHER TO PARTICIPATE IN THE EXCHANGE
OFFER.
THE EXCHANGE OFFER
The exchange of the Old Notes for the Notes pursuant to the Exchange Offer
will not constitute a material modification of the terms of the Old Notes or
the Notes and, thus, such exchange will not constitute an exchange for federal
income tax purposes. Accordingly, such exchange will have no federal income
tax consequences to the holders of the Old Notes or the Notes, regardless of
whether such holders participate in the Exchange Offer, and each holder will
continue to be required to include interest on the Notes or the Old Notes, if
not exchanged, in its gross income in accordance with its method of accounting
for federal income tax purposes. The Company intends, to the extent required,
to treat the Exchange Offer for federal income tax purposes in accordance with
the position described in this paragraph.
BACKUP WITHHOLDING
Under the Code, a holder of a Note may be subject, under certain
circumstances, to "backup withholding" at a 31% rate with respect to payments
in respect of interest thereon or the gross proceeds from the disposition
thereof. This withholding generally applies only if the holder (i) fails to
furnish his or her social security or other taxpayer identification number
("TIN") within a reasonable time after request therefor, (ii) furnishes an
incorrect TIN, (iii) is notified by the IRS that he or she has failed to
report properly payments of interest and dividends and the IRS has notified
the Company that he or she is subject to backup withholding, or (iv) fails,
under certain circumstances, to provide a certified statement, signed under
penalty of perjury, that the TIN provided is his or
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<PAGE>
her correct number and that he or she is not subject to backup withholding.
Any amount withheld from a payment to a holder under the backup withholding
rules is allowable as a credit against such holder's federal income tax
liability, provide that the required information is furnished to the IRS.
Corporations and certain other entities described in the Code and Treasury
regulations are exempt from such withholding if their exempt status is
properly established.
PLAN OF DISTRIBUTION
Each broker-dealer that receives Notes for its own account pursuant to the
Exchange Offer in exchange for Old Notes that were acquired by such broker-
dealer for its own account as a result of market-making activities or other
trading activities (a "Participating Broker") must acknowledge that it will
deliver a prospectus in connection with any resale of such Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Participating Broker in connection with any resale of Notes. For a
period of 180 days after the Expiration Date, the Company will make a
reasonable number of additional copies of this Prospectus, as amended or
supplemented, available to any Participating Broker requesting the same
through the Exchange Agent for use in connection with any such resale. In
addition, until , 1998 (90 days after the date of this Prospectus), all
dealers effecting transactions in the Notes may be required to deliver a
prospectus.
The Company will not receive any proceeds from any sale of Notes by broker-
dealers. Notes received by any Participating Broker may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Notes or a combination of
such methods of resale, at market prices prevailing at the time of resale, at
prices related to such prevailing market prices or at negotiated prices. Any
such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such broker-dealer and/or the purchasers of any such Notes. Any
Participating Broker that resells Notes that were received by it for its own
account pursuant to the Exchange Offer and any broker or dealer that
participates in a distribution of such Notes may be deemed to be an
"underwriter" within the meaning of the Securities Act and any profit on any
such resale of Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will
deliver and by delivering a prospectus as required, a Participating Broker
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange Offer
(which shall not include the expenses of any holder in connection with resales
of the Notes). The Company has agreed to indemnify the holders of the Notes,
including any Participating Broker, against certain liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the Notes and Guarantees offered hereby will be passed upon
for the Company by Gibson, Dunn & Crutcher LLP, Orange County, California.
EXPERTS
The consolidated financial statements of Salem Communications Corporation at
December 31, 1995 and 1996, and for each of the three years in the period
ended December 31, 1996, appearing in this Prospectus and Registration
Statement have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon appearing elsewhere herein, and are included in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Auditors............................................ F-2
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1995 and 1996 and September
30, 1997 (unaudited)..................................................... F-3
Consolidated Statements of Operations for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1996 and 1997
(unaudited).............................................................. F-4
Consolidated Statements of Shareholders' Equity for the years ended
December 31, 1994, 1995 and 1996 and the nine months ended September 30,
1996 and 1997 (unaudited)................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1994, 1995 and 1996 and the nine months ended September 30, 1996 and 1997
(unaudited).............................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders
Salem Communications Corporation
We have audited the accompanying consolidated balance sheets of Salem
Communications Corporation as of December 31, 1995 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash flows
for each of the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Salem
Communications Corporation at December 31, 1995 and 1996, and the consolidated
results of their operations and their cash flows for each of the three years
in the period ended December 31, 1996 in conformity with generally accepted
accounting principles.
Ernst & Young LLP
May 9, 1997, except for basis of presentation and reorganization under Note 1
as to which the date is August 13, 1997
Woodland Hills, California
F-2
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DECEMBER 31
----------------- SEPTEMBER 30
1995 1996 1997
-------- -------- ------------
(UNAUDITED)
ASSETS
------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents..................... $ 1,007 $ 1,962 $ 2,103
Accounts receivable (less allowance for
doubtful accounts of $704 in 1995, $1,005 in
1996 and $1,249 in 1997)..................... 9,215 10,542 10,991
Other receivables............................. 151 194 110
Prepaid expenses.............................. 197 308 964
Prepaid income taxes.......................... 24 70 39
Tower construction project held for sale...... -- -- 2,943
Deferred income taxes......................... 1,071 537 3,170
-------- -------- --------
Total current assets............................ 11,665 13,613 20,320
Property, plant and equipment, net.............. 24,595 30,307 36,172
Intangible assets:
Broadcast licenses............................ 69,169 117,081 138,460
Noncompetition agreements..................... 14,887 14,893 14,893
Customer lists and contracts.................. 3,144 4,094 4,094
Favorable and assigned leases................. 1,798 1,800 1,800
Goodwill...................................... 5,152 5,795 6,002
Organizational costs and other intangible
assets....................................... 974 972 972
-------- -------- --------
95,124 144,635 166,221
Less accumulated amortization................. 33,201 37,854 44,388
-------- -------- --------
Intangible assets, net........................ 61,923 106,781 121,833
Notes receivable from shareholders and accrued
interest....................................... 4,642 28 --
Bond issue costs................................ -- -- 4,638
Other assets.................................... 1,992 8,456 1,170
-------- -------- --------
Total assets.................................... $104,817 $159,185 $184,133
======== ======== ========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
Current liabilities:
Accounts payable.............................. $ 2,786 $ 1,935 $ 884
Accrued expenses.............................. 295 485 592
Accrued compensation and related.............. 1,224 1,589 1,615
Accrued interest.............................. 252 1,157 11
Income taxes.................................. 20 189 --
Current portion of long-term debt............. 6,000 -- --
-------- -------- --------
Total current liabilities....................... 10,577 5,355 3,102
Long-term debt, less current portion ........... 75,020 121,790 160,100
Deferred income taxes........................... 5,829 11,427 11,490
Other liabilities............................... 109 79 55
Shareholders' equity:
Common stock, no par value; authorized 100,000
shares; issued and outstanding 81,672 shares. 5,832 5,832 5,832
Retained earnings............................. 7,450 14,702 3,554
-------- -------- --------
Total shareholders' equity...................... 13,282 20,534 9,386
-------- -------- --------
Total liabilities and shareholders' equity...... $104,817 $159,185 $184,133
======== ======== ========
</TABLE>
See accompanying notes.
F-3
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER
YEAR ENDED DECEMBER 31 30
------------------------- ----------------
1994 1995 1996 1996 1997
------- ------- ------- ------- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Gross broadcasting revenue........ $42,591 $53,303 $65,141 $46,974 $54,471
Less agency commissions........... 4,016 5,135 6,131 4,509 5,022
------- ------- ------- ------- -------
Net broadcasting revenue.......... 38,575 48,168 59,010 42,465 49,449
Operating expenses:
Station operating expenses...... 22,179 27,527 33,463 23,907 28,793
Corporate expenses (including
$800 in shareholder salaries in
1994, 1995 and 1996)........... 3,292 3,799 4,663 3,413 4,998
Tax reimbursements to S
corporation shareholders....... 977 2,057 2,038 1,529 1,780
Depreciation and amortization... 7,633 7,884 8,394 6,148 9,382
------- ------- ------- ------- -------
Operating expenses.............. 34,081 41,267 48,558 34,997 44,953
------- ------- ------- ------- -------
Net operating income.............. 4,494 6,901 10,452 7,468 4,496
Other income (expense):
Interest income................. 230 319 523 312 156
Gain (loss) on disposal of
assets......................... (482) (7) 16,064 12,659 (190)
Interest expense................ (3,668) (6,646) (7,361) (5,510) (8,548)
Other expense................... (135) (255) (270) (209) (288)
------- ------- ------- ------- -------
Income (loss) before income taxes
and extraordinary item........... 439 312 19,408 14,720 (4,374)
Provision (benefit) for income
taxes............................ (247) (204) 6,655 5,046 (1,790)
------- ------- ------- ------- -------
Income (loss) before extraordinary
item............................. 686 516 12,753 9,674 (2,584)
Extraordinary loss on early
extinguishment of debt (net of
income tax benefit of $263 in
1995 and $755 in 1997)........... -- (394) -- -- (1,090)
------- ------- ------- ------- -------
Net income (loss)................. $ 686 $ 122 $12,753 $ 9,674 $(3,674)
======= ======= ======= ======= =======
Pro forma information (unaudited):
Income (loss) before income taxes
and extraordinary item as
reported above................... $ 439 $ 312 $19,408 $14,720 $(4,374)
Add back tax reimbursements to S
Corporation shareholders......... 977 2,057 2,038 1,529 1,780
------- ------- ------- ------- -------
Pro forma income (loss) before
income taxes and extraordinary
item ............................ 1,416 2,369 21,446 16,249 (2,594)
Pro forma provision (benefit) for
income taxes..................... 568 951 8,608 6,522 (1,033)
------- ------- ------- ------- -------
Pro forma income (loss) before
extraordinary item............... 848 1,418 12,838 9,727 (1,561)
Extraordinary loss................ -- (394) -- -- (1,090)
------- ------- ------- ------- -------
Pro forma net income (loss)....... $ 848 $ 1,024 $12,838 $ 9,727 $(2,651)
======= ======= ======= ======= =======
</TABLE>
See accompanying notes.
F-4
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON RETAINED
STOCK EARNINGS TOTAL
------ -------- -------
<S> <C> <C> <C>
Shareholders' equity, January 1, 1994.............. $5,832 $ 6,642 $12,474
Net income......................................... -- 686 686
------ ------- -------
Shareholders' equity, December 31, 1994............ 5,832 7,328 13,160
Net income......................................... -- 122 122
------ ------- -------
Shareholders' equity, December 31, 1995............ 5,832 7,450 13,282
Net income......................................... -- 12,753 12,753
Shareholder distributions.......................... -- (5,501) (5,501)
------ ------- -------
Shareholders' equity, December 31, 1996............ 5,832 14,702 20,534
Net loss (unaudited)............................... -- (3,674) (3,674)
Shareholder distributions (unaudited).............. -- (7,474) (7,474)
------ ------- -------
Shareholders' equity, September 30, 1997
(unaudited)....................................... $5,832 $ 3,554 $ 9,386
====== ======= =======
</TABLE>
See accompanying notes.
F-5
<PAGE>
SALEM COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED DECEMBER 31 SEPTEMBER 30
---------------------------- -------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........... $ 686 $ 122 $ 12,753 $ 9,674 $ (3,674)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and
amortization.............. 7,633 7,884 8,394 6,148 9,382
Amortization of bank loan
fees...................... 85 104 109 82 165
Deferred income taxes...... (214) (341) 6,133 4,335 (2,570)
(Gain) loss on sale of
assets.................... 482 7 (16,064) (12,659) 190
Accrued interest from
shareholders.............. (174) (213) -- (172) --
Income recognition on
noncompetition
agreements................ (80) -- -- -- --
Loss on early
extinguishment of debt.... -- 657 -- -- 1,845
Changes in operating
assets and liabilities:
Accounts receivable...... (931) (2,539) (1,370) 511 (365)
Prepaid expenses and
other current assets.... (81) 9 (111) (275) (798)
Accounts payable and
accrued expenses........ 401 1,950 558 1,639 (2,065)
Other liabilities........ (5) (30) (30) (22) (25)
Income taxes............. (320) 71 123 -- (157)
-------- -------- -------- -------- ---------
Net cash provided by
operating activities....... 7,482 7,681 10,495 9,261 1,928
INVESTING ACTIVITIES
Capital expenditures....... (2,441) (3,040) (6,982) (4,119) (5,502)
Purchases of radio
stations.................. (14,935) (24,454) (21,160) (8,329) (18,806)
Deposits on radio station
acquisitions.............. (1,050) (125) (6,314) (16,288) --
Proceeds from disposal of
property, plant and
equipment and intangible
assets.................... 47 38 15,867 15,831 133
Expenditures for tower
construction project held
for sale.................. -- -- -- -- (2,943)
Other assets............... (427) (100) (334) (345) 526
-------- -------- -------- -------- ---------
Net cash used in investing
activities................. (18,806) (27,681) (18,923) (13,250) (26,592)
FINANCING ACTIVITIES
Proceeds from issuance of
long-term debt and notes
payable to shareholders... 17,300 42,840 23,800 17,500 222,710
Payments of long-term
debt...................... (5,300) (22,220) (15,430) (10,630) (182,500)
Payments of bank loan
fees...................... (175) (856) -- -- (1,003)
Payments of costs related
to debt refinancing....... -- (228) -- -- (418)
Payments of bond issue
costs..................... -- -- -- -- (4,638)
Repayments (additions) of
shareholder notes and
repayment of accrued
interest receivable--net.. 2 (309) 4,614 (2,838) (1,872)
Proceeds from shareholder
notes payable............. -- -- 1,900 -- --
Distributions to
shareholders.............. -- -- (5,501) (700) (7,474)
-------- -------- -------- -------- ---------
Net cash provided by
financing activities...... 11,827 19,227 9,383 3,332 24,805
-------- -------- -------- -------- ---------
Net (decrease) increase in
cash and cash
equivalents............... 503 (773) 955 (657) 141
Cash and cash equivalents
at beginning of year...... 1,277 1,780 1,007 1,007 1,962
-------- -------- -------- -------- ---------
Cash and cash equivalents at
end of year................ $ 1,780 $ 1,007 $ 1,962 $ 350 $ 2,103
======== ======== ======== ======== =========
Supplemental disclosures of
cash flow information:
Cash paid during the year
for:
Interest................. $ 3,425 $ 6,816 $ 6,158 $ 4,475 $ 9,288
Income taxes............. 287 288 400 227 221
Noncash transactions:
Acquisition of radio
station (KWRD-FM)
Fair market value of
assets acquired......... $ -- $ -- $ 40,100 $ -- $ --
Debt to seller........... -- -- (30,500) -- --
Fair market value of
assets exchanged........ -- -- (8,000) -- --
-------- -------- -------- -------- ---------
Cash paid (reflected in
Deposits on radio station
acquisitions).............. $ -- $ -- $ 1,600 $ -- $ --
======== ======== ======== ======== =========
</TABLE>
See accompanying notes.
F-6
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND REORGANIZATION
The accompanying consolidated financial statements of Salem Communications
Corporation (Salem or the Company) include the Company and its wholly-owned
subsidiaries. Prior to the reorganization described below (the Reorganization)
the financial statements had been presented on a combined basis and included
Salem, New Inspiration Broadcasting Company, Inc. (New Inspiration), Golden
Gate Broadcasting Company, Inc. (Golden Gate) and Beltway Media Partners
(Beltway), all of these entities were under common control. New Inspiration
and Golden Gate were S corporations for income tax purposes. Salem, New
Inspiration and Golden Gate are the partners of Beltway. The combined
financial statements were entitled Salem Broadcasting Entities. Pursuant to
the Reorganization the financial statements have been renamed and the
disclosure of common stock information has been retroactively restated for all
periods presented as if the Reorganization had been completed as of the
beginning of the earliest period presented. All significant intercompany
balances and transactions have been eliminated.
The Company is a holding company with substantially no assets, operations or
cash flows other than its investment in subsidiaries. All of the Company's
subsidiaries are Guarantors of the 9 1/2% Senior Subordinated Notes due 2007
(the Notes) and the exchange notes (the Exchange Notes) discussed in Note 4.
The Guarantors (i) are wholly owned subsidiaries of the Company, (ii) comprise
all the Company's direct and indirect subsidiaries and (iii) have and will
fully and unconditionally guarantee, on a joint and several basis, the Notes
and the Exchange Notes, respectively. The Company has not presented separate
financial statements and other disclosures concerning the Guarantors because
management has determined that such information is not material to investors.
In August 1997, the Company, New Inspiration and Golden Gate effected the
Reorganization pursuant to which New Inspiration and Golden Gate became
wholly-owned subsidiaries of the Company, with Beltway remaining a
partnership. The Company accounted for the Reorganization as a combination of
entities under common control, which is a method similar to a pooling of
interests.
The S corporation status of New Inspiration and Golden Gate was terminated
in the Reorganization. Prior to the Reorganization, New Inspiration and Golden
Gate distributed cash and promissory notes to their respective shareholders in
the aggregate amount of $8.5 million. Of such amount, $1.8 million, equal to
the estimated federal and state income tax liability of the S corporation
shareholders on the earnings of New Inspiration and Golden Gate, was paid by
New Inspiration and Golden Gate in cash. The balance, $6.7 million
representing the balance of the net income of New Inspiration and Golden Gate
that had previously been taxed, but not distributed to the shareholders, was
paid in the form of promissory notes. In September 1997, the Company financed
the repayment of these promissory notes by an additional borrowing.
DESCRIPTION OF BUSINESS
Salem operated 39 and 31 radio stations across the United States at December
31, 1996 and 1995, respectively. The Company also owns and operates Salem
Radio Network (SRN), SRN News Network (SNN), Salem Music Network (SMN) and
Salem Radio Representatives (SRR). SRN, SNN and SMN are radio networks which
produce and distribute talk, news and music programming to Salem's radio
stations and other affiliated independent radio stations. SRR sells commercial
air time to national advertisers for Salem's radio stations and networks, and
for affiliated independent radio stations.
The significant accounting policies of Salem are summarized below and
conform with generally accepted accounting principles and reflect practices
appropriate to the radio broadcasting industry.
F-7
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INTERIM FINANCIAL DATA
The unaudited financial statements of the Company for the nine months ended
September 30, 1996 and 1997 have been prepared on the same basis as the
audited financial statements and, in the opinion of management, include all
adjustments (consisting only of normal recurring adjustments) necessary to
state fairly the financial information set forth therein, in accordance with
generally accepted accounting principles.
The results of operations for the nine months ended September 30, 1997 are
not necessarily indicative of the results to be expected for the full fiscal
year.
REVENUE RECOGNITION
Revenue from radio programs and commercial advertising is recognized when
broadcast. Salem's customers principally include not-for-profit charitable
organizations and commercial advertisers.
Advertising by the radio stations exchanged for goods and services is
recorded as the advertising is broadcast and is valued at the fair market
value of goods or services received or to be received. The value of the goods
and services received in such barter transactions is charged to expense when
used. Barter revenue for the years ended December 31, 1994, 1995 and 1996, was
approximately $1,431,000, $1,467,000 and $1,498,000, respectively. Barter
expenses were approximately the same.
CASH EQUIVALENTS
Salem considers all highly liquid debt instruments with a maturity of three
months or less when purchased to be cash equivalents. The recorded amount for
cash and cash equivalents approximates the fair market value.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost less accumulated
depreciation. Depreciation is computed using the straight-line method over
estimated useful lives as follows:
<TABLE>
<S> <C>
Buildings..................................... 40 years
Office furnishings and equipment.............. 5-10 years
Antennae, towers and transmitting equipment... 20 years
Studio and production equipment............... 10 years
Record and tape libraries..................... 20 years
Automobiles................................... 5 years
Leasehold improvements........................ 15 years
</TABLE>
The carrying value of property, plant and equipment is evaluated
periodically in relation to the operating performance and anticipated future
cash flows of the underlying radio stations and businesses for indicators of
impairment. When indicators of impairment are present and the undiscounted
cash flows estimated to be generated from these assets are less than the
carrying value of these assets an adjustment to reduce the carrying value (if
necessary) to the fair market value of the assets is recorded. No adjustments
to the carrying amounts of property, plant and equipment have been made during
the years ended December 31, 1994, 1995 and 1996.
F-8
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INTANGIBLE ASSETS
Intangible assets acquired in conjunction with the acquisition of various
radio stations are being amortized over the following estimated useful lives
using the straight-line method:
<TABLE>
<S> <C>
Broadcast licenses..................... 10-25 years
Noncompetition agreements.............. 3-5 years
Customer lists and contracts........... 10 years
Favorable and assigned leases.......... Life of the lease
Goodwill............................... 15-40 years
Organizational costs and other......... 5-10 years
</TABLE>
The carrying value of intangibles is evaluated periodically in relation to
the operating performance and anticipated future cash flows of the underlying
radio stations and businesses for indicators of impairment. When indicators of
impairment are present and the undiscounted cash flows estimated to be
generated from these assets are less than the carrying amounts of these
assets, an adjustment to reduce the carrying value (if necessary) to the fair
market value of these assets is recorded. No adjustments to the carrying
amounts of intangible assets have been made during the year ended December 31,
1994, 1995 and 1996.
BOND ISSUE COSTS
Bond issue costs are being amortized over the term of the Notes as an
adjustment to interest expense.
TAX REIMBURSEMENTS TO S CORPORATION SHAREHOLDERS
"Tax reimbursements to S Corporation shareholders" represents additional
salary payments made in the amount necessary to satisfy individual federal and
state income tax liabilities of the S Corporation shareholders on the earnings
of New Inspiration and Golden Gate.
INCOME TAXES
The Company accounts for income taxes in accordance with the Financial
Accounting Standards Board Statement of Financial Accounting Standards (SFAS)
No. 109, "Accounting for Income Taxes." SFAS No. 109 prescribes the liability
method of providing for deferred income taxes. Deferred income taxes arise
from temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements.
Federal and state income taxes (except for 1.5% state franchise tax) have
not been provided through August 12, 1997 for New Inspiration and Golden Gate
because they were S Corporations and income tax attributes of S Corporations
are passed through to their shareholders.
Income taxes for the nine months ended September 30, 1996 and 1997 were
provided for using the estimated annual effective tax rate. The income tax
provision for the nine months ended September 30, 1997 includes a charge of
$612,000 for the reinstatement of deferred taxes upon the reorganization and
conversion of New Inspiration and Golden Gate from S Corporation to C
Corporation status effective August 13, 1997.
F-9
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
CONCENTRATIONS OF BUSINESS AND CREDIT RISKS
The majority of the Company's operations are conducted in several locations
across the country. The Company's credit risk is spread across a large number
of customers, none of which accounted for a significant volume of revenue or
outstanding receivables. The Company does not normally require collateral on
credit sales; however, credit histories are reviewed before extending
substantial credit to any customer. The Company
establishes an allowance for doubtful accounts based on customers' payment
history and perceived credit risks. Bad debts have been within management's
expectations.
INTEREST RATE SWAP AGREEMENTS
The Company enters into interest-rate swap agreements to modify the interest
characteristics of its outstanding debt. Each interest-rate swap agreement is
designated with all or a portion of the principal balance and term of a
specific debt obligation. These agreements involve the exchange of amounts
based on a fixed interest rate for amounts based on variable interest rates
over the life of the agreement without an exchange of the notional amount upon
which the payments are based. The differential to be paid or received as
interest rates change is accrued and recognized as an adjustment of interest
expense related to the debt. The related amount payable to or receivable from
counterparties is included in other liabilities or assets. The fair value of
the swap agreements and changes in the fair value as a result of changes in
market interest rates are not recognized in the financial statements.
Gains and losses on terminations of interest-rate swap agreements are
deferred as an adjustment to the carrying amount of the outstanding debt and
amortized as an adjustment to interest expense related to the debt over the
remaining term of the original contract life of the terminated swap agreement.
In the event of the early extinguishment of a designated debt obligation, any
realized or unrealized gain or loss from the swap would be recognized in
income coincident with the extinguishment gain or loss.
INTEREST RATE CAP AGREEMENTS
The Company purchases interest-rate cap agreements that are designed to
limit its exposure to increasing interest rates. An interest rate cap entitles
the Company to receive a payment from the counter-party equal to the excess,
if any, of the hypothetical interest expense (strike price) on a specified
notional amount at a current market interest rate over an amount specified in
the agreement. The only amount the Company is obligated to pay to the
counterparty is an initial premium. The strike price of these agreements
exceeds the current market levels at the time they are entered into. The cost
of these agreements is included in other assets and amortized to interest
expense ratably during the life of the agreement.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
RECLASSIFICATIONS
Certain reclassifications were made to the prior year financial statements
to conform to the current year presentation.
F-10
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS
Pro forma information to present operating results as if the acquisitions
discussed below had occurred at the beginning of the year acquired is not
presented because the Company, generally, changes the programming format of
the radio stations such that the source and nature of revenue and operating
expenses are significantly different than they were prior to the acquisition
and, accordingly, historical and pro forma financial information is not
considered meaningful by management. Pro forma and historical financial
information of radio stations acquired where the format was not changed is not
significant to the consolidated financial position or operating results of the
Company.
During the nine months ended September 30, 1997, the Company purchased the
assets (principally intangibles) of the following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
January 21, 1997............. WHK-AM Cleveland, OH $ 6,220
February 20, 1997............ WHK-FM Canton, OH 5,903
February 20, 1997............ WHLO-AM Akron, OH 1,995
February 28, 1997............ WEZE-AM Boston, MA 7,030
April 2, 1997................ KTKZ-AM Sacramento, CA 1,485
July 18, 1997................ WITH-AM Baltimore, MD 1,114
July 18, 1997................ WTSJ-AM Cincinnati, OH 1,114
-------
$24,861
=======
</TABLE>
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 3,534
Broadcast licenses and other intangibles.................... 21,327
-------
$24,861
=======
</TABLE>
F-11
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS, CONTINUED
During the year ended December 31, 1996, the Company purchased the assets
(principally intangibles) (and in the case of KBIQ-FM, all of the outstanding
shares of common stock) of the following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
February 1, 1996........ KTSL-FM Seattle, WA $ 900
February 1, 1996........ KLTE-FM Kirksville, MO 550
February 1, 1996........ KPRZ-FM Colorado Springs, CO 1,400
March 1, 1996........... KGFT-FM Colorado Springs, CO 3,000
March 15, 1996.......... KNUS-AM Denver, CO 1,100
October 5, 1996......... KPXQ-AM Phoenix, AZ 6,500
October 25, 1996........ KBIQ-FM Colorado Springs, CO 2,825
December 6, 1996........ KKMS-AM Minneapolis, MN 1,894
December 30, 1996....... KWRD-FM Dallas, TX 40,100
April 3, 1996........... Standard News Network Washington, D.C. --
August 1, 1996.......... The Word in Music Colorado Springs, CO 120
August 23, 1996......... Morningstar Radio Network Nashville, TN 1,232
-------
$59,621
=======
</TABLE>
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 3,767
Broadcast licenses.......................................... 53,116
Goodwill and other intangibles.............................. 2,738
-------
$59,621
=======
</TABLE>
In 1996, the Company sold the assets (principally intangibles) of radio
stations WTJY-FM (Johnstown, Ohio), for $1.5 million, KLTE-FM (Kirksville,
Missouri), for $550,000 and KDBX-FM (Banks, Oregon), for $14 million. In
addition, KDFX-AM (Dallas, Texas), was exchanged as part of the purchase price
of KWRD-FM. The Company received approximately $8 million of value of KDFX-AM
towards the total purchase price of KWRD-FM of $40.1 million, resulting in a
gain recognized of approximately $4.0 million.
In 1995, the Company purchased the assets (principally intangibles) (and in
the case of KDBX-FM, all of the outstanding shares of common stock) of the
following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
August 1, 1995................... KDBX-FM Portland, OR $ 1,850
August 9, 1995................... KDFX-AM Dallas, TX 4,500
April 14, 1995................... KFIA-AM Sacramento, CA 3,850
March 4, 1995.................... KKHT-FM Houston, TX 11,850
March 4, 1995.................... KENR-AM Houston, TX 2,500
-------
$24,550
=======
</TABLE>
F-12
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS
UNAUDITED)
2. ACQUISITIONS AND DISPOSITIONS OF ASSETS, CONTINUED
The purchase price has been allocated to the assets acquired as follows:
<TABLE>
<CAPTION>
ASSET AMOUNT
----- ------
(IN THOUSANDS)
<S> <C>
Property and equipment...................................... $ 5,125
Broadcast licenses.......................................... 17,572
Goodwill and other intangibles.............................. 1,853
-------
$24,550
=======
</TABLE>
In 1994, the Company purchased the assets (principally intangibles) of the
following radio stations:
<TABLE>
<CAPTION>
ACQUISITION MARKET PURCHASE
DATE STATION SERVED PRICE
----------- ------- ------ --------------
(IN THOUSANDS)
<S> <C> <C> <C>
January 3, 1994................. KRKS-AM Denver, CO $ 400
August 5, 1994.................. WWDJ-AM New York, NY 7,985
August 5, 1994.................. WZZD-AM Philadelphia, PA 4,600
August 5, 1994.................. KSLR-AM San Antonio, TX 1,000
April 24, 1994.................. WTJY-FM Columbus, OH 650
August 23, 1994................. KLFE-AM Seattle, WA 300
-------
$14,935
=======
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following at December 31:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
--------------- 1997
1995 1996 (UNAUDITED)
------- ------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Land............................................ $ 352 $ 356 $ 391
Buildings....................................... 1,744 2,084 1,783
Office furnishings and equipment................ 5,336 7,057 7,676
Antennae, towers and transmitting equipment..... 20,068 23,210 25,582
Studio and production equipment................. 9,127 11,545 12,694
Record and tape libraries....................... 442 442 442
Automobiles..................................... 82 81 62
Leasehold improvements.......................... 1,892 2,997 3,141
Construction-in-progress........................ 1,679 1,633 6,202
------- ------- -------
40,722 49,405 57,973
Less accumulated depreciation................... 16,127 19,098 21,801
------- ------- -------
$24,595 $30,307 $36,172
======= ======= =======
</TABLE>
F-13
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT
Long-term debt consisted of the following at:
<TABLE>
<CAPTION>
DECEMBER 31 SEPTEMBER 30
---------------- 1997
1995 1996 (UNAUDITED)
------- -------- ------------
(IN THOUSANDS)
<S> <C> <C> <C>
Note payable to banks and revolving line of
credit....................................... $81,020 $ 89,390 $ 10,100
9 1/2% Senior Subordinated Notes due 2007..... -- -- 150,000
Note payable to seller of KWRD-FM............. -- 30,500 --
Unsecured notes payable to shareholder with
interest at a bank's prime rate plus 1 1/4%.. -- 1,900 --
------- -------- --------
81,020 121,790 160,100
Less current portion.......................... 6,000 -- --
------- -------- --------
$75,020 $121,790 $160,100
======= ======== ========
</TABLE>
Since the note payable to banks and revolving line of credit carry floating
interest rates, the carrying amount approximates their fair market value. The
Notes were issued in September 1997 at par; the carrying amount approximates
their fair market value.
CREDIT AGREEMENTS WITH BANKS
In January 1997, Salem amended and restated its credit agreement with five
banks to provide for a $150 million revolving line of credit. Interest was
payable quarterly. Commencing June 30, 1999, the commitment under the credit
agreement reduced by $12.5 million semiannually through December 31, 2002, and
by $25 million semiannually through December 31, 2003, when the credit
agreement was to expire. The classification of the notes payable to banks and
revolving line of credit in the accompanying balance sheet at December 31,
1996 is based on the terms of this credit agreement. The interest rate on
amounts outstanding at December 31, 1996 under this credit agreement was
7.83%.
In September 1997, Salem entered into a new credit agreement with the five
banks (the Credit Agreement) to provide for borrowing capacity of up to $75
million under a revolving line of credit. The maximum amount that the Company
may borrow under the Credit Agreement is limited by the Company's debt to cash
flow ratio, adjusted for recent radio station acquisitions as defined in the
Credit Agreement (the Adjusted Debt to Cash Flow Ratio). At September 30,
1997, the maximum Adjusted Debt to Cash Flow Ratio allowed under the Credit
Agreement was 7.00 to 1.00. The Company's ability to borrow for the purpose of
acquiring a radio station is further limited by the Credit Agreement in that
the Company may not borrow for an acquisition if the Adjusted Debt to Cash
Flow Ratio is greater than 6.00 to 1.00. At September 30, 1997, the Adjusted
Debt to Cash Flow Ratio was 6.07 to 1.00, resulting in total borrowing
availability of approximately $19.9 million, none of which can currently be
used for radio station acquisitions. The note evidencing the indebtedness
bears interest at a fluctuating base rate plus a spread that was determined by
Salem's Adjusted Debt to Cash Flow Ratio. At Salem's option, the base rate is
either a bank's prime rate or LIBOR. For purposes of determining the interest
rate the prime rate spread ranges from 0% to 1.75%, and the LIBOR spread
ranges from 1% to 3%. Interest is payable quarterly. Commencing March 31,
1999, the commitment under the Credit Agreement reduces by $2.5 million
quarterly through December 31, 2003, and by $6.25 million quarterly through
June 30, 2004. The Credit Agreement expires August 31, 2004. The
classification of the amounts due under the revolving line of credit in the
accompanying balance sheet at September 30, 1997 is based on the terms of the
Credit Agreement.
F-14
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT, CONTINUED
The Credit Agreement with the banks (a) provides for restrictions on
additional borrowings and leases; (b) prohibits Salem, without prior approval
from the banks, from paying dividends, liquidating, merging, consolidating or
selling its assets or business, and (c) requires Salem to maintain certain
financial ratios and other covenants. Salem has pledged all of its assets as
collateral under the Credit Agreement. Additionally, all the Company's stock
holdings in its subsidiaries are pledged as collateral.
In September 1997, in connection with the issuance of the Notes and the
Credit Agreement the Company repaid all amounts due under the revolving line
of credit with the banks. The Company wrote off certain deferred financing
costs and terminated all of its interest rate swap and cap agreements
associated with the line of credit (see Note 5). The write-off and termination
fees of $1,090,000, net of a $755,000 income tax benefit, was recorded as an
extraordinary item in the accompanying statement of operations for the nine
months ended September 30, 1997.
In March 1995, Salem amended and restated its then existing credit agreement
with two banks. The number of banks which were parties to the credit agreement
was increased to five, and the credit facility was structured to provide for a
$50 million term loan and a $50 million revolving line of credit. In
connection with the refinancing the Company repaid all amounts due under the
then existing credit agreement with the two banks and senior subordinated
notes payable to insurance companies and wrote off certain deferred financing
costs as well as a make-whole premium to the insurance companies. The write-
off of $394,000, net of a $263,000 income tax benefit, was recorded as an
extraordinary item in the accompanying statement of operations for 1995.
SENIOR SUBORDINATED NOTES
The Notes bear interest at 9 1/2% per annum, with interest payment dates on
April 1 and October 1, commencing April 1, 1998. Principal is due on the
maturity date, October 1, 2007. The Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after October 1, 2002, at the
redemption prices specified in the indenture. The Notes are fully and
unconditionally guaranteed, jointly and severally, on a senior subordinated
basis by the Guarantors (the Company's subsidiaries). The Notes are general
unsecured obligations of the Company, subordinated in right of payment to all
existing and future senior indebtedness, including the Company's obligations
under the Credit Agreement. The indenture limits the incurrence of additional
indebtedness by the Company, the payment of dividends, the use of proceeds of
certain asset sales, and contains certain other restrictive covenants
affecting the Company. The Company has filed a registration statement under
the Securities Act of 1933, relating to an exchange offer for the Notes (the
Exchange Offer). If such registration statement has not become effective or
the Exchange Offer is not consummated within the time periods set forth in the
registration rights agreement, the interest rate on the Notes will be
increased. The exchange notes (the Exchange Notes) will be identical in all
material respects to the Notes except that the Exchange Notes will not contain
terms with respect to transfer restrictions or provide for penalty amounts for
future periods. The Exchange Notes are fully and unconditionally guaranteed,
jointly and severally, on a senior subordinated basis by the Guarantors. The
Exchange Notes would in general be freely transferable after the Exchange
Offer without further registration under the Securities Act of 1933.
OTHER DEBT
The $30,500,000 note payable to the seller of KWRD-FM represents amounts
payable at December 31, 1996, under a purchase agreement. The amount was paid
in January 1997 with the proceeds from a borrowing under the revolving line of
credit with the banks; accordingly, the amount is reflected as long-term debt
in the accompanying balance sheet at December 31, 1996, consistent with the
terms of the January 1997 credit agreement.
F-15
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
4. LONG-TERM DEBT, CONTINUED
In December 1996, the Company borrowed $1.9 million from one of its
shareholders. The note was repaid, including interest at 9 1/4%, on January
10, 1997, with proceeds from a borrowing under the revolving line of credit
with the banks; accordingly, the amount is reflected as long-term debt in the
accompanying balance sheet at December 31, 1996, consistent with the terms of
the January 1997 credit agreement.
MATURITIES OF LONG-TERM DEBT
Principal repayment requirements under all long-term debt agreements
outstanding at December 31, 1996 and September 30, 1997, for each of the next
five years and thereafter are as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30
DECEMBER 31 1997
1996 (UNAUDITED)
----------- ------------
(IN THOUSANDS)
<S> <C> <C>
1997............... $ -- $ --
1998............... -- --
1999............... -- --
2000............... 21,790 --
2001............... 25,000 --
Thereafter......... 75,000 160,100
-------- --------
$121,790 $160,100
======== ========
</TABLE>
The repayment requirements as of December 31, 1996 are per the revolving line
of credit agreement with the banks that the Company entered into in January
1997. The repayment requirements as of September 30, 1997 are per the Credit
Agreement and the Notes.
5. INTEREST RATE CAP AND SWAP AGREEMENTS
Salem had entered into interest rate swap and cap agreements to reduce the
impact of changes in interest rates on its floating-rate long-term debt. At
December 31, 1996, Salem had two outstanding interest rate cap agreements with
commercial banks, having a notional principal amount of $35 million. The
agreements effectively changed Salem's interest rate exposure on $35 million
of its senior secured notes to a fixed rate of 11.75% (including the interest
rate spread of 2.25%). In addition, Salem had two interest rate swap
agreements with two other commercial banks, having an aggregate notional
principal amount of $10 million. These agreements effectively changed Salem's
interest rate exposure on $5 million of its senior secured notes to a fixed
rate of 11.36% (including the interest rate spread of 2.25%) and on $5 million
of its senior secured notes to a fixed rate of 9.035% (including the interest
rate spread of 2.25%). The interest rate cap agreements were to mature in
March 1998, and the interest rate swap agreements were to mature in March
1999. Salem is exposed to credit loss in the event of nonperformance by the
other parties to the interest rate swap and cap agreements. However, Salem
does not anticipate nonperformance by the counterparties.
The fair value of the above interest rate swap agreements which are not
recognized in the financial statements reflected a negative value of the swaps
of $400,955 at December 31, 1996. The fair market value of the interest rate
cap agreements was $2,000 at December 31, 1996.
In March 1997, Salem amended its swap agreements to an aggregate notional
amount of $21.5 million, expiring in March 2001. These agreements effectively
changed Salem's interest rate exposure on $11.5 million
F-16
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
5. INTEREST RATE CAP AND SWAP AGREEMENTS, CONTINUED
of its senior secured notes to a fixed 9.405% (including the interest rate
spread of 2.25%), and on $10 million of its senior secured notes to a fixed
8.885% (including the interest rate spread of 2.25%). Also in March 1997,
Salem entered into two cap agreements having an aggregate notional amount of
$38.5 million, expiring in March 2000. The agreements effectively changed
Salem's interest rate exposure on $38.5 million of its senior secured notes to
a fixed rate of 11.75% (including the interest rate spread of 2.25%).
Salem assigned its obligation under a $5 million swap agreement to another
bank on January 8, 1996, for a fee of $426,000. This fee was being amortized
to interest expense over the term of the original agreement of three years. In
September 1997, in connection with the issuance of the Notes and the Credit
Agreement the Company terminated all of its interest rate swap and cap
agreements for aggregate fees of $417,000. The Company wrote off these costs
(unamortized swap fee of $201,000 and the swap termination fee of $417,000) in
September 1997. This write-off, net of income tax benefit, was included in the
extraordinary loss in the accompanying statement of operations for the nine
months ended September 30, 1997 (see Note 4).
6. INCOME TAXES
As discussed in Note 1, prior to the Reorganization, New Inspiration and
Golden Gate were S corporations for income tax purposes. Accordingly, any
federal and state income tax liability on net income of the S corporations has
been the liability of shareholders of the S corporations. The S corporation
status of New Inspiration and Golden Gate was terminated in the
Reorganization, which was effective August 13, 1997, and the income of New
Inspiration and Golden Gate will thereafter be subject to federal and state
income taxes. The accompanying consolidated statements of operations include
an unaudited pro forma income tax adjustment, using an estimated combined
effective tax rate of approximately 40%, to reflect the estimated income tax
expense of the Company as if New Inspiration and Golden Gate had been subject
to federal and state income taxes for the periods presented. In connection
with the Reorganization, which resulted in the termination of the
S corporation status of New Inspiration and Golden Gate, the Company recorded
a deferred tax liability and provision of approximately $612,000 in September
1997.
The consolidated provision (benefit) for income taxes for Salem consisted of
the following at December 31:
<TABLE>
<CAPTION>
1994 1995 1996
----- ----- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................ $ 14 $ 45 $ 189
State.......................... (47) 314 333
----- ----- ------
(33) 359 522
Deferred:
Federal........................ (321) (775) 5,737
State.......................... 107 (51) 396
----- ----- ------
(214) (826) 6,133
Current tax benefit reflected in
net extraordinary loss.......... -- (263) --
----- ----- ------
Income tax provision (benefit)... $(247) $(204) $6,655
===== ===== ======
</TABLE>
F-17
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
6. INCOME TAXES, CONTINUED
The consolidated deferred tax asset and liability consisted of the following
at December 31:
<TABLE>
<CAPTION>
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Financial statement accruals not currently deductible.... $ 359 $ 447
Net operating loss, AMT credit and other carryforwards... 910 280
State taxes.............................................. 95 102
------ -------
Total deferred tax assets.................................. 1,364 829
Valuation allowance for deferred tax assets................ (95) (95)
------ -------
Net deferred tax assets.................................... 1,269 734
Deferred tax liabilities:
Excess of net book value of property, plant and equipment
for financial reporting purposes over income tax
purposes................................................ 2,498 2,700
Excess of net book value of intangible assets for
financial reporting purposes over income tax purposes... 3,272 8,668
Other.................................................... 257 256
------ -------
Total deferred tax liabilities............................. 6,027 11,624
------ -------
Net deferred tax liabilities............................... $4,758 $10,890
====== =======
</TABLE>
A reconciliation of the statutory federal income tax rate to the effective
tax rate, as a percentage of income before income taxes, is as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31
------------------
1994 1995 1996
---- ---- ----
<S> <C> <C> <C>
Statutory federal income tax rate........................ 34 % 34 % 34 %
State income taxes, net.................................. (13) 53 3
Exclusive of income taxes of S corporations and the
Partnership............................................. (82) (177) (7)
Change in valuation allowance............................ 21 -- --
Other, net............................................... (16) 25 4
--- ---- ---
(56)% (65)% 34 %
=== ==== ===
</TABLE>
The S corporations had book income before income taxes of $1,062,191,
$1,791,580 and $3,814,431 in 1994, 1995 and 1996, respectively. These amounts
include the S corporations' 85% ownership interest in Beltway.
In 1996 the increase in the deferred tax liabilities related to intangible
assets is primarily due to gains on the disposal of assets of approximately
$14.6 million that are deferred for tax purposes under (S)1031 of the Internal
Revenue Code.
At December 31, 1996, the Company has net operating loss carryforwards for
state income tax purposes of approximately $1,200,000 which expire in years
1997 through 2008. The Company has federal alternative minimum tax credit
carryforwards of approximately $109,000. For financial reporting purposes, a
valuation allowance of $95,000 has been provided in 1996 and 1995 to offset a
portion of the deferred tax assets related to the state net operating loss
carryforwards.
F-18
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
7. COMMITMENTS AND CONTINGENCIES
Salem leases various land, offices, studios and other equipment under
operating leases that expire over the next 10 years. The majority of these
leases may be renewed for successive periods ranging from one to five years on
terms similar to current agreements except for specified increases in lease
payments. Rental expense included in operating expense under all lease
agreements was $2,485,661, $3,123,049 and $3,821,254 in 1994, 1995 and 1996,
respectively.
Future minimum rental payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1996, are as follows:
<TABLE>
<CAPTION>
RELATED
PARTIES OTHER TOTAL
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
1997........................... $1,046 $ 3,255 $ 4,301
1998........................... 1,045 3,259 4,304
1999........................... 1,045 3,208 4,253
2000........................... 1,045 2,724 3,769
2001........................... 1,045 2,149 3,194
Thereafter..................... 1,539 8,068 9,607
------ ------- -------
$6,765 $22,663 $29,428
====== ======= =======
</TABLE>
The Company is involved in certain legal actions and claims arising in the
normal course of business. It is the opinion of management that such
litigation and claims will be resolved without material effect on the
Company's consolidated financial position, operations and cash flows.
The Company has a deferred compensation agreement with one of its officers,
which provides for retirement payments to the officer for a period of ten
consecutive years, if he remains employed by the Company until age 60. The
retirement payments are based on a formula defined in the agreement. The
estimated obligation under the deferred compensation agreement is being
provided for over the service period. At September 30, 1997, a liability of
approximately $355,000 is included in accrued compensation in the accompanying
balance sheet for the amounts earned under this agreement.
8. RELATED PARTY TRANSACTIONS
A shareholder's trust owns real estate on which certain assets of two radio
stations are located. Salem, in the ordinary course of its business, entered
into two separate lease agreements with this trust. Rental expense included in
operating expense for 1994, 1995 and 1996 amounted to $66,501, $55,915, and
$57,003, respectively.
Land and buildings occupied by various Salem radio stations are leased from
the shareholders of Salem. Rental expense under these leases included in
operating expense for 1994, 1995 and 1996 amounted to $574,410, $690,380 and
$827,378, respectively.
At December 31, 1995, notes receivable from shareholders totaled $3,387,080.
The notes bore interest at the Applicable Federal Rate and were payable upon
demand. In December 1996, New Inspiration and Golden Gate distributed $5.5
million to the shareholders, of which $4.8 million was used by the
shareholders to repay the notes receivable and accrued interest.
In June 1997, the Company entered into a local marketing agreement (LMA)
with a corporation, Sonsinger, Inc. ("Sonsinger"), owned by two of Salem's
shareholders for radio station KKOL-AM. Under the LMA, Salem
programs KKOL-AM and sells all the airtime. Salem retains all of the revenue
and incurs all of the expenses related to the operation of KKOL-AM and pay no
fees or rent under the LMA.
F-19
<PAGE>
SALEM COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION PERTAINING TO THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
IS UNAUDITED)
9. DEFINED CONTRIBUTION PLAN
In 1993, the Company established a 401(k) defined contribution plan (the
Plan), which covers all eligible employees (as defined in the Plan).
Participants are allowed to make nonforfeitable contributions up to 15% of
their annual salary, but may not exceed the annual maximum contribution
limitations established by the Internal Revenue Service. The Company currently
matches 10% of the amounts contributed by each participant but does not match
participants' contributions in excess of 10% of their compensation per pay
period. The Company contributed $36,000, $44,000 and $48,000 to the Plan in
1994, 1995 and 1996, respectively.
10. SUBSEQUENT EVENTS (UNAUDITED)
In October 1997, the Company assigned its contract with a tower construction
company to build a broadcast tower in Houston to two of the Company's
shareholders (the Principal Shareholders), subject to the Principal
Shareholders obtaining financing. The Principal Shareholders will reimburse
the Company for its costs and expenses, which amounted to approximately
$2.9 million as of September 30, 1997. The antenna for the Company's station
in Houston, KKHT-FM, will be located on the tower and the Company will pay
rent to the Principal Shareholders. Proceeds from the sale will be used to
reduce borrowings.
In October 1997, the Company purchased the assets of radio station WCCD-AM,
Cleveland, Ohio, for $700,000 from available cash. The Company had operated
WCCD-AM under an LMA since April 1997.
In November 1997, the Company sold substantially all of the assets of radio
station WPZE-AM, Boston, Massachusetts, for $5 million. Proceeds from the sale
are being held by a qualified intermediary under a like-kind exchange
agreement to preserve the Company's ability to effect a tax-deferred exchange.
If the Company does not identify replacement property it will use the proceeds
to reduce borrowings.
F-20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE BY THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURIS-
DICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE
PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANYONE
TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information and Incorporation by Reference...................... 1
Prospectus Summary........................................................ 3
Risk Factors ............................................................. 14
Use of Proceeds .......................................................... 19
The Exchange Offer........................................................ 19
Selected Consolidated Financial Information of the Company ............... 27
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 30
Business.................................................................. 36
Management................................................................ 53
Certain Transactions ..................................................... 56
Securities Ownership of Certain Beneficial Owners......................... 60
Description of Certain Indebtedness ...................................... 60
Description of the Notes ................................................. 62
Certain Federal Income Tax Considerations................................. 89
Plan of Distribution...................................................... 90
Legal Matters............................................................. 90
Experts................................................................... 90
Index to Financial Statements............................................. F-1
</TABLE>
UNTIL , 1998 (90 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE NOTES, WHETHER OR NOT PARTICIPATING IN THIS
EXCHANGE OFFER, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$150,000,000
[LOGO OF SALEM COMMUNICATIONS CORPORATION]
OFFER FOR ALL OUTSTANDING
9 1/2% SERIES A SENIOR
SUBORDINATED
NOTES DUE 2007
IN EXCHANGE FOR 9 1/2%
SERIES B SENIOR SUBORDINATED NOTES
DUE 2007
--------------
PROSPECTUS
--------------
, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Salem Communications Corporation (the "Company"), is a California
corporation and, therefore, is subject to the California General Corporations
Code.
Subject to certain limitations, Section 317 of the California General
Corporations Code provides in part that a corporation shall have power to
indemnify any person who was or is a party or is threatened to be made a party
to any proceeding (other than an action by or in the right of the corporation
to procure a judgment in its favor) by reason of the fact that the person is
or was an agent (which term includes officers and directors) of the
corporation, against expenses, judgments, fines, settlements, and other
amounts actually and reasonably incurred in connection with the proceeding if
that person acted in good faith and in a manner the person reasonably believed
to be in the best interests of the corporation and, in the case of a criminal
proceeding, had no reasonable cause to believe the conduct of the person was
unlawful.
The California indemnification statute, as provided in Section 317 of the
California General Corporations Code (noted above), is nonexclusive and allows
a corporation to expand the scope of indemnification provided, whether by
provisions in its bylaws or by agreement, to the extent authorized in the
corporation's articles.
The Company's bylaws provides that the Company "shall, to the maximum extent
permitted by California General Corporation Law, indemnify each of its agents
against expenses, judgments, fines, settlements and other amounts actually and
reasonably incurred in connection with any proceeding arising by reason of the
fact that any such person is or was an agent of the corporation." The
indemnification extends to an "agent" of the Company including "any person who
is or was a director, officer, employee or other agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, or was a director, officer, employee or agent of a
corporation which was a predecessor corporation of the corporation or of
another enterprise at the request of such predecessor corporation."
The indemnification provisions in the Company's bylaws may permit
indemnification for liabilities arising under the Securities Act. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.
The Guarantors are organized in various jurisdictions. Indemnification of
the Guarantors' directors, officers and agents provided by applicable law, by
each Guarantor's articles or certificates of incorporation, bylaws, by
contract or otherwise are substantially similar to that afforded the
directors, officers and agents of the Company.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*1.01 Placement Agreement, dated September 17, 1997, among the Company,
the Guarantors, and Furman Selz LLC, Smith Barney, Inc.,
BancBoston Securities, Inc., and BNY Capital Markets, Inc.
(collectively, the "Initial Purchasers").
*1.02 Registration Rights Agreement, dated September 17, 1997, between
the Company, the Guarantors and the Initial Purchasers.
**1.03 Form of Letter of Transmittal.
</TABLE>
II-1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
**1.04 Form of Notice of Guaranteed Delivery.
*3.01 Articles of Incorporation of the Company.
*3.02 Bylaws of the Company.
*3.03 Partnership Agreement of Beltway Media Partners.
*3.04 Articles of Incorporation of ATEP Radio, Inc.
*3.05 Bylaws of ATEP Radio, Inc.
*3.06 Articles of Incorporation of Bison Media, Inc.
*3.07 Bylaws of Bison Media, Inc.
*3.08 Articles of Incorporation of Caron Broadcasting, Inc.
*3.09 Code of By-laws of Caron Broadcasting, Inc.
*3.10 Articles of Incorporation of Common Ground Broadcasting, Inc.
*3.11 Bylaws of Common Ground Broadcasting, Inc.
*3.12 Articles of Incorporation of Golden Gate Broadcasting Company,
Inc.
*3.13 Bylaws of Golden Gate Broadcasting Company, Inc.
*3.14 Articles of Incorporation of Inland Radio, Inc.
*3.15 Bylaws of Inland Radio, Inc., a California Corporation.
*3.16 Articles of Incorporation of Inspiration Media, Inc.
*3.17 Bylaws of Inspiration Media, Inc.
*3.18 Articles of Incorporation of Inspiration Media of Texas, Inc.
*3.19 Bylaws of Inspiration Media of Texas, Inc.
*3.20 Articles of Organization of New England Continental Media Inc.
*3.21 By-laws of New England Continental Media Inc.
*3.22.01 Articles of Incorporation of New Inspiration Broadcasting
Company, Inc.
*3.22.02 Articles of Incorporation of Inspirational Media of Southern
California, Inc. (see Exhibit 3.22.03 for name change to New
Inspiration Broadcasting Company, Inc.).
*3.22.03 Certificate of Ownership of Inspirational Media of Southern
California, Inc. (evidencing merger of New Inspiration
Broadcasting Company, Inc. with and into the corporation and
revision of articles to adopt the name New Inspiration
Broadcasting Company, Inc.).
*3.23 Bylaws of Inspirational Broadcasting Company, Inc. (see Exhibit
3.22.03 for name change to New Inspiration Broadcasting
Company, Inc.).
*3.24 Articles of Incorporation of Oasis Radio, Inc.
*3.25 Bylaws of Oasis Radio, Inc.
*3.26 Articles of Incorporation of Pennsylvania Media Associates, Inc.
*3.27 Pennsylvania Media Associates, Inc. By-laws
*3.28 Articles of Incorporation of Radio 1210, Inc.
*3.29 Bylaws of Radio 1210, Inc.
*3.30 Certificate of Incorporation of Salem Communications Corporation
(a Delaware corporation).
*3.31 Salem Communications Corporation Bylaws (a Delaware
corporation).
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*3.32 Certificate of Incorporation of Salem Media Corporation.
*3.33 By-laws of Salem Media Corporation.
*3.34.01 Articles of Incorporation of John Brown Schools of California,
Inc. (see Exhibit 3.34.03 for name change to Salem Media of
California, Inc.).
*3.34.02 Certificate of Amendment of Articles of Incorporation of John
Brown Schools of California, Inc. (see Exhibit 3.34.03 for name
change to Salem Media of California, Inc.).
*3.34.03 Certificate of Amendment of Articles of Incorporation of John
Brown Schools of California, Inc. (amending the name of the
corporation to be Salem Media of California, Inc.).
*3.35 By-laws of Salem Media of California, Inc.
*3.36 Articles of Incorporation of Salem Media of Colorado, Inc.
*3.37 Bylaws of Salem Media of Colorado, Inc.
*3.38 Articles of Incorporation of Salem Media of Louisiana, Inc.
*3.39 By-laws of Salem Media of Louisiana, Inc.
*3.40 Articles of Incorporation of Salem Media of Ohio, Inc.
*3.41 Code of By-laws For the Government of the Board of Directors of
Salem Media of Ohio, Inc.
*3.42 Articles of Incorporation of Salem Media of Oregon, Inc.
*3.43 Bylaws of Salem Media of Oregon, Inc.
*3.44 Articles of Incorporation of Salem Media of Pennsylvania, Inc.
*3.45 Salem Media of Pennsylvania, Inc. By-laws.
*3.46 Articles of Incorporation of Salem Media of Texas, Inc.
*3.47 Bylaws of Salem Media of Texas, Inc.
*3.48 Articles of Incorporation of Salem Music Network, Inc.
*3.49 Bylaws of Salem Music Network, Inc.
*3.50 Certificate of Incorporation of Salem Radio Network
Incorporated.
*3.51 Salem Radio Network Incorporated Bylaws.
*3.52 Articles of Incorporation of Salem Radio Representatives, Inc.
*3.53 Bylaws of Salem Radio Representatives, Inc.
*3.54 Articles of Incorporation of South Texas Broadcasting, Inc.
*3.55 Bylaws of South Texas Broadcasting, Inc.
*3.56 Articles of Incorporation of SRN News Network, Inc.
*3.57 Bylaws of SRN News Network, Inc.
*3.58 Articles of Incorporation of Vista Broadcasting, Inc.
*3.59 Bylaws of Vista Broadcasting, Inc.
*4.01 Indenture between the Company, the Guarantors and The Bank of
New York, as Trustee, dated as of September 25, 1997, relating
to the Old Notes and the Notes, including form of Note.
*4.02 Form of Note (filed as part of Exhibit 4.01).
*4.03 Form of Note Guarantee (filed as part of Exhibit 4.01).
*4.04 Registration Rights Agreement, dated September 25, 1997, between
the Company, the Guarantors and the Initial Purchasers (filed
as Exhibit 1.02).
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*4.05 Letter of Transmittal (filed as Exhibit 1.03).
*4.06 Notice of Guaranteed Delivery (filed as Exhibit 1.04).
*4.07 Credit Agreement, dated as of September 25, 1997, among the
Company, the several Lenders from time to time parties thereto,
and The Bank of New York, as administrative agent for the
Lenders.
*4.08 Borrower Security Agreement, dated as of September 25, 1997, by
and between the Company and The Bank of New York, as
Administrative Agent of the Lenders.
*4.09 Subsidiary Guaranty and Security Agreement dated as of September
25, 1997, by and between the Company, the Guarantors, and The
Bank of New York, as Administrative Agent.
5.01 Opinion and Consent of Gibson, Dunn & Crutcher LLP, regarding
validity and enforceability of the Notes and Guarantees
*10.01 Employment Agreement, dated as of August 1, 1997, between the
Company and Edward G. Atsinger III.
*10.02 Employment Agreement, dated as of August 1, 1997, between the
Company and Stuart W. Epperson.
*10.03.01 Employment Contract, dated November 7, 1991, between the Company
and Eric H. Halvorson.
*10.03.02 First Amendment to Employment Contract, dated April 22, 1996,
between the Company and Eric H. Halvorson.
*10.03.03 Second Amendment to Employment Contract, dated July 8, 1997,
between the Company and Eric H. Halvorson.
*10.03.04 Deferred Compensation Agreement, dated November 7, 1991, between
the Company and Eric H. Halvorson.
*10.04.01 Employment Agreement, dated February 9, 1995, between Salem Radio
Network Incorporated and Greg R. Anderson.
*10.04.02 Letter Agreement dated December 22, 1995, by Inspiration Media of
Texas, Inc. re compensation of Greg R. Anderson under Employment
Agreement with Salem Radio Network Incorporated.
*10.04.03 First Amendment to Employment Agreement, dated August 1, 1997
between Salem Radio Network Incorporated and Greg R. Anderson.
*10.05.01 Antenna/tower lease between Caron Broadcasting, Inc. (WHLO-
AM/Akron, Ohio) and Messrs. Atsinger and Epperson expiring 2007.
*10.05.02 Antenna/tower/studio lease between Caron Broadcasting, Inc.
(WTSJ-AM/Cincinnati, Ohio) and Messrs. Atsinger and Epperson
expiring 2007.
*10.05.03 Antenna/tower lease between Caron Broadcasting, Inc. (WHK-
FM/Canton, Ohio) and Messrs. Atsinger and Epperson expiring
2007.
*10.05.04 Antenna/tower/studio lease between Common Ground Broadcasting,
Inc. (KKMS-AM/Eagan, Minnesota) and Messrs. Atsinger and
Epperson expiring in 2006.
10.05.05 Antenna/tower lease between Common Ground Broadcasting, Inc.
(WHK-AM/Cleveland, Ohio) and Messrs. Atsinger and Epperson
expiring 2008.
10.05.06 Antenna/tower lease (KFAX-FM/Hayward, California) and Salem
Broadcasting Company, a partnership consisting of Messrs.
Atsinger and Epperson, expiring in 2003.
10.05.07 Antenna/tower/studio lease between Inland Radio, Inc. (KKLA-
AM/San Bernardino, California) and Messrs. Atsinger and Epperson
expiring 2002.
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.05.08 Antenna/tower lease between Inspiration Media, Inc. (KGNW-
AM/Seattle, Washington) and Messrs. Atsinger and Epperson
expiring in 2002.
10.05.09 Antenna/tower lease between Inspiration Media, Inc. (KLFE-
AM/Seattle, Washington) and The Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring in 2004.
10.05.10 Antenna/tower lease between Oasis Radio, Inc (KAVC-
FM/Rosamond, California) and The Atsinger Family Trust under
a lease expiring in 2002.
10.05.11.01 Antenna/tower/lease between Pennsylvania Media Associates,
Inc. (WZZD-AM/
WFIL-AM/Philadelphia, Pennsylvania) and Messrs. Atsinger and
Epperson, as
assigned from WEAZ-FM Radio, Inc., expiring 2004.
10.05.11.02 Antenna/tower/studio lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/ WFIL-AM/Philadelphia,
Pennsylvania) and The Atsinger Family Trust and Stuart W.
Epperson Revocable Living Trust expiring 2004.
10.05.12 Antenna/tower lease between Radio 1210, Inc. (KPRZ-
AM/Olivenhain, California) and The Atsinger Family Trust
expiring in 2002.
10.05.13 Antenna/tower lease between Salem Media Corporation (WYLL-
FM/Arlington Heights, Illinois) and Messrs. Atsinger and
Epperson expiring in 2002.
10.05.14 Antenna/turner/studio leases between Salem Media Corporation
(KLTX-AM/Long Beach and Paramount, California) and Messrs.
Atsinger and Epperson expiring in 2002.
10.05.15 Antenna/tower lease between Salem Media of Colorado, Inc.
(KNUS-AM/Denver-Bolder, Colorado) and Messrs. Atsinger and
Epperson expiring 2006.
10.05.16 Antenna/tower lease between Salem Media of Ohio, Inc. (WRFD-
AM/Columbus, Ohio) and Messrs. Atsinger and Epperson expiring
2002.
10.05.17.01 Studio Lease between Salem Media of Oregon, Inc. (KPDQ-
AM/FM/Portland, Oregon) and Edward G. Atsinger III, Mona J.
Atsinger, Stuart W. Epperson, and Nancy K. Epperson expiring
2002.
10.05.17.02 Antenna/tower lease between Salem Media of Oregon, Inc. (KPDQ-
AM/FM/Raleigh Hills, Oregon and Messrs. Atsinger and Epperson
expiring 2002.
10.05.18 Antenna/tower lease between Salem Media of Pennsylvania, Inc.
(WORD-FM/WPIT-AM/ Pittsburgh, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable Living Trust
expiring 2003.
10.05.19 Antenna/tower lease between Salem Media of Texas, Inc. (KSLR-
AM/San Antonio, Texas) and Epperson-Atsinger 1983 Family
Trust expiring 2007.
10.05.20 Antenna/tower lease between South Texas Broadcasting, Inc.
(KENR-AM/KKHT-FM/ Houston-Galveston, Texas) and Atsinger
Family Trust and Stuart W. Epperson Revocable Living Trust
expiring 2005.
10.05.21 Antenna/tower lease between Vista Broadcasting, Inc. (KFIA-
AM/Sacramento, California) and The Atsinger Family Trust and
Stuart W. Epperson Revocable Living Trust expiring 2005.
10.06.01 Asset Purchase Agreement dated as of June 5, 1996 by and
between Radio 94 of Phoenix Limited Partnership and Salem
Media of Arizona, Inc. (KOOL-AM, Phoenix, Arizona).
10.06.02 Asset Purchase Agreement dated as of September 3, 1996 by and
between Caron Broadcasting, Inc. and Mortenson Broadcasting
Company of Canton, LLC and Mortensen Broadcasting Company of
Akron, LLC (WTOF-FM, Canton, Ohio and WHLO-AM, Akron, Ohio).
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
10.06.03.01 Asset Purchase Agreement dated March 28, 1996 by and between
American Radio Assistance Corporation and Common Ground
Broadcasting, Inc. (KDBX-FM, Banks, Oregon).
10.06.03.02 First Amendment to Asset Purchase Agreement dated as of July
22, 1996 by and between American Radio Systems Corporation
and Common Ground Broadcasting, Inc. (KDBX-FM, Banks,
Oregon).
10.06.04.01 Asset Purchase Agreement dated as of April 23, 1996 by and
between OmniAmerica Group and WHK License Partnership and
Inspiration Media of Ohio, Inc. (WHK-AM, Cleveland, Ohio).
10.06.04.02 First Amendment to the Asset Purchase Agreement dated as of
July 23, 1996 by and between OmniAmerica Group and WHK
License Partnership and Inspiration Media of Ohio, Inc. (WHK-
AM, Cleveland, Ohio).
10.06.04.03 Second Amendment to Asset Purchase Agreement dated as of
August 12, 1996 by and between OmniAmerica Group and WHK
License Partnership and Inspiration Media of Ohio, Inc. (WHK-
AM, Cleveland, Ohio).
10.06.05 Asset Purchase Agreement dated as of September 30, 1996 by and
between Infinity Broadcasting Corporation of Dallas and
Inspiration Media of Texas, Inc. (KEWS, Arlington, Texas;
KDFX, Dallas, Texas).
10.06.06.01 Asset Purchase Agreement dated as of December 4, 1996 by and
between Backbay Broadcasters, Inc. and New England
Continental Media, Inc. (WBNW-AM, Boston, Massachusetts).
10.06.06.02 First Amendment to the Asset Purchase Agreement dated as of
February, 1997 by and between Backbay Broadcasters, Inc. and
New England Continental Media, Inc. (WBNW-AM, Boston,
Massachusetts).
10.06.07 Asset Purchase Agreement dated June 2, 1997 by and between New
England Continental Media, Inc. and Hibernia Communications,
Inc. (WPZE-AM, Boston, Massachusetts).
10.06.08 Option to Purchase dated as of August 18, 1997 by and between
Sonsinger, Inc. and Inspiration Media, Inc. (KKOL-AM,
Seattle, Washington).
10.07.01 Tower Purchase Agreement dated August 22, 1997 by and between
the Company and Sonsinger Broadcasting Company of Houston,
L.P.
*10.07.02 Amendment to the Tower Purchase Agreement dated November 10,
1997 by and between the Company and Sonsinger Broadcasting
Company of Houston, L.P.
*10.07.03 Promissory Note dated November 11, 1997 made by Sonsinger
Broadcasting Company of Houston, L.P. payable to the Company.
10.07.04 Promissory Note dated December 24, 1997 made by the Company
payable to Edward G. Atsinger III.
10.07.05 Promissory Note dated December 24, 1997 made by the Company
payable to Stuart W. Epperson.
*10.08.01 Local Programming and Marketing Agreement dated June 13, 1997
between Sonsinger, Inc. and Inspiration Media, Inc.
*10.08.02 Local Programming and Marketing Agreement and Put/Call
Agreement dated October 23, 1997 by and between Cherokee
Broadcasting Co., Inc. and Salem Media of Georgia, Inc.
*10.09.01 Evidence of Key man life insurance policy no. 2256440M
insuring Edward G. Atsinger III in the face amount of
$5,000,000.
*10.09.02 Evidence of Key man life insurance policy no. 2257474H
insuring Edward G. Atsinger III in the face amount of
$5,000,000.
*10.09.03 Evidence of Key man life insurance policy no. 2257476B
insuring Stuart W. Epperson in the face amount of $5,000,000.
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
*12.01 Statement regarding Computation of Ratio of Earnings to Fixed
Charges.
*21.01 Subsidiaries of the Company.
**23.01 Consent of Ernst & Young LLP.
23.02 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.01).
*24.01 Powers of Attorney (included on Signature Pages of Registration
Statement).
25.01 Statement of Eligibility of Trustee.
*27.01 Financial Data Schedule.
</TABLE>
---------------------
* Previously filed.
** Marked to show changes.
(B) FINANCIAL STATEMENT SCHEDULES: SCHEDULE II--VALUATION AND QUALIFYING
ACCOUNTS
All other schedules for which provision is made in the applicable accounting
regulation of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable and therefore have been omitted.
ITEM 22. UNDERTAKINGS
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described under Item 20 or otherwise,
each Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
a Registrant of expenses incurred or paid by a director, officer or
controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, such Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(b) Each Registrant undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933, as
amended; (ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-7
<PAGE>
(c) Each undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of this form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the Registration Statement through
the date of responding to the request.
(d) Each undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the Registration Statement when it became effective.
II-8
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE COMPANY HAS
DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN CAMARILLO,
CALIFORNIA ON JANUARY 29, 1998.
Salem Communications Corporation
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President and Chief
* Financial Officer (Principal
- ------------------------------------- Financial Officer)
DIRK GASTALDO
Vice President--Accounting &
* Taxation (Principal
- ------------------------------------- Accounting Officer)
EILEEN E. HILL
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
/s/ Eric H. Halvorson Director
- -------------------------------------
ERIC H. HALVORSON
Director
*
- -------------------------------------
RICHARD A. RIDDLE
Director
*
- -------------------------------------
ROLAND S. HINZ
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-9
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, ATEP RADIO, INC.
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
ATEP Radio, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-10
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BISON MEDIA,
INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Bison Media, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-11
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, CARON
BROADCASTING, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Caron Broadcasting, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-12
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, COMMON GROUND
BROADCASTING, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Common Ground Broadcasting, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-13
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, GOLDEN GATE
BROADCASTING COMPANY, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Golden Gate Broadcasting Company,
Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INLAND RADIO,
INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Inland Radio, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-15
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INSPIRATION
MEDIA, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Inspiration Media, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-16
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, INSPIRATION
MEDIA OF TEXAS, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Inspiration Media of Texas, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-17
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NEW ENGLAND
CONTINENTAL MEDIA, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
New England Continental Media, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-18
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, NEW INSPIRATION
BROADCASTING COMPANY, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
New Inspiration Broadcasting
Company, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-19
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, OASIS RADIO,
INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Oasis Radio, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-20
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, PENNSYLVANIA
MEDIA ASSOCIATES, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Pennsylvania Media Associates, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-21
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RADIO 1210, INC.
HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Radio 1210, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-22
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM
COMMUNICATIONS CORPORATION, HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Communications Corporation, a
Delaware corporation
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-23
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA
CORPORATION HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media Corporation
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-24
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
CALIFORNIA, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of California, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-25
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
COLORADO, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Colorado, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-26
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
LOUISIANA, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Louisiana, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-27
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
OHIO, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Ohio, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-28
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
OREGON, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Oregon, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-29
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
PENNSYLVANIA, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Pennsylvania, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-30
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MEDIA OF
TEXAS, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Media of Texas, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-31
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM MUSIC
NETWORK, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Music Network, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-32
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM RADIO
REPRESENTATIVES, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Radio Representatives, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-33
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SOUTH TEXAS
BROADCASTING, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
South Texas Broadcasting, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-34
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SRN NEWS
NETWORK, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
SRN News Network, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-35
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, VISTA
BROADCASTING, INC. HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Vista Broadcasting, Inc.
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-36
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SALEM RADIO
NETWORK INCORPORATED HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Salem Radio Network Incorporated
*
By: _________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
NAME TITLE
President and Chief Executive
* Officer (Principal Executive
- ------------------------------------- Officer)
EDWARD G. ATSINGER III
Vice President (Principal
* Financial and Accounting
- ------------------------------------- Officer)
DIRK GASTALDO
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
/s/ Eric H. Halvorson
By:
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-37
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, BELTWAY MEDIA
PARTNERS HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN
CAMARILLO, CALIFORNIA ON JANUARY 29, 1998.
Beltway Media Partners
Salem Communications Corporation,
a California corporation, a
general partner
By: *
________________________________
EDWARD G. ATSINGER III PRESIDENT
AND CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON JANUARY 29, 1998.
<TABLE>
<CAPTION>
NAME TITLE
<S> <C>
Salem Communications Corporation, a
California corporation, a general
partner
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
/s/ Eric H. Halvorson Director
- -------------------------------------
ERIC H. HALVORSON
Director
*
- -------------------------------------
RICHARD A. RIDDLE
</TABLE>
II-38
<PAGE>
NAME TITLE
Director
*
- -------------------------------------
ROLAND S. HINZ
New Inspiration Broadcasting
Company, Inc., a general partner
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
Golden Gate Broadcasting Company,
Inc., a general partner
Director
*
- -------------------------------------
EDWARD G. ATSINGER III
Director
*
- -------------------------------------
STUART W. EPPERSON
Bestway Media Partners
* Vice President and Chief
- ------------------------------------- Financial Officer (Principal
DIRK GASTALDO Financial Officer and
Accounting Officer)
* Eric H. Halvorson, by signing his name hereto, does sign this document on
behalf of each of the persons indicated above pursuant to powers of attorney
duly executed by such persons and filed with the Securities and Exchange
Commission.
By: /s/ Eric H. Halvorson
- -------------------------------------
ERIC H. HALVORSON
ATTORNEY-IN-FACT
II-39
<PAGE>
SALEM COMMUNICATIONS CORPORATION
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
ADDITIONS DEDUCTIONS
--------------------- --------
BALANCE AT CHARGED TO CHARGED BAD BALANCE
BEGINNING COSTS AND TO OTHER DEBT AT END
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS WRITE-OFFS OF PERIOD
- ----------- ---------- ---------- -------- ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Year Ended December 31,
1994
Allowance for doubtful
accounts............. $242 $ 484 $ -- $(195) $ 531
Year Ended December 31,
1995
Allowance for doubtful
accounts............. 531 929 -- (756) 704
Year Ended December 31,
1996
Allowance for doubtful
accounts............. 704 1,067 -- (766) 1,005
</TABLE>
S-1
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
*1.01 Placement Agreement, dated September 17, 1997,
among the Company, the Guarantors, and Furman
Selz LLC, Smith Barney, Inc., BancBoston
Securities, Inc., and BNY Capital Markets, Inc.
(collectively, the "Initial Purchasers").
*1.02 Registration Rights Agreement, dated September
17, 1997, between the Company, the Guarantors
and the Initial Purchasers.
**1.03 Form of Letter of Transmittal.
**1.04 Form of Notice of Guaranteed Delivery.
*3.01 Articles of Incorporation of the Company.
*3.02 Bylaws of the Company.
*3.03 Partnership Agreement of Beltway Media Partners.
*3.04 Articles of Incorporation of ATEP Radio, Inc.
*3.05 Bylaws of ATEP Radio, Inc.
*3.06 Articles of Incorporation of Bison Media, Inc.
*3.07 Bylaws of Bison Media, Inc.
*3.08 Articles of Incorporation of Caron Broadcasting,
Inc.
*3.09 Code of By-laws of Caron Broadcasting, Inc.
*3.10 Articles of Incorporation of Common Ground
Broadcasting, Inc.
*3.11 Bylaws of Common Ground Broadcasting, Inc.
*3.12 Articles of Incorporation of Golden Gate
Broadcasting Company, Inc.
*3.13 Bylaws of Golden Gate Broadcasting Company, Inc.
*3.14 Articles of Incorporation of Inland Radio, Inc.
*3.15 Bylaws of Inland Radio, Inc., a California
Corporation.
*3.16 Articles of Incorporation of Inspiration Media,
Inc.
*3.17 Bylaws of Inspiration Media, Inc.
*3.18 Articles of Incorporation of Inspiration Media of
Texas, Inc.
*3.19 Bylaws of Inspiration Media of Texas, Inc.
*3.20 Articles of Organization of New England
Continental Media Inc.
*3.21 By-laws of New England Continental Media Inc.
*3.22.01 Articles of Incorporation of New Inspiration
Broadcasting Company, Inc.
*3.22.02 Articles of Incorporation of Inspirational Media
of Southern California, Inc. (see
Exhibit 3.22.03 for name change to New
Inspiration Broadcasting Company, Inc.).
*3.22.03 Certificate of Ownership of Inspirational Media
of Southern California, Inc. (evidencing merger
of New Inspiration Broadcasting Company, Inc.
with and into the corporation and revision of
articles to adopt the name New Inspiration
Broadcasting Company, Inc.).
*3.23 Bylaws of Inspirational Broadcasting Company,
Inc. (see Exhibit 3.22.03 for name change to New
Inspiration Broadcasting Company, Inc.).
*3.24 Articles of Incorporation of Oasis Radio, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
*3.25 Bylaws of Oasis Radio, Inc.
*3.26 Articles of Incorporation of Pennsylvania Media
Associates, Inc.
*3.27 Pennsylvania Media Associates, Inc. By-laws
*3.28 Articles of Incorporation of Radio 1210, Inc.
*3.29 Bylaws of Radio 1210, Inc.
*3.30 Certificate of Incorporation of Salem
Communications Corporation (a Delaware
corporation).
*3.31 Salem Communications Corporation Bylaws (a
Delaware corporation).
*3.32 Certificate of Incorporation of Salem Media
Corporation.
*3.33 By-laws of Salem Media Corporation.
*3.34.01 Articles of Incorporation of John Brown Schools
of California, Inc. (see Exhibit 3.34.03 for
name change to Salem Media of California, Inc.).
*3.34.02 Certificate of Amendment of Articles of
Incorporation of John Brown Schools of
California, Inc. (see Exhibit 3.34.03 for name
change to Salem Media of California, Inc.).
*3.34.03 Certificate of Amendment of Articles of
Incorporation of John Brown Schools of
California, Inc. (amending the name of the
corporation to be Salem Media of California,
Inc.).
*3.35 By-laws of Salem Media of California, Inc.
*3.36 Articles of Incorporation of Salem Media of
Colorado, Inc.
*3.37 Bylaws of Salem Media of Colorado, Inc.
*3.38 Articles of Incorporation of Salem Media of
Louisiana, Inc.
*3.39 By-laws of Salem Media of Louisiana, Inc.
*3.40 Articles of Incorporation of Salem Media of Ohio,
Inc.
*3.41 Code of By-laws For the Government of the Board
of Directors of Salem Media of Ohio, Inc.
*3.42 Articles of Incorporation of Salem Media of
Oregon, Inc.
*3.43 Bylaws of Salem Media of Oregon, Inc.
*3.44 Articles of Incorporation of Salem Media of
Pennsylvania, Inc.
*3.45 Salem Media of Pennsylvania, Inc. By-laws.
*3.46 Articles of Incorporation of Salem Media of
Texas, Inc.
*3.47 Bylaws of Salem Media of Texas, Inc.
*3.48 Articles of Incorporation of Salem Music Network,
Inc.
*3.49 Bylaws of Salem Music Network, Inc.
*3.50 Certificate of Incorporation of Salem Radio
Network Incorporated.
*3.51 Salem Radio Network Incorporated Bylaws.
*3.52 Articles of Incorporation of Salem Radio
Representatives, Inc.
*3.53 Bylaws of Salem Radio Representatives, Inc.
*3.54 Articles of Incorporation of South Texas
Broadcasting, Inc.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
*3.55 Bylaws of South Texas Broadcasting, Inc.
*3.56 Articles of Incorporation of SRN News Network,
Inc.
*3.57 Bylaws of SRN News Network, Inc.
*3.58 Articles of Incorporation of Vista Broadcasting,
Inc.
*3.59 Bylaws of Vista Broadcasting, Inc.
*4.01 Indenture between the Company, the Guarantors and
The Bank of New York, as Trustee, dated as of
September 25, 1997, relating to the Old Notes and
the Notes, including form of Note.
*4.02 Form of Note (filed as part of Exhibit 4.01).
*4.03 Form of Note Guarantee (filed as part of Exhibit
4.01).
*4.04 Registration Rights Agreement, dated September 25,
1997, between the Company, the Guarantors and the
Initial Purchasers (filed as Exhibit 1.02).
*4.05 Letter of Transmittal (filed as Exhibit 1.03).
*4.06 Notice of Guaranteed Delivery (filed as Exhibit
1.04).
*4.07 Credit Agreement, dated as of September 25, 1997,
among the Company, the several Lenders from time
to time parties thereto, and The Bank of
New York, as administrative agent for the
Lenders.
*4.08 Borrower Security Agreement, dated as of September
25, 1997, by and between the Company and The Bank
of New York, as Administrative Agent of the
Lenders.
*4.09 Subsidiary Guaranty and Security Agreement dated
as of September 25, 1997, by and between the
Company, the Guarantors, and The Bank of New
York, as Administrative Agent.
5.01 Opinion and Consent of Gibson, Dunn & Crutcher
LLP, regarding validity and enforceability of the
Notes and Guarantees
*10.01 Employment Agreement, dated as of August 1, 1997,
between the Company and Edward G. Atsinger III.
*10.02 Employment Agreement, dated as of August 1, 1997,
between the Company and Stuart W. Epperson.
*10.03.01 Employment Contract, dated November 7, 1991,
between the Company and Eric H. Halvorson.
*10.03.02 First Amendment to Employment Contract, dated
April 22, 1996, between the Company and Eric H.
Halvorson.
*10.03.03 Second Amendment to Employment Contract, dated
July 8, 1997, between the Company and Eric H.
Halvorson.
*10.03.04 Deferred Compensation Agreement, dated November 7,
1991, between the Company and Eric H. Halvorson.
*10.04.01 Employment Agreement, dated February 9, 1995,
between Salem Radio Network Incorporated and Greg
R. Anderson.
*10.04.02 Letter Agreement dated December 22, 1995, by
Inspiration Media of Texas, Inc. re compensation
of Greg R. Anderson under Employment Agreement
with Salem Radio Network Incorporated.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
*10.04.03 First Amendment to Employment Agreement, dated
August 1, 1997 between Salem Radio Network
Incorporated and Greg R. Anderson.
*10.05.01 Antenna/tower lease between Caron Broadcasting,
Inc. (WHLO-AM/Akron, Ohio) and Messrs.
Atsinger and Epperson expiring 2007.
*10.05.02 Antenna/tower/studio lease between Caron
Broadcasting, Inc. (WTSJ-AM/Cincinnati, Ohio)
and Messrs. Atsinger and Epperson expiring
2007.
*10.05.03 Antenna/tower lease between Caron Broadcasting,
Inc. (WHK-FM/Canton, Ohio) and Messrs.
Atsinger and Epperson expiring 2007.
*10.05.04 Antenna/tower/studio lease between Common
Ground Broadcasting, Inc. (KKMS-AM/Eagan,
Minnesota) and Messrs. Atsinger and Epperson
expiring in 2006.
10.05.05 Antenna/tower lease between Common Ground
Broadcasting, Inc. (WHK-AM/Cleveland, Ohio)
and Messrs. Atsinger and Epperson expiring
2008.
10.05.06 Antenna/tower lease (KFAX-FM/Hayward,
California) and Salem Broadcasting Company, a
partnership consisting of Messrs. Atsinger and
Epperson, expiring in 2003.
10.05.07 Antenna/tower/studio lease between Inland
Radio, Inc. (KKLA-AM/San Bernardino,
California) and Messrs. Atsinger and Epperson
expiring 2002.
10.05.08 Antenna/tower lease between Inspiration Media,
Inc. (KGNW-AM/Seattle, Washington) and Messrs.
Atsinger and Epperson expiring in 2002.
10.05.09 Antenna/tower lease between Inspiration Media,
Inc. (KLFE-AM/Seattle, Washington) and The
Atsinger Family Trust and Stuart W. Epperson
Revocable Living Trust expiring in 2004.
10.05.10 Antenna/tower lease between Oasis Radio, Inc
(KAVC-FM/Rosamond, California) and The
Atsinger Family Trust under a lease expiring
in 2002.
10.05.11.01 Antenna/tower/lease between Pennsylvania Media
Associates, Inc. (WZZD-AM/ WFIL-
AM/Philadelphia, Pennsylvania) and Messrs.
Atsinger and Epperson, as assigned from WEAZ-
FM Radio, Inc., expiring 2004.
10.05.11.02 Antenna/tower/studio lease between Pennsylvania
Media Associates, Inc. (WZZD-AM/ WFIL-
AM/Philadelphia, Pennsylvania) and The
Atsinger Family Trust and Stuart W. Epperson
Revocable Living Trust expiring 2004.
10.05.12 Antenna/tower lease between Radio 1210, Inc.
(KPRZ-AM/Olivenhain, California) and The
Atsinger Family Trust expiring in 2002.
10.05.13 Antenna/tower lease between Salem Media
Corporation (WYLL-FM/Arlington Heights,
Illinois) and Messrs. Atsinger and Epperson
expiring in 2002.
10.05.14 Antenna/turner/studio leases between Salem
Media Corporation (KLTX-AM/Long Beach and
Paramount, California) and Messrs. Atsinger
and Epperson expiring in 2002.
10.05.15 Antenna/tower lease between Salem Media of
Colorado, Inc. (KNUS-AM/Denver-Bolder,
Colorado) and Messrs. Atsinger and Epperson
expiring 2006.
10.05.16 Antenna/tower lease between Salem Media of
Ohio, Inc. (WRFD-AM/Columbus, Ohio) and
Messrs. Atsinger and Epperson expiring 2002.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
10.05.17.01 Studio Lease between Salem Media of Oregon,
Inc. (KPDQ-AM/FM/Portland, Oregon) and Edward
G. Atsinger III, Mona J. Atsinger, Stuart W.
Epperson, and Nancy K. Epperson expiring 2002.
10.05.17.02 Antenna/tower lease between Salem Media of
Oregon, Inc. (KPDQ-AM/FM/Raleigh Hills, Oregon
and Messrs. Atsinger and Epperson expiring
2002.
10.05.18 Antenna/tower lease between Salem Media of
Pennsylvania, Inc. (WORD-FM/WPIT-AM/
Pittsburgh, Pennsylvania) and The Atsinger
Family Trust and Stuart W. Epperson Revocable
Living Trust expiring 2003.
10.05.19 Antenna/tower lease between Salem Media of
Texas, Inc. (KSLR-AM/San Antonio, Texas) and
Epperson-Atsinger 1983 Family Trust expiring
2007.
10.05.20 Antenna/tower lease between South Texas
Broadcasting, Inc. (KENR-AM/KKHT-FM/ Houston-
Galveston, Texas) and Atsinger Family Trust
and Stuart W. Epperson Revocable Living Trust
expiring 2005.
10.05.21 Antenna/tower lease between Vista Broadcasting,
Inc. (KFIA-AM/Sacramento, California) and The
Atsinger Family Trust and Stuart W. Epperson
Revocable Living Trust expiring 2005.
10.06.01 Asset Purchase Agreement dated as of June 5,
1996 by and between Radio 94 of Phoenix
Limited Partnership and Salem Media of
Arizona, Inc. (KOOL-AM, Phoenix, Arizona).
10.06.02 Asset Purchase Agreement dated as of September
3, 1996 by and between Caron Broadcasting,
Inc. and Mortenson Broadcasting Company of
Canton, LLC and Mortensen Broadcasting Company
of Akron, LLC (WTOF-FM, Canton, Ohio and WHLO-
AM, Akron, Ohio).
10.06.03.01 Asset Purchase Agreement dated March 28, 1996
by and between American Radio Assistance
Corporation and Common Ground Broadcasting,
Inc. (KDBX-FM, Banks, Oregon).
10.06.03.02 First Amendment to Asset Purchase Agreement
dated as of July 22, 1996 by and between
American Radio Systems Corporation and Common
Ground Broadcasting, Inc. (KDBX-FM, Banks,
Oregon).
10.06.04.01 Asset Purchase Agreement dated as of April 23,
1996 by and between OmniAmerica Group and WHK
License Partnership and Inspiration Media of
Ohio, Inc. (WHK-AM, Cleveland, Ohio).
10.06.04.02 First Amendment to the Asset Purchase Agreement
dated as of July 23, 1996 by and between
OmniAmerica Group and WHK License Partnership
and Inspiration Media of Ohio, Inc. (WHK-AM,
Cleveland, Ohio).
10.06.04.03 Second Amendment to Asset Purchase Agreement
dated as of August 12, 1996 by and between
OmniAmerica Group and WHK License Partnership
and Inspiration Media of Ohio, Inc. (WHK-AM,
Cleveland, Ohio).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBITS PAGE
------- ----------------------- ------------
<C> <S> <C>
10.06.05 Asset Purchase Agreement dated as of September
30, 1996 by and between Infinity Broadcasting
Corporation of Dallas and Inspiration Media of
Texas, Inc. (KEWS, Arlington, Texas; KDFX,
Dallas, Texas).
10.06.06.01 Asset Purchase Agreement dated as of December 4,
1996 by and between Backbay Broadcasters, Inc.
and New England Continental Media, Inc. (WBNW-
AM, Boston, Massachusetts).
10.06.06.02 First Amendment to the Asset Purchase Agreement
dated as of February, 1997 by and between
Backbay Broadcasters, Inc. and New England
Continental Media, Inc. (WBNW-AM, Boston,
Massachusetts).
10.06.07 Asset Purchase Agreement dated June 2, 1997 by
and between New England Continental Media, Inc.
and Hibernia Communications, Inc. (WPZE-AM,
Boston, Massachusetts).
10.06.08 Option to Purchase dated as of August 18, 1997
by and between Sonsinger, Inc. and Inspiration
Media, Inc. (KKOL-AM, Seattle, Washington).
10.07.01 Tower Purchase Agreement dated August 22, 1997
by and between the Company and Sonsinger
Broadcasting Company of Houston, L.P.
*10.07.02 Amendment to the Tower Purchase Agreement dated
November 10, 1997 by and between the Company
and Sonsinger Broadcasting Company of Houston,
L.P.
*10.07.03 Promissory Note dated November 11, 1997 made by
Sonsinger Broadcasting Company of Houston, L.P.
payable to the Company.
10.07.04 Promissory Note dated December 24, 1997 made by
the Company payable to Edward G. Atsinger III.
10.07.05 Promissory Note dated December 24, 1997 made by
the Company payable to Stuart W. Epperson.
*10.08.01 Local Programming and Marketing Agreement dated
June 13, 1997 between Sonsinger, Inc. and
Inspiration Media, Inc.
*10.08.02 Local Programming and Marketing Agreement and
Put/Call Agreement dated October 23, 1997 by
and between Cherokee Broadcasting Co., Inc. and
Salem Media of Georgia, Inc.
*10.09.01 Evidence of Key man life insurance policy no.
2256440M insuring Edward G. Atsinger III in the
face amount of $5,000,000.
*10.09.02 Evidence of Key man life insurance policy no.
2257474H insuring Edward G. Atsinger III in the
face amount of $5,000,000.
*10.09.03 Evidence of Key man life insurance policy no.
2257476B insuring Stuart W. Epperson in the
face amount of $5,000,000.
*12.01 Statement regarding Computation of Ratio of
Earnings to Fixed Charges.
*21.01 Subsidiaries of the Company.
**23.01 Consent of Ernst & Young LLP.
23.02 Consent of Gibson, Dunn & Crutcher LLP (included
in Exhibit 5.01).
*24.01 Powers of Attorney (included on Signature Pages
of Registration Statement).
25.01 Statement of Eligibility of Trustee.
*27.01 Financial Data Schedule.
</TABLE>
---------------------
* Previously filed.
** Marked to show changes.
<PAGE>
LETTER OF TRANSMITTAL
OFFER FOR ALL OUTSTANDING
PRIVATELY PLACED 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
OF
SALEM COMMUNICATIONS CORPORATION
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON , 1998, UNLESS EXTENDED
The Exchange Agent is The Bank of New York, whose mailing address, facsimile
number and telephone number are as follows:
<TABLE>
<S> <C> <C>
By Hand Delivery: By Facsimile: By Mail or Overnight Express:
(Insured or registered recommended):
The Bank of New York (212) 815-6339
101 Barclay Street - Floor 7E The Bank of New York
Corporate Trust Services Window By Telephone: 101 Barclay Street - Floor 7E
Ground Level New York, New York 10286
New York, New York 10286 (212) 815-[TBD] Attn: Reorganization Department
Attn: Reorganization Department
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA FACSIMILE TO A NUMBER
OTHER THAN AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY.
This Letter of Transmittal is to be completed by holders of Old Notes either
if Old Notes are to be forwarded herewith or if tenders of Old Notes are to be
made by book-entry transfer to an account maintained by The Bank of New York
(the "Exchange Agent") at The Depository Trust Company (the "DTC") pursuant to
the procedures set forth in "The Exchange Offer--Procedures for Tendering" in
the Prospectus (as defined herein).
Holders of Old Notes whose certificates (the "Certificates") for such Old
Capital Securities are not immediately available or who cannot deliver their
Certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date (as defined in the Prospectus) or who cannot
complete the procedures for book-entry transfer on a timely basis, must tender
their Old Notes according to the guaranteed delivery procedures set forth in
"The Exchange Offer--Procedures for Tendering" in the Prospectus.
If any tendered Old Notes are not exchanged pursuant to the Exchange Offer
for any reason, or if Certificates are submitted for more Old Notes than are
tendered or accepted for exchange, Certificates for such nonexchanged or
nontendered Old Notes will be returned (or, in the case of Old Notes tendered
by book-entry transfer, such Old Notes will be credited to an account
maintained at DTC), without expenses to the tendering holder promptly
following the Expiration Date (as defined in the Prospectus).
DELIVERY OF DOCUMENTS TO THE DTC DOES NOT CONSTITUTE DELIVERY TO THE
EXCHANGE AGENT.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
<PAGE>
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Exchange Offer.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
NAME AND ADDRESS OF REGISTERED HOLDER AS IT
APPEARS ON THE PRIVATELY PLACED 9 1/2% SERIES A CERTIFICATE NUMBER(S) OF PRINCIPAL AMOUNT OF
SENIOR SUBORDINATED NOTES DUE 2007 ("OLD NOTES") OLD NOTES TRANSMITTED OLD NOTES TRANSMITTED
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[_]CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution__________________________________________
Account Number_________________________________________________________
Transaction Code Number________________________________________________
[_]CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED DELIVERY IF
TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE THE FOLLOWING:
Name of Registered Holder(s)___________________________________________
Window Ticket Number (if any)__________________________________________
Date of Execution of Notice Guaranteed Delivery________________________
Name of Institution which Guaranteed Delivery__________________________
If Guaranteed Delivery is to be made By Book-Entry Transfer:
Name of Tendering Institution__________________________________________
Account Number_________________________________________________________
Transaction Code Number________________________________________________
[_]CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND ANY NON-EXCHANGED OLD
NOTES ARE TO BE RETURNED BY CREDITING DTC ACCOUNT NUMBER SET FORTH ABOVE.
2
<PAGE>
Ladies and Gentlemen:
1. The undersigned hereby agrees to exchange the aggregate principal amount
of privately placed 9 1/2% Series A Senior Subordinated Notes Due 2007 (the
"Old Notes") for a like principal amount of 9 1/2% Series B Senior
Subordinated Notes Due 2007 (the "Notes") of Salem Communications Corporation,
a California corporation (the "Company"), guaranteed on a senior, subordinated
basis by all of the Company's current subsidiaries (the "Guarantors") upon the
terms and subject to the conditions contained in the Registration Statement on
Form S-4 filed by the Company with the Securities and Exchange Commission (the
"Registration Statement") and the accompanying Prospectus dated , 1998
included therein (the "Prospectus"), receipt of which is hereby acknowledged.
2. The undersigned hereby acknowledges and agrees that the Notes will bear
interest from and including September 25, 1997, the date of issuance of the
Old Notes. Accordingly, the undersigned will forgo accrued but unpaid interest
on his, her or its Old Notes that are exchanged for Notes from and including
September 25, 1997 but will receive such interest under the Notes.
3. The undersigned hereby represents and warrants that he, she or it has
full authority to tender the Old Notes described above. The undersigned will,
upon request, execute and deliver any additional documents deemed by the
Company to be necessary or desirable to complete the exchange of the Old
Notes.
4. The undersigned understands that the tender of the Old Notes pursuant to
all of the procedures set forth in the Prospectus will constitute an agreement
between the undersigned and the Company as to the terms and conditions set
forth in the Prospectus.
5. The undersigned hereby represents and warrants that the undersigned (i)
is not an affiliate of the Company or any Guarantor within the meaning of Rule
405 of the Securities Act of 1933, as amended (the "Securities Act") and (ii)
is acquiring the Notes in the ordinary course of the business of the
undersigned and, if the undersigned is not a broker-dealer, that the
undersigned is not engaged in, and does not intend to engage in, a
distribution of the Notes.
6. If the undersigned is a broker-dealer, (i) it hereby represents and
warrants that it acquired the Old Notes for its own account as a result of
market-making activities or other trading activities and (ii) it hereby
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act, in connection with any resale of the Notes received hereby.
The acknowledgment contained in the foregoing sentence shall not be deemed an
admission that the undersigned is an "underwriter" within the meaning of the
Securities Act.
7. Any obligation of the undersigned hereunder shall be binding upon the
successors, assigns, executors, administrators, trustees in bankruptcy and
legal and personal representatives of the undersigned.
3
<PAGE>
SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS
(SEE INSTRUCTION 1)
To be completed ONLY IF the Notes are to be issued in the name of
someone other than the undersigned or are to be sent to someone other than
the undersigned or to the undersigned at an address other than that
provided above.
Issue to:
Name ______________________________________________________________________
(PLEASE PRINT)
Address ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
Telephone No.: _______________________________________________________
Mail to: (INCLUDE AREA CODE)
Name ______________________________________________________________________
(PLEASE PRINT)
Address ___________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
(INCLUDE ZIP CODE)
Telephone No.: _______________________________________________________
(INCLUDE AREA CODE)
4
<PAGE>
SIGNATURE
___________________________________________________________________________
(NAME OF REGISTERED HOLDER)
By: _______________________________________________________________________
Name: _____________________________________________________________________
Title: ____________________________________________________________________
(Must be signed by registered holder exactly as name appears on
Certificates for Old Notes or on the register of holders of Old Notes
maintained by The Bank of New York, as trustee for the Old Notes (the
"Trustee"), or any person(s) authorized to become the registered holder(s)
of the Old Notes by endorsements and documents transmitted herewith
(including such opinions of counsel, certifications and other information
as may be required by the Trustee to comply with the restrictions on
transfer applicable to the Old Notes). If signature is by trustee,
executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative
capacity, please set forth full title. See Instruction 3.)
Address: __________________________________________________________________
Telephone No.: ____________________________________________________________
(INCLUDE AREA CODE)
Taxpayer Identification No.: ______________________________________________
Signature Guaranteed By: __________________________________________________
(SEE INSTRUCTION 1)
Title: ____________________________________________________________________
Name of Institution: ______________________________________________________
Address: __________________________________________________________________
Telephone No.: _______________________________________________________
(INCLUDE AREA CODE)
Date: _____________________________________________________________________
PLEASE READ THE INSTRUCTIONS BELOW, WHICH FORM A PART OF THIS LETTER OF
TRANSMITTAL.
5
<PAGE>
INSTRUCTIONS
1. GUARANTEE OF SIGNATURES. Signatures on this Letter of Transmittal must be
guaranteed by a firm that is a member of a registered national securities
exchange, a member of the National Association of Securities Dealers, Inc. or
by a commercial bank or trust company having an office in the United States
which is a member of a recognized Medallion Signature Program approved by the
Securities Transfer Association, Inc. (an "Eligible Institution") unless (i)
the "Special Issuance and Delivery Instructions" above have not been completed
or (ii) the Old Notes described above are tendered for the account of an
Eligible Institution.
2. DELIVERY OF LETTER OF TRANSMITTAL AND OLD NOTES. This Letter of
Transmittal is to be completed either if (a) Certificates are to be forwarded
herewith or (b) tenders are to be made pursuant to the procedures for tender
by book-entry transfer set forth in "The Exchange Offer--Procedures for
Tendering" in the Prospectus. Certificates, or timely confirmation of a book-
entry transfer of such Old Notes into the Exchange Agent's account at the DTC,
as well as this Letter of Transmittal (of facsimile thereof), properly
completed and duly executed, with any required signature guarantees, and any
other documents required by this Letter of Transmittal, must be received by
the Exchange Agent at its address set forth herein on or prior to the
Expiration Date. Old Notes may be tendered in whole or in part in the
principal amount of integral multiples of $1,000.
THE METHOD OF DELIVERY OF OLD NOTES AND OTHER DOCUMENTS IS AT THE ELECTION
AND RISK OF THE RESPECTIVE HOLDER. IF DELIVERY IS BY MAIL, REGISTERED MAIL
(WITH RETURN RECEIPT), PROPERLY INSURED, IS SUGGESTED.
3. GUARANTEED DELIVERY PROCEDURES. Registered holders who wish to tender
their Old Notes and (i) whose Old Notes are not immediately available, or (ii)
who cannot deliver their Old Notes, the Letter of Transmittal or any other
required documents to the Exchange Agent on or prior to the Expiration Date,
or (iii) who cannot complete the procedures for delivery by book-entry
transfer on a timely basis may effect a tender if:
(a) The tender is made through an Eligible Institution;
(b) Prior to the Expiration Date, the Exchange Agent receives from such
Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
substantially in the form made available by the Company; and
(c) Such properly completed and executed Letter of Transmittal (or
facsimile thereof), as well as the Certificate(s) (or a Book-Entry
Confirmation (as defined in the Prospectus)) representing all tendered Old
Notes in proper form for transfer and all other documents required by the
Letter of Transmittal are received by the Exchange Agent within five New
York Stock Exchange trading days after the Expiration Date.
Upon request of the Exchange Agent, a Notice of Guaranteed Delivery will be
sent to registered holders who wish to tender their Old Notes according to the
guaranteed delivery procedures set forth above.
4. SIGNATURES ON LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by a person other than a registered
holder of any Old Notes, such Old Notes must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the registered holder or holders appear on the Old Notes.
If this Letter of Transmittal or any Old Notes or bond power is signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
person should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must
be submitted.
5. EXCHANGE OF OLD NOTES ONLY. Only the above-described Old Notes may be
exchanged for Notes pursuant to the Exchange Offer.
6. PARTIAL TENDERS AND WITHDRAWAL RIGHTS. Tenders of Old Notes will be
accepted only in the principal amount of integral multiples of $1,000.
6
<PAGE>
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time on or prior to the Expiration Date. In order for a withdrawal to
be effective on or prior to that time, a written, telegraphic, telex or
facsimile transmission of such notice of withdrawal must be timely received by
the Exchange Agent at one of its addresses set forth above or in the
Prospectus on or prior to the Expiration Date. Any such notice of withdrawal
must specify the name of the person who tendered the Old Notes to be
withdrawn, the aggregate principal amount of Old Notes to be withdrawn, and
(if Certificates for Old Notes have been tendered) the name of the registered
holder of the Old Notes as set forth on the Certificate for the Old Notes, if
different from that of the person who tendered such Old Notes. If Certificates
for the Old Notes have been delivered or otherwise identified to the Exchange
Agent, then prior to the physical release of such Certificates for the Old
Notes, the tendering holder must submit the serial numbers shown on the
particular Certificates for the Old Notes to be withdrawn and the signature on
the notice of withdrawal must be guaranteed by an Eligible Institution, except
in the case of Old Notes tendered for the account of an Eligible Institution.
If Old Notes have been tendered pursuant to the procedures for book-entry
transfer set forth in the Prospectus under "The Exchange Offer--Procedures for
Tendering," the notice of withdrawal must specify the name and number of the
account at the DTC to be credited with the withdrawal of Old Notes, in which
case a notice of withdrawal will be effective if delivered to the Exchange
Agent by written, telegraphic, telex or facsimile transmission. Withdrawals of
tenders of Old Notes may not be rescinded. Old Notes properly withdrawn will
not be deemed validly tendered for purposes of the Exchange Offer, but may be
retendered at any subsequent time on or prior to the Expiration Date by
following any of the procedures described in the Prospectus under "The
Exchange Offer--Procedures for Tendering."
7. MISCELLANEOUS. All questions as to the validity, form, eligibility
(including time of receipt), acceptance and withdrawal of tendered Old Notes
will be resolved by the Company, whose determination will be final and
binding. The Company reserves the absolute right to reject any or all tenders
that are not in proper form or the acceptance of which would, in the opinion
of counsel for the Company, be unlawful. The Company also reserves the right
to waive any irregularities or conditions of tender as to particular Old
Notes. The Company's interpretation of the terms and conditions of the
Exchange Offer (including the instructions in this Letter of Transmittal) will
be final and binding. Unless waived, any irregularities in connection with
tenders or consents must be cured within such time as the Company shall
determine. Neither the Company nor the Exchange Agent shall be under any duty
to give notification of defects in such tenders or shall incur liabilities for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such irregularities have been cured or waived. Any Old
Notes received by the Exchange Agent that are not properly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Exchange Agent to the tendering holder thereof.
7
<PAGE>
IMPORTANT TAX INFORMATION
Under current Federal income tax law, an Old Noteholder whose tendered Old
Notes are accepted for payment generally is required to provide the Exchange
Agent (as agent for the payer) with his or her correct taxpayer identification
number ("TIN") on Substitute Form W-9 below. If such Old Noteholder is an
individual, the TIN is his or her social security number. If the Exchange
Agent is not provided with the correct TIN, the Old Noteholder may be subject
to a $50 penalty imposed by the Internal Revenue Service. In addition,
payments that are made to such Old Noteholders with respect to Notes exchanged
pursuant to the Offer may be subject to backup withholding.
Certain Old Noteholders (including, among others, all corporations and
certain foreign individuals) may not be subject to these backup withholding
and reporting requirements. Exempt Old Noteholders should indicate their
exempt status on Substitute Form W-9. In order for a foreign individual to
qualify as an exempt recipient, that Old Noteholder must submit a properly
completed Internal Revenue Service Form W-8, signed under penalties of
perjury, attesting to his or her exempt status. Such statements can be
obtained from the Exchange Agent. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions.
If backup withholding applies, the Exchange Agent is required to withhold 31
percent of any such payments made to the Old Noteholder. Backup withholding is
not an additional tax. Rather, the federal income tax liability of persons
subject to backup withholding will be reduced by the amount of tax withheld.
If withholding results in an overpayment of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to an Old Noteholder
with respect to Old Notes exchanged pursuant to the Offer, each Old Noteholder
is required to notify the Exchange Agent of his, her or its correct TIN by
completing the Substitute Form W-9 below certifying the TIN provided on such
form is correct (or that such Old Noteholder is awaiting a TIN) and that (1)
the Old Noteholder has not been notified by the Internal Revenue Service that
he, she or it is subject to backup withholding as a result of a failure to
report all interest or dividends or (2) the Internal Revenue Service has
notified the Old Noteholder that he, she or it is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE EXCHANGE AGENT
The Old Noteholder is required to give the Exchange Agent the social
security number or employer identification number of the record owner of the
Old Notes. If the Old Notes are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional
guidelines on which number to report.
8
<PAGE>
PAYER'S NAME: THE BANK OF NEW YORK AS AGENT
PART 1--PLEASE PROVIDE YOUR
TIN IN THE BOX AT RIGHT AND ---------------------
CERTIFY BY SIGNING AND DATING Social Security Number
BELOW. OR
SUBSTITUTE
FORM W-9
DEPARTMENT OF
THE TREASURY ---------------------
INTERNAL Employer Identification
REVENUE SERVICE Number
PART 2--Certification Under penalties of perjury, I
certify that:
----------------------------------------------------------
PAYER'S REQUEST
FOR TAXPAYER (1) The number shown on this form is my correct
IDENTIFICATION Taxpayer Identification Number (or I am waiting
NUMBER (TIN) for a number to be issued to me) and
(2) I am not subject to backup withholding because:
(a) I am exempt from backup withholding, (b) I
have not been notified by the Internal Revenue
Service (the "IRS") that I am subject to backup
withholding as a result of a failure to report
all interest or dividends or (c) the IRS has
notified me that I am no longer subject to backup
withholding.
Certification Instructions--You must cross out
Item (2) above if you have been notified by the
IRS that you are currently subject to backup
withholding because of under-reporting interest or
dividends on your tax return. However, if after
being notified by the IRS that you were subject to
backup withholding you received another
notification from the IRS that you are no longer
subject to backup withholding, do not cross out
such Item (2).
----------------------------------------------------------
SIGNATURE: _____________ DATE: _____________ PART 3
Awaiting
TIN [_]
NOTE: FAILURE TO COMPLETE THIS FORM MAY RESULT IN BACKUP WITHHOLDING OF 31
PERCENT OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF AWAITING TAX IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or
delivered an application to receive a taxpayer identification number to
the appropriate Internal Revenue Service Center or Social Security
Administration Office or (b) I intend to mail or deliver an application
in the near future. I understand that if I do not provide a taxpayer
identification number within sixty (60) days, 31 percent of all
reportable payments made to me thereafter will be withheld until I
provide a number.
<TABLE>
<S> <C>
________________________________________ ________________________________________
Signature Date
</TABLE>
9
<PAGE>
NOTICE OF GUARANTEED DELIVERY
OFFER FOR ALL OUTSTANDING
PRIVATELY PLACED 9 1/2% SERIES A SENIOR SUBORDINATED NOTES DUE 2007
IN EXCHANGE FOR
9 1/2% SERIES B SENIOR SUBORDINATED NOTES DUE 2007
OF
SALEM COMMUNICATIONS CORPORATION
Registered holders of privately placed 9 1/2% Series A Senior Subordinated
Notes Due 2007 (the "Old Notes") who wish to tender their Old Notes in
exchange for a like principal amount of 9 1/2% Series B Senior Subordinated
Notes Due 2007 (the "Notes") and (i) whose Old Notes are not immediately
available, or (ii) who cannot deliver their Old Notes and Letter of
Transmittal or any other documents required by the Letter of Transmittal to
The Bank of New York, as exchange agent (the "Exchange Agent") on or prior to
the Expiration Date, or (iii) who cannot complete the procedures for delivery
by book-entry transfer on a timely basis must use this Notice of Guaranteed
Delivery or one substantially equivalent hereto. This Notice of Guaranteed
Delivery may be delivered by hand or sent by facsimile transmission or mail to
the Exchange Agent. See "THE EXCHANGE OFFER--Procedures for Tendering" in the
Prospectus.
THE EXCHANGE AGENT FOR THE OFFER IS
THE BANK OF NEW YORK
<TABLE>
<S> <C>
By Hand Delivery By Mail or Overnight Express
(Insured or registered recommended):
THE BANK OF NEW YORK THE BANK OF NEW YORK
101 BARCLAY STREET - FLOOR 7E 101 BARCLAY STREET - FLOOR 7E
CORPORATE TRUST SERVICES WINDOW NEW YORK, NEW YORK 10286
GROUND LEVEL ATTN: REORGANIZATION DEPARTMENT
NEW YORK, NEW YORK 10286
ATTN: REORGANIZATION DEPARTMENT
By Facsimile: By Telephone:
(212) 815-6339 (212) 815-[TBD]
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE TRANSMISSION
TO A NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID
DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN ELIGIBLE INSTITUTION UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED ON THE LETTER
OF TRANSMITTAL FOR GUARANTEE OF SIGNATURES.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders the principal amount of Old Notes
indicated below, upon the terms and subject to the conditions contained in
the Registration Statement on Form S-4 filed by Salem Communications
Corporation, a California corporation, and its subsidiaries identified
therein as Other Registrants with the Securities and Exchange Commission
(the "Registration Statement") and the accompanying Prospectus dated
, 1998 included therein (the "Prospectus"), receipt of which is
hereby acknowledged.
DESCRIPTION OF SECURITIES TENDERED
<TABLE>
<S> <C> <C>
NAME AND ADDRESS OF
REGISTERED HOLDER AS IT CERTIFICATE NUMBER(S) PRINCIPAL AMOUNT OF
APPEARS ON THE OLD NOTES OF OLD NOTES TRANSMITTED OLD NOTES TRANSMITTED
-------------------------- -------------------------- --------------------------
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
__________________________ __________________________ __________________________
</TABLE>
2
<PAGE>
THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a member of a registered national
securities exchange or a member of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company having an office,
branch, agency or correspondent in the United States, which is a member of
a recognized Medallion Signature Program approved by the Securities
Transfer Association, Inc., hereby guarantees to deliver to the Exchange
Agent at one of its addresses set forth above, either the Old Notes
tendered hereby in proper form for transfer, or confirmation of the book-
entry transfer of such Old Notes to the Exchange Agent's account at The
Depository Trust Company pursuant to the procedures for book-entry
transfer set forth in the Prospectus, in either case together with a
properly completed and duly executed Letter of Transmittal (or facsimile
thereof), with any required signature guarantees, and any other documents
required by the Letter of Transmittal within five New York Stock Exchange,
Inc. trading days after the date of execution of this Notice of Guaranteed
Delivery.
Name of Firm: _____________________________________________________________
___________________________________________________________________________
(AUTHORIZED SIGNATURE)
Address: __________________________________________________________________
(ZIP CODE)
Area Code and Telephone Number: ___________________________________________
Name: _____________________________________________________________________
(PLEASE TYPE OR PRINT)
Title: ____________________________________________________________________
Date: , 1998
If Old Notes will be tendered by book-entry transfer, provide the
following information:
DTC Account Number:
Date:
NOTE:DO NOT SEND OLD NOTES WITH THIS NOTICE OF GUARANTEED DELIVERY. OLD
NOTES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
3
<PAGE>
[Letterhead of Gibson, Dunn & Crutcher LLP]
January 26, 1998
(714) 451-3800 C 80253-00029
Salem Communications Corporation
and the Guarantors identified herein
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Re: Salem Communications Corporation
Gentlemen and Mesdames:
We have acted as special counsel for Salem Communications Corporation, a
Delaware corporation (the "Company"), and its subsidiaries (collectively, the
"Guarantors") that are party to the Indenture, dated as of September 25, 1997
(the "Indenture"), with The Bank of New York, as trustee (the "Trustee"), in
connection with the proposed offer by the Company (the "Exchange Offer") to
exchange up to $150,000,000 aggregate principal amount of its outstanding 9 1/2%
Series A Senior Subordinated Notes Due 2007 (the "Old Notes") for a like
principal amount of its 9 1/2% Series B Senior Subordinated Notes Due 2007 (the
"Notes"). The Old Notes were, and the Notes will be, issued pursuant to the
Indenture. The Old Notes were guaranteed on a senior, subordinated basis by the
Guarantors, in accordance with the terms of the Indenture. As were the Old
Notes, the Notes will be guaranteed (the "Guarantees") by the Guarantors on a
senior, subordinated basis, in accordance with the terms of the Indenture. The
Indenture, the Notes and the Guarantees are referred to herein collectively as
the "Financing Documents."
I.
In our capacity as special counsel to the Company and the Guarantors in
connection with the proposed Exchange Offer, we have examined originals, or
copies certified or otherwise identified to our satisfaction, of the
Registration Statement (no. 333-41733) on Form S-4, as amended to date (the
"Registration Statement"), as filed by the Company and the Guarantors with the
Securities and Exchange Commission (the "Commission") to register under the
Securities Act of 1933, as amended (the "Securities Act"), the offering of the
Notes and the
<PAGE>
Salem Communications Corporation
and the Guarantors identified herein
January 26, 1998
Page 2
Guarantees pursuant to the Exchange Offer and such other documents, corporate
records, partnership records, certificates of such public officials and other
instruments as we have deemed necessary or advisable to enable us to render the
opinions set forth below. In our examination, we have assumed the genuineness
of all signatures, the legal capacity of natural persons, the authenticity of
all documents submitted to us as originals, the conformity to original documents
of all documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of such copies. As to any facts material to these
opinions, we have relied upon statements and representations of officers and
other representations of the Company and the Guarantors and others, in each case
without having independently verified the accuracy or completeness thereof. In
rendering this opinion, we have assumed that the Company and each Guarantor has
been duly organized under the laws of their respective state of incorporation or
partnership formation.
We have assumed, without independent investigation or inquiry with respect
to any such matter, that (i) the Trustee has all requisite power and authority
to execute, deliver and perform its obligations under the Indenture, the
execution and delivery of the Indenture and the performance of such obligations
have been duly authorized by all necessary action on the Trustee's part and the
Indenture has been duly delivered by it; and (ii) the Indenture is enforceable
against the Trustee in accordance with the terms thereof.
Based upon the foregoing, and subject to the qualifications, exceptions,
limitations and assumptions hereinafter set forth, we are of the opinion that:
1. The Notes, when executed and authenticated in accordance with the
provisions of the Indenture and when issued and delivered in exchange for
the Old Notes in the manner described in the Registration Statement, will
be legal, valid and binding obligations of the Company, enforceable against
the Company in accordance with their terms.
2. The Guarantees, when executed, when the Notes with the Guarantees
endorsed thereon have been authenticated in accordance with the provisions
of the Indenture and when issued and delivered in connection with the
exchange of the Old Notes in the manner described in the Registration
Statement, will be legal, valid and binding obligations of the Guarantors,
enforceable against the Guarantors in accordance with their terms.
Each of the opinions set forth above is subject to the following
exceptions, qualifications, limitations and assumptions:
<PAGE>
Salem Communications Corporation
and the Guarantors identified herein
January 26, 1998
Page 3
(a) The execution and delivery of the Financing Documents by the Trustee
and performance by the Trustee of its obligations thereunder comply with all
laws and regulations that are applicable to the Trustee or the transactions
contemplated by such Financing Documents because of the nature of the Trustee's
business.
(b) Our opinions are subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, arrangement or other similar laws affecting
enforcement of creditors' rights generally, including, without limitation, the
effect of statutory or other laws regarding fraudulent conveyances or transfers,
preferential transfers, and of laws affecting distributions by corporations to
stockholders.
(c) Our opinions are subject to the application of general principles of
equity, whether considered in a case or proceeding at law or in equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing.
(d) Our opinions are subject to the qualification that indemnification or
contribution provisions in any of the Financing Documents may be unenforceable
to the extent that such indemnification or contribution may be held to be in
violation of or against public policy, including, without limitation,
limitations under certain circumstances on enforceability of provisions (i)
indemnifying a party against loss attributable to or liability for its own
negligent acts or (ii) providing for contribution with respect to such loss or
liability.
Furthermore, the opinions herein expressed are subject to the qualification
that we express no opinion as to:
(a) The legality, validity, binding effect or enforceability (whether
according to its terms or otherwise) of any provision of any Financing Document
to the effect that rights or remedies are not exclusive, that every right or
remedy is cumulative and may be exercised in addition to any other right or
remedy, that the election of some particular remedy does not preclude recourse
to one or more other remedies or that failure to exercise or delay in exercising
rights or remedies will not operate as a waiver of any such right or remedy.
(b) The legality, validity, binding effect or enforceability of any waiver
under any Financing Document or any consent thereunder relating to the rights of
the Company or Guarantor party thereto existing, or duties owing to it, as a
matter of law, except to the extent that the Company or such Guarantor can waive
such rights or duties or give such consent under applicable law. We express no
opinion as to the effectiveness of any waiver or consent contained in any
Financing Document relating to such rights or duties that is broadly or vaguely
stated, does not describe the right or duty purportedly waived or to which such
consent relates with reasonable specificity or relates to unknown future rights.
<PAGE>
Salem Communications Corporation
and the Guarantors identified herein
January 26, 1998
Page 4
(c) The legality, validity, binding effect or enforceability of any
provision of any Financing Document to the extent that it provides for a rate of
interest after failure to pay principal when due or other occurrence of a
default that is in excess of the rate of interest otherwise payable, to the
extent such rate is found to constitute a penalty.
(d) Any provision of any Financing Document requiring written amendments
or waivers of such document insofar as it suggests that oral or other
modifications, amendments or waivers could not effectively be agreed upon by the
parties or that the doctrine of promissory estoppel might not apply.
(e) The effect on the enforceability of any of the Financing Documents
against any Guarantor of any facts or circumstances that would constitute a
defense to the obligation of a surety, unless such defense has been waived
effectively by the Guarantor, to the extent that any of the Guarantor's
obligations under such Financing Document constitute obligations to answer for
the debt of another Person.
Our opinions expressed herein are limited to the internal laws (excluding
choice of law rules) of the State of New York. The opinions expressed herein
are based upon the law and circumstances as they are in effect or exist on the
date hereof, and we assume no obligation to revise or supplement this letter in
the event of future changes in the law or interpretations thereof with respect
to circumstances or events that may occur subsequent to the date hereof. We
express no opinion as to the effect of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our name under the
caption "Legal Matters" in the Prospectus included in the Registration
Statement. In giving this consent, we do not admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act or the Rules and Regulations of the Commission promulgated thereunder. This
opinion is solely for the benefit of the Company and the Guarantors and may not
be relied upon by any other person. This opinion may not be quoted, in whole or
in part, or copies hereof furnished, to any other person without our prior
express written consent.
Very truly yours,
/s/ Gibson, Dunn & Crutcher LLP
Gibson, Dunn & Crutcher LLP
TDM/JHE/SPG/AME
<PAGE>
Exhibit 10.05.05
ORIGINAL
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the first day of February, 1997,
by and between EDWARD G. ATSINGER III and STUART W. EPPERSON (collectively
referred to herein as "Lessor") and Common Ground Broadcasting, Inc. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station WHK(AM), Cleveland, Ohio; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations"). Lessee
is fully familiar with the physical condition of the Land and has received the
same in good order and condition, and agrees that the Land complies in all
respects with all requirements of this Agreement. Lessee shall use the Land
exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within
<PAGE>
thirty (30) days after Lessor's receipt thereof, then such changes shall be
deemed approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created
or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1, 1997
(the "Commencement Date"), and shall expire on January 31, 1998 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date
Lessee shall pay a base rent of $33,600 per annum, in equal monthly installments
of $2,800 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
anniversary of the Commencement Date and each subsequent anniversary of the
Commencement Date this Agreement remains in effect. During the one (1) year
period beginning with each Adjustment Date, the monthly rent payable by Lessee
shall reflect an adjustment, as herein provided, for the change, if any, from
the year in which the Commencement Date falls, in the Consumer Price Index for
Urban Wage Earners and Clerical Workers, Los Angeles area [Base Year 1982-
84=100] ("CPI") as measured in February and published by the United States
Department of Labor, Bureau of Labor Statistics; i.e., during the one (1) year
period beginning with the Adjustment Date, the monthly rent shall be the product
obtained by multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for February of the year such Adjustment Date falls and the
denominator of which shall be the CPI for February of the year in which the
Commencement Date falls. Notwithstanding the results of the foregoing
calculation, the amount payable by Lessee hereunder shall not in any event be
less than the rental paid during the immediately preceding one (1) year period
and the annual adjustment, as set forth in this Section 4.3, shall not exceed
-----------
five percent (5%) of the rental paid in the preceding one (1) year period. In
the event that the Bureau of Labor Statistics shall change the base period for
the CPI, the new index number shall be substituted for the old index number in
making the above computation. In the event the Bureau of Labor Statistics ceases
publishing the CPI, or materially changes the method of its computation, Lessor
and Lessee shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension,
<PAGE>
deferment, diminution or reduction. Except as expressly provided herein, Lessee
waives all rights now or hereafter conferred by statute or otherwise to quit,
terminate or surrender this Agreement or the Real Property or any part thereof,
or to any abatement, suspension, deferment, diminution or reduction of rent or
any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to
<PAGE>
Lessor evidencing such payment. If by law any such amount may be paid in
installments, Lessee shall be obligated to pay only those installments as they
become due from time to time before any interest, penalty, fine or cost may be
added thereto; and any such amount relating to the fiscal period of the taxing
authority, part of which is included within the Term and a part of which extends
beyond the Term shall, if Lessee shall not be in default under this Agreement,
be apportioned between Lessee and Lessor as of the expiration of the Term of
this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice
to Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to
<PAGE>
time reasonably request for the protection by insurance of their respective
interests. The policy or policies of insurance maintained by Lessee pursuant to
this Paragraph shall be of a company or companies authorized to do business in
California and a certificate thereof shall be delivered to Lessor, together with
evidence of the payment of the premiums therefor, not less than fifteen (15)
days prior to the commencement of the Term hereof or of the date when Lessee
shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen
(15) days prior to the expiration or termination date of any policy, Lessee
shall deliver a certificate of a renewal or replacement policy with proof of the
payment of the premium therefor. Any such insurance required by this Paragraph
may, at Lessee's option, be provided through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be
<PAGE>
required to indemnify Lessee for any damages, injury, loss or expense arising
out of Lessee's or its agents', employees', invitees' or contractors' negligent
acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
<PAGE>
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation or
foreclosing order, Lessee may continue to use the property for operations under
the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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
<PAGE>
"American National Standard Safety Levels With Respect to Human Exposure to
Radio Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the
American National Standards Institute ("Acceptable Radio Frequency Radiation
Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the
radio tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property
or any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly
upon request, a certificate certifying that (i) this Agreement is unmodified and
in full force and effect (or, if there have been modifications, that the
Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any prospective
purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all
or substantially all of its business or assets on the ground of its insolvency,
or has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and
<PAGE>
notwithstanding any waiver of any prior breach of condition or event of default
hereunder, Lessor may re-enter the Leased Premises either by reasonable force or
otherwise, or dispossess Lessee, any legal representative of Lessee or other
occupant of the Leased Premises by appropriate suit, action or proceeding and
remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee
shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect
to any mortgages and security agreements placed or hereafter to be placed by
Lessor upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of
<PAGE>
trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn to
the purchaser upon any such foreclosure or sale and recognize such purchaser as
the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained
by Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign,
in whole or in part, Lessor's interest in this Lease and (b) may sell all or
part of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment, fixtures,
goods or other property of Lessee not removed within ten (10) days after any
quitting, vacating or abandonment of the Leased Premises, or upon Lessee's
eviction therefrom, shall be considered abandoned, and Lessor shall have the
right, without notice to Lessee, to sell or otherwise dispose of same without
having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Texas.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE
Common Ground Broadcasting, Inc.
/s/ Edward G. Atsinger, III /s/ Eric H. Halvorson
- ----------------------------- ---------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
/s/ Stuart W. Epperson
- -----------------------------
STUART W. EPPERSON
Trustee
<PAGE>
Exhibit 10.05.06
LEASE
-----
THIS LEASE is made and entered into as of the 1st day of January, 1989, by
and between SALEM BROADCASTING COMPANY, a California general partnership,
hereinafter referred to as "Landlord" or "Lessor", and GOLDEN GATE BROADCASTING
COMPANY, INC., a California corporation, hereinafter referred to as "Tenant"
or "Lessee".
In consideration of the following covenants, agreements, conditions and
representations, the parties agree as follows:
1. Property Leased. Landlord hereby leases to Tenant and Tenant hereby
---------------
rents from Landlord on the terms, covenants and conditions hereinafter set
forth, those certain premises and appurtenances located in Hayward, California
and described on Exhibit A attached hereto (the "premises" or the "leased
premises").
2. Term; Option to Extend. The term of this Lease is five (5) years,
----------------------
commencing on the date hereof and terminating five (5) years from that date.
Tenant shall have the option, if Tenant is not at the time in default under this
Lease, to extend the term of this Lease for up to two (2) successive periods of
five (5) years each, and, except as set forth in Paragraph 4, below, on the same
terms, covenants and conditions herein contained. Each option to extend the term
shall be exercised only by Tenant's delivery to Landlord by United States mail
on or before 90 days prior to the commencement of the renewal term of written
notice of Tenant's election to extend as provided herein.
3. Use.
---
(a) The premises shall be used to operate a radio station,
including, but not limited to, operation of a directional antenna system
including a transmitter for use in connection with the operation of a radio
station, and for such uses as are incidental or customarily related thereto. The
premises shall not be used for any other purpose without Tenant first obtaining
the written consent of Landlord thereto.
(b) Landlord agrees that in the event an inspection by any
municipal or governmental authority results in a citation or order being issued
requiring the correction of any condition existing on the leased premises at the
time they were made available to Tenant, Landlord shall at its expense remedy
said condition within a reasonable period of time; provided that Landlord shall
have the right to dispute any such order and shall
<PAGE>
be required to correct said condition only after it has exhausted its rights to
appeal or review of said order or citation. Tenant agrees that it will comply
with all laws, ordinances, orders, rules, regulations or requirements of all
governmental authorities which are applicable to its use and/or occupancy of the
leased premises. Notwithstanding the foregoing, either Landlord or Tenant shall
have the right to contest by appropriate proceedings the validity and/or
applicability of any such laws, ordinances, orders, rules, regulations and/or
requirements.
4. Rent. Tenant shall pay rent to Landlord during the term of this
----
Lease as follows;
4.1. During the first five (5) years of this Lease, the amount of Eleven
Thousand Dollars ($11,000.00) per month.
4.2. During the first (5) year extended term of this Lease, a monthly
amount equal to one (1%) of the appraised value of the leased premises as of the
commencement of the extended term as determined by an appraiser mutually
selected by Landlord and Tenant not later than fifteen (15) days after Tenant's
delivery of the election to extend the term of the Lease under Section 2, above.
The cost of the appraisal shall be paid by Tenant.
4.3 During the second five (5) year extended term of this Lease, a
monthly amount equal to one (1%) of the appraised value of the leased premises
as of the commencement of the extended term as determined by an appraiser
mutually selected by Landlord and Tenant not later than fifteen (15) days after
Tenant's delivery of the election to extend the term of the Lease under Section
2, above. The cost of the appraisal shall be paid by Tenant.
4.4 Rent shall be payable in lawful money of the United States to
Landlord at 2310 Ponderosa Drive, Suite 29, Camarillo, California 93010 on the
first day of each month.
5. Taxes and Assessments. Tenant shall pay all real property taxes,
---------------------
governmental special assessments and land benefit charges levied against the
real property leased to Tenant herein and which are applicable to the period
beginning with the commencement of this Lease. Tenant shall pay before
delinquency all general and special taxes, licenses, fees, charges or taxes
imposed by any governmental entity by reason of the Lease, Tenant's occupation
or use of the leased premises or Tenant's activities thereon. In addition,
Tenant shall pay all taxes levied against the personal property of Tenant or
improvements installed by Tenant becoming a part of the real property of every
2
<PAGE>
description, maintained on and used by Tenant in connection with the leased
premises. All of such charges, costs, and expenses shall constitute additional
rent, and upon the failure of Tenant to pay any of such costs, charges or
expenses, Landlord shall have the same rights and remedies as otherwise provided
in this Lease for the failure of Tenant to pay rent.
6. Improvements. The term "improvements" as used herein means any
------------
improvement, addition or change to the leased premises, any alteration of the
leased premises, or anything placed, installed or constructed in, on or upon the
leased premises, whether or not characterized by law as a fixture, but does not
include the Tenant's personal property.
Tenant shall not make, or permit to be made any structural improvements or
alterations, in, on, or to the leased premises or any part thereof without the
prior written consent of Landlord, which consent shall not be unreasonably
withheld; provided that the improvements shall not lessen the value of the
leased premises. Any improvements made in, on, or to the leased premises shall
be at the sole expense of Tenant and any additions to or alterations of said
premises shall become at once a part of the realty and belong to Landlord.
Tenant shall keep the premises and the property in which they are situated free
from any liens arising out of any work performed on the leased premises, by or
on behalf of Tenant, for material furnished to the leased premises, or for
obligations incurred by Tenant. In making any alteration that Tenant has a right
to make, Tenant shall not commence such improvement or alteration until three
(3) days after Landlord has received notice from Tenant stating the date of
commencement of the improvement or alteration so that Landlord can post and
record any appropriate notice of nonresponsibility. All alterations shall be
completed with due diligence.
Subject to the provisions of Paragraph 16, below, if any installation,
alteration or improvement is required by law by any governmental authority,
Tenant shall at Tenant's cost and expense promptly make such installation,
alteration or improvement.
Provided Tenant is not in default or in breach of this Lease beyond the
expiration of any applicable grace periods, Tenant may during the term of this
Lease, and shall immediately upon the expiration of this Lease, remove from the
leased premises all of Tenant's personal property and trade fixtures and such
other property which Landlord may during the term of this Lease agree or
acknowledge in writing are improvements belonging to Tenant.
3
<PAGE>
Tenant may from time to time during the term of this Lease install trade
fixtures of various kinds and descriptions for the purpose of carrying on, and
used in connection with, any broadcasting business conducted on the leased
premises, and upon any of such trade fixtures being so installed or placed on
the leased premises by Tenant or any other person, the same shall remain at all
times the property of Tenant or such other person and, at any time during the
term of this Lease, and at the termination thereof, Tenant or such other person
shall be entitled to remove any and all of such trade fixtures that shall belong
to the person so removing the same, and Landlord shall have the right to require
the Tenant at the expiration of the term to remove any or all of such trade
fixtures; provided that all damage to the leased premises caused by such removal
shall be fully repaired by Tenant at Tenant's sole expense.
7. Maintenance and Upkeep. By entry hereunder, Tenant accepts the
----------------------
premises as being in good and sanitary order, condition and repair. Tenant shall
at Tenant's own cost and expense keep the entire property in a clean, neat,
sanitary and sightly condition at all times and free from dirt, debris,
accumulation of waste and fire hazards. Tenant shall upon the expiration or
sooner termination of this Lease surrender to Landlord the leased premises and
appurtenances thereto in a good, sanitary order, condition and repair, ordinary
wear and tear excepted.
8. Repairs. Tenant shall at its sole cost and expense maintain the
-------
leased premises in good condition and shall make all necessary repairs thereto.
In the event that Landlord determines that a repair or replacement is needed and
Tenant after notice does not make said repair or replacement within a reasonable
period of time, Landlord shall notify Tenant that it considers said repair or
replacement necessary and it is contemplating making said repair. Landlord may
then, at its option, make such repair or replacement and charge the cost
incurred to Tenant as additional rental. It is agreed that nothing in the
foregoing shall relieve Tenant from full performance of its obligations and that
the limitation referred to above is in addition to any other remedy available to
Landlord.
9. Indemnification; Liability Insurance. Tenant shall save and hold
------------------------------------
harmless, indemnify and defend Landlord from any damage or liability arising out
of or relating to any death, bodily injury, or property damage resulting from,
or in connection with, the acts of, or the maintenance, use, or occupation of
the leased premises by Tenant, Tenant's agents, servants, employees,
contractors, or patrons. Tenant shall, at
4
<PAGE>
Tenant's sole cost and expense, carry public liability insurance and property
damage insurance in amounts reasonably required by Landlord. All such insurance
shall be carried with insurance companies satisfactory to Landlord. Said
insurance shall name Landlord as a co-insured or an additional insured. Tenant
shall furnish, or cause to be furnished to Landlord, upon request, certificates
of insurance from the insurance carrier stating that such insurance is in full
force and effect, that the premiums thereon have been paid and that the
insurance carrier will give Landlord at least ten (10) days prior written notice
of any termination, cancellation, or modification of such insurance.
10. Fire Insurance. Through the term of this Lease, Tenant shall
--------------
maintain at its sole cost and expense, fire and extended coverage insurance on
the premises and the appurtenances being leased by Tenant, insuring the premises
for not less than ninety percent (90%) of its replacement value. Landlord and
Tenant shall be named as loss payees as their interest shall appear and, on
Landlord's demand, Tenant shall also include the holder of any mortgage or deed
of trust encumbering the fee as a loss payee to the extent of that mortgagee's
interest.
Tenant shall furnish, or cause to be furnished to Landlord, upon request,
certificates of insurance from the insurance carrier stating that such insurance
is in full force and effect, that the premiums have been paid and that the
insurance carrier will give Landlord at least ten (10) days prior written notice
of any termination, cancellation or modification of such insurance. Tenant may
provide a certificate of insurance under its blanket insurance policies in
satisfaction of this requirement.
If Tenant fails or refuses to procure or maintain said fire or liability
insurance as required by this Lease or fails or refuses to furnish Landlord with
the required proof that the insurance has been procured and is in force and paid
for, Landlord shall have the right, at Landlord's option upon five (5) days
written notice, to procure and maintain such insurance. The premium paid by
Landlord shall be treated as additional rent due and payable immediately.
Landlord shall give prompt notice of the payment of such premiums, stating the
amounts paid and the insurer or insurers, and interest shall run from the date
of the notice.
11. Assignment and Subletting. Tenant shall not have the right to assign
-------------------------
this Lease, or any part thereof, to any third person(s), firm(s) or
corporation(s) without the prior written consent of Landlord.
5
<PAGE>
12. Utilities. Tenant shall pay for all utilities furnished to or
---------
delivered at the leased premises, including connection and installation charges
and shall make payments directly to the utility company furnishing same. Tenant
shall protect Landlord and save Landlord harmless from any liens arising out of
the nonpayment of its utility charges.
13. Entry by Owner Inspection and Notices. Except as expressly provided
-------------------------------------
to the contrary herein, Tenant shall permit Landlord and his agents to enter
into and upon said premises upon first giving reasonable notice, reasonable
notice being twenty-four (24) hours, for the purpose of inspecting the same
or for the purpose of making repairs, alterations, or additions to any portion
of said building to be made by Landlord upon Tenant's breach of its obligations
to maintain and repair the premises, including the erection and maintenance of
such scaffolding, canopies, fences and props as may be required, or for the
purpose of posting notices of non-responsibility for alterations, additions, or
repairs, or for the purpose of placing upon the property in which the said
premises are located any usual or ordinary "for sale" signs, or to show during
the last twelve (12) months of the term the premises to prospective future
tenants, without any rebate of rent and without any liability to Tenant for any
loss of occupation or quiet enjoyment of the premises occasioned thereby. Prior
notice is not required in the event of an emergency situation.
14. Waivers of Damages. Tenant as a material part of the consideration
------------------
to be rendered to Landlord, hereby waives all claims against Landlord, except
for Landlord's, its employees', contractors', invitees', agents' and servants'
negligence or willful misconduct or breach of this Lease.
15. Destruction of Premises. In the event of a total or partial
-----------------------
destruction of the leased premises during the term of this Lease, Tenant shall
forthwith repair the same upon the receipt of insurance proceeds, provided such
repairs can be made within one hundred twenty (120) days under the applicable
laws and regulations. Landlord will cooperate with Tenant in such manner as is
necessary in order that the insurance proceeds payable under the insurance
obtained under Paragraph 10 are paid to Tenant as promptly as possible. Any such
destruction shall not annul or void this Lease; however, rent to be paid by
Tenant hereunder shall be equitably adjusted according to the amount and value
of the undamaged premises remaining. If such repairs cannot be made within one
hundred twenty (120) days, this Lease may be terminated at the option of Tenant.
If the leased premises are not rebuilt as provided herein, the insurance
6
<PAGE>
proceeds obtained under Paragraph 10 shall belong to Landlord, except that
Tenant shall be entitled to that portion of the award, if any, attributable to
the destruction of Tenant's trade fixtures and personal property which Tenant
had the right to remove upon the termination of this Lease.
16. Remedies Upon Default.
---------------------
(a) Landlord's Remedies. Except as otherwise provided herein,
-------------------
should Tenant default in the performance of any covenant or provision herein
with reference to the payment of rent or other payment of money, and such
default continues for five (5) days after receipt by Tenant of written notice
from Landlord of such default, or should Tenant default in the performance of
any other covenant or provision herein, other than the payment of money, and
such default, if curable, is not cured within thirty (30) days after service
upon Tenant of a written notice thereof from Landlord, or if not curable within
thirty (30) days, Tenant fails to commence a cure within thirty (30) days after
service upon Tenant of a written notice thereof from Landlord and thereafter
diligently pursues such cure to completion, Landlord may terminate Tenant's
right of possession to the leased premises and may recover from Tenant all of
the damages to which Landlord is entitled under the laws of the State of
California.
None of Landlord's rights herein specified in the event of a default by
Tenant shall prejudice any other legal remedies available to Landlord other than
those herein enumerated.
(b) No Waiver. Efforts by Landlord to mitigate the damages caused
---------
by Tenant's breach of this Lease shall not waive Landlord's right to recover
damages under this paragraph. For the purpose of subparagraph (a) above, the
following shall not constitute a termination of Tenant's right of possession:
(1) Acts of maintenance or preservation or efforts to relet
the property; and
(2) Appointment of a receiver upon initiative of Landlord to
protect Landlord's interest under this Lease.
(c) Reentry. Upon a default of Tenant not cured within the time
-------
specified in subparagraph (a), or if Tenant abandons the premises, Landlord
shall have the right to reenter the leased premises and take possession thereof
with or without terminating the Lease upon giving the notice of reentry as
required by law. Upon such reentry, Landlord may (but is not
7
<PAGE>
obligated to do so) relet the leased premises for the benefit of the Landlord
and Tenant on such terms and conditions and at such rental as may then be
reasonably available to Landlord. Such reletting shall not relieve Tenant from
any of Tenant's obligations hereunder unless the Lease is terminated by Landlord
by a written notice of termination served on Tenant.
17. Waste; Nuisance. Tenant shall not commit, or suffer to be committed,
---------------
any waste upon the premises, nor cause, maintain or permit any nuisance in, on
or about the premises.
18. Compliance with Law.
-------------------
(a) Tenant shall, at Tenant's sole cost and expense, comply with
all of the requirements of all Municipal, State and Federal authorities now in
force, or which may hereafter be in force, pertaining to the said premises, and
shall faithfully observe in the use of the premises all Municipal ordinances and
State and Federal statutes now in force or which may hereafter be in force. The
judgment of any court of competent jurisdiction, after appeals have been taken
or waived, or the admission of Tenant in any action or proceeding against
Tenant, whether Landlord is a party thereto or not, that Tenant has violated any
such ordinance or statute in the use of the premises shall be conclusive of that
fact as between Tenant and Landlord.
(b) Subject to other provisions of this Lease, Tenant, upon prior
notice to Landlord, shall be entitled to contest or have reviewed in good faith
in the name of Landlord or Tenant, but at the expense of Tenant (except as
otherwise provided in this Lease) by appropriate proceedings diligently
conducted, the amount, validity or applicability, as the case may be, of any:
(i) Law, ordinance, order, rule, regulation or requirement of
any governmental authority applicable to the leased premises or to the use
thereof or any such proposed law, ordinance, order, rule, regulation or
requirement;
(ii) Any tax or any proposed tax or other charge or amount
levied or assessed against the leased premises by any governmental
authority which under the terms of this Lease is payable by the Tenant;
8
<PAGE>
(iii) Lien or encumbrance filed or asserted against the leased
premises or any part thereof arising out of any claim asserted against the
Tenant which might be or become a lien or encumbrance upon the leased
premises or any part thereof, or
(iv) Other expense or charge, which, during the term of this
Lease, shall be levied, assessed, imposed, demanded or threatened to be
assessed, demanded or imposed by any governmental authority or by any
insurance carrier upon or with respect to or alleged by any person to have
been incurred in connection with Tenant's possession, occupation,
operation, alteration, maintenance, repair or use of the leased premises or
the making of any additions thereto. The period of any such permitted
contest shall be excluded in computing the period during which a default
shall be deemed to exist, if such default would not have occurred except by
such contest.
If any mechanic's, laborer's or materialman's lien shall at
any time be filed against the leased premises as a result of either Landlord's
or Tenant's occupancy thereof, or which arises out of any claim asserted against
the Landlord or Tenant, the party against who a claim exists giving rise to such
lien shall, within thirty (30) days after notice of the filing thereof, cause
the same to be discharged of record by payment, deposit, bond, order of a court
of competent jurisdiction, or otherwise. If either party shall fail to cause
such lien to be discharged during the period aforesaid, then, in addition to any
other right or remedy, the other party may, but shall not be obligated to,
discharge the same by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit or by bonding proceedings. Any amount paid by
Tenant and all costs and expenses incurred by Tenant in connection with any such
claim shall be credited upon installments of rent payable by Tenant to Landlord
hereunder. Interest at the rate of ten percent (10%) per annum from the making
of any such payment or incurring of any such costs or expenses shall be added to
such amount to be credited to Tenant by Landlord. Any amount paid by Landlord
and in connection with any such mechanic's, laborer's and materialman's lien or
arising out of a claim asserted against Tenant incurred by Landlord in
connection therewith, together with interest thereon at the rate of ten percent
(10%) per annum from the respective dates of Landlord's making of the payment or
incurring of such costs and expenses shall constitute additional rent payable as
additional rent by Tenant to Landlord on demand.
9
<PAGE>
19. Attorneys' Fees. If either party employs an attorney or attorneys to
---------------
determine or enforce the provisions hereof, the prevailing party (whether by
negotiation, settlement or suit) shall be paid his reasonable attorneys' fees
and expenses by the non-prevailing party.
20. Time. Time is of the essence of this Lease.
----
21. Condemnation. If the leased premises, or any part thereof, are taken
------------
by condemnation, or incident to the exercise of the power of eminent domain,
(hereinafter referred to as "condemnation") the following shall apply:
(a) If the entire leased premises are taken or acquired by
condemnation this Lease shall terminate. Such termination shall take effect as
of the date taking becomes effective by passage of title to the leased premises
to the condemning authority pursuant to court order, or by the physical taking
of possession of the leased premises by the condemning authority, whichever is
earlier.
If only a portion of the leased premises is taken or acquired by or
incident to condemnation and a part thereof remains which in Tenant's opinion
can be used for the purpose specified in Paragraph 3 of this Lease without
compromising Tenant's activity or usability of the premises, this Lease shall,
except for the part actually taken, remain in full force and effect.
(b) If only a portion of the leased premises is taken by condemnation
and part thereof remains which can be used for the purposes specified in
Paragraph 3 of this Lease, rent payable under this Lease shall be equitably
adjusted according to the amount and value of the leased premises remaining for
Tenant's use.
Such adjustment in rent shall take effect on the date title to the
condemned portion of the leased premises passes to the condemning authority
pursuant to court order or on the date the condemning authority takes physical
possession of the condemned leased property, whichever is earlier.
(c) All compensation paid for the land and improvements taken,
including severance damage, if any, shall belong to Landlord except that Tenant
shall be entitled to any relocation award specifically for Tenant's benefit and
such portion of the award attributable to Tenant's trade fixtures and
personalty, if any.
10
<PAGE>
(d) Landlord, under no circumstances, shall be or become liable for
or on account of any damage to, loss of, or interference with Tenant's business
occasioned by any condemnation or threat thereof.
22. Bankruptcy or Insolvency. It shall be a breach of this Lease and
------------------------
Landlord, at its option, upon giving written notice of termination to Tenant,
may terminate this Lease for any of the following events:
(a) Assignment of the Lease by operation of law;
(b) The appointment of a receiver to take possession of all or
substantially all of the assets of Tenant and the receiver is not discharged
within thirty (30) days after his appointment.
(c) A general assignment for benefit of creditors by Tenant;
(d) The filing of a voluntary petition or arrangement in bankruptcy
by Tenant;
(e) The filing of an involuntary petition or arrangement in
bankruptcy against Tenant and the same is not dismissed within sixty (60) days
from the date of filing; and
(f) Any other action taken or suffered by Tenant because of Tenant's
insolvency.
23. Condition of property Upon Surrender. Upon the expiration of the term
------------------------------------
of this Lease, or upon its sooner termination, for any reason, Tenant shall make
any restorations required pursuant to Paragraph 6, shall peacefully vacate the
leased premises and deliver the same and all improvements (except for those
which the Tenant has the right to remove) in the condition required by
paragraphs 6, 7 and 8, and shall surrender to Landlord all keys and other items
of similar nature pertaining to the leased premises.
24. Waiver of Subrogation. Landlord and Tenant each hereby waives all
---------------------
rights of recovery, claim, action, or cause of action for any property, loss or
damage of the leased premises, leasehold improvements, or personal property of
either party by reason of fire, the elements, or any other cause(s) which is
insured or would have been insured under the terms of the
11
<PAGE>
insurance policies required hereunder. This paragraph shall apply so long as the
insurance required under this Lease is no invalidated by this paragraph.
Landlord and Tenant shall obtain such insurance which is not invalidated
whenever possible.
25. Covenant of Quiet Enjoyment. Landlord covenants and agrees that
---------------------------
Tenant, upon paying the rents reserved herein and observing and keeping the
covenants, agreements and stipulations of this Lease on its part to be observed
and kept, shall lawfully, peaceably and quietly hold, occupy and enjoy the
leased premises during the term of this Lease and any extension thereof, without
hindrance, eviction or molestation by Landlord or any person or persons claiming
under Landlord or claiming by a title superior to that of Landlord.
26. Notices. All notices under this Lease shall be given by either
-------
personal service or registered or certified mail, return receipt requested.
Notices given by mail shall be addressed as follows:
(a) Notice to be served upon Landlord shall be sent to Landlord
addressed to:
Salem Broadcasting Company
2310 Ponderosa Drive, Suite 29
Camarillo, California 93010
(b) Notice to be served upon tenant shall be sent to Tenant addressed
to:
Golden Gate Broadcasting Company, Inc.
2310 Ponderosa Drive, Suite 29
Camarillo, California 93010
All notices by mail shall be deemed served on receipt.
Either party may change his address for notice purposes by giving notice of
such changes as provided above.
27. Waiver. A waiver by a party hereto of any default by the other party
------
hereto in the performance of any of the covenants, terms or condition of this
Lease shall not constitute or be deemed a waiver of any subsequent or other
default. The subsequent acceptance of rent hereunder by Landlord shall not be
deemed to be a waiver of any preceding breach by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the particular
rental so accepted, regardless of Landlord's knowledge of such preceding breach
at the time of acceptance of such rent. The rights and remedies of a party
12
<PAGE>
under this Lease shall be cumulative and in addition to any rights given to it
by law. The exercise of any right or remedy shall not impair a party's right to
any other remedy.
28. Parties Bound and Benefitted. The covenants and conditions herein
----------------------------
contained shall (subject to the provision as to assignment) apply to and bind
the heirs, executors, administrators, assigns and successors in interest of all
of the parties hereto.
29. Governing Law. This Lease shall be governed by and subject to the
-------------
Federal Communications Act, the rules and regulations of the FCC, and other
federal laws as applicable; and the laws of the State of California, as to
matters of local law and interpretation.
30. Amendments, Changes, or Additions to Statute. Whenever reference is
--------------------------------------------
made in this Lease to any provision of law, such reference applies to all
amendments, changes and additions now or hereinafter made to such law.
31. Captions. The captions of this Lease are not a portion of the
--------
substantive terms hereof.
32. Miscellaneous.
-------------
32.1 This Lease contains the entire agreement between the parties
respecting the Lease of the premises and all matters covered or mentioned
herein. This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
32.2 The illegality, invalidity or unenforceability of any provision
of this Lease shall in no way impair or invalidate any other provision of this
Lease, and such remaining provisions shall remain in full force and effect.
32.3 As used in this Lease, the masculine, feminine or neuter gender,
and the singular or plural number, shall each be deemed to include the other
whenever the context so indicates. If there is more than one Tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. The
paragraph headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
32.4 All exhibits attached to this Lease are hereby incorporated by
this reference and made a part hereof.
13
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Lease as to the
date and year first above written.
LANDLORD:
By: /s/ Edward G. Atsinger III
-----------------------------------------
Edward G. Atsinger III
General Partner
TENANT:
GOLDEN GATE BROADCASTING COMPANY, INC.
By: /s/ Eric H. Halvorson
-------------------------------------------
Eric H. Halvorson
Vice President
14
<PAGE>
EXHIBIT A
Transmitter Site
DESCRIPTION:
REAL PROPERTY IN THE CITY OF HAYWARD, COUNTY OF ALAMEDA, STATE OF CALIFORNIA,
DESCRIBED AS FOLLOWS:
BEGINNING AT A POINT ON THE SOUTHERN LINE OF THE 67.85 ACRE PARCEL OF LAND
DESCRIBED IN THE DEED FROM JOSE T. BAPTISTA TO M. B. BETTENCOURT AND TONY A.
BETTENCOURT, DATED JANUARY 15, 1924, RECORDED JANUARY 16, 1924, IN BOOK 591 OF
OFFICIAL RECORDS OF ALAMEDA COUNTY, PAGE 355, SERIES NO. T/88764, SAID LINE
BEING ALSO THE SOUTHERN LINE OF THE PARCEL OF LAND DESIGNATED "BETTENCOURT" ON
THE "RECORD OF SURVEY, WILLIAM JOHNSON PROPERTY", ETC., FILED AUGUST 14, 1952,
IN BOOK 3 OF RECORD OF SURVEYS, PAGE 32, IN THE OFFICE OF THE COUNTY RECORDER OF
ALAMEDA COUNTY, DISTANT THEREON SOUTH 88(degrees) 31' 23" WEST 2969.87 FEET
FROM THE WESTERN LINE OF CLAWITER ROAD, OR COUNTY ROAD NO. 1649, AS THE SAME
EXISTED 50 FEET WIDE, PRIOR TO THE WIDENING THEREOF, ON APRIL 5, 1960; RUNNING
THENCE NORTH 1(degree) 00' 06" WEST 723.21 FEET TO THE SOUTHERN LINE OF THE
65.85 ACRE PARCEL OF LAND, DESCRIBED IN THE DEED FROM JOHN JOHNSON TO AUGUST
LEWIS JOHNSON, DATED DECEMBER 4, 1896, RECORDED AUGUST 13, 1897, IN BOOK 620 OF
DEEDS, PAGE 117, ALAMEDA COUNTY RECORDS; THENCE ALONG THE LAST NAMED LINE, SOUTH
88(degrees) 59' 54" WEST 675 FEET; THENCE SOUTH 1(degree) 00' 06" EAST 646.68
FEET TO SAID SOUTHERN LINE OF THE 67.85 ACRE PARCEL, 591 or 355; AND THENCE
ALONG THE LAST NAMED LINE, SOUTH 69(degrees) 12' 33" EAST 216.72 FEET TO AN
ANGLE POINT THEREON, AND NORTH 88(degrees) 31' 23" EAST 473.78 FEET TO THE POINT
OF BEGINNING.
RESERVING THEREFROM, A NON-EXCLUSIVE EASEMENT FOR ALL PUBLIC UTILITY PURPOSES,
IN, UNDER, OVER, ALONG AND ACROSS THE NORTHERN 10 FEET, RIGHT ANGLE MEASUREMENT
THEREOF.
ALSO RESERVING THEREFROM, A NON-EXCLUSIVE EASEMENT FOR INGRESS AND
EGRESS, OVER, ALONG AND ACROSS THE NORTHERN 60 FEET RIGHT ANGLE
MEASUREMENT THEREOF.
SAID EASEMENTS TO BE APPURTENANT TO AND FOR THE BENEFIT OF THE REMAINING LANDS
OF THE GRANTOR.
<PAGE>
EXHIBIT 10.05.07
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON
AND
INLAND RADIO, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and INLAND RADIO,
INC., a California corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the City of San Bernardino, in the
County of San Bernardino and State of California, more particularly described as
set forth in Exhibit A, which is attached hereto and made a part hereof (the
"Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee certain portions of
the Real Property, more particularly described as set forth in Exhibit B, which
is attached hereto and made a part hereof (constituting the "Leased Premises")
on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
-1-
<PAGE>
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting tower and
equipment (the "Installations") . Lessee is fully familiar with the physical
condition of the Real Property and has received the same in good order and
condition, and agrees that the Real Property complies in all respects with all
requirements of this Agreement. Lessee shall use the Real Property exclusively
for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those here in above specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
-2-
<PAGE>
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors .
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics,
-3-
<PAGE>
materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary
course of business for sums which under the terms of the related contracts are
not at the time due, provided that adequate provision for the payment thereof
shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date") . If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880
-4-
<PAGE>
Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement
Date, a base rent of Thirty-Nine Thousand Six Hundred Dollars
($39,600.00) per annum, in equal monthly installments of Three
Thousand Three Hundred Dollars ($3,300.00) (the "Base Rent") in
advance on the first day of each month; and thereafter on each and
every Adjustment Date (hereinafter defined) the monthly rent shall be
computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the nineteenth (19th) anniversaries of the Commencement Date.
During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for the calendar month of the
-5-
<PAGE>
Adjustment Date and the denominator of which shall be the CPI for the
month in which the Commencement Date falls. Notwithstanding the
results of the foregoing calculation, the monthly amount payable by
Lessee hereunder shall not in any event be less than the monthly
rental paid during the immediately preceding one (1) year period. In
the event that the Bureau of Labor Statistics shall change the base
period for the CPI, the new index number shall be substituted for the
old index numbers in making the above computation. In the event the
Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept
comparable statistics on the purchasing power of the consumer dollar
as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
-6-
<PAGE>
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the
-7-
<PAGE>
estimated cost of such alteration or addition exceeds Ten Thousand Dollars
($10,000.00), under the supervision of an architect or engineer satisfactory to
Lessor and in accordance with plans, specifications and cost estimates approved
by Lessor, and (v) does not interfere with Lessor's rights of use under this
Agreement .
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect
-8-
<PAGE>
thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days
after written request, official receipts of the appropriate taxing authority or
other proof satisfactory to Lessor evidencing such payment. If by law any such
amount may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection
-9-
<PAGE>
with the Real Property or any part thereof, will comply with all contracts
relating to any such services, and will do all other things required for the
maintenance and continuance of all such services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
------------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an
-10-
<PAGE>
amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of
any partial loss under the applicable policies, which shall be written on a
replacement cost basis; (iii) appropriate workers' compensation or other
insurance against liability arising from claims of workers in respect of and
during the period of any work on or about the Real Property; and (iv) insurance
against such other hazards and in such amounts as is customarily carried by
owners and operators of similar properties, and as Lessor may reasonably require
for its protection. Lessee shall comply with such other requirements as Lessor,
or any mortgagee, may from time to time reasonably request for the protection by
insurance of their respective interests. The policy or policies of insurance
maintained by Lessee pursuant to this Paragraph shall be of a company or
companies authorized to do business in California and a certificate thereof
shall be delivered to Lessor, together with evidence of the payment of the
premiums therefor, not less than fifteen (15) days prior to the commencement of
the Term hereof or of the date when Lessee shall enter upon the Leased Premises,
whichever occurs sooner. At least fifteen (15) days prior to the expiration or
termination date of any policy, Lessee shall deliver a certificate of a renewal
or replacement policy with proof of the payment of the premium therefor. Any
such insurance required by this Paragraph may, at Lessee's option, be provided
through a blanket policy or policies.
-11-
<PAGE>
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel
-12-
<PAGE>
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss
-13-
<PAGE>
or expense arising out of Lessee's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable .
-14-
<PAGE>
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises
-15-
<PAGE>
relating to or arising out of its ownership, management, use or operation.
Lessor shall give to Lessee prompt notice of institution of any such proceeding
or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the
-16-
<PAGE>
foregoing representation and warranty in entering into this Agreement
and in expanding monies in connection herewith. Lessor shall not
encumber or permit any encumbrances, liens or restrictions on Lessee's
Installations, except with the prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking of all of the Leased Premises,
or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the
-17-
<PAGE>
terms of this Agreement until Lessee finds and begins to utilize new facilities
or until prevented by the condemning or foreclosing authority from utilizing the
Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
Lessor represents and warrants its equipment and property at the Leased
Premises and the operation thereof do not and will note exceed Acceptable Radio
Frequency Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased
-18-
<PAGE>
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting tower is and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all regulations of the
Federal Aviation Administration ("FAA") and the Federal Communications
Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be
-19-
<PAGE>
sufficient for the purpose, at its sole expense, shall promptly commence and
complete the restoration, replacement or rebuilding of the Improvements as
nearly as possible to their value, condition and character immediately prior to
such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(1) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective
-20-
<PAGE>
purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the
part of Lessee:
(i) The failure of Lessee to pay rent or additional rent,
and continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period
prior to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under
the terms hereof, and continuation of such failure to cure for more
than thirty (30) days after notice by Lessor, provided, however, that
if the nature of Lessee's default is such that more than thirty (30)
days is required for its cure, then Lessee shall not be deemed to be
in default if Lessee has commenced such cure within the thirty (30)
day period, demonstrates to Lessor's reasonable satisfaction that
such default is curable and thereafter diligently prosecutes such
cure to completion; or
(iii) Lessee is finally and without further right of appeal
or review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its
-21-
<PAGE>
business or assets on the ground of its insolvency, or has a trustee
appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any
future law of the United States having the same general purpose, or
if Lessee shall make an assignment for the benefit of its creditors,
or if Lessee's interest hereunder shall be levied upon or attached,
which levy or attachment shall not be removed within twenty (20) days
from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased
-22-
<PAGE>
Premises either by reasonable force or otherwise, or dispossess Lessee, any
legal representative of Lessee or other occupant of the Leased Premises by
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and
-23-
<PAGE>
Lessee shall not be liable for payment of rent for any period after such
expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security Agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed
-24-
<PAGE>
of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn
to the purchaser upon any such foreclosure or sale and recognize such purchaser
as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
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<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting tower, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
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<PAGE>
part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor's assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio tower located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to
the benefit of Lessor and Lessee, their respective successors, legal
representatives or assigns. The terms of this Agreement and any disputes arising
therefrom, shall be governed by the laws of the State of California.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement
between the parties. No representative, agent or employee of Lessor has been
authorized to make any representations or promises with reference to the within
agreement or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
LESSOR: LESSEE:
INLAND RADIO, INC.
/s/ Edward G. Atsinger By: /S/ Edward G. Atsinger
- ------------------------------------- ---------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Stuart W. Epperson
- --------------------------------------
STUART W. EPPERSON
-29-
<PAGE>
EXHIBIT A
---------
LOTS 3 TO 11, INCLUSIVE, BLOCK "B", AND LOTS 2 To 15, INCLUSIVE, BLOCK "C",
TRACT NO. 2397 IN THE CITY OF SAN BERNARDINO, COUNTY OF SAN BERNARDINO. STATE OF
CALIFORNIA. AS PER PLAT RECORDED IN BOOK 34 OF MAPS, PAGES 27 AND 30, RECORDS OF
SAID COUNTY.
TOGETHER WITH THOSE PORTIONS OF "J" STREET AND DE SIENNA DRIVE, CLOSED, ADJACENT
TO SAID LOTS, AND WHICH ACCRUED TO SAID LOTS BY REASON OF THE CLOSING OF SAID
STREETS BY RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO, DATED JULY 15, 1940, ALSO THAT PORTION OF COLTON AVENUE IN
RESOLUTION DATED MAY 4, 1976, IN BOOK 8922, PAGE 1050, OFFICIAL RECORDS,
ADJOINING SAID PROPERTY AND WHAT WOULD PASS BY OPERATION OF LAW WITH A
CONVEYANCE OF SAID PROPERTY.
<PAGE>
Exhibit B
---------
The building commonly known as 992 Inland Center Drive, San Bernardino, CA
92408.
Sufficient space on the Real Property for the Lessee's broadcasting
tower, related guy wires and ground system, and any other of its Installations.
The building commonly known as 990 Inland Center Drive, San Bernardino, CA
92408, is specifically excluded from the definition of Leased Premises.
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
INLAND RADIO, INC.
The undersigned, being all of the members of the Board of Directors of
Inland Radio, Inc., a California corporation ("Corporation"), do hereby consent
to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and directed to
sell the real estate owned by it and located in San Bernardino, California
to Edward G. Atsinger III and Stuart W. Epperson for the amount of
$394,285, such amount to be paid by the assumption of the Corporation
obligations to Thomas M. Jones and Sally Lenart in that amount; and
RESOLVED that the Corporation is hereby authorized and directed to
lease said real estate from Edward G. Atsinger III and Stuart W. Epperson
pursuant to the terms of a lease in the form of and with the terms and
conditions set forth in the Lease Agreement attached hereto and
incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby directed to
take any and all actions they deem necessary, advisable, convenient or
proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of February, 1992.
/s/ Stuart W. Epperson
----------------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
----------------------------------
Edward G. Atsinger III
<PAGE>
Exhibit 10.05.08
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON
AND
INSPIRATION MEDIA, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of. this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and INSPIRATION MEDIA,
INC., a Washington corporation ("Lessee") .
WHEREAS, Lessor owns certain land (the "Land") and certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in King County, State of Washington, more
particularly described as set forth in Exhibit A, which is attached hereto and
made a part hereof (the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting towers and
equipment (the "Installations").
-1-
<PAGE>
Lessee is fully familiar with the physical condition of the Real Property and
has received the same in good order and condition, and agrees that the Real
Property complies in all respects with all requirements of this Agreement.
Lessee shall use the Real Property exclusively for purposes associated with the
operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
-2-
<PAGE>
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
-3-
<PAGE>
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
-4-
<PAGE>
(i) During the, first year beginning with the Commencement Date, a
base rent of Thirty-One Thousand Two Hundred Dollars ($31,200.00) per annum, in
equal monthly installments of Two Thousand Six Hundred Dollars ($2,600.00) (the
"Base Rent") in advance on the first day of each month; and thereafter on each
and every Adjustment Date (hereinafter defined) the monthly rent shall be
computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through the
nineteenth (19th) anniversaries of the Commencement Date. During the one (1)
year period beginning with each Adjustment Date, the monthly rent payable by
Lessee shall reflect an adjustment, as herein provided, for the change, if any,
from the month in which the Commencement Date falls, in the Consumer Price Index
for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of Labor
Statistics; i.e., during the one (1) year period beginning with the Adjustment
Date, the monthly rent shall be the product obtained by multiplying the Base
Rent times a fraction, the numerator of which shall be the CPI for the calendar
month of the Adjustment Date and the denominator of which shall be the CPI for
the month in which the Commencement Date falls. Notwithstanding the results of
the foregoing calculation, the monthly amount payable by Lessee hereunder shall
not in
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<PAGE>
any event be less than the monthly rental paid during the immediately
preceding one (1) year period. In the event that the Bureau of Labor
Statistics shall change the base period for the CPI, the new index
number shall be substituted for the old index numbers in making the
above computation. In the event the Bureau of Labor Statistics ceases
publishing the CPI, or materially changes the method of its
computation, Lessor and Lessee shall accept comparable statistics on
the purchasing power of the consumer dollar as published at the time
of said discontinuation or change by a responsible financial
periodical of recognized authority to be then chosen by Lessor subject
to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean
-6-
<PAGE>
order and condition and will promptly make all necessary or appropriate repairs,
replacements and renewals thereof, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs,
replacements and renewals shall be equal in quality and class to the original
work. Lessee waives any right created by any law now or hereafter in force to
make repairs to the Real Property at Lessor's expense. Lessee, at its sole
expense, shall do or cause others to do every act necessary or appropriate for
the preservation and safety of the Real Property whether or not the Lessor shall
be required by any legal requirement to take such action or be liable for
failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v)
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<PAGE>
does not interfere with Lessor's rights of use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be
-8-
<PAGE>
paid in installments, Lessee shall be obligated to pay only those installments
as they become due from time to time before any interest, penalty, fine or cost
may be added thereto; and any such amount relating to the fiscal period of the
taxing authority, part of which is included within the Term and a part of which
extends beyond the Term shall, if Lessee shall not be in default under this
Agreement, be apportioned between Lessee and Lessor as of the expiration of the
Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
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<PAGE>
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability
-10-
<PAGE>
arising from claims of workers in respect of and during the period of any work
on or about the Real Property; and (iv) insurance against such other hazards and
in such amounts as is customarily carried by owners and operators of similar
properties, and as Lessor may reasonably require for its protection. Lessee
shall comply with such other requirements as Lessor, or any mortgagee, may from
time to time reasonably request for the protection by insurance of their
respective interests. The policy or policies of insurance maintained by Lessee
pursuant to this Paragraph shall be of a company or companies authorized to do
business in Washington and a certificate thereof shall be delivered to Lessor,
together with evidence of the payment of the premiums therefor, not less than
fifteen (15) days prior to the commencement of the Term hereof or of the date
when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At
least fifteen (15) days prior to the expiration or termination date of any
policy, Lessee shall deliver a certificate of a renewal or replacement policy
with proof of the payment of the premium therefor. Any such insurance required
by this Paragraph may, at Lessee's option, be provided through a blanket policy
or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal
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<PAGE>
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but
-12-
<PAGE>
at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such
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<PAGE>
approval not to be unreasonably withheld), against any claim to which the
foregoing indemnity may apply. Lessee may assume, or require that such defense
be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of
Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or
believes that its interests would be better served thereby. In any case where
Lessor is defending any such claim, Lessee may participate in the defense
thereof by counsel selected by it, but at Lessee's expense. Lessor shall not
enter into any settlement of any claim without the consent of Lessee, which
consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor
is a party.
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<PAGE>
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
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<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
monies in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
-16-
<PAGE>
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking of all of the Leased Premises,
or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
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<PAGE>
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
Lessor represents and warrants its equipment and property at the Leased
Premises and the operation thereof do not and will note exceed Acceptable Radio
Frequency Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and
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<PAGE>
validly authorized by all necessary actions on the part of Lessee (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessee, enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting towers are and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all regulations of the
Federal Aviation Administration ("FAA") and the Federal Communications
Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
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<PAGE>
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(1) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
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<PAGE>
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part
of Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period prior
to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than
thirty (30) days after notice by Lessor, provided, however, that if
the nature of Lessee's default is such that more than thirty (30) days
is required for its cure, then Lessee shall not be deemed to be in
default if Lessee has commenced such cure within the thirty (30) day
period, demonstrates to Lessor's reasonable satisfaction that such
default is curable and thereafter diligently prosecutes such cure to
completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its business or assets on
the ground of its insolvency, or has a trustee appointed for it after
a petition has been filed for
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Lessee's reorganization under the Bankruptcy Act of the United
States, or any future law of the United States having the same general
purpose, or if Lessee shall make an assignment for the benefit of its
creditors, or if Lessee's interest hereunder shall be levied upon or
attached, which levy or attachment shall not be removed within twenty
(20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of
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<PAGE>
the Leased Premises by appropriate suit, action or proceeding and remove its
effects and hold the Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
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SECTION 7
---------
ASSIGNNENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security Agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by the Lessor encumbering the Leased Premises,
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<PAGE>
Lessee shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
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<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting towers, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
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part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor's assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Washington.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between
the parties. No representative, agent or employee of Lessor has been authorized
to make any representations or promises with reference to the within agreement
or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LESSOR: LESSEE:
INSPIRATION MEDIA, INC.
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ------------------------------- ----------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Stuart W. Epperson
- -------------------------------
STUART W. EPPERSON
-29-
<PAGE>
EXHIBIT A
---------
THE SOUTHWEST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST QUARTER; AND
WEST HALF OF THE SOUTHEAST QUARTER OF THE SOUTHWEST QUARTER OF THE SOUTHEAST
QUARTER; ALL IN SECTION 31, TOWNSHIP 23 NORTH, RANGE 3 EAST, W.M, IN KING
COUNTY, WASHINGTON;
EXCEPT THE SOUTH 180 FEET OF THE WEST 400 FEET AND EXCEPT THE NORTH 195 FEET OF
THE EAST 400 FEET; ALSO
THE NORTH 1/2 OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF THE
NORTHEAST QUARTER OF SECTION 6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN
KING COUNTY, WASHINGTON;
EXCEPT THE WEST 30 FEET;
ALSO KNOWN AS LOT A AND PARCEL A OF LOT LINE ADJUSTMENT RECORDED UNDER AUDITOR'S
FILE NO. 8502190649;
TOGETHER WITH AN EASEMENT FOR INGRESS, EGRESS AND UTILITIES OVER THE EAST 30
FEET OF THE WEST HALF OF THE NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF.
SECTION 6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON;
EXCEPT THAT PORTION LYING WITHIN SW 196TH ST.;
TOGETHER WITH AN EASEMENT FOR INGRESS, EGRESS AND UTILITIES OVER THE WEST 30
FEET OF THE EAST HALF OF NORTHWEST QUARTER OF THE NORTHEAST QUARTER OF SECTION
6, TOWNSHIP 22 NORTH, RANGE 3 EAST, W.M, IN KING COUNTY, WASHINGTON;
EXCEPT THAT PORTION LYING WITHIN S.W. 196TH ST.
<PAGE>
Exhibit 10.05.09
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the twenty-second day of
August, 1994, by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not
individually but solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W.
EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON
REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and
INSPIRATION MEDIA, INC. ("Lessee"), a Washington corporation.
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the County of Kitsap, State of
Washington, more particularly described as set forth in Exhibit "A", which is
attached hereto and made a part hereof (the "Real Property"); and,
WHEREAS, Lessee uses said Real Property in operating its radio station
KLFE-AM, Seattle, Washington; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations"). Lessee
is fully familiar with the physical condition of the Land and has received the
same in good order and condition, and agrees that the Land complies in all
respects with all requirements of this Agreement. Lessee shall use the Land
exclusively for purposes associated with the operation of a radio station.
<PAGE>
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on August 22,
1994 (the "Commencement Date"), and shall expire on August 21, 2004 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
(i) During the first year beginning with the Commencement
Date Lessee shall pay a base rent of TWENTY-FOUR THOUSAND DOLLARS ($24,000) per
annum, in equal monthly installments of TWO THOUSAND DOLLARS ($2,000) (the "Base
Rent") in advance on the first day of each month; and thereafter on each and
every Adjustment Date (hereinafter defined) the monthly rent shall be computed
according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the ninth (9th) anniversaries of the Commencement Date. During the one
(1) year period beginning with each Adjustment Date, the monthly rent payable by
Lessee shall reflect an adjustment, as herein provided, for an increase, if any,
in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities
Average [Base Year 1982/84=100] ("CPI") published by the United States
Department of Labor, Bureau of Labor Statistics, as measured in February of each
year; i.e., during the one (1) year period beginning with the Adjustment Date,
the monthly rent shall be the product obtained by multiplying the Base Rent
times a fraction, the numerator of which shall be the CPI for February of the
year in which the Adjustment Date falls and the denominator of which shall be
the CPI for February of the year in which the Commencement Date falls.
Notwithstanding the results of the foregoing calculation, the monthly amount
payable by Lessee hereunder shall not in any event be less than the monthly
rental paid during the immediately preceding one (1) year period. In the event
that the Bureau of Labor Statistics shall change the base period for the CPI,
the new index number shall be substituted for the old index numbers in making
the above computation. In the event the Bureau of Labor Statistics ceases
publishing the CPI, or materially changes the method of its computation, Lessor
and Lessee shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then chosen by
Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment,
<PAGE>
diminution or reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or nonstructural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any interest, penalty, fine or cost may be added thereto; and any
such amount relating to the
<PAGE>
fiscal period of the taxing authority, part of which is included within the Term
and a part of which extends beyond the Term shall, if Lessee shall not be in
default under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies authorized to do business in California and a
certificate thereof shall be delivered
<PAGE>
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall
not constitute a breach or violation under any Agreement to which Lessor is a
party.
(ii) To the best of Lessor's knowledge, there are no
violations of any federal, state, county or municipal law, ordinance, order,
regulations or requirement with respect to the Leased Premises, and as of the
date of this Agreement, no notice of any kind relating thereto (which would
adversely affect the transactions contemplated by this Agreement) has been
issued by public authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use
the Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action,
suit or proceeding pending or threatened against or affecting the Leased
Premises or any portion thereof and Lessor has not received notice written or
otherwise of any litigation affecting or concerning the Leased Premises relating
to or arising out of its ownership, management, use or operation. Lessor shall
give to Lessee prompt notice of institution of any such proceeding or
litigation.
(vi) To the best of Lessor's knowledge, there are presently
no proceedings for overdue real estate taxes assessed against the Leased
Premises for any fiscal period.
<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of any
written notice received from any governmental authority to comply with the
terms, provisions and requirements of any local, state and federal laws,
ordinances, directives, orders, regulations and requirements which apply to any
portion of the Leased Premises or to any adjacent street or other public area or
to the maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, have
been duly and validly authorized by all necessary actions on the part of Lessor
(none of which actions have been modified or rescinded and all of which actions
are in full force and effect). This Agreement constitutes a valid and binding
agreement and obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor
owns good and marketable title in fee simple to the Real Property on which the
Leased Premises are located, and Lessor acknowledges that Lessee is relying upon
the foregoing representation and warranty in entering into this Agreement and in
expending moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking of all of the Leased Premises,
or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards").
<PAGE>
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the
radio tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other
<PAGE>
sums payable hereunder have been paid, and (iii) whether or not, to the
knowledge of Lessor, there are then existing any defaults under this Agreement
(and if so, specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part
of Lessee:
(i) The failure of Lessee to pay rent or additional rent,
and continuation of such failure for more than ten (10) days after Lessee's
receipt of written notice thereof from Lessor; provided, however, that Lessor
shall not be required to provide such written notice to Lessee more than twice
in any twelve (12) month period prior to declaring such failure to pay an event
of default; or
(ii) The failure of Lessee to cure any other default under
the terms hereof, and continuation of such failure to cure for more than thirty
(30) days after notice by Lessor, provided, however, that if the nature of
Lessee's default is such that more than thirty (30) days is required for its
cure, then Lessee shall not be deemed to be in default if Lessee has commenced
such cure within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all
or substantially all of its business or assets on the ground of its insolvency,
or has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of the Leased Premises by appropriate
suit, action or proceeding and remove its effects and hold the Leased Premises
as if
<PAGE>
this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
-------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any mortgages and security agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such mortgages and
security agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by the Lessor encumbering the Leased Premises,
Lessee shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.
<PAGE>
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between
the parties. No representative, agent or employee of Lessor has been authorized
to make any representations or promises with reference to the within agreement
or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LESSOR: LESSEE
ATSINGER FAMILY TRUST INSPIRATION MEDIA, INC.
/s/ Edward G. Atsinger, III /s/ Eric H. Halvorson
- ------------------------------ ------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
/s/ Mona J. Atsinger
- ------------------------------
MONA J. ATSINGER
Trustee
STUART W. EPPERSON
REVOCABLE LIVING TRUST
/s/ Stuart W. Epperson
- ------------------------------
STUART W. EPPERSON
Trustee
<PAGE>
AGREEMENT
---------
EXHIBIT A
---------
The following described real estate, situated in the county of KITSAP State of
Washington:
That portion of Government Lot 5, Section 14, Township 25 North, Range 2 East,
W.M., described as follows:
Beginning at the Southwest corner of Government Lot 5, said Section, the True
Point of Beginning; thence East 528 Feet; thence North 660 feet; thence East 132
feet; thence North 330 feet; thence West 451 feet; thence South 104.5 feet;
thence West 209 feet to Section line; thence South 885.3 feet to the Point of
Beginning;
EXCEPT portion taken for road in Kitsap County SC No. 14124;
AND EXCEPT County Road No. 214;
Situate in the City of Bainbridge Island, Kitsap County, Washington.
<PAGE>
Exhibits 10.05.10
AGREEMENT
BETWEEN
ATSINGER FAMILY TRUST
AND
OASIS RADIO, INC.
June 1, 1992
<PAGE>
AGREEMENT made as of this first day of June, 1992, by and between
EDWARD G. ATSINGER III AND MONA J. ATSINGER, not individually but solely as
Trustees of the ATSINGER FAMILY TRUST ("Lessor"), and OASIS RADIO, INC., a
California corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located on Fifteenth Avenue, in the City of
Rosamond, County of Kern, State of California, more particularly described as
set forth in Exhibit A, which is attached hereto and made a part hereof (the
"Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Land
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the
-1-
<PAGE>
installation, repair, maintenance, operation, housing and removal of its
Improvements and other related broadcasting equipment (together comprising the
"Installations"). Lessee is fully familiar with the physical condition of the
Land and has received the same in good order and condition, and agrees that the
Land complies in all respects with all requirements of this Agreement. Lessee
shall use the Land exclusively for purposes associated with the operation of a
radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned
-2-
<PAGE>
by the negligence of Lessor, its agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of
-3-
<PAGE>
the related contracts are not at the time due, provided that adequate provision
for the payment thereof shall have been made.
SECTION 2
----------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on June 1, 1992
(the "Commencement Date") and shall expire on May 31, 2002 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: accounting, or to such other person or place as Lessor may
-4-
<PAGE>
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
(i) During the first year beginning with the Commencement
Date, a base rent of Ten Thousand Eight Hundred Dollars ($10,800) per
annum, in equal monthly installments of Nine Hundred Dollars ($900.00)
(the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the
monthly rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the nineteenth (19th) anniversaries of the Commencement Date.
During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for the calendar month of the Adjustment Date and the
denominator of which shall be the CPI for the month in which the
Commencement Date falls.
-5-
<PAGE>
Notwithstanding the results of the foregoing calculation, the monthly
amount payable by Lessee hereunder shall not in any event be less than
the monthly rental paid during the immediately preceding one (1) year
period. In the event that the Bureau of Labor Statistics shall change
the base period for the CPI, the new index number shall be substituted
for the old index numbers in making the above computation. In the event
the Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept
comparable statistics on the purchasing power of the consumer dollar as
published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
-6-
<PAGE>
thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days
after written request, official receipts of the appropriate taxing authority or
other proof satisfactory to Lessor evidencing such payment. If by law any such
amount may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection
-9-
<PAGE>
with the Real Property or any part thereof, will comply with all contracts
relating to any such services, and will do all other things required for the
maintenance and continuance of all such services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an
-10-
<PAGE>
amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any
partial loss under the applicable policies, which shall be written on a
replacement cost basis; (iii) appropriate workers' compensation or other
insurance against liability arising from claims of workers in respect of and
during the period of any work on or about the Real Property; and (iv) insurance
against such other hazards and in such amounts as is customarily carried by
owners and operators of similar properties, and as Lessor may reasonably require
for its protection. Lessee shall comply with such other requirements as Lessor,
or any mortgagee, may from time to time reasonably request for the protection by
insurance of their respective interests. The policy or policies of insurance
maintained by Lessee pursuant to this Paragraph shall be of a company or
companies authorized to do business in California and a certificate thereof
shall be delivered to Lessor, together with evidence of the payment of the
premiums therefor, not less than fifteen (15) days prior to the commencement of
the Term hereof or of the date when Lessee shall enter upon the Leased Premises,
whichever occurs sooner. At least fifteen (15) days prior to the expiration or
termination date of any policy, Lessee shall deliver a certificate of a renewal
or replacement policy with proof of the payment of the premium therefor. Any
such insurance required by this Paragraph may, at Lessee's option, be provided
through a blanket policy or policies.
-11-
<PAGE>
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel
-12-
<PAGE>
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss
-13-
<PAGE>
or expense arising out of Lessee's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
-14-
<PAGE>
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises
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<PAGE>
relating to or arising out of its ownership, management, use or operation.
Lessor shall give to Lessee prompt notice of institution of any such proceeding
or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
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<PAGE>
foregoing representation and warranty in entering into this Agreement and
in expending monies in connection herewith. Lessor shall not encumber or
permit any encumbrances, liens or restrictions on Lessee's Installations,
except with the prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation or
foreclosing order, Lessee may continue to use the property for operations under
the
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<PAGE>
terms of this Agreement until Lessee finds and begins to utilize new facilities
or until prevented by the condemning or foreclosing authority from utilizing the
Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards"). Lessor
represents and warrants its equipment and property at the Leased Premises and
the operation thereof do not and will not exceed Acceptable Radio Frequency
Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased
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<PAGE>
sufficient for the purpose, at its sole expense, shall promptly commence and
complete the restoration, replacement or rebuilding of the Improvements as
nearly as possible to their value, condition and character immediately prior to
such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly
upon request, a certificate certifying that (i) this Agreement is unmodified and
in full force and effect (or, if there have been modifications, that the
Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any prospective
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<PAGE>
purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's
receipt of written notice thereof from Lessor; provided, however, that
Lessor shall not be required to provide such written notice to Lessee more
than twice in any twelve (12) month period prior to declaring such failure
to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30)
days after notice by Lessor, provided, however, that if the nature of
Lessee's default is such that more than thirty (30) days is required for
its cure, then Lessee shall not be deemed to be in default if Lessee has
commenced such cure within the thirty (30) day period, demonstrates to
Lessor's reasonable satisfaction that such default is curable and
thereafter diligently prosecutes such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver appointed
for all or substantially all of its
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<PAGE>
business or assets on the ground of its insolvency, or has a trustee
appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future
law of the United States having the same general purpose, or if Lessee
shall make an assignment for the benefit of its creditors, or if Lessee's
interest hereunder shall be levied upon or attached, which levy or
attachment shall not be removed within twenty (20) days from the date
thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased
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<PAGE>
Premises either by reasonable force or otherwise, or dispossess Lessee, any
legal representative of Lessee or other occupant of the Leased Premises by
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and
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<PAGE>
Lessee shall not be liable for payment of rent for any period after such
expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee
shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect
to any Mortgages and Security Agreements placed or hereafter to be placed by
Lessor upon the Leased Premises. The recording of such Mortgages and Security
Agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed
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<PAGE>
of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn
to the purchaser upon any such foreclosure or sale and recognize such purchaser
as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained
by Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
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<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF IMPROVEMENTS BY LESSOR
-----------------------------
At all times during the Term of this Agreement (a) Lessor shall have the
exclusive right to unrestricted use of the space on the radio tower located on
the Land not used by the Lessee, and (b) Lessor shall have the right to
unrestricted use of approximately 300 square feet of the transmitter building
located on the Land, as outlined on Exhibit B attached hereto. Lessor shall have
no obligation to pay rent for the use described above and may use the allowed
space for any lawful purpose which does not interfere with Lessee's operations.
Lessor shall hold Lessee harmless from and defend Lessee against any and all
claims or liability arising out of or in any way connected to Lessor's use or
occupancy of the allowed space.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign,
in whole or in part, Lessor's interest in this Lease and (b) may sell all or
part of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon
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<PAGE>
the condition that, as part of such sale or exchange, Lessor will cause the
grantee to agree in writing to assume to carry out any and all of the covenants
and obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio tower located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment, fixtures,
goods or other property of Lessee not removed within ten (10) days after any
quitting, vacating or abandonment of the Leased Premises, or upon Lessee's
eviction therefrom, shall be considered abandoned, and Lessor shall have the
right, without notice to Lessee, to sell or otherwise dispose
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<PAGE>
of same without having to account to Lessee for any part of the proceeds of such
sale.
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of California.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No
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<PAGE>
additions, changes or modifications shall be binding unless reduced to writing
and signed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE:
ATSINGER FAMILY TRUST OASIS RADIO, INC.
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ---------------------------------- ---------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
Trustee President
/s/ Mona J. Atsinger
- ----------------------------------
MONA J. ATSINGER
Trustee
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<PAGE>
EXHIBIT A
BLOCK 52, BEING A PORTION OF THE EAST HALF OF SECTION 21, TOWNSHIP 9 NORTH,
RANGE 12 WEST, SAN BERNARDINO MERIDIAN, IN THE UNINCORPORATED AREA OF THE COUNTY
OF KERN, STATE OF CALIFORNIA, ACCORDING TO THE MAP OF ROSAMOND TOWNSITE, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, RECORDED AUGUST 12, 1907, IN BOOK
195 PAGES 66 AND 67 OF DEEDS.
<PAGE>
EXHIBIT B
[LOT DRAWING APPEARS HERE]
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
OASIS RADIO, INC.
The undersigned, being all of the members of the Board of Directors of
Oasis Radio, Inc., a California corporation ("Corporation"), do hereby consent
to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and directed to
lease the real estate owned by the Atsinger Family Trust and located in
Rosamond, California, pursuant to the terms of a lease in the form of and
with the terms and conditions set forth in the Lease Agreement attached
hereto and incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby directed to
take any and all actions they deem necessary, advisable, convenient or
proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of June, 1992.
/s/ Stuart W. Epperson
----------------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
----------------------------------
Edward G. Atsinger III
<PAGE>
Exhibit 10.05.11.01
LEASE AGREEMENT
---------------
This Lease Agreement (hereinafter called "this Lease"), is made and
entered into the 30th day of September, 1993, by and between WEAZ-FM , Inc., a
Pennsylvania corporation (hereinafter called "Landlord"), and PENNSYLVANIA MEDIA
ASSOCIATES, INC., a Pennsylvania corporation (hereinafter called "Tenant").
WITNESSETH:
That Landlord is the owner of certain property located in Whitemarsh
Township, Montgomery County, Pennsylvania, and more fully and particularly
described in Exhibit A attached hereto, which is hereby incorporated herein
(hereinafter sometimes called the "demised premises" or the "leased premises");
and
Landlord has, pursuant to an Asset Purchase and Sale Agreement, dated
September ___, 1993, between Landlord and Tenant, sold, transferred and conveyed
to Tenant, inter alia, certain towers and antennas located on the demised
----- ----
premises and certain monitoring and control equipment presently housed in a
building located on the demised premises.
NOW THEREFORE, in consideration of the execution and delivery of this
Lease, the mutual promises contained herein and the sum of One Dollar ($1.00) in
hand each paid to the other, the
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<PAGE>
receipt and sufficiency of all of which is hereby acknowledged, the parties
hereto do covenant and agree as follows:
1. Term.
----
(A) Landlord hereby leases to Tenant, and Tenant hereby leases
from Landlord, the leased premises, for a term of five (5) years, commencing on
October 1, 1993, upon the terms, covenants and agreements contained herein.
(B) Tenant shall have the right to extend the term of this
Lease for three (3) successive periods of five (5) years each, by giving written
notice to Landlord at least one hundred eighty (180) days prior to the
expiration of the then current term.
(C) Notwithstanding anything contained herein to the contrary,
Tenant shall have the right to terminate this Lease at any time by: (1) giving
not less than one hundred eighty (180) days prior written notice of termination
to Landlord, (2) removing from the leased premises all towers, antennas,
buildings, improvements, trade fixtures and equipment now on the demised
premises or placed or installed in or upon the demised premises by Tenant on or
before the effective of termination, and (3) quitting and surrendering the
leased premises to Landlord on or before the effective date of such termination.
(D) In the event that Tenant terminates this Lease pursuant to
Section 1(C) hereof, all of Tenant's right, title and interest in and to the
property shall terminate as of the effective date of such termination,
specifically including but
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<PAGE>
not limited to Tenant's rights pursuant to the option granted by Landlord to
Tenant pursuant to Section 18 hereof. Further, notwithstanding anything
contained herein to the contrary, in the event that Tenant terminates this Lease
pursuant to Section 1(C) hereof at any time during the third (3rd) through fifth
(5th) years of the term of this Lease, then Landlord shall, within thirty (30)
days following the effective date of such termination, reimburse Tenant for the
actual costs incurred by Tenant with respect to its move from the demised
premises; provided, however, that notwithstanding anything contained herein to
-------- -------
the contrary, Landlord's liability to Tenant pursuant to this Section 1(D) shall
in no event exceed the total sum of Five Hundred Thousand ($500,000.00) Dollars.
2. Rental. Tenant shall pay rent for the demised premises to Landlord,
------
commencing October 1, 1993, as follows:
(A) During the first year of the term hereof, Tenant shall pay
annual rent in the amount of Fifty Thousand ($50,000) Dollars, payable in equal
monthly installments.
(B) During the second year of the term hereof, Tenant shall pay
annual rent in an amount equal to the sum of (i) Fifty Thousand ($50,000)
Dollars, plus (ii) an amount equal to the product of (x) Fifty Thousand
($50,000) Dollars and (y) the percentage increase, if any, in the Consumer Price
Index (as hereinafter defined) between October 1993 and October 1994, payable in
equal monthly installments.
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<PAGE>
(C) During the third year of the term hereof, Tenant shall pay
annual rent in an amount equal to the sum of (i) Fifty Five Thousand ($55,000)
Dollars, plus (ii) an amount equal to the product of (x) Fifty Five Thousand
($55,000) Dollars and (y) the percentage increase, if any, in the Consumer Price
Index between October 1993 and October 1995, payable in equal monthly
installments.
(D) During each subsequent year during the balance of the term
hereof, Tenant shall pay annual rent in an amount equal to the sum of (i) the
annual rent in effect during the preceding lease year, plus (ii) an amount equal
to the product of (x) the annual rent in effect during the preceding lease year
and (y) the percentage increase, if any, in the Consumer Price Index between
October of the preceding calendar year and October of the current calendar year,
payable in equal monthly installments.
(E) In no event shall the annual rent for any lease year be
less then the annual rent for the prior lease year. Thus, if there is a decrease
in the Consumer Price Index during the relevant period of comparison, the annual
rent for the ensuing lease year shall remain the same as the annual rent for the
prior lease year.
(F) For purposes of this Section 2, the "Consumer Price Index"
means the Consumer Price Index for all Urban Consumers, Philadelphia-Wilmington-
Trenton area, Consumer Prices for All Items (1982-84=100), determined and
released by the Bureau of Labor Statistics of the United States Department of
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<PAGE>
Labor (hereinafter called the "Index"). If the base year selected by the United
States Department of Labor shall be changed, then the resultant Index shall be
readjusted so as to reflect the base initially established under this Section 2.
If the Consumer Price Index shall no longer be published or cannot be
readjusted, then Landlord shall designate another index generally recognized as
authoritative, which shall then be substituted for the Consumer Price Index for
purposes of this Agreement.
(G) All monthly payments of rent are due in advance on or before the
first day of each month during the term hereof.
3. Landlord's Remedies.
-------------------
(A) The following are hereby defined as "Events of Default":
(1) If Tenant shall default in the payment of any installment of
rent, or of any other sum payable by Tenant to Landlord, on any day upon which
the same is due to be paid, and if such default shall continue for five (5) days
after Landlord shall have given to Tenant a written notice specifying such
default; or
(2) If Tenant shall do or permit anything to be done, whether by
action or inaction, contrary to any covenant or agreement on the part of Tenant
herein contained, or contrary to any of the covenants, agreements, terms, or
provisions of this Lease, or shall fail in the keeping or performance of any of
the covenants, agreements, terms, or provisions contained in this
-5-
<PAGE>
Lease which on the part or behalf of Tenant are to be kept or performed, and
Tenant shall fail to commence to take steps to remedy the same within thirty
(30) days after Landlord shall have given to Tenant a written notice specifying
the same, or having so commenced, shall thereafter fail to proceed diligently to
remedy the same.
(B) Upon the occurrence of any Event of Default, then regardless of
and notwithstanding the fact that Landlord has or may have some other remedy
under this Lease or by virtue hereof, or in law or in equity, Landlord may give
to Tenant a notice (herein called the "second notice") of intention to end the
term of this Lease, specifying a day not less than ten (10) days thereafter,
and, upon the giving of the second notice, this Lease and the term and estate
hereby granted shall expire and terminate upon the day so specified in the
second notice as fully and completely and with the same force and effect as if
the day so specified were the date hereinbefore fixed for the expiration of the
term of this Lease, and all rights of Tenant under this Lease shall expire and
terminate, but Tenant shall remain liable for damages as hereinafter provided.
(C) Upon any termination or expiration of this Lease, Tenant shall
peaceably quit and surrender the demised premises to Landlord, having removed
all improvements and personal property now on the demised premises and/or placed
or installed in or upon the demised premises by Tenant, and Landlord may without
further notice enter upon, re-enter, possess, and repossess itself
-6-
<PAGE>
thereof peaceably through summary proceedings, ejectment, or otherwise, and may
dispossess and remove Tenant and all other persons and property from the demised
premises and may have, hold, and enjoy the demised premises and the right to
receive all rental and other income of and from the same.
(D) It is covenanted and agreed by Tenant that, in the event of the
expiration or termination of this Lease, or re-entry by Landlord under any of
the provisions of this paragraph or pursuant to law, by reasons of default
hereunder on the part of Tenant, Tenant will pay to Landlord, as damages, a sum
equal to all of the rent which would have been payable by Tenant had this Lease
not so terminated, or had Landlord not so re-entered the Premises, for the
period ending such time as Tenant shall quit and surrender the demised premises
to Landlord.
(E) If Tenant shall fail to make any payment required to be made
under this Lease or shall default in the performance of any other covenant,
agreement, term, provision, or condition herein contained, Landlord, without
being under any obligation to do so and without thereby waiving such default,
may make such payment and/or remedy such other default for the account and at
the expense of Tenant, immediately and without notice in the case of emergency,
or in any other case, provided that Tenant shall fail to make such payment or
remedy such default with all reasonable dispatch within ten (10) days (for
payment defaults) or thirty (30) days (for performance defaults), after Landlord
shall have notified Tenant in writing of such failure or default.
-7-
<PAGE>
(F) Tenant will also pay to Landlord, upon demand, any and all
reasonable expenses incurred by Landlord as a result of Tenant's failure to make
any payment required under this Lease or default in performance of any other
covenant, agreement, term, provision, or condition herein contained, including
reasonable counsel fees involved in collection of any sum due Landlord
hereunder, or enforcement of any right against Tenant under or in connection
with this Lease or pursuant to law, including (without being limited to) any
such cost, expense, and disbursement involved in instituting and prosecuting
summary proceedings, as well as bills for any property, material, labor, or
services provided, furnished, or rendered, or caused to be, by Landlord to
Tenant, with respect to the Premises.
(G) The failure of Landlord to insist upon the strict performance of
any one of the covenants, agreements, terms, provisions, or conditions of this
Lease or to exercise any right, remedy, or election herein contained or
permitted by law shall not constitute or be construed as a waiver or
relinquishment for the future of such covenant, agreement, term, provision,
condition, right, remedy, or election, but the same shall continue and remain in
full force and effect.
4. Use Provision. Subject to the rights of Landlord and/or its assigns
-------------
as set forth herein, Tenant may use the demised premises in any lawful manner in
connection with the operation of towers, antennas and monitoring and control
-8-
<PAGE>
equipment for the operation of an AM radio station and may lease space on the
existing towers to other communication companies.
5. Tenant's Obligations. Tenant will supply any apparatus, appliance,
--------------------
or material and will cause any work to be done in and about the demised premises
or the Building which may be required or ordered by any lawful authority during
the term hereof or any extension thereof. Tenant has leased the demised premises
in its "As Is", "Where Is" condition, without any warranties or representations
by Landlord of any kind.
6. Repair and Maintenance. Tenant shall, at its sole cost and expense,
----------------------
keep the demised premises in good condition and repair, and Landlord shall have
no responsibility of repair or maintenance with respect to the demised premises.
7. Towers, Antennas, Buildings, Improvements and Fixtures. All towers,
------------------------------------------------------
antennas, buildings, improvements, trade fixtures and equipment and other
personal property of whatsoever nature now in or upon on the demised premises or
hereafter placed or installed in or upon the demised premises by Tenant shall be
and remain at all times Tenant's sole property, and Tenant shall have the right
to remove the same at any time, and Tenant shall be required to remove the same
upon the expiration or earlier termination of this Lease.
8. Indemnification and Hold Harmless. Tenant agrees to indemnify,
---------------------------------
defend and hold Landlord harmless from and against any and all claims which may
arise from, on, in, or about the demised premises, which such claims arise out
of or are caused in whole
-9-
<PAGE>
or in part by a defective, dangerous, or unsafe condition of the demised
premises, or the equipment, fixtures, or appurtenances thereon and/or thereat
which are required by law or the terms hereof to be maintained in good repair.
9. Condemnation.
------------
(A) If any taking in condemnation proceedings will not render
the Premises unsatisfactory for Tenant's use, Tenant will restore the Premises
to proper, tenantable condition forthwith, as to the land, and shall be entitled
to use all condemnation proceedings for such restoration. If any taking will
render the Premises unsatisfactory for Tenant's use, this Lease shall terminate,
and all condemnation proceeds shall be payable to Landlord. Nothing herein shall
prevent Tenant from pursuing its own claim directly against the condemning
authority for loss of business, trade fixtures, moving costs or other items of
loss.
(B) For purposes of this paragraph, the term "condemnation
proceedings" shall include conveyances and grants made in anticipation or in
lieu of condemnation proceedings.
10. Subletting and Assignment. Tenant may not sublet the demised
-------------------------
premises or assign this Lease at any time without the consent of Landlord, which
consent may be granted or withheld in Landlord's sole discretion. In the event
of any subletting or assignment, Tenant shall not be released from its liability
hereunder absent an express release by Landlord. Notwithstanding the foregoing,
(i) Tenant shall have the right to assign the Lease or sublease the demised
premises or any part thereof to a
-10-
<PAGE>
parent, subsidiary, affiliated, or controlled corporation of or to a surviving
entity of a merger or consolidation of any of the foregoing, without the consent
of Landlord, and (ii) in the event of a proposed sale of radio station WBEB(AM),
Landlord shall not unreasonably withhold consent of the assignment of this Lease
to the purchaser of the radio station and the release of Tenant of any further
liability hereunder.
11. Tax Clause.
----------
(A) During the entire term of this Lease, Tenant covenants to
pay, in addition to all other sums required to be paid by Tenant under the
Lease, before delinquency, all real estate taxes levied or assessed against the
demised premises for each year of the Lease term, and all installments for
special assessments due during the Lease term with respect to the demised
premises during the Lease term.
(B) Tenant shall also pay, before delinquency, any and all taxes
and assessments levied or assessed and becoming payable during the term against
Tenant's personal property located upon the demised premises.
(C) As between the parties hereto, Tenant shall have the duty of
making and filing all statements or reports which may be required under
applicable law in connection with any tax, charge, fee, rate, imposition or
assessment referred to in either subparagraphs (A) or (B) hereof.
-11-
<PAGE>
(D) Any payments due under the provisions of subparagraph (A) shall
be prorated as of the commencement and the termination or expiration date of
this Lease.
12. Liability Insurance. During the Leased term, Tenant shall keep
-------------------
Landlord, and any other parties in interest designated by Landlord, insured
against all statutory common law liabilities for damages on account of damage to
property or injuries and loss of life sustained by any person or persons while
on the demised premises in a policy or policies in the amount of not less than
One Million Dollars ($1,000,000.00) for any single occurrence, and Tenant shall
also indemnify, defend and save Landlord harmless from and against any such
liability. Any such policies shall bear endorsements to the effect that and
Landlord shall be notified not less than fifteen (15) days in advance of any
such modification or cancellation thereof. Copies of such policies, so endorsed,
or certificates evidencing the existence thereof, shall be promptly delivered to
Landlord. Tenant shall have the right to avail itself of blanket policies of
insurance which may include other properties of Tenant.
13. Net/Net/Net Lease.
-----------------
(A) This Lease shall be deemed and construed to be a
"net/net/net lease" and Tenant shall pay to Landlord, absolutely net throughout
the term of this Lease, the rent and other sums payable hereunder, and under no
circumstances or conditions, whether now existing or hereafter arising, or
whether beyond the present contemplation of the parties, shall Landlord be
expected
-12-
<PAGE>
or required to make any payment of any kind whatsoever hereunder or be under any
other obligations or liability with respect to the demised premises except as
herein otherwise expressly set forth.
(B) If Landlord is required to employ an attorney to collect any
of the monies due Landlord or to enforce the performance by Tenant of the
agreement, conditions, covenants, provisions, or stipulations of this Lease,
then in such an event, Landlord's costs, expenses, and reasonable counsel fees
shall be paid (if Landlord prevails) by Tenant to Landlord upon demand.
(C) Except to the extent elsewhere provided in this Lease, no
happening, event, occurrence, or situation during the term of this Lease,
whether foreseen or unforeseen, and however extraordinary, shall relieve Tenant
from its liability to pay the full rent and other charges under this Lease, or
shall relieve Tenant from any of its other obligations under this Lease; and
Tenant waives any rights now or hereafter conferred upon it by statute,
proclamation, decree, or order, or otherwise, to quit or surrender the demised
premises or this Lease, or any part thereof, or to any abatement, diminution,
reduction, or suspension of rent on account of any such event, happening,
occurrence, or situation.
14. Estoppel Certificate.
--------------------
(A) Each party shall, at any time and from time to time upon not
less than twenty (20) days' prior notice from the other party, or its successors
or assigns, execute, acknowledge,
-13-
<PAGE>
and deliver to the other party a statement setting forth the commencement date,
the expiration date, and the rent, and further stating: (i) that this Lease is
unmodified and in full force and effect (or, if there has been any modification,
that the same is in full force and effect as modified and stating the
modification); (ii) the date to which the rent has been paid in advance, if any;
(iii) whether or not, to the knowledge of the party issuing the certificate, the
other party is in default in performance of any of its obligations under this
Lease and, if so, specifying each such default of which the party issuing the
certificate may have knowledge; (iv) whether the party issuing the certificate
has accepted possession of the demised premises; (v) whether the party issuing
the certificate has made any claim against the other party under this Lease and,
if so, the nature thereof and the dollar amount, if any, of such claim; (vi)
whether there exist any known offsets or defenses against enforcement of any of
the terms of this Lease upon the part of the party issuing the certificate to be
performed, and, if so, specifying the same; and (vii) such further information
with respect to this Lease or the demised premises as the other party reasonably
request.
(B) It is agreed that any such statement delivered pursuant
hereto shall be binding upon the issuing party and may be relied upon by the
other party by any prospective purchaser of the demised premises or any part
thereof, by any mortgagee or prospective mortgagee thereof, by any lessor or
prospective
-14-
<PAGE>
lessor thereof, by any lessee or prospective lessee thereof, or by any
prospective assignee or any mortgagee thereof.
15. Landlord's Liability; Indemnification by Tenant.
-----------------------------------------------
(A) Landlord shall not be responsible for any damage or injury
to any property, fixtures, merchandise, or decorations or to any person or
persons at any time on the demised premises.
(B) Landlord shall not in any way be responsible or liable in
case of any accident or injury, including death, to any of Tenant's servants,
employees, agents, or to any person or persons in or about the demised premises.
(C) Tenant agrees that it will not hold Landlord in any way
responsible or liable therefor and will further indemnify, defend and hold
Landlord harmless from and against any and all claims, liabilities, penalties,
damages, expenses, and judgments arising from injury to persons or property of
any nature and also for any matter or thing growing out of the use and/or
occupation of the demised premises.
16. Quiet Enjoyment. Landlord hereby warrants and covenants that it
---------------
has the right to lease the demised premises to Tenant, and that it will do
nothing to disturb Tenant's full right of possession and enjoyment thereof and
the exercise of all Tenant's rights with respect thereto as provided by this
Lease so long as Tenant is not in default hereunder.
17. Remodel Provisions. Any remodeling or alterations to the demised
------------------
premises which Tenant may deem necessary during the
-15-
<PAGE>
term hereof shall be made at Tenant's expense, and Landlord hereby consents
thereto.
18. Option to Purchase the Premises. Landlord hereby grants to Tenant
-------------------------------
an option to purchase the leased premises, upon the terms and conditions set
forth herein, for the purchase price of Two Million Two Hundred Fifty Thousand
($2,250,000) Dollars. The option herein granted may be exercised by Tenant, at
any time during the first seven (7) years of the term of this Lease, provided
that this Lease has not been sooner terminated and Tenant is not in default
hereunder, by providing written notice to Landlord at any time within the first
six and one-half (6 1/2) years of the term hereof. Within thirty (30) days after
the giving of notice by Tenant exercising its option to purchase, Landlord
shall, at Tenant's expense, furnish to Tenant an owner's policy of title
insurance (or a binding commitment to issue such title insurance) in an amount
equal to the purchase price issued by a title insurance company acceptable to
Tenant, naming Tenant as the insured and guaranteeing Landlord's title to the
Premises to be free from all liens, charges, or encumbrances, except (i)
municipal and zoning ordinances; (ii) any taxes and assessments whether or not
due and payable; (iii) any recorded easements, restrictions, or other matters
existing as of the date of this Lease; and (iv) any liens, claims, or
encumbrances arising by, through or under Tenant. Tenant shall be allowed ten
(10) days in which to examine such evidence of title, and if the same does not
show Landlord's title to be free from all liens,
-16-
<PAGE>
charges, and encumbrances excepting those permitted by this paragraph, Landlord
shall, within a reasonable time thereafter, cure such defects and clear title.
The closing of the transaction shall, in all events, be held on a date within
such seven (7) year period and the time of such closing is agreed to be of the
essence. If the evidence of title furnished by Landlord discloses any defects in
Landlord's title which cannot be cured, and the curing of which Tenant is
unwilling to waive, Tenant may withdraw its exercise of this option to purchase,
and its performance of the contract formed by such exercise shall be excused,
and this Lease shall continue in full force and effect in accordance with its
terms. At the closing, Landlord shall by special warranty deed convey to Tenant
fee simple title to the Premises free and clear of all liens, charges, and
encumbrances excepting those permitted by this paragraph. Upon delivery of such
warranty deed, Tenant shall pay the purchase price to Landlord in cash or by
certified check. All deed stamp and/or transfer taxes imposed in connection with
such transfer shall be divided equally between Landlord and Tenant. Upon the
closing, this Lease and all of the obligations arising from and after the
closing shall terminate. Tenant shall have the right to assign this option to
permitted assignees, as set forth in Section 10 hereof, and may assign its
rights and obligations under this Section 18 to Edward G. Atsinger, Stuart W.
Epperson, their spouses and children, or trusts created for the benefit of their
spouses and children. Upon Tenant's request, the parties shall
-17-
<PAGE>
record a summary of this option with the office for the recording of deeds in
and for Montgomery County.
19. Addresses. All notices required under this Lease shall be deemed to
---------
be properly served if delivered in writing personally or sent by certified mail
with return receipt requested, to Landlord at 10 Presidential Boulevard, Bala
Cynwyd, Pennsylvania 19004, Attention: President, and to Tenant at 4880 Santa
Rosa Road, Suite 300, Camarillo, California 93012, Attention: President, or to
any subsequent address which either party may designate for such purpose. Date
of service of a notice served by a mail shall be the date on which such notice
is deposited in a post office of the United States Postal Service.
20. Successors and Assigns. The provisions of this Lease shall bind and
----------------------
inure to the benefit of the parties hereto and their successors and assigns.
21. Entire Agreement. This instrument and its attachments contain the
----------------
entire agreement between the parties with respect to the subject matter hereof,
and there are no covenants, express or implied, except as contained herein. No
statement, promise, or inducement made by either party or agent of either party
that is not contained in this written agreement shall be valid or binding. No
waiver of any condition or covenant of this Lease by either party shall be
deemed to imply or constitute a further waiver of the same or any other
condition or covenant of said Lease.
-18-
<PAGE>
IN WITNESS HEREOF, the parties have caused this Lease to be duly
executed, in quadruplicate, as of the day and year first above written.
LANDLORD:
WEAZ-FM Radio, Inc.,
a Pennsylvania corporation
BY: /s/ Jerry Lee
-------------------------------
Jerry Lee, President
ATTEST: [SIGNATURE APPEARS HERE]
---------------------------
TENANT:
PENNSYLVANIA MEDIA ASSOCIATES,
INC., a Pennsylvania corporation
BY: /s/ Eric H. Halvorson
-------------------------------
Eric H. Halvorson
Exec. V.P.
-19-
<PAGE>
STATE OF Pennsylvania :
: SS.
COUNTY OF Philadelphia :
On this 30th day of September, 1993, before me, an officer duly
authorized in the County and State aforesaid to take acknowledgments, personally
appeared ERIC H. HALVORSON, who is Executive Vice President of Pennsylvania
Media Associates, Inc., a corporation existing under the laws of the
Commonwealth of Pennsylvania, to me known to be the individual and Executive
Vice President of said corporation described in and who executed the foregoing
instrument, and that he acknowledged the execution thereof to be his free act
and deed as such Executive Vice President thereunto duly authorized, and that
the said instrument is the act and deed of said corporation.
WITNESS my hand and official seal in the above County and State.
/s/ Patrice Kelly
----------------------------------
NOTARY PUBLIC
My Commission Expires:
[SEAL OF NOTARY PUBLIC
APPEARS HERE]
----------------------------------
STATE OF Pennsylvania :
: SS.
COUNTY OF Philadelphia :
On this 30th day of September, 1993, before me, an officer duly
authorized in the County and State aforesaid to take acknowledgments, personally
appeared JERRY LEE, who is President of WEAZ-FM Radio, Inc., a corporation
existing under the laws of the Commonwealth of Pennsylvania, to me known to be
the individual and President of said corporation described in and who executed
the foregoing instrument, and that he acknowledged the execution thereof to be
his free act and deed as such President thereunto duly authorized, and that the
said instrument is the act and deed of said corporation.
WITNESS my hand and official seal in the above County and State.
----------------------------------
NOTARY PUBLIC
My Commission Expires:
----------------------------------
<PAGE>
EXHIBIT 10.05.11.02
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the fifth day of August, 1994,
by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not individually but
solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not
individually but solely as Trustee of the STUART W. EPPERSON REVOCABLE LIVING
TRUST, collectively referred to herein as "Lessor", and PENNSYLVANIA MEDIA
ASSOCIATES, INC. ("Lessee"), a Pennsylvania corporation.
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the County of Montgomery, State of
Pennsylvania, more particularly described as set forth in Exhibit "A", which is
attached hereto and made a part hereof (the "Real Property"); and,
WHEREAS, Lessee uses said Real Property in operating its radio station
WZZD-AM, Philadelphia, Pennsylvania; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated
<PAGE>
with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in advance by Lessor, and Lessor shall not
unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on August 5, 1994 (the
"Commencement Date"), and shall expire on August 4, 2004 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the
<PAGE>
last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of FORTY EIGHT THOUSAND DOLLARS ($48,000) per annum, in
equal monthly installments of FOUR THOUSAND DOLLARS ($4,000) (the "Base Rent")
in advance on the first day of each month; and thereafter on each and every
Adjustment Date (hereinafter defined) the monthly rent shall be computed
according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through the
ninth (9th) anniversaries of the Commencement Date. During the one (1) year
period beginning with each Adjustment Date, the monthly rent payable by Lessee
shall reflect an adjustment, as herein provided, for an increase, if any, in the
Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average
[Base Year 1982/84=100] ("CPI") published by the United States Department of
Labor, Bureau of Labor Statistics, as measured in February of each year; i.e.,
during the one (1) year period beginning with the Adjustment Date, the monthly
rent shall be the product obtained by multiplying the Base Rent times a
fraction, the numerator of which shall be the CPI for February of the year in
which the Adjustment Date falls and the denominator of which shall be the CPI
for February of the year in which the Commencement Date falls. Notwithstanding
the results of the foregoing calculation, the monthly amount payable by Lessee
hereunder shall not in any event be less than the monthly rental paid during the
immediately preceding one (1) year period. In the event that the Bureau of Labor
Statistics shall change the base period for the CPI, the new index number shall
be substituted for the old index numbers in making the above computation. In the
event the Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept comparable
statistics on the purchasing power of the consumer dollar as published at the
time of said discontinuation or change by a responsible financial periodical of
recognized authority to be then chosen by Lessor subject to reasonable consent
of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid without
notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all
<PAGE>
rights now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Agreement or the Real Property or any part thereof, or to any
abatement, suspension, deferment, diminution or reduction of rent or any other
sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after
<PAGE>
written request, official receipts of the appropriate taxing authority or other
proof satisfactory to Lessor evidencing such payment. If by law any such amount
may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv)
<PAGE>
insurance against such other hazards and in such amounts as is customarily
carried by owners and operators of similar properties, and as Lessor may
reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies authorized to do business in California and a
certificate thereof shall be delivered to Lessor, together with evidence of the
payment of the premiums therefor, not less than fifteen (15) days prior to the
commencement of the Term hereof or of the date when Lessee shall enter upon the
Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to
the expiration or termination date of any policy, Lessee shall deliver a
certificate of a renewal or replacement policy with proof of the payment of the
premium therefor. Any such insurance required by this Paragraph may, at Lessee's
option, be provided through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in,
<PAGE>
on, about or with respect to the Leased Premises or otherwise, (iii) the use by
Lessor of any part of the Leased Premises, (iv) any work undertaken by or at the
request of Lessor on or about the Leased Premises, (v) any other activity
undertaken by or at the request of Lessor pursuant to or in connection with this
Agreement, or (vi) the presence of any individuals on the Leased Premises as a
result of Lessor's request or this Agreement; provided, however, that Lessor
shall not be required to indemnify Lessee for any damages, injury, loss or
expense arising out of Lessee's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not constitute
a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the Leased
Premises for any purpose which would affect Lessee's right to use the Leased
Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
<PAGE>
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not
<PAGE>
yet discharged at the date of termination. Following any condemnation or
foreclosing order, Lessee may continue to use the property for operations under
the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character
<PAGE>
immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
<PAGE>
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of the Leased Premises by appropriate
suit, action or proceeding and remove its effects and hold the Leased Premises
as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
<PAGE>
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by
the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Lessor
under this Lease.
<PAGE>
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
ATSINGER FAMILY TRUST PENNSYLVANIA MEDIA
ASSOCIATES, INC.
/s/ EDWARD G. ATSINGER /s/ ERIC H. HALVORSON
- --------------------------- -----------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
/s/ MONA J. ATSINGER
- ---------------------------
MONA J. ATSINGER
Trustee
STUART W. EPPERSON
REVOCABLE LIVING TRUST
/s/ STUART W. EPPERSON
- ---------------------------
STUART W. EPPERSON
Trustee
<PAGE>
EXHIBIT 10.05.12
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 1st day of September, 1997,
by and between EDWARD G. ATSINGER III, not individually but solely as Trustee of
the ATSINGER FAMILY TRUST ( "Lessor"), and RADIO 1210, INC. ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property, more particularly described as set forth in
Exhibit "A", which is attached hereto and made a part hereof (the "Real
Property"); and,
WHEREAS, Lessee desires to use said Real Property in operating its radio
station KPRZ(AM), SAN DIEGO, CALIFORNIA; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in advance by Lessor, and Lessor shall not
unreasonably delay or withhold its approval. In the event
<PAGE>
Lessee submits any such changes for Lessor's approval and Lessor does not
respond within thirty (30) days after Lessor's receipt thereof, then such
changes shall be deemed approved by Lessor, so long as such changes otherwise
comply with this Agreement, five (5) days after Lessor's receipt of notice that
it has not responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on August 1, 1997 (the
"Commencement Date"), and shall expire on December 31, 2002 (the "Expiration
Date").
(b) {Intentionally omitted.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts
<PAGE>
and in the following manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of $45,596 per annum, in equal monthly installments of
$3,799.67 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first day of February
following the Commencement Date and each subsequent anniversary of such date
this Agreement remains in effect. During the one (1) year period beginning with
each Adjustment Date, the monthly rent payable by Lessee shall reflect an
adjustment, as herein provided, for the change, if any, from the year in which
the Commencement Date falls, in the Consumer Price Index for Urban Wage Earners
and Clerical Workers, Los Angeles area [Base Year 1982-84=100] ("CPI") as
measured in February and published by the United States Department of Labor,
Bureau of Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which shall be the
CPI for February of the year such Adjustment Date falls and the denominator of
which shall be the CPI for February of the year in which the Commencement Date
falls. Notwithstanding the results of the foregoing calculation, the amount
payable by Lessee hereunder shall not in any event be less than the rental paid
during the immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI, the new
index number shall be substituted for the old index number in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing the
CPI, or materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the consumer
dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid without
notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for
<PAGE>
the preservation and safety of the Real Property whether or not the Lessor shall
be required by any legal requirement to take such action or be liable for
failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any interest, penalty, fine or cost may be added thereto; and any
such amount relating to the fiscal period of the taxing authority, part of which
is included within the Term and a part of which extends beyond the Term shall,
if Lessee shall not be in default under this Agreement, be apportioned between
Lessee and Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
<PAGE>
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than Three Million Dollars ($3,000,000.00) for injuries to
one person, Five Million Dollars ($5,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than Five Million Dollars
($5,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies authorized to do business in Ohio and a
certificate thereof shall be delivered to Lessor, together with evidence of the
payment of the premiums therefor, not less than fifteen (15) days prior to the
commencement of the Term hereof or of the date when Lessee shall enter upon the
Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to
the expiration or termination date of any policy, Lessee shall deliver a
certificate of a renewal or replacement policy with proof of the payment of the
premium therefor. Any such insurance required by this Paragraph may, at
Lessee's option, be provided through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or
<PAGE>
with respect to the Leased Premises or otherwise, (iii) the use by Lessee of any
part of the Leased Premises, (iv) any work undertaken by or at the request of
Lessee on or about the Leased Premises, (v) any other activity undertaken by or
at the request of Lessee pursuant to or in connection with this Agreement, or
(vi) the presence of any individuals on the Leased Premises as a result of
Lessee's request or this Agreement; provided, however, that Lessee shall not be
required to indemnify Lessor for any damages, injury, loss or expense arising
out of Lessor's or its agents', employees', invitees' or contractors' negligent
acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or
<PAGE>
damage caused by fire or any of the extended coverage casualties, even if such
fire or other casualty shall be brought about by the fault or negligence of the
other party or persons for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and obligation
of Lessor, enforceable in accordance with its terms.
<PAGE>
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and
<PAGE>
validly authorized by all necessary actions on the part of Lessee (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessee, enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such
<PAGE>
failure for more than ten (10) days after Lessee's receipt of written notice
thereof from Lessor; provided, however, that Lessor shall not be required to
provide such written notice to Lessee more than twice in any twelve (12) month
period prior to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of the Leased Premises by
<PAGE>
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by
the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Lessor
under this Lease.
<PAGE>
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR: LESSEE
ATSINGER FAMILY TRUST RADIO 1210, INC.
/s/ Edward G. Atsinger III /s/ Eric H. Halvorson
- -------------------------------- ----------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
<PAGE>
Exhibit 10.05.13
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON AND
SALEM MEDIA CORPORATION
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA
CORPORATION, a New York corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in Cook County, Illinois, more
particularly described as:
Lot 3 in Hardee's Dundee Road Resubdivision of Lot 5 (except the south 33
feet thereof) and all of Lot 6 in Freedom Small Farms, being a Subdivision
of parts of the north west 1/4 of the north west 1/4 and north 1/2 of the
south west 1/4 of the north west 1/4 of Section 8, Township 42 North, Range
11 east of the Third Principal Meridian, in Cook County, Illinois
(the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Land
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
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<PAGE>
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting tower and
equipment (the "Installations"). Lessee is fully familiar with the physical
condition of the Real Property and has received the same in good order and
condition, and agrees that the Real Property complies in all respects with all
requirements of this Agreement. Lessee shall use the Real Property exclusively
for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
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<PAGE>
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics,
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<PAGE>
materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary
course of business for sums which under the terms of the related contracts are
not at the time due, provided that adequate provision for the payment thereof
shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880
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<PAGE>
Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such
other person or place as Lessor may designate from time to time by notice to
Lessee, in the following amounts and in the following manner:
(i) During the first year beginning with the Commencement Date, a
base rent of Thirty-Six Thousand Dollars ($36,000.00) per annum, in equal
monthly installments of Three Thousand Dollars ($3,000.00) (the "Base
Rent") in advance on the first day of each month; and thereafter on each
and every Adjustment Date (hereinafter defined) the monthly rent shall be
computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through
the nineteenth (19th) anniversaries of the Commencement Date. During the
one (1) year period beginning with each Adjustment Date, the monthly rent
payable by Lessee shall reflect an adjustment, as herein provided, for the
change, if any, from the month in which the Commencement Date falls, in the
Consumer Price Index for All Urban Consumers, All Items, U.S. Cities
Average (Base Year 1982/84=100] ("CPI") published by the United States
Department of Labor, Bureau of Labor Statistics; i.e., during the one (1)
year period beginning with the Adjustment Date, the monthly rent shall be
the product obtained by multiplying the Base Rent times a fraction, the
numerator of which shall be the CPI for the calendar month of the
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<PAGE>
Adjustment Date and the denominator of which shall be the CPI for the month
in which the Commencement Date falls. Notwithstanding the results of the
foregoing calculation, the monthly amount payable by Lessee hereunder shall
not in any event be less than the monthly rental paid during the
immediately preceding one (1) year period. In the event that the Bureau of
Labor Statistics shall change the base period for the CPI, the new index
number shall be substituted for the old index numbers in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing
the CPI, or materially changes the method of its computation, Lessor and
Lessee shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or change
by a responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
-6-
<PAGE>
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the
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<PAGE>
estimated cost of such alteration or addition exceeds Ten Thousand Dollars
($10,000.00), under the supervision of an architect or engineer satisfactory to
Lessor and in accordance with plans, specifications and cost estimates approved
by Lessor, and (v) does not interfere with Lessor's rights of use under this
Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed
prior to the date hereof and whether or not to be completed within the Term
hereof), ground rents, water, sewer or similar rents, rates and charges,
excises, levies, license fees, permit fees, inspection fees and other
authorization fees and other charges in each case, whether general or special,
ordinary or extraordinary, foreseen or unforeseen, of every character (including
all interest and penalties thereof), which at any time during or in respect of
the Term hereof may be assessed, levied, confirmed or imposed on or in respect
of or be a lien upon the Real Property or any part thereof or any rent therefrom
or any estate, right or interest therein, or any occupancy, use or possession of
or activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect
-8-
<PAGE>
thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days
after written request, official receipts of the appropriate taxing authority or
other proof satisfactory to Lessor evidencing such payment. If by law any such
amount may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice
to Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection
-9-
<PAGE>
with the Real Property or any part thereof, will comply with all contracts
relating to any such services, and will do all other things required for the
maintenance and continuance of all such services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an
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<PAGE>
amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any
partial loss under the applicable policies, which shall be written on a
replacement cost basis; (iii) appropriate workers' compensation or other
insurance against liability arising from claims of workers in respect of and
during the period of any work on or about the Real Property; and (iv) insurance
against such other hazards and in such amounts as is customarily carried by
owners and operators of similar properties, and as Lessor may reasonably require
for its protection. Lessee shall comply with such other requirements as Lessor,
or any mortgagee, may from time to time reasonably request for the protection by
insurance of their respective interests. The policy or policies of insurance
maintained by Lessee pursuant to this Paragraph shall be of a company or
companies authorized to do business in Illinois and a certificate thereof shall
be delivered to Lessor, together with evidence of the payment of the premiums
therefor, not less than fifteen (15) days prior to the commencement of the Term
hereof or of the date when Lessee shall enter upon the Leased Premises,
whichever occurs sooner. At least fifteen (15) days prior to the expiration or
termination date of any policy, Lessee shall deliver a certificate of a renewal
or replacement policy with proof of the payment of the premium therefor. Any
such insurance required by this Paragraph may, at Lessee's option, be provided
through a blanket policy or policies.
-11-
<PAGE>
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel
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<PAGE>
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss
-13-
<PAGE>
or expense arising out of Lessee's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
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<PAGE>
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents-and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a
party.
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations
or requirement with respect to the Leased Premises, and as of the date of
this Agreement, no notice of any kind relating thereto (which would
adversely affect the transactions contemplated by this Agreement) has been
issued by public authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use
the Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any
part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises
or any portion thereof and Lessor has not received notice written or
otherwise of any litigation affecting or concerning the Leased Premises
-15-
<PAGE>
relating to or arising out of its ownership, management, use or
operation. Lessor shall give to Lessee prompt notice of institution of any
such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased
Premises for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws,
ordinances, directives, orders, regulations and requirements which apply to
any portion of the Leased Premises or to any adjacent street or other
public area or to the maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly
and validly authorized by all necessary actions on the part of Lessor (none
of which actions have been modified or rescinded and all of which actions
are in full force and effect). This Agreement constitutes a valid and
binding agreement and obligation of Lessor, enforceable in accordance with
its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon
the
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<PAGE>
foregoing representation and warranty in entering into this Agreement and
in expending monies in connection herewith. Lessor shall not encumber or
permit any encumbrances, liens or restrictions on Lessee's Installations,
except with the prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking of all of the Leased Premises,
or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the
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<PAGE>
terms of this Agreement until Lessee finds and begins to utilize new facilities
or until prevented by the condemning or foreclosing authority from utilizing
the Leased Premises, whichever occurs first.
(c) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards"). Lessor
represents and warrants its equipment and property at the Leased Premises and
the operation thereof do not and will note exceed Acceptable Radio Frequency
Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
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Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting tower is and will
remain in material compliance at all times during the Term and any Extension
Term with all federal, state, county, municipal, local, administrative and other
governmental laws, statutes, ordinances, codes, rules, regulations and orders
pertaining thereto, including, without limitation, to the extent applicable, all
zoning laws and building codes and all regulations of the Federal Aviation
Administration ("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property
or any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be
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sufficient for the purpose, at its sole expense, shall promptly commence and
complete the restoration, replacement or rebuilding of the Improvements as
nearly as possible to their value, condition and character immediately prior to
such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly
upon request, a certificate certifying that (i) this Agreement is unmodified and
in full force and effect (or, if there have been modifications, that the
Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(1) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any prospective
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purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's
receipt of written notice thereof from Lessor; provided, however, that
Lessor shall not be required to provide such written notice to Lessee more
than twice in any twelve (12) month period prior to declaring such failure
to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than thirty
(30) days after notice by Lessor, provided, however, that if the nature of
Lessee's default is such that more than thirty (30) days is required for
its cure, then Lessee shall not be deemed to be in default if Lessee has
commenced such cure within the thirty (30) day period, demonstrates to
Lessor's reasonable satisfaction that such default is curable and
thereafter diligently prosecutes such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver appointed
for all or substantially all of its
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business or assets on the ground of its insolvency, or has a trustee
appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future
law of the United States having the same general purpose, or if Lessee
shall make an assignment for the benefit of its creditors, or if Lessee's
interest hereunder shall be levied upon or attached, which levy or
attachment shall not be removed within twenty (20) days from the date
thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased
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<PAGE>
Premises either by reasonable force or otherwise, or dispossess Lessee, any
legal representative of Lessee or other occupant of the Leased Premises by
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and
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<PAGE>
Lessee shall not be liable for payment of rent for any period after such
expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee
shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect
to any Mortgages and Security Agreements placed or hereafter to be placed by
Lessor upon the Leased Premises. The recording of such Mortgages and Security
Agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed
-24-
<PAGE>
of trust made by the Lessor encumbering the Leased Premises, Lessee shall
attorn to the purchaser upon any such foreclosure or sale and recognize such
purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained
by Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
-25-
<PAGE>
of rent, provided entrance to the Real Property shall not be -denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting tower, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign,
in whole or in part, Lessor's interest in this Lease and (b) may sell all or
part of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
-26-
<PAGE>
part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor s assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio tower located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment, fixtures,
goods or other property of Lessee not removed within ten (10) days after any
quitting, vacating or abandonment of the Leased Premises, or upon Lessee's
eviction therefrom, shall be considered abandoned, and Lessor shall have the
right, without notice to Lessee, to sell or otherwise dispose of same without
having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Illinois.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE:
SALEM MEDIA CORPORATION
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ---------------------------- --------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Stuart W. Epperson
- ----------------------------
STUART W. EPPERSON
-29-
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
SALEM MEDIA CORPORATION
The undersigned, being all of the members of the Board of Directors of
Salem Media Corporation, a New York corporation ("Corporation"), do hereby
consent to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and
directed to sell the real estate owned by it and located in Chicago,
Illinois to Edward G. Atsinger II and Stuart W. Epperson for the
amount of $90,000, such amount to be paid in cash.
RESOLVED that the Corporation is hereby authorized and
directed to lease said real estate from Edward G. Atsinger II and
Stuart W. Epperson pursuant to the terms of a lease in the form of and
with the terms and conditions set forth in the Lease Agreement attached
hereto and incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby
directed to take any and all actions they deem necessary, advisable,
convenient or proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of February, 1992.
/s/ Stuart W. Epperson
----------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
----------------------------
Edward G. Atsinger Ill
<PAGE>
Exhibit 10.05.14
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON
AND
SALEM MEDIA OF CALIFORNIA, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF
CALIFORNIA, INC., a California corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the City of Paramount, in the County
of Los Angeles, State of California, more particularly described as set forth in
Exhibit A, which is attached hereto and made a part hereof, and certain
easements more particularly described as set forth in Exhibit B, which is
attached hereto and made a part hereof (the "Easements") (together comprising
the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee approximately 43,745
square feet of the Real Property, more particularly described as set forth in
Exhibit C, which is attached hereto and made a part hereof, and the Easements
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
-1-
<PAGE>
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting towers and
equipment (the "Installations"). Lessee is fully familiar with the physical
condition of the Leased Premises and has received the same in good order and
condition, and agrees that the Leased Premises complies in all respects with
all requirements of this Agreement. Lessee shall use the Leased Premises
exclusively for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
-2-
<PAGE>
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which
-3-
<PAGE>
may be approved by the Lessor in writing, which approval shall not be
unreasonably withheld, (iii) liens for impositions not yet payable, or payable
without the addition of any fine, penalty, interest or cost for non-payment, or
being contested as permitted by Paragraph 3(d), below, and (iv) liens of
mechanics, materialmen, suppliers or vendors, or rights thereto, incurred in the
ordinary course of business for sums which under the terms of the related
contracts are not at the time due, provided that adequate provision for the
payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date") . If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the
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<PAGE>
commencement of the renewal term of written notice of Lessee's election to
extend as provided herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Edward G. Atsinger III, or to such other person or place as Lessor
may designate from time to time by notice to Lessee, in the following amounts
and in the following manner:
(i) During the first year beginning with the Commencement
Date, a base rent of One Hundred Twenty Thousand Dollars ($120,000)
per annum, in equal monthly installments of Ten Thousand Dollars
($10,000.00) (the "Base Rent") in advance on the first day of each
month; and thereafter on each and every Adjustment Date (hereinafter
defined) the monthly rent shall be computed according to subparagraph
(ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the nineteenth (19th) anniversaries of the Commencement Date.
During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States
-5-
<PAGE>
Department of Labor, Bureau of Labor Statistics; i.e., during the one
(1) year period beginning with the Adjustment Date, the monthly rent
shall be the product obtained by multiplying the Base Rent times a
fraction, the numerator of which shall be the CPI for the calendar
month of the Adjustment Date and the denominator of which shall be the
CPI for the month in which the Commencement Date falls.
Notwithstanding the results of the foregoing calculation, the monthly
amount payable by Lessee hereunder shall not in any event be less than
the monthly rental paid during the immediately preceding one (1) year
period. In the event that the Bureau of Labor Statistics shall change
the base period for the CPI, the new index number shall be substituted
for the old index numbers in making the above computation. In the
event the Bureau of Labor Statistics ceases publishing the CPI, or
materially changes the method of its computation, Lessor and Lessee
shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or
change by a responsible financial periodical of recognized authority
to be then chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided
-6-
<PAGE>
herein, Lessee waives all rights now or hereafter conferred by statute or
otherwise to quit, terminate or surrender this Agreement or the Leased Premises
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Leased Premises and
the adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary
or extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Leased
Premises at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Leased Premises whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value
-7-
<PAGE>
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000.00), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, and
except for taxes and assessments paid by the lessee under Section 8 of the lease
agreement for the Real Property dated July 1, 1981 between John Brown Schools of
California, Inc. and C. Robert Langslet & Son, Inc., Lessee shall pay all taxes,
assessments (including without limitation, all assessments for public
improvements or benefits, whether or not commenced or completed prior to the
date hereof and whether or not to be completed within the Term hereof), ground
rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied,
-8-
<PAGE>
confirmed or imposed on or in respect of or be a lien upon the Leased Premises
or any part thereof or any rent therefrom or any estate, right or interest
therein, or any occupancy, use or possession of or activity conducted on the
Leased Premises or any part thereof, other than any income or excess profits tax
imposed upon the Lessor's general income or revenues, but excluding any income
or excess profits or franchise taxes of Lessor determined on the basis of
general income or revenue or any interest or penalties in respect thereof.
Lessee shall furnish to Lessor for inspection within thirty (30) days after
written request, official receipts of the appropriate taxing authority or other
proof satisfactory to Lessor evidencing such payment. If by law any such amount
may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Leased Premises, provided that (i)
Lessee
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<PAGE>
shall first make all contested payments, under protest if it desires, (ii)
neither the Leased Premises nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Leased Premises or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Leased Premises arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
-10-
<PAGE>
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Leased Premises;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies authorized to do business in California and a
certificate thereof shall be delivered to Lessor, together with evidence of the
payment of the premiums therefor, not less than
-11-
<PAGE>
fifteen (15) days prior to the commencement of the Term hereof or of the date
when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At
least fifteen (15) days prior to the expiration or termination date of any
policy, Lessee shall deliver a certificate of a renewal or replacement policy
with proof of the payment of the premium therefor. Any such insurance required
by this Paragraph may, at Lessee's option, be provided through a blanket policy
or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss
-12-
<PAGE>
or expense arising out of Lessor's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased
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<PAGE>
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be
-14-
<PAGE>
subrogated to any right of Lessor or Lessee against the other. Each of Lessor
and Lessee hereby releases the other to the extent of its insurance coverage for
any loss or damage caused by fire or any of the extended coverage casualties,
even if such fire or other casualty shall be brought about by the fault or
negligence of the other party or persons for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is
a party.
(ii) To the best of Lessor's knowledge, there are no violations
of any federal, state, county or municipal law, ordinance, order,
regulations or requirement with respect to the Leased Premises, and as
of the date of this Agreement, no notice of any kind relating thereto
(which would adversely affect the transactions contemplated by this
Agreement) has been issued by public authorities having jurisdiction
over the Leased Premises.
(iii) No person or party other than Lessor has a right to use
the Leased Premises for any purpose which would affect Lessee's right
to use the Leased Premises as contemplated hereunder.
-15-
<PAGE>
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or
any part thereof.
(v) To the best of Lessor's knowledge, there is no action,
suit or proceeding pending or threatened against or affecting the
Leased Premises or any portion thereof and Lessor has not received
notice written or otherwise of any litigation affecting or concerning
the Leased Premises relating to or arising out of its ownership,
management, use or operation. Lessor shall give to Lessee prompt notice
of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently
no proceedings for overdue real estate taxes assessed against the
Leased Premises for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any
written notice received from any governmental authority to comply with
the terms, provisions and requirements of any local, state and federal
laws, ordinances, directives, orders, regulations and requirements
which apply to any portion of the Leased Premises or to any adjacent
street or other public area or to the maintenance, operation or use
thereof.
(viii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby,
have been duly and validly authorized by all necessary actions on the
part of Lessor (none of
-16-
<PAGE>
which actions have been modified or rescinded and all of which actions
are in full force and effect). This Agreement constitutes a valid and
binding agreement and obligation of Lessor, enforceable in accordance
with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns
good and marketable title in fee simple to the Real Property on which
the Leased Premises are located, and Lessor acknowledges that Lessee is
relying upon the foregoing representation and warranty in entering into
this Agreement and in expending monies in connection herewith. Lessor
shall not encumber or permit any encumbrances, liens or restrictions on
Lessee's Installations, except with the prior written approval of
Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking
-17-
<PAGE>
of all of the Leased Premises, or a portion thereof such that it renders the
premises unsuitable for broadcasting, this Agreement may be terminated by
written notice from either party to the other and thereafter each of the parties
shall be relieved of any future liability to the other under this Agreement,
except as to obligations accrued and not yet discharged at the date of
termination. Following any condemnation or foreclosing order, Lessee may
continue to use the property for operations under the terms of this Agreement
until Lessee finds and begins to utilize new facilities or until prevented by
the condemning or foreclosing authority from utilizing the Leased Premises,
whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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," issued by the American National
Standards Institute ("Acceptable Radio Frequency Radiation Standards") . Lessor
represents and warrants its equipment and property at the Leased Premises and
the operation thereof do not and will note exceed Acceptable Radio Frequency
Radiation Standards.
-18-
<PAGE>
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting towers are and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all
-19-
<PAGE>
regulations of the Federal Aviation Administration ("FAA") and the Federal
Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Leased
Premises or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
-20-
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part
of Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's
receipt of written notice thereof from Lessor; provided, however, that
Lessor shall not be required to provide such written notice to Lessee
more than twice in any twelve (12) month period prior to declaring such
failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than
thirty (30) days after notice by Lessor,
-21-
<PAGE>
provided, however, that if the nature of Lessee's default is such that
more than thirty (30) days is required for its cure, then Lessee shall
not be deemed to be in default if Lessee has commenced such cure within
the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently
prosecutes such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its business or assets on the
ground of its insolvency, or has a trustee appointed for it after a
petition has been filed for Lessee's reorganization under the
Bankruptcy Act of the United States, or any future law of the United
States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest
hereunder shall be levied upon or attached, which levy or attachment
shall not be removed within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said
-22-
<PAGE>
period. If such notice is given, the Agreement shall expire on the day so
specified as fully and completely as if that day were the day herein originally
fixed for such expiration, and Lessee shall then quit and surrender the Leased
Premises to Lessor, but Lessee shall remain liable for the payment of rent
during the full period which would otherwise constitute the balance of the Term
of this Agreement; and without prejudice to any other right or remedy which it
may have hereunder or by law, and notwithstanding any waiver of any prior breach
of condition or event of default hereunder, Lessor may re-enter the Leased
Premises either by reasonable force or otherwise, or dispossess Lessee, any
legal representative of Lessee or other occupant of the Leased Premises by
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
-23-
<PAGE>
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security
-24-
<PAGE>
Agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb Lessee's quiet possession in the event
of foreclosure. If any proceedings are brought for foreclosure, or in the event
of the exercise of the power of sale under any mortgage or deed of trust made by
the Lessor encumbering the Leased Premises, Lessee shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Lessor
under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
-25-
<PAGE>
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Leased Premises to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Leased Premises to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Leased Premises shall not be
denied Lessee.
SECTION 11
----------
USE OF LEASED PREMISES BY LESSOR
--------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting towers, or to use the Leased Premises for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the
Leased Premises.
-26-
<PAGE>
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
-27-
<PAGE>
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
-28-
<PAGE>
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to
the benefit of Lessor and Lessee, their respective successors, legal
representatives or assigns. The terms of this Agreement and any disputes arising
therefrom, shall be governed by the laws of the State of California.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement
between the parties. No representative, agent or employee of Lessor has been
authorized to make any representations or promises with reference to the within
agreement or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
LESSOR: LESSEE:
SALEM MEDIA OF CALIFORNIA, INC.
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ----------------------------- -----------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Stuart W. Epperson
- -----------------------------
STUART W. EPPERSON
-29-
<PAGE>
EXHIBIT A
---------
PARCEL 2, IN THE CITY OF PARAMOUNT, IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, AS SHOWN ON PARCEL MAP NO. 13658 FILED IN BOOK 137 PAGE 95 OF PARCEL
MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
<PAGE>
EXHIBIT B
---------
LEGAL DESCRIPTION
FOR
RADIO STATION TOWER GUY WIRES AND ANCHORS
EASEMENTS FOR GUY WIRES AND ANCHORS IN THE CITY OF PARAMOUNT, COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
PARCEL `A':
A 5.00 FOOT WIDE EASEMENT WITHIN PARCEL 3 OF PARCEL MAP NO. 16925, AS SHOWN ON A
MAP FILED IN BOOK 187, PAGES 74 THROUGH 76, INCLUSIVE OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:
BEGINNING AT A POINT IN THE EASTERLY BOUNDARY OF SAID PARCEL 3, SAID POINT BEING
THE NORTHERLY TERMINUS OF THAT CERTAIN COURSE IN SAID EASTERLY BOUNDARY SHOWN AS
"N 3(degrees) 16' 51" W 122.07 FEET" ON SAID MAP; THENCE S 3(degrees) 16' 51" E
15.31 FEET ALONG SAID BOUNDARY TO THE TRUE POINT OF BEGINNING; THENCE LEAVING
SAID EASTERLY BOUNDARY AND THROUGH A PORTION OF SAID PARCEL 3 S 68(degrees) 25;
58" W 92.87 FEET TO A POINT HEREINAFTER REFERRED TO AS POINT `A'.
PARCEL `B':
AN EASEMENT WITHIN PARCEL 3 OF PARCEL MAP NO. 16925, AS DESCRIBED IN PARCEL `A'
HEREON, MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT POINT `A' AS DESCRIBED IN PARCEL `A' HEREON; THENCE N 84(degrees)
34' 48" W 5.00 FEET; THENCE N 5(degrees) 25' 12" E 5.00 FEET TO THE TRUE POINT
OF BEGINNING; THENCE S 84(degrees) 34' 48" E 10.00 FEET; THENCE S 5(degrees) 25'
12" W 10.00 FEET; THENCE N 84(degrees) 34' 48" W 10.00 FEET; THENCE N
5(degrees) 25' 12" E 10.00 FEET TO THE TRUE POINT OF BEGINNING.
THE SIDELINES OF SAID PARCELS `A' AND `B' SHALL BE PROLONGED OR FORESHORTENED SO
AS TO TERMINATE AT SAID DESCRIBED BOUNDARIES AND/ OR INTERSECT WITH NO OVERLAP.
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
SALEM MEDIA OF CALIFORNIA, INC.
The undersigned, being all of the members of the Board of Directors of
Salem Media of California, Inc. a California corporation ("Corporation"), do
hereby consent to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and
directed to sell the real estate owned by it and located at Long Beach,
California to Edward G. Atsinger II and Stuart W. Epperson for the
amount of $625,000, such amount to be paid in the form of cash in the
amount of $588,903.94 and a Promissory Note in the amount of
$36,096.06, such Promissory Note to be in the form and with the terms
and conditions set forth in the Promissory Note attached hereto and
incorporated herein by reference; and
RESOLVED that the Corporation is hereby authorized and
directed to sell the real estate owned by it and located at Paramount
California to Edward G. Atsinger II and Stuart W. Epperson for the
amount of $1,150,000, such amount to be paid in cash; and
RESOLVED that the Corporation is hereby authorized and
directed to lease said real estate from Edward G. Atsinger II and
Stuart W. Epperson pursuant to the terms of leases in the form of and
with the terms and conditions set forth in the Lease Agreements
attached hereto and incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby
directed to take any and all actions they deem necessary, advisable,
convenient or proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of February, 1992.
/s/ Stuart W. Epperson
-------------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
-------------------------------
Edward G. Atsinger III
<PAGE>
EXHIBIT 10.05.15
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the 15th day of March, 1996 by
and between EDWARD G. ATSINGER III, not individually but solely as Trustee of
the ATSINGER FAMILY TRUST, and STUART W. EPPERSON, not individually but solely
as Trustee of the STUART W. EPPERSON REVOCABLE LIVING TRUST, collectively
referred to herein as "Lessor", and Salem Media of Colorado, Inc.("Lessee"), a
Colorado corporation.
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise the real property located in the State of Colorado, County of Adams,
more particularly described as set forth in Exhibit "A", which is attached
hereto and made a part hereof (the "Real Property"); and,
WHEREAS, Lessee uses said Real Property in operating its radio station
KNUS-AM, Denver, Colorado (the "Station"); and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations").
Lessee is fully familiar with the physical condition of the Land and has
received the same in good order and condition, and agrees that the Land complies
in all respects with all requirements of this Agreement. Lessee shall use the
Land exclusively for purposes associated with the operation of a radio station.
<PAGE>
(c) Lessee shall have the right from time to time to substitute Installations
of similar kind and character for those hereinabove specified, provided such
changes shall be approved in advance by Lessor, and Lessor shall not
unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24) hours
per day, seven (7) days per week, for the purpose of installing, maintaining and
repairing its Installations, provided that the contractors performing such work
are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created or
to remain, and will discharge any mortgage, lien, security interest, encumbrance
or charge on, pledge of or conditional sale or other title retention agreement
with respect to the Real Property or any part thereof or Lessee's interest
therein other than (i) this Agreement, (ii) any lien, including a mortgage on
the leasehold interest of Lessee, which may be approved by the Lessor in
writing, which approval shall not be unreasonably withheld, (iii) liens for
impositions not yet payable, or payable without the addition of any fine,
penalty, interest or cost for non-payment, or being contested as permitted by
Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on March 15, 1996 (the
"Commencement Date"), and shall expire on March 22, 2006 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Accounting, or to such other person or place as Lessor may designate from time
to time by notice to Lessee, in the following amounts and in the following
manner:
(i) During the first year beginning with the Commencement Date Lessee
shall pay a base rent of EIGHTEEN THOUSAND DOLLARS ($18,000) per annum, in equal
monthly installments of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500) (the "Base
Rent") in advance on the first day of each month; and thereafter on each and
every Adjustment Date (hereinafter defined) the monthly rent shall be computed
according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through the
ninth (9th) anniversaries of the Commencement Date. During the one (1) year
period beginning with each Adjustment Date, the monthly rent payable by Lessee
shall reflect an adjustment, as herein provided, for an increase, if any, in the
Consumer Price Index for All Urban Consumers, All Items, U.S. Cities Average
[Base Year 1982/84=100] ("CPI") published by the United States Department of
Labor, Bureau of Labor Statistics, as measured in February of each year; i.e.,
during the one (1) year period beginning with the Adjustment Date, the monthly
rent shall be the product obtained by multiplying the Base Rent times a
fraction, the numerator of which shall be the CPI for February of the year in
which the Adjustment Date falls and the denominator of which shall be the CPI
for February of the year in which the Commencement Date falls. Notwithstanding
the results of the foregoing calculation, the monthly amount payable by Lessee
hereunder shall not in any event be less than the monthly rental paid during the
immediately preceding one (1) year period. In the event that the Bureau of Labor
Statistics shall change the base period for the CPI, the new index number shall
be substituted for the old index numbers in making the above computation. In the
event the Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept comparable
statistics on the purchasing power of the consumer dollar as published at the
time of said discontinuation or change by a responsible financial periodical of
recognized authority to be then chosen by Lessor subject to reasonable consent
of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid without
notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement
<PAGE>
or the Real Property or any part thereof, or to any abatement, suspension,
deferment, diminution or reduction of rent or any other sum payable by Lessee
hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any
<PAGE>
interest, penalty, fine or cost may be added thereto; and any such amount
relating to the fiscal period of the taxing authority, part of which is included
within the Term and a part of which extends beyond the Term shall, if Lessee
shall not be in default under this Agreement, be apportioned between Lessee and
Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies
<PAGE>
authorized to do business in California and a certificate thereof shall be
delivered to Lessor, together with evidence of the payment of the premiums
therefor, not less than fifteen (15) days prior to the commencement of the Term
hereof or of the date when Lessee shall enter upon the Leased Premises,
whichever occurs sooner. At least fifteen (15) days prior to the expiration or
termination date of any policy, Lessee shall deliver a certificate of a renewal
or replacement policy with proof of the payment of the premium therefor. Any
such insurance required by this Paragraph may, at Lessee's option, be provided
through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessee and
approved by Lessor (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessor may assume, or require
that such defense be assumed, by Lessor and counsel selected by Lessor, at the
cost and expense of Lessee if Lessor is for any reason dissatisfied with the
defense by Lessee, or believes that its interests would be better served
thereby. In any case where Lessee is defending any such claim, Lessor may
participate in the defense thereof by counsel selected by it, but at Lessor's
expense. Lessee shall not enter into any settlement of any claim without the
consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the obligation
of defending, at its sole cost and expense, by counsel selected by Lessor and
approved by Lessee (such approval not to be unreasonably withheld), against any
claim to which the foregoing indemnity may apply. Lessee may assume, or require
that such defense be assumed, by Lessee and counsel selected by Lessee, at the
cost and expense of Lessor if Lessee is for any reason dissatisfied with the
defense by Lessor, or believes that its interests would be better served
thereby. In any case where Lessor is defending any such claim, Lessee may
participate in the defense thereof by counsel selected by it, but at Lessee's
expense. Lessor shall not enter into any settlement of any claim without the
consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or permit
any insurer of Lessor or Lessee to be subrogated to any right of Lessor or
Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the Leased
Premises for any purpose which would affect Lessee's right to use the Leased
Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or contemplated
condemnation proceedings affecting the Leased Premises or any part thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for
<PAGE>
overdue real estate taxes assessed against the Leased Premises for any fiscal
period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessor (none of which actions
have been modified or rescinded and all of which actions are in full force and
effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good and
marketable title in fee simple to the Real Property on which the Leased Premises
are located, and Lessor acknowledges that Lessee is relying upon the foregoing
representation and warranty in entering into this Agreement and in expending
moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local, state
and federal laws, statutes, ordinances, rules, regulations, orders and decrees
that it knows to be applicable in connection with its activities and operations
at the Leased Premises, and Lessor shall require the same representation and
warranty from all additional users of the facilities at the Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither party
shall intentionally do anything at the Leased Premises which will interfere with
or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be an
actual condemnation or foreclosure and taking of all of the Leased Premises, or
a portion thereof such that it renders the premises unsuitable for broadcasting,
this Agreement may be terminated by written notice from either party to the
other and thereafter each of the parties shall be relieved of any future
liability to the other under this Agreement, except as to obligations accrued
and not yet discharged at the date of termination. Following any condemnation
or foreclosing order, Lessee may continue to use the property for operations
under the terms of this Agreement until Lessee finds and begins to utilize new
facilities or until prevented by the condemning or foreclosing authority from
utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located on or
about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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
<PAGE>
Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
(f) Lessee covenants that it will not at any time during the Term of this
Agreement, transmit, store, handle or dump toxic or hazardous wastes anywhere at
or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written notice
received from any governmental authority to comply with the terms, provisions
and requirements of any local, state and federal laws, ordinances, directives,
orders, regulations, and requirements which apply to any portion of the Leased
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the radio
tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real Property or
any part thereof, Lessee shall promptly give written notice thereof to Lessor
and any mortgagee, generally describing the nature and extent of such damage or
destruction. In case of any damage to or destruction of the Improvements or any
parts thereof, Lessee, whether or not the insurance proceeds, if any, on account
of such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Improvements as nearly as possible to their value, condition
and character immediately prior to such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor, promptly upon
request, a certificate certifying that (i) this Agreement is unmodified and in
full force and effect (or, if there have been modifications, that the Agreement
is in full force and effect, as modified, and stating the modifications), (ii)
the dates, if any, to which rent and other sums payable hereunder have been
paid, and (iii) no notice has been received by Lessee of any default which has
not been cured, except as to defaults specified in said certificate. Any such
certificate may be relied upon by any prospective purchaser or mortgagee of the
Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part of
Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or review,
adjudicated a bankrupt or insolvent, or has a receiver appointed for all or
substantially all of its business or assets on the ground of its insolvency, or
has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any time,
Lessor, at its election, may give Lessee a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessee has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without
<PAGE>
prejudice to any other right or remedy which it may have hereunder or by law,
and notwithstanding any waiver of any prior breach of condition or event of
default hereunder, Lessor may re-enter the Leased Premises either by reasonable
force or otherwise, or dispossess Lessee, any legal representative of Lessee or
other occupant of the Leased Premises by appropriate suit, action or proceeding
and remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof, and
continuation of such failure to cure for more than thirty (30) days after notice
by Lessee, shall constitute a default on the part of Lessor; provided, however,
that if the nature of Lessor's default is such that more than thirty (30) days
is required for its cure, then Lessor shall not be deemed to be in default if
Lessor has commenced such cure within the thirty (30) day period, demonstrates
to Lessee's reasonable satisfaction that such default is curable and thereafter
diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect to
any mortgages and security agreements placed or hereafter to be placed by Lessor
upon the Leased Premises. The recording of such mortgages and security
agreements shall have preference and precedence and be superior and prior in
lien to this Agreement, irrespective of the date of recording, and Lessee agrees
to execute any instruments, without cost, which may be deemed necessary or
desirable to further effect the subordination of this Agreement. Lessor shall
make a reasonable effort to obtain from any mortgagees or lenders holding an
interest in the nature of a mortgage in the Leased Premises an agreement that
the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
<PAGE>
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be sustained by
Lessee or any other person by reason of the failure, breakage, leakage or
obstruction of the water, sewer, plumbing, roof, drains, leaders, electrical,
air conditioning or any other equipment; or by reason of the elements; or
resulting from the carelessness, negligence or improper conduct of Lessee, its
agents, employees, contractors, invitees, assignees or successors; or
attributable to any interference with or the interruption of or failure of any
services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign, in
whole or in part, Lessor's interest in this Lease and (b) may sell all or part
of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio towers located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given hereunder
shall be in writing and sent certified mail, return receipt requested, and if to
Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Edward
G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300, Camarillo,
CA 93012, Attn: Accounting. Either party hereto may change the place for
notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the benefit
of Lessor and Lessee, their respective successors, legal representatives or
assigns. The terms of this Agreement and any disputes arising therefrom, shall
be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR LESSEE
ATSINGER FAMILY TRUST SALEM MEDIA OF COLORADO, INC.
/s/ Edward G. Atsinger, III /s/ Eric H. Halvorson
- ------------------------------- -------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
STUART W. EPPERSON
REVOCABLE LIVING TRUST
/s/ Stuart W. Epperson
- -------------------------------
STUART W. EPPERSON
Trustee
<PAGE>
Exhibit 10.05.16
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON
AND
SALEM MEDIA OF OHIO, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF
OHIO, INC., an Ohio corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the County of Delaware, State of Ohio,
more particularly described as set forth in Exhibit A, which is attached hereto
and made a part hereof (the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting tower and
equipment (the "Installations").
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<PAGE>
Lessee is fully familiar with the physical condition of the Real Property and
has received the same in good order and condition, and agrees that the Real
Property complies in all respects with all requirements of this Agreement.
Lessee shall use the Real Property exclusively for purposes associated with the
operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
-2-
<PAGE>
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as
permitted by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen,
suppliers or vendors, or rights thereto, incurred in the ordinary course of
business for sums which under the terms of the related contracts are not at the
time due, provided that adequate provision for the payment thereof shall have
been made.
-3-
<PAGE>
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
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<PAGE>
(i) During the first year beginning with the Commencement Date, a
base rent of Thirty-Eight Thousand Four Hundred Dollars ($38,400.00) per annum,
in equal monthly installments of Three Thousand Two Hundred Dollars ($3,200.00)
(the "Base Rent") in advance on the first day of each month; and thereafter on
each and every Adjustment Date (hereinafter defined) the monthly rent shall be
computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through
the nineteenth (19th) anniversaries of the Commencement Date. During the one (1)
year period beginning with each Adjustment Date, the monthly rent payable by
Lessee shall reflect an adjustment, as herein provided, for the change, if any,
from the month in which the Commencement Date falls, in the Consumer Price Index
for All Urban Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of Labor
Statistics; i.e., during the one (1) year period beginning with the Adjustment
Date, the monthly rent shall be the product obtained by multiplying the Base
Rent times a fraction, the numerator of which shall be the CPI for the calendar
month of the Adjustment Date and the denominator of which shall be the CPI for
the month in which the Commencement Date falls. Notwithstanding the results of
the foregoing calculation, the monthly amount payable by Lessee hereunder shall
not in
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<PAGE>
any event be less than the monthly rental paid during the immediately
preceding one (1) year period. In the event that the Bureau of Labor
Statistics shall change the base period for the CPI, the new index number
shall be substituted for the old index numbers in making the above
computation. In the event the Bureau of Labor Statistics ceases publishing
the CPI, or materially changes the method of its computation, Lessor and
Lessee shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or change
by a responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean
-6-
<PAGE>
order and condition and will promptly make all necessary or appropriate repairs,
replacements and renewals thereof, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs,
replacements and renewals shall be equal in quality and class to the original
work. Lessee waives any right created by any law now or hereafter in force to
make repairs to the Real Property at Lessor's expense. Lessee, at its sole
expense, shall do or cause others to do every act necessary or appropriate for
the preservation and safety of the Real Property whether or not the Lessor shall
be required by any legal requirement to take such action or be liable for
failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000.00), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor,
-7-
<PAGE>
and (v) does not interfere with Lessor's rights of use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be
-8-
<PAGE>
paid in installments, Lessee shall be obligated to pay only those installments
as they become due from time to time before any interest, penalty, fine or cost
may be added thereto; and any such amount relating to the fiscal period of the
taxing authority, part of which is included within the Term and a part of which
extends beyond the Term shall, if Lessee shall not be in default under this
Agreement, be apportioned between Lessee and Lessor as of the expiration of the
Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
-9-
<PAGE>
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability
-10-
<PAGE>
arising from claims of workers in respect of and during the period of any work
on or about the Real Property; and (iv) insurance against such other hazards and
in such amounts as is customarily carried by owners and operators of similar
properties, and as Lessor may reasonably require for its protection. Lessee
shall comply with such other requirements as Lessor, or any mortgagee, may from
time to time reasonably request for the protection by insurance of their
respective interests. The policy or policies of insurance maintained by Lessee
pursuant to this Paragraph shall be of a company or companies authorized to do
business in Ohio and a certificate thereof shall be delivered to Lessor,
together with evidence of the payment of the premiums therefor, not less than
fifteen (15) days prior to the commencement of the Term hereof or of the date
when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At
least fifteen (15) days prior to the expiration or termination date of any
policy, Lessee shall deliver a certificate of a renewal or replacement policy
with proof of the payment of the premium therefor. Any such insurance required
by this Paragraph may, at Lessee's option, be provided through a blanket policy
or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal
-11-
<PAGE>
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but
-12-
<PAGE>
at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such
-13-
<PAGE>
approval not to be unreasonably withheld), against any claim to which the
foregoing indemnity may apply. Lessee may assume, or require that such defense
be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of
Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or
believes that its interests would be better served thereby. In any case where
Lessor is defending any such claim, Lessee may participate in the defense
thereof by counsel selected by it, but at Lessee's expense. Lessor shall not
enter into any settlement of any claim without the consent of Lessee, which
consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor
is a party.
-14-
<PAGE>
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
-15-
<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending monies in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
-16-
<PAGE>
(b) Each party shall comply in all material respects with all
local, state and federal laws, statutes, ordinances, rules, regulations, orders
and decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement
neither party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall
be an actual condemnation or foreclosure and taking of all of the Leased
Premises, or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
-17-
<PAGE>
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation
Standards"). Lessor represents and warrants its equipment and property at the
Leased Premises and the operation thereof do not and will not exceed Acceptable
Radio Frequency Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term
of this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and
-18-
<PAGE>
validly authorized by all necessary actions on the part of Lessee (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessee, enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting tower is and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all regulations of the
Federal Aviation Administration ("FAA") and the Federal Communications
Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
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<PAGE>
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(1) Lessor will execute, acknowledge and deliver to the Lessee or
any mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
-20-
<PAGE>
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part
of Lessee:
(i) The failure of Lessee to pay rent or additional rent,
and continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period prior
to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under
the terms hereof, and continuation of such failure to cure for more
than thirty (30) days after notice by Lessor, provided, however, that
if the nature of Lessee's default is such that more than thirty (30)
days is required for its cure, then Lessee shall not be deemed to be in
default if Lessee has commenced such cure within the thirty (30) day
period, demonstrates to Lessor's reasonable satisfaction that such
default is curable and thereafter diligently prosecutes such cure to
completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its business or assets on the
ground of its insolvency, or has a trustee appointed for it after a
petition has been filed for
-21-
<PAGE>
Lessee's reorganization under the Bankruptcy Act of the United States,
or any future law of the United States having the same general purpose,
or if Lessee shall make an assignment for the benefit of its creditors,
or if Lessee's interest hereunder shall be levied upon or attached,
which levy or attachment shall not be removed within twenty (20) days
from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of
-22-
<PAGE>
the Leased Premises by appropriate suit, action or proceeding and remove its
effects and hold the Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
-23-
<PAGE>
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security Agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by the Lessor encumbering the Leased Premises,
-24-
<PAGE>
Lessee shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
-25-
<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting tower, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign,
in whole or in part, Lessor's s interest in this Lease and (b) may sell all or
part of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
-26-
<PAGE>
part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor's assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises, and, at Lessor's option, all interest of the Lessee in and to the
Improvements (including the radio tower located on the Land), to Lessor in good
order and condition, reasonable wear and tear excepted. Any equipment, fixtures,
goods or other property of Lessee not removed within ten (10) days after any
quitting, vacating or abandonment of the Leased Premises, or upon Lessee's
eviction therefrom, shall be considered abandoned, and Lessor shall have the
right, without notice to Lessee, to sell or otherwise dispose of same without
having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Ohio.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LESSOR: LESSEE:
SALEM MEDIA OF OHIO, INC.
/s/ EDWARD G. ATSINGER III By: /s/ EDWARD G. ATSINGER III
- --------------------------------- -------------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ STUART W. EPPERSON
- ---------------------------------
STUART W. EPPERSON
-29-
<PAGE>
EXHIBIT A
Situate in the State of Ohio, County of Delaware, and being a part of Lot No. 5
in the Subdivision of Quarter Township 3, Range 18, United States Military Lands
and being part of the tract of land known as Parcel No. 1 conveyed to Peoples
Broadcasting Corporation as the same is shown of record in Deed Book 220, Page
14, Recorder's Office, Delaware County, Ohio and being more particularly
described as follows:
Beginning for reference at the intersection of the centerline of Powell Road
with the original centerline of U.S. Route No. 23 and the southwesterly corner
of the aforementioned Lot No. 5 and the northwesterly corner of Lot No. 6, said
point also being the southwesterly corner of the aforementioned Parcel No. 1
said point being located N 89(degrees) 37' 45" W a distance of 1.57 feet from a
point in the curved centerline of existing U.S. Route No. 23 at Sta. 75+53.54
(Del-23-1.22);
Thence with the centerline of Powell Road and the southerly line of the
aforementioned Lot No. 5 and the southerly line of the aforementioned Parcel No.
1 S 89(degrees) 37' 45" E a distance of 2057.09 feet to a railroad spike at the
point of true beginning of the tract of land herein described;
Thence N 00(degrees)" 22' 15" E a distance of 250.49 feet to an iron pin in a
curve, passing an iron pin on line in the northerly right-of-way line of Powell
Road at a distance of 20.00 feet;
Thence with a curve to the right having a radius of 600 feet, a central angle of
190(degrees) 44' 08" and a length of 1997.38 feet, the chord to which bears N
44(degrees) 27' 29" E a distance of 1194.74 feet to an iron pin;
Thence N 88" 12' 36" E a distance of 227.83 feet to an iron pin in the westerly
line of the Penn Central Railroad;
Thence with the westerly right-of-way line of the Penn Central Railroad
S 1(degree) 47' 24" E a distance of 1075.00 feet to an iron pin at an angle
point in said right-of-way line;
Thence continuing with the right-of-way line of the Penn Central Railroad S
84(degrees)" 06' 15" W a distance of 210.70 feet to an iron pin in the northerly
right-of-way line of Powell Road;
Thence S 0(degrees)" 22' 15" W a distance of 20.00 feet to a railroad spike in
the centerline of Powell Road and the southerly line of the aforementioned Lot
No. 5 and the southerly line of the aforementioned Parcel No. 1;
Thence with the centerline of Powell Road, the southerly line of the
aforementioned Lot No. 5 and the southerly line of the aforementioned Parcel No.
1 N 89(degrees)" 37' 45" W a distance of 890.00 feet to the point of true
beginning containing 33.698 acres more or less of which 0.408 acres more or less
lies within the right-of-way line of Powell Road.
<PAGE>
EXHIBIT 10.05.17.01
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND MONA J. ATSINGER
AND STUART W. EPPERSON AND NANCY K. EPPERSON
AND
SALEM MEDIA OF OREGON, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and
between EDWARD G. ATSINGER III AND MONA J. ATSINGER AND STUART W. EPPERSON AND
NANCY K. EPPERSON ("Lessor"), and SALEM MEDIA OF OREGON, INC., an Oregon
corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and a building thereon
(the "Building"), which Land and Building together comprise certain real
property described as Lot 1 and 2, Paradise Park Addition, in the City of
Portland, County of Multnomah and State of Oregon (the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting equipment (the
"Installations"). Lessee is fully familiar with the physical condition of the
Leased Premises
-1-
<PAGE>
and has received the same in good order and condition, and agrees that the
Leased Premises complies in all respects with all requirements of this
Agreement. Lessee shall use the Leased Premises exclusively for purposes
associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four
(24) hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number
-2-
<PAGE>
which, if called will ring at a location that is staffed by their respective
agents twenty-four (24) hours each and every day, seven (7) days each and every
week; and Lessor and Lessee shall notify each other promptly in the event of any
change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
-3-
<PAGE>
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on
February 1, 1992 (the "Commencement Date") and shall expire on January 31, 2002
(the "Expiration Date"). If the Term has been extended as provided in
subparagraph (b), below, the Expiration Date shall be the last day of the Term
as so extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Edward G. Atsinger III, or to such other person or place as Lessor
may designate from time to time by notice to Lessee, in the following amounts
and in the following manner:
-4-
<PAGE>
(i) During the first year beginning with the Commencement
Date, a base rent of Fifty-Two Thousand Eight Hundred Dollars
($52,800.00) per annum, in equal monthly installments of Four
Thousand Four Hundred Dollars ($4,400.00) (the "Base Rent") in
advance on the first day of each month; and thereafter on each and
every Adjustment Date (hereinafter defined) the monthly rent shall be
computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the nineteenth (19th) anniversaries of the Commencement Date.
During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained
by multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for the calendar month of the Adjustment Date and
the denominator of which shall be the CPI for the month in which the
Commencement Date falls. Notwithstanding the results of the foregoing
calculation, the monthly amount payable by Lessee hereunder shall not
in
-5-
<PAGE>
any event be less than the monthly rental paid during the immediately
preceding one (1) year period. In the event that the Bureau of Labor
Statistics shall change the base period for the CPI, the new index
number shall be substituted for the old index numbers in making the
above computation. In the event the Bureau of Labor Statistics ceases
publishing the CPI, or materially changes the method of its
computation, Lessor and Lessee shall accept comparable statistics on
the purchasing power of the consumer dollar as published at the time
of said discontinuation or change by a responsible financial
periodical of recognized authority to be then chosen by Lessor
subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be
paid without notice, demand, counterclaim, set-off, deduction or defense and
without abatement, suspension, deferment, diminution or reduction. Except as
expressly provided herein, Lessee waives all rights now or hereafter conferred
by statute or otherwise to quit, terminate or surrender this Agreement or the
Leased Premises or any part thereof, or to any abatement, suspension, deferment,
diminution or reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Leased Premises and
the adjoining streets and ways in good and clean
-6-
<PAGE>
order and condition and will promptly make all necessary or appropriate repairs,
replacements and renewals thereof, whether interior or exterior, structural or
non-structural, ordinary or extraordinary, foreseen or unforeseen. All repairs,
replacements and renewals shall be equal in quality and class to the original
work. Lessee waives any right created by any law now or hereafter in force to
make repairs to the Leased Premises at Lessor's expense. Lessee, at its sole
expense, shall do or cause others to do every act necessary or appropriate for
the preservation and safety of the Leased Premises whether or not the Lessor
shall be required by any legal requirement to take such action or be liable for
failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at
its sole expense, may make reasonable alterations of and additions to the
Building or any part thereof, provided that any alteration or addition (i) shall
not change the general character of the Building, or reduce the fair market
value thereof below its value immediately before such alteration or addition, or
impair its usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the estimated cost of such alteration or addition exceeds Ten Thousand
Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v)
-7-
<PAGE>
does not interfere with Lessor's rights of use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Leased Premises or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Leased Premises or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be
-8-
<PAGE>
paid in installments, Lessee shall be obligated to pay only those installments
as they become due from time to time before any interest, penalty, fine or cost
may be added thereto; and any such amount relating to the fiscal period of the
taxing authority, part of which is included within the Term and a part of which
extends beyond the Term shall, if Lessee shall not be in default under this
Agreement, be apportioned between Lessee and Lessor as of the expiration of the
Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Leased Premises, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Leased Premises nor any part thereof or interest therein nor
any such rents or other sums would be in any danger of being sold, forfeited,
lost or interfered with, and (iii) Lessee shall have furnished such security, if
any, as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Leased Premises or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
-9-
<PAGE>
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Building against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Building and, in
any event, in an amount sufficient to prevent Lessor or Lessee from becoming a
co-insurer of any partial loss under the applicable policies, which shall be
written on a replacement cost basis; (iii) appropriate workers' compensation or
other insurance against liability arising from
-10-
<PAGE>
claims of workers in respect of and during the period of any work on or about
the Real Property; and (iv) insurance against such other hazards and in such
amounts as is customarily carried by owners and operators of similar properties,
and as Lessor may reasonably require for its protection. Lessee shall comply
with such other requirements as Lessor, or any mortgagee, may from time to time
reasonably request for the protection by insurance of their respective
interests. The policy or policies of insurance maintained by Lessee pursuant to
this Paragraph shall be of a company or companies authorized to do business in
Oregon and a certificate thereof shall be delivered to Lessor, together with
evidence of the payment of the premiums therefor, not less than fifteen (15)
days prior to the commencement of the Term hereof or of the date when Lessee
shall enter upon the Leased Premises, whichever occurs sooner. At least fifteen
(15) days prior to the expiration or termination date of any policy, Lessee
shall deliver a certificate of a renewal or replacement policy with proof of the
payment of the premium therefor. Any such insurance required by this Paragraph
may, at Lessee' s option, be provided through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or
-11-
<PAGE>
resulting from in whole or any material part, (i) any breach of this Agreement
by Lessee, (ii) any negligent or intentional act or omission of Lessee, its
employees, agents, invitees or contractors, whether in, on, about or with
respect to the Leased Premises or otherwise, (iii) the use by Lessee of any part
of the Leased Premises, (iv) any work undertaken by or at the request of Lessee
on or about the Leased Premises, (v) any other activity undertaken by or at the
request of Lessee pursuant to or in connection with this Agreement, or (vi) the
presence of any individuals on the Leased Premises as a result of Lessee' s
request or this Agreement; provided, however, that Lessee shall not be required
to indemnify Lessor for any damages, injury, loss or expense arising out of
Lessor's or its agents', employees', invitees' or contractors' negligent acts
or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor' s expense. Lessee shall not enter into any settlement
-12-
<PAGE>
of any claim without the consent of Lessor, which consent shall not be
unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee' s or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to
-13-
<PAGE>
which the foregoing indemnity may apply. Lessee may assume, or require that such
defense be assumed, by Lessee and counsel selected by Lessee, at the cost and
expense of Lessor if Lessee is for any reason dissatisfied with the defense by
Lessor, or believes that its interests would be better served thereby. In any
case where Lessor is defending any such claim, Lessee may participate in the
defense thereof by counsel selected by it, but at Lessee's expense. Lessor shall
not enter into any settlement of any claim without the consent of Lessee, which
consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize
or permit any insurer of Lessor or Lessee to be subrogated to any right of
Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases
the other to the extent of its insurance coverage for any loss or damage caused
by fire or any of the extended coverage casualties, even if such fire or other
casualty shall be brought about by the fault or negligence of the other party or
persons for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor
is a party.
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<PAGE>
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
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<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending monies in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
-16-
<PAGE>
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall
be an actual condemnation or foreclosure and taking of all of the Leased
Premises, or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
-17-
<PAGE>
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
Lessor represents and warrants its equipment and property at the Leased Premises
and the operation thereof do not and will not exceed Acceptable Radio Frequency
Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and
-18-
<PAGE>
validly authorized by all, necessary actions on the part of Lessee (none of
which actions have been modified or rescinded and all of which actions are in
full force and effect). This Agreement constitutes a valid and binding
agreement and obligation of Lessee, enforceable in accordance with its terms.
(i) In case of any material damage to or destruction of the Leased
Premises or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the Building
or any parts thereof, Lessee, whether or not the insurance proceeds, if any, on
account of such damage or destruction shall be sufficient for the purpose, at
its sole expense, shall promptly commence and complete the restoration,
replacement or rebuilding of the Building as nearly as possible to its value,
condition and character immediately prior to such damage or destruction.
(j) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may
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<PAGE>
be relied upon by any prospective purchaser or mortgagee of the Real Property or
any part thereof.
(k) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee' s interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the
part of Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period
prior to declaring such failure to pay an event of default; or
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<PAGE>
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than
thirty (30) days after notice by Lessor, provided, however, that if
the nature of Lessee's default is such that more than thirty (30)
days is required for its cure, then Lessee shall not be deemed to be
in default if Lessee has commenced such cure within the thirty (30)
day period, demonstrates to Lessor's reasonable satisfaction that
such default is curable and thereafter diligently prosecutes such
cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its business or assets on
the ground of its insolvency, or has a trustee appointed for it after
a petition has been filed for Lessee's reorganization under the
Bankruptcy Act of the United States, or any future law of the United
States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest
hereunder shall be levied upon or attached, which levy or attachment
shall not be removed within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end,
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<PAGE>
unless such default shall be cured within said period, or, if the default is
such that more than thirty (30) days is required for its cure, unless Lessee has
commenced such cure within said period. If such notice is given, the Agreement
shall expire on the day so specified as fully and completely as if that day were
the day herein originally fixed for such expiration, and Lessee shall then quit
and surrender the Leased Premises to Lessor, but Lessee shall remain liable for
the payment of rent during the full period which would otherwise constitute the
balance of the Term of this Agreement; and without prejudice to any other right
or remedy which it may have hereunder or by law, and notwithstanding any waiver
of any prior breach of condition or event of default hereunder, Lessor may
re-enter the Leased Premises either by reasonable force or otherwise, or
dispossess Lessee, any legal representative of Lessee or other occupant of the
Leased Premises by appropriate suit, action or proceedings and remove its
effects and hold the Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction
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<PAGE>
that such default is curable and thereafter diligently prosecutes such cure to
completion.
(d) If an event of default on the part of Lessor shall occur at any time,
Lessee, at its election, may give Lessor a notice of termination specifying a
day not less than thirty (30) days thereafter on which the Term of this
Agreement shall end, unless such default shall be cured within said period, or,
if the default is such that more than thirty (30) days is required for its cure,
unless Lessor has commenced such cure within said period. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the Leased
Premises without the prior written consent of the Lessor, which consent shall
not be unreasonably withheld. Notwithstanding any assignment or sublease, Lessee
shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in respect
to any Mortgages and Security Agreements
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<PAGE>
placed or hereafter to be placed by Lessor upon the Leased Premises. The
recording of such Mortgages and Security Agreements shall have preference and
precedence and be superior and prior in lien to this Agreement, irrespective of
the date of recording, and Lessee agrees to execute any instruments, without
cost, which may be deemed necessary or desirable to further effect the
subordination of this Agreement. Lessor shall make a reasonable effort to
obtain from any mortgagees or lenders holding an interest in the nature of a
mortgage in the Leased Premises an agreement that the mortgagee or lender shall
not disturb Lessee's quiet possession in the event of foreclosure. If any
proceedings are brought for foreclosure, or in the event of the exercise of the
power of sale under any mortgage or deed of trust made by the Lessor encumbering
the Leased Premises, Lessee shall attorn to the purchaser upon any such
foreclosure or sale and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the
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<PAGE>
interruption of or failure of any services, beyond the control of Lessor, to be
supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter the
Leased Premises to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Leased Premises to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Leased Premises shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may assign,
in whole or in part, Lessor's interest in this Lease and (b) may sell all or
part of the Real Property. In the event of any sale or exchange of the Leased
Premises by Lessor and assignment by Lessor of this Lease, Lessor shall be and
is hereby relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or
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<PAGE>
exchange and assignment, but only upon the condition that, as part of such sale
or exchange, Lessor will cause the grantee to agree in writing to assume to
carry out any and all of the covenants and obligations of Lessor under this
Lease occurring after the consummation of the Lessor's assignment of its
interest in and to this Lease.
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been brought
about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves that other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the Leased
Premises to Lessor in good order and condition, reasonable wear and tear
excepted. Any equipment, fixtures, goods or other property of Lessee not removed
within ten (10) days after any quitting, vacating or abandonment of the Leased
Premises, or upon Lessee's eviction therefrom, shall be considered abandoned,
and the Lessor shall have the right, without notice to Lessee, to sell or
otherwise dispose of same without having to account to Lessee for any part of
the proceeds of such sale.
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<PAGE>
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, as 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Oregon.
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between
the parties. No representative, agent or employee of Lessor has been authorized
to make any representations or promises with reference to the within agreement
or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written.
LESSOR: LESSEE:
SALEM MEDIA OF OREGON, INC.
By:
- ----------------------------- ---------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
- -----------------------------
MONA J. ATSINGER
/s/ Stuart W. Epperson
- -----------------------------
STUART W. EPPERSON
/s/ Nancy K. Epperson
- -----------------------------
NANCY K. EPPERSON
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written.
LESSOR: LESSEE:
SALEM MEDIA OF OREGON, INC.
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ----------------------------- ---------------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Mona J. Atsinger
- -----------------------------
MONA J. ATSINGER
/s/ Stuart W. Epperson
- -----------------------------
STUART W. EPPERSON
/s/ Nancy K. Epperson
- -----------------------------
NANCY K. EPPERSON
-28-
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
SALEM MEDIA OF OREGON, INC.
The undersigned, being all of the members of the Board of Directors of
Salem Media of Oregon, Inc. an Oregon corporation ("Corporation"), do hereby
consent to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and directed to
lease the real estate owned by Edward G. Atsinger III and Mona J. Atsinger
and Stuart W. Epperson and Nancy K. Epperson and located in Portland,
Oregon, pursuant to the terms of a lease in the form of and with the terms
and conditions set forth in the Lease Agreement attached hereto and
incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby directed to
take any and all actions they deem necessary, advisable, convenient or
proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of February, 1992.
/s/ Stuart W. Epperson
---------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
---------------------------
Edward G. Atsinger III
<PAGE>
EXHIBIT 10.05.17.02
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III AND STUART W. EPPERSON
AND
SALEM MEDIA OF OREGON, INC.
February 1, 1992
<PAGE>
AGREEMENT made as of this first day of February, 1992, by and between
EDWARD G. ATSINGER III AND STUART W. EPPERSON ("Lessor"), and SALEM MEDIA OF
OREGON, INC., an Oregon corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns
certain improvements thereon (the "Improvements"), which Land and Improvements
together comprise certain real property located in the County of Washington,
State of Oregon, more particularly described as set forth in Exhibit A, which is
attached hereto and made a part hereof (the "Real Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Land
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting towers and
equipment (the "Installations").
-1-
<PAGE>
Lessee is fully familiar with the physical condition of the Real Property and
has received the same in good order and condition, and agrees that the Real
Property complies in all respects with all requirements of this Agreement.
Lessee shall use the Real Property exclusively for purposes associated with the
operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four
(24) hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
-2-
<PAGE>
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
-3-
<PAGE>
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on February 1,
1992 (the "Commencement Date") and shall expire on January 31, 2002 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
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<PAGE>
(i) During the first year beginning with the Commencement
Date, a base rent of Twelve Thousand Dollars ($12,000.00) per annum,
in equal monthly installments of One Thousand Dollars ($1,000.00)
(the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined)
the monthly rent shall be computed according to subparagraph (ii)
below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the nineteenth (19th) anniversaries of the Commencement Date.
During the one (1) year period beginning with each Adjustment Date,
the monthly rent payable by Lessee shall reflect an adjustment, as
herein provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained
by multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for the calendar month of the Adjustment Date and
the denominator of which shall be the CPI for the month in which the
Commencement Date falls. Notwithstanding the results of the foregoing
calculation, the monthly amount payable by Lessee hereunder shall not
in any event be less than the monthly rental paid during the
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<PAGE>
immediately preceding one (1) year period. In the event that the
Bureau of Labor Statistics shall change the base period for the CPI,
the new index number shall be substituted for the old index numbers
in making the above computation. In the event the Bureau of Labor
Statistics ceases publishing the CPI, or materially changes the
method of its computation, Lessor and Lessee shall accept comparable
statistics on the purchasing power of the consumer dollar as
published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or
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<PAGE>
appropriate repairs, replacements and renewals thereof, whether interior or
exterior, structural or non-structural, ordinary or extraordinary, foreseen or
unforeseen. All repairs, replacements and renewals shall be equal in quality and
class to the original work. Lessee waives any right created by any law now or
hereafter in force to make repairs to the Real Property at Lessor's expense.
Lessee, at its sole expense, shall do or cause others to do every act necessary
or appropriate for the preservation and safety of the Real Property whether or
not the Lessor shall be required by any legal requirement to take such action or
be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at
its sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000.00), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor,
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<PAGE>
and (v) does not interfere with Lessor's rights of use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be
-8-
<PAGE>
paid in installments, Lessee shall be obligated to pay only those installments
as they become due from time to time before any interest, penalty, fine or cost
may be added thereto; and any such amount relating to the fiscal period of the
taxing authority, part of which is included within the Term and a part of which
extends beyond the Term shall, if Lessee shall not be in default under this
Agreement, be apportioned between Lessee and Lessor as of the expiration of the
Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
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<PAGE>
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability
-10-
<PAGE>
arising from claims of workers in respect of and during the period of any work
on or about the Real Property; and (iv) insurance against such other hazards and
in such amounts as is customarily carried by owners and operators of similar
properties, and as Lessor may reasonably require for its protection. Lessee
shall comply with such other requirements as Lessor, or any mortgagee, may from
time to time reasonably request for the protection by insurance of their
respective interests. The policy or policies of insurance maintained by Lessee
pursuant to this Paragraph shall be of a company or companies authorized to do
business in Oregon and a certificate thereof shall be delivered to Lessor,
together with evidence of the payment of the premiums therefor, not less than
fifteen (15) days prior to the commencement of the Term hereof or of the date
when Lessee shall enter upon the Leased Premises, whichever occurs sooner. At
least fifteen (15) days prior to the expiration or termination date of any
policy, Lessee shall deliver a certificate of a renewal or replacement policy
with proof of the payment of the premium therefor. Any such insurance required
by this Paragraph may, at Lessee's option, be provided through a blanket policy
or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal
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<PAGE>
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but
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<PAGE>
at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such
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<PAGE>
approval not to be unreasonably withheld), against any claim to which the
foregoing indemnity may apply. Lessee may assume, or require that such defense
be assumed, by Lessee and counsel selected by Lessee, at the cost and expense of
Lessor if Lessee is for any reason dissatisfied with the defense by Lessor, or
believes that its interests would be better served thereby. In any case where
Lessor is defending any such claim, Lessee may participate in the defense
thereof by counsel selected by it, but at Lessee's expense. Lessor shall not
enter into any settlement of any claim without the consent of Lessee, which
consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor
is a party.
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<PAGE>
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises relating to or arising
out of its ownership, management, use or operation. Lessor shall give to Lessee
prompt notice of institution of any such proceeding or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
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<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending monies in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
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<PAGE>
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall
be an actual condemnation or foreclosure and taking of all of the Leased
Premises, or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
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<PAGE>
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
Lessor represents and warrants its equipment and property at the Leased
Premises and the operation thereof do not and will not exceed Acceptable Radio
Frequency Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and
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<PAGE>
validly authorized by all necessary actions on the part of Lessee (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessee, enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting towers are and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all regulations of the
Federal Aviation Administration ("FAA") and the Federal Communications
Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
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<PAGE>
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(1) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
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<PAGE>
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the
part of Lessee:
(i) The failure of Lessee to pay rent or additional rent,
and continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period
prior to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under
the terms hereof, and continuation of such failure to cure for more
than thirty (30) days after notice by Lessor, provided, however, that
if the nature of Lessee's default is such that more than thirty (30)
days is required for its cure, then Lessee shall not be deemed to be
in default if Lessee has commenced such cure within the thirty (30)
day period, demonstrates to Lessor's reasonable satisfaction that
such default is curable and thereafter diligently prosecutes such
cure to completion; or
(iii) Lessee is finally and without further right of appeal
or review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its business or assets on
the ground of its insolvency, or has a trustee appointed for it after
a petition has been filed for
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Lessee's reorganization under the Bankruptcy Act of the United
States, or any future law of the United States having the same
general purpose, or if Lessee shall make an assignment for the
benefit of its creditors, or if Lessee's interest hereunder shall be
levied upon or attached, which levy or attachment shall not be
removed within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of
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<PAGE>
the Leased Premises by appropriate suit, action or proceeding and remove its
effects and hold the Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
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SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security Agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by the Lessor encumbering the Leased Premises,
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<PAGE>
Lessee shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
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<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting towers, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
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<PAGE>
part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor's assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio tower located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of Oregon.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between
the parties. No representative, agent or employee of Lessor has been authorized
to make any representations or promises with reference to the within agreement
or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
LESSOR: LESSEE:
SALEM MEDIA OF OREGON, INC.
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- ----------------------------- --------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
President
/s/ Stuart W. Epperson
- -----------------------------
STUART W. EPPERSON
-29-
<PAGE>
EXHIBIT "A"
All that real property situated in the County of Washington, State of Oregon, to
wit:
Beginning at the Southwest corner of the Southeast quarter of Section 13,
Township 1 South, Range 1 West of the Willamette Meridian, and running thence
North 1(degree) 21' East 557.2 feet to a pipe set on the South boundary of the
tract conveyed to S.B. and Vivian Lawrence by deed recorded at page 360 of Book
115, Records of Deed for said County; thence with said South boundary,North
85(degrees) 20' East 940 feet to an iron pipe; thence South 1(degree) 21' West
654.2 feet to the South boundary of said Section and thence North 88(degrees)
42' West 935.2 feet to the place of beginning.
<PAGE>
CERTIFICATE OF UNANIMOUS CONSENT
OF
SALEM MEDIA OF OREGON, INC.
The undersigned, being all of the members of the Board of Directors of
Salem Media of Oregon, Inc., an Oregon corporation ("Corporation"), do hereby
consent to and adopt the following resolutions:
RESOLVED that the Corporation is hereby authorized and
directed to sell the real estate owned by it and located in Washington
County, Oregon to Edward G. Atsinger III and Stuart W. Epperson for the
amount of $77,000, such amount to be paid in cash.
RESOLVED that the Corporation is hereby authorized and
directed to lease said real estate from Edward G. Atsinger III and
Stuart W. Epperson pursuant to the terms of a lease in the form of and
with the terms and conditions set forth in the Lease Agreement attached
hereto and incorporated herein by reference; and
RESOLVED that the officers of the Corporation are hereby
directed to take any and all actions they deem necessary, advisable,
convenient or proper to carry out the intent of these resolutions.
IN WITNESS WHEREOF the undersigned have executed this certificate of
unanimous consent as of the 1st day of February, 1992.
/s/ Stuart W. Epperson
-----------------------------------
Stuart W. Epperson
/s/ Edward G. Atsinger III
-----------------------------------
Edward G. Atsinger III
<PAGE>
Exhibit 10.05.18
AGREEMENT
BETWEEN
EDWARD G. ATSINGER III, not individually but solely as Trustee of
the Atsinger Family Trust, AND STUART W. EPPERSON, not
individually but solely as Trustee of the Stuart W. Epperson
Revocable Living Trust
AND
SALEM MEDIA OF PENNSYLVANIA, INC.
January 27, 1993
<PAGE>
AGREEMENT made as of this twenty-seventh day of January, 1993, by and
between EDWARD G. ATSINGER III, not individually but solely as Trustee of the
Atsinger Family Trust, AND STUART W. EPPERSON, not individually but solely as
Trustee of the Stuart W. Epperson Revocable Living Trust ("Lessor"), and SALEM
MEDIA OF PENNSYLVANIA, INC., a Pennsylvania corporation ("Lessee").
WHEREAS, Lessor owns certain land (the "Land") and certain improvements
thereon (the "Improvements"), which Land and Improvements together comprise
certain real property located in the Township of Reserve, County of Allegheny
and Commonwealth of Pennsylvania, more particularly described as set forth in
Exhibit A, which is attached hereto and made a part hereof (the "Real
Property"); and
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants herein
contained, hereby leases to Lessee the Leased Premises.
-1-
<PAGE>
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its broadcasting towers and
equipment (the "Installations"). Lessee is fully familiar with the physical
condition of the Real Property and has received the same in good order and
condition, and agrees that the Real Property complies in all respects with all
requirements of this Agreement. Lessee shall use the Real Property exclusively
for purposes associated with the operation of a radio station.
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
-2-
<PAGE>
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall each
provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by any
dangerous, toxic, noxious or offensive trade or business, or for any unlawful
purpose.
(h) Lessee shall not directly or indirectly create or permit to be created
or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as
permitted by Paragraph 3(d), below, and (iv) liens of mechanics,
-3-
<PAGE>
materialmen, suppliers or vendors, or rights thereto, incurred in the ordinary
course of business for sums which under the terms of the related contracts are
not at the time due, provided that adequate provision for the payment thereof
shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on January 27, 1993
(the "Commencement Date") and shall expire on January 31, 2003 (the "Expiration
Date"). If the Term has been extended as provided in subparagraph (b), below,
the Expiration Date shall be the last day of the Term as so extended.
(b) Lessee shall have the option, if Lessee is not at the time in default
under this Agreement, to extend the Term of this Agreement for up to two (2)
successive periods of five (5) years each (the "Extended Terms"), and, except as
set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date through
the Expiration Date, or such earlier date as this Agreement is terminated as
provided herein, at 4880
-4-
<PAGE>
Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn: Accounting, or to such
other person or place as Lessor may designate from time to time by notice to
Lessee, in the following amounts and in the following manner:
(i) During the first year beginning with the Commencement Date, a
base rent of Twenty-Four Thousand Dollars ($24,000) per annum, in
equal monthly installments of Two Thousand Dollars ($2,000.00) (the
"Base Rent") in advance on the first day of each month; and thereafter
on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st) through
the nineteenth (19th) anniversaries of the Commencement Date. During
the one (1) year period beginning with each Adjustment Date, the
monthly rent payable by Lessee shall reflect an adjustment, as herein
provided, for the change, if any, from the month in which the
Commencement Date falls, in the Consumer Price Index for All Urban
Consumers, All Items, U.S. Cities Average [Base Year 1982/84=100]
("CPI") published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with
the Adjustment Date, the monthly rent shall be the product obtained by
multiplying the Base Rent times a fraction, the numerator of which
shall be the CPI for the calendar month of the
-5-
<PAGE>
Adjustment Date and the denominator of which shall be the CPI for the
month in which the Commencement Date falls. Notwithstanding the
results of the foregoing calculation, the monthly amount payable by
Lessee hereunder shall not in any event be less than the monthly
rental paid during the immediately preceding one (1) year period. In
the event that the Bureau of Labor Statistics shall change the base
period for the CPI, the new index number shall be substituted for the
old index numbers in making the above computation. In the event the
Bureau of Labor Statistics ceases publishing the CPI, or materially
changes the method of its computation, Lessor and Lessee shall accept
comparable statistics on the purchasing power of the consumer dollar
as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then
chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment, diminution or
reduction of rent or any other sum payable by Lessee hereunder.
-6-
<PAGE>
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its sole
expense, may make reasonable alterations of and additions to the Improvements or
any part thereof, provided that any alteration or addition (i) shall not change
the general character of the Improvements, or reduce the fair market value
thereof below their value immediately before such alteration or addition, or
impair their usefulness, (ii) is effected with due diligence, in a good and
workmanlike manner and in compliance with all legal requirements and insurance
requirements, (iii) is promptly and fully paid for by Lessee, (iv) is made, in
case the
-7-
<PAGE>
estimated cost of such alteration or addition exceeds Ten Thousand Dollars
($10,000), under the supervision of an architect or engineer satisfactory to
Lessor and in accordance with plans, specifications and cost estimates approved
by Lessor, and (v) does not interfere with Lessor's rights of use under this
Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee shall
pay all taxes, assessments (including without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect
-8-
<PAGE>
thereof. Lessee shall furnish to Lessor for inspection within thirty (30) days
after written request, official receipts of the appropriate taxing authority or
other proof satisfactory to Lessor evidencing such payment. If by law any such
amount may be paid in installments, Lessee shall be obligated to pay only those
installments as they become due from time to time before any interest, penalty,
fine or cost may be added thereto; and any such amount relating to the fiscal
period of the taxing authority, part of which is included within the Term and a
part of which extends beyond the Term shall, if Lessee shall not be in default
under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written notice to
Lessor, by appropriate legal proceedings conducted in good faith and with due
diligence, the amount or validity or application, in whole or in part, of any
tax, lien or other imposition on the Real Property, provided that (i) Lessee
shall first make all contested payments, under protest if it desires, (ii)
neither the Real Property nor any part thereof or interest therein nor any such
rents or other sums would be in any danger of being sold, forfeited, lost or
interfered with, and (iii) Lessee shall have furnished such security, if any, as
may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection
-9-
<PAGE>
with the Real Property or any part thereof, will comply with all contracts
relating to any such services, and will do all other things required for the
maintenance and continuance of all such services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an
-10-
<PAGE>
amount sufficient to prevent Lessor or Lessee from becoming a co-insurer of any
partial loss under the applicable policies, which shall be written on a
replacement cost basis; (iii) appropriate workers' compensation or other
insurance against liability arising from claims of workers in respect of and
during the period of any work on or about the Real Property; and (iv) insurance
against such other hazards and in such amounts as is customarily carried by
owners and operators of similar properties, and as Lessor may reasonably require
for its protection. Lessee shall comply with such other requirements as Lessor,
or any mortgagee, may from time to time reasonably request for the protection by
insurance of their respective interests. The policy or policies of insurance
maintained by Lessee pursuant to this Paragraph shall be of a company or
companies authorized to do business in Pennsylvania and a certificate thereof
shall be delivered to Lessor, together with evidence of the payment of the
premiums therefor, not less than fifteen (15) days prior to the commencement of
the Term hereof or of the date when Lessee shall enter upon the Leased Premises,
whichever occurs sooner. At least fifteen (15) days prior to the expiration or
termination date of any policy, Lessee shall deliver a certificate of a renewal
or replacement policy with proof of the payment of the premium therefor. Any
such insurance required by this Paragraph may, at Lessee's option, be provided
through a blanket policy or policies.
-11-
<PAGE>
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessor, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessee, (ii) any
negligent or intentional act or omission of Lessee, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor s or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel
-12-
<PAGE>
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and against
all claims, actions, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) incurred by or asserted against Lessee, whether
during or after the Term of this Agreement, including by reason of personal
injury, loss of life, or damage to property, caused by or resulting from in
whole or any material part, (i) any breach of this Agreement by Lessor, (ii) any
negligent or intentional act or omission of Lessor, its employees, agents,
invitees or contractors, whether in, on, about or with respect to the Leased
Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss
-13-
<PAGE>
or expense arising out of Lessee's or its agents', employees', invitees' or
contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld) ,
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
-14-
<PAGE>
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no violations of
any federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to the Leased Premises, and as of the date of this
Agreement, no notice of any kind relating thereto (which would adversely affect
the transactions contemplated by this Agreement) has been issued by public
authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use the
Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action, suit or
proceeding pending or threatened against or affecting the Leased Premises or any
portion thereof and Lessor has not received notice written or otherwise of any
litigation affecting or concerning the Leased Premises
-15-
<PAGE>
relating to or arising out of its ownership, management, use or operation.
Lessor shall give to Lessee prompt notice of institution of any such proceeding
or litigation.
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or to the
maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby, have been duly and
validly authorized by all necessary actions on the part of Lessor (none of which
actions have been modified or rescinded and all of which actions are in full
force and effect). This Agreement constitutes a valid and binding agreement and
obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns good
and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
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<PAGE>
foregoing representation and warranty in entering into this
Agreement and in expending monies in connection herewith. Lessor
shall not encumber or permit any encumbrances, liens or restrictions
on Lessee's Installations, except with the prior written approval of
Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall
be an actual condemnation or foreclosure and taking of all of the Leased
Premises, or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the
-17-
<PAGE>
terms of this Agreement until Lessee finds and begins to utilize new facilities
or until prevented by the condemning or foreclosing authority from utilizing the
Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
Lessor represents and warrants its equipment and property at the Leased
Premises and the operation thereof do not and will not exceed Acceptable Radio
Frequency Radiation Standards.
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased
-18-
<PAGE>
Premises or to any adjacent street or other public area or the maintenance,
operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This
Agreement constitutes a valid and binding agreement and obligation of Lessee,
enforceable in accordance with its terms.
(i) Lessee warrants unto Lessor that its broadcasting towers are and
will remain in material compliance at all times during the Term and any
Extension Term with all federal, state, county, municipal, local, administrative
and other governmental laws, statutes, ordinances, codes, rules, regulations and
orders pertaining thereto, including, without limitation, to the extent
applicable, all zoning laws and building codes and all regulations of the
Federal Aviation Administration ("FAA") and the Federal Communications
Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be
-19-
<PAGE>
sufficient for the purpose, at its sole expense, shall promptly commence and
complete the restoration, replacement or rebuilding of the Improvements as
nearly as possible to their value, condition and character immediately prior to
such damage or destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any
prospective
-20-
<PAGE>
purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the
part of Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after
Lessee's receipt of written notice thereof from Lessor; provided,
however, that Lessor shall not be required to provide such written
notice to Lessee more than twice in any twelve (12) month period
prior to declaring such failure to pay an event of default; or
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than
thirty (30) days after notice by Lessor, provided, however, that if
the nature of Lessee's default is such that more than thirty (30)
days is required for its cure, then Lessee shall not be deemed to be
in default if Lessee has commenced such cure within the thirty (30)
day period, demonstrates to Lessor's reasonable satisfaction that
such default is curable and thereafter diligently prosecutes such
cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver
appointed for all or substantially all of its
-21-
<PAGE>
business or assets on the ground of its insolvency, or has a trustee
appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any
future law of the United States having the same general purpose, or
if Lessee shall make an assignment for the benefit of its creditors,
or if Lessee's interest hereunder shall be levied upon or attached,
which levy or attachment shall not be removed within twenty (20) days
from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased
-22-
<PAGE>
Premises either by reasonable force or otherwise, or dispossess Lessee, any
legal representative of Lessee or other occupant of the Leased Premises by
appropriate suit, action or proceeding and remove its effects and hold the
Leased Premises as if this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and
-23-
<PAGE>
Lessee shall not be liable for payment of rent for any period after such
expiration.
SECTION 7
---------
ASSIGNNENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any Mortgages and Security Agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such Mortgages and
Security Agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed
-24-
<PAGE>
of trust made by the Lessor encumbering the Leased Premises, Lessee shall attorn
to the purchaser upon any such foreclosure or sale and recognize such purchaser
as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement
-25-
<PAGE>
of rent, provided entrance to the Real Property shall not be denied Lessee.
SECTION 11
----------
USE OF REAL PROPERTY BY LESSOR
------------------------------
At all times during the Term of this Agreement Lessor shall have the
exclusive right to place and operate, or to permit another tenant to place and
operate, broadcasting equipment on the Leased Premises and on the Lessee's
broadcasting towers, or to use the Real Property for any other lawful purpose,
provided, such actions do not interfere with Lessee's operations. Lessor shall
have no obligation to pay rent for the uses described above. Lessor shall hold
Lessee harmless from and defend Lessee against any and all claims or liability
arising out of or in any way connected to Lessor's use or occupancy of the Real
Property.
SECTION 12
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as
-26-
<PAGE>
part of such sale or exchange, Lessor will cause the grantee to agree in writing
to assume to carry out any and all of the covenants and obligations of Lessor
under this Lease occurring after the consummation of Lessor's assignment of its
interest in and to this Lease.
SECTION 13
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 14
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
-27-
<PAGE>
SECTION 15
-----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 16
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the Commonwealth of Pennsylvania.
SECTION 17
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between
the parties. No representative, agent or employee of Lessor has been authorized
to make any representations or promises with reference to the within agreement
or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
-28-
<PAGE>
IN WITNESS WHEREOF, .the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE:
SALEM MEDIA CORPORATION
/s/ Edward G. Atsinger III By: /s/ Edward G. Atsinger III
- --------------------------- -----------------------------
EDWARD G. ATSINGER III EDWARD G. ATSINGER III
Trustee President
Atsinger Family Trust
/s/ Stuart W. Epperson
- ---------------------------
STUART W. EPPERSON
TRUSTEE
Stuart W. Epperson
Revocable Living Trust
-29-
<PAGE>
Exhibit "A"
ALL that certain lot or piece of ground situate in the Township of Reserve,
County of Allegheny and Commonwealth of Pennsylvania, bounded and described as
follows, to-wit:
BEGINNING at the point formed by the intersection of the Southerly line of land
now or formerly of William H. Schneider and the Westerly line of Mount Troy Road
(33 feet wide), formerly known as Troy Hill Road; thence along said Westerly
line of Mount Troy Road, South 27 degrees 19' East, a distance of 247.90 feet to
an iron pin; thence by a line in said Mount Troy Road, South 41 degrees 38'
East, a distance of 161.00 feet to a point; thence by a line in said Mount Troy
Road, South 52 East, a distance of 21.10 feet to an existing nail; thence along
the Northwesterly line of land now or formerly of Ridgelawn Cemetery Company,
South 57 degrees 18' West, a distance of 1032.695 feet to an iron pin; thence
along the Easterly line of Lots Nos. 52, 53, 54, 55, 56, 57, 58, 59, 60 and 61
in the Feldman Plan of Lots (recorded in Plan Book Volume 24, pages 102 and
103), land now or formerly of Alice Melensky, and land now or formerly of Thelma
M. Filmore, North 0 degrees 41' 36" West, a distance of 924.829 feet to an iron
pin; and thence along the Southerly line of Lots Nos. 20 and 21 in the Sherling
Manor Plan (recorded in Plan Book Volume 42, page 29) and the aforesaid land now
or formerly of William H. Schneider, South 88 degrees 49' East, a distance of
643.00 feet to a nail at the place of beginning.
<PAGE>
EXHIBIT 10.05.19
ASSIGNMENT AND ASSUMPTION
-------------------------
This Assignment and Assumption is made and entered into this 5th day of
August, 1994 by and among COMMUNICOM CO. OF AMERICA, L.P., a Colorado limited
partnership ("Assignor") and SALEM MEDIA OF TEXAS, a Texas corporation
("Assignee").
WITNESSETH:
----------
WHEREAS, under the Purchase Agreement dated as of March 30, 1994 (the
"Agreement"), between Assignor and Assignee, Assignor is obligated to assign to
Assignee all of its right, title and interest in and to certain contracts and
obligations, and Assignee is obligated to assume such contracts and obligations.
NOW THEREFORE, for valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Assignor hereby assigns, sells, transfers, sets over and delivers,
as of August 6, 1994, unto Assignee all of Assignor's right, title and interest
in and to the agreements set forth on Schedule I attached hereto and
incorporated herein by reference, and Assignee hereby accepts such assignment.
2. Assignee, as of August 6, 1994, hereby assumes and agrees to
perform, without duplication, the liabilities and obligations arising under the
agreements assigned to Assignee under Paragraph I above to the extent such
liabilities and obligations arise on and after August 6, 1994. Except as
specifically set forth herein, Assignee shall not assume or in any manner be
liable for any duties, responsibilities, obligations or liabilities of Assignor
of any kind or nature whether express or implied, known or unknown, contingent
or absolute.
3. All representations and warranties under the Agreement and relating
to the agreements and obligations assigned and assumed hereunder shall survive,
for the time specified in the Agreement, the execution and delivery of this
Assignment and Assumption.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Assignment and Assumption as of the date first above written.
COMMUNICOM CO. OF AMERICA, L.P.
By: CCA, INC., General Partner
By: /s/ Richard L. Kylberg
---------------------------------
Richard L. Kylberg
President
SALEM MEDIA OF TEXAS, INC.
By /s/ Eric H. Halvorson
---------------------------------
Eric H. Halvorson
Vice President
<PAGE>
SCHEDULE 1
KSLR Contracts
- --------------
l. Agreement between Brad Burkhart Christian Media, Inc. and Seller dated
January 12, 1993.
2. Service Agreement between CellularOne and Seller dated September 30, 1993.
3. Agreement between Metro Traffic Control, Inc. and Seller dated November 9,
1993.
4. License Agreement between Nordic Software, Inc. and Seller dated March 14,
1994.
5. Agreement between USA Radio Network and Seller dated May 1, 1993.
6. All cash and barter contracts for sale of advertising and programming.
7. Lease between E. Atsinger III and S. Epperson and Seller dated March 1, 1983.
<PAGE>
[Tower Lease]
ASSIGNMENT OF LEASE AND
ASSUMPTION OF OBLIGATIONS
THIS ASSIGNMENT dated January 7, 1988 is between SALEM MEDIA OF TEXAS,
INC., a Texas corporation, with an address of 2310 Ponderosa Drive, Suite 29,
Camarillo, CA 93010 ("Assignor") and AMERICAN COMMUNICOM CORP. OF TEXAS, a
Colorado corporation, with an address of Plaza 6000 Office Park, 6000 East Evans
Avenue, Building One, Suite 400, Denver, Colorado 80222 ("Assignee").
For good and valuable consideration and pursuant to Section 11(a) of
the Asset Purchase Agreement dated October 16, 1987 among Assignor, Assignee and
the individuals named therein, Assignor hereby conveys, grants, transfers and
assigns to Assignee, its successors and assigns, all of the right, title and
interest of such Assignor in, to and under the Lease dated March 1, 1983 between
Edward G. Atsinger III and Stuart W. Epperson, co-trustees, as landlord, and
Assignor, as tenant, as amended to date, and attached hereto as Exhibit A and
incorporated herein by this reference (the "Lease").
TO HAVE AND TO HOLD the same unto Assignee, its successors and
assigns, forever; and Assignor, for itself, its successors and assigns,
covenants and agrees with Buyer, its successors and assigns, that Assignor will
for three years from the date hereof, WARRANT AND DEFEND the same against all
persons whomsoever.
Assignee, for itself, its successors and assigns, hereby accepts this
Assignment, and agrees to assume as of the date hereof all of the tenant's
obligations under the Lease accruing from and after the date hereof, and agrees
to indemnify, defend and hold harmless Assignor, its successors and assigns,
from and against any damage, liability, loss, expense or deficiency which such
Assignor may pay or suffer by reason of any claims or liabilities arising out of
the obligations assumed by Assignee pursuant to this Assignment.
Assignor, for itself, its successors and assigns hereby represents and
warrants to Assignee, its successors and assigns, that: (i) Assignor is the
lawful owner of and has good, valid and marketable title as lessee to the
leasehold interest created by the Lease and to the interest above assigned in,
to and under the Lease; (ii) Assignor's right, title and interest in, to and
under the Lease is free and clear from all liens, encumbrances or adverse claims
of any nature; (iii) the Lease is in full force and effect and
<PAGE>
Assignor is not in default thereunder and no event has occurred that with notice
or the passage of time would constitute a default thereunder; (iv) Assignor has
good right, full power and lawful authority to assign and transfer all of its
right, title and interest in, to and under the Lease; (v) the Lease constitutes
the legal, valid and binding obligations of the parties thereto, enforceable
against such parties in accordance with their respective terms; (vi) there is no
liability or obligation of Assignor as tenant with respect to the Lease which,
pursuant to the terms thereof, is required to be paid or otherwise performed, or
is required to have been paid or otherwise performed, as of the date hereof,
which has not been paid or otherwise performed in full; (vii) Assignor has
obtained each consent, approval and authorization and filed each document
required to be obtained by Assignor from or filed by Assignor with any person or
entity with respect to such assignment and transfer; and (viii) immediately
after the assignment and transfer hereunder, Assignee will have good, valid and
marketable title to the leasehold interest created by the Lease and Assignee's
right, title and interest in, to and under the Lease will be free and clear of
all liens, encumbrances or adverse claims of any nature.
Assignor hereby assigns and transfers to Assignee, its successors and
assigns, to the extent held by Assignor, all warranties of others relating to
the Lease conveyed, transferred and assigned hereunder.
EXECUTED by the parties on the day and year first above written.
ASSIGNOR:
SALEM MEDIA OF TEXAS, INC., a
Texas corporation
By: /s/ [SIGNATURE APPEAR HERE]
---------------------------
Its: President
---------------------------
-2-
<PAGE>
ASSIGNEE:
AMERICAN COMMUNICOM CORP. OF
TEXAS, a Colorado corporation
By: /s/ John F. Mueller, Jr.
--------------------------------
John F. Mueller, Jr., Vice
President
Its: V.P. & C.O.O.
-------------------------------
THE STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
Before me Robert N. Lepine on this day personally appeared Edward G.
Atsinger III, the President of SALEM MEDIA OF TEXAS, INC., known to me to be the
person whose name is subscribed to the foregoing instrument and acknowledged to
me that he executed the same for the purpose and consideration therein
expressed.
[Seal] Given under my hand and seal of office this 7th day of January A.D.,
1988.
/s/ Robert N. Lepine
-------------------------------
Notary Public
My commission expires 9-30-90 .
------------------------------
THE STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
Before me Robert N. Lepine on this day personally appeared John F.
Mueller, Jr., the Vice President of AMERICAN COMMUNICOM CORP. OF TEXAS, known to
me to be the person whose name is subscribed to the foregoing instrument and
-3-
<PAGE>
acknowledged to me that he executed the same for the purpose and consideration
therein expressed.
[Seal] Given under my hand and seal of office this 7th day of January A.D.,
1988.
[SEAL APPEARS HERE]
/s/ Robert N. Lepine
-------------------------------
Notary Public
My commission expires 9/30/90
---------------------------------
-4-
<PAGE>
EXHIBIT the to
Assignment of Lease and
Assumption of Obligations
[attach copy of lease, the amendment
dated October 1, 1987 and
the new amendment dated
of even date with closing]
<PAGE>
Exhibit A
LEASE
-----
THIS LEASE is made and entered into as of the 1st day of March, 1983, by
and between EDWARD G. ATSINGER III and STUART W. EPPERSON, not individually but
solely as co-Trustees of the Epperson-Atsinger 1983 Family Trust, hereinafter
referred to as "Landlord", and SALEM MEDIA OF TEXAS, INC., a Texas corporation,
hereinafter referred to as "Tenant", with reference to the following recitals of
facts:
RECITALS:
---------
A. Landlord purchased the property on February 22, 1983.
B. The parties desire to enter into this Lease which shall contain all of
the rights and obligations of the parties to each other with respect to the
subject property.
NOW, THEREFORE, in consideration of the following covenants, agreements,
conditions and representations, the parties agree as follows:
1. Property Leased. Landlord hereby leases to Tenant and Tenant hereby
---------------
rents from Landlord on the terms, covenants and conditions hereinafter set
forth, those certain premises and appurtenances located at 7025 Gonzales Road,
San Antonio, Bexar County, Texas, being an approximately thirty-five and
one-half (35.5) acre tract of land and more fully described on Exhibit A
attached hereto (the "premises"). Tenant acknowledges that portions of the
property are unimproved, and that Landlord shall have the right to lease such
portions of the property for any lawful purpose and, if Landlord so desires, to
subdivide portions of
<PAGE>
the property and sell such portions, as long as Landlord's other leasing
activities do not interfere with the operation of Tenant's radio station,
transmission equipment and the directional array ground system.
Landlord agrees to indemnify Tenant for any damage or injury caused by
other tenants to the radio station, transmitting equipment and directional array
ground system and to promptly correct the same upon demand.
2. Term. The term of this Lease is twenty-four (24) years, commencing
----
on March 1, 1983, and terminating on February 28, 2007.
3. Use. The premises shall be used to operate a radio station,
---
including but not limited to, use as a radio studio, operation of a directional
antenna system including a transmitter for use by the radio station, and for
such uses as are incidental or customarily related thereto. The premises shall
not be used for any other purposes without Tenant first obtaining the written
consent of Landlord thereto, which consent the Landlord agrees shall not be
unreasonably or arbitrarily withheld or delayed.
4. Rent. Tenant shall pay rent to Landlord during the term of this
----
Lease as follows:
4.1 During the period March 1, 1983 through February 28, 1988, the
amount of One Thousand Seven Hundred Fifty Dollars ($1,750.00) per month (the
"Base Rent").
4.2 During the period March 1, 1988 through February 28, 1993, a monthly
amount equal to the greater of (i) Two Thousand Twelve and 50/100 Dollars
($2,012.50) or (ii) the Base Rent multiplied by a fraction, the numerator of
which shall be the cost of living index figure (as hereinafter defined) for
February, 1988, and the denominator of which
-2-
<PAGE>
shall be the cost of living index figure for February, 1983 (the "Base Index").
4.3 During the period March 1, 1993, through February 28, 1998, a monthly
amount equal to the greater of (i) Two Thousand Two Hundred Seventy-five Dollars
($2,275.00) or (ii) the Base Rent multiplied by a fraction, the numerator of
which shall be the cost of living index figure for February, 1993, and the
denominator of which shall be the Base Index.
4.4 During the period March 1, 1998, through February 28, 2003, a
monthly amount equal to the greater of (i) Two Thousand Five Hundred
Thirty-seven and 50/100 Dollars ($2,537.50), or (ii) the Base Rent multiplied by
a fraction, the numerator of which shall be the cost of living index figure for
February, 1998, and the denominator of which shall be the Base Index.
4.5 During the period March 1, 2003, through February 28, 2007, a monthly
amount equal to the greater of (i) Two Thousand Eight Hundred Dollars
($2,800.00) or (ii) the Base Rent multiplied by a fraction, the numerator of
which shall be the cost of living index figure for February, 2003, and the
denominator of which shall be the Base Index.
4.6 For purposes of this Lease, the "cost of living index figure" shall
be the index number in the column for "all items" in the table entitled
"Consumer Price Index-U.S. Cities Average," published by the Bureau of Labor
Statistics of the United Stated Department of Labor in the "Monthly Labor
Review." In the event that the Bureau of Labor Statistics shall change the base
period (1967 equals 100), the new index number shall be substituted for the old
index numbers in making the above computation. In the event the Bureau of Labor
Statistics ceases
-3-
<PAGE>
publishing the Consumer Price Index, or materially changes the method of its
computation, Landlord and Tenant shall accept comparable statistics on the
purchasing power of the consumer dollar as published at the time of said
discontinuation of change by a responsible financial periodical of recognized
authority to be then chosen by Landlord subject to reasonable consent of Tenant.
4.7 Rent shall be payable in lawful money of the United States to Landlord
at 2310 Ponderosa Drive, Suite 29, Camarillo, California 93010, on the first day
of each month.
5. Taxes and Assessments. Landlord shall pay all real property taxes,
---------------------
governmental special assessments and land benefit charges levied against the
real property leased to Tenant herein. Tenant shall pay before delinquency all
general and special taxes, licenses, fees, charges or taxes imposed by any
governmental entity by reason of the Lease, Tenant's occupation or use of the
leased premises or Tenant's activities thereon. In addition, Tenant shall pay
all taxes levied against the personal property of Tenant or improvements
installed by Tenant becoming a part of the real property of every description,
maintained on and used by Tenant in connection with the leased premises. All of
such charges, costs, and expenses shall constitute additional rent, and upon the
failure of Tenant to pay any of such costs, charges or expenses, Landlord shall
have the same rights and remedies as otherwise provided in this Lease for the
failure of Tenant to pay rent.
6. Improvements. The term "improvements" as used herein means any
------------
improvement, addition or change to the leased premises, any alteration of the
leased premises, or anything placed, installed or constructed in, on or upon the
leased premises, whether or not
-4-
<PAGE>
characterized by law as a fixture, but does not include Tenant's personal
property.
Tenant shall not make, or permit to be made any structural improvements or
alterations, in, on, or to the leased premises or any part thereof without the
prior written consent of Landlord. Any improvements made in, on, or to the
leased premises shall be at the sole expense of Tenant and any additions to or
alterations of said premises shall become at once a part of the realty and
belong to Landlord. Tenant shall keep the premises and the property in which
they are situated free from any liens arising out of any work performed on the
leased premises, by or on behalf of Tenant, for material furnished to the leased
premises, or for obligations incurred by Tenant. In making any alteration that
Tenant has a right to make, Tenant shall not commence such improvement or
alteration until three (3) days after Landlord has received notice from Tenant
stating the date of commencement of the improvement or alteration so that
Landlord can post and record any appropriate notice of nonresponsibility. All
alterations shall be completed with due diligence.
If any installation, alteration or improvement is required by law by any
governmental authority, Tenant shall at Tenant's cost and expense promptly make
such installation, alteration or improvement.
Provided Tenant is not in default or in breach of this Lease beyond the
expiration of any applicable grace periods, Tenant may during the term of this
Lease, and shall immediately upon the expiration of this Lease, remove from the
leased premises all of Tenant's personal property and trade fixtures and such
other property which Landlord may during the term of this Lease agree or
acknowledge in writing are improvements belonging to Tenant.
-5-
<PAGE>
7. Maintenance and Upkeep. By entry hereunder, Tenant accepts the
----------------------
premises as being in good and sanitary order, condition and repair. Tenant shall
at Tenant's own cost and expense keep the entire property, including the outside
areas and landscaping, in a clean, neat, sanitary and sightly condition at all
times and free from dirt, debris, accumulation of waste and fire hazards. Tenant
shall upon the expiration or sooner termination of this Lease surrender to
Landlord the leased premises and appurtenances thereto in a good, sanitary
order, condition and repair, ordinary wear and tear excepted.
8. Repairs. Tenant shall at its sole cost and expense maintain the
-------
leased premises in good condition and shall make all necessary repairs thereto,
whether or not structural in nature.
9. Indemnification; Liability Insurance. Tenant shall save and hold
------------------------------------
harmless, indemnify and defend Landlord from any damage or liability arising out
of or relating to any death, bodily injury, or property damage resulting from,
or in connection with, the acts of, or the maintenance, use, or occupation of
the leased premises by Tenant, Tenant's agents, servants, employees,
contractors, or patrons. Tenant shall, at Tenant's sole cost and expense, carry
public liability insurance with liability limits of not less than $1,000,000.00
for the injury or death of one person and not less than $2,000,000.00 for the
injury or death of more than one person in any one accident and property damage
insurance in an amount of not less than $300,000.00 liability. Tenant shall not
be responsible for the negligence of the Landlord, or their agents, servants,
employees, contractors, patrons or invitees. All such insurance shall be carried
with insurance companies satisfactory to Landlord. Tenant may provide
certification of insurance under its blanket insurance policies in
-6-
<PAGE>
satisfaction of this requirement. Said insurance shall name Landlord as a
co-insured or an additional insured. Tenant shall furnish, or cause to be
furnished to Landlord, upon request, certificates of insurance from the
insurance carrier stating that such insurance is in full force and effect, that
the premiums thereon have been paid and that the insurance carrier will give
Landlord at least ten (10) days prior written notice of any termination,
cancellation, or modification of such insurance.
10. Fire Insurance. Through the term of this Lease, Tenant shall maintain
--------------
at its sole cost and expense, fire and extended coverage insurance on the
premises and the appurtenances being leased by Tenant, insuring the premises for
not less than ninety percent (90%) of its replacement value. Landlord and Tenant
shall be named as loss payees as their interests shall appear and, on Landlord's
demand, Tenant shall also include the holder of any mortgage or deed of trust
encumbering the fee as a loss payee to the extent of that mortgagee's interest.
Tenant shall furnish, or cause to be furnished to Landlord, upon request,
certificates of insurance from the insurance carrier stating that such insurance
is in full force and effect, that the premiums have been paid and that the
insurance carrier will give Landlord at least ten (10) days prior written notice
of any termination, cancellation or modification of such insurance. Tenant may
provide a certificate of insurance under its blanket insurance policies in
satisfaction of this requirement.
If Tenant fails or refused to procure or maintain said fire or liability
insurance as required by this Lease or fails or refuses to furnish Landlord with
the required proof that the insurance has been procured and is in force and paid
for, Landlord shall have the right, at Landlord's option upon five (5) days
written notice, to procure and
-7-
<PAGE>
maintain such insurance. The premium paid by Landlord shall be treated as
additional rent due and payable immediately. Landlord shall give prompt notice
of the payment of such premiums, stating the amounts paid and the insurer or
insurers, and interest shall run from the date of the notice.
11. Assignment and Subletting. Tenant shall not assign this Lease or
-------------------------
any interest therein, and shall not sublet said premises or any part thereof, or
any right or privilege appurtenant thereto, or allow any other person (the
agents, contractors, permittees, invitees and employees of Tenant excepted) to
occupy or use said premises, or any portion thereof, without the prior written
consent of Landlord. In the event Landlord grants such consent, Tenant shall
remain liable under the terms of this Lease. Landlord agrees that it shall not
unreasonably withhold or delay its consent to an assignment of this Lease. The
test of reasonableness for the withholding of Landlord's consent to the
assignment of the Lease shall not necessarily be the same as the test applied by
the FCC in deciding whether to approve the sale of Tenant's radio station.
A consent to one assignment, subletting, occupation, or use by another
person shall not be deemed to be a consent to any subsequent assignment,
subletting, occupation, or use by another person. Any assignment or subletting
without such consent of Landlord shall be void, and shall, at the option of
Landlord, terminate this Lease. This Lease shall not, nor shall any interest of
Tenant therein, be assignable by operation of law, without the written consent
of Landlord. Tenant may, without Landlord's consent, have the right to assign
this Lease to a corporation with which it may merge or consolidate or to a
purchaser of substantially all of Tenant's assets, if the assignee executes an
agreement assuming Tenant's obligations hereunder.
-8-
<PAGE>
12. Utilities. Tenant shall pay for all utilities furnished to or
---------
delivered at the leased premises, including connection and installation charges
and shall make payments directly to the utility company furnishing same. Tenant
shall protect Landlord and save Landlord harmless from any liens arising out of
the nonpayment of its utility charges.
13. Entry by Owner; Inspection and Notices. Except as expressly provided
--------------------------------------
to the contrary herein, Tenant shall permit Landlord and its agents to enter
into and upon said premises upon first giving reasonable notice, reasonable
notice being twenty-four (24) hours, for the purpose of inspecting the same or
for the purpose of making repairs, alterations, or additions to any portion of
said building to be made by Landlord upon Tenant's breach of its obligations to
maintain and repair the premises, including the erection and maintenance of such
scaffolding, canopies, fences and props as may be required, or for the purpose
of posting notices of non-responsibility for alterations, additions, or repairs,
or for the purpose of placing upon the property in which the said premises are
located any usual or ordinary "for sale" signs, or to show during the last
twelve (12) months of the term the premises to prospective future tenants,
without any rebate of rent and without any liability to Tenant for any loss of
occupation or quiet enjoyment of the premises occasioned thereby. Prior notice
is not required in the event of an emergency situation. Tenant shall permit
Landlord, at any time within twelve (12) months prior to the expiration of the
Lease, to place upon said premises any usual or ordinary "to rent" or "to lease"
signs.
14. Waivers of Damages. Tenant as a material part of the consideration to
------------------
be rendered to Landlord, hereby waives all claims against
-9-
<PAGE>
Landlord, except for Landlord's, its employees', contractors', invitees', agents
and servants' gross negligence or willful misconduct.
15. Destruction of Premises. In the event of a total or partial destruction
-----------------------
of the leased premises during the term of this Lease, Tenant shall forthwith
repair the same upon the receipt of insurance proceeds, provided such repairs
can be made within one hundred twenty (120) days under the applicable laws and
regulations. Landlord will cooperate with Tenant in such manner as is necessary
in order that the insurance proceeds payable under the insurance obtained under
Paragraph 10 are paid to Tenant as promptly as possible. Any such destruction
shall not annul or void this Lease; however, rent to be paid by Tenant hereunder
shall be equitably adjusted according to the amount and value of the undamaged
premises remaining. If such repairs cannot be made within one hundred twenty
(120) days, this Lease may be terminated at the option of Tenant. If the leased
premises are not rebuilt as provided herein, the insurance proceeds obtained
under Paragraph 10 shall belong to Landlord, except that Tenant shall be
entitled to that portion of the award, if any, attributable to the destruction
of Tenant's trade fixtures and personal property which Tenant had the right to
remove upon termination of this Lease.
16. Remedies Upon Default.
---------------------
(a) Landlord's Remedies. Except as otherwise provided herein, should
-------------------
Tenant default in the performance of any covenant or provision herein with
reference to the payment of rent or other payment of money, and such default
continues for five (5) days after receipt by Tenant of written notice from
Landlord of such default, or should Tenant default in the performance of any
other covenant or provision herein,
-10-
<PAGE>
other than the payment of money, and such default, if curable, is not cured
within fifteen (15) days after service upon Tenant of a written notice thereof
from Landlord, or if not curable within fifteen (15) days, Tenant fails to
commence a cure within fifteen (15) days after service upon Tenant of a written
notice thereof from Landlord and thereafter diligently pursues such cure to
completion, Landlord may terminate Tenant's right of possession to the leased
premises and may recover from Tenant all of the damages to which Landlord is
entitled under the laws of the State of Texas.
None of Landlord's rights herein specified in the event of a default by
Tenant shall prejudice any other legal remedies available to Landlord other than
those herein enumerated.
(b) No Waiver. Efforts by Landlord to mitigate the damages caused by
---------
Tenant's breach of this Lease shall not waive Landlord's right to recover
damages under this paragraph. For the purpose of subparagraph (a) above, the
following shall not constitute a termination of Tenant's right of possession:
(1) Acts of maintenance or preservation or efforts to relet the
property; and
(2) Appointment of a receiver upon initiative of Landlord to protect
Landlord's interest under this Lease.
(c) Reentry. Upon a default of Tenant not cured within the time specified
-------
in subparagraph (a), or if Tenant abandons the premises, Landlord shall have the
right to reenter the leased premises and take possession thereof with or without
terminating the Lease upon giving the notice of reentry as required by law. Upon
such reentry, Landlord may (but is not obligated to do so) relet the leased
premises for the benefit
<PAGE>
of the Landlord and Tenant on such terms and conditions and at such rental as
may then be reasonably available to Landlord. Such reletting shall not relieve
Tenant from any of Tenant's obligations hereunder unless the Lease is terminated
by Landlord by a written notice of termination served on Tenant.
17. Waste; Nuisance. Tenant shall not commit, or suffer to be committed,
---------------
any waste upon the said premises, nor cause, maintain or permit any nuisance in,
on or about the premises.
18. Compliance with Law. Tenant shall, at Tenant's sole cost and expense,
-------------------
comply with all of the requirements of all Municipal, State and Federal
authorities now in force, or which may hereafter be in force, pertaining to the
said premises, and shall faithfully observe in the use of the premises all
Municipal ordinances and State and Federal statutes now in force or which may
hereafter be in force. The judgment of any court of competent jurisdiction,
after appeals have been taken or waived, or the admission of Tenant in any
action or proceeding against Tenant, whether Landlord is a party thereto or not,
that Tenant has violated any such ordinance or statute in the use of the
premises shall be conclusive of that fact as between Tenant and Landlord.
19. Attorneys' Fees. If either party employs an attorney or attorneys to
---------------
determine or enforce the provisions hereof, the prevailing party (whether by
negotiation, settlement or suit) shall be paid his reasonable attorneys' fees
and expenses by the non-prevailing party.
20. Time. Time is of the essence of this Lease.
----
21. Condemnation. If the leased premises, or any part thereof, are taken by
------------
condemnation, or incident to the exercise of the power of eminent domain,
(hereinafter referred to as "condemnation") the following shall apply:
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<PAGE>
(a) Termination of Lease. If the entire leased premises are taken or
--------------------
acquired by condemnation this Lease shall terminate. Such termination shall take
effect as of the date taking becomes effective by passage of title to the leased
premises to the condemning authority pursuant to court order, or by the physical
taking of possession of the leased premises by the condemning authority,
whichever is earlier.
If only a portion of the leased premises is taken or acquired by or
incident to condemnation and a part thereof remains which in Landlord's opinion
can be used for the purpose specified in Paragraph 3 of this Lease without
compromising Tenant's activity or usability of the premises, this Lease shall,
except for the part actually taken, remain in full force and effect.
(b) Adjustment in Rent. If only a portion of the leased premises is
------------------
taken by condemnation and a part thereof remains which can be used for the
purposes specified in Paragraph 3 of this Lease, rent payable under this Lease
shall be equitably adjusted according to the amount and value of the leased
premises remaining for Tenant's use.
Such adjustment in rent shall take effect on the date title to the
condemned portion of the leased premises passes to the condemning authority
pursuant to court order or on the date the condemning authority takes physical
possession of the condemned leased property, whichever is earlier.
(c) Condemnation Award. All compensation paid for the land and
------------------
improvements taken, including severance damage, if any, shall belong to Landlord
except that Tenant shall be entitled to any relocation award specifically for
Tenant's benefit and such portion of the award attributable to Tenant's trade
fixtures and personalty, if any.
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<PAGE>
(d) Non-Liability of Landlord. Landlord, under no circumstances,
-------------------------
shall be or become liable for or on account of any damage to, loss of, or
interference with Tenant's business occasioned by any condemnation or threat
thereof.
22. Bankruptcy or Insolvency. It shall be a breach of this Lease and
------------------------
Landlord, at its option, upon giving written notice of termination to Tenant,
may terminate this Lease for any of the following events:
(a) Assignment of the Lease by operation of law;
(b) The appointment of a receiver to take possession of all or
substantially all of the assets of Tenant and the receiver is not discharged
within thirty (30) days after his appointment;
(c) A general assignment for benefit of creditors by Tenant;
(d) The filing of a voluntary petition or arrangement in
bankruptcy by Tenant;
(e) The filing of an involuntary petition or arrangement in
bankruptcy against Tenant and the same is not dismissed within sixty (60) days
from the date of filing; and
(f) Any other action taken or suffered by Tenant because of
Tenant's insolvency.
23. Use of Tower by Landlord. At all times during this Lease,
------------------------
Landlord shall have the right to use of the radio tower located on the leased
premises beginning at and including the location of antenna equipment used for
broadcasting the signal of KISS-FM and continuing downward therefrom for a
distance of thirty (30) feet; Landlord shall have no obligation to pay rent for
the use described above and may use the
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<PAGE>
allowed space for any lawful purpose which does not interfere with Tenant's
operations. Landlord shall hold Tenant harmless from and defend Tenant against
any and all claims or liability arising out of or in any way connected to
Landlord's use or occupancy of the allowed space.
24. Condition of Property Upon Surrender. Upon the expiration of the
------------------------------------
term of this Lease, or upon its sooner termination, for any reason, Tenant shall
make any restorations required pursuant to Paragraph 6, shall peacefully vacate
the leased premises and deliver the same an all improvements (except for those
which the Tenant has the right to remove) in the condition required by
paragraphs 6, 7 and 8, and shall surrender to Landlord all keys and other items
of similar nature pertaining to the leased premises.
25. Notices. All notices under this Lease shall be given by either
-------
personal service or registered or certified mail, return receipt requested.
Notices given by mail shall be addressed as follows:
(a) Notice to be served upon Landlord shall be sent to Landlord
addressed to:
Edward G. Atsinger III
Stuart W. Epperson
2310 Ponderosa Drive, Suite 29
Camarillo, CA 93010
(b) Notice to be served upon Tenant shall be sent to Tenant
addressed to:
5430 Fredericksburg Road
Suite 504
San Antonio, TX 78229
All notices by mail shall be deemed served 48 hours after deposit in the
United States mail.
Either party may change his address for notice purposes by giving notice
of such change as provided above.
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<PAGE>
26. Subordination of Lease. This Lease and the leasehold estate created hereby
----------------------
are and shall be, at the option and upon written declaration of Landlord,
subordinate, and inferior to the lien of a first and second deed of trust, or
any renewals, extensions, or replacements of said deed or deeds of trust, now or
hereafter imposed by Landlord upon the leased premises or any part thereof.
Landlord hereby expressly reserves the right, at its option and declaration, to
place the lien of a first and second deed of trust on and against the leased
premises, or any part thereof, superior in lien and effect to this Lease and the
estate hereby created.
The execution by Landlord and the recording in the office of the
County Recorder's office in which the property is located of a declaration that
this Lease and leasehold estate are subject, subordinate, and inferior to the
lien of a first and/or second deed of trust placed or to be placed by Landlord
upon or against the leased premises or any part thereof, shall, of and by
itself, in favor of the trustee and beneficiary of said deed or deeds of trust,
make this Lease subject, subordinate and inferior thereto. Tenant shall, with
all reasonable diligence, after written request made to it by Landlord or the
title company issuing a policy of title insurance insuring the effect of the
lien of said deed or deeds of trust, execute and deliver to said title company
an agreement or subordination, in accordance with the foregoing.
In the event any proceedings are brought for the foreclosure of,
or in the event of the exercise of the power of sale under any mortgage or deed
of trust made by Landlord or its successors or assigns covering the demised
premises, the Tenant shall attorn to the purchaser upon any such foreclosure or
sale and recognize such purchaser as the Landlord under this Lease.
-16-
<PAGE>
27. Waiver. A waiver by Landlord of any default by Tenant in the
------
performance of any of the covenants, terms, or conditions of this Lease shall
not constitute or be deemed a waiver of any subsequent or other default. The
subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a
waiver of any preceding breach by Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular rental so
accepted, regardless of Landlord's knowledge of such preceding breach at the
time of acceptance of such rent. The rights and remedies of Lessor under this
Lease shall be cumulative and in addition to any rights given Landlord by law.
The exercise of any right or remedy shall not impair Landlord's right to any
other remedy.
28. Parties Bound and Benefited. The covenants and conditions herein
---------------------------
contained shall (subject to the provision as to assignment) apply to and bind
the heirs, executors, administrators, assigns and successors in interest of all
of the parties hereto.
29. Governing Law. This Lease shall be governed by and subject to the
-------------
Federal Communications Act, the rules and regulations of the FCC, and other
federal laws as applicable; and the laws of the State of Texas, as to matters of
local law and interpretation.
30. Amendments, Changes or Additions to Statute. Whenever reference is made
-------------------------------------------
in this Lease to any provision of law, such reference applies to all amendments,
changes and additions now or hereinafter made to such Law.
31. Captions. The captions of this Lease are not a portion of the
--------
substantive terms hereof.
32. Estoppel Certificate. Tenant shall at any time and from time to time
--------------------
upon not less than ten (10) days prior written notice from
-17-
<PAGE>
Landlord execute, acknowledge and deliver to Landlord a statement (an "Estoppel
Certificate") in writing (i) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such modification
and certifying that this Lease, as so modified, is in full force and effect) and
the dates to which the rent and other charges are paid in advance, if any, and
(ii) acknowledging that there are not, if such be the case, to Tenant's
knowledge, any uncured defaults on the part of Landlord hereunder and that
Tenant has no right of offset, counterclaim or deduction alleged by Tenant. Any
such Estoppel Certificate may be relied upon by any prospective purchaser or
lender upon the security of the property of which the premises are a part.
33. Miscellaneous.
-------------
33.1 This Lease contains the entire agreement between the
parties respecting the Lease of the premises and all matters covered or
mentioned herein. This Lease may not be altered, changed or amended except by an
instrument in writing signed by both parties hereto.
33.2 The illegality, invalidity or unenforceability of any
provision of this Lease shall in no way impair or invalidate any other
provision of this Lease, and such remaining provisions shall remain in full
force and effect.
33.3 As used in this Lease, the masculine, feminine or neuter
gender, and the singular or plural number, shall each be deemed to include the
other whenever the context so indicates. If there is more than one Tenant, the
obligations hereunder imposed upon Tenant shall be joint and several. The
paragraph headings of this Lease are not a part of this Lease and shall have no
effect upon the construction or interpretation of any part hereof.
-18-
<PAGE>
33.4 All exhibits attached to this Lease are hereby incorporated by
this reference and made a part hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the
date and year first above written.
LANDLORD:
THE EPPERSON-ATSINGER 1983
FAMILY TRUST
/s/ Edward G. Atsinger III
-----------------------------------------
Edward G. Atsinger III, Co-Trustee
/s/ Stuart W. Epperson
-----------------------------------------
Stuart W. Epperson, Co-Trustee
TENANT:
SALEM MEDIA OF TEXAS, INC., a Texas Corporation
/s/ Edward G. Atsinger III
-----------------------------------------
President
Ret. to:
HOLME ROBERTS & OWEN
ATTORNEYS AT LAW
1700 BROADWAY
DENVER, COLORADO 80290
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<PAGE>
EXHIBIT A
---------
A 35.473 acre tract of land, being all of the remaining portion of that certain
38.17 acre tract of land described in deed from Howard W. Davis, and wife,
Maidell Davis, to Hermitage Properties, Inc., dated February 17, 1969, recorded
in Volume 6109 at Page 681 of the Deed Records of Bexar County, Texas, being out
of the M.D. Oliver Survey No. 55, Abstract 559, County Block 5127, Bexar County,
Texas, said 35.473 acre tract being more particularly described as follows:
BEGINNING at a point on the present Northeast right-of-way line of U.S. Highway
No. 87 (Gonzales Road), an iron pin set at the intersection of a cutback
right-of-way line to F.M. Highway No. 1516, the Southeast corner of the herein
described tract;
THENCE Northwesterly along the present Northeast right-of-way line of U.S.
Highway No. 87 (Gonzales Road), as follows:
N. 68(degrees) 36' 42" W. - 178.35 feet to an iron pin set for angle point;
N. 70(degrees) 38' 30" W. - 205.47 feet to an iron pin set for angle point;
N. 72(degrees) 26' 37" W. - 219.94 feet to an iron pin set for angle point;
and
N. 75(degrees) 21' 00" W. - 547.05 feet to its intersection with the existing
fence on the Northwest line of the said 38.17 acre tract, an iron pin found set,
the Southwest corner of the herein described tract;
THENCE N. 15(degrees) 13' 24" E. - 464.55 feet, N. 14(degrees) 50' 47" E. -
300.00 feet, N. 15(degrees) 08' 45" E. - 209.22 feet and N. 14(degrees) 45'
32" E. - 316.00 feet all along the existing fence on the Northwest line of the
said 38.17 acre tract, to its Northwest corner, the Northwest corner of the
herein described tract;
THENCE S. 75(degrees) 23' 14" E. - 1178.74 feet along the existing fence on the
Northeast line of the said 38.17 acre tract to its Northeast corner, an iron pin
found set on the Northwest right-of-way line of F.M. Highway No. 1516, the
Northeast corner of the herein described tract;
THENCE S. 14(degrees) 10' 00" W. - 1295.51 feet along the Northwest
right-of-way line of F.M. Highway No. 1516, to its intersection with a cutback
right-of-way line to U.S. Highway No. 87 (Gonzales Road), an iron pin set;
THENCE S. 62(degrees) 52' 48" W. - 66.05 feet along said cutback right-of-way
line, to the POINT OF BEGINNING.
<PAGE>
easement; thence S. 62(degrees) 36' 00" East (ILLEGIBLE) west line of F. M.
Highway 1516, the east corner of this easement; thence S. 14(degrees) 10' 00"
West 20.55 feet along the west line of F. M. Highway 1516 to the place of
beginning and containing 0.175 acre according to a survey on the ground November
2, 1982 for KISS Broadcasting, Inc. by Baker Surveying, Inc.
<PAGE>
AMENDMENT TO LEASE
This Amendment to Lease is made and entered into as of the 1st day of
October, 1987, by and between Edward G. Atsinger III and Stuart W. Epperson, not
individually but solely as co-trustees of the Epperson-Atsinger 1983 Family
Trust, hereinafter referred to as "Landlord", and Salem Media of Texas, Inc., a
Texas corporation, hereinafter referred to as "Tenant", with reference to the
following recitals of facts:
R E C I T A L S
- - - - - - - -
A. The parties entered into a Lease Agreement as of March 1, 1983
(the "Lease Agreement").
B. The parties desire to make certain amendments to the Lease Agreement.
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties agree as follows:
1. Option to Extend Term. Paragraph 2 of the Lease Agreement is hereby
---------------------
amended to read as follows:
2. Term; Option to Extend. The term of this Lease is twenty-four (24)
----------------------
years, commencing on March 1, 1983, and terminating on February 28, 2007. Tenant
shall have the option, if Tenant is not at the time in default under this Lease,
to extend the term of this Lease for up to two (2) successive periods of five
(5) years each, with the termination dates of the renewal period(s) being
February 28, 2012, and February 28, 2017, and, except as set forth in Paragraph
4, below, on the same terms, covenants and conditions herein contained. Each
option to extend the term shall be exercised only by Tenant's delivery to
Landlord by United States mail on or before 180 days prior to the commencement
of the renewal term of written notice of Tenant's election to extend as provided
herein.
<PAGE>
2. Rent During Option Terms. Paragraph 4 of the Lease Agreement is hereby
------------------------
amended by inserting the following new Subparagraphs 4.6 and 4.7, and by
renumbering the current Subparagraphs 4.6 and 4.7 as Subparagraphs 4.8 and 4.9:
4.6 During the period March 1, 2007, through February 28, 2012 (if
Tenant elects to extend the term of this Lease), a monthly amount equal to
the greater of (i) Three Thousand Sixty-two and 50/100 Dollars ($3,062.50)
or (ii) the Base Rent multiplied by a fraction, the numerator of which
shall be the cost of living index figure for February, 2007, and the
denominator of which shall be the Base Index.
4.7 During the period March 1, 2012, through February 28, 2017 (if
Tenant elects to extend the term of this Lease), a monthly amount equal to
the greater of (i) Three Thousand Three Hundred Twenty-five Dollars
($3,325.00) or (ii) the Base Rent multiplied by a fraction, the numerator
of which shall be the cost of living index figure for February, 2012, and
the denominator of which shall be the Base Index.
3. Assignment and Subletting. Paragraph 11 of the Lease shall be deleted
-------------------------
and a new Paragraph 11 substituted which shall read as follows:
11. Assignment and Subletting.
-------------------------
(a) Tenant shall have the right to assign this Sublease to a firm or
corporation controlled by its shareholders without the prior consent of the
Landlord; provided, however, that Tenant shall remain liable for the
performance of all the covenants and conditions herein contained in the
event of any uncured default on the part of the assignee. For purposes of
this subsection (a), the shareholders of Tenant shall be deemed in control
of a firm or a corporation if their ownership interests, when combined,
constitute more than fifty percent (50) of the voting rights of the firm or
corporation.
(b) Tenant shall have the right to assign this Sublease to the
assignee of all of the FCC authorizations (the "license") for KSLR-AM,
after approval by the FCC of the assignment or transfer of said license.
Tenant shall provide Landlord at least sixty (60) days' written notice of
its intent to assign its rights hereunder and shall provide Landlord with
written confirmation of the assignment. Upon assignment of this Lease to
the successor licensee, Tenant shall have no further liability under this
Lease except for any uncured defaults which arose prior to the assignment.
(c) Except as provided in subsections (a) and (b), above, Tenant
shall not have the right to assign this Lease, or any part hereof, to any
third person(s), firm(s) or corporation(s) without the prior written
consent of Landlord, which consent shall not be unreasonably withheld.
<PAGE>
4. Landlord's Option to Relocate. A new Paragraph 34 shall be added to
-----------------------------
the Lease Agreement which shall read as follows:
34. Landlord's Right to Relocate. Landlord shall have the right to
----------------------------
relocate Tenant's radio station and related equipment and thereafter
terminate this Lease if, prior to such termination, Landlord has provided
Tenant with another site for operation of the station which provides a
total coverage area equal to or better than is presently available at the
premises. Landlord's rights hereunder are further conditioned upon any
relocation being done without disruption of Tenant's ability to broadcast.
Landlord shall provide Tenant with a lease at the new site on the same
terms and conditions as the remaining term of this Lease. All expenses
associated with this relocation will be paid in full by Landlord, including
without limitation all costs of installation, supervision, proofs of
performance, and all reasonable costs incurred by attorneys, engineers, and
other parties consulted by Tenant in connection with the relocation.
5. No Other Amendments. Except as specifically set forth herein, all
-------------------
other terms and conditions of the Lease Agreement shall remain in full force and
effect.
IN WITNESS WHEREOF the undersigned have executed this Agreement as of the
day, month and year first-above written.
LANDLORD:
THE EPPERSON-ATSINGER 1983
FAMILY TRUST
/s/ Stuart W. Epperson
------------------------------------
Stuart W. Epperson, Co-Trustee
/s/ Edward G. Atsinger III
------------------------------------
Edward G. Atsinger III, Co-Trustee
TENANT:
SALEM MEDIA OF TEXAS, INC., a Texas
corporation
By: /s/ Edward G. Atsinger
---------------------------------
President
<PAGE>
SECOND AMENDMENT TO LEASE
THIS AMENDMENT TO LEASE is made and entered into as of the 7th day of
January, 1987, by and between Edward G. Atsinger III and Stuart W. Epperson, not
individually but solely as co-trustees of the Epperson-Atsinger 1983 Family
Trust, hereinafter referred to as "Landlord," and Salem Media of Texas, Inc., a
Texas corporation, hereinafter referred to as "Tenant," with reference to the
following recitals of facts:
RECITALS
--------
A. The parties entered into a Lease Agreement as of March 1, 1983,
as amended by Amendment to Lease as of October 1, 1987 (the "Lease Agreement").
B. The parties desire to make certain amendments to the Lease
Agreement.
NOW, THEREFORE, for good and valuable consideration, the parties agree
as follows:
1. Subordination of Lease. Section 26 of the Lease Agreement is
----------------------
hereby amended by adding at the end of said Section the following sentence:
"Notwithstanding the foregoing, no subordination or attornment pursuant to the
provisions of this Section 26 shall be effective unless, prior to the date any
party desiring such subordination or attornment obtains title to the leased
premises or any part
<PAGE>
thereof, such party has acknowledged by written notice to Tenant that this Lease
and Tenant's rights hereunder shall continue undisturbed while Tenant is not in
default hereunder; except that such party shall not be (i) liable for any act or
omission of any prior Landlord or (ii) subject to any offsets or defenses which
Tenant might have against any prior Landlord or (iii) bound by any amounts which
Tenant might have paid as rent to any Landlord for a period ending beyond the
end of the month following the month in which such party acquired title to the
leased premises or any part thereof."
2. No Other Amendments. Except as specifically set forth herein, all other
-------------------
terms and conditions of the Lease Agreement shall remain in full force and
effect.
3. Lease Agreement. A true and correct copy of the Lease Agreement is
---------------
attached hereto as Exhibit A.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day, month and year first above written.
LANDLORD:
THE EPPERSON-ATSINGER 1983
FAMILY TRUST
/s/ Stuart W. Epperson
----------------------------------
Stuart W. Epperson, Co-Trustee
/s/ Edward G. Atsinger III
----------------------------------
Edward G. Atsinger III, Co-Trustee
2
<PAGE>
TENANT:
SALEM MEDIA OF TEXAS, INC., a
Texas corporation
By: /s/ Edward G. Atsinger III
-----------------------------
President
THE STATE OF NORTH CAROLINA )
)ss.
COUNTY OF Forsyth )
--------
Before me Linda R. Lynch on this day personally appeared, Stuart W.
--------------
Epperson, co-trustee of the Epperson-Atsinger 1983 Family Trust, known to me to
be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purpose and consideration
therein expressed.
[Seal] Given under my hand and seal of office this 5th day of January A.D.,
1988. ---
Linda R. Lynch
------------------------------------
Notary Public
My commission expires April 20,1988 .
---------------------------------
[NOTARY SEAL APPEARS HERE]
3
<PAGE>
THE STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
Before me Robert N. Lepine on this day personally appeared, Edward G.
Atsinger III, co-trustee of the Epperson-Atsinger 1983 Family Trust, known to me
to be the person whose name is subscribed to the foregoing instrument and
acknowledged to me that he executed the same for the purpose and consideration
therein expressed.
[Seal] Given under my hand and seal of office this 7 day of January A.D., 1988.
/s/ Robert N. Lepine
-------------------------------
Notary Public
My commission expires 9-30-90 .
-----------------------------------------
THE STATE OF TEXAS )
) ss.
COUNTY OF BEXAR )
Before me Robert N. Lepine on this day personally appeared Edward G.
Atsinger III, the President of Salem Media of Texas, Inc., known to me to be the
person whose name is subscribed to the foregoing instrument and acknowledged to
me that he executed the same for the purpose and consideration therein
expressed.
[Seal] Given under my hand and seal of office this 7 day of January A.D., 1988.
/s/ Robert N. Lepine
-------------------------------
Notary Public
My commission expires 9-30-90 .
-----------------------------------------
4
<PAGE>
EXHIBIT 10.05.20
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of the fourth day of March,
1995, by and between EDWARD G. ATSINGER III and MONA J. ATSINGER, not
individually but solely as Trustees of the ATSINGER FAMILY TRUST, and STUART W.
EPPERSON, not individually but solely as Trustee of the STUART W. EPPERSON
REVOCABLE LIVING TRUST, collectively referred to herein as "Lessor", and SOUTH
TEXAS BROADCASTING, INC. ("Lessee"), a Texas corporation.
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns
certain improvements thereon (the "Improvements"), which Land and Improvements
together comprise certain real property located in the County of Harris, State
of Texas, more particularly described as set forth in Exhibit "A", which is
attached hereto and made a part hereof (the "Real Property"); and,
WHEREAS, Lessee uses said Real Property in operating its radio
station KENR-AM, Houston, Texas; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations"). Lessee
is fully familiar with the physical condition of the Land and has received the
same in good order and condition, and agrees that the Land complies in all
respects with all requirements of this Agreement. Lessee shall use the Land
exclusively for purposes associated with the operation of a radio station.
<PAGE>
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on March 4,
1995 (the "Commencement Date"), and shall expire on March 3, 2005 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
(i) During the first year beginning with the Commencement
Date Lessee shall pay a base rent of THIRTY THOUSAND DOLLARS ($30,000) per
annum, in equal monthly installments of TWO THOUSAND FIVE HUNDRED DOLLARS
($2,500) (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date (hereinafter defined) the monthly
rent shall be computed according to subparagraph (ii) below.
(ii) The term "Adjustment Date" shall mean the first (1st)
through the ninth (9th) anniversaries of the Commencement Date. During the one
(1) year period beginning with each Adjustment Date, the monthly rent payable by
Lessee shall reflect an adjustment, as herein provided, for an increase, if any,
in the Consumer Price Index for All Urban Consumers, All Items, U.S. Cities
Average [Base Year 1982/84=100] ("CPI") published by the United States
Department of Labor, Bureau of Labor Statistics, as measured in February of each
year; i.e., during the one (1) year period beginning with the Adjustment Date,
the monthly rent shall be the product obtained by multiplying the Base Rent
times a fraction, the numerator of which shall be the CPI for February of the
year in which the Adjustment Date falls and the denominator of which shall be
the CPI for February of the year in which the Commencement Date falls.
Notwithstanding the results of the foregoing calculation, the monthly amount
payable by Lessee hereunder shall not in any event be less than the monthly
rental paid during the immediately preceding one (1) year period. In the event
that the Bureau of Labor Statistics shall change the base period for the CPI,
the new index number shall be substituted for the old index numbers in making
the above computation. In the event the Bureau of Labor Statistics ceases
publishing the CPI, or materially changes the method of its computation, Lessor
and Lessee shall accept comparable statistics on the purchasing power of the
consumer dollar as published at the time of said discontinuation or change by a
responsible financial periodical of recognized authority to be then chosen by
Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all rights now or hereafter conferred by statute
or otherwise to quit, terminate or surrender this Agreement or the Real Property
or any part thereof, or to any abatement, suspension, deferment,
<PAGE>
diminution or reduction of rent or any other sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at
its sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
shall be obligated to pay only those installments as they become due from time
to time before any interest, penalty, fine or cost may be added thereto; and any
such amount relating to the
<PAGE>
fiscal period of the taxing authority, part of which is included within the Term
and a part of which extends beyond the Term shall, if Lessee shall not be in
default under this Agreement, be apportioned between Lessee and Lessor as of the
expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public
or private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term
hereof, obtain or provide and keep in full force for the benefit of Lessor, as
an additional named insured (i) general public liability insurance, insuring
Lessor against any and all liability or claims or liability arising out of,
occasioned by or resulting from any accident or other occurrence in or about the
Real Property arising out of any act or omission of Lessee or any officer,
employee, agent or contractor of Lessee, for injuries to any person or persons,
with limits of not less than One Million Dollars ($1,000,000.00) for injuries to
one person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy or policies of insurance maintained by Lessee pursuant to this Paragraph
shall be of a company or companies authorized to do business in California and a
certificate thereof shall be delivered
<PAGE>
to Lessor, together with evidence of the payment of the premiums therefor, not
less than fifteen (15) days prior to the commencement of the Term hereof or of
the date when Lessee shall enter upon the Leased Premises, whichever occurs
sooner. At least fifteen (15) days prior to the expiration or termination date
of any policy, Lessee shall deliver a certificate of a renewal or replacement
policy with proof of the payment of the premium therefor. Any such insurance
required by this Paragraph may, at Lessee's option, be provided through a
blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
<PAGE>
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize
or permit any insurer of Lessor or Lessee to be subrogated to any right of
Lessor or Lessee against the other. Each of Lessor and Lessee hereby releases
the other to the extent of its insurance coverage for any loss or damage caused
by fire or any of the extended coverage casualties, even if such fire or other
casualty shall be brought about by the fault or negligence of the other party or
persons for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall
not constitute a breach or violation under any Agreement to which Lessor is a
party.
(ii) To the best of Lessor's knowledge, there are no
violations of any federal, state, county or municipal law, ordinance, order,
regulations or requirement with respect to the Leased Premises, and as of the
date of this Agreement, no notice of any kind relating thereto (which would
adversely affect the transactions contemplated by this Agreement) has been
issued by public authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to
use the Leased Premises for any purpose which would affect Lessee's right to use
the Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action,
suit or proceeding pending or threatened against or affecting the Leased
Premises or any portion thereof and Lessor has not received notice written or
otherwise of any litigation affecting or concerning the Leased Premises relating
to or arising out of its ownership, management, use or operation. Lessor shall
give to Lessee prompt notice of institution of any such proceeding or
litigation.
(vi) To the best of Lessor's knowledge, there are presently
no proceedings for overdue real estate taxes assessed against the Leased
Premises for any fiscal period.
<PAGE>
(vii) Lessor shall promptly advise Lessee in writing of
any written notice received from any governmental authority to comply with the
terms, provisions and requirements of any local, state and federal laws,
ordinances, directives, orders, regulations and requirements which apply to any
portion of the Leased Premises or to any adjacent street or other public area or
to the maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, have
been duly and validly authorized by all necessary actions on the part of Lessor
(none of which actions have been modified or rescinded and all of which actions
are in full force and effect). This Agreement constitutes a valid and binding
agreement and obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor
owns good and marketable title in fee simple to the Real Property on which the
Leased Premises are located, and Lessor acknowledges that Lessee is relying upon
the foregoing representation and warranty in entering into this Agreement and in
expending moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall
be an actual condemnation or foreclosure and taking of all of the Leased
Premises, or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be
located on or about the Leased Premises, together with the existence of the
equipment of Lessor, and the operation thereof do not and will 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," issued by the American
National Standards Institute ("Acceptable Radio Frequency Radiation Standards").
<PAGE>
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the
radio tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other
<PAGE>
sums payable hereunder have been paid, and (iii) whether or not, to the
knowledge of Lessor, there are then existing any defaults under this Agreement
(and if so, specifying the same). Any such certificate may be relied upon by any
prospective purchaser transferee or mortgagee of Lessee's interest under this
Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the
part of Lessee:
(i) The failure of Lessee to pay rent or additional rent,
and continuation of such failure for more than ten (10) days after Lessee's
receipt of written notice thereof from Lessor; provided, however, that Lessor
shall not be required to provide such written notice to Lessee more than twice
in any twelve (12) month period prior to declaring such failure to pay an event
of default; or
(ii) The failure of Lessee to cure any other default under
the terms hereof, and continuation of such failure to cure for more than thirty
(30) days after notice by Lessor, provided, however, that if the nature of
Lessee's default is such that more than thirty (30) days is required for its
cure, then Lessee shall not be deemed to be in default if Lessee has commenced
such cure within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal
or review, adjudicated a bankrupt or insolvent, or has a receiver appointed for
all or substantially all of its business or assets on the ground of its
insolvency, or has a trustee appointed for it after a petition has been filed
for Lessee's reorganization under the Bankruptcy Act of the United States, or
any future law of the United States having the same general purpose, or if
Lessee shall make an assignment for the benefit of its creditors, or if Lessee's
interest hereunder shall be levied upon or attached, which levy or attachment
shall not be removed within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and notwithstanding any waiver of any prior breach of
condition or event of default hereunder, Lessor may re-enter the Leased Premises
either by reasonable force or otherwise, or dispossess Lessee, any legal
representative of Lessee or other occupant of the Leased Premises by appropriate
suit, action or proceeding and remove its effects and hold the Leased Premises
as if
<PAGE>
this Agreement had not been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT
----------
Lessee shall not assign this Agreement nor sublet any portion of the
Leased Premises without the prior written consent of the Lessor, which consent
shall not be unreasonably withheld. Notwithstanding any assignment or sublease,
Lessee shall remain primarily liable under this Agreement.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any mortgages and security agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such mortgages and
security agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb Lessee's quiet
possession in the event of foreclosure. If any proceedings are brought for
foreclosure, or in the event of the exercise of the power of sale under any
mortgage or deed of trust made by the Lessor encumbering the Leased Premises,
Lessee shall attorn to the purchaser upon any such foreclosure or sale and
recognize such purchaser as the Lessor under this Lease.
<PAGE>
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to
the benefit of Lessor and Lessee, their respective successors, legal
representatives or assigns. The terms of this Agreement and any disputes arising
therefrom, shall be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement between the
parties. No representative, agent or employee of Lessor has been authorized to
make any representations or promises with reference to the within agreement or
to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE
ATSINGER FAMILY TRUST SOUTH TEXAS BROADCASTING, INC.
/s/ EDWARD G. ATSINGER, III /s/ ERIC H. HALVORSON
- ----------------------------------- --------------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
/s/ MONA J. ATSINGER
___________________________________
MONA J. ATSINGER
Trustee
STUART W. EPPERSON
REVOCABLE LIVING TRUST
/s/ STUART W. EPPERSON
- -----------------------------------
STUART W. EPPERSON
Trustee
<PAGE>
EXHIBIT A
---------
REAL PROPERTY
-------------
49.09 acres consisting of Tract #1(1.04 acres), Tract #2 (9.41 acres) and Tract
#3 (38.64 acres) out of the H. Simmons Survey, A-745 and the E. Richey Survey,
A-1424, Harris County, Texas.
Tract One
---------
The surface only of 1.04 acres of land, more or less, lying and being
situated partly in the E. Richey Survey, Abstract 1424 and partly in the H.
Simmons Survey, Abstract 745, Harris County, Texas, and being a portion of
that tract designated as private road, in a partition of the Mrs. Mary
Tautenhahn 121.68 acre tract out of the said E. Richey Survey and the said
H. Simmons Survey; said 1.04 acres of land, more or less, being more
particularly described by metes and bounds as follows:
BEGINNING at a 1" iron pipe from which a 12" Sweet Gum X bears N
87(degrees) 45' W 35.5 feet and a 5" Pine X bears N 27(degrees) 15' E 30.0
feet and which 1" pipe marks the northwesterly, corner of C. C. McLean
Survey and the northeasterly corner of the said Richey Survey, as fenced
and generally recognized;
THENCE S 33(degrees) 11' 28" E along a fence and the westerly boundary of
the said McLean Survey and the easterly boundary of the said Richey Survey
697.69 feet to a 3/4" iron pipe from which a 8" Post Oak X bears N
62(degrees) 40' W 23.3 feet and a 12" Post Oak X bears S 2(degrees) 00' W
58.2 feet;
THENCE S 56(degrees) 55' 32" W 60.00 feet, to a 3/4" iron pipe marking the
southeasterly corner of Share 3 of the aforementioned Mrs. Mary Tautenhahn
partition;
THENCE N 33(degrees) 11' 28" W parallel to and 60.0 feet at right angles
from the easterly line of the said Richey Survey and the westerly line of
the said McLean Survey, at 697.69 feet cross the northerly boundary of the
said Richey Survey and the southerly boundary of the said Simmons Survey,
in all 757.69 feet to a 3/4" iron pipe which marks the northeasterly corner
of the said Share 3 and an angle point in the southerly line of Share 2 of
the said partition;
<PAGE>
THENCE N 56(degrees) 55' 32" E parallel to and 60.0 feet at right angles from
the southerly boundary of the said H. Simmons Survey and the northerly boundary
of the said McLean Survey and the northerly boundary of the McLean Survey 60.00
feet to a point;
THENCE S 33(degrees) 11' 28" E 60.00 feet to the point or place of beginning and
containing as aforesaid 1.04 acres of land, more or less.
Tract Two
- ---------
The surface only of 9.41 acres of land, more or less, lying and being situated
in the H. Simmons Survey, Abstract 745, Harris County, Texas, and being a
portion of that tract of land designated as Share 2 of a partition of the Mrs.
Mary Tautenhahn 121.68 acre tract out of the E. Richey Survey, Abstract 1424,
and the H. Simmons Survey, Abstract 745, Harris County, Texas; said 9.41 acres
of land, more or less, being more particularly described by metes and bounds as
follows:
BEGINNING at a 3/4" iron pipe from which a 4" Pine X bears N 2(degrees) 45' E
38.0 feet and a 14" Post Oak X bears N 74(degrees) 05' W 35.6 feet, said pipe
being located in the westerly line of the said H. Simmons Survey and the
easterly line of the John Schnell Survey as fenced and generally recognized and
being N 33(degrees) 17' 29" w 505.26 feet from the southwesterly corner of the
said Simmons Survey and marking the northwesterly corner of Share 3 of the
aforementioned partition and the southwesterly corner of Share 2 of the said
partition;
THENCE N 56(degrees) 55' 32" E 1778.59 feet to a 5/8" iron rod for corner from
which a 24" Post Oak X bears N 89(degrees) 00' W 60.2 feet and a 24" Pin Oak X
bears 5 29(degrees) 00' W 50.5 feet;
THENCE S 33(degrees) 11' 28" E 445.26 feet to a point, same being located N
33(degrees) 11' 28" W 60.00 feet from the northwesterly corner of the C. C.
McLean Survey and the northeasterly corner of the E. Richey Survey as fenced and
generally recognized;
THENCE S 57(degrees) 01' 28" W parallel to and 60.0 feet at right angles from
the southerly line of the said Simmons Survey and the northerly line of the E.
Richey Survey 60.00 feet to a 3/4" iron pipe for corner, same being the
northeasterly corner of the aforementioned Share 3;
THENCE S 71(degrees) 26' 32" W along the dividing line between the said Share 2
and Share 3 a distance of 1776.23 feet to the point of beginning and containing
9.41 acres of land, more or less;
<PAGE>
Tract Three
- -----------
The surface only of 38.64 acres of land, more or less, lying and being situated
partly in the E. Richey Survey, Abstract 1424 and partly in the H. Simmons
Survey, Abstract 745, Harris County, Texas, and being all of that tract of land
designated as Share 3 of a partition of the Mrs. Mary Tautenhahn 121.68 acre
tract out of the said E. Richey Survey and the said H. Simmons Survey; said
38.64 acres of land, more or less, being more particularly described by metes
and bounds as follows:
BEGINNING at a 3/4" iron pipe from which a 10" Pine X bears N 56(degrees) 00' E
41.00 feet and a 16" Post Oak X bears N 18(degrees) 00' E 47.00 feet, said pipe
being in. the westerly boundary of the said E. Richey Survey and the easterly
boundary of the said John Schnell Survey, Abstract 742, and being located N 33
(degrees) 17'. 28" W 736.8 feet from the southeasterly corner of the said
Schnell Survey which is also a re-entrant corner of the said Richey Survey as
fenced and generally recognized;
THENCE N 33(degrees) 17' 28" W along a fence marking the westerly line of the
said Richey Survey and the easterly line of the said Schnell Survey at 697.69
feet pass the northwesterly corner of the said Richey Survey and the
southwesterly corner of the said H. Simmons Survey, and continuing along the
westerly line of the said Simmons Survey a total distance of 1202.95 feet to a
3/4" iron pipe for corner from which a 4" Pipe X bears N 2(degrees) 45' E 38.0
feet and a 14" Post Oak X bears N 74(degrees) 05' W 35.6 feet, said pipe also
marking the southwesterly corner of Share 2 of the aforementioned partition;
THENCE N 71(degrees) 26' 32" E along the dividing line between Shares 2 and 3 a
distance of 1776.23 feet to a 3/4" iron pipe for corner, said pipe being located
N 33(degrees) 11' 28" W 60.0 feet from a point in the southerly line of the said
Simmons Survey which is S 57(degrees) 01' 28" W 60.0 feet from the northeasterly
corner of the said Richey Survey;
THENCE S 33(degrees) 11' 28" E at 60.0 feet cross the southerly line of the said
Simmons Survey and the northerly line of the said Richey Survey and continuing
parallel to and 60.0 feet at right angles from the easterly line of the said
Richey Survey and the westerly line of the C. C. McLean Survey, Abstract 1415, a
distance of 757.69 feet to a 3/4" iron pipe for corner;
THENCE S 56(degrees) 55' 32" w along the southerly line of the said Share 3 a
distance of 1716.50 feet to the point or place of beginning and containing as
aforesaid 38.64 acres of land, more or less.
<PAGE>
EASEMENTS AND RESTRICTIONS OF RECORD:
(a) Thirty (30) foot pipe line easement granted to Houston Pipe Line Company
as reflected by instrument recorded in Volume 5249, page 521, Deed Records of
Harris County, Texas.
(b) Pipe line easement granted to Houston Pipe Line Company as reflected by
instrument recorded in Volume 2408, page 577, Deed Records of Harris County,
Texas.
(c) Terms, conditions, and stipulations contained in Oil and Gas Lease from
J. G. Ehrhardt, et al, to H. M. Harrell, recorded in Volume 334, page 104,
Contract Records of Harris County, Texas, as amended by instrument recorded
in Volume 338, page 686, Contract Records of Harris County, Texas, and as
further supplemented or amended by Pooling Agreement recorded in Volume 399,
page 263, Contract Records of Harris County, Texas.
(d) All prior reservations of minerals in and under the above described
property.
(e) Lease dated September 15, 1983, as filed for record under Harris County
Clerk's File No. J-679462, between Lake Huron Broadcasting Corporation, as
Lessor, and the United States of America, as Lessee.
<PAGE>
AGREEMENT
---------
EXHIBIT A
---------
EASEMENTS AND RESTRICTIONS OF RECORD:
(a) Thirty (30) foot pipe line easement granted to Houston Pipe Line Company
as reflected by instrument recorded in Volume 5249, page 521, Deed Records of
Harris County, Texas.
(b) Pipe line easement granted to Houston Pipe Line Company as reflected by
instrument recorded in Volume 2408, page 577, Deed Records of Harris County,
Texas.
(c) Terms, conditions, and stipulations contained in Oil and Gas Lease from
J. G. Ehrhardt, et al, to H. M. Harrell, recorded in Volume 334, page 104,
Contract Records of Harris County, Texas, as amended by instrument recorded
in Volume 338, page 686, Contract Records of Harris County, Texas, and as
further supplemented or amended by Pooling Agreement recorded in Volume 399,
page 263, Contract Records of Harris County, Texas.
(d) All prior reservations of minerals in and under the above described
property.
(e) Lease dated September 15, 1983, as filed for record under Harris County
Clerk's File No. J-679462, between Lake Huron Broadcasting Corporation, as
Lessor, and the United States of America, as Lessee.
<PAGE>
Exhibit 10.05.21
LEASE AGREEMENT
---------------
This Agreement ("Agreement") is made as of October 1, 1996, by and
between the ATSINGER FAMILY TRUST the STUART W. EPPERSON REVOCABLE LIVING TRUST,
collectively referred to herein as "Lessor", and VISTA BROADCASTING, INC.
("Lessee"), a California corporation.
WHEREAS, Lessor owns certain land (the "Land") and Lessee owns certain
improvements thereon (the "Improvements"), which Land and Improvements together
comprise certain real property located in the County of Placer, State of
California, more particularly described as set forth in Exhibit "A", which is
attached hereto and made a part hereof (the "Real Property"); and,
WHEREAS, Lessee uses said Real Property in operating its radio station
KFIA-AM, Carmichael, California; and,
WHEREAS, the parties are desirous of making a mutually suitable and
satisfactory agreement whereby Lessor will lease to Lessee the Real Property
(constituting the "Leased Premises") on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the following covenants,
agreements, conditions and representations, the parties hereto agree as follows:
SECTION 1
---------
USE OF THE LEASED PREMISES
--------------------------
(a) Lessor, in consideration of the rents to be paid and covenants
herein contained, hereby leases to Lessee the Leased Premises.
(b) Lessee may use the Leased Premises for the operation of its radio
station, and, in connection therewith, for the installation, repair,
maintenance, operation, housing and removal of its Improvements and other
related broadcasting equipment (together comprising the "Installations"). Lessee
is fully familiar with the physical condition of the Land and has received the
same in good order and condition, and agrees that the Land complies in all
respects with all requirements of this Agreement. Lessee shall use the Land
exclusively for purposes associated with the operation of a radio station.
Notwithstanding the foregoing, Lessor retains all rights to lease and sub-lease
space in, on or about the Leased Premises and the Installations.
<PAGE>
(c) Lessee shall have the right from time to time to substitute
Installations of similar kind and character for those hereinabove specified,
provided such changes shall be approved in advance by Lessor, and Lessor shall
not unreasonably delay or withhold its approval. In the event Lessee submits any
such changes for Lessor's approval and Lessor does not respond within thirty
(30) days after Lessor's receipt thereof, then such changes shall be deemed
approved by Lessor, so long as such changes otherwise comply with this
Agreement, five (5) days after Lessor's receipt of notice that it has not
responded.
(d) Lessee shall have access to the Leased Premises twenty-four (24)
hours per day, seven (7) days per week, for the purpose of installing,
maintaining and repairing its Installations, provided that the contractors
performing such work are reasonably acceptable to Lessor.
(e) Lessor shall not be responsible for repairs or maintenance to the
Installations, except for repairs occasioned by the negligence of Lessor, its
agents, employees or contractors.
(f) During the Term (as hereinafter defined), Lessor and Lessee shall
each provide the other with a telephone number which, if called will ring at a
location that is staffed by their respective agents twenty-four (24) hours each
and every day, seven (7) days each and every week; and Lessor and Lessee shall
notify each other promptly in the event of any change in such telephone number.
(g) Lessee shall not use or permit the Leased Premises to be used by
any dangerous, toxic, noxious or offensive trade or business, or for any
unlawful purpose.
(h) Lessee shall not directly or indirectly create or permit to be
created or to remain, and will discharge any mortgage, lien, security interest,
encumbrance or charge on, pledge of or conditional sale or other title retention
agreement with respect to the Real Property or any part thereof or Lessee's
interest therein other than (i) this Agreement, (ii) any lien, including a
mortgage on the leasehold interest of Lessee, which may be approved by the
Lessor in writing, which approval shall not be unreasonably withheld, (iii)
liens for impositions not yet payable, or payable without the addition of any
fine, penalty, interest or cost for non-payment, or being contested as permitted
by Paragraph 3(d), below, and (iv) liens of mechanics, materialmen, suppliers or
vendors, or rights thereto, incurred in the ordinary course of business for sums
which under the terms of the related contracts are not at the time due, provided
that adequate provision for the payment thereof shall have been made.
SECTION 2
---------
TERM AND RENT
-------------
(a) The term of this Lease (the "Term") shall commence on October 1,
1996 (the "Commencement Date"), and shall expire on September 30, 2006 (the
"Expiration Date"). If the Term has been extended as provided in subparagraph
(b), below, the Expiration Date shall be the last day of the Term as so
extended.
<PAGE>
(b) Lessee shall have the option, if Lessee is not at the time in
default under this Agreement, to extend the Term of this Agreement for up to two
(2) successive periods of five (5) years each (the "Extended Terms"), and,
except as set forth in subparagraph (c), below, on the same terms, covenants and
conditions herein contained. The word "Term" as used in this Agreement shall be
deemed to include the Extended Terms when and if the Agreement is extended. Each
option to extend the Term shall be exercised only by Lessee's delivery to Lessor
by United States mail on or before ninety (90) days prior to the commencement of
the renewal term of written notice of Lessee's election to extend as provided
herein.
(c) Lessee agrees to pay rent to Lessor from the Commencement Date
through the Expiration Date, or such earlier date as this Agreement is
terminated as provided herein, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA
93012, Attn: Accounting, or to such other person or place as Lessor may
designate from time to time by notice to Lessee, in the following amounts and in
the following manner:
(i) During the first year beginning with the Commencement Date
Lessee shall pay a base rent of $78,960 per annum, in equal monthly installments
of $6,580 (the "Base Rent") in advance on the first day of each month; and
thereafter on each and every Adjustment Date, as hereinafter defined, the
monthly rent shall be computed according to subparagraph (ii) below.
(ii) For purposes of this Agreement, the Adjustment Date shall
be the first day of February of each calendar year of this Agreement. During the
one (1) year period beginning with each Adjustment Date, the monthly rent
payable by Lessee shall reflect an adjustment, as herein provided, for the
change, if any, from the year in which the Commencement Date falls, in the
Consumer Price Index for Urban Wage Earners and Clerical Workers, Los Angeles
area [Base Year 1982-84=100] ("CPI") as measured in February and published by
the United States Department of Labor, Bureau of Labor Statistics; i.e., during
the one (1) year period beginning with the Adjustment Date, the monthly rent
shall be the product obtained by multiplying the Base Rent times a fraction, the
numerator of which shall be the CPI for February of the year such Adjustment
Date falls and the denominator of which shall be the CPI for February of the
year in which the Commencement Date falls. Notwithstanding the results of the
foregoing calculation, the amount payable by Lessee hereunder shall not in any
event be less than the rental paid during the immediately preceding one (1) year
period and the annual adjustment, as set forth in this Section 4.3, shall not
-----------
exceed five percent (5%) of the rental paid in the preceding one (1) year
period. In the event that the Bureau of Labor Statistics shall change the base
period for the CPI, the new index number shall be substituted for the old index
number in making the above computation. In the event the Bureau of Labor
Statistics ceases publishing the CPI, or materially changes the method of its
computation, Lessor and Lessee shall accept comparable statistics on the
purchasing power of the consumer dollar as published at the time of said
discontinuation or change by a responsible financial periodical of recognized
authority to be chosen by Lessor subject to reasonable consent of Lessee.
(d) Rent and all other sums payable to Lessor hereunder shall be paid
without notice, demand, counterclaim, set-off, deduction or defense and without
abatement, suspension, deferment, diminution or reduction. Except as expressly
provided herein, Lessee waives all
<PAGE>
rights now or hereafter conferred by statute or otherwise to quit, terminate or
surrender this Agreement or the Real Property or any part thereof, or to any
abatement, suspension, deferment, diminution or reduction of rent or any other
sum payable by Lessee hereunder.
SECTION 3
---------
CHARGES AND UTILITIES
---------------------
(a) Lessee, at its sole expense, shall keep the Real Property and the
adjoining streets and ways in good and clean order and condition and will
promptly make all necessary or appropriate repairs, replacements and renewals
thereof, whether interior or exterior, structural or non-structural, ordinary or
extraordinary, foreseen or unforeseen. All repairs, replacements and renewals
shall be equal in quality and class to the original work. Lessee waives any
right created by any law now or hereafter in force to make repairs to the Real
Property at Lessor's expense. Lessee, at its sole expense, shall do or cause
others to do every act necessary or appropriate for the preservation and safety
of the Real Property whether or not the Lessor shall be required by any legal
requirement to take such action or be liable for failure to do so.
(b) If not at the time in default under this Agreement, Lessee, at its
sole expense, may make reasonable alterations of and additions to the
Improvements or any part thereof, provided that any alteration or addition (i)
shall not change the general character of the Improvements, or reduce the fair
market value thereof below their value immediately before such alteration or
addition, or impair their usefulness, (ii) is effected with due diligence, in a
good and workmanlike manner and in compliance with all legal requirements and
insurance requirements, (iii) is promptly and fully paid for by Lessee, (iv) is
made, in case the estimated cost of such alteration or addition exceeds Ten
Thousand Dollars ($10,000), under the supervision of an architect or engineer
satisfactory to Lessor and in accordance with plans, specifications and cost
estimates approved by Lessor, and (v) does not interfere with Lessor's rights of
use under this Agreement.
(c) Subject to subparagraph (d), below, relating to contests, Lessee
shall pay all taxes, assessments (including without limitation, all assessments
for public improvements or benefits, whether or not commenced or completed prior
to the date hereof and whether or not to be completed within the Term hereof),
ground rents, water, sewer or similar rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other authorization fees and
other charges in each case, whether general or special, ordinary or
extraordinary, foreseen or unforeseen, of every character (including all
interest and penalties thereof), which at any time during or in respect of the
Term hereof may be assessed, levied, confirmed or imposed on or in respect of or
be a lien upon the Real Property or any part thereof or any rent therefrom or
any estate, right or interest therein, or any occupancy, use or possession of or
activity conducted on the Real Property or any part thereof, other than any
income or excess profits tax imposed upon the Lessor's general income or
revenues, but excluding any income or excess profits or franchise taxes of
Lessor determined on the basis of general income or revenue or any interest or
penalties in respect thereof. Lessee shall furnish to Lessor for inspection
within thirty (30) days after written request, official receipts of the
appropriate taxing authority or other proof satisfactory to Lessor evidencing
such payment. If by law any such amount may be paid in installments, Lessee
<PAGE>
shall be obligated to pay only those installments as they become due from time
to time before any interest, penalty, fine or cost may be added thereto; and any
such amount relating to the fiscal period of the taxing authority, part of which
is included within the Term and a part of which extends beyond the Term shall,
if Lessee shall not be in default under this Agreement, be apportioned between
Lessee and Lessor as of the expiration of the Term of this Agreement.
(d) Lessee, at its sole expense, may contest, after prior written
notice to Lessor, by appropriate legal proceedings conducted in good faith and
with due diligence, the amount or validity or application, in whole or in part,
of any tax, lien or other imposition on the Real Property, provided that (i)
Lessee shall first make all contested payments, under protest if it desires,
(ii) neither the Real Property nor any part thereof or interest therein nor any
such rents or other sums would be in any danger of being sold, forfeited, lost
or interfered with, and (iii) Lessee shall have furnished such security, if any,
as may be required in the proceedings or reasonably requested by Lessor.
(e) Lessee shall pay or cause to be paid all charges for all public or
private utility services and all sprinkler systems and protective services at
any time rendered to or in connection with the Real Property or any part
thereof, will comply with all contracts relating to any such services, and will
do all other things required for the maintenance and continuance of all such
services.
SECTION 4
---------
INSURANCE AND INDEMNIFICATION
-----------------------------
(a) Lessee shall, at its sole cost and expense, during the Term hereof,
obtain or provide and keep in full force for the benefit of Lessor, as an
additional named insured (i) general public liability insurance, insuring Lessor
against any and all liability or claims or liability arising out of, occasioned
by or resulting from any accident or other occurrence in or about the Real
Property arising out of any act or omission of Lessee or any officer, employee,
agent or contractor of Lessee, for injuries to any person or persons, with
limits of not less than One Million Dollars ($1,000,000.00) for injuries to one
person, One Million Dollars ($1,000,000.00) for injuries to more than one
person, in any one accident or occurrence, and for loss or damage to the
property of any person or persons, for not less than One Million Dollars
($1,000,000.00); (ii) insurance with respect to the Improvements against loss or
damage by fire, lightning, windstorm, hail, explosion, riot, riot attending a
strike, civil commotion, aircraft, vehicles, smoke and other risks from time to
time included under "extended coverage" policies, in an amount equal to at least
One Hundred Percent (100%) of the full replacement value of the Improvements
and, in any event, in an amount sufficient to prevent Lessor or Lessee from
becoming a co-insurer of any partial loss under the applicable policies, which
shall be written on a replacement cost basis; (iii) appropriate workers'
compensation or other insurance against liability arising from claims of workers
in respect of and during the period of any work on or about the Real Property;
and (iv) insurance against such other hazards and in such amounts as is
customarily carried by owners and operators of similar properties, and as Lessor
may reasonably require for its protection. Lessee shall comply with such other
requirements as Lessor, or any mortgagee, may from time to time reasonably
request for the protection by insurance of their respective interests. The
policy
<PAGE>
or policies of insurance maintained by Lessee pursuant to this Paragraph shall
be of a company or companies authorized to do business in California and a
certificate thereof shall be delivered to Lessor, together with evidence of the
payment of the premiums therefor, not less than fifteen (15) days prior to the
commencement of the Term hereof or of the date when Lessee shall enter upon the
Leased Premises, whichever occurs sooner. At least fifteen (15) days prior to
the expiration or termination date of any policy, Lessee shall deliver a
certificate of a renewal or replacement policy with proof of the payment of the
premium therefor. Any such insurance required by this Paragraph may, at Lessee's
option, be provided through a blanket policy or policies.
(b) Lessee shall indemnify Lessor and hold Lessor harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessor,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessee,
(ii) any negligent or intentional act or omission of Lessee, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessee of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessee on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessee pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessee's request or this
Agreement; provided, however, that Lessee shall not be required to indemnify
Lessor for any damages, injury, loss or expense arising out of Lessor's or its
agents', employees', invitees' or contractors' negligent acts or omissions.
(c) If Lessor so elects by notice to Lessee, Lessee shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessee and approved by Lessor (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessor may assume,
or require that such defense be assumed, by Lessor and counsel selected by
Lessor, at the cost and expense of Lessee if Lessor is for any reason
dissatisfied with the defense by Lessee, or believes that its interests would be
better served thereby. In any case where Lessee is defending any such claim,
Lessor may participate in the defense thereof by counsel selected by it, but at
Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
(d) Lessor shall indemnify Lessee and hold Lessee harmless from and
against all claims, actions, losses, damages, liabilities and expenses
(including reasonable attorneys' fees) incurred by or asserted against Lessee,
whether during or after the Term of this Agreement, including by reason of
personal injury, loss of life, or damage to property, caused by or resulting
from in whole or any material part, (i) any breach of this Agreement by Lessor,
(ii) any negligent or intentional act or omission of Lessor, its employees,
agents, invitees or contractors, whether in, on, about or with respect to the
Leased Premises or otherwise, (iii) the use by Lessor of any part of the Leased
Premises, (iv) any work undertaken by or at the request of Lessor on or about
the Leased Premises, (v) any other activity undertaken by or at the request of
Lessor pursuant to or in connection with this Agreement, or (vi) the presence of
any individuals on the Leased Premises as a result of Lessor's request or this
Agreement; provided, however, that Lessor shall not be required to indemnify
Lessee for any damages, injury, loss or expense arising out of Lessee's or
<PAGE>
its agents', employees', invitees' or contractors' negligent acts or omissions.
(e) If Lessee so elects by notice to Lessor, Lessor shall have the
obligation of defending, at its sole cost and expense, by counsel selected by
Lessor and approved by Lessee (such approval not to be unreasonably withheld),
against any claim to which the foregoing indemnity may apply. Lessee may assume,
or require that such defense be assumed, by Lessee and counsel selected by
Lessee, at the cost and, expense of Lessor if Lessee is for any reason
dissatisfied with the defense by Lessor, or believes that its interests would be
better served thereby. In any case where Lessor is defending any such claim,
Lessee may participate in the defense thereof by counsel selected by it, but at
Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
(f) Nothing in this Agreement shall be construed so as to authorize or
permit any insurer of Lessor or Lessee to be subrogated to any right of Lessor
or Lessee against the other. Each of Lessor and Lessee hereby releases the other
to the extent of its insurance coverage for any loss or damage caused by fire or
any of the extended coverage casualties, even if such fire or other casualty
shall be brought about by the fault or negligence of the other party or persons
for whose acts said party is liable.
SECTION 5
---------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
(a) Lessor represents and warrants that:
(i) The execution and performance of this Agreement shall not
constitute a breach or violation under any Agreement to which Lessor is a party.
(ii) To the best of Lessor's knowledge, there are no
violations of any federal, state, county or municipal law, ordinance, order,
regulations or requirement with respect to the Leased Premises, and as of the
date of this Agreement, no notice of any kind relating thereto (which would
adversely affect the transactions contemplated by this Agreement) has been
issued by public authorities having jurisdiction over the Leased Premises.
(iii) No person or party other than Lessor has a right to use
the Leased Premises for any purpose which would affect Lessee's right to use the
Leased Premises as contemplated hereunder.
(iv) Lessor has not received written notice of pending or
contemplated condemnation proceedings affecting the Leased Premises or any part
thereof.
(v) To the best of Lessor's knowledge, there is no action,
suit or proceeding pending or threatened against or affecting the Leased
Premises or any portion thereof and Lessor has not received notice written or
otherwise of any litigation affecting or concerning the Leased Premises relating
to or arising out of its ownership, management, use or operation. Lessor shall
give to Lessee prompt notice of institution of any such proceeding or
litigation.
<PAGE>
(vi) To the best of Lessor's knowledge, there are presently no
proceedings for overdue real estate taxes assessed against the Leased Premises
for any fiscal period.
(vii) Lessor shall promptly advise Lessee in writing of any
written notice received from any governmental authority to comply with the
terms, provisions and requirements of any local, state and federal laws,
ordinances, directives, orders, regulations and requirements which apply to any
portion of the Leased Premises or to any adjacent street or other public area or
to the maintenance, operation or use thereof.
(viii) The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, have
been duly and validly authorized by all necessary actions on the part of Lessor
(none of which actions have been modified or rescinded and all of which actions
are in full force and effect). This Agreement constitutes a valid and binding
agreement and obligation of Lessor, enforceable in accordance with its terms.
(ix) Subject to liens and encumbrances of record, Lessor owns
good and marketable title in fee simple to the Real Property on which the Leased
Premises are located, and Lessor acknowledges that Lessee is relying upon the
foregoing representation and warranty in entering into this Agreement and in
expending moneys in connection herewith. Lessor shall not encumber or permit any
encumbrances, liens or restrictions on Lessee's Installations, except with the
prior written approval of Lessee.
(b) Each party shall comply in all material respects with all local,
state and federal laws, statutes, ordinances, rules, regulations, orders and
decrees that it knows to be applicable in connection with its activities and
operations at the Leased Premises, and Lessor shall require the same
representation and warranty from all additional users of the facilities at the
Leased Premises.
(c) The parties agree that, during the Term of this Agreement neither
party shall intentionally do anything at the Leased Premises which will
interfere with or adversely affect the operations of the other party.
(d) In the event that during the Term of this Agreement there shall be
an actual condemnation or foreclosure and taking of all of the Leased Premises,
or a portion thereof such that it renders the premises unsuitable for
broadcasting, this Agreement may be terminated by written notice from either
party to the other and thereafter each of the parties shall be relieved of any
future liability to the other under this Agreement, except as to obligations
accrued and not yet discharged at the date of termination. Following any
condemnation or foreclosing order, Lessee may continue to use the property for
operations under the terms of this Agreement until Lessee finds and begins to
utilize new facilities or until prevented by the condemning or foreclosing
authority from utilizing the Leased Premises, whichever occurs first.
(e) Lessee represents and warrants that its Installations to be located
on or about the Leased Premises, together with the existence of the equipment of
Lessor, and the operation thereof do not and will 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
<PAGE>
"American National Standard Safety Levels With Respect to Human Exposure to
Radio Frequency Electromagnetic Fields, 300 KHz to 100 GHz," issued by the
American National Standards Institute ("Acceptable Radio Frequency Radiation
Standards").
(f) Lessee covenants that it will not at any time during the Term of
this Agreement, transmit, store, handle or dump toxic or hazardous wastes
anywhere at or around the Leased Premises.
(g) Lessee shall promptly advise Lessor in writing of any written
notice received from any governmental authority to comply with the terms,
provisions and requirements of any local, state and federal laws, ordinances,
directives, orders, regulations, and requirements which apply to any portion of
the Leased Premises or to any adjacent street or other public area or the
maintenance, operation or use thereof.
(h) Lessee represents and warrants that the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, have been duly and validly authorized by all necessary
actions on the part of Lessee (none of which actions have been modified or
rescinded and all of which actions are in full force and effect). This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(i) Lessee warrants unto Lessor that the Improvements (including the
radio tower(s) located on the Real Property) are and will remain in material
compliance at all times during the Term and any Extension Term with all federal,
state, county, municipal, local, administrative and other governmental laws,
statutes, ordinances, codes, rules, regulations and orders pertaining thereto,
including, without limitation, to the extent applicable, all zoning laws and
building codes and all regulations of the Federal Aviation Administration
("FAA") and the Federal Communications Commission ("FCC").
(j) In case of any material damage to or destruction of the Real
Property or any part thereof, Lessee shall promptly give written notice thereof
to Lessor and any mortgagee, generally describing the nature and extent of such
damage or destruction. In case of any damage to or destruction of the
Improvements or any parts thereof, Lessee, whether or not the insurance
proceeds, if any, on account of such damage or destruction shall be sufficient
for the purpose, at its sole expense, shall promptly commence and complete the
restoration, replacement or rebuilding of the Improvements as nearly as possible
to their value, condition and character immediately prior to such damage or
destruction.
(k) Lessee will execute, acknowledge and deliver to the Lessor,
promptly upon request, a certificate certifying that (i) this Agreement is
unmodified and in full force and effect (or, if there have been modifications,
that the Agreement is in full force and effect, as modified, and stating the
modifications), (ii) the dates, if any, to which rent and other sums payable
hereunder have been paid, and (iii) no notice has been received by Lessee of any
default which has not been cured, except as to defaults specified in said
certificate. Any such certificate may be relied upon by any prospective
purchaser or mortgagee of the Real Property or any part thereof.
<PAGE>
(l) Lessor will execute, acknowledge and deliver to the Lessee or any
mortgagee, promptly upon request, a certificate certifying that (i) this
Agreement is unmodified and in full force and effect (or, if there have been
modifications, that the Agreement is in full force and effect, as modified, and
stating the modifications), (ii) the dates, if any, to which rent and other sums
payable hereunder have been paid, and (iii) whether or not, to the knowledge of
Lessor, there are then existing any defaults under this Agreement (and if so,
specifying the same). Any such certificate may be relied upon by any prospective
purchaser transferee or mortgagee of Lessee's interest under this Agreement.
SECTION 6
---------
EVENTS OF DEFAULT
-----------------
(a) Any of the following events shall constitute a default on the part
of Lessee:
(i) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided, however, that Lessor shall not
be required to provide such written notice to Lessee more than twice in any
twelve (12) month period prior to declaring such failure to pay an event of
default; or
(ii) The failure of Lessee to cure any other default under the
terms hereof, and continuation of such failure to cure for more than thirty (30)
days after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion; or
(iii) Lessee is finally and without further right of appeal or
review, adjudicated a bankrupt or insolvent, or has a receiver appointed for all
or substantially all of its business or assets on the ground of its insolvency,
or has a trustee appointed for it after a petition has been filed for Lessee's
reorganization under the Bankruptcy Act of the United States, or any future law
of the United States having the same general purpose, or if Lessee shall make an
assignment for the benefit of its creditors, or if Lessee's interest hereunder
shall be levied upon or attached, which levy or attachment shall not be removed
within twenty (20) days from the date thereof.
(b) If an event of default on the part of Lessee shall occur at any
time, Lessor, at its election, may give Lessee a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessee has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, but Lessee shall remain liable for the payment of rent during the full
period which would otherwise constitute the balance of the Term of this
Agreement; and without prejudice to any other right or remedy which it may have
hereunder or by law, and
<PAGE>
notwithstanding any waiver of any prior breach of condition or event of default
hereunder, Lessor may re-enter the Leased Premises either by reasonable force or
otherwise, or dispossess Lessee, any legal representative of Lessee or other
occupant of the Leased Premises by appropriate suit, action or proceeding and
remove its effects and hold the Leased Premises as if this Agreement had not
been made.
(c) The failure of Lessor to cure any default under the terms hereof,
and continuation of such failure to cure for more than thirty (30) days after
notice by Lessee, shall constitute a default on the part of Lessor; provided,
however, that if the nature of Lessor's default is such that more than thirty
(30) days is required for its cure, then Lessor shall not be deemed to be in
default if Lessor has commenced such cure within the thirty (30) day period,
demonstrates to Lessee's reasonable satisfaction that such default is curable
and thereafter diligently prosecutes such cure to completion.
(d) If an event of default on the part of Lessor shall occur at any
time, Lessee, at its election, may give Lessor a notice of termination
specifying a day not less than thirty (30) days thereafter on which the Term of
this Agreement shall end, unless such default shall be cured within said period,
or, if the default is such that more than thirty (30) days is required for its
cure, unless Lessor has commenced such cure within said period. If such notice
is given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Premises to
Lessor, and Lessee shall not be liable for payment of rent for any period after
such expiration.
SECTION 7
---------
ASSIGNMENT & SUBLETTING
-----------------------
Lessee shall not assign this Agreement without the prior written
consent of the Lessor, which consent shall not be unreasonably withheld.
Notwithstanding any assignment, Lessee shall remain primarily liable under this
Agreement. Under no circumstances shall Lessee enter into any agreement to lease
or sublease any space in, on or about the Leased Premises or the Installations,
which rights are specifically reserved to Lessor.
SECTION 8
---------
SUBORDINATION, NONDISTURBANCE AND ATTORNMENT
--------------------------------------------
This Agreement shall not be a lien against the Leased Premises in
respect to any mortgages and security agreements placed or hereafter to be
placed by Lessor upon the Leased Premises. The recording of such mortgages and
security agreements shall have preference and precedence and be superior and
prior in lien to this Agreement, irrespective of the date of recording, and
Lessee agrees to execute any instruments, without cost, which may be deemed
necessary or desirable to further effect the subordination of this Agreement.
Lessor shall make a reasonable effort to obtain from any mortgagees or lenders
holding an interest in the nature of a mortgage in the Leased Premises an
agreement that the mortgagee or lender shall not disturb
<PAGE>
Lessee's quiet possession in the event of foreclosure. If any proceedings are
brought for foreclosure, or in the event of the exercise of the power of sale
under any mortgage or deed of trust made by the Lessor encumbering the Leased
Premises, Lessee shall attorn to the purchaser upon any such foreclosure or sale
and recognize such purchaser as the Lessor under this Lease.
SECTION 9
---------
NON-LIABILITY OF LESSOR
-----------------------
Lessor shall not be liable for any damages or injury which may be
sustained by Lessee or any other person by reason of the failure, breakage,
leakage or obstruction of the water, sewer, plumbing, roof, drains, leaders,
electrical, air conditioning or any other equipment; or by reason of the
elements; or resulting from the carelessness, negligence or improper conduct of
Lessee, its agents, employees, contractors, invitees, assignees or successors;
or attributable to any interference with or the interruption of or failure of
any services, beyond the control of Lessor, to be supplied by Lessor.
SECTION 10
----------
QUIET ENJOYMENT
---------------
(a) Lessor agrees that it shall not enforce any unreasonable rules or
regulations which would unduly prejudice the conduct of Lessee's business, or
which would prevent full and free access to the Leased Premises by Lessee, as
herein provided.
(b) Lessor reserves and shall at all times have the right to re-enter
the Real Property to inspect the same, to supply any service to be provided by
Lessor to Lessee hereunder, and to show the Real Property to prospective
purchasers, mortgagees, or lessees, to post notices of non-responsibility,
without abatement of rent, provided entrance to the Real Property shall not be
denied Lessee.
SECTION 11
----------
SALE OF LEASED PREMISES BY LESSOR
---------------------------------
Notwithstanding any of the provisions of this Lease, Lessor (a) may
assign, in whole or in part, Lessor's interest in this Lease and (b) may sell
all or part of the Real Property. In the event of any sale or exchange of the
Leased Premises by Lessor and assignment by Lessor of this Lease, Lessor shall
be and is hereby relieved of all liability under any and all of its covenants
and obligations contained in or derived from this Lease arising out of any act,
occurrence or omission relating to the Leased Premises occurring after the
consummation of such sale or exchange and assignment, but only upon the
condition that, as part of such sale or exchange, Lessor will cause the grantee
to agree in writing to assume to carry out any and all of the covenants and
obligations of Lessor under this Lease occurring after the consummation of
Lessor's assignment of its interest in and to this Lease.
<PAGE>
SECTION 12
----------
BROKERAGE
---------
The parties acknowledge and agree that this Agreement has not been
brought about as a result of the services of any real estate broker, firm or
corporation, and each indemnifies and saves the other harmless from any and all
claims from any person(s) claiming to have rendered real estate services in
connection with this Agreement.
SECTION 13
----------
SURRENDER OF PREMISES
---------------------
Upon the expiration of the Term hereof, Lessee shall surrender the
Leased Premises, and, at Lessor's option, all interest of the Lessee in and to
the Improvements (including the radio towers located on the Land), to Lessor in
good order and condition, reasonable wear and tear excepted. Any equipment,
fixtures, goods or other property of Lessee not removed within ten (10) days
after any quitting, vacating or abandonment of the Leased Premises, or upon
Lessee's eviction therefrom, shall be considered abandoned, and Lessor shall
have the right, without notice to Lessee, to sell or otherwise dispose of same
without having to account to Lessee for any part of the proceeds of such sale.
SECTION 14
----------
NOTICES
-------
All notices, demands, and requests required or permitted to be given
hereunder shall be in writing and sent certified mail, return receipt requested,
and if to Lessor, at 4880 Santa Rosa Road, Suite 300, Camarillo, CA 93012, Attn:
Edward G. Atsinger III, and if Lessee, at 4880 Santa Rosa Road, Suite 300,
Camarillo, CA 93012, Attn: Accounting. Either party hereto may change the place
for notice to it by sending like written notice to the other party hereto.
SECTION 15
----------
BINDING NATURE
--------------
The provisions of this Agreement shall apply to, bind and inure to the
benefit of Lessor and Lessee, their respective successors, legal representatives
or assigns. The terms of this Agreement and any disputes arising therefrom,
shall be governed by the laws of the State of California.
<PAGE>
SECTION 16
----------
ENTIRE AGREEMENT
----------------
This Agreement contains the entire understanding and agreement
between the parties. No representative, agent or employee of Lessor has been
authorized to make any representations or promises with reference to the within
agreement or to vary, alter or modify the terms hereof. No additions, changes or
modifications shall be binding unless reduced to writing and signed by the
parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
LESSOR: LESSEE
ATSINGER FAMILY TRUST VISTA BROADCASTING, INC.
/s/ Edward G. Atsinger /s/ Eric H. Halvorson
- ------------------------------- ------------------------------------
EDWARD G. ATSINGER, III ERIC H. HALVORSON
Trustee Vice-President
/s/ Mona J. Atsinger
- -------------------------------
MONA J. ATSINGER
Trustee
(By Edward G. Atsinger III,
Attorney in Fact)
STUART W. EPPERSON
REVOCABLE LIVING TRUST
/s/ Stuart W. Epperson
- -------------------------------
STUART W. EPPERSON
Trustee
<PAGE>
EXHIBIT 10.06.01
EXECUTION COPY
--------------
ASSET PURCHASE AGREEMENT
------------------------
This ASSET PURCHASE AGREEMENT (this "Agreement"), made as of the 5TH day of
June, 1996, is by and between Radio 94 of Phoenix Limited Partnership, a
Maryland limited partnership ("Seller"), and Salem Media of Arizona, Inc., an
Arizona corporation ("Buyer").
RECITALS
--------
Seller is the licensee of and operates radio broadcast station KOOL(AM),
Phoenix, Arizona (the "Station"), pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
Seller and Buyer have agreed, subject to the prior approval of the FCC, that
Seller will sell and Buyer will acquire certain of the assets associated solely
with the operation of the Station on the terms and subject to the conditions set
forth in this Agreement.
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
---------------------
1.1. CLOSING. Subject to Section 17.1 hereof and except as otherwise
mutually agreed upon by Seller and Buyer, the closing of this transaction (the
"Closing") shall take place on a date designated by Seller within five (5)
business days after the last of the conditions specified in Sections 11.2 and
12.2 hereof has been fulfilled (or waived by the party entitled to waive such
condition). The Closing shall be held at 10:00 a.m. in the offices of Leventhal,
Senter & Lerman, 2000 K Street, N.W., Washington, D.C., or at such place as the
parties may otherwise agree.
1.2. STATION ASSETS. At the Closing, Seller shall sell, assign, transfer
and convey to Buyer, and Buyer shall purchase from Seller, certain assets held
by Seller and used solely in the operation of the Station (but excluding the
assets specified in Section 1.3), as follows:
(a) all of Seller's rights in and to the licenses, permits and
other authorizations issued to Seller by any governmental
authority and associated solely with the operation of the Station,
including the Station Licenses listed in Schedule
--------
<PAGE>
2
1.2(a), together with any additions thereto (including renewals or
------
modifications of such licenses, permits and authorizations and
applications therefor) between the date hereof and the Closing
Date;
(b) all of Seller's right, title and interest in and to the
leasehold interests and easements associated solely with the
operation of the Station (the "Leases"), as listed in Schedule
--------
1.2(b); and
------
(c) the tangible personal property owned, leased or held by
Seller and associated solely with the operation of the Station,
specifically limited to items listed in Schedule 1.2(c), including
---------------
any warranties in effect relating thereto; and
(d) all of Seller's rights under and interest in any contracts
entered into or acquired by Seller between the date hereof and the
Closing Date that Seller offers to assign to Buyer and which are
accepted in writing by Buyer (the "Contracts"); and
(e) true and complete copies of all of the files, logs,
ledgers, reports of engineers and other consultants or independent
contractors, pertaining to the Station Assets.
The assets to be transferred to Buyer hereunder are hereinafter
collectively referred to as the "Station Assets." The Station Assets shall be
transferred to Buyer free and clear of any debts, liens, or encumbrances of any
kind or nature except as to any obligation or liability of Seller that Buyer may
expressly agree in writing to assume and except for Permitted Liens.
1.3. EXCLUDED ASSETS. The Station Assets shall not include the
following:
(a) Seller's books and records as pertain to the corporate
organization, existence or capitalization of Seller, and duplicate
copies of such records as are necessary to enable Seller to file
tax returns and reports. Seller's files, records, books of
account, computer programs and software relating to the operation
of the Station except as set forth in Section 1.2(e) hereof,
including, without limitation, payable records, receivable
records, invoices, statements, traffic material, programming
information and studies, news and advertising studies and
consultants' reports, ratings reports, marketing and demographic
data, sales correspondence, lists of advertisers, promotional
materials, credit and sales reports, budgets, financial reports
and projections, sales, operating and business plans; and
(b) all cash, cash equivalents, accounts receivable (which
shall be collected by Seller) and any assets of any kind or
description used in connection
<PAGE>
3
with the Station that are also used or held for use in connection
with Radio Station KOOL-FM, Phoenix, Arizona and the call letters
"KOOL"; and
(c) all insurance policies, except for any rights that may be
assigned pursuant to Article 20 hereof; and
(d) all pension, profit sharing or cash or deferred (Section
401 (k)) plans and trusts and the assets thereof and any other
employee benefit plan or arrangement and all employment contracts
or any rights or obligations relating thereto.
(e) all commitments, contracts and agreements not specifically
assigned to and assumed by Buyer pursuant to Section 1.2(d),
above.
ARTICLE 2
PURCHASE PRICE
--------------
2.1. PURCHASE PRICE. The total consideration to be paid by
Buyer for the Station Assets (the "Purchase Price ") shall be Six Million Five
Hundred Thousand Dollars ($6,500,000), as adjusted pursuant to Section 5.2.
2.2. PAYMENT OF PURCHASE PRICE. The Purchase Price will be
payable as follows:
(a) Upon the execution of this Agreement, Buyer shall deposit the
amount of Four Hundred Thousand Dollars ($400,000) (the "Escrow Deposit") with
Escrow Agent to be held pursuant to the terms and conditions of the Escrow
Agreement, as set forth on Exhibit A. At the Closing, the Escrow Deposit shall
be paid by Escrow Agent to Seller. If Closing does not occur, the Escrow Deposit
shall either be delivered to Seller or returned to Buyer in accordance with this
Agreement. All interest earned on the Escrow Deposit shall be paid by Escrow
Agent to Buyer.
(b) Six Million One Hundred Thousand Dollars ($6,100,000) shall be
paid on the Closing Date by wire transfer of immediately available federal funds
to a bank or other financial institution designated by Seller at least two (2)
days prior to the Closing Date.
2.3. ALLOCATION. Buyer shall prepare an initial draft of IRS
Form 8594. Buyer shall forward such form to Seller for its approval, which shall
not be unreasonably withheld, and Buyer and Seller shall each file the IRS Form
8594 finally agreed upon by the parties with their respective federal income tax
return for the tax year in which the Closing occurs.
<PAGE>
4
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
-------------------------
3.1. ASSUMPTION OF OBLIGATIONS. Subject to the provisions of
this Article 3 and Article 5 of this Agreement, Buyer shall assume and undertake
to pay, satisfy or discharge: (a) the liabilities, obligations and commitments
of Seller arising or accruing after the Closing Date under the Leases listed
in Schedule 1.2(b); and (b) the liabilities, obligations and commitments of
---------------
Seller arising or accruing after the Closing Date under other leases and any
Contracts entered into between the date of this Agreement and the Closing Date
which Buyer expressly agrees in writing to assume.
3.2. LIMITATION. Except as set forth in Section 3.1 hereof,
Buyer expressly does not, and shall not, assume or be deemed to assume, under
this Agreement or otherwise by reason of the transactions contemplated hereby,
any liabilities, obligations or commitments of Seller of any nature whatsoever.
ARTICLE 4
REQUIRED CONSENTS
-----------------
4.1. FCC APPLICATION. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. No later than five (5) business days after the date of this Agreement,
Buyer and Seller shall file the FCC Application. Seller and Buyer shall
thereafter prosecute the FCC Application with all reasonable diligence and
otherwise use their best efforts to obtain the grant of the FCC Application as
expeditiously as practicable and shall diligently oppose any objections to,
appeals from or petitions to reconsider such approval of the FCC, to the end
that the FCC Consent and a Final Order with respect thereto may be obtained as
soon as practicable; provided, however, that neither Seller nor Buyer shall have
any obligation to satisfy any complainant or the FCC by taking any steps which
would have a material adverse effect upon Seller or Buyer or upon any affiliated
entity, but neither the expense nor inconvenience to a party of defending
against a complainant or an inquiry by the FCC shall be considered a material
adverse effect on such party. If the FCC Application has been designated for
hearing by the FCC, either Buyer or Seller may elect to terminate this Agreement
pursuant to Article 17 hereof. Buyer and Seller covenant that neither of them
shall knowingly take any action that such party knows or has reason to know
would materially and adversely affect or materially delay issuance of the FCC
Consent or materially and adversely affect or materially delay the FCC Consent
becoming a Final Order, unless such action is requested by the FCC or its staff
or is required by the FCC's rules or policies. Should Buyer or Seller become
aware of any facts which could reasonably be expected to materially and
adversely affect or materially delay the FCC Consent from becoming a Final
<PAGE>
5
Order, or which would result in the imposition of a Material Adverse Condition,
such party shall promptly notify the other party thereof in writing and both
parties shall cooperate to take all steps necessary or desirable to resolve the
matter expeditiously and to obtain the FCC Consent and the Final Order without
the imposition of a Material Adverse Condition so long as such steps would not
have a material adverse effect upon Seller or Buyer or any affiliated entity.
4.2. OTHER GOVERNMENTAL CONSENTS. Promptly following the
execution of this Agreement, the parties shall prepare and file with the
appropriate governmental authorities any other requests for approval or waiver
that are required from such governmental authorities in connection with the
transactions contemplated hereby and shall diligently and expeditiously
prosecute, and shall cooperate fully with each other in the prosecution of, such
requests for approval or waiver and all proceedings necessary to secure such
approvals and waivers.
ARTICLE 5
PRORATIONS
----------
5.1. PRORATION OF EXPENSES. All expenses arising from the conduct
of the operation of the Station shall be prorated between Buyer and Seller as of
the Effective Time in accordance with GAAP. Such prorations shall be based upon
the principle that Seller shall be responsible for all liabilities and
obligations incurred or accruing in connection with the operation of the Station
until the Effective Time, and Buyer shall be responsible for such liabilities
and obligations incurred by Buyer thereafter. Such prorations shall include,
without limitation, all ad valorem, real estate and other property taxes,
business and license fees, utility expenses, rents and similar prepaid and
deferred items, except taxes arising by reason of the transfer of the Station
Assets as contemplated hereby, which shall be paid in accordance with Section
14.2. To the extent not known, real estate taxes shall be apportioned on the
basis of taxes assessed for the preceding year, with a reapportionment as soon
as the new tax rate and valuation can be ascertained. All income derived from
the sale of advertising time on the Station prior to the Closing shall be for
the benefit of and shall be collected by Seller.
5.2. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to
Closing, Seller shall deliver to Buyer a preliminary list of all items to be
prorated pursuant to Section 5.1 (the "Preliminary Proration Schedule"), and, to
the extent feasible, such prorations shall be credited against or added to the
Purchase Price at Closing. To the extent that all prorations and adjustments are
not resolved at Closing, Seller shall deliver to Buyer a schedule of such
additional prorations and adjustments (the "Proration Schedule") no later than
forty-five (45) days after the Closing Date. The Proration Schedule shall be
conclusive and binding upon Buyer unless Buyer provides Seller with written
notice of objection (the "Notice of Disagreement") within twenty (20) days after
Buyer's receipt of the Proration Schedule, which notice shall state
<PAGE>
6
the prorations of expenses proposed by Buyer (the "Buyer's Proration Amount").
Seller shall have twenty (20) days from receipt of a Notice of Disagreement to
accept or reject Buyer's Proration Amount. If Seller rejects Buyer's Proration
Amount, and the amount in dispute exceeds five thousand dollars ($5,000), the
dispute shall be submitted within ten (10) days to the Phoenix, Arizona office
of Deloitte & Touche (the "Referee") for resolution, such resolution to be made
within twenty (20) days after submission to the Referee and to be final,
conclusive and binding on Seller and Buyer. The cost and expenses of the Referee
shall be proportionately allocated between Buyer and Seller based on the
percentage of the disputed amount allocated by the Referee to Buyer and Seller,
respectively, but each party shall bear its own legal and other expenses, if
any. If the amount in dispute is equal to or less than five thousand dollars
($5,000), such amount shall be divided equally between Buyer and Seller. Payment
by Buyer or Seller, as the case may be, of the proration amounts determined
pursuant to this Section 5.2 shall be due ten (10) days after the last to occur
of (i) Buyer's acceptance of the Proration Schedule or failure to give Seller a
timely Notice of Disagreement; (ii) Seller's acceptance of Buyer's Proration
Amount or failure to reject Buyer's Proration Amount within ten (10) days of
receipt of a Notice of Disagreement; (iii) Seller's rejection of Buyer's
Proration Amount in the event the amount in dispute equals or is less than five
thousand dollars ($5,000); and (iv) notice to Seller and Buyer of the resolution
of the disputed amount by the Referee in the event that the amount in dispute
exceeds five thousand dollars ($5,000). Any payment required by Seller to Buyer
or by Buyer to Seller, as the case may be, under this Section 5.2 shall be paid
by wire transfer of immediately available federal funds to the account of the
payee with a financial institution in the United States as designated by Seller
in the Proration Schedule or by Buyer in the Notice of Disagreement (or by
separate notice in the event that Buyer does not send a Notice of Disagreement).
If either Buyer or Seller fails to pay when due any amount under this Section
5.2, interest on such amount will accrue from the date payment was due to the
date such payment is made at a per annum rate equal to the Prime Rate plus two
percent (2%), and such interest shall be payable upon demand.
5.3 Nothing in this Article 5 shall in any way limit Buyer or
Seller from seeking any remedy from the other party for breach of any provision
of this Agreement or indemnification pursuant to Article 16.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
6.1. ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Arizona.
<PAGE>
7
6.2. AUTHORIZATION AND BINDING OBLIGATION. Buyer has all
necessary power and authority to enter into and perform under this Agreement
and the transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation, enforceable
in accordance with its terms, except as limited by laws affecting creditors'
rights or equitable principles generally.
6.3. FCC QUALIFICATIONS. There are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify Buyer as assignee of the Station Licenses, and Buyer
is able to certify on FCC Form 314 to its financial qualifications.
6.4. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Article 4 with respect to FCC and other governmental
consents or as disclosed on Schedule 6.4, the execution, delivery and
------------
performance of this Agreement and the consummation of the transactions
contemplated hereby by Buyer: (a) do and will not require the consent of any
third party; (b) do and will not violate any provisions of Buyer's articles of
incorporation or bylaws; (c) do and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which any Buyer is a party; and (d) do and will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under any
agreement, instrument, license or permit to which Buyer is now subject.
6.5. ABSENCE OF LITIGATION. There is no claim, litigation,
proceeding or investigation pending or, to the best of Buyer's knowledge,
threatened against Buyer which seeks to enjoin or prohibit, or which otherwise
questions the validity of, any action taken or to be taken in connection with
this Agreement.
6.6. FINANCIAL QUALIFICATION. Buyer is financially qualified to
meet all terms, conditions and undertakings contemplated by this Agreement.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
7.1. ORGANIZATION AND STANDING. Seller is a limited partnership
duly formed, validly existing and in good standing under the laws of the State
of Maryland, and has all
<PAGE>
8
necessary power and authority to own, lease and operate the Station Assets and
to carry on the business of the Station as now being conducted and as proposed
to be conducted by Seller between the date hereof and the Closing Date.
7.2. AUTHORIZATION AND BINDING OBLIGATION. Seller has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights or equitable principles generally.
7.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except
as set forth in Article 4 with respect to FCC and other governmental consents
and except as set forth on Schedule 7.3, the execution, delivery and
-------------
performance of this Agreement and the consummation of the transactions
contemplated hereby by Seller (a) do not and will not require the consent of any
third party; (b) do not and will not violate any provisions of Seller's limited
partnership agreement (c) do not and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Seller is a party or by which it or the Station
Assets are bound; (d) do not and will not, either alone or with the giving of
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under any Lease, agreement, instrument, license or
permit to which either Seller or the Station Assets are now subject; and (e) do
not and will not result in the creation of any lien, charge or encumbrance on
any of the Station Assets.
7.4. FCC AUTHORIZATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the Station
---------------
Licenses, including their expiration dates. Seller has delivered to Buyer true
and complete copies of the Station Licenses, including any and all amendments
and other modifications thereto. The Station Licenses and other licenses,
permits and authorizations listed in Schedule 1.2(a) are (i) validly held by
---------------
Seller, and are in full force and effect, and except as disclosed in Schedule
--------
1.2(a), to Seller's knowledge none is subject to any restriction or condition
- -------
which would limit in any respect the full operation of the Station as now
operated and (ii) constitute all the licenses and authorizations issued by the
FCC to Seller that are utilized solely in connection with the current operation
of the Station. Seller has no knowledge of any condition imposed by the FCC as
part of any Station License which is neither set forth on the face thereof as
issued by the FCC nor contained in the FCC's rules applicable generally to
stations of the type, nature, class or location of the Station. Except as
disclosed on Schedule 1.2(a), the Station is being operated at full
<PAGE>
9
authorized power, in material compliance with the terms and conditions of the
Station Licenses applicable to it and in material compliance with all rules and
regulations of the FCC. Seller has no reason to believe that the FCC will not
renew the Station Licenses in the ordinary course.
(b) Except as disclosed in Schedule 1.2(a), there are no applications,
---------------
complaints or proceedings pending or, to the best of Seller's knowledge,
threatened before the FCC relating to the operation of the Station or that may
result in the revocation, modification, non-renewal or suspension of any of the
Station Licenses, the denial of any pending application or the imposition of any
fines, forfeitures, or other administrative actions by the FCC with respect to
the Station or its operation other than proceedings affecting the broadcasting
industry generally. Except as disclosed in Schedule 1.2(a), Seller is not
---------------
subject to any outstanding judgment or order of the FCC relating to the Station.
To Seller's knowledge, the Station is being operated in all material respects in
accordance with the terms and conditions of the Station Licenses, the underlying
construction permits, the Communications Act of 1934, as amended, and all rules,
regulations and policies of the FCC.
(c) To the knowledge of Seller, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations of
the FCC, would disqualify Seller as the assignor of the Station Licenses.
(d) Seller has complied in all material respects with all requirements to
file reports, applications and other documents with the FCC with respect to the
Station, and all such reports, applications and documents are complete and
correct in all material respects. The "Public Inspection File" of the Station is
complete and in substantial and material compliance with Section 73.3526 of the
Rules and Regulations.
7.5. CONDITION OF LEASED REAL PROPERTY.
Schedule 1.2(b) contains descriptions of all of Seller's leasehold
---------------
interests with respect to real property associated solely with Seller's
operation of the Station (the "Real Property"). All of the Real Property is in
good condition and repair consistent with its current use and available for use
in the operations of the Station. The improvements on the Real Property owned or
leased by Seller are in good working condition and repair and adequate for their
intended use.
Seller has not received any notice of any appropriation, condemnation
or like proceeding, or of any violation of any applicable zoning law, regulation
or other law, order, regulation or requirement affecting such Real Property or
improvements thereon, or of the need for any material repair, remedy,
construction, alteration or installation with respect to the Real
<PAGE>
10
Property or improvements thereon, or any change in the means or methods of
conducting operations thereon.
The Leases listed on Schedule 1.2(b) constitute valid and binding obligations
----------------
of Seller and, to Seller's knowledge, of all other parties thereto, and are in
full force and effect as of the date hereof. Except as disclosed on Schedule
--------
1.2(b), Seller is not in default under any of the Leases and to Seller's
- -------
knowledge, the other parties to such Leases are not in default thereunder.
Seller has not received or given written notice of any default thereunder from
or to any of the other parties thereto. Except as disclosed on Schedule 1.2(b),
---------------
Seller has all requisite power and authority to assign its rights under the
Leases to Buyer in accordance with this Agreement on terms and conditions no
less favorable than those in effect on the date hereof, and such assignment will
not affect the validity, enforceability or continuity of any such Leases.
7.6. TITLE TO AND CONDITION OF PERSONAL PROPERTY. Schedule 1.2(c),
----------------
contains a list of the principal items (and a summary description of the other
items) of tangible personal property owned, leased or held by Seller and
associated solely with the operation of the Station ("Personal Property") which
is complete and correct in all material respects. Except as described in
Schedule 1.2(c), Seller has good and marketable title to all Personal Property
- ----------------
free and clear of all Liens (except for Permitted Liens) including the right to
transfer same. Except as described in Schedule 1.2(c), to Seller's knowledge all
----------------
of the items of tangible personal property and facilities included in the
Station Assets are in good operating condition and repair (reasonable wear and
tear excepted), are insurable at standard rates, have been properly maintained
in accordance with industry standards, are performing satisfactorily and in
accordance with standards of good engineering practice, comply in all material
respects with applicable rules and regulations of the FCC and the terms of the
Station Licenses and are available for immediate use in the operation of the
Station. Seller has no knowledge of any defect in the condition or operation of
any item of Personal Property which is reasonably likely to have a material
adverse effect on the operation of the Station.
7.7. CONTRACTS. The Contracts, if any, will constitute valid and
binding obligations of Seller and, to Seller's knowledge, of all other parties
thereto, will be in full force and effect as of the Closing Date. Seller will
not be in default under any of the Contracts and to Seller's knowledge, the
other parties to such Contracts will not be in default thereunder. Should there
be any Contracts, Seller will have all requisite power and authority to assign
its rights under the Contracts to Buyer in accordance with this Agreement, and
such assignment will not affect the validity, enforceability or continuity of
any such Contracts.
7.8. LITIGATION. Seller is not subject to any judgment, award,
order, writ, injunction, arbitration decision or decree affecting the Station.
Except as disclosed on Schedule 7.8, there is no claim, litigation, proceeding
------------
or investigation pending or, to the best of Seller's
<PAGE>
11
knowledge, threatened against the Station in any federal, state or local court,
or before any administrative agency, arbitrator or other tribunal authorized to
resolve disputes. Except as disclosed on Schedule 7.8, there is no claim,
------------
litigation, proceeding or investigation pending or, to the best of Seller's
knowledge, threatened against Seller, which might have a material adverse effect
upon the assets or condition of the Station or which seeks to enjoin or
prohibit, or otherwise questions the validity of, any action taken or to be
taken in connection with this Agreement. To the actual knowledge of Seller,
there is no basis for any such claim, investigation, action, suit or proceeding
which would, individually or in the aggregate if adversely determined, have a
material adverse effect on the Station Assets or the operation of the Station.
7.9. COMPLIANCE WITH LAWS. To Seller's knowledge, Seller has
operated and is operating in material compliance with all laws, regulations and
governmental orders applicable to the operation of the Station, and its present
use of the Station Assets does not violate any such laws, regulations or orders
in any material respect. Seller has not received any notice asserting any
noncompliance with any applicable statute, role or regulation, in connection
with the operation of the Station.
7.10. ENVIRONMENTAL MATTERS; OSHA. Except to the extent disclosed in
the Phase I Environmental Site Assessment Update, Pinnacle Peak AM Tower Site,
3701 East Pinnacle Peak Road, Phoenix, AZ, prepared for Compass Radio Group,
Inc. by Dames & Moore, dated September 1, 1995, a copy of which has been
provided to Buyer, to Seller's actual knowledge, during the period of Seller's
ownership of the Station: (a) No Hazardous Materials (i) are or have been used,
treated, stored, disposed of, released, spilled, generated, manufactured,
transported or otherwise handled on the Real Property, (ii) have been spilled,
released or disposed of on property adjacent to the Real Property, or (iii) have
otherwise come to be located on or under the Real Property; (b) the Real
Property and all operations on the Real Property are in material compliance with
all Environmental Laws; (c) Seller has obtained all environmental, health and
safety permits necessary for the operation of the Station, and all such permits
are in full force and effect, and Seller is in compliance with the terms and
conditions of all such permits; (d) there are no underground storage tanks,
whether in use or closed, on or under the Real Property, and no PCB is present
on the Real Property or used in the Personal Property; and (e) Seller is in
material compliance with OSHA Laws. Seller has not received any notice, and is
not aware, of any administrative or judicial investigations, proceedings or
actions with respect to violations, alleged or proven, of Environmental Laws by
Seller or any tenants of Seller. The term "actual knowledge," as used in this
Section 7.10, shall mean the knowledge and awareness of Seller's principals,
after inquiry of the Station's general manager and chief engineer.
<PAGE>
12
7.11 FILING OF TAX RETURNS. Seller has filed all Federal, State and
local tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due.
7.12 ABSENCE OF INSOLVENCY. No insolvency proceeding of any
character including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting the Seller or any of the Station Assets, are pending or,
to the best knowledge of Seller, threatened, and Seller has made no assignment
for the benefit of creditors, nor taken any action with a view to, or which
would constitute the basis for the institution of, any such insolvency
proceedings.
7.13 INSURANCE. There is now in full force and effect with
reputable insurance companies fire and extended coverage insurance with respect
to all material tangible Station Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE 8
COVENANTS OF BUYER
------------------
8.1. NOTIFICATION. Buyer shall notify Seller of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Buyer which challenges the transactions
contemplated hereby, including any challenges to the FCC Application, and shall
use reasonable efforts to remove any such impediment to the transactions
contemplated by this Agreement.
8.2. NO INCONSISTENT ACTION. Buyer shall not take any action
materially inconsistent with its obligations under this Agreement or that would
hinder or delay the consummation of the transactions contemplated by this
Agreement.
8.3. RIGHT OF FIRST REFUSAL. At the Closing, Buyer shall execute
and deliver, the Right of First Refusal Agreement in the form of Exhibit B.
---------
8.4. NON-COMPETITION AGREEMENT. At the Closing, Buyer shall execute
and deliver to Seller the Non-competition Agreement in the form of Exhibit C.
---------
8.5. REQUEST FOR CALL SIGN CHANGE. Prior to Closing, Buyer shall
file an application with the FCC requesting a change to the call sign of the
Station to be effective upon the consummation of the transactions contemplated
hereby.
<PAGE>
13
ARTICLE 9
COVENANTS OF SELLER
-------------------
9.1. INTERIM OPERATION. Between the date of this Agreement and the
Closing Date, except as expressly permitted by this Agreement or with the prior
written consent of Buyer:
(a) Seller shall conduct the technical operation of the
Station solely in the ordinary and normal course of operation
consistent with past practice, including continuation of the current
broadcast hours of the Station and the carriage of programming during
such hours, except that Seller shall be permitted to take steps which
encourage the Station's listeners to listen to the Station's
programming on Station KOOL-FM;
(b) Seller shall not sell, assign, lease or otherwise transfer
or dispose of any of the Station Assets, except where no longer used
or useful in the operation of the Station;
(c) Seller shall not create, assume or permit to exist any
claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Station Assets, except
for those in existence on the date of this Agreement, all of which
will be removed on or prior to the Closing Date unless they are to be
assumed by Buyer in accordance with Section 3.1 of this Agreement;
(d) Seller shall operate the Station in material compliance
with the FCC's rules and regulations and the Station Licenses and with
all other applicable laws, regulations, rules and orders;
(e) Seller shall comply in all material respects with the
Leases;
(f) Seller shall promptly notify Buyer of any material default
by, or claim of default against, any party under any of the Leases
which are material, individually or in the aggregate, to the operation
of the Station, and any event or condition which, with notice or lapse
of time or both, would constitute an event of default under such
Leases; and
(g) Seller shall maintain insurance policies on the Station
and the Station Assets.
9.2. NOTIFICATION. Seller shall notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against Seller which
<PAGE>
14
challenges the transactions contemplated hereby, including any challenges to the
FCC Application, and shall use its reasonable efforts to take such steps as may
be necessary to remove any such impediment to the transactions contemplated by
this Agreement.
9.3. THIRD-PARTY CONSENTS. Seller shall use commercially reasonable
efforts to obtain the consent of any third party necessary for the assignment to
Buyer of any Lease or Contract to be assigned hereunder; provided, however, that
-------- -------
Seller shall have no obligation to pay consideration to any third-party to
obtain such consent, except as specifically provided in such Lease or Contract.
9.4. CLOSING COVENANT. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets as provided in Article 1
of this Agreement.
9.5. PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. Seller shall
secure the release of all liens or encumbrances on the Station Assets that
secure the payment of any indebtedness and shall deliver to Buyer at the Closing
releases or terminations under the Uniform Commercial Code and any other
applicable federal, state or local statutes or regulations of any financing or
similar statements filed against any Station Assets in (a) the jurisdictions in
which the Station Assets are and have been located since such Station Assets
were acquired by Seller, and (b) any other location specified or required by
applicable federal, state or local statutes or regulations.
9.6. NO INCONSISTENT ACTION. Seller shall not take any action which
is materially inconsistent with its obligations under this Agreement or that
would hinder or delay the consummation of the transactions contemplated by this
Agreement.
9.7. ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer
and its representatives may make reasonable investigation of the Station Assets
and Seller shall give to Buyer and it engineers, and other representatives
reasonable access during normal business hours throughout the period prior to
the Closing to Seller's personnel that may provide information relating to the
Station Assets; provided that (i) Buyer shall give Seller reasonable advance
notice of each date on which Buyer or any such other person or entity desires
such access, (ii) each person shall, if requested by Seller, be accompanied by
an officer or other representative of Seller; (iii) the investigations at the
offices of Seller shall be reasonable in number and frequency, and (iv) all
investigations shall be conducted in such a manner as not to physically damage
any property or constitute a disruption of the operation of the Station or
Seller. Seller shall furnish to Buyer during such period all documents and
copies of documents and information concerning the Station Assets as Buyer may
reasonably request.
<PAGE>
15
9.8. FCC REPORTS. Seller shall continue to file, on a current basis
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station Assets.
ARTICLE 10
JOINT COVENANTS
---------------
10.1. CONDITIONS. If any event should occur between the date hereof
and the Closing, either within or without the control of any party hereto, which
would prevent fulfillment of the conditions upon the obligations of any party to
consummate the transactions contemplated by this Agreement, the parties shall
use their reasonable efforts to cure the event as expeditiously as possible.
10.2. BEST EFFORTS. Between the date of this Agreement and the
Closing, each party shall use its best efforts to cause the fulfillment at the
earliest practicable date of all of the conditions to the obligations of the
other party to consummate the sale and purchase under this Agreement.
10.3. CONTROL OF STATION. Between the date of this Agreement and the
Closing, Buyer shall not, directly or indirectly, control, supervise or direct
the operations of the Station. Such operations shall be the sole responsibility
of Seller and, subject to the provisions of Article 9, shall be in its complete
discretion.
ARTICLE 11
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Seller made in this
Agreement shall be true and complete in all material respects on and as of the
Closing Date as if made on and as of that date.
(b) All of the terms, covenants and conditions to be complied with
and performed by Seller on or prior to Closing Date shall have been complied
with or performed.
<PAGE>
16
11.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of
this Agreement shall have been satisfied, and the FCC Consent shall have become
a Final Order without any Material Adverse Condition.
11.3. GOVERNMENTAL AUTHORIZATIONS. Seller shall be the lawful holder
of the Station Licenses and all other material licenses, permits and other
authorizations listed in Schedule 1.2(a), and there shall not have been any
---------------
modification of any of such licenses, permits and other authorizations which
would have an adverse effect on the operation of the Station. No proceeding
shall be pending which seeks or the effect of which reasonably could be to
revoke, cancel, fail to renew, suspend or modify adversely any of the Station
Licenses or any other licenses, permits or other authorizations relating to the
Station.
11.4. THIRD-PARTY CONSENTS. Seller shall have obtained and shall have
delivered to Buyer all third-party consents that may be required for assignment
of the Leases and Contracts, without any condition adverse to Buyer, or shall
have made arrangements for Buyer to receive the benefits of such Leases and
Contracts.
11.5. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto that would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
11.6. DELIVERIES. Seller shall have made or stand willing to make all
the deliveries required under Section 13.1.
11.7. OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
Seller's FCC counsel an opinion, dated the Closing Date, in the form of Exhibit
D hereto.
ARTICLE 12
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
----------------------------------------------------
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties made by Buyer in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date.
<PAGE>
17
(b) All the terms, covenants and conditions to be complied with and
performed by Buyer under this Agreement on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.2. GOVERNMENTAL CONSENTS. The conditions specified in Article 4 of
this Agreement shall have been satisfied, and the FCC Consent shall have become
a Final Order.
12.3. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto that would render it unlawful, as of the Closing Date, to
effect the transactions contemplated by this Agreement in accordance with its
terms.
12.4. DELIVERIES. Buyer shall have made or stand willing to make all
the deliveries required under Section 13.2.
ARTICLE 13
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
13.1. DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller shall
deliver to Buyer the following:
(a) a certificate signed by an officer of Seller's general
partner, dated the Closing Date, in form and substance reasonably
satisfactory to Buyer, certifying to the fulfillment of the conditions
set forth in Sections 11.1 through 11.5 hereof;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Station Assets to Buyer,
including, but not limited to, the following:
(i) assignment of the Station Licenses;
(ii) bill of sale for all Personal Property;
(iii) assignment of the Leases and Contracts; and
(c) resolutions of the boards of directors and shareholders of
Seller's
<PAGE>
18
general partner, authorizing the execution, delivery and
performance of this Agreement, certified by the secretary of the
Seller's general partner; and
(d) executed releases, in suitable form for filing and
otherwise in form and substance reasonably satisfactory to Buyer,
of any security interests granted in the Station Assets as
security for payment of loans and other obligations and of any
other Liens; and
(e) such other documents as may reasonably be requested by
Buyer's counsel.
13.2. DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
deliver to Seller the following:
(a) a certificate signed by an officer of Buyer, dated the
Closing Date, in form and substance reasonably satisfactory to
Seller, certifying to the fulfillment of the conditions specified
in Sections 12.1 through 12.3 hereof;
(b) immediately available wire-transferred federal funds as
provided in Section 2.1;
(c) instruments, in form and substance reasonably
satisfactory to Seller and its counsel, pursuant to which Buyer
assumes obligations, liabilities and commitments as provided in
Article 3;
(d) the Right of First Refusal and Non-competition
Agreements in the form of Exhibits B and C;
---------- -
(e) a copy of the application filed with the FCC requesting
a change to the call sign of the Station to be effective upon the
consummation of the transactions contemplated hereby and the FCC's
grant thereof; and,
(f) such other documents as may reasonably be requested by
Seller's counsel.
ARTICLE 14
FEES AND EXPENSES; TRANSFER TAXES
---------------------------------
14.1. GOVERNMENTAL FILING OR GRANT FEES. Any filing or grant fees
imposed by any governmental authority, the consent of which is required for the
transactions contemplated hereby, including all filing fees incurred pursuant to
Article 4, shall be borne equally by Buyer and Seller.
<PAGE>
19
14.2. TRANSFER TAXES. Any taxes arising by reason of the transfer of
the Station Assets as contemplated hereby shall be borne by Buyer.
14.3. EXPENSES. Each party hereto shall be solely responsible for and
shall pay all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement.
ARTICLE 15
BROKER'S COMMISSION OR FINDER'S FEE
-----------------------------------
15.1. BUYER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor has it or any person or entity acting on its behalf taken
any action on which a claim for any such payment could be based. Buyer further
agrees to indemnify and hold Seller harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorneys' fees)
arising out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by Buyer.
15.2. SELLER'S REPRESENTATION AND AGREEMENT TO INDEMNIFY. Seller
represents and warrants to Buyer that, except for its agreement with Kalil &
Co., Inc., neither it nor any person or entity acting on its behalf has agreed
to pay a commission, finder's fee or similar payment in connection with this
Agreement or any matter related hereto to any person or entity, nor have they or
any person or entity acting on its behalf taken any action on which a claim for
any such payment could be based. Seller further agrees that it shall be solely
responsible for the payment of any fee due to Kalil & Co., Inc. Seller further
agrees to indemnify and hold Buyer harmless from and against any and all claims,
losses, liabilities and expenses (including reasonable attorneys' fees) arising
out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by Seller.
ARTICLE 16
INDEMNIFICATION
---------------
16.1. INDEMNIFICATION BY SELLER. Notwithstanding the Closing, Seller
hereby agrees to indemnify, defend and hold Buyer harmless against and with
respect to, and shall reimburse Buyer for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by
<PAGE>
20
Seller contained herein or in any certificate, document or instrument delivered
to Buyer hereunder;
(b) Any and all obligations of Seller arising prior to the Effective
Time and which are not assumed by Buyer pursuant to the terms of this Agreement;
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station prior to the Effective Time, including but
not limited to any and all liabilities arising under the Station Licenses or the
Leases or the Contracts which relate to events occurring prior to the Effective
Time;
(d) Any and all losses, liabilities or damages resulting from the
litigation listed on Schedule 7.7;
------------
(e) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(f) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Buyer from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Seller.
16.2. INDEMNIFICATION BY BUYER. Notwithstanding the Closing, Buyer
hereby agrees to indemnify and hold the Seller harmless against and with respect
to, and shall reimburse the Seller for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or nonfulfillment
of any covenant or obligation by Buyer contained herein or in any certificate,
document or instrument delivered to Seller hereunder;
(b) Any and all obligations of Seller arising after the Effective Time
and which are assumed by Buyer pursuant to the terms of this Agreement;
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station by Buyer on and after the Effective Time,
including but not limited to any and all liabilities arising under the Station
Licenses, the Leases or the Contracts assigned to Buyer which relate to events
occurring after the Effective Time;
<PAGE>
21
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(e) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller from the date of payment, in the case of a reimbursable
expense, and from the date of incurrence, in the case of any other losses, until
the date of reimbursement by Buyer.
16.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification
shall be as follows:
(a) The party seeking indemnification under this Article 16 (the
"Claimant") shall give notice to the party from whom indemnification is sought
(the "Indemnitor") of any claim, whether solely between the parties or brought
by a third party, specifying (i) the factual basis for the claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding filed
by a third party against Claimant, notice shall be given by Claimant within
fifteen (15) business days after written notice of the action, suit or
proceeding was given to Claimant. In all other circumstances, notice shall be
given by Claimant within thirty (30) business days after Claimant becomes, or
should have become, aware of the facts giving rise to the claim. Notwithstanding
the foregoing, Claimant's failure to give Indemnitor timely notice shall not
preclude Claimant from seeking indemnification from Indemnitor except to the
extent that Claimant's failure has materially prejudiced Indemnitor's ability to
defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
business days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the Claimant
agrees to make available to the Indemnitor and/or its authorized representatives
the information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnitor cannot agree as to the validity and amount of the
claim within the 30-day period (or any mutually agreed upon extension thereof),
the Claimant may pay, compromise, or defend such a claim without prejudice to
any rights it may have hereunder.
(c) With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnitor shall have the
right at its own expense to participate in or assume control of the defense of
the claim with counsel of Indemnitor's choice, provided, that once the defense
thereof is assumed by the Indemnitor, the Indemnitor shall keep the Claimant
advised of all developments in the defense thereof, and any related litigation,
and the Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for actual
<PAGE>
22
out-of-pocket expenses incurred by the Claimant as the result of a request by
the Indemnitor. If the Indemnitor elects to assume control of the defense of any
third-party claim, the Claimant shall have the right to participate in the
defense of the claim as its own expense. If the Indemnitor does not elect to
assume control or otherwise participate in the defense of any third party claim,
Claimant may, but shall have no obligation to, defend or settle such claim or
litigation in such manner as it deems appropriate, and in any event Indemnitor
shall be bound by the results obtained by the Claimant with respect to the claim
(by default or otherwise) and shall promptly reimburse Claimant for the amount
of all expenses (including the amount of any judgment rendered), legal or
otherwise, incurred in connection with such claim or litigation. The Indemnitor
shall be subrogated to all rights of the Claimant against any third party with
respect to any claim for which indemnity was paid.
16.4. LIMITATIONS.
(a) Neither Seller nor Buyer shall have any obligation to the other
party for any matter described in Section 16.1 or Section 16.2, as the case may
be, except upon compliance by the other party with the provisions of this
Article 16, particularly Section 16.3. Neither party shall be required to
indemnify the other party under this Article 16 for any breach of any
representation or warranty contained in this Agreement unless written notice of
a claim under this Article 16 was received by the party within the pertinent
survival period specified in Article 18 of this Agreement.
(b) No party shall be entitled to indemnification hereunder unless and
until the amount for which indemnification is owing exceeds Twenty-Five Thousand
Dollars ($25,000) in the aggregate for all such matters; provided, however, that
-------- -------
the foregoing exclusion shall not apply to any individual occurrence pursuant to
which the amount for which indemnification is owing exceeds Ten Thousand Dollars
($10,000). Subject to the foregoing proviso, if such amount exceeds Twenty-Five
-------
Thousand Dollars ($25,000), the Indemnitor shall be liable to the Claimant for
just that portion in excess of Twenty-Five Thousand Dollars ($25,000).
(c) The provision of Section 16.4(b) hereof shall not be applicable to
any indemnification of Buyer pursuant to Section 21.10 hereof.
<PAGE>
23
ARTICLE 17
TERMINATION RIGHTS
------------------
17.1. TERMINATION.
(a) This Agreement may be terminated by either Buyer or Seller, if the
party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of the
following:
(i) if, on or prior to the Closing Date, the other party
defaults in any material respect in the observance or in the due
and timely performance of any of its covenants or agreements
contained herein, or any representation or warranty hereunder is
inaccurate in any material respect and such inaccuracy is
materially adverse to the party giving notice, and such default or
inaccuracy, if curable, has not been cured within ten (10) days
from receipt of written notice of default from the non-defaulting
party;
(ii) if the FCC denies the FCC Application or any part thereof
or designates any part of it for a trial-type hearing, provided
that the party which is the subject of the hearing (or whose
alleged actions or omissions resulted in the designation for
hearing) may not elect to terminate under this subsection (a)(ii);
(iii) if there shall be in effect any judgment, final decree
or order that would prevent or make unlawful the Closing; or
(iv) if the Closing has not occurred within nine (9) months of
the date of the FCC Application is accepted for filing.
(b) This Agreement may be terminated by Buyer, upon written notice to
Seller,
(i) if Buyer elects to terminate pursuant to Article 20
hereof; or
(ii) if the broadcast transmission of any of the Station from
its main broadcasting antenna at full authorized power is
interrupted or impaired for a period of more than forty-eight (48)
consecutive hours or for an aggregate of seventy-two (72) hours in
any seven (7) day period.
17.2. LIABILITY; RETURN OF ESCROW DEPOSIT. The termination of this
Agreement under Section 17.1 hereof shall not relieve any party of any liability
for breach of this Agreement
<PAGE>
24
prior to the date of termination, but if neither party is in breach or default
of its representations, warranties, covenants or agreements hereunder, neither
party shall have any further liability hereunder. If either Buyer or Seller
shall terminate this Agreement pursuant to Section 17.1 hereof and Buyer shall
not be in material breach of its representations, warranties, covenants or other
agreements hereunder, the parties shall instruct the Escrow Agent to remit the
Escrow Deposit, together with all interest earned thereon, to Buyer.
17.3. TERMINATION NOTICE. Each notice given by a party pursuant to
Section 17.1 to terminate this Agreement shall specify the Subsection (and
clause or clauses thereof) of Section 17.1 pursuant to which such notice is
given.
ARTICLE 18
SURVIVAL OF REPRESENTATIONS,
WARRANTIES AND COVENANTS
------------------------
The representations, warranties, covenants, indemnities and agreements
contained in this Agreement or in any certificate, document or instrument
delivered pursuant to this Agreement are and will be deemed and construed to be
continuing representations, warranties, covenants, indemnities and agreements
and shall survive the Closing for a period of nine (9) months after the Closing
Date. No claim may be brought under this Agreement or any other certificate,
document or instrument delivered pursuant to this Agreement unless written
notice describing in reasonable detail the nature and basis of such claim is
given on or prior to the last day of the applicable survival period. In the
event such a notice is given, the right to indemnification with respect thereto
shall survive the applicable survival period until such claim is finally
resolved and any obligations thereto are fully satisfied. Any investigation by
or on behalf of any party hereto shall not constitute a waiver as to enforcement
of any representation, warranty, covenant or agreement contained herein.
ARTICLE 19
REMEDIES UPON DEFAULT
---------------------
19.1. DEFAULT BY SELLER. Seller recognizes that, in the event Seller
defaults in the performance of its obligations under this Agreement, monetary
damages alone will not be adequate. Buyer shall therefore be entitled in such
event, in lieu of bringing suit at law or equity for money or other damages
(including return of the Escrow Deposit and the interest earned thereon as well
as costs and expenses incurred by Buyer in the preparation and negotiation of
this Agreement and in contemplation of the Closing hereunder) or for
indemnification under Article 16 hereof, to obtain specific performance of the
terms of this Agreement. In any action to enforce the provisions of this
Agreement, Seller shall waive the defense that there is an adequate remedy at
law or equity and agree that Buyer shall have the right to obtain specific
performance
<PAGE>
25
of the terms of this Agreement without being required to prove actual damages,
post bond or furnish other security. In addition, Buyer shall be entitled to
obtain from Seller court costs and reasonable attorneys' fees incurred by it in
enforcing its rights hereunder, plus interest at the Prime Rate on the amount of
any judgment obtained against Seller from the date of default until the date of
payment of the judgment. As a condition to seeking specific performance, Buyer
shall not be required to have tendered the Purchase Price specified in Section
2.1 of this Agreement, but shall be ready, willing and able to do so.
19.2. DEFAULT BY BUYER. If the transactions contemplated by this
Agreement are not consummated as a result of Buyer's wrongful failure to close
hereunder, and Seller is not also in material breach hereunder, Seller shall be
entitled to payment of Five Hundred Thousand Dollars ($500,000) as liquidated
damages in full settlement of any damages of any nature or kind that Seller may
suffer or allege to suffer as the result thereof. It is understood and agreed
that the amount of liquidated damages represents Buyer's and Seller's reasonable
estimate of actual damages and does not constitute a penalty. Recovery of
liquidated damages under this Section 19.2 shall be the sole and exclusive
remedy of Seller against Buyer for breach of or failure to consummate this
Agreement and shall be applicable regardless of the actual amount of damages
sustained. In addition, Seller shall be entitled to obtain from Buyer court
costs and reasonable attorneys' fees incurred by it in enforcing its rights
hereunder, plus interest at the Prime Rate on the amount of any judgment
obtained against Buyer from the date of default until the date of payment of the
judgment. As a condition to obtaining liquidated damages, Seller shall not be
required to have tendered the Station Assets but shall be required to
demonstrate that it is willing and able to do so and to perform its other
closing obligations in all material respects.
ARTICLE 20
RISK OF LOSS
------------
The risk of loss or damage to the Station Assets prior to the Effective
Time shall be upon Seller. Seller shall repair, replace and restore any damaged
or lost Station Asset to its prior condition as soon as possible and in no event
later than the Effective Time; provided, however, that Seller shall have no
-----------------
obligation to repair, replace or restore a damaged or lost Station Asset that is
obsolete if no replacement asset is necessary or useful for the continued
operation of the Station consistent with past practice. If Seller is unable or
fails to restore or replace a lost or damaged Station Asset prior to the Closing
and the cost of such restoration or replacement would exceed $75,000, Buyer may
elect (a) to terminate this Agreement pursuant to Article 17 hereof, (b) to
consummate the transactions contemplated by this Agreement on the Closing Date,
in which event Seller shall assign to Buyer at Closing Seller's rights under any
insurance policy or pay over to Buyer all proceeds of insurance covering such
Station Asset's damage, destruction or loss, or (c) delay the Closing Date until
a date within fifteen (15) days after Seller gives written notice to Buyer of
completion of the restoration or replacement of such Station Asset. If Seller is
<PAGE>
26
unable or fails to restore or replace any lost or damaged Station Asset prior to
the Closing Date and the cost of such restoration or replacement would be
$75,000 or less the Purchase Price shall be reduced in an amount equal to the
reasonable cost to restore or replace said Station Asset or a reasonable reserve
shall be placed in escrow pending cure or repair. If the delay in the Closing
Date under this Article 20 would cause the Closing to fall at any time after the
period permitted by the FCC Consent, Seller and Buyer shall file an appropriate
request with the FCC for an extension of time within which to complete the
Closing.
ARTICLE 21
OTHER PROVISIONS
----------------
21.1. PUBLICITY. Except as required by applicable law or with the other
party's express written consent, no party to this Agreement nor any affiliate of
any party shall issue any press release or similar public statement regarding
the Transactions contemplated by this Agreement.
21.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Neither Buyer nor Seller may assign this Agreement without the
prior written consent of the other parties hereto except that Buyer may assign
its rights (but not its obligations) under this Agreement to an Affiliate of
Buyer.
21.3. ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
21.4. HEADINGS. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
21.5. COMPUTATION OF TIME. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
<PAGE>
27
21.6. GOVERNING LAW. The construction and performance of this Agreement
shall be governed by the laws of the State of Arizona without regard to its
principles of conflict of law.
21.7. NOTICES. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, addressed
to the following addresses, or to such other address as any party may request in
writing.
If to Seller:
Radio 94 of Phoenix Limited Partnership
920 Dain Plaza
60 South Sixth Street
Minneapolis, MN 55402
Attn: L. Steven Goldstein
With a copy to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
If to Buyer:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
receipt, if mailed by registered or certified mail, postage prepaid and return
receipt requested, or (iii) on the date of a signed receipt, if sent by an
overnight delivery service, but only if sent in the same manner to all persons
entitled to receive notice or a copy.
21.8. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
<PAGE>
28
21.9. FURTHER ASSURANCES. Seller shall at any time and from time to
time after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may reasonably request in
order to vest and confirm in Buyer (or its assignees) the title and rights to
and in all of the Station Assets to be and intended to be transferred, assigned
and conveyed hereunder.
21.10. BULK SALES. Buyer hereby waives compliance by Seller with the
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article 16, indemnify and hold
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
21.11. SEVERABILITY. Any provision of this Agreement which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
21.12. COOPERATION IN ARRANGING EXCHANGE(S). Buyer may elect to
exchange the Station Assets for other property of a like-kind in a simultaneous
tax-deferred exchange which would qualify as a tax-deferred like-kind exchange
under Section 1031 of the Internal Revenue Code (the "Like-kind Exchange"). If
Buyer elects to so exchange the Station Assets, Buyer may at any time prior to
the Closing assign its rights under this Agreement to one or more "qualified
intermediaries," as defined in Treasury Regulation (S) 1.103 l(k) - 1 (g)(4),
subject to all of Seller's rights under this Agreement. Seller agrees to
reasonably cooperate with Buyer and such intermediary(ies) in arranging and
effecting the Like-kind Exchange and shall execute such additional documents as
may be reasonably necessary in order to effect the Like-kind Exchange, provided
that Seller shall have no obligations under this Section 21.12 unless (a) Buyer
gives notice to Seller of its decision to proceed with a Like-kind Exchange not
later than ten (10) business days prior to the Closing Date, (b) Buyer agrees to
indemnify and reimburse Seller for any and all costs and expenses (including
reasonable fees and expenses of counsel) incurred by Seller in cooperating with
Buyer; (c) such Like-kind Exchange will not, in Seller's judgment, materially
adversely affect Seller, (d) such Like-kind Exchange will not result in any
delay of the Closing, and (e) such Like-kind Exchange will not expose Seller to
any additional liability or obligation.
<PAGE>
29
ARTICLE 22
DEFINITIONS
-----------
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"Affiliate" shall mean any person or entity that is controlling,
controlled by or under common control with the named person or entity.
"Agreement" shall mean this Asset Purchase Agreement, including the
exhibits and schedules hereto .
"Buyer" shall have the meaning set forth in the preamble to this
Agreement. "Buyer's Proration Amount" shall have the meaning set forth in
Section 5.3.
"Business Day," whether or not capitalized, shall mean every day of the
week excluding Saturdays, Sundays and Federal holidays.
"Claimant" shall have the meaning set forth in Section 16.3(a).
"Closing" shall have the meaning set forth in Section 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Contracts" shall have the meaning set forth in Section 1.2(d).
"Effective Time" shall mean 12:01 a.m., Washington, D.C. time, on the
Closing Date.
"Environmental Laws" shall mean the Comprehensive Environmental Response
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substance Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouting, emitting or dumping of Hazardous Materials.
"Escrow Agent" shall mean Kalil & Co., Inc.
<PAGE>
30
"Escrow Agreement" shall mean the agreement between Seller, Buyer and
Escrow Agent, substantially in the form of Exhibit A to this Agreement.
---------
"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean the application or applications that Seller
and Buyer must file with the FCC requesting its consent to the assignment of the
Station Licenses.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
"Final Order" shall mean action by the FCC (i) which has not been
vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect
to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC on
its own motion under the Communications Act of 1934, as amended, and the rules
and regulations of the Commission, has expired.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Hazardous Materials" shall mean toxic materials, hazardous wastes,
hazardous substances, pollutants or contaminants, asbestos or asbestos-related
products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as
such terms are defined in any applicable federal, state or local laws,
ordinances, rules and regulations, and including any other terms which are or
may be used in any applicable environmental laws to define prohibited or
regulated substances).
"Indemnitor" shall have the meaning set forth in Section 16.3(a).
"Leases" shall have the meaning set forth in Section 1.2(b).
"Liens" shall mean any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, lien, lease or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
assets or property, including any written or oral agreement to give or grant any
of the foregoing, any conditional sale or other title retention agreement, and
the filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Material Adverse Condition" shall mean a condition which would
materially restrict, limit, or otherwise materially adversely affect or
materially impair the right of Buyer to the ownership or operation of the
Station Assets; provided, however, that any condition which
<PAGE>
31
requires that the Station be operated in accordance with a condition similar to
those contained in the Station Licenses shall not be deemed a Material Adverse
Condition.
"Non-Competition Agreement" shall mean the Non-Competition Agreement
substantially in the form of Exhibit C to this Agreement.
---------
"Notice of Disagreement" shall have the meaning set forth in Section 5.3.
"OSHA Laws" shall mean the Occupational Safety and Health Act of 1970, as
amended, and all other federal, state or local laws or ordinances, including
orders, rules, and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
"Permitted Liens" shall mean any statutory lien which secures a payment
not yet due that arises, and is customarily discharged, in the ordinary course
of Seller's business; any easement, right-of-way or similar imperfection in the
Seller's title to its assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Seller material to the operation of its
business as it has been and is now conducted.
"Personal Property" shall have the meaning set forth in Section 7.6.
"Preliminary Proration Schedule" shall have the meaning set forth in
Section 5.3.
"Prime Rate" shall mean a per annum rate equal to the "prime rate" as
published in the Money Rates column of the Eastern Edition of The Wall Street
---------------
Journal (or the average of such rates if more than one rate is indicated).
- -------
"Proration Schedule" shall have the meaning set forth in Section 5.3.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Real Property" shall have the meaning set forth in Section 7.5.
"Referee" shall have the meaning set forth in Section 5.2.
"Right of First Refusal Agreement" shall mean the Right of First Refusal
Agreement substantially in the form of Exhibit B to this Agreement.
---------
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
<PAGE>
32
"Station" shall mean radio broadcast Station KOOL(AM), Phoenix,
Arizona;
"Station Assets" shall have the meaning set forth in Section 1.2.
"Station Licenses" shall mean the licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued by the FCC to Seller in connection with the operation of
the Station and are used solely in the operation of the Station.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
RADIO 94 OF PHOENIX LIMITED PARTNERSHIP
By: Colfax Communications, Inc., Its General Partner
By: /s/ Joseph O. Bunting, III
-------------------------------------------------
Name: Joseph O. Bunting, III
-----------------------------------------------
Title: Vice President
----------------------------------------------
SALEM MEDIA OF ARIZONA, INC.
By: /s/ Eric H. Halvorson
-------------------------------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
<PAGE>
EXHIBIT A
---------
FORM OF ESCROW AGREEMENT
------------------------
<PAGE>
ESCROW AGREEMENT
This ESCROW AGREEMENT is made as of the __ day of June, 1996, by and among
Radio 94 of Phoenix Limited Partnership, a Maryland limited partnership
("Seller"), Salem Media of Arizona, Inc., an Arizona corporation ("Buyer"), and
Kalil & Co., Inc., an Arizona corporation ("Escrow Agent").
RECITALS
--------
Seller and Buyer have entered into an Asset Purchase Agreement (the "Purchase
Agreement"), made as of the ___ day of ___________,1996, which provides for the
sale and acquisition of certain of the assets associated solely with the
operation of radio broadcast station KOOL(AM), Phoenix, Arizona (the "Station").
Pursuant to the Purchase Agreement, Buyer has delivered the sum of Four
Hundred Thousand Dollars ($400,000) ("Escrow Deposit") to Escrow Agent, who has
agreed to act as escrow agent with respect to the Escrow Deposit and all
interest earned thereon pursuant to the terms of this Escrow Agreement.
NOW, THEREFORE, the parties agree as follows:
1. DUTY TO HOLD ESCROW DEPOSIT. Escrow Agent shall hold the Escrow Deposit
------------------------------
until receipt of either (a) a joint notice from Seller and Buyer in accordance
-
with Paragraph 3(a), (b) a notice and demand from Seller as provided in
-
Paragraph 3(b), (c) a notice and demand from Buyer as provided in Paragraph
-
3(c), or (d) joint instructions from Buyer and Seller otherwise
-
<PAGE>
2
directing Escrow Agent of the manner in which to dispose of the Escrow Deposit
and any interest earned thereon.
2. INVESTMENT OF ESCROW DEPOSIT. Escrow Agent shall invest and reinvest the
-----------------------------
Escrow Deposit and any interest earned thereon in an interest bearing federally
insured money market account or in short-term U.S. Treasury obligations or the
equivalent thereof. Notwithstanding anything in this Agreement to the contrary,
interest and any other earnings on the Escrow Deposit shall be distributed by
the Escrow Agent to Buyer from time to time upon the request of Buyer.
3. DISPOSITION OF ESCROW DEPOSIT. The Escrow Deposit shall be paid to Buyer
------------------------------
or Seller or distributed as follows:
(a) Upon receipt by Escrow Agent of a joint notice from Buyer and Seller
stating that the Closing under the Purchase Agreement has occurred, Escrow Agent
shall immediately pay the Escrow Deposit in immediately available funds without
deduction, set-off, or counterclaim to Seller and shall pay all interest earned
thereon not previously distributed in immediately available funds without
deduction, set-off or counterclaim to Buyer.
(b) Upon receipt by Escrow Agent of a notice from Seller stating that Seller
is entitled to the Escrow Deposit and following the failure of Buyer to make a
timely protest (in accordance with Paragraph 4 hereof) after receipt of notice
from Escrow Agent pursuant to Paragraph 4 hereof, Escrow Agent shall pay the
Escrow Deposit in immediately available funds without deduction, set-off or
counterclaim to Seller, free and clear of any and all claims thereto
<PAGE>
3
by Buyer. If Seller provides any notice hereunder, Seller shall concurrently
provide a copy of such notice to Buyer.
(c) Upon receipt by Escrow Agent of a notice from Buyer stating that Buyer is
entitled to the Escrow Deposit and following the failure of Seller to make a
timely protest (in accordance with Paragraph 4 hereto) after receipt of notice
from Escrow Agent pursuant to Paragraph 4 hereof, Escrow Agent shall pay the
Escrow Deposit and all interest earned thereon not previously distributed in
immediately available funds without deduction, set-off or counterclaim to Buyer,
free and clear of any claim thereto by Seller. If Buyer provides any notice
hereunder, Buyer shall concurrently provide a copy of such notice to Seller.
4. DISAGREEMENT BETWEEN BUYER AND SELLER. If either Buyer or Seller (for
---------------------------------------
purposes of this paragraph referred to as the "Demanding Party") gives notice to
Escrow Agent as provided in Paragraph 3(b) or 3(c) hereof and makes demand upon
Escrow Agent for payment of the Escrow Deposit, Escrow Agent shall, within seven
(7) business days of receipt of such demand, serve upon Buyer or Seller, as the
case may be (the "Notified Party"), a copy of the Demanding Party's notice.
Unless the Notified Party protests the payment of the Escrow Deposit in writing
delivered to Escrow Agent within seven (7) business days after the receipt by
the Notified Party of the Demanding Party's notice from the Escrow Agent, Escrow
Agent shall thereupon make payment to the Demanding Party as required by such
demand in accordance with Paragraph 3(b) or 3(c) hereof. If the Notified Party
timely and duly protests,
<PAGE>
4
the Escrow Agent shall hold the Escrow Deposit until the disagreement is
resolved as provided in Paragraph 5(f) below.
5. LIMITATIONS ON LIABILITY OF ESCROW AGENT.
----------------------------------------
(a) The duties and obligations of Escrow Agent shall be determined solely by
the express provisions of this Escrow Agreement and no implied duties or
obligations shall be read into this Escrow Agreement against Escrow Agent.
Escrow Agent shall be under no obligation to refer to the Purchase Agreement or
any other documents between or among the parties related in any way to this
Escrow Agreement, except as specifically provided herein.
(b) Escrow Agent shall not be liable to anyone for any damages, losses or
expenses for any act done or step taken or omitted by Escrow Agent in good
faith, provided, however, that Escrow Agent shall be liable for damages, losses
and expenses arising out of its willful default, gross negligence or bad faith
under this Escrow Agreement.
(c) Escrow Agent shall be entitled to rely upon, and shall be protected in
acting in reasonable reliance upon, any writing furnished to Escrow Agent by any
party in accordance with the terms hereof, which Escrow Agent believes in good
faith to be genuine and valid and to have been signed by the proper party.
(d) Escrow Agent may obtain advice of its counsel with respect to any
questions relating to its duties or responsibilities hereunder and shall not be
liable for any action taken or omitted in good faith on such advice of such
counsel.
<PAGE>
5
(e) Without limiting the foregoing, Escrow Agent shall not in any event be
liable, and Seller and Buyer shall jointly and severally indemnify and hold
harmless Escrow Agent, in connection with Escrow Agent's investment or
reinvestment of the Escrow Deposit in good faith, including without limitation
any delays (not resulting from its gross negligence or willful default) in the
investment or reinvestment of the Escrow Deposit, or any loss of income incident
to any such delays.
(f) If any disagreement between the parties to this Escrow Agreement occurs
which results in adverse claims and demands being made in connection with or
against the Escrow Deposit, or any interest earned thereon, Escrow Agent shall
refuse to comply with the claims or demands of any party until such disagreement
is finally resolved by mutual agreement of the parties or by a court of
competent jurisdiction (including expiration of all available appeal remedies),
and, in so doing, Escrow Agent shall not be or become liable to any party.
Alternatively, in the event of any dispute or disagreement between Buyer and
Seller sufficient in the sole discretion of Escrow Agent to justify its doing
so, Escrow Agent shall be entitled to tender into the registry or custody of any
court of competent jurisdiction the Escrow Deposit and to initiate such legal
proceedings as it deems appropriate, including without limitation, an
interpleader action, for determination of the respective rights, titles and
interests of Seller and Buyer therein. Upon such tender, Escrow Agent shall be
entitled to receive from Seller and Buyer its reasonable attorney fees and
expenses and shall be forthwith released and discharged from all further duties,
liabilities and obligations under this Escrow Agreement.
<PAGE>
6
(g) Buyer and Seller jointly and severally agree to indemnify Escrow Agent
against all legal fees, costs and other expenses reasonably incurred by Escrow
Agent in connection with or as a result of any disagreement among or between the
parties hereto or the performance by Escrow Agent of its duties hereunder,
including, without limitation, any litigation arising from this Escrow Agreement
or involving the subject matter hereof; except, as provided in Paragraph 5(b)
hereof. Except as otherwise provided in this Escrow Agreement, Buyer and Seller
shall each pay one-half of the reasonable expenses incurred by Escrow Agent
under this Escrow Agreement.
(h) Any action claimed to be required to be taken by Escrow Agent hereunder
and not otherwise specifically set forth herein shall require the agreement of
Buyer, Seller, and Escrow Agent.
(i) Except as stated herein, Escrow Agent does not have any interest in the
Escrow Deposit held hereunder, but is serving as escrow holder only.
6. RESIGNATION OF ESCROW AGENT. If Escrow Agent desires to resign as Escrow
---------------------------
Agent, it shall provide thirty (30) days notice (a "Resignation Notice") of its
intention to so resign to Buyer and to Seller. Notwithstanding the foregoing, if
following the resignation of Escrow Agent there would be no replacement escrow
agent hereunder, Escrow Agent's resignation shall not be effective until Buyer
and Seller shall have mutually agreed to the appointment of a replacement escrow
agent and such appointment shall have been accepted in writing. In the event
that no replacement escrow agent has been appointed by Buyer and Seller
<PAGE>
7
within sixty (60) days of the Resignation Notice, Escrow Agent shall be
permitted to select a reputable replacement escrow agent.
7. AMENDMENTS. No modification or amendment to this Escrow Agreement, or
-----------
waiver of compliance with any provision or condition hereof, shall be valid
unless reduced to writing and signed by all of the parties hereto.
8. EFFECT OF THIS ESCROW AGREEMENT. This Escrow Agreement sets forth the
--------------------------------
entire understanding of the parties with respect to the subject matter hereof
and supersedes any and all prior or contemporaneous agreements, arrangements and
understandings relating to the subject matter hereof. This Escrow Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors, permitted assigns and legal representatives. The
paragraph headings of this Escrow Agreement are for convenience of reference
only and do not form a part hereof and do not in any way modify, interpret or
construe the intentions of the parties. This Escrow Agreement shall be governed
by and construed in accordance with the laws of the State of Arizona without
regard to its principles of conflicts of laws, and the state and federal courts
of Arizona shall have exclusive jurisdiction over any controversy or claim
arising out of or relating to this Agreement.
9. NOTICES. Any notice, report, demand, waiver, or protest required,
--------
permitted or contemplated hereunder shall be in writing and shall be personally
delivered, transmitted by telecopy or mailed, postage prepaid, certified or
registered mail, or delivered by a nationally
<PAGE>
8
recognized express courier service, charges prepaid, to the following addresses
(or such other addresses as the parties may specify from time to time):
To Seller:
Radio 94 of Phoenix Limited Partnership
920 Dain Plaza
60 South 6th Street
Minneapolis, MN 55402
Attention: L. Steven Goldstein
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006
Attention: Steven A. Lerman, Esq.
To Buyer:
Salem Communications Corporation
4880 Santa Rosa Road,
Suite 300 Camarillo, CA 93012
Attention: Jonathan L. Block, Esq.
To Escrow Agent:
Kalil & Co., Inc.
3444 N. Country Club, Suite 200
Tucson, AZ 85716
Attention: Mr. Frank Kalil
and shall be deemed to have been duly delivered and received (i) on the date of
personal delivery, if delivered by hand or (ii) on the date of receipt if
transmitted by telecopy or mailed by registered or certified mail, postage
prepaid and return receipt requested; or (iii) on the date
<PAGE>
9
of a signed receipt, if sent by an overnight delivery service, but only if
sent in the same manner to all persons entitled to receive notice or a copy.
10. COUNTERPARTS. This Escrow Agreement may be executed in one or more
-------------
counterparts, and by the different parties hereto on separate counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same Agreement.
IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of the
date first above written.
RADIO 94 OF PHOENIX LIMITED
PARTNERSHIP
By: Colfax Communications, Inc.
Its General Partner
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
SALEM MEDIA OF ARIZONA, INC.
By:
----------------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
<PAGE>
10
KALIL & CO., INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
<PAGE>
EXHIBIT B
---------
FORM OF RIGHT OF FIRST REFUSAL AGREEMENT
----------------------------------------
<PAGE>
RIGHT OF FIRST REFUSAL AGREEMENT
--------------------------------
This RIGHT OF FIRST REFUSAL AGREEMENT (this "Agreement"), made as of the __
day of ___ 1996, is by and between Radio 94 of Phoenix Limited
Partnership, a Maryland limited partnership ("Radio 94"), and Salem Media of
Arizona, Inc., an Arizona corporation, _______ corporation ("Salem").
RECITALS
--------
Radio 94 is the licensee of and operates radio broadcast station KOOL(AM),
Phoenix, Arizona (the "Station"), pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
Radio 94 and Salem have entered into an Asset Purchase Agreement, made as of
the __ day of ___ 1996 (the "Purchase Agreement"), pursuant to which
Radio 94 and Salem have agreed that Radio 94 will sell and Salem will acquire
certain of the assets associated solely with the operation of the Station on the
terms and subject to the conditions set forth in the Purchase Agreement.
As a condition of the Purchase Agreement, Salem has agreed to grant Radio 94
a right of first refusal to acquire the Station.
Therefore, the parties agree as follows:
1. SALE OF THE STATION. Following the acquisition of the Station by Salem
-------------------
pursuant to the Purchase Agreement, if at any time, Salem or its shareholders
receives from a third party a bona fide offer to purchase the station or to
acquire control of Salem, as hereinafter defined, which offer Salem or its
shareholders are prepared to accept (the "Offer"), Salem shall promptly notify
Radio 94 of the Offer in writing, specifying all of the terms and conditions of
the Offer (or, in the event of an offer to transfer control of Salem's parent
company, Salem Communications Corporation ("SCC"), an amount to be allocated to
the Station by SCC based upon terms set forth in the Offer, or, at Radio 94's
election and expense, an independent appraisal conducted by an independent
appraiser selected by Radio 94, which selection shall be subject to SCC's prior
approval which shall not be unreasonably withheld, may be requested to determine
the fair market value of the Station, based upon the value of the Station in
relation to the terms of the Offer) and providing Radio 94 with a complete copy
of the Offer. Radio 94 shall have thirty (30) days after receipt of such
notification within which to obtain such appraisal. Radio 94 shall have ten (10)
business days after receipt of such notification or, if applicable, ten (10)
business days after receipt of the appraisal within which to elect to purchase
the Station on the same financial terms and conditions described in the Offer or
in the event of an offer to transfer control of SCC to agree to SCC's allocation
or to agree to be subject to the results of the independent appraisal. If Radio
94 notifies Salem in writing within this period that it does not wish to
<PAGE>
2
purchase the Station, or if Radio 94 fails to notify Salem within this period
that it wishes to purchase the Station, Salem or its shareholders shall be
permitted for a period of the following forty-five (45) days to enter into a
definitive contract to sell the Station on substantially the same terms and
conditions of, and to the party submitting, the Offer disclosed to Radio 94. If
the terms and conditions of the offer as initially disclosed to Radio 94 are
proposed to be changed in a material manner within such forty-five (45) day
period, the revised terms and conditions shall be disclosed in writing to Radio
94, which shall have ten (10) business days following receipt of the changes to
elect to exercise its right to purchase the Station on such revised terms and
conditions in the manner set forth in this paragraph. If Salem or its
shareholders do not enter into a definitive contract with the offeror to sell
the Station on the terms initially disclosed to Radio 94 within the permitted
forty-five (45) day period, or within ten (10) days following Radio 94's
decision not to purchase the Station on the revised terms and conditions or its
failure to notify Salem within the applicable period, then Radio 94's right of
first refusal shall be reinstated. A sale is any transaction which involves an
assignment of the broadcast license requiring prior FCC approval by the filing
of an FCC application on current FCC Form 314 or the equivalent thereof, as
defined under the FCC Rules. A transfer of control is any transaction requiring
prior FCC approval by the filing of an FCC application on current FCC Form 315
or the equivalent thereof, as defined under the FCC Rules; provided however that
control of the Station shall not be deemed to have been transferred in the event
that the stock of SCC becomes publicly traded and Edward G. Atsinger III and
Smart W. Epperson collectively maintain not less than a 25% voting interest in
SCC.
2. TERM. This Agreement shall be in effect during the time period during
----
which Salem, or an entity controlling, controlled by or under common control
with Salem, is the licensee of the Station (the "Term"). This Agreement shall
terminate on the first occurrence of either (a) following Radio 94's failure to
exercise its right of first refusal hereunder, the assignment of the Station's
license or transfer of control of the licensee of the Station to any person or
entity not controlling, controlled by or under common control with Salem, or (b)
the date on which Radio 94 no longer owns any radio station licensed to a
community located within a seventy-five (75) mile radius of Phoenix, Arizona.
3. NOTICES. Any notice required or permitted to be given under the provisions
-------
of this Agreement shall be in writing, addressed to the following addresses, or
to such other address as any party may request in writing.
<PAGE>
3
If to Radio 94:
Radio 94 of Phoenix Limited Partnership
920 Dain Plaza
60 South Sixth Street
Minneapolis, MN 55402
Attn: L. Steven Goldstein
With a copy to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
If to Salem:
Salem Media of Arizona, Inc.
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Any such notice shall be deemed to have been duly delivered and received (i) on
the date of personal delivery, or (ii) on the date of receipt, if mailed by
registered or certified mail, postage prepaid and return receipt requested, or
(iii) on the date of a signed receipt, if sent by an overnight delivery service,
but only if sent in the same manner to all persons entitled to receive notice or
a copy.
4. ASSIGNABILITY. This Agreement and the rights and obligations of the
--------------
parties hereunder shall not be assigned by either party without the express
written consent of the other party; provided, however, that either party may
assign its rights without such consent to an entity controlling, controlled by
or under common control with such party.
5. GOVERNING LAW. The construction and performance of this Agreement shall be
---------------
governed by the laws of the State of Arizona without regard to its principles of
conflict of law.
<PAGE>
4
6. COUNTERPARTS. This Agreement may be executed in one or more
-------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
RADIO 94 OF PHOENIX LIMITED
PARTNERSHIP
By: Colfax Communications, Inc.,
Its General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
SALEM MEDIA OF ARIZONA, INC.
By:
-------------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
<PAGE>
EXHIBIT C
---------
FORM OF NON-COMPETITION AGREEMENT
---------------------------------
<PAGE>
COVENANT NOT TO COMPETE
-----------------------
This Covenant Not to Compete (the "Agreement") is made as of the ___ day of
______, 1996, by and between Salem Communications Corporation ("SCC"), Salem
Media of Arizona, Inc. ("Buyer") and Radio 94 of Phoenix Limited Partnership, a
Maryland limited partnership ("Seller").
RECITALS
--------
Seller has been the licensee of radio station KOOL(AM), Phoenix,
Arizona (the "Station").
SCC is the parent corporation of Buyer.
Concurrently with the execution of this Agreement, Buyer acquired certain of
the assets of the Station pursuant to an Asset Purchase Agreement made as of the
__ day of ____, 1996, between Buyer and Seller (the "Asset Purchase Agreement").
Pursuant to Section 8.4 of the Asset Purchase Agreement, and as a material
inducement to Seller to enter into the Asset Purchase Agreement and consummate
the transactions contemplated therein, Buyer and SCC have agreed to enter into
this Agreement on the terms and conditions set forth herein.
Therefore, in consideration of the covenants and agreements contained herein
and in the Asset Purchase Agreement, the parties agree as follows:
1. Recitals. The foregoing recitals are affirmed by the
---------
parties as true and correct and are incorporated by reference in this Agreement.
2. Agreement Not to Compete. Buyer and SCC agree that for a
-------------------------
period ending on the earlier of: (1) ten (10) years from the Closing (as defined
in Section 1.1 of the Asset Purchase Agreement); or (2) the date on which Seller
no longer owns any radio station licensed to a community located within a
seventy-five (75) mile radius of Phoenix, Arizona, neither Buyer nor SCC shall
broadcast over the facilities of the Station any of the following formats: Adult
Album Alternative ("AAA"), Adult Contemporary, Alternative, Alternative AC,
Beautiful Music, Big Band, Black, Classic Rock, Classical, Contemporary Hit/Top
40, Country, Disco, Jazz, Middle-of-the-Road ("MOR"), New Age, News, News/Talk,
Nostalgia, Oldies, Progressive, Reggae, Rock/AOR, Spanish, Sports, Talk, or
Urban Contemporary.
<PAGE>
-2-
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
prohibit or prevent SCC or Buyer from broadcasting in a Religious, Religious
Talk (defined as a format in which more than 50% of the broadcast day is devoted
to talk programming emphasizing religious and cultural issues) or Contemporary
Christian Music format or any format derived from those formats.
3. Enforceability. Each party acknowledges and agrees as follows:
---------------
3.1 The covenant set forth in Paragraph 2 above is reasonably
necessary for the protection of the interests of Seller, is reasonable as to
duration, scope and geographic area and is not unreasonably restrictive upon the
rights of Buyer or SCC;
3.2 Buyer and SCC specifically recognize and acknowledge that the
covenant set forth in Paragraph 2 above, and the rights and privileges granted
to Seller are of a special, unique, unusual and extraordinary character which
gives them a peculiar value, the loss of which cannot adequately be compensated
for by means of an award of damages to Seller in an action at law, and that the
breach by Buyer or SCC of this Agreement will cause Seller irreparable and
continuing injury and damage, which will substantially outweigh any conceivable
injury which Buyer or SCC might incur as a result of being restrained from
engaging in conduct that materially breaches this Agreement. Accordingly, Seller
shall be entitled, as a matter of right, without further notice in addition to
any other rights and remedies Seller may have, to obtain injunctive and other
equitable relief to prevent the violation of any of the provisions of this
Agreement by Buyer or SCC. Buyer and SCC agree that Seller shall not be required
to file any bond in connection with any such request for injunctive or other
equitable relief;
3.3 The amount of payment by Buyer for the Station Assets (as defined
in the Asset Purchase Agreement) or the lack of an express dollar valuation for
the covenants contained in this Agreement shall not define, limit or evidence
the amount of damages, if any, to which Seller may be entitled as a result of
the breach by Buyer or SCC of any of the provisions of this Agreement; and
3.4 Notwithstanding Paragraph 3.1 above, should any court determine
that any of the covenants in Paragraph 2 above are unreasonable as to duration,
scope and/or geographic areas, such covenants shall be reformed to the minimum
extent required to be enforceable and, as so reformed, shall remain in full
force and effect as provided herein with respect to such duration, scope and
territory as a court of competent jurisdiction determines to be reasonable under
applicable law.
<PAGE>
-3-
4. Indemnification. Buyer and SCC agree to indemnify, defend and
-----------------
hold Seller harmless against, and in respect of, all liabilities, losses,
claims, costs or damages (including reasonable legal fees incurred in connection
with any of the foregoing and in seeking indemnification) resulting from or
arising out of any failure by Buyer or SCC to perform any of their obligations,
covenants or agreements hereunder.
5. Attorneys' Fees. If any legal action or other proceeding is
----------------
brought for the enforcement of this Agreement, or because of an alleged dispute,
breach, default or misrepresentation in connection with any of the provisions of
this Agreement, the successful or prevailing party shall be entitled to recover
reasonable attorney's' fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it may be entitled.
6. Notices. Any notice required or permitted to be given under the
--------
provisions of this Agreement shall be in writing, addressed to the following
addresses, or to such other address as any party may request in writing.
If to Radio 94:
Radio 94 of Phoenix Limited Partnership
920 Dain Plaza
60 South Sixth Street
Minneapolis, MN 55402
Attn: L. Steven Goldstein
With a copy to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
If to Buyer or SCC:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
<PAGE>
-4-
7. Binding Effect: Governing Law. This Agreement will be binding upon
------------------------------
and inure to the benefit of the parties and their respective heirs, personal
representatives, successors and assigns. This Agreement and the rights and
obligations of the parties hereunder shall not be assigned by either party
without the express written consent of the other party; provided, however, that
either party may assign its rights without such consent to an entity
controlling, controlled by or under common control with such party. This
Agreement shall apply in all respects to the Station regardless of whether the
licensee of the Station is Salem or any entity controlling, controlled by or
under common control with Salem or SCC. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Arizona.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date hereof.
SALEM COMMUNICATIONS CORPORATION
By:
------------------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
SALEM MEDIA OF ARIZONA, INC.
By:
------------------------------------
Name: Eric H. Halvorson
Title: Executive Vice President
<PAGE>
-5-
RADIO 94 OF PHOENIX LIMITED PARTNERSHIP
By: Colfax Communications, Inc., its General Partner
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
<PAGE>
EXHIBIT D
---------
FORM OF OPINION OF SELLER'S FCC COUNSEL
---------------------------------------
<PAGE>
___________,1996
Salem Media of Arizona, Inc.
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Ladies and Gentlemen:
We have acted as counsel to Radio 94 of Phoenix Limited Partnership, a
Maryland limited partnership ("Seller"), in connection with the negotiation,
preparation, execution and delivery of that certain Asset Purchase Agreement by
and between you and Seller dated as of _______ __, 1996 (the "Agreement"). We
are furnishing this opinion to you pursuant to Section 11.7 of the Agreement.
Capitalized terms used but not defined in this letter shall have the meaning
assigned to them in the Agreement.
In connection with this opinion, we have assumed the genuineness of
signatures on documents, the conformity to the originals of all copies examined
by or submitted to us as photocopies or conformed copies, and the authenticity
of the originals of such latter documents.
As to questions of fact in connection with this opinion, we have relied upon
an examination of our own files and records and examination of the public
records of the Federal Communications Commission (the "FCC') available as of
_______ __, 1996. We have also relied upon representations made by Seller to the
FCC as we have deemed necessary. As used herein, the term "to our knowledge"
shall mean to the actual knowledge of attorneys in our firm who have substantial
responsibility for Sellers legal matters handled by our firm without further
investigation other than as described in this paragraph. You should be aware
that records of the FCC that are public as a matter of
<PAGE>
Salem Media of Arizona, Inc.
______ __,1996
PAGE -2-
law may not be publicly available as a matter of fact. Furthermore, there may be
records of matters pending at the FCC that are not available for inspection by
the public as a matter of law.
This opinion is limited to matters arising under the Communications Act of
1934, as amended (the "Act"), and the rules and regulations of the FCC.
Based on the foregoing and subject to the foregoing and to the further
limitations set forth hereinafter, we are of the opinion that:
1. Seller holds the FCC Licenses listed on Annex A hereto. To our
knowledge, such FCC Licenses are in full force and effect, and
none of the FCC Licenses is subject to any condition other than
(i) conditions generally applicable to stations of this type by
virtue of the Act and the FCC's rules or (ii) conditions
contained on the form by which the Commission evidences the grant
of such licenses or routinely added to such forms. We have no
knowledge, but for purposes of this sentence we have not reviewed
the files of the FCC, of any other license issued by the FCC to
Seller with respect to the Station.
2. The FCC Consent has been granted and has become a
Final Order.
3. To our knowledge:
(a) there is no unsatisfied adverse FCC order, decree or
ruling outstanding against Seller relating to the
Station;
(b) there is no proceeding, complaint or
investigation against Seller relating to the Station
pending or threatened before the FCC (including any
pending judicial review of such an action by the FCC)
except for proceedings affecting the broadcast radio
industry generally to which Seller is not a specific
party; and
<PAGE>
Salem Media of Arizona, Inc.
_____ __,1996
PAGE -3-
(c) Annex A includes all applications of Seller on
behalf of the Station or with respect to the FCC
Licenses now pending before the FCC.
This opinion is delivered solely to you and is solely for your benefit in
connection with the above transaction. This opinion may not be quoted or relied
upon for any purpose by any person other than the addressee hereof.
Very truly yours,
LEVENTHAL, SENTER & LERMAN
By:
--------------------------
A Partner
<PAGE>
SCHEDULE 1.2(A) - GOVERNMENTAL LICENSES
---------------------------------------
(All licenses expire 10/1/97)
KOOL(AM) Main Station License
Emergency Broadcast System Authorization
WLD-961 Aural STL License
WLE-696 Aural STL License
KA-35291 Remote Pickup Mobile
<PAGE>
SCHEDULE 1.2,(B) - LEASED REAL PROPERTY
---------------------------------------
1. Ground Lease dated January 11, 1991 by and between Johnaquille J. Hegel and
Adams Radio of Phoenix, Inc., as assigned to Compass Radio of Phoenix, Inc.,
as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of Phoenix
Limited Partnership (AM Tower Site - Pinnacle Peak).
2. Ground Lease dated October 4, 1995 by and between Johnaquille J. Hegel and
Compass Radio of Phoenix, Inc., as assigned to Par Broadcasting, Inc., as
assigned to Radio 94 of Phoenix Limited Partnership (AM Tower Site -
Pinnacle Peak).
3. Lease Agreement dated September 12, 1988 by and between Shamrock
Broadcasting, Inc. and Adams Radio of Phoenix, Inc., as assigned to Compass
Radio of Phoenix, Inc., as assigned to Par Broadcasting, Inc., as assigned
to Radio 94 of Phoenix Limited Partnership (AM STL Tower - Shaw Butte).
4. Agreement of Sublease dated March 29, 1996 by and between Compass Radio of
Phoenix, as assigned to Par Broadcasting, Inc., as assigned to Radio 94 of
Phoenix Limited Partnership, and CRC Broadcasting Co. (Sublease for AM Tower
Site).
<PAGE>
SCHEDULE 1.2(C) - TANGIBLE PERSONAL PROPERTY
--------------------------------------------
[see list attached hereto]
<PAGE>
SCHEDULE 1.2(c) PERSONAL PROPERTY
EQUIPMENT DESCRIPTION AMOUNT / SO. FT.
--------------------- ----------------
<TABLE>
<CAPTION>
TRANSMISSION EQUIPMENT
- ----------------------
<S> <C>
Transmitter, Harris SX-5B Solid State AM 1
Exciter, Harris STX-1 AM stereo 1
Harris 4 tower directional phasor, antenna tuning units, TX lines 1
and conduit
Audio processing system CRLAM Stereo (main) 1
CRL AM stereo Matrix processor SMP-900 1
CRL AM stereo Matrix processor SMP-950 1
CRL SGC-800 Stereo 4 Band AGC 1
Broadcast Electronics BE AS-10AM stereo modulation monitor 1
Moseley MRC-1620 transmitter remote control unit 1
Potomac Instruments tower lights monitor 1
STL Receiver. Moseley PCL-505C 2
Transfer switch. Moseley STL Receiver 1
Modem, Hayes 2400 Baud 1
Antenna Monitor, Potomac Instruments AM-9 4 Tower 1
Stereo Demod/AM stereo audio, Belar FMS-1 1
Tower / Antenna
- ---------------
Towers, Utility model 380-256-ft Guyed w/ground systems 4
Furniture, Fixtures & Equipment
- -------------------------------
Desk 1
Chair, Desk 1
Shelving unit, 8x6 metal storage 1
Bench, homemade wood test 1
Test Equipment
- --------------
Operating inpedence bridge, Delta OIB-1 1
Potomac Instrument FIM-41 AM Field Strength Meter 1
Multimeter, Simpson 260 1
BUILDINGS
- ---------
32x32 cinder block 1/asphalt shingles and wood truss roof 1,024
Improvements to Buildings & Land
- --------------------------------
6-ft high chain link fencing W 1-ft barb wire 930
Perimeter fence around entire AM tower site 1
</TABLE>
1
<PAGE>
SCHEDULE 1.2(C) PERSONAL PROPERTY
EQUIPMENT DESCRIPTION AMOUNT / SQ. FT.
--------------------- ----------------
<TABLE>
<CAPTION>
MICROWAVE & ELECTRONICS
- -----------------------
<S> <C>
Antenna, Anixter/Mark P48GRN 4-ft Grid Dish-Horizontal 1
STL TX, Moseley PCL-505C 1
Antenna, 6-ft STL 950MHZ Grid Dish-Horizontal 1
Spare Parts Kit, Harris SX-5B 1
Spare Parts, 1-Lot 1
Air Conditioning Units, Carrier 5-Ton (Model 40QB060310) 2
</TABLE>
2
<PAGE>
SCHEDULE 1.2(C) - TANGIBLE PERSONAL PROPERTY
--------------------------------------------
The Tangible Personal Property shall include the following assets and the
assets on the list attached hereto:
Audio Console Pacific Recorders BMX-14
CD Players, Denon DN-950FA
386SX-16 PC, Automatic Transmitter Control System (connected to
Moseley 1620)
APC BackUPS 250, for Moseley 1620 and PCController
Audio DA's, Videoquip 210
Reel to Reel Recorder Otari 5050B
Monitoramp, Crown D-75 Stereo
Otari, Remote Control Head for 5050B
Microphone Electrovoice EV-RE-20
Loudspeakers JFL 4311 Monitor
Cassette Deck, Tascam 112
<PAGE>
SCHEDULE 1.2(D) - CONTRACTS
---------------------------
None
<PAGE>
SCHEDULE 6.4 - BUYER'S CONSENTS
-------------------------------
[to be completed by Buyer]
<PAGE>
SCHEDULE 7.3 - SELLER'S CONSENTS
--------------------------------
Consent under Loan Agreement dated as of December 27, 1995, as amended by the
First Amendment to Loan Agreement dated as of April 2, 1996, by and among
Classical Acquisition Limited Partnership, Radio 100 of Maryland Limited
Partnership, Radio 100 Limited Partnership, Radio 570 Limited Partnership, and
Radio 94 of phoenix Limited Partnership, as the Borrowers, Society National
Bank, as Managing Agent, the First National Bank of Boston, as Co-Managing
Agent, and the Financial Institutions listed therein.
<PAGE>
SCHEDULE 7.7 - SELLER'S LITIGATION
----------------------------------
None
<PAGE>
EXHIBIT 10.06.02
ASSET PURCHASE AGREEMENT
------------------------
AGREEMENT (the "Agreement") dated as of September 3, 1996 by and among
CARON BROADCASTING, INC., an Ohio corporation ("Buyer"), and MORTENSON
BROADCASTING COMPANY OF CANTON, LLC, a Kentucky limited liability company ("MBC-
Canton"), and MORTENSON BROADCASTING COMPANY OF AKRON, LLC, Kentucky limited
liability company ("MBC-Akron") (MBC-CANTON and MBC-AKRON are hereinafter
sometimes referred to collectively as "Sellers").
RECITALS:
---------
1. MBC-Canton and MBC-Akron own and operate radio stations WTOF-FM,
Canton, Ohio and WHLO-AM, Akron, Ohio, respectively (the "Stations"), and hold
the licenses and authorizations issued by the FCC for the operation of the
Stations.
2. Buyer desires to acquire substantially all the assets of the
Stations, and Sellers are willing to convey such assets to Buyer.
3. The acquisition of the Stations is subject to prior approval of
the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, Sellers and Buyer hereby agree as follows:
ARTICLE 1
---------
TERMINOLOGY
-----------
1.1 ACT. The Communications Act of 1934, as amended.
---
1.2 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in
-------------------
Section 2.3.
- -----------
1.3 BUSINESS DAY. Any calendar day, excluding Saturdays and
-------------
Sundays, on which federally chartered banks in the city of Akron, Ohio, are
regularly open for business.
1
<PAGE>
1.4 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3(b),
----------------------------- --------------
the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Sellers shall
be obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.5 CLOSING. The closing with respect to the transactions
--------
contemplated by this Agreement.
1.6 CLOSING DATE. The date determined as the Closing Date as
-------------
provided in Section 8.1.
1.7 DOCUMENTS. This Agreement and all Exhibits and Schedules
----------
hereto, and each other agreement, certificate, or instrument delivered pursuant
to or in connection with this Agreement, including amendments thereto that are
expressly permitted under the terms of this Agreement.
1.8 EARNEST MONEY. Such term shall have the meaning defined in
--------------
Section 2.4.
- -----------
1.9 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning
-------------------------
defined in Section 5.11.
------------
1.10 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
-------------------
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.11 ESCROW AGENT. Jerrold Miller, Esq.
-------------
1.12 ESCROW AGREEMENT. The Escrow Agreement in the form attached
------------------
as Exhibit A which Sellers, Buyer and the Escrow Agent have entered into
---------
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.13 EXCLUDED ASSETS. Such term shall have the meaning defined in
---------------
Section 2.2.
- -----------
1.14 FCC. Federal Communications Commission.
----
1.15 FCC LICENSES. The licenses, permits and authorizations of the
-------------
FCC for the operation of the Stations as listed on Schedule 3.8.
-------------
2
<PAGE>
1.16 FCC ORDER. An order or decisions of the FCC granting its
----------
consent to the assignment of the FCC Licenses to Buyer.
1.17 FINAL ACTION. An action of the FCC that has not been reversed,
-------------
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
---
sponte action of the FCC with comparable effect is pending and as to which the
- ------
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
----------
1.18 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes,
--------------------
hazardous substances, pollutants or contaminants, asbestos or asbestos-related
products, polychlorinated biphenyls, petroleum, crude oil or any fraction or
distillate thereof (as such terms are defined in any applicable federal, state
or local laws, ordinances, rules and regulations, and including any other terms
which are or may be used in any applicable environmental laws to define
prohibited or regulated substances).
1.19 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or
------------------ --------------
9.4(a) against which any claim or liability may be asserted by a third party
- ------
which would give rise to a claim for indemnification under the provisions of
this Agreement by such party.
1.20 INDEMNIFYING PARTY. The party to the Agreement (not the
-------------------
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.21 LMA. The Local Programming and Marketing Agreement entered into
----
on this date by Buyer and Sellers.
1.22 LIEN. Any mortgage, deed of trust, pledge, hypothecation,
-----
security interest, encumbrance, lien, lease or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
assets or property, including any written or oral agreement to give or grant any
of the foregoing, any conditional sale or other title retention agreement, and
the filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.23 MATERIAL ADVERSE CONDITION. A condition which would materially
---------------------------
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Stations or the proceeds therefrom; provided, however, that
any condition which requires that the Stations be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of the Stations, shall not be deemed a Material Adverse Condition.
3
<PAGE>
1.24 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
----------
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
1.25 PERMITTED LIEN. Any statutory lien which secures a payment not
---------------
yet due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way or similar imperfection in the
Sellers' title to their assets or properties that, individually and in the
aggregate, are not material in character or amount and do not and are not
reasonably expected to materially impair the value or materially interfere with
the use of any asset or property of the Sellers material to the operation of
their business as it has been and is now conducted.
1.26 PURCHASE PRICE. The consideration to be paid by Buyer to
---------------
Sellers for purchase of the Sale Assets in the amount of Eight Million Dollars
($8,000,000).
1.27 REAL PROPERTY. Such term shall have the meaning defined in
--------------
Section 3.7.
1.28 RULES AND REGULATIONS. The rules of the FCC as set forth in
----------------------
Volume 47 of the Code of Federal Regulations, as well as such other policies of
the Commission, whether contained in the Code of Federal Regulations or not,
that apply to the Stations.
1.29 SALE ASSETS. All of the tangible and intangible assets to be
------------
transferred by Sellers to Buyer as set forth in Section 2.1.
-----------
1.30 STATION AGREEMENTS. The agreements, commitments, contracts
-------------------
and other items described in Section 2.1(d) which relate to operation of the
--------------
Stations.
1.31 SELLERS' THRESHOLD LIMITATION. As provided in Section 9.4(b),
------------------------------ --------------
the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Sellers. The Sellers' Threshold Limitation shall be Ten
Thousand Dollars ($10,000).
1.32 SURVIVAL PERIOD. The term following the Closing Date during
----------------
which all representations, warranties, covenants and agreements of the parties
under this Agreement shall survive. The term shall be twelve (12) months.
1.33 TANGIBLE PERSONAL PROPERTY. The personal property described in
---------------------------
Section 2.1(a).
- --------------
1.34 TRADE AGREEMENTS. All contracts for sale of time on the
-----------------
Stations for other than monetary consideration.
4
<PAGE>
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 SALE ASSETS. On the Closing Date, Sellers will sell, transfer,
------------
assign and convey to Buyer, and Buyer will purchase from Sellers, free and clear
of all Liens (except Permitted Liens), all of Sellers' right, title and
interest, legal and equitable, in and to all tangible and intangible assets
(except Excluded Assets) used or useful in the operation of the Stations as they
have been and are now operated, including the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
--------------------------
furniture, fixtures, music library and other tangible personal property now or
hereafter owned by Sellers and used and/or useful in the operation of the
Stations as they have been and are now operated, including but not limited to
the items listed on Schedule 3.6, together with such modifications,
------------
replacements, improvements and additional items, and subject to such deletions
therefrom, made or acquired between the date hereof and the Closing Date in
accordance with the terms and provisions of this Agreement.
(b) REAL PROPERTY. Sellers' interests in the Real Property and any
--------------
other real estate or interests therein acquired by Sellers between the date
hereof and the Closing Date in accordance with the terms and provisions of this
Agreement.
(c) LICENSES AND PERMITS. The FCC Licenses and all other assignable
---------------------
or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Sellers
or hereafter obtained by Sellers between the date hereof and the Closing Date,
to the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Stations.
(d) STATION AGREEMENTS. All agreements, leases, advertising
------------------
contracts, Trade Agreements (including all non-cash receivables therefrom),
orders and other commitments which Sellers are a party to or bound by which are
listed on Schedule 3.9 as agreements which Buyer is electing to assume; any
------------
renewals, extensions, amendments or modifications of those agreements being
assumed which are made in the ordinary course of Sellers' operation of the
Stations and in accordance with the terms and provisions of this Agreement; and
any additional such agreements, contracts, leases, commitments or orders (and
any renewals, extensions, amendments or modifications thereof) made or entered
into between the date hereof and the Closing Date in accordance with the terms
and provisions of this Agreement and which Buyer elects to assume in writing.
(e) RECORDS. True and complete copies of all of the books, records,
--------
accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Stations.
(f) INTELLECTUAL PROPERTY. All trade names, trademarks, service
----------------------
marks, symbols, logos, copyrights and any other proprietary material or trade
right used
5
<PAGE>
primarily in the operation of the Stations, and all registrations, applications
and licenses for any of the foregoing, including, without limitation, those set
forth on Schedule 3.10, the call letters WHLO and WTOF and jingles and slogans
--------------
pertaining to the Stations; and any additional such items acquired or used
primarily in connection with the operation of the Stations between the date
hereof and the Closing Date.
(g) MISCELLANEOUS ASSETS. Any other tangible or intangible assets,
---------------------
properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or hereafter owned or used by Sellers in the operation of
- -----------
the Stations, including but not limited to all goodwill of the Stations.
2.2 EXCLUDED ASSETS. Notwithstanding any provision of this
----------------
Agreement to the contrary, Sellers shall not transfer, convey or assign to
Buyer, but shall retain all of their right, title and interest in and to, the
following assets owned or held by them on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations, all inter-company receivables from any affiliate of
Sellers and all other accounts receivable (other than non-cash receivables under
Trade Agreements), bank deposits and securities held by Sellers in respect of
the Stations at the Closing Date.
(b) Any and all claims of Sellers with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses.
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(h) Sellers' corporate records except to the extent such records
pertain to or are used in the operation of the Stations, in which case Seller
shall deliver accurate copies thereof to Buyer.
6
<PAGE>
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
---------------
2.3 ASSUMPTION OF LIABILITIES.
--------------------------
(a) At the Closing, Buyer shall assume and agree to perform, without
duplication of Sellers' performance, the following liabilities and obligations
of Sellers (the "Assumed Obligations"):
(i) The obligation under any Trade Agreements to provide
advertising on the Stations on and after the Closing Date.
(iii) Liabilities and obligations arising under the Station
Agreements assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(b) Except for the Assumed Obligations and except as expressly
provided in the LMA, Buyer shall not assume or in any manner be liable for any
duties, responsibilities, obligations or liabilities of Sellers of any kind or
nature, whether express or implied, known or unknown, contingent or absolute,
including, without limitation, any liabilities to or in connection with Seller's
employees whether arising in connection with the transaction contemplated
hereunder or otherwise.
2.4 EARNEST MONEY.
--------------
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with the Escrow Agent under the Escrow Agreement, in immediately
available funds, the sum of One Hundred Thousand Dollars ($100,000) (which
amount is hereinafter referred to as the "Earnest Money"). The Escrow Agent
shall hold the Earnest Money under the terms of the Escrow Agreement in trust
for the benefit of the parties hereto. Interest and other earnings on the
Earnest Money shall be distributed by the Escrow Agent to Buyer from time to
time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Sellers or returned to Buyer in accordance with Section 10.2, and if
-------------
Closing does occur, the Earnest Money shall be applied to payment of the
Purchase Price at Closing as provided in Section 2.6.
-----------
2.5 PAYMENT OF PURCHASE PRICE.
--------------------------
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
-----------
the property of
7
<PAGE>
Sellers and shall, pursuant to the Escrow Agreement, be disbursed to Sellers by
cashier's check or wire transfer of immediately available funds.
(ii) The amount of the Purchase Price, less the amount of
the Earnest Money disbursed to Seller, shall be paid to Seller at Closing by
wire transfer of immediately available funds.
2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and
---------------------------------
Sellers shall use good faith efforts to agree to an allocation of the Purchase
Price. Buyer and Sellers shall use such allocation, if agreed upon, for all
reporting purposes in connection with federal, state and local income and, to
the extent permitted under applicable law, franchise taxes. Buyer and Sellers
agree to report such allocation to the Internal Revenue Service in the form
required by Treasury Regulation 1.1060-1T.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Sellers hereby jointly and severally represent and warrant to Buyer as
follows:
3.1 ORGANIZATION AND GOOD STANDING. Each Seller is a limited
-------------------------------
liability company, validly existing and in good standing under the laws of the
State of Kentucky, and is qualified to do business and in good standing under
the laws of the State of Ohio and all other jurisdictions where the failure to
be qualified to do business and in good standing would have a material adverse
effect on the Stations. Sellers have all requisite power to own, operate and
lease their properties and carry on their business as they are now being
conducted and as the same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
----------------------------------------------
delivery of, and the performance of their obligations under, this Agreement and
each of the other Documents by Sellers, and the consummation by Sellers of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary action on the part of Sellers' members. Sellers have
the power and authority to execute, deliver and perform their obligations under
this Agreement and each of the other Documents and to consummate the
transactions hereby and thereby contemplated. This Agreement and each of the
other Documents have been, or at or prior to the Closing will be, duly executed
by Sellers. This Agreement constitutes (and each of the other Documents, when
so executed and delivered, will constitute) legal and valid obligations of
Sellers enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting the enforcement of creditors' rights or remedies generally, and
subject, as to enforceability, to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law).
8
<PAGE>
3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents by Sellers, and the consummation by Sellers of the transactions
contemplated hereby and thereby:
(a) do not violate in any material respect, with or without the
giving of notice or the passage of time or both (or result in the creation of
any Lien other than a Permitted Lien on any of the Sale Assets under), any
provision of law, rule or regulation or any order, judgment, injunction, decree
or ruling applicable to Sellers;
(b) except as set forth on Schedule 3.3, do not conflict with or
------------
result in a breach or termination of, or constitute a default or give rise to a
right of termination or acceleration under the articles of incorporation or
bylaws of Sellers or pursuant to any lease, agreement, commitment or other
instrument which Sellers are a party to or bound by or by which any of the Sale
Assets may be bound, or result in the creation or any Lien other than a
Permitted Lien upon any of the Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as
----------------------------------------------------
set forth on Schedule 3.4 and Schedule 3.9, the execution and delivery of, and
------------ ------------
the performance of their obligations under, this Agreement and each of the other
Documents by Sellers, and the consummation by Sellers of the transactions
contemplated hereby and thereby, do not require the consent, waiver, approval,
permit, license, clearance or authorization of, or any declaration of filing
with, any court or public agency or other authority, or the consent of any
person under any agreement, arrangement or commitment of a nature which Sellers
are a party to or bound or by which the Sale Assets are bound by or subject to,
the failure of which to obtain would have a material adverse effect on the Sale
Assets or the operation of the Stations.
3.5 SALE ASSETS. The Sale Assets include all of the assets,
------------
properties and rights of every type and description, real, personal and mixed,
tangible and intangible, that are used to a material extent in the conduct of
the business of owning and operating the Stations in the manner in which that
business has been and is now conducted, with the exception of the Excluded
Assets.
3.6 TANGIBLE PERSONAL PROPERTY. Except for office equipment,
---------------------------
supplies and other incidental items which in the aggregate are not of material
value, the list of Tangible Personal Property set forth on Schedule 3.6 is, in
------------
all material respects, a complete and correct list of all of the items of
tangible personal property (other than Excluded Assets) used to a material
extent in the operation of the Stations in the manner in which they have been
and are now operated. Except as set forth on Schedule 3.6:
------------
(a) Sellers have or at closing will have good and valid title to
all of the items of Tangible Personal Property free and clear of all Liens
except Permitted Liens, and including the right to transfer same.
9
<PAGE>
(b) The Tangible Personal Property has been maintained in
accordance with industry practices and is in good operating condition subject to
ordinary wear and tear.
(c) The Tangible Personal Property complies with applicable
rules and regulations of the FCC and the terms of the FCC Licenses.
(d) Sellers have no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Stations.
3.7 REAL PROPERTY.
--------------
(a) The real property described on Schedule 3.7 constitutes a
------------
complete and correct summary description in all material respects of all of the
interests in real estate (other than Sellers' studio lease) used to any extent
in the operation of the Stations in the manner in which they have been and are
now operated. Such real estate (other than Sellers' studio lease), together
with all improvements affixed thereto, is herein defined as the "Real Property."
(b) Sellers do not owe any money to any architect, contractor,
subcontractor or materialman for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. Except as set
forth on Schedule 3.7, there is no work being done at or materials being
------------
supplied to the Real Property at the date hereof other than routine maintenance
projects having an aggregate cost through completion thereof of no more than Ten
Thousand Dollars ($10,000).
(c) The present use of the Real Property is in compliance with all
applicable zoning codes in effect as of the date hereof, and Sellers have not
received any notices of uncorrected violations of the applicable housing,
building, safety or fire ordinances. The Real Property is served by electricity
and water in capacities adequate for the present use of the Real Property and
improvements thereon. Except as set forth on Section 3.7, Sellers have not made
-----------
any other agreement for the sale or lease of, or given any other person an
option to purchase or lease or a right of first refusal to purchase or lease,
all or any part of the Real Property, and except as set forth on Schedule 3.7,
------------
Sellers have not subjected the Real Property to any liens (other than Permitted
Liens), easements, rights, duties, obligations, convenants, conditions,
restrictions, limitations or agreements not of record.
(d) No portion of the Real Property or improvements thereon is the
subject of any condemnation or eminent domain proceeding presently instituted
or, to Sellers' actual knowledge, pending, and Sellers have not received notice
from any condemning authority that such proceedings are threatened.
10
<PAGE>
3.8 FCC LICENSES. Seller are the holders of the FCC Licenses listed
-------------
on Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i)
------------
are valid, in good standing and in full force and effect and constitute all of
the licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Stations as now
operated, and (ii) constitute all the licenses and authorizations issued by the
FCC to Sellers for or in connection with the current operation of the Stations.
Sellers have no knowledge of any condition imposed by the FCC as part of any FCC
License which is neither set forth on the face thereof as issued by the FCC nor
contained in the rules and regulations of the FCC applicable generally to
stations of the type, nature, class or location of the Stations. Except as
disclosed on Schedule 3.8, the Stations are being operated at full authorized
------------
power in accordance with the terms and conditions of the FCC Licenses applicable
to them and in accordance with the Rules and Regulations. Except as set forth
on Schedule 3.8, no proceedings are pending or, to the knowledge of the Sellers,
------------
are threatened which may result in the revocation, modification, non-renewal or
suspension of any of the FCC Licenses, the denial of any pending applications,
the issuance of any cease and desist order or the imposition of any fines,
forfeitures or other administrative actions by the FCC with respect to the
Stations or their operation, other than proceedings affecting the radio
broadcasting industry in general. Sellers have complied in all material
respects with all requirements to file reports, applications and other documents
with the FCC with respect to the Stations, and all such reports, applications
and documents are complete and correct in all material respects. Sellers have
no knowledge of any matters (i) which could reasonably be expected to result in
the suspension or revocation of or the refusal to renew any of the FCC Licenses
or the imposition of any fines or forfeitures by the FCC, or (ii) against
Sellers which could reasonably be expected to result in the FCC's refusal to
grant approval of the assignment to Buyer of the FCC Licenses or the imposition
of any Material Adverse Condition in connection with approval of such
assignment. There are not any unsatisfied or otherwise outstanding citations
issued by the FCC with respect to the Stations or their operation. Complete and
accurate copies of all FCC Licenses are attached as a part of Schedule 3.8. The
------------
"Public Inspection File" of each of the Stations is complete and in substantial
and material compliance with Section 73.3526 of the Rules and Regulations.
3.9 STATION AGREEMENTS.
-------------------
(a) Schedule 3.9 under the heading "Trade Agreements" sets
------------
forth an accurate summary description of all Trade Agreements.
(b) Schedule 3.9 under the heading "Other Station Agreements"
------------
sets forth an accurate and complete list of all other agreements, contracts,
arrangements or commitments in effect as of the date hereof, including all
amendments, modifications and supplements thereto, (i) which Sellers are a party
to or bound by or (ii) which the Stations or their assets or properties are
bound by, except (A) the employee benefit plans described in Section 3.14, (B)
------------
employment contracts and manuals, (C) each contract (other than Trade
Agreements) for the sale of time on the Stations (Sellers warrant that all
11
<PAGE>
such contracts are cancelable on thirty (30) days or less notice), and (D)
contracts which are cancelable by Sellers or its assignee without breach or
penalty on not more than sixty (60) days notice. Complete and correct copies of
all such agreements, contracts, arrangement, or commitments that are in writing
(other than as set forth in (A), (B), (C) and (D) of the preceding sentence),
including all amendments, modifications and supplements thereto, have been
delivered to Buyer.
(c) Except as set forth in the Schedules, and with respect to
all Station Agreements being assumed by Buyer, (i) all Station Agreements are
legal, valid and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors/ rights generally, and subject, as to enforceability, to
general principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Sellers nor, to the knowledge of
Sellers, any other party thereto, is in material breach of or in material
default under any Station Agreements; (iii) to the knowledge of Sellers, there
has not occurred any event which, after the giving of notice or the lapse of
time or both, would constitute a material default under, or result in the
material breach of, any Station Agreements which are, individually or in the
aggregate, material to the operation of the Stations; and (iv) Sellers hold the
right to enforce and receive the benefits under all of the Station Agreements,
free and clear of all Liens (other than Permitted Liens) but subject to the
terms and provision of each such agreement.
(d) Schedule 3.9 indicates, for each Station Agreement listed
------------
thereon which is being assumed by Buyer, whether consent or approval by any
party thereto is required thereunder for consummation of the transactions
contemplated hereby.
3.10 INTELLECTUAL PROPERTY. Schedule 3.10 contains an accurate and
---------------------- -------------
complete description of the Intellectual Property in all material respects.
Except as disclosed in Schedule 3.10:
-------------
(a) To Sellers' knowledge, Sellers own, free and clear of
conflicting claims or restrictions, all right and interest in, and right and
authority to use in the operation of the Stations as presently conducted, all of
the Intellectual Property, if any, which is material to the operation of the
Stations; and
(b) There are no outstanding or, to the knowledge of Sellers,
threatened judicial or adversary proceedings with respect to any of the
Intellectual Property.
3.11 FINANCIAL STATEMENTS. Sellers have delivered to Buyer certain
---------------------
financial information respecting the Stations, a copy of which is attached
hereto as Schedule 3.11, as follows:
-------------
(a) Audited financial statements for the Stations as of
December 31, 1995;
12
<PAGE>
(b) Unaudited monthly Income Statements for the Stations for
the months of July through December, 1995 and January through June, 1996.
The financial information described above and set forth on Schedule 3.11
-------------
accurately reflects the books and records of the Stations and fairly summarizes,
in all material respects, the results of operations of the Stations for the
periods indicated. Since July 1, 1996 and through the date of this Agreement,
there has been no material adverse change in the Stations' results of operation
from that shown on the Income Statements set forth on Schedule 3.11, and the
-------------
operations and businesses of the Stations have been conducted in all material
respects in the ordinary course.
3.12 LITIGATION. There are no claims, investigations or
-----------
administrative, arbitration or other proceedings pending or, to the actual
knowledge of Sellers, threatened against Sellers which would, individually or in
the aggregate if adversely determined, have an adverse effect on the Sale Assets
or the operation of the Stations, or which would give any third party the right
to enjoin the transactions contemplated by this Agreement. To the actual
knowledge of Sellers, there is no basis for any such claim, investigation,
action, suit or proceeding which would, individually or in the aggregate if
adversely determined, have an adverse effect on the Sale Assets or operation of
the Stations. There are no existing or, to the actual knowledge of Sellers,
pending orders, judgments or decrees of any court or governmental agency
affecting Sellers, the Stations or any of the Sale Assets.
3.13 LABOR MATTERS.
--------------
(a) Attached hereto as part of Schedule 3.13 is a list of the
-------------
names of all persons who are employed by Sellers at the Stations, their job
titles, and the original date of hire. Seller is not a party to any collective
bargaining agreement, and there is no collective bargaining agreement that
determines the terms and conditions of employment of any employees of Sellers.
(b) Except as disclosed on Schedule 3.13:
-------------
(i) There is no labor strike, dispute, slow-down or
stoppage pending or, to the knowledge of Sellers, threatened against the
Stations;
(ii) There are neither pending nor, to the actual
knowledge of Sellers threatened, any suits, actions, administrative proceedings,
union organizing activities, arbitrations, grievances or other proceedings
between Sellers and any employees of the Stations or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Stations which have had or are
reasonably likely to have a material adverse effect on the operation of the
Stations;
(iii) With respect to the Stations, (A) Sellers are in
compliance in all material respects with all laws, rules and regulations
relating to the employment of
13
<PAGE>
labor and all employment contractual obligations, including those relating to
wages, hours, collective bargaining, affirmative action, discrimination, sexual
harassment, wrongful discharge and the withholding and payment of taxes and
contributions; (B) Sellers have withheld all amounts required by law or
agreement to be withheld from the wages or salaries of their employees; and (C)
Sellers are not liable to any present or former employees or any governmental
authority for damages, arrears of wages or any tax or penalty for failure to
comply with the foregoing;
(iv) Buyer's consummation of the transactions contemplated
by this Agreement in accordance with the terms hereof shall not, as a result of
or in connection with the transactions contemplated hereby, impose upon Buyer
the obligation to pay any severance or termination pay under any agreement, plan
or arrangement binding upon Sellers.
3.14 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the
-----------------------
transactions contemplated by this Agreement in accordance with the terms hereof
shall not, as a result of or in connection with the transactions contemplated
hereby, impose upon Buyer any obligation under any benefit plan, contract or
arrangement (regardless of whether they are written or unwritten and funded or
unfunded) covering employees or former employees of Sellers in connection with
their employment by Sellers. For purposes of the Agreement, "benefit plans"
shall include without limitation employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.15 COMPLIANCE WITH LAW. The operation of the Stations complies in
--------------------
all material respects with the applicable rules and regulations of the FCC and
all federal, state, local or other laws, statutes, ordinances, regulations, and
any applicable order, writ, injunction or decree of any court, commission,
board, agency or other instrumentality.
3.16 ENVIRONMENTAL MATTERS; OSHA.
----------------------------
(a) Sellers have obtained all environmental, health and safety
permits necessary or required for either the operation of the Stations or the
ownership of the Real Property, and all such permits are in full force and
effect and Sellers are in compliance with all terms and conditions of such
permits.
(b) There is no proceeding pending or, to Sellers' actual
knowledge, threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Stations or the ownership of the Real
Property.
(c) With respect to the Stations and the ownership of the Real
Property, Sellers are in compliance in all material respects with the provisions
of Environmental Laws.
14
<PAGE>
(d) During Sellers' occupancy of the Real Property, Sellers
have not, and to Sellers' actual knowledge, no other person or entity has caused
or permitted materials to be generated, released, stored, treated, recycled,
disposed of on, under or at such parcels, which materials, if known to be
present, would require clean up, removal or other remedial or responsive action
under Environmental Laws (other than normal office, cleaning and maintenance
supplies in reasonable quantities used and /or stored appropriately in the
buildings or improvements on the Real Property). Sellers have, to their actual
knowledge, not caused the migration of any materials from the Real Property onto
or under any property adjacent to the Real Property which materials, if known to
be present, would require cleanup, removal or other remedial or responsive
action under Environmental Laws. To Sellers' actual knowledge, there are no
underground storage tanks and no polychlorinated biphenyls or friable asbestos
on such property.
(e) Sellers are not subject to any judgment, decree, order or
citation with respect to the Stations or the Real Property related to or arising
out of Environmental Laws, and Sellers have not received notice that they have
been named or listed as a potentially responsible party by any person or
governmental body or agency in any matter arising under Environmental Laws.
(f) Sellers have not discharged or disposed of any petroleum
product or solid waste on the Real Property, or on the property adjacent to the
Real Property owned by third parties, which may form the basis for any present
or future claim based upon the Environmental Laws in existence on the date
hereof or as of the Closing, or any demand or action seeking clean-up of any
site, location, body of water, surface or subsurface, under any Environmental
Laws or otherwise, or which may subject the owner of the Real Property to claims
by third parties (except to the extent third party liability can be established)
for damages.
(g) No portion of the Real Property has ever been used by
Sellers (or, to Sellers' actual knowledge, by any previous occupant of the Real
Property) in material violation of Environmental Laws, as a landfill, dump site
or used for any other use which involves the disposal or storage of solid waste
on-site in any manner which may materially affect the value of the Real
Property.
(h) No pesticides, herbicides, fertilizers or other materials
have been used on, applied to or disposed of by Sellers on the Real Property in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property).
(i) With respect to the Stations or the Real Property, Sellers
have disposed of all waste in full compliance with all Environmental Laws and
there is no existing condition that may form the basis of any present or future
claim, demand or action seeking clean up of any facility, site, location or body
of water, surface or subsurface, for
15
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which the Buyer could be liable or responsible solely as a result of the
disposal of Sellers' waste at such site.
(j) Sellers are in material compliance with all OSHA Laws.
3.17 FILING OF TAX RETURNS. Sellers have filed all Federal, State
----------------------
and local tax returns which are required to be filed, and have paid all taxes
and all assessments to the extent that such taxes and assessments have become
due.
3.18 ABSENCE OF INSOLVENCY. No insolvency proceedings of any
----------------------
character including without limitation, bankruptcy, receivership,
reorganization, composition or arrangement with creditors, voluntary or
involuntary, affecting the Sellers or any of the Sale Assets, are pending or, to
the best knowledge of Sellers, threatened, and Sellers have made no assignment
for the benefit of creditors, nor taken any action with a view to, or which
would constitute the basis for the institution of, any such insolvency
proceedings.
3.19 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker
--------------------------
or other person or firm acting on behalf of or under the authority of Sellers or
any affiliate of Sellers is or will be entitled to any broker's or finder's fee
or any other commission or similar fee, directly or indirectly, in connection
with the transactions contemplated by this Agreement.
3.20 INSURANCE. There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in reasonable
commercial amounts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has all requisite corporate power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution
----------------------------------------------
and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Buyer. This Agreement
and each of the other Documents to be executed by Buyer have been, or at or
prior to the Closing will be, duly executed by Buyer. The Documents, when
executed and delivered by the parties hereto, will
16
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constitute the valid and legally binding agreement of Buyer, enforceable against
Buyer in accordance with their terms, except as may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors' rights
generally, and except as may be limited by general principles of equity
(regardless of whether such enforceability is sought in a proceeding in equity
or at law).
4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not (with or without the giving of notice or the passage
of time or both) violate (or result in the creation of any claim, lien, charge
or encumbrance on any of the assets or properties of Buyer under) any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Buyer in any manner which would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer;
(b) Do not (with or without the giving of notice or the passage
of time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment or other instrument which Buyer is a party to or bound by or by which
any of its assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for
----------------------------------------------------
the required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer.
4.5 QUALIFICATION.
--------------
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Stations upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.
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(b) Without limiting the foregoing Subsection (a), Buyer shall
--------------
make the affirmative certifications provided in Section III of FCC Form 314 at
the time of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 LITIGATION. There are no legal, administrative, arbitration or
-----------
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
4.7 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker,
--------------------------
or other person or firm acting on behalf of or under the authority or Buyer or
any affiliate of Buyer is or will be entitled to any broker's or finder's fee or
any other commission or similar fee, directly or indirectly, in connection with
transactions contemplated by this Agreement.
ARTICLE V
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATIONS' BUSINESS PRIOR TO THE CLOSING DATE.
------------------------------------------------------------
Sellers covenant and agree with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld), Sellers shall:
(a) Subject to the LMA, operate the Stations in the ordinary
course consistent in all material respects with past practice;
(b) Use reasonable commercial efforts to maintain insurance upon
all of the tangible Sale Assets in such amounts and of such kind comparable to
that in effect on the date hereof with respect to such Sale Assets and with
respect to the operation of the Stations, with insurers of substantially the
same or better financial condition;
(c) Subject to the LMA, operate the Stations and otherwise
conduct their business in accordance with the terms or conditions of their FCC
Licenses, the Rules and Regulations, the Act and all other rules and
regulations, statutes, ordinances and orders of all governmental authorities
having jurisdiction over any aspect of the operation of the Stations, except
where the failure to so operate the Stations would not have a material adverse
effect on the Sale Assets or the operation of the Stations or on the ability of
Sellers to consummate the transactions contemplated hereby;
(d) Maintain the books and records of the Stations in Seller's
customary manner on a basis consistent with prior years;
18
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(e) Comply in all material respects with all Station Agreements
now or hereafter existing which are material, individually or in the aggregate,
to the operation or financial condition of the Stations;
(f) Promptly notify Buyer of any material default by, or claim
of default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation or financial condition of the
Stations, and any event or condition which, with notice or lapse of time or
both, would constitute an event of default under such Station Agreements;
(g) Not mortgage, pledge or subject to any Lien (except in the
ordinary course of business) any of the Sale Assets;
(h) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;
(i) Not acquire or lease any goods or services or enter into,
amend or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(j) Subject to the LMA, not introduce any material change with
respect to the operation of the Stations including, without limitation, any
material changes in the broadcast hours of the Stations or any other material
change in the Stations' programming policies, except such changes as in the sole
discretion of Seller, exercised in good faith after consultation with Buyer, are
required by the public interest;
(k) Not voluntarily agree to enter into any collective
bargaining agreement applicable to any employees of the Stations or otherwise
recognize any union as the bargaining representative of any such employees; and
not enter into any collective bargaining agreement applicable to any employees
of the Stations which provides that it shall be binding upon any "successor"
employer of such employees; or
(l) Not enter into any new Trade Agreements other than in the
ordinary course of business.
(m) Notify Buyer of any material litigation pending or
threatened against Stations or Sellers or any material damage to or destruction
of any assets included or to be included in the Sale Assets;
5.2 GOVERNMENTAL CONSENTS. Sellers and Buyer shall file with the
----------------------
FCC, within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Sellers or Buyer, as
appropriate, as may be necessary or advisable to obtain the FCC Order. Seller
and Buyer shall take all commercially reasonable steps necessary to prosecute
such filings with diligence and shall diligently
19
<PAGE>
oppose any objections to, appeals from or petitions to reconsider such approval
of the FCC, to the end that the FCC Order and a Final Action with respect
thereto may be obtained as soon as practicable; provided, however, that in the
event the application for assignment of the FCC Licenses has been designated for
hearing, either Buyer or Sellers may elect to terminate this Agreement pursuant
to Section 10.1(c). Buyer shall not knowingly take, and Sellers covenant
---------------
that Sellers shall not knowingly take, any action that party knows or has reason
to know would materially and adversely affect or materially delay issuance of
the FCC Order or materially and adversely affect or materially delay its
becoming a Final Action without a Material Adverse Condition, unless such action
is requested or required by the FCC, its staff or the Rules and Regulations.
Should Buyer or Sellers become aware of any facts which could reasonably be
expected to materially and adversely affect or materially delay issuance of the
FCC Order without a Material Adverse Condition (including but not limited to, in
the case of Buyer, any facts which would reasonably be expected to disqualify
Buyer from controlling the Stations), such party shall promptly notify the other
party thereof in writing and both parties shall cooperate to take all steps
necessary or desirable to resolve the matter expeditiously and to obtain the
FCC's approval of matters pending before it.
5.3 OTHER CONSENTS. Sellers shall use their reasonable best efforts
---------------
to obtain the consent or waivers to the transactions contemplated by this
Agreement required under any assumed Station Agreements; provided that Sellers
shall not be required to pay or grant any material consideration in order to
obtain any such consent or waiver.
5.4 TAX RETURNS AND PAYMENTS.
-------------------------
(a) All tax returns, estimates, and reports required to be filed
by Sellers prior to the Closing Date or relating to periods prior to the Closing
Date will be timely filed with the appropriate governmental agencies unless
valid extensions therefor shall have been obtained.
(b) All taxes pertaining to ownership of the Sale Assets or
operation of the Stations prior to the Closing Date will be timely paid;
provided that Sellers shall not be required to pay any such tax so long as the
validity thereof shall be contested in good faith by appropriate proceedings and
Sellers shall have set aside adequate reserves with respect to any such tax.
5.5 UPDATING OF INFORMATION. Between the date of this Agreement and
------------------------
the Closing Date, Sellers will supplement or amend all schedules, exhibits, and
other written information provided hereunder, with respect to any matter
hereafter arising that, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such schedule, exhibit,
or other written information.
5.6 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer
---------------------------------
and its representatives may make such reasonable investigation of the assets and
business of the Stations as it may desire; and Sellers shall give to Buyer, its
counsel, accountants,
20
<PAGE>
engineers and other representatives reasonable access during normal business
hours throughout the period prior to the Closing to personnel and all of the
assets, books, records and files of or pertaining to the Stations, provided that
Buyer shall give Sellers reasonable advance notice of each date on which Buyer
or any such other person or entity desires such access. Sellers shall furnish to
Buyer during such period all documents and copies of documents and information
concerning the business and affairs of Sellers and the Stations as Buyer may
reasonably request.
5.7 CONFIDENTIALITY; PRESS RELEASE. All information, data and
-------------------------------
materials furnished or to be furnished to either party with respect to the other
party in connection with this transaction or pursuant to this Agreement are
confidential. Each party agrees that prior to Closing (a) it shall not disclose
or otherwise make available, at any time, any such information, data or material
to any person who does not have a confidential relationship with such party; (b)
it shall protect such information, data and material with a high degree of care
to prevent the disclosure thereof; and (c) if, for any reason, this transaction
is not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available
to any person any of such information, data or material concerning the other
party, except as may be necessary or appropriate in connection with the
operation of the Stations by Buyer. Each party shall use its reasonable efforts
to prevent the violation of any of the foregoing confidentiality provisions by
its respective representatives. Notwithstanding the foregoing, nothing
contained herein shall prohibit Buyer or Sellers from:
(a) using such information, data and materials in connection
with any action or proceeding brought or any claim asserted by Buyer or Sellers
in respect of any breach by the other of any representation, warranty or
covenant made in or pursuant to this Agreement; or
(b) supplying or filing such information, data or materials to
or with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.8 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
------------------------
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.
21
<PAGE>
5.9 FCC REPORTS. Sellers shall continue to file, on a current basis
------------
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Stations. Sellers shall provide Buyer with copies of
all such filings within five business days of the filing with the FCC.
5.10 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
-----------------------------------
Sellers shall obtain executed releases, in suitable form for filing and
otherwise in form and substance reasonably satisfactory to Buyer, of any
security interests granted in the Sale Assets and properties as security for
payment of loans and other obligations or judgments and of any other Liens on
the Sale Assets. At the closing, Sellers shall transfer and convey to Buyer all
of the Sale Assets free and clear of all Liens except Permitted Liens.
5.11 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days
-------------------------
after execution of this Agreement, Buyer shall obtain a Phase I environmental
assessment of the Real Property by an environmental engineer selected by Buyer
(the "Environmental Assessment"). Buyer shall commission and pay the cost of
such Environmental Assessment and shall provide a copy to Seller. The
Environmental Assessment shall be subject to the confidentiality provisions of
Section 5.7. If after appropriate inquiry into the previous ownership of and
- -----------
uses of the Real Property consistent with good commercial or customary practice,
the engineer concludes that environmental conditions exist on, under or
affecting such properties that would constitute a violation of breach of
Sellers' representations and warranties contained in Section 3.16 of this
------------
Agreement or cause the condition contained in Section 6.9 to not be satisfied,
------------
then notwithstanding any other provisions of this Agreement to the contrary but
subject to the following sentence, Sellers' shall at its sole cost and expense
(up to a maximum amount of $50,000 for each separate parcel of Real Property),
remove, correct or remedy any condition or conditions which constitute a
violation or breach of Sellers' representations and warranties contained in
Section 3.16 prior to the Closing Date and provide to Buyer at Closing a
- ------------
certificate from an environmental abatement firm reasonably acceptable to Buyer
that such removal, correction or remedy has been completed so that Sellers'
representations and warranties contained in Section 3.16 will be true as of the
------------
Closing Date and the condition contained in Section 6.9 will be satisfied as of
-----------
the Closing Date. In the event the cost of removal, correction or remedy of the
environmental conditions exceeds Fifty Thousand Dollars ($50,000), Buyer may
elect to proceed with the Closing but shall not be obligated to close under any
circumstances which would require Buyer to assume ownership of the Stations
under conditions where there exist any uncured violations of warranties,
representations or covenants with respect to environmental matters. In the
event Buyer does elect to close the transaction, Buyer shall have no further
recourse against Sellers with respect to the removal, correction or remedy of
such environmental conditions.
5.12 ACCOUNTS RECEIVABLE. For a period of ninety (90) days
--------------------
commencing October 1, 1996, Buyer, as agent for Sellers, agrees to use
reasonable efforts in accordance with normal business practices (but not
including resorting to litigation or threat thereof) to collect on behalf of
Sellers all accounts receivable of the Stations
22
<PAGE>
accrued as of September 30, 1996. All payments received from account debtors
shall be applied on a "first in, first out" basis, except to the extent an
account is disputed by the account debtor as properly due, in which case Sellers
and Buyer shall reasonably agree on an appropriate allocation of the payment.
The full amount of such payments collected in each semi-monthly period shall be
remitted and delivered to Seller on the fifteenth (15/th/) and last business
days of the months of October, November and December, 1996. Immediately
following such ninety (90) day period, Buyer shall furnish Sellers with all
files concerning any uncollected accounts receivable, and Buyer shall have no
further responsibilities hereunder except to remit promptly to Sellers any
amounts subsequently received by it on account of such receivables.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
----------------------------------------------------------------
(a) The representations and warranties of Sellers contained in
this Agreement or in any other Document shall be complete and correct in all
material respects on the date hereof and at the Closing Date with same effect as
though made at such time except for changes that are not materially adverse to
the Stations or the Sale Assets taken as a whole, and except as follows:
(i) as to Section 3.16(a) - (i) the accuracy or inaccuracy
---------------------
of this representation as of the date of this Agreement or as of the Closing
Date shall not be a condition to Closing if (A) the breach is cured or the item
is removed on or before Closing, all costs associated with such cure, removal,
clean up or other action have been paid in full (or reserved for) by Sellers and
all required certificates of removal or completion or other certificates
demonstrating that all required action under Section 5.11 has been completed
------------
have been received from applicable regulatory authorities, or (B) to the extent
removal, clean up or other action cannot be completed and/or governmental or
regulatory certificates obtained prior to Closing (which Closing may be delayed
by Sellers by not more than thirty (30) days if Sellers reasonably determine
that any necessary action can be completed during such delay period), a portion
of the Purchase Price equal to the estimated costs of completion and/or
certification (to be determined by an independent consulting engineer) is
escrowed under an agreement negotiated in good faith by the parties and the
amount so escrowed is used to pay all costs of completion; provided, however,
that in no event shall Buyer be required to consummate the Agreement if the
removal, clean up or other action would likely result in a disruption of Buyer's
ability to broadcast at substantially full power for material periods of time.
23
<PAGE>
(ii) as to Section 3.16(j), the accuracy or inaccuracy of
---------------
this representation shall not be a condition to Closing if the noncompliance is
cured on or before Closing or if the Sellers remain liable for the noncompliance
after the Closing; and
(iii) as to Sections 3.6 and 3.7, the accuracy or
--------------------
inaccuracy of the representations(s) shall not be a condition to Closing if the
amount to cure or repair the matter is reasonably estimated at less than $50,000
in the aggregate and the Purchase Price is reduced accordingly (if the amount
can be accurately determined) or a reasonable reserve is placed into escrow
pending cure or repair or Buyer and Sellers make other arrangements which are
reasonable under the circumstances. In addition, Sellers may elect to delay
Closing for a period not to exceed thirty (30) days if Sellers reasonably
determine that any action necessary to cure or repair can be completed during
such delay period; provided that the reduction or escrow described in the
preceding sentence shall apply to the extent any cure or repair is not completed
within such delay period.
(b) Sellers shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Stations, the Sale Assets or
Sellers' ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date, and
-----------
further except that as to Section 6.2, non-satisfaction of the condition(s)
-----------
shall not be a condition to Closing if the amount to cure or repair the matter
is reasonably estimated at less than $50,000 in the aggregate and the Purchase
Price is reduced accordingly (if the amount can be accurately determined) or a
reasonable reserve is placed into escrow pending cure or repair or Buyer and
Sellers make other arrangements which are reasonable under the circumstances.
In addition, Sellers may elect to delay Closing for a period not to exceed
thirty (30) days if Sellers reasonably determine that any action necessary to
cure or repair can be completed during such delay period; provided that the
reduction or escrow described in the preceding sentence shall apply to the
extent any cure or repair is not completed within such delay period.
6.2 PERFORMANCE OF AGREEMENTS. Sellers shall have performed in all
--------------------------
material respects all of their covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by them prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become a Final Action without any Material Adverse Condition.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and
24
<PAGE>
requires to be satisfied prior to transfer of the FCC Licenses to Buyer shall
have been satisfied by Sellers.
(c) All other authorizations, consents, approvals and clearances
of federal, state or local governmental agencies required to permit the
consummation by Buyer of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have a material adverse effect on the operations of the
Stations.
6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer
-------------------
shall be subject to any ruling, decree, order or injunction restraining,
imposing material limitations on or prohibiting (i) the consummation of the
transactions contemplated hereby or (ii) its participation in the operation,
management, ownership or control of the Stations; and no litigation, proceeding
or other action seeking to obtain any such ruling, decree, order or injunction
shall be pending or shall have been threatened in writing. No governmental
authority having jurisdiction shall have notified any party to this Agreement
that consummation of the transaction contemplated hereby would constitute a
violation of the laws of the United States or of any state or political
subdivision or that it intends to commence proceedings to restrain such
consummation or to force divestiture, unless such governmental authority shall
have withdrawn such notice. No governmental authority having jurisdiction shall
have commenced any such proceeding.
6.5 OPINION OF SELLERS' FCC COUNSEL. Buyer shall have received from
--------------------------------
Sellers' FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed in Schedule 3.8 are valid, in good
------------
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Sellers
to operate the Stations in the manner in which the Stations are currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Stations.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Stations or their
operation, other than proceedings affecting the radio broadcasting industry in
general.
25
<PAGE>
In rendering such opinion, counsel shall be entitled to rely upon
Sellers' representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to any factual matters embodied in, or
forming a basis for any legal opinion expressed in, such opinion, counsel's
knowledge is based solely on such inquiry.
6.6 OTHER CONSENTS. Sellers shall have obtained in writing and
---------------
provided to Buyer on or before the Closing Date, without any condition
materially adverse to Buyer or the Stations, the consents or waivers to the
transactions contemplated by this Agreement required under those Station
Agreements which Buyer has elected to assume.
6.7 DELIVERY OF CLOSING DOCUMENTS. Sellers shall have delivered or
------------------------------
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.
-----------
6.8 NO CESSATION OF BROADCASTING.
----------------------------
(a) Between the date hereof and the Closing Date, neither of the
Stations shall have for a period of more than ten (10) days in the aggregate (i)
ceased broadcasting on its authorized frequency, (ii) lost substantially all of
its normal broadcasting capability or (iii) been broadcasting at a power level
of 50% or less of its FCC authorized level. Sellers shall promptly notify Buyer
of the occurrence of any one or more of the foregoing events or conditions, and
the non-fulfillment of the condition precedent set forth in this Subsection
caused by the occurrence of the events specified in Sellers' notice shall be
deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Sellers' written notice, Buyer notifies Sellers in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding
the Closing Date, each of the Stations shall have been operating continuously
with substantially all of its normal broadcasting capability except for
cessation or reductions for insignificant periods of time resulting from
occurrences (such as lightning strikes) over which Sellers have no control.
Sellers shall have the right to delay Closing for a period not to exceed thirty
(30) days if Sellers reasonably determine that any action to restore the
Stations to substantially all of their normal broadcasting capability can be
completed during such delay period.
(c) Notwithstanding the foregoing, the loss or damage to
Sellers' transmission facilities shall not be a condition precedent to Buyer's
obligation to close if such loss or damage arose by reason of the act or
omission of Buyer in its capacity as the programmer of the Stations under the
LMA.
6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained
-------------------------
by Buyer pursuant to Section 5.11 hereof shall not have disclosed any material
------------
violation of
26
<PAGE>
any Environmental Law at the Real Property which is not removed or cured by
Sellers prior to Closing.
6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be
---------------------------
in fee simple, good and marketable and insurable at regular rates by any title
insurance company, selected by Buyer and licensed in the State of Ohio, pursuant
to the standard stipulations and conditions of owner's title insurance policies
prescribed by applicable Ohio regulatory authorities, free and clear of all
liens and encumbrances except Permitted Encumbrances, as hereinafter defined.
For purposes hereof, "Permitted Encumbrances" shall mean (i) easements,
restrictions, and other similar matters which will not adversely affect the use
of the Real Property in the ordinary course of business; (ii) liens for taxes
not due and payable or, that are being contested in good faith by appropriate
proceedings; (iii) mechanics, materialmen's, carriers', warehousemen's,
landlords' or other similar liens in the ordinary course of business for sums
not yet due or being contested in good faith by appropriate proceedings; (iv)
deposits or pledges to secure the performance of bids, tenders, contracts (other
than for borrowed money), leases, statutory obligations, surety or appeal bonds
or other deposits or pledges for purposes of a like general nature made or given
in the ordinary course of business: and (v) liens or mortgages that will be
released at Closing; (vi) zoning ordinances and regulations, including statutes
and ordinances relating to the liens of streets and to other municipal
improvements, which will not adversely affect the use of the Real Property in
the ordinary course of business.
6.11 SURVEY. Within ten (10) business days after execution of this
-------
Agreement, Sellers shall provide Buyer with the originals or readable copies of
any surveys of the Real Property in Sellers' possession. All costs associated
with updating such survey or preparing new surveys shall be paid by Buyer.
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLERS TO CLOSE
------------------------------
The obligation of Sellers to close the transaction contemplated by
this Agreement is subject to the satisfaction, on or prior to the closing Date,
of each of the following conditions, unless waived by Sellers in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
(a) The representations and warranties of Buyer contained in
this Agreement shall be complete and correct in all material respects on the
date hereof and at the Closing Date with the same effect as though made at such
time except for changes that are not materially adverse to Sellers.
(b) Buyer shall have delivered to Sellers on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii)
27
<PAGE>
except as set forth in such certificate (none of which exceptions shall be
materially adverse to Buyer's ability to consummate the transaction contemplated
hereby), the conditions specified in Section 7.2 are satisfied as of the
-----------
Closing Date.
7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances
of all Federal, state and local governmental agencies required to permit the
consummation by Sellers of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Sellers.
7.4 ADVERSE PROCEEDINGS. Sellers shall not be subject to any ruling,
--------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transactions contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall
-------------------------------------------------
have delivered or caused to be delivered to Sellers on the Closing Date each of
the documents required to be delivered pursuant to Section 8.3, and Sellers
-----------
shall have received payment of the Purchase Price with the form of payment set
forth in Section 2.6.
-----------
28
<PAGE>
ARTICLE VIII
CLOSING
-------
8.1 TIME AND PLACE. The Closing shall take place at the offices of
---------------
Buyer's counsel in Cleveland, Ohio or at such other place as the parties agree,
at 10:00 A.M. Eastern Time on the date (the "Closing Date") that is the later
of (i) the fifth Business Day after the Applicable Date or (ii) the date as soon
as practicable following satisfaction or waiver of the conditions precedent
hereunder; provided, however, that in no event shall the Closing take place
-------- -------
prior to January 2, 1997; and provided further, that Buyer may elect to postpone
-------- -------
Closing to a date not later than July 2, 1997. The Applicable Date shall be the
date on which the FCC Order shall have become a Final Action without any
Material Adverse Condition.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
---------------------------------------------
Sellers shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Sellers' members approving the
execution and delivery of this Agreement and each of the other documents and
authorizing the consummation of the transactions contemplated hereby and
thereby.
(b) The certificate required by Section 6.1(b).
--------------
(c) A bill of sale and other instruments of transfer and
conveyance transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) Warranty deeds and any other required instruments of
transfer and conveyance transferring to Buyer the Real Property.
(f) Executed mortgage satisfactions and any other documents
required by the title insurance company under Section 6.10 as a condition to
------------
issuing the title insurance policy in the form required by Section 6.10.
------------
(g) An instrument or instruments assigning to Buyer all right,
title and interest of Sellers in and to all Station Agreements being assumed by
Buyer.
(h) An instrument or instruments assigning to Buyer all right,
title and interest of Sellers in the FCC Licenses, all pending applications
relating to the Stations before the FCC, and any remaining Sale Assets not
otherwise conveyed.
29
<PAGE>
(i) The opinion of Sellers' FCC counsel, dated the Closing Date,
to the effect set forth in Section 6.5.
------------
(j) Such additional information and materials as Buyer shall
have reasonably requested, including without limitation, evidence that all
consents and approvals required as a condition to Buyer's obligation to close
hereunder have been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLERS BY BUYER. At the Closing,
----------------------------------------------
Buyer shall deliver or cause to be delivered to Sellers the following:
(a) Certified resolutions of Buyer's Board of Directors
approving the execution and delivery of this Agreement and each of the other
Documents and authorizing the consummation of the transaction contemplated
hereby and thereby.
(b) The Purchase Price with the form of payment set forth in
Section 2.5.
- ------------
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
--------------
(e) Such additional information and materials as Sellers shall
have reasonably requested.
30
<PAGE>
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
------------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period. In the
event such a notice is so given, the right to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
Notwithstanding the foregoing, the provisions for survival and the making of
claims shall not apply to the agreements whereby Buyer assumes the obligations
under Subsection 8.3(c), each of which agreements shall be governed by its own
-----------------
terms.
9.2 INDEMNIFICATION IN GENERAL. Buyer and Sellers agree that the
---------------------------
rights to indemnification and to be held harmless set forth in this Agreement
shall, as between the parties hereto and their respective successors and
assigns, be exclusive of all rights to indemnification and to be held harmless
that such party (or its successors or assigns) would otherwise have by statute,
common law or otherwise.
9.3 INDEMNIFICATION BY SELLERS.
---------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Sellers shall indemnify and hold harmless Buyer and any officer,
- ----
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Sellers of any of
their representations, warranties, covenants or agreements set forth in this
Agreement or any other Documents; or
(ii) The ownership or operation by Sellers of the Stations
or the Sale Assets on or prior to the Closing Date, except as relates to
operation of the Stations by Buyer under the LMA;
(iii) All other liabilities and obligations of Sellers other
than the Assumed Obligations; and
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<PAGE>
(iv) Noncompliance by Sellers with the provisions of the
Bulk Sales Act, if applicable, in connection with the transaction contemplated
hereby.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Sellers shall not be obligated to indemnify Buyer pursuant to
Subsection (a) above (i) for any amounts in excess of the Purchase Price in the
- --------------
aggregate, or (ii) unless and until the aggregate amount of such claims,
liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold
Limitation, in which case Buyer shall then be entitled to indemnification of the
entire aggregate amount, provided that any amounts owed by Sellers to Buyer
under Subsection (a) (iv) above shall not be counted in determining whether
-------------------
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation.
9.4 INDEMNIFICATION BY BUYER.
-------------------------
(a) Subject to the provisions of Subsection (b) below and
--------------
Section 10.2 below, Buyer shall indemnify and hold harmless Sellers and any
- ------------
officer, director, agent, employee and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Stations after the
Closing Date; or
(iii) All other liabilities or obligations of Buyer.
(b) Notwithstanding anything contained herein to the contrary,
if Closing occurs, Buyer shall not be obligated to indemnify Sellers pursuant to
Subsection (a) above unless and until the aggregate amount of such claims,
- --------------
liabilities, damages, losses, costs and expenses exceeds Sellers' Threshold
Limitation, in which case Sellers shall then be entitled to indemnification of
the entire aggregate amount.
9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified
---------------------------
Party may be entitled to indemnification hereunder with respect to any asserted
claim of, or obligation or liability to, any third party, such party shall
notify the Indemnifying Party thereof, describing the matters involved in
reasonable detail, and the Indemnifying Party shall be entitled to assume the
defense thereof upon written notice to the Indemnified Party with counsel
reasonably satisfactory to the Indemnified Party; provided, that once the
defense thereof is assumed by the Indemnifying Party, the Indemnifying Party
shall keep the Indemnified Party advised of all developments in the defense
thereof and any related litigation, and the Indemnified Party shall be entitled
at all times to participate in the
32
<PAGE>
defense thereof at its own expense. If the Indemnifying Party fails to notify
the Indemnified Party of its election to defend or contest its obligation to
indemnify under this Article IX, the Indemnified Party may pay, compromise, or
----------
defend such a claim without prejudice to any right it may have hereunder.
ARTICLE X
---------
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION. If Closing shall not have previously occurred,
------------
this Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Sellers to Buyer, or from
Buyer to Sellers, if:
(i) Sellers give such termination notice and are not at
such time in material default hereunder, or Buyer gives such termination notice
and Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Sellers), or of Sellers
(if such termination notice is given by Buyer), are inaccurate in any respect
and materially adverse to the party giving such termination notice unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice; or
(B) Any material obligation to be performed by Buyer
(if such termination notice is given by Sellers) or by Sellers (if such
termination notice is given by Buyer) is not timely performed in any material
respect unless the lack of timely performance has been induced by or is the
result of actions or omissions of the party giving such termination notice; or
(C) Any condition (other than those referred to in
foregoing Clauses (A) and (B)) to the obligation to close the transaction
----------- ---
contemplated herein of the party giving such termination notice has not
been timely satisfied;
and any such inaccuracy, failure to perform or non-satisfaction of a condition
neither has been cured nor satisfied within twenty (20) days after written
notice thereof from the party giving such termination notice nor waived in
writing by the party giving such termination notice.
33
<PAGE>
(b) Written notice from Sellers to Buyer, or from Buyer to
Sellers, at any time after July 2, 1997 provided that termination shall not
occur upon the giving of such termination notice by Sellers if Sellers are at
such time in material default hereunder or upon the giving of such termination
notice by Buyer if Buyer is at such time in material default hereunder.
(c) Written notice from Sellers to Buyer, or from Buyer to
Seller, at any time following a determination by the FCC that the application
for consent to assignment of the FCC Licenses has been designated for hearing;
provided that the party which is the subject of the hearing (or whose alleged
actions or omissions resulted in the designation for hearing) may not elect to
terminate under this subsection (c).
(d) The written election by Buyer under Article XI.
----------
10.2 OBLIGATIONS UPON TERMINATION.
----------------------------
(a) In the event this Agreement is terminated pursuant to
Section 10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach
- ---------------------- ---
hereunder shall be limited as provided in Subsections (c) and (e), below and the
-----------------------
aggregate liability for Sellers for breach hereunder shall be limited as
provided in Subsections (d) and (e), below. In the event this Agreement is
-----------------------
terminated for any other reason, neither party shall have any liability
hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled
to the return of the Earnest Money from the Escrow Agent under the Escrow
Agreement (i) if such termination is effected by Buyer's giving of valid written
notice to Sellers pursuant to Subsections 10.1(a), (b) (c) or (d) , or (ii) if
-----------------------------------
such termination is effected by Sellers' giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is
----------------------------------------------
entitled to the return of the Earnest Money, Sellers shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Sellers' giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
--------------------------------
agrees that Sellers shall be entitled to receive upon such termination, as
liquidated damages and not as a penalty, (i) the Earnest Money, and (ii) the
additional sum of Three Hundred Thousand Dollars ($300,000) from Buyer (the sum
of such amounts is hereafter referred to as the "Liquidated Damages Amount").
SELLERS' RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE PAYMENT OF
LIQUIDATED DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLERS' SOLE
REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. BUYER AND SELLERS EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGES
AMOUNT IS REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY
BUYER'S BREACH OF THIS AGREEMENT, THE DIFFICULTY OF
34
<PAGE>
PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE OBTAINING AN
ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the
contrary, but subject to the provisions of the following sentences, if this
Agreement is terminated by Buyer's giving of written notice to Sellers pursuant
to Subsection 10.1(a), Buyer shall not be entitled to damages or indemnification
------------------
from Sellers. Subject to the following sentence, if Sellers attempt to terminate
this Agreement under circumstances where they are not entitled to do so, or if
Sellers, by their own action, cause a breach of warranty or fail to satisfy a
condition (including without limitation a refusal to consummate the transaction
after Buyer has satisfied all conditions to Sellers' obligation to close and
Buyer has demonstrated its willingness and ability to close on the terms set
forth in this Agreement and Buyer is not in default hereunder) with the intent
of creating a situation whereby Buyer elects to terminate under Section 10.1(a)
---------------
and Buyer does so elect to terminate, the monetary damages, if any, to which
Buyer shall be entitled shall be limited to direct and actual damages and shall
in no event exceed Four Hundred Thousand Dollars ($400,000) in the aggregate.
If a circumstance described in the preceding sentence should arise and if Buyer
establishes that the action of Sellers described therein was taken intentionally
in order to allow Sellers to sell or enter into negotiations to sell the
Stations to another party, the damages to which Buyer shall be entitled shall
not be limited to direct and actual damages.
(e) In any dispute between Buyer and Sellers as to which party
is entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 TERMINATION NOTICE. Each notice given by a party pursuant to
-------------------
Section 10.1 to terminate this Agreement shall specify the Subsection (and
- ------------
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
------------
given.
ARTICLE XI
----------
CASUALTY
--------
Upon the occurrence of any casualty loss, damage or destruction
material to the operation of either of the Stations prior to the Closing,
Sellers shall promptly give Buyer written notice setting forth in detail the
extent of such loss, damage or destruction and the cause thereof if known.
Sellers shall use their reasonable efforts to promptly commence and thereafter
to diligently proceed to repair or replace any such lost, damaged or destroyed
property. In the event that such repair or replacement is not fully completed
prior to the Closing Date, Buyer may elect to postpone the Closing until
Sellers' repairs have been fully completed or to consummate the transactions
contemplated hereby on the
35
<PAGE>
Closing Date, in which event Sellers shall assign to Buyer the portion of the
insurance proceeds (less all reasonable costs and expenses, including without
limitation attorney's fees, expenses and court costs incurred by Sellers to
collect such amounts), if any, not previously expended by Sellers to repair or
replace the damaged or destroyed property (such assignment of proceeds to take
place regardless of whether the parties close on the scheduled or deferred
Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged
condition. In the event the loss, damage or destruction causes or will cause
either Station to be off the air for more than seven (7) consecutive days or
fifteen (15) total days, whether or not consecutive, then Buyer may elect either
(i) to consummate the transactions contemplated hereby on the Closing Date, in
which event Sellers shall assign to Buyer the portion of the insurance proceeds
(less all reasonable costs and expenses, including without limitation attorney's
fees, expenses and court costs, incurred by Sellers to collect such amounts), if
any, not previously expended by Sellers to repair or replace the damaged or
destroyed property, and Buyer shall accept the damaged Sale Assets in their
damaged condition, or (ii) to terminate this Agreement.
ARTICLE XII
-----------
CONTROL OF STATIONS
-------------------
Between the date of this Agreement and the Closing Date and subject
only to the provisions of the LMA, Buyer shall not control, manage or supervise
the operation of the Stations or the conduct of their business, all of which
shall remain the sole responsibility and under the control of Sellers, subject
to Sellers' compliance with this Agreement.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.1 FURTHER ACTIONS. From time to time before, at and after the
----------------
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a
------------------------------
period of forty-eight (48) months, Buyer shall provide Sellers, Sellers'
counsel, accountants and other representatives with reasonable access during
normal business hours to the books, records, property, personnel, contracts,
commitments and documents of the Stations pertaining to transactions occurring
prior to the Closing Date when requested by Sellers, and Buyer shall retain such
books and records for the normal document retention period of Buyer. At the
request and expense of Sellers, Buyer shall deliver copies of any such books and
records to Sellers.
36
<PAGE>
13.3 PAYMENT OF EXPENSES.
--------------------
(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
--------------
hereby shall be shared equally between Sellers and Buyer.
(b) All title insurance premiums and costs shall be paid by
Buyer.
(c) All state or local sales or use, stamp or transfer, grant
and other similar taxes payable in connection with consummation of the
transactions contemplated hereby shall be paid by the party primarily liable
under applicable law to pay such tax.
(d) Except as otherwise expressly provided in this Agreement,
each of the parties shall bear its own expenses, including the fees of any
attorneys and accountants engaged by such party, in connection with this
Agreement and the consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Sellers acknowledge that the Stations
---------------------
are of a special, unique, and extraordinary character, and that any breach of
this Agreement by Sellers should not be compensated for by damages.
Accordingly, if Sellers shall breach their obligations under this Agreement,
Buyer shall be entitled, in lieu of its remedies in Section 10.2(d), to
---------------
enforcement of this Agreement (subject to obtaining any required approval of the
FCC) by decree of specific performance or injunctive relief requiring Sellers to
fulfill their obligations under this Agreement. In any action by Buyer to
equitably enforce the provisions of this Agreement, Sellers shall waive the
defense that there is an adequate remedy at law or equity and agrees that (i)
Buyer shall have the right to obtain specific performance of the terms of this
Agreement without being required to prove actual damages, post bond or furnish
other security, and (ii) Buyer shall be entitled to recover reasonable
attorney's fees and costs incurred in connection with Buyer's successful
obtaining of specific performance..
13.5 NOTICES. All notices, demands or other communications given
-------
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile or similar written means of
communication, addressed as follows:
(a) if to Seller, to:
Mortenson
Broadcasting Company
3191 Nicholasville Road
Suite 600
Lexington, KY 40503-3318
Facsimile No.: (606) 245-1600
Attention: Jack M. Mortenson
President
37
<PAGE>
Copy to:
William Rigsby, Esq.
201 West Short St., Suite 820
Lexington, KY 40507
Facsimile No.: (606) 233-4642
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Facsimile No.: (805) 482-7290
Attention: Eric H. Halvorson
Executive Vice President
Chief Operating Officer
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date mailed, and
(ii) if personally delivered or otherwise sent as provided above, on the date
received.
13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
-----------------
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.
13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein,
-------------------------
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and their respective successors or
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not
-----------
be assignable by either party hereto without the prior written consent of the
other party; provided, however, that Buyer may, at its own expense, without
Sellers' prior written consent, assign its rights and obligations to acquire the
Real Property to Edward G. Atsinger III and Stuart W. Epperson, or trusts
created for their benefit and/or the benefit of their spouses and their issue so
long as (i) no delay results in the Closing Date (ii) no
38
<PAGE>
extra expense results to Sellers, and (iii) Buyer remains liable for
indemnification of Sellers in respect of all Assumed Obligations in respect of
the Real Property.
13.9 GOVERNING LAW. This Agreement shall in all respects be
--------------
governed by and construed in accordance with the laws of the State of Ohio,
including all matters of construction, validity and performance.
13.10 BULK SALES. Buyer hereby waives compliance by Sellers with the
-----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Sellers shall, in accordance with Article IX, indemnify and hold
----------
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
-----------------------
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.
13.12 SEVERABILITY. Any provision of this Agreement which is
-------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.13 HEADINGS. The captions in this Agreement are for convenience
---------
of reference only and shall not define or limit any of the terms or provisions
hereof.
13.14 COUNTERPARTS. This Agreement may be executed in any number of
-------------
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.15 REFERENCES. All references in this Agreement to Articles and
-----------
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.16 SCHEDULES AND EXHIBITS. Unless otherwise specified herein,
-----------------------
each Schedule and Exhibit referred to in this Agreement is attached hereto, and
each such Schedule and Exhibit is hereby incorporated by reference and made a
part hereof as if fully set forth herein.
39
<PAGE>
13.17 SECTION 1031 ASSET EXCHANGE.
----------------------------
(a) The parties acknowledge that each may desire to effectuate
a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code
(the "Code"), which may include a non-simultaneous exchange, with respect to the
sale and acquisition of the Sale Assets. The parties agree to cooperate with the
other in connection therewith, provided each party participating in such an
exchange agrees to hold the other free and harmless of, and indemnify the other
from, any liabilities, claims, costs, damages, expenses and fees (including
attorneys' fees) which may arise out of said party's participation in a tax-
deferred exchange, including without limitation any claims by the Internal
Revenue Service.
(b) Sellers may identify and acquire additional assets (the
"Exchange Assets") in lieu of the Purchase Price and exchange such Exchange
Assets for the Sale Assets in lieu of the Purchase Price. Therefore, Sellers may
elect prior to the Closing Date to effect the acquisition of such Exchange
Assets connected with the transfer and conveyance of the Sale Assets hereunder
as part of an exchange under Section 1031 of the Code, in lieu of receiving the
Purchase Price hereunder. If Sellers so elect, they shall provide written notice
to Buyer of their election prior to the closing Date, and thereafter (i) shall
at any time at or prior to closing assign their rights under this Agreement to a
"qualified intermediary" as defined in Treas. Reg. Section 1.1031 (k)-1(g) (4),
subject to all of Sellers' rights and obligations hereunder and (ii) shall
promptly provide written notice of such assignment to all parties hereto. Buyer
shall cooperate with all reasonable requests of Sellers and the "qualified
intermediary" in arranging and effecting this exchange as one which qualifies
under Section 1031 of the Code. Without limiting the generality of the
foregoing, if Sellers have given notice of their intention to effect the
acquisition of the Exchange Assets as part of a tax-deferred exchange, Buyer
will (i) promptly provide Sellers with written acknowledgment of such notice and
(ii) at Closing, pay the Purchase Price to the "qualified intermediary" rather
than to Sellers (which payment shall discharge the obligation of Buyer to make
payment for the Sale Assets). Sellers shall indemnify and hold harmless Buyer
from and against all costs, taxes and expenses arising from Seller's election to
effect the acquisition of the Exchange Assets as part of a tax-deferred exchange
rather than a purchase thereof, other than such costs, taxes and expenses
arising from the Buyer's failure to perform its obligations hereunder with
respect to such exchange. Nothing in this Section 13.7 shall in any way alter or
------------
modify any of Sellers' representations, warranties or covenants made in this
Agreement nor affect, diminish or nullify in any respects Sellers' covenants to
indemnify Buyer under this Agreement.
40
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written.
CARON BROADCASTING, INC.
By: /s/ Eric H. Halvorson
---------------------
Eric H. Halvorson
Executive Vice President
MORTENSON BROADCASTING COMPANY
OF CANTON, LLC
By: /s/ Jack M. Mortenson
---------------------
Jack M. Mortenson
President
MORTENSON BROADCASTING COMPANY
OF AKRON, LLC
By: /s/ Jack M. Mortenson
---------------------
Jack M. Mortenson
President
41
<PAGE>
LIST OF SCHEDULES TO ASSET PURCHASE AGREEMENT
---------------------------------------------
SCHEDULE 3.3 Conflicts
SCHEDULE 3.4 List of required consents of any court,
public agency, authority or any person to
the consummation of the transactions
contemplated by Asset Purchase
Agreement.
SCHEDULE 3.6 List of Tangible Personal Property.
SCHEDULE 3.7 Description of Real Property
SCHEDULE 3.8 List of FCC Licenses.
SCHEDULE 3.9 List of Trade Agreements and other Station
Agreements.
SCHEDULE 3.10 List of Intellectual Property
SCHEDULE 3.11 Financial Statements
SCHEDULE 3.13 Employee Information
42
<PAGE>
SCHEDULE 3.3
------------
CONFLICTS
Sellers have outstanding loan obligations to First National Bank of Ohio. All
loans and related liens will be repaid and released at Closing.
43
<PAGE>
SCHEDULE 3.4
------------
CONSENTS
The acquisition of the Stations is subject to prior approval of the FCC.
The consent of S&S Realty Investments is required to assign the studio
lease for property located at 2780 S. Arlington Road, Akron, Ohio.
See Schedule 3.3.
------------
44
<PAGE>
SCHEDULE 3.6
------------
TANGIBLE PERSONAL PROPERTY
See attached
45
<PAGE>
EXHIBIT 10.06.03.01
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated March 28, 1996, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and Common
Ground Broadcasting, Inc., an Oregon corporation ("Seller").
PREMISES:
A. Seller is the licensee of and operates radio station KDBX(FM), Banks,
Oregon (the "Station") and pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all of
Seller's assets used or useful in the operation of the Station and the broadcast
business made possible thereby for the price and on the terms and conditions
hereafter set forth.
AGREEMENTS:
In consideration of the above premises and the covenants and agreements
contained herein, Buyer and Seller agree as follows:
Section 1
DEFINED TERMS
The following terms shall have the following meanings in this Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for services
rendered (including sale of time or talent on the Station for cash) by Seller
prior to the Closing Date as reflected on the billing records of Seller relating
to the Station.
1
<PAGE>
1.2 "Assets" means the tangible and intangible assets owned by Seller in
connection with the conduct of the business or operations of the Station, which
assets are being sold, transferred, or otherwise conveyed to Buyer hereunder,
and which are specified in detail in Section 2.1.
1.3 "Back Bay" shall mean Back Bay Broadcasters, Inc., a Delaware
corporation, and shall include its successors and assigns.
1.4 "Back Bay Agreement" shall mean the Agreement, dated March 15, 1994, by
and between American and Back Bay, as from time to time amended.
1.5 "Assumed Contracts" means (i) all agreements listed in Schedule 3.6,
and (ii) any agreements entered into by Seller in the ordinary course of
business between the date hereof and the Closing Date which Buyer agrees in
writing to assume.
1.6 "Closing" means the consummation of the transaction contemplated by this
Agreement in accordance with the provisions of Section 8.
1.7 "Closing Date" means the date of the Closing specified in Section 8.1.
1.8 "Consents" means all of the consents, permits or approvals of government
authorities and other third parties necessary to transfer the Assets to Buyer or
otherwise to consummate the transaction contemplated hereby, including without
limitation the consents of the parties to those agreements designated in
Schedule 3.6 with an asterisk.
1.9 "Escrow Deposit" shall mean the sum of Five Hundred Thousand Dollars
($500,000) held by Media Venture Partners as Escrow Agent pursuant to an Escrow
Agreement of even date, by and among Buyer, Seller, and Escrow Agent in the form
of Schedule 1.9 hereto.
1.10 "Excluded Assets" shall mean those assets described or set forth in
Section 2.2 herein and on Schedule 2.2 hereto.
1.11 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
2
<PAGE>
1.12 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.13 "Final Order" means a written action, order or public notice issued by
the FCC, setting forth the FCC Consent and (a) which has not been reversed,
stayed, enjoined, set aside, annulled or suspended, and (b) with respect to
which (i) no requests have been filed for administrative or judicial review,
reconsideration, appeal or stay, and the time for filing any such requests and
for the FCC to review the action on its own motion has expired, or (ii) in the
event of review, reconsideration or appeal that does not result in the FCC
consent being reversed, stayed, enjoined, set aside, annulled or suspended, the
time for further review, reconsideration or appeal has expired.
1.14 "Licenses" means all of the licenses, permits and other authorizations,
including the FCC Licenses, issued by the FCC, the Federal Aviation
Administration ("FAA"), and any other federal, state or local governmental
authorities to Seller in connection with the conduct of the business or
operations of the Station.
1.15 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned by Seller and which
are set forth on Schedule 3.5, plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date.
1.16 "Purchase Price" means the purchase price specified in Section 2.3.
3
<PAGE>
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set forth
-------------------------
in this Agreement, Seller hereby agrees to transfer and deliver to Buyer on the
Closing Date, and Buyer agrees to purchase, all of the Assets, free and clear of
any claims, liabilities, mortgages, liens, pledges, conditions, charges, or
encumbrances of any nature whatsoever (except for those permitted in accordance
with Section 2.5, 3.5 or 3.6 below), more specifically described as follows:
(a) The Personal Property;
(b) The Licenses;
(c) The Assumed Contracts;
(d) All trademarks, trade names, service marks and all other
information and similar intangible assets relating to the Station,
including those listed in Schedule 3.8 hereto;
(e) All of the Seller's proprietary information, which relate to the
Station, including without limitation, technical information and data,
machinery and equipment warranties, maps, computer discs and tapes, plans,
diagrams, blueprints, and schematics, including filings with the FCC which
relate to the Station, if any;
(f) All choses in action and rights under warranties of Seller relating
to the Station or the Assets, if any;
(g) All books and records relating exclusively to the business or
operations of the Station, including executed copies of the Assumed
Contracts, and all records required by the FCC to be kept, subject to the
right of Seller to
4
<PAGE>
have such books and records made available to Seller for a reasonable
period, not to exceed three (3) years; and
(h) All intangible assets of Seller relating to the Station not
specifically described above.
2.2 Excluded Assets. The Assets shall exclude the following assets:
---------------
(a) Seller's cash on hand as of the Closing Date and all other cash in
any of Seller's bank or savings accounts; any and all insurance policies,
letters of credit, or other similar items and any cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar investments.
(b) Seller's Accounts Receivable
(c) Any agreements other than the Assumed Contracts;
(d) All books and records of Seller, subject to the right of Buyer to
have access and to copy for a period of three (3) years from the Closing
Date, and Seller's corporate records and other books and records related to
internal corporate matters and financial relationships with Seller's
lenders;
(e) Any and all claims of Seller with respect to transactions prior
to the Closing Date, including without limitation any claims, rights and
interest in and to any refunds of federal, state or local franchise, income
or other taxes or fees of any nature whatsoever;
(f) Any pension, profit-sharing or employee benefit plans, and any
employment or collective bargaining agreement.
2.3 Purchase Price. The Purchase Price shall be Fourteen Million
--------------
Dollars - ($14,000,000). The Purchase Price shall be (i) adjusted to reflect any
adjustments or prorations made and agreed to at Closing as provided in Section
2.4 hereof, and (ii) shall be increased by the amount of payments, if any, made
prior to Closing by Seller to Combined Communications, Inc. pursuant to the
Assumed Contract relating to Combined Communications, Inc. described in Schedule
3.6.
5
<PAGE>
2.4 Adjustments and Prorations. All revenues arising from the Station up
--------------------------
until midnight on the Closing Date, and all expenses arising from the Station up
until midnight on the Closing Date, including business and license fees
(including any retroactive adjustments thereof), utility charges, real and
personal property taxes and assessments levied against the Assets, property and
equipment rentals, applicable copyright or other fees, sales and service
charges, taxes (except for taxes arising from the transfer of the Assets
hereunder), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall receive all
revenues, and all refunds to Seller and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the business or operations of the Station for the
period prior to the Closing Date, and Buyer shall receive all revenues and shall
be responsible for all expenses, costs and obligations allocable to the conduct
of the business or operations of the Station on the Closing Date and for the
period thereafter.
Notwithstanding the foregoing, there shall be no adjustment for, and Seller
shall remain solely liable with respect to, any Contracts not included in the
Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall deliver to
Seller a certificate (the "Closing Certificate"), signed by a senior officer of
Buyer after due inquiry by such officer but without any personal liability to
such officer, providing a compilation of the adjustments and prorations to be
made pursuant to this Section 2.4, including any adjustments and prorations made
at Closing, together with a copy of any working papers relating to such Closing
Certificate and such other supporting evidence as
6
<PAGE>
Seller may reasonably request. If Seller shall conclude that the Closing
Certificate does not accurately reflect the adjustments and prorations to be
made pursuant to this Section 2.4, Seller shall, within thirty (30) days after
its receipt of the Closing Certificate, provide to Buyer its written statement
of any discrepancies believed to exist. Joseph L. Winn on behalf of Buyer, and
Dirk Gastaldo on behalf of Seller, or their respective designees, shall attempt
jointly to resolve the discrepancies within fifteen (15) days after receipt of
Seller's discrepancy statement, which resolution, if achieved, shall be binding
upon all parties to this Agreement and not subject to dispute or review. If such
representatives cannot resolve the discrepancy to their mutual satisfaction
within such fifteen (15) day period, Buyer and Seller shall, within the
following ten (10) days, jointly designate a nationally known independent public
accounting firm to be retained to review the Closing Certificate together with
Seller's discrepancy statement and any other relevant documents. The cost of
retaining such independent public accounting firm shall be borne equally by
Buyer and Seller. Such firm shall report its conclusions as to adjustments
pursuant to this Section 2.4, which report shall be conclusive on all parties to
this Agreement and not subject to dispute or review. If, after adjustment as
appropriate with respect to the amount of the aforesaid adjustments paid or
credited at the Closing, Buyer is determined to owe an amount to Seller, Buyer
shall pay such amount to Seller, and if Seller is determined to owe an amount to
Buyer, Seller shall pay such amount thereof to Buyer, in each case within ten
(10) days of such determination.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date, Buyer
-----------------------------------------
shall pay, discharge and perform (i) all of the obligations and liabilities of
Seller under the Licenses and the Assumed Contracts insofar as they relate to
the time period on and after the Closing Date, and arising out of events
occurring on or after the Closing Date, (ii) all obligations and liabilities
arising out of events occurring on or after the Closing Date related to Buyer's
ownership of the Assets or its conduct of the business or operations of the
Station on or after the Closing Date, and (iii) all obligations and liabilities
for which
7
<PAGE>
Buyer receives a proration adjustment hereunder. All other obligations and
liabilities of Seller, including (i) any obligations under any agreement not
included in the Assumed Contracts, (ii) any obligations under the Assumed
Contracts relating to the time period prior to the Closing Date, (iii) any
claims or pending litigation or proceedings relating to the operation of the
Station prior to the Closing Date, and (iv) any liabilities or obligations to
Seller's employee (including obligations for accrued vacation or sick pay and
severance pay), shall remain and be the obligations and liabilities solely of
Seller.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
------------------------------------
formed, validly existing and in good standing under the laws of the State of
Oregon and is duly qualified to conduct its business in the state of Oregon,
which is the only jurisdiction where the conduct of the business or operations
of the Station requires such qualification. Seller has all requisite corporate
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Station
as presently conducted. Seller has all requisite corporate power and authority
to execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Seller, hereunder and thereunder. Seller is not a
participant in any joint venture or partnership with any other person or entity
with respect to any part of the Station's operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
------------------------------------
performance of this Agreement by Seller have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement has been duly
executed and
8
<PAGE>
delivered by Seller and constitutes the legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms except as the
enforceability hereof may be affected by bankruptcy, insolvency, or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery, and performance of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party; (ii) will not
conflict with any provision of the Articles of Incorporation and By-Laws of
Seller; (iii) will not conflict with, result in a breach of, or constitute a
default under, any law, judgment, order, ordinance, decree, rule, regulation or
ruling of any court or governmental instrumentality, which is applicable to
either Seller; (iv) will not conflict with, constitute grounds for termination
of, result in a breach of, constitute a default under, or accelerate or permit
the acceleration of any performance required by the terms of, any material
agreement, instrument, license or permit to which either Seller is a party or by
which either may be bound; or (v) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon the Assets.
3.4 Licenses. Schedule 3.4 includes a true and complete list of the
--------
Licenses. Seller has delivered to Buyer true and complete copies of the Licenses
(including any and all amendments and other modifications thereto). As described
in Schedule 3.4, the Licenses were validly issued with the Seller designated
thereon being the authorized legal holder thereof. The Licenses comprise all of
the licenses, permits and other authorizations required from any governmental or
regulatory authority for the lawful conduct of the business or operations of the
Station as presently operated. Seller has no reason to believe that the Licenses
will not be renewed by the FCC or other granting authority in the ordinary
course.
9
<PAGE>
3.5 Title to and Condition of Personal Property. Schedule 3.5 contains a
-------------------------------------------
description of the items of Personal Property of the Station which shall be
conveyed to Buyer at Closing. Except as described in Schedule 3.5, Seller owns
and has good title to all Personal Property. None of the Personal Property is
subject to any security interest, mortgage, pledge, conditional sales agreement,
or other lien or encumbrance, except for (i) liens for current taxes not yet due
and payable, and (ii) any other claims or encumbrances which are described in
Schedule 3.5 and annotated to indicate that such claims or encumbrances shall be
removed prior to or at Closing. Except as shown in Schedule 3.5, the Personal
Property taken as a whole is in good operating condition and repair (ordinary
wear and tear excepted), and is available for immediate use in the business or
operation of the Station, and the transmitting and studio equipment included in
the Personal Property (i) has been maintained consistent with FCC rules and
regulations, and (ii) will permit the Station and any unit auxiliaries thereto
to operate in accordance with the terms of the FCC Licenses and the rules and
regulations of the FCC, and with all other applicable federal, state and local
statutes, ordinances, rules and regulations.
3.6 Assumed Contracts. Schedule 3.6 contains descriptions of all the Assumed
-----------------
Contracts. Seller has delivered to Buyer true and complete copies of all Assumed
Contracts. All of the Assumed Contracts are in full force and effect, and are
valid, binding and enforceable in accordance with their terms, except as the
enforceability thereof may be affected by bankruptcy, insolvency or similar laws
affecting creditors' rights generally, or by court-applied equitable remedies.
Seller is not in material breach, nor to Seller's knowledge is any other party
in material breach, of the terms of any Assumed Contracts. Except as expressly
set forth in Schedule 3.6, the Seller is not aware of any intention by any party
to any Assumed Contract (i) to terminate such contract or amend the terms
thereof, (ii) to refuse to renew the same upon expiration of its term, or (iii)
to renew the same upon expiration only on terms and conditions which are more
onerous than those pertaining to such existing contract. Except for the
Consents, Seller has full legal power
10
<PAGE>
and authority to assign its rights under the Assumed Contracts to Buyer in
accordance with this Agreement, and such assignment will not affect the
validity, enforceability and continuation of any of the Assumed Contracts.
3.7 Consents. Except for the FCC Consent provided for in Section 6.1 and the
--------
other Consents indicated in Schedule 3.6 or described in Schedule 3.7, no
consent, approval, permit or authorization of, or declaration to or filing with
any governmental or regulatory authority, or any other third party is required
(i) to consummate this Agreement and the transaction contemplated hereby, (ii)
to permit Seller to assign or transfer the Assets to Buyer, or (iii) to enable
Buyer to conduct the business or operations of the Station in essentially the
same manner as such business or operations are presently conducted.
3.8 Trademarks, Trade Names and Copyrights. Schedule 3.8 is a true and
--------------------------------------
complete list of all copyrights, trademarks, trade names, licenses, patents,
permits, jingles, privileges and other similar intangible property rights and
interests (exclusive of those required to be listed in Schedule 3.4) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business or operations of
the Station, all of which are valid and in good standing and uncontested. Seller
has delivered to Buyer copies of all documents establishing such rights,
licenses, or other authority. Seller is not aware that it is infringing upon or
otherwise acting adversely to any trademarks, trade names, copyrights, patents,
patent applications, know-how, methods, or processes owned by any other person
or persons, and there is no claim or action pending, or to the knowledge of
Seller threatened, with respect thereto.
3.9 Insurance. All of the tangible property included in the Assets is
---------
insured against loss or damage in amounts generally customary in the broadcast
industry. Schedule 3.9 comprises a true and complete list of all insurance
policies of Seller which insure any part of the Assets. All policies of
insurance listed in Schedule 3.9 are in full force and effect. Since the date of
Seller's acquisitions of the Station, no insurance policy
11
<PAGE>
of Seller on the Assets or the Station has been cancelled by the insurer and no
application of Seller for insurance has been rejected by any insurer.
3.10 Reports. Except where failure to do so would not have a material
-------
adverse effect on the ownership or operation of the Station: all returns,
reports and statements which the Station is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
substantially complete and correct as filed; and the Station's public inspection
file is located at the US National Bank in Banks, Oregon and is in compliance
with the FCC's rules and regulations.
3.11 Labor Relations. Seller is not a party to or subject to any collective
---------------
bargaining agreements with respect to the Station. Seller, in the operation of
the Station, has complied in all material respects with all applicable laws,
rules and regulations relating to the employment of labor, including those
related to wages, hours, collective bargaining, occupational safety,
discrimination, and the payment of social security and other payroll related
taxes, and it has not received any notice alleging that it has failed to comply
in any material respect with any such laws, rules or regulations. No
controversies, disputes, or proceedings are pending or, to the best of its
knowledge, threatened, between it and employees (collectively) of the Station.
No labor union or other collective bargaining unit represents any of the
employees of the Station. To the best knowledge of Seller, there is no union
campaign being conducted to solicit cards from employees to authorize a union to
request a National Labor Relations Board certification election with respect to
any of Seller's employees at the Station.
3.12 Taxes. Seller has filed or caused to be filed all federal income tax
-----
returns and all other federal, state, county, local or city tax returns which
are required to be filed, and it has paid or caused to be paid all taxes shown
on said returns or on any tax assessment received by it to the extent that such
taxes have become due, or has set aside
12
<PAGE>
on its books reserves (segregated to the extent required by sound accounting
practice) deemed by it to be adequate with respect thereto. No events have
occurred which could impose on Buyer any transferee liability for any taxes,
penalties or interest due or to become due from Seller.
3.13 Claims, Legal Actions. Except for any investigations and rule-making
---------------------
proceedings generally affecting the broadcasting industry, there is no claim,
legal action, counterclaim, suit, arbitration, governmental investigation or
other legal, administrative or tax proceeding, nor any order, decree or
judgment, in progress or pending, or to the knowledge of Seller threatened,
against or relating to Seller, the Assets, or the business or operations of the
Station, nor does Seller know of any basis for the same. In particular, but
without limiting the generality of the foregoing, there are no applications,
complaints or proceedings pending or, to the best of its knowledge, threatened
(i) before the FCC relating to the business or operations of the Station other
than applications, complaints or proceedings which affect the radio industry
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.14 Compliance with Laws. To the best knowledge of Seller, Seller has
--------------------
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances. To the best
knowledge of Seller, neither the ownership or use, nor the conduct of the
business or operations, of the Station conflicts with rights of any other
person, firm or corporation.
3.15 Environmental Matters.
---------------------
(a) During Seller's period of ownership there has been no production,
storage, treatment, recycling, disposal, use, generation, discharge, release or
other handling or disposition of any kind by Seller or any such predecessor
(collectively, "Handling") of any
13
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toxic or hazardous wastes, substances, products, pollutants or materials of any
kind, including, without limitation, petroleum and petroleum products and
asbestos, or any other wastes, substances, products, pollutants or material
regulated under any Environmental Laws (as defined below) (collectively,
"Hazardous Materials") at, in, on, from or under the Station's transmission site
(the "Site") or any structure or improvement on the Site which in any event is
in material violation of Environmental Law. The operations of Seller at the
Site, are and have been conducted, as the case may be, in material compliance
with all applicable Environmental Laws. There are no pending or threatened
actions, suits, claims, demands, legal proceedings, administrative proceedings,
requests for information, or other notices, proceedings or requests
(collectively, "Claims") against or upon Seller based on or relating to any Pre-
Closing Environmental Matters (as defined below), and Seller has no knowledge
that any such Claims will be asserted. Environmental Laws means any and all
Federal, state or local laws, statutes, rules, regulations, plans, ordinances,
codes, licenses or other restrictions relating to health, safety or the
environment, including without limitation the Comprehensive Environmental
Response, Compensation and Liability Act, the Clean Air Act the Safe Drinking
Water Act, the Toxic Substances Control Act and the Occupational Health and
Safety Act. Pre-Closing Environmental Matters means (i) the Handling of any
Hazardous Materials on, at, in, from or under the Site prior to the Closing
Date, including without limitation, the effects of any Handling of Hazardous
Materials within or outside the boundaries of the Site, the presence of any
Hazardous Materials in, on or under the Site or any improvements or structures
thereon regardless of how such Hazardous Materials came to
14
<PAGE>
rest there, (ii) the failure of Seller to be in compliance with any
Environmental Law or (iii) any other act, omission, event or condition which
could give rise to liability or potential liability under any Environmental Law
with respect to the Site or the present or prior business of Seller.
(b) Buyer shall be entitled to order and have undertaken on its behalf prior
to closing a Phase I Environmental Assessment of the at the Site, and shall be
granted all cooperation and access by Seller reasonably necessary to complete
such Assessment. If the report of such Assessment, which shall be completed and
furnished to Seller no later than forty (40) days following the date hereof,
demonstrates or recommends remediation in order to cause the Site to comply with
Environmental Laws, Seller shall immediately undertake to arrange, at its own
expense, such remediation prior to Closing. Notwithstanding the foregoing, in
the event such remediation costs or is estimated to cost in excess of Fifty
Thousand Dollars ($50,000), Seller shall not be obligated to expend such excess,
but in such event Buyer may thereafter, at its option, (i) accept the condition
of the Site at Closing as so remediated, or (ii) terminate its obligations to
purchase the Station under this Agreement.
3.16 Conduct of Business in Ordinary Course. Since August 1, 1995, Seller
--------------------------------------
has conducted the business and operations of the Station only in the ordinary
course and has not:
(a) Suffered any material adverse change in the business assets or
properties, or condition of the Station, including without limitation any
damage, destruction or loss affecting the Assets;
(b) Made any sale, assignment, lease or other transfer of any of
Seller's properties other than in the normal and usual course of business
with suitable replacements being obtained therefor.
15
<PAGE>
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
------------------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware, and shall be, at Closing, qualified to conduct business in the State
of Oregon. Buyer has all requisite corporate power and authority to execute and
deliver this Agreement and the documents contemplated hereby, and to perform and
comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder and thereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
------------------------------------
performance of this Agreement by Buyer have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as the enforceability hereof may be affected by bankruptcy, insolvency,
or similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery, and performance of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party; (ii) will not
conflict with the Articles of Incorporation or Bylaws of Buyer; (iii) will not
conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
16
<PAGE>
4.4 FCC Qualification. Buyer has no knowledge of any facts which would,
-----------------
under present law (including the Communications Act of 1934, as amended) and
present rules, regulations and practices of the FCC, disqualify Buyer as an
assignee of the licenses, permits and authorizations listed on Schedule 3.4
hereto, or as an owner and/or operator of the Station's Assets, and Buyer will
not take, or unreasonably fail to take, any action which Buyer knows or has
reason to know would cause such disqualification (it being understood that Buyer
has an active duty to attempt to ascertain what would cause such
disqualification). Should Buyer become aware of any such facts, it will promptly
notify Seller in writing thereof and use its best efforts to prevent any such
disqualification. Buyer further represents and warrants that it is financially
qualified to meet all terms, conditions and undertakings contemplated by this
Agreement and that all necessary amounts to or approvals of this transaction by
Buyer's lenders have been obtained.
SECTION 5
COVENANTS OF SELLER
-------------------
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or with
---------------------
the prior written consent of Buyer, not to be unreasonably withheld, between the
date hereof and the Closing Date, Seller shall operate the Station in the
ordinary course of business in accordance with its past practices (except where
such would conflict with the following covenants or with Seller's other
obligations hereunder), and abide by the following negative and affirmative
covenants:
A. Negative Covenants. Seller shall not do any of the following:
------------------
(1) Contracts. Modify or amend any of the Assumed Contracts;
---------
(2) Disposition of Assets. Sell, assign, lease, or otherwise transfer
---------------------
or dispose of any of the Assets, except for assets consumed or disposed of
in the ordinary course of business, where no longer used or useful in the
business or operations of the Station or in connection with the acquisition
of replacement property of equivalent kind and value;
17
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(3) Encumbrances. Create, assume or permit to exist any claim,
------------
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon the Assets, except for (i) those in existence on the
date of this Agreement, disclosed in Schedule 3.5, or permitted by Section
2.5 or 3.5 and (ii) mechanics' liens and other similar liens which will be
removed prior to the Closing Date;
(4) Programming. Make any material changes in the broadcast hours or
-----------
in the percentages of types of programming broadcast by the Station, or
make any other material changes in the Station's programming policies,
except such changes as in the good faith judgment of the Seller are
required by the public interest;
(5) Licenses. Do any act or fail to do any act which might result in
--------
the expiration, revocation, suspension or modification of any of the
Licenses, or fail to prosecute with due diligence any applications to any
governmental authority in connection with the operation of the Station;
(6) Rights. Waive any material right relating to the Station or the
------
Assets; or
(7) No Inconsistent Action. Knowingly take any action which is
----------------------
inconsistent with its obligations hereunder or which could hinder or delay
the consummation of the transaction contemplated by this Agreement.
B. Affirmative Covenants. Seller shall do the following:
---------------------
(1) Access to Information. Upon prior notice, allow Buyer and its
---------------------
authorized representatives reasonable access at mutually agreeable times at
Buyer's expense during normal business hours to the Assets and to all other
properties, equipment, books, records, agreements and documents relating to
the Station for the purpose of audit and inspection, and furnish or cause
to be furnished to Buyer or its authorized representatives all information
with respect to the affairs and business of the Station as Buyer may
reasonably request, it being understood that the rights of Buyer hereunder
shall not be exercised in such a manner as to interfere with the operations
of the business of Seller; provided that neither the furnishing of such
information to Buyer or its representatives nor any investigation made
heretofore or hereafter by Buyer shall affect Buyer's rights to rely on any
representation or warranty made by Seller in this Agreement, each of which
shall survive any furnishing of information or any investigation;
18
<PAGE>
(2) Maintenance of Assets. Maintain all of the Assets or
---------------------
replacements thereof and improvements thereon in current condition
(ordinary wear and tear excepted), and use, operate and maintain all of the
above assets in a reasonable manner, with inventories or spare parts and
expendable supplies being maintained at levels consistent with past
practices;
(3) Insurance. Maintain the existing insurance policies on the
---------
Station and the Assets;
(4) Consents. Use its reasonable efforts to obtain the Consents;
--------
(5) Books and Records. Maintain its books and records in accordance
-----------------
with past practices;
(6) Notification. Promptly notify Buyer in writing of any unusual
------------
or material developments with respect to the assets of the Station, and of
any material change in any of the information contained in Seller's
representations and warranties contained in Section 3 hereof or in the
schedules hereto, provided that such notification shall not relieve Seller
of any obligations hereunder;
(7) Compliance with Laws. Comply in all material respects with all
--------------------
rules and regulations of the FCC, and all other laws, rules and regulations
to which Seller, the Station and the Assets are subject.
5.2 Post-Closing Covenants. After the Closing, Seller will take such actions,
----------------------
and execute and deliver to Buyer such further deeds, bills of sale, or other
transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
--------------------------------
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
-------------
this Agreement is subject to the prior consent and approval of the FCC.
19
<PAGE>
A. Within ten (10) days after the execution of this Agreement, Buyer
and Seller shall file with the FCC an appropriate application for FCC Consent.
The parties shall prosecute said application with all reasonable diligence and
otherwise use their best efforts to obtain the grant of such application as
expeditiously as practicable. If the FCC Consent imposes any condition on any
party hereto, such party shall use its best efforts to comply with such
condition unless compliance would be unduly burdensome or would have a material
adverse effect upon it. If reconsideration or judicial review is sought with
respect to the FCC Consent, Buyer and Seller shall oppose such efforts to obtain
reconsideration or judicial review (but nothing herein shall be construed to
limit any party's right to terminate this Agreement pursuant to Section 9 of
this Agreement).
B. The transfer of the Assets hereunder is expressly conditioned
upon (i) the grant of the FCC Consent without any materially adverse conditions
on Buyer, (ii) compliance by the parties hereto with the condition (if any)
imposed in the FCC Consent, and (iii) the FCC Consent, through the passage of
time or otherwise, becoming a Final Order, provided, though, that the condition
that the FCC Consent shall have become a Final Order may be waived by Buyer, in
its sole discretion.
6.2 Signal Upgrade Application. Buyer shall afford Seller full permission
--------------------------
and cooperation to seek an upgrade of the Station's signal to Class C-1 under
FCC rules and proceedings. Without limitation, Buyer (i) shall be Framed full
access to the technical facilities and records of the Station in Seller's
possession, and (ii) shall be entitled to prepare and submit to the FCC such
filings and applications as it deems advisable in order to prosecute such signal
upgrade. Seller shall (i) continue using its best efforts to cause the licensee
of KLLR(FM), Redmond, Oregon to join in and file positive Joint Comments with
the FCC with respect to the such proceeding insofar as the change in frequency
of KLLR is required therefor, and (ii) consent to or execute on its behalf as
licensee any such filings or applications required in conjunction with the
signal upgrade application. All expenses and fees associated with such
application shall be borne solely by Buyer.
20
<PAGE>
6.3 Control of the Station. Buyer shall not, directly or indirectly,
----------------------
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the Station; such operations, including complete control and
supervision of all of the Station's programs, employees, and policies, shall be
the sole responsibility of Seller until the completion of the Closing hereunder.
6.4 Taxes, Fees and Expenses. Seller and Buyer shall each pay 50% of all
------------------------
sales, gains, transfer and similar taxes and fees, if any, arising out of the
transfer of the Assets pursuant to this Agreement. All filing fees required by
the FCC shall be paid equally by Seller and Buyer. Except as otherwise provided
in this Agreement, each party shall pay its own expenses incurred in connection
with the authorization, preparation, execution, and performance of this
Agreement, including all fees and expenses of counsel, accountants, agents, and
other representatives.
6.5 Brokers. Buyer and Seller each represents and warrants that neither it
-------
nor any person or entity acting on its behalf has incurred any liability for any
finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Media Venture Partners, whose fee
shall be the responsibility of Seller, provided that Buyer shall contribute
thereto the amount of One Hundred Thousand Dollars ($100,000).
6.6 Confidentiality. Except as necessary for the consummation of the
---------------
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, each party will return to the other
21
<PAGE>
party all documents, work papers and other written material obtained by it in
connection with the transaction contemplated hereby.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each other and
-----------
their respective counsel and accountants in connection with any actions required
to be taken as part of their respective obligations under this Agreement, and
Buyer and Seller shall execute such other documents as may be necessary and
desirable to the implementation and consummation of this Agreement, and
otherwise use their best efforts to consummate the transaction contemplated
hereby and to fulfill their obligations hereunder. Notwithstanding the
foregoing, except as otherwise set forth herein, Buyer shall have no obligation
(i) to expend funds to obtain the Consents, or (ii) to agree to any adverse
change in any License or Assumed Contract to obtain a Consent required with
respect thereto.
6.8 Risk of Loss.
------------
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other event
occurs which prevents signal transmission by the Station in the normal and usual
manner and Seller cannot restore or replace the Assets so that the conditions
are cured and normal and usual transmission is resumed before the Closing Date,
the Closing Date shall be postponed, for a period of up to one hundred and
twenty (120) days, to permit the repair or replacement of the damage or loss.
C. In the event of any damage or destruction of the Assets described
above, if such Assets have not been restored or replaced and the Station's
normal and usual transmission resumed within the one hundred and twenty (120)
day period specified above, Buyer may terminate this Agreement forthwith without
any further obligation hereunder by written notice to Seller. Alternatively,
Buyer may, at its option, proceed to
22
<PAGE>
close this Agreement and complete the restoration and replacement of such
damaged Assets after the Closing Date, in which event Seller shall deliver to
Buyer all insurance proceeds received in connection with such damage or
destruction of the Assets to the extent not already expended by Seller arising
in connection with such restoration and replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder by written notice
to Seller if any event occurs which prevents signal transmission by the Station
in a manner generally equivalent to its current operations for a consecutive
period of five (5) or a cumulative period of fourteen (14) days after the date
hereof.
6.9 Audit Cooperation. Seller agrees to fully cooperate, and use reasonable
-----------------
efforts to cause their accounting firms to reasonably cooperate with Buyer and
at Buyer's expense, to the extent required for the Buyer to prepare audited
financial statements for the Station for the period of Seller's ownership
thereof.
6.10 Back Bay Transaction. Buyer has heretofore delivered to Seller a true,
--------------------
correct and complete copy of the Back Bay Agreement as in effect on the date
hereof. Pursuant to the Back Bay Agreement, American has the freely assignable
right (a) at any time after August 31, 1998 to purchase (the "Purchase Right")
all of the business and assets of Back Bay, including without limitation the
WBNW Business (as defined in the Back Bay Agreement), and (b) of first refusal
(the "Right of First Refusal") in the event Back Bay desires to sell, transfer
or otherwise dispose of all or any material portion of the business and assets
of Back Bay, including without limitation the WBNW Business. Buyer hereby agrees
that Seller shall have the right (the "WBNW Purchase Right"), but not the
obligation, to purchase the WBNW Business for $6,000,000 by written notice (the
"Election Notice") given to and received by Buyer at any time prior to January
1, 1998. Anything herein to the contrary notwithstanding, if Buyer has not
received the Election
23
<PAGE>
Notice prior to January 1, 1998, all rights of Seller to purchase the WBNW
Business shall cease and terminate and by of no further force and effect.
The Election Notice shall constitute a representation that Seller is ready,
willing and able, and has the financial resources, to purchase the WBNW Business
for $6,000,000 and that it will negotiate in good faith with respect to and
execute and deliver a purchase and sale agreement on terms and conditions
customary with respect to similar transactions with Buyer (or, at Buyer's
discretion, with Back Bay) to purchase the WBNW Business. Buyer agrees that it
will cooperate in all reasonable respects with Seller in order to enable it to
exercise the WBNW Purchase Right, including without limitation (a) advising
Seller promptly of buyer's receipt of any Asset Transfer Notice pursuant to the
provisions of Section 4.13 of the Back Bay Agreement, and (b) exercising any and
all of its rights under the Back Bay Agreement, including without limitation the
exercise by Buyer of the Right of First Refusal and the Purchase Right.
Seller acknowledges and agrees that (a) Buyer's rights with respect to the
Purchase Rights and the Right of First Refusal apply or may apply, as the case
may be, to all of the business and assets of Back Bay and, therefore, Buyer may
be required to acquire businesses and assets other than the WBNW Business in
order to enable Seller to exercise its WBNW Purchase Rights, and (b) the
purchase price to be paid by Buyer pursuant to the exercise of (i) the Purchase
Rights will be based on a formula set forth in the Back Bay Agreement and (ii)
the Right of First Refusal will be based on a third party offer. Accordingly,
Buyer and Seller acknowledge and agree that the amount required to be paid by
Buyer for the WBNW Business may be more or less than $6,000,000 and that Buyer
will, therefore, be required to pay any excess of the purchase price over
$6,000,000, and will be entitled to any excess of $6,000,000 over such purchase
price.
Buyer agrees that, in the event Seller purchases the WBNW Business pursuant
to the exercise of the WBNW Purchase Right, from and after the consummation of
such transaction, Buyer will assume, at no expense to Seller, fifty percent
(50%) of the base
24
<PAGE>
rental fees payable under the WBNW tower site lease between Back Bay and
Fellsway Plaza Trust, dated December 14, 1987, as amended to the date hereof
(the "WBNW Tower Lease"), or any extension or renewal therefore. Seller agrees
that Buyer shall have the fight to manage, sublease and develop the tower site
covered by the WBNW Tower Lease so long as such activities do not disrupt or
interfere with, in either case in any material manner, with the operations of
the WBNW Business.
Buyer acknowledges its right of specific performance with respect to the
purchase of the WBNW Business pursuant to Section 11.13 of the Back Bay
Agreement and agrees to use its best efforts to enforce, and to assist Seller in
enforcing, such fights to purchase the WBNW Business. Buyer further agrees not
to take any action, and to use its best efforts not to allow any action to take
place, which would impair or abrogate its fight to purchase the WBNW Business
pursuant to the Back Bay Agreement.
The parties recognize that the WBNW Business is of a special, unique and
extraordinary character. Accordingly, if Seller is unable to acquire the WBNW
Business by reason of Buyer failing to have complied with its agreements under
this Section 6.10, Seller shall be entitled to bring an action against Buyer for
damages or, in lieu of, and in substitution for any damages, to obtain specific
performance of the terms of this Section 6.10. In the event of any action to
enforce the provisions of this Section 6.10, Seller hereby waives the defense
that there is an adequate remedy at law.
The provisions of this Section 6.10 shall survive the termination of this
Agreement if this Agreement is terminated by reason of the fault or default of
Buyer. If this Agreement is terminated for any reason other than the fault or
default of Buyer, the provisions of this Section 6.10 shall be of no force and
effect.
6.11 Cooperation Regarding Tax Free Exchange. The parties acknowledge that
---------------------------------------
Seller may desire to effectuate a tax-deferred exchange pursuant to Section 1031
of the Internal Revenue Code (which may include a nonsimultaneous exchange),
with respect to
25
<PAGE>
the sale of the assets of the Station; however, such an exchange shall not be a
condition or obligation of Seller under this Agreement.
Buyer agrees to cooperate with Seller in connection therewith, provided:
(a) There is no additional cost or expense to Buyer, Seller shall
reimburse Buyer for the actual amount of reasonable attorneys' fees and
other expenses incurred by Buyer in the review of any documentation
presented to Buyer for its approval or execution in connection with a
particular exchange transaction; and
(b) The Closing is not delayed beyond the Closing Date. Seller will
agree to hold Buyer free and harmless of, and indemnify Buyer from, any
liabilities, claims, costs, damages, expenses and fees (including
attorney's fees) which may arise out of the property or properties forming
a part of such tax deferred exchange, including without limitation any
claims by the Internal Revenue Service.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
---------------------------------------------
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the
----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and
------------------------------
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, except for changes contemplated
by this Agreement, as though such representations and warranties were made at
and as of such time.
B. Covenants and Conditions. Seller shall have in all material
------------------------
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
26
<PAGE>
C. Consents. Each of the Consents marked as "material" on Schedule
--------
3.6 shall have been duly obtained and delivered to Buyer with no material
adverse change to the terms of the License or Assumed Contract with respect to
which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
--------
shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and able to
----------
make all the deliveries to Buyer set forth in Section 8.2
F. Adverse Change. Between the date of this Agreement and the
--------------
Closing Date, there shall have been no material adverse change in the Assets.
7.2 Conditions to Obligations of Seller. The obligations of Seller at the
-----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
------------------------
respects performed and complied with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
C. Deliveries. Buyer shall have made or stand willing and able to
----------
make all the deliveries set forth in Section 8.3
27
<PAGE>
SECTION 8
CLOSING AND CLOSING DELIVERIES
------------------------------
8.1 Closing. The closing shall take place at 10:00am on a date, to be set
-------
by Buyer, upon five (5) days written notice to Seller, no later than ten (10)
days following the date upon which the FCC Consent has become a Final Order (the
"Closing Date"), provided, though, that Buyer may waive the requirement for a
Final Order and schedule the Closing Date, with five (5) days written notice to
Seller, at any time after the receipt of FCC Consent. Closing shall be held at
the offices of Seller's Portland, Oregon counsel or such other place as shall be
mutually agreed to by Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
--------------------
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed bills of sale, assignments and
------------------
other transfer documents which shall be sufficient to vest good and
marketable title to the Assets in the name of Buyer or its permitted
assignees, free and clear of any claims, liabilities, mortgages, liens,
pledges, conditions, charges, or encumbrances of any nature whatsoever
(except for those permitted in accordance with Sections 2.5 or 3.5 hereof);
(b) Consents. The original of each Consent marked as "material" with
--------
an asterisk on Schedule 3.6;
(c) Officer's Certificate. A certificate, dated as of the Closing
---------------------
Date, executed by a duly authorized officer of Seller, certifying: (i) that
the representations and warranties of Seller contained in this Agreement
are true and complete in all material respects as of the Closing Date,
except for changes contemplated by this Agreement, as though made on and as
of that date; and (ii) that Seller has, in all material respects, performed
its obligations and complied with its covenants set forth in this Agreement
to be performed and complied with prior to or on the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the Closing
-----------------------
Date, executed by Seller's Secretary; certifying that the resolutions, as
attached to such certificate, were duly adopted by such Seller's sole
shareholder and Board of Directors, authorizing and approving the execution
of this Agreement by Seller
28
<PAGE>
and the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect.
(e) Licenses, Contracts, Business Records, Etc. Copies, if available,
------------------------------------------
of all licenses, Assumed Contracts, blueprints, schematics, working
drawings, plans, projections, statistics, engineering records, and all
files and records used by Seller in connection with its operations of the
Station;
(f) Opinions of Counsel. Opinions of Seller's General Counsel and
-------------------
communications counsel dated as of the Closing Date, and addressed to Buyer
and at Buyer's directions, to Buyer's lenders, substantially in the form of
Schedule 8.2(f) hereto.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
-------------------
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section 2.3;
--------------
(b) Assumption Agreements. Appropriate assumption agreements pursuant
---------------------
to which Buyer shall assume and undertake to perform Seller's obligations
under the Licenses and Assumed Contracts arising on or after the Closing
Date;
(c) Officer's Certificate. A certificate, dated as of the Closing
---------------------
Date, executed by the President or Vice President of Buyer, certifying (i)
that the representations and warranties of Buyer contained in this
Agreement are true and complete in all material respects as of the Closing
Date, except for changes contemplated by this Agreement, as though made on
and as of that date, and (ii) that Buyer has, in all material respects,
performed its obligations and complied with its covenants set forth in this
Agreement to be performed or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the Closing
-----------------------
Date, executed by Buyer's Secretary, certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of
Directors, authorizing and approving the execution of this Agreement and
the consummation of the transaction contemplated hereby and that such
resolutions remain in full force and effect.
(e) Opinion of Counsel. An opinion of Buyer's General Counsel dated
------------------
as of the Closing Date, substantially in the form of Schedule 8.3(e)
hereto.
29
<PAGE>
SECTION 9
RIGHTS OF BUYER AND SELLER
--------------------------
ON TERMINATION OR BREACH
------------------------
9.1 Termination Rights. This Agreement may be terminated by either Buyer or
------------------
Seller if the terminating party is not then in breach of any material provision
of this Agreement, upon written notice to the other party, upon the occurrence
of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent to the
obligations of the terminating party set forth in Section 7 of this
Agreement shall not have been materially satisfied, and (ii) satisfaction
of such condition shall not have been waived by the terminating party;
(b) If the application for FCC Consent shall be set for hearing by the
FCC for any reason; or
(c) If the Closing shall not have occurred on or before October 31,
1996.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Sections 9.3 or 9.4 or (iii) if Buyer shall be in breach of any
material provision of this Agreement, Seller shall be entitled only to
liquidated damages as provided in Section 9.2 hereof, and its continued rights
pursuant to Section 6.10 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
30
<PAGE>
9.2 Liquidated Damages. In the event this Agreement is terminated by Seller
------------------
due to a material breach by Buyer of its representations, warranties, covenants
and other obligations under this Agreement, then the Escrow Deposit shall be
paid to Seller as liquidated damages, it being agreed that the Escrow Deposit
shall constitute full payment for any and all damages suffered by Seller by
reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of the Escrow Deposit is a fair and equitable amount to reimburse Seller for
damages sustained due to Buyer's failure to consummate this Agreement for the
above-stated reason. All interest or other proceeds from the investment of the
Escrow Deposit, less any compensation due the Escrow Agent, shall be paid to
Seller.
9.3 Monetary Damages. Notwithstanding any provision of this Agreement to the
----------------
contrary, but subject to the provisions of the following sentence, if this
Agreement is terminated pursuant to Section 9.1 by reason of Buyer being in
breach of any material provision of this Agreement, Buyer shall not be entitled
to any damages or indemnification from Seller. If, however, Seller attempts to
terminate this Agreement under circumstances where it is not entitled to do so,
or if Seller, by its own action, causes a breach of warranty or fails to satisfy
a condition (including without limitation a refusal to consummate the
transaction after Buyer has satisfied all conditions to Seller's obligation to
close and Buyer has demonstrated its willingness and ability to close on the
terms set forth in this Agreement and Buyer is not in default hereunder) of
whereby Buyer is entitled to terminate this Agreement and Buyer does so elect to
terminate, the monetary damages to which Buyer shall be entitled shall be
limited to direct and actual damages and shall in no event exceed $250,000 in
the aggregate.
31
<PAGE>
9.4 Specific Performance. The parties recognize that the Station is of a
--------------------
special, unique and extraordinary character. Accordingly, if Seller shall be in
breach of any material provision of this Agreement, Buyer shall be entitled, in
lieu of, and in substitution for the damages described in Section 9.3, to obtain
specific performance of the terms of this Agreement. In the event of any action
to enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law.
9.5 Expenses Upon Default. In the event of a default by a party hereto (the
---------------------
"Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance, or other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTS,
-----------------------------------------
AND INDEMNIFICATION
-------------------
10.1 Representations and Warranties. All representations and warranties
------------------------------
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive the Closing Date for a period of fifteen (15)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at Closing
and such knowledge is documented in writing at Closing, such party shall be
deemed to have waived such misrepresentation or breach. Notwithstanding the
foregoing, the provision for survival and making of claims shall not apply to
any agreements whereby
32
<PAGE>
Buyer assumes the obligations under any Assumed Contract, each of which
agreements shall be governed by its own terms to the extent longer periods of
performance are therein provided.
10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
-------------------------
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from
any untrue representation, breach of warranty or nonfulfillment of any
covenants by Seller contained herein or in any certificate, delivered to
Buyer hereunder.
(b) Any and all obligations of Seller not assumed by Buyer
pursuant to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from
Seller's operation or ownership of the Station prior to the Closing Date,
including any and all liabilities arising under the Licenses or the Assumed
Contracts which relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to any
of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof;
provided, however, that if Closing occurs, Seller shall not be obligated to
indemnify Buyer (i) for any amounts in excess of the Purchase Price in the
aggregate, or (ii) until the aggregate amount of such claims, liabilities,
damages, losses, costs and expenses exceeds Twenty Thousand Dollars ($20,000),
in which case Buyer shall then be entitled to indemnification of the entire
amount in excess of Twenty Thousand Dollars ($20,000).
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller harmless
------------------------
against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any
covenants by Buyer contained herein or in any certificate delivered to
Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from Buyer's
operation or ownership of the Station on or after the Closing Date,
including any
33
<PAGE>
and all liabilities or obligations arising under the Licenses or the
Assumed Contracts which relate to events occurring after the Closing Date
or otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, including
reasonable legal fees and expenses, incident to any of the foregoing or
incurred in investigating or attempting to avoid the same or to oppose the
imposition thereof;
provided, however, that if Closing occurs, Buyer shall not be obligated to
indemnify Seller until the aggregate amount of such claims, liabilities,
damages, losses, costs and expenses exceeds Twenty Thousand Dollars ($20,000),
in which case Buyer shall then be entitled to indemnification of the entire
amount in excess of Twenty Thousand Dollars ($20,000).
10.4 Procedures for Indemnification. The procedures for indemnification
------------------------------
shall be as follows:
A. The party claiming the indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought
by a third party, specifying (i) the factual basis for such claim, and (ii)
the amount of the claim. If the claim relates to an action, suit or
proceeding filed by a third party against Claimant, such notice shall be
given by Claimant within five (5) days after written notice of such action,
suit or proceeding was given to Claimant.
B. Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty (30) days to make such investigation
of the claim as the Indemnifying Party deems necessary or desirable. For
the purposes of such investigation, the Claimant agrees to make available
to the Indemnifying Party and/or its authorized representative(s) the
information relied upon by the Claimant to substantiate the claim. If the
Claimant and the Indemnifying Party agree at or prior to the expiration of
said thirty (30) day period (or any mutually agreed upon extension thereof)
to the validity
34
<PAGE>
and amount of such claim, or if the Indemnifying Party does not respond to
such notice, the Indemnifying Party shall immediately pay to the Claimant
the full amount of the claim. If the Claimant and the Indemnifying Party do
not agree within said period (or any mutually agreed upon extension
thereof), the Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party
shall have the fight at its own expense, to participate in or assume
control of the defense of such claim, and the Claimant shall cooperate
fully with the Indemnifying Party, subject to reimbursement for reasonable
actual out-of-pocket expenses incurred by the Claimant as the result of a
request by the Indemnifying Party. If the Indemnifying Party elects to
assume control of the defense of any third-party claim, the Claimant shall
have the right to participate in the defense of such claim at its own
expense.
D. If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make all reasonable efforts to
reach a decision with respect thereto as expeditiously as possible.
E. If the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third party claim, it shall be
bound by the results obtained in good faith by the Claimant with respect to
such claim.
F. The indemnification rights provided in Sections 10.2 and 10.3
shall extend to the shareholders, directors, officers, partners employees
and representatives of the Claimant although for the purpose of the
procedures set forth in this Section 10.4, any indemnification claims by
such parties shall be made by and through the Claimant.
35
<PAGE>
SECTION 11
MISCELLANEOUS
-------------
11.1 Notices. All notices, demands, and requests required or permitted to be
-------
given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or by facsimile
transmission, with receipt confirmation, (iii) deemed to have been given on the
date of personal delivery or the date set forth in the records of the delivery
service or on the return receipt, and (iv) addressed as follows:
If to Seller: Common Ground Broadcasting, Inc.
c/o Salem Communications
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Attn: Eric H. Halvorson, Executive Vice President
Fax: (805) 482-8570
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsore, Vice President & General Counsel
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate in a writing delivered in accordance with this Section
11.1.
36
<PAGE>
11.2 Benefit and Binding Effect. Neither party hereto may assign this
--------------------------
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated entity; provided that following such assignment Buyer shall remain
liable for all of the obligations of the Buyer. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
-------------
enforced in accordance with the laws of the State of Oregon.
11.4 Headings. The headings herein are included for ease of reference only
--------
and shall not control or affect the meaning or construction of the provisions of
this Agreement.
11.5 Gender and Number. Words used herein, regardless of the gender and
-----------------
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.6 Entire Agreement. This Agreement, all schedules hereto, and all
----------------
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to this
Agreement shall be deemed part of this Agreement and incorporated herein, where
applicable, as if fully set forth herein. This Agreement supersedes all prior
negotiations between Buyer and Seller, and all letters of intent and other
writings related to such negotiations, and cannot be amended, supplemented or
modified except by an agreement in writing which makes specific reference to
this Agreement or an agreement delivered pursuant hereto, as the case may be,
and which is signed by the party against which enforcement of any such
amendment, supplement or modification is sought.
37
<PAGE>
11.7 Waiver of Compliance; Consents. Except as otherwise provided in this
------------------------------
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, representation, warranty, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure. Whenever this Agreement requires or
permits consent by or on behalf of any party hereto, such consent shall be given
in writing in a manner consistent with the requirements for a waiver of
compliance as set forth in this Section 11.7.
11.8 Severability. If any provision of this Agreement or the application
------------
thereof to any person or circumstance shall be invalid or unenforceable or any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greater extent permitted by law.
11.9 Counterparts. This Agreement may be signed in any number of counterparts
------------
with the same effect as if the signature on each such counterpart were upon the
same instrument.
38
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as
of the date first above written.
SELLER: COMMON GROUND BROADCASTING, INC.
By: /s/ Eric H. Halvorson
------------------------------
Eric H. Halvorson
Executive Vice President
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By: /s/ Steven B. Dodge
-----------------------------
Title: President and CEO
39
<PAGE>
SCHEDULES TO ASSET PURCHASE AGREEMENT
1.9 Escrow Agreement
3.4 Licenses
3.5 Personal property
3.6 Assumed Contracts
3.7 Consents required
3.8 Trademarks; trade names; copyrights
3.9 Insurance policies
8.2(f) Opinion of Seller's General and FCC Counsels
8.3(e) Opinion of Buyer's General Counsel
40
<PAGE>
Exhibit 1.9
MEDIA VENTURE PARTNERS
ESCROW AGREEMENT
AGREEMENT, effective as of the ___ day of ______, 19__, by and among:
BUYER: ____________________________________________
Address:___________________________________________
___________________________________________
SELLER: ___________________________________________
Address:___________________________________________
___________________________________________
ESCROW AGENT: Media Venture Partners, Ltd.
Address: 1650 Tysons Boulevard
Suite 790
McLean, VA 22102
WITNESSETH:
WHEREAS, Buyer and Seller have entered into an Agreement of Purchase and Sale
with respect to __________, said Agreement dated the __ day of ______ ,19__,
being by reference incorporated herein and made a part hereof (the "Agreement"),
and
WHEREAS. the parties wish to provide for an orderly disposition of the funds
deposited into escrow pursuant to said Agreement;
NOW, THEREFORE, in consideration of the premises, promises and mutual covenants
herein, the parties hereby agree as follows:
1. DEPOSIT OF ESCROW FUNDS. Upon the execution of this Escrow Agreement, buyer
is delivering or causing to be delivered to the Escrow Agent, the sum of
_____ Dollars in cash __, check __, or other _____ (check appropriate box,
and if other, describe).
<PAGE>
MEDIA VENTURE PARTNERS
2. INVESTMENT OF ESCROW FUND. The Escrow Agent shall, upon request of Buyer,
invest and reinvest the escrow funds in direct obligations of the United
States government, in federally insured savings accounts or in bank
certificates of deposits, as Buyer shall instruct; provided, that the
Escrow Agent shall not be required to invest in or hold any instrument in
bearer form. The Escrow Agent shall hold said escrow funds together with
all interest accumulated thereon and proceeds therefrom and dispose of the
same as hereinafter provided.
3. DISPOSITION OF ESCROW FUNDS. The Escrow Agent shall distribute and dispose
of the escrow funds as follows:
(a) In the event the purchase and sale closes in the manner contemplated
in the Agreement, the escrow funds shall be paid over to the Seller at
closing in accord with said Agreement. In such event, all interest
earned and accumulated thereon and proceeds therefrom shall be paid
over to Buyer at closing.
(b) In the event the purchase and sale does not close as contemplated in
the Agreement due to the material breach by or default of the Buyer
under the terms of the Agreement, then the escrow funds shall be paid
over to Seller together with all interest earned and accumulated
thereon and the proceeds therefrom.
(c) In the event the purchase and sale does not close as contemplated in
the Agreement due to material breach by or default of the Seller under
the terms of the Agreement, then the escrow funds shall be paid over
to Buyer together with all interest earned and accumulated thereon and
the proceeds therefrom.
(d) In all other events, if the Agreement is terminated or if the
transactions or closing contemplated thereby are not consummated, the
escrow funds shall be returned to the Buyer together with all interest
earned.
(e) If any provision of this Paragraph with respect to the disposition of
the escrow fund is in conflict with any provision or the Agreement
with respect to such disposition, then such provision in the Agreement
shall prevail.
4. CONTROVERSIES WITH RESPECT TO ESCROW. The Escrow Agent shall discharge his
duties to dispose of the escrow fund in accord with the provisions of
paragraph 3 above upon the joint written instructions of the Seller and
Buyer or their duty designated representatives. If the Escrow Agent shall
not have received such joint written instructions and a controversy shall
exist between Buyer and Seller as to the correct disposition of the escrow
funds, the Escrow Agent shall continue to hold the escrow funds and the
income earned or accrued thereon until:
(a) The receipt by the Escrow Agent of the joint written instructions of
the Seller and Buyer as to the disposition of the escrow funds; or
2
<PAGE>
MEDIA VENTURE PARTNERS
(b) The receipt by the Escrow Agent of a final order entered by a court of
competent jurisdiction determining the disposition of the escrow funds
and the income earned or accrued thereon; or
(c) The Escrow Agent shall have, at its option, filed an action or bill in
interpleader, or similar action for such purpose, in a court of
competent jurisdiction and paid the escrow funds and all income earned
or accrued thereon into said court, in which event, the Escrow Agent's
duties, responsibilities and liabilities with respect to the escrow
fund, proceeds therefrom and this Agreement shall terminate.
5. CONCERNING THE ESCROW AGENT. The following shall control the fees,
resignation, discharge, liabilities and indemnification of the Escrow
Agent:
(a) The Escrow Agent shall charge no fees for its service hereunder, but
shall be reimbursed for all reasonable expenses, disbursements and
advancements incurred or made by the Escrow Agent in performance of
his duties hereunder, one-half (1/2) of any such expenses,
disbursements and advances to be paid by Buyer and one-half (1/2) by
the Seller, other than expenses for investments authorized hereunder
which shall be borne by Buyer.
(b) The Escrow Agent may resign and be discharged from its duties
hereunder at any time by giving written notice of such resignation to
the parties hereto, specifying the date when such resignation shall
take effect. Upon such notice, a successor escrow agent shall be
appointed with the unanimous consent of the parties hereto, and the
service of such successor escrow agent shall be effective as of the
date of resignation specified in such notice, which date shall not be
less than thirty (30) days after the giving of such notice. If the
parties hereto are unable to agree upon a successor escrow agent
within thirty (30) days after such notice, the Escrow Agent shall be
authorized to appoint its successor. The Escrow Agent shall continue
to serve until its successor accepts the escrow by written notice to
the parties hereto and the Escrow Agent deposits the escrow fund with
such successor escrow agent.
(c) The Escrow Agent undertakes to perform such duties as are specifically
set forth herein and may conclusively rely, and shall be protected in
acting or refraining from acting, on any written notice, instrument or
signature believed by it to be genuine and to have been signed or
presented by the proper party or parties duly authorized to do so. The
Escrow Agent shall have no responsibility for the contents of any
writing contemplated herein and may rely without any liability upon
the contents thereof.
3
<PAGE>
MEDIA VENTURE PARTNERS
(d) The Escrow Agent shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized hereby or
within the rights and powers conferred upon it hereunder, nor for
action taken or omitted by it in good faith, or in accordance with
advice of counsel and it shall not be liable for any mistake of fact
or error of judgment or for any acts or omissions of any kind unless
caused by its own misconduct or gross negligence.
(e) Each of the Buyer and Seller agrees to indemnify the Escrow Agent and
hold it harmless against any and all liabilities incurred by it
hereunder as a consequence of such party's action, and the Buyer and
Seller agree jointly to indemnify the Escrow Agent and hold it
harmless against any and all liabilities incurred by it hereunder
which are not a consequence of any party's actions, except in the case
of liabilities incurred by the Escrow Agent resulting from its own
misconduct or gross negligence.
(f) The Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner for the sufficiency, correctness,
genuineness or validity of any cash or security deposited with it.
(g) Buyer and Seller agree each to pay one half of the escrow agent's out-
of-pocket costs within fifteen (15) days of presentment, including
reasonable attorneys fees which the escrow agent may expend of incur
in any dispute or action.
Should Buyer or Seller fail to reimburse escrow agent for such out-of-
pocket costs and/or attorneys fees, the escrow agent, at its option,
may choose to deduct said expenses from any escrow funds disbursed
from the escrow account.
6. MISCELLANEOUS.
(a) This Escrow Agreement shall be construed by and governed in accordance
with the laws of the District of Columbia, applicable to agreements
executed and wholly to be performed therein.
(b) This Escrow Agreement shall be binding upon and shall inure to the
benefit of the parties, their successors and assigns.
(c) This Escrow Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which
together shall constitute but one and the same instrument.
(d) All notices, requests, demands and other communication hereunder shall
be in writing, shall be given simultaneously to all parties hereunder
and shall be deemed to have been duly given if delivered or mailed
(certified mail, postage pre-paid, return receipt requested) as
follows:
4
<PAGE>
MEDIA VENTURE PARTNERS
If to Seller:
----------------------
----------------------
----------------------
Attention:
----------------------
If to Buyer:
----------------------
----------------------
----------------------
Attention:
----------------------
If to Escrow Agent: Media Venture Partners, Ltd.
1650 Tysons Boulevard
Suite 790
McLean, VA 22102
Attention:
-------------------------
or to such other addresses as any party may have furnished to the other in
writing, in accord herewith.
7. TERMINATION. This Escrow Agreement shall automatically terminate upon the
distribution of the escrow fund in accord with the terms hereof.
IN WITNESS WHEREOF, the parties have caused their hands, or those of their duly
authorized officers, and seals to be affixed as of the date first above written.
SELLER:
By:
--------------------------
BUYER:
By:
--------------------------
ESCROW AGENT: MEDIA VENTURE PARTNERS, LTD.
By:
--------------------------
5
<PAGE>
EXHIBIT 3.5 Personal Property
KDBX INVENTORY
--------------
3/13/96 PAGE 1
<TABLE>
<CAPTION>
Location QTY Item Manufacturer Model
====================================================================================================
<S> <C> <C> <C> <C>
Transmitter 700 feet 1 5/8 inch Celfex Coax Cable Wave
- -----------------------------------------------------------------------------------------------------
Transmitter 1 1 5/8" Coax Switch Dielectric 1896
- -----------------------------------------------------------------------------------------------------
Transmitter 2 1 5/8" through line sections Bird
- -----------------------------------------------------------------------------------------------------
Transmitter 1 1 kW slug Bird
- -----------------------------------------------------------------------------------------------------
Transmitter 1 10 kW slug Bird
- -----------------------------------------------------------------------------------------------------
Transmitter 1 3 1/8" 2-bay FM ant.(107.5) ERI
- -----------------------------------------------------------------------------------------------------
Transmitter 1 480 to 208 Step down 45kva transformer Westinghouse DT3
- -----------------------------------------------------------------------------------------------------
Transmitter 1 5' Equipment Rack
- -----------------------------------------------------------------------------------------------------
Transmitter 1 6' Equipment Rack
- -----------------------------------------------------------------------------------------------------
Transmitter 1 A/C Breakpanels/disconnect (installed)
- -----------------------------------------------------------------------------------------------------
Transmitter 2 A/C units (3 tons) Lennox CD19-31-3P-
- -----------------------------------------------------------------------------------------------------
Transmitter 1 AC emergency power generator Kohler 40R03P
- -----------------------------------------------------------------------------------------------------
Transmitter 1 AM noise monitor RDL ACM2
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Bandpass Filter Shively Labs 2516-3A
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Best Fortress UPS L117.7KVA
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Cat Link Single composite QEI 400
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Dummy Load Altronic Rsrch 6715E3
- -----------------------------------------------------------------------------------------------------
Transmitter 1 FM Antenna Shively Labs 6015-21-3R
- -----------------------------------------------------------------------------------------------------
Transmitter 1 FM Transmitter QEI FMQ-10,000
- -----------------------------------------------------------------------------------------------------
Transmitter 1 FM Exciter QEI 675B
- -----------------------------------------------------------------------------------------------------
Transmitter 1 FM Mod Monitor TFT 844A
- -----------------------------------------------------------------------------------------------------
Transmitter 2 Interface panels Burk IP-8
- -----------------------------------------------------------------------------------------------------
Transmitter 1 misc. 1 5/8" elbows and coax hardline Cable Wave
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Modem (for Burke RC) Hayes Accura 144
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Nitrogen Regulator
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Optimod FM Orban 8200/U35
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Remote Control - Xmtr unit only Burk ARC-16
- -----------------------------------------------------------------------------------------------------
Transmitter 1 sample ports
- -----------------------------------------------------------------------------------------------------
Transmitter 2 T1-ISO Digital Link DL551A
- -----------------------------------------------------------------------------------------------------
Transmitter 1 Transformer Panel Zenith 43R-1000C
</TABLE>
<PAGE>
SCHEDULE 3.6
------------
ASSUMED CONTRACTS
-----------------
1. Agreement dated March 26, 1996 by and between Combined Communications,
Inc., Common Ground Broadcasting, Inc. and Salem Communications Corporation.
2. Agreement dated July 1, 1995 by and between First Media Television, L.P.,
a Delaware limited partnership, and Salem Communications Corporation, a
California corporation. (Assignment of this agreement requires the consent of
the landlord.)
<PAGE>
SCHEDULE 3.8
------------
FCC LICENSES
------------
See Attached.
<PAGE>
[LETTERHEAD OF FEDERAL COMMUNICATIONS COMMISSION]
FM BROADCAST STATION LICENSE
Official Mailing Address: AUTHORIZING OFFICIAL:
- ------------------------------- --------------------
COMMON GROUND BROADCASTING INC Robert D. Greenberg
57400 SOUTH MORSE ROAD Supervisory Engineer
WARREN, OR 97053 Audio Services Division
- ------------------------------- Mass Media Bureau
GRANT DATE: NOV 28, 1995
Call Sign: KDBX This license expires 3:00 a.m.
local time, February 01, 1998
License File No.: BLH-950801KC
This license covers Permit No.: BPH-940930IE
Subject to the provisions of the Communications Act of 1934, subsequent acts
and treaties, and all regulations heretofore or hereafter made by this
Commission, and further subject to the conditions set forth in this license, the
licensee is hereby authorized to use and operate the radio transmitting
apparatus herein described.
This license is issued on the licensee's representation that the statements
contained in licensee's application are true and that the undertakings therein
contained so far as they are consistent herewith, will be carried out in good
faith. The licensee shall, during the term of this license, render such
broadcasting service as will serve the public interest, convenience, or
necessity to the full extent of the privileges herein conferred.
This license shall not vest in the licensee any right to operate the station nor
any right in the use of the frequency designated in the license beyond the term
hereof, nor in any other manner than authorized herein. Neither the license nor
the right granted hereunder shall be assigned or otherwise transferred in
violation of the Communications Act of 1934. This license is subject to the
right of use or control by the Government of the United States conferred by
Section 606 of the Communications Act of 1934.
Name of Licensee:
COMMON GROUND BROADCASTING, INC.
Page 1
<PAGE>
Callsign: KDBX License No.: BLH - 950801KC
Station Location:
OR BANKS
Frequency (MHZ): 107.5
Channel: 298
Class: C2
Hours of Operation: Unlimited
Main Studio Address:
OR-448 SOUTH 1ST STREET, HILLSBORO
Transmitter location (address or description): OR-262 NORTHWEST MILLER ROAD,
PORTLAND
Remote Control Point Address:
OR - 448 SOUTH 1ST STREET, HILLSBORO
OR - 5110 SOUTHEAST STARK STREET, PORTLAND
Transmitter: Type Accepted. See Sections 73.1660, 73.1665 and 73.1670 of the
Commission's Rules.
Transmitter output power: 9.2 kW
Antenna type: (directional or non-directional): Non-Directional
Description: SHIVELY 6015-2-3R, TWO SECTIONS
Antenna Coordinates: North Latitude: 45 31 22
West Longitude: 122 45 7
<TABLE>
<CAPTION>
Horizontally Vertically
Polarized Polarized
Antenna Antenna
<S> <C> <C>
Effective radiated power in the
Horizontal Plane (kW) .......... : 6.3 6.3
Height of radiation center above
ground (Meters) ................ : 198 198
Height of radiation center above
mean sea level (Meters)......... : 493 493
Height of radiation center above
average terrain (Meters)........ : 406 406
</TABLE>
Overall height of antenna structure above ground
(including obstruction lighting if any): 330 Meters
Obstruction marking and lighting specifications for antenna structure:
It is to be expressly understood that the issuance of these specifications
Page 2
<PAGE>
Callsign: KDBX License No.:BLH - 950801KC
is in no way to be considered as precluding additional or modified marking
or lighting as may hereafter be required under the provisions of Section
303(q) of the Communications Act of 1934, as amended.
PARAGRAPH 01.0, FCC FORM 715 (OCTOBER 1985): Antenna structures shall be
painted throughout their height with alternate bands of aviation surface
orange and white, terminating with aviation surface orange bands-at both
top and bottom. The width of the bands shall be equal and approximately
one-seventh the height of the structure, provided however, that the bands
shall not be more than 100 feet nor less than 1 and 1/2 feet in width. All
towers shall be cleaned and repainted as often as necessary to maintain
good visibility.
PARAGRAPH 03.0, FCC FORM 715 (APRIL 1985): There shall be installed at
the top of the structure one 300 m/m electric code beacon equipped with two
620- or 700-watt lamps (PS-40, Code Beacon type), both lamps to burn
simultaneously, and equipped with aviation red color filters. Where a rod
or other construction of not more than 20 feet in height and incapable of
supporting this beacon is mounted on top of the structure and it is
determined that this additional construction does not permit unobstructed
visibility of the code beacon from aircraft at any normal angle of
approach, there shall be installed two such beacons positioned so as to
insure unobstructed visibility of at least one of the beacons from aircraft
at any normal angle of approach. The beacons shall be equipped with a
flashing mechanism producing not more than 40 flashes per minute nor less
than 12 flashes per minute with a period of darkness equal to approximately
one-half of the luminous period.
PARAGRAPH 08.0, FCC FORM 715 (APRIL 1985): On levels at approximately
three-fourths, one-half and one-fourth of the over-all height of the tower
one similar flashing 300 m/m electric code beacon shall be installed in
such position within the tower proper that the structural members will not
impair the visibility of the beacon from aircraft at any normal angle of
approach. In the event these beacons cannot be installed in a manner to
insure unobstructed visibility of the beacon from aircraft at any normal
angle of approach, there shall be installed two such beacons at each level.
Each beacon shall be mounted on the outside of diagonally opposite corners
or opposite sides of the tower at the prescribed height.
PARAGRAPH 17.0, FCC FORM 715 (APRIL 1985): On levels at approximately
seven-eighths, five-eighths, three-eighths and one-eight of the over-all
height of the tower, at least one 116- or 125-watt lamp (A21/TS) enclosed
in an aviation red obstruction light globe shall be installed on each
outside corner of the structure.
PARAGRAPH 21.0, FCC FORM 715 (APRIL 1985): All lighting shall burn
continuously or shall be controlled by a light sensitive device adjusted so
that the lights will be turned on at a north sky light intensity level of
about 35 foot candles and turned off at a north sky light intensity level
of about 58 foot candles.
Page 3
<PAGE>
Callsign: KDBX License No.: BLH - 950801KC
Special operating conditions or restrictions:
1. The permittee/licensee in coordination with other users of the
site must reduce power or cease operation as necessary to protect
persons having access to the site, tower or antenna from radio-
frequency radiation in excess of FCC guidelines.
*** END OF AUTHORIZATION ***
Page 4
<PAGE>
Exhibit 3.9
Insurance Policies
================================================================================
Producer THIS CERTIFICATE IS ISSUED AS A MATTER OF
INFORMATION ONLY AND CONFERS NO RIGHTS
Sullivan & Curtis UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE
3310 Two Union Square DOES NOT AMMEND, EXTEND OR ALTER THE COVERAGE
Seattle, WA 98101 AFFORDED BY THE POLICIES BELOW.
(206) 521-3800 ==============================================
- ---------------------------------- COMPANIES AFFORDING COVERAGES
Insured Company
Letter A National Surety Corporation
Common Ground Broadcasting, Inc. ---------------------------------------------
(KDBX-FM) Company
448 S. First Ave., #100 Letter B TIG Insurance Company
Hillsboro OR 97123 ---------------------------------------------
Company
Letter C CIGNA Insurance Company
---------------------------------------------
Company
Letter D National Casualty Company
---------------------------------------------
Company
Letter E Cert. #07 (KDBX-FM)
===============================================================================
THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED
TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED, NOTWITHSTANDING ANY
REQUIREMENTS, TERM OR CONDITION OR ANY CONDITION OF ANY CONTRACT OR OTHER
DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN,
THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE
TERMS, EXCLUSION AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN
REDUCED BY PAID CLAIMS.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CO TYPE OF INSURANCE POLICY NUMBER POLICY EFF DATE POLICY EXP DATE LIMITS
LTR mm/dd/yy mm/dd/yy
- -------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C> <C> <C> <C>
GENERAL LIABILITY General Aggregate $ 2,000,000
A [X] Commercial General liab. MXX80637062 12/31/95 12/31/96 Prod-Comp/Ops Agg $ 2,000,000
[_] claim made [X] Occur Pers & Adv Injury $ 1,000,000
[_] Owner's & Contractors Each Occurrence $ 1,000,000
Protective Fire Damage $ 50,000
[_] (Any one fire)
[_] Medical Payments $ 5,000
(Any one person)
- -------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE LIABILITY Combined $ 1,000,000
A [X] Any Auto MXX80637062 12/31/95 12/31/96 Single Limit
[_] All Owned Autos -------------------------------
[_] Scheduled Autos Bodily Injury $
[X] Hired Autos (Per Person)
[X] Non-Owned Autos -------------------------------
[_] Garage Liability Bodily Injury $
[_] (Per Accident)
--------------------------------
Property Damage $
=========================================================================================================================
EXCESS LIABILITY Ea Occurrence $10,000,000
B [X] Umbrella Form XKB2784050 12/31/95 12/31/96 Aggregate $10,000,000
[_] Other Than Umbrella Form
- ------------------------------------------------------------------------------------------------------------------------
WORKER'S COMPENSATION [X] Statutory
C AND C29205917 12/01/95 12/01/96 Each Accident $ 1,000,000
EMPLOYER'S LIABILITY Disease-Pol Limit $ 1,000,000
Disease-Each Empl $ 1,000,000
- ------------------------------------------------------------------------------------------------------------------------
A OTHER PROPERTY- MXX80637062 12/31/95 12/31/96 Blkt. Pars. Prop. and Equip.
Special Form incl Towers & Antennas/EDP/BI.
========================================================================================================================
Description of Operations/Locations/Vehicles/Special Items
Broadcaster and Film & Program Producer Errors and Omissions Coverage, Policy no, LS004536, Company Letter D,
12/31/95-12/31/96, $1,000,000 Limit each occurrence.
========================================================================================================================
001 Should any of the above described policies be cancelled before the
expiration date thereof, the issuing company will endeavor to mail
For Informational Purposes Only 10 days written notice to the certificate holder named to the left,
but failure to mail such notice shall impose no obligation or
liability of any kind upon the company, it's agent's or
representatives.
--------------------------------------------------------------------
Authorized Representative
/s/ Steven s. Stafford
========================================================================================================================
</TABLE>
<PAGE>
Opinion of Seller's Counsel
__________ 1995
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
The Bank of New York, as Agent
One Wall Street
New York, NY 10286
Gentlemen:
This opinion is being delivered to you in connection with the Asset Purchase
Agreement (the "Agreement") dated as of _______________ by and between American
Radio Systems, Inc., a Massachusetts corporation ("Buyer") and ____________, a
_____________ corporation ("Seller"). Capitalized terms used herein, unless
otherwise defined herein, shall have the meanings ascribed to them in the
Agreement.
I have reviewed the Agreement and other pertinent information and records and
files necessary to render this opinion. In arriving at the opinions expressed
herein, I have examined and relied upon original or copies, identified to my
satisfaction, of all corporate records and other instruments, documents,
certificates of public officials, officers and representations of the Seller,
and other persons or entities and have made such investigations as I have
considered necessary or appropriate. In making such examinations, I have assumed
but not independently verified the genuineness and authenticity of all
documents, and the conformity to original documents of all certified or
photostatic copies submitted.
As to matters of fact material to the opinions expressed herein, and which have
not been independently established, I have relied upon certificates of the
officers, directors and representatives of the Seller and certificates of public
officials, and I have assumed the accuracy and correctness of all statements of
fact contained therein, including the accuracy and correctness of the factual
representations and warranties of the Seller set forth in the Agreement and the
documents and instruments delivered to you in connection therewith.
1. Seller is a corporation, duly organized, validly existing and in good
standing under the laws of the State of ___________, and is duly qualified to
conduct business in the State of ____________.
2. Seller has full corporate power and authority to enter into the
Agreement and all documents required to be executed or delivered by Seller
pursuant to the
<PAGE>
PAGE 2
Agreement (the "Related Documents"), and to consummate the transactions
contemplated thereby. The Agreement and the Related Documents have been duly
authorized, executed and delivered by Seller and constitute the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms, except as such enforceability may be limited by (a) applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting the
rights of creditors generally, or (b) general principles of equity, whether
considered in a proceeding in equity or at law.
3. The execution and delivery of the Agreement and the Related Documents,
and the consummation of the transactions contemplated thereby, will not (a)
result in a breach of or constitute a default under, the Articles of
Incorporation or Bylaws of Seller, (b) result in a breach of or constitute a
default under any agreement, trust or instrument to which Seller is a party or
by which Seller or its respective properties or assets are bound, or (c)
constitute a breach, violation or default under any judgment, order, writ,
injunction or decree of any court or governmental agency or other authority
applicable to Seller.
4. Except as disclosed in the Agreement, there are no governmental
consents, permits, approvals or authorizations required to be obtained by Seller
in order to consummate the transactions contemplated by the Agreement.
5. To the best of our knowledge and except as set forth in the schedules
to the Agreement, there is no litigation, proceeding or investigation of any
nature pending or threatened, or any judgment, award, order or decree
outstanding, against the Seller or the Assets, which if adversely determined
might have a material adverse effect on the Station or the Assets (taken as a
whole) or prevent the consummation of the transactions contemplated by the
Agreement.
The opinions expressed herein are rendered only to you and are solely for your
benefit and that of other lenders who are participants in the Amended and
Restated Credit Agreement dated September 12, 1994, as amended, by and among
Seller, the Bank of New York as Agent, and the lenders named therein, their
assigns, and by any future participants thereof and their assigns and may not be
relied upon by you or by such other lenders for any purpose other than in
connection with the transactions contemplated by the Agreement; or relied upon
by any other person for any purpose; or, except as required by applicable law or
requested by any governmental authority, furnished to or quoted to any person
without our prior written consent.
Very truly yours,
<PAGE>
Opinion of Seller's FCC Counsel
-------------------------------
___________1996
American Radio Systems Corporation
116 Huntington Avenue
Boston, MA 02116
The Bank of New York, as Agent
One Wall Street
New York, NY 10286
Gentlemen:
This opinion is being delivered to you in connection with the Asset Purchase
Agreement (the "Agreement") dated as of, _____________, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer") and
_________________ ("Seller"). Capitalized terms used herein, unless otherwise
defined herein, shall have the meanings ascribed to them in the Agreement.
We have reviewed the Agreement and other pertinent information and records and
files necessary to render this opinion. In arriving at the opinions expressed
herein, I have examined and relied upon original or copies, identified to my
satisfaction, of all records, instruments, documents, and certificates of the
Seller and of public officials, officers and representatives of the Seller, as I
have considered necessary or appropriate, and I have made such other
investigations as I have considered necessary or appropriate. In making such
examinations, I have assumed but not independently verified the genuineness and
authenticity of all documents, and the conformity to original documents of all
certified or photostatic copies submitted.
As to matters of fact material to the opinions expressed herein, and which have
not been independently established, we have relied upon certificates of the
officers and representatives of the Seller and certificates of public officials,
and we have assumed the accuracy and correctness of all statements of fact
contained therein, including the accuracy and correctness of the factual
representations and warranties of the Seller set forth in the Agreement and the
documents and instruments delivered to you in connection therewith. This opinion
is limited to the Communications Act of 1934, as amended (the "Act") and the
Rules and Regulations of the FCC.
1. Seller validly holds the Licenses listed on Schedule 3.4 of the
Agreement and the Licenses are in full force and effect. The Licenses include
all licenses, permits and authorizations which are necessary under FCC rules for
Seller to operate the Station in the manner in which we understand the station
is currently being operated.
<PAGE>
Opinion of Buyer's Counsel
--------------------------
________________1996
Regent Broadcasting of Dayton, Inc.
Gentlemen:
This opinion is being delivered to you in connection with the Asset Purchase
Agreement (the "Agreement") dated as of ________________ by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer") and
_________ , a ________________ corporation ("Seller"). Capitalized terms used
herein, unless otherwise defined herein, shall have the meanings ascribed to
them in the Agreement.
We have reviewed the Agreement and other pertinent information and records and
files necessary to render this opinion. In arriving at the opinions expressed
herein, we have examined and relied upon original or copies, identified to my
satisfaction, of all corporate records and other instruments, documents,
certificates of public officials, officers and representations of the Buyer, and
other persons or entities and have made such investigations as we have
considered necessary or appropriate. In making such examinations, we have
assumed but not independently verified the genuineness and authenticity of all
documents, and the conformity to original documents of all certified or
photostatic copies submitted.
As to matters of fact material to the opinions expressed herein, and which have
not been independently established, we have relied upon certificates of the
officers, directors and representatives of the Buyer and certificates of public
officials, and we have assumed the accuracy and correctness of all statements of
fact contained therein, including the accuracy and correctness of the factual
representations and warranties of the Buyer set forth in the Agreement and the
documents and instruments delivered to you in connection therewith.
1. Buyer is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware, and is qualified to conduct
business in the State of
2. Buyer has full corporate power and authority to enter into the Agreement
and all documents required to be executed or delivered by Seller pursuant to the
<PAGE>
EXHIBIT 10.06.03.02
FIRST AMENDMENT TO THE ASSET PURCHASE AGREEMENT
This amendment ("Amendment") is dated this 22nd day of July 1996, by and between
AMERICAN RADIO SYSTEMS CORPORATION, a Delaware corporation ("Buyer") and COMMON
GROUND BROADCASTING, INC., an Oregon Corporation ("Seller").
WHEREAS, on March 28, 1996, Buyer and Seller entered into a Asset Purchase
Agreement ("Agreement") relating to the sale of certain assets relating to radio
station KDBX-FM, Banks, Oregon; and
WHEREAS, the Schedules of the Agreement contained clerical errors; and
WHEREAS, in connection with the sale contemplated by the Agreement, Seller
elects to participate in a tax deferred exchange ("Exchange") pursuant to
Internal Revenue Code (S)1031; and
WHEREAS, pursuant to the Internal Revenue Service regulations regarding the
Exchange, the Agreement shall be assigned to a qualified intermediary as defined
in IRC (S)1031; and
WHEREAS Buyer and Seller agree that certain portions of the Agreement shall
not be assigned to the qualified intermediary;
NOWTHEREFORE the parties agree as follows:
1. Unless defined herein all capitalized terms used in this Amendment
shall have the meaning given such term in the Agreement.
2. The Agreement shall be amended as follows:
2.1 Section 6.10 of the Agreement shall be deleted in its entirety.
------------
2.2 Schedule 3.4 shall be amended and restated as set forth on
------------
Exhibit "A" hereto.
2.3 Schedule 3.8 shall be amended and restated as set forth on
------------
Exhibit "B" hereto.
<PAGE>
3. The effectiveness of this Amendment shall be expressly subject to and
conditioned upon the execution by Buyer and delivery by Buyer to Seller of the
Back Bay Agreement as set forth on Exhibit "C" hereto.
4. Except as expressly stated herein all terms and conditions of the
Agreement shall remain in full force and affect.
5. This Amendment may be executed in any number of counterparts and all
such counterparts shall be deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this amendment as of the
date first stated above.
"SELLER"
COMMON GROUND BROADCASTING, INC.
By: /s/ Edward G. Atsinger
-----------------------------------
Edward G. Atsinger III
President, CEO
"BUYER"
AMERICAN RADIO SYSTEMS CORPORATION
By:
----------------------------------
Steven Dodge
President, CEO
<PAGE>
EXHIBIT "A"
----------
SCHEDULE 3.4
------------
FCC LICENSES
------------
See attached.
<PAGE>
EXHIBIT "B"
----------
SCHEDULE 3.8
------------
TRADEMARKS; TRADENAMES; COPY RIGHTS
-----------------------------------
None.
<PAGE>
EXHIBIT "C"
-----------
BACK BAY AGREEMENT
This Agreement ("Agreement") is entered into on this __ of July, 1996 by and
between American Radio Systems Corporation, a Delaware corporation ("American")
and Common Ground Broadcasting, Inc., an Oregon corporation ("CGB").
WHEREAS American has heretofore delivered to CGB a true, correct and complete
copy of the agreement ("Back Bay Agreement") dated March 15, 1994, by and
between American and Back Bay Broadcasters, Inc., a Delaware corporation ("Back
Bay") as in effect on the date hereof.
WHEREAS, pursuant to the Back Bay Agreement, American has the freely
assignable right (a) at any time after August 31, 1998 to purchase (the
"Purchase Right") all of the business and assets of Back Bay, including without
limitation the WBNW Business (as defined in the Back Bay Agreement), and (b) of
first refusal (the "Right of First Refusal") in the event Back Bay desires to
sell, transfer or otherwise dispose of all or any material portion of the
business and assets of Back Bay, including without limitation the WBNW Business.
NOW THEREFORE, the parties, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, agree as follows:
1. CGB shall have the right (the "WBNW Purchase Right"), but not the
obligation, to purchase the WBNW Business for $6,000,000 by written notice (the
"Election Notice") given to and received by American at any time prior to
January 1, 1998. Anything herein to the contrary notwithstanding, if American
has not received the Election Notice prior to January 1, 1998, all rights of CGB
to purchase the WBNW Business shall cease and terminate and by of no further
force and effect.
2. The Election Notice shall constitute a representation that CGB is
ready, willing and able, and has the financial resources, to purchase the WBNW
Business for $6,000,000 and that it will negotiate in good faith with respect to
and execute and deliver a purchase and sale agreement on terms and conditions
customary with respect to similar transactions with American (or, at American's
discretion, with Back Bay) to purchase the WBNW Business. American agrees that
it will cooperate in all reasonable respects with CGB in order to enable it to
exercise the WBNW Purchase Right, including without limitation (a) advising CGB
promptly of American's receipt of any Asset Transfer Notice pursuant to the
provisions of Section 4.13 of the Back Bay Agreement, and (b) exercising any and
all of its rights under the Back Bay Agreement, including without limitation the
exercise by American of the Right of First Refusal and the Purchase Right.
3. CGB acknowledges and agrees that (a) American's rights with respect to
the Purchase Rights and the Right of First Refusal apply or may apply, as the
case may be, to all of the business and assets of Back Bay and, therefore,
American may be required to acquire
<PAGE>
businesses and assets other than the WBNW Business in order to enable CGB to
exercise its WBNW Purchase Rights, and (b) the purchase price to be paid by
American pursuant to the exercise of (i) the Purchase Rights will be based on a
formula set forth in the Back Bay Agreement and (ii) the Right of First Refusal
will be based on a third party offer. Accordingly, American and CGB acknowledge
and agree that the amount required to be paid by American for the WBNW Business
may be more or less than $6,000,000 and that American will, therefore, be
required to pay any excess of the purchase price over $6,000,000, and will be
entitled to any excess of $6,000,000 over such purchase price.
4. American agrees that, in the event CGB purchases the WBNW Business
pursuant to the exercise of the WBNW Purchase Right, from and after the
consummation of such transaction, American will assume, at no expense to CGB,
fifty percent (50%) of the base rental fees payable under the WBNW tower site
lease between Back Bay and Fellsway Plaza Trust, dated December 14, 1987, as
amended to the date hereof (the "WBNW Tower Lease"), or any extension or renewal
therefore. CGB agrees that American shall have the right to manage, sublease and
develop the tower site covered by the WBNW Tower Lease so long as such
activities do not disrupt or interfere with, in either case in any material
manner, with the operations of the WBNW Business.
5. American acknowledges its right of specific performance with respect
to the purchase of the WBNW Business pursuant to Section 11.13 of the Back Bay
Agreement and agrees to use its best efforts to enforce, and to assist CGB in
enforcing, such rights to purchase the WBNW Business. American further agrees
not to take any action, and to use its best efforts not to allow any action to
take place, which would impair or abrogate its right to purchase the WBNW
Business pursuant to the Back Bay Agreement.
6. The parties recognize that the WBNW Business is of a special, unique
and extraordinary character. Accordingly, if CGB is unable to acquire the WBNW
Business by reason of American failing to have complied with its covenants under
this Agreement, CGB shall be entitled to bring an action against American for
damages or, in lieu of, and in substitution for any damages, to obtain specific
performance of the terms of this Agreement. In the event of any action to
enforce the provisions of this Agreement, CGB hereby waives the defense that
there is an adequate remedy at law.
IN WITNESS WHEREOF, the parties hereto have executed this amendment as of
the date first stated above.
"SELLER" "BUYER"
COMMON GROUND BROADCASTING, INC. AMERICAN RADIO SYSTEMS CORPORATION
By: By:
----------------------------- -------------------------------
Edward G. Atsinger III Steven Dodge
President, CEO President, CEO
<PAGE>
Exhibit 10.06.04.01
ASSET PURCHASE AGREEMENT
------------------------
(WHK-AM, CLEVELAND, OHIO)
This AGREEMENT (the "Agreement") is dated as of April 23, 1996 by and
between OMNIAMERICA GROUP ("Omni Group") and WHK LICENSE PARTNERSHIP ("WHK LP")
(Omni Group and WHK LP shall collectively be referred to herein as "Seller") and
INSPIRATION MEDIA OF OHIO, INC. ("Buyer").
RECITALS:
---------
1. Seller owns and operates radio station WHK(AM) licensed to
Cleveland, Ohio (the "Station"), and holds the licenses and authorizations
issued by the FCC for the operation of the Station.
2. Buyer desires to acquire substantially all the assets of the
Station, and Seller is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of
the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:
ARTICLE 1
---------
TERMINOLOGY
-----------
1.1 ACT. The Communications Act of 1934, as amended.
----
1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by
------------------ --------------
which Buyer's account is to be credited or charged, as reflected on the
Adjustment List.
1.3 ADJUSTMENT LIST. As provided in Section 2.7 (b), an itemized
---------------- ---------------
list of all sums to be credited or charged against the account of Buyer, with a
brief explanation in reasonable detail of the credits or charges.
1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined
--------------------
in Section 2.3.
-----------
1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and
-------------
Sundays, on which federally chartered banks in the city of Cleveland, Ohio, are
regularly open for business.
1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b),
----------------------------- ---------------
the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify
1
<PAGE>
Buyer. The Buyer's Threshold Limitation shall be (a) Twenty Five Thousand
Dollars ($25,000) for all claims, liabilities, damages, losses, costs and
expenses; and (b) Ten Thousand Dollars ($10,000) for any individual claim,
liability, damage, loss, cost or expense.
1.7 CLOSING. The closing with respect to the transactions
--------
contemplated by this Agreement.
1.8 CLOSING DATE. The date determined as the Closing Date as
-------------
provided in Section 8.1.
-----------
1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules
----------
hereto, and each other agreement, certificate, or instrument delivered pursuant
to or in connection with this Agreement, including amendments thereto that are
expressly permitted under the terms of this Agreement.
1.10 EARNEST MONEY. The amount of Three Hundred Twenty Five Thousand
--------------
Dollars ($325,000).
1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning
-------------------------
defined in Section 5.10.
------------
1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
-------------------
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.13 ESCROW AGENT. Gary Stevens & Co., Incorporated.
-------------
1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached
------------------
as Exhibit A which Seller, Buyer and the Escrow Agent have entered into
---------
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in
----------------
Section 2.2.
- ------------
1.16 FCC. Federal Communications Commission.
----
1.17 FCC LICENSES. The licenses, permits and authorizations of the
-------------
FCC for the operation of the Station as listed on Schedule 3.8.
-------------
1.18 FCC ORDER. An order or decisions of the FCC granting its
----------
consent to the assignment of the FCC Licenses to Buyer.
2
<PAGE>
1.19 FINAL ACTION. An action of the FCC that has not been reversed,
-------------
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
---
sponte action of the FCC with comparable effect is pending and as to which the
- ------
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
----------
1.20 KNOWLEDGE. As used herein, "knowledge" shall refer to the
----------
actual knowledge of Carl E. Hirsch, Anthony S. Ocepek, or H. Dean Thacker.
1.21 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes,
--------------------
hazardous substances, pollutants or contaminants, asbestos or asbestos-related
products, PCB's, petroleum, crude oil or any fraction or distillate thereof (as
such terms are defined in any applicable federal, state or local laws,
ordinances, rules and regulations, and including any other terms which are or
maybe used in any applicable environmental laws to define prohibited or
regulated substances).
1.22 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or
------------------ --------------
9.4(a) against which any claim or liability may be asserted by a third party
- ------
which would give rise to a claim for indemnification under the provisions of
this Agreement by such party.
1.23 INDEMNIFYING PARTY. The party to the Agreement (not the
-------------------
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.24 LIEN. Any mortgage, deed of trust, pledge, hypothecation,
-----
security interest, encumbrance, lien, lease or charge of any kind, whether
voluntarily incurred or arising by operation of law or otherwise, affecting any
assets or property, including any written or oral agreement to give or grant any
of the foregoing, any conditional sale or other title retention agreement, and
the filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.25 MATERIAL ADVERSE CONDITION. A condition which would materially
---------------------------
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of the Station shall not be deemed a Material Adverse Condition.
1.26 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
----------
amended, and all other federal, state or local laws or ordinances, including
orders, rules
3
<PAGE>
and regulations thereunder, regulating or otherwise affecting health and safety
of the workplace.
1.27 PERMITTED LIEN. Any statutory lien which secures a payment not
---------------
yet due that arises, and is customarily discharged, in the ordinary course of
Seller's business; any easement, right-of-way, encroachment or similar
imperfection in the Seller's title to its assets or properties that,
individually and in the aggregate, are not material in character or amount and
do not and are not reasonably expected to materially impair the value or
materially interfere with the use of any asset or property of the Seller
material to the operation of its business as it has been and is now conducted.
1.28 PURCHASE PRICE. The consideration to be paid by Buyer to
---------------
Seller for purchase of the Sale Assets in an amount equal to Six Million Five
Hundred Thousand Dollars ($6,500,000).
1.29 REAL PROPERTY. Such term shall have the meaning defined in
--------------
Section 3.7.
- -----------
1.30 RULES AND REGULATIONS. The rules of the FCC as set forth in
----------------------
Volume 47 of the Code of Federal Regulations, as well as such other written
policies of the Commission, whether contained in the Code of Federal
Regulations, or not, that apply to the Station.
1.31 SALE ASSETS. All of the tangible and intangible assets to be
------------
transferred by Seller to Buyer as set forth in Section 2.1.
-----------
1.32 STATION AGREEMENTS. The agreements, commitments, contracts,
-------------------
leases and other items described in Section 2.1(d) which relate to operation of
--------------
the Station.
1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b),
------------------------------ --------------
the threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be (a)
Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages,
losses, costs and expenses; and (b) Ten Thousand Dollars ($10,000) for any
individual claim, liability, damage, loss, cost or expense.
1.34 SURVIVAL PERIOD. The term following the Closing Date during
----------------
which all representations, warranties, covenants and agreements of the parties
under this Agreement shall survive. The term shall be twelve (12) months.
1.35 TANGIBLE PERSONAL PROPERTY. The personal property described in
---------------------------
Section 2.1(a).
- --------------
4
<PAGE>
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, assign
------------
and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens, except Permitted Liens and other Liens expressly accepted by Buyer, all
of Seller's right, title and interest, legal and equitable, in and to all
tangible and intangible assets (except Excluded Assets) used in the operation of
the Station as it is now operated, including the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
--------------------------
furniture, fixtures and other tangible personal property now or hereafter owned
by Seller and used in the operation of the Station as it is now operated,
including but not limited to the items listed on Schedule 3.6, together with
------------
such modifications, replacements, improvements and additional items, and subject
to such deletions therefrom, made or acquired between the date hereof and the
Closing Date in accordance with the terms and provisions of this Agreement.
(b) REAL PROPERTY. Seller's interests in the Real Property and any
--------------
other real estate or interests therein acquired by Seller solely in connection
with the Station between the date hereof and the Closing Date in accordance with
the terms and provisions of this Agreement.
(c) LICENSES AND PERMITS. The FCC Licenses and all other assignable
---------------------
or transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Station.
(d) STATION AGREEMENTS. All agreements which Seller is a party to or
------------------
bound by which are listed on Schedule 3.9 as agreements which Buyer is electing
------------
to assume; any renewals, extensions, amendments or modifications of those
agreements being assumed which are made in the ordinary course of Seller's
operation of the Station and in accordance with the terms and provisions of this
Agreement; and any additional such agreements, contracts, leases, commitments or
orders (and any renewals, extensions, amendments or modifications thereof) made
or entered into between the date hereof and the Closing Date in accordance with
the terms and provisions of this Agreement and which Buyer elects to assume in
writing.
(e) RECORDS. True and complete copies of all of the books, records,
--------
accounts, files, logs, ledgers, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records).
5
<PAGE>
(f) MISCELLANEOUS ASSETS. Any other tangible or intangible assets,
---------------------
properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or hereafter owned or used by Seller in the operation of the
- -----------
Station, including but not limited to all goodwill of the Station.
2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to
----------------
the contrary, Seller shall not transfer, convey or assign to Buyer, but shall
retain all of its right, title and interest in and to, the following assets
owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
-----------
Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
-----------
included as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1(d), above.
--------------
6
<PAGE>
(j) Any assets used in the operation of WMMS-FM (Cleveland, Ohio) and
WMJI-FM (Cleveland, Ohio) and any assets used in the operation of the corporate
offices of Seller.
2.3 ASSUMPTION OF LIABILITIES.
--------------------------
(a) At the Closing, Buyer shall assume and agree to perform the
following liabilities and obligations of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
-----------
(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(iii) Liabilities and obligations as the landlord under the
tower space lease for the WMMS-FM antenna substantially in the form of Exhibit
"B".
(b) Except for the Assumed Obligations, Buyer shall not assume or in
any manner be liable for any duties, responsibilities, obligations or
liabilities of Seller of any kind or nature, whether express or implied, known
or unknown, contingent or absolute, including, without limitation, any
liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
2.4 EARNEST MONEY.
--------------
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed
by the Escrow Agent to Buyer from time to time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
------------
does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.
-----------
2.5 PAYMENT OF PURCHASE PRICE.
--------------------------
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery by Seller of the closing documents described in Section
-------
8.2,
- ---
7
<PAGE>
become the property of Seller and shall, pursuant to the Escrow Agreement, be
disbursed to Seller by cashier's check or wire transfer of immediately available
funds.
(ii) The Purchase Price, less the amount of the Earnest Money
disbursed to Seller, shall be paid to Seller, at the option of Seller, either:
(A) At Closing by wire transfer of immediately available
funds; or
(B) At Closing by delivery of Buyer's promissory note
payable to Seller with a payment date of January 15, 1997, and a letter of
credit securing payment of the promissory note, in each case in form and
substance reasonably satisfactory to the parties, in which case Seller shall
reimburse Buyer for all costs associated with procuring the letter of credit.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
-----------
2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and Seller
---------------------------------
shall agree to an allocation of the Purchase Price. Buyer and Seller shall use
such allocation for all reporting purposes in connection with federal, state and
local income and, to the extent permitted under applicable law, franchise taxes.
Buyer and Seller agree to report such allocation to the Internal Revenue Service
in the form required by Treasury Regulation (S) 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
-----------------------------
(a) All operating income and operating expenses of the Station shall
be adjusted and allocated between Seller and Buyer, and an adjustment in the
Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
-----------
in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this Section,
Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30)
days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the Adjustment Amount is a credit to the account of
Buyer, unless disputed, Seller shall pay such amount to Buyer, and if the
Adjustment Amount is a charge to the account of Buyer, Buyer shall pay such
amount to Seller. In the event Seller disagrees with the Adjustment Amount
determined by Buyer or with any other matter arising out of this subsection, and
8
<PAGE>
Buyer and Seller cannot within sixty (60) days resolve the disagreement
themselves, the parties will refer the disagreement to a firm of independent
certified public accountants, mutually acceptable to Seller and Buyer, whose
decision shall be final and whose fees and expenses shall be allocated between
and paid by Seller and Buyer, respectively, to the extent that such party does
not prevail on the disputed matters decided by the accountants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Omni Group is a general
-------------------------------
partnership duly organized and validly existing under the laws of Massachusetts.
WHK LP is a general partnership duly organized and validly existing under the
laws of Ohio. Seller has all requisite power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary action on the part of Seller. Seller has the power
and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.3 ABSENCE OF CONFLICTS. Assuming all the consents described in
---------------------
Section 3.4 are obtained, the execution and delivery of, and the performance of
- -----------
its obligations under, this Agreement and each of the other Documents by Seller,
and the consummation by Seller of the transactions contemplated hereby and
thereby:
(a) do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a Permitted Lien on any of the Sale Assets under), any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller;
9
<PAGE>
(b) do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration,
where such conflict, breach, termination, default or right would have a material
adverse effect on the Sale Assets or the operation of the Station, under charter
documents of Seller or pursuant to any lease, agreement, commitment or other
instrument which Seller is a party to, or bound by, or by which any of the Sale
Assets may be bound, or result in the creation of any Lien, other than a
Permitted Lien, upon any of the Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as
----------------------------------------------------
set forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, and to Seller's actual
------------ ------------ ------------
knowledge, the execution and delivery of, and the performance of its obligations
under, this Agreement and each of the other Documents by Seller, and the
consummation by Seller of the transactions contemplated hereby and thereby, do
not require the consent, waiver, approval, permit, license, clearance or
authorization of, or any declaration of filing with, any court or public agency
or other authority, or the consent of any person under any agreement,
arrangement or commitment of a nature which Seller is a party to or bound or by
which the Sale Assets are bound by or subject to, the failure of which to obtain
would have a material adverse effect on the Sale Assets or the operation of the
Station.
3.5 SALE ASSETS. The Sale Assets include all of the assets,
------------
properties and rights of every type and description, real, personal and mixed,
tangible and intangible, that are used to a material extent in the conduct of
the business of owning and operating the Station in the manner in which that
business is now conducted, with the exception of the Excluded Assets.
3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other
---------------------------
incidental items which in the aggregate are not of material value, the list of
Tangible Personal Property set forth on Schedule 3.6 is a complete and correct
------------
list of all of the items of tangible personal property (other than Excluded
Assets) used to a material extent in the operation of the Station in the manner
in which it is now operated. Except as set forth on Schedule 3.6:
------------
(a) Seller has good, marketable and valid title to all of the
items of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property is in working order.
3.7 REAL PROPERTY.
--------------
(a) The real property described on Schedule 3.7 constitutes a
------------
complete and correct summary description in all material respects of all of the
interests in real estate (other than any real property leased by Seller pursuant
to a lease described in Schedule 3.9) used to any extent in the operation of the
------------
Station in the manner in which it is now operated. Said real property,
together with all improvements affixed thereto, is herein defined as the "Real
Property."
10
<PAGE>
(b) Seller does not owe any money to any architect, contractor,
subcontractor or material man for labor or materials performed, rendered or
supplied to or in connection with the Real Property within the past four (4)
months which shall not be paid in full on or before Closing. Except as set
forth on Schedule 3.7, there is no work being done at or materials being
------------
supplied to the Real Property at the date hereof other than routine maintenance
projects having an aggregate cost through completion thereof of no more than Ten
Thousand Dollars ($10,000).
(c) To Seller's actual knowledge the present use of the Real Property
is in compliance with all applicable zoning codes in effect as of the date
hereof, and Seller has not received any notices of uncorrected violations of the
applicable housing, building, safety or fire ordinances. To Seller's actual
knowledge the Real Property is served by electricity and water in capacities
adequate for the present use of the Real Property and improvements thereon.
Except as set forth on Section 3.7, Seller has not made any other agreement for
-----------
the sale or lease of, or given any other person an option to purchase or lease
or a right of first refusal to purchase or lease, all or any part of the Real
Property, and except as set forth on Schedule 3.7, Seller has not subjected the
------------
Real Property to any Liens (other than Permitted Liens), easements, rights,
duties, obligations, convenants, conditions, restrictions, limitations or
agreements not of record.
(d) To Seller's actual knowledge no portion of the Real Property or
improvements thereon is the subject of any condemnation or eminent domain
proceeding presently instituted or, to Seller's actual knowledge, pending, and
Seller has not received notice from any condemning authority that such
proceedings are threatened.
3.8 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
-------------
Schedule 3.8, and except as set forth on such Schedule, the FCC Licenses (i) are
- ------------
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station as now
operated, and (ii) constitute all the licenses and authorizations issued by the
FCC to Seller for or in connection with the current operation of the Station.
Seller has no knowledge of any condition imposed by the FCC as part of any FCC
License which is neither set forth on the face thereof as issued by the FCC nor
contained in the Rules and Regulations applicable generally to stations of the
type, nature, class or location of the Station. Except as disclosed on Schedule
--------
3.8, the Station is being operated at full authorized power, in accordance with
- ---
the terms and conditions of the FCC Licenses applicable to it and in accordance
with the Rules and Regulations. Except as set forth on Schedule 3.8, no
------------
proceedings are pending or, to the knowledge of the Seller, are threatened which
may result in the revocation, modification, non-renewal or suspension of any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
Seller has complied in all material respects with all requirements to file
reports, applications and other documents with the FCC with respect to the
Station, and all such reports, applications and
11
<PAGE>
documents are complete and correct in all material respects. Seller has no
knowledge of any matters (i) which could reasonably be expected to result in the
suspension or revocation of or the refusal to renew any of the FCC Licenses or
the imposition of any fines or forfeitures by the FCC, or (ii) against Seller
which could reasonably be expected to result in the FCC's refusal to grant
approval of the assignment to Buyer of the FCC Licenses or the imposition of any
Material Adverse Condition in connection with approval of such assignment. There
are not any unsatisfied or otherwise outstanding citations issued by the FCC
with respect to the Station or its operation. Complete and accurate copies of
all FCC Licenses are attached as a part of Schedule 3.8. The "Public Inspection
------------
File" of the Station is in substantial and material compliance with Section
73.3526 of the Rules and Regulations.
3.9 STATION AGREEMENTS.
-------------------
(a) Schedule 3.9 sets forth an accurate and complete list of all
------------
material agreements, contracts, arrangements or commitments in effect as of the
date hereof, including all amendments, modifications and supplements thereto
which the Station or its assets or properties are bound by, except (A) employee
benefit plans and employment contracts, (B) contracts for the sale of time on
the Station, and (C) contracts which are cancelable by Seller or its assignee
without breach or penalty on not more than sixty (60) days' notice. Complete
and correct copies of all such agreements, contracts, arrangements or
commitments that are in writing, including all amendments, modifications and
supplements thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, and with respect to all
material Station Agreements being assumed by Buyer, (i) all Station Agreements
are legal, valid and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally, and subject, as to enforceability, to
general principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any material Station Agreements; (iii) to the knowledge of Seller, there
has not occurred any event which, after the giving of notice or the lapse of
time or both, would constitute a material default under, or result in the
material breach of, any Station Agreements which are, individually or in the
aggregate, material to the operation of the Station; and (iv) Seller holds the
right to enforce and receive the benefits under all of the material Station
Agreements, free and clear of all Liens (other than Permitted Liens) but subject
to the terms and provision of each such agreement.
(c) Schedule 3.9 indicates, for each Station Agreement listed thereon
------------
which is being assumed by Buyer, whether consent or approval by any party
thereto is required thereunder for consummation of the transactions contemplated
hereby.
3.10 LITIGATION. Except as disclosed on Schedule 3.10, there are no
----------- -------------
claims, investigations or administrative, arbitration or other proceedings
(collectively referred to herein as "Litigation") pending or, to the actual
knowledge of Seller, threatened against
12
<PAGE>
Seller which would, individually or in the aggregate if adversely determined,
have an adverse effect on the Sale Assets or the operation of the Station, or
which would give any third party the right to enjoin the transactions
contemplated by this Agreement. To the actual knowledge of Seller, there is no
basis for any such claim, investigation, action, suit or proceeding which would,
individually or in the aggregate if adversely determined, have an adverse effect
on the Sale Assets or operation of the Station. There are no existing or, to the
actual knowledge of Seller, pending orders, judgments or decrees of any court or
governmental agency affecting Seller, the Station or any of the Sale Assets.
Notwithstanding the disclosure of Litigation of Seller to Buyer pursuant to this
Section, Buyer shall not assume any liability, damages, cost or expense of
Seller relating to or arising out of any Litigation.
3.11 LABOR MATTERS.
--------------
(a) Seller is not a party to any collective bargaining agreement, and
there is no collective bargaining agreement that determines the terms and
conditions of employment of any employees of Seller.
(b) Except as disclosed on Schedule 3.11:
-------------
(i) There is no labor strike, dispute, slow-down or stoppage
pending or, to the knowledge of Seller, threatened against the Station;
(ii) There are neither pending nor, to the actual knowledge of
Seller threatened, any suits, actions, administrative proceedings, union
organizing activities, arbitrations, grievances or other proceedings between
Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station which have had or are
reasonably likely to have a material adverse effect on the operation of the
Station;
(iii) With respect to the Station, (A) Seller is in compliance in
all material respects with all laws, rules and regulations relating to the
employment of labor and all employment contractual obligations, including those
relating to wages, hours, collective bargaining, affirmative action,
discrimination, sexual harassment, wrongful discharge and the withholding and
payment of taxes and contributions; (B) Seller has withheld all amounts required
by law or agreement to be withheld from the wages or salaries of its employees;
and (C) Seller is not liable to any present or former employees or any
governmental authority for damages, arrears of wages or any tax or penalty for
failure to comply with the foregoing;
(iv) Buyer's consummation of the transactions contemplated by
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
13
<PAGE>
3.12 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the
-----------------------
transactions contemplated by this Agreement in accordance with the terms hereof
shall not, as a result of or in connection with the transactions contemplated
hereby, impose upon Buyer any obligation under any benefit plan, contract or
arrangement (regardless of whether they are written or unwritten and funded or
unfunded) covering employees or former employees of Seller in connection with
their employment by Seller. For purposes of the Agreement, "benefit plans"
shall include without limitation employee benefit plans within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.13 COMPLIANCE WITH LAW. The operation of the Station complies in
--------------------
all material respects with the applicable rules and regulations of the FCC.
3.14 ENVIRONMENTAL MATTERS; OSHA.
----------------------------
(a) Seller has obtained all environmental, health and safety
permits, the failure of which to obtain would have a material adverse effect on
either the operation of the Station or the ownership of the Real Property and
all such permits are in full force and effect and Seller is in material
compliance with all terms and conditions of such permits.
(b) To Seller's actual knowledge on the date hereof, there is
no proceeding pending or threatened which may result in the reversal,
rescission, termination, modification or suspension of any environmental or
health or safety permits necessary for the operation of the Station or the
ownership of the Real Property.
(c) Except as set forth on the Phase I Environmental Site
Assessment dated April 21, 1994 attached hereto as Schedule 3.14 ("the 1994
-------------
Assessment"), with respect to the Station and the ownership of the Real
Property, Seller is in compliance in all material respects with the provisions
of Environmental Laws.
(d) During Seller's occupancy of the Real Property, Seller has
not, and to Seller's actual knowledge on the date hereof, no other person or
entity has caused or permitted materials to be generated, released, stored,
treated, recycled, disposed of on, under or at such parcels, which materials, if
known to be present, would require clean up, removal or other remedial or
responsive action under Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and /or stored
appropriately in the buildings or improvements on the Real Property). Seller has
not caused the migration of any materials from the Real Property onto or under
any property adjacent to the Real Property which materials, if known to be
present, would require cleanup, removal or other remedial or responsive action
under Environmental Laws. To Seller's actual knowledge on the date hereof,
except as disclosed on the 1994 Assessment, there are no underground storage
tanks and no polychlorinated biphenyls ("PCB") or friable asbestos on such
property.
14
<PAGE>
(e) To Seller's actual knowledge Seller is not subject to any
judgment, decree, order or citation with respect to the Station or the Real
Property related to or arising out of Environmental Laws, and Seller has not
received notice that it has been named or listed as a potentially responsible
party by any person or governmental body or agency in any matter arising under
Environmental Laws.
(f) Seller has not discharged or disposed of any petroleum product or
solid waste on the Real Property or on the property adjacent to the Real
Property owned by third parties, which may form the basis for any present or
future claim based upon the Environmental Laws or any demand or action seeking
clean-up of any site, location, body of water, surface or subsurface, under any
Environmental Laws or otherwise, or which may subject the owner of the Real
Property to claims by third parties (except to the extent third party liability
can be established) for damages.
(g) Except as otherwise disclosed on the 1994 Assessment no portion
of the Real Property has ever been used by Seller, nor, to the actual knowledge
of Seller as of the date hereof, any previous occupant of the Real Property, in
material violation of Environmental Laws or as a landfill, dump site or any
other use which involves the disposal or storage of Hazardous Materials on-site
or in any manner which may adversely affect the value of the Real Property.
(h) No pesticides, herbicides, fertilizers or other materials have
been used on, applied to or disposed of by Seller on the Real Property in
material violation of any Environmental Laws (other than normal office, cleaning
and maintenance supplies in reasonable quantities used and/or stored
appropriately in the buildings or improvements on the Real Property.
(i) With respect to the Station or the Real Property, Seller has
disposed of all waste in material compliance with all Environmental Laws and, to
the actual knowledge of Seller on the date hereof, there is no existing
condition that may form the basis of any present or future material claim,
demand or action seeking clean up of any facility, site, location or body of
water, surface or subsurface, for which the Buyer could be liable or responsible
solely as a result of the disposal of waste at such site by a prior owner of the
Real Property.
(j) Seller is in material compliance with all OSHA Laws.
3.15 FILING OF TAX RETURNS. To the extent the failure to file or pay
----------------------
would result in a Lien on the Sale Assets, Seller has filed all Federal, State
and local tax returns which are required to be filed and has paid all taxes and
all assessments to the extent that such taxes and assessments have become due.
3.16 ABSENCE OF INSOLVENCY. Except as set forth on Schedule 3.16, no
---------------------- -------------
insolvency proceedings of any character including without limitation,
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, affecting the Seller or any of the Sale
Assets, are pending or, to the best
15
<PAGE>
knowledge of Seller, threatened, and Seller has made no assignment for the
benefit of creditors, nor taken any action with a view to, or which would
constitute the basis for the institution of, any such insolvency proceedings.
3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule
-------------------------- --------
3.17, no agent, broker, investment banker or other person or firm acting on
- ----
behalf of or under the authority of Seller or any affiliate of Seller is or will
be entitled to any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, in connection with the transactions contemplated by
this Agreement.
3.18 INSURANCE. There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the State of
Ohio. Buyer has all requisite corporate power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution
----------------------------------------------
and delivery of, and the performance of its obligations under, this Agreement
and each of the other Documents, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Buyer. This Agreement
and each of the other Documents to be executed by Buyer have been, or at or
prior to the Closing will be, duly executed by Buyer. The Documents, when
executed and delivered by the parties hereto, will constitute the valid and
legally binding agreement of Buyer, enforceable against Buyer in accordance with
their terms, except as may be limited by bankruptcy, insolvency, or other
similar laws affecting the enforcement of creditors' rights generally, and
except as may be limited by general principles of equity (regardless of whether
such enforceability is sought in a proceeding in equity or at law).
4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule
16
<PAGE>
or regulation or any order, judgment, injunction, decree or ruling applicable to
Buyer in any manner which would have a material adverse effect on the assets,
business, operation or financial condition or results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage
of time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the articles of incorporation or bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for
----------------------------------------------------
the required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer.
4.5 QUALIFICATION.
--------------
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Station upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall
--------------
make the affirmative certifications provided in Section III of FCC Form 314 at
the time of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17,
-------------------------- -------------
no agent, broker, investment banker, or other person or firm acting on behalf of
or under the authority or Buyer or any affiliate of Buyer is or will be entitled
to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, in connection with transactions contemplated by this Agreement.
4.7 LITIGATION. There are no legal, administrative, arbitration or
-----------
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
17
<PAGE>
ARTICLE V
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
------------------------------------------------------------
Seller covenants and agrees with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld), Seller shall:
(a) Use reasonable efforts to operate the Station in substantially
the same manner in which it is currently being operated:
(b) Use reasonable commercial efforts to maintain insurance upon all
of the tangible Sale Assets in such amounts and of such kind comparable to that
in effect on the date hereof with respect to such Sale Assets and with respect
to the operation of the Station, with insurers of substantially the same or
better financial condition;
(c) Operate the Station and otherwise conduct its business in
accordance with the terms or conditions of its FCC Licenses, the Rules and
Regulations, the Act and use reasonable efforts to conduct its business in
accordance with all other rules and regulations, statutes, ordinances and orders
of all governmental authorities having jurisdiction over any aspect of the
operation of the Station, except where the failure to so operate the Station
would not have a material adverse effect on the Sale Assets or the operation of
the Station or on the ability of Seller to consummate the transactions
contemplated hereby;
(d) Maintain the books and records of the Station in Seller's
customary manner on a basis consistent with prior years;
(e) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Station;
(f) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute a
material default under such Station Agreements;
(g) Not mortgage, pledge or subject to any Lien (except in the
ordinary course of business) any of the Sale Assets;
(h) Not sell, lease or otherwise dispose of, nor agree to sell, lease
or otherwise dispose of, any of the Sale Assets, except for dispositions in the
ordinary course of business;
18
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(i) Not acquire or lease any goods or services or enter into, amend
or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(j) Not introduce any material change with respect to the operation
of the Station including, without limitation, any material changes in the
broadcast hours of the Station or any other material change in the Station's
programming policies, except such changes as in the sole discretion of Seller,
exercised in good faith after consultation with Buyer, are required by the
public interest;
(k) Notify Buyer of any material litigation pending or threatened
against Station or Seller or any material damage to or destruction of any assets
included or to be included in the Sale Assets;
5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
----------------------
within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer
shall take all commercially reasonable steps necessary to prosecute such filings
with diligence and shall diligently oppose any objections to, appeals from or
petitions to reconsider such approval of the FCC, to the end that the FCC Order
and a Final Action with respect thereto may be obtained as soon as practicable.
Buyer shall not knowingly take, and Seller covenants that Seller shall not
knowingly take, any action that party knows or has reason to know would
materially and adversely affect or materially delay issuance of the FCC Order or
materially and adversely affect or materially delay its becoming a Final Action
without a Material Adverse Condition, unless such action is requested or
required by the FCC, its staff or the Rules and Regulations. Should Buyer or
Seller become aware of any facts which could reasonably be expected to
materially and adversely affect or materially delay issuance of the FCC Order
without a Material Adverse Condition (including but not limited to, in the case
of Buyer, any facts which would reasonably be expected to disqualify Buyer from
controlling the Station), such party shall promptly notify the other party
thereof in writing and both parties shall cooperate to take all steps necessary
or desirable to resolve the matter expeditiously and to obtain the FCC's
approval of matters pending before it.
5.3 OTHER CONSENTS. Seller shall use commercially reasonable efforts to
---------------
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
5.4 TAX RETURNS AND PAYMENTS. To the extent the failure to file any
-------------------------
return, estimate, or report or pay any taxes would result in a Lien on the Sale
Assets:
(a) All tax returns, estimates, and reports required to be filed by
Seller prior to the Closing Date or relating to periods prior to the Closing
Date will be timely
19
<PAGE>
filed with the appropriate governmental agencies unless valid extensions
therefor shall have been obtained.
(b) All taxes pertaining to ownership of the Sale Assets or operation
of the Station prior to the Closing Date will be timely paid; provided that
Seller shall not be required to pay any such tax so long as the validity thereof
shall be contested in good faith by appropriate proceedings and Seller shall
have set aside adequate reserves with respect to any such tax.
5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its
---------------------------------
representatives may make such reasonable investigation of the assets and
business of the Station as it may desire; and Seller shall give to Buyer, its
engineers, counsel, accountants and other representatives reasonable access
during normal business hours throughout the period prior to the Closing to
personnel and all of the assets, books, records and files of or pertaining to
the Station, provided that (i) Buyer shall give Seller reasonable advance notice
of each date on which Buyer or any such other person or entity desires such
access, (ii) each person (other than an officer of Buyer) shall, if requested by
Seller, be accompanied by an officer or their representative of Buyer approved
by Seller, which approval shall not be unreasonably withheld, (iii) the
investigations at the offices of Seller shall be reasonable in number and
frequency, and (iv) all investigations shall be conducted in such a manner as
not to physically damage any property or constitute a disruption of the
operation of the Station or Seller. Seller shall furnish to Buyer during such
period all documents and copies of documents and information concerning the
business and affairs of the Station as Buyer may reasonably request.
5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials
-------------------------------
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be necessary or appropriate in connection with the operation of
the Station by Buyer. Each party shall use its reasonable efforts to prevent the
violation of any of the foregoing confidentiality provisions by its respective
representatives. Notwithstanding the foregoing, nothing contained herein shall
prohibit Buyer or Seller from:
(i) using such information, data and materials in connection with any
action or proceeding brought or any claim asserted by Buyer or Seller in respect
of any breach by the other of any representation, warranty or covenant made in
or pursuant to this Agreement; or
20
<PAGE>
(ii) supplying or filing such information, data or materials to or
with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to determine the appropriate timing, form and
content of such release or announcement and thereafter may make such release or
announcement.
5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
------------------------
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.
5.8 FCC REPORTS. Seller shall continue to file, on a current basis
------------
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.
5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
-----------------------------------
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets and properties as security for payment of
loans and other obligations or judgments and of any other Liens on the Sale
Assets. At the closing, Seller shall transfer and convey to Buyer all of the
Sale Assets free and clear of all Liens except Permitted Liens.
5.10 ENVIRONMENTAL ASSESSMENT. Not later than forty-five (45) days
-------------------------
after execution of this Agreement, Buyer shall obtain a Phase I environmental
assessment of the Real Property by an environmental engineer selected by Buyer
(the "Environmental Assessment"). Buyer shall commission and pay the cost of
such Environmental Assessment and shall provide a copy to Seller within ten (10)
days of its receipt by Buyer. The Environmental Assessment shall be subject to
the confidentiality provisions of Section 5.6. If, after appropriate inquiry
-----------
into the previous ownership of and uses of the Real Property consistent with
good commercial or customary practice, the engineer concludes, as set forth in
the Environmental Assessment, that environmental conditions exist on, under or
affecting such properties that would constitute a violation or breach of
Seller's representations and warranties contained in Section 3.14 of this
------------
Agreement or cause the condition contained in Section 6.9 to not be satisfied,
------------
then notwithstanding any other provisions of this Agreement to the contrary, but
subject to the following sentence, Seller shall at its sole cost and expense (up
to a maximum amount of Fifty Thousand Dollars ($50,000)) remove, correct or
remedy any condition or conditions which constitute a violation or breach of
Seller's representations and warranties contained in Section 3.14 prior to the
------------
Closing Date and provide to Buyer at Closing a certificate from
21
<PAGE>
an environmental abatement firm reasonably acceptable to Buyer that such
removal, correction or remedy has been completed so that Seller's
representations and warranties contained in Section 3.14 will be true as of the
------------
Closing Date and the condition contained in Section 6.9 will be satisfied as of
-----------
the Closing Date. In the event the cost of removal, correction or remedy of the
environmental conditions exceeds Fifty Thousand Dollars ($50,000), Buyer may
elect to proceed with the Closing but shall not be obligated to close under any
circumstances which would require Buyer to assume ownership of the Station under
conditions where there exist any uncured violations of warranties,
representations or covenants with respect to environmental matters.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this Agreement
is subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
----------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole, and except as follows:
(i) as to Section 3.14(d), (f), (g), (h) or (i) the accuracy
--------------------------------------
or inaccuracy of this representation as of the date of this Agreement or as of
the Closing Date shall not be a condition to Closing if (A) the item is removed
on or before Closing, all costs associated with such removal, clean up or other
action have been paid in full by Seller and all required certificates of removal
or completion or other certificates demonstrating that all required action under
Section 5.10 has been completed have been received from applicable regulatory
- ------------
authorities, or (B) the removal, clean up or other action cannot be completed
and/or governmental or regulatory certificates cannot be obtained prior to
Closing (which Closing may be delayed by Seller or Buyer by not more than thirty
(30) days if either party reasonably determines that any necessary action can be
completed during such delay period), a portion of the Purchase Price equal to
the estimated costs of completion and/or certification (to be determined by an
independent consulting engineer but in no event exceeding Fifty Thousand Dollars
($50,000) without the prior consent of Seller) is escrowed under an agreement
negotiated in good faith by the parties and the amount so escrowed is used to
pay all costs of completion; provided, however, that in no event shall Buyer be
required to consummate the Agreement if (A) the removal, clean up or other
action would likely result in a disruption of Buyer's ability to broadcast at
substantially full power from its transmitter site for material periods of
22
<PAGE>
time or (B) the estimated cost of completion and/or certification exceeds the
amount escrowed pursuant to this Section.
(ii) as to Section 3.14(j), the accuracy or inaccuracy of this
---------------
representation shall not be a condition to Closing if the noncompliance is cured
on or before Closing or if the Seller remains liable for the noncompliance after
the Closing; and
(iii) as to Sections 3.6 and 3.7, the accuracy or inaccuracy
--------------------
of the representations(s) shall not be a condition to Closing if the amount to
cure or repair the matter is reasonably estimated at less than One Hundred
Thousand Dollars ($100,000) in the aggregate and the Purchase Price is reduced
accordingly (if the amount can be accurately determined) or a reasonable reserve
is placed into escrow pending cure or repair or Buyer and Seller make other
arrangements which are reasonable under the circumstances. In addition, Seller
may elect to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action necessary to cure or repair can be
completed during such delay period; provided that the reduction or escrow
described in the preceding sentence shall apply to the extent any cure or repair
is not completed within such delay period.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date, and
-----------
further except that as to Section 6.2, non-satisfaction of the condition(s)
-----------
shall not be a condition to Closing if the amount to cure or repair the matter
is reasonably estimated at less than One Hundred Thousand Dollars ($100,000) in
the aggregate and the Purchase Price is reduced accordingly (if the amount can
be accurately determined) or a reasonable reserve is placed into escrow pending
cure or repair or Buyer and Seller make other arrangements which are reasonable
under the circumstances. In addition, Seller may elect to delay Closing for a
period not to exceed thirty (30) days if Seller reasonably determines that any
action necessary to cure or repair can be completed during such delay period;
provided that the reduction or escrow described in the preceding sentence shall
apply to the extent any cure or repair is not completed within such delay
period.
6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become a Final Action without any Material Adverse Condition.
23
<PAGE>
(b) Conditions which the FCC Order or any order, ruling or decree of
any judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied prior to transfer of the FCC Licenses to
Buyer shall have been satisfied by Seller.
(c) All other material authorizations, consents, approvals and
clearances of federal, state or local governmental agencies required to permit
the consummation by Buyer of the transactions contemplated by this Agreement
shall have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have a material adverse effect on the operations of the Station.
6.4 ADVERSE PROCEEDINGS. Buyer shall not be subject to any ruling,
-------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting (i) the consummation of the transactions contemplated hereby or (ii)
its participation in the operation, management, ownership or control of the
Station; and no litigation, proceeding or other action seeking to obtain any
such ruling, decree, order or injunction shall be pending or shall have been
threatened in writing and have a reasonable likelihood of success. No
governmental authority having jurisdiction shall have notified any party to this
Agreement that consummation of the transaction contemplated hereby would
constitute a violation of the laws of the United States or of any state or
political subdivision or that it intends to commence proceedings to restrain
such consummation or to force divestiture, unless such governmental authority
shall have withdrawn such notice. No governmental authority having jurisdiction
shall have commenced any such proceeding.
6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
--------------------------------
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.8 are valid, in good
------------
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the
24
<PAGE>
Station or its operation, other than proceedings affecting the radio
broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon
Seller's representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to any factual matters embodied in, or
forming a basis for any legal opinion expressed in, such opinion, counsel's
knowledge is based solely on such inquiry.
6.6 OTHER CONSENTS. Seller shall have obtained in writing and
---------------
provided to Buyer on or before the Closing Date, without any condition
materially adverse to Buyer or the Station, the consents or waivers to the
transactions contemplated by this Agreement required under those Station
Agreements which Buyer has elected to assume.
6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or
------------------------------
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.
-----------
6.8 NO CESSATION OF BROADCASTING.
----------------------------
(a) Between the date hereof and the Closing Date, the Station
shall not have for a period of more than ten (10) days in the aggregate (i)
ceased broadcasting on its authorized frequency, (ii) lost substantially all of
its normal broadcasting capability or (iii) been broadcasting at a power level
of 50% or less of its FCC authorized level. Seller shall promptly notify Buyer
of the occurrence of any one or more of the foregoing events or conditions, and
the non-fulfillment of the condition precedent set forth in this Subsection
caused by the occurrence of the events specified in Seller's notice shall be
deemed waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding
the Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller or Buyer shall have
the right to delay Closing for a period not to exceed thirty (30) days if Seller
or Buyer reasonably determines that any action to restore the Station
substantially all of its normal broadcasting capability can be completed during
such delay period.
6.9 ENVIRONMENTAL CONDITIONS. The Environmental Assessment obtained
-------------------------
by Buyer pursuant to Section 5.10 hereof shall not have disclosed any material
------------
violation of any Environmental Law at the Real Property which is not removed or
cured by Seller prior to Closing.
25
<PAGE>
6.10 TITLE INSURANCE COMMITMENT. Title to the Real Property shall be
---------------------------
in fee simple, good and marketable and insurable at regular rates by Surety
Title Agency, Inc., licensed in the State of Ohio, pursuant to the standard
stipulations and conditions of the ALTA policy of owner's title insurance
prescribed by the applicable regulatory authorities for the State of Ohio, free
and clear of all liens and encumbrances except Permitted Encumbrances, as
hereinafter defined. For purposes hereof, "Permitted Encumbrances" shall mean
(i) easements, restrictions, and other similar matters which will not adversely
affect the use of the Real Property in the ordinary course of business; (ii)
liens for taxes not due and payable or, that are being contested in good faith
by appropriate proceedings; (iii) mechanics, materialmen's, carriers',
warehousemen's, landlords' or other similar liens in the ordinary course of
business for sums not yet due or being contested in good faith by appropriate
proceedings; (iv) deposits or pledges to secure the performance of bids,
tenders, contracts (other than for borrowed money), leases, statutory
obligations, surety or appeal bonds or other deposits or pledges for purposes of
a like general nature made or given in the ordinary course of business: and (v)
liens or mortgages that will be released at Closing; (vi) zoning ordinances and
regulations, including statutes and ordinances relating to the liens of streets
and to other municipal improvements, which will not adversely affect the use of
the Real Property in the ordinary course of business. All costs associated with
obtaining the standard ALTA policy of title insurance shall be shared equally by
Seller and Buyer.
6.11 SURVEY. Within ten (10) business days after execution of this
-------
Agreement, Seller shall provide Buyer with the originals or readable copies of
any surveys of the Real Property in Seller's possession. All costs associated
with updating such survey or preparing new surveys shall be paid by Buyer.
6.12 DISCLAIMER OF CONDITION PRECEDENT. Provided that Seller
----------------------------------
continues after the date of this Agreement to operate the Station in the
ordinary course of business and in compliance with the provisions of this
Agreement, then notwithstanding anything contained herein to the contrary,
Buyer's obligation to close hereunder shall not be conditioned upon the absence,
between the date hereof and the Closing Date, of a material adverse change in
the Station's revenues, ratings, financial condition, assets, properties or
prospects and such a material adverse change shall not relieve Buyer of its
obligations to close hereunder; provided that nothing contained herein shall in
any way diminish or affect any specific warranties and representations made by
Seller in Article III.
-----------
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
26
<PAGE>
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
-----------
are satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall
have become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or
decree of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other material authorizations, consents, approvals and
clearances of all Federal, state and local governmental agencies required to
permit the consummation by Seller of the transactions contemplated by this
Agreement shall have been obtained; all statutory and regulatory requirements
for such consummation shall have been fulfilled; and no such authorizations,
consents, approvals or clearances shall contain any conditions that individually
or in the aggregate would have any material adverse effect on Seller.
7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling,
--------------------
decree, order or injunction restraining, imposing material limitations on or
prohibiting the consummation of the transactions contemplated hereby; and no
litigation, proceeding or other action seeking to obtain any such ruling,
decrees, order or injunction shall be pending or shall have been threatened in
writing and have a reasonable likelihood of success. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transactions contemplated hereby would constitute a
violation of the laws of the United States or of any state or political
subdivision or that it intends to commence proceedings to restrain such
consummation or to force divestiture, unless such governmental authority shall
have withdrawn such
27
<PAGE>
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall
-------------------------------------------------
have delivered or caused to be delivered to Seller on the Closing Date each of
the Documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
-----------
ARTICLE VIII
CLOSING
-------
8.1 TIME AND PLACE. The Closing shall take place at the offices of
---------------
Seller's counsel in Cleveland, Ohio, or at such other place as the parties
agree, at 10:00 A.M. Eastern Time on the fifth business day following the last
to occur of the following dates (the "Closing Date") (i) the date on which
issuance of the FCC Order without any Material Adverse condition has become a
Final Action; (ii) the date on which the FCC's grant of Seller's application for
renewal of the FCC Licenses has become a Final Action; provided, however, that
Buyer, at its sole option, may elect to close at any time after the expiration
of any time period allowed for petitions to deny or other public comment with
respect to Seller's application for renewal of the FCC Licenses.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
---------------------------------------------
Seller shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of the Board of Directors of the
Managing General Partner of WHK LP and the Omni Group approving the execution
and delivery of this Agreement and each of the other documents and authorizing
the consummation of the transactions contemplated hereby and thereby.
(b) The certificate required by Section 6.1(b).
--------------
(c) A bill of sale and other instruments of transfer and
conveyance transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) Limited warranty deeds and any other required instruments of
transfer and conveyance transferring to Buyer the Real Property.
(f) Executed mortgage satisfactions and any other documents
required by the title insurance company under Section 6.10 as a condition to
------------
issuing the title insurance policy in the form required by Section 6.10.
------------
28
<PAGE>
(g) An instrument or instruments assigning to Buyer all right, title
and interest of Seller in and to all Station Agreements being assumed by Buyer.
(h) An instrument assigning to Buyer all right, title and interest of
Seller in the FCC Licenses, all pending applications relating to the station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(i) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
------------
(j) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all material
consents and approvals required as a condition to Buyer's obligation to close
hereunder have been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing,
---------------------------------------------
Buyer shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of the Board of Directors of Buyer and
Salem Communications Corporation approving the execution and delivery of this
Agreement and each of the other Documents and authorizing the consummation of
the transaction contemplated hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
-----------
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1(b).
--------------
(e) Such additional information and materials as Seller shall have
reasonably requested.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
------------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day
29
<PAGE>
of the Survival Period. In the event such a notice is so given, the right to
indemnification with respect thereto under this Article shall survive the
Survival Period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied. Notwithstanding the foregoing, the
provisions for survival and the making of claims shall not apply to the
agreements whereby Buyer assumes the obligations under Subsection 8.3(c), each
-----------------
of which agreements shall be governed by its own terms.
9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the
---------------------------
rights to indemnification and to be held harmless set forth in this Agreement
shall, as between the parties hereto and their respective successors and
assigns, be exclusive of all rights to indemnification and to be held harmless
that such party (or its successors or assigns) would otherwise have by statute,
common law or otherwise.
9.3 INDEMNIFICATION BY SELLER.
--------------------------
(a) Subject to the provisions of Subsection (b) below and
--------------
Section 10.2 below, Seller shall indemnify and hold harmless Buyer and any
- ------------
officer, director, agent, employee and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses, including reasonable attorneys' fees,
(collectively referred to herein or "Losses") relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other than
the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.
(b) Notwithstanding anything contained herein to the contrary,
if Closing occurs, Seller shall not be obligated until the aggregate amount of
Losses exceeds Buyer's Threshold Limitation, in which case Buyer shall then be
entitled to indemnification of the entire amount in excess of Buyer's Threshold
Limitation, provided that any amounts owed by Seller to Buyer under Subsection
----------
(a) (iv) above and Section 2.7 shall not be counted in determining whether
- -------- -----------
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation. Notwithstanding
anything contained herein to the contrary, if Closing occurs, Seller shall not
be obligated to pay any amounts pursuant to this Section 9.3 in excess of the
Purchase Price.
30
<PAGE>
9.4 INDEMNIFICATION BY BUYER.
-------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
- ----
director, agent, employee and affiliate thereof with respect to any and all
Losses relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the
Closing Date; or
(iii) The Assumed Obligations and all other liabilities or
obligations of Buyer.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above unless and until the aggregate amount of such Losses
- --------------
exceeds Seller's Threshold Limitation, in which case Seller shall then be
entitled to indemnification of the entire amount in excess of Seller's Threshold
Limitation, provided that any payment owed by Buyer to Seller under Section 2.7
-----------
shall not be counted in determining whether Seller's Threshold Limitation is
satisfied, and Seller shall have the right to recover any such payment without
regard to any such limitation. Notwithstanding anything contained herein to the
contrary, if Closing occurs, Buyer shall not be obligated to pay any amounts
pursuant to this Section 9.4 in excess of the Purchase Price.
9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party
---------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
----------
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
{THIS SPACE INTENTIONALLY LEFT BLANK.}
31
<PAGE>
ARTICLE X
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION. If Closing shall not have previously occurred,
------------
this Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:
(i) Seller gives such termination notice and is not at
such time in material default hereunder, or Buyer gives such termination notice
and Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties
contained herein of Buyer (if such termination notice is given by Seller), or of
Seller (if such termination notice is given by Buyer), are inaccurate in any
respect and materially adverse to the party giving such termination notice
unless the inaccuracy has been induced by or is the result of actions or
omissions of the party giving such termination notice or unless the accuracy of
such representation or warranty is not a condition to closing; or
(B) Any material obligation to be performed by Buyer
(if such termination notice is given by Seller) or by Seller (if such
termination notice is given by Buyer) is not timely performed in any material
respect unless the lack of timely performance has been induced by or is the
result of actions or omissions of the party giving such termination notice; or
(C) Any material condition (other than those
referred to in foregoing Clauses (A) and (B)) to the obligation to close the
----------- ---
transaction contemplated herein of the party giving such termination notice
has not been timely satisfied, unless the failure of said condition to be
satisfied was induced by the party giving such termination notice with the
intended result of terminating the Agreement pursuant to this Clause (C); and
----------
(iii) any such inaccuracy, failure to perform or non-
satisfaction of a condition neither has been cured nor satisfied within twenty
(20) days after written notice thereof from the party giving such termination
notice nor waived in writing by the party giving such termination notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time after March 31, 1997 provided that termination shall not occur upon the
giving of
32
<PAGE>
such termination notice by Seller if Seller is at such time in material default
hereunder or upon the giving of such termination notice by Buyer if Buyer is at
such time in material default hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller, at
any time following a determination by the FCC that the application for consent
to assignment of the FCC Licenses has been designated for hearing if Seller or
Buyer reasonably determine that approval to the assignment can not be obtained
prior to March 31, 1997, even with diligent efforts; provided, however, only the
party whose qualifications are not in issue may terminate this Agreement under
this provision and only if such party has given the other sixty (60) days' prior
written notice and the requirement for such hearing has not been set aside
within that period.
(d) The written election by Buyer under Article XI.
----------
10.2 OBLIGATIONS UPON TERMINATION.
----------------------------
(a) In the event this Agreement is terminated pursuant to Section
-------
10.1(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder
- -------------- ---
shall be limited as provided in Subsections (c) and (e), below and the aggregate
-----------------------
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
- -----------------------
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to
the return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Subsections 10.1(a), (b), (c) or (d) , or (ii) if such
------------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1(a)(ii)(C), 10.1(b) or 10.1(c). If Buyer is
----------------------------------------------
entitled to the return of the Earnest Money, Seller shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid
written notice to Buyer pursuant to Subsection 10.1(a)(ii)(A) or (B), Buyer
--------------------------------
agrees that (i) Buyer shall pay Seller upon such termination, as liquidated
damages and not as penalty, the sum ("Liquidated Damage Amount") of (A) Six
Hundred Seventy Five Thousand Dollars ($675,000), plus (B) the amount of the
Earnest Money; (ii) Seller shall be entitled to collect the Liquidated Damage
Amount by receiving a disbursement from the Escrow Agent under the Escrow
Agreement equal to the Earnest Money; and (iii) Seller shall be entitled to
pursue any other remedy available to Seller at law or in equity to recover the
full amount of the Liquidated Damage Amount from Buyer provided that the total
monetary damages (including any amount received from the Escrow Agent under the
Escrow Agreement) to which Seller shall be entitled shall not exceed the
Liquidated Damage Amount. SELLER'S RECEIPT OF THE LIQUIDATED DAMAGE AMOUNT
SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER
33
<PAGE>
AND NOT A PENALTY, AND, EXCEPT AS PROVIDED IN SECTION 13.4, SHALL BE SELLER'S
------------
SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT
OCCUR. EXCEPT AS PROVIDED IN SECTION 13.4, BUYER AND SELLER EACH ACKNOWLEDGE AND
------------
AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS REASONABLE IN LIGHT OF THE
ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE
DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE
OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED
HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary,
but subject to the provisions of the following sentences, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
----------
10.1(a), Buyer shall not be entitled to damages or indemnification from Seller.
- -------
Subject to the following sentence, if Seller attempts to terminate this
Agreement under circumstances where it is not entitled to do so, or if Seller,
by its own action, causes a breach of warranty or fails to satisfy a condition
(including without limitation a refusal to consummate the transaction after
Buyer has satisfied all conditions to Seller's obligation to close and Buyer has
demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1(a) and Buyer does
---------------
so elect to terminate, the monetary damages, if any, to which Buyer shall be
entitled shall be limited to direct and actual damages and shall in no event
exceed Three Hundred Thousand Dollars ($300,000) in the aggregate. If a
circumstance described in the preceding sentence should arise and if Buyer
establishes that the action of Seller described therein was taken intentionally
in order to allow Seller to sell or enter into negotiations to sell the Station
to another party, the damages to which Buyer shall be entitled shall not be
limited to direct and actual damages.
(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 TERMINATION NOTICE. Each notice given by a party pursuant
-------------------
to Section 10.1 to terminate this Agreement shall specify the Subsection (and
------------
clause or clauses thereof) of Section 10.1 pursuant to which such notice is
------------
given.
ARTICLE XI
----------
CASUALTY
--------
Upon the occurrence of any casualty loss, damage or destruction
material to the operation of the Station prior to the Closing, Seller shall
promptly give Buyer written
34
<PAGE>
notice setting forth in detail the extent of such loss, damage or destruction
and the cause thereof if known. Seller shall use its reasonable efforts to
promptly commence and thereafter to diligently proceed to repair or replace any
such lost, damaged or destroyed property. In the event that such repair or
replacement is not fully completed prior to the Closing Date, Buyer may elect to
postpone the Closing until Seller's repairs have been fully completed or to
consummate the transactions contemplated hereby on the Closing Date, in which
event Seller shall assign to Buyer the portion of the insurance proceeds (less
all reasonable costs and expenses, including without limitation attorney's fees,
expenses and court costs incurred by Seller to collect such amounts), if any,
not previously expended by Seller to repair or replace the damaged or destroyed
property (such assignment of proceeds to take place regardless of whether the
parties close on the scheduled or deferred Closing Date) and Buyer shall accept
the damaged Sale Assets in their damaged condition. In the event the loss,
damage or destruction causes or will cause the Station to be off the air for
more than seven (7) consecutive days or fifteen (15) total days, whether or not
consecutive, then Buyer may elect either (i) to consummate the transactions
contemplated hereby on the Closing Date, in which event Seller shall assign to
Buyer the portion of the insurance proceeds (less all reasonable costs and
expenses, including without limitation attorney's fees, expenses and court
costs, incurred by Seller to collect such amounts), if any, not previously
expended by Seller to repair or replace the damaged or destroyed property, and
Buyer shall accept the damaged Sale Assets in their damaged condition, or (ii)
to terminate this Agreement.
ARTICLE XII
CONTROL OF STATION
------------------
Between the date of this Agreement and the Closing Date, Buyer shall
not control, manage or supervise the operation of the Station or conduct of its
business, all of which shall remain the sole responsibility and under the
control of Seller, subject to Seller's compliance with this Agreement.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 FURTHER ACTIONS. From time to time before, at and after the
----------------
Closing, each party, at its expense and without further consideration, will
execute and deliver such documents to the other party as the other party may
reasonably request in order more effectively to consummate the transactions
contemplated hereby.
13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a
------------------------------
period of twelve (12) months, Buyer shall provide Seller, Seller's counsel,
accountants and other representatives with reasonable access during normal
business hours to the books, records, property, personnel, contracts,
commitments and documents of the Station pertaining to transactions occurring
prior to the Closing Date when requested by Seller, and Buyer shall retain such
books and records for the normal document retention period
35
<PAGE>
of Buyer. At the request and expense of Seller, Buyer shall deliver copies of
any such books and records to Seller .
13.3 PAYMENT OF EXPENSES.
--------------------
(a) Any fees assessed by the FCC in connection with the
filings contemplated by Section 5.2(a) or consummation of the transactions
--------------
contemplated hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant
and other similar taxes payable in connection with consummation of the
transactions contemplated hereby shall be shared equally between Buyer and
Seller.
(c) Except as otherwise expressly provided in this Agreement,
each of the parties shall bear its own expenses, including the fees of any
attorneys and accountants engaged by such party, in connection with this
Agreement and the consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
--------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. Buyer acknowledges that certain transactions
that Seller may enter into may be premised upon the consummation of the
transaction contemplated by this Agreement and if Buyer breaches its obligations
under this Agreement, the value of the Station to Seller could be adversely
affected in an amount exceeding the Liquidated Damages Amount. Therefore, at
Sellers option, in lieu of receiving the Liquidated Damages Amount as provided
in Section 10.2(c), Seller shall be entitled to seek enforcement of this
---------------
Agreement by decree of specific performance or injunctive relief requiring Buyer
to fulfill its obligations under this Agreement. In any action to equitably
enforce the provisions of this Agreement, the other party shall waive the
defense that there is an adequate remedy at law or equity and agrees that the
party seeking equitable relief shall have the right to obtain specific
performance of the terms of this Agreement without being required to prove
actual damages, post bond or furnish other security.
13.5 NOTICES. All notices, demands or other communications given
-------
hereunder shall be in writing and shall be sufficiently given if delivered by
courier or sent by registered or certified mail, first class, postage prepaid,
or by telex, cable, telegram, facsimile machine or similar written means of
communication, addressed as follows:
THIS SPACE INTENTIONALLY LEFT BLANK.
36
<PAGE>
(a) if to Seller, to:
OmniAmerica Communications, Inc.
11111 Santa Monica Blvd., Suite 220
Los Angeles, California 90025
Attn: Carl Hirsch, CEO
Copy to:
Howard Mandel, Esq.
Thompson, Hine & Flory
3900 Society Center
127 Public Square
Cleveland, Ohio 44114
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date mailed, and
(ii) if personally delivered or otherwise sent as provided above, on the date
received.
13.5 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits
-----------------
hereto, and the other Documents constitute the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersede any prior negotiations, agreements, understandings or
arrangements between the parties with respect to the subject matter hereof.
13.6 BINDING EFFECT; BENEFITS. Except as otherwise provided herein,
-------------------------
this Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective successors or assigns. Except to the extent
specified herein, nothing in this Agreement, express or implied, shall confer on
any person other than the parties hereto and their respective successors or
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
13.7 ASSIGNMENT. This Agreement and any rights hereunder shall not
-----------
be assignable by either party hereto without the prior written consent of the
other party,
37
<PAGE>
which consent shall not be unreasonably withheld; provided, however, that Buyer
may, at its own expense, without Seller's prior written consent, assign its
rights and obligations to acquire the Real Property to Edward G. Atsinger III
and Stuart W. Epperson, or trusts or limited partnerships created for their
benefit and/or the benefit of their spouses and their issue, so long as (i) no
delay results in the Closing Date (ii) no extra expense results to Seller, and
(iii) Buyer remains liable for indemnification of Seller in respect of all
Assumed Obligations in respect of the Real Property.
13.8 GOVERNING LAW. This Agreement shall in all respects be
--------------
governed by and construed in accordance with the laws of the State of Ohio,
including all matters of construction, validity and performance.
13.9 BULK SALES. Buyer hereby waives compliance by Seller with the
-----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
----------
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.10 AMENDMENTS AND WAIVERS. No term or provision of this Agreement
-----------------------
may be amended, waived, discharged or terminated orally but only by an
instrument in writing signed by the party against whom the enforcement of such
amendment, waiver, discharge or termination is sought. Any waiver shall be
effective only in accordance with its express terms and conditions.
13.11 SEVERABILITY. Any provision of this Agreement which is
-------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such unenforceability without invalidating the remaining
provisions hereof, and any such unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the parties hereto hereby waive any
provision of law now or hereafter in effect which renders any provision hereof
unenforceable in any respect.
13.12 HEADINGS. The captions in this Agreement are for convenience
---------
of reference only and shall not define or limit any of the terms or provisions
hereof.
13.13 COUNTERPARTS. This Agreement may be executed in any number of
-------------
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.14 REFERENCES. All references in this Agreement to Articles and
-----------
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
13.15 SCHEDULES AND EXHIBITS. Unless otherwise specified herein,
-----------------------
each Schedule and Exhibit referred to in this Agreement is attached hereto, and
each such Schedule and Exhibit is hereby incorporated by reference and made a
part hereof as if fully set forth herein.
38
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement
as of the date first written.
"SELLER" "BUYER "
OMNIAMERICA GROUP INSPIRATION MEDIA OF OHIO, INC.
By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson
---------------------------- ----------------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
WHK LICENSE PARTNERSHIP
By: /s/ Carl Hirsch
----------------------------
Carl Hirsch
Chief Executive Officer
39
<PAGE>
GUARANTY
Salem Communications Corporation ("Guarantor") hereby absolutely and
unconditionally guarantees the following (the "Guaranteed Obligations"):
(a) the punctual and full payment when due of all the obligations of
Buyer in connection with the Documents; it being the intention of Guarantor that
this guaranty be an absolute and unconditional guarantee of payment; and
(b) the performance and observance by Buyer of all its obligations
and covenants under the Documents.
Guarantor further agrees that the guaranty will not be discharged or affected by
the fact that the Guaranteed Obligations or any of them shall be invalid or
unenforceable for any reason. The guaranty shall be liberally construed in
favor of Seller. Guarantor hereby waives any right to require payment of the
Guaranteed Obligations by Buyer, or to require Seller to proceed against any
collateral or escrow for the Guaranteed Obligations, or to require any action or
proceeding against Buyer on the Guaranteed Obligations, or otherwise to require
Seller to exhaust any and all remedies against Buyer or any other person before
proceeding against Guarantor on the guaranty.
SALEM COMMUNICATIONS CORPORATION
By: /s/ Eric H. Halvorson
-------------------------
Eric H. Halvorson
Executive Vice President
40
<PAGE>
EXHIBIT 10.06.04.02
FIRST AMENDMENT
TO THE
ASSET PURCHASE AGREEMENT
WHK-AM - CLEVELAND, OHIO
This amendment ("Amendment") is dated as of this 23rd day of July, 1996 by and
between OmniAmerica Group ("Omni Group") and WHK License Partnership ("WHK LP")
(Omni Group and WHK LP shall be collectively be referred to herein as "Seller")
and Inspiration Media of Ohio, Inc. ("Buyer").
WHEREAS, pursuant to an Asset Purchase Agreement ("WHK Agreement") dated April
23, 1996, by and between Seller and Buyer, Buyer obtained the right to purchase
and acquire certain assets relating to radio station WHK-AM ("WHK"), Cleveland,
Ohio;
WHEREAS Buyer is a wholly owned subsidiary of Salem Communications Corporation
("Salem");
WHEREAS Common Ground Broadcasting, Inc., an Oregon corporation and wholly owned
subsidiary of Salem, is selling certain assets relating to radio station KDBX-FM
("KDBX"), Banks, Oregon;
WHEREAS Salem elects to exchange ("the Exchange") the assets of WHK, for purpose
of a tax-deferred exchange pursuant to IRC (S) 1031, with the assets of KDBX;
and,
WHEREAS, in order to effectuate the Exchange, it is necessary that the purchaser
named in the WHK Agreement be changed from "Inspiration Media of Ohio, Inc." to
"Common Ground Broadcasting, Inc."
NOW THEREFORE, Seller and Buyer agree as follows:
1. Any and all references to "Inspiration Media of Ohio, Inc." in the WHK
Agreement shall be replaced by "Common Ground Broadcasting, Inc."
2. Except as expressly provided herein, the terms and conditions of the
Agreement shall remain in full force and effect and unamended. In the event of a
conflict between this Amendment and the terms of the Agreement, the terms of
this Amendment shall control.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written.
"SELLER" "BUYER"
OMNIAMERICA COMMUNICATIONS, INC. INSPIRATION MEDIA OF OHIO, INC.
By: By: /s/ Eric H. Halvorson
------------------------ ------------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
WHK LICENSE PARTNERSHIP
By:
------------------------
Carl Hirsch
Chief Executive Officer
39
<PAGE>
EXHIBIT 10.06.04.03
SECOND AMENDMENT TO
ASSET PURCHASE AGREEMENT
This Second Amendment to Asset Purchase Agreement (the "Amendment") is
executed as of August 12, 1996, by and between OmniAmerica Group ("Omni"), WHK
License Partnership ("WHK LP") (Omni and WHK LP shall collectively be referred
to herein as "Seller"), and Inspiration Media of Ohio, Inc. ("Buyer").
WHEREAS, Seller and Buyer have executed an Asset Purchase Agreement, dated
April 23, 1996 (the "Agreement"), pertaining to the acquisition by Buyer of
substantially all of the assets of WHK-AM (Cleveland) (the "Station"); and
WHEREAS, Buyer and Seller desire to amend certain provisions of the
Agreement;
NOW, THEREFORE, for good and valuable consideration, including the
furtherance of the transactions contemplated by the Agreement, the parties agree
as follows:
1. Amendment to Section 8.1. Section 8.1 of the Agreement is hereby
------------------------
deleted in its entirety and replaced with the following:
8.1 TIME AND PLACE. The Closing shall take place at the offices of
--------------
Seller's counsel in Cleveland, Ohio, or at such other place as the parties
agree, but no later than January 17, 1997 if all conditions to closing have
been satisfied by that date (the "Closing Date"); provided, however, that
the Closing Date shall not occur until after the last to occur of the
following dates: (i) the date on which issuance of the FCC Order without
any Material Adverse condition has become a Final Action; and (ii) the date
on which the FCC's grant of Seller's application for renewal of the FCC
Licenses has become a Final Action; provided, however, that Buyer, at its
sole option, may elect to close at any time after the expiration of any
time period allowed for petitions to deny or other public comment with
respect to Seller's application for renewal of the FCC Licenses. The
parties agree to take all commercially reasonable actions to extend any
approvals by the FCC through the Closing Date.
2. Addition of Section 13.16. The following is hereby added as Section
-------------------------
13.16 of the Agreement:
13.16 LOCAL MARKETING AGREEMENT. If the parties enter into a local
-------------------------
marketing agreement for the operation of the Station by Buyer (the "LMA"),
Buyer shall not have any right or claim, including, without limitation, any
right to terminate this Agreement or any claim for liabilities, damages,
losses, costs or expenses, due to the inaccuracy of any representation or
warranty, the breach of any covenant, or the failure of any condition
resulting from (a) the operation of the Station by Buyer under
<PAGE>
the LMA or (b) Buyer's repairs, modifications, or maintenance to the
Station's broadcast facilities.
3. Addition of Section 13.17. The following is hereby added as Section
-------------------------
13.17 of the Agreement:
13.17 Access to Sale Assets; Waiver. Commencing on August 12, 1996,
-----------------------------
Buyer shall have access to the Station's broadcast facilities in order to
make certain repairs and modifications and conduct certain maintenance
thereto (collectively, the "Work") at Buyer's sole expense. In exchange for
this access, Buyer agrees to waive any right or claim, now existing or
hereafter arising, known or unknown, for liabilities, damages, losses,
costs or expenses due to the inaccuracy of any representation or warranty
by Seller, the breach of any covenant by Seller, or the failure of any
condition of Seller, in each case, relating to the condition of or the
engineering or technical aspects of the Tangible Personal Property or their
compliance with governmental (including FCC) law, rules, policies, or
regulations; provided, however, Buyer shall be entitled to assert claims to
the extent provided for in the Agreement in connection with casualty losses
occasioned by events other than those for which Buyer is required to
indemnify Seller pursuant to the immediately following sentence. Buyer will
indemnify and hold Seller and all officers, directors, agents, employees
and affiliates thereof harmless from and against any Losses arising in
connection with the Work, regardless of whether such Work is done prior to
or subsequent to August 12, 1996.
4. Common Ground Broadcasting, Inc.; Salem. Common Ground Broadcasting,
---------------------------------------
Inc., an Oregon corporation and wholly owned subsidiary of Salem Communications
Corporation ("Salem"), hereby assumes all obligations of Inspiration Media of
Ohio, Inc. under the Agreement. Salem consents to the First Amendment to the
Asset Purchase Agreement (the "First Amendment") and this Second Amendment and
hereby reaffirms its guaranty as provided in the Agreement.
5. Limited Effect. Except as provided in the First Amendment and this
--------------
Second Amendment, the Agreement remains unchanged and in full force and effect.
2
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment
to be duly executed and delivered as of date first above written.
"SELLER" "BUYER"
OMNIAMERICA GROUP COMMON GROUND
BROADCASTING, INC.
By: By: /s/ Eric H. Halvorson
------------------------ -----------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
WHK LICENSE PARTNERSHIP SALEM COMMUNICATIONS
CORPORATION
By: By: /s/ Eric H. Halvorson
----------------------- -----------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
3
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
duly executed and delivered as of date first above written.
"SELLER" "BUYER"
OMNIAMERICA GROUP COMMON GROUND
BROADCASTING, INC.
By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson
---------------------------- ----------------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
WHK LICENSE PARTNERSHIP SALEM COMMUNICATIONS
CORPORATION
By: /s/ Carl Hirsch By: /s/ Eric H. Halvorson
---------------------------- ----------------------------
Carl Hirsch Eric H. Halvorson
Chief Executive Officer Executive Vice President
<PAGE>
EXHIBIT 10.06.05
EXECUTION COPY
================================================================================
ASSET PURCHASE AGREEMENT by and between
INFINITY BROADCASTING CORPORATION OF DALLAS
AND
INSPIRATION MEDIA OF TEXAS, INC.
Dated as of September 30, 1996
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE 1 ASSETS TO BE CONVEYED............................................ 1
1.1. Closing.......................................................... 1
1.2. Transfer of KEWS Assets.......................................... 1
1.3. Excluded Assets.................................................. 2
ARTICLE 2 PURCHASE PRICE................................................... 2
2.1. Purchase Price................................................... 2
2.2. Payment of Cash Purchase Price................................... 3
2.3. Transfer of the KDFX Assets...................................... 3
2.4. Allocation....................................................... 4
ARTICLE 3 ASSUMPTION OF OBLIGATIONS; PRORATIONS ........................... 4
3.1. Assumption of Obligations........................................ 4
3.2. Limitation....................................................... 4
3.3. Proration of Expenses............................................ 5
3.4. Payment of Proration Items....................................... 5
ARTICLE 4 REPRESENTATIONS AND WARRANTIES COMMON TO BOTH
INFINITY AND SALEM.............................................. 6
4.1. Organization and Standing........................................ 6
4.2. Authorization and Binding Obligation............................. 6
4.3. Absence of Conflicting Agreements or Required Consents........... 6
4.5 Taxes............................................................ 7
4.6 Insolvency Proceedings........................................... 7
4.7. Broker's Fees.................................................... 7
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF INFINITY....................... 7
5.1. FCC Authorizations and Qualifications............................ 7
5.2. Title to and Condition of Personal Property...................... 8
5.3. Assumed Contracts; Real Estate Leases............................ 8
5.4. Compliance With Laws............................................. 9
5.5. Insurance........................................................ 10
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF SALEM ......................... 10
6.1. FCC Authorizations and Qualifications............................ 10
6.2. Title to and Condition of Personal Property...................... 10
6.3. Assumed Contracts; Real Estate Leases............................ 11
6.4. Compliance With Laws............................................. 11
6.5. Insurance........................................................ 12
ARTICLE 7 GOVERNMENTAL CONSENTS ........................................... 12
7.1. FCC Application.................................................. 12
7.2 Compliance with HSRA............................................. 13
7.3 Other Governmental Consents...................................... 13
ARTICLE 8 COVENANTS........................................................ 14
8.1. Conduct of Business.............................................. 14
8.2. Notification..................................................... 14
8.3. Access........................................................... 14
8.4. Third-Party Consents............................................. 15
8.5. Pre-Closing Efforts.............................................. 15
8.6. Risk of Loss..................................................... 15
8.7. Confidentiality.................................................. 16
8.7. Further Assurances............................................... 16
8.8 Covenant Not to Compete.......................................... 16
8.9 KDFX Transmitter Site Lease...................................... 16
ARTICLE 9 CONDITIONS PRECEDENT............................................. 16
9.1. To Salem's Obligations........................................... 16
9.2 To Infinity's Obligations........................................ 17
ARTICLE 10 DOCUMENTS TO BE DELIVERED AT THE CLOSING......................... 18
10.1. Documents to be Delivered by Infinity............................ 18
10.2. Documents to be Delivered by Salem............................... 18
ARTICLE 11 INDEMNIFICATION, SURVIVAL........................................ 19
11.1. Infinity's Indemnities........................................... 19
11.2. Salem's Indemnities.............................................. 20
11.3. Procedure for Indemnification.................................... 20
11.4. Limitations...................................................... 21
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
11.5. Survival of Representations, Warranties and Covenants............ 22
11.6. Sole Remedy...................................................... 22
ARTICLE 12 TERMINATION RIGHTS............................................... 22
12.1. Termination...................................................... 22
12.2. Effect of Termination............................................ 23
ARTICLE 13 REMEDIES LIPON DEFAULT; SPECIFIC PERFORMANCE..................... 23
13.1. Default by Infinity; Specific Performance........................ 23
13.2. Default by Salem; Liquidated Damages............................. 23
ARTICLE 14 OTHER PROVISIONS................................................. 24
14.1. Transfer Taxes and Expenses...................................... 24
14.2. Benefit and Assignment........................................... 24
14.3. Entire Agreement; Schedules; Amendment; Waiver................... 24
14.4. Headings......................................................... 24
14.5. Computation of Time.............................................. 25
14.6. Governing Law; Waiver of Jury Trial.............................. 25
14.7. Attorneys' Fees.................................................. 25
14.8. Severability..................................................... 25
14.9. Notices.......................................................... 25
14.10. Counterparts..................................................... 26
ARTICLE 15 DEFINITIONS...................................................... 26
15.1. Defined Terms.................................................... 26
15.2. Miscellaneous Terms.............................................. 30
</TABLE>
iii
<PAGE>
EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Form of Covenant Not to Compete
Exhibit C Form of Amended KDFX Transmitter Site Lease
SCHEDULES
Schedule 1.2(a) KEWS FCC Licenses
Schedule 1.2(c) KEWS Main Studio Equipment
Schedule 1.2(d) KEWS Assumed Contracts
Schedule 2.3(a)(i) KDFX FCC Licenses
Schedule 2.3(a)(iii) KDFX Main Studio Equipment
Schedule 2.3(a)(iv) KDFX Assumed Contracts
Schedule 4.3(a) Infinity's Required Consents
Schedule 4.3(b) Salem's Required Consents
Schedule 5.1 Infinity's FCC Qualifications Exceptions
iv
<PAGE>
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement"), made as of the 30th day of
September 1996, is between Infinity Broadcasting Corporation of Dallas, a
Delaware corporation ("Infinity"), and Inspiration Media of Texas, Inc., a Texas
corporation ("Salem").
Infinity is the licensee of station KEWS-FM, 94.9 mHz, Arlington, Texas
("KEWS"). Salem is the licensee of station KDFX(AM), 1190 kHz, Dallas, Texas
("KDFX").
Salem has expressed an interest in acquiring certain assets used in the
operation of KEWS, including the KEWS FCC Licenses (as defined below). Infinity
has expressed an interest in acquiring certain assets used in the operation of
KDFX, including the KDFX FCC Licenses (as defined below). Infinity has agreed to
sell the KEWS Assets (as defined below) to Salem in return for the payment of
$32,000,000 and the assignment of the KDFX Assets (as defined below).
Definitions of capitalized terms in this Agreement are set forth in SECTION
15.1.
The assignment of KEWS FCC Licenses to Salem and the assignment of the KDFX
FCC Licenses to Infinity require the prior consent of the Federal Communications
Commission ("FCC").
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
---------------------
1.1. CLOSING. Subject to SECTION 12.1 (Termination Rights), the closing (the
"Closing") of the sale and purchase of the KEWS Assets and the KDFX Assets shall
take place in the offices of Leventhal, Senter & Lerman, 2000 K Street, N.W.,
Washington, D.C., at 10:00 a.m., local time, on the fifth (5th) business day
following the satisfaction or waiver of the conditions set forth in SECTIONS
9.1(b) and 9.2(b) (FCC Consent), but in no event prior to December 2, 1996, or
at such other place, time or date as Salem and Infinity may agree in writing.
1.2. TRANSFER OF KEWS ASSETS. At the Closing, Infinity shall sell, assign,
transfer and convey to Salem, and Salem shall purchase from Infinity, the
following assets (the "KEWS Assets"):
(a) all of Infinity's rights in and to the FCC licenses, permits and
other authorizations, including any temporary waiver or special temporary
authorization, issued to or held by Infinity exclusively in the operation
of KEWS, including any pending applications therefor, all as set forth in
Schedule 1.2(a) (the "KEWS FCC Licenses").
---------------
(b) all of Infinity's right, title and interest in the equipment, spare
parts and other tangible personal property located at the KEWS transmitter
site and used or held for use exclusively in the operation of KEWS (the
"KEWS Transmitter Site Equipment");
<PAGE>
(c) all of Infinity's right, title and interest in the equipment, spare
parts and other tangible personal property listed on Schedule 1.2(c) (the
---------------
"KEWS Main Studio Equipment" and together with the KEWS Transmitter Site
Equipment, the "KEWS Personal Property");
(d) all of Infinity's rights under and interest in, to the extent
assignable, the leases set forth contained in Schedule 1.2(d) (the "KEWS
---------------
Assumed Contracts");
(e) KEWS's public inspection file, filings with the FCC related to KEWS,
executed copies of all written KEWS Assumed Contracts, and such technical
information, engineering data, rights under manufacturers' warranties as
exist at Closing and relate exclusively to the KEWS Personal Property being
conveyed hereunder.
The KEWS Assets shall be delivered without any representation or warranty by
Infinity except as expressly set forth in this Agreement, and Salem acknowledges
that it has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth in ARTICLES 4
AND 5 hereof. The KEWS Assets shall be conveyed to Salem free and clear of all
Liens, except as otherwise expressly provided in this Agreement.
1.3. EXCLUDED ASSETS. Except as set forth in SECTION 1.2, the KEWS Assets
shall not include any properties, assets, privileges, rights, interests and
claims, real and personal, tangible and intangible, of every type and
description, wherever located, of Infinity or any of its affiliates, including
all right, title and interest in the call sign "KEWS," which Salem agrees
Infinity may use on any other station the Dallas/Ft. Worth market, including
station KDFX after it has been acquired by Infinity.
ARTICLE 2
PURCHASE PRICE
--------------
2.1. PURCHASE PRICE.
(a) The aggregate purchase price to be paid by Salem for the KEWS Assets (the
"Purchase Price") shall be (i) $32,100,000 (the "Cash Purchase Price") plus (ii)
the assignment of the KDFX Assets as provided in SECTION 2.3 below.
(b) The parties stipulate that the Purchase Price is not based in any way
upon the ratings or financial performance of either KEWS or KDFX. Neither
station is being sold as a going concern, and the assets being conveyed do not
include any goodwill or intellectual property. Therefore, neither Infinity nor
Salem makes any representation or warranty as to ratings or cash flow, and
neither Salem's nor Infinity's obligations under this Agreement are conditioned
in any way on the financial performance between the date of this Agreement and
the Closing of the station to be acquired.
2
<PAGE>
2.2. PAYMENT OF CASH PURCHASE PRICE. Salem shall pay the Cash Purchase Price
as follows:
(a) Simultaneous with the execution of this Agreement, Salem shall
deposit $1,600,000 with the Escrow Agent to be held and distributed
pursuant to the Escrow Agreement.
(b) At the Closing, Salem shall pay $30,500,000 by wire transfer prior
to 3:00 p.m., local Washington, D.C. time, of immediately available federal
funds to an account at a bank or financial institution pursuant to wire
instructions that Infinity shall deliver to Salem at least one (1) business
day prior to the Closing Date.
2.3. TRANSFER OF THE KDFX ASSETS.
(a) At the Closing, Salem shall sell, assign, transfer and convey to
Infinity, and Infinity shall acquire from Salem, the following assets (the
"KDFX Assets"):
(i) all of Salem's rights in and to the FCC licenses, permits and other
authorizations, including any temporary waiver or special temporary
authorization, issued to or held by Salem exclusively in the operation of
KDFX, including any pending applications therefor, all as set forth in
Schedule 2.3(i) (the "KDFX FCC Licenses").
---------------
(ii) all of Salem's right, title and interest in the equipment, spare
parts and other tangible personal property located at the KDFX transmitter
site and used or held for use exclusively in the operation of KDFX (the
"KDFX Transmitter Site Equipment");
(iii) all of Salem's right, title and interest in the equipment, spare
parts and other tangible personal property included on Schedule 2.3(a)(iii)
--------------------
(the "KDFX Main Studio Equipment" and together with the KDFX Transmitter
Site Equipment, the "KDFX Personal Property");
(iv) subject to the requirement of SECTION 8.9 of this Agreement, all of
Salem's rights under and interest in, to the extent assignable, the leases
set forth in Schedule 2.3(a)(iv) (the "KDFX Assumed Contracts");
-------------------
(v) KDFX's public inspection file, filings with the FCC related to KDFX,
executed copies of all written KDFX Assumed Contracts, and such technical
information, engineering data, rights under manufacturers' warranties as
exist at Closing and relate exclusively to the KDFX Personal Property being
conveyed hereunder.
3
<PAGE>
The KDFX Assets shall be delivered without any representation or warranty by
Salem except as expressly set forth in this Agreement, and Infinity acknowledges
that it has not relied on or been induced to enter into this Agreement by any
representation or warranty other than those expressly set forth in ARTICLES 4
AND 6 hereof. The KDFX Assets shall be conveyed to Infinity free and clear of
all Liens, except as otherwise expressly provided in this Agreement.
(b) Except as set forth in this SECTION 2.3, the KDFX Assets shall not
include any properties, assets, privileges, rights, interests and claims, real
and personal, tangible and intangible, of every type and description, wherever
located, of Salem or any of its affiliates, including all right, title and
interest in the call sign "KDFX," which Infinity agrees Salem may use on any
other station the Dallas/Ft. Worth market, including station KEWS after it has
been acquired by Salem.
2.4. ALLOCATION. If Salem and Infinity are unable to agree between the date
hereof and the Closing on an allocation of the Purchase Price for income tax
purposes, Infinity shall arrange for an appraisal of the KDFX Assets and the
KEWS Assets. Any such appraisal shall be completed within one hundred eighty
(180) days after the Closing, and based upon such appraisal, if prepared,
Infinity shall prepare an initial draft of IRS Form 8594. Infinity shall forward
such form to Salem for its approval. If the parties reach an agreement on the
contents of IRS Form 8594, Salem and Infinity shall each file the IRS Form 8594
finally agreed upon by the parties with their respective federal income tax
return for the tax year in which the Closing occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS; PRORATIONS
-------------------------------------
3.1. ASSUMPTION OF OBLIGATIONS.
(a) At the Closing, Salem shall assume and undertake to pay, satisfy or
discharge (i) all liabilities, obligations and commitments of Infinity under the
KEWS Assumed Contracts, arising or accruing after 12:01 a.m., local Dallas time,
on the Closing Date (the "Effective Time"), and (ii) all liabilities,
obligations and commitments arising from or relating to the ownership of the
KEWS Assets after the Effective Time.
(b) At the Closing, Infinity shall assume and undertake to pay, satisfy or
discharge (i) all liabilities, obligations and commitments of Salem under the
KDFX Assumed Contracts, arising or accruing after the Effective Time, subject to
the requirement of SECTION 8.9 of this Agreement, and (ii) all liabilities,
obligations and commitments arising from or relating to the ownership of the
KDFX Assets after the Effective Time.
3.2. LIMITATION. Except as set forth in Section 3.1, Infinity and Salem
expressly do not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by
4
<PAGE>
reason of the transactions contemplated hereby, any liabilities, obligations or
commitments of the other of any nature whatsoever.
3.3. PRORATION OF EXPENSES. All expenses arising from the operation of the
KEWS Assets and the KDFX Assets shall be prorated between Infinity and Salem as
of the Effective Time in accordance with GAAP. Such prorations shall be based
upon the principle that (a) Infinity shall be responsible for all liabilities
and obligations accruing in connection with the ownership of the KEWS Assets
until the Effective Time, and Salem shall (subject to SECTION 3.2 above) be
responsible for such liabilities and obligations accruing thereafter and (b)
Salem shall be responsible for all liabilities and obligations accruing in
connection with the ownership of the KDFX Assets until the Effective Time, and
Infinity shall (subject to SECTION 3.2 above) be responsible for such
liabilities and obligations accruing thereafter. Such prorations shall include,
without limitation, all ad valorem and other property taxes (but excluding
taxes arising by reason of the transfers of the KEWS Assets and the KDFX Assets
as contemplated hereby, which shall be paid as set forth in SECTION 14.1 of this
Agreement), deposits, utility expenses, liabilities and obligations under the
KEWS Assumed Contracts and the KDFX Assumed Contracts, rents and similar prepaid
and deferred items and all other expenses attributable to the ownership and
operation of the KEWS Assets and the KDFX Assets. Any real estate taxes shall be
apportioned on the basis of the number of days that each party owned such real
property during the relevant tax year.
3.4. PAYMENT OF PRORATION ITEMS. Three (3) business days prior to the
Closing, Infinity shall deliver to Salem a preliminary list of all items to be
prorated pursuant to SECTION 3.3 and, to the extent feasible, such prorations
shall be made at the Closing. In the event Infinity and Salem do not reach a
final agreement on such prorations at the Closing, Salem shall deliver to
Infinity a schedule of its proposed prorations (which shall set forth in
reasonable detail the basis for those determinations) (the "Proration Schedule")
no later than forty-five (45) days after the Closing Date. The Proration
Schedule shall be conclusive and binding upon Infinity unless Infinity provides
Salem with written notice of objection (the "Notice of Disagreement") within
thirty (30) days after Infinity's receipt of the Proration Schedule, which
notice shall state the prorations of expenses proposed by Infinity (the
"Infinity's Proration Amount"). Salem shall have twenty (20) days from receipt
of a Notice of Disagreement to accept or reject Infinity's Proration Amount. If
Salem rejects Infinity's Proration Amount, the dispute shall be submitted within
ten (10) days to the Dallas office of Arthur Andersen (the "Referee") for
resolution of the dispute, such resolution to be made within thirty (30) days
after submission to the Referee and to be final, conclusive and binding on
Infinity and Salem. Salem and Infinity agree to share equally the cost and
expenses of the Referee, but each party shall bear its own legal and other
expenses, if any. Payment by Salem or Infinity, as the case may be, for the
proration amounts determined pursuant to this SECTION 3.4 shall be due fifteen
(15) days after the last to occur of (a) Infinity's acceptance of the Proration
Schedule or failure to give Salem a timely Notice of Disagreement; (b) Salem's
acceptance of Infinity's Proration Amount or failure to reject Infinity's
Proration Amount
5
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within twenty (20) days of receipt of a Notice of Disagreement; and (c) notice
to Infinity and Salem of the resolution of the disputed amount by the Referee.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
COMMON TO BOTH INFINITY AND SALEM
---------------------------------
Infinity represents and warrants to Salem, and Salem represents and warrants
to Infinity, as follows (the party making the representations and warranties
being referred to as the "Representing Party"):
4.1. ORGANIZATION AND STANDING. The Representing Party (a) is a corporation
duly formed, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, (b) if necessary, is qualified to do business
as a foreign corporation and is in good standing in the State of Texas and (c)
has all necessary corporate power and authority to own, lease and operate the
assets it is conveying hereunder and to carry on its business as now conducted.
4.2. AUTHORIZATION AND BINDING OBLIGATION. The Representing Party has the
full right and authority to execute and deliver this Agreement, to perform its
obligations hereunder, and to consummate the transactions provided for herein.
All required corporate action with respect to the Representing Party has been
taken to approve this Agreement and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Representing Party and
constitutes its valid and binding obligation, enforceable against the
Representing Party in accordance with its terms.
4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. Except as set
forth in ARTICLE 7 and in Schedules 4.3 (a) and (b) hereto, the execution,
--------- -------------------------
delivery and performance of this Agreement by the Representing Party: (a) do not
and will not violate any provisions of the Representing Party's organizational
documents; (b) do not and will not require the consent or approval of or any
filing with any third party or governmental authority; (c) do not and will not
violate any applicable law, judgment, order, injunction, decree, rule,
regulation or ruling of any governmental authority; and (d) do not and will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination or acceleration of or result
in a breach of the terms, conditions or provisions of, or constitute a default
under any agreement, lease, instrument, license or permit to which the
Representing Party is now subject.
4.4. NO LITIGATION. There are (a) no unsatisfied judgments, awards, orders,
writs, injunctions, arbitration decisions or decrees outstanding, and (b) no
claims, actions, suits, investigations or proceedings pending or, to the best of
the Representing Party's knowledge, threatened against or affecting the
Representing Party's assets to be conveyed hereunder, in
6
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any court or before any governmental authority or arbitrator that (if adversely
determined, in the case of pending or threatened matters) would impair in any
material respect the ability of the Representing Party to perform its
obligations hereunder or would impair or hinder in any material respect the
ability or right of the Acquiring Party to operate the station to be conveyed to
it by the Representing Party after the Closing in the manner heretofore operated
by the Representing Party.
4.5 TAXES. There are no tax audits or other governmental proceedings pending
or, to the best of the Representing Party's knowledge, threatened that could
result in a Lien on the assets being conveyed by the Representing Party
hereunder or the imposition of any tax liability on the Acquiring Party and, to
the best of the Representing Party's knowledge, no event has occurred that
could impose on the applicable Acquiring Party any liability for any taxes,
penalties or interest due or to become due from the Representing Party.
4.6 INSOLVENCY PROCEEDINGS. Neither the Representing Party nor any of the
Representing Party's assets to be conveyed hereunder are the subject of any
pending insolvency proceedings of any character. The Representing Party has
neither made an assignment for the benefit of creditors nor taken any action
with a view to the institution of any such insolvency proceedings.
4.7. BROKER'S FEES. Except for the brokerage fee payable to Gary Stevens &
Co., neither the Representing Party nor any person or entity acting on its
behalf has agreed to pay a commission, finder's fee or similar payment in
connection with this Agreement or any matter related hereto to any person or
entity, and no person or entity is entitled to any such payment from the
Representing Party in connection with the transactions contemplated by this
Agreement. The parties agree that Infinity shall pay $100,000 and Salem shall
pay the balance of any brokerage fee payable to Gary Stevens & Co.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF INFINITY
------------------------------------------
Infinity represents and warrants to Salem as follows:
5.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 1.2(a) contains a true and complete list of the KEWS FCC
---------------
Licenses, and there are no other licenses, permits or other authorizations from
the FCC required for the lawful operation of KEWS in the manner now operated.
The KEWS FCC Licenses are in full force and effect. All required FCC regulatory
fees with respect to the KEWS FCC Licenses have been paid. The KEWS FCC Licenses
have been issued for the full terms customarily issued to a radio broadcast
station in the State of Texas, and the KEWS FCC Licenses are not subject to any
condition except for conditions shown on the face of the
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KEWS FCC Licenses, applicable to radio broadcast licenses generally or otherwise
disclosed in Schedule 1.2(a). Except as disclosed in Schedule 1.2(a), KEWS is
---------------
being operated at full authorized power in material compliance with the terms
and conditions of the KEWS FCC Licenses and the rules and regulations of the
FCC.
(b) Except as set forth in Schedule 1.2(a), to Infinity's knowledge, there
---------------
are no applications, petitions, complaints, proceedings or other actions pending
or threatened before the FCC relating to KEWS, other than proceedings affecting
the radio broadcasting industry generally.
(c) Except as disclosed on Schedule 5.1, to the best of its knowledge,
------------
Infinity is legally, financially and otherwise qualified under the
Communications Act of 1934, as amended, and the rules and regulations of the FCC
(together, the "Act"), to become the assignee of the KDFX FCC Licenses. Infinity
has no reason to believe that the FCC Applications might be challenged or might
not be granted by the FCC in the ordinary course.
5.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Infinity
will have good title to the KEWS Personal Property free and clear of all Liens.
At the Closing, the KEWS Personal Property will be in good operating condition
and repair (ordinary wear and tear excepted), will be performing satisfactory
and will be in material compliance with the rules and regulations of the FCC and
all other applicable federal, state and local statues, ordinances, rules and
regulations.
5.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Infinity has delivered to Salem true and complete copies of all of the
KEWS Assumed Contracts. At the Closing, all KEWS Assumed Contracts will be
valid, binding and enforceable by Infinity in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Infinity will have complied in all
material respects with all KEWS Assumed Contracts. To Infinity's knowledge, no
other contracting party will be in material default under any of the KEWS
Assumed Contracts as of the Closing. Except as set forth in Schedule 4.3(a), as
---------------
of the Closing, Infinity will have full legal power and authority to assign its
rights under the KEWS Assumed Contracts to Salem in accordance with this
Agreement on terms and conditions no less favorable than those in effect on the
date hereof, and such assignment will not require the consent of any third party
or affect the validity, enforceability and continuity of any of the KEWS Assumed
Contracts.
(b) So long as Infinity fulfills its obligations under any real property
lease set forth on Schedule 1.2(d), Infinity has enforceable rights to
---------------
nondisturbance and quiet enjoyment, and no third party holds any interest in the
leased premises (the "KEWS Real Property") with the right to foreclose upon
Infinity's leasehold or subleasehold interest. All of KEWS's transmitting
antenna, antenna towers, guy anchors, transmitter buildings and related
8
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improvements are located entirely on the KEWS Real Property. Infinity has no
knowledge of any pending, threatened or contemplated action to take by eminent
domain or otherwise to condemn any part of the KEWS Real Property.
5.4. COMPLIANCE WITH LAWS. Infinity has complied in all material respects
with, and is not in violation of any federal, state or local laws, regulations
or orders relating to the operation of KEWS. Without limiting the generality of
the foregoing:
(a) The KEWS transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of the
KEWS FCC Licenses and all underlying construction permits, and the rules,
regulations and policies of the FCC, including, without limitation all
regulations concerning equipment authorization and human exposure to radio
frequency radiation.
(b) All ownership reports, employment reports and other documents
required to be filed by Infinity with the FCC have been so filed. Such
items as are required to be placed in KEWS's local public inspection files
have been placed in such files. All proofs of performance and measurements
that are required to be made by Infinity with respect to KEWS's
transmission facilities have been completed and filed at KEWS. All
information contained in the foregoing documents is true, complete and
accurate in all material respects.
(c) To the best of Infinity's knowledge, (a) no Hazardous Substance
(i) is or has been used, treated, stored, disposed of, released, spilled,
generated, manufactured, transported or otherwise handled on KEWS Real
Property, (ii) has been spilled, released or disposed of on property
adjacent to the KEWS Real Property, or (iii) has otherwise come to be
located on or under the KEWS Real Property, (b) the KEWS Real Property and
all operations on the KEWS Real Property are in compliance with all
Environmental Laws, and (c) Infinity has obtained all environmental, health
and safety permits necessary for the operation of KEWS, and all such
permits are in full force and effect, and Infinity is in compliance with
the terms and conditions of all such permits. No outstanding liens have
been placed on the KEWS Real Property under any Environmental Laws.
Infinity has not received any notice, and is not aware, of any
administrative or judicial investigations, proceedings or actions with
respect to violations, alleged or proven, of Environmental Laws by Infinity
or any tenants of Infinity, or otherwise involving the KEWS Real Property
or the operations conducted on the KEWS Real Property. The KEWS Real
Property and all operations conducted on the KEWS Real Property are in
compliance with all federal and state statutes and regulations relating to
Asbestos, and to the best of Infinity's knowledge, no Asbestos-Containing
Material is present in any of the improvements on the KEWS Real Property or
is otherwise located on the KEWS Real Property. To the best of Infinity's
knowledge, there are no underground storage tanks, whether in use or
closed, on or under the KEWS Real Property, and no PCB is
9
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present on the KEWS Real Property. No PCB is used in the KEWS Personal
Property.
5.5. INSURANCE. The KEWS Assets are, and will be until the Closing Date, in
the reasonable judgment of Infinity, adequately insured.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF SALEM
---------------------------------------
Salem represents and warrants to Infinity as follows:
6.1. FCC AUTHORIZATIONS AND QUALIFICATIONS.
(a) Schedule 2.3(a)(i) contains a true and complete list of the KDFX FCC
------------------
Licenses, and there are no other licenses, permits or other authorizations from
the FCC required for the lawful operation of KDFX in the manner now operated.
The KDFX FCC Licenses are in full force and effect. All required FCC regulatory
fees with respect to the KDFX FCC Licenses have been paid. The KDFX FCC Licenses
have been issued for the full terms customarily issued to a radio broadcast
station in the State of Texas, and the KDFX FCC Licenses are not subject to any
condition except for conditions shown on the face of the KDFX FCC Licenses,
applicable to radio broadcast licenses generally or otherwise disclosed in
Schedule 2.3(a)(i). Except as disclosed in Schedule 2.3(a)(i), KDFX is being
- ------------------- -------------------
operated at full authorized power in material compliance with the terms and
conditions of the KDFX FCC Licenses and the rules and regulations of the FCC.
(b) Except as set forth in Schedule 2.3(a)(i), to Salem's knowledge, there
-------------------
are no applications, petitions, complaints, proceedings or other actions pending
or threatened before the FCC relating to KDFX, other than proceedings affecting
the radio broadcasting industry generally.
(c) To the best of its knowledge, Salem is legally, financially and otherwise
qualified under the Act to be the assignee of the KEWS FCC Licenses. Salem has
no reason to believe that the FCC Applications might be challenged or might not
be granted by the FCC in the ordinary course.
6.2. TITLE TO AND CONDITION OF PERSONAL PROPERTY. At the Closing, Salem will
have good title to the KDFX Personal Property free and clear of all Liens. At
the Closing, the KDFX Personal Property will be in good operating condition and
repair (ordinary wear and tear excepted), will be performing satisfactory and
will be in material compliance with the rules and regulations of the FCC and all
other applicable federal, state and local statues, ordinances, rules and
regulations.
10
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6.3. ASSUMED CONTRACTS; REAL ESTATE LEASES.
(a) Salem has delivered to Infinity true and complete copies of all of the
KDFX Assumed Contracts. At the Closing, all KDFX Assumed Contracts will be
valid, binding and enforceable by Salem in accordance with their respective
terms, except as limited by laws affecting creditors' rights or equitable
principles generally. At the Closing, Salem will have complied in all material
respects with all KDFX Assumed Contracts. To Salem's knowledge, no other
contracting party will be in material default under any of the KDFX Assumed
Contracts as of the Closing. Except as set forth in Schedule 4.3(b), as of the
----------------
Closing, Salem will have full legal power and authority to assign its rights
under the KDFX Assumed Contracts to Infinity in accordance with this Agreement
on terms and conditions no less favorable than those in effect on the date
hereof, and such assignment will not require the consent of any third party or
affect the validity, enforceability and continuity of any of the KDFX Assumed
Contracts.
(b) so long as Salem fulfills its obligations under any real property lease
set forth on Schedule 2.3(a)(iv), Salem has enforceable rights to nondisturbance
-------------------
and quiet enjoyment, and no third party holds any interest in the leased
premises (the "KDFX Real Property") with the right to foreclose upon Salem's
leasehold or subleasehold interest. All of KDFX's transmitting towers, ground
radials, guy anchors, transmitter buildings and related improvements are located
entirely on the KDFX Real Property. Salem has no knowledge of any pending,
threatened or contemplated action to take by eminent domain or otherwise to
condemn any part of the KDFX Real Property.
6.4. COMPLIANCE WITH LAWS. Salem has complied in all material respects with,
and is not in violation of any federal, state or local laws, regulations or
orders relating to the operation of KDFX. Without limiting the generality of the
foregoing:
(a) The KDFX transmitting and other equipment to be conveyed
hereunder is operating in accordance with the terms and conditions of the
KDFX FCC Licenses and all underlying construction permits, and the rules,
regulations and policies of the FCC, including, without limitation all
regulations concerning equipment authorization and human exposure to radio
frequency radiation.
(b) All ownership reports, employment reports and other documents
required to be filed by Salem with the FCC have been so filed. Such items
as are required to be placed in KDFX's local public inspection files have
been placed in such files. All proofs of performance and measurements that
are required to be made by Salem with respect to KDFX's transmission
facilities have been completed and filed at KDFX. All information contained
in the foregoing documents is true, complete and accurate in all material
respects.
11
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(c) To the best of Salem's knowledge, (a) no Hazardous Substance (i)
is or has been used, treated, stored, disposed of, released, spilled,
generated, manufactured, transported or otherwise handled on KDFX Real
Property, (ii) has been spilled, released or disposed of on property
adjacent to the KDFX Real Property, or (iii) has otherwise come to be
located on or under the KDFX Real Property, (b) the KDFX Real Property and
all operations on the KDFX Real Property are in compliance with all
Environmental Laws, and (c) Salem has obtained all environmental, health
and safety permits necessary for the operation of KDFX, and all such
permits are in full force and effect, and Salem is in compliance with the
terms and conditions of all such permits. No outstanding liens have been
placed on the KDFX Real Property under any Environmental Laws. Salem has
not received any notice, and is not aware, of any administrative or
judicial investigations, proceedings or actions with respect to violations,
alleged or proven, of Environmental Laws by Salem or any tenants of Salem,
or otherwise involving the KDFX Real Property or the operations conducted
on the KDFX Real Property. The KDFX Real Property and all operations
conducted on the KDFX Real Property are in compliance with all federal and
state statutes and regulations relating to Asbestos, and to the best of
Salem's knowledge, no Asbestos-Containing Material is present in any of the
improvements on the KDFX Real Property or is otherwise located on the KDFX
Real Property. To the best of Salem's knowledge, there are no underground
storage tanks, whether in use or closed, on or under the KDFX Real
Property, and no PCB is present on the KDFX Real Property. No PCB is used
in the KDFX Personal Property.
6.5. INSURANCE. The KDFX Assets are, and will be until the Closing Date, in
the reasonable judgment of Salem, adequately insured.
ARTICLE 7
GOVERNMENTAL CONSENTS
---------------------
7.1. FCC Application.
(a) The assignments of the KEWS FCC Licenses and the KDFX FCC Licenses as
contemplated by this Agreement are subject to the prior consent and approval of
the FCC. Between the date of this Agreement and the Closing, Salem shall not
directly or indirectly, control the operation of KEWS, and Infinity shall not
directly or indirectly, control the operation of KDFX.
(b) No later than five (5) business days after the date of this Agreement,
Salem and Infinity shall each prepare and jointly file complete and grantable
applications requesting the FCC's consent to the assignment of the KEWS FCC
Licenses to Salem and the assignment of KDFX FCC Licenses to Infinity pursuant
to this Agreement (the "FCC
12
<PAGE>
Applications"). Infinity and Salem shall thereafter prosecute the FCC
Applications in good faith and with all reasonable diligence and otherwise use
their best efforts to obtain the grant of the FCC Applications as expeditiously
as practicable; provided, however, that neither Infinity nor Salem shall have
any obligation to satisfy any complainant or the FCC by taking any steps which
would have a material adverse effect upon Infinity or Salem or upon any
affiliated entity, but neither the expense nor inconvenience to a party of
defending against a complainant or an inquiry by the FCC shall be considered a
material adverse effect on such party. If the FCC Consent to either of the FCC
Applications imposes any condition on any party hereto, such party shall use its
best efforts to comply with such condition; provided, however, that no party
shall be required to comply with any condition that would have a material
adverse effect upon it or any affiliated entity. If reconsideration or judicial
review is sought with respect to one of the FCC Consents, the party or parties
affected shall vigorously oppose such efforts for reconsideration or judicial
review; provided, however, that nothing herein shall be construed to limit
either party's right to terminate this Agreement pursuant to ARTICLE 12
(Termination Rights).
(c) All FCC filing or grant fees shall be borne equally by Salem and
Infinity. Each party shall otherwise bear its own costs and expenses (including
the fees and disbursements of its counsel) in connection with the preparation of
the portion of the FCC Applications to be prepared by it and in connection with
the processing and defense of such applications.
7.2 COMPLIANCE WITH HSRA. Each party shall make or cause to be made in a
timely fashion, and in any event within ten (10) business days following the
date of this Agreement, all filings which are required in connection with the
transactions contemplated hereby under the HSRA, and shall furnish to the other
party all information that the other reasonably requests in connection with such
filings. The transfer of the KEWS Assets hereunder is conditioned upon the
expiration of the applicable waiting period under the HSRA without the
institution or threat of any action with respect to the consummation of the
transactions contemplated hereunder. Salem and Infinity shall split the cost of
any HSRA filing fees. Each party shall otherwise bear its own costs and expenses
(including the fees and disbursements of its counsel) in connection with the
preparation of any HSRA filing to be prepared by it and in connection with the
prosecution and defense of that filing.
7.3 OTHER GOVERNMENTAL CONSENTS. Promptly following the execution of this
Agreement, the parties shall prepare and file with the appropriate governmental
authorities any other requests for approval or waiver that are required from
such governmental authorities in connection with the transactions contemplated
hereby and shall diligently and expeditiously prosecute, and shall cooperate
fully with each other in the prosecution of, such requests for approval or
waiver and all proceedings necessary to secure such approvals and waivers. Each
party shall bear its own costs and expenses in connection with the preparation
of any filings, documents or requests to be prepared by it in order to obtain
such
13
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governmental consents, approvals or waivers and in connection with any
prosecution or defense by it of such filings, documents or requests.
ARTICLE 8
COVENANTS
---------
8.1. CONDUCT OF BUSINESS. Between the date of this Agreement and the Closing,
Infinity, with respect to KEWS, and Salem, with respect to KDFX, shall, except
as expressly permitted by this Agreement or with the prior written consent of
the other:
(a) comply in all material respects with all laws and contractual
obligations applicable to such station or to the conduct of the business of
such station;
(b) perform all material obligations relating to the business of such
station;
(c) refrain from selling, assigning, leasing or otherwise transferring
or disposing of any of the KEWS Assets or the KDFX Assets, as the case may
be, except for assets consumed or disposed of in the ordinary course of
business;
(d) maintain the KEWS Assets or the KDFX Assets, as the case may be, in
customary repair, maintenance and condition, replace all items of equipment
at time intervals consistent with prior practice, and repair or replace
(subject to SECTION 8.6 (Risk of Loss)) any asset that may be damaged or
destroyed with items of equal or greater value and utility unless Infinity
or Salem, as the case may be, determines in good faith that such a repair
or replacement is not necessary or useful for the continued operation of
such station; and
(e) not modify the KEWS Assumed Contracts or the KDFX Assumed Contracts,
as amended through the date of this Agreement.
8.2. NOTIFICATION. Between the date of this Agreement and the Closing,
Infinity and Salem shall each promptly notify the other of (a) any pending or,
to its knowledge, threatened litigation, arbitration or administrative
proceeding that seeks to revoke, cancel, rescind, modify or fail to renew in the
ordinary course any of the KEWS FCC Licenses or the KDFX FCC Licenses, as the
case may be, or that challenges the transactions contemplated hereby, including
any challenges to the FCC Applications; (b) the issuance of any order to show
cause, notice of violation, notice of apparent liability or notice of forfeiture
with respect to KEWS or KDFX; or (c) the submission, to such party's knowledge,
of any material complaint against or with respect to KEWS or KDFX.
8.3. ACCESS. Between the date hereof and the Closing, Infinity and Salem
shall each give, upon prior reasonable notice, the other or it representatives
(including consultants
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and advisors) reasonable access to the KEWS Assets or the KDFX Assets as
applicable. It is expressly understood that, pursuant to this SECTION 8.3, the
Acquiring Party, at its sole expense, shall be entitled to make such engineering
and other inspections of the KEWS Assets or the KDFX Assets, as applicable, as
it may desire, so long as such inspection does not unreasonably interfere with
the operation of such station in the conveying party's reasonable judgment.
8.4. THIRD-PARTY CONSENTS. Between the date of this Agreement and the
Closing, each party shall use reasonable efforts to obtain the consent of any
third party necessary for the assignment of any of the KEWS Assumed Contracts or
KDFX Assumed Contracts; provided, that neither party shall be obligated to pay
any money to obtain such consent. In the event a consent or waiver required with
respect to the assignment of any of the KEWS Assumed Contracts or the KDFX
Assumed Contracts has not been obtained on or before the Closing, Infinity or
Salem, as the case may be, shall use reasonable efforts to provide the other
with the benefits of any such assumed contract (including, without limitation,
permitting such other party to enforce any rights of Infinity or Salem under
such assumed contract), and Salem or Infinity shall, to the extent Salem or
Infinity, as the case may be, is provided with the benefits of such assumed
contract, perform all obligations of the other party thereunder.
8.5. PRE-CLOSING EFFORTS. Between the date of this Agreement and the Closing,
each party shall use its reasonable efforts to cause the fulfillment at the
earliest practicable date of all of the conditions to the obligations of the
other party to consummate the sale and purchase under this Agreement. Neither
party shall take any action which is materially inconsistent with its
obligations under this Agreement or that would materially hinder or delay the
consummation of the transactions contemplated by this Agreement. In particular,
neither party shall take any action that would result in its disqualification to
hold the KEWS FCC Licenses or the KDFX FCC Licenses, as the case may be, or in
any way delay grant of the FCC Applications or consummation of the transactions
contemplated by this Agreement. Should either party become aware of any such
fact or circumstance, such party shall promptly inform the other.
8.6. RISK OF LOSS. The risk of any loss, damage, impairment, confiscation, or
condemnation of any of the KEWS Assets from any cause whatsoever shall be borne
by Infinity at all times prior to the Closing. The risk of any loss, damage,
impairment, confiscation, or condemnation of any of the KDFX Assets from any
cause whatsoever shall be borne by Salem at all times prior to the Closing. If
there is any loss, damage, impairment, confiscation, or condemnation of or to
any of such assets, Infinity or Salem, as the case may be, shall repair,
replace, or restore such assets (the "Damaged Assets") to their prior condition
as represented in this Agreement as soon thereafter as possible; provided,
however, that no party shall have any obligation to repair or replace any
immaterial or obsolete asset no longer necessary or useful for the continued
operation of the station consistent with past practice. If Infinity or Salem, as
the case may be (the "Repairing Party"), is unable to repair
15
<PAGE>
or replace the Damaged Assets by the date on which the Closing would otherwise
occur under this Agreement, then the Repairing Party shall reimburse all
reasonable costs incurred by the Acquiring Party in repairing or replacing the
Damaged Assets after the Closing.
8.7. CONFIDENTIALITY.
(a) Salem and Infinity shall each keep confidential all information obtained
by it with respect to the other in connection with this Agreement, except where
such information is known or available through other lawful sources or where its
disclosure is required in accordance with applicable law. If the transactions
contemplated hereby are not consummated for any reason, Salem and Infinity shall
return to the other, without retaining a copy thereof, any schedules, documents
or other written information, including all financial information, obtained from
the other in connection with this Agreement and the transactions contemplated
hereby.
(b) Except as required by the FCC in connection with the filing of the FCC
application, without the prior consent of both Salem and Infinity, there shall
be no public announcement relating to this Agreement or the transactions
proposed herein.
8.7. FURTHER ASSURANCES. Infinity and Salem shall cooperate and take such
actions, and execute such other documents, at the Closing or subsequently, as
may be reasonably requested by the other in order to carry out the provisions
and purposes of this Agreement.
8.8 COVENANT NOT TO COMPETE. At the Closing, Salem shall execute and deliver,
and cause its parent to execute and deliver, the Covenant Not to Compete.
8.9 KDFX TRANSMITTER SITE LEASE. Prior to or at the Closing, Salem shall
enter into an amended lease for KDFX's transmitter site. Such amended lease
shall be in the form of Exhibit C hereto (the "Amended KDFX Transmitter Site
---------
Lease").
ARTICLE 9
CONDITIONS PRECEDENT
--------------------
9.1. TO SALEM'S OBLIGATIONS. The obligations of Salem hereunder are, at its
option, subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
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(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Infinity in this
Agreement shall be true and complete in all material respects on and
as of the Closing Date (except to the extent they expressly relate to
an earlier time, in which case they shall have been true and correct
only as of such earlier time) as if made on and as of that date,
except to the extent changes are permitted under SECTION 8.1 of this
Agreement.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Infinity under this Agreement on or prior to
Closing Date shall have been complied with or performed in all
material respects.
(b) FCC CONSENT. The FCC Consents to the Applications shall have been
obtained, without the imposition of any condition materially adverse to
Salem, and such FCC Consents shall have become Final Orders; provided, that
Salem agrees to waive the requirement of Final Orders if its senior lenders
consent to such waiver.
(c) NO INJUNCTION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by
this Agreement in accordance with its terms.
(d) DELIVERIES. Infinity shall have made or stand willing to make all
deliveries required under SECTION 10.1.
9.2 TO INFINITY'S OBLIGATIONS. The obligations of Infinity hereunder are, at
its option, subject to satisfaction, at or prior to the Closing Date, of each of
the following conditions:
(a) REPRESENTATIONS, WARRANTIES AND COVENANTS.
(i) All representations and warranties made by Salem in this
Agreement shall be true and complete in all material respects on and
as of the Closing Date (except to the extent they expressly relate to
an earlier time, in which case they shall have been true and correct
only as of such earlier time) as if made on and as of that date.
(ii) All of the terms, covenants and conditions to be complied
with and performed by Salem under this Agreement on or prior to the
Closing Date shall have been complied with or performed in all
material respects.
(b) FCC CONSENT. The FCC Consents to the FCC Applications shall have
been obtained, without the imposition of any condition materially adverse
to Infinity, and such FCC Consents shall have become Final Orders;
provided, that Infinity agrees
17
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to waive the requirement of Final Orders if Salem's senior lenders consent
to Salem's waiving of the requirement.
(c) NO INJUNCTION. No order of any court or administrative agency shall
be in effect which restrains or prohibits the transactions contemplated by
this Agreement in accordance with its terms.
(d) DELIVERIES. Salem shall have made or stand willing to make all the
deliveries required under SECTION 10.2 and shall have paid or stand willing
to pay the Cash Purchase Price as provided in SECTION 2.2.
ARTICLE 10
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
10.1. DOCUMENTS TO BE DELIVERED BY INFINITY. At the Closing, Infinity shall
deliver to Salem the following:
(a) a copy of the resolution of the board of directors of Infinity,
certified by an authorized officer of Infinity, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Salem, effecting the sale, transfer,
assignment and conveyance of the KEWS Assets to Salem, including, but not
limited to, the following:
(i) an assignment of the KEWS FCC Licenses;
(ii) bills of sale for all KEWS Personal Property;
(iii) assignments of the Assumed Contracts, together with all third
party consents as provided in SECTION 8.4;
(c) instruments, in form and substance reasonably satisfactory to Salem
and its counsel, pursuant to which Infinity assumes the obligations,
liabilities and commitments of Salem as provided in ARTICLE 3; and
(d) such other documents as may reasonably be requested by Salem's
counsel.
10.2. DOCUMENTS TO BE DELIVERED BY SALEM. At the Closing, Salem shall deliver
to Infinity the following:
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<PAGE>
(a) a copy of the resolution of the board of directors of Salem,
certified by an authorized officer of Salem, authorizing the execution,
delivery and performance of this Agreement;
(b) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Infinity, effecting the sale,
transfer, assignment and conveyance of the KDFX Assets to Infinity,
including, but not limited to, the following:
(i) an assignment of the KDFX FCC Licenses;
(ii) bills of sale for all KDFX Personal Property;
(iii) assignments of the Assumed Contracts, together with all
third party consents as provided in SECTION 8.4;
(c) instruments, in form and substance reasonably satisfactory to
Infinity and its counsel, pursuant to which Salem assumes the obligations,
liabilities and commitments of infinity as provided in ARTICLE 3;
(d) the Covenant Not to Compete duly executed by Salem and its parent;
(e) immediately available wire transferred federal funds as provided
in SECTION 2.2;
(f) the Amended KDFX Transmitter Site Lease executed by the landlord
thereunder and dated the Closing Date; and
(g) such other documents as may reasonably be requested by Infinity's
counsel.
ARTICLE 11
INDEMNIFICATION, SURVIVAL
-------------------------
11.1. INFINITY'S INDEMNITIES. From and after the Closing, Infinity shall
indemnify, defend, and hold harmless Salem and its affiliates and their
respective directors, officers, employees, and representatives, and the
successors and assigns of any of them, from and against, and reimburse them for,
all claims, damages, costs and expenses, including, without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
resulting from:
(a) any liabilities or obligations of Infinity or its affiliates not
assumed by Salem under this Agreement;
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(b) any untrue representation, breach of warranty, or nonfulfillment of
any covenant by Infinity contained in this Agreement or in any certificate
document or instrument delivered to Salem under this Agreement;
(c) Infinity's operation or ownership of KEWS prior to the Effective
Time;
(d) Infinity's operation or ownership of KDFX after the Effective Time;
or
(e) any failure to comply with any "bulk sales" laws applicable to the
sale of KEWS hereunder.
11.2. SALEM'S INDEMNITIES. From and after the Closing, Salem shall indemnify,
defend and hold harmless Infinity and its affiliates and their respective
directors, officers, employees, and representatives, and the successors and
assigns of any of them, from and against, and reimburse them for, all claims,
damages, costs and expenses, including, without limitation, interest, penalties,
court costs and reasonable attorneys' fees and expenses, resulting from:
(a) any liabilities or obligations of Salem or its affiliates not
assumed by Infinity under this Agreement;
(b) any untrue representation, breach of warranty, or nonfulfillment of
any covenant by Salem contained in this Agreement or in any certificate
document or instrument delivered to Infinity under this Agreement;
(c) Salem's operation or ownership of KDFX prior to the Effective Time;
(d) Salem's operation or ownership of KEWS after the Effective Time; or
(e) any failure to comply with any "bulk sales" laws applicable to the
sale of KDFX hereunder.
11.3. PROCEDURE FOR INDEMNIFICATION. The procedure for indemnification shall
be as follows:
(a) The party seeking indemnification under this ARTICLE 11 (the
"Claimant") shall give notice to the party from whom indemnification is
sought (the "Indemnitor") of any claim, whether solely between the parties
or brought by a third party, reasonably specifying (i) the factual basis
for the claim, and (ii) the amount of the claim if then known. If the claim
relates to an action, suit or proceeding filed by a third party against
Claimant, notice shall be given by Claimant within fifteen (15) days after
written notice of the action, suit or proceeding was given to Claimant. In
all other circumstances, notice shall be given by Claimant within thirty
(30) days after
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Claimant becomes, or should have become, aware of the facts giving rise to
the claim. Notwithstanding the foregoing, Claimant's failure to give
Indemnitor timely notice shall not preclude Claimant from seeking
indemnification from Indemnitor if Claimant's failure has not materially
prejudiced Indemnitor's ability to defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the
Claimant agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate
the claim. If the Claimant and the Indemnitor cannot agree as to the
validity and amount of the claim within the 30-day period (or any mutually
agreed upon extension thereof), the Claimant may seek appropriate legal
remedy.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnitor shall have the
right at its own expense to participate in or assume control of the defense
of the claim with counsel reasonably acceptable to Claimant, and the
Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for reasonable expenses incurred by the Claimant as the
result of a request by the Indemnitor. If the Indemnitor elects to assume
control of the defense of any third-party claim, the Claimant shall have
the right to participate in the defense of the claim at its own expense. If
the Indemnitor does not elect to assume control or otherwise participate in
the defense of any third party claim, Claimant may, but shall have no
obligation to, defend or settle such claim or litigation in such a manner
as it deems appropriate, and in any event Indemnitor shall be bound by the
results obtained by the Claimant with respect to the claim (by default or
otherwise) and shall promptly reimburse Claimant for the amount of all
expenses (including the amount of any judgment rendered), legal or
otherwise, incurred in connection with such claim or litigation. The
Indemnitor shall be subrogated to all rights of the Claimant against any
third party with respect to any claim for which indemnity was paid.
11.4. LIMITATIONS.
(a) Neither Infinity nor Salem shall have any obligation to the other
party for any matter described in SECTION 11.1 or SECTION 11.2, as the case
may be, except upon compliance by the other party with the provisions of
this ARTICLE 11, particularly SECTION 11.3.
(b) Neither party shall be required to indemnify the other party under
this ARTICLE 11 unless (i) written notice of a claim under this ARTICLE 11
was received by the party within the pertinent survival period specified in
SECTION 11.5 and (ii) unless and until the aggregate amount of claims
against the party to which the other party (as a Claimant) is entitled to
be
21
<PAGE>
indemnified under this Agreement exceeds $50,000, and then only for the
excess over $50,000. The foregoing "deductible" shall not apply to (i) any
proration of expenses under SECTION 3.3, (ii) either party's obligation to
indemnify by reason of such party's non-compliance with the provisions of
any bulk sales laws applicable to this transaction, or (iii) any obligation
to indemnify against third-party claims. Neither party shall have any
liability to the other party under any circumstances for special,
consequential, punitive or exemplary damages.
11.5. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties, covenants, indemnities and agreements contained in
this Agreement or in any certificate, document or instrument delivered pursuant
to this Agreement are and will be deemed and construed to be continuing
covenants, indemnities and agreements and shall survive the Closing for a period
of six (6) months after the Closing Date (the "Survival Period"). No claim may
be brought under this Agreement unless written notice describing in reasonable
detail the nature and basis of such claim is given on or prior to the last day
of the Survival Period. In any event such notice is given, the tight to
indemnification with respect thereto shall survive the Survival Period until
such claim is finally resolved and any obligations thereto are fully satisfied.
Any investigation by or on behalf of any party hereto shall not constitute a
waiver as to enforcement of any representation, warranty, covenant or agreement
contained herein.
11.6. SOLE REMEDY. After the Closing, the right to indemnification under this
ARTICLE 11 shall be the exclusive remedy of any party in connection with any
breach or default by another party under this Agreement.
ARTICLE 12
TERMINATION RIGHTS
------------------
12.1. TERMINATION.
(a) This Agreement may be terminated by either Salem or Infinity, if the
party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of
the following:
(i) if, subject to the opportunity to cure period set forth in
Section 12.1(c) below, the other party is in material breach of this
Agreement;
(ii) if there shall be in effect any order or decree from the
Department of Justice or any judgment, final decree or order that would
prevent or make unlawful the Closing or if the FCC shall have released a
hearing designation order requiring a formal hearing on either of the FCC
Applications; or
(iii) if the Closing has not occurred by June 30, 1997 (the "Upset
Date").
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<PAGE>
(b) This Agreement may be terminated by mutual written consent of Salem
and Infinity
(c) If either party believes the other to be in breach or default of
this Agreement, the non-defaulting party shall, prior to exercising its right to
terminate under SECTION 12.1(a)(i), provide the defaulting party with notice
specifying in reasonable detail the nature of such breach or default. Except for
a failure to pay the Cash Purchase Price, the defaulting party shall have ten
(10) days from receipt of such notice to cure such default; provided, that if
the breach or default is due to no fault of the defaulting party and is
incapable of cure within such 1O-day period, the cure period shall be extended
as long as the defaulting party is diligently and in good faith attempting to
effectuate a cure. Nothing in this SECTION 12.1(c) shall be interpreted to
extend the Upset Date.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement pursuant to SECTION 12.1, this
Agreement (other than SECTION 8.7 (Confidentiality), which shall remain in full
force and effect) shall forthwith become null and void, and no party hereto (nor
any of their respective affiliates, directors, officers or employees) shall have
any liability or further obligation, except as provided in this ARTICLE 12 and
in ARTICLE 13; provided, that nothing in this SECTION 12.2 shall relieve any
party from liability for any breach of this Agreement.
ARTICLE 13
REMEDIES UPON DEFAULT; SPECIFIC PERFORMANCE
-------------------------------------------
13.1. DEFAULT BY INFINITY; SPECIFIC PERFORMANCE. Infinity recognizes that, in
the event Infinity defaults in the performance of its obligations under this
Agreement, monetary damages alone will not be adequate. In such event, Salem
shall be entitled to obtain specific performance of the terms of this Agreement
without being required to post bond or furnish other security. In addition,
Salem shall be entitled to obtain from Infinity court costs and reasonable
attorneys' fees and expenses incurred by it in enforcing its rights hereunder.
As a condition to seeking specific performance, Salem shall not be required to
have tendered the Purchase Price specified in ARTICLE 2 of this Agreement, but
shall be ready, willing and able to do so.
13.2. DEFAULT BY SALEM; LIQUIDATED DAMAGES. If Salem breaches or defaults in
its obligations under this Agreement, Infinity may pursue any legal or equitable
remedies available to it and shall be entitled to obtain from Salem court costs
and reasonable attorneys' fees and expenses incurred by it in enforcing its
rights hereunder; provided, however, that if this Agreement is terminated by
-------------------
Infinity pursuant to SECTION 12.1(a) as a result of a breach or default by Salem
of its representations, warranties, covenants or obligations hereunder, then
Salem shall pay Infinity $2,000,000 as liquidated damages, in full settlement of
any damages of any kind or nature that Infinity may suffer or allege to suffer
as a result thereof, it being
23
<PAGE>
understood and agreed that the amount of liquidated damages represents Salem's
and Infinity's reasonable estimate of actual damages and does not constitute a
penalty. In the event that Infinity is entitled to liquidated damages, the
Escrow Deposit shall be paid over to Infinity in partial satisfaction of Salem's
liability for liquidated damages. In the event of a termination of this
Agreement pursuant to SECTION 12.1 for any other reason, the Escrow Deposit,
together with any interest and earnings thereon, shall be paid to Salem.
ARTICLE 14
OTHER PROVISIONS
----------------
14.1. TRANSFER TAXES AND EXPENSES. All recordation, transfer, documentary,
excise, sales or use taxes or fees imposed on this transaction shall be shared
equally by Salem and Infinity. Except as otherwise provided in this Agreement,
each party shall be solely responsible for and shall pay all other costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
14.2. BENEFIT AND ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns. Neither Salem nor Infinity may assign its rights under this Agreement
without the prior written consent of the other party hereto.
14.3. ENTIRE AGREEMENT; SCHEDULES; AMENDMENT; WAIVER. This Agreement, and the
exhibits and schedules hereto and thereto, embody the entire agreement and
understanding of the parties hereto and supersede any and all prior agreements,
arrangements and understandings relating to the matters provided for herein. Any
matter that is disclosed in a Schedule hereto in such a way as to make its
relevance to the information called for by another Schedule readily apparent
shall be deemed to have been included in such other Schedule, notwithstanding
the omission of an appropriate cross-reference. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any waiver, amendment, change,
extension or discharge is sought. No failure or delay on the part of Salem or
Infinity in exercising any right or power under this Agreement shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power.
14.4. HEADINGS. The headings set forth in this Agreement are for convenience
only and shall not control or affect the meaning or construction of the
provisions of this Agreement.
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<PAGE>
14.5. COMPUTATION OF TIME. If after making computations of time provided for
in this Agreement, a time for action or notice falls on Saturday, Sunday or a
Federal holiday, then such time shall be extended to the next business day.
14.6. GOVERNING LAW; WAIVER OF JURY TRIAL. The construction and performance
of this Agreement shall be governed by the law of the State of New York without
regard to its principles of conflicts of law. SALEM AND INFINITY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING IN ANY WAY TO THIS AGREEMENT, INCLUDING ANY COUNTERCLAIM
MADE IN SUCH ACTION OR PROCEEDING, AND AGREE THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE DECIDED SOLELY BY A JUDGE. Salem and Infinity hereby acknowledge that
they have each been represented by counsel in the negotiation, execution and
delivery of this Agreement and that their lawyers have fully explained the
meaning of the Agreement, including in particular the jury-trial waiver. Any
question of doubtful interpretation shall not be resolved by any rule providing
for interpretation against the party who causes the uncertainty to exist or
against the drafter of this Agreement.
14.7. ATTORNEYS' FEES. In the event of any dispute between the parties to
this Agreement, Infinity or Salem, as the case may be, shall reimburse the
prevailing party for its reasonable attorneys' fees and other costs incurred in
enforcing its rights or exercising its remedies under this Agreement. Such right
of reimbursement shall be in addition to any other right or remedy that the
prevailing party may have under this Agreement.
14.8. SEVERABILITY. If any term or provision of this Agreement, or the
application thereof to any person or circumstance shall, to any extent be held
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby, and each
such term and provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
14.9. NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request.
If to Infinity:
c/o Infinity Broadcasting Corporation
600 Madison Avenue, 4th Floor
New York, NY 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
25
<PAGE>
With a copy (which shall not constitute notice) to:
Leventhal, Senter & Lerman
2000 K Street, N.W., Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lermart, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
If to Salem:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Jonathan L. Block, Esq.
Telephone: 805-987-0400
Facsimile: 805-482-8570
Any such notice, demand or request shall be deemed to have been duly delivered
and received (a) on the date of personal delivery, or (b) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (c) on the date of receipt, if mailed by registered or
certified mail, postage prepaid and return receipt requested, or (d) on the date
of a signed receipt, if sent by an overnight delivery service, but only if sent
in the same manner to all persons entitled to receive notice or a copy.
14.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
ARTICLE 15
DEFINITIONS
-----------
15.1. DEFINED TERMS. Unless otherwise stated in this Agreement, the following
terms when used herein shall have the meanings assigned to them below (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined).
"Acquiring Party" shall mean either Infinity or Salem, as required by the
context in which such term is used, in its capacity as the party acquiring a
station hereunder.
"Act" shall have the meaning set forth in SECTION 5.1(c).
"Agreement" shall mean this Asset Purchase Agreement.
26
<PAGE>
"Amended KDFX Transmitter Site Lease" shall have the meaning set forth in
SECTION 8.9.
"Asbestos" shall mean any and all varieties of materials included in the
definition of "asbestos" under any federal or state law or regulation relating
to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more than
one (1) percent Asbestos by weight.
"Cash Purchase Price" shall have the meaning set forth in SECTION 1.2.
"Claimant" shall have the meaning set forth in SECTION 11.3.
"Closing" shall have the meaning set forth in SECTION 1.1.
"Closing Date" shall mean the date on which the Closing is completed.
"Covenant Not to Compete" shall mean the Covenant Not to Compete among
Infinity, Salem and Salem's parent substantially in the form of Exhibit B to
---------
this Agreement.
"Damaged Assets" shall have the meaning set forth in SECTION 8.6.
"Effective Time" shall have the meaning set forth in SECTION 3.1.
"Environmental Laws" shall mean all applicable local, state and federal
statutes and regulations relating to the protection of human health or the
environment including the FCC's regulations concerning radio frequency
radiation.
"Escrow Agent" shall mean Gary Stevens & Co.
"Escrow Agreement" shall mean the agreement among Infinity, Salem and
Escrow Agent substantially in the form attached hereto as Exhibit A.
---------
"Escrow Deposit" shall mean the amount held by the Escrow Agent pursuant to
the Escrow Agreement, including all earnings and interest thereon.
"FCC" shall have the meaning set forth in the preamble to this Agreement.
"FCC Applications" shall have the meaning set forth in SECTION 7.1.
"FCC Consent" shall mean the action by the FCC granting the applicable FCC
Application.
27
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"Final Order" shall mean action by the FCC, with respect to an FCC
Application, (i) which has not been vacated, reversed, stayed, or suspended;
(ii) with respect to which no timely appeal, request for stay or petition for
rehearing, reconsideration or review by any party or by the FCC on its own
motion, is pending; and (iii) as to which the time for filing any such appeal
request, petition, or similar document or for the reconsideration or review by
the FCC on its own motion under the Communications Act of 1934, as amended, and
the rules and regulations of the FCC, has expired.
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Hazardous Substance" shall mean all hazardous or toxic waste or material
which, because of its quantity, concentration or physical, chemical or
infectious characteristics, may cause or pose a present or potential hazard to
human health or the environment when improperly used, treated, stored, disposed
of, generated, manufactured, transported or otherwise handled. "Hazardous
Substance" shall include, but is not limited to, any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such federal
or state statutes. "Hazardous Substance" shall not include ordinary quantities
of consumer or commercial products used in the normal course of broadcast
station operations, including grounds and building operation and maintenance;
provided, that such products have been properly stored, handled and disposed of.
- --------
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act 1976, as
amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in SECTION 11.3.
"Infinity" shall have the meaning set forth in the preamble to this
Agreement.
"Infinity's Proration Amount" shall have the meaning set forth in SECTION
3.4.
"KDFX" shall have the meaning set forth in the preamble to this Agreement.
"KDFX Assets" shall have the meaning set forth in SECTION 2.3(a).
"KDFX Assumed Contracts" shall have the meaning set forth in SECTION
2.3(a)(iv).
"KDFX FCC Licenses" shall have the meaning set forth in SECTION 2.3(a)(i).
"KDFX Main Studio Equipment" shall have the meaning set forth in SECTION
2.3(a)(iii).
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"KDFX Personal Property" shall have the meaning set forth in SECTION
2.3(a)(iii). "KDFX Real Property" shall have the meaning set forth in SECTION
6.3(b).
"KDFX Transmitter Site Equipment shall have the meaning set forth in
SECTION 2.3(a)(ii).
"KEWS" shall have the meaning set forth in the preamble to this Agreement.
"KEWS Assets" shall mean the assets to be transferred to Salem hereunder,
as more fully specified in SECTION 1.2.
"KEWS Assumed Contracts" shall have the meaning set forth in SECTION 1.2.
"KEWS FCC Licenses" shall have the meaning set forth in SECTION 1.2.
"KEWS Main Studio Equipment" shall have the meaning set forth in SECTION
1.2.
"KEWS Personal Property" shall have the meaning set forth in SECTION 1.2.
"KEWS Real Property" shall have the meaning set forth in SECTION 5.3(C).
"KEWS Transmitter Site Equipment" shall have the meaning set forth in
SECTION 1.2.
"Liens" shall mean mortgages, deeds of trust, liens, security interests,
pledges, collateral assignments, conditional sales agreements, leases,
encumbrances, claims, or other defects of title, but shall not include (i) liens
for current taxes not yet due and payable, (ii) other liens imposed by law (such
as materialman's, mechanic's, carrier's, worker's and repairman's liens) arising
in the ordinary course of business (provided that such liens do not interfere in
any material respect with the use of the Station Assets as currently used),
(iii) valid leases or subleases to third parties with respect to property not
used in the operation of the Station, and (iv) defects in title or other matters
that are not material to the owner or lessee, as the case may be.
"Notice of Disagreement" shall have the meaning set forth in SECTION 3.4.
"PCB" shall mean polychlorinated biphenyl.
"Proration Schedule" shall have the meaning set forth in SECTION 3.4.
"Purchase Price" shall have the meaning set forth in SECTION 2.1.
"Referee" shall have the meaning set forth in SECTION 3.4.
29
<PAGE>
"Repairing Party" shall have the meaning set forth in SECTION 8.6.
"Representing Party" shall have the meaning set forth in ARTICLE 4.
"Salem" shall have the meaning set forth in the preamble to this Agreement.
"Survival Period" shall have the meaning set forth in SECTION 11.5.
"To Infinity's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Infinity.
"To Salem's knowledge," or words of similar import, shall mean to the
actual knowledge of the president or chief financial officer of Salem.
"Upset Date" shall have the meaning set forth in SECTION 12.1.
15.2. MISCELLANEOUS TERMS. The term "or" is disjunctive; the term "and" is
conjunctive. The term "shall" is mandatory; the term "may" is permissive.
Masculine terms apply to females; feminine terms apply to males. The term
"includes" or "including" is by way of example and not limitation.
[Signatures immediately following this page.]
3O
<PAGE>
IN WITNESS WHEREOF. the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING
CORPORATION OF DALLAS
By: /s/ Farid Suleman
-----------------------------
Name: Farid Suleman
Title: VP Finance/CFO
INSPIRATION MEDIA OF TEXAS, INC.
By:
-----------------------------
Eric H. Halvorson
Executive Vice President
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Asset Purchase
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING
CORPORATION OF DALLAS
By:
----------------------------
Name:
-----------------------
Title:
----------------------
INSPIRATION MEDIA OF TEXAS, INC.
By: /s/ Eric H. Halvorson
----------------------------
Eric H. Halvorson
Executive Vice President
<PAGE>
EXHIBIT 10.06.06.01
ASSET PURCHASE AGREEMENT
------------------------
(WBNW, BOSTON, MASSACHUSETTS)
This AGREEMENT (the "Agreement") is dated as of December 4, 1996 by and
between BACK BAY BROADCASTERS, INC. ("Seller"), and NEW ENGLAND CONTINENTAL
MEDIA, INC. ("Buyer").
RECITALS:
---------
1. Seller owns and operates radio station WBNW(AM) licensed to Boston,
Massachusetts (the "Station"), and holds the licenses and authorizations issued
by the FCC for the operation of the Station.
2. Buyer desires to acquire substantially all the assets of the
Station, and Seller is willing to convey such assets to Buyer.
3. The acquisition of the Station is subject to prior approval of
the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, Seller and Buyer hereby agree as follows:
ARTICLE 1
---------
TERMINOLOGY
-----------
1.1 ACT. The Communications Act of 1934, as amended.
----
1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by
------------------ --------------
which Buyer's account is to be credited or charged, as reflected on the
Adjustment List.
1.3 ADJUSTMENT LIST. As provided in Section 2.7(b), an itemized list
---------------- --------------
of all sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in
--------------------
Section 2.3.
- -----------
1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on
-------------
which federally chartered banks in the city of Boston, Massachusetts, are
regularly open for business.
1.6 BUYER'S Threshold Limitation. As provided in Section 9.3 (b), the
----------------------------- ---------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify
1
<PAGE>
Buyer. The Buyer's Threshold Limitation shall be (a) Ten Thousand Dollars
($10,000) for any individual claim, liability, damage, loss, cost or expense and
(b) Twenty Five Thousand Dollars ($25,000) for all claims, liabilities, damages,
losses, costs and expenses.
1.7 CLOSING. The closing with respect to the transactions contemplated
--------
by this Agreement.
1.8 CLOSING DATE. The date determined as the Closing Date as provided
-------------
in Section 8.1.
------------
1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto,
----------
and each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.10 EARNEST MONEY. The amount of Three Hundred Thousand Dollars
--------------
($300,000).
1.11 ENVIRONMENTAL ASSESSMENT. Such term shall have the meaning defined
-------------------------
in Section 5.10.
-------------
1.12 ENVIRONMENTAL LAWS. The Comprehensive Environmental Response
-------------------
Compensation and Liability Act, the Resource Conservation and Recovery Act, the
Clean Water Act, the Clean Air Act and the Toxic Substances Control Act, each as
amended, and any other applicable federal, state and local laws, statutes, rules
or regulations concerning the treating, producing, handling, storing, releasing,
spilling, leaking, pumping, pouring, emitting or dumping of Hazardous Materials.
1.13 ESCROW AGENT. Media Services Group, Inc. and Gary Stevens & Co.,
-------------
Incorporated.
1.14 ESCROW AGREEMENT. The Escrow Agreement in the form attached as
-----------------
Exhibit A which Seller, Buyer and the Escrow Agent have entered into
- ---------
concurrently with the execution of this Agreement relating to the deposit,
holding, investment and disbursement of the Earnest Money.
1.15 EXCLUDED ASSETS. Such term shall have the meaning defined in
----------------
Section 2.2.
- ------------
1.16 FCC. Federal Communications Commission.
----
1.17 FCC LICENSES. The licenses, permits and authorizations of the FCC
-------------
for the operation of the Station as listed on Schedule 3.8.
-------------
2
<PAGE>
1.18 FCC ORDER. An order or decisions of the FCC granting its consent
----------
to the assignment of the FCC Licenses to Buyer.
1.19 FINAL ACTION. An action of the FCC that has not been reversed,
-------------
stayed, enjoined, set aside, annulled or suspended; with respect to which no
timely petition for reconsideration or administrative or judicial appeal or sua
---
sponte action of the FCC with comparable effect is pending and as to which the
- ------
time for filing any such petition or appeal (administrative or judicial) or for
the taking of any such sua sponte action of the FCC has expired.
----------
1.20 HAZARDOUS MATERIALS. Toxic materials, hazardous wastes, hazardous
--------------------
substances, pollutants or contaminants, asbestos or asbestos-related products,
PCB's, petroleum, crude oil or any fraction or distillate thereof (as such terms
are defined in any applicable federal, state or local laws, ordinances, rules
and regulations, and including any other terms which are or maybe used in any
applicable environmental laws to define prohibited or regulated substances).
1.21 INDEMNIFIED PARTY. Any party described in Section 9.3(a) or 9.4(a)
------------------ -------------- ------
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.22 INDEMNIFYING PARTY. The party to the Agreement (not the
-------------------
Indemnified Party) that, in the event of a claim or liability asserted by a
third party against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.23 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security
-----
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.24 LMA. The Local Programming and Marketing Agreement entered into on
----
this date by Buyer and Seller.
1.25 MATERIAL ADVERSE CONDITION. A condition which would materially
---------------------------
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that the Station be operated in accordance with a
condition similar to those contained in
3
<PAGE>
the present FCC licenses issued for operation of the Station shall not be deemed
a Material Adverse Condition.
1.26 OSHA LAWS. The Occupational Safety and Health Act of 1970, as
----------
amended, and all other federal, state or local laws or ordinances, including
orders, rules and regulations thereunder, regulating or otherwise affecting
health and safety of the workplace.
1.27 PERMITTED LIEN. Any lien which secures a payment not yet due that
---------------
arises, and is customarily discharged, in the ordinary course of Seller's
business; any easement, right-of-way or similar imperfection in the Seller's
title to its assets or properties that, individually and in the aggregate, are
not material in character or amount and do not and are not reasonably expected
to materially impair the value or materially interfere with the use of any asset
or property of the Seller material to the operation of its business as it is now
conducted.
1.28 PURCHASE PRICE. The consideration to be paid by Buyer to Seller
---------------
for purchase of the Sale Assets in an amount equal to Six Million Dollars
($6,000,000).
1.29 REAL PROPERTY. Such term shall have the meaning defined in Section
-------------- -------
3.13.
- ----
1.30 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume
----------------------
47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.
1.31 SALE ASSETS. All of the tangible and intangible assets to be
------------
transferred by Seller to Buyer as set forth in Section 2.1.
-----------
1.32 STATION AGREEMENTS. The agreements, commitments, contracts, leases
-------------------
and other items described in Section 2.l(c).
--------------
1.33 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), the
------------------------------ --------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be (a)
Ten Thousand Dollars ($10,000) for any individual claim, liability, damage,
loss, cost or expense and (b) Twenty Five Thousand Dollars ($25,000) for all
claims, liabilities, damages, losses, costs and expenses.
1.34 SURVIVAL PERIOD. The term following the Closing Date during which
----------------
all representations, warranties, covenants and agreements of the parties under
this Agreement shall survive. The term shall be twelve (12) months.
4
<PAGE>
1.35 TANGIBLE PERSONAL PROPERTY. The personal property described in
---------------------------
Section 2.1(a).
- --------------
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer,
-----------
assign and convey to Buyer, and Buyer will purchase from Seller, free and clear
of all Liens, except Permitted Liens, all of Seller's right, title and interest,
legal and equitable, in and to all tangible and intangible assets (except
Excluded Assets) used or useful in the operation of the Station as it is now
operated, including the following:
(a) TANGIBLE PERSONAL PROPERTY. All equipment, parts, supplies,
--------------------------
furniture, fixtures and other tangible personal property now or hereafter owned
by Seller and used and/or useful in the operation of the Station as it has been
and is now operated, including but not limited to the items listed on Schedule
--------
3.6, together with such modifications, replacements, improvements and additional
- ---
items, and subject to such deletions therefrom, made or acquired between the
date hereof and the Closing Date in accordance with the terms and provisions of
this Agreement;
(b) LICENSES AND PERMITS. The FCC Licenses and all other
--------------------
assignable or transferable governmental permits, licenses and authorizations
(and any renewals, extensions, amendments or modifications thereof) now held by
Seller or hereafter obtained by Seller between the date hereof and the Closing
Date, to the extent such other permits, licenses and authorizations pertain to
or are used in the operation of the Station.
(c) STATION AGREEMENTS. All agreements which Seller is a party to
-------------------
or bound by which are listed on Schedule 3.8 and which Buyer is electing to
------------
assume; any renewals, extensions, amendments or modifications of those
agreements being assumed which are made in the ordinary course of Seller's
operation of the Station and in accordance with the terms and provisions of this
Agreement; and any additional such agreements, contracts, leases, commitments or
orders (and any renewals, extensions, amendments or modifications thereof) made
or entered into between the date hereof and the Closing Date in accordance with
the terms and provisions of this Agreement and which Buyer elects to assume in
writing.
(d) RECORDS. True and complete copies of all of the books,
--------
records, accounts, files, logs, reports of engineers and other consultants or
independent contractors, pertaining to or used in the operation of the Station
(other than corporate records).
(e) MISCELLANEOUS ASSETS. Any other tangible or intangible assets,
---------------------
properties or rights of any kind or nature not otherwise described above in this
Section
- -------
5
<PAGE>
2.1 and now or hereafter owned or used by Seller in the operation of the
- ---
Station, including but not limited to all goodwill of the Station; excepting
therefrom, any and all right, title or interest in and to the call letters of
the Station, "WBNW".
2.2 EXCLUDED ASSETS. Notwithstanding any provision of this
----------------
Agreement to the contrary, Seller shall not transfer, convey or assign to Buyer,
but shall retain all of its right, title and interest in and to, the following
assets owned or held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure
contract obligations (except to the extent Seller receives a credit therefor
under Section 2.7, in which event the deposit shall be included as part of the
-----------
Sale Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior
to the Closing including, without limitation, claims for tax refunds and refunds
of fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a
credit therefor under Section 2.7, in which event the prepaid expense shall be
-----------
included as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms
and provisions of this Agreement or have expired prior to the Closing Date in
the ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(h) Seller's corporate records except to the extent such records
pertain to or are used in the operation of the Station, in which case Seller
shall deliver accurate copies thereof to Buyer.
(i) All commitments, contracts and agreements not specifically
assumed by Buyer pursuant to Section 2.1 (d), above.
---------------
(j) Any asset of Seller not comprising the Sale Assets.
6
<PAGE>
(k) All of Seller's right, title and interest in and to the call
letters of the Station, "WBNW".
2.3 ASSUMPTION OF LIABILITIES.
-------------------------
(a) At the Closing, Buyer shall assume and agree to perform,
without duplication of Seller's performance, the following liabilities and
obligations of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
-----------
(ii) Liabilities and obligations arising under the Station
Agreements, if any, assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(b) Except for the Assumed Obligations and except as expressly
provided in the LMA, Buyer shall not assume or in any manner be liable for any
duties, responsibilities, obligations or liabilities of Seller of any kind or
nature, whether express or implied, known or unknown, contingent or absolute,
including, without limitation, any liabilities to or in connection with Seller's
employees whether arising in connection with the transaction contemplated
hereunder or otherwise.
2.4 EARNEST MONEY.
-------------
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the Earnest Money. The Escrow Agent shall hold the Earnest Money under
the terms of the Escrow Agreement in trust for the benefit of the parties
hereto. Interest and other earnings on the Earnest Money shall be distributed by
the Escrow Agent to Buyer from time to time upon the request of Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered
to Seller or returned to Buyer in accordance with Section 10.2, and if Closing
------------
does occur, the Earnest Money shall be applied to payment of the Purchase Price
at Closing as provided in Section 2.5.
-----------
2.5 PAYMENT OF PURCHASE PRICE.
--------------------------
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
-----------
the
7
<PAGE>
property of Seller and shall, pursuant to the Escrow Agreement, be disbursed to
Seller by wire transfer of immediately available federal funds.
(ii) The Purchase Price, less the amount of the Earnest Money
disbursed to Seller, shall be paid to Seller at Closing by wire transfer of
immediately available federal funds.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
-----------
2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and
---------------------------------
Seller shall use good faith efforts to agree to an allocation of the Purchase
Price. Buyer and Seller shall use such allocation, if agreed upon, for all
reporting purposes in connection with federal, state and local income and, to
the extent permitted under applicable law, franchise taxes. Buyer and Seller
agree to report such allocation to the Internal Revenue Service in the form
required by Treasury Regulation (S) 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
-----------------------------
(a) Except as otherwise provided in the LMA, all operating income
and operating expenses of the Station shall be adjusted and allocated between
Seller and Buyer, and an adjustment in the Purchase Price shall be made as
provided in this Section, to the extent necessary to reflect the principle that
all such income and expenses attributable to the operation of the Station on or
before the Closing Date shall be for the account of Seller, and all income and
expenses attributable to the operation of the Station after the Closing Date
shall be for the account of Buyer.
(b) To the extent not inconsistent with the express provisions of
this Agreement, the allocations made pursuant to this Section 2.7 shall be made
-----------
in accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this
Section, Buyer shall prepare and deliver the Adjustment List to Seller within
thirty (30) days following the Closing Date, or such earlier or later date as
shall be mutually agreed to by Seller and Buyer. The Adjustment List shall set
forth the Adjustment Amount. If the Adjustment Amount is a credit to the account
of Buyer, Seller shall pay such amount to Buyer, and if the Adjustment Amount is
a charge to the account of Buyer, Buyer shall pay such amount to Seller. In the
event Seller disagrees with the Adjustment Amount determined by Buyer or with
any other matter arising out of this subsection, and Buyer and Seller cannot
within sixty (60) days resolve the disagreement themselves, the parties will
refer the disagreement to a firm of independent certified public accountants,
mutually acceptable to Seller and Buyer, whose decision shall be final and whose
fees and expenses shall be allocated between and paid by Seller and Buyer,
respectively, to the
8
<PAGE>
extent that such party does not prevail on the disputed matters decided by the
accountants.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly
-------------------------------
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Seller has all requisite power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Seller. Seller has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Seller. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Seller enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a Permitted Lien on any of the Sale Assets under), any provision
of law, rule or regulation or any order, judgment, injunction, decree or ruling
applicable to Seller;
(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under the Articles of Organization or Bylaws
9
<PAGE>
of Seller or pursuant to any lease, agreement, commitment or other instrument
which Seller is a party to, or bound by, or by which any of the Sale Assets may
be bound, or result in the creation of any Lien, other than a Permitted Lien,
upon any of the Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except as set
----------------------------------------------------
forth on Schedule 3.4, Schedule 3.8 and Schedule 3.9, the execution and delivery
------------ ------------ ------------
of, and the performance of its obligations under, this Agreement and each of the
other Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby, do not require the consent, waiver, approval,
permit, license, clearance or authorization of, or any declaration of filing
with, any court or public agency or other authority, or the consent of any
person under any agreement, arrangement or commitment of a nature which Seller
is a party to or bound or by which the Sale Assets are bound by or subject to,
the failure of which to obtain would have a material adverse effect on the Sale
Assets or the operation of the Station.
3.5 SALE ASSETS. The Sale Assets include all of the assets, properties
------------
and rights of every type and description, real, personal and mixed, tangible and
intangible, that are used to a material extent in the conduct of the business of
owning and operating the Station in the manner in which that business has been
and is now conducted, with the exception of the Excluded Assets.
3.6 TANGIBLE PERSONAL PROPERTY. Except for supplies and other
---------------------------
incidental items which in the aggregate are not of material value, the list of
Tangible Personal Property set forth on Schedule 3.6 is a complete and correct
------------
list of all of the items of tangible personal property (other than Excluded
Assets) used to a material extent in the operation of the Station in the manner
in which it has been and is now operated. Except as set forth on Schedule 3.6:
------------
(a) Seller has good, marketable and valid title to all of the items
of Tangible Personal Property free and clear of all Liens except Permitted
Liens, and including the right to transfer same.
(b) The Tangible Personal Property has been maintained in
accordance with industry practices and is in good operating condition subject to
ordinary wear and tear.
(c) The Tangible Personal Property complies with applicable rules
and regulations of the FCC and the terms of the FCC Licenses.
(d) Seller has no knowledge of any defect in the condition or
operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Station.
10
<PAGE>
3.7 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
-------------
Schedule 3.7, and except as set forth on such Schedule, the FCC Licenses (i) are
- ------------
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station as now
operated, and (ii) constitute all the licenses and authorizations issued by the
FCC to Seller for or in connection with the current operation of the Station.
Seller has no knowledge of any condition imposed by the FCC as part of any FCC
License which is neither set forth on the face thereof as issued by the FCC nor
contained in the Rules and Regulations applicable generally to stations of the
type, nature, class or location of the Station. Except as disclosed on Schedule
--------
3.7, the Station is being operated at full authorized power, in accordance with
- ---
the terms and conditions of the FCC Licenses applicable to it and in accordance
with the Rules and Regulations. Except as set forth on Schedule 3.7, no
------------
proceedings are pending or, to the knowledge of the Seller, are threatened which
may result in the revocation, modification, non-renewal or suspension of any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
Seller has complied in all material respects with all requirements to file
reports, applications and other documents with the FCC with respect to the
Station, and all such reports, applications and documents are complete and
correct in all material respects. Seller has no knowledge of any matters (i)
which could reasonably be expected to result in the suspension or revocation of
or the refusal to renew any of the FCC Licenses or the imposition of any fines
or forfeitures by the FCC, or (ii) against Seller which could reasonably be
expected to result in the FCC's refusal to grant approval of the assignment to
Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in
connection with approval of such assignment. There are not any unsatisfied or
otherwise outstanding citations issued by the FCC with respect to the Station or
its operation. Complete and accurate copies of all FCC Licenses are attached as
a part of Schedule 3.8. The "Public Inspection File" of the Station is complete
------------
and in substantial and material compliance with Section 73.3526 of the Rules and
Regulations.
3.8 STATION AGREEMENTS.
-------------------
(a) Schedule 3.8 sets forth an accurate and complete list of all
------------
agreements, contracts, arrangements, commitments or leases in effect as of the
date hereof and which Buyer has agreed to assume, including all amendments,
modifications and supplements thereto by which the Station or its assets or
properties are bound. Complete and correct copies of all such agreements,
contracts, arrangements or commitments that are in writing, including all
amendments, modifications and supplements thereto, have been delivered to Buyer.
(b) Except as set forth in the Schedules, (i) all Station
Agreements are legal, valid and enforceable in accordance with their terms,
subject to applicable
11
<PAGE>
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally, and subject, as to enforceability, to general
principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material breach of or in material default
under any Station Agreements; (iii) to the knowledge of Seller, there has not
occurred any event which, after the giving of notice or the lapse of time or
both, would constitute a material default under, or result in the material
breach of, any Station Agreements which are, individually or in the aggregate,
material to the operation of the Station; and (iv) Seller holds the right to
enforce and receive the benefits under all of the Station Agreements, free and
clear of all Liens (other than Permitted Liens) but subject to the terms and
provision of each such agreement.
(c) Schedule 3.8 indicates whether consent or approval by any party
------------
thereto is required for consummation of the transactions contemplated hereby.
3.9 LITIGATION. Except as set forth on Schedule 3.9, there are no
----------- ------------
claims, known investigations or administrative, arbitration or other proceedings
("Litigation") pending or, to the actual knowledge of Seller, threatened against
Seller which would, individually or in the aggregate if adversely determined,
have a material adverse effect on the Sale Assets or the operation of the
Station, or which would give any third party the right to enjoin the
transactions contemplated by this Agreement. To the actual knowledge of Seller,
there is no basis for any such claim, investigation, action, suit or proceeding
which would, individually or in the aggregate if adversely determined, have an
adverse effect on the Sale Assets or operation of the Station. There are no
existing or, to the actual knowledge of Seller, pending orders, judgments or
decrees of any court or governmental agency materially affecting Seller, the
Station or any of the Sale Assets. Notwithstanding the disclosure of Litigation
of Seller to Buyer, Buyer shall not assume any liability, damages costs or
expense of Seller relating to or arising out of the Litigation.
3.10 LABOR MATTERS.
--------------
(a) Except as set forth on Schedule 3.10, Seller is not a party to
-------------
any collective bargaining agreement, and there is no collective bargaining
agreement that determines the terms and conditions of employment of any
employees of Seller.
(b) There is no labor strike, dispute, slow-down or stoppage
pending or, to the actual knowledge of Seller, threatened against the Station;
(c) There are neither pending nor, to the actual knowledge of
Seller threatened, any suits, actions, administrative proceedings, union
organizing activities, arbitrations, grievances or other proceedings between
Seller and any employees of the Station or any union representing such
employees; and there are no existing labor or employment or other controversies
or grievances involving employees of the Station
12
<PAGE>
which have had or are reasonably likely to have a material adverse effect on the
operation of the Station;
(d) With respect to the Station, (i) Seller is in compliance in all
material respects with all laws, rules and regulations relating to the
employment of labor and all employment contractual obligations, including those
relating to wages, hours, collective bargaining, affirmative action,
discrimination, sexual harassment, wrongful discharge and the withholding and
payment of taxes and contributions; (ii) Seller has withheld all amounts
required by law or agreement to be withheld from the wages or salaries of its
employees; and (iii) Seller is not liable to any present or former employees or
any governmental authority for damages, arrears of wages or any tax or penalty
for failure to comply with the foregoing;
(e) Buyer's consummation of the transactions contemplated by this
Agreement in accordance with the terms hereof shall not, as a result of or in
connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller.
3.11 EMPLOYEE BENEFIT PLANS. Buyer's consummation of the transactions
-----------------------
contemplated by this Agreement in accordance with the terms hereof shall not, as
a result of or in connection with the transactions contemplated hereby, impose
upon Buyer any obligation under any benefit plan, contract or arrangement
(regardless of whether they are written or unwritten and funded or unfunded)
covering employees or former employees of Seller in connection with their
employment by Seller. For purposes of the Agreement, "benefit plans" shall
include without limitation employee benefit plans within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended,
vacation benefits, employment and severance contracts, stock option plans, bonus
programs and plans of deferred compensation.
3.12 COMPLIANCE WITH LAW. The operation of the Station complies in all
--------------------
material respects with the applicable rules and regulations of the FCC and all
federal, state, local or other laws, statutes, ordinances, regulations, and any
applicable order, writ, injunction or decree of any court, commission, board,
agency or other instrumentality.
3.13 ENVIRONMENTAL MATTERS; OSHA.
----------------------------
(a) Seller has obtained all environmental, health and safety
permits necessary or required for either the operation of the Station and all
such permits are in full force and effect and Seller is in compliance with all
terms and material conditions of such permits.
13
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(b) There is no proceeding pending or, to Seller's actual
knowledge, threatened which may result in the reversal, rescission, termination,
modification or suspension of any environmental or health or safety permits
necessary for the operation of the Station.
(c) With respect to the Station, Seller is in compliance in all
material respects with the provisions of Environmental Laws.
(d) During Seller's occupancy of any real property associated with
the Station ("the Real Property"), Seller has not, and to Seller's actual
knowledge, no other person or entity has caused or permitted materials to be
generated, released, stored, treated, recycled, disposed of on, under or at such
parcels, which materials, if known to be present, would require clean up,
removal or other remedial or responsive action under Environmental Laws. Seller
has not caused the migration of any materials from the Real Property onto or
under any property adjacent to the Real Property which materials, if known to be
present, would require cleanup, removal or other remedial or responsive action
under Environmental Laws. To Seller's actual knowledge there are no underground
storage tanks and no polychlorinated biphenyls ("PCB") or friable asbestos on
such property.
(e) Seller is not subject to any judgment, decree, order or
citation with respect to the Station or the Real Property related to or arising
out of Environmental Laws, and Seller has not received notice that it has been
named or listed as a potentially responsible party by any person or governmental
body or agency in any matter arising under Environmental Laws.
(f) Seller has not discharged or disposed of any petroleum product
or solid waste on the Real Property, or on the property adjacent to the Real
Property, which may form the basis for any present or future claim based upon
the Environmental Laws in existence on the date hereof or as of the Closing, or
any demand or action seeking clean-up of any site, location, body of water,
surface or subsurface, under any Environmental Laws or otherwise, or which may
subject the owner of the Real Property to claims by third parties (except to the
extent third party liability can be established) for damages.
(g) No portion of the Real Property has ever been used by Seller in
material violation of Environmental Laws or used by Seller as a landfill, dump
site or any other use which involves the disposal or storage of Hazardous
Materials on-site or in any manner which may adversely affect the value of the
Real Property.
(h) No pesticides, herbicides, fertilizers or other materials have
been used on, applied to or disposed of by Seller on the Real Property in
material violation of any Environmental Laws.
14
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(i) With respect to the Station or the Real Property, Seller has
disposed of all waste in full compliance with all Environmental Laws and to
Seller's actual knowledge, there is no existing condition that may form the
basis of any present or future claim, demand or action seeking clean up of any
facility, site, location or body of water, surface or subsurface.
(j) To Seller's actual knowledge, Seller is in material compliance
with all OSHA Laws.
3.14 TOWER COORDINATES. At closing Seller shall provide to Buyer the
------------------
current vertical elevation and geographical coordinates of the Station's towers
("the Tower Coordinates") and that the Tower Coordinates comply with and
correspond to the then current vertical elevation an geographical coordinates
authorized by the FAA and FCC.
3.15 FILING OF TAX RETURNS. Seller has filed all Federal, State and
----------------------
local tax returns which are required to be filed, and has paid all taxes and all
assessments to the extent that such taxes and assessments have become due.
3.16 ABSENCE OF INSOLVENCY. No insolvency proceedings of any character
----------------------
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.17 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17,
-------------------------- -------------
no agent, broker, investment banker or other person or firm acting on behalf of
or under the authority of Seller or any affiliate of Seller is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, in connection with the transactions contemplated by this
Agreement.
3.18 INSURANCE. There is now in full force and effect with reputable
----------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in
commercially reasonable amounts.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
-------------------------------
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Buyer has all requisite corporate power to own,
operate and lease its
15
<PAGE>
properties and carry on its business as it is now being conducted and as the
same will be conducted following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
----------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Buyer, and the consummation by Buyer of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary corporate action on the part of Buyer. Buyer has the
power and authority to execute, deliver and perform its obligations under this
Agreement and each of the other Documents and to consummate the transactions
hereby and thereby contemplated. This Agreement and each of the other Documents
have been, or at or prior to the Closing will be, duly executed by Buyer. This
Agreement constitutes (and each of the other Documents, when so executed and
delivered, will constitute) legal and valid obligations of Buyer enforceable
against it in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting the
enforcement of creditors' rights or remedies generally, and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
4.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the
---------------------
performance of its obligations under, this Agreement and each of the other
Documents by Buyer, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) Do not in any material respect (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
claim, lien, charge or encumbrance on any of the assets or properties of Buyer
under) any provision of law, rule or regulation or any order, judgment,
injunction, decree or ruling applicable to Buyer;
(b) Do not (with or without the giving of notice or the passage of
time or both) conflict with or result in a breach or termination of, or
constitute a default or give rise to a right of termination or acceleration
under, the Articles of Organization or Bylaws of Buyer or any lease, agreement,
commitment, or other instrument which Buyer is a party to, bound by, or by which
any of its assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
----------------------------------------------------
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a
16
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material adverse effect on the assets, business, operation or financial
condition or results of operations of Buyer.
4.5 QUALIFICATION.
--------------
(a) Buyer has no knowledge after due inquiry of any facts
concerning Buyer or any other person with an attributable interest in Buyer (as
such term is defined under the Rules and Regulations) which, under present law
(including the Act) and the Rules and Regulations, would (i) disqualify Buyer
from being the holder of the FCC Licenses, the owner of the Sale Assets or the
operator of the Station upon consummation of the transactions contemplated by
this Agreement, or (ii) raise a substantial and material question of fact
(within the meaning of Section 309(e) of the Act) respecting Buyer's
qualifications.
(b) Without limiting the foregoing Subsection (a), Buyer shall make
--------------
the affirmative certifications provided in Section III of FCC Form 314 at the
time of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 BROKER'S OR FINDER'S FEES. Except as set forth in Schedule 3.17, no
-------------------------- -------------
agent, broker, investment banker, or other person or firm acting on behalf of or
under the authority or Buyer or any affiliate of Buyer is or will be entitled to
any broker's or finder's fee or any other commission or similar fee, directly or
indirectly, in connection with transactions contemplated by this Agreement.
4.7 LITIGATION. There are no legal, administrative, arbitration or
----------
other proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
---------
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE.
------------------------------------------------------------
Seller covenants and agrees with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld), Seller shall:
(a) Subject to the LMA, use reasonable efforts to operate the
Station in substantially the same manner in which it is currently being
operated:
(b) Use reasonable commercial efforts to maintain insurance upon
all of the tangible Sale Assets in such amounts and of such kind comparable to
that in effect on
17
<PAGE>
the date hereof with respect to such Sale Assets and with respect to the
operation of the Station, with insurers of substantially the same or better
financial condition;
(c) Subject to the LMA, operate the Station and otherwise conduct
its business in accordance with the terms or conditions of its FCC Licenses, the
Rules and Regulations, the Act and all other rules and regulations, statutes,
ordinances and orders of all governmental authorities having jurisdiction over
any aspect of the operation of the Station, except where the failure to so
operate the Station would not have a material adverse effect on the Sale Assets
or the operation of the Station or on the ability of Seller to consummate the
transactions contemplated hereby;
(d) Maintain the books and records of the Station in Seller's
customary manner on a basis consistent with prior years;
(e) Comply in all material respects with all Station Agreements now
or hereafter existing which are material, individually or in the aggregate, to
the operation of the Station; provided, however, that Seller shall not be
required to continue or resume the broadcast of Bloomberg Financial News once
the existing arraignment for such service is terminated;
(f) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;
(g) Not mortgage, pledge or subject to any Lien (except in the
ordinary course of business) any of the Sale Assets;
(h) Not sell, lease or otherwise dispose of, nor agree to sell,
lease or otherwise dispose of, any of the Sale Assets, except for dispositions
in the ordinary course of business;
(i) Not acquire or lease any goods or services or enter into, amend
or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(j) Subject to the LMA, not introduce any material change with
respect to the operation of the Station including, without limitation, any
material changes in the broadcast hours of the Station or any other material
change in the Station's programming policies, except such changes as in the sole
discretion of Seller, exercised in good faith after consultation with Buyer, are
required by the public interest;
18
<PAGE>
(k) Notify Buyer of any material litigation pending or threatened
against Station or Seller or any material damage to or destruction of any assets
included or to be included in the Sale Assets;
5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC,
---------------------
within five (5) business days after the execution of this Agreement, such
applications and other documents in the name of Seller or Buyer, as appropriate,
as may be necessary or advisable to obtain the FCC Order. Seller and Buyer shall
take all commercially reasonable steps necessary to prosecute such filings with
diligence and shall diligently oppose any objections to, appeals from, petitions
to reconsider or administrative review of such approval of the FCC, to the end
that the FCC Order and a Final Action with respect thereto may be obtained as
soon as practicable; provided, however, that in the event the application for
assignment of the FCC Licenses has been designated for hearing, either Buyer or
Seller may elect to terminate this Agreement pursuant to Section 10.1 (c). Buyer
----------------
shall not knowingly take, and Seller covenants that Seller shall not knowingly
take, any action that party knows or has reason to know would materially and
adversely affect or materially delay issuance of the FCC Order or materially and
adversely affect or materially delay its becoming a Final Action without a
Material Adverse Condition, unless such action is requested or required by the
FCC, its staff or the Rules and Regulations. Should Buyer or Seller become aware
of any facts which could reasonably be expected to materially and adversely
affect or materially delay issuance of the FCC Order without a Material Adverse
Condition (including but not limited to, in the case of Buyer, any facts which
would reasonably be expected to disqualify Buyer from controlling the Station),
such party shall promptly notify the other party thereof in writing and both
parties shall cooperate to take all steps necessary or desirable to resolve the
matter expeditiously and to obtain the FCC's approval of matters pending before
it. Should Buyer, at any time after entering into this Agreement, enter into an
agreement to acquire other radio stations in a manner that, in the reasonable
opinion of Buyer's counsel, will disqualify Buyer from acquiring the Station
without a waiver of the Rules and Regulations by the FCC, then, to the extent
permitted by the Rules and Regulations, Buyer shall request such waiver only in
conjunction with its acquisition of the other radio stations and Buyer shall
request the FCC to process the applications necessary to obtain the FCC Order as
if the Buyer did not enter into the agreement to acquire other radio stations;
provided, however, that nothing herein shall prohibit Buyer from informing the
FCC that such waivers relate to the instant transaction and may affect the
ability to obtain a FCC Order.
5.3 OTHER CONSENTS. Seller shall use its reasonable best efforts to
--------------
obtain the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant any material consideration in order to obtain any such
consent or waiver.
19
<PAGE>
5.4 TAX RETURNS AND PAYMENTS.
------------------------
(a) All tax returns, estimates, and reports required to be filed by
Seller prior to the Closing Date or relating to periods prior to the Closing
Date will be timely filed with the appropriate governmental agencies unless
valid extensions therefor shall have been obtained.
(b) All taxes pertaining to ownership of the Sale Assets or
operation of the Station prior to the Closing Date will be timely paid; provided
that Seller shall not be required to pay any such tax so long as the validity
thereof shall be contested in good faith by appropriate proceedings and Seller
shall have set aside adequate reserves with respect to any such tax.
5.5 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and
its representatives may make such reasonable investigation of the Sale Assets as
it may desire; and Seller shall give to Buyer, its engineers, counsel,
accountants and other representatives reasonable access during normal business
hours throughout the period prior to the Closing to personnel and all of the
assets, books, records and files of or pertaining to the Station, provided that
(i) Buyer shall give Seller reasonable advance notice of each date on which
Buyer or any such other person or entity desires such access, (ii) each person
(other than an officer of Buyer) shall, if requested by Seller, be accompanied
by an officer or their representative of Buyer approved by Seller, which
approval shall not be unreasonably withheld, (iii) the investigations at the
offices of Seller shall be reasonable in number and frequency, and (iv) all
investigations shall be conducted in such a manner as not to physically damage
any property or constitute a disruption of the operation of the Station or
Seller. Seller shall furnish to Buyer during such period all documents and
copies of documents and information concerning the business and affairs of
Seller and the Station as Buyer may reasonably request.
5.6 CONFIDENTIALITY; PRESS RELEASE. All information, data and materials
------------------------------
furnished or to be furnished to either party with respect to the other party in
connection with this transaction or pursuant to this Agreement are confidential.
Each party agrees that prior to Closing (a) it shall not disclose or otherwise
make available, at any time, any such information, data or material to any
person who does not have a confidential relationship with such party; (b) it
shall protect such information, data and material with a high degree of care to
prevent the disclosure thereof; and (c) if, for any reason, this transaction is
not consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be necessary or appropriate in connection with the operation of
the Station by Buyer. Each party shall use its reasonable efforts to prevent the
violation of any of the foregoing
20
<PAGE>
confidentiality provisions by its respective representatives. Notwithstanding
the foregoing, nothing contained herein shall prohibit Buyer or Seller from:
(i) using such information, data and materials in connection
with any action or proceeding brought or any claim asserted by Buyer or Seller
in respect of any breach by the other of any representation, warranty or
covenant made in or pursuant to this Agreement; or
(ii) supplying or filing such information, data or materials to
or with the FCC or any other valid governmental or court authority to the extent
reasonably necessary to obtain any consent, waiver, amendment, modification,
approval, authorization, permit or license which may be necessary to effectuate
this Agreement, and to consummate the transaction contemplated herein.
In the event that either party determines in good faith that a press release or
other public announcement is desirable under any circumstances, the parties
shall consult with each other to agree upon the appropriate timing, form and
content of such release or announcement prior to making such release or
announcement.
5.7 REASONABLE BEST EFFORTS. Subject to the terms and conditions of
------------------------
this Agreement, each of the parties hereto will use its reasonable best efforts
to take all action and to do all things necessary, proper or advisable to
satisfy any condition to the parties' obligations hereunder in its power to
satisfy and to consummate and make effective as soon as practicable the
transactions contemplated by this Agreement.
5.8 FCC REPORTS. Seller shall continue to file, on a current basis
------------
until the Closing Date, all reports and documents required to be filed with the
FCC with respect to the Station. Seller shall provide Buyer with copies of all
such filings within five business days of the filing with the FCC.
5.9 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing,
-----------------------------------
Seller shall obtain executed releases, in suitable form for filing and otherwise
in form and substance reasonably satisfactory to Buyer, of any security
interests granted in the Sale Assets as security for payment of loans and other
obligations or judgments and of any other Liens (other than Permitted Liens) on
the Sale Assets. At the closing, Seller shall transfer and convey to Buyer all
of the Sale Assets free and clear of all Liens except Permitted Liens.
5.10 Intentionally Omitted
5.11 REQUEST FOR CALL SIGN CHANGE. Seller shall cooperate with all
-----------------------------
reasonable requests of Buyer to change the call sign of the Station. Buyer shall
pay the costs of the call sign change.
21
<PAGE>
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the Closing Date, of
each of the following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
----------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date.
-----------
6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall have
become a Final Action without any Material Adverse Condition.
(b) Conditions which the FCC Order or any order, ruling or decree
of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Seller.
(c) All other authorizations, consents, approvals and clearances of
federal, state or local governmental agencies required to permit the
consummation by Buyer of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that
22
<PAGE>
individually or in the aggregate would have a material adverse effect on the
operations of the station.
6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall
--------------------
be subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending or shall have been threatened in writing. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transaction contemplated hereby would constitute a violation
of the laws of the United States or of any state or political subdivision or
that it intends to commence proceedings to restrain such consummation or to
force divestiture, unless such governmental authority shall have withdrawn such
notice. No governmental authority having jurisdiction shall have commenced any
such proceeding.
6.5 OPINION OF SELLER'S FCC COUNSEL. Buyer shall have received from
--------------------------------
Seller's FCC counsel an opinion, dated the Closing Date, in form and substance
reasonably satisfactory to Buyer's FCC counsel, to the effect that:
(a) The FCC Licenses listed on Schedule 3.7 are valid, in good
------------
standing and in full force and effect and include all licenses, permits and
authorizations which are necessary under the Rules and Regulations for Seller to
operate the Station in the manner in which the Station is currently being
operated.
(b) To counsel's knowledge, no condition has been imposed by the
FCC as part of any FCC License which is not set forth on the face thereof as
issued by the FCC or contained in the Rules and Regulations applicable generally
to stations of the type, nature, class or location of the Station.
(c) No proceedings are pending or, to counsel's knowledge, are
threatened which may result in the revocation, modification, non-renewal of,
suspension of, or the imposition of a Material Adverse Condition upon, any of
the FCC Licenses, the denial of any pending applications, the issuance of any
cease and desist order or the imposition of any fines, forfeitures or other
administrative actions by the FCC with respect to the Station or its operation,
other than proceedings affecting the radio broadcasting industry in general.
In rendering such opinion, counsel shall be entitled to rely upon
Seller's representations and warranties in this Agreement and to limit its
inquiry to its files and such FCC files and records as are available to it as of
10:00 o'clock A.M. Eastern time the business day immediately preceding the
Closing Date. Counsel may state that, as to any factual matters embodied in, or
forming a basis for any legal opinion expressed in, such opinion, counsel's
knowledge is based solely on such inquiry.
23
<PAGE>
6.6 OTHER CONSENTS. Seller shall have obtained in writing and provided
---------------
to Buyer on or before the Closing Date, without any condition materially adverse
to Buyer or the Station, the consents or waivers to the transactions
contemplated by this Agreement required under the Station Agreements.
6.7 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or
------------------------------
caused to be delivered to Buyer on the Closing Date each of the Documents
required to be delivered pursuant to Section 8.2.
------------
6.8 NO CESSATION OF BROADCASTING.
-----------------------------
(a) Between the date hereof and the Closing Date, the Station shall
not have for a period of more than ten (10) days in the aggregate (i) ceased
broadcasting on its authorized frequency, (ii) lost substantially all of its
normal broadcasting capability or (iii) been broadcasting at a power level of
50% or less of its FCC authorized level. Seller shall promptly notify Buyer of
the occurrence of any one or more of the foregoing events or conditions, and the
non-fulfillment of the condition precedent set forth in this Subsection caused
by the occurrence of the events specified in Seller's notice shall be deemed
waived by Buyer unless, within fifteen (15) days after Buyer's receipt of
Seller's written notice, Buyer notifies Seller in writing to the contrary.
(b) In addition, during the five (5) days immediately preceding the
Closing Date, the Station shall have been operating continuously with
substantially all of its normal broadcasting capability except for cessation or
reductions for insignificant periods of time resulting from occurrences (such as
lightning strikes) over which Seller has no control. Seller shall have the right
to delay Closing for a period not to exceed thirty (30) days if Seller
reasonably determines that any action to restore the Station substantially all
of its normal broadcasting capability can be completed during such delay period.
(c) Notwithstanding the foregoing, the loss or damage to Seller's
transmission facilities or the failure to comply with any standard set forth in
Section 6.8(a) or Section 6.8(b) shall not be a condition precedent to Buyer's
- -------------- --------------
obligation to close if such loss, damage or failure to comply arose solely by
reason of the act or omission of Buyer in its capacity as the programmer of the
Station under the LMA.
6.9 Intentionally Omitted
24
<PAGE>
ARTICLE VII
-----------
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
-------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
--------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to Buyer's ability to consummate
the transaction contemplated hereby), the conditions specified in Section 7.2
-----------
are satisfied as of the Closing Date.
7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all
--------------------------
material respects all of its covenants, agreements and obligations required by
this Agreement and each of the other Documents to be performed or complied with
by it prior to or upon the Closing Date.
7.3. FCC AND OTHER CONSENTS.
-----------------------
(a) The FCC Order shall have been issued by the FCC and shall have
become effective under the rules of the FCC.
(b) Conditions which the FCC Order or any order, ruling or decree
of any judicial or administrative body relating thereto or in connection
therewith specifies and requires to be satisfied prior to transfer of the FCC
Licenses to Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances of
all federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.
25
<PAGE>
7.4 ADVERSE PROCEEDINGS. Neither Seller nor any affiliate of Seller
--------------------
shall be subject to any ruling, decree, order or injunction restraining,
imposing material limitations on or prohibiting (i) the consummation of the
transactions contemplated hereby or (ii) its participation in the operation,
management, ownership or control of the Station; and no litigation, preceding or
other action seeking to obtain any such ruling, decree, order or injunction
shall be pending or threatened in writing. No governmental authority having
jurisdiction shall have notified any party to this Agreement that consummation
of the transactions contemplated hereby would constitute a violation of the laws
of the United States or of any state or political subdivision or that it intends
to commence proceedings to restrain such consummation or to force divestiture,
unless such governmental authority shall have withdrawn such notice. No
governmental authority having jurisdiction shall have commenced any such
proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall have
-------------------------------------------------
delivered or caused to be delivered to Seller on the Closing Date each of the
Documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
------------
ARTICLE VIII
------------
CLOSING
-------
8.1 TIME AND PLACE. Unless otherwise agreed to in advance by the
---------------
parties, Closing shall take place at the offices of Seller's counsel in Boston,
Massachusetts, or at such other place as the parties agree, at 10:00 A.M.
Eastern Time on the date (the "Closing Date") that is the later of (i) the fifth
Business Day after the Applicable Date or (ii) the date as soon as practicable
following satisfaction or waiver of the conditions precedent hereunder. The
Applicable Date shall be the date on which issuance of the FCC Order without any
Material Adverse Condition has become a Final Action.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing,
---------------------------------------------
Seller shall deliver or cause to be delivered to Buyer the following:
(a) Certified resolutions of Seller's Board of Directors (and
shareholders, if required by applicable law) approving the execution and
delivery of this Agreement and each of the other Documents and authorizing the
consummation of the transactions contemplated hereby and thereby.
(b) The certificate required by Section 6.1 (b).
---------------
(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.
26
<PAGE>
(d) Executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) An instrument or instruments assigning to Buyer all right,
title and interest of Seller in and to all Station Agreements being assumed by
Buyer.
(f) An instrument assigning to Buyer all right, title and interest
of Seller in the FCC Licenses, all pending applications relating to the station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(g) The opinion of Seller's FCC counsel, dated the Closing Date, to
the effect set forth in Section 6.5.
------------
(h) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and approvals required as a condition to Buyer's obligation to close hereunder
have been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer
---------------------------------------------
shall deliver or cause to be delivered to Seller the following:
(a) Certified resolutions of Buyer's Board of Directors (ad Buyer's
shareholders if required by law) approving the execution and delivery of this
Agreement and each of the other Documents and authorizing the consummation of
the transaction contemplated hereby and thereby.
(b) The Purchase Price as set forth in Section 2.5.
------------
(c) The agreement of Buyer assuming the obligations under any
Station Agreements being assumed by Buyer.
(d) The certificate required under Section 7.1 (b).
----------------
(e) Such additional information and materials as Seller shall have
reasonably requested.
27
<PAGE>
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES:
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
------------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period. In the
event such a notice is so given, the right to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
Notwithstanding the foregoing, the provisions for survival and the making of
claims shall not apply to the agreements whereby Buyer assumes the obligations
under Subsection 8.3(c), each of which agreements shall be governed by its own
-----------------
terms.
9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights
---------------------------
to indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
9.3 INDEMNIFICATION BY SELLER.
--------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Seller shall indemnify and hold harmless Buyer and any officer,
- ----
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date, except as relates to operation of
the Station by Buyer under the LMA;
(iii) All other liabilities and obligations of Seller other than
the Assumed Obligations; or
28
<PAGE>
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transaction contemplated
hereby.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Seller shall not be obligated to indemnify Buyer pursuant to
Subsection (a) above (i) for any amounts in excess of the Purchase Price in
- --------------
the aggregate, or (ii) unless and until the aggregate amount of such claims,
liabilities, damages, losses, costs and expenses exceeds Buyer's Threshold
Limitation, in which case Buyer shall then be entitled to indemnification of the
entire aggregate amount, provided that any amounts owed by Seller to Buyer under
Sections 2.7 and 9.3(a)(iv) above shall not be counted in determining whether
- ------------ ----------
Buyer's Threshold Limitation is satisfied, and Buyer shall have the right to
recover any such payment without regard to such limitation. In no event shall
Seller be liable hereunder for any lost profits of Buyer, consequential damages
or injury to the reputation of Buyer.
9.4 INDEMNIFICATION BY BUYER.
-------------------------
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Buyer shall indemnify and hold harmless Seller and any officer,
- ----
director, agent, employee and affiliate thereof with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station after the
Closing Date; or
(iii) All other liabilities or obligations of Buyer including,
without limitation, the Assumed Obligations.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above unless and until the aggregate amount of such claims,
- --------------
liabilities, damages, losses, costs and expenses exceeds Seller's Threshold
Limitation, in which case Seller shall then be entitled to indemnification of
the entire aggregate amount, provided that any amounts owed by Buyer to Seller
under Section 2.7 above shall not be counted in determining whether Seller's
-----------
Threshold Limitation is satisfied, and Seller shall have the right to recover
any such payment without regard to such limitation. In no event shall Buyer be
liable hereunder for any lost profits of Seller, consequential damages or injury
to the reputation of Seller.
29
<PAGE>
9.5 Indemnification Procedures. In the event that an Indemnified Party
---------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
------------
compromise, or defend such a claim without prejudice to any right it may have
hereunder.
ARTICLE X
---------
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION. If Closing shall not have previously occurred, this
------------
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from
Buyer to Seller, if:
(i) Seller gives such termination notice and is not at such
time in material default hereunder, or Buyer gives such termination notice and
Buyer is not at such time in material default hereunder; and
(ii) Either:
(A) any of the representations or warranties contained
herein of Buyer (if such termination notice is given by Seller), or of Seller
(if such termination notice is given by Buyer), are inaccurate in any respect
and materially adverse to the party giving such termination notice unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice; or
(B) Any material obligation to be performed by Buyer (if
such termination notice is given by Seller) or by Seller (if such termination
notice is given by Buyer) is not timely performed in any material respect unless
the lack of timely performance has been induced by or is the result of actions
or omissions of the party giving such termination notice; or
30
<PAGE>
(C) Any condition (other than those referred to in
fore-going Clauses (A) and (B) to the obligation to close the transaction
----------- ---
contemplated herein of the party giving such termination notice has not been
timely satisfied;
and any such inaccuracy, failure to perform or non-satisfaction of a condition
neither has been cured nor satisfied within twenty (20) days after written
notice thereof from the party giving such termination notice nor waived in
writing by the party giving such termination notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time after June 30, 1997 provided that termination shall not occur upon the
giving of such termination notice by Seller if Seller is at such time in
material default hereunder or upon the giving of such termination notice by
Buyer if Buyer is at such time in material default hereunder.
(C) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time following a determination by the FCC that the application for consent to
assignment of the FCC Licenses has been designated for hearing; provided that
the party which is the subject of the hearing (or whose alleged actions or
omissions resulted in the designation for heating) may not elect to terminate
under this subsection (c).
(d) The written election by Buyer under Article XI.
------------
10.2 OBLIGATIONS UPON TERMINATION.
-----------------------------
(a) In the event this Agreement is terminated pursuant to Section 10.1
------------
(a)(ii)(A) or (B), the aggregate liability of Buyer for breach hereunder shall
- ---------- ---
be limited as provided in Subsections (c) and (e), below and the aggregate
-----------------------
liability for Seller for breach hereunder shall be limited as provided in
Subsections (d) and (e), below. In the event this Agreement is terminated for
- -----------------------
any other reason, neither party shall have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to the
return of the Earnest Money from the Escrow Agent under the Escrow Agreement
(i) if such termination is effected by Buyer's giving of valid written notice
to Seller pursuant to Subsections 10.1 (a), (b) (c) or (d), or (ii) if such
------------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Subsections 10.1 (a)(ii)(C), 10.1 (b) or 10.1 (c). If Buyer is
-------------------------------------------------
entitled to the return of the Earnest Money, Seller shall cooperate with Buyer
in taking such action as is required under the Escrow Agreement in order to
effect such return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid written
notice to Buyer pursuant to Subsection 10.1 (a)(ii)(A) or (B), Buyer agrees that
---------------------------------
Seller shall be entitled to receive upon such termination, as liquidated damages
and not as a
31
<PAGE>
penalty, the Earnest Money ("Liquidated Damages Amount"). SELLER'S RECEIPT OF
THE EARNEST MONEY SHALL CONSTITUTE PAYMENT OF LIQUIDATED DAMAGES HEREUNDER AND
NOT A PENALTY, AND SHALL BE SELLER'S SOLE REMEDY AT LAW OR IN EQUITY FOR BUYER'S
BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND SELLER EACH ACKNOWLEDGE
AND AGREE THAT THE LIQUIDATED DAMAGES AMOUNT IS REASONABLE IN LIGHT OF THE
ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S BREACH OF THIS AGREEMENT, THE
DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND NON-FEASIBILITY OF OTHERWISE
OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE TRANSACTION TO BE CONSUMMATED
HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary, but
subject to the provisions of the following sentences, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
----------
10.1 (a), Buyer shall not be entitled to damages or indemnification from Seller.
- --------
Subject to the following sentence, if Seller attempts to terminate this
Agreement under circumstances where it is not entitled to do so, or if Seller,
by its own action, causes a breach of warranty or fails to satisfy a condition
(including without limitation a refusal to consummate the transaction after
Buyer has satisfied all conditions to Seller's obligation to close and Buyer has
demonstrated its willingness and ability to close on the terms set forth in this
Agreement and Buyer is not in default hereunder) with the intent of creating a
situation whereby Buyer elects to terminate under Section 10.1 (a) and Buyer
----------------
does so elect to terminate, the monetary damages, if any, to which Buyer shall
be entitled shall be limited to direct and actual damages and shall in no event
exceed Three Hundred Thousand Dollars ($300,000) in the aggregate.
(e) In any dispute between Buyer and Seller as to which party is entitled to
all or a portion of the Earnest Money, the prevailing party shall receive, in
addition to that portion of the Earnest Money to which it is entitled, an amount
equal to interest on that portion at the rate of 10% per annum, calculated from
the date the prevailing party's demand for all or a portion of the Earnest Money
is received by the Escrow Agent.
10.3 TERMINATION NOTICE. Each notice given by a party pursuant to Section
------------------- -------
10.1 to terminate this Agreement shall specify the Subsection (and clause or
- ----
clauses thereof) of Section 10.1 pursuant to which such notice is given.
----
ARTICLE XI CASUALTY
-------------------
Upon the occurrence of any casualty loss, damage or destruction material to
the operation of the Station prior to the Closing, Seller shall promptly give
Buyer written notice setting forth in detail the extent of such loss, damage or
destruction and the cause
32
<PAGE>
thereof if known. Seller shall use its reasonable efforts to promptly commence
and thereafter to diligently proceed to repair or replace any such lost, damaged
or destroyed property; provided, however, that if Seller shall have complied
with Section 5.1 (b) hereof, Seller shall have no obligation to incur any costs
or expenses for such repair or replacement not covered by insurance available
therefore. In the event that the repair or replacement of any such lost, damaged
or destroyed property is not fully completed prior to the Closing Date, Buyer
may elect to: (a) terminate this Agreement; (b) postpone the Closing until
Seller's repairs have been fully completed; or (c) consummate the transactions
contemplated hereby on the Closing Date, in which event Seller shall assign to
Buyer the portion of the insurance proceeds (less all reasonable costs and
expenses, including without limitation attorney's fees, expenses and court costs
incurred by Seller to collect such amounts), if any, not previously expended by
Seller to repair or replace the damaged or destroyed property (such assignment
of proceeds to take place regardless of whether the parties close on the
scheduled or deferred Closing Date) and Buyer shall accept the damaged Sale
Assets in their damaged condition. In the event the loss, damage or destruction
causes or will cause the Station to be off the air for more than seven (7)
consecutive days or fifteen (15) total days, whether or not consecutive, then
Buyer may elect either (i) to consummate the transactions contemplated hereby on
the Closing Date, in which event Seller shall assign to Buyer the portion of the
insurance proceeds (less all reasonable costs and expenses, including without
limitation attorney's fees, expenses and court costs, incurred by Seller to
collect such amounts), if any, not previously expended by Seller to repair or
replace the damaged or destroyed property, and Buyer shall accept the damaged
Sale Assets in their damaged condition, or (ii) to terminate this Agreement.
ARTICLE XII
-----------
CONTROL OF STATION
------------------
Except as otherwise provided in the LMA, between the date of this Agreement
and the Closing Date, Buyer shall not control, manage or supervise the operation
of the Station or conduct of its business, all of which shall remain the sole
responsibility and under the control of Seller, subject to Seller's compliance
with this Agreement.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.1 FURTHER ACTIONS. From time to time before, at and after the Closing,
----------------
each party, at its expense and without further consideration, will execute and
deliver such documents to the other party as the other party may reasonably
request in order more effectively to consummate the transactions contemplated
hereby.
33
<PAGE>
13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period of
------------------------------
thirty-six (36) months, Buyer shall provide Seller, Seller's counsel,
accountants and other representatives with reasonable access during normal
business hours to the books, records, property, personnel, contracts,
commitments and documents of the Station pertaining to transactions occurring
prior to the Closing Date when requested by Seller, and Buyer shall retain such
books and records for the normal document retention period of Buyer. At the
request and expense of Seller, Buyer shall deliver copies of any such books and
records to Seller.
13.3 PAYMENT OF EXPENSES.
--------------------
(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
--------------
hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant and other
similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be paid by the party primarily liable under applicable
law to pay such tax.
(c) Except as otherwise expressly provided in this Agreement, each of the
parties shall bear its own expenses, including the fees of any attorneys and
accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
---------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any of the remedies that it may have, to enforcement of
this Agreement (subject to obtaining any required approval of the FCC) by decree
of specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.
13.5 NOTICES. All notices, demands or other communications given hereunder
--------
shall be in writing and shall be sufficiently given if delivered by courier or
sent by registered or certified mail, first class, postage prepaid, or by telex,
cable, telegram, facsimile machine or similar written means of communication,
addressed as follows:
34
<PAGE>
(a) if to Seller, to:
Mr. Peter Ottmar
Mercury Print and Mail
P.O. Box 6447
Providence, RI 02940
Facsimile No.: (401) 728-1865
with a copies to:
Thomas E. Neely, Esq.
Hale & Dorr
60 State Street
Boston, MA 02109
Facsimile No.: (617) 526-5000
and
Peter Tannenwald, Esq.
Irwin, Campbell & Tannenwald
1730 Rhode Island Ave., NW, Suite 200
Washington D.C. 20036-5101
Facsimile No.: (202) 728-0354
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third (3rd) business day following the date
mailed, and (ii) if personally delivered or otherwise sent as provided above, on
the date received.
13.6 ENTIRE AGREEMENT. Except as provided in the following sentence, this
------------------
Agreement, the Schedules and Exhibits hereto, and the other Documents constitute
the
35
<PAGE>
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersede any prior negotiations, agreements,
understandings or arrangements between the parties with respect to the subject
matter hereof. The execution of this Agreement shall in no way terminate or
modify the rights of Buyer to otherwise acquire the Station in the future (by
reason of its rights as successor to an option held by American Radio Systems)
unless this Agreement is terminated as the result of Buyer's failure to act in
good faith to pursue and effect the consummation of the Station pursuant to the
terms set forth herein.
13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this
-------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or assigns. Except to the extent specified
herein, nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto and their respective successors or assigns
any rights, remedies, obligations or liabilities under or by reason of this
Agreement.
13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be
-----------
assignable by either party hereto without the prior written consent of the other
party, except that Buyer may assign its rights and obligations to an entity
controlled directly or indirectly by Edward G. Atsinger III and Stuart W.
Epperson without the prior written consent of Seller.
13.9 GOVERNING LAW. This Agreement shall in all respects be governed by and
--------------
construed in accordance with the laws of the Commonwealth of Massachusetts,
including all matters of construction, validity and performance.
13.10 BULK SALES. Buyer hereby waives compliance by Seller with the
-----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
-----------
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 SECTION 1031 ASSET EXCHANGE. The parties acknowledge that each may
----------------------------
desire to effectuate a tax-deferred exchange pursuant to Section 1031 of the
Internal Revenue Code (the "Code"), which may include a non-simultaneous
exchange, with respect to the sale and acquisition of the Sale Assets. The
parties agree to cooperate with each other in connection therewith, provided
each party participating in such an exchange agrees to hold the other free and
harmless of, and indemnify the other from, any liabilities, claims, costs,
damages, expenses and fees (including attorneys' fees) which may arise out of
said party's participation in a tax-deferred exchange, including without
limitation any claims by the Internal Revenue Service.
13.12 AMENDMENTS AND WAIVERS. NO term or provision of this Agreement may be
-----------------------
amended, waived, discharged or terminated orally but only by an instrument in
writing
36
<PAGE>
signed by the party against whom the enforcement of such amendment, waiver,
discharge or termination is sought. Any waiver shall be effective only in
accordance with its express terms and conditions.
13.13 SEVERABILITY. Any provision of this Agreement which is unenforceable in
-------------
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such unenforceability without invalidating the remaining provisions hereof, and
any such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.14 HEADINGS. The captions in this Agreement are for convenience of
---------
reference only and shall not define or limit any of the terms or provisions
hereof.
13.15 COUNTERPARTS. This Agreement may be executed in any number of
-------------
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.16 REFERENCES. All references in this Agreement to Articles and Sections
-----------
are to Articles and Sections contained in this Agreement unless a different
document is expressly specified.
13.17 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, each
-----------------------
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By /s/ Peter Ottman By /s/ Eric H. Halvorson
------------------------ ------------------------
Peter Ottman Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
37
<PAGE>
SCHEDULE 3.4
------------
NAME DESCRIPTION
- --------------------------------- ---------------------------------
The Flatley Company Office Lease
Fellsway Plaza Trust Tower Land Lease
Federal Communications Commission FCC Licenses
Bloomberg Communications, Inc. Programming
SMI Multi Media Group Programming - Don McDonald
Westwood One Programming - Bruce Williams
FirstCom Production Library
Tokai Financial Services Telephone equipment
Notwithstanding the disclosure of the required consents herein, except as
specifically provided in this Agreement, the failure to obtain such consents
shall not be a condition precedent to the obligations of the parties hereto, or
either of them, to complete the transactions contemplated by this Agreement.
38
<PAGE>
SCHEDULE 3.6
------------
SEE ATTACHED.
39
<PAGE>
SCHEDULE 3.7
------------
1. License for Station WBNW(AM), Boston, MA, FCC File No. BR-901203UW,
renewing authority to operate facilities specified in FCC File No. BZ-861022AM,
expiring October 1, 1998. Assignment of license to Back Bay Broadcasters, Inc.
authorized under FCC File No. BAL-940405EA, granted June 1, 1994. Transfer of
control to James H. Ottmar and Peter H. Ottmar (50% each authorized under FCC
File No. BTC-941130EA, granted December 21, 1994. Frequency 590 KHz.
2. Studio transmitter link used by WBNW, call sign WLO-559, frequency 946.5
MHz, expiring October 1, 1998.
3. Remote pickup license used by WBNW, call sign KVY914, frequency 450.95
MHz.
4. Remote control point under File No. BRC-951006AB, granted 3/7/96.
5. Microwave license, call sign WNEF-633, used for security camera at
transmitter site, expires 10/14/98.
40
<PAGE>
SCHEDULE 3.8
------------
AGREEMENTS BUYER ELECTS TO ASSUME:
- ----------------------------------
Capital Engineering (Maintenance) - through March 31, 1997.
Harvard University (Football) - through 1997 season.
Metro Traffic Control (Traffic Reports) - through January 24, 1997. Seller
to give notice of termination at least 90 days prior to January 24, 1997.
Tower Site Lease - through remainder of 20 year term. (Consent Required)
Studios/Offices - through remainder of 20 year term. (Consent Required)
University of Massachusetts (Men's Basketball) - through 1996/1997 regular
season
AGREEMENTS BUYER ELECTS NOT TO ASSUME:
- --------------------------------------
AFTRA - Collective Bargaining Agreement
Bloomberg Financial News
Capitol Engineering
FirstCom
The Media Audit
New England Weather Bureau
Tokai Financial Services
Richard Shafer
Tofias Fleishman Shapiro & Co.
SMI Multi Media Group
Westwood One
Joan Venocchi
Steve Bailey
John Hannah
Josh Hyatt
Maryhelen Gillespie
CBSI (Traffic/Accounting Software)
41
<PAGE>
SCHEDULE 3.9
------------
1. Back Bay Broadcasters, Inc. v. Michele E. Merolla, et al, Attleboro
District Court. This is a claim by Back Bay against Merolla for failure to
honor a sales contract, to which Merolla has filed a counterclaim alleging
breach of contract to sell Merolla real estate. Merolla asked damages in
excess of $57,000.
2. BBB adv. Associated Press - Boston Municipal Court. The Associated Press
has sued BBB alleging breach of contract and asking for damages of $75,900
plus costs and interests.
3. BBB v. Merolla Chiropractic, Attleboro District Court. This is a companion
case to the case referred to at item #1 above, and Merolla Chiropractic has
failed to pay approximately $5,500 owed to Back Bay.
<PAGE>
SCHEDULE 3.10
-------------
1. AFTRA - WBNW 1995-97 Collective Bargaining Agreement between Back Bay
Broadcasters, Inc. and American Federation of Television and Radio Artists.
(2/1/95-1/31/97).
2. Agreement dated February 8, 1994 with Local Union No. 1228 of the
International Brotherhood of Electrical Workers (AFL-CIO).
<PAGE>
SCHEDULE 3.17
-------------
Buyer and Seller acknowledge that Gary Stevens & Co., Inc. and Media Services
Group, Inc. acted as the brokers with respect to this transaction. All fees due
Gary Stevens & Co., Inc. arising out of this transaction shall be paid in full
by Buyer. All fees due Media Services Group, Inc. shall be paid in full by
Seller.
44
<PAGE>
ESCROW AGREEMENT
----------------
THIS ESCROW AGREEMENT (the "Agreement") is made as of this __ day of
December, 1996 by and among BACK BAY BROADCASTERS, INC. ("Seller"), NEW ENGLAND
CONTINENTAL MEDIA, INC. ("Buyer"), and MEDIA SERVICES GROUP, INC. ("Escrow
Agent").
WITNESSETH
WHEREAS, concurrently with the execution of this Agreement, Seller and Buyer
are entering into an Asset Purchase Agreement (the "Purchase Agreement"),
pursuant to which Seller has agreed to sell to Buyer, subject to the terms and
conditions of the Purchase Agreement, substantially all the assets used in the
operation of radio station WBNW-AM, Boston, Massachusetts; and
WHEREAS, the Purchase Agreement provides, upon the terms and conditions set
forth therein, for Buyer to deposit into escrow the amount of Three Hundred
Thousand Dollars ($300,000) (the "Escrow Deposit"), and
WHEREAS, the Escrow Deposit shall be held by the Escrow Agent subject to the
terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in the Purchase Agreement, the parties hereto
agree as follows:
1. The Escrow Agent is hereby appointed and shall have all the rights,
powers, duties and obligations hereinafter provided, and the Escrow Agent
accepts such appointment.
2. Concurrently with the execution and delivery of this Agreement, Buyer has
deposited with the Escrow Agent, in escrow, the Escrow Deposit. The Escrow
Deposit shall be held and disbursed by Escrow Agent as hereinafter set forth.
3. The Escrow Agent agrees to accept Buyer's deposit of the Escrow Deposit.
The Escrow Agent agrees to invest and reinvest the Escrow Deposit in accordance
with the following provisions:
(a) The Escrow Agent shall invest and reinvest the Escrow Deposit in one or
more of the following investments as selected from time to time by the Escrow
Agent in its discretion (the "Obligations"):
EXHIBIT A
<PAGE>
(i) Direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America, or
(ii) money market funds or certificates of deposit issued by any bank,
trust company or national banking association, provided the capital stock,
surplus, and undivided profits of such institution are not less that Fifty
Million Dollars ($50,000,000), or
(iii) Money market funds authorized to invest solely in direct
obligations of the United States of America.
(b) The Obligations shall have a maturity of thirty (30) days or less during
the sixty (60) days immediately after deposit of the Escrow Deposit, and
thereafter shall be available on demand without penalty unless Escrow Agent is
otherwise directed in writing by both Seller and Buyer.
(c) Notwithstanding anything else in this Agreement to the contrary, interest
and other earnings on the Escrow Deposit shall be distributed by the Escrow
Agent to Buyer from time to time upon the request of Buyer.
4. If the Escrow Agent shall receive a certificate in the form of Exhibit B
---------
executed by an authorized officer of each of Buyer and Seller named on Exhibit A
---------
(each, an "Authorized Officer"), the Escrow Agent shall deliver the Escrow
Deposit to Seller not more than one (1) business day after receipt of such
certificate.
5. If the Escrow Agent shall receive a certificate in the form of Exhibit C
---------
executed by an Authorized Officer of each of Buyer and Seller, the Escrow Agent
shall deliver the Escrow Deposit to Buyer not more than one (1) business day
after receipt of such certificate.
6. Either Buyer or Seller, on its own, may request the Escrow Agent to
release the Escrow Deposit to it by sending a written request to the Escrow
Agent, with a copy to the other party, which request shall state the basis upon
which the Buyer or Seller is requesting the release of the Escrow Deposit. The
Escrow Agent shall deliver the Escrow Deposit to the requesting party if the
other party hereto has not objected in writing to such written request with
seven (7) business days after the date of receipt of the request by the Escrow
Agent.
7. If a controversy arises between the parties hereto with respect to the
release of the Escrow Deposit, the Escrow Agent shall not be required to resolve
such controversy or take any action, but shall await final resolution of the
controversy by joint written instructions from the parties hereto or pursuant to
a nonappealable order from a court of competent jurisdiction. In any dispute
between the Buyer and Seller as to which party is entitled to all or a portion
of the Escrow Deposit, the prevailing party shall receive from
<PAGE>
the losing party, in addition to that portion of the Escrow Deposit to which it
is entitled, an amount equal to interest on that portion of the Escrow Deposit
to which it is entitled at the rate of ten percent (10%) per annum, calculated
from the date the prevailing party's demand for all or a portion of the Escrow
Deposit is received by the Escrow Agent.
8. The Escrow Agent's duties are only such as are specifically provided
herein, and the Escrow Agent shall incur no liability whatsoever to Buyer or
Seller except for gross negligence or willful misconduct. The Escrow Agent shall
have no responsibility hereunder other than to follow the instructions herein
contained. The Escrow Agent may consult with counsel and shall be fully
protected in any action taken reasonably and in good faith in accordance with
any written instructions given to it hereunder and believed by it reasonably and
in good faith to have been executed by the proper parties.
9. As between Seller and Buyer on the one hand and Escrow Agent on the other,
Seller and Buyer shall be jointly and severally liable to indemnify Escrow Agent
for all reasonable costs, charges, damages and expenses, including but not
limited to reasonable attorneys' fees (the "Indemnifiable Costs") incurred by
Escrow Agent arising out of or in connection with the performance of its
obligations under this Agreement, provided that Indemnifiable Costs shall not
include any costs, charges, damages or expenses, including attorneys' fees,
arising out of or in connection with Escrow Agent's gross negligence or willful
misconduct. Solely as between Seller and Buyer in connection with any
controversy or litigation regarding the Escrow Deposit, (i) the one of them who
as a claimant fails to obtain a majority of the relief sought, or who as a
defendant or respondent fails to obtain denial by a judgment not subject to
further appeal of a majority of the relief sought by the other, shall be
responsible for payment of all of the Escrow Agent's Indemnifiable Costs
relating to the controversy or litigation in question; and (ii) in any other
event, Seller and Buyer shall each be responsible for payment of one-half of
Escrow Agent's Indemnifiable Costs.
10. Escrow Agent agrees to serve without compensation for the services to be
rendered hereunder.
11. The obligations of Seller and Buyer to indemnify Escrow Agent under
Paragraph 9 shall survive termination of this Agreement.
- -----------
12. The Escrow Agent may resign at any time by giving written notice thereof
to the other parties hereto, but such resignation shall not become effective
until a successor escrow agent shall have been appointed by the Escrow Agent and
approved by Seller and Buyer and shall have accepted such appointment in
writing. If an instrument of acceptance by a successor escrow agent shall not
have been delivered to the Escrow Agent within thirty (30) days after the giving
of such notice of resignation, the resigning Escrow Agent may at the expense of
both Buyer and Seller petition any court of competent jurisdiction for the
appointment of a successor escrow agent.
<PAGE>
13. In the event of any litigation between Seller and Buyer involving a
disputed claim to the Escrow Deposit, the one of them who is the prevailing
party shall be entitled to receive from the other reasonable attorneys' fees and
other reasonable costs and expenses reasonably incurred by the prevailing party
in connection with such litigation regardless of whether such litigation is
prosecuted to judgment. As used herein, "prevailing party" shall mean in the
case of a claimant, one who is successful in obtaining a majority of the relief
sought, and in the case of a defendant or respondent, one who is successful in
obtaining denial by a judgment not subject to further appeal of a majority of
the relief sought by the claimant.
14. If a controversy arises between the parties hereto with respect to the
release of the Escrow Deposit, any of the Seller, Buyer or Escrow Agent shall,
at its option, file an action or bill in interpleader, or similar action for
such purpose, in a court of competent jurisdiction and the Escrow Agent shall
promptly pay the Escrow Deposit into said court, in which event the Escrow
Agent's duties, responsibilities and liabilities under this Agreement shall
terminate.
15. This Agreement shall be construed in accordance with the laws of the
Commonwealth of Massachusetts. This Agreement may be executed in several
counterparts, each one of which shall constitute an original, and all
collectively shall constitute but one instrument.
16. Any notice, consent or request to be given in connection with any of the
terms or provisions of this Agreement shall be in writing and shall be
sufficiently given if delivered by overnight delivery service or sent by
registered or certified mail, first class postage prepaid, or by telegram,
facsimile machine or similar written means of communication, addressed as
follows:
(a) if to the Escrow Agent, to:
Media Services Group, Inc.
170 Westminster Street
Suite 701
Providence, RI 02903
Facsimile No.: (401) 454-3131
(b) if to Seller, to:
Mr. Peter Ottmar
Mercury Print and Mail
P.O. Box 6447
Providence, RI 02940
Facsimile No.: (401) 724-1865
with a copies to:
<PAGE>
Thomas E. Neely, Esq.
Hale & Dorr
60 State Street
Boston, MA 02109
Facsimile No.: (617) 526-5000
and
Peter Tannenwald, Esq.
Irwin, Campbell & Tannenwald
1730 Rhode Island Ave., NW, Suite 200
Washington D.C. 20036-3101
Facsimile No.: (202) 728-0354
(b) if to Buyer, to:
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
Corporate Counsel
or any such other address with respect to any party hereto as such party may
from time to time notify (as provided above) to the other parties hereto. Any
such notice, demand or communication shall be deemed to have been given (i) if
so mailed, as of the close of the third business day following the date so
mailed, and (ii) if personally delivered or sent by overnight mail or otherwise
sent as provided above, on the date received.
17. This Agreement shall terminate upon valid delivery of the Escrow Deposit
to Seller and/or Buyer or to a successor escrow agent which executes an Escrow
Agreement substantially similar to this Agreement.
18. Buyer's Federal Taxpayer Identification Number is 77-0121400.
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Escrow Agreement
as of the date first written.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: By:
--------------------------- --------------------------------
Peter Ottmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
"ESCROW AGENT"
MEDIA SERVICES GROUP, INC.
By:
--------------------------------
<PAGE>
EXHIBIT A
---------
TO ESCROW AGREEMENT
-------------------
SIGNATURES OF AUTHORIZED OFFICERS
---------------------------------
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: By:
------------------------------- -------------------------------
Peter Ottmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
<PAGE>
EXHIBIT B
---------
TO ESCROW AGREEMENT
-------------------
This Certificate is presented pursuant to Section 4 of the Escrow Agreement,
dated December 4, 1996 by and among BACK BAY BROADCASTERS, INC. ("Seller"), NEW
ENGLAND CONTINENTAL MEDIA, INC. ("Buyer") and MEDIA SERVICES GROUP, INC.
("Escrow Agent"). All capitalized terms used and not otherwise defined shall
have their respective meanings provided in the Escrow Agreement.
Pursuant to Section 4 of the Escrow Agreement, Seller and Buyer DO HEREBY
CERTIFY that Seller is entitled to delivery of the Escrow Deposit.
Accordingly, the Escrow Agent is hereby directed to deliver the Escrow
Deposit to Seller within one (1) business day of the receipt of this
Certificate.
IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of the
date indicated.
Dated:__________, 1997.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: By:
---------------------------------- ---------------------------
Peter Ottmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
<PAGE>
EXHIBIT C
---------
TO ESCROW AGREEMENT
-------------------
This Certificate is presented pursuant to Section 5 of the Escrow
Agreement, dated December 4, 1996 by and among BACK BAY BROADCASTERS, INC.
("Seller"), NEW ENGLAND CONTINENTAL MEDIA, INC. ("Buyer") and MEDIA
SERVICES GROUP, INC. ("Escrow Agent"). All capitalized terms used and not
otherwise defined shall have their respective meanings provided in the
Escrow Agreement.
Pursuant to Section 5 of the Escrow Agreement, Seller and Buyer DO
HEREBY CERTIFY that Buyer is entitled to delivery of the Escrow Deposit.
Accordingly, the Escrow Agent is hereby directed to deliver the Escrow
Deposit to Buyer within one (1) business day of the receipt of this
Certificate.
Dated:___________, 1997.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: By:
---------------------------------- ----------------------
Peter Ottmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
<PAGE>
EXHIBIT 10.06.06.02
FIRST AMENDMENT
TO THE
ASSET PURCHASE AGREEMENT
This amendment ("Amendment") is dated as of this ___ day of February, 1997 by
and between BACK BAY BROADCASTERS, INC. ("Seller"), and NEW ENGLAND CONTINENTAL
MEDIA, INC. ("Buyer").
WHEREAS, pursuant to an agreement ("Purchase Agreement") dated December 4, 1996,
by and between Seller and Buyer, Buyer obtained the right to purchase and
acquire certain assets relating to radio station WBNW(AM), Boston Massachusetts;
WHEREAS, pursuant to Section 2.1(c) of the Purchase Agreement Buyer agreed,
--------------
inter alia, to assume all obligations of Seller arising out of that certain
lease agreement ("Lease") dated May 19, 1988 by and between Thomas J. Flatley
d/b/a/ The Flatley Company ("the Landlord"), and WEEI, The Helen Broadcasting
Company Limited Partnership, on or after the date for the closing ("the
Closing") of the transactions contemplated by the Purchase Agreement;
WHEREAS, Buyer has entered into an agreement ("Termination Agreement") with the
Landlord to terminate the Lease as of February 21, 1997, provided the Closing
occurs before said date; and,
WHEREAS, the parties have agreed to and desire to amend the Purchase Agreement
as set forth herein so that the Closing may occur on February 21, 1997,
NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Seller and Buyer agree as follows:
1. Section 1.28 of the Purchase Agreement is amended in its entirety to
------------
provide as follows: "PURCHASE PRICE. The consideration to be paid by Buyer to
--------------
Seller for purchase of the Sale Assets in an amount equal to Five Million Nine
Hundred Eighty Three Thousand Five Hundred Dollars ($5,983,500)."
2. Buyer hereby waives the requirement under Section 6.3 of the Purchase
-----------
Agreement, that the FCC Order shall have "become a Final Action without any
Material Adverse Condition."
3. Section 8.1 of the Purchase Agreement is amended in its entirety to provide
-----------
as follows: "The Closing shall take place by mail on February 28, 1997."
4. Section 8.2 of the Purchase Agreement is amended to provide that at the
-----------
Closing, Seller shall deliver or cause to be delivered to Buyer an Unwind
Agreement in the form of Exhibit "B", attached hereto.
5. Section 8.3 of the Purchase Agreement is amended to provide that at the
-----------
Closing, Buyer shall deliver or cause to be delivered to Seller an Unwind
Agreement in the form of Exhibit "B", attached hereto.
6. Section 9.4(a) of the Purchase Agreement is amended in its entirety to
--------------
provide as follows:
(a) Subject to the provisions of Subsection (b) below and Section
-------------- -------
10.2 below, Buyer shall indemnify and hold harmless Seller and any
----
officer, director, agent, employee and affiliate thereof with respect to
any and all demands, claims, actions, suits, proceedings, assessments,
judgments, costs, losses, damages, liabilities and expenses (including
reasonable attorneys' fees) relating to or arising out of:
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this
Agreement or any other Document; or
(ii) The ownership or operation of the Station after the
Closing Date;
(iii) Commissions, fees, compensation or reimbursement due
pursuant to the agreement attached hereto as Exhibit "C" and resulting
from the termination by Buyer of the Station Agreement known as the
Flatley Lease. (This Section 9.4(a)(iii) shall not be subject to Seller's
------------------
Threshold Limitation.)
(iv) Any activity on or after December 4, 1996 relating to
the failure by Back Bay or New England to enter into the proposed subleases to
Shadow Broadcast Services LLC ("Shadow") and Partner Provider Health, Inc.
("PPH") of space demised by the Flatley Lease, including without limitation any
claims by Shadow, PPH, any broker or finder, or the Flatley Company. (This
Section 9.4(a)(iv) shall not be subject to Seller's Threshold Limitation.)
- ------------------
<PAGE>
(v) All other liabilities or obligations of Buyer
including, without limitation, the Assumed Obligations.
7. Except as expressly provided herein, the terms and conditions of the
Purchase Agreement shall remain in full force and effect and unamended. In the
event of a conflict between this Amendment and the terms of the Purchase
Agreement, the terms of this Amendment shall control.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the date
first written above.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: /s/ Peter Othmar By:
------------------------ --------------------------------
Peter Othmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
<PAGE>
(v) All other liabilities or obligations of Buyer
including, without limitation, the Assumed Obligations.
7. Except as expressly provided herein, the terms and conditions of the
Purchase Agreement shall remain in full force and effect and unamended. In the
event of a conflict between this Amendment and the terms of the Purchase
Agreement, the terms of this Amendment shall control.
IN WITNESS WHEREOF, the parties have duly executed this Amendment as of the
date first written above.
"SELLER" "BUYER"
BACK BAY BROADCASTERS, INC. NEW ENGLAND CONTINENTAL MEDIA, INC.
By: By: /s/ ERIC H. HALVORSON
-------------------------------- --------------------------------
Peter Ottmar Eric H. Halvorson
Chairman/Chief Executive Officer Executive Vice President
<PAGE>
EXHIBIT 10.06.07
ASSET PURCHASE AGREEMENT
------------------------
WPZE(AM), BOSTON, MASSACHUSETTS
AGREEMENT (the "Agreement") dated as of June 2nd, 1997 by and between NEW
ENGLAND CONTINENTAL MEDIA, INC. ("Seller"), and HIBERNIA COMMUNICATIONS, INC.
("Buyer").
RECITALS:
---------
1. WHEREAS, Seller owns and operates radio station WPZE(AM) 1260 kHz,
Boston, Massachusetts (the "Station"), and holds the licenses and authorizations
issued by the FCC for the operation of the Station.
2. AND WHEREAS Buyer desires to acquire substantially all the assets of the
Station, and Seller is willing to convey such assets to Buyer.
3. AND WHEREAS the acquisition of the Station is subject to prior approval
of the FCC.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer hereby agree as follows:
ARTICLE 1
---------
TERMINOLOGY
-----------
1.1 ACT. The Communications Act of 1934, as amended.
----
1.2 ADJUSTMENT AMOUNT. As provided in Section 2.7(b), the amount by which
------------------ --------------
Buyer's account is to be credited or charged, as reflected on the Adjustment
List.
1.3 ADJUSTMENT LIST. As provided in Section 2.7 (b), an itemized list of all
---------------- ---------------
sums to be credited or charged against the account of Buyer, with a brief
explanation in reasonable detail of the credits or charges.
1.4 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in Section
-------------------- -------
2.3.
- ---
1.5 BUSINESS DAY. Any calendar day, excluding Saturdays and Sundays, on which
-------------
federally chartered banks in the city of Boston, Massachusetts, are regularly
open for business.
<PAGE>
1.6 BUYER'S THRESHOLD LIMITATION. As provided in Section 9.3 (b), the
----------------------------- ---------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Buyer before Seller shall be
obligated to indemnify Buyer. The Buyer's Threshold Limitation shall be Twenty-
Five Thousand Dollars ($25,000).
1.7 CLOSING. The closing with respect to the transactions contemplated by
--------
this Agreement.
1.8 CLOSING DATE. The date determined as the Closing Date as provided in
-------------
Section 8.1.
- -----------
1.9 DOCUMENTS. This Agreement and all Exhibits and Schedules hereto, and
----------
each other agreement, certificate, or instrument delivered pursuant to or in
connection with this Agreement, including amendments thereto that are expressly
permitted under the terms of this Agreement.
1.10 EARNEST MONEY. Such term shall have the meaning defined in Section
-------------- -------
2.4.
- ---
1.11 ESCROW AGENT. (TBD).
-------------
1.12 ESCROW AGREEMENT. The Escrow Agreement in the form attached as Exhibit A
----------------- ---------
which Seller, Buyer and the Escrow Agent have entered into concurrently with the
execution of this Agreement relating to the deposit, holding, investment and
disbursement of the Earnest Money.
1.13 EXCLUDED ASSETS. Such term shall have the meaning defined in Section
---------------- -------
2.2.
- ----
1.14 FCC. Federal Communications Commission.
----
1.15 FCC LICENSES. The licenses, permits and authorizations of the FCC for
-------------
the operation of the Station and all pending applications related thereto
including, without limitation, those licenses, permits, authorizations and
applications as listed on Schedule 3.7.
-------------
1.16 FCC ORDER. An order or decision of the FCC granting its consent to the
----------
assignment of the FCC Licenses to Buyer.
1.17 FINAL ACTION. An action of the FCC that has not been reversed, stayed,
-------------
enjoined, set aside, annulled or suspended; with respect to which no timely
petition for reconsideration or administrative or judicial appeal or sua sponte
----------
action of the FCC with comparable effect is pending and as to which the time for
filing any such petition or
2
<PAGE>
appeal (administrative or judicial) or for the taking of any such sua sponte
----------
action of the FCC has expired.
1.18 INDEMNIFIED PARTY. Any party described in Section 9.3 (a) or 9.4(a)
------------------ -------------------------
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.19 INDEMNIFYING PARTY. The party to the Agreement (not the Indemnified
-------------------
Party) that, in the event of a claim or liability asserted by a third party
against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.20 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security
-----
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1.21 LMA. A Local Programming and Marketing Agreement by and between Buyer
----
and Seller relating to the programming of the Station prior to Closing, which
agreement may be entered into after the execution of this Agreement.
1.22 MATERIAL ADVERSE CONDITION. A condition which would materially restrict,
---------------------------
limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Station or the proceeds therefrom; provided, however, that
any condition which requires that a Station be operated in accordance with a
condition similar to those contained in the present FCC licenses issued for
operation of that Station, shall not be deemed a Material Adverse Condition.
1.23 PERMITTED LIEN. Any statutory lien which secures a payment not yet due
---------------
that arises, and is customarily discharged, in the ordinary course of Seller's
business; any easement, right-of-way or similar imperfection in the Seller's
title to its assets or properties that, individually and in the aggregate, are
not material in character or amount and do not and are not reasonably expected
to materially impair the value or materially interfere with the use of any asset
or property of the Seller material to the operation of its business.
1.24 PURCHASE PRICE. The consideration to be paid by Buyer to Seller for
---------------
purchase of the Sale Assets in an amount equal to Five Million Dollars
($5,000,000).
3
<PAGE>
1.25 RULES AND REGULATIONS. The rules of the FCC as set forth in Volume
----------------------
47 of the Code of Federal Regulations, as well as such other policies of the
Commission, whether contained in the Code of Federal Regulations, or not, that
apply to the Station.
1.26 SALE ASSETS. All of the tangible and intangible assets to be
------------
transferred by Seller to Buyer as set forth in Section 2.1.
-----------
1.27 STATION AGREEMENTS. The agreements, commitments, contracts and other
-------------------
items described in Section 2.1 (c) which relate to operation of the Station.
---------------
1.28 SELLER'S THRESHOLD LIMITATION. As provided in Section 9.4(b), the
------------------------------ --------------
threshold dollar amount for the aggregate of claims, liabilities, damages,
losses, costs and expenses that must be incurred by Seller before Buyer shall be
obligated to indemnify Seller. The Seller's Threshold Limitation shall be
Twenty-Five Thousand Dollars ($25,000).
1.29 SURVIVAL PERIOD. The term following the Closing Date during which
----------------
all representations, warranties, covenants and agreements of the parties under
this Agreement shall survive. The term shall be twelve (12) months.
1.30 TANGIBLE PERSONAL PROPERTY. The personal property described in
---------------------------
Section 2.1(a).
- --------------
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 SALE ASSETS. On the Closing Date, Seller will sell, transfer, assign
------------
and convey to Buyer, and Buyer will purchase from Seller, free and clear of all
Liens except Permitted Liens, all of Seller's right, title and interest, legal
and equitable, in and to the tangible and intangible assets (except Excluded
Assets) set forth below:
(a) TANGIBLE PERSONAL PROPERTY. The equipment, parts, supplies,
--------------------------
furniture, fixtures and other tangible personal property now owned by Seller and
set forth on Schedule 3.6, and any improvements, replacements and alterations
------------
thereto made between the date of this Agreement and the Closing Date.
(b) LICENSES AND PERMITS. The FCC Licenses and all other assignable or
---------------------
transferable governmental permits, licenses and authorizations (and any
renewals, extensions, amendments or modifications thereof) now held by Seller or
hereafter obtained by Seller between the date hereof and the Closing Date, to
the extent such other permits, licenses and authorizations pertain to or are
used in the operation of the Station.
(c) STATION AGREEMENTS. All agreements which Seller is a party to or
-------------------
bound by which are listed on Schedule 3.8; any renewals, extensions, amendments
------------
or
4
<PAGE>
modifications of those agreements which are made in the ordinary course of
Seller's operation of the Station and in accordance with the terms and
provisions of this Agreement.
(d) RECORDS. True and complete copies of all of the public inspection
--------
files, logs, reports of engineers and other consultants or independent
contractors, pertaining to or used in the operation of the Station (other than
corporate records).
2.2 EXCLUDED ASSETS. Notwithstanding any provision of this Agreement to the
----------------
contrary, Seller shall not transfer, convey or assign to Buyer, but shall retain
all of its right, title and interest in and to, the following assets owned or
held by it on the Closing Date ("Excluded Assets"):
(a) Any and all cash, cash equivalents, cash deposits to secure contract
obligations (except to the extent Seller receives a credit therefor under
Section 2.7, in which event the deposit shall be included as part of the Sale
- -----------
Assets), all inter-company receivables from any affiliate of Seller and all
other accounts receivable, bank deposits and securities held by Seller in
respect of the Station at the Closing Date.
(b) Any and all claims of Seller with respect to transactions prior to
the Closing including, without limitation, claims for tax refunds and refunds of
fees paid to the FCC.
(c) All prepaid expenses (except to the extent Seller receives a credit
therefor under Section 2.7, in which event the prepaid expense shall be included
-----------
as part of the Sale Assets).
(d) All contracts of insurance and claims against insurers.
(e) All employee benefit plans and the assets thereof and all
employment contracts.
(f) All contracts that are terminated in accordance with the terms and
provisions of this Agreement or have expired prior to the Closing Date in the
ordinary course of business; and all loans and loan agreements.
(g) All tangible personal property disposed of or consumed between the
date hereof and the Closing Date in the ordinary course of business and in
accordance with the terms and provisions of this Agreement.
(h) Seller's corporate records except to the extent such records pertain
to or are used in the operation of the Station, in which case Seller shall
deliver accurate copies thereof to Buyer.
5
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(i) All contracts for the sale of broadcast time on the Station for
cash or non-cash consideration.
(j) All commitments, contracts and agreements not specifically assumed
by Buyer pursuant to Section 2.1 (d), above.
---------------
(k) Any and all assets of Seller used by Seller in the ownership and/or
operation of the radio station WEZE(AM) 590 kHz, Boston, Massachusetts ("WEZE").
2.3 ASSUMPTION OF LIABILITIES.
--------------------------
(a) At the Closing, Buyer shall assume and agree to perform, without
duplication of Seller's performance, the following liabilities and obligations
of Seller (the "Assumed Obligations"):
(i) Current liabilities of Seller for which Buyer receives a
credit pursuant to Section 2.7, but not in excess of the amount of such credit.
-----------
(ii) Liabilities and obligations arising under the Station
Agreements assumed by and transferred to Buyer in accordance with this
Agreement, but only to the extent such liabilities and obligations relate to any
period of time after the Closing Date.
(b) Except for the Assumed Obligations, Buyer shall not assume or in any
manner be liable for any duties, responsibilities, obligations or liabilities of
Seller of any kind or nature, whether express or implied, known or unknown,
contingent or absolute, including, without limitation, any liabilities to or in
connection with Seller's employees whether arising in connection with the
transaction contemplated hereunder or otherwise.
2.4 EARNEST MONEY.
--------------
(a) Concurrently with the execution of this Agreement, Buyer has
deposited with Escrow Agent under the Escrow Agreement, in immediately available
funds, the sum of Two Hundred Fifty Thousand Dollars ($250,000), which amount is
hereinafter referred to as the "Earnest Money". The Escrow Agent shall hold the
Earnest Money under the terms of the Escrow Agreement in trust for the benefit
of the parties hereto. Interest and other earnings on the Earnest Money shall be
distributed by the Escrow Agent to Buyer from time to time upon the request of
Buyer.
(b) If Closing does not occur, the Earnest Money shall be delivered to
Seller or returned to Buyer in accordance with Section 10.2, and if Closing does
------------
occur, the Earnest Money shall be applied to payment of the Purchase Price at
Closing as provided in Section 2.5.
-----------
6
<PAGE>
2.5 PAYMENT OF PURCHASE PRICE.
--------------------------
(a) The Purchase Price shall be paid by Buyer as follows:
(i) At the Closing, the Earnest Money shall, subject to
execution and delivery of the closing documents described in Section 8.2, become
-----------
the property of Seller and shall, pursuant to the Escrow Agreement, be disbursed
to Seller by cashier's check or wire transfer of immediately available funds.
(ii) At the Closing, Purchase Price, less the amount of the
Earnest Money disbursed to Seller, shall be paid to Seller by wire transfer of
immediately available funds.
(b) Buyer shall pay to Seller, or Seller shall pay to Buyer, the
Adjustment Amount in accordance with Section 2.7.
-----------
2.6 ALLOCATION OF THE PURCHASE PRICE. Prior to Closing, Buyer and Seller
--------------------------------
shall use their best efforts to agree on an allocation of the Purchase Price. In
the event Buyer and Seller cannot agree, the allocation shall be made by an
independent appraiser, with the fees of the appraiser to be shared equally by
Buyer and Seller. Buyer and Seller shall use such allocation for all reporting
purposes in connection with federal, state and local income and, to the extent
permitted under applicable law, franchise taxes. Buyer and Seller agree to
report such allocation to the Internal Revenue Service in the form required by
Treasury Regulation (S) 1.1060-1T.
2.7 ADJUSTMENT OF PURCHASE PRICE.
----------------------------
(a) All operating income and operating expenses of the Station shall
be adjusted and allocated between Seller and Buyer, and an adjustment in the
Purchase Price shall be made as provided in this Section, to the extent
necessary to reflect the principle that all such income and expenses
attributable to the operation of the Station on or before the Closing Date shall
be for the account of Seller, and all income and expenses attributable to the
operation of the Station after the Closing Date shall be for the account of
Buyer.
(b) To the extent not inconsistent with the express provisions of this
Agreement, the allocations made pursuant to this Section 2.7 shall be made in
-----------
accordance with generally accepted accounting principles.
(c) For purposes of making the adjustments pursuant to this Section,
Buyer shall prepare and deliver the Adjustment List to Seller within thirty (30)
days following the Closing Date, or such earlier or later date as shall be
mutually agreed to by Seller and Buyer. The Adjustment List shall set forth the
Adjustment Amount. If the
7
<PAGE>
Adjustment Amount is a credit to the account of Buyer, Seller shall pay such
amount to Buyer, and if the Adjustment Amount is a charge to the account of
Buyer, Buyer shall pay such amount to Seller. In the event Seller disagrees with
the Adjustment Amount determined by Buyer or with any other matter arising out
of this subsection, and Buyer and Seller cannot within sixty (60) days resolve
the disagreement themselves, the parties will refer the disagreement to an
independent certified public accounting firm mutually agreeable to Buyer and
Seller, whose decision shall be final and whose fees and expenses shall be
allocated between and paid by Seller and Buyer, respectively, to the extent that
such party does not prevail on the disputed matters decided by the accountants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation, validly
------------------------------
existing and in good standing under the laws of the Commonwealth of
Massachusetts. Seller has all requisite power to own, operate and lease its
properties and carry on its business as it is now being conducted and as the
same will be conducted until the Closing.
3.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. The execution and
---------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents by Seller, and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized and
approved by all necessary action on the part of Seller. Seller has the power and
authority to execute, deliver and perform its obligations under this Agreement
and each of the other Documents and to consummate the transactions hereby and
thereby contemplated. This Agreement and each of the other Documents have been,
or at or prior to the Closing will be, duly executed by Seller. This Agreement
constitutes (and each of the other Documents, when so executed and delivered,
will constitute) legal and valid obligations of Seller enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting the enforcement of
creditors' rights or remedies generally, and subject, as to enforceability, to
general principles of equity (regardless of whether enforcement is sought in a
proceeding in equity or at law).
3.3 ABSENCE OF CONFLICTS. The execution and delivery of, and the
--------------------
performance of its obligations under, this Agreement and each of the other
Documents by Seller, and the consummation by Seller of the transactions
contemplated hereby and thereby:
(a) do not in any material respect, (with or without the giving of
notice or the passage of time or both) violate (or result in the creation of any
Lien other than a
8
<PAGE>
Permitted Lien on any of the Sale Assets under) any provision of law, rule or
regulation or any order, judgment, injunction, decree or ruling applicable to
Seller;
(b) do not in any material respect, (with or without the giving of
notice or the passage of time or both) conflict with or result in a breach or
termination of, or constitute a default or give rise to a right of termination
or acceleration under the articles of incorporation or bylaws of Seller or
pursuant to any lease, agreement, commitment or other instrument which Seller is
a party to or bound by or by which any of the Sale Assets may be bound, or
result in the creation or any Lien other than a Permitted Lien upon any of the
Sale Assets.
3.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
---------------------------------------------------
required consent of the FCC and except as set forth on Schedule 3.8, the
------------
execution and delivery of, and the performance of its obligations under, this
Agreement and each of the other Documents by Seller, and the consummation by
Seller of the transactions contemplated hereby and thereby, do not require the
consent, waiver, approval, permit, license, clearance or authorization of, or
any declaration of filing with, any court or public agency or other authority,
or the consent of any person under any agreement, arrangement or commitment of a
nature which Seller is a party to or bound or by which the Sale Assets are bound
by or subject to, the failure of which to obtain would have a material adverse
effect on the Sale Assets or the operation of the Station.
3.5 SALE ASSETS. The Sale Assets include all of the assets, properties and
-----------
rights of every type and description, real, personal and mixed, tangible and
intangible, that are used to a material extent in the conduct of the business of
operating the Station in the manner in which it is now being conducted, with the
exception of the Excluded Assets. The Sale Assets include sufficient assets to
operate the transmitter site of the Station in a manner consistent with ordinary
industry practices, except that no field intensity meter is included in the Sale
Assets.
3.6 TANGIBLE PERSONAL PROPERTY. Except as set forth on Schedule 3.6:
-------------------------- ------------
(a) Seller has good, marketable and valid title to all of the items of
Tangible Personal Property free and clear of all Liens except Permitted Liens,
and including the right to transfer same.
(b) The Tangible Personal Property complies with applicable rules and
regulations of the FCC and the terms of the FCC Licenses.
(c) The items of Tangible Personal Property are in good operating
condition and repair and Seller has no knowledge of any defect in the condition
or operation of any item of the Tangible Personal Property which is reasonably
likely to have a material adverse effect on the operation of the Station.
9
<PAGE>
3.7 FCC LICENSES. Seller is the holder of the FCC Licenses listed on
------------
Schedule 3.7, and except as set forth on such Schedule, the FCC Licenses (i) are
- ------------
valid, in good standing and in full force and effect and constitute all of the
licenses, permits and authorizations required by the Act, the Rules and
Regulations or the FCC for, or used in, the operation of the Station as now
operated, and (ii) constitute all the licenses and authorizations issued by the
FCC to Seller for or in connection with the current operation of the Station.
Seller has no actual knowledge of any condition imposed by the FCC as part of
any FCC License which is neither set forth on the face thereof as issued by the
FCC nor contained in the Rules and Regulations applicable generally to stations
of the type, nature, class or location of the Station. Except as disclosed on
Schedule 3.7, the Station is being operated in accordance with the terms and
- ------------
conditions of the FCC Licenses applicable to it and in accordance with the Rules
and Regulations. Except as set forth on Schedule 3.7, no proceedings are pending
------------
or, to the knowledge of the Seller, are threatened which may result in the
revocation, modification, non-renewal or suspension of any of the FCC Licenses,
the denial of any pending applications, the issuance of any cease and desist
order or the imposition of any fines, forfeitures or other administrative
actions by the FCC with respect to the Station or its operation, other than
proceedings affecting the radio broadcasting industry in general. Seller has
complied in all material respects with all requirements to file reports,
applications and other documents with the FCC with respect to the Station, and
all such reports, applications and documents are complete and correct in all
material respects. Seller has no knowledge of any matters (i) which could
reasonably be expected to result in the suspension or revocation of or the
refusal to renew any of the FCC Licenses or the imposition of any fines or
forfeitures by the FCC, or (ii) against Seller which could reasonably be
expected to result in the FCC's refusal to grant approval of the assignment to
Buyer of the FCC Licenses or the imposition of any Material Adverse Condition in
connection with approval of such assignment. There are not any unsatisfied or
otherwise outstanding citations issued by the FCC with respect to the Station or
its operation. The "Public Inspection File" of the Station is complete and in
substantial and material compliance with Section 73.3526 of the Rules and
Regulations.
3.8 STATION AGREEMENTS.
------------------
(a) Schedule 3.8 sets forth an accurate and complete list of all
------------
agreements, contracts, arrangements or commitments in effect as of the date
hereof, including all amendments, modifications and supplements thereto which
the Station or its assets or properties are bound by (except employee benefit
plans and employment contracts, and other contracts comprising Excluded Assets)
which Buyer has agreed to assume.
(b) Except as set forth in the Schedules, (i) all Station Agreements
are legal, valid and enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' fights generally, and subject, as to enforceability, to
general principles of equity regardless of whether enforcement is sought in any
proceeding at law or in equity; (ii) neither Seller nor, to the knowledge of
Seller, any other party thereto, is in material
10
<PAGE>
breach of or in material default under any Station Agreements; (iii) to the
knowledge of Seller, there has not occurred any event which, after the giving of
notice or the lapse of time or both, would constitute a material default under,
or result in the material breach of, any Station Agreements which are,
individually or in the aggregate, material to the operation of the Station; and
(iv) Seller holds the right to enforce and receive the benefits under all of the
Station Agreements, free and clear of all Liens (other than Permitted Liens) but
subject to the terms and provision of each such agreement.
(c) Schedule 3.8 indicates, for each Station Agreement listed thereon,
------------
whether consent or approval by any party thereto is required thereunder for
consummation of the transactions contemplated hereby.
3.9 LITIGATION. There are no claims, investigations or administrative,
------------
arbitration or other proceedings pending or, to the knowledge of Seller,
threatened against Seller which would, individually or in the aggregate if
adversely determined, have an adverse effect on the Sale Assets or the operation
of the Station, or which would give any third party the right to enjoin the
transactions contemplated by this Agreement. To the knowledge of Seller, there
is no basis for any such claim, investigation, action, suit or proceeding which
would, individually or in the aggregate if adversely determined, have an adverse
effect on the Sale Assets or the operation of the Station. There are no existing
or, to the knowledge of Seller, pending orders, judgements or decrees of any
court or governmental agency affecting Seller, the Station or any of the Sale
Assets.
3.10 LABOR MATTERS. Buyer's consummation of the transactions contemplated by
--------------
this Agreement in accordance with the terms hereof shall not, as a result of or
in connection with the transactions contemplated hereby, impose upon Buyer the
obligation to pay any severance or termination pay under any agreement, plan or
arrangement binding upon Seller. Seller is not a party or subject to any
collective bargaining agreements with respect to the Station. Seller, in the
operation of the Station, has complied in all material respects with all
applicable laws, rules and regulations relating to the employment of labor,
including those related to wages, hours, collective bargaining, occupational
safety, discrimination, and the payment of social security and other payroll-
related taxes, and it has not received any notice alleging that it has failed to
comply in any material respect with any such laws, rules or regulations. No
labor union or other collective bargaining representative represents or, to the
knowledge of the Seller, claims to represent any of the employees of the
Station. To the knowledge of Seller, there is no effort being made to organize
the employees or any group of employees of the Station for purposes of
collective bargaining.
3.11 COMPLIANCE WITH LAW. The operation of the Station complies in all
-------------------
material respects with the applicable rules and regulations of the FCC and all
federal, state, local or other laws, statutes, ordinances, regulations, and any
applicable order, writ, injunction or decree of any court, commission, board,
agency or other instrumentality.
11
<PAGE>
3.12 ABSENCE OF INSOLVENCY. No insolvency proceedings of any character
---------------------
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Seller or any of the Sale-Assets, are pending or, to the best knowledge of
Seller, threatened, and Seller has made no assignment for the benefit of
creditors, nor taken any action with a view to, or which would constitute the
basis for the institution of, any such insolvency proceedings.
3.13 BROKER'S OR FINDER'S FEES. Except as set forth on Schedule 3.13, no
-------------------------
agent, broker, investment banker or other person or firm acting on behalf of or
under the authority of Seller or any affiliate of Seller is or will be entitled
to any broker's or finder's fee or any other commission or similar fee, directly
or indirectly, in connection with the transactions contemplated by this
Agreement.
3.14 INSURANCE. There is now in full force and effect with reputable
---------
insurance companies fire and extended coverage insurance with respect to all
material tangible Sale Assets and public liability insurance, all in reasonable
commercial amounts.
3.15 TAXES. Seller has filed, or caused to be filed, all federal, state and
-----
local tax returns required to be filed by Seller with respect to the Station and
the Sale Assets. Seller has paid all taxes due for periods covered by such
returns.
3.16 TRANSMITTER SITE ZONING. The transmitter site utilized by the Station
-----------------------
conforms in all material respects with all applicable zoning ordinances and
other governmental regulations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly organized,
------------------------------
validly existing and in good standing under the laws of the State of Delaware
and, as of the date of closing, shall be authorized and in good standing to
conduct business in the Commonwealth of Massachusetts. Buyer has all requisite
corporate power to own, operate and lease its properties and carry on its
business as it is now being conducted and as the same will be conducted
following the Closing.
4.2 AUTHORIZATION AND BINDING EFFECT OF DOCUMENTS. Buyer's execution and
---------------------------------------------
delivery of, and the performance of its obligations under, this Agreement and
each of the other Documents, and the consummation by Buyer of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
necessary corporate action on the part of Buyer. This Agreement and each of the
other Documents to be executed by Buyer have been, or at or prior to the Closing
will be, duly executed by Buyer. The Documents, when executed and delivered by
the parties hereto, will
12
<PAGE>
constitute the valid and legally binding agreement of Buyer, enforceable against
Buyer in accordance with their terms, except as may be limited by bankruptcy,
insolvency, or other similar laws affecting the enforcement of creditors' rights
generally, and except as may be limited by general principles of equity
(regardless of whether such enforceability is sought in a proceeding in equity
or at law).
4.3 ABSENCE OF CONFLICTS. Buyer's execution and delivery of, and the
--------------------
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby:
(a) Do not in any material respect (with or without the giving of notice
or the passage of time or both) violate (or result in the creation of any claim,
lien, charge or encumbrance on any of the assets or properties of Buyer under)
any provision of law, rule or regulation or any order, judgment, injunction,
decree or ruling applicable to Buyer in any manner which would have a material
adverse effect on the assets, business, operation or financial condition or
results of operations of Buyer;
(b) Do not (with or without the giving of notice or the passage of time
or both) conflict with or result in a breach or termination of, or constitute a
default or give rise to a right of termination or acceleration under, the
articles of incorporation or bylaws of Buyer or any lease, agreement, commitment
or other instrument which Buyer is a party to or bound by or by which any of its
assets or properties may be bound.
4.4 GOVERNMENTAL CONSENTS AND CONSENTS OF THIRD PARTIES. Except for the
---------------------------------------------------
required consent of the FCC, Buyer's execution and delivery of, and the
performance of its obligations under, this Agreement and each of the other
Documents and the consummation by Buyer of the transaction contemplated hereby
and thereby, do not require the consent, waiver, approval, permit, license,
clearance or authorization of, or any declaration or filing with, any court or
public agency or other authority, or the consent of any person under any
agreement, arrangement or commitment of any nature which Buyer is a party to or
bound by, the failure of which to obtain would have a material adverse effect on
the assets, business, operation or financial condition or results of operations
of Buyer.
4.5 QUALIFICATION.
-------------
(a) Buyer has no knowledge after due inquiry of any facts concerning
Buyer or any other person with an attributable interest in Buyer (as such term
is defined under the Rules and Regulations) which, under present law (including
the Act) and the Rules and Regulations, would (i) disqualify Buyer from being
the holder of the FCC Licenses, the owner of the Sale Assets or the operator of
the Station upon consummation of the transactions contemplated by this
Agreement, or (ii) raise a substantial and material question of fact (within the
meaning of Section 309(e) of the Act) respecting Buyer's qualifications.
13
<PAGE>
(b) Without limiting the foregoing Subsection (a), Buyer shall make the
--------------
affirmative certifications provided in Section III of FCC Form 314 at the time
of filing of such form with the FCC as contemplated by Section 5.2.
-----------
4.6 BROKER'S OR FINDER'S FEES. No agent, broker, investment banker, or other
-------------------------
person or firm acting on behalf of or under the authority or Buyer or any
affiliate of Buyer is or will be entitled to any broker's or finder's fee or any
other commission or similar fee, directly or indirectly, in connection with
transactions contemplated by this Agreement.
4.7 LITIGATION. There are no legal, administrative, arbitration or other
----------
proceedings or governmental investigations pending or, to the knowledge of
Buyer, threatened against Buyer that would give any third party the right to
enjoin the transactions contemplated by this Agreement.
ARTICLE V
---------
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
5.1 CONDUCT OF THE STATION'S BUSINESS PRIOR TO THE CLOSING DATE. Subject
-----------------------------------------------------------
to the terms and conditions of the LMA, Seller covenants and agrees with Buyer
that between the date hereof and the Closing Date, unless the Buyer otherwise
agrees in writing, Seller shall:
(a) Use reasonable efforts to operate the Station in substantially the
manner in which it is currently being operated:
(b) Use reasonable commercial efforts to maintain insurance upon all of
the tangible Sale Assets in such amounts and of such kind comparable to that in
effect on the date hereof with respect to such Sale Assets and with respect to
the operation of the Station, with insurers of substantially the same or better
financial condition;
(c) Operate the Station and otherwise conduct its business in accordance
with the terms or conditions of its FCC Licenses, the Rules and Regulations, the
Act and all other rules and regulations, statutes, ordinances and orders of all
governmental authorities having jurisdiction over any aspect of the operation of
the Station, except where the failure to so operate the Station would not have a
material adverse effect on the Sale Assets or the operation of the Station or on
the ability of Seller to consummate the transactions contemplated hereby;
(d) Comply in all material respects with all Station Agreements now or
hereafter existing which are material, individually or in the aggregate, to the
operation of the Station;
14
<PAGE>
(e) Promptly notify Buyer of any material default by, or claim of
default against, any party under any Station Agreements which are material,
individually or in the aggregate, to the operation of the Station, and any event
or condition which, with notice or lapse of time or both, would constitute an
event of default under such Station Agreements;
(f) Not mortgage, pledge or subject to any Lien (except in the ordinary
course of business) any of the Sale Assets;
(g) Not sell, lease or otherwise dispose of, nor agree to sell, lease or
otherwise dispose of, any of the Sale Assets, except for dispositions in the
ordinary course of business unless said assets are replaced with assets of
equivalent condition and functionality;
(h) Not acquire or lease any goods or services or enter into, amend or
terminate any license, lease of real or personal property or any other Station
Agreement, other than in the ordinary course of business;
(i) Notify Buyer of any material litigation pending or threatened
against the Station or Seller or any material damage to or destruction of any
assets included or to be included in the Sale Assets.
5.2 GOVERNMENTAL CONSENTS. Seller and Buyer shall file with the FCC, within
---------------------
ten (10) business days after the execution of this Agreement, such applications
and other documents in the name of Seller or Buyer, as appropriate, as may be
necessary or advisable to obtain the FCC Order. Seller and Buyer shall take all
commercially reasonable steps necessary to prosecute such filings with diligence
and shall diligently oppose any objections to, appeals from or petitions to
reconsider such approval of the FCC, to the end that the FCC Order and a Final
Action with respect thereto may be obtained as soon as practicable; provided,
however, that in the event the application for assignment of the FCC Licenses
has been designated for hearing, either Buyer or Seller may elect to terminate
this Agreement pursuant to Section 10.1 (c). Buyer shall not knowingly take, and
----------------
Seller covenants that Seller shall not knowingly take, any action that party
knows or has reason to know would materially and adversely affect or materially
delay issuance of the FCC Order without a Material Adverse Condition, unless
such action is requested or required by the FCC, its staff or the Rules and
Regulations. Should Buyer or Seller become aware of any facts which could
reasonably be expected to materially and adversely affect or materially delay
issuance of the FCC Order without a Material Adverse Condition (including but
not limited to, in the case of Buyer, any facts which would reasonably be
expected to disqualify Buyer from controlling the Station), such party shall
promptly notify the other party thereof in writing and both parties shall
cooperate to take all steps necessary or desirable to resolve the matter
expeditiously and to obtain the FCC's approval of matters pending before it.
15
<PAGE>
5.3 OTHER CONSENTS. Seller shall use its reasonable best efforts to obtain
--------------
the consent or waivers to the transactions contemplated by this Agreement
required under any assumed Station Agreements; provided that Seller shall not be
required to pay or grant- any material consideration in order to obtain any such
consent or waiver.
5.4 ACCESS PRIOR TO THE CLOSING DATE. Prior to the Closing, Buyer and its
--------------------------------
representatives may make such reasonable investigation of the assets and
business of the Station as it may desire; and Seller shall give to Buyer, its
counsel, accountants and other representatives reasonable access during normal
business hours throughout the period prior to the Closing, provided that (i)
Buyer shall give Seller reasonable advance notice of each date on which Buyer or
any such other person or entity desires such access, (ii) each person (other
than an officer of Buyer) shall, if requested by Seller, be accompanied by an
officer or their representative of Buyer approved by Seller, which approval
shall not be unreasonably withheld, (iii) the investigations at the offices of
Seller shall be reasonable in number and frequency, and (iv) all investigations
shall be conducted in such a manner as not to physically damage any property or
constitute a disruption of the operation of the Station or Seller. Seller shall
furnish to Buyer during such period all documents and copies of documents and
information concerning the business and affairs of Seller and the Station as
Buyer may reasonably request.
5.5 CONFIDENTIALITY; PRESS RELEASE.
------------------------------
(a) All information, data and materials furnished or to be furnished to
either party with respect to the other party in connection with this transaction
or pursuant to this Agreement are confidential. Each party agrees that prior to
Closing (i) it shall not disclose or otherwise make available, at any time, any
such information, data or material to any person who does not have a
confidential relationship with such party; (ii) it shall protect such
information, data and material with a high degree of care to prevent the
disclosure thereof; and (iii) if, for any reason, this transaction is not
consummated, all information, data or material concerning the other party
obtained by such party, and all copies thereof, will be returned to the other
party. After Closing, neither party will disclose or otherwise make available to
any person any of such information, data or material concerning the other party,
except as may be necessary or appropriate in connection with the operation of
the Station by Buyer. Each party shall use its reasonable efforts to prevent the
violation of any of the foregoing confidentiality provisions by its respective
representatives.
(b) Nothing in this Section shall prohibit Buyer or Seller from: (i)
using such information, data and materials in connection with any action or
proceeding brought or any claim asserted by Buyer or Seller in respect of any
breach by the other of any representation, warranty or covenant made in or
pursuant to this Agreement; (ii) supplying or filing such information, data or
materials to or with the FCC or any other valid governmental or court authority
to the extent reasonably necessary to obtain any consent, waiver, amendment,
modification, approval, authorization, permit or license which may be necessary
to effectuate this Agreement, and to consummate the transaction
16
<PAGE>
contemplated herein; or (iii) in the case of Buyer, supplying such information,
data or materials as may be reasonably requested by a prospective lender or
investor; provided that said prospective lender or investor shall agree, in
advance of its receipt of said information, data or materials, to treat the
information, data and materials confidentially and will not disclose it, or any
portion of it, to anyone.
(c) In the event that either party determines in good faith that a press
release or other public announcement is desirable under any circumstances, the
parties shall consult with each other to determine the appropriate timing, form
and content of such release or announcement and thereafter may make such release
or announcement.
5.6 REASONABLE BEST EFFORTS. Subject to the terms and conditions of this
-----------------------
Agreement, each of the parties hereto will use its reasonable best efforts to
take all action and to do all things necessary, proper or advisable to satisfy
any condition to the parties' obligations hereunder in its power to satisfy and
to consummate and make effective as soon as practicable the transactions
contemplated by this Agreement.
5.7 FCC REPORTS. Seller shall continue to file, on a current basis until the
-----------
Closing Date, all reports and documents required to be filed with the FCC with
respect to the Station. Seller shall provide Buyer with copies of all such
filings within five (5) business days of the filing with the FCC.
5.8 CONVEYANCE FREE AND CLEAR OF LIENS. At or prior to the Closing, Seller
----------------------------------
shall obtain executed releases, in suitable form for filing and otherwise in
form and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets and properties as security for payment of loans and
other obligations or judgments and of any other Liens on the Sale Assets. At the
closing, Seller shall transfer and convey to Buyer all of the Sale Assets free
and clear of all Liens except Permitted Liens.
ARTICLE VI
----------
CONDITIONS PRECEDENT TO THE
OBLIGATIONS OF BUYER TO CLOSE
-----------------------------
Buyer's obligation to close the transaction contemplated by this Agreement is
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, unless waived by Buyer in writing:
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; CLOSING CERTIFICATE.
---------------------------------------------------------------
(a) The representations and warranties of Seller contained in this
Agreement or in any other Document shall be complete and correct in all material
respects on the date hereof and at the Closing Date with same effect as though
made at such time except for changes that are not materially adverse to the
Station or the Sale Assets taken as a whole; provided, however, that the
accuracy of Seller's representations
17
<PAGE>
or warranties shall not be a condition precedent to Buyer's obligation to close
if the representation or warranty are made untrue by the acts, errors, or
omissions of Buyer in its capacity as programmer under the LMA agreement.
(b) Seller shall have delivered to Buyer on the Closing Date a
certificate that (i) the condition specified in Section 6.1 (a) is satisfied as
---------------
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially adverse to the Station, the Sale Assets or
Seller's ability to consummate the transaction contemplated hereby), the
condition specified in Section 6.2 is satisfied as of the Closing Date.
-----------
6.2 PERFORMANCE OF AGREEMENTS. Seller shall have performed in all material
-------------------------
respects all of its covenants, agreements and obligations required by this
Agreement and each of the other Documents to be performed or complied with by it
prior to or upon the Closing Date.
6.3 FCC AND OTHER CONSENTS.
----------------------
(a) The FCC Order shall have been issued by the FCC without any Material
Adverse Condition affecting Buyer and shall have become a Final Action without
any Material Adverse Condition affecting Buyer.
(b) Conditions which the FCC Order or any order, ruling or decree of any
judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied prior to transfer of the FCC Licenses to
Buyer shall have been satisfied by Seller.
(c) All other authorizations, consents, approvals and clearances of
federal, state or local governmental agencies required to permit the
consummation by Buyer of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have a material adverse effect on the operations of the Station.
6.4 ADVERSE PROCEEDINGS. Neither Buyer nor any affiliate of Buyer shall be
-------------------
subject to any ruling, decree, order or injunction restraining, imposing
material limitations on or prohibiting (i) the consummation of the transactions
contemplated hereby or (ii) its participation in the operation, management,
ownership or control of the Station; and no litigation, proceeding or other
action seeking to obtain any such ruling, decree, order or injunction shall be
pending or shall have been threatened in writing. No governmental authority
having jurisdiction shall have notified any party to this Agreement that
consummation of the transaction contemplated hereby would constitute a violation
of the laws of the United States or of any state or political subdivision or
that it intends to commence proceedings to restrain such consummation or to
force divestiture,
18
<PAGE>
unless such governmental authority shall have withdrawn such notice. No
governmental authority having jurisdiction shall have commenced any such
proceeding.
6.5 OTHER CONSENTS. Seller shall have obtained in writing and provided to
--------------
Buyer on or before the Closing Date, without any condition materially adverse to
Buyer or the Station, the consents or waivers to the transactions contemplated
by this Agreement required under those Station Agreements which Buyer has
elected to assume.
6.6 DELIVERY OF CLOSING DOCUMENTS. Seller shall have delivered or caused to
-----------------------------
be delivered to Buyer on the Closing Date each of the Documents required to be
delivered pursuant to Section 8.2.
-----------
6.7 DAMAGE TO THE ASSETS. The Station shall not have on the Closing Date, or
--------------------
any time between the date of this Agreement and the Closing Date, suspended
broadcasting at authorized power by reason of any cause or event. In such event,
Buyer shall have the fight to postpone the Closing Date until the Station is
broadcasting at authorized power. Seller shall use all reasonable efforts to
effect the resumption of such broadcasting. In any event, if the Station has
suspended broadcasting and does not resume broadcasting at authorized power
within 168 hours, Buyer at any time thereafter shall have the right, in its
complete discretion, to terminate this Agreement upon written notice to Seller.
For purposes of this Section 6.7, suspending broadcasting at authorized power
-----------
shall mean failure to broadcast regularly with the presently authorized power in
accordance with established past practice and schedules, except for ordinary
maintenance and other temporary suspension.
ARTICLE VII
CONDITIONS PRECEDENT OF THE
OBLIGATION OF SELLER TO CLOSE
-----------------------------
The obligation of Seller to close the transaction contemplated by this
Agreement is subject to the satisfaction, on or prior to the closing Date, of
each of the following conditions, unless waived by Seller in writing:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
(a) The representations and warranties of Buyer contained in this
Agreement shall be complete and correct in all material respects on the date
hereof and at the Closing Date with the same effect as though made at such time
except for changes that are not materially adverse to Seller.
(b) Buyer shall have delivered to Seller on the Closing Date a
certificate that (i) the condition specified in Section 7.1(a) is satisfied as
of the Closing Date, and (ii) except as set forth in such certificate (none of
which exceptions shall be materially
19
<PAGE>
adverse to Buyer's ability to consummate the transaction contemplated hereby),
the conditions specified in Section 7.2 are satisfied as of the Closing Date.
-----------
7.2 PERFORMANCE OF AGREEMENTS. Buyer shall have performed in all material
-------------------------
respects all of its covenants, agreements and obligations required by this
Agreement and each of the other Documents to be performed or complied with by it
prior to or upon the Closing Date.
7.3 FCC AND OTHER CONSENTS.
----------------------
(a) The FCC Order shall have been issued by the FCC and shall have
become effective without a material adverse condition affecting Seller.
(b) Conditions which the FCC Order or any order, ruling or decree of any
judicial or administrative body relating thereto or in connection therewith
specifies and requires to be satisfied prior to transfer of the FCC Licenses to
Buyer shall have been satisfied by Buyer.
(c) All other authorizations, consents, approvals and clearances of all
Federal, state and local governmental agencies required to permit the
consummation by Seller of the transactions contemplated by this Agreement shall
have been obtained; all statutory and regulatory requirements for such
consummation shall have been fulfilled; and no such authorizations, consents,
approvals or clearances shall contain any conditions that individually or in the
aggregate would have any material adverse effect on Seller.
7.4 ADVERSE PROCEEDINGS. Seller shall not be subject to any ruling, decree,
-------------------
order or injunction restraining, imposing material limitations on or prohibiting
the consummation of the transactions contemplated hereby. No governmental
authority having jurisdiction shall have notified any party to this Agreement
that consummation of the transactions contemplated hereby would constitute a
violation of the laws of the United States or of any state or political
subdivision or that it intends to commence proceedings to restrain such
consummation or to force divestiture, unless such governmental authority shall
have withdrawn such notice. No governmental authority having jurisdiction shall
have commenced any such proceeding.
7.5 DELIVERY OF CLOSING DOCUMENTS AND PURCHASE PRICE. Buyer shall have
------------------------------------------------
delivered or caused to be delivered to Seller on the Closing Date each of the
documents required to be delivered pursuant to Section 8.3, and Seller shall
-----------
have received payment of the Purchase Price with the form of payment set forth
in Section 2.5.
-----------
20
<PAGE>
ARTICLE VIII
CLOSING
-------
8.1 TIME AND PLACE. The Closing shall take place at the offices of Seller's
--------------
Counsel in Boston, Massachusetts, or at such other place as the parties agree,
at 10:00 A.M. Pacific Time on the date (the "Closing Date") that is the later of
(i) the fifth Business Day after the Applicable Date or (ii) the date as soon as
practicable following satisfaction or waiver of the conditions precedent
hereunder. The Applicable Date shall be the date on which the FCC Order shall
have become a Final Action.
8.2 DOCUMENTS TO BE DELIVERED TO BUYER BY SELLER. At the Closing, Seller
--------------------------------------------
shall deliver or cause to be delivered to Buyer the following in form and
substance reasonably satisfactory to Buyer:
(a) Certified resolutions of Seller's Board of Directors approving the
execution and delivery of this Agreement and each of the other documents and
authorizing the consummation of the transactions contemplated hereby and
thereby.
(b) The certificate required by Section 6.1(b).
--------------
(c) A bill of sale and other instruments of transfer and conveyance
transferring to Buyer the Tangible Personal Property.
(d) Executed releases, in suitable form for filing and otherwise in form
and substance reasonably satisfactory to Buyer, of any security interests
granted in the Sale Assets as security for payment of loans and other
obligations and of any other Liens (other than Permitted Liens).
(e) An instrument or instruments assigning to Buyer all fight, title and
interest of Seller in and to all Station Agreements being assumed by Buyer.
(f) An instrument assigning to Buyer all right, title and interest of
Seller in the FCC Licenses, all pending applications relating to the Station
before the FCC, and any remaining Sale Assets not otherwise conveyed.
(g) A receipt acknowledging payment by the Buyer of the Purchase Price.
(h) A certificate of Seller's good standing in the Commonwealth of
Massachusetts.
(i) Such additional information and materials as Buyer shall have
reasonably requested, including without limitation, evidence that all consents
and
21
<PAGE>
approvals required as a condition to Buyer's obligation to close hereunder have
been obtained.
8.3 DOCUMENTS TO BE DELIVERED TO SELLER BY BUYER. At the Closing, Buyer
--------------------------------------------
shall deliver or cause to be delivered to Seller the following in form and
substance reasonably satisfactory to Seller:
(a) Certified resolutions of Buyer's Board of Directors approving the
execution and delivery of this Agreement and each of the other Documents and
authorizing the consummation of the transaction contemplated hereby and thereby.
(b) The Purchase Price with the form of payment set forth in Section
-------
2.5.
- ---
(c) All documents necessary for the release of the Earnest Money to
Seller;
(d) The certificate required under Section 7.1 (b).
---------------
(e) An instrument executed by Buyer whereby Buyer shall assume all
obligations of Seller under the Station Agreements.
(f) A certificate of Buyer's good standing in Massachusetts.
(g) Such additional information and materials as Seller shall have
reasonably requested.
ARTICLE IX
----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
9.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
-----------------------------------------
warranties, covenants and agreements contained in this Agreement or in any other
Document shall survive the Closing for the Survival Period and the Closing shall
not be deemed a waiver by either party of the representations, warranties,
covenants or agreements of the other party contained herein or in any other
Document. No claim may be brought under this Agreement or any other Document
unless written notice describing in reasonable detail the nature and basis of
such claim is given on or prior to the last day of the Survival Period. In the
event such a notice is so given, the fight to indemnification with respect
thereto under this Article shall survive the Survival Period until such claim is
finally resolved and any obligations with respect thereto are fully satisfied.
9.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights to
--------------------------
indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to
22
<PAGE>
indemnification and to be held harmless that such party (or its successors or
assigns) would otherwise have by statute, common law or otherwise.
9.3 INDEMNIFICATION BY SELLER.
-------------------------
(a) Subject to the provisions of Subsection (b) below, Seller shall
--------------
indemnify and hold harmless Buyer and any officer, director, agent, employee and
affiliate thereof with respect to any and all demands, claims, actions, suits,
proceedings, assessments, judgments, costs, losses, damages, liabilities and
expenses (including reasonable attorneys' fees) relating to or arising out of:
(i) Any breach or non-performance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Documents; or
(ii) The ownership or operation by Seller of the Station or the
Sale Assets on or prior to the Closing Date; or
(iii) All other liabilities and obligations of Seller other than
the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk Sales
Act, if applicable, in connection with the transaction contemplated hereby.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Seller shall not be obligated to indemnify Buyer pursuant to
Subsection (a), above (i) for any amounts in excess of the Purchase Price in the
- --------------
aggregate, or (ii) until the aggregate amount of such claims, liabilities,
damages, losses, costs and expenses exceeds Buyer's Threshold Limitation, in
which case Buyer shall then be entitled to indemnification of the amount in
excess of Buyer's Threshold Limitation, provided that any amounts owed by Seller
to Buyer under Subsection (a) (iv) above and Section 2.7 shall not be counted in
------------------- -----------
determining whether Buyer's Threshold Limitation is satisfied, and Buyer shall
have the right to recover any such payment without regard to such limitation.
9.4 INDEMNIFICATION BY BUYER.
-------------------------
(a) Subject to the provisions of Subsection (b) below and Section 10.2
-------------- ------------
below, Buyer shall indemnify and hold harmless Seller and any officer, director,
agent, employee and affiliate thereof with respect to any and all demands,
claims, actions, suits, proceedings, assessments, judgments, costs, losses,
damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
23
<PAGE>
(i) Any breach or non-performance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other Document; or
(ii) The ownership or operation of the Station or the sale of the
Station after the Closing Date.
(b) Notwithstanding anything contained herein to the contrary, if
Closing occurs, Buyer shall not be obligated to indemnify Seller pursuant to
Subsection (a) above (i) for any amounts in excess of the Purchase Price in the
- --------------
aggregate, or (ii) unless and until the aggregate amount of such claims,
liabilities, damages, Iosses, costs and expenses exceeds Seller's Threshold
Limitation, in which case Seller shall then be entitled to indemnification of
the amount in excess of Seller's Threshold Limitation, provided that any payment
owed by Buyer to Seller under Section 2.7 shall not be counted in determining
-----------
whether Seller's Threshold Limitation is satisfied, and Seller shall have the
right to recover any such payment without regard to any such limitation.
9.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party may
--------------------------
be entitled to indemnification hereunder with respect to any asserted claim of,
or obligation or liability to, any third party, such party shall notify the
Indemnifying Party thereof, describing the matters involved in reasonable
detail, and the Indemnifying Party shall be entitled to assume the defense
thereof upon written notice to the Indemnified Party with counsel reasonably
satisfactory to the Indemnified Party; provided, that once the defense thereof
is assumed by the Indemnifying Party, the Indemnifying Party shall keep the
Indemnified Party advised of all developments in the defense thereof and any
related litigation, and the Indemnified Party shall be entitled at all times to
participate in the defense thereof at its own expense. If the Indemnifying Party
fails to notify the Indemnified Party of its election to defend or contest its
obligation to indemnify under this Article IX, the Indemnified Party may pay,
----------
compromise, or defend such a claim without prejudice to any fight it may have
hereunder.
ARTICLE X
---------
TERMINATION; LIQUIDATED DAMAGES
-------------------------------
10.1 TERMINATION. If Closing shall not have previously occurred, this
-----------
Agreement shall terminate upon the earliest of:
(a) the giving of written notice from Seller to Buyer, or from Buyer to
Seller, if:
(i) Seller gives such termination notice and is not at such time
in material default hereunder, or Buyer gives such termination notice and Buyer
is not at such time in material default hereunder; and
24
<PAGE>
(ii) Either:
(A) any of the representations or warranties contained herein
of Buyer (if such termination notice is given by Seller), or of Seller (if such
termination notice is given by Buyer), are inaccurate in any material respect
and materially adverse to the party giving such termination notice unless the
inaccuracy has been induced by or is the result of actions or omissions of the
party giving such termination notice, and such inaccuracy has not been corrected
or remedied within twenty (20) days after written notice thereof from the party
giving such termination notice nor waived in writing by the party giving such
termination notice; or
(B) Any material obligation to be performed by Buyer (if such
termination notice is given by Seller) or by Seller (if such termination notice
is given by Buyer) is not timely performed in any material respect unless the
lack of timely performance has been induced by or is the result of actions or
omissions of the party giving such termination notice, and such material
obligation has not been satisfied within twenty (20) days after written notice
thereof from the party giving such termination notice nor waived in writing by
the party giving such termination notice; or
(C) Any condition (other than those referred to in foregoing
Clauses (A) and (B)) to the obligation to close the transaction contemplated
- ----------- ---
herein of the party giving such termination notice has not been timely
satisfied; and any such inaccuracy, failure to perform or non-satisfaction of a
condition neither has been cured nor satisfied within twenty (20) days after
written notice thereof from the party giving such termination notice nor waived
in writing by the party giving such termination notice.
(b) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time after one year from the date of execution of this Agreement, provided that
termination shall not occur upon the giving of such termination notice by Seller
if Seller is at such time in material default hereunder or upon the giving of
such termination notice by Buyer if Buyer is at such time in material default
hereunder.
(c) Written notice from Seller to Buyer, or from Buyer to Seller, at any
time following a determination by the FCC that the application for consent to
assignment of the FCC Licenses has been designated for hearing; provided that
the party which is the subject of the hearing (or whose alleged actions or
omissions resulted in the designation for hearing) may not elect to terminate
under this subsection (c).
(d) The written election by Buyer under Article XI.
----------
(e) The default of Buyer under the LMA.
(f) The default of Seller under the LMA.
25
<PAGE>
10.2 OBLIGATIONS UPON TERMINATION.
----------------------------
(a) In the event this Agreement is terminated pursuant to Section 10.1
----------
(a)(ii)(A), Section 10.1 (a)(ii)(B) or Section 10.1 (e), the aggregate
- ---------- ----------------------- ----------------
liability of Buyer for breach hereunder shall be limited as provided in
Subsections (c) and (e), below and the aggregate liability for Seller for breach
- -----------------------
hereunder shall be limited as provided in Subsections (d) and (e), below. In the
-----------------------
event this Agreement is terminated for any other reason, neither party shall
have any liability hereunder.
(b) Upon termination of this Agreement, Buyer shall be entitled to the
return of the Earnest Money from the Escrow Agent under the Escrow Agreement (i)
if such termination is effected by Buyer's giving of valid written notice to
Seller pursuant to Sections 10.1 (a), (b), (c), (d) or (f), or (ii) if such
---------------------------------------
termination is effected by Seller's giving of valid written notice to Buyer
pursuant to Sections 10.1 (a)(ii)(C), 10.1 (b) or 10.1 (c). If Buyer is entitled
----------------------------------------------
to the return of the Earnest Money, Seller shall cooperate with Buyer in taking
such action as is required under the Escrow Agreement in order to effect such
return from the Escrow Agent.
(c) If this Agreement is terminated by Seller's giving of valid written
notice to Buyer pursuant to Section(s) 10.1 (a)(ii)(A) or (B) or Section 10.1
--------------------------------- ------------
(e), Buyer agrees that: (i) Seller shall be entitled to receive upon such
- ---
termination, as liquidated damages and not as a penalty, Two Hundred Fifty
Thousand Dollars ($250,000) ("Liquidated Damages Amount"); (ii) Seller shall be
entitled to collect the Liquidated Damages Amount by receiving a disbursement
from the Escrow Agent under the Escrow Agreement equal to the lesser of the
entire Earnest Money or the Liquidated Damages Amount; and (iii) Seller shall be
entitled to pursue any other remedy available to Seller at law or equity to
recover from Buyer the full amount of the Liquidated Damages Amount provided
that the total monetary damages to which Seller shall be entitled shall not
exceed the Liquidated Damages Amount. Notwithstanding anything herein to the
contrary, in the event the parties enter into the LMA, the "Liquidated Damages
Amount" shall be Three Hundred Fifty Thousand Dollars ($350,000). SELLER'S
RECEIPT OF THE LIQUIDATED DAMAGES AMOUNT SHALL CONSTITUTE PAYMENT OF LIQUIDATED
DAMAGES HEREUNDER AND NOT A PENALTY, AND SHALL BE SELLER'S SOLE REMEDY AT LAW OR
IN EQUITY FOR BUYER'S BREACH HEREUNDER IF CLOSING DOES NOT OCCUR. BUYER AND
SELLER EACH ACKNOWLEDGE AND AGREE THAT THE LIQUIDATED DAMAGE AMOUNT IS
REASONABLE IN LIGHT OF THE ANTICIPATED HARM WHICH WILL BE CAUSED BY BUYER'S
BREACH OF THIS AGREEMENT, THE DIFFICULTY OF PROOF OF LOSS, THE INCONVENIENCE AND
NON-FEASIBILITY OF OTHERWISE OBTAINING AN ADEQUATE REMEDY, AND THE VALUE OF THE
TRANSACTION TO BE CONSUMMATED HEREUNDER.
(d) Notwithstanding any provision of this Agreement to the contrary, but
subject to the provisions of the following sentence, if this Agreement is
terminated by Buyer's giving of written notice to Seller pursuant to Subsection
----------
10.1 (a), Buyer shall not
- --------
26
<PAGE>
be entitled to damages or indemnification from Seller. Subject to the following
sentence, if Seller attempts to terminate this Agreement under circumstances
where it is not entitled to do so, or if Seller, by its own action, causes a
breach of warranty or fails to satisfy a condition (including without limitation
a refusal to consummate the transaction after Buyer has satisfied all conditions
to Seller's obligation to close and Buyer has demonstrated its willingness and
ability to close on the terms set forth in this Agreement and Buyer is not in
default hereunder) with the intent of creating a situation whereby Buyer elects
to terminate under Section 10.1(a) and Buyer does so elect to terminate, the
---------------
monetary damages, if any, to which Buyer shall be entitled shall be limited to
direct and actual damages and shall in no event exceed One Hundred Thousand
Dollars ($100,000) in the aggregate.
(e) In any dispute between Buyer and Seller as to which party is
entitled to all or a portion of the Earnest Money, the prevailing party shall
receive, in addition to that portion of the Earnest Money to which it is
entitled, an amount equal to interest on that portion at the rate of 10% per
annum, calculated from the date the prevailing party's demand for all or a
portion of the Earnest Money is received by the Escrow Agent.
10.3 Termination Notice. Each notice given by a party pursuant to Section
------------------ -------
10.1 to terminate this Agreement shall specify the Subsection (and clause or
- ----
clauses thereof) of Section 10.1 pursuant to which such notice is given.
------------
ARTICLE XI
----------
CASUALTY
--------
The risk of any loss, damage or destruction to the Sale Assets from fire or
other cause shall be borne by Seller at all times prior to the Closing Date
hereunder. Upon the occurrence of any casualty loss, damage or destruction
material to the operation of the Station prior to the Closing, Seller shall
promptly give Buyer written notice setting forth in detail the extent of such
loss, damage or destruction and the cause thereof if known. Seller shall use its
reasonable efforts to promptly commence and thereafter to diligently proceed to
repair or replace any such lost, damaged or destroyed property. In the event
that such repair or replacement is not fully completed prior to the Closing
Date, Buyer may elect to postpone the Closing until Seller's repairs have been
fully completed or to consummate the transactions contemplated hereby on the
Closing Date, in which event Seller shall assign to Buyer the portion of the
insurance proceeds (less all reasonable costs and expenses, including without
limitation attorney's fees, expenses and court costs incurred by Seller to
collect such amounts), if any, not previously expended by Seller to repair or
replace the damaged or destroyed property (such assignment of proceeds to take
place regardless of whether the parties close on the scheduled or deferred
Closing Date) and Buyer shall accept the damaged Sale Assets in their damaged
condition.
27
<PAGE>
ARTICLE XII
-----------
CONTROL OF STATION
------------------
Except as otherwise provided in the LMA, between the date of this Agreement
and the Closing Date, Buyer shall not control, manage or supervise the operation
of the Station or conduct of its business, all of which shall remain the sole
responsibility and under the control of Seller, subject to Seller's compliance
with this Agreement.
ARTICLE XIII
------------
MISCELLANEOUS
-------------
13.1 FURTHER ACTIONS. From time to time before, at and after the Closing,
----------------
each party, at its expense and without further consideration, will execute and
deliver such documents to the other party, and take all such actions, as the
other party may reasonably request in order more effectively to consummate the
transactions contemplated hereby.
13.2 ACCESS AFTER THE CLOSING DATE. After the Closing and for a period of
-----------------------------
twelve (12) months, Buyer shall provide Seller, Seller's counsel, accountants
and other representatives with reasonable access during normal business hours to
the books, records and personnel of the Station pertaining to transactions
occurring prior to the Closing Date when requested by Seller, and Buyer shall
retain such books and records for the normal document retention period of Buyer.
At the request and expense of Seller, Buyer shall deliver copies of any such
books and records to Seller.
13.3 PAYMENT OF EXPENSES.
--------------------
(a) Any fees assessed by the FCC in connection with the filings
contemplated by Section 5.2(a) or consummation of the transactions contemplated
--------------
hereby shall be shared equally between Seller and Buyer.
(b) All state or local sales or use, stamp or transfer, grant and other
similar taxes payable in connection with consummation of the transactions
contemplated hereby shall be shared equally between Seller and Buyer.
(c) Except as otherwise expressly provided in this Agreement, each of
the parties shall bear its own expenses, including the fees of any attorneys and
accountants engaged by such party, in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.4 SPECIFIC PERFORMANCE. Seller acknowledges that the Station is of a
---------------------
special, unique, and extraordinary character, and that any breach of this
Agreement by Seller could not be compensated for by damages. Accordingly, if
Seller shall breach its obligations under this Agreement, Buyer shall be
entitled, in addition to any other
28
<PAGE>
remedies it may have pursuant to this Agreement, to enforcement of this
Agreement (subject to obtaining any required approval of the FCC) by decree of
specific performance or injunctive relief requiring Seller to fulfill its
obligations under this Agreement. In any action by Buyer to equitably enforce
the provisions of this Agreement, Seller shall waive the defense that there is
an adequate remedy at law or equity and agrees that Buyer shall have the right
to obtain specific performance of the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security.
13.5 NOTICES. All notices, demands or other communications given hereunder
--------
shall be in writing and shall be sufficiently given if delivered by courier or
sent by registered or certified mail, first class, postage prepaid, or by telex,
cable, telegram, telecopy or similar written means of communication, addressed
as follows:
(a) if to Buyer, to:
Hibernia Communications, Inc.
42 West Lancaster Drive, Suite 200
Ardmore, Pennsylvania 19003
Facsimile No.: (610) 658-2929
With a copy to:
Kenneth E. Satten, Esq.
Wilkinson, Barker, Knauer & Quinn
1735 New York Avenue, N.W.
Washington, D.C. 20006
Facsimile No.: (202) 783-5851
(b) if to Seller, to:
New England Continental Media, Inc.
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Facsimile No.: (805) 482-7290
Attention: Jonathan L. Block, Esq.
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date mailed, and
(ii) if personally delivered or otherwise sent as provided above, on the date
received.
29
<PAGE>
13.6 ENTIRE AGREEMENT. This Agreement, the Schedules and Exhibits hereto,
-----------------
and the other Documents constitute the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede any prior negotiations, agreements, understandings or arrangements
between the parties with respect to the subject matter hereof.
13.7 BINDING EFFECT; BENEFITS. Except as otherwise provided herein, this
-------------------------
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective successors or assigns. Except to the extent specified
herein, nothing in this Agreement, express or implied, shall confer on any
person other than the parties hereto and their respective successors or assigns
any fights, remedies, obligations or liabilities under or by reason of this
Agreement.
13.8 ASSIGNMENT. This Agreement and any rights hereunder shall not be
-----------
assignable by either party hereto without the prior written consent of the other
party; provided, however, that (so long as the assignment does not delay the
date of Closing hereunder) Buyer may assign this Agreement and its rights
hereunder to an entity controlled by Buyer or controlled by those persons and/or
entities controlling Buyer.
13.9 GOVERNING LAW. This Agreement shall in all respects be governed by and
--------------
construed in accordance with the laws of the Commonwealth of Massachusetts,
including all matters of construction, validity and performance.
13.10 BULK SALES. Buyer hereby waives compliance by Seller with the
-----------
provisions of the Bulk Sales Act and similar laws of any state or jurisdiction,
if applicable. Seller shall, in accordance with Article IX, indemnify and hold
----------
Buyer harmless from and against any and all claims made against Buyer by reason
of such non-compliance.
13.11 ENVIRONMENTAL REPORTS. Buyer may, at its election and cost, conduct a
----------------------
Phase I audit of the Real Property.
13.12 EMPLOYEES AND EMPLOYEE BENEFITS. Buyer has no obligation hereunder to
--------------------------------
offer employment to any employee of Seller. Seller shall be responsible for all
compensation (including accrued vacation and commissions), employees benefits
and any severance obligations due to be paid for employees of the Station.
13.13 AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be
-----------------------
amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
13.14 SEVERABILITY. Any provision of this Agreement which is
-------------
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such
30
<PAGE>
unenforceability without invalidating the remaining provisions hereof, and any
such unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
13.15 HEADINGS. The captions in this Agreement are for convenience of
--------
reference only and shall not define or limit any of the terms or provisions
hereof.
13.16 COUNTERPARTS. This Agreement may be executed in any number of
------------
counterparts, and by either party on separate counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument.
13.17 REFERENCES. All references in this Agreement to Articles and Sections
----------
are to Articles and Sections contained in this Agreement unless a different
document is expressly specified.
13.18 SCHEDULES AND EXHIBITS. Unless otherwise specified herein, each
----------------------
Schedule and Exhibit referred to in this Agreement is attached hereto, and each
such Schedule and Exhibit is hereby incorporated by reference and made a part
hereof as if fully set forth herein.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written.
NEW ENGLAND CONTINENTAL MEDIA, INC.
By: /s/ Eric H. Halvorson
--------------------------------
Eric H. Halvorson
Vice President
HIBERNIA COMMUNICATIONS, INC.
By: /s/ Michael Craven
--------------------------------
Name: Michael Craven
------------------------
Title: President
------------------------
31
<PAGE>
Schedule 3.6
------------
See attached.
<PAGE>
Schedule 3.13
-------------
Serafin Bros. has acted as the exclusive broker in this transaction and shall be
paid by Seller pursuant to a separate agreement between Seller and Serafin Bros.
<PAGE>
TRANSMITTER EQUIPMENT LIST
--------------------------
(WPZE)
------
QUANTITY DESCRIPTION
-------- -----------
1 Coax Cable
3 Antenna, ATUs
1 Ground System
1 Antenna Phasor
3 AM Self-Support Towers
1 Catwalk System
1 Power Generator
1 Aux Transmitter*
1 Electric Transformer
1 Main XMTR
1 Belar Monitor
1 XMTR Wiring
1 RF Meter
1 Panel
1 ADC Propatch
1 CRL Processor w/NRSC Chassis
1 Antenna Monitor
Existing Satellite Dish
* Buyer and Seller acknowledge that the auxiliary transmitter may
contain PCB containing capacitors. Seller shall remove and dispose of
said capacitors at its sole expense; provided Seller shall not be
obligated to replace said capacitors.
<PAGE>
STUDIO EQUIPMENT LIST
---------------------
(WPZE)
------
QUANTITY DESCRIPTION
-------- -----------
1 McCurdy SS8760 13 Channel Audio Console with Power Supply
1 Tascam 112 Cassette Tape Recorder
4 ITC Delta Audio Cartridge Player Machine
2 ITC Delta Record Cart Machine
2 RANE HC-6 Headphone Amplifier Console
1 Ramko RC 1/48 IPB Remote Control
1 UREI 535 Dual Graphic Equalizer
1 Gentner IC - 20 Station Control Unit
1 Technics SL 1200MKII Turntable
1 Audio Metrics TP - 84 Preamplifier
2 JBL 4408 Studio Monitor Speakers
1 Crown 75 Monitor Amplifier
1 Electro Voice 635 Microphone
1 Gentnet Telemix X Phone Director
4 Lake Audio Patch Panels
1 Gentner SPH - 5 Telephone Hybrid
1 Crown D - 75 Monitor Amplifier
2 Fostex 630 1B Personal Monitor
1 Tascam 122MKII Cassette Recorder
<PAGE>
QUANTITY DESCRIPTION
-------- -----------
1 Technics RS - TR333 Double Cassette Deck
1 Technics SL - PG440 Compact Disc Player
2 JBL 4410 Studio Monitors
1 Technics SL 1200MKII Turntable
1 Stanton 310 Turntable Pre Amplifier
4 Rarnko DA - 2080 Distribution Amplifiers with Mounting Rack
4 Rarnko RS - 1616LC Primus Routing Units
1 Ramko RC 1/48 IPB Remote Control
1 Ramko Primus RCR - 1 Receiver Interface
1 Gentner SPH - 3 Telephone System
1 Technics RS - T22 Dual Cassette Deck
4 Otari MX - 5050 Stereo Reel-to-Reel Recorders
with Floor Stand
2 Ramko DA - 2080 with Power Supply
1 Tascam 112 Cassette Tape Recorder
1 Arrakis 10000 20 Channel Audio Console with Power Supply
1 Electro Voice 635A Microphone
2 Microphone Booms
* Seller shall provide Buyer a credit of $5,000 which Buyer may use to
purchase or install studio equipment; said credit being given on the
understanding that Seller shall not be obligated to provide any equipment to
Buyer except as stated in this schedule.
<PAGE>
Schedule 3.7
------------
See attached.
<PAGE>
FCC Form 352 UNITED STATES OF AMERICA File No.: BZ-910201AC
May 1988 FEDERAL COMMUNICATIONS COMMISSION
AM BROADCAST STATION LICENSE Call Sign: W E Z E
- -------------------------------------------------------------------------------
LICENSEE:
New England Continental Media, Inc.
- -------------------------------------------------------------------------------
1. Community of License........: Boston, MA
2. Transmitter location........: Corner of Vershire Street
and Harriet Avenue
Quincy, MA
North latitude..............: 42 . 16' 30"
West longitude..............: 71 . 02' 31"
3. Transmitter(s): Type Accepted. (See Sections 73,1660, 73,1665
and 73,1670 of the Commission's rules)
4. Main Studio location: (See Section 73,1125)
500 Victory Road
Quincy, MA
5. Remote control location:
500 Victory Road
Quincy, MA
6. Antenna and ground system: Attached
7. Obstruction marking and lighting specifications - FCC Form 715, paragraphs:
1, 3, 21 & 21.
8. Frequency .................: l260 kHZ
---------------
9. Nominal power (kW) ........: 5.0 Day 5.0 Night
--------------- ---------------
Antenna input power (kW) :
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
5.0 Day [XX] Non-directional antenna: current 10.0 amperes; resistance 50.0
--------------- [ ] Directional antenna : --------------- --------------- ohms.
5.0 Night [ ] Non-directional antenna: current 10.4 amperes; resistance 50.0
--------------- [XX] Directional antenna : --------------- --------------- ohms.
</TABLE>
10. Hours of operation: Specified in BZ-800530AP
11. Conditions ..............: - - -
----------------
Subject to the provisions of the Communications Act of 1934, as amended
subsequent Acts, Treaties, and Commission rules made thereunder, and further
subject to conditions set forth in this license,/1/ the LICENSEE is hereby
authorized to use and operate the radio transmitting apparatus herein described
for the purpose of broadcasting for the term ending 3 A.M. Local Time
April 1, 1998
- --------------------.
- -------------------------------------------------------------------------------
The Commission reserves the right during said license period of terminating
this license or making effective any change, or modification of this license
which may be necessary to comply with any decision of the Commission rendered as
a result of any hearing held under the rules of the Commission prior to the
commencement of this license period or any decision rendered as a result of any
such hearing which has been designated but not held, prior to the commencement
of this license period.
The license is issued on the licensee's representation that the statements
contained in the licensee's application are true and that the undertakings
therein contained so far as they are consistent herewith, will be carried out in
good faith. The licensee shall, during the term of this license, render such
broadcasting service as will serve the public interest, convenience, or
necessity to the full extent of the privileges herein conferred.
This license shall not vest in the licensee any right to operate the station
nor any right in the use of the frequency designated in the license beyond the
term hereof, nor in any other manner than authorized herein. Neither the
license nor the right granted hereunder shall be assigned or otherwise
transferred in violation of the Communications Act of 1934, as amended. This
license is subject to the right of use or control by the Government of the
United States conferred by Section 606 of the Communications Act of 1934, as
amended.
- --------------------------------------------------------------------------------
/1/ This license consists of FEDERAL JNW:yl
this page and pages 2 & 3 COMMUNICATIONS [FCC LOGO] JUN 25, 1991
COMMISSION
Dated: JUN 19, 1991
<PAGE>
FEDERAL COMMUNICATIONS COMMISSION
LICENSE RENEWAL AUTHORIZATION WASHINGTON, DC. 20554
----------------------------- -------------------
OFFICIAL BUSINESS
PENALTY FOR PRIVATE USE $300
THIS IS TO NOTIFY YOU THAT YOUR
APPLICATION FOR RENEWAL OF LICENSE
WAS GRANTED ON 03-20-91 FOR A TERM POSTAGE AND FEES PAID
EXPIRING ON 04-01-98. FEDERAL COMMUNICATION
COMMISSION
FCC 615
FREQUENCY: 1260KHZ
THIS IS YOUR LICENSE RENEWAL
AUTHORIZATION FOR STATION WEZE
LOCATION: BOSTON, MA
THIS ALSO IS THE RENEWAL CERTIFICATE NEW ENGLAND CONTINENTAL MEDIA, INC.
FOR YOUR CURRENTLY AUTHORIZED WEZE AM STATION
AUXILIARY SERVICES. C/O 2310 PONDEROSA DRIVE
CAMARILLO, CA 93010
THIS CARD MUST BE POSTED WITH THE
STATION'S LICENSE CERTIFICATE AND ANY
SUBSEQUENT MODIFICATIONS.
<PAGE>
Schedule 3.8
------------
Tower Lease Agreement - Attached to this Schedule.
<PAGE>
LEASE AGREEMENT
---------------
This agreement is entered into on this __ day of ___________ , 199_, by and
between the ATSINGER FAMILY TRUST and the EPPERSON FAMILY LIMITED PARTNERSHIP
(collectively "Lessor") and HIBERNIA COMMUNICATIONS, INC. ("Lessee").
WHEREAS Lessor owns the real property and improvements comprising Lessor's
Property, as hereafter defined, for the use and enjoyment of Lessor, and such
other and future tenants and sub-tenant's of Lessor's Property; and
WHEREAS Lessee desires to lease space on Lessor's Property to install,
maintain and operate the facilities and equipment required for the operation of
Lessee's radio station WPZE(AM), Boston, Massachusetts ("the Station") thereon;
and,
NOW THEREFORE, for valuable consideration as set forth herein, the parties
agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
The terms listed below when spelled with initial capital letters have the
following meanings in this agreement:
1.1 ADJUSTMENT DATE shall mean the first (l/st/) day of February following
---------------
the first (l/st/) anniversary of the Commencement Date and each subsequent first
(1/st/) day of February this Agreement remains is effect.
1.2 AGREEMENT means this Lease Agreement, including the schedules and any
---------
other executed attachments and/or addenda all of which are made part of this
Agreement.
1.3 ANTENNA means the AM radio towers identified on Schedule 1.3 hereof.
------- ------------
1.4 ARTICLE or ARTICLES means one or more of the articles of this Agreement.
------- --------
1.5 CABLING means the coaxial cable, wire or other electrical
-------
transmission facilities of Lessee.
1.6 COMMENCEMENT DATE means 12:01 AM on the date specified in this Agreement
-----------------
as the Commencement Date of the Initial Term.
<PAGE>
Lease Agreement - Hibernia
Page 2
1.7 EQUIPMENT. Any device, equipment, structure, buildings, material and
----------
apparatus used or useful in the operation of the Station and approved by Lessor
for use on Lessor's Property. Notwithstanding anything in this Agreement to the
contrary, the Equipment shall be paid for, furnished and installed by Lessee.
1.8 EXPIRATION DATE means 11:59 PM on the date specified in this Agreement as
---------------
the date on which the Initial Term or any extended term of this Agreement
expires.
1.9 FACILITIES and FACILITY refer collectively or individually to any and all
---------- --------
Equipment, Cabling, and/or Antenna as the context may indicate.
1.10 INITIAL TERM means the period from the Commencement Date to the date set
------------
forth in Section 3.2.
------------
1.11 INTEREST RATE means the lesser of eighteen percent (18%) per annum or
-------------
the maximum amount of interest permitted by applicable law.
1.12 LEASED SPACE refers to the portion of Lessor's Property reasonably
------------
necessary for Lessee's use of its Facilities.
1.13 LESSEE'S EMPLOYEES means any employee, officer, or partner of Lessee;
------------------
any agent, contractor, invitee or subcontractor of Lessee; any employee,
officer, or partner of such agent, contractor, or subcontractor; and any person
placed on the Authorized Entry List, as provided in Article VIII, at the request
------------
of Lessee.
1.14 LESSOR'S PROPERTY means the land and improvements comprising the
-----------------
premises in which the Leased Space is located. The address and location of the
Lessor's Property is more fully and legally described in Schedule 1.14.
--------------
1.15 SCHEDULE or SCHEDULES means one or more schedules attached to this
-------- ---------
Agreement.
1.16 SECTION or SECTIONS means one or more of the sections of this
------- --------
Agreement.
1.17 SECURITY DEPOSIT. Four Thousand Seven Hundred Fifty Dollars ($4,750).
----------------
ARTICLE II
----------
SCOPE OF THE AGREEMENT
----------------------
2.1 LEASE. This Agreement sets forth the terms and conditions under which
------
Lessor agrees to lease space to Lessee. Lessee agrees to use the Leased Space
and related rights only in accordance with the terms and conditions of this
Agreement; to comply with all applicable
<PAGE>
Lease Agreement - Hibernia
Page 3
governmental regulations and requirements of law pertaining to Lessee's
activities in or around Lessor's Property; to pay all fees, charges, costs and
expenses in accordance with this Agreement promptly when due; to keep the
Facilities properly maintained and to comply in all respects with each of the
obligations, duties, rules, conditions, and requirements applicable to Lessee
under this Agreement
2.2 NO OTHER USE. Lessee will use the Leased Space and related rights solely
-------------
for the purposes of operating Lessee's AM radio station. Lease will not make any
other use of the Leased Space and related rights provided under this Agreement
without the prior written consent of Landlord.
2.3 NO OTHER RIGHTS. Only the Leased Space and related rights described in
----------------
this Agreement are provided under this Agreement. Lessor does not provide any
service or product under this Agreement.
ARTICLE III
-----------
TERM OF THE AGREEMENT; TERMINATION; RENEWALS
--------------------------------------------
3.1 COMMENCEMENT DATE. The Commencement Date shall be the day and year first
------------------
written above.
3.2 EXPIRATION DATE. The Expiration Date of this Lease shall be the day
----------------
preceding the fifth (5/th/) anniversary of the Commencement Date. If the term
has been extended as provided in Section 3.3, the Expiration Date shall be the
-----------
last day of the term as so extended.
3.3 LEASE OPTION. Lessee shall have four (4) options, if Lessee is not then
-------------
in default under this Agreement, to extend the term of this Agreement for a
period of five (5) years, each, (the "Extension Term") and except as provided in
Section 4.3 hereof, on the same terms, covenants and conditions herein
- -----------
contained. The word "Term" as used in this Agreement shall be deemed to include
the Extension Term when and if the Agreement is extended. The option to extend
the Term shall be exercised only by Lessee's delivery to Lessor, by United
States mail, on or before one hundred eighty (180) days prior to the Expiration
Date, written notice of Lessee's election to extend as provided herein.
3.4 TERMINATION ON INTERFERENCE. [Intentionally Omitted]
----------------------------
3.5 TERMINATION BY LAW. Lessor shall also have the right to terminate this
-------------------
Lease, upon notice to Lessee, and shut down and/or remove Lessee's Antenna,
Cabling and Equipment, at Lessee's cost, if:
<PAGE>
Lease Agreement - Hibernia
Page 4
(a) This Lease is required to be terminated by a final ruling or
regulation, not subject to appeal, of the Federal Communications Commission
("FCC"); or
(b) A final determination, not subject to appeal, of any local, state or
federal governmental body that the placement and/or operation of Lessee's
Facilities is in violation of any laws, rules or regulations of any local state
or federal agencies including, without limitation, any land use provisions
and/or any zoning and/or planning codes and such violation is not corrected
within ninety (90) days; or
(c) A final determination, not subject to appeal, that the Facilities fail
to meet the requirements imposed by law or the rules and regulations of local,
state and federal agencies.
ARTICLE IV
----------
FEES AND CHARGES; BILLING
-------------------------
4.1 PAYMENT OF RENT. Lessee agrees to pay rent to Lessor, without notice
----------------
or demand, from the Commencement Date through the Expiration Date, or such
earlier date as this Agreement is terminated as provided herein, at:
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Attention: Accounting
or to such other person or place as Lessor may designate from time to time by
notice to Lessee, in the following amounts and in the following manner:
4.2 BASE RENT. During the first year beginning with the Commencement Date,
----------
the base rent shall be the sum of $57,000 per annum, payable in equal monthly
installments of $4,750 in advance of the first day of each month (and thereafter
on each and every Adjustment Date the monthly rent shall be computed according
to Section 4.3); provided, however, that the installment of the base rent
-----------
payable for the first full month of the term shall be due and payable on the
full execution and delivery of this Lease. If the Commencement Date and/or
Expiration Date occur on a day other than the first day of a calendar month,
rent shall be prorated for the month in which the Commencement Date and/or
Expiration Date occurs.
4.3 ADJUSTED RENT. During the one (1) year period beginning with each
--------------
Adjustment Date, the monthly rent payable by Lessee shall reflect an adjustment,
as herein provided, for the change, if any, from the year in which the
Commencement Date falls, in the Consumer Price Index for Urban Wage Earners and
Clerical Workers, Los Angeles area [Base Year 1982 - 84=100] ("CPI") as measured
in February and published by the United States Department of Labor, Bureau of
Labor Statistics; i.e., during the one (1) year period beginning with the
<PAGE>
Lease Agreement - Hibernia
Page 5
Adjustment Date, the monthly rent shall be the product obtained by multiplying
the Base Rent times a fraction, the numerator of which shall be the CPI for
February of the year such Adjustment Date falls and the denominator of which
shall be the CPI for February of the year in which the Commencement Date falls.
Notwithstanding the results of the foregoing calculation, the annual base rent
payable by Lessee hereunder shall not in any event be less than 103% of the
annual base rent payable during the immediately preceding one (1) year period.
In the event that the Bureau of Labor Statistics shall change the base period
for the CPI, the new index number shall be substituted for the old index number
in making the above computation. In the event the Bureau of Labor Statistics
ceases publishing the CPI, or materially changes the method of its computation,
Lessor and Lessee shall accept comparable statistics on the purchasing power of
the consumer dollar as published at the time of said discontinuation or change
by a responsible financial periodical of recognized authority to be chosen by
Lessor subject to reasonable consent of Lessee.
4.4 ADDITIONAL RENT. In addition to the monthly rent provided for in Section
---------------- -------
4.2 herein, Lessee shall be obligated to pay monthly, as additional rent, a sum
- ---
equal to Lessee's allocable share of all Operating Expenses incurred by Lessor.
(a) Lessee's allocable share shall be a percentage ("Lessee's
Percentage"), as reasonably determined by Lessor from time to time based
upon Lessor's determination of the benefit derived by Lessee from the
Operating Expenses, which percentage shall, together with the percentage of
Operating Expenses paid by other tenants of the Real Property, shall equal
not less than one hundred percent (100%) of the Operating Expenses; it
being the intention of the parties hereto that Lessor shall have no
operational or ownership cost associated with Lessor's Property or this
Agreement.
(b) For purposes of this Agreement, the term "Operating Expenses"
shall mean the amount of all of Lessor's direct costs and expenses
reasonably paid or incurred in operating and maintaining Lessor's Property
in accordance with generally accepted accounting principles, consistently
applied, including by way of illustration and not limitation, all general
real estate taxes and all special assessments levied against Lessor's
Property; costs and expenses of contesting the validity or amount of real
estate taxes; insurance premiums; water, sewer, electrical and other
utility charges other than the separately billed electrical and other
charges paid by Lessee as provided in this Agreement; service and other
charges incurred in the operation and maintenance of the plumbing systems,
the electrical systems and the heating, ventilation and air-conditioning
systems (if any); cleaning and other janitorial services; tools and
supplies; repair costs; landscape and maintenance costs; security services;
license, permit and inspection fees; wages and related employee benefits
payable for the maintenance and operation of Lessor's Property;
amortization of capital improvements or replacements for Lessor's Property
including those that benefit the health and safety of the tenants of
Lessor's Property, produce a reduction in operating costs or are required
under any applicable
<PAGE>
Lease Agreement - Hibernia
Page 6
governmental law, ordinance, resolution, order or regulation, together with
interest at the Interest Rate on the unamortized balance thereof;
maintenance and repair costs, dues, fees and assessments incurred under any
documents of record or owners association agreement, as amended from time
to time, if any (the "Covenants"); and in general all other costs and
expenses which would, under generally accepted accounting principles, be
regarded as operating and maintenance costs and expenses, including those
which would normally be amortized over a period not to exceed five (5)
years. The foregoing list of Operating Expenses is for definitional
purposes only and shall not impose any obligations upon Lessor to incur
such expenses or provide such services.
(c) Lessee shall pay as additional rent with each monthly installment
of base rent an amount equal to one-twelfth (1/12) of Lessor's reasonable
estimate of the amount of Operating Expenses for the year multiplied by
Lessee's Percentage. An adjustment will be made at the end of each calendar
year based upon the actual Operating Expenses of Lessor, with Lessee
receiving a credit against the payment of Rent for any excess Operating
Expense paid by Lessee in the previous year. If the actual Operating
Expenses of Lessor exceed the Operating Expenses paid by Lessee, then
Lessee shall pay the difference within ten (10) business days from the
receipt by Lessee of Lessor's statement indicating a balance due.
(d) Lessee shall also be obligated to pay all sums due from Lessee to
Lessor pursuant to any term or provision of this Lease requiring Lessee to
reimburse Lessor for any costs and/or expenses incurred by Lessor, and all
expenses, including but not limited to, court costs, reasonable attorneys'
fees, bond expenses and recording charges, incurred by Lessor in collecting
any Rent due under this lease and all monies expended by Lessor releasing
any liens filed against the Real Property arising from the construction
contemplated hereby.
(e) As used herein, "Rent" shall refer to all sums due to Lessor
under the terms of this Article IV.
-----------
4.5 NO NOTICE. From and after the Commencement Date, Lessee will pay to
----------
Lessor the monthly installments identified herein. Said installments are due and
payable in advance, without notice or demand. Although Lessor may, for its own
convenience, issue bills to Lessee, any failure of Lessor to issue a timely bill
will not relieve Lessee of its obligation to pay the monthly installments
without notice or demand.
4.6 NO SET-OFF. Except as otherwise provided in this Agreement, Lessee will
-----------
pay all monthly installments, fees, costs, and expenses without deduction or
set-off of any kind.
4.7 SECURITY DEPOSIT. Simultaneously with the execution of this Lease, Lessee
-----------------
shall deposit in the form of cash the Security Deposit with Lessor, which shall
be held by Lessor,
<PAGE>
Lease Agreement - Hibernia
Page 7
without obligation for interest, as security, for the performance of Lessee's
obligations and covenants under this Lease. It is expressly understood and
agreed that such deposit is not an advance rental deposit or a measure of
Lessor's damages in case of Lessee's default. If Lessee shall be in default of
this Lease or fails to surrender the Leased Space and Lessor's Property in the
condition required by this Lease, Lessor shall have the right (but not the
obligations), without prejudice to any other remedy which Lessor may have on
account thereof, to apply all or any portion of the Security Deposit to cure
such default or to remedy the condition of the Lessor's Property. If Lessor so
applies the Security Deposit or any portion thereof before the Expiration Date
or earlier termination of this Lease, Lessee shall deposit with Lessor, upon
demand, the amount necessary to restore the Security Deposit to 150% of its
original amount. If Lessor shall sell or transfer its interest in Lessor's
Property, Lessor shall have the fight to assign this agreement and transfer the
Security Deposit to such purchaser or transferee, in which event Lessee shall
look solely to the new owner for the return of the Security Deposit, and Lessor
thereupon shall be released from all liability to Lessee for the return of the
Security Deposit. Although the Security Deposit shall be deemed the property of
Lessor, any remaining balance of the Security Deposit shall be returned to
Lessee no later than thirty (30) days after the Expiration Date or earlier
termination of this Lease that all of Lessee's obligations under this Lease have
been fulfilled.
ARTICLE V
---------
GRANT OF LEASED SPACE
---------------------
Lessor, in consideration of the rents to be paid and the covenants contained
herein, hereby leases to Lessee the Leased Space for the limited purpose of
installing, maintaining, operating, or repairing the Facilities in accordance
with this Agreement; and to pass through portions of the Lessor's Property
designated by Lessor for ingress to and egress from the Leased Space.
Notwithstanding the foregoing, Lessor shall have the exclusive right to lease
Lessor's Property, other than the Leased Space, to any other tenant for any use;
provided said tenant's uses of Lessor's Property shall not unreasonably
interfere with Lessee's use of the Leased Space. Lessor agrees that it will not
lease or license other persons or entities to use Lessor's Property if the use
by any such person or entity will cause interference with Lessee's then-in-use
frequency or signal or with Lessee's Facilities.
ARTICLE VI
----------
INSTALLATIONS OF FACILITIES
---------------------------
6.1 SPECIFICATIONS. Lessor accepts all of the Facilities of Lessee as they
---------------
exist on the Commencement Date of this Lease. Lessor shall prepare
specifications for Lessee's delivery in the future of any additional Facilities
to Lessor's property and Lessee's installation of the Facilities in the Leased
Space. All such specifications shall be based upon engineering data
<PAGE>
Lease Agreement - Hibernia
Page 8
furnished by Lessee and may include the requirement of Lessee to provide at
Lessee' s expense the purchase and installation of such equipment or the taking
of the action for protecting Lessor's Property, or the property of any adjacent
or neighboring property
6.2 PRIOR APPROVAL. Prior to the initiation by Lessee of the delivery,
---------------
installation, replacement, or removal of Facilities, Lessee must obtain the
prior written approval of Lessor to Lessee's proposed scheduling of work and
Lessee's choice of vendors and contractors, which approval shall not be
unreasonably withheld. Lessor, at its sole discretion and election, may
condition said approval on obtaining additional information and/or requiring
schedule changes and substitution of vendors and contractors. Lessor's approval
of any act or action of Lessee or Lessee's Employees pursuant to this Agreement
shall not be considered an endorsement, representation, or warranty regarding
the viability of said scheduling, and/or the ability or suitability of said
vendor or contractor to perform the work intended by Lessee. Lessee shall
deliver and install the Facilities in conformity with the specifications,
schedules, and choice of vendors and contractors approved by Lessee. This
Section 6.2 shall not apply to any delivery, installation, replacement or
- -----------
removal of Facilities which in Lessee's reasonable judgment is necessary to
remedy an emergency situation.
6.3 DELIVERY & INSTALLATION OF FACILITIES. Lessee shall furnish and
--------------------------------------
install all Facilities, and is solely responsible for their timely delivery and
installation to Lessor's Property. Physical delivery of the Facilities to
Lessor's property and all installation work performed by Lessee shall be
performed in accordance with the specifications and approvals furnished pursuant
to this Article.
6.4 LESSEE'S RESPONSIBILITIES. Lessee has the sole responsibility for any
--------------------------
product liability claims, product warranty claims, delays and service outages of
Lessee that may result from defective Facilities, improper scheduling, improper
installation, or any other matter, irrespective of the cause.
ARTICLE VII
-----------
USE OF LEASED SPACE
-------------------
7.1 FACILITIES. Lessee may bring the Facilities into the Leased Space at
------------
Lessee's own risk and expense.
7.2 OTHER MATERIALS. In addition to the Antenna, Cabling, and Equipment,
----------------
Lessee may bring into the Leased Space, at Lessee's own risk and expense, (a)
any materials and apparatus specially identified in written engineering
specifications approved in writing by Lessor, and (b) small tools and portable
test equipment as needed to perform Lessee's obligations under this Agreement.
Lessee's rights under this Section 7.2 are subject to the conditions that all
-----------
such materials, apparatus, tools, and test equipment will remain at all times in
the care, custody, and control of Lessee's Employees.
<PAGE>
Lease Agreement - Hibernia
Page 9
7.3 NEGATIVE COVENANTS. Lessee may not bring into the Leased Space any
-------------------
material, apparatus, facilities, tools, or equipment other than those identified
in this Agreement unless Lessee first obtains written permission from Lessor.
Without limiting the foregoing, Lessee is specifically informed that the
following are not permitted within the Leased Space or in or upon the Lessor's
Property: wet cell batteries, explosives, flammable liquids or gases, alcohol,
controlled substances, weapons, toxic materials, hazardous waste, pollutants,
contaminants, asbestos and asbestos related products, polychlorinated biphenyls,
petroleum, crude oil or any fraction or distillate thereof, and any similar
equipment and/or materials. Lessee shall not use or permit Lessor's Property to
be used by any dangerous, toxic, noxious, offensive, or unlawful purposes.
7.4 EMERGENCY NUMBER. During the term of this Agreement and any extension
-----------------
thereof, Lessee shall provide Lessor with a telephone number which, if called,
will ring at a location that is staffed by Lessee's agents 24 hours each and
every day, 7 days a week and every week. Lessee shall notify Lessor promptly in
the event of any change in such telephone number.
ARTICLE VIII
------------
RIGHT OF ENTRY
--------------
8.1 ACCESS. Lessor shall provide Lessee with 24-hour access to the
-------
Leased Space for the purpose of installing, operating, maintaining, and
repairing Lessee's Facilities.
8.2 AUTHORIZED PERSONNEL. All persons, contractors and/or engineers
---------------------
installing, maintaining, repairing, removing or otherwise working on the
Facilities shall be approved in advance by Lessor, which approval shall not be
unreasonably withheld. A list ("Authorized Entry List") of those persons,
contractors and/or engineers approved by Lessor shall be maintained by Lessor.
Prior to the Commencement Date, Lessee will submit to Lessor a proposed
"Authorized Entry List". Lessor may request additional information from Lessee
before granting its approval, which approval may not be unreasonably withheld.
Lessee will promptly give notice to Lessor, both orally and in writing, of the
name of any person who ceases to be one of Lessee's employees or agents or whom
Lessee wishes to remove from the "Authorized Entry List". Lessor shall issue its
approval or disapproval of any additions to the Authorized Entry List within
five (5) business days of Lessor's receipt of Lessee's request therefor and such
approval shall not be unreasonably withheld.
8.3 QUALIFIED PERSONNEL. Lessee represents and warrants that on the date
--------------------
hereof and each and every date prior to the last act to be performed by Lessee
pursuant to this Agreement, Lessee's Employees and any other person(s)
installing, maintaining, repairing, removing or otherwise working on the
Facilities or otherwise on Lessor's Property at the request or direction
<PAGE>
Lease Agreement - Hibernia
Page 10
of Lessee shall be a technician qualified to perform said duties and have been
trained in compliance with current OSHA, FCC, and ANSI standards regarding radio
frequency radiation.
ARTICLE IX
----------
PROTECTION OF PROPERTY
----------------------
Lessee and Lessee's Employees will at all times exercise the highest degree
of care to prevent damages to the Lessor's Property and to the Leased Space and
to all other real and personal property of Lessor and Lessee. Lessee and
Lessee's Employees will perform any work and use the Facilities in a manner that
will protect all other structures, equipment, utilities, and/or work areas of
any kind against damage or interruption of service. Lessor reserves the right,
and Lessee hereby grants Lessor the right, to take any reasonable action needed
to cease or prevent any harm to the personnel, property and/or services of
Lessor.
ARTICLE X
---------
INSPECTION
----------
10.1 WORK IN PROGRESS. Lessor, its employees and agents may inspect and
-----------------
observe any work while in progress or after completion to ascertain whether the
work is in accordance with the specifications and requirements of this
Agreement, provided, however, that Lessor's exercise of its rights hereunder
shall not unreasonably interfere with Lessee's use of the Leased Space. Lessor
may require Lessee to correct any faulty work. However, inspection or
observation by Lessor or by its agents of work performed by Lessee or Lessee's
Employees will not relieve Lessee of full responsibility for the proper
performance of the work.
10.2 TIME. Lessor, its agent and its designees (including without limitation
-----
building inspectors, fire marshals, and other officials) may inspect the Leased
Space and the Facilities at any reasonable time. At Lessee's request, Lessee's
Employees on the Authorized Entry List may accompany Lessor during such
inspections except when, in the reasonable judgment of Lessor, safety or service
considerations require otherwise.
ARTICLE XI
----------
UTILITIES
---------
11.1 ELECTRICITY. Lessee shall be required to provide any and all electrical
------------
service to the Leased Space necessary for the installation, maintenance, use and
removal of the Facilities including, without limitation, any and all meters,
transformers or other machinery or equipment attached thereto.
<PAGE>
Lease Agreement - Hibernia
Page 11
11.2 INTERRUPTION. Lessor shall not be liable for any interruption or failure
-------------
in the supply of any utility, service, repair or damage to the Leased Space or
Lessee, nor shall Lessee have any right to an abatement in rent or offset to
rent in such circumstances. In the event Lessee fails to pay an electrical
service charge and for any reason Lessor is approached by a utility company for
such payment, Lessor may, but shall not be obligated to, pay such amount and
collect the amount paid as additional rent.
ARTICLE XII
-----------
OWNERSHIP OF FACILITIES
-----------------------
12.1 RISK OF LOSS. Except as otherwise provided in this Agreement, all
-------------
Facilities shall be owned by Lessee, and Lessee shall bear all risk of loss
and/or damage to the Facilities.
12.2 OWNERSHIP. Any and all machinery, equipment and trade fixtures installed
----------
in the Leased Space by Lessee shall remain personalty of Lessee notwithstanding
the fact that it may be affixed or attached to the realty or Lessor's Property,
and shall, during the term of this Agreement or any extension thereof, belong to
Lessee.
ARTICLE XIII
------------
MAINTENANCE AND REPAIR
----------------------
13.1 FACILITIES. Lessee will, at its own risk and expense, maintain and
-----------
repair, including replacement if necessary (collectively referred to as
"Maintenance"), the Facilities and any other items or things placed on Lessor's
Property by Lessee pursuant to this Agreement. All Maintenance shall be
performed in a manner suitable to Lessor so as not to conflict with the use of
Lessor's Property by Lessor, or any other tenant of Lessor. All Maintenance
shall be provided by qualified technicians, authorized to enter Lessor's
Property pursuant to Article VIII.
------------
13.2 LEASED SPACE. Subject to Section 4.4 hereof, Lessor shall provide all
-------------- -----------
Maintenance to the Leased Space.
13.3 MATERIAL DAMAGE OR DESTRUCTION. In case of any material damage to or
-------------------------------
destruction of the Lessor's Property or any part thereof, Lessee shall promptly
give written notice thereof to Lessor and any mortgagee, generally describing
the nature and extent of such damage or destruction. In case of any such damage
to or destruction of the Lessor's Property or any parts thereof, caused by
Lessee or Lessee's Employees or which is covered by insurance maintained by
Lessee, Lessee, whether or not the insurance proceeds, if any, on account of
such damage or destruction shall be sufficient for the purpose, at its sole
expense, shall promptly commence and complete the restoration, replacement or
rebuilding of the Lessor's Property as nearly as possible to its value,
condition and character immediately prior to such damage or destruction.
<PAGE>
Lease Agreement - Hibernia
Page 12
ARTICLE XIV
-----------
NO ALTERATIONS
--------------
Except as specifically set forth in this Agreement, Lessee may not make any
alterations, additions and/or improvements to any part of the Lessor's Property,
the Leased Space, the Antenna, Equipment, and or Cabling without the prior
written consent of the Lessor, which consent shall not be unreasonably withheld.
Notwithstanding anything herein to the contrary, Lessor shall have the right to
condition its consent to any alterations, additions, and/or improvements by
Lessee or the posting of a bond or other security securing the ability of Lessee
to fulfill its obligations pursuant to Article IX, hereof.
----------
ARTICLE XV
----------
REPRESENTATIONS, WARRANTIES AND OTHER OBLIGATIONS
-------------------------------------------------
15.1 LESSOR'S REPRESENTATIONS AND WARRANTIES. Lessor represents and
----------------------------------------
warrants that:
(a) Lessor owns Lessor's Property in fee simple. The execution and
performance of this Agreement shall not constitute a breach or violation under
any Agreement to which Lessor is a party.
(b) To the best of Lessor's knowledge, there are no violations of any
federal, state, county or municipal law, ordinance, order, regulations or
requirement with respect to Lessor's Property and the Leased Space.
(c) There is no action, suit or proceeding pending or, to Lessor's
knowledge, threatened against or affecting Lessor's Property or the Leased Space
or any portion thereof and Lessor has not received notice, written or otherwise,
of any litigation affecting or concerning Lessor's Property or the Leased Space
relating to or arising out of its ownership, management, use or operation.
(d) The execution, delivery and performance of this Agreement, and the
consummation of the transaction contemplated hereby, have been duly authorized
by all necessary action on the part of Lessor. This Agreement constitutes a
valid and binding agreement and obligation of Lessor, enforceable in accordance
with its terms.
(e) Lessor's Property, the existing use of Lessor's Property and the
Leased Space conform in all material respects with applicable zoning ordinances
and other governmental regulations.
<PAGE>
Lease Agreement - Hibernia
Page 13
15.2 LESSEE'S REPRESENTATIONS AND WARRANTIES. Lessee represents and warrants
----------------------------------------
that:
(a) The Facilities and the operation thereof do not and will 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," issued by the
American National Standards Institute ("Acceptable Radio Frequency Radiation
Standards").
(b) The execution, delivery and performance of this Agreement, and the
consummation of the transactions contemplated hereby, have been duly and validly
authorized by all necessary actions on the part of Lessee. This Agreement
constitutes a valid and binding agreement and obligation of Lessee, enforceable
in accordance with its terms.
(c) Lessee will conduct its activities on Lessor's Property in material
compliance with all applicable laws, including, without limitation, all OSHA,
FCC, and FAA rules and regulations, environmental laws, and any rule or law
applicable to the construction or operation of Lessee's Facilities.
ARTICLE XVI
-----------
EVENTS OF DEFAULT
-----------------
16.1 DEFAULT OF LESSEE. Any of the following events shall constitute a
------------------
default on the part of Lessee:
(a) The failure of Lessee to pay rent or additional rent, and
continuation of such failure for more than ten (10) days after Lessee's receipt
of written notice thereof from Lessor; provided however that Lessor shall not be
required to provide such written notice to Lessee more than twice in any twelve
(12) month period prior to declaring such failure to pay an event of default; or
(b) The failure of Lessee to cure any other default under the terms
hereof, and continuation of such failure to cure for more than thirty (30) days
after notice by Lessor, provided, however, that if the nature of Lessee's
default is such that more than thirty (30) days is required for its cure, then
Lessee shall not be deemed to be in default if Lessee has commenced such cure
within the thirty (30) day period, demonstrates to Lessor's reasonable
satisfaction that such default is curable and thereafter diligently prosecutes
such cure to completion.
16.2 Termination of Default by Lessee. If an event of default on the part of
---------------------------------
Lessee shall occur at any time, Lessor, at its election, may give Lessee a
notice of termination specifying a day not less than thirty (30) days thereafter
on which the term of this Agreement shall end. If
<PAGE>
Lease Agreement - Hibernia
Page 14
such notice is given, the Agreement shall expire on the day so specified as
fully and completely as if that day were the day herein originally fixed for
such expiration, and Lessee shall then quit and surrender the Leased Space to
Lessor. If the Agreement is terminated pursuant to this Section, Lessee shall
remain liable to Lessor for the payment of rent for the remainder of the lease
term and without prejudice to any other right or remedy which Lessor may have
hereunder or by law. Notwithstanding any waiver of any prior breach or event of
default hereunder, Lessor may, after the termination of this Lease as a result
of a default by Lessee, re-enter the Leased Space either by reasonable force or
otherwise, or dispossess Lessee, any legal representative of Lessee or other
occupant of the Leased Space by appropriate suit, action or proceeding and
remove its effects and hold the Leased Space as if this Agreement had not been
made.
16.3 DEFAULT OF LESSOR. The failure of Lessor to comply with any of its
------------------
obligations under the terms of this Agreement, and continuation of such failure
to cure for more than thirty (30) days after notice by Lessee, shall constitute
a default on the part of Lessor; provided however that if the nature of Lessor's
default is such that more than thirty (30) days is required for its cure, then
Lessor shall not be deemed to be in default if Lessor has commenced such cure
within the thirty (30) day period, demonstrates to Lessee's reasonable
satisfaction that such default is curable and thereafter diligently
prosecutes such cure to completion.
16.4 TERMINATION BY DEFAULT OF LESSOR. If an event of default on the
---------------------------------
part of Lessor shall occur at any time, Lessee, at its election, may give Lessor
a notice of termination specifying a day not less than thirty (30) days
thereafter on which the term of this Agreement shall end. If such notice is
given, the Agreement shall expire on the day so specified as fully and
completely as if that day were the day herein originally fixed for such
expiration, and Lessee shall then quit and surrender the Leased Space to Lessor,
and Lessee shall not be liable for payment of rent for any period after such
expiration.
ARTICLE XVII
------------
INSURANCE
---------
17.1 LESSEE'S OBLIGATION. It is understood that Lessor is not an
--------------------
insurer, and the parties mutually agree that Lessee will obtain insurance
against risks of loss, damage, and liability, as set forth below. The parties
also mutually agree that liability will be allocated or limited in accordance
with the terms of this Agreement. These insurance and liability provisions are
part of the consideration underlying this Agreement.
17.2 INSURANCE AND INDEMNIFICATION. Lessee shall, at its sole cost and
------------------------------
expense, during the Term hereof, obtain or provide and keep in full force for
the benefit of Lessor, as an additional named insured (i) general public
liability insurance, insuring Lessor against any and all liability or claims or
liability arising out of, occasioned by or resulting from any accident or other
occurrence in or about Lessor's Property arising out of any act or omission of
Lessee's
<PAGE>
Lease Agreement - Hibernia
Page 15
Employees, Lessee or any officer, agent or contractor of Lessee, for injuries to
any person or persons, with limits of not less than Three Million Dollars
($3,000,000.00) for injuries to one person, Five Million Dollars ($5,000,000.00)
for injuries to more than one person, in any one accident or occurrence, and for
loss or damage to the property of any person or persons, for not less than Five
Million Dollars ($5,000,000.00); (ii) insurance with respect to any improvements
against loss or damage by fire, lightning, windstorm, hail, explosion, riot,
riot attending a strike, civil commotion, aircraft, vehicles, smoke and other
risks from time to time included under "extended coverage" policies, in an
amount equal to at least One Hundred Percent (100%) of the full replacement
value of the improvements and the Facilities and, in any event, in an amount
sufficient to prevent Lessor or Lessee from becoming a co-insurer of any partial
loss under the applicable policies, which shall be written on a replacement cost
basis; (iii) appropriate workers' compensation or other insurance against
liability arising from claims of workers in respect of and during the period of
any work on or about Lessor's Property; and (iv) insurance against such other
hazards and in such amounts as is customarily carried by owners and operators of
similar properties, and as Lessor may reasonably require for its protection.
Lessee shall comply with such other requirements as Lessor, or any mortgagee,
may from time to time reasonably request for the protection by insurance of
their respective interests. The policy or policies of insurance maintained by
Lessee pursuant to this Paragraph shall be of a company or companies authorized
to do business in Massachusetts and a certificate thereof shall be delivered to
Lessor, together with evidence of the payment of the premiums therefor, not less
than fifteen (15) days prior to the commencement of the Term hereof or of the
date when Lessee shall enter upon the Leased Premises, whichever occurs sooner.
At least thirty (30) days prior to the expiration or termination date of any
policy, Lessee shall deliver a certificate of a renewal or replacement policy
with proof of the payment of the premium therefor. Any such insurance required
by this Paragraph may, at Lessee's option, be provided through a blanket policy
or policies.
17.3 PRIMARY & NON-CONTRIBUTING. Each policy evidencing insurance required to
---------------------------
be carded by Lessee pursuant to this Article must contain a provision that the
insurance policy, and the coverage it provides, shall be primary and non-
contributing with respect to any policies carried by Lessor, and that any
coverage carried by Lessor shall be excess insurance.
17.4 RIGHT OF SUBROGATION. The insurance policies shall contain a waiver by
---------------------
Lessee's insurer of any right of subrogation against Lessor and its respective
agents, officers, employees, and representatives, which arises or might arise by
reason of any payment under such policy or by reason of any act or omission of
Lessor, or its respective agents, officers, employees, or representatives.
17.5 WAIVER. Notwithstanding any provision in this Agreement to the contrary,
-------
Lessee hereby waives any and all rights of recovery, claim, action, or causes of
action, against Lessor, its agents, officers or employees for any loss or damage
that may occur to the Facilities by reason of fire, the elements or any other
cause, claim or damage which could be insured against or for under the terms of
any insurance policy, including, without limitation, the insurance policies set
<PAGE>
Lease Agreement - Hibernia
Page 16
forth in Section 17.2 hereof, regardless of the cause or origin including,
------------
without limitation, the negligence of either party hereto, its agents, officers
or employees, or a loss resulting from the interruption of Lessee's business
operations.
ARTICLE XVIII
-------------
INDEMNIFICATION
---------------
18.1 INDEMNIFICATION BY LESSEE. Lessee shall indemnify and defend Lessor, its
--------------------------
agents, officers and employees and hold Lessor, its agents, officers and
employees harmless from and against all claims, actions, losses, damages,
liabilities and expense (including reasonable attorneys' fees) incurred by or
asserted against Lessor, whether during or after the term of this Agreement,
including by reason of personal injury, loss of life, or damage to property,
caused by or resulting from, in whole or any material part, (i) any breach of
this Agreement by Lessee, (ii) Lessee's breach of any warranty contained in this
Agreement (iii) any negligent or intentional act or omission of Lessee, its
employees, agents, invitees or contractors, whether in, on, about or with
respect to the Leased Space or Lessor's Property or otherwise, (iv) the use by
Lessee of any part of the Leased Space or Lessor's Property, (v) any work
undertaken by or at the request of Lessee on or about the Leased Space, (vi) any
inspection, observation or any action undertaken by Lessor pursuant to Article
-------
X, hereof, (vii) the existence or discovery of any hazardous substance on
- -
Lessor's Property arising from Lessee's activities on Lessor's Property, (viii)
any other activity undertaken by or at the request of Lessee pursuant to or in
connection with this Agreement, (ix) any claim brought by Lessee's Employees, or
(x) the presence of any individuals on the Leased Space or Lessor's Property as
a result of Lessee's request or this Agreement; provided, however, that Lessee
shall not be required to indemnify Lessor for any damages, injury, loss or
expense arising solely out of Lessor's or its agents', employees', invitees' or
contractors' willfully negligent acts or omissions.
18.2 DEFENSE BY LESSEE. If Lessor so elects by notice to Lessee, Lessee shall
------------------
have the obligation of defending, at its sole cost and expense, by counsel
selected by Lessee and approved by Lessor (such approval not to be unreasonably
withheld), against any claim to which the foregoing indemnity may apply. Lessor
may assume, or require that such defense be assumed, by Lessor and counsel
selected by Lessor, at the cost and expense of Lessee if Lessor is for any
reason dissatisfied with the defense by Lessee, or believes that its interests
would be better served thereby. In any case where Lessee is defending any such
claim, Lessor may participate in the defense thereof by counsel selected by it,
but at Lessor's expense. Lessee shall not enter into any settlement of any claim
without the consent of Lessor, which consent shall not be unreasonably withheld.
18.3 INDEMNIFICATION BY LESSOR. Lessor shall indemnify and defend Lessee and
--------------------------
hold Lessee harmless from and against all claims, actions, losses, damages,
liabilities and expenses (including reasonable attorneys' fees) incurred by or
asserted against Lessee, whether during or
<PAGE>
Lease Agreement - Hibernia
Page 17
after the term of this Agreement, including by reason of personal injury, loss
of life, or damage to property, caused by or resulting from in whole or any
material part, (i) any breach of this Agreement by Lessor, (ii) Lessor's breach
of any warranty contained in this Agreement, (iii) any negligent or intentional
act or omission of Lessor, its employees, agents, invitees or contractors,
whether in, on, about or with respect to the Leased Space or Lessor's Property,
(iv) the existence or discovery of any hazardous substance on Lessor's Property
or the Leased Space (or liability for violation of any federal, state or local
environmental law or regulation) arising from Lessor's use, or the use by any
current, future or previous tenant of Lessor's Property or the Leased Space
(other than Lessee); (v) any work undertaken by or at the request of Lessor on
or about the Leased Space; provided, however, that Lessor shall not be required
to indemnify Lessee for any damages, injury, loss or expense arising out of
Lessee's or its agents', employees', invitees' or contractors' negligent acts or
omissions.
18.4 DEFENSE BY LESSOR. If Lessee so elects by notice to Lessor, Lessor shall
------------------
have the obligation of defending, at its sole cost and expense, by counsel
selected by Lessor and approved by Lessee (such approval not to be unreasonably
withheld), against any claim to which the foregoing indemnity may apply. Lessee
may assume, or require that such defense be assumed, by Lessee and counsel
selected by Lessee, at the cost and expense of Lessor if Lessee is for any
reason dissatisfied with the defense by Lessor, or believes that its interests
would be better served thereby. In any case where Lessor is defending any such
claim, Lessee may participate in the defense thereof by counsel selected by it,
but at Lessee's expense. Lessor shall not enter into any settlement of any claim
without the consent of Lessee, which consent shall not be unreasonably withheld.
ARTICLE XIX
-----------
FORCE MAJEURE
-------------
19.1 FORCE MAJEURE. Except for Lessee's obligation to pay rent, neither party
--------------
shall be held liable for any delay or failure in performance of any part of this
Agreement from any cause beyond its control and without its fault or negligence,
such as acts of God, acts of civil or military authority, government
regulations, strikes, labor disputes, embargoes, epidemics, war, terrorist acts,
riots, insurrections, fire, explosions, earthquakes, nuclear accidents, floods,
power blackouts or brownouts or surges, volcanic action, other major
environmental disturbances, unusually severe weather conditions, inability to
secure products or services of other persons or transportation facilities, or
act or omissions of transportation common carriers (collectively referred to as
"Force Majeure Conditions").
19.2 TERMINATION BY FORCE MAJEURE. If any such Force Majeure Condition occurs
------------------------------
and is the proximate cause of a delay or failure in performance of any part of a
party's obligations under this Agreement for more than ninety (90) days, Lessor
or Lessee may, by written notice given to the other, terminate this Agreement or
that part of this Agreement that is affected by such delay or failure to
perform.
<PAGE>
Lease Agreement - Hibernia
Page 18
ARTICLE XX
----------
SAFETY
------
20.1 FACILITIES. Lessee is responsible for the safety of all Antenna,
-----------
Cabling and Equipment and other materials brought by Lessee onto Lessor's
Property, and for the safety of all work performed by Lessee's Employees in the
delivery, provision, installation, operation, maintenance, repair and removal of
the Antenna, Cabling or Equipment and any other material brought by Lessee onto
Lessor's Property. In discharging this responsibility, Lessee shall comply (and
shall cause Lessee's Employees to comply) with the requirements of the
Occupational Safety and Health Act of 1970, as amended; and with any other
Federal, state, or local act or other requirements of law affecting safety and
health.
20.2 VIOLATIONS.
-----------
(a) Lessee shall be responsible for any violation by Lessee or
Lessee's Employees of any safety or health standard under this Agreement. If any
material furnished or any work performed by Lessee or Lessee's Employees gives
rise to a safety or health violation, Lessee will immediately remedy such
condition and will indemnify, defend, and hold Lessor (or any of Lessor's
employees, agents, officers, representatives, affiliates, parent, subsidiaries
and their affiliated companies, and their employees, agents, officers and
representatives) harmless from any penalty, fine, or liability in connection
with such a violation.
(b) Lessor shall be responsible for any violation by Lessor or
Lessor's employees of any safety or health standard relating to Lessor's
Property. If any material furnished or any work performed by Lessor or Lessor's
employees gives rise to a safety or health violation relating to the Lessor's
Property, Lessor will immediately remedy such condition and will indemnity,
defend and hold Lessee (or any of Lessee's Employees, agents, officers,
representatives, affiliates, parent, subsidiaries and their affiliated
companies, and their employees, agents, officers and representatives) or
liability in connection with such a violation.
ARTICLE XXI
-----------
MISCELLANEOUS PROVISIONS
------------------------
21.1 Severability. If any one or more of the provisions contained in this
-------------
Agreement is, for any reason, held to be unenforceable in any respect under
applicable state law or laws of the United States of America, such
unenforceability will not affect any other provision of this Agreement, but this
Agreement will then be construed in such a way as will achieve the intent of
such unenforceable provision or provisions to the extent permitted by law.
<PAGE>
Lease Agreement - Hibernia
Page 19
21.2 ASSIGNMENT BY LESSOR. Notwithstanding any of the provisions of this
---------------------
Agreement, Lessor may assign, in whole or in part, Lessor's interest in this
Lease. In the event Lessor assigns this Agreement, Lessor shall be and is hereby
relieved of all liability under any and all covenants and obligations contained
in or derived from this Agreement or arising out of any act, occurrence or
omission relating to the Leased Space occurring after the consummation or such
assignment, but only upon the condition that, as part of such Assignment, Lessor
will cause the assignee to agree, in writing to carry out any and all of the
covenants and obligations of Lessor under this Agreement occurring after the
consummation of Lessor's assignment of its interest in and to this Agreement.
21.3 ASSIGNMENT BY LESSEE. Lessee may not assign this Agreement or sublet
---------------------
the Leased Space or any portion thereof without the prior written consent of
Lessor, which consent shall be given or withheld in Lessor's sole discretion and
election, and shall be expressly conditioned on the payment of fifty percent
(50%) of the net proceeds of the assignment or sublease; provided consent of
Lessor shall not be required hereunder if the assignment is made to an entity
contemporaneously acquiring the Station and the financial condition of the
assignee is reasonably acceptable to Lessor. Under no circumstance shall this
Lease be assigned or sublet by Lessee to any party which does not agree in
writing to be bound by all terms and conditions contained herein. In the event
of Lessee's total assignment of this Agreement to an entity contemporaneously
acquiring the Station, Lessee shall be and is hereby relieved of all liability
under any and all covenants and obligations contained in or derived from this
Agreement or arising out of any act, occurrence or omission relating to the
Leased Space occurring after the consummation of such assignment, but only upon
the condition that, as part of such Assignment, Lessee will cause the assignee
to agree, in writing, to carry out any and all of the covenants and obligations
of Lessee under this Agreement occurring after the consummation of Lessee's
assignment of its interest in and to this Agreement.
21.4 CONDEMNATION. In the event Lessor's Property or any portion thereof is
-------------
taken pursuant to a condemnation proceeding or by eminent domain such that
Lessor or Lessee can no longer operate telecommunications equipment on Lessor's
Property, this Agreement shall terminate without liability to either party and
Lessee shall not be entitled to any portion of any award arising out of such
proceedings.
21.5 RULES AND REGULATIONS. Lessor agrees that it shall not enforce any
----------------------
unreasonable rules or regulations which would unduly prejudice Lessee's use of
the Leased Space, or which would prevent full and free access to the Leased
Space by Lessee, as herein provided.
21.6 SURRENDER OF PREMISES. Upon the expiration of the Term hereof, Lessee
----------------------
shall surrender the Leased Premises to Lessor in good order and condition,
reasonable wear and tear excepted. Any equipment, fixtures, goods or other
property of Lessee not removed within ten (10) days after any quitting, vacating
or abandonment of the Leased Premises, or upon Lessee's eviction therefrom,
shall be considered abandoned, and Lessor shall have the right, without notice
to Lessee, to sell or otherwise dispose of same without having to account to
Lessee for any part of the proceeds of such sale.
<PAGE>
Lease Agreement - Hibernia
Page 20
21.7 RESTORATION ON TERMINATION. Upon the termination of the Agreement for
---------------------------
any reason, Lessee will restore the Leased Space to its original condition,
normal wear and tear excepted, at Lessee's sole cost and expense. Any fixtures,
including without limitation all Antenna, Cabling and Equipment, goods or other
property of Lessee not removed within ten (10) days after any quitting, vacating
or abandonment of the Leased Premises, or upon Lessee's eviction therefrom,
shall be considered abandoned, and Lessor shall have the right, without notice
to Lessee, to sell or otherwise dispose of same without having to account to
Lessee for any part of the proceeds of such sale.
21.8 NOTICES. All notices, demands, and requests required or permitted to be
--------
given hereunder shall be in writing and sent certified mail, return receipt
requested.
If to Lessor:
Jonathan L. Block, Esq.
c/o Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
If to Lessee:
Hibernia Communications, Inc.
42 West Lancaster Drive, Suite 200
Ardmore, Pennsylvania 19003
Either party hereto may change the place for notice to it by sending like
written notice to the other party hereto.
21.9 ESTOPPEL CERTIFICATE. Lessee and Lessor will each execute, acknowledge
---------------------
and deliver to the other, promptly upon request, a certificate certifying that
(i) this Agreement is unmodified and in full force and effect (or, if there have
been modifications, that the Agreement is in full force and effect, as modified,
and stating the modifications), (ii) the dates, if any, to which rent and other
sums payable hereunder have been paid, and (iii) no notice has been received by
such party of any default which has not been cured, except as to defaults
specified in said certificate. Any such certificate may be relied upon by any
prospective purchaser or mortgagee of Lessor's Property or any part thereof or
by a lender, other creditor, investor or prospective buyer of Lessee or any of
its assets.
21.10 SUBORDINATION, NONDISTURBANCE AND ATTORNMENT. This Agreement shall not
---------------------------------------------
be a lien against Lessor's Property in respect to any mortgages and security
agreements placed or hereafter to be placed by Lessor upon Lessor's Property.
The recording of such mortgages and security agreements shall have preference
and precedence and be superior and prior in lien to this
<PAGE>
Lease Agreement - Hibernia
Page 21
Agreement, irrespective of the date of recording, and Lessee agrees to execute
any instruments, without cost, which may be deemed necessary or desirable to
further effect the subordination of this Agreement. Lessor shall make a
reasonable effort to obtain from any mortgagees or lenders holding an interest
in the nature of a mortgage in Lessor's Property an agreement that the mortgagee
or lender shall not disturb Lessee's quiet possession in the event of
foreclosure. If any proceedings are brought for foreclosure, or in the event of
the exercise of the power of sale under any mortgage or deed of trust made by
the Lessor encumbering Lessor's Property, Lessee shall attorn to the purchaser
upon any such foreclosure or sale and recognize such purchaser as the Lessor
under this Lease.
21.11 BINDING EFFECT. The provisions of this Agreement shall apply to, bind
---------------
and inure to the benefit of Lessor and Lessee, their respective successors,
legal representatives or assigns.
21.12 ENTIRE AGREEMENT/MODIFICATIONS. This Agreement contains the entire
-------------------------------
understanding and agreement between the parties. No representative, agent or
employee of Lessor has been authorized to make any representations or promises
with reference to the within agreement or to vary, alter or modify the terms
hereof. No additions, changes or modifications shall be binding unless reduced
to writing and signed by the parties.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
LESSOR: LESSEE:
ATSINGER FAMILY TRUST HIBERNIA COMMUNICATIONS, INC.
By: By:
------------------------------- --------------------------
Edward G. Atsinger III, Trustee Michael R. Craven
By:
-------------------------------
Mona J. Atsinger, Trustee
By Edward G. Atsinger III, Attorney-in-fact
for Mona J. Atsinger
By:
--------------------------------
Stuart W. Epperson
General Partner
<PAGE>
Lease Agreement - Hibernia
Page 22
Salem Communications Corporation, a California corporation, hereby guarantees
all obligations and liabilities of Lessor under this Agreement.
SALEM COMMUNICATION CORPORATION
- ---------------------------
Eric H. Halvorson
Executive Vice President
<PAGE>
Lease Agreement - Hibernia
Page 23
Schedule 1.3
------------
AM Towers.
<PAGE>
Lease Agreement - Hibernia
Page 24
Schedule 1.14
-------------
Legal and Street Address.
<PAGE>
Schedule 1.3
------------
[MAP OF WOLLASTON GOLF CLUB GROUNDS]
<PAGE>
SCHEDULE 3.13
-------------
Serafin Bros. has acted as the exclusive broker in this transaction and shall be
paid by Seller pursuant to a separate agreement between Seller and Serafin Bros.
<PAGE>
EXHIBIT 10.06.08
OPTION TO PURCHASE
------------------
THIS OPTION AGREEMENT ("Option Agreement") is made and entered into as of
August 18, 1997, by and between SONSINGER, INC. (collectively refered to herein
as "Optionor"), and INSPIRATION MEDIA, INC. ("Optionee").
WHEREAS Optionor is the licensee of radio station KKOL(AM) Seattle,
Washington (the "Station");
WHEREAS Optionor and Optionee have on entered into a Local Programming and
Marketing Agreement (the "LMA") by which Optionee provides certain programming
to the Station;
WHEREAS Optionee desires to acquire from Optionor and Optionor is willing to
grant to Optionee, upon the terms and conditions hereinafter set forth, the
exclusive option to purchase certain assets of the Station (the "Assets"),
subject to the approval of the Federal Communications Commission ("FCC"), at a
future date.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
Optionor and Optionee agree as follows:
1. PURCHASE OPTION.
----------------
1.1 GRANT OF OPTION. Optionor hereby grants to Optionee the exclusive
---------------
option (the "Option") to purchase the Assets on the terms and conditions set
forth in the Asset Purchase Agreement attached hereto as Exhibit "A" and
incorporated herein by reference (the "Asset Purchase Agreement").
1.2 OPTION CONSIDERATION. This Option is granted in consideration of
--------------------
the payment of One Hundred Dollars ($100) by Optionee to Optionor, the receipt
and sufficiency of which are hereby acknowledged.
1.3 TERM OPTION. Provided this Option Agreement shall not have first
-----------
terminated, the Option may be exercised at any time after the execution hereof
This Option Agreement terminates and the Option shall expire, if not yet
exercised, on December 31, 1999.
1.4 OPTION PRICE. In the event Optionee shall exercise its option
------------
hereunder, the consideration to be paid by Optionee to Optionor for purchase of
the assets of the Station shall be an amount equal to the lesser of (i) the
purchase price paid by Seller for the Station (less any amounts allocated to
real estate simultaneously purchased) being an amount equal to One Million Three
Hundred Twenty Five Thousand Dollars ($1,325,000); or (ii) the fair market value
of the radio station at the time the option is exercised as reasonably
determined by Gary Stevens & Co.,
1
<PAGE>
or, if then unavailable, a recognized national media brokerage company
reasonably selected by Optionee and Optionor.
1.5 MANNER OF EXERCISING OPTION. Unless this Option Agreement shall
---------------------------
have previously terminated, the Option may be exercised by the Optionee's
delivery to the Optionor of written notice of Optionee's election to exercise
the Option ("Exercise Notice") together with a written valuation of the Station
as provided in Section 1.4 hereof, if any. The Exercise Notice shall state that
-----------
the Option is exercised without condition or qualification other than (i) the
receipt by Optionee of updated schedules to the Asset Purchase Agreement
reasonably satisfactory to Optionee, (ii) the receipt of any required approval
of the FCC for the assignment of the Station's FCC licenses, and (iii) the
satisfaction of all conditions set forth in the Asset Purchase Agreement. Within
five (5) business days following receipt by the Optionor of the Exercise Notice,
Optionor shall deliver updated schedules to the Asset Purchase Agreement to
Optionee, and Optionee shall have five (5) business days thereafter to review
such schedules. In the event the updated schedules disclose information that
Optionee reasonably determines would have a material adverse effect on the
Station after Optionee's acquisition of the Station, Optionee may elect not to
proceed with the purchase; provided however, that Optionee's election not to
proceed may be made only after Optionor has been given a reasonable period of
time to remedy or cure the matters at issue and such matters cannot be remedied
or cured to the reasonable satisfaction of Optionee. If Optionee elects to
proceed with the purchase, Optionor and Optionee shall execute the Asset
Purchase Agreement and diligently proceed pursuant to the provisions contained
therein.
2. OPTIONOR'S REPRESENTATIONS & WARRANTIES. Optionor warrants and
-----------------------------------------
represents to Optionee that:
(a) Except for any Liens, as defined in the Asset Purchase Agreement,
created by the recording of this Option Agreement or the Promissory Note,
Optionor has and at Closing, as provided in the Asset Purchase Agreement, will
have good, marketable and indefensible title to and full power of disposition
over the Assets, and the full right to sell and transfer to Optionee all of the
Assets without the requirement of obtaining the consent or approval of any other
person, entity, agency or authority except the FCC.
(b) Except for any Liens created by the recording of this Option
Agreement or the Promissory Note, the Assets are and at Closing, as set forth in
the Asset Purchase Agreement, will be free of all Liens, claims, debts or other
encumbrances.
(c) The representations and warranties of Seller, contained in
Article III of the Asset Purchase Agreement are complete and correct in all
- -----------
material respects on the date hereof and shall be at dosing except for changes
that are not materially adverse to the Station or the Sale Assets, as defined in
the Asset Purchase Agreement.
3. The representations and warranties of Buyer, contained in Article IV
----------
of the Asset Purchase Agreement are complete and correct in all material
respects on the date hereof and shall be at closing.
2
<PAGE>
4. OPTIONOR'S COVENANTS. Optionor covenants that, commencing on the date
----------------------
hereof and continuing through the term of this Option the Station shall be
operated in accordance with the covenants set forth in Section 5.1 of the Asset
------------
Purchase Agreement, which covenants are incorporated herein by reference.
5. WAIVER. No waiver by a party of any provision of this Option Agreement
--------
shall be considered a waiver of any other provision or any subsequent breach of
the same or any other provision, The exercise by a party of any remedy provided
for in this Option Agreement or at law shall not prevent the exercise by that
party of any other remedy provided for in this Option Agreement or at law.
6. INTERPRETATION.
---------------
6.1 ENTIRE AGREEMENT. This Option Agreement and the LMA constitute
----------------
the entire agreement between the parties and supersede all prior discussions,
negotiations and agreements, whether oral or written, between them concerning
the Station. Any amendment to this Option Agreement, including an oral
modification supported by new consideration, must be reduced to writing and
signed by all parties before it will be effective.
6.2 COUNTERPARTS. This Option Agreement and all amendments and
------------
supplements to it may be executed in counterparts and all counterparts together
shall be construed as one document.
6.3 BINDING ON SUCCESSORS. This Option Agreement inures to the
---------------------
benefit of, and is binding on, the parties, their respective heirs, personal
representatives, successors and assigns. Neither party may assign its right and
obligations hereto without the prior written consent of the other party.
6.4 CAPTIONS. The captions heading the various paragraphs of this
--------
Option Agreement are for convenience only and shall not be considered to limit,
expand, or define the contents of the respective paragraphs.
6.5 CONTROLLING LAW. This Option Agreement shall be interpreted under
----------------
California law and according to its fair meaning and not in favor of or against
any party.
6.6 NOTICES. Any notice required hereunder shall be in writing and
-------
shall be sufficiently given if delivered by overnight delivery service or sent
by registered or certified mail, first class postage prepaid, or by telegram,
facsimilie machine or similar means of communication, addressed as follows:
If to the Optionee, TO:
c/o Salem Communications Corporation
3
<PAGE>
4880 Santa Rosa Road, Suite 300
Camarillo, CA 93012
Attn: Eric H. Halvorson
If to the Optionor, to:
c/o Salem Communications Corporation
4880 Santa Rosa Road,
Suite 300 Camarillo, CA 93012
Attn: Jonathan L. Block
IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement as
of the date first above written.
OPTIONOR: OPTIONEE:
SONSINGER, INC. INSPIRATION MEDIA, INC.
By: /s/ Edward G. Atsinger III By: /s/ Eric H. Halvorson
--------------------------- --------------------------
Edward G. Atsinger III Eric H. Halvorson
President Vice President
4
<PAGE>
EXHIBIT 10.07.01
TOWER PURCHASE AGREEMENT
This Agreement ("Agreement") is made this 22/nd/ day of August, 1997 by and
between SALEM COMMUNICATIONS CORPORATION ("Seller"), and SONSINGER BROADCASTING
COMPANY OF HOUSTON, LP. ("Buyer").
RECITALS:
---------
1. Seller is currently constructing a tower ("Tower") on certain real
property ("Real Property") located in the State of Texas and the Counties of
Liberty and Montgomery and in conjunction therewith has entered into certain
contracts and expended certain amounts; and
2. Seller desires to sell and Buyer desires to acquire the Tower and
assume the contracts and other obligations of Seller relating thereto on the
terms and conditions set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained herein,
Seller and Buyer hereby agree as follows:
ARTICLE I
---------
TERMINOLOGY
-----------
1.1 ASSUMED OBLIGATIONS. Such term shall have the meaning defined in
--------------------
Section 2.2.
- -----------
1.2 CONSTRUCTION AGREEMENTS. The agreements, commitments, contracts,
------------------------
leases and other items described in Section 2.1(b) which relate to construction
--------------
of the Tower.
1.3 INDEMNIFIED PARTY. Any party described in Section 6.3(a) or 6.4(a)
------------------ ------------------------
against which any claim or liability may be asserted by a third party which
would give rise to a claim for indemnification under the provisions of this
Agreement by such party.
1.4 INDEMNIFYING PARTY. The party to the Agreement (not the Indemnified
-------------------
Party) that, in the event of a claim or liability asserted by a third party
against the Indemnified Party which would give rise to a claim for
indemnification under the provisions of this Agreement, may at its own expense,
and upon written notice to the Indemnified Party, compromise or defend such
claim.
1.5 LIEN. Any mortgage, deed of trust, pledge, hypothecation, security
-----
interest, encumbrance, lien, lease or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise, affecting any assets or
property, including any written or oral agreement to give or grant any of the
foregoing, any conditional sale or other title retention agreement, and the
filing of or agreement to give any financing statement with respect to any
assets or property under the Uniform Commercial Code or comparable law of any
jurisdiction.
1
<PAGE>
1.6 MATERIAL ADVERSE CONDITION. A condition which would materially
---------------------------
restrict, limit, increase the cost or burden of or otherwise adversely affect or
materially impair the right of Buyer to the ownership, use, control, enjoyment
or operation of the Tower or the proceeds therefrom.
1.7 PURCHASE PRICE. The consideration, in addition to the assumption
---------------
of the Assumed Obligations, to be paid by Buyer to Seller for the purchase of
the Sale Assets in an amount equal to all amounts expended by Seller for the
construction of the Tower, as set forth on Schedule 3.3.
------------
1.8 SALE ASSETS. All of the tangible and intangible assets to be
------------
transferred by Seller to Buyer as set forth in Section 2.1.
-----------
1.9 SURVIVAL PERIOD. The term following the Closing Date during which all
----------------
representations, warranties, covenants and agreements of the parties under this
Agreement shall survive. The term shall be thirty (30) days.
1.10 TANGIBLE PERSONAL PROPERTY. The personal property identified on
---------------------------
Schedule 3.6 together with any improvements constructed on the Real Property and
- ------------
all warranties, if any, now existing on said personal property, or any portion
thereof.
ARTICLE II
----------
PURCHASE AND SALE
-----------------
2.1 SALE ASSETS. Upon the execution of this Agreement, Seller will
------------
transfer, assign and convey to Buyer, and Buyer will purchase from Seller, all
of Seller's right, title and interest, legal and equitable, in and to the
following assets:
(a) TANGIBLE PERSONAL PROPERTY: All of Seller's right title and interest
---------------------------
in and to the Tangible Personal Property, together with such modifications,
replacements, improvements and additional items, and subject to such deletions
therefrom, made or acquired between the date hereof and the Closing Date in
accordance with the terms and provisions of this Agreement;
(b) CONSTRUCTION AGREEMENTS: All agreements to which Seller is a
------------------------
party or by which it is bound and which are listed on Schedule 3.4; any
------------
renewals, extensions, amendments or modifications of those agreements which are
made in the ordinary course of Seller's operation of the Station and in
accordance with the terms and provisions of this Agreement; and any additional
such agreements, contracts, leases, commitments or orders (and any renewals,
extensions, amendments or modifications thereof) made or entered into between
the date hereof and the Closing Date in accordance with the terms and provisions
of this Agreement.
(c) RECORDS: The originals (where available) or true and complete
--------
copies (if originals are not available) of all of the records, files, logs and
ledgers pertaining to the Sale
2
<PAGE>
Assets or used or useful in the construction of the Tower. Seller shall have the
right to retain a copy of all books, records and other items provided by Seller
to Buyer.
(d) MISCELLANEOUS ASSETS: Any other tangible or intangible assets,
---------------------
properties or rights of any kind or nature not otherwise described above in this
Section 2.1 and now or hereafter owned or used by Seller in the construction of
- -----------
the Tower.
2.2 ASSUMPTION OF LIABILITIES. At the Closing, Buyer shall assume and
--------------------------
agree to perform, without duplication of Seller's performance, the liabilities
and obligations arising under the Construction Agreements assumed by and
transferred to Buyer in accordance with this Agreement (the "Assumed
Obligations").
2.3 NO OTHER ASSUMPTIONS. Except for the Assumed Obligations, Buyer shall
---------------------
not assume or in any manner be liable for any duties, responsibilities,
obligations or liabilities of Seller of any kind or nature, whether express or
implied, known or unknown, contingent or absolute including, without limitation
any liabilities to or in connection with Seller's employees whether arising in
connection with the transaction contemplated hereunder or otherwise.
2.4 PURCHASE PRICE. The Purchase Price shall be paid by Buyer to Seller
---------------
at Closing by wire transfer of immediately available funds.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
3.1 SALE ASSETS. The Sale Assets include all of the assets, properties
------------
and rights of every type and description, real, personal and mixed, tangible and
intangible, that are used to a material extent in the conduct of the business of
owning and constructing the Tower in the manner in which it has been and is now
conducted.
3.2 TANGIBLE PERSONAL PROPERTY. Except for supplies and other incidental
---------------------------
items which in the aggregate are not of material value, the list of Tangible
Personal Property set forth on Schedule 3.2 is a complete and correct list of
------------
all of the items of tangible personal property used to a material extent in the
construction of the Tower.
3.3 EXPENDITURES. Schedule 3.3, as it may be amended from time to time
------------- ------------
prior to Closing, is a complete and correct itemization of all amounts expended
by Seller in the construction of the Tower.
3.4 CONSTRUCTION AGREEMENTS. Attached hereto as Schedule 3.4 are
------------------------ ------------
complete and correct copies of the contracts to be assigned to Buyer under this
Agreement.
3
<PAGE>
ARTICLE IV
----------
TRANSACTIONS PRIOR TO THE CLOSING DATE
--------------------------------------
Seller covenants and agrees with Buyer that between the date hereof and the
Closing Date, unless the Buyer otherwise agrees in writing (which agreement
shall not be unreasonably withheld), Seller shall:
(a) Use reasonable efforts to continue the construction of the Tower;
(b) Use reasonable commercial efforts to maintain insurance upon all
of the tangible Sale Assets in such amounts and of such kind comparable to that
in effect on the date hereof with respect to such Sale Assets, with insurers of
substantially the same or better financial condition;
(c) Conduct its business in all material respects in accordance with
any rules and regulations, statutes, ordinances and orders of all governmental
authorities having jurisdiction over any aspect of the operation of the Sale
Assets, except where the failure to so would not have a material adverse effect
on the Sale Assets or on the ability of Seller to consummate the transactions
contemplated hereby;
(d) Comply in all material respects with all Construction Agreements
now or hereafter existing which are material, individually or in the aggregate,
to the operation of the Sale Assets;
(e) Not sell, lease or otherwise dispose of, nor agree to sell, lease
or otherwise dispose of, any of the Sale Assets, except for dispositions in the
ordinary course of business;
(f) Not acquire or lease any goods or services or enter into, amend
or terminate any license, lease of real or personal property or any other
Station Agreement, other than in the ordinary course of business;
(g) Not introduce any material change with respect to the
architectural or engineering plans for the construction of the Tower; provided,
Seller shall be entitled to make such changes, at the discretion of Seller
exercised in good faith after consultation with Buyer, as do not materially and
adversely affect the Sale Assets;
4
<PAGE>
ARTICLE V
---------
CLOSING
-------
5.1 TIME. The closing (the "Closing") shall take place on or before
-----
October 15, 1997.
5.2 DELIVERIES TO BUYER BY SELLER. At the Closing, Seller shall deliver
------------------------------
or cause to be delivered to Buyer, the following:
(a) A Bill of Sale conveying the Tangible Personal Property;
(b) An instrument or instruments assigning to Buyer all right, title
and interest of Seller in and to the Construction Agreements;
(c) Such additional information and materials as Buyer shall have
reasonably requested.
5.3 DELIVERIES TO SELLER BY BUYER. At the Closing, Buyer shall deliver or
------------------------------
cause to be delivered to Seller:
(a) The Purchase Price;
(b) An instrument or instruments signed by Buyer assuming the Assumed
Obligations.
(c) Such additional information and materials as Seller shall have
reasonably requested.
ARTICLE VI
-----------
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
-------------------------------------------
INDEMNIFICATION
---------------
6.1 SURVIVAL OF REPRESENTATION AND WARRANTIES. All representations,
------------------------------------------
warranties, covenants and agreements contained in this Agreement shall survive
the Closing for the Survival Period and the Closing shall not be deemed a waiver
by either party of the representations, warranties, covenants or agreements of
the other party contained herein. No claim may be brought under this Agreement
or any other document unless written notice describing in reasonable detail the
nature and basis of such claim is given on or prior to the last day of the
Survival Period. In the event such a notice is so given, the right to
indemnification with respect thereto under this Article shall survive the
Survival Period until such claim is finally resolved and any obligations with
respect thereto are fully satisfied. Notwithstanding the foregoing, the
5
<PAGE>
provisions for survival and the making of claims shall not apply to the
agreements whereby Buyer assumes the obligations under Section 4.2.
-----------
6.2 INDEMNIFICATION IN GENERAL. Buyer and Seller agree that the rights to
---------------------------
indemnification and to be held harmless set forth in this Agreement shall, as
between the parties hereto and their respective successors and assigns, be
exclusive of all rights to indemnification and to be held harmless that such
party (or its successors or assigns) would otherwise have by statute, common law
or otherwise.
6.3 INDEMNIFICATION BY SELLER. Seller shall indemnify and hold harmless
--------------------------
Buyer and any officer, director and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or nonperformance by Seller of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other document; or
(ii) The ownership or operation of the Sale Assets by Seller
prior to the Closing; or
(iii) All other liabilities and obligations of Seller other
than the Assumed Obligations; or
(iv) Noncompliance by Seller with the provisions of the Bulk
Sales Act, if applicable, in connection with the transactions contemplated by
this Agreement.
6.4 INDEMNIFICATION BY BUYER. Buyer shall indemnify and hold harmless
-------------------------
Seller and any officer, director and affiliate thereof with respect to any and
all demands, claims, actions, suits, proceedings, assessments, judgments, costs,
losses, damages, liabilities and expenses (including reasonable attorneys' fees)
relating to or arising out of:
(i) Any breach or nonperformance by Buyer of any of its
representations, warranties, covenants or agreements set forth in this Agreement
or any other document; or
(ii) The ownership by Buyer of the assets to be conveyed and
assigned hereunder from and after the Closing; or
(iii) Any other liabilities and obligations of Buyer, including
liabilities and obligations arising after the Closing under the Assumed
Obligations.
6.5 INDEMNIFICATION PROCEDURES. In the event that an Indemnified Party
--------------------------
may be entitled to indemnification hereunder with respect to any asserted claim
of, or obligation or
6
<PAGE>
liability to, any third party, such party shall notify the Indemnifying Party
thereof, describing the matters involved in reasonable detail, and the
Indemnifying Party shall be entitled to assume the defense thereof upon written
notice to the Indemnified Party with counsel reasonably satisfactory to the
Indemnified Party; provided that once the defense thereof is assumed by the
Indemnifying Party, the Indemnifying Party shall keep the Indemnified Party
advised of all developments in the defense thereof and any related litigation,
and the Indemnified Party shall be entitled at all times to participate in the
defense thereof at its own expense. If the Indemnifying Party fails to notify
the Indemnified Party of its election to defend or contest its obligation to
indemnify under this Article IX, the Indemnified Party may pay, compromise, or
----------
defend such a claim without prejudice to any right it may have hereunder.
ARTICLE VII
-----------
MISCELLANEOUS
-------------
7.1 FURTHER ACTIONS. From time to time before, at and after the Closing,
----------------
each party, at its expense and without further consideration, will execute and
deliver such documents to the other party as the other party may reasonably
request in order more effectively to consummate the transactions contemplated
hereby.
7.2 PAYMENT OF EXPENSES. Each of the parties shall bear its own expenses,
--------------------
including the fees of any attorneys and accountants engaged by such party, in
connection with this Agreement and the consummation of the transactions
contemplated herein.
7.3 NOTICES. All notices, demands or other communications given hereunder
--------
shall be in writing and shall be sufficiently given if delivered by overnight
delivery service or sent by registered or certified mail, first class, postage
prepaid, or by telegram, facsimile machine or similar written means of
communication, addressed as follows:
(a) if to Seller, to:
Eric H. Halvorson
Vice President
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 482-8570
7
<PAGE>
(b) if to Buyer, to:
Jonathan L. Block, Esq.
Corporate Counsel
Salem Communications Corporation
4880 Santa Rosa Road, Suite 300
Camarillo, California 93012
Facsimile No.: (805) 384-4505
or such other address with respect to any party hereto as such party may from
time to time notify (as provided above) to the other party hereto. Any such
notice, demand or communication shall be deemed to have been given (i) if so
mailed, as of the close of the third business day following the date so mailed,
and (ii) if personally delivered or otherwise sent as provided above, on the
date received.
7.4 ENTIRE AGREEMENT. This Agreement, the Schedules and the Exhibits
-----------------
hereto constitute the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede any prior
negotiations, agreements, understandings or arrangements between the parties
hereto with respect to the subject matter hereof.
7.5 BINDING EFFECT: BENEFITS. Except as otherwise provided herein, this
-------------------------
Agreement and all other documents to be executed in connection herewith shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors or assigns. Except to the extent specified herein,
nothing in this Agreement, express or implied, shall confer on any person other
than the parties hereto and their respective successors or assigns any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
7.6 ASSIGNMENT. This Agreement and any rights hereunder shall not be
-----------
assignable by either party hereto without the prior written consent of the other
party; provided that Buyer may assign this Agreement to an entity controlled by
Edward G. Atsinger III and Stuart W. Epperson.
7.7 GOVERNING LAW. This Agreement shall in all respects be governed by
--------------
and construed in accordance with the laws of the State of Texas including all
matters of construction, validity and performance.
7.8 AMENDMENTS AND WAIVERS. No term or provision of this Agreement may be
-----------------------
amended, waived, discharged or terminated orally but only by an instrument in
writing signed by the party against whom the enforcement of such amendment,
waiver, discharge or termination is sought. Any waiver shall be effective only
in accordance with its express terms and conditions.
7.9 SEVERABILITY. Any provision of this Agreement which is unenforceable
-------------
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such unenforceability
8
<PAGE>
without invalidating the remaining provisions hereof, and any such
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto hereby waive any provision of law now or
hereafter in effect which renders any provision hereof unenforceable in any
respect.
7.10 HEADINGS. The captions in this Agreement are for convenience of
---------
reference only and shall not define or limit any of the terms or provisions
hereof.
7.11 COUNTERPARTS. This Agreement may be executed in any number of
-------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.12 REFERENCES. All references in this Agreement to Articles and
-----------
Sections are to Articles and Sections contained in this Agreement unless a
different document is expressly specified.
7.13 CONTINGENCY. Buyer's obligations hereunder, including its obligation
------------
to Close hereunder, are expressly conditioned upon its ability to obtain
financing for 100% of the Purchase Price at a favorable rate of interest and
with favorable terms. In the event Buyer is unable, for any reason, to obtain
such financing, Buyer, upon written notice to Seller, may terminate this
Agreement without obligation to Seller.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed as of the date first written above.
SONSINGER BROADCASTING COMPANY OF SALEM COMMUNICATIONS CORPORATION
HOUSTON, LP.
By: Sonsinger Management, Inc.,
Its General Partner
By: /s/ Jonathan L. Block By: /s/ Eric H. Halvorson
---------------------- ----------------------
Jonathan L. Block Eric H. Halvorson
Secretary Executive Vice President
9
<PAGE>
SCHEDULE 3.2
------------
TANGIBLE PERSONAL PROPERTY
See attached.
10
<PAGE>
SCHEDULE 3.3
------------
EXPENDITURES
See attached.
11
<PAGE>
SCHEDULE 3.4
------------
CONSTRUCTION AGREEMENTS
See attached.
12
<PAGE>
EXHIBIT 10.07.04
PRINCIPAL AMOUNT: REVOLVING Loan Date: December 24, 1997
Interest Rate: Credit Agreement Base Rate Maturity Date: December 31, 2002
less 1%
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, SALEM COMMUNICATIONS CORPORATION
("Maker") and EDWARD G. ATSINGER III ("Payee") agree as follows:
1. Maker promises to pay to Payee at 4880 Santa Rosa Road, Suite 300,
Camarillo, California, or at such other place as Payee shall direct, Two Million
Five Hundred Thousand Dollars ($2,500,000) or such amount as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
(a) The rate of interest ("Interest Rate") on this Promissory Note
("Note") shall be the rate payable by the Maker pursuant to the Credit Agreement
("Credit Agreement") dated as of September 25, 1997 by and among Maker, the Bank
of New York, as Administrative Agent, and Bank of America NT&SA, as
Documentation Agent, less one percent (1%). Under no circumstances will the
interest rate on this Note be greater than the maximum amount of interest
allowed by applicable law.
(b) This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Maker. Payee may, but
need not, require that all oral requests be confirmed in writing. Payee shall
have no obligation to advance funds under this Note if: (i) Maker is in default
under the terms of this Note; (ii) Maker ceases to do business or becomes
insolvent; (iii) Payee, in good faith, deems itself insecure under this Note or
any other agreement between Payee and Maker.
(c) Subject to the terms and conditions of the Credit Agreement, Maker
will pay this loan upon demand, or, if no demand is made, in one payment of all
outstanding principal plus accrued unpaid interest on December 31, 2002. In
addition, Maker will pay regular monthly payments of accrued unpaid interest
beginning the first day of each month following the execution hereof. The
inclusion of specific default provisions or rights of Payee shall not preclude
Payee's right to declare payment of all principal and interest under this Note
due upon Payee's demand.
2. The unpaid principal amount of this Note, together with all interest
accrued thereon shall, at the option of Payee, become immediately due and
payable in case any one of the following events occur (an "Event of Default"):
2.1. Maker shall commence any case, proceeding or other action under
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, composition, arrangement, readjustment
of debt, dissolution, liquidation of relief or debtors.
<PAGE>
2.2. Maker shall commence any case, proceeding or other action
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets; or (ii) Maker shall
make a general assignment for the benefit of its creditors; or (iii) there shall
be commenced against Maker any case, proceeding or other action of a nature
referred to in clause (i), above, which (A) results in an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unhanded for a period of sixty (60) days; or (iv) there shall be commenced
against Maker any case, proceeding or other action seeking issuance of a warrant
of attachment, execution or similar process against all or any substantial part
of its assets which results in the entry of an order or any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (b) Maker shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), (iii) or (iv)
above; or (vi) Maker shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or (vii) Maker shall conceal, remove, or
permit to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or make or suffer a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law, or shall make any transfer of its property
to or for the benefit of a creditor at a time when other creditors similarly
situated have not been paid, or shall suffer or permit, while insolvent, any
creditor to obtain a lien upon any of its property through legal proceedings
which is not vacated within sixty (60) days from the date thereof.
3. No delay or omission on the part of Payee in exercising any right or
option herein given to it shall impair such right or option or be considered as
a waiver thereof or acquiescence in any default hereunder.
4. Maker waives presentment, demand, notice of dishonor and protest and
consents to any and all extensions and renewals hereof without notice.
5. This instrument shall be construed in accordance with the laws of the
State of California.
6. This instrument may be prepaid in whole or in part at any time without
penalty.
7. Maker, its directors, officers, employees, members, and agents will
have no personal liability for any deficiency under this instrument.
8. In the event a suit or action is filed to enforce this Note or with
respect to this Note, the prevailing party shall be reimbursed by the other
party for all costs and expenses incurred in connection with the suit or action,
including without limitation reasonable attorneys' fees at the trial level and
on appeal.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument as of this 24th
day of December, 1997.
PAYEE:
EDWARD G. ATSINGER III SALEM COMMUNICATIONS CORPORATION
/s/ EDWARD G. ATSINGER III /s/ DIRK GASTALDO
- ---------------------------------- -------------------------------
Edward G. Atsinger III Dirk Gastaldo
Vice President
<PAGE>
EXHIBIT 10.07.05
Principal Amount: Revolving Loan Date: December 24, 1997
Interest Rate: Credit Agreement Base Rate Maturity Date: December 31, 2002
less 1%
PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned, SALEM COMMUNICATIONS CORPORATION
("Maker") and STUART W. EPPERSON ("Payee") agree as follows:
1. Maker promises to pay to Payee at 4880 Santa Rosa Road, Suite 300,
Camarillo, California, or at such other place as Payee shall direct, Two Million
Five Hundred Thousand Dollars ($2,500,000) or such amount as may be outstanding,
together with interest on the unpaid outstanding principal balance of each
advance. Interest shall be calculated from the date of each advance until
repayment of each advance.
(a) The rate of interest ("Interest Rate") on this Promissory Note
("Note") shall be the rate payable by the Maker pursuant to the Credit Agreement
("Credit Agreement") dated as of September 25, 1997 by and among Maker, the Bank
of New York, as Administrative Agent, and Bank of America NT&SA, as
Documentation Agent, less one percent (1%). Under no circumstances will the
interest rate on this Note be greater than the maximum amount of interest
allowed by applicable law.
(b) This Note evidences a revolving line of credit. Advances under
this Note may be requested either orally or in writing by Maker. Payee may, but
need not, require that all oral requests be confirmed in writing. Payee shall
have no obligation to advance funds under this Note if: (i) Maker is in default
under the terms of this Note; (ii) Maker ceases to do business or becomes
insolvent; (iii) Payee, in good faith, deems itself insecure under this Note or
any other agreement between Payee and Maker.
(c) Subject to the terms and conditions of the Credit Agreement, Maker
will pay this loan upon demand, or, if no demand is made, in one payment of all
outstanding principal plus accrued unpaid interest on December 31, 2002. In
addition, Maker will pay regular monthly payments of accrued unpaid interest
beginning the first day of each month following the execution hereof. The
inclusion of specific default provisions or rights of Payee shall not preclude
Payee's right to declare payment of all principal and interest under this Note
due upon Payee's demand.
2. The unpaid principal amount of this Note, together with all interest
accrued thereon shall, at the option of Payee, become immediately due and
payable in case any one of the following events occur (an "Event of Default"):
2.1. Maker shall commence any case, proceeding or other action under
any existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization, composition, arrangement, readjustment
of debt, dissolution, liquidation of relief or debtors.
<PAGE>
2.2. Maker shall commence any case, proceeding or other action
seeking appointment of a receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its assets; or (ii) Maker shall
make a general assignment for the benefit of its creditors; or (iii) there shall
be commenced against Maker any case, proceeding or other action of a nature
referred to in clause (i), above, which (A) results in an order for relief or
any such adjudication or appointment or (B) remains undismissed, undischarged or
unhanded for a period of sixty (60) days; or (iv) there shall be commenced
against Maker any case, proceeding or other action seeking issuance of a warrant
of attachment, execution or similar process against all or any substantial part
of its assets which results in the entry of an order or any such relief which
shall not have been vacated, discharged, or stayed or bonded pending appeal
within sixty (60) days from the entry thereof; or (b) Maker shall take any
action in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), (iii) or (iv)
above; or (vi) Maker shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or (vii) Maker shall conceal, remove, or
permit to be concealed or removed, any part of its property, with intent to
hinder, delay or defraud its creditors or any of them, or make or suffer a
transfer of any of its property which may be fraudulent under any bankruptcy,
fraudulent conveyance or similar law, or shall make any transfer of its property
to or for the benefit of a creditor at a time when other creditors similarly
situated have not been paid, or shall suffer or permit, while insolvent, any
creditor to obtain a lien upon any of its property through legal proceedings
which is not vacated within sixty (60) days from the date thereof.
3. No delay or omission on the part of Payee in exercising any right or
option herein given to it shall impair such right or option or be considered as
a waiver thereof or acquiescence in any default hereunder.
4. Maker waives presentment, demand, notice of dishonor and protest and
consents to any and all extensions and renewals hereof without notice.
5. This instrument shall be construed in accordance with the laws of the
State of California.
6. This instrument may be prepaid in whole or in part at any time without
penalty.
7. Maker, its directors, officers, employees, members, and agents will
have no personal liability for any deficiency under this instrument.
8. In the event a suit or action is filed to enforce this Note or with
respect to this Note, the prevailing party shall be reimbursed by the other
party for all costs and expenses incurred in connection with the suit or action,
including without limitation reasonable attorneys' fees at the trial level and
on appeal.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this instrument as of this 24th
day of December, 1997.
PAYEE: MAKER:
STUART W. EPPERSON SALEM COMMUNICATIONS CORPORATION
/s/ STUART W. EPPERSON /s/ DIRK GASTALDO
- -------------------------- -------------------------
Stuart W. Epperson Dirk Gastaldo
Vice President
<PAGE>
EXHIBIT 23.01
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" and to the
reference to our firm under the caption "Selected Consolidated Financial
Information of the Company" and to the use of our report dated May 9, 1997
(except Note 1, as to which the date is August 13, 1997) in the Amendment No. 1
to the Registration Statement (Form S-4) and related Prospectus of Salem
Communications Corporation for the registration of $150,000,000 9 1/2% Series B
Senior Subordinated Notes Due 2007.
Our audit also included the financial statement schedule of Salem Communications
Corporation listed in Item 21(b). This schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion based on our
audits. In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.
/s/ Ernst & Young LLP
Woodland Hills, California
January 28, 1998
<PAGE>
EXHIBIT 25.01
THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO RULE 901(d) OF REGULATION S-T
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
SALEM COMMUNICATIONS CORPORATION
(Exact name of obligor as specified in its charter)
California 77-0121400
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
Table of Additional Registrants
-------------------------------
ATEP Radio, Inc. California 77-0132973
Beltway Media Partners Virginia 77-0293196
Bison Media, Inc. Colorado 77-0434654
Caron Broadcasting, Inc. Ohio 77-0439370
Common Ground
Broadcasting, Inc. Oregon 93-1079989
Golden Gate Broadcasting
Company, Inc. California 94-3082936
Inland Radio, Inc. California 77-0114987
Inspiration Media, Inc. Washington 77-0132974
<PAGE>
Inspiration Media of
Texas, Inc. Texas 75-2615876
New England Continental
Media, Inc. Massachusetts 04-2625658
New Inspiration Broadcasting
Company, Inc. California 95-3356921
Oasis Radio, Inc. California 77-0061780
Pennsylvania Media
Associates, Inc. Pennsylvania 94-3134636
Radio 1210, Inc. California 77-0052616
Salem Communications
Corporation Delaware 77-0363592
Salem Media Corporation New York 95-3482072
Salem Media of
California, Inc. California 95-1581210
Salem Media of Colorado, Inc. Colorado 84-1239646
Salem Media of
Louisiana, Inc. Louisiana 77-0114983
Salem Media of Ohio, Inc. Ohio 95-3690954
Salem Media of Oregon, Inc. Oregon 77-0114986
Salem Media of
Pennsylvania, Inc. Pennsylvania 77-0237182
Salem Media of Texas, Inc. Texas 77-0379125
Salem Music Network, Inc. Texas 77-0434655
Salem Radio Network
Incorporated Delaware 77-0305542
Salem Radio
Representatives, Inc. Texas 77-0281576
South Texas Broadcasting, Inc. Texas 77-0388924
SRN News Network, Inc. Texas 77-0426090
Vista Broadcasting, Inc. California 77-0389639
4880 Santa Rosa Road
Suite 300
Camarillo, California 93012
(Address of principal executive offices) (Zip code)
______________________
9 1/2% Series B Senior Subordinated
Notes due 2007
(Title of the indenture securities)
================================================================================
-2-
<PAGE>
1. GENERAL INFORMATION. FURNISH THE FOLLOWING INFORMATION AS TO THE TRUSTEE:
(a) NAME AND ADDRESS OF EACH EXAMINING OR SUPERVISING AUTHORITY TO WHICH IT
IS SUBJECT.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-
29 UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND 17 C.F.R.
229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, has
duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 5th day of December, 1997.
THE BANK OF NEW YORK
By: /s/ THOMAS E. TABOR
----------------------------
Name: THOMAS E. TABOR
Title: ASSISTANT TREASURER
-4-
<PAGE>
EXHIBIT 25.01
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286 And Foreign and Domestic Subsidiaries, a
member of the Federal Reserve System, at the close of business June 30, 1997,
published in accordance with a call made by the Federal Reserve Bank of this
District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and
currency and coin...................... $ 7,769,502
Interest-bearing balances............... 1,472,524
Securities:
Held-to-maturity securities............ 1,080,234
Available-for-sale securities.......... 3,046,199
Federal funds sold and Securities
purchased under agreements to
resell................................. 3,193,800
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ..............35,352,045
LESS: Allowance for loan and
lease losses ......625,042
LESS: Allocated transfer risk
reserve.................429
Loans and leases, net of unearned
income, allowance, and reserve....... 34,726,574
Assets held in trading accounts.......... 1,611,096
Premises and fixed assets (including
capitalized leases).................... 676,729
Other real estate owned.................. 22,460
Investments in unconsolidated sub-
sidiaries and associated com-
panies.............................. 209,959
Customers' liability to this bank on
acceptances outstanding................ 1,357,731
Intangible assets........................ 720,883
Other assets............................. 1,627,267
-----------
Total assets............................. $57,514,958
===========
LIABILITIES
Deposits:
In domestic offices.................... $26,875,596
Noninterest-bearing .........11,213,657
Interest-bearing ............15,661,939
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 16,334,270
Noninterest-bearing ......... 596,369
Interest-bearing ......... 15,737,901
Federal funds purchased and Se-
curities sold under agreements to
repurchase............................. 1,583,157
Demand notes issued to the U.S.
Treasury............................... 303,000
Trading liabilities...................... 1,306,173
Other borrowed money:
With remaining maturity of one
year or less.......................... 2,383,570
With remaining maturity of more
than one year through three
years................................. 0
With remaining maturity of more
than three years...................... 20,679
Bank's liability on acceptances exe-
cuted and outstanding.................. 1,377,244
Subordinated notes and debentures........ 1,018,940
Other liabilities........................ 1,732,792
-----------
Total liabilities........................ 52,937,421
-----------
EQUITY CAPITAL
Common stock............................. 1,135,284
Surplus.................................. 731,319
Undivided profits and capital
reserves............................... 2,721,258
Net unrealized holding gains
(losses) on available-for-sale se-
curities............................. 1,948
Cumulative foreign currency transla-
tion adjustments....................... (12,272)
-----------
Total equity capital..................... 4,577,537
-----------
Total liabilities and equity
capital ........................... $57,514,958
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true and
correct.
Thomas A. Renyl
J. Carter Bacot Directors
Alan R. Griffith
