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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-K
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[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998 or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _______________
Commission file number 333-61211
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RADIO UNICA CORP.
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(Exact name of registrant as specified in its charter)
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DELAWARE 65-0776004
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
8400 NW 52ND STREET, SUITE 101
MIAMI, FLORIDA 33166
(Address of principal executive offices) (Zip Code)
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(Registrant's telephone number, including area code) 305-463-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] Yes [ ] No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
As of March 30, 1999, there were 100 shares of Common Stock, par value $.01 per
share, outstanding and owned by Radio Unica Holdings Corp. Accordingly, there is
no practicable manner to obtain an aggregate market valuation.
DOCUMENTS INCORPORATED BY REFERENCE
None
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TABLE OF CONTENTS
<TABLE>
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PART I
Item 1. Business ................................................................................. 3
Item 2. Properties ............................................................................... 14
Item 3. Legal Proceedings ........................................................................ 15
Item 4. Submission of Matters to a Vote of Security Holders ...................................... 15
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters .................... 15
Item 6. Selected Financial Data .................................................................. 16
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations .... 17
Item 7A. Quantitative and Qualitative Disclosures About Market Risk ............................... 21
Item 8. Financial Statements and Supplemental Data ............................................... 22
Item 9. Changes in and Disagreements on Accounting and Financial Disclosure ...................... 43
PART III
Item 10. Directors and Executive Officers ......................................................... 43
Item 11. Executive Compensation ................................................................... 45
Item 12. Security Ownership of Certain Beneficial Owners and Management ........................... 46
Item 13. Certain Relationships and Related Transactions ........................................... 46
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K ......................... 49
</TABLE>
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PART I
THIS ANNUAL REPORT INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") AND
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE
ACT"). ALL STATEMENTS OTHER THAN STATEMENTS OF HISTORICAL FACT INCLUDED IN THIS
ANNUAL REPORT, INCLUDING, WITHOUT LIMITATION, THE STATEMENTS UNDER "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS",
"BUSINESS" AND ELSEWHERE HEREIN, REGARDING THE COMPANY OR ANY OF THE
TRANSACTIONS DESCRIBED HEREIN, INCLUDING THE EFFECTS OF SUCH TRANSACTIONS, ARE
FORWARD-LOOKING STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT CAN GIVE NO
ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE BEEN CORRECT.
ITEM 1. BUSINESS
GENERAL
Radio Unica Corp. (the "Company"), incorporated on September 12, 1996
(inception), was organized for the purpose of producing, broadcasting and
distributing Spanish-language radio programming in the United States. The
Company's strategy is to develop its radio network as a national advertising
platform that is attractive to national advertisers. The Company launched its
network on January 5, 1998 with 30 affiliated stations and three stations
operated under time brokerage agreements (also known as local marketing
agreements and referred to herein as "LMAs"). In July 1998, the Company effected
a holding company reorganization (the "Reorganization"). In the Reorganization,
the Company became a wholly owned subsidiary of Radio Unica Holdings Corp.
("Holdings") and the Company's stockholders received shares of Holdings common
stock and Holdings Series A Cumulative Redeemable Preferred Stock bearing
identical rights and preferences to the Company's common stock and Series A
Cumulative Redeemable Preferred Stock ("Company Preferred Stock") previously
held by such stockholders. Upon consummation of the Reorganization, each option
to purchase common stock of the Company was converted into an option to purchase
Holdings common stock, exercisable upon the same terms and conditions as they
were under the Company's stock option plan, and the Company's stock option plan
was cancelled.
The Company is the only national long-form, Spanish-language AM radio
network in the U.S., broadcasting 24-hours a day, 7-days a week. The Company,
which began broadcasting its network programming on January 5, 1998, produces 19
hours of live and first-run celebrity-based news/talk, sports and information
programming each weekday and 20 hours of such programming each weekend. With
twelve Company-operated stations and 38 affiliated stations, the Company's
network reaches approximately 82% of the U.S. Hispanic population. The
Company-operated stations are located in eight of the top ten U.S. markets in
terms of Spanish-language media spending. The markets in which the Company
maintains stations collectively account for approximately 57.5% of the total
U.S. Hispanic population.
The Company believes that its strong programming line-up provides the
Company with a competitive advantage over other Spanish-language radio
broadcasters in appealing to U.S. Hispanic listeners. The Company's programming
line-up includes contemporary-themed talk shows hosted by internationally known
personalities such as Pedro Sevcec, Dr. Isabel Gomez-Bassols and Mauricio
Zeillic; sports-talk hosted by Jorge Ramos and other top names in sports
broadcasting; and newscasts on the hour, 24 hours a day. In addition, the
Company airs segments featuring the number one Hispanic talk show host in the
country, Cristina, as well as the most recognized Hispanic female news anchor,
Maria Elena Salinas. Many of the Company's programs are interactive, allowing
listeners nationwide to call in toll-free. The Company's daily program schedule
begins with a three-hour talk and information program focusing on current events
followed by an hour of world news. From mid-morning until late afternoon the
Company broadcasts a series of talk and information shows that focus on topics
including personal and family problem solving, immigration law and policy, and
entertainment news. During the evening commute, the Company broadcasts
entertainment programming, including sports news and talk shows.
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The Company's evening programming contains talk and information programs
whose subjects range from entertainment to relationships. In addition, the
Company broadcast live, play-by-play coverage of the 1998 World Cup matches and
a daily program with World Cup news and interviews with World Cup participants.
The Company has recently acquired exclusive Spanish-language radio broadcasting
rights in the United States for several large soccer events including Copa
America 1999 and 2001, Copa Oro 2000 and 2002, and elimination games for the
2002 World Cup. The Company has experienced ratings increases in key markets
including San Francisco, Houston and Miami. Significant advertising campaigns
for Los Angeles, New York and other markets began in January 1999. Consequently,
the Company hopes to achieve continued rating improvements following these
campaigns.
OWNED AND OPERATED STATIONS
The Company owns radio stations in Los Angeles, New York, Miami, San
Francisco, Houston, Dallas/Fort Worth, and Phoenix.
LOS ANGELES. The Company's station KBLA(AM), broadcasting on 1580 kHz,
serves the Los Angeles market, which has a population of approximately 16.3
million, of which approximately 6.3 million or 38.7% are Hispanic.
Spanish-language radio advertising spending in the market was approximately $119
million in 1998. The Company acquired substantially all of the assets used in
the operation of KBLA from subsidiaries of Sinclair Communications, Inc.
("Sinclair") for a purchase price of approximately $21 million on July 30, 1998.
The acquired assets included the broadcast license, land, the transmitter site
and related transmitter equipment. Radio Korea U.S.A. Inc. operated the station,
broadcasting in the Korean language, pursuant to an LMA with Sinclair through
December 31, 1998. KBLA is licensed at 50,000 watts during the daytime. KBLA's
transmitter site is located in Los Angeles and enables this station to reach
substantially all of the Los Angeles designated market area ("DMA.")
NEW YORK. The Company's station WWRU(AM), broadcasting on 1660 kHz in the
expanded band, serves the New York market which has a population of
approximately 30.5 million, of which approximately 3.6 million or 12% are
Hispanic. Spanish-language radio advertising spending in the market was
approximately $46.7 million in 1998. The Company acquired substantially all of
the assets used in the operation of WWRU from subsidiaries of Children's
Broadcasting Corporation ("CBC") in January 1999 for a purchase price of
approximately $30 million. The acquired assets included the broadcast license,
the transmitter site and related transmitter equipment. WWRU is licensed at
10,000 watts during the daytime. The WWRU's transmitter is located in Elizabeth,
New Jersey and enables this station to reach a significant portion of the New
York DMA.
In connection with the acquisition of WWRU, the Company also acquired
substantially all the assets used in the operation of WJDM(AM), broadcasting on
1530 kHz. The acquired assets included the broadcast license, the transmitter
site and related transmitter equipment. WJDM is licensed at 1,000 watts during
the daytime. This station is currently time brokered to a third party. WJDM's
transmitter is located in Secaucus, New Jersey. Based on current Federal
Communication Commission ("FCC") guidelines, the license of either WWRU or WJDM
must be relinquished by the Company by March 12, 2003.
MIAMI. The Company's station WNMA(AM), broadcasting on 1210 kHz, serves the
Miami market, which has a population of approximately 3.7 million, of which
approximately 1.4 million or 38.1% are Hispanic. Spanish-language radio
advertising spending in the market was approximately $62 million in 1998. The
Company acquired substantially all of the assets used in the operation of WNMA
from subsidiaries of One-on-One Sports Inc. ("One-on-One") in May 1998 for a
purchase price of approximately $9 million. The acquired assets included the
broadcast license, the transmitter site and related transmitter equipment. Prior
to the acquisition, One-on-One operated the station with an English language
sports talk format. WNMA is licensed at 25,000 watts during the daytime. WNMA's
transmitter site is located in Miami Springs, Florida and enables this station
to reach substantially all of the Miami DMA.
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In connection with the acquisition of WNMA, the Company acquired WRUN (AM),
broadcasting on 1700 kHz. This station, which operates in the expanded band,
began simulcasting Radio Unica programming on January 1, 1999. Based on current
FCC guidelines, the license of either WNMA or WRUN must be relinquished by the
Company by October 8, 2002.
SAN FRANCISCO. The Company's station KIQI(AM), broadcasting on 1010 kHz,
serves the San Francisco/San Jose market, which has a population of
approximately 6.8 million, of which approximately 1.2 million or 18.4% are
Hispanic. Spanish-language radio advertising spending in the market was
approximately $18.3 million in 1998. The Company acquired all of the issued and
outstanding shares of Oro Spanish Broadcasting, Inc. ("Oro"), the licensee of
KIQI, in April 1998 for a purchase price of approximately $12 million. In
connection with the acquisition, the Company received assets including the
broadcast license, the transmitter site and related transmitter equipment. Prior
to the acquisition, Oro operated the station for approximately 17 years with a
Spanish-language format. KIQI is licensed at 10,000 watts during the daytime.
KIQI's transmitter site is located in Oakland, California and enables this
station to reach substantially all of the San Francisco DMA.
HOUSTON. The Company's station KXYZ(AM), broadcasting on 1320 kHz, serves
the Houston market, which has a population of approximately 4.7 million, of
which approximately 1.1 million or 24.2% are Hispanic. Spanish-language radio
advertising spending in the market was approximately $32.5 million in 1998. The
Company acquired an 80% economic interest in substantially all of the assets
used in the operation of KXYZ in March 1998 from 13 Radio Corp. ("13 Radio"),
through an investment in Blaya, Inc., and acquired the remaining interest from
Joaquin F. Blaya in September 1998. See "Certain Relationships and Related
Transactions". Blaya, Inc. acquired substantially all of the assets of 13 Radio
for approximately $6.4 million. The acquired assets included the broadcast
license, land, the transmitter site, related transmitter equipment, studios and
related studio equipment. Prior to the acquisition, 13 Radio operated the
station for approximately 13 years with a Spanish-language format. KXYZ is
licensed at 5,000 watts during the daytime. KXYZ's transmitter site is located
in Pasadena, Texas and enables this station to reach substantially all of the
Houston DMA.
DALLAS/FORT WORTH. The Company's station KAHZ(AM), broadcasting on 1360 kHz,
serves the Dallas/Fort Worth market, which has a population of approximately 5.3
million, of which approximately 787,000 or 14.9% are Hispanic. Spanish-language
radio advertising spending in the market was approximately $13 million in 1998.
The Company acquired substantially all of the assets used in the operation of
KAHZ from subsidiaries of CBC in January 1999. The acquired assets included the
broadcast license, land, the transmitter site and related transmitter equipment.
KAHZ is licensed at 5,000 watts during the daytime. KAHZ's transmitter is
located in Fort Worth, Texas and enables this station to reach substantially all
of the Dallas/Forth Worth DMA.
PHOENIX. The Company's station KIDR(AM), broadcasting on 740 kHz, serves the
Phoenix market which has a population of approximately 3.6 million, of which
approximately 668,000 or 18.7% are Hispanic. Spanish-language radio advertising
spending in the market was approximately $6.0 million in 1998. The Company
acquired substantially all of the assets used in the operation of KIDR from
subsidiaries of CBC in January 1999. The acquired assets included the broadcast
license, land, the transmitter site and related transmitter equipment. KIDR is
licensed at 1,000 watts during the daytime. KIDR's transmitter is located in
Phoenix, Arizona and enables this station to reach substantially all of the
Phoenix DMA.
CHICAGO. On February 22, 1999, the Company contracted to acquire
substantially all the assets used in the operations of station WIDB (AM) in
Chicago, Illinois from subsidiaries of One-on-One, for a cash purchase price of
approximately $16.75 million. The Company funded a $1 million escrow account in
conjunction with this transaction. The transaction is expected to be finalized
upon the receipt of the FCC's approval and the expiration or termination of the
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
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LOCAL MARKETING AGREEMENTS
The Company has entered into LMAs with respect to radio stations in Los
Angeles, San Antonio and Chicago. Pursuant to these LMAs, the Company operates,
and supplies all programming for, these stations.
LOS ANGELES. The Company operates station KVCA(AM), broadcasting on 670 kHz,
in Los Angeles pursuant to an LMA with Lotus Oxnard Corp. ("Lotus"). The term of
this LMA is through December 31, 2001 and the Company's annual LMA payment was
$2 million in 1998 and increases $200,000 per year thereafter. The Company has
an option to purchase the assets of KVCA. The option is exercisable from June
24, 2001 through September 30, 2001. KVCA is licensed at 5,000 watts during the
daytime. KVCA's transmitter site is located in Simi Valley, California and
enables this station to reach a significant portion of the Los Angeles DMA.
CHICAGO. The Company operates station WYPA(AM), broadcasting on 820 kHz, in
Chicago pursuant to an LMA with Achievement Radio Holdings, Inc.
("Achievement"). Spanish-language radio advertising spending in the Chicago
market was approximately $25.4 million in 1998. The term of this LMA is through
June 8, 1999 and may be extended at the Company's option for an additional
twelve months (the "Renewal Term"). The Company's annual LMA payment for the
first year is $1,416,000 and $1,458,480 for the second year. The Company has an
option to purchase the assets of WYPA. The Company has provided notice to
Achievement that it does not intend to exercise its option for the second year
or exercise its option to acquire the station. WYPA is licensed at 5,000 watts
during the daytime. WYPA's transmitter site is located just outside of Chicago
and enables the station to reach substantially all of the Chicago DMA.
SAN ANTONIO. The Company operates station KZDC(AM), broadcasting on 1250
kHz, in San Antonio pursuant to an LMA with Lotus. Spanish-language radio
advertising spending in the market was approximately $20 million in 1998. The
term of this LMA is through December 31, 2001 and the Company's annual LMA
payment ranges from $200,000 in 1998 to $275,000 in 2001. The Company has an
option to purchase the assets of KZDC. The option is exercisable from June 24,
2001 through September 30, 2001. KZDC is licensed at 5,000 watts during the
daytime. KZDC's transmitter site is located in San Antonio and enables this
station to reach substantially all of the San Antonio DMA.
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The following table sets forth certain information concerning the stations
owned and/or operated by the Company and the stations covered by LMAs and their
respective markets:
<TABLE>
<CAPTION>
Hispanic Hispanic Hispanic
Rank by Purchase Population Population Population
Hispanic Market Company-owned Price in Market as a % of as a % of
Population Served/Station or LMA (in millions) (in thousands) Total Market U.S. Hispanics
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1 Los Angeles
KBLA (AM) Owned $21.0 6,326 38.7% 20.8%
KVCA (AM) LMA N/A
2 New York
WWRU (AM) Owned $25.0 3,645 18.1% 12.0%
WJDM (AM) Owned N/A
3 Miami
WNMA (AM) Owned $9.0 1,423 38.1% 4.7%
WRUN (AM) Owned N/A
4 San Francisco/San Jose
KIQI (AM) Owned $12.0 1,243 18.4% 4.1%
5 Chicago
WYPA (AM) LMA N/A 1,198 12.0% 3.9%
WIDB (AM) Owned* $16.75
6 Houston
KXYZ (AM) Owned $6.4 1,141 24.2% 3.7%
7 San Antonio
KZDC (AM) LMA N/A 1,065 51.6% 3.5%
9 Dallas/Ft. Worth
KAHZ (AM) Owned $2.5 787 14.9% 2.6%
12 Phoenix
KIDR (AM) Owned $2.5 668 18.7% 2.2%
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Totals $95.15 17,496 57.5%
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</TABLE>
* Pending the consummation of the acquisition from subsidiaries of One-on-One.
AFFILIATION AGREEMENTS
The Company has entered into Affiliation Agreements ("AFAs") with
substantially all of its affiliated radio stations. Pursuant to the AFAs, the
Company supplies programming for the affiliated stations which are typically
required to carry a minimum of eight hours per day of the Company's network
programming. The AFAs typically provide that the Company's programming will
include a certain number of minutes per hour of network advertising to be sold
by the Company and a certain number of minutes per hour for local advertising to
be sold by the station. The terms of the AFAs are generally one to two years,
subject to earlier termination under certain circumstances. Some of the AFAs
grant the Company a right of first refusal in the event the station owner offers
to sell the station.
THE HISPANIC MARKET IN THE UNITED STATES
The Hispanic population is currently one of the fastest growing segments of
the U.S. population, growing at approximately five times the rate of the
non-Hispanic population, and represents the fifth largest Hispanic population in
the world. The Hispanic population, which consisted of 23.7 million people (9.5%
of the U.S. population) in 1990, is estimated to be 30.5 million people (11.3%
of the U.S. population) in 1998, and is expected to grow to 45.8 million people
(15.4% of the U.S. population) by 2010. Approximately 55% of the Hispanic
population is concentrated in the top eight markets, making the group relatively
easy to reach with broadcast media.
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Hispanic households on average are larger and younger and spend a larger
percentage of their total household income on consumer products than
non-Hispanic households. Furthermore, approximately 69% of all Hispanics,
regardless of income or educational level, use Spanish as the language most
frequently spoken at home. This percentage is expected to remain relatively
constant through 2010. Consequently, the aggregate number of Hispanics speaking
Spanish in the home is expected to increase significantly in the foreseeable
future.
According to published reports, total advertising expenditures targeting
Hispanics grew from $730 million in 1992 to approximately $1.7 billion in 1998,
representing a compound annual growth rate of 15%. Radio is an increasingly
important medium for advertisers targeting the Hispanic market. Approximately
26% of the $1.7 billion in advertising expenditures in 1998 targeting Hispanics
was spent on Spanish-language radio, compared with 8% for all U.S. media
advertising. The Company believes that advertiser interest in the Hispanic
population will continue to grow primarily because Hispanic consumer spending,
which is expected to total approximately $380 billion in 1998, is expected to
grow at an annual rate of 7.8% over the next 12 years to $939 billion in 2010,
far outpacing the expected growth in total U.S. consumer spending.
In addition, Hispanic consumer spending currently represents approximately
6.6% of all U.S. consumer spending while Hispanic-targeted advertising
expenditures represent approximately 1% of all U.S. advertising expenditures.
The Company believes that this disparity will narrow and fuel growth in
Hispanic-targeted advertising as major advertisers continue to find that
Spanish-language advertising is a more effective means to target the growing
Hispanic audience than English-language advertising.
TALK AND INFORMATION PROGRAMS. Three of the most popular programs produced
by the Company are "Sevcec en Vivo", a three-hour talk show hosted by Pedro
Sevcec devoted to in-depth coverage of the top news stories of the day, issues
of importance to the Hispanic population and interviews with prominent figures;
"Dra. Isabel", an advice program hosted by Dr. Isabel Gomez-Bassols that focuses
on such issues as personal relationships and child rearing; and "Inmigracion . .
. Preguntas y Respuestas", a program hosted by Fulvia Peimbert that focuses on
the rules of the U.S. immigration system. The format of these programs allows
listeners to participate via toll-free phone lines.
NEWS. The Company produces newscasts on the hour, 24 hours a day, including
an hour-long late morning newscast, all of which focus on events of interest to
Hispanic audiences. The Company also produces a three-hour national morning news
program Monday through Saturday, "Esta Manana en Unica", that allows local
stations the opportunity to insert local segments of news, weather, sports and
other information. In addition, the Company has a five-year agreement with the
publisher of El Nuevo Herald newspaper, the Spanish-language version of the
Miami Herald (the "Herald"), under which the Company and the Herald jointly
produce and sell advertising for the local segments inserted in "Esta Manana en
Unica" broadcast Monday through Friday mornings on the Company's Miami stations.
El Nuevo Herald is the number one Spanish-language newspaper in Miami and the
U.S. in terms of circulation.
SPORTS. The Company's regular sports programming includes "Unica en
Deportes" a sports talk show hosted by Jorge Ramos which features sports news
and interviews appealing to Hispanic audiences. In addition, under an agreement
with Univision Network Limited Partnership, the Company obtained exclusive
Spanish-language radio broadcasting rights in the U. S. for all of the 1998
World Cup soccer matches. The purchase price for such rights was $2.65 million.
These rights allowed the Company to produce its own play-by-play description of
each of the 56 matches in the 1998 World Cup, an estimated total of
approximately 168 hours of programming. The Company has recently acquired radio
broadcasting rights for several large soccer events including Copa America 1999
and 2001, Copa Oro 2000 and 2002, and elimination games for the 2002 World Cup.
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ENTERTAINMENT. The Company also produces afternoon entertainment programming
featuring comedians, entertainment-world news, gossip and interviews with major
Hispanic celebrities. The show is hosted by Mauricio Zeilic and others. Mauricio
Zeilic has been hosting entertainment shows for more than 20 years and is
currently the host of an entertainment segment on Telemundo's daily afternoon
magazine show.
ON-AIR TALENT. The Company has contracts with some of the Hispanic world's
best known media personalities to host its programs. Pedro Sevcec was a senior
reporter for Telemundo's popular TV newsmagazine, "Ocurrio Asi," and currently
hosts his own talk show on Telemundo called "Sevcec." "Sevcec" is one of
Telemundo's highest rated shows. Dr. Isabel Gomez-Bassols is a noted
psychologist and educator and makes regular appearances on such popular
television shows as "Cristina," "Sevcec" and "Miami Ahora." Jorge Ramos has
served as sports anchor for Telemundo since 1994 and in his career has broadcast
four World Cups. In addition, the Company airs segments featuring the number one
Hispanic talk show host in the country, Cristina, as well as the most recognized
Hispanic female news anchor, Maria Elena Salinas. All of these personalities are
under contracts with the Company that include revenue sharing and/or equity
participation agreements.
ADVERTISING
The Company believes that radio is one of the most efficient and cost
effective means for advertisers to reach targeted demographic groups.
Advertising rates charged by a radio station are based primarily on the
station's ability to attract listeners in a given market and on the
attractiveness to advertisers of the station's listener demographics. Rates vary
depending upon a program's popularity among the listeners an advertiser is
seeking to attract, the number of advertisers vying for available air time, and
the availability of alternative media in the market. Radio advertising rates
generally are highest during the morning and afternoon drive-time hours.
The Company believes that its rates are somewhat below the rates charged by
similarly-rated and even lower-rated English-language stations in the Company's
markets although the Company believes this differential will narrow and that the
Company should be able to increase its rates as advertisers recognize the
desirability of targeting the growing Hispanic population in the United States.
The Company employs its own sales representatives to obtain advertising
revenues and currently does not use third party national representatives or
"rep" firms. As a result, the Company has more control over and greater
accountability from its sales force. The Company believes that its sales force
is important in maintaining relationships with key advertisers and agencies and
identifying new advertisers. The Company generally pays sales commissions to its
sales staff upon the receipt from advertisers of the payments related to such
sales. The Company offers assistance to advertisers by providing them with
content and production advice and services and with studio facilities to produce
commercials.
Virtually all of the Company's revenue is derived from advertising sales.
Advertising revenue is broken down into two categories: station and network.
STATION ADVERTISING. Station advertising consists of local and national
advertising. Local advertising time is sold by the Company's local sales force
to the local community. The Company generates its local advertising revenues
primarily from local merchants and service providers. National advertising time
is sold by the Company's national sales force to clients outside the local
community. The Company generates its national advertising revenues primarily
from regional and national businesses which wish to reach Hispanic audiences in
particular local market(s) but not all of the markets in which the Company's
programming is broadcast.
NETWORK ADVERTISING. Network revenue is earned by sales of advertising time
by the Company's national sales force on the Company's network programming. The
Company attracts network advertising expenditures from diverse industries, with
advertising for food and beverages, personal care products, automobiles, other
household goods and telephone services representing the majority of network
advertising. Network advertisers typically wish to target the entire U.S.
Hispanic audience.
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COMPETITION
The radio broadcasting business is highly competitive. Competition for
advertising revenues is based on the size of the applicable market, the cost of
such advertising and the effectiveness of such advertising. The Company believes
that it is competitive in the size of market it reaches and the cost and
effectiveness of advertising time it sells.
The Company competes for listeners and revenues with other Spanish-language
and English-language radio stations. The Company also competes for viewers and
revenues with television stations, other video media, suppliers of cable
television programs, direct broadcast systems, newspapers, magazines and other
forms of entertainment and advertising.
SEASONALITY
The Company's revenues and cash flow are expected to be typically lowest in
the first calendar quarter and highest in the fourth calendar quarter. Seasonal
fluctuations are common in the radio broadcasting industry and are due primarily
to fluctuations in consumer spending.
PATENTS, TRADEMARKS, LICENSES, FRANCHISES AND CONCESSIONS
In the course of its business, the Company uses various trademarks, names
and service marks, including its logos, in its advertising and promotions. The
Company believes the strength of its trademarks, trade names and service marks
are important to its business and intends to continue to protect and promote its
marks as appropriate. The Company does not hold or depend upon any material
patent, government license, franchise or concession, except the broadcast
licenses granted by the FCC.
FEDERAL REGULATION OF RADIO BROADCASTING
The ownership, operation and sale of radio stations are subject to the
jurisdiction of the FCC, which acts under authority granted by the
Communications Act of 1934, as amended (the "Communications Act"). Among other
things, the FCC assigns frequency bands for broadcasting; determines the
particular frequencies, locations and power of stations; issues, renews, revokes
and modifies station licenses; determines whether to approve changes in
ownership or control of station licenses; regulates equipment used by stations;
imposes regulations and takes other action to prevent harmful interference
between stations; adopts and implements regulations and policies that directly
or indirectly affect the ownership, management, programming, operation and
employment practices of stations; and has the power to impose penalties for
violations of its rules or the Communications Act.
In February 1996, Congress enacted the Telecommunications Act of 1996 (the
"Telecom Act") to amend the Communications Act. The Telecom Act, among other
measures, directed the FCC, which has since conformed its rules, to (a)
eliminate the national radio ownership limits; (b) liberalize the local radio
ownership limits as specified in the Telecom Act; (c) issue broadcast licenses
for periods of up to eight years; and (d) eliminate the opportunity for the
filing of competing applications against broadcast license renewal applications.
Congress, via the Balanced Budget Act of 1997, authorized the FCC for the
first time to conduct auctions for the awarding of construction permits for
commercial radio and television stations. To facilitate the settlement without
auctions of already pending mutually exclusive applications, Congress directed
the FCC to waive existing rules as necessary. The FCC has initiated a rulemaking
proceeding to implement these provisions. While the Company is not a participant
in any such proceeding, this recent action should result in the awarding of
construction permits for additional radio stations, some of which might have the
potential to compete with the Company's radio stations.
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LICENSE GRANTS AND RENEWALS
The Communications Act provides that a broadcast license may be granted to
an applicant if the grant would serve the public interest, convenience and
necessity, subject to certain limitations referred to below. In making licensing
determinations, the FCC considers the legal, technical, financial and other
qualifications of the applicant, including compliance with the Communications
Act's limitations on alien ownership, compliance with various rules limiting
common ownership of broadcast, cable and newspaper properties, and the
"character" of the licensee and those persons holding "attributable" interests
in the licensee.
Broadcast licenses are granted for specific periods of time and, upon
application, are renewable for additional terms. The Telecom Act amended the
Communications Act to provide that broadcast licenses be granted, and thereafter
renewed, for a term not to exceed eight years, if the FCC finds that the public
interest, convenience, and necessity would be served. Generally, the FCC renews
broadcast licenses without a hearing.
The Telecom Act amended the Communications Act to require the FCC to grant
an application for renewal of a broadcast license if: (i) the station has served
the public interest, convenience and necessity; (ii) there have been no serious
violations by the licensee of the Communications Act or the rules and
regulations of the FCC; and (iii) there have been no other violations by the
licensee of the Communications Act or the rules and regulations of the FCC
which, taken together, would constitute a pattern of abuse.
Competing applications against broadcast license renewal applications are
therefore not entertained. The Telecom Act provided that if the FCC, after
notice and an opportunity for a hearing, decides that the requirements for
renewal have not been met and that no mitigating factors warrant lesser
sanctions, it may deny a renewal application. Only thereafter may the FCC accept
applications by third parties to operate on the frequency of the former
licensee.
The Communications Act continues to authorize the filing of petitions to
deny against broadcast license renewal applications during particular periods of
time following the filing of renewal applications. Petitions to deny can be used
by interested parties, including members of the public, to raise issues
concerning the qualifications of the renewal applicant.
None of the Company's licenses are currently subject to renewal proceedings.
The Company does not anticipate any material difficulty in obtaining license
renewals for full terms in the future.
The action of the FCC or its staff granting a renewal application may be
reconsidered during specified time periods by the FCC or its staff on their own
motion or by request of the petitioner, and the petitioner may also appeal
within a certain period actions by the FCC to the U.S. Court of Appeals.
If the FCC does not, on its own motion, or upon a request by an interested
party for reconsideration or review, review a staff grant or its own action
within the applicable time periods, and if no further reconsideration, review or
appeals are sought within the applicable time periods, an action by the FCC or
its staff becomes a "Final Order."
LICENSE ASSIGNMENTS AND TRANSFERS OF CONTROL
The Communications Act prohibits the assignment of an FCC license or the
transfer of control of a corporation holding such a license without the prior
approval of the FCC. Applications to the FCC for such assignments or transfers
are subject to petitions to deny by interested parties and must satisfy
requirements similar to those for renewal and new station applications. Many
transactions involving radio stations provide, as a waivable pre-condition to
closing, that the FCC consent to the transaction has become a "Final Order."
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OWNERSHIP RULES
Rules of the FCC limit the number and location of broadcast stations in
which one licensee (or any party with a control position or attributable
ownership interest therein) may have an attributable interest. The FCC, pursuant
to the Telecom Act, eliminated the previously existing "national radio ownership
rule." Consequently, there now is no limit imposed by the FCC to the number of
radio stations one party may own nationally.
The "local radio ownership rule" limits the number of stations in a radio
market in which any one individual or entity may have a control position or
attributable ownership interest. Pursuant to the Telecom Act, the FCC revised
its rules to set the local radio ownership limits as follows: (a) in markets
with 45 or more commercial radio stations, a party may own up to eight
commercial radio stations, no more than five of which are in the same service
(AM or FM); (b) in markets with 30-44 commercial radio stations, a party may own
up to seven commercial radio stations, no more than four of which are in the
same service; (c) in markets with 15-29 commercial radio stations, a party may
own up to six commercial radio stations, no more than four of which are in the
same service; and (d) in markets with 14 or fewer commercial radio stations, a
party may own up to five commercial radio stations, no more than three of which
are in the same service, provided that no party may own more than 50% of the
commercial stations in the market.
FCC cross-ownership rules also prohibit one party from having attributable
interests in a radio station as well as in a local television station or daily
newspaper, although such limits are waived by the FCC under certain
circumstances. In addition, the FCC has a "cross interest" policy that may
prohibit a party with an attributable interest in one station in a market from
also holding either a "meaningful" non-attributable equity interest (e.g.,
non-voting stock, voting stock, limited partnership interests) or key management
position in another station in the same market, or which may prohibit local
stations from combining to build or acquire another local station.
The FCC is presently evaluating its radio/television, radio/newspaper and
cross-interest rules and policies as well as policies governing attributable
ownership interests. The Company cannot predict whether the FCC will adopt any
changes in these policies or, if so, what the new policies will be or how they
might affect the Company.
ATTRIBUTION RULES
All holders of attributable interests must comply with, or obtain waivers
of, the FCC's multiple and cross-ownership rules. Under the current FCC rules,
an individual or other entity owning or having voting control of 5% or more of a
corporation's voting stock is considered to have an attributable interest in the
corporation and its stations, except that banks holding such stock in their
trust accounts, investment companies, and certain other passive interests are
not considered to have an attributable interest unless they own or have voting
control over 10% or more of such stock. The FCC is currently evaluating whether
to raise the foregoing benchmarks to 10% and 20%, respectively.
An officer or director of a corporation or any general partner of a
partnership also is deemed to hold an attributable interest in the media
license. At present, when a single shareholder holds a majority of the voting
stock of a corporate licensee, the FCC considers other shareholders, unless they
are also officers or directors, exempt from attribution. The FCC has asked for
comments as to whether it should continue the single majority shareholder
exemption.
Holders of non-voting stock generally will not be attributed an interest in
the issuing entity, and holders of debt and instruments such as warrants,
convertible debentures, options, or other non-voting interests with rights to
conversion to voting interests generally will not be attributed such an interest
unless and until such conversion is effected. The FCC is currently considering
whether it should expand its attribution rules to reach certain of these
interests in certain circumstances. The Company cannot predict whether the FCC
will adopt these or any other proposals to change its attribution policies.
Under current FCC rules, any stockholder of the Company with 5% or more of the
outstanding votes (except for qualified institutional investors, for which the
10% benchmark is applicable), will be considered to hold attributable interests
in the Company. Such holders of attributable interests must comply with or
obtain waivers of the FCC's multiple and cross-ownership rules.
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At present, none of the attributable stockholders, officers or directors
of the Company have any other media interests besides those of the Company that
implicate the FCC's multiple ownership limits except that affiliates of Warburg,
Pincus Ventures, L.P. ("Warburg Ventures L.P.") hold interests in several daily
newspapers none of which is published in communities served by the Company's
stations.
The FCC will consider a radio station providing programming and sales on
another local radio station pursuant to an LMA to have an attributable ownership
interest in the other station for purposes of the FCC's radio multiple ownership
rules. In particular, a radio station is not permitted to enter into an LMA
giving it the right to program more than 15% of the broadcast time, on a weekly
basis, of another local radio station which it could not own under the FCC's
local radio ownership rules.
ALIEN OWNERSHIP LIMITS
Under the Communications Act, broadcast licenses may not be granted,
transferred or assigned to any corporation of which more than one-fifth of the
capital stock is owned of record or voted by non-U.S. citizens or foreign
governments or their representatives or by foreign corporations (collectively,
"Aliens"). Where the corporation owning the license is controlled by another
corporation, the parent corporation cannot have more than one-fourth of the
capital stock owned of record or voted by Aliens, unless the FCC finds it in the
public interest to allow otherwise. The FCC has issued interpretations of
existing law, under which the Alien ownership restrictions in slightly modified
form apply to other forms of business organizations, including general and
limited partnerships.
The FCC also prohibits a licensee from continuing to control broadcast
licenses if the licensee otherwise falls under Alien influence or control in a
manner determined by the FCC to be in violation of the Communications Act or
contrary to the public interest. At present, none of the Company's officers,
directors or stockholders are known to be Aliens.
PROGRAMMING REQUIREMENTS
While the FCC has relaxed or eliminated many of its regulatory requirements
related to programming and content, radio stations are still required to
broadcast programming responsive to the problems, needs and interests of the
stations' service areas and must comply with various rules promulgated under the
Communications Act that regulate political broadcasts and advertisements,
sponsorship identifications, indecent programming and other matters. Affirmative
action requirements also exist. The U.S. Court of Appeals for the D.C. Circuit,
however, recently found that these requirements are unconstitutional. In
response to this ruling, the FCC issued a notice of proposed rulemaking
suggesting changes to its rules to bring them in compliance with the decision of
the U.S. Court of Appeals for the D.C. Circuit. No final decision has been made
regarding the FCC's proposed changes. Failure to observe these or other FCC
rules can result in the imposition of monetary forfeitures, in the grant of a
"short" (less than full term) license term or, where there have been serious or
a pattern of violations, license revocation.
AGREEMENTS WITH OTHER BROADCASTERS
Over the past several years a significant number of broadcast licensees have
entered into cooperative agreements with other stations in their markets. One
typical example is an LMA between two separately or co-owned stations, whereby
the licensee of one station programs substantial portions or all of the
broadcast day on the other licensee's station, subject to ultimate editorial and
other controls being exercised by the latter licensee, and sells advertising
time during such program segments for its own account.
The FCC has held that LMAs do not per se constitute a transfer of control
and are not contrary to the Communications Act provided that the licensee of the
station maintains ultimate responsibility for and control over operations of its
broadcast station.
As is the case with the Company, in certain circumstances the LMA is
entered into in anticipation of the sale of the station, with the proposed
acquirer providing programming for the station while the parties are awaiting
the necessary regulatory approvals to the transaction.
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The FCC's rules also prohibit a radio licensee from simulcasting more than
25% of its programming on other radio stations in the same broadcast service
(e.g., AM-AM), whether it owns both stations or operates one or both through a
LMA, where such stations serve substantially the same geographic area as defined
by the stations' principal community contours. The Company-operated stations in
the Los Angeles and Miami markets are subject to this limitation.
PROPOSED REGULATORY CHANGES
The FCC has not yet formally implemented certain of the changes to its rules
necessitated by the Telecom Act. Moreover, the Congress and the FCC 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, (i) affect the operation, programming, technical requirements,
ownership and profitability of the Company and its radio broadcast stations,
(ii) result in the loss of audience share and advertising revenues of the
Company's radio broadcast stations, (iii) affect the ability of the Company to
acquire additional radio broadcast stations or finance such acquisitions, (iv)
affect cooperative agreements and/or financing arrangements with other radio
broadcast licensees, or (v) affect the Company's competitive position in
relationship to other advertising media in its markets.
Such matters include, for example, changes to the license, authorization and
renewal process; proposals to revise the FCC's equal employment opportunity
rules and other matters relating to minority and female involvement in
broadcasting; proposals to alter the benchmark or thresholds for attributing
ownership interest in broadcast media; proposals to change rules or policies
relating to political broadcasting; changes to technical and frequency
allocation matters, including those relative to the implementing of digital
audio broadcasting on both a satellite and terrestrial basis; proposals to
restrict or prohibit the advertising of beer, wine and other alcoholic beverages
on radio; changes in the FCC's cross-interest, multiple ownership, Alien
ownership and cross-ownership policies; and proposals to limit the tax
deductibility of advertising expenses by advertisers.
Although the Company believes the foregoing discussion is sufficient to
provide the reader with a general understanding of all material aspects of FCC
regulations that affect the Company, it does not purport to be a complete
summary of all provisions of the Communications Act the Telecom Act or FCC rules
and policies. Reference is made to the Communications Act, the Telecom Act, FCC
rules, and the public notices and rulings of the FCC for further information.
EMPLOYEES
As of December 31, 1998, the Company employed approximately 176 full-time
employees. As of such date, none of the Company's employees were represented by
unions. Management believes that its relations with its employees are good.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in Miami, Florida. The
types of properties required to support each of the Company's owned and operated
stations and stations operated under LMAs include offices, studios and towers
where broadcasting transmitters and antenna equipment are located. The Company
leases space in the building housing its corporate headquarters under a lease
expiring in 2004. The studios and offices of the Company's owned and operated
stations and of the stations operated by the Company under LMAs are located in
leased facilities with lease terms expiring from 2000 to 2007.
The Company owns the transmitter, building and equipment and, in certain
markets, the building and land for each of its owned and operated stations. The
transmitter sites for the Company's stations are material to the Company's
overall operations. Management believes that the Company's properties are in
good condition and are suitable for its operations; however, the Company
continually seeks opportunities to upgrade its properties.
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ITEM 3. LEGAL PROCEEDINGS
The Company is not currently involved in any material litigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
MARKET PRICE FOR COMMON STOCK
The Company's Common Stock has not been registered under the Securities Act
of 1933 (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and is not listed on any national securities
exchange. There is no established public trading market for the Company's Common
Stock. All of the Company's outstanding shares of common stock are owned by
Radio Unica Holdings Corp. The indenture relating to the Company's 11 3/4%
Senior Discount Notes due 2006 and the Senior Secured Revolving Credit Facility
have covenants restricting among other things, the payment of dividends. For the
year ended December 31, 1998, the Company did not declare nor pay any dividends.
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ITEM 6. SELECTED FINANCIAL DATA
The selected financial data set forth below as of and for the years ended
December 31, 1998 and 1997 and as of and for the period from September 12, 1996
(inception) through December 31, 1996, have been derived from the consolidated
financial statements of the Company, which were audited by Ernst & Young LLP,
independent certified public accountants. The selected historical financial data
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the financial statements,
including the notes thereto, appearing elsewhere in this annual report.
<TABLE>
<CAPTION>
FOR THE PERIOD FROM
FOR THE YEAR ENDED SEPTEMBER 12, 1996
DECEMBER 31, (INCEPTION) THROUGH
--------------------------------- DECEMBER 31,
1998 1997 1996
------------- ------------- -------------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue .................................. $ 8,218,043 $ -- $ --
Operating expenses ........................... 28,196,739 1,802,816 40,000
------------- ------------- -------------
Loss from operations.......................... (19,978,696) (1,802,816) (40,000)
Interest expense, net ........................ (4,289,658) (12,765) --
Other loss ................................... (14,867) -- --
------------- ------------- -------------
Loss before income taxes ..................... (24,283,221) (1,815,581) (40,000)
Income tax benefit ........................... 2,446,745 -- --
------------- ------------- -------------
Net loss ..................................... $ (21,836,476) $ (1,815,581) $ (40,000)
============= ============= =============
Net loss applicable to common
shareholders ............................. $ (24,687,084) $ (1,935,071) $ (40,000)
============= ============= =============
Net loss per common share applicable to
common shareholders-basic and diluted .... $ (2,438.47) $ (356.10) $ (13.33)
============= ============= =============
Weighted average common
shares outstanding-basic and diluted .... 10,124 5,434 3,000
============= ============= =============
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents .................... $ 38,894,144 $ 1,126,862 $ 5,000
Working capital .............................. 52,867,136 1,047,193 5,000
Total assets ................................. 123,505,573 6,678,088 5,000
Long-term debt ............................... 105,029,128 -- --
Series A redeemable cumulative preferred
stock ..................................... 38,266,437 5,316,990 --
Stockholders' (deficit) equity ............... (26,303,393) (1,922,571) 5,000
</TABLE>
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the accompanying consolidated financial statements, the notes thereto and the
supplemental data included in this annual report.
GENERAL
The Company, incorporated on September 12, 1996 (inception), was organized
for the purpose of producing, broadcasting and distributing Spanish-language
radio programming in the United States. The Company's strategy is to develop its
radio network as a national advertising platform that is attractive to national
advertisers. The network is comprised of owned and operated stations, stations
operated under LMAs and affiliated stations. From inception through the year
ended December 31, 1997, the Company had no revenue and had not commenced
operations. The Company launched its network on January 5, 1998 with 30
affiliated stations and three stations operated under LMAs. The Company expects
to incur operating losses for the foreseeable future as the Company develops its
network and stations and establishes its base of advertising revenue.
The Company generates revenue from sales of network advertising time and
sales of advertising time on the Company-owned and operated stations and
stations operated under LMAs (collectively "O&Os"). Advertising rates are, in
large part, based upon the network's and each station's ability to attract
audiences in demographic groups targeted by advertisers. All revenues are stated
net of any agency commissions.
The Company's operating expenses consist of network programming expenses,
marketing and selling costs, including commissions paid to the Company's sales
staff, technical and engineering costs, and general and administrative expenses.
As is true of other radio operators, the Company's performance is
customarily measured by its earnings before net interest, taxes, depreciation
and amortization ("EBITDA"). EBITDA is defined as net income (loss) plus (i)
provision for income taxes, (ii) interest expense, net and (iii) depreciation
and amortization. EBITDA is presented not as an alternative measure of operating
results or cash flow from operations (as determined in accordance with generally
accepted accounting principles ("GAAP")), but because it is a widely accepted
supplemental financial measure of a company's ability to service debt. The
Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies since all companies do not calculate this
non-GAAP measure in the same fashion. The Company's EBITDA calculation is not
intended to represent cash used in operating activities, since it does not
include interest and taxes and changes in operating assets and liabilities, nor
is it intended to represent the net increase or decrease in cash, since it does
not include cash provided by (used in) investing and financing activities.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998 COMPARED TO THE YEAR ENDED DECEMBER 31, 1997
NET REVENUE. Net revenue for the year ended December 31, 1998 was
approximately $8.2 million relating to sales of network advertising and sales of
advertising on the Company's O&Os. The Company was not operating its network or
O&Os during the year ended December 31, 1997 and as a result had no revenues.
OPERATING EXPENSES. Operating expenses for the year ended December 31, 1998
were approximately $28.2 million as compared to approximately $1.8 million for
the year ended December 31, 1997.
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Direct operating expenses of approximately $1.9 million related to
engineering and programming costs of the Company's O&Os.
Selling, general and administrative expenses of approximately $10.1 million
related to the operations of the Company's O&Os, an increase of approximately
$10.0 million over the year ended December 31, 1997. Selling, general and
adminstrative expenses for the year ended December 31, 1997 primarily related to
sales personnel hired for the Company's stations operated under LMAs.
Network expenses of approximately $11.8 million related to the operations of
the Company's network including engineering, programming, sales and
administration, an increase of approximately $11 million over the year ended
December 31, 1997. Network expenses for the year ended December 31, 1997
included costs related to the developing and launching of the network including
programming, sales, engineering and administration.
Corporate expenses for the year ended December 31, 1998 of approximately
$2.8 million related to the costs of executive management, legal and
professional fees and other costs, an increase of approximately $1.8 million
over the year ended December 31, 1997. Corporate expenses for the year ended
December 31, 1997 included primarily legal and professional fees, promotional
costs and travel expenses incurred during the development stage.
Depreciation and amortization for the year ended December 31, 1998 of
approximately $1.7 million related to the depreciation of the Company's fixed
assets as well as the amortization of its intangibles. The Company placed a
majority of its property and equipment as well as its broadcast licenses and
other intangibles into service on or about December 31,1997; therefore, there
was no depreciation and amortization expense recorded for the year ended
December 31, 1997.
OTHER INCOME (EXPENSE). Other income (expense) for the year ended December
31, 1998 included interest income of approximately $1.7 million, interest
expense of approximately $6.0 million and equity in loss of equity investee of
approximately $15,000. Interest income primarily related to interest earned on
the remaining proceeds from the Senior Discount Notes. Interest expense related
primarily to the interest on the outstanding balance of the Senior Discount
Notes. The Company had approximately $13,000 in interest expense during the year
ended December 31, 1997 associated with promissory notes due to stockholders.
INCOME TAX BENEFIT. The Company recorded an income tax benefit in 1998 of
approximately $2.4 million. The benefit results from the Company's ability to
utilize a portion of its net operating loss to offset existing deferred tax
liabilities.
NET LOSS. The Company incurred a net loss of approximately $21.8 million for
the year ended December 31, 1998 as compared to a loss of approximately $1.8
million for the year ended December 31, 1997. The increase in the net loss is a
result of the increased costs associated with the operation of the Company's
network and O&Os as well as the increase in interest expense resulting from the
Senior Discount Notes.
EBITDA. EBITDA was approximately $(18.3) million for the year ended December
31, 1998 as compared to approximately $(1.8) million for the year ended December
31, 1997. The decrease in EBITDA is a result of the increased costs associated
with the operations of the Company's network and O&Os.
YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE PERIOD FROM SEPTEMBER 12, 1996
(INCEPTION) THROUGH DECEMBER 31, 1996
NET REVENUE. During the year ended December 31, 1997 and for the period from
inception through December 31, 1996, the Company had no revenue and had not
begun operations.
OPERATING EXPENSES. Operating expenses for the year ended December 31, 1997
were approximately $1.8 million as compared to $40,000 for the period from
inception through December 31, 1996. The increase in costs was associated with
the Company's planned launching of its network and operations.
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Selling, general and administrative expenses of approximately $31,000 for
the year ended December 31, 1997 primarily related to sales personnel hired for
the Company's stations operated under LMAs.
Network expenses of approximately $813,000 for the year ended December 31,
1997 included costs related to the development and launching of the network
including programming, sales, engineering and administration.
Corporate expenses of approximately $959,000 for the year ended December 31,
1997 primarily related to the costs of personnel, legal and professional fees
and travel associated with the development of the Company. Corporate expenses
for the period from inception through December 31, 1996 were primarily related
to legal and professional fees and travel expenses.
INTEREST EXPENSE. Interest expense for the year ended December 31, 1997
related to certain promissory notes due to stockholders.
NET LOSS. The Company incurred a net loss of approximately $1.8 million for
the year ended December 31, 1997 and $40,000 for the period from inception
through December 31, 1996. The increase in the net loss was related to the
increased costs incurred in 1997 associated with the Company's planned launching
of its network and operations.
EBITDA. EBITDA was approximately $(1.8) million for the year ended December
31, 1997 as compared to $(40,000) for the period from inception through December
31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Due to the developmental nature of the Company, the Company has had negative
cash flows since inception. Working capital and financing for the Company's
acquisitions to date have been provided primarily by the issuance of the 11 3/4
% Senior Discount Notes due August 1, 2006 and promissory notes, common stock
and preferred stock to the Company's shareholders.
The Company's primary sources of liquidity will be the remaining proceeds
from the Senior Discount Notes issued on July 27, 1998 (see Note 5 to financial
statements) and the Senior Secured Revolving Credit Facility. The Senior Secured
Revolving Credit Facility is a senior secured revolver with $20.0 million of
available borrowings subject to certain conditions. At December 31, 1998 there
were no amounts outstanding under the Senior Secured Revolving Credit Facility.
Net cash used in operating activities was approximately $21.7 million for
the year ended December 31, 1998 as compared to approximately $2.2 million for
the year ended December 31, 1997. The increase in cash used in operating
activities during the year ended December 31, 1998 is due to the increased costs
associated with the operations of the Company's network and O&Os. Net cash used
in operating activities for the period from inception through December 31, 1996
was approximately $40,000. Net cash used in operating activities increased
during 1997 as compared to 1996 as a result of the Company's planned launching
of its network and programming.
Net cash used in investing activities for the year ended December 31, 1998
was approximately $60.6 million as compared to approximately $2.2 million for
the year ended December 31, 1997. The increase in cash used in investing
activities during the year ended December 31, 1998 is due to the acquisition of
radio stations, funding of escrow accounts related to acquisitions and
acquisitions of property and equipment. Net cash used in investing activities
for the year ended December 31, 1997 was due to the Company advancing funds to
an equity investee and acquiring property and equipment related to its network
and stations operated under LMAs. No cash was used in investing activities in
1996.
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Capital expenditures primarily related to the purchase of broadcast
equipment for the network and O&Os, leasehold improvements, computer equipment
and telecommunications equipment. For the year ended December 31, 1998, capital
expenditures were approximately $5.3 million as compared to approximately $1.2
million for the year ended December 31, 1997. The Company expects to spend, in
the aggregate, approximately $2.0 million over the next two years for planned
equipment purchases and for upgrades of existing stations.
Net cash provided by financing activities for the year ended December 31,
1998 was approximately $120.1 million as compared to approximately $5.6 million
for the year ended December 31, 1997. The increase in cash provided by financing
activities during the year ended December 31, 1998 is primarily related to the
net proceeds from the issuance of the Senior Discount Notes as well as
additional capital which was raised through the issuance of preferred and common
stock. In addition, the Company entered into promissory notes payable with
Warburg Ventures, L.P. of approximately $21.8 million. Net cash provided by
financing activities for the year ended December 31, 1997 primarily related to
the issuance of $5.2 million in preferred and common stock. The funds were
mainly used to acquire radio stations, fund escrow accounts related to
acquisitions, make investments and advances to an equity investee and acquire
property and equipment.
The Company believes that its current cash position, the remaining proceeds
from the issuance of the Senior Discount Notes and the borrowing availability
under the Senior Secured Revolving Credit Facility will provide adequate
resources to fund the Company's operating expenses, working capital
requirements, capital expenditures and acquisitions until the implementation of
its business strategy provides the Company with sufficient operating cash flow.
Upon the implementation of its business strategy, the Company believes that cash
from operating activities should be sufficient to permit the Company to meet
required cash interest obligations (which will consist of cash interest expense
on the Senior Discount Notes commencing August 1, 2002 of $18.6 million
annually), capital expenditures of approximately $1.0 million per year for
existing owned and operated stations, and operating obligations. In the event
that the Company is unable to generate the cash flow that is sufficient to
service its obligations, the Company may be forced to adopt one or more
alternatives, such as refinancing or restructuring its indebtedness, selling
material assets or operations or selling equity.
There can be no assurance that such business strategy will be successfully
implemented. Furthermore there can be no assurance that any such actions could
be effected on satisfactory terms or at all, that they would enable the Company
to satisfy its debt service requirements or that they would be permitted by the
terms of the Senior Discount Notes or the Senior Secured Revolving Credit
Facility. The failure to generate such sufficient cash flow or to achieve such
alternatives could significantly adversely affect the market value of the Senior
Discount Notes and the Company's ability to pay the principal of and interest on
the Senior Discount Notes.
The known impact on future operating results related to the Senior Discount
Notes will be annual interest expense through August 1, 2006 as follows:
YEAR ENDED DECEMBER 31,
--------------------------------------
(IN MILLIONS)
-----------------
1999................ $ 12.7
2000................ 14.2
2001................ 16.0
2002................ 17.9
2003................ 18.6
2004................ 18.6
2005................ 18.6
2006................ 10.8
20
<PAGE> 21
Expected interest payments under the terms of the Senior Discount Notes are
as follows:
YEAR ENDED DECEMBER 31,
--------------------------------------
(IN MILLIONS)
-------------------
2002.............. $ 9.3
2003.............. 18.6
2004.............. 18.6
2005.............. 18.6
2006.............. 9.3
Amortization of deferred financing costs and intangibles resulting from the
Senior Discount Notes and the acquisitions of radio stations will be
approximately $3.7 million annually.
YEAR 2000 ISSUES
The Company has conducted a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
developed an implementation plan to resolve the issue. The Year 2000 issue is
the result of computer programs being written using two digits rather than four
to define the applicable year. Any of the Company's computer programs that have
time/date sensitive software and hardware may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in a major system failure
or miscalculation. The Company presently believes that based on the results of
recent investigations, the Company's primary information and communication
systems are believed to be compliant with Year 2000 requirements. The Company's
cost of compliance has been minimal and any future costs are not anticipated to
be material to financial condition and results of operations.
The Year 2000 issue creates risk for the Company from unforeseen problems in
its own computer systems and from third parties on which the Company relies.
Accordingly, the Company is requesting assurances from all software vendors from
which it has purchased or from which it may purchase software that the software
sold to the Company correctly processes all date information at all times. In
addition, the Company is querying its customers and suppliers as to their
progress in identifying and addressing problems that their computer systems will
face in correctly processing date information as the Year 2000 approaches and is
reached. However, there are no assurances that the Company will identify all
date handling problems in its business systems or that the Company will be able
to successfully remedy Year 2000 compliance issue that are discovered. To the
extent that the Company is unable to resolve its Year 2000 issues prior to
January 1, 2000 operating results could be adversely affected. In addition, the
Company could be adversely affected if other entities (e.g., vendors or
customers) not affiliated with the Company do not appropriately address their
own Year 2000 compliance issues in advance of their occurrence.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
21
<PAGE> 22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
Number
----------
<S> <C>
Report of Independent Certified Public Accountants 23
Consolidated Balance Sheets as of December 31, 1998 and 1997 24
Consolidated Statements of Operations for the Years Ended December 31, 1998 and
1997 and for the period from September 12, 1996 (inception) through
December 31, 1996 25
Consolidated Statements of Changes in Series A Redeemable Cumulative Preferred
Stock and Stockholders' (Deficit) Equity 26
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and
1997 and for the period from September 12, 1996 (inception) through
December 31, 1996 27
Notes to Consolidated Financial Statements 28
</TABLE>
22
<PAGE> 23
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Radio Unica Corp.
We have audited the accompanying consolidated balance sheets of Radio Unica
Corp. and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of operations, changes in Series A redeemable cumulative
preferred stock and stockholders' (deficit) equity and cash flows for each of
the two years in the period ended December 31, 1998 and for the period from
September 12, 1996 (inception) through December 31, 1996. Our audits also
included the financial statement schedule listed in the Index of Item 14(a).
These financial statements and schedule 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 consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Radio Unica Corp. and subsidiaries as of December 31, 1998 and 1997, and the
consolidated results of their operations and their cash flows for the years
ended December 31, 1998 and 1997 and for the period from September 12, 1996
(inception) through December 31, 1996, in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, present fairly in all material respects the information set forth
therein.
/s/ Ernst & Young LLP
Miami, Florida
February 24, 1999
23
<PAGE> 24
RADIO UNICA CORP.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
--------------------------------
1998 1997
------------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,894,144 $ 1,126,862
Restricted cash 12,600,000 -
Accounts receivable, net of allowance for doubtful accounts of $116,031 1,232,402 -
Prepaid expenses 5,012,001 554,000
Radio broadcasting rights - 2,650,000
------------- -----------
Total current assets 57,738,547 4,330,862
Property and equipment, net 11,769,654 1,221,995
Broadcast licenses, net of accumulated amortization of $752,775 43,729,708 -
Other intangible assets, net 9,894,522 -
Investments and advances to equity investee - 1,016,590
Other assets 373,142 108,641
------------- -----------
$ 123,505,573 $ 6,678,088
============= ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 922,064 $ 354,120
Accrued expenses 3,199,347 179,549
Radio broadcasting rights obligation - 2,385,000
Notes payable 750,000 365,000
------------- -----------
Total current liabilities 4,871,411 3,283,669
Deferred taxes 1,641,990 -
Senior discount notes 105,029,128 -
Commitments and contingencies
Series A redeemable cumulative preferred stock of Radio Unica
Holdings Corp. $.01 par, value; 450,000 shares authorized;
353,560 and 951,975 issued and outstanding at December 31, 1998
and 1997, respectively 38,266,437 5,316,990
Stockholders' deficit:
Common stock $.01 par value; 1,000 shares and 100,000 shares
authorized at December 31, 1998 and 1997, respectively;
100 shares and 5,250 shares issued and outstanding
at December 31, 1998 and 1997, respectively 1 53
Capital deficiency (2,611,337) (67,043)
Accumulated deficit (23,692,057) (1,855,581)
------------- -----------
Total stockholders' deficit (26,303,393) (1,922,571)
------------- -----------
$ 123,505,573 $ 6,678,088
============= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
24
<PAGE> 25
RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period from
September 12, 1996
(inception)
through
For the Year Ended December 31, December 31,
1998 1997 1996
------------ ------------ -----------------
<S> <C> <C> <C>
Net revenue $ 8,218,043 $ -- $ --
Operating expenses:
Direct operating expenses 1,852,832 -- --
Selling, general and administrative expenses 10,064,219 31,124 --
Network expenses 11,812,105 812,654 --
Corporate expenses 2,771,207 959,038 40,000
Depreciation and amortization 1,696,376 -- --
------------ ------------ ------------
28,196,739 1,802,816 40,000
------------ ------------ ------------
Loss from operations (19,978,696) (1,802,816) (40,000)
Other income (expense):
Interest expense (6,038,483) (12,765) --
Interest income 1,748,825 -- --
Equity in loss of equity investee (14,867) -- --
------------ ------------ ------------
(4,304,525) (12,765) --
------------ ------------ ------------
Loss before income taxes (24,283,221) (1,815,581) (40,000)
Income tax benefit 2,446,745 -- --
------------ ------------ ------------
Net loss (21,836,476) (1,815,581) (40,000)
Accrued dividends on Series A redeemable
cumulative preferred stock 2,850,608 119,490 --
------------ ------------ ------------
Net loss applicable to common shareholders $(24,687,084) $ (1,935,071) $ (40,000)
============ ============ ============
Net loss per common share applicable to
common shareholders - basic and diluted $ (2,438.47) $ (356.10) $ (13.33)
============ ============ ============
Weighted average common shares
outstanding - basic and diluted 10,124 5,434 3,000
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
25
<PAGE> 26
RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SERIES A REDEEMABLE CUMULATIVE PREFERRED
STOCK AND STOCKHOLDERS' (DEFICIT) EQUITY
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Series A
Redeemable
Cumulative
Preferred Stock Common Stock
----------------------------- -------------------------------
Shares Amount Shares Amount
---------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at September 12, 1996 -- $ -- -- $ --
Issuance of common stock -- -- 3,000 300
Net loss -- -- -- --
---------- ------------ ------------ ------------
Balance at December 31, 1996 -- -- 3,000 300
Issuance of common stock -- -- 7,000 700
Conversion of Predecessor
Company common stock to
Radio Unica Corp. Series A
redeemable cumulative
preferred stock and common
stock 4,950 495,000 (9,500) (995)
Issuance of Series A
redeemable cumulative
preferred stock and common
stock 47,025 4,702,500 4,750 48
Accrued dividends in arrears
on Series A redeemable
cumulative preferred stock -- 119,490 -- --
Net loss -- -- -- --
---------- ------------ ------------ ------------
Balance at December 31, 51,975 5,316,990 5,250 53
Issuance of Series A
redeemable cumulative
preferred stock and common
stock 148,500 14,850,000 15,000 150
Conversion of notes payable
and promissory notes payable
to stockholders to Series A
redeemable cumulative preferred
stock and common stock 154,700 15,469,965 15,626 156
Cancellation of common stock in
connection with the Radio
Unica Holdings Corp.
reorganization -- -- (35,876) (359)
Issuance of common stock in
connection with the Radio
Unica Holdings Corp.
reorganization -- -- 100 1
Redemption and cancellation of
Series A redeemable cumulative
preferred stock of Radio Unica
Holdings Corp. (2,110) (221,126) -- --
Issuance of Series A
reedemable cumulative
preferred stock of Radio Unica
Holdings Corp. 495 49,500 -- --
Shareholder note receivable issued
for Series A redeemable
cumulative preferred stock
of Radio Unica Holdings Corp. -- (49,500) -- --
Accrued dividends in arrears
on Series A redeemable
cumulative preferred stock
of Radio Unica Holdings Corp. -- 2,850,608 -- --
Net loss -- -- -- --
---------- ------------ ------------ ------------
Balance at December 31, 1998 353,560 $ 38,266,437 100 $ 1
---------- ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Additional
Paid-in
Capital Accumulated
(Deficiency) Deficit Total
------------ ------------ ------------
<S> <C> <C> <C>
Balance at September 12, 1996 $ -- $ -- $ --
Issuance of common stock 44,700 -- 45,000
Net loss -- (40,000) (40,000)
------------ ------------ ------------
Balance at December 31, 1996 44,700 (40,000) 5,000
Issuance of common stock 454,300 -- 455,000
Conversion of Predecessor
Company common stock to
Radio Unica Corp. Series A
redeemable cumulative
preferred stock and common
stock (494,005) -- (495,000)
Issuance of Series A
redeemable cumulative
preferred stock and common
stock 47,452 -- 47,500
Accrued dividends in arrears
on Series A redeemable
cumulative preferred stock (119,490) -- (119,490)
Net loss -- (1,815,581) (1,815,581)
------------ ------------ ------------
Balance at December 31, (67,043) (1,855,581) (1,922,571)
Issuance of Series A
redeemable cumulative
preferred stock and common
stock 149,850 -- 150,000
Conversion of notes payable
and promissory notes payable
to stockholders to Series A
redeemable cumulative preferred
stock and common stock 156,106 -- 156,262
Cancellation of common stock in
connection with the Radio
Unica Holdings Corp.
reorganization 359 -- --
Issuance of common stock in
connection with the Radio
Unica Holdings Corp.
reorganization (1) -- --
Redemption and cancellation of
Series A redeemable cumulative
preferred stock of Radio Unica
Holdings Corp. -- -- --
Issuance of Series A
reedemable cumulative
preferred stock of Radio Unica
Holdings Corp. -- -- --
Shareholder note receivable issued
for Series A redeemable
cumulative preferred stock
of Radio Unica Holdings Corp. -- -- --
Accrued dividends in arrears
on Series A redeemable
cumulative preferred stock
of Radio Unica Holdings Corp. (2,850,608) -- (2,850,608)
Net loss -- (21,836,476) (21,836,476)
------------ ------------ ------------
Balance at December 31, 1998 $ (2,611,337) $(23,692,057) $(26,303,393)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
26
<PAGE> 27
RADIO UNICA CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the period from
September 12, 1996
(inception)
through
For the Year Ended December 31, December 31,
1998 1997 1996
------------- ------------- ------------------
<S> <C> <C> <C>
Operating activities
Net loss $ (21,836,476) $ (1,815,581) $ (40,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization and amortization 1,696,376 -- --
Equity in loss of equity investee 14,867 -- --
Interest on notes payable paid with the issuance of
preferred and common stock 261,227 -- --
Accretion of interest on senior discount notes 5,029,128 -- --
Amortization of deferred financing costs 321,181 -- --
Deferred taxes (2,446,745) -- --
Change in assets and liabilities:
Accounts receivable (1,136,353) -- --
Prepaid expenses (3,433,576) (554,000) --
Radio broadcasting rights 1,650,000 (2,650,000) --
Other assets (301,689) (108,641) --
Accounts payable 551,046 354,120 --
Accrued expenses 324,743 179,549 --
Radio broadcasting rights obligation (2,385,000) 2,385,000 --
------------- ------------- -------------
Net cash used in operating activities (21,691,271) (2,209,553) (40,000)
------------- ------------- -------------
Investing activities
Acquisition of property and equipment (5,336,309) (1,221,995) --
Restricted cash-escrow account (12,600,000) -- --
Advances to equity investee -- (1,016,590) --
Repayment of advances to equity investee 1,016,590 -- --
Acquisition of WNMA-AM and WWRU-AM Miami (9,167,000) -- --
Acquisiton of KIQI-AM San Francisco (6,276,520) -- --
Acquisition of KBLA-AM Los Angeles (21,465,920) -- --
Acquisition of KXYZ-AM Houston (6,500,000) -- --
Covenant not to compete (276,743) -- --
------------- ------------- -------------
Net cash used in investing activities (60,605,902) (2,238,585) --
------------- ------------- -------------
Financing activities
Proceeds from issuance of senior discount notes, net 95,535,581 -- --
Proceeds from issuance of Series A redeemable cumulative
preferred stock and common stock 15,000,000 5,205,000 45,000
Proceeds from issuance of notes payable to stockholders 21,795,000 365,000 --
Repayment on notes payable to stockholders (6,795,000) -- --
Repayment on note payable issued in connection with
the acquisition of KIQI-AM San Francisco (5,250,000) -- --
Redemption and cancellation of preferred stock (221,126) -- --
------------- ------------- -------------
Net cash provided by financing activities 120,064,455 5,570,000 45,000
------------- ------------- -------------
Net increase in cash and cash equivalents 37,767,282 1,121,862 5,000
Cash and cash equivalents at beginning of period 1,126,862 5,000 --
------------- ------------- -------------
Cash and cash equivalents at end of period $ 38,894,144 $ 1,126,862 $ 5,000
============= ============= =============
Supplemental disclosures of cash flow information:
Note payable issued in connection with the
acquisition of KIQI-AM San Francisco $ 6,000,000 $ -- $ --
============= ============= =============
Cash paid for interest $ 413,712 $ -- $ --
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
27
<PAGE> 28
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND PRESENTATION
Radio Unica Corp., a Florida corporation incorporated on September 12, 1996
("Old Radio Unica"), was merged into Radio Unica Corp. (the "Company"), a
Delaware corporation, on August 7, 1997. As a result of the merger, the
investors of Old Radio Unica exchanged all of their common shares in Old Radio
Unica for 500 shares of common stock and 4,950 shares of preferred stock of the
Company, the surviving corporation. The merger was accounted for as a
combination of entities under common control in a manner similar to a pooling.
The Company was formed for the purpose of producing, broadcasting and
distributing Spanish language radio programming in the United States. The
Company launched its network on January 5, 1998 and began broadcasting
programming to radio broadcast stations that it operates and to affiliated
stations in the United States and abroad. Prior to the launch, the Company was a
development stage company.
The Company has entered into Affiliation Agreements ("AFAs") with
substantially all of its affiliated radio stations. Pursuant to the AFAs, the
Company supplies programming for the affiliated stations which are typically
required to carry a minimum of eight hours per day of the Company's network
programming. The AFAs typically provide that the Company's programming will
include a certain number of minutes per hour of network advertising to be sold
by the Company and a certain number of minutes per hour for local advertising to
be sold by the station. The terms of the AFAs are generally one to two years,
subject to earlier termination under certain circumstances. Some of the AFAs
grant the Company a right of first refusal in the event the station owner offers
to sell the station.
In July 1998, the Company effected a holding company reorganization (the
"Reorganization"), pursuant to which the Company became a wholly owned
subsidiary of Radio Unica Holdings Corp. ("Holdings"). Holdings has no assets
other than the shares of Company's common stock. In connection with the
Reorganization, the holders of the Company's common stock and Series A
redeemable cumulative preferred stock exchanged their shares for shares of
Holdings' common stock and Series A redeemable cumulative preferred stock
bearing identical rights and preferences to the Company's then existing common
stock and Series A cumulative redeemable preferred stock. The existing shares of
the Company's common stock and Series A redeemable cumulative preferred stock
were cancelled. The Company subsequently authorized and issued 100 shares par
value $0.01 of common stock to Holdings. The outstanding shares of Series A
redeemable cumulative preferred stock issued by Holdings have been "pushed-down"
to the Company and accordingly are reflected in the Company's financial
statements as of December 31, 1998.
2. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation. The Company accounts for investments in
20% to 50% owned companies and for investments in over 50% owned companies over
which the Company does not have control under the equity method of accounting.
CASH EQUIVALENTS
The Company defines as cash equivalents all highly liquid investments with a
maturity of three months or less at the time of purchase.
RESTRICTED CASH
Restricted cash represents escrow accounts established by the Company in
connection with asset purchase agreements or local marketing agreements entered
into during the year.
28
<PAGE> 29
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is recorded on a
straight-line basis over the estimated useful lives of the related assets, which
range from 3 to 30 years. Leasehold improvements are capitalized and amortized
over their estimated useful lives or the remaining life of the lease, whichever
is shorter. The Company place a majority of its property and equipment into
service on or about December 31, 1997; therefore, there was no depreciation
expense recorded for the year ended December 31, 1997 and for the period from
September 12, 1996 (inception) through December 31, 1996.
INTANGIBLE ASSETS
Intangible assets are recorded at cost. Amortization of intangible assets
is provided in amounts sufficient to relate the asset cost to operations over
the estimated useful lives on a straight-line basis. Intangible assets consist
primarily of broadcast licenses, goodwill and other identifiable intangible
assets. The estimated useful lives are as follows:
Broadcast licenses...... 30 years
Goodwill................ 30 years
Other intangibles....... 1-5 years
The Company evaluates periodically the propriety of the carrying amount of
intangible assets as well as the amortization period to determine whether
current events or circumstances warrant adjustments to the carrying value and/or
revised estimates of useful lives. This evaluation consists of the projection of
undiscounted operating income before depreciation, amortization, nonrecurring
charges and interest for each of the Company's radio stations over the remaining
amortization periods of the related intangible assets. If such projections
indicate that undiscounted operating income is not expected to be adequate to
recover the carrying amounts of the related intangible assets, a loss is
recognized to the extent the carrying amount of the asset exceeds its fair
value. At this time, the Company believes that no impairment of goodwill or
other intangible assets has occurred and that no reduction of the estimated
useful lives is warranted.
REVENUE RECOGNITION
Revenue is derived primarily from the sale of commercial announcements to
local, national and network advertisers. Revenue is recognized as commercials
are broadcast.
ADVERTISING COSTS
The Company incurs various marketing and promotional costs to add and
maintain listenership. These costs are charged to expense as incurred and for
the periods ended December 31, 1998, 1997 and 1996 amounted to approximately
$3.6 million, $82,000 and $1,150, respectively.
BARTER TRANSACTIONS
Barter transactions represent advertising time exchanged for promotional
items, advertising, supplies, equipment and services. Barter transactions are
recorded at the estimated fair value of the goods or services received. Revenues
from barter transactions are recognized as income when advertisements are
broadcast. Expenses are recognized when goods or services are received. Barter
amounts are not significant to the Company's consolidated financial statements.
29
<PAGE> 30
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
INCOME TAXES
The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes".
Prior to August 7, 1997, the Company, with the consent of its shareholders,
elected S Corporation treatment for the Company. As a result, the shareholders
of the Company were taxed on their proportionate share of the Company's taxable
income. Accordingly, no provision or credit for federal income tax amounts has
been included in the consolidated financial statements for the period prior to
August 7, 1997. On August 7, 1997, upon the merger of Old Radio Unica into the
Company, the Company became a C Corporation.
Deferred tax assets and liabilities are determined based upon differences
between the financial statements and income tax basis of assets and liabilities
using enacted tax rates in effect for the year in which the differences are
expected to reverse. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some portion
of the deferred tax assets will not be realized.
ACCOUNTING FOR IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for the impairment of long-lived assets under the
provisions of SFAS No. 121, "Accounting For The Impairment Of Long-Lived
Assets". SFAS No. 121 requires impairment losses to be recorded on long-lived
assets when indications of impairment are present and the undiscounted cash
flows estimated to be generated by those assets are less than the assets
carrying amounts. If the carrying value of the assets will not be recoverable,
as determined based on the undiscounted cash flows estimated, the carrying value
of the assets are reduced to fair value. Generally, fair value will be
determined using valuation techniques such as expected discounted cash flows or
appraisals, as appropriate. The Company has not recorded any impairment losses.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's financial instruments of cash and cash equivalents, accounts
receivable, accounts payable, and accrued expenses approximate fair value
because of their short duration to maturity. The fair value of the long term
debt is based on quoted market prices. At December 31, 1998, the fair value of
the senior discount notes was $85,367,520.
USE OF ESTIMATES
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Accordingly, actual results could differ from those
reported.
BUSINESS SEGMENTS
Pursuant to SFAS No. 131, "Disclosure About Segments of a Business
Enterprise and Related Information," the Company is required to report segment
information. As the Company only operates in one business segment, no additional
reporting is required.
LOSS PER SHARE
In 1997, the Company retroactively adopted SFAS No. 128, "Earnings Per
Share", which replaced the calculations of primary and fully diluted earnings
per share (EPS) with basic and diluted EPS. For the years ended December 31,
1998 and 1997 and for the period from September 12, 1996 (inception) through
December 31, 1996, there was no difference between the basic and diluted EPS
calculations.
30
<PAGE> 31
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
2. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
LOSS PER SHARE, CONTINUED
Net loss per common share is calculated using the weighted average number of
common shares for the basic EPS presentation, and the weighted average number of
common and common equivalent shares for the diluted EPS presentation,
outstanding during the respective periods.
3. RADIO BROADCASTING RIGHTS AGREEMENTS
On July 30, 1997, the Company entered into a Radio Broadcasting Rights
Agreement with Univision Network Limited Partnership for the 1998 World Cup
Soccer Championship (1998 World Cup). This agreement granted the Company
exclusive Spanish-language radio broadcast rights in the United States for the
1998 World Cup. The Company amortized the cost of the Rights Agreement, on a
pro-rata basis, as revenue for the 1998 World Cup was earned.
4. ACQUISITIONS
On January 26, 1998, the Company entered into an asset purchase agreement
with One-on-One Sports License of Florida, L.L.C. and One-on-One Sports Radio of
Florida L.L.C. to acquire Miami radio stations WNMA-AM and WRUN-AM for a cash
purchase price of $9.0 million. Other costs associated with the transaction were
approximately $167,000. On May 13, 1998, after receiving the consent of the
Federal Communications Commission (the "FCC") to assign the broadcasting
licenses, the Company completed the acquisitions. The Company operated the
stations under a Time Brokerage Agreement (also known as local marketing
agreements and referred to herein as "LMAs") for a monthly fee of $72,500 from
February 1, 1998 to May 13, 1998. Based on current Federal Communication
Commission ("FCC") guidelines, the license of either WNMA or WRUN must be
relinquished by the Company by October 8, 2002.
On February 20, 1998, the Company entered into a stock purchase agreement
with Oro Spanish Broadcasting, Inc. to acquire San Francisco radio station
KIQI-AM for $11.5 million. In connection with this acquisition, the Company
entered into a five-year non-compete agreement with the seller for $500,000.
Other costs associated with the transactions were approximately $277,000. On
April 30, 1998, after receiving the consent of the FCC to transfer the
broadcasting license, the Company completed the acquisition of all the common
stock of Oro Spanish Broadcasting, Inc. The purchase price was comprised of a $6
million cash payment and a $6 million promissory note. The promissory note bears
interest at 8% and is payable monthly. On July 2, 1998 the Company revised
certain terms of and paid down $5.25 million against the promissory note. The
remaining $750,000 is due on or before October 31, 1999. The Company operated
the station under an LMA for a monthly fee of $58,000 from March 2, 1998 to
April 30, 1998. Effective February 1999, the Company ceased interest payments on
the note. The Company has made a claim to offset certain costs and expenses
related to the acquired transmitter site against the balance due. The Company
accounted for the acquisition as a purchase and, accordingly, the purchase price
was allocated to the assets acquired and liabilities assumed based on appraisals
and other estimates of the underlying values.
On May 20, 1998, the Company entered into an asset purchase agreement to
acquire the assets of Los Angeles radio station KBLA-AM from subsidiaries of
Sinclair Communications, Inc. for $21 million in cash. Other costs associated
with the transaction were approximately $466,000. On July 30, 1998, after
receiving the FCC's consent to assign the broadcasting licenses, the Company
completed the acquisition.
31
<PAGE> 32
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. ACQUISITIONS, CONTINUED
On October 27, 1997, the Company obtained 49.9% of the ownership and voting
rights of Blaya, Inc., a newly formed company. The remaining ownership interest
was held by one of the stockholders of Holdings.
On December 24, 1997, Blaya, Inc. entered into an asset purchase agreement
with 13 Radio Corporation ("13 Radio"), a CBS Broadcasting ("CBS") subsidiary,
to acquire Houston radio station KXYZ-AM, for a cash purchase price of $6.4
million. In connection with this acquisition, the Company advanced $1,016,590 to
Blaya, Inc., which was reflected in investments and advances to equity investee.
Also on December 24, 1997, Blaya, Inc. entered into an LMA with 13 Radio
effective as of January 5, 1998. The LMA made available to Blaya, Inc.
substantially all of the broadcasting time of the station, pending the
completion of the acquisition, which was subject to FCC consent. The Company
entered into an LMA with Blaya, Inc. for substantially all of the broadcasting
time of the station for a fee of $165,000 per quarter. The Company began
operating the station under its LMA on January 5, 1998. Blaya, Inc. did not have
any operations during 1997.
On March 6, 1998, Blaya, Inc.'s capital stock was divided into the following
two classes: (i) Class A common stock with rights identical to all other shares
of Blaya, Inc.'s capital stock except that each share is entitled to cast 4.016
votes and (2) Class B common stock with rights identical to all other shares of
Blaya, Inc.'s capital stock except that each share is entitled to cast 1 vote.
On March 6, 1998, the Company acquired 800 shares of Blaya, Inc.'s Class B
common stock, representing 49.9% of the voting rights and 80% of the economic
ownership rights in Blaya, Inc., in exchange for its 499 shares of common stock
in Blaya, Inc. and $640,000. On the same day, the Company loaned Mr. Blaya
$160,000 in the form of a 10 year 9% promissory note. These proceeds were used
by Mr. Blaya to purchase 200 shares of Blaya, Inc.'s Class A common stock
representing 50.1% of the voting rights and 20% of the ownership rights in
Blaya, Inc. In connection with this equity investment, the stockholders of
Blaya, Inc. entered into a stockholders agreement that provided the Company the
right of first refusal if the majority voting stockholder decided to sell any
interest in Blaya, Inc.
On March 10, 1998, the Company entered into a promissory note in the amount
of $5.7 million with Blaya, Inc. The proceeds were used to complete the asset
purchase agreement with 13 Radio and to pay related closing costs. The
promissory note bore interest of 9% compounded quarterly and was payable
annually. The entire principal amount outstanding under the promissory note was
due and payable in full on the earliest to occur of (i) the termination of the
LMA, (ii) fifteen days following the date when 50% of the voting stock was
transferred to any party or substantially all the assets of Blaya, Inc. were
sold, or (iii) March 10, 2008. The promissory note was secured by substantially
all of the assets of Blaya, Inc.
On March 11, 1998, Blaya Inc. completed the acquisition of certain assets of
13 Radio for $6.4 million pursuant to an asset purchase agreement dated December
24, 1997. Other costs associated with the transaction were approximately
$100,000.
On June 10, 1998, the Company entered into a stock purchase agreement
with the majority-voting stockholder of Blaya, Inc. to purchase his remaining
50.1% voting rights and 20% ownership interest in Blaya, Inc. (the "Remaining
Interest"). On September 11, 1998, the Company completed the acquisition of the
Remaining Interest for $160,000 and, accordingly, Blaya, Inc., became a wholly
owned subsidiary of the Company and Radio Unica of Houston License Corp., a
wholly owned subsidiary of Blaya, Inc., became an indirect, wholly owned
subsidiary of the Company. The majority-voting stockholder of Blaya, Inc. repaid
the $160,000, plus interest, he owed the Company pursuant to the 10 year 9%
promissory note. In addition, the $5.7 million promissory note was cancelled by
the Company and accounted for such cancellation as a contribution to Blaya,
Inc.'s capital.
32
<PAGE> 33
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. ACQUISITIONS, CONTINUED
The Company accounted for the acquisition of Blaya, Inc. as a purchase and
accordingly, the purchase price was allocated to the assets acquired and
liabilities assumed based on appraisals and other estimates of the underlying
values. The operations of Blaya, Inc. are included in the consolidated statement
of operations of the Company beginning on September 11, 1998.
On October 27, 1998, the Company entered into an asset purchase agreement
with Children's Broadcasting Corporation to acquire certain assets of New York
City area radio stations WWRU-AM and WJDM-AM, Dallas/Ft. Worth radio station
KAHZ-AM and Phoenix radio station KIDR-AM for a purchase price of $29.25
million. In connection with this acquisition, the Company entered into a
two-year non-compete agreement with the seller for $750,000. Pursuant to this
agreement, the Company established escrow accounts totaling $10 million. The
Company operated these stations under an LMA for a monthly fee of $200,000 until
the transaction closed. An advanced payment of $2.5 million was made to
Children's Broadcasting Corporation with the execution of the LMA. On January
14, 1999, after receiving the consent of the FCC to assign the broadcasting
licenses, the Company completed the acquisitions. Based on current FCC
guidelines, the license of either WWRU or WJDM must be relinquished by the
Company by March 12, 2003.
The acquisitions of the assets of WNMA-AM and WRUN-AM, Miami and KBLA-AM,
Los Angeles, were not the purchases of businesses, as the format and language of
the stations were changed and the Company did not assume responsibility for any
employees. The acquisitions were accounted for as purchases and, accordingly,
the purchase price was allocated to the assets acquired and liabilities assumed
based on appraisals and other estimates of their underlying values.
The pro forma results of operations of the Company for the years ended
December 31, 1998 and 1997 assuming the Oro Spanish Broadcasting, Inc. and
Blaya, Inc. acquisitions had been consummated as of January 1, 1997 and assuming
Blaya, Inc. had acquired 13 Radio as of January 1, 1997 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------------
1998 1997
------------- -----------
<S> <C> <C>
Net revenue ................................... $ 8,529,015 $ 3,586,407
============= ===========
Net loss applicable to common shareholders .... $ (25,004,564) $(3,433,090)
============= ===========
Net loss per common share applicable to
common shareholders - basic and diluted ..... $ (2,469.83) $ (631.78)
============= ===========
</TABLE>
5. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY
SENIOR DISCOUNT NOTES
On July 27, 1998, the Company sold in an unregistered offering to qualified
institutional buyers and accredited institutional investors $158,088,000
aggregate principal amount at maturity of the Company's 11 3/4% Senior Discount
Notes due August 1, 2006 (the "Old Notes"). Cash interest on the Old Notes would
not accrue or be payable prior to August 1, 2002. Thereafter, cash interest
would accrue at a rate of 11 3/4% per annum on the principal amount at maturity
of the Old Notes through and including the maturity date and would be payable
semi-annually on August 1 and February 1 of each year. In connection with this
transaction, the Company received net proceeds of approximately $94.4 million
after deducting issuance expenses of approximately $5.6 million of which
approximately $1.1 million are accrued for at December 31, 1998.
33
<PAGE> 34
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY, CONTINUED
The Old Notes were general senior unsecured obligations of the Company and
ranked pari passu in right of payment with all existing and future unsecured and
unsubordinated indebtedness of the Company and senior in right of payment to any
subordinated indebtedness of the Company. The Old Notes were guaranteed on a
senior unsecured basis, as to payment of principal, premium if any, and
interest, by the Guarantors, which consist of the Company's Domestic Restricted
Subsidiaries, (as defined in the Indenture, dated July 27, 1998 between the
Company, Wilmington Trust as trustee and the Guarantors named therein (the
"Indenture")), on a full, unconditional, joint and several basis. The Old Notes
were redeemable at any time and from time to time at the option of the Company,
in whole or in part on or after August 1, 2002, plus accrued and unpaid interest
thereon to the date of redemption.
In addition, on or prior to August 1, 2001, the Company could redeem, at its
option, up to 35% of the aggregate principal amount at maturity of the Old Notes
with the net proceeds of one or more Equity Offerings, as defined, at 111.75% of
the Accreted Value thereof, as defined in the Indenture, as long as Old Notes
representing at least $65.0 million of the aggregate initial Accreted Value of
the Old Notes originally issued remained outstanding after each such redemption
and that such redemption occurred within 90 days of the closing of any such
Equity Offering.
Upon a Change of Control as defined in the Indenture, the Company would be
required to offer to repurchase the Old Notes at a purchase price equal to (i)
101% of the Accreted Value thereof, if the purchase date was on or prior to
August 1, 2002, or (ii) 101% of the principal amount at maturity thereof, plus
accrued and unpaid interest thereon, if any, to the purchase date, if such date
was after August 1, 2002.
The Old Notes restricted, among other things, the Company's ability to incur
additional indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, create liens on assets, enter into
transactions with affiliates, make investments, loans or advances, consolidate
or merge with or into any other person or convey, transfer or lease all or
substantially all of its assets or change the business conducted by the Company.
On December 17, 1998, in order to satisfy certain obligations of the Company
under a Registration Rights Agreement, dated July 22, 1998 (the "Registration
Rights Agreement"), between the Company, CIBC Oppenheimer Corp. and Bear,
Stearns & Co. Inc., the Company completed the registration of the Old Notes and
exchanged the Old Notes for newly issued 11 3/4% Senior Discount Notes Series B
due 2006 (the "New Notes").
The form and terms of the New Notes are substantially the same as the Old
Notes, except that the New Notes have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), and hence are not subject to certain
transfer restrictions, registration rights and related liquidated damages
provisions applicable to the Old Notes. The New Notes evidence the same debt as
the Old Notes and are entitled to the benefits of the Indenture. The Indenture
provides for the issuance of both the Old Notes and the New Notes.
SENIOR SECURED REVOLVING CREDIT FACILITY
On July 8, 1998, the Company entered into a credit agreement with a bank for
a senior secured revolving credit facility (the "Revolving Credit Facility")
providing for up to $20.0 million of availability. The Revolving Credit Facility
will mature in May 2002. Amounts outstanding under the Revolving Credit Facility
bear interest at the higher of the (i) bank's prime rate plus 1.25% or (ii)
LIBOR plus 2.50%. The obligations under the Revolving Credit Facility are
guaranteed by Holdings and secured by substantially all the assets of the
Company and its subsidiaries.
34
<PAGE> 35
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. SENIOR DISCOUNT NOTES AND SENIOR SECURED REVOLVING CREDIT FACILITY, CONTINUED
SENIOR SECURED REVOLVING CREDIT FACILITY, CONTINUED
The Company has paid and pays certain fees in connection with the Revolving
Credit Facility, including a commitment fee of 0.50% per annum on the aggregate
unused portion of the Revolving Credit Facility. At December 31, 1998, there
were no amounts outstanding under the Revolving Credit Facility.
The Revolving Credit Facility contains certain financial and operational
covenants and customary events of default, including, among others, payment
defaults and default in the performance of other covenants, breach of
representations or warranties, cross-default to other indebtedness, certain
bankruptcy or ERISA defaults, the entry of certain judgments against the Company
or any subsidiary, and any security interest or guarantee that ceases to be in
effect. The Revolving Credit Facility also provides that an event of default
will occur upon the occurrence of a "change of control", as defined. As of
December 31, 1998 the Company was in compliance with these covenants.
6. PROMISSORY NOTES PAYABLE
On July 15 and July 24, 1997, the Company entered into promissory notes
payable with several stockholders amounting to $365,000. On April 17, 1998 the
Company converted $365,000 in notes payable to stockholders plus accrued
interest of $22,323 into 3,835 shares of Series A redeemable cumulative
preferred stock and 387 shares of common stock valued at $383,450 and $3,873,
respectively.
On January 5, 1998, WPV purchased 148,500 shares of preferred stock and
15,000 shares of common stock in exchange for $15,000,000.
In April, May and June 1998, the Company entered into four promissory notes
payable to Warburg, Pincus Ventures, L.P. ("WPV") in the aggregate amount of
approximately $21.8 million. Such notes bore interest at 10% per annum and were
due on demand. On June 30, 1998, the Company converted $15 million of the
promissory notes payable to preferred stock. The Company paid the remaining
$6.795 million on July 15, 1998.
On June 30, 1998, the Company converted $15 million in promissory notes
payable to WPV plus $238,904 in accrued interest into 150,865 shares of Series A
redeemable cumulative preferred stock and 15,239 shares of common stock valued
at $15,086,515 and $152,389, respectively.
35
<PAGE> 36
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
7. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL LIVES ----------------------------
(YEARS) 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Land ................................................. -- $ 2,629,241 $ --
Buildings ............................................ 30 1,064,349 --
Broadcast equipment .................................. 7 6,273,644 867,735
Leasehold improvements ............................... 10 910,393 147,759
Office equipment, computers & software ............... 3-5 1,205,049 146,804
Furniture & fixtures ................................. 5 380,804 59,697
----------- -----------
12,463,480 1,221,995
Less: Accumulated depreciation and amortization....... 693,826 --
----------- -----------
$11,769,654 $ 1,221,995
=========== ===========
</TABLE>
Depreciation expense for the years ended December 31, 1998 and 1997 and for
the period from September 12, 1996 (inception) through December 31, 1996 was
$693,826, $0 and $0, respectively.
8. OTHER INTANGIBLE ASSETS
Other intangible assets consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
USEFUL LIVES ----------------------------
(YEARS) 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Goodwill ............................................. 30 4,088,735 --
Deferred financing costs ............................. 4-8 5,600,000 --
Covenants not to compete ............................. 1-5 776,743 --
----------- ----------
10,465,478 --
Less: Accumulated amortization ........................ 570,956 --
----------- ----------
$ 9,894,522 $ --
=========== ==========
</TABLE>
Amortization expense for the year ended December 31, 1998 was $570,956.
Amortization expense relating to the deferred financing costs of $321,181 for
the year ended December 31, 1998 was classified as interest expense. There was
no amortization expense for the year ended December 31, 1997 and for the period
from September 12, 1996 (inception) through December 31, 1996.
9. INCOME TAXES
Concurrent with the August 7, 1997 merger of Old Radio Unica with and into
the Company, Old Radio Unica's S Corporation election was terminated.
Thereafter, the Company became subject to corporate income taxes. The Company
had no income tax expense or benefit for the year ended December 31, 1997 and
for the period from September 12, 1996 (inception) through December 31, 1996.
36
<PAGE> 37
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES, CONTINUED
HISTORICAL
The components of the income tax benefit are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------
1998 1997
----------- ------------
<S> <C> <C>
Current .......................................... $ -- $ --
Deferred ......................................... (2,446,745) --
----------- ------------
$(2,446,745) $ --
=========== ============
</TABLE>
The differences between the federal statutory income tax and the effective
income tax rate are summarized below:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Tax benefit at federal statutory rate ............ $(8,499,127) $ (493,823)
State income tax benefit, net of federal benefit . (1,239,329) (52,375)
Permanent differences ............................ 60,111 3,259
Other ............................................ (58,775) (7,924)
Increase in valuation allowance .................. 7,290,375 550,863
----------- -----------
$(2,446,745) $ --
=========== ===========
</TABLE>
Deferred income taxes reflect the tax effects of temporary differences
between the carrying amount of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant
components of the Company's net deferred income taxes are as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards ................. $ 11,079,878 $ 542,939
Other ............................................ 45,340 7,924
------------ ------------
11,125,218 550,863
Valuation allowance .............................. (7,841,238) (550,863)
------------ ------------
Total deferred tax assets ........................ 3,283,980 --
Deferred tax liabilities:
Amortization ..................................... (4,912,080) --
Other ............................................ (13,890) --
------------ ------------
(4,925,970) --
------------ ------------
Total net deferred taxes ......................... $ (1,641,990) $ --
============ ============
</TABLE>
37
<PAGE> 38
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. INCOME TAXES, CONTINUED
The differences between the federal statutory income tax rate of 34% and the
effective income tax rate are summarized below assuming the Company was a C
corporation for the periods presented:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------
1997 1996
--------- ---------
<S> <C> <C>
Tax benefit at federal statutory rate ............ $(617,298) $ (13,600)
State income tax benefit, net of federal benefit . (65,392) (1,422)
Permanent differences ............................ 4,810 280
Valuation allowance .............................. 677,880 14,742
--------- ---------
Net deferred tax asset ........................... $ -- $ --
========= =========
</TABLE>
SFAS No. 109 requires a valuation allowance to reduce the deferred tax
assets reported if based on the weight of the evidence, it is more likely than
not that some portion or all of the deferred tax assets will not be realized.
After consideration of all the evidence, both positive and negative, management
has determined that a $7,841,238 valuation allowance at December 31, 1998 is
necessary to reduce the deferred tax assets to the amount that will more likely
than not be realized. The change in the valuation allowance for the current year
is approximately $7,290,000. At December 31, 1998, the Company has available net
operating loss carryforwards of approximately $27,575,000, of which
approximately $24,578,000 expire in the year 2018 and the remaining $2,997,000
expires in years 2007 through 2012.
10. SERIES A REDEEMABLE CUMULATIVE PREFERRED STOCK
Holdings has 450,000 authorized shares of redeemable, 10% cumulative,
nonconvertible, voting, Series A Preferred Stock (the "Preferred Stock"), $.01
par value, of which 353,560 and 51,975 shares were issued and outstanding at
December 31, 1998 and 1997, respectively. If and when dividends are declared by
the Board of Directors of Holdings, holders of the Preferred Stock shall be
entitled to receive cumulative dividends at the rate of 10% per annum. Each
share of Preferred Stock shall be entitled to ten votes per share on all matters
upon which common stockholders of Holdings are entitled to vote (one vote per
common share) and have a redemption price of $100 per share, together with
accrued and unpaid dividends thereon. Redemption of the Preferred Stock is at
the option of the holders for any or all the outstanding shares upon the
occurrence of (i) a change in control, (ii) an initial public offering or (iii)
on August 6, 2007. In the event of any liquidation, dissolution or winding up of
the affairs of the Company, holders of Preferred Stock shall be paid the
redemption price plus all accrued dividends to the date of liquidation,
dissolution or wind up of affairs before any payment to other stockholders.
Pursuant to the Reorganization, all of the outstanding shares of Series A
redeemable cumulative preferred stock issued by Holdings have been "pushed-down"
to the Company, and accordingly are reflected in the Company's financial
statements as of December 31, 1998. Accrued dividends in arrears of
approximately $2,970,000 and $119,000, as of December 31, 1998 and 1997,
respectively, are included in the redemption value of the Preferred Stock.
On August 28, 1998 the Company, pursuant to a separation agreement between
the Company and its former President and Chief Operating Officer, redeemed and
cancelled 2,110 shares of Series A redeemable cumulative preferred stock of
Holdings in exchange for $221,126.
38
<PAGE> 39
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCK OPTION PLAN
On August 8, 1997, the Company adopted the 1997 Stock Option Plan (the Plan)
which provides for the granting of incentive stock options to purchase shares of
the Company's common stock to officers, directors and key employees responsible
for the direction and management of the Company and to non-employee consultants
and independent contractors. At December 31, 1997, the Company reserved 20,000
shares of its common stock for issuance under the Plan. The vesting period and
the terms of the incentive stock options granted are established by a Committee
of the Board of Directors (the Committee). The incentive stock options expire no
later than ten years from the date of grant. Upon the adoption of the Plan, the
Company granted options to its employees to purchase 7,700 shares of its common
stock. Such options were cancelled by the Company and reissued by Holdings in
1998. The Company has granted options to its employees to purchase 9,177 shares
of Holdings' common stock. Of the 9,177 options granted, 2,188 vested
immediately, 1,315 vest ratably over time and 2,050 vest upon the attainment of
certain performance goals as determined by the Committee. The exercise price of
these incentive stock options is $10 per share, which was determined by the
Committee to be the fair value at the date of grant. As a result, no
compensation cost has been recognized under the provisions of APB Opinion No.
25. The remaining 3,624 incentive stock options vest upon the attainment of
specified return on equity targets and have a variable exercise price per share
based on a formula which is triggered upon the occurrence of certain events.
There were no options granted by the Company prior to the adoption of this plan.
Upon consummation of the Reorganization, each option to purchase one share of
the Company's common stock was converted into an option to purchase one share of
Holdings common stock, exercisable upon the same terms and conditions as they
were under the Company's stock option plan, and the Company's stock option plan
was cancelled. All of the options issued by Holdings were issued to employees of
the Company and accordingly such options are reflect below.
Changes to the plan for 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------------------------------
1998 1997 1996
------------------------ --------------------- -----------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
HOLDINGS' EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
-------- --------- ------ --------- -------- -------
Outstanding at beginning of
<S> <C> <C> <C> <C> <C> <C>
Year ............................ 7,700 $ 10.00 -- -- -- --
Granted ............................ 9,177 $ 10.00 7,700 -- -- --
Exercised .......................... -- -- -- -- -- --
Cancelled .......................... (7,700) $ 10.00 -- -- -- --
-------- --------- ------ --------- ------ ------
Outstanding at end of year ......... 9,177 $ 10.00 7,700 $ 10.00 -- --
-------- ========= ====== ========= ====== ======
Options exercisable at year-end .... 2,611 $ 10.00 2,153 $ 10.00 -- --
======== ========= ====== ========= ====== ======
</TABLE>
The following table summarizes information about stock options outstanding
at December 31, 1998:
<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------------- --------------------------------------
WEIGHTED
NUMBER AVERAGE NUMBER WEIGHTED
OUTSTANDING AT REMAINING EXERCISABLE AVERAGE
EXERCISE PRICE DECEMBER 31, 1998 CONTRACTUAL LIFE AT DECEMBER 31, 1998 EXERCISE PRICE
-------------- ------------------ ----------------- -------------------- ---------------
<S> <C> <C> <C> <C>
$10.00 9,177 6.93 2,611 $10.00
</TABLE>
39
<PAGE> 40
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. STOCK OPTION PLAN, CONTINUED
The weighted average per share fair values of options granted under the
stock option plan during 1998 and 1997 based on the Black-Scholes option
valuation model, were $2.13 and $2.59, respectively. Had the compensation
expense for the grants under this plan been recognized the proforma net loss and
proforma basic and diluted loss per share would have not materially differed
from actual.
The following weighted average assumptions were used:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1998 1997 1996
------------ ----------- ----------
<S> <C> <C> <C>
Expected life.......... 5-9 years 5 years --
Interest rate.......... 6.00% 6.00% --
Volatility............. -- -- --
Dividend yield......... -- -- --
</TABLE>
The Black-Scholes options valuation model was developed for use in
estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility. Because Holdings' stock options have characteristics significantly
different from traded options, and because changes in the subjective input
assumptions can materially affect the fair value estimate, the existing models,
in management's opinion, do not necessarily provide a reliable single measure of
the fair value of Holdings' stock options.
12. COMMITMENTS
LOTUS OXNARD CORP. TIME BROKERAGE AGREEMENTS
On October 31, 1997, the Company entered into a LMA with Lotus Oxnard Corp.
(Lotus) to operate Simi Valley, CA radio station KVCA, effective January 5,
1998. Simultaneous with the LMA, the Company entered into an escrow agreement
whereby the Company provided a $2.5 million escrow account deposit on January 5,
1998 to secure compliance with the LMA terms. In addition to the LMA and escrow
agreement, the Company entered into an asset purchase option agreement with
Lotus, which provides an option to purchase the assets of KVCA, including its
broadcasting license, from Lotus. This purchase option is exercisable at any
time from June 24, 2001 through and including December 31, 2001. The LMA shall
end upon the earliest to occur of (i) the closing or termination as defined in
the asset purchase option agreement or (ii) December 31, 2001.
On October 31, 1997, the Company entered into a LMA with Lotus to operate
San Antonio radio station KZDC, effective January 5, 1998. Simultaneous with the
LMA, the Company entered into an asset purchase option agreement with Lotus
which provides an option to purchase the assets of KZDC, including its
broadcasting license, from Lotus, which is exercisable at any time from June 24,
2001 through and including December 31, 2001. The LMA shall end upon the
earliest to occur of (i) the closing or termination as defined in the asset
purchase option agreement or (ii) December 31, 2001.
The future minimum payments under the Lotus LMAs are as follows:
1999 .................... $2,425,000
2000 .................... 2,650,000
2001 .................... 2,875,000
----------
$7,950,000
==========
40
<PAGE> 41
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS, CONTINUED
TIME BROKERAGE AGREEMENT FOR KDFT-AM DALLAS
On April 27, 1998, the Company entered into a LMA with The Freedom Network,
Inc. to operate Dallas radio station KDFT-AM through May 18, 2000 for a monthly
fee of $44,786 and $56,546 through May 18, 1999 and 2000, respectively. An
advance payment of $146,903 was made to The Freedom Network, Inc. in connection
with the execution of the LMA. In accordance with the terms of the LMA
agreement, on December 11, 1998, the Company gave The Freedom Network, Inc. the
required termination notification. The Company operated the station under the
LMA through March 11, 1999.
TIME BROKERAGE AGREEMENT AND OPTION TO PURCHASE WYPA-AM CHICAGO
On June 9, 1998, the Company entered into a LMA with Achievement Radio
Holdings, Inc. ("Achievement") for substantially all of the broadcast time on
Chicago radio station WYPA-AM for a monthly fee of $118,000 through June 8,
1999. The term of the LMA may be extended at the Company's option through June
9, 2000 (Renewal Term). In addition to the LMA, the Company has an option to
purchase the assets of WYPA-AM, which is exercisable from June 9, 1998 through
June 9, 1999 and will be exercisable for the Renewal Term if the LMA is
extended. The Company has provided Achievement with a termination notification
and expects to cease broadcasting by June, 1999.
RADIO BROADCASTING RIGHTS
On September 28, 1998, the Company entered into Radio Broadcasting Rights
Agreements ("Rights Agreements") with Inter/Forever Sports, Inc. for several
large soccer events including Copa America 1999 and 2001, Copa Oro 2000 and
2002, and elimination games for the 2002 World Cup (collectively the "Soccer
Events"). The Rights Agreements grant the Company exclusive Spanish-language
radio broadcast rights in the United States for the Soccer Events.
At December 31, 1998, remaining cash payment obligations under the Rights
Agreements are as follows:
January 15, 2000 .... $ 600,000
June 30, 2000 ....... 600,000
March 31, 2001 ...... 600,000
----------
$1,800,000
==========
LEASES
The Company leases office space, broadcasting studios and certain equipment
under operating leases, which expire at various dates through September 2007.
Certain leases contain renewal options and provide for base rental payments plus
escalation charges for real estate taxes and operating expenses.
At December 31, 1998, future minimum lease payments under such leases are as
follows:
1999 .................... $ 638,000
2000 .................... 632,000
2001 .................... 556,000
2002 .................... 538,000
2003 .................... 462,000
Thereafter .............. 539,000
----------
$3,365,000
==========
41
<PAGE> 42
RADIO UNICA CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
12. COMMITMENTS, CONTINUED
Total rent expense for the years ended December 31, 1998 and 1997 and for
the period from September 12, 1996 (inception) through December 31, 1996 was
approximately $526,000, $109,000 and $0, respectively.
13. SUMMARIZED FINANCIAL INFORMATION
The New Notes are guaranteed by all of the Company's Domestic Restricted
Subsidiaries, which comprises all of the Company's existing subsidiaries, on a
full, unconditional, joint and several basis. The financial statements of the
subsidiary guarantors are omitted as management has determined that separate
financial statements and other disclosures concerning the subsidiaries are not
material to investors.
Summarized financial information of guarantor subsidiaries are as follows:
<TABLE>
<CAPTION>
AS OF AND FOR THE YEAR ENDED
DECEMBER 31,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Current assets ..................................... $ 18,844,403 $ 3,204,000
Total assets ....................................... 84,611,429 6,678,088
Current liabilities (including due to parent of
$19,421,468 and $514,730, respectively) ......... 24,292,879 3,433,399
Total liabilities .................................. 25,934,869 3,798,399
Net revenue ........................................ 8,218,043 --
Operating expenses ................................. 22,677,176 1,641,592
Net loss ........................................... (16,316,913) (1,654,357)
</TABLE>
14. SUBSEQUENT EVENTS
On February 22, 1999, the Company contracted to acquire substantially all
the assets used in the operation of station WIDB (AM) in Chicago, Illinois from
subsidiaries of One-on-One, for a cash purchase price of approximately $16.75
million. The Company funded a $1 million escrow account in conjunction with this
transaction. The transaction is expected to be finalized upon the receipt of the
FCC's approval and the expiration or termination of the applicable waiting
period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
42
<PAGE> 43
ITEM 9. CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the directors
and executive officers of the Company and certain key employees of Radio Unica
Network, Inc.
<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------- ------------- ---------------------------------------
<S> <C> <C>
Joaquin F. Blaya 53 Chairman of the Board and
Chief Executive Officer
Jose C. Cancela 41 President
Steven E. Dawson 35 Chief Financial Officer, Executive
Vice President, Secretary
and Director
Andrew C. Goldman 51 Executive Vice President, Business
Affairs and Director
Blaine R. Decker 47 Executive Vice President,
Network Sales
Omar Marchant 63 Vice President, Programming of
Radio Unica Network, Inc.
Adrianna Grillet 45 Vice President, Affiliate Relations of
Radio Unica Network, Inc.
Roy Pressman 45 Vice President, Engineering of
Radio Unica Network, Inc.
John D. Santoleri 35 Director
Sidney Lapidus 61 Director
</TABLE>
JOAQUIN F. BLAYA. Mr. Blaya has been Chairman of the Board of Directors and
Chief Executive Officer of the Company since August 1997. From 1995 through
1996, Mr. Blaya served as the President of Solomon International Latino, the
Latin American division of Solomon International Enterprises, an international
telecommunications company. From 1992 through 1995, Mr. Blaya was the President,
Chief Executive Officer and a member of the Board of Directors of Telemundo, the
second largest U.S. Spanish-language television network. Prior to that, Mr.
Blaya was employed by Univision since 1971 in various positions, the latest
being President and a member of Univision's Board of Directors.
43
<PAGE> 44
JOSE C .CANCELA. Mr. Cancela has been President of the Company since September
1998. He initially joined the Company in July 1998 serving as President,
Network. From 1992 through 1998, Mr. Cancela served as Executive Vice President
of Telemundo, responsible for the overall management of Telemundo's owned and
operated television stations in Puerto Rico and Miami. From 1990 to 1992, Mr.
Cancela was the Vice President of the Univision Southwest Station Group.
STEVEN E. DAWSON. Mr. Dawson has been Chief Financial Officer, Executive Vice
President, Secretary and a Director of the Company since August 1997. From 1991
through 1997, Mr. Dawson was employed by Telemundo in several positions, the
most recent being Vice President, Finance and Controller. Prior to that, Mr.
Dawson was employed at Coopers & Lybrand since 1986. Mr. Dawson is a Certified
Public Accountant.
ANDREW C. GOLDMAN. Mr. Goldman has been a Director and Executive Vice President,
Business Affairs of the Company since August 1997. Mr. Goldman served in
different capacities for Univision from 1981 to 1993 including as Executive Vice
President and President of Galavision. Prior to joining Univision, Mr. Goldman
was the Senior Vice President of Marketing at Teleprompter Corporation. Mr.
Goldman has served as President and Director of Cable Television Administration
and Marketing Society (CTAM), and as Founder and Director of the Cable
Advertising Bureau (CAB).
BLAINE R. DECKER. Mr. Decker has served as the Company's Executive Vice
President, Network Sales since October 1997. He was previously employed by
KWHY-TV--Los Angeles as General Sales Manager from November 1995 through October
1997. From February 1984 through February 1995, Mr. Decker was employed by
Univision as Senior Vice President, Network Sales and in other management
positions. Prior to joining Univision, Mr. Decker was employed by Arbitron
Ratings Company as Vice President of Sales and Marketing from January 1980
through February 1984.
OMAR MARCHANT. Mr. Marchant has served as Radio Unica Network, Inc.'s Vice
President, Programming and as Creative Director since September 1997. Mr.
Marchant has been employed in various media-related capacities including TV
host, radio disc jockey, radio director, producer and creator of jingles and
producer of TV specials for the Latin and general market. Additionally, Mr.
Marchant served as Senior Vice President and Creative Director for Telemundo
from June 1992 through July 1994 and as Vice President and Director of
Promotions and Special Events or in other capacities for Univision from
September 1972 through July 1994.
ADRIANA GRILLET. Ms. Grillet has served as Radio Unica Network, Inc.'s Vice
President, Affiliate Relations since August 1997. Ms. Grillet had previously
served as Director of Affiliate Relations for Caracol (Latino Broadcasting
Company) from April 1996 through July 1997 and CBS--Americas from February 1992
through April 1996. From 1992 through 1996 Ms. Grillet also served as a program
production consultant at WADO-NY and from 1988 through 1992 as Senior Program
Producer.
ROY PRESSMAN. Mr. Pressman has served as Radio Unica Network, Inc.'s Vice
President, Engineering since December 1997. Mr. Pressman has over 20 years of
experience in building and managing radio station facilities. From August 1997
to December 1997, Mr. Pressman served as Director of Engineering at Clear
Channel Communications, Inc. ("Clear Channel"). He was employed as Vice
President, Engineering at Paxson Communications Corp., the predecessor to Clear
Channel, from August 1993 to July 1997. Prior to that, Mr. Pressman was employed
as Director of Engineering at Gilmore Broadcasting, Inc.
JOHN D. SANTOLERI. Mr. Santoleri has been a Director of the Company since August
1997. Mr. Santoleri is a Managing Director and a member of Warburg, Pincus &
Company LLC ("Warburg") where he has been employed since 1989. Warburg is the
managing entity of Warburg Ventures, L.P., the Company's controlling
stockholder. Prior to joining Warburg, Mr. Santoleri was a Vice President of the
New York based real estate consulting firm, The Harlan Company, Inc. Mr.
Santoleri is also a director of Axxess Technologies, Inc., Grubb & Ellis
Company, and NexCycle, Inc.
44
<PAGE> 45
SIDNEY LAPIDUS. Mr. Lapidus, a Director of the Company since September 1998, is
a Managing Director and a member of Warburg, where he has been employed since
1967. Mr. Lapidus is also a director of Caribiner International, Inc., Grubb &
Ellis Company, Information Holdings Inc., Journal Register Company, Knoll Inc.,
Lennar Corp. and several private companies.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth information regarding the total compensation
of the Chief Executive Officer and each of the four most highly compensated
executive officers of the Company during the year ended December 31, 1998, as
well as the total compensation paid to each such individual for the Company's
previous fiscal years.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM COMPENSATION
-----------------------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------------------------------- --------------------- ------------------------------
OTHER RESTRICTED (1)
NAME AND ANNUAL STOCK OPTIONS/ LTIP ALL OTHER
PRINCIPAL SALARY BONUS COMPEN- AWARDS SARs PAYOUT COMPEN-
POSITION YEAR ($) ($) SATION($) (#) (#) ($) SATION($)
--------- ---- --------- -------- --------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Joaquin F. Blaya ........................ 1998 $350,000 $160,000 -- -- -- -- $ 5,000
Chairman and Chief ................... 1997 145,834 -- -- -- -- -- 4,375
Executive Officer
Jose C. Cancela ......................... 1998 $168,500 -- -- -- -- -- $ 438
President ............................ 1997 -- -- -- -- -- -- --
Steven E. Dawson ........................ 1998 $200,000 -- -- -- -- -- $ 4,006
Chief Financial Officer and ........... 1997 88,667 -- -- -- -- -- 2,065
Secretary
Blaine R. Decker ........................ 1998 $165,000 $ 65,100 -- -- -- -- --
Executive Vice President ............. 1997 52,500 -- -- -- -- -- --
Herbert M. Levin (2) .................... 1998 $183,312 -- -- -- -- -- --
Chief Operating Officer and President ... 1997 114,583 -- -- -- -- -- 2,005
</TABLE>
(1) Amounts in this column represent the Company's matching contributions to a
401(k) plan.
(2) Mr. Levin resigned from his position as Chief Operating Officer, President
and Director of the Company in August 1998.
STOCK OPTION PLANS/ARRANGEMENTS
Prior to the consummation of the Reorganization, each of the officers held
options to purchase shares of Company common stock. Upon consummation of the
Reorganization, each option was converted into an option to purchase Holdings
common stock.
45
<PAGE> 46
DIRECTORS COMPENSATION
Directors do not receive any compensation for serving on the Company's
Board of Directors. The Company also maintains a directors' and officers'
liability insurance policy for its directors.
EMPLOYMENT AGREEMENTS
Joaquin F. Blaya and Steven E. Dawson each entered into separate
Non-Competition and Confidentiality Agreements on August 13, 1997 pursuant to
which they have each agreed, among other things, that: (i) until the later of
(a) August 13, 2002 or (b) two years after the termination of their respective
employment (if terminated for cause or if voluntarily resigned) they will not
engage directly or indirectly in any business directly competitive to that of
the Company or any of its subsidiaries; (ii) during the two year period after
their respective termination (if terminated for cause or if voluntarily
resigned) they will not hire, offer to hire or entice away any of the Company's
officers, employees, affiliates or agents; and (iii) they will not at any time
divulge, furnish, use, publish or make accessible to others any confidential
information about the Company.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The Company's Common Stock has not been registered under the Securities Act
of 1933 (the "Securities Act") or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and is not listed on any national securities
exchange. There is no established public trading market for the Company's Common
Stock. All of the Company's outstanding shares of common stock are owned by
Radio Unica Holdings Corp.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As a matter of policy the Company approves all transactions involving
insiders through the majority vote of disinterested directors.
PURCHASE OF RADIO STATION KXYZ(AM); TRANSACTIONS INVOLVING BLAYA, INC.
Blaya, Inc., a Delaware corporation, was formed in October 1997 to
facilitate the purchase of radio station KXYZ (AM) located in Houston, Texas
("KXYZ"). Upon such formation, the Company acquired 499 shares of Blaya Inc.'s
common stock (which represented a 49.9% interest in Blaya, Inc.) and Joaquin F.
Blaya acquired 501 shares of Blaya, Inc.'s common stock (which represented a
50.1% interest in Blaya, Inc.). On December 24, 1997, Blaya, Inc. entered into
an asset purchase agreement with 13 Radio to acquire substantially all of the
assets necessary to operate KXYZ for a cash purchase price of $6.4 million. In
connection with the purchase, the Company advanced $1,016,590 to Blaya, Inc.
On March 6, 1998, the Company acquired 800 shares of Blaya, Inc.'s Class B
common stock, representing 49.9% of the voting rights and 80% of the economic
ownership rights in Blaya, Inc., in exchange for its 499 shares of Blaya, Inc.'s
common stock and $640,000. On the same day, the Company loaned Mr. Blaya
$160,000 in exchange for a 10 year 9% promissory note. These proceeds were used
by Mr. Blaya (together with the surrender of 501 shares of Blaya, Inc.'s common
stock then held by him) to acquire 200 shares of Blaya, Inc.'s Class A common
stock, representing 50.1% of the voting rights and 20% of the ownership rights
in Blaya, Inc.
On March 10, 1998, the Company loaned $5.7 million to Blaya, Inc. in
exchange for a promissory note. The proceeds were used to complete the asset
purchase agreement with 13 Radio and to pay related closing costs. The
promissory note bore interest at 9%, compounded quarterly and payable annually,
and was secured by substantially all of the assets of Blaya, Inc.
46
<PAGE> 47
On September 11, 1998, the Company purchased all of Mr. Blaya's interest in
Blaya, Inc. for $160,000 and Mr. Blaya repaid the $160,000, plus interest, he
owed to the Company pursuant to the 10 year 9% promissory note. Upon the
Company's purchase of Mr. Blaya's shares, Blaya, Inc. became a wholly-owned
subsidiary of the Company and Radio Unica of Houston License Corp., a
wholly-owned subsidiary of Blaya, Inc., became an indirect, wholly-owned
subsidiary of the Company. Effective September 11, 1998, the $5.7 million
promissory note was cancelled by the Company and accounted for as a contribution
to Blaya, Inc.'s capital.
INITIAL INVESTMENTS IN THE COMPANY; AGREEMENTS AMONG STOCKHOLDERS
On August 11, 1997, Warburg, Pincus Ventures, L.P. ("Warburg Ventures
L.P."), Joaquin F. Blaya, Herbert M. Levin, Andrew C. Goldman, Alan Stess,
Barrett Alley (collectively, the "Investors") and the Company, entered into a
Securities Purchase Agreement (the "Purchase Agreement") pursuant to which the
Investors purchased (the "Initial Investment") an aggregate of 21,000 shares of
the Company common stock and 207,900 shares of the Company preferred stock. The
purchase price for the Company common stock was $10 per share and the purchase
price for the Company preferred stock was $100 per share. In addition, Warburg
Ventures, L.P. was given the option at any time on or prior to three years from
the date of the Purchase Agreement and upon the request of the Chief Executive
Officer ("CEO") of the Company, to purchase an additional 198,000 shares of the
Company preferred stock and 20,000 shares of the Company common stock (the
"Additional Shares") on the same terms as the shares purchased in the Initial
Investment. Each of the other Investors and the Senior Executives (as defined in
the Purchase Agreement) of the Company had the right to acquire its pro rata
share (based on the original shares and vested options owned by such Investor or
Senior Executive) of the Additional Shares on the same terms and conditions.
For so long as Warburg Ventures, L.P. owned more than 5% of the Company
preferred stock, the Company agreed to (among other things) furnish certain
financial reports to the Investors and to cause each of its significant
employees to enter into agreements relating to non-disclosure of information and
confidentiality and not to compete with the Company. The Company also agreed to
use its reasonable best efforts to cause its Board of Directors to consist of
six persons, who were to be designated jointly by Warburg Ventures, L.P. and the
CEO. However, Warburg Ventures, L.P. had the right at any time, in its sole
discretion, to designate a majority of the directors, provided, further,
however, that if Warburg Ventures, L.P. designated a majority of the directors,
it agreed not to make any material change in the nature of the business
conducted by the Company without the consent of the CEO.
Pursuant to the Purchase Agreement, the Company also agreed that for so long
as any Company preferred stock remained outstanding, it would not, without the
prior approval of Warburg Ventures, L.P., (i) become a party to a merger or
consolidation, sell or lease any of its assets other than in the ordinary course
of business or voluntarily dissolve, liquidate or wind up, (ii) engage in any
business other than the operation or ownership of the Network (as defined in the
Purchase Agreement), (iii) purchase or redeem any shares of its capital stock,
(iv) declare or pay any dividends except for dividends declared and paid on the
Company preferred stock, (v) create, incur, or assume any additional
indebtedness, except for commitments of up to an aggregate of $200,000 in any
fiscal year, (vi) make any capital expenditures in excess of that set forth in
the budget prepared according to the Purchase Agreement, (vii) acquire any
properties, assets or stock of another entity, except in the ordinary course of
business, (viii) amend its Articles of Incorporation or Bylaws, (ix) create or
issue any series or shares of capital stock, options, warrants or other rights
to purchase or acquire its capital stock, (x) hire, fire or change the
compensation of any of the Chief Executive Officer, Chief Financial Officer or
Chief Operating Officer, (xi) engage in any transactions with any of its
officers, directors or stockholders or any Affiliate or Associate of such
person, (xii) create, incur or suffer to exist any mortgage, pledge, lien,
security interest or other encumbrance except as provided in the annual budget
or (xiii) engage or discharge its independent certified public accountants or
legal counsel.
47
<PAGE> 48
Additionally, the Purchase Agreement provided that the Company would not
make a registered public offering of its securities without the prior consent of
Warburg Ventures, L.P. Warburg Ventures, L.P. had demand registration rights and
the other Investors could have registered their Shares with Warburg Ventures,
L.P.'s demand registration statement. All of the Investors had piggy-back
registration rights with respect to any registration statement initiated by the
Company. The Investors also had preemptive rights to purchase any new securities
offered by the Company on the same terms as such new securities were offered
until there is a public offering of the Company's securities.
All of the stockholders or holders of Options (including Warburg Ventures,
L.P. and the Investors) entered into a Stockholders' Agreement, dated as of
August 11, 1997 (the "Stockholders' Agreement") to remain in effect until the
Company completed an initial public offering which resulted in aggregate gross
proceeds of at least $21 million. Pursuant to the Stockholders' Agreement, each
of the stockholders agreed (i) not to sell, offer to sell or otherwise dispose
of its shares of Company common stock and Company preferred stock, other than
those included in such public offering, for a period of at least 180 days from
the effective date of a registration statement in connection with such public
offering and (ii) for a period of five years, to grant the Company a right of
first refusal with respect to any of its shares of Company common stock and
Company preferred stock that the stockholder proposed to sell or otherwise
dispose of. If Warburg Ventures, L.P. had decided to sell the Company, each of
the stockholders would have been obligated to sell its stock pursuant to such
sale. If the employment of any stockholder terminated, the Company and then
Warburg Ventures, L.P. and Messrs. Blaya and Levin had the option to purchase
any stock owned by such stockholder.
As part of the Reorganization, Holdings assumed the rights and obligations
of the Company with respect to the agreements described above with the Company's
stockholders (who became stockholders of Holdings) on the same terms and
conditions as the Stockholder Agreement.
LOANS TO THE COMPANY
On July 15, 1997, Joaquin F. Blaya, Herbert M. Levin and Andrew C. Goldman,
Officers of the Company, and Barrett Alley, a stockholder of the Company, loaned
the Company an aggregate of $100,000. The loan was due upon demand and bore
interest at a rate of 9% per annum. In April 1998, the Company fully repaid the
loan by issuing Messrs. Blaya, Levin, Goldman and Alley 40.584, 40.584, 18.156
and 7.476 shares of Company common stock, respectively, and 401.7816, 401.7816,
179.7444 and 74.0124 shares of Company preferred stock, respectively.
On July 24, 1997, Warburg Ventures, L.P. loaned the Company $265,000. The
loan was due upon demand and bore interest at a rate of 8% per annum. The funds
from the loan were used to pay a deposit to Univision Network Limited
Partnership ("Univision Network L.P.") pursuant to the Radio Broadcasting Rights
Agreement, dated as of July 30, 1997(the "World Cup Rights Agreement"), entered
into by and between Univision Network L.P. and the Company for the exclusive
Spanish-language radio broadcast rights in the United States for the 1998 World
Cup. Warburg Ventures, L.P. also arranged for the issuance of a letter of credit
(the "Original Letter of Credit") in the amount of $2,385,000 to Univision
Network L.P. on behalf of the Company to secure the Company's payments under the
World Cup Rights Agreement. In April 1998, the Company fully repaid the loan by
issuing Warburg Ventures, L.P. 280.5231 shares of Company common stock and
2,777.1788 shares of Company preferred stock. On July 9, 1998, the Original
Letter of Credit was replaced by a letter of credit issued by Canadian Imperial
Bank of Commerce (the "CIBC Letter of Credit") for the remaining amount of
$795,000.
48
<PAGE> 49
On April 3, April 27, May 19 and June 16, 1998, Warburg Ventures, L.P.
loaned the Company $5,000,000, $11,000,000, $5,000,000 and $795,000 in exchange
for the Promissory Notes. The funds from the Promissory Notes were primarily
used to finance the acquisition of radio stations in San Francisco and Miami.
Each of the Promissory Notes was due upon demand and bore interest at the rate
of 10% per annum. On June 30, 1998, the Company repaid $15,000,000 of the
Promissory Notes plus accrued interest by issuing Warburg Ventures, L.P.
15,238.9041 shares of Company common stock and 150,865.1507 shares of Company
preferred stock. The remaining $6,795,000 due under the Promissory Notes has
been repaid from amounts borrowed under the Revolving Credit Facility.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(A) 1. FINANCIAL STATEMENTS
The following financial statements have been filed under Item 8 of this report:
Report of Independent Certified Public Accountants
Consolidated Balance Sheets as of December 31, 1998 and 1997
Consolidated Statements of Operations for the Years Ended December 31, 1998 and
1997 and for the period from September 12, 1996 (inception) through
December 31, 1996
Consolidated Statements of Changes in Series A Redeemable Cumulative Preferred
Stock and Stockholders' (Deficit) Equity
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998 and
1997 and for the period from September 12, 1996 (inception) through
December 31, 1996
Notes to Consolidated Financial Statements
49
<PAGE> 50
2. FINANCIAL STATEMENT SCHEDULES
RADIO UNICA CORP.
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
ADDITIONS
---------------------------
BALANCE AT CHARGED CHARGES BALANCE AT
BEGINNING OF TO COSTS TO OTHER END OF
DESCRIPTION YEAR AND EXPENSES ACCOUNTS DEDUCTION YEAR
- ----------- ----------- ------------- -------- --------- ----------
<S> <C> <C> <C> <C> <C>
1998:
Allowance for doubtful trade accounts
Receivable $ -- $ 118,098 $ -- $ 2,067 $ 116,031
=========== ============= ======== ========= ==========
Deferred tax valuation allowance $ 550,863 $ 7,290,375 $ -- $ -- $7,841,238
=========== ============= ======== ========= ==========
1997:
Allowance for doubtful trade accounts
Receivable $ -- $ -- $ -- $ -- $ --
=========== ============= ======== ========= ==========
Deferred tax valuation allowance $ -- $ 550,863 $ -- $ -- $ 550,863
=========== ============= ======== ========= ==========
1996:
Allowance for doubtful trade accounts
Receivable $ -- $ -- $ -- $ -- $ --
=========== ============= ======== ========= ==========
Deferred tax valuation allowance $ -- $ -- $ -- $ -- $ --
=========== ============= ======== ========= ==========
</TABLE>
(B) REPORTS ON FORM 8-K
None
(C) EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K
EXHIBIT
NUMBER DESCRIPTION
3.1* Certificate of Incorporation of the Company.
3.2* Bylaws of the Company.
4.1* Purchase Agreement, dated July 22, 1998, among the Company, each of the
Company's subsidiaries set forth therein, CIBC Oppenheimer Corp. and Bear,
Stearns & Co. Inc.
4.2* Indenture dated as of July 27, 1998 between the Company and Wilmington
Trust Company, as Trustee.
4.3* Registration Rights Agreement, dated as of July 22, 1998, between the
Company and CIBC Oppenheimer Corp. and Bear, Stearns & Co. Inc.
10.1* Credit Agreement, dated as of July 8, 1998 among the Company, Holdings,
the several banks and other financial institutions from time to time parties
thereto and Canadian Imperial Bank of Commerce, in its individual capacity and
as Agent ("CIBC").
50
<PAGE> 51
10.2* Securities Purchase Agreement, dated as of August 11, 1997, by and among
the Company, Warburg, Pincus Ventures, L.P. and the other investors named
therein.
10.3* Supplement to Securities Purchase Agreement, dated as of June, 1998, among
the Company, Holdings, Warburg, Pincus Ventures, L.P. and the other investors
named therein.
10.4* Stockholders' Agreement, dated as of June 30, 1998, by and among Holdings,
Warburg, Pincus Ventures, L.P., Joaquin Blaya, Herbert Levin and the other
persons listed therein.
10.5* Time Brokerage Agreement, dated as of October 31, 1997, by and between the
Company and Lotus Oxnard Corp. relating to KVCA(AM).
10.6* Time Brokerage Agreement, dated as of October 31, 1997, by and between the
Company and Texas Lotus Corp. relating to KZDC(AM).
10.7* Time Brokerage Agreement, dated as of June 9, 1998, by and between
Achievement Radio Holdings, Inc. and the Company relating to WYPA(AM).
10.8* Time Brokerage Agreement, dated as of April 27, 1998, by and between The
Freedom Network, Inc. and the Company relating to KDFT(AM).
10.9*(a) Asset Purchase Agreement, dated as of January 26, 1998, by and among
the Company, One-On-One Sports License of Florida, L.L.C. and One-On-One Sports
Radio of Florida, L.L.C.
10.10*(a) Stock Purchase Agreement, dated as of February 20, 1998, by and among
the Company, Oro Spanish Broadcasting, Inc. and Rene De La Rosa.
10.11* Asset Purchase Agreement, dated as of May 20, 1998, by and among the
Company, Sinclair Radio of Los Angeles, Inc. and Sinclair Radio of Los Angeles
Licensee, Inc.
10.12* Form of Non Competition and Confidentiality Agreement between each of
Joaquin F. Blaya, Herbert M. Levin and Steven E. Dawson, dated August 13, 1997.
10.13* Agreement, dated as of November 19, 1997, entered into by and between The
Miami Herald Publishing Company and the Company.
10.14* Agreement, dated as of January 15, 1998, entered into by and between
Radio Unica Corp. and Jorge Ramos.
10.15* Amended and Restated Artist Agreement, dated as of June 5, 1998, entered
into by and between Radio Unica Network, Inc. and Raque Productions (for
services of Pedro Sevcec).
10.16* Independent Contractor Agreement dated as of June 30, 1998 between Radio
Unica Network, Inc. and Dra Isabel, Inc. (for services of Isabel Gomez Bassols).
10.17* Amendment to Time Brokerage Agreement, dated as of May 20, 1998, by and
between The Freedom Network, Inc. and the Company relating to KDFT(AM).
10.18* Local Programming and Marketing Agreement, dated as of June 1, 1998, by
and between Children's Radio of New York, Inc. and the Company relating to
WBAH(AM) (now known as WWRU).
10.19* Stock Purchase Agreement, dated as of June 10, 1998, by and among the
Company, Blaya, Inc. and Joaquin F. Blaya.
10.20* Option Agreement, dated as of October 31, 1997, by and between Lotus
Oxnard Corp. and the Company.
10.21* Option Agreement, dated as of October 31, 1997, by and between Texas
Lotus Corp. and the Company.
10.22* Option Agreement, dated as of June 9, 1998, by and between Personal
Achievement Radio of Illinois, Inc. and the Company.
51
<PAGE> 52
10.23* First Supplemental Indenture, dated as of September 11, 1998, among the
Company, Blaya, Inc., Radio Unica of Houston License Corp. and Wilmington Trust
Company.
10.24*(a) Agreement, dated as of September 28, 1998, between the Company and
Inter/Forever Sports, Inc.
10.25*(a) Agreement, dated as of September 28, 1998, between the Company and
Inter/Forever Sports, Inc.
10.26* Asset Purchase Agreement, dated as of October 26, 1998, among the
Company, Children's Broadcasting Corporation, Children's Radio of Dallas, Inc.,
Children's Radio of Phoenix, Inc. and Children's Radio of New York, Inc.
10.27* First Amendment to Asset Purchase Agreement, dated as of October 27,
1998, among the Company, Children's Broadcasting Corporation, Children's Radio
of Dallas, Inc., Children's Radio of Phoenix, Inc. and Children's Radio of New
York, Inc.
10.28* Local Programming and Marketing Agreement, dated as of October 26, 1998,
among the Company, Children's Radio of New York, Inc., Children's Radio of
Dallas, Inc. and Children's Radio of Phoenix, Inc.
10.29* Security Agreement, dated as of October 26, 1998, among the Company,
Children's Radio of Dallas, Inc., Children's Radio of Phoenix, Inc., Children's
Radio of New York, Inc., KAHZ-AM, Inc. and Children's Broadcasting Corporation.
10.30 Asset Purchase Agreement, dated as of February 22, 1999, among the
Company, One-on-One Sports License of Illinois, L.L.C. and One-on-One Sports
Radio of Illinois, L.L.C.
10.31 Time Brokerage Agreement, dated as of February 22, 1999, by and between
the Company and , One-on-One Sports License of Illinois, L.L.C. and One-on-One
Sports Radio of Illinois, L.L.C., relating to WIDB (AM).
10.32 Second Supplemental Indenture dated as of January 14, 1999, among the
Company, Radio Unica of New York, Inc., Radio Unica of New York License Corp.,
Radio Unica of Dallas, Inc., Radio Unica of Dallas License Corp., Radio Unica of
Phoenix, Inc., Radio Unica of Phoenix License Corp., and Wilmington Trust
Company, as trustee.
21.1 Subsidiaries
27.1 Financial data schedule
- ----------
* Incorporated by reference from Registration Statement on Form S-4 filed on
December 17, 1998.
(a) Portions of this exhibit have been omitted pursuant to a request for
confidential treatment and have been filed separately with the Securities
and Exchange Commission
52
<PAGE> 53
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on March 30, 1999.
Radio Unica Corp.
By: /s/ Joaquin F. Blaya
------------------------------------
Joaquin F. Blaya
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Joaquin F. Blaya Chairman of the Board March 30, 1999
- ----------------------------- Chief Executive Officer
Joaquin F. Blaya
/s/ Steven E. Dawson Chief Financial Officer March 30, 1999
- ----------------------------- Secretary and Director
Steven E. Dawson
/s/ Manuel Borges Chief Accounting Officer March 30, 1999
- -----------------------------
Manuel Borges
/s/ John Santoleri Director March 30, 1999
- -----------------------------
John Santoleri
/s/ Sidney Lapidus Director March 30, 1999
- -----------------------------
Sidney Lapidus
/s/ Andrew C. Goldman Director March 30, 1999
- -----------------------------
Andrew C. Goldman
</TABLE>
53
<PAGE> 1
Exhibit 10.30
ASSET PURCHASE AGREEMENT
BY AND AMONG
ONE-ON-ONE SPORTS LICENSE OF ILLINOIS, L.L.C.,
ONE-ON-ONE SPORTS RADIO OF ILLINOIS, L.L.C.
AND
RADIO UNICA CORP.
FOR
RADIO STATION
WIDB (AM)
CHICAGO, ILLINOIS
DATED AS OF
FEBRUARY 22, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
RECITALS ....................................................................................... 1
ARTICLE 1. DEFINITIONS AND REFERENCES .......................................................... 1
ARTICLE 2. SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; ADJUSTMENTS; ASSUMPTION OF LIABILITY ... 6
2.1. Asset Sale and Purchase of Assets ......................................................... 6
2.1(a) FCC Licenses ...................................................................... 7
2.1(b) Real Property ..................................................................... 7
2.1(c) Tangible Personal Property ........................................................ 7
2.1(d) Contracts ......................................................................... 7
2.1(e) Files and Records ................................................................. 7
2.1(f) Third-Party Claims ................................................................ 7
2.1(g) Permits and Licenses .............................................................. 7
2.2. Excluded Assets ........................................................................... 8
2.2(a) Third Party Claims ................................................................ 8
2.2(b) Personal Property Disposed Of ..................................................... 8
2.2(c) Insurance ......................................................................... 8
2.2(d) Certain Books and Records ......................................................... 8
2.2(e) Rights under this Agreement ....................................................... 8
2.2(f) Excluded Contracts ................................................................ 8
2.2(g) Cash, Receivables and Cash Equivalents ............................................ 8
2.2(h) Intellectual Property ............................................................. 8
2.2(i) Off-Site Equipment ................................................................ 9
2.2(j) Excluded Transmitter Sites Equipment .............................................. 9
2.3. Consideration ............................................................................. 9
2.4. Escrow Deposit ............................................................................ 9
2.5. Adjustments ............................................................................... 9
2.6. Assumption of Liabilities ................................................................. 10
ARTICLE 3. REPRESENTATIONS AND WARRANTIES BY SELLERS ........................................... 11
3.1. Organization and Standing ................................................................. 11
3.2. Authorization ............................................................................. 11
3.3. Compliance with Laws ...................................................................... 11
3.4. Required Consents; No Conflicts ........................................................... 12
3.5. Absence of Litigation ..................................................................... 12
3.6. Real Property ............................................................................. 12
3.6(a) Owned Real Property ............................................................... 12
3.6(b) Leased Real Property .............................................................. 14
3.7. Personal Property ......................................................................... 16
3.8. FCC Matters ............................................................................... 17
3.9. Intellectual Property ..................................................................... 17
3.10. Reports and Records ...................................................................... 18
3.11. Material Contracts; Scheduled Contracts .................................................. 18
3.12. Taxes .................................................................................... 18
3.13. Financial Information .................................................................... 18
3.14. Labor Relations; Employee Benefits ....................................................... 19
3.15. Environmental Matters .................................................................... 19
3.16. Insurance ................................................................................ 20
3.17. Disclosure ............................................................................... 20
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE 4. REPRESENTATIONS AND WARRANTIES BY BUYER ............................................. 20
4.1. Organization and Standing ................................................................. 20
4.2. Authorization ............................................................................. 21
4.3. Required Consents; No Conflicts ........................................................... 21
4.4. Absence of Litigation ..................................................................... 21
4.5. Qualification of Buyer .................................................................... 22
4.6. Disclosure ................................................................................ 22
ARTICLE 5. PRE-CLOSING FILINGS AND UNDERTAKINGS ................................................ 22
5.1. Applications for FCC Consent .............................................................. 22
5.2. Hart-Scott-Rodino ......................................................................... 22
5.3. Sharing Information ....................................................................... 23
ARTICLE 6. COVENANTS AND AGREEMENTS OF SELLERS ................................................. 23
6.1. Negative Covenants ........................................................................ 23
6.1(a) Dispositions; Mergers ............................................................. 23
6.1(b) Additional Agreements ............................................................. 23
6.1(c) Contract Breaches ................................................................. 23
6.1(d) Actions Affecting FCC Licenses or Contracts ....................................... 24
6.2. Affirmative Covenants ..................................................................... 24
6.2(a) Normal Operations ................................................................. 24
6.2(b) FCC Matters ....................................................................... 24
6.2(c) Actions ........................................................................... 24
6.2(d) Transfer Tax; Bulk Sales .......................................................... 24
6.2(e) Access ............................................................................ 24
6.2(f) Encumbrances ...................................................................... 25
6.2(g) Insurance ......................................................................... 25
6.2(h) Violations ........................................................................ 25
6.2(i) Interruption in Broadcast Operations .............................................. 25
6.2(j) Environmental Matters ............................................................. 25
6.2(k) Consents .......................................................................... 25
6.2(l) Updating .......................................................................... 25
6.3.Confidentiality ............................................................................ 25
ARTICLE 7. COVENANTS AND AGREEMENTS OF BUYER ................................................... 26
7.1. Confidentiality ........................................................................... 26
7.2. Actions ................................................................................... 26
7.3. Access .................................................................................... 27
7.4. Notice of Certain Events .................................................................. 27
ARTICLE 8. MUTUAL COVENANTS AND UNDERSTANDINGSOF SELLERS AND BUYER ............................. 27
8.1. Possession and Control .................................................................... 27
8.2. Risk of Loss .............................................................................. 27
8.3. Allocation of Purchase Price .............................................................. 28
8.4. Public Announcements ...................................................................... 28
8.5. Employee Matters .......................................................................... 28
8.6. Unwind Agreement .......................................................................... 29
8.7. Time Brokerage Agreement .................................................................. 29
8.8. Diplexing ................................................................................. 29
8.9. Hockey Broadcasts ......................................................................... 29
ARTICLE 9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE ................................ 30
9.1. Representations and Covenants ............................................................. 30
9.2. Consents .................................................................................. 30
9.3. Delivery of Documents ..................................................................... 30
9.4. FCC Consent ............................................................................... 30
9.5 HSR ....................................................................................... 31
9.5. Legal Proceedings ......................................................................... 31
9.6. Title Insurance, Survey and Estoppel Certificates ......................................... 31
9.7. Time Brokerage Agreement .................................................................. 32
</TABLE>
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE 10. CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE ............................... 32
10.1. Representations and Covenants ............................................................ 32
10.2. Delivery by Buyer ........................................................................ 32
10.3. FCC Consent .............................................................................. 32
10.4. HSR ...................................................................................... 32
10.5. Legal Proceedings ........................................................................ 32
10.6. Time Brokerage Agreement ................................................................. 33
10.7. Call Letters ............................................................................. 33
ARTICLE 11. THE CLOSING ........................................................................ 33
11.1. Closing .................................................................................. 33
11.2. Delivery by Sellers ...................................................................... 33
11.2(a) Contracts, Agreements and Instruments ............................................ 33
11.2(b) Consents ......................................................................... 34
11.2(c) UCC Report ....................................................................... 34
11.2(d) Certified Consents ............................................................... 34
11.2(e) Members' Certificates ............................................................ 35
11.2(f) Expense Payment .................................................................. 35
11.2(g) Opinions of Counsel .............................................................. 35
11.2(h) Unwind Agreement ................................................................. 35
11.2(i) Other Documents .................................................................. 35
11.3. Delivery by Buyer ........................................................................ 35
11.3(a) Purchase Price Payment ........................................................... 35
11.3(b) Buyer Documents .................................................................. 35
11.3(c) Certified Resolutions and Corporate Documents .................................... 35
11.3(d) Officers' Certificate ............................................................ 36
11.3(e Expense Payment .................................................................. 36
11.3(f) Opinion of Counsel ............................................................... 36
11.3(g) Unwind Agreement ................................................................. 36
11.3(h) Grant of Call Letters ............................................................ 36
11.3(i) Other Documents .................................................................. 36
ARTICLE 12. SURVIVAL; INDEMNIFICATION .......................................................... 36
12.1. Survival of Representations .............................................................. 36
12.2. Indemnification by Sellers ............................................................... 37
12.3. Indemnification by Buyer ................................................................. 37
12.4. Conditions of Indemnification ............................................................ 38
ARTICLE 13. TERMINATION ........................................................................ 40
13.1. Termination .............................................................................. 40
13.2. Effect of Termination .................................................................... 40
ARTICLE 14. REMEDIES ........................................................................... 41
14.1. Default by Sellers ....................................................................... 41
14.2. Default by Buyer ......................................................................... 41
14.3. Specific Performance ..................................................................... 41
14.4. Remedies Not Exclusive ................................................................... 42
ARTICLE 15. GENERAL PROVISIONS ................................................................. 42
15.1. Further Assurances ....................................................................... 42
15.2. Mail ..................................................................................... 42
15.3. Brokers .................................................................................. 42
15.4. Expenses ................................................................................. 43
15.5. Notices .................................................................................. 43
15.6. Waiver ................................................................................... 44
15.7. Benefit and Assignment ................................................................... 45
15.8. Entire Agreement; Amendment .............................................................. 45
15.9. Severability ............................................................................. 45
15.10. Headings ................................................................................ 46
15.11. Governing Law ........................................................................... 46
15.12. Signature in Counterparts ............................................................... 46
</TABLE>
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into as of
the 22nd day of February, 1999 by and among ONE-ON-ONE SPORTS LICENSE OF
ILLINOIS, L.L.C., a Delaware limited liability company ("One-On-One License"),
ONE-ON-ONE SPORTS RADIO OF ILLINOIS, L.L.C., a Delaware limited liability
company ("One-On-One Radio") (One-On-One License and One-On-One Radio are
collectively referred to herein as "Sellers"), and RADIO UNICA CORP., a Delaware
corporation ("Buyer").
RECITALS
WHEREAS, One-On-One License is the licensee of radio station WIDB(AM),
Chicago, Illinois, operating at 950 kHz (the "Station"); and
WHEREAS, One-On-One License is a subsidiary of One-On-One Radio; and
WHEREAS, Sellers wish to sell, and Buyer wishes to buy, all of the
assets used or useful in connection with the ownership and operation of the
Station, other than the Excluded Assets (as defined below), all in accordance
with and subject to the terms and conditions set forth below; and
WHEREAS, One-On-One Radio and Buyer are simultaneously entering into
that certain Time Brokerage Agreement dated as of the date hereof (the "TBA"),
whereby One-On-One Radio shall make available to Buyer substantially all of the
broadcasting time on the Station from the Operational Commencement Date (as
defined in the TBA) through and including the Closing Date (as defined herein).
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto hereby agree
as follows:
ARTICLE 1.
DEFINITIONS AND REFERENCES
Unless the context otherwise specifies or requires, terms used herein
shall have the respective meanings assigned thereto as follows (such definitions
to be equally applicable to both the singular and plural forms of the terms
defined). Unless otherwise specified, all references herein to "Articles" or
"Sections" are to Articles or Sections of this Agreement.
ADDITIONAL AGREEMENTS means any and all Contracts, agreements and
leases executed and delivered by Sellers between the date hereof and the Closing
Date.
<PAGE> 6
ADJUSTMENT DATE shall have the meaning specified in SECTION 2.5.
AFFILIATE means, as to any entity, any other entity which owns, is
owned by or is under common control with such entity.
ASSETS shall have the meaning specified in SECTION 2.1.
ASSIGNMENT APPLICATIONS shall have the meaning specified in SECTION
5.1.
ASSIGNMENT OF CONTRACTS means an Assignment of Contracts, dated as of
the Closing Date and executed by Sellers, in form and substance reasonably
satisfactory to Buyer and Sellers with respect to Contracts as to which consents
have been obtained pursuant to SECTION 6.2(K).
ASSIGNMENT OF LEASES means an Assignment of Leases, dated as of the
Closing Date and executed by Sellers, in form and substance reasonably
satisfactory to Buyer and Sellers.
ASSIGNMENT OF FCC LICENSES means an Assignment of FCC Licenses, dated
as of the Closing Date and executed by One-On-One License, in form and substance
reasonably satisfactory to Buyer and Sellers.
ASSUMED LIABILITIES means the Scheduled Contracts and the Additional
Agreements, and any liabilities and agreements assumed by Buyer hereunder.
BILL OF SALE means a Bill of Sale and Assignment of Assets, dated as of
the Closing Date and executed by Sellers, in form and substance reasonably
satisfactory to Buyer and Sellers.
BUYER DOCUMENTS means, collectively, this Agreement and any other
agreement to be executed and delivered by Buyer hereunder or as otherwise
contemplated herein.
BUYER INDEMNIFIED PARTIES shall have the meaning specified in SECTION
12.2.
CLOSING means the closing of the purchase and sale of the Assets (other
than the Excluded Assets) and the assumption of the Assumed Liabilities.
CLOSING DATE means the time and date on which the Closing takes place,
as established by SECTION 11.1.
CODE means the Internal Revenue Code of 1986, as amended.
COMMUNICATIONS ACT means the Communications Act of 1934, as amended,
and the rules and regulations of the FCC promulgated pursuant thereto.
<PAGE> 7
CONTRACTS shall have the meaning specified in SECTION 2.1(D).
DEEDS means the grant deed, dated as of the Closing Date and executed
by One-On-One Radio, in form and substance reasonably satisfactory to Buyer,
conveying the Owned Real Property to the Buyer in accordance with this
Agreement.
ENCUMBRANCES means any mortgages, pledges, liens, claims, security
interests, agreements, restrictions, defects in title, easements or
encumbrances.
ENVIRONMENTAL LAWS means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"), as amended by the Superfund
Amendments and Reauthorization Act of 1986 ("SARA"), 42 U.S.C. ss. 9601 ET Seq.;
the Toxic Substances Control Act ("TSCA"), 15 U.S.C. ss. 2601 ET seq.; the
Hazardous Materials Transportation Act, 49 U.S.C. ss. 1802 ET Seq.; the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. ss. 9601 ET Seq.; the Clean
Water Act ("CWA"), 33 U.S.C. ss. 1251 ET seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 300F ET Seq.; the Clean Air Act ("CAA"), 42 U.S.C. ss. 7401 ET seq.;
or any other applicable federal, state, or local laws, regulations, ordinances,
decrees, rules, judgments, orders or directives now or hereinafter in effect
relating to the protection of human health, safety or the environment, or
otherwise relating to Hazardous Materials generation, production, use, storage,
treatment, transportation or disposal.
ERISA mean Employee Retirement Income Security Act of 1974, as amended.
ESCROW AGENT shall have the meaning specified in SECTION 2.4.
ESCROW AGREEMENT shall have the meaning specified in SECTION 2.4.
ESCROW DEPOSIT shall have the meaning specified in SECTION 2.4.
ESTOPPEL CERTIFICATES shall have the meaning specified in SECTION
9.7(B).
EXCLUDED ASSETS shall have the meaning specified in SECTION 2.2.
FAA means the Federal Aviation Administration.
FCC means the Federal Communications Commission.
FCC CONSENT means an order or orders of the FCC consenting to the
assignment to Buyer of the FCC Licenses for the Station.
FCC LICENSES shall have the meaning specified in SECTION 2.1(A).
<PAGE> 8
FINAL ORDER means an FCC Consent as to which the time for filing a
request for administrative or judicial review, or for instituting administrative
review SUA SPONTE, shall have expired without any such filing having been made
or notice of such review having been issued; or, in the event of such filing or
review sua SPONTE, as to which such filing or review shall have been disposed of
favorably to the grant and the time for seeking further relief with respect
thereto shall have expired without any request for such further relief having
been filed.
FIRPTA AFFIDAVIT means the Foreign Investment in Real Property Tax Act
Certification and Affidavit, dated as of the Closing Date and executed by
One-On-One Radio.
GAAP means generally accepted accounting principles.
GOVERNMENTAL APPROVALS shall have the meaning specified in SECTION
3.6(A).
GOVERNMENTAL AUTHORITY means any agency, board, bureau, court,
commission, department, instrumentality or administration of the United States
government, any state government or any local or other governmental body in a
state of the United States or the District of Columbia.
HAZARDOUS MATERIALS means any wastes, substances, or materials (whether
solids, liquids or gases) that are defined or regulated as hazardous or toxic
under any Environmental Law, including without limitation, substances defined as
"hazardous wastes," "hazardous substances," "toxic substances," "radioactive
materials," or other similar designations in any Environmental Laws. "Hazardous
Materials" includes, without limitation, polychlorinated biphenyls (PCBs),
asbestos, lead-based paints and petroleum and petroleum products.
INDEMNIFIED PARTY and INDEMNIFYING PARTY shall have the respective
meanings specified in SECTION 12.4(A).
INTELLECTUAL PROPERTY shall have the meaning specified in SECTION
2.2(H).
IRS means the Internal Revenue Service.
LEASED IMPROVEMENTS shall have the meaning specified in SECTION 3.6(B).
LEASED REAL PROPERTY shall have the meaning specified in SECTION
3.6(B).
LEASES shall have the meaning specified in SECTION 3.6(B).
<PAGE> 9
LOSSES means any and all demands, claims, complaints, actions or causes
of action, suits, proceedings, investigations, arbitrations, assessments,
losses, damages (including diminution in value), liabilities, obligations
(including those arising out of any action, such as any settlement or compromise
thereof or judgment or award therein) and any costs and expenses, including,
without limitation to, interest, penalties and reasonable attorneys' fees and
disbursements.
MATERIAL ADVERSE EFFECT means, except as otherwise specifically
provided herein, any event or condition which has a material adverse effect
(financial or otherwise) on the Assets, other than the Excluded Assets, to be
acquired hereunder, taken as a whole.
MATERIAL CONTRACTS means those Scheduled Contracts that are designated
as Material Contracts in SCHEDULE 2.1(D).
ORDINARY COURSE OF BUSINESS means, with respect to Sellers, the
ordinary course of business consistent with past practices of Sellers.
PERMITTED ENCUMBRANCES means (a) easements that do not materially
adversely affect the full use and enjoyment of the Real Property for the
purposes for which it is currently used or detract from the value of the Real
Property in any material respect; (b) imperfections of title and non-consensual
encumbrances, if any, which, in the aggregate, do not detract from the
marketability or value of the properties subject thereto in any material respect
and do not impair the operations of the owner thereof; (c) liens for taxes not
yet due and payable; and (d) liens of Sellers' lenders, all of which shall be
removed at the Closing.
PURCHASE PRICE shall have the meaning specified in SECTION 2.3.
REAL PROPERTY shall have the meaning specified in SECTION 2.1(B).
SCHEDULED CONTRACTS means those Contracts listed or described in
SCHEDULE 2.1(D).
SELLERS' INDEMNIFIED PARTIES shall have the meaning specified in
SECTION 12.3.
SELLERS' TAX RETURNS means all federal, state, local, foreign and other
applicable Tax returns and declarations of estimated Tax reports required to be
filed with respect to the ownership or operation of the Station.
STATEMENT OF EXPENSES shall have the meaning specified in SECTION 3.13.
STATION shall have the meaning set forth in the recitals.
SURVEY shall have the meaning specified in SECTION 9.7(C).
<PAGE> 10
TAXES means all federal, state and local taxes (including, without
limitation, income, profit, franchise, sales, use, real property, personal
property, ad valorem, excise, employment, social security and wage withholding
taxes) and installments of estimated taxes, assessments, deficiencies, levies,
imports, duties, license fees, registration fees, withholdings, or other similar
charges of every kind, character or description imposed by any Governmental
Authorities, and any interest, penalties or additions to tax imposed thereon or
in connection therewith.
TBA shall have the meaning set forth in the recitals.
TITLE POLICIES shall have the meaning specified in SECTION 9.7(A).
TRANSACTION DOCUMENTS means, collectively, this Agreement, the
Assignment of Leases, the Bill of Sale, the Assignment of FCC Licenses, the
Assignment of Contracts, the Grant Deed, the FIRPTA Affidavit and any other
agreements to be executed and delivered by any Sellers hereunder or as otherwise
contemplated herein.
TRANSMITTER SITES shall mean that leased site located at 1500 - 1524
South Western Avenue, Chicago, Illinois and that owned site located at 3 East
Muskegon Road, Burnham, Illinois.
WARN ACT shall have the meaning specified in SECTION 8.5.
ARTICLE 2.
SALE AND PURCHASE OF ASSETS; PURCHASE PRICE; ADJUSTMENTS; ASSUMPTION OF
LIABILITY
2.1. ASSET SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions hereof and in reliance upon the
representations, warranties, covenants and agreements contained herein, at the
Closing, Sellers shall sell, assign, transfer, convey and deliver to Buyer, and
Buyer agrees to purchase from Sellers, all of Sellers' right, title and interest
in the following property, free and clear of all mortgages, security interests,
liens or similar claims by third parties (other than Permitted Encumbrances),
but excluding the Excluded Assets described in SECTION 2.2 (collectively, the
"Assets"). Subject to the provisions of SECTIONS 2.2 and 6.1(A), Assets shall
include all such assets (excluding the Excluded Assets) existing on the date
hereof and all such assets acquired between the date hereof and midnight
(Central Time) on the date immediately preceding the Closing Date.
<PAGE> 11
The Assets shall consist of all of Sellers' right, title and interest
in, to and under the following:
2.1(a) FCC LICENSES. All licenses, permits and other
authorizations issued by the FCC to Sellers for the operation of the Station
(the "FCC Licenses"), including without limitation those listed or described in
SCHEDULE 2.1(A), and all applications therefor, together with any renewals,
extensions or modifications thereof and additions thereto;
2.1(b) REAL PROPERTY. All realty, fixtures, easements, rights
of way, leasehold interests in real estate, buildings and improvements,
including any undivided interest in any of the foregoing, located at or
pertaining to the Transmitter Sites ("Real Property"), including but not limited
to those listed or described in SCHEDULE 2.1(B);
2.1(c) TANGIBLE PERSONAL PROPERTY. All of the furniture,
fixtures, furnishings, machinery, computers, equipment (mobile or otherwise),
inventory, supplies, antenna installations, towers, office materials and other
tangible property located at the Transmitter Sites used or useful in the
operation of the Station (it being expressly acknowledged that no studio
facility is used by the Station or is being conveyed to Buyer), including but
not limited to the property listed or described in SCHEDULE 2.1(C), but
excluding the property listed or described in SCHEDULE 2.2(J);
2.1(d) CONTRACTS. The contracts, commitments, plans,
agreements, leases, arrangements, undertakings and licenses, including
Additional Agreements, which relate to the ownership, operation, business or use
of the Station or any of the Assets (collectively, "Contracts") which are listed
or described in SCHEDULE 2.1(D);
2.1(e) FILES AND RECORDS. All engineering, business and other
books, customer lists, papers, logs, files and records pertaining to the Assets,
including without limitation all records required by the FCC to be kept by the
Station;
2.1(f) THIRD-PARTY CLAIMS. All rights and claims of Sellers
whether mature, contingent or otherwise, against third parties relating to the
Assets (other than the Excluded Assets), whether in tort, contract, or
otherwise, under or pursuant to all warranties, representations and guarantees
made by manufacturers, suppliers or vendors; and
2.1(g) PERMITS AND LICENSES. All permits, approvals, orders,
authorizations, consents, licenses, certificates, franchises, exemptions of, or
filings or registrations with, any court or Governmental Authority (other than
the FCC) in any jurisdiction, which have been issued or granted to or are owned
or used by Sellers in connection with the business and operation of the Station
and ownership of the Assets and all pending applications therefor.
<PAGE> 12
2.2. EXCLUDED ASSETS.
Notwithstanding anything to the contrary in this Agreement,
there shall be excluded from the Assets and retained by Sellers, to the extent
in existence at midnight (Central Time) on the date immediately preceding the
Closing Date, all assets not specified in SECTION 2.1, including the following
assets (collectively, the "Excluded Assets"):
2.2(a) THIRD PARTY CLAIMS. All rights and claims of Sellers,
including any Affiliate thereof, against third parties relating to Taxes and to
property or equipment repaired, replaced or restored by Sellers prior to the
Closing;
2.2(b) PERSONAL PROPERTY DISPOSED OF. All tangible personal
property disposed of in the Ordinary Course of Business as permitted by this
Agreement;
2.2(c) INSURANCE. All contracts of insurance and any life
insurance plans and the assets thereof, including, without limitation, prepaid
insurance expenses; and all insurance proceeds or claims of Sellers relating to
property or equipment repaired, replaced or restored by Sellers prior to the
Closing;
2.2(d) CERTAIN BOOKS AND RECORDS. All of (i) duplicated copies
of any books, records, accounts, checks, payment records, Tax records (including
payroll, unemployment, real estate and other Tax records) and other similar
books, records and information of the Sellers relating to the Assets, (ii) all
records prepared by or on behalf of Sellers in connection with the sale of the
Station, (iii) all records and documents relating to any Excluded Assets, and
(iv) all records and documents not related to the Assets or the operation of the
Station;
2.2(e) RIGHTS UNDER THIS AGREEMENT. All of the Sellers' rights
under or pursuant to this Agreement or any other rights in favor of Sellers
pursuant to the other agreements contemplated hereby;
2.2(f) EXCLUDED CONTRACTS. All Contracts that have terminated
or expired prior to the Closing in the Ordinary Course of Business or as
otherwise permitted by this Agreement and all contracts, commitments, plans,
agreements, leases, arrangements, undertakings and licenses not identified in
SCHEDULE 2.1(d), including, without limitation, all employment agreements;
2.2(g) CASH, RECEIVABLES AND CASH EQUIVALENTS. All cash,
inter-company receivables, account receivables, note receivables, bank deposits,
prepayments, overpayments, other cash equivalents and/or investment securities;
2.2(h) INTELLECTUAL PROPERTY. The name "One-On-One Sports" or
any derivation thereof and all of Sellers' rights in and to the call letters of
the Station (the "Intellectual Property"), and all goodwill associated
therewith;
2.2(i) OFF-SITE EQUIPMENT. All tangible personal property not
located at the Transmitter Sites; and
<PAGE> 13
2.2(j) EXCLUDED TRANSMITTER SITES EQUIPMENT. All proprietary
satellite remote equipment relating to the Station, including, without
limitation, all equipment listed or described on SCHEDULE 2.2(J).
2.3. CONSIDERATION.
Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, in consideration for the conveyance and
assignment of the Assets described herein, in addition to the assumption of
Assumed Liabilities by Buyer as set forth in SECTION 2.6, Buyer will pay Sellers
an aggregate amount of Sixteen Million Seven Hundred Fifty Thousand Dollars
($16,750,000) in cash, as adjusted pursuant to SECTION 2.5 (the "Purchase
Price") on the Closing Date by wire transfer of immediately available funds to
such bank or other financial institution as shall be designated by Sellers at
least one (1) business day prior to the Closing Date.
2.4. ESCROW DEPOSIT.
Upon the execution of this Agreement, Buyer shall deposit the amount of
One Million Dollars ($1,000,000) into escrow (the "Escrow Deposit"). The total
Escrow Deposit shall be held by The Chase Manhattan Bank (together with any
successor thereto, the "Escrow Agent") pursuant to the terms and conditions of
the escrow agreement executed on the date hereof (the "Escrow Agreement") in the
form of EXHIBIT A hereto. At the Closing, the Escrow Deposit and the interest
earned thereon, if any, shall be paid to Buyer. If the Closing does not occur
due to the reason specified in SECTION 14.2 hereof, the Escrow Deposit shall be
paid to Sellers as liquidated damages as specified in SECTION 14.2 and the
interest earned thereon, if any, shall be paid to Buyer. If the Closing does not
occur for any other reason, the total Escrow Deposit, together with any interest
earned thereon, shall be returned to Buyer.
<PAGE> 14
2.5. ADJUSTMENTS.
The operation of the Station and the normal operating expenses
attributable thereto through midnight (Central Time) of the day immediately
preceding the Closing Date (the "Adjustment Date") shall be for the account of
Sellers and thereafter for the account of Buyer, and all such expenses (other
than expenses excluded from Assumed Liabilities, none of which shall be payable
by the Buyer) shall be allocated, charged or prorated accordingly. Expenses for
goods or services received both before and after the Adjustment Date, power and
utilities charges, commissions, license fees, and rents and similar prepaid and
deferred items shall be prorated between Sellers and Buyer as of the Adjustment
Date in accordance with GAAP. All property taxes, special assessments and
similar charges or liens imposed against the Real Property and personal property
attributable to any period of time up to and including the Adjustment Date,
whether payable in installments or otherwise, shall be the responsibility of
Sellers, and amounts payable with respect to such special assessments, charges
or liens attributable to any period of time after the Adjustment Date shall be
the responsibility of Buyer, and such charges shall be adjusted as required
hereunder. To the extent that any of the foregoing prorations and adjustments
cannot be determined as of the Closing Date, Buyer and Sellers shall conduct a
final accounting and make any further payments, as required, on a date mutually
agreed upon, but in any event within ninety (90) days after the Closing and the
net amount, if any, due to or due from Buyer as the result of such prorations
and adjustments shall be paid to or by Buyer, as the case may be, within fifteen
(15) business days following such final accounting.
2.6. ASSUMPTION OF LIABILITIES.
2.6(a) At the Closing, Buyer shall assume and become liable
for the following: (i) the liabilities and obligations of Sellers attributable
to all periods after the Adjustment Date under the Scheduled Contracts and (ii)
the liabilities and obligations of Sellers attributable to all periods after the
Adjustment Date under any Additional Agreements entered into after the date
hereof in compliance with SECTION 6.1(B).
2.6(b) Except for (i) those liabilities and obligations
expressly assumed by Buyer pursuant to SECTION 2.6(A) hereof, (ii) those
liabilities for which Buyer has received a credit under SECTION 2.5, and (iii)
liabilities and obligations of Sellers arising under Contracts (exclusive of
Additional Agreements) which are not Scheduled Contracts but which Buyer, in its
sole discretion, elects to assume on or after the Closing Date, Buyer shall have
no responsibility for any liabilities or obligations of any kind or description
whether connected with the business and operations of the Station or the
Sellers, including to any employee of Sellers, or otherwise arising from the
ownership or operation of any of the Assets or the business and operations of
the Station or the Sellers prior to the Closing Date.
2.6(c) After the Closing Date, Sellers shall have no
responsibility (i) for any Assumed Liabilities or (ii) in connection with any
Permitted Encumbrances.
<PAGE> 15
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES BY SELLERS
Sellers represent and warrant to Buyer as follows:
3.1. ORGANIZATION AND STANDING.
Each Seller is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite power and authority to carry on its business as now being
conducted. Each Seller has all requisite power and authority to execute and
deliver this Agreement and the other Transaction Documents and to consummate the
transactions contemplated hereby and thereby. Neither the nature of the business
of the Station, nor the character of the properties owned, leased or otherwise
held by Sellers for use in the Station's business makes any qualification
necessary in any other state, country, territory or jurisdiction other than as
set forth in SCHEDULE 3.1 and each Seller is qualified to do business in any
such jurisdictions.
3.2. AUTHORIZATION.
The execution, delivery and performance of this Agreement and
the other Transaction Documents to be executed and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate or other proceedings on the part of each
Seller and no other corporate or other proceedings or actions on the part of
either Seller, their respective managers or their respective members is
necessary therefor. This Agreement constitutes, and upon execution and delivery
each other Transaction Document will constitute, a valid and binding agreement
and obligation of each Seller, enforceable in accordance with their respective
terms.
3.3. COMPLIANCE WITH LAWS.
Sellers are not in violation of, and have not received any
notice asserting any material noncompliance by Sellers with, any applicable
statute, law, rule or regulation, whether federal, state, local or otherwise, in
connection with the ownership of the Assets. Sellers have complied and are in
compliance, in all material respects, with all laws, regulations and
governmental orders applicable to Sellers' operation of the Station and
ownership of the Assets. Sellers have obtained and hold all permits, licenses
and approvals (none of which has been rescinded and all of which are in full
force and effect) from all Governmental Authorities necessary in order to
conduct the operations of the Station in accordance with applicable law, as
presently conducted and to own, use and maintain the Assets.
3.4. REQUIRED CONSENTS; NO CONFLICTS.
3.4(a) Except (i) as set forth in SCHEDULE 3.4(A); (ii) those
consents, approvals, authorizations, permits, filings or notifications required
in connection with the filings referred to in SECTIONS 5.1 AND 5.2; (iii) the
consents of third parties to the assignment of the Contracts as indicated on
SCHEDULE 2.1(D); and (iv) those consents, approvals, authorizations, permits,
filings or notifications which would not materially affect Sellers' ability to
consummate the transactions contemplated by this Agreement, the execution,
delivery and performance by Sellers of the Transaction Documents will not
require the consent, approval, authorization or permit of, or filing with, or
notification to any person, entity or Governmental Authority.
<PAGE> 16
3.4(b) Except as set forth in SCHEDULE 3.4(B), the execution
and delivery of the Transaction Documents, the fulfillment of and the compliance
with the respective terms and provisions of each, and the consummation of the
transactions described in each, do not and will not (i) conflict with or violate
any law, regulation, order, award, judgment, injunction or decree applicable to
or affecting Sellers, the Assets (other than the Excluded Assets) or the
Station, (ii) conflict with or result in any breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under any contract to which either Seller is a party or by which either Seller
is bound or to which any of the Assets or the Station is subject or affected
(except with respect to consents of third parties referred to in SECTION
3.4(A)), or result in the creation of any Encumbrance upon the Assets, or (iii)
conflict with or violate any provision of either Seller's certificate of
formation or limited liability company agreement, except, in each case, as would
not materially affect Sellers' ability to consummate the transactions
contemplated by this Agreement.
3.5. ABSENCE OF LITIGATION.
Except as set forth and described in SCHEDULE 3.5, there is no
action, suit, investigation, claim, arbitration or litigation pending or, to the
best of Sellers' knowledge, threatened against, affecting or involving the
Assets, the Station or the business and operations of the Station, or the
transactions contemplated by this Agreement or any other Transaction Document,
at law or in equity, or before or by any court, arbitrator or Governmental
Authority, and the Station is not operating under or subject to an order, award,
judgment, writ, decree, determination or injunction of any court, arbitrator or
Governmental Authority.
3.6. REAL PROPERTY.
3.6(a) OWNED REAL PROPERTY. All of the real property owned by
Sellers is identified on SCHEDULE 2.1(B) (collectively referred to herein as the
"Owned Real Property").
(i) TITLE AND DESCRIPTION. Except as disclosed on
SCHEDULE 2.1(B), Seller has good, record and marketable fee simple title to the
Owned Real Property, in all cases free and clear of all mortgages, deeds of
trust, ground leases, security interests or similar encumbrances, liens,
assessments, leases and tenancies, licenses, claims, rights of first refusal,
options, covenants, conditions, restrictions, rights of way, easements,
judgments or other encumbrances or matters affecting title, and free of
encroachments onto or off of the Owned Real Property, except in all cases for
Permitted Encumbrances. The descriptive information concerning the Owned Real
Property set forth on SCHEDULE 2.1(B) is complete, accurate, true and correct in
all material respects.
(ii) PHYSICAL CONDITION. Except as set forth on
SCHEDULE 2.1(B), there is no defect in the physical condition of any
improvements located on or constituting a part of the Owned Real Property (the
"Improvements"). The Owned Real Property, including, without limitation, the
Improvements, is in good condition and repair and is adequate for the uses to
which it is being put, and the Owned Real Property is not in need of maintenance
or repairs except for ordinary, routine maintenance and repairs which are not
material in nature or cost. To the best of Sellers' knowledge, the soil
condition of the Owned Real Property is such that it will support all of the
improvements thereon for the foreseeable life of the improvements without the
need for unusual or new subsurface excavations, fill, footings, caissons or
other installations.
<PAGE> 17
(iii) UTILITIES. To the best of Sellers' knowledge,
all water, sewer, gas, electric, telephone, drainage and other utility
equipment, facilities and services required by law or necessary for the
operation of the Owned Real Property as it is now improved and operated are
installed and connected pursuant to valid permits, are sufficient to service the
Owned Real Property as it is now improved and are in good operating condition
except in each case as will not materially interfere with or impair the use,
occupancy or operation of the Owned Real Property as it is currently used,
occupied or operated.
(iv) COMPLIANCE WITH LAW; GOVERNMENT APPROVALS.
Sellers have received no notice from any Governmental Authority of any violation
of any zoning, building, fire, water, use, health, or other law, ordinance,
code, regulation, license, permit or authorization issued in respect of any of
the Owned Real Property that has not been heretofore corrected, and no such
violation or violations now exist which would materially interfere with or
impair the use, occupancy or operation of the Owned Real Property as it is
currently used, occupied or operated. The Improvements located on or
constituting a part of the Owned Real Property and the construction,
installation, use and operation thereof (including, without limitation, the
construction, installation, use and operation of any signs located thereon) are
in compliance with all applicable municipal, state, federal or other
governmental laws, ordinances, codes, regulations, licenses, permits and
authorizations, including, without limitation, applicable zoning, building,
fire, water, use or health laws, ordinances, codes, regulations, licenses,
permits and authorizations, and there are presently in effect all certificates
of occupancy, licenses, permits and authorizations required by law, ordinance,
code or regulation or by any governmental or private authority having
jurisdiction over the ownership or operation of the Sellers' business or any of
the Assets, including the Station and the Owned Real Property or any portion
thereof, or the occupancy thereof or any present use thereof, exclusive of the
FCC Consents (hereafter, collectively, "Governmental Approvals") except such
non-compliance as will not materially interfere with or impair the use,
occupancy or operation of the Owned Real Property as it is currently used,
occupied or operated. All Governmental Approvals required by law, ordinance,
code, regulation or otherwise to be held by the owner of any of the Owned Real
Property shall be transferred to Buyer at Closing, if and to the extent
transferrable. Except as set forth in SCHEDULE 2.1(B), the conveyance of the
Owned Real Property to Buyer includes all rights to the use of any off-site
facilities necessary to ensure compliance with all such laws, ordinances, codes
and regulations. There is legally enforceable pedestrian and vehicular access to
the Owned Real Property.
(v) REAL PROPERTY TAXES. Except as set forth in
SCHEDULE 2.1(B), Sellers have received no notice of any pending or threatened
special assessment or reassessment of all or any portion of any of the Owned
Real Property.
(vi) CONDEMNATION. There is no pending or, to the
best of Sellers' knowledge, threatened condemnation of all or any part of the
Owned Real Property.
<PAGE> 18
(vii) INSURABILITY. Sellers have received no notice
from any insurance company of any material defects or inadequacies in the Owned
Real Property or any part thereof, which would materially, adversely affect the
insurability of the same or of any termination or threatened termination of any
policy of insurance.
3.6(b) LEASED REAL PROPERTY. All of the real property leased
by Sellers as tenant or lessee is identified on SCHEDULE 2.1(B) (collectively
referred to herein as the "Leased Real Property").
(i) LEASES. All of the leases of any of the Leased
Real Property (collectively, the "Leases") are as set forth on SCHEDULE 2.1(B).
The copies of the Leases set forth in SCHEDULE 2.1(B) are complete, accurate,
true and correct copies of each of the Leases. The information with respect to
each of the Leases set forth in SCHEDULE 2.1(B) is complete, accurate, true and
correct in all material respects. With respect to each of the Leases, except as
set forth on SCHEDULE 2.1(B):
(A) each of the Leases is in full force and
effect on the terms set forth therein and has not been modified,
amended, or altered, in writing or otherwise;
(B) all obligations of the landlord or lessor
under the Leases that have accrued have been performed, and no landlord
or lessor is in default under or in arrears in the payment of any sum
or in the performance of any obligation required of it under any Lease,
and no circumstance presently exists which, with notice or the passage
of time, or both, would give rise to a default by the landlord or
lessor under any Lease except, in all cases as such as will not
materially detract from the marketability or value of the Leased Real
Property and do not impair the operations of the lessee thereof in any
respect;
(C) all obligations of the tenant or lessee
under the Leases that have accrued have been performed, and neither
Seller is in default under or in arrears in the payment of any sum or
in the performance of any obligation required of it under any Lease,
and no circumstance presently exists which, with notice or the passage
of time, or both, would give rise to a default by either Seller except,
in all cases, as such as will not materially detract from the
marketability or value of the Leased Real Property and do not impair
the operations of the lessee thereof in any respect; and
(D) except as set forth on SCHEDULE 2.1(B),
there are no consents of any landlord or lessor required to transfer
the Leased Real Property to Buyer.
(ii) TITLE AND DESCRIPTION. Sellers hold valid and
enforceable leasehold interests in the Leased Real Property pursuant to the
Leases, subject only to the rights of the landlord or lessor under the Leases
and Permitted Encumbrances.
<PAGE> 19
(iii) PHYSICAL CONDITION. Except as set forth on
SCHEDULE 2.1(B), there is no defect in the physical condition of any
improvements located on or constituting a part of the Leased Real Property (the
"Leased Improvements"). The Leased Real Property, including, without limitation,
the Leased Improvements, is in good condition and repair and is adequate for the
uses to which it is being put, and the Leased Real Property is not in need of
maintenance or repairs except for ordinary, routine maintenance and repairs
which are not material in nature or cost. To the best of Sellers' knowledge, the
soil condition of the Leased Real Property is such that it will support all of
the improvements thereon for the foreseeable life of the improvements without
the need for unusual or new subsurface excavations, fill, footings, caissons or
other installations.
(iv) UTILITIES. To the best of Seller's knowledge,
all water, sewer, gas, electric, telephone, drainage and other utility
equipment, facilities and services required by law or necessary for the
operation of the Leased Real Property as it is now improved and operated are
installed and connected pursuant to valid permits, are sufficient to service the
Leased Real Property and are in good operating condition except in such case as
will not materially interfere with or impair the use, occupancy or operation of
the Leased Real Property as it is currently used, occupied or operated.
(v) COMPLIANCE WITH LAW; GOVERNMENT APPROVALS.
Sellers have received no notice from any Governmental Authority of any violation
of any zoning, building, fire, water, use, health, or other law, ordinance,
code, regulation, license, permit or authorization issued in respect of any of
the Leased Real Property that has not been heretofore corrected, and no such
violation or violations now exist that would materially interfere with or impair
the use, occupancy or operation of the Leased Real Property as it is currently
used, occupied or operated. The Leased Improvements located on or constituting a
part of the Leased Real Property and the construction, installation, use and
operation thereof (including, without limitation, the construction,
installation, use and operation of any signs located thereon) are in compliance
with all applicable municipal, state, federal or other governmental laws,
ordinances, codes, regulations, licenses, permits and authorizations, including,
without limitation, applicable zoning, building, fire, water, use or health
laws, ordinances, codes, regulations, licenses, permits and authorizations, and
there are presently in effect all Governmental Approvals except such
non-compliance as will not materially interfere with or impair the use,
occupancy or operation of the Leased Real Property as it is currently used,
occupied or operated. All Governmental Approvals required by law, ordinance,
code, regulation or otherwise to be held by the tenant of any of the Leased Real
Property shall be transferred to Buyer at Closing, if and to the extent
transferrable. Except as set forth in SCHEDULE 2.1(B), the assignment of the
Leased Real Property to Buyer includes all rights to the use of any off-site
facilities necessary to ensure compliance in all material respects with all such
laws, ordinances, codes and regulations. There is legally enforceable pedestrian
and vehicular access to the Leased Real Property.
<PAGE> 20
(vi) REAL PROPERTY TAXES. Except as set forth in
SCHEDULE 2.1(B), Sellers have received no notice of any pending or threatened
special assessment or reassessment of all or any portion of any of the Leased
Real Property.
(vii) CONDEMNATION. There is no pending or, to the
best of Sellers' knowledge, threatened condemnation of all or any part of the
Leased Real Property.
(viii) INSURABILITY. Sellers have received no notice
from any insurance company of any material defects or inadequacies in the Leased
Real Property or any part thereof, which would materially, adversely affect the
insurability of the same or of any termination or threatened termination of any
policy of insurance.
3.7. PERSONAL PROPERTY.
SCHEDULE 2.1(C) contains a complete description of all of
Sellers' machinery, equipment and other tangible personal property that is
located at the Transmitter Sites and is material to the operation of the Station
(other than Excluded Assets) (collectively, the "Material Equipment"). Sellers
have good and marketable title to all of the Material Equipment. None of such
Material Equipment is subject to any mortgage, pledge, lien, conditional sale
agreement, security agreement, encumbrance or other charge, except for Permitted
Encumbrances. The Material Equipment is sufficient for Buyer to continue the
operations of the Station in accordance with applicable law as conducted by
Sellers. Except as otherwise specified in SCHEDULE 2.1(C), all Material
Equipment of Sellers is in good repair and working order, ordinary wear and tear
excepted, and Sellers have maintained all Material Equipment in compliance with
good engineering and customary business practice and all Material Equipment is
otherwise sufficient to permit the Station to operate in accordance with the FCC
Licenses and the rules and regulations of the FCC.
3.8. FCC MATTERS.
3.8(a) One-On-One License holds the FCC Licenses set forth and
described on SCHEDULE 2.1(A). The FCC Licenses constitute all of the licenses,
permits and authorizations from the FCC that are necessary or required for
and/or used in the business and operations of the Station. The FCC Licenses are
valid and in full force and effect through the dates set forth on SCHEDULE
2.1(A). Except as set forth on SCHEDULE 2.1(A), no application, action or
proceeding is pending for the renewal or modification of any of the FCC
Licenses, and, except for actions or proceedings affecting radio broadcast
stations generally and the proceedings set forth in SCHEDULE 3.8(A) hereto, no
application, complaint, action or proceeding is pending or, to the best of
Sellers' knowledge, threatened that may result in the (i) denial of an
application for renewal, (ii) the revocation, modification, non-renewal or
suspension of any of the FCC Licenses, (iii) the issuance of a cease-and-desist
order, or (iv) the imposition of any administrative or judicial sanction with
respect to the Station.
<PAGE> 21
3.8(b) The Station, its physical facilities, electrical and
mechanical systems and transmitting equipment (i) are being operated in all
respects in compliance with the specifications of the applicable FCC Licenses,
and (ii) are being operated in compliance in all respects with all requirements
of the Communications Act. Sellers have complied with all requirements of the
FCC and the FAA with respect to the construction and/or alteration of Sellers'
antenna structures, and "no hazard" determinations for each antenna structure
have been obtained.
3.8(c) Sellers and the Station are in compliance with the
Communications Act.
3.8(d) Sellers know of no facts, conditions or events relating
to Sellers or the Station that might cause the FCC to have a legally valid basis
to deny the assignment of the FCC Licenses as provided for in this Agreement or
not to renew any of the FCC Licenses in the ordinary course.
3.9. INTELLECTUAL PROPERTY.
Sellers do not have any knowledge and have not received any
notice to the effect that their use of the Intellectual Property in their
renderings of services relating to the business of the Station infringes on any
Intellectual Property right of another. Sellers have the right pursuant to the
rules and regulations of the FCC to the use of the call letters "WIDB".
3.10. REPORTS AND RECORDS.
All reports, statements and other documents relating to the
Station currently required to be filed by Sellers with the FCC or any other
Governmental Authority in connection with, or as a result of, Sellers' operation
of the Station or ownership of the Assets have been filed and complied with and
were true, correct and complete in all material respects when filed. All such
reports, statements and other documents shall continue to be filed on a current
basis until the Closing Date, and will be true, correct, and complete in all
respects.
3.11. MATERIAL CONTRACTS; SCHEDULED CONTRACTS.
SCHEDULE(D) contains a listing and true copies of all Material
Contracts as of the date hereof. Each Scheduled Contract is in full force and
effect, and constitutes a legal, valid and binding obligation of, and is legally
enforceable against the applicable Seller. Each Seller, where applicable, and,
to the best of such Seller's knowledge, the other parties thereto, have complied
with all of the provisions of such Scheduled Contracts and are not in default
thereunder in any material respect, and there has not occurred any event which
(whether with or without notice or lapse of time) would constitute such a
default. To Sellers' knowledge, there has not been any threatened cancellation
of any Scheduled Contract or any outstanding dispute thereunder.
<PAGE> 22
3.12. TAXES.
3.12(a) Each Seller has (or, in the case of returns becoming
due after the date hereof and on or before the Closing Date, will have prior to
the Closing Date) duly filed or caused to be filed all Sellers' Tax Returns
required to be filed by such Seller on or before the Closing Date with respect
to all applicable Taxes and have paid all Taxes shown to be due on such Sellers'
Tax Returns.
3.12(b) There is no action, suit, proceeding, audit,
investigation or claim pending or, to Sellers' knowledge, threatened in respect
of any Taxes for which either Seller is liable, nor, to Sellers' knowledge, has
any deficiency or claim for any such Taxes been proposed, asserted or
threatened.
3.13. FINANCIAL INFORMATION.
Attached hereto as SCHEDULE 3.13 is a listing of the
approximate monthly operating expenses incurred by Sellers in connection with
their ownership and operation of the Station (the "Statement of Expenses"). The
Statement of Expenses presents fairly the estimated monthly expenses of Sellers
and does not materially understate the true costs and expenses of conducting the
business or operations of the Station as currently conducted by Sellers or
otherwise materially inaccurately reflect the operations of the Station.
3.14. LABOR RELATIONS; EMPLOYEE BENEFITS
Sellers are in compliance in all material respects with all
applicable laws and regulations relating to employment at the Station including,
without limitation, provisions relating to wages, hours, collective bargaining,
safety and health, work authorization, equal employment opportunity,
unemployment compensation, workers' compensation and employee benefits. There
are no collective bargaining agreements, employment agreements between Sellers
and their employees not terminable at will or professional service contracts not
terminable at will relating to the Station or the business and operations
thereof. The consummation of the transactions contemplated hereby will not cause
Buyer to incur or suffer any liability relating to, or obligation to pay,
severance, termination, or other payments to any person or entity, or any
liability under any employee benefit plans of Sellers, including, without
limitation, any liability under the Code or ERISA.
<PAGE> 23
3.15. ENVIRONMENTAL MATTERS.
3.15(a) There are no pending or, to the best of Sellers'
knowledge, threatened actions, suits, claims, legal proceedings or other
proceedings based on, and Sellers have not received any notice of any complaint,
order, directive, citation, notice of responsibility, notice of potential
responsibility, or information request from any Governmental Authority arising
out of or attributable to: (i) the presence at any part of the Real Property of
Hazardous Materials; (ii) the release or threatened release into the environment
from the Real Property (including, without limitation, into any storm drain,
sewer, septic system or publicly owned treatment works) of any Hazardous
Materials; (iii) the off-site disposal of Hazardous Materials originating on or
from the Real Property or the Assets of Sellers; (iv) any facility operations or
procedures of Sellers relating to the Station or the Assets that do not conform
to requirements of the Environmental Laws; or (v) any violation of Environmental
Laws at any part of the Real Property or otherwise arising from any of Sellers'
activities relating to the Station or the Assets involving Hazardous Materials.
3.15(b) Each Seller is in compliance, in all material
respects, with all applicable Environmental Laws, including having obtained and
maintained all permits, licenses, certificates, and approvals required under any
Environmental Law. A true and complete list of all such permits, licenses,
certificates and approvals, all of which are valid and in full force and effect,
is set out in SCHEDULE 3.15(B).
3.15(c) To the best of Sellers' knowledge, there have been no
releases of Hazardous Materials on, at, in, under or from the Real Property that
would require investigation and/or remediation under any applicable
Environmental Law.
3.15(d) Other than in compliance with the Communications Act,
the operation of the Station does not cause or result in exposure of workers or
the general public to levels of radio frequency radiation in excess of the
"Radio Frequency Protection Guides" recommended in "American National Standard
Safety Levels with Respect to Human Exposure to Radio Frequency Electromagnetic
Fields 300 kHz to 100 gHz" (ANSI C95.1-1982), issued by the American National
Standards Institute. Renewal of the FCC Licenses would not constitute a "major
action" within the present meaning of Section 1.1301, ET SEQ., of the FCC's
rules.
3.16. INSURANCE.
SCHEDULE 3.16 contains a list of all policies of title,
property, fire, casualty, liability, life, workmen's compensation, libel and
slander, and other forms of insurance of any kind relating to the Assets (other
than the Excluded Assets) or the business and operations of the Station and
owned or held by Sellers as of the date hereof. All such policies are in full
force and effect.
<PAGE> 24
3.17. DISCLOSURE.
The representations and warranties of Sellers in this
Agreement and the other information furnished by Sellers to Buyer in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, do not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in order to make such information not materially misleading. Except for
facts affecting the radio industry generally, there is no fact known to either
Seller which can reasonably be expected to have a Material Adverse Effect.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer represents and warrants to Sellers as follows:
4.1. ORGANIZATION AND STANDING.
Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
power and authority to carry on its business as now being conducted. Buyer has
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
4.2. AUTHORIZATION.
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 corporate proceedings on the part of Buyer
and no other corporate proceedings or actions on the part of Buyer, its board of
directors or its shareholders is necessary therefor. This Agreement constitutes
a valid and binding agreement and obligation of Buyer, enforceable in accordance
with its terms.
4.3. REQUIRED CONSENTS; NO CONFLICTS.
4.3(a) Except in connection with the filings referred to in
SECTIONS 5.1 AND 5.2, the execution, delivery and performance by Buyer of this
Agreement will not require the consent, approval, authorization or permit of, or
filing with, or notification to any person, entity or Governmental Authority,
except which would not materially affect Buyer's ability to consummate the
transactions contemplated by this Agreement.
<PAGE> 25
4.3(b) The execution and delivery of this Agreement, the
fulfillment of and the compliance with the terms and provisions hereof, and the
consummation of the transactions described herein, do not and will not (i)
conflict with or violate any law, regulation, order, award, judgment, injunction
or decree applicable to or affecting Buyer, (ii) conflict with or result in any
breach of or constitute any default (or an event which with notice or the lapse
of time or both would become a default) under any contract to which Buyer is a
party or by which Buyer is bound or to which any of the Buyer's assets are
subject or affected, or result in the acceleration of any indebtedness of Buyer,
or (iii) conflict with or violate any provision of Buyer's certificate of
incorporation or by-laws, except, in each case, as would not materially affect
Buyer's ability to consummate the transactions contemplated by this Agreement.
4.4. ABSENCE OF LITIGATION.
There is no action, suit, investigation, claim, arbitration or
litigation pending or, to the best of Buyer's knowledge, threatened against,
affecting or involving the transactions contemplated by this Agreement or that
would affect Buyers' ability to perform its obligations under this Agreement, at
law or in equity, or before or by any court, arbitrator or Governmental
Authority, and the Buyer is not operating under or subject to an order, award,
judgment, writ, decree, determination or injunction of any court, arbitrator or
Governmental Authority that would affect the transactions contemplated by this
Agreement or its ability to perform its obligations under this Agreement.
4.5. QUALIFICATION OF BUYER.
Buyer knows of no facts or circumstances that would cause
Buyer not to meet any qualification to be the assignee of the FCC Licenses or
that Buyer believes will delay a routine grant of the Assignment Applications.
4.6. DISCLOSURE.
The representations and warranties of Buyer in this Agreement
and the other information furnished by Buyer to Sellers in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated in order to
make such information not misleading.
<PAGE> 26
ARTICLE 5.
PRE-CLOSING FILINGS AND UNDERTAKINGS
5.1. APPLICATIONS FOR FCC CONSENT.
As promptly as practicable and no later than ten (10) days
following the execution of this Agreement, Sellers and Buyer shall jointly file
one or more applications with the FCC requesting its consent to the assignment
of the FCC Licenses for the Station from Sellers to Buyer (the "Assignment
Applications"). Sellers and Buyer shall diligently take, or fully cooperate in
the taking of, all necessary and proper steps, and provide any additional
information reasonably requested, and use their respective reasonable commercial
efforts to resolve and/or overcome objections that may be asserted by the FCC or
any third party, in order to obtain promptly the requested consent and approval
of the Assignment Applications by the FCC. Notwithstanding anything in this
Agreement to the contrary, this SECTION 5.1 shall survive the Closing until the
FCC Consent becomes a Final Order. No assignment of the FCC Licenses shall occur
without the prior written consent of the FCC.
5.2. HART-SCOTT-RODINO.
As promptly as practicable and no later than ten (10) days
following the execution of this Agreement, Sellers and Buyer shall complete any
filing (each a "HSR Filing") that may be required pursuant to the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and all laws
promulgated thereto or in connection therewith ("HSR"), or shall mutually agree
that no such filing is required. Sellers and Buyer shall diligently take, or
fully cooperate in the taking of, all necessary and proper steps, and provide
any additional information reasonably requested in order to comply with the
requirements of HSR. Sellers and Buyer shall use their respective reasonable
commercial efforts to resolve and/or overcome objections that may be asserted
under HSR or any other antitrust law in connection with the transactions
contemplated by this Agreement.
5.3. SHARING INFORMATION.
Each party hereto shall as promptly as possible, and in any
event within two (2) business days, inform the other of any material
communications between such party and the FCC or any other Governmental
Authority regarding this Agreement or the transactions contemplated hereby. If
any party receives a request for additional information or documentary material
from any such Governmental Authority, then such party shall endeavor in good
faith to make, or cause to be made, as promptly as practicable and after
consultation with the other party, an appropriate response to such request.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF SELLERS
Subject to SECTION 8.1 below, Sellers covenant and agree with
Buyer as follows:
6.1. NEGATIVE COVENANTS.
Pending and prior to the Closing, Sellers will not, without
the prior written consent or approval of Buyer, which shall not be unreasonably
withheld, do or agree to do any of the following, as such actions relate to the
Station or the Assets:
<PAGE> 27
6.1(a) DISPOSITIONS; MERGERS. Sell, assign, lease or otherwise
transfer or dispose of any of the Assets; or merge or consolidate with or into
any other entity or enter into any Contracts relating thereto; PROVIDED,
HOWEVER, that Sellers may sell, assign, lease or otherwise transfer or dispose
of any Asset in the Ordinary Course of Business provided that either (i) it is
replaced or (ii) the sale proceeds in respect of such Asset are held for the
benefit of the Buyer.
6.1(b) ADDITIONAL AGREEMENTS. Acquire or enter into any
Additional Agreements except in the Ordinary Course of Business, or renew,
extend, amend, alter, modify, replace or otherwise change any Scheduled
Contract, except in the Ordinary Course of Business or as set forth on SCHEDULE
6.1(B).
6.1(c) CONTRACT BREACHES. Do or omit to do any act (or permit
such action or omission) which will cause a material breach of any Contract to
which either Seller is a party or by which either Seller is bound.
6.1(d) ACTIONS AFFECTING FCC LICENSES OR CONTRACTS. Take any
action that jeopardizes the validity or enforceability of or rights under the
FCC Licenses, or take any action under any Scheduled Contract that would have a
Material Adverse Effect.
6.2. AFFIRMATIVE COVENANTS.
Pending and prior to the Closing Date, Sellers will, as such
actions relate to the Station or the Assets:
6.2(a) NORMAL OPERATIONS. Subject to the terms and conditions
of this Agreement (including, without limitation, SECTION 6.1) (i) carry on the
business and activities of the Station in the Ordinary Course of Business; (ii)
pay or otherwise satisfy all obligations (cash and barter) of the Station in the
Ordinary Course of Business; (iii) maintain all Assets in customary repair,
order and condition; and (iv) maintain their books of account, records, and
files in substantially the same manner as heretofore maintained.
6.2(b) FCC MATTERS. (i) Maintain the validity of the FCC
Licenses, and comply in all material respects with all requirements of the FCC
Licenses and the rules and regulations of the FCC; and (ii) deliver to Buyer,
within ten (10) business days after filing, copies of any reports, applications
or responses to the FCC related to the Station that are filed between the date
of this Agreement and the Closing Date.
6.2(c) ACTIONS. Take all actions under the applicable laws and
regulations of any state having jurisdiction over Sellers necessary to
effectuate the transactions contemplated by this Agreement and by the other
Transaction Documents.
<PAGE> 28
6.2(d) TRANSFER TAX; BULK SALES. If any laws pertaining to
bulk sales apply to the transactions contemplated hereby, Sellers will indemnify
the Buyer against any and all debts, claims, unpaid bills, attachments,
injunctions or other writs and against any and all loss on account of charges,
assessments, damages or expenses incurred by the Buyer, except to the extent
assumed by the Buyer hereunder, on account of failure to comply with such laws
pertaining to bulk sales. Payment of any claims under the immediately preceding
sentence shall be made promptly in cash upon demand.
6.2(e) ACCESS. Sellers shall (i) give to Buyer and Buyer's
authorized representatives access during normal business hours to Sellers'
properties, books, records, Contracts, commitments, Transmitter Sites
facilities, premises, and equipment and to Sellers' officers and employees,
agents and representatives (including, without limitation, the independent
accountants of Sellers) relating to the Assets and (ii) permit Buyer and Buyer's
consulting engineers and independent contractors, at Buyer's expense, to conduct
engineering and other inspections of the Station and the Assets, PROVIDED that
all access under subparagraphs (i) and (ii) shall be upon reasonable prior
notice and in a manner that will not interfere with the Station's operations.
6.2(f) ENCUMBRANCES. Pay in full all liabilities associated
with and use its reasonable commercial efforts to obtain discharges of all
mortgages, security interests, liens and similar claims by third parties
encumbering the Assets (other than Permitted Encumbrances) at or prior to the
Closing Date.
6.2(g) INSURANCE. Maintain in full force and effect all of
their existing casualty, liability, and other insurance through the day
following the Closing Date in amounts not less than those in effect on the date
hereof.
6.2(h) VIOLATIONS. Upon receiving notice or otherwise becoming
aware of any violation relating to the FCC Licenses, any violation by the
Station of any rules and regulations of the FCC, or any material violations
under any other applicable laws and regulations, promptly notify Buyer and, at
Sellers' expense, use reasonable commercial efforts to cure all such violations
prior to the Closing Date.
6.2(i) INTERRUPTION IN BROADCAST OPERATIONS. Promptly notify
Buyer in writing if the Station ceases to broadcast at its authorized power for
more than 48 consecutive hours. Such notice shall specify the reason or reasons
for such cessation and the corrective measures taken or to be taken by Sellers.
6.2(j) ENVIRONMENTAL MATTERS. (i) Promptly furnish to Buyer
written notice of any material discharge of any Hazardous Materials or of any
actions or notices described in SECTION 3.15; and (ii) any material change in
the information set forth in SECTION 3.15 or SCHEDULE 3.15(B).
6.2(k) CONSENTS. Use commercially reasonable best efforts to
obtain any third party consents required to assign to Buyer the Assets,
including but not limited to the Material Contracts.
<PAGE> 29
6.2(l) UPDATING. Prior to the Closing Date, provide Buyer with
documentation regarding any material changes to the Schedules hereto including,
without limitation, copies of Additional Agreements.
6.3. CONFIDENTIALITY.
Sellers shall maintain strict confidentiality with respect to
(i) all documents and information furnished to Sellers by or on behalf of Buyer
or retained by Sellers pursuant to SECTION 2.2(D) and (ii) the terms of the
transactions contemplated hereby. Nothing shall be deemed to be confidential
information that: (a) is known to Sellers at the time of its disclosure to
Sellers; (b) becomes publicly known or available other than through disclosure
by Sellers; (c) is received by Sellers from a third party not actually known by
Sellers to be bound by a confidentiality agreement with or obligation to Buyer;
or (d) is independently developed by Sellers as clearly evidenced by its
records. Notwithstanding the foregoing provisions of this SECTION 6.3, Sellers
may disclose such confidential information (x) to the extent required or deemed
advisable to comply with applicable laws and regulations, (y) to its officers,
managers, members, employees, representatives, financial advisors, attorneys,
accountants, lenders and agents and to its members' officers and directors with
respect to the transactions contemplated hereby (so long as such parties are
informed of the confidentiality of such information), and (z) to any
Governmental Authority in connection with the transactions contemplated hereby.
In the event this Agreement is terminated, Sellers will return to Buyer all
confidential information prepared or furnished by Buyer relating to the
transactions contemplated hereunder, whether obtained before or after the
execution of this Agreement.
<PAGE> 30
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer covenants and agrees with Sellers as follows:
7.1. CONFIDENTIALITY.
Buyer shall maintain strict confidentiality with respect to
(i) all documents and information furnished to Buyer by or on behalf of Sellers
and (ii) the terms of the transactions contemplated hereby. Nothing shall be
deemed to be confidential information that: (a) is known to Buyer at the time of
its disclosure to Buyer; (b) becomes publicly known or available other than
through disclosure by Buyer; (c) is received by Buyer from a third party not
actually known by Buyer to be bound by a confidentiality agreement with or
obligation to Sellers; or (d) is independently developed by Buyer as clearly
evidenced by its records. Notwithstanding the foregoing provisions of this
SECTION 7.1, Buyer may disclose such confidential information (x) to the extent
required or deemed advisable to comply with applicable laws and regulations, (y)
to its officers, directors, employees, representatives, financial advisors,
attorneys, accountants, and agents with respect to the transactions contemplated
hereby (so long as such parties are informed of the confidentiality of such
information), and (z) to any Governmental Authority in connection with the
transactions contemplated hereby. In the event this Agreement is terminated,
Buyer will return to Sellers all confidential information prepared or furnished
by Sellers relating to the transactions contemplated hereunder, whether obtained
before or after the execution of this Agreement.
7.2. ACTIONS.
Prior to the Closing, Buyer shall take all action under the
applicable laws and regulations of any state having jurisdiction over Buyer
necessary to effectuate the transactions contemplated by this Agreement.
7.3. ACCESS.
Buyer agrees to (i) maintain all of the books and records of
the Station existing on the Closing Date for a period of ten (10) years from the
Closing Date, unless earlier released by Sellers and (ii) give Sellers and
Sellers' authorized representatives full and complete access upon reasonable
notice during normal business hours to such books and records of the Station
existing on the Closing Date.
7.4. NOTICE OF CERTAIN EVENTS.
Buyer agrees to promptly notify Sellers of any fact or
circumstance of which Buyer becomes aware after the date of this Agreement that
would reasonably be expected to cause it not to meet any qualification to be the
assignee of the FCC Licenses or that it believes may delay a routine grant of
the Assignment Applications. Buyer will use its reasonable commercial efforts to
remedy such fact or circumstance. Buyer will not take any action that Buyer
knows, or has reason to believe, would result in the occurrence of any such fact
or circumstance.
<PAGE> 31
ARTICLE 8.
MUTUAL COVENANTS AND UNDERSTANDINGS
OF SELLERS AND BUYER
8.1. POSSESSION AND CONTROL.
Notwithstanding any other provision of this Agreement or any
Transaction Document, between the date hereof and the Closing Date, Buyer shall
not directly or indirectly control, supervise or direct, or attempt to control,
supervise or direct, the business and operations of the Station, and such
operation, including complete control and supervision of all programming,
finances and employment shall be the sole responsibility of Sellers; provided,
however, that Buyer shall be entitled to inspect the Assets as provided in
SECTION 6.2(E). On and after the Closing Date, Sellers shall have no control
over, or right to intervene, supervise, direct or participate in, the business
and operations of the Station.
8.2. RISK OF LOSS.
8.2(a) The risk of loss or damage by fire or other casualty or
cause to the Assets until the Closing Date shall be upon Sellers. In the event
of such loss or damage prior to the Closing Date, Sellers shall use reasonable
commercial efforts to restore, replace or repair the damaged Assets in
accordance with Sellers' past practices at Sellers' sole cost and expense. In
the event such loss or damage shall not be restored, replaced, or repaired as of
the Closing Date, Buyer shall proceed with the Closing and receive at Closing a
reduction of the Purchase Price in an amount which, net of any insurance
proceeds paid by Sellers to Buyer, or the value of any rights to receive
insurance proceeds which are assigned by Sellers to Buyer, is sufficient to pay
for such restoration, replacement or repair.
8.2(b) In the event that any loss or damage described in
SECTION 8.2(A) shall not be restored, replaced or repaired as of the Closing
Date, Sellers may defer the Closing Date until such restorations, replacements
or repairs are made, so long as such restorations, replacements or repairs are
made within sixty (60) days after the date the Closing would have occurred in
the absence of such loss or damage.
8.3. ALLOCATION OF PURCHASE PRICE.
Buyer and Sellers will allocate the Purchase Price payable by
Buyer hereunder in accordance with the requirements of Section 1060 of the Code.
A preliminary allocation shall be prepared by Buyer and the final allocation
shall be determined by mutual agreement of the parties prior to the Closing.
Buyer and Sellers further agree to file their respective federal income tax
returns and other tax returns in a manner consistent with such final allocation.
8.4. PUBLIC ANNOUNCEMENTS.
Sellers and Buyer shall consult with each other before making
any public statements with respect to this Agreement or the transactions
contemplated herein.
<PAGE> 32
8.5. EMPLOYEE MATTERS.
All employees of the Station shall be and remain Sellers'
employees, with Sellers having full authority and control over their actions,
and Buyer shall not assume the status of an employer or a joint employer of, or
incur or be subject to any liability or obligations of an employer with respect
to, any such employees unless and until actually hired by Buyer. Sellers shall
be solely responsible for any and all liabilities and obligations Sellers may
have to the employees of the Station, including, without limitation,
compensation, severance pay, incentive bonuses, health expenses, and accrued
vacation time, sick leave and obligations under any of Sellers' employee benefit
plans. Sellers shall comply with the provisions of the Worker Adjustment and
Retraining and Notification Act (the "WARN Act") and similar laws and
regulations, if applicable, and shall be solely responsible for any and all
liabilities, penalties, fines, or other sanctions that may be assessed or
otherwise due under such applicable laws and regulations on account of the
dismissal or termination of the employees of the Station by Sellers.
8.6. UNWIND AGREEMENT.
Pursuant to Sections 9.4 and 10.3 of this Agreement, the
parties agree to close the transactions contemplated by this Agreement prior to
the FCC Consent becoming a Final Order and to enter into an unwind agreement, at
Closing, in substantially the form attached as EXHIBIT B hereto (the "Unwind
Agreement").
8.7 TIME BROKERAGE AGREEMENT.
Upon execution of this Agreement, One-On-One Radio and Buyer
shall enter into the TBA.
8.8 DIPLEXING.
From and after the Closing Date, Buyer shall, upon the written
request of One-On-One Sports, Inc., permit either Seller or any other subsidiary
of One-On-One Sports, Inc. (the "Diplexing Party") to have access to the
Transmitter Site located in Burnham, Illinois (the "Night Site") for the purpose
of diplexing the transmission of a radio signal from such site. The Diplexing
Party shall have the right to install equipment on the Night Site, affix
equipment to the towers on such site, build and utilize one or more towers on
such site, and take such other actions as may be necessary to effectively diplex
such transmission; PROVIDED, HOWEVER, that such rights of the Diplexing Party
shall be subject to the following conditions: (i) no diminution of Buyer's
signal or adverse effect on the signal pattern of the Station; (ii) receipt of
requisite governmental approvals and other required consents, if any; (iii)
Buyer's reasonable satisfaction with all related safety and engineering
considerations; (iv) payment by the Diplexing Party of all costs associated with
constructing or upgrading the Night Site to accommodate such diplexing; (v)
payment by each of Buyer and the Diplexing Party of its own electricity charges;
and (vi) the mutually satisfactory agreement of Buyer and Diplexing Party upon
and the payment by Diplexing Party to Buyer, on a monthly basis, of fair and
commercially reasonable (relative to the market value for antenna site leases
for comparable transmitter sites) compensation for such access and rights.
<PAGE> 33
8.9 HOCKEY BROADCASTS.
Buyer and Sellers each acknowledge that Buyer has not assumed
the obligations of One-On-One as set forth in that certain Radio Broadcast
Agreement, dated September 3, 1998 (the "Hockey Contract"), entered into between
Rosemont Hockey Partners, L.P. and One-On-One Sports. Notwithstanding the
previous sentence hereof, from and after the Closing Date, Buyer shall use
commercially reasonable best efforts, consistent with the limited operating
hours of radio station WYPA(AM), Chicago, Illinois ("WYPA"), to broadcast on
WYPA the hockey games set forth in the Hockey Contract until such time as that
certain Time Brokerage Agreement, dated as of June 9, 1998, entered into by and
between Achievement Radio Holdings, Inc. and Buyer has terminated and shall
likewise use commercially reasonable best efforts, consistent with the
availability of air time on the Station, to broadcast such games on the Station
after 9 p.m.
ARTICLE 9.
CONDITIONS PRECEDENT TO
BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to purchase the Assets and to proceed
with the Closing are subject to the satisfaction (or waiver in writing by Buyer)
at or prior to the Closing of each of the following conditions:
9.1. REPRESENTATIONS AND COVENANTS.
Each of the representations and warranties (other than those
representations and warranties which by their terms are as of a specific date)
of Sellers made in this Agreement or in any other Transaction Document shall be
true and correct, as though made on or as of the Closing Date, and Sellers shall
have performed and complied with all covenants and agreements required by this
Agreement or any other Transaction Document to be performed or complied with by
Sellers prior to the Closing.
9.2. CONSENTS.
Except as set forth on SCHEDULE 9.2, Sellers shall have
obtained prior to the Closing Date all consents, authorizations or approvals
necessary to effect valid assignments to Buyer of the Assets, including but not
limited to the Scheduled Contracts, except for the FCC Consent, which shall be
governed by SECTION 9.4 and except for any HSR Filing, which shall be governed
by SECTION 9.5.
9.3. DELIVERY OF DOCUMENTS.
Sellers shall have delivered to Buyer the Transaction
Documents required to be delivered by Sellers to Buyer pursuant to SECTION 11.2.
<PAGE> 34
9.4. FCC CONSENT.
The FCC Consent shall have been granted and shall be in full
force and effect (but without having waited for the FCC Consent to become a
Final Order).
9.5 HSR
All applicable waiting periods under HSR shall be expired or
terminated.
9.6. LEGAL PROCEEDINGS.
No Governmental Authority shall have enacted, enforced, issued
or entered any law, rule, regulation or order, including in connection with any
action or proceeding brought by a third party (not subsequently dismissed,
settled or otherwise terminated), which prohibits or invalidates the
transactions contemplated by this Agreement or any other Transaction Document or
prevents, limits, restricts or impairs the ownership, use or operation of the
Assets or the Station by Buyer, other than an action or proceeding instituted by
Buyer.
9.7. TITLE INSURANCE, SURVEY AND ESTOPPEL CERTIFICATES.
9.7(a) Sellers shall have delivered to Buyer, at Sellers' sole
expense, good and valid title insurance policies (the "Title Policies") dated as
of the close of business on the date of the Closing, insuring Buyer's title as
fee or leasehold owner, as applicable, in each parcel of real or leased property
to be conveyed to Buyer pursuant hereto. In each instance the title shall be
insured by means of a current ALTA policy dated, or updated, to the Closing
Date, insuring, among other things, access rights to such property and specific
survey facts, if any. Each such policy, as to the insurer, the insured, the
dollar limit and amount of coverage and the exceptions and conditions thereof
shall be, in all respects, satisfactory to the Buyer, both as to form and
substance. In no event shall any such policy contain any exception from the
policy coverage, printed or otherwise, not specifically permitted by the
Permitted Encumbrances.
9.7(b) Sellers shall have delivered to Buyer estoppel
certificates (the "Estoppel Certificates"), dated within ten (10) days prior to
the Closing, from each of the landlords or lessors of the Leases set forth in
SCHEDULE 2.1(B), in form and substance satisfactory to Buyer;
<PAGE> 35
9.7(c) Seller shall have delivered to Buyer, at Buyer's sole
cost and expense, an ALTA and American Congress on Surveying and Mapping (ACSM)
survey ("Survey") acceptable to Buyer. Such Survey shall (i) be prepared and
certified by a Registered Public Surveyor or Registered Professional Engineer,
(ii) comply with 1997 ALTA/ACSM minimum detail requirements for Urban Land Title
Surveys including Table A, items 1-4, 6-11 and 13, (iii) locate all
improvements, building lines, rights-of-way and easements (identified by
appropriate recording reference) and other matters of record, evidenced by
on-site observation or as determined by the surveyor's examination of Sellers'
records affecting the Real Property, (iv) contain a legal description of the
Real Property, (v) include a surveyor's certification in form and substance
acceptable to Buyer and (vi) be dated as of the Closing Date.
9.8 TIME BROKERAGE AGREEMENT.
The TBA and all agreements contemplated therein shall have
become effective in accordance with the terms and conditions thereof and, from
and after the date the TBA and such agreements are to first become effective
through and including the Closing Date, the TBA and such agreements shall have
not been terminated due to One-On-One Radio's breach thereof. The Refund (as
defined in the TBA) shall have been paid to Buyer.
ARTICLE 10.
CONDITIONS PRECEDENT TO
SELLERS' OBLIGATION TO CLOSE
The obligations of Sellers to sell, transfer, convey and
deliver the Assets (other than the Excluded Assets) and to proceed with the
Closing are subject to the satisfaction (or waiver in writing by Sellers) at or
prior to the Closing of each of the following conditions:
10.1. REPRESENTATIONS AND COVENANTS.
Each of the representations and warranties of Buyer made in
this Agreement shall be true and correct, as though made on or as of the Closing
Date, and Buyer shall have performed and complied with all covenants and
agreements required by this Agreement or any other Transaction Document to be
performed or complied with by Buyer prior to the Closing.
10.2. DELIVERY BY BUYER.
Buyer shall have delivered to Sellers (i) the Purchase Price
and (ii) any other document required to be delivered by Buyer to Sellers
pursuant to SECTION 11.3.
10.3. FCC CONSENT.
The FCC Consent shall have been granted and shall be in full
force and effect (but without having waited for the FCC Consent to become a
Final Order).
10.4 HSR
All applicable waiting periods under HSR shall have expired
or terminated.
<PAGE> 36
10.5. LEGAL PROCEEDINGS.
No Governmental Authority shall have enacted, enforced,
issued or entered any law, rule, regulation or order, including in connection
with any action or proceeding brought by a third party, (not subsequently
dismissed, settled, or otherwise terminated) which prohibits or invalidates the
transactions contemplated by this Agreement, any other Buyer Document or any
Transaction Document, other than an action or proceeding instituted by Sellers.
10.6 TIME BROKERAGE AGREEMENT.
The TBA and all agreements contemplated therein shall have
become effective in accordance with the terms and conditions thereof and, from
and after the date the TBA and such agreements are to first become effective
through and including the Closing Date, the TBA and such agreements shall have
not been terminated due to Buyer's breach thereof.
10.7 CALL LETTERS.
Buyer shall have applied for and received a grant from the
FCC authorizing it to use new call letters for the Station other than the call
letters "WIDB", which pursuant to SECTION 2.2(H) herein shall remain an Excluded
Asset together with all rights therein.
ARTICLE 11.
THE CLOSING
11.1. CLOSING.
11.1(a) Unless otherwise agreed upon in writing by Buyer and
Sellers, the Closing Date shall be on the tenth (10th) day following the grant
of the FCC Consent; PROVIDED, HOWEVER, that the Closing shall not occur prior to
May 1, 1999 (except that Buyer may, at its sole option, designate an earlier
Closing Date upon ten (10) days prior written notice to Seller).
11.1(b) The Closing shall be held at such time of day and
place or places as the parties may agree.
<PAGE> 37
11.2. DELIVERY BY SELLERS.
At or before the Closing, Sellers shall deliver to Buyer the
following:
11.2(a) CONTRACTS, AGREEMENTS AND INSTRUMENTS. The following
Transaction Documents dated as of the Closing Date and duly executed by Sellers,
in form and substance reasonably satisfactory to counsel to Buyer and sufficient
to transfer and convey to Buyer all of Sellers' right, title and interest (of
the quality required in this Agreement) in and to the Assets other than the
Excluded Assets:
(i) the Assignment of Leases;
(ii) the Bill of Sale;
(iii) the Assignment of FCC Licenses;
(iv) the Assignment of Contracts;
(v) the Deeds;
(vi) the Title Policies;
(vii) the Estoppel Certificates;
(viii) the Survey; and
(ix) all such other general instruments of transfer,
assignment and
conveyance, grant deeds, certificates of title, assignments, estoppel
certificates for Leased Real Property, evidences of consent or waiver, and other
instruments or documents in form and substance satisfactory to Buyer, as shall
be necessary to evidence the sale, assignment, transfer and conveyance of the
Assets other than the Excluded Assets to Buyer in accordance with this
Agreement.
11.2(b) CONSENTS. Originals of all consents obtained
pursuant to Section 6.2(k).
11.2(c) UCC REPORT. A report dated not more than ten (10)
days prior to the Closing Date of the appropriate filing officers in the
jurisdictions specified in SCHEDULE 3.1 evidencing no judgments, financing
statements, tax liens, mechanics', materialmen's or other statutory liens on
file with respect to the Assets, and, if such report evidences that judgments,
financing statements, tax liens, mechanics', materialmen's or other statutory
liens are on file with respect to any of the Assets, a termination statement or
other appropriate document signed by the secured party or lienholder evidencing
the release or termination of such financing statement or such lien or a pay-off
letter from such secured party or lienholder indicating that such party or
lienholder will provide such release or termination statement upon receipt of
payment from the proceeds of the sale contemplated herein.
<PAGE> 38
11.2(d) CERTIFIED CONSENTS. A copy of (i) a written consent
signed by each Sellers' members and certified as being correct and complete and
then in full force and effect, authorizing the execution, delivery and
performance of the Transaction Documents, and the consummation of the
transactions contemplated thereby, and (ii) a copy of the certificate of
formation and the limited liability company agreement of each Seller, certified
by the members of each Seller as being true, correct and complete as of the
Closing Date.
11.2(e) MEMBERS' CERTIFICATES.
(i) Certificates from each Seller signed on behalf of
such Seller by each of their members certifying that all conditions set forth in
Section 9.1 (giving effect to any updated Schedules pursuant to SECTION 6.2(L))
have been satisfied; and
(ii) Certificates signed by the members of each
Seller as to the authorization of the officers of such members executing any
Transaction Document on behalf of such Seller.
11.2(f) EXPENSE PAYMENT. A check or checks, or other
evidence of payment acceptable to Buyer, with respect to the expenses payable by
Sellers, if any, as described in SECTION 15.4.
11.2(g) OPINIONS OF COUNSEL. The opinions of Winston &
Strawn and Fletcher, Heald & Hildreth, P.L.C., counsel to Sellers, in form and
substance reasonably satisfactory to Buyer.
11.2(h) UNWIND AGREEMENT. The Unwind Agreement (unless at
the time of the Closing the FCC Consent shall have become a Final Order).
11.2(i) OTHER DOCUMENTS. Such other documents to be
delivered by Sellers hereunder as are reasonably necessary for Buyer to
effectuate and document the transactions contemplated hereby.
11.3. DELIVERY BY BUYER.
At or before the Closing, Buyer shall deliver to Sellers the
following:
11.3(a) PURCHASE PRICE PAYMENT. The Purchase Price.
11.3(b) BUYER DOCUMENTS. Such certificates, instruments or
documents as Sellers may reasonably request in order to effect and document the
transactions contemplated hereby.
<PAGE> 39
11.3(c) CERTIFIED RESOLUTIONS AND CORPORATE DOCUMENTS. A
copy of (i) the resolutions of the board of directors of Buyer, certified as
being correct and complete and then in full force and effect, authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby and (ii) a copy of the certificate of
incorporation and by-laws of Buyer, certified by the corporate secretary of
Buyer as being true, correct and complete as of the Closing Date.
11.3(d) OFFICERS' CERTIFICATE.
(i) A certificate of Buyer signed by its president
and corporate secretary certifying that all conditions set forth in SECTION 10.1
have been satisfied; and
(ii) a certificate signed by the corporate secretary
of Buyer as to the incumbency of the officer of Buyer executing this Agreement
on behalf of the Buyer.
11.3(e) EXPENSE PAYMENT. A check or checks, or other
evidence of payment acceptable to Sellers, with respect to the expenses payable
by Buyer, if any, as described in SECTION 15.4.
11.3(f) OPINION OF COUNSEL. The opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to Buyer, in form and substance reasonably
satisfactory to Sellers.
11.3(g) UNWIND AGREEMENT. The Unwind Agreement (unless at
the time of the Closing the FCC Consent shall have become a Final Order).
11.3(h) GRANT OF CALL LETTERS. Evidence reasonably
satisfactory to Sellers of the FCC's grant to Buyer of new call letters for the
Station.
11.3(i) OTHER DOCUMENTS. Such other documents to be
delivered by Buyer hereunder as are reasonably necessary for Sellers to
effectuate the transactions contemplated herein.
<PAGE> 40
ARTICLE 12.
SURVIVAL; INDEMNIFICATION
12.1. SURVIVAL OF REPRESENTATIONS.
Except as otherwise set forth herein, all representations
and warranties, covenants and agreements of Sellers and Buyer contained in or
made pursuant to this Agreement or in any certificate furnished pursuant hereto
shall survive the Closing Date and shall remain in full force and effect for a
period of twelve (12) months after the Closing Date, except that the
representations and warranties of Sellers contained in SECTION 3.15 shall
survive the Closing Date and shall remain in full force and effect for a period
of eighteen (18) months after the Closing Date. All such representations and
warranties, covenants, and agreements shall also survive and be unaffected by
(and shall not be deemed waived by) any investigation, audit, appraisal, or
inspection at any time made by or on behalf of any party hereto. Notwithstanding
anything herein to the contrary, any representation, warranty, covenant or
agreement which is the subject of a claim which is asserted in writing prior to
the expiration of the applicable period set forth above shall survive with
respect to such claim or dispute until the final resolution thereof.
12.2. INDEMNIFICATION BY SELLERS.
Subject to the conditions and provisions of SECTION 12.4,
Sellers agree to indemnify, defend and hold harmless Buyer and Buyer's
respective directors, officers, managers and employees ("Buyer Indemnified
Parties") from and against and in respect of any and all Losses, asserted
against, resulting to, imposed upon or incurred by the Buyer Indemnified
Parties, directly or indirectly, by reason of or resulting from (a) any
liability or obligation of or claim against Buyer Indemnified Parties (whether
absolute, accrued, contingent or otherwise and whether a contractual or any
other type of liability or obligation or claim) not expressly assumed by Buyer
pursuant to SECTION 2.6, arising out of, relating to or resulting from the
businesses of Sellers, or relating to or resulting from the Assets or the
business and operations of the Station during the period prior to the Closing
Date; (b) any misrepresentation or breach of the warranties of Sellers contained
in or made pursuant to any Transaction Document; (c) any noncompliance by
Sellers with any covenants, agreements or undertakings of Sellers contained in
or made pursuant to any Transaction Document including without limitation any
failure to comply with applicable Bulk Sales laws; (d) any employment related
practices, policies, Contracts, decisions, actions or omissions by Sellers with
respect to any of Sellers' employees or former employees or otherwise with
respect to any employee benefit plan or arrangement sponsored or maintained by
Sellers or any Affiliate of Sellers or; (e) any breach by Sellers of any
Scheduled Contract; (f) any pre-closing breach by Sellers of either (x) any
Contract assumed by Buyer pursuant to SECTION 2.6(B) (III) or (y) any Additional
Agreement that constitutes an Assumed Liability.
<PAGE> 41
12.3. INDEMNIFICATION BY BUYER.
Subject to the conditions and provisions of SECTION 12.4,
Buyer hereby agrees to indemnify, defend and hold harmless Sellers, their
members, One-On-One Sports, Inc. and their respective directors, officers and
employees ("Sellers Indemnified Parties") from, against and with respect to any
and all Losses, asserted against, resulting to, imposed upon or incurred by
Sellers Indemnified Parties, directly or in indirectly, by reason of or
resulting from (a) any liability or obligation of or claims against Sellers
Indemnified Parties (whether absolute, accrued, contingent or otherwise and
whether contractual, Tax or any other type of liability or obligation or claim)
expressly assumed by Buyer pursuant to SECTION 2.6; (b) any misrepresentation or
breach of the warranties of Buyer contained in or made pursuant to any Buyer
Document; (c) any noncompliance by Buyer with any covenants, agreements or
undertakings of Buyer contained in or made pursuant to any Buyer Document; (d)
any liability or obligation of or claims against Sellers Indemnified Parties
(whether absolute, accrued, contingent or otherwise and whether a contractual,
Tax or any other type of liability or obligation or claim) arising out of,
relating to or resulting from the business of Buyer, or relating to or resulting
from the Assets (other than the Excluded Assets) or the Assumed Liabilities, or
the business and operations of the Station during the period from and after the
Closing Date; (e) any failure by Buyer to obtain and hold any permit, license or
approval from any Governmental Authority necessary in order to conduct the
operations of the Station in accordance with applicable law and to own, use and
maintain the Assets; and (f) any decision by Buyer to close the transactions
contemplated by this Agreement notwithstanding a failure by Sellers to obtain
any consent, authorization or approval, including Governmental Approvals
relating to the assignment of governmental permits, orders or authorizations,
and consents, authorizations and approvals of non-governmental third parties
necessary to effect valid assignments or transfers to Buyer of any Asset,
including any Material Contract set forth on SCHEDULE 2.1(D), or any Additional
Agreement.
12.4. CONDITIONS OF INDEMNIFICATION.
The obligations and liabilities of Sellers and of Buyer
hereunder with respect to their respective indemnities pursuant to this ARTICLE
12, shall be subject to the following terms and conditions:
12.4(a) The party seeking indemnification (the "Indemnified
Party") must give the other party or parties, as the case may be (the
"Indemnifying Party"), notice specifying in reasonable detail the nature of any
such Losses promptly after the Indemnified Party receives notice thereof;
provided that the failure to give such notice shall not affect the rights of the
Indemnified Party hereunder except to the extent that the Indemnifying Party's
defense shall have been materially impaired.
12.4(b) The Indemnifying Party shall have the right, absent
a conflict of interest, to undertake, by counsel or other representatives of its
own choosing, the defense of such Losses at the Indemnifying Party's risk and
expense.
12.4(c) In the event that the Indemnifying Party shall elect
not to undertake such defense, or, within a reasonable time after notice from
the Indemnified Party of any such Losses, shall fail to defend, the Indemnified
Party (upon further written notice to the Indemnifying Party) shall have the
right to undertake the defense, compromise or settlement of such Losses, by
counsel or other representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the right of the
Indemnifying Party to assume defense under SECTION 12.4(B) hereof at any time
prior to settlement, compromise or final determination thereof). In such event,
the Indemnifying Party shall pay to the Indemnified Party, in addition to the
other sums required to be paid hereunder, the costs and expenses incurred by the
Indemnified Party in connection with such defense, compromise or settlement as
and when such costs and expenses are so incurred.
<PAGE> 42
12.4(d) Anything in this SECTION 12.4 to the contrary
notwithstanding, (i) if there is a reasonable probability that Losses may
materially and adversely affect the Indemnified Party other than as a result of
money damages or other money payments, the Indemnified Party shall have the
right, at its own cost and expense, to participate in the defense, compromise or
settlement of the Losses, (ii) the Indemnifying Party shall not, without the
Indemnified Party's written consent, which shall not be unreasonably withheld,
settle or compromise any Losses or consent to entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all liability in respect of
such Losses in form and substance satisfactory to the Indemnified Party, and
(iii) in the event that the Indemnifying Party undertakes defense of any Losses,
the Indemnified Party, by counsel or other representative of its own choosing
and at its sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives concerning such
Losses and the Indemnifying Party and the Indemnified Party and their respective
counsel or other representatives shall cooperate with respect to such Losses and
(iv) in the event that the Indemnifying Party undertakes defense of any Losses,
the Indemnifying Party shall have an obligation to keep the Indemnified Party
informed of the status of the defense of such Losses and furnish the Indemnified
Party with all documents, instruments and information that the Indemnified party
shall reasonably request in connection therewith.
12.4(e) No claim for indemnification shall be made by either
Indemnified Party unless the aggregate losses of such Indemnified Party exceed
Twenty-Five Thousand Dollars ($25,000) (the "Threshold Amount"), whereupon, the
Indemnified Party shall be entitled to indemnification hereunder by the
Indemnifying Party for any such aggregate losses in excess of the Threshold
Amount. Notwithstanding any other provision of this Agreement, the maximum
liability that any Indemnifying Party shall have for indemnification claims
hereunder shall not exceed Sixteen Million Seven Hundred Fifty Thousand Dollars
($16,750,000) in the aggregate.
12.4(f) The indemnification obligations under this ARTICLE
12 with respect to SECTIONS 12.2(B) AND 12.3(B) shall expire twelve (12) months
following the Closing Date; PROVIDED, that, if any such indemnification claim
under such Sections has been asserted in writing prior to the stated expiration
of the applicable period set forth above, then any indemnification obligation
with respect thereto shall survive until final resolution thereof.
12.4(g) If any indemnity claim relates to the cleanup of
Hazardous Materials, such cleanup shall be required only to the extent that it
is required by a Governmental Authority pursuant to an Environmental Law.
<PAGE> 43
ARTICLE 13.
TERMINATION
13.1. TERMINATION.
This Agreement may be terminated at any time prior to the
Closing by:
13.1(a) the mutual consent, in writing, of Sellers and
Buyer;
13.1(b) Buyer, by written notice of termination delivered to
Sellers, if Sellers are in material default of their obligations hereunder and
have failed to cure such default to Buyer's reasonable satisfaction within
thirty (30) days following written notice of such default sent by Buyer to
Sellers;
13.1(c) Sellers, by written notice of termination delivered
to Buyer, if Buyer is in material default of its obligations hereunder and has
failed to cure such default to Sellers' reasonable satisfaction within thirty
(30) days following written notice of such default sent by Sellers to Buyer;
13.1(d) automatically, without the need for further action
on the part of any party hereto, upon the first date on which the denial of the
FCC Consent becomes a Final Order; or
13.1(e) by any party not then in default hereunder if for
any reason the Closing has not occurred within one year following the date of
this Agreement (as such date may be extended by mutual agreement of the
parties).
13.2. EFFECT OF TERMINATION.
In the event this Agreement is terminated as provided in
SECTION 13.1(A), (D) OR (E), this Agreement shall be deemed null, void and of no
further force or effect, and the parties hereto shall be released from all
future obligations hereunder with respect to the Station; provided, however,
that the obligations of Buyer and Sellers as in SECTIONS 6.3, 7.1, 13.2, 15.3
and 15.4, shall survive such termination. If this Agreement is subject to
termination as provided in SECTIONS 13.1(B) OR (C), the rights of the parties
shall be governed by ARTICLE 14.
<PAGE> 44
ARTICLE 14.
REMEDIES
14.1. DEFAULT BY SELLERS.
If this Agreement is terminable by Buyer pursuant to SECTION
13.1(B) and Buyer is not in material default or material breach of this
Agreement, Buyer shall be entitled:
(i) to require Sellers to consummate and specifically
perform the sale in accordance with SECTION 14.3, if necessary through
injunction or other court order or process; or
(ii) by written notice to Sellers, to terminate this
Agreement; and
(iii) to pursue any and all remedies against Sellers
available at law or in equity.
14.2. DEFAULT BY BUYER.
If this Agreement is terminated pursuant to SECTION 13.1(C)
and neither Seller is in material default or material breach of this Agreement,
Sellers shall be paid the Escrow Deposit as liquidated damages, it being agreed
that such payment shall constitute full payment for any and all damages suffered
by Sellers by reason thereof and that Sellers shall have no rights to or claims
for damages from Buyer or its Affiliates other than as set forth in this
Agreement.
14.3. SPECIFIC PERFORMANCE.
Sellers acknowledge that the Assets to be sold and delivered
to Buyer pursuant to this Agreement are unique and that Buyer has no adequate
remedy at law if Sellers shall fail to perform any of their obligations
hereunder, and Sellers therefore confirm and agree that Buyer's right to
specific performance is essential to protect the rights and interests of Buyer.
Accordingly, Sellers hereby agree that if this Agreement is terminable by Buyer
pursuant to SECTION 13.1(B) and Buyer is not in material default or material
breach of this Agreement, Buyer shall have the right to have all obligations,
undertakings, agreements and other provisions of this Agreement specifically
performed by Sellers and that Buyer shall have the right to obtain an order or
decree of such specific performance in any of the courts of the United States or
of any state or other political subdivision thereof.
<PAGE> 45
14.4. REMEDIES NOT EXCLUSIVE.
The remedies provided in this ARTICLE 14 shall be cumulative
and not exclusive.
ARTICLE 15.
GENERAL PROVISIONS
15.1. FURTHER ASSURANCES.
Subject to the terms and conditions herein provided, each of
the parties hereto agrees to use its commercially reasonable efforts to take or
cause to be taken all such further actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement or
in order to fully effectuate the purposes, terms and conditions of this
Agreement (including, without limitation, executing, delivering and filing or
causing to be executed, delivered and filed such further documents and
instruments and obtaining such consents (including Governmental Approvals), as
may be necessary or reasonably requested in connection with the consummation of
the transactions contemplated hereby). In case at any time after the Closing
Date any further action is necessary to carry out the purposes of this
Agreement, including, without limitation, the securing of consents of third
parties, each party hereto shall use its reasonable best efforts to take all
such necessary action.
15.2. MAIL.
Sellers hereby authorize and empower Buyer from and after
the Closing Date (a) to receive and open mail addressed to the Station and (b)
to deal with the contents thereof in any manner Buyer sees fit, provided such
mail and the contents thereof relate to the Station or the Assets (other than
the Excluded Assets) or to any of the Assumed Liabilities. Sellers agree to
deliver to Buyer any mail, checks or other documents received by it pertaining
to the Station or the Assets (other than the Excluded Assets) or any of the
Assumed Liabilities. Buyer agrees to deliver to Sellers any mail which it
receives to which it is not entitled by reason of the Agreement or otherwise and
to which Sellers are entitled.
15.3. BROKERS.
Sellers represent to Buyer that Sellers have not engaged, or
incurred any liability (for any brokerage fees, finders' fees, commissions or
otherwise) to, any broker, finder or agent in connection with the transactions
contemplated by this Agreement; Buyer represents to Sellers that Buyer has not
engaged, or incurred any unpaid liability (for any brokerage fees, finders'
fees, commissions or otherwise) to, any broker, finder or agent in connection
with the transactions contemplated by this Agreement; and Sellers agree to
indemnify Buyer, and Buyer agrees to indemnify Sellers, against any claims
asserted against the other parties for any such fees or commissions by any
person purporting to act or to have acted for or on behalf of the indemnifying
party. Notwithstanding any other provision of this Agreement, this SECTION 15.3
shall survive the Closing without limitation.
<PAGE> 46
15.4. EXPENSES.
Except as otherwise provided in this Agreement, each party
hereto shall pay its own expenses incurred in connection with this Agreement and
in the preparation for and consummation of the transactions provided for herein.
Notwithstanding the foregoing, Buyer and Sellers shall share equally any
expenses in connection with any transfer, sales, filing or use Taxes or fees
applicable to, imposed upon or arising out of the transactions contemplated
hereby including, without limitation, any transfer Tax or filing fee relating to
the assignment of the FCC Licenses, the HSR Filing or the transfer of Real
Property or personal property.
15.5. NOTICES.
All notices, demands, requests, or other communications
which may be or are required to be given or made by any party to any other party
pursuant to this Agreement shall be in writing and shall be hand delivered,
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid, delivered by overnight air courier, or transmitted by facsimile
transmission addressed as follows:
(i) If to Buyer:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attention: Joaquin F. Blaya
Facsimile: (305) 463-5001
with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue
Washington, D.C. 20005
Attention: John C. Quale
Facsimile: (202) 393-5760
<PAGE> 47
(ii) If to Sellers:
c/o One-On-One Sports, Inc.
1935 Techny Rd.
Suite 18
Northbrook, Illinois 60062
Attention: Christopher J. Brennan
Facsimile: (847) 400-3033
with a copy (which shall not constitute notice) to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attention: Gregory S. Murray
Facsimile: (312) 558-5700
and
Fletcher, Heald & Hildreth, P.L.C.
11th Floor
1300 North 17th Street
Rosslyn, Virginia 22209
Attention: Richard Hildreth
Facsimile: (703) 812-0486
or such other address as the addressee may indicate by written notice to the
other parties.
Each notice, demand, request, or communication which shall
be given or made in the manner described above shall be deemed sufficiently
given or made for all purposes at such time as it is delivered to the addressee
(with the return receipt, the delivery receipt, the facsimile transmission
confirmation or the affidavit of messenger being deemed conclusive but not
exclusive evidence of such delivery) or at such time as delivery is refused by
the addressee upon presentation.
<PAGE> 48
15.6. WAIVER.
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any other
instrument or document given in connection with or pursuant to this Agreement
shall impair any such right, power or privilege or be construed as a waiver of
any default or any acquiescence therein. No single or partial exercise of any
such right, power or privilege shall preclude the further exercise of such
right, power or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto unless made in
writing and signed by the party against whom enforcement of such waiver is
sought and then only to the extent expressly specified therein.
15.7. BENEFIT AND ASSIGNMENT.
15.7(a) Except as hereinafter specifically provided in this
SECTION 15.7, no party hereto shall assign this Agreement, in whole or in part,
whether by operation of law or otherwise, without the prior written consent of
Sellers (if the assignor is Buyer) or Buyer (if the assignor is Sellers); and
any purported assignment contrary to the terms hereof shall be null, void and of
no force and effect. Buyer shall have the right to assign this Agreement to any
entity or entities controlling, controlled by, or under common control with
Buyer so long as any such assignment will not delay the Closing beyond the date
on which any Closing would otherwise occur in accordance with this Agreement;
PROVIDED, HOWEVER, that no such assignment by Buyer shall release Buyer from its
obligations hereunder. Any assignment in accordance with the terms hereof shall
become effective upon delivery of written notice in accordance with SECTION
15.5.
15.7(b) This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors and assigns
as permitted hereunder. No person or entity other than the parties hereto or
One-On-One Sports, Inc. is or shall be entitled to bring any action to enforce
any provision of this Agreement against any of the parties hereto, and the
covenants and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto, their
respective successors and assigns as permitted hereunder or One-On-One Sports,
Inc.
15.8. ENTIRE AGREEMENT; AMENDMENT.
This Agreement, including the Schedules hereto and the other
instruments and documents referred to herein or delivered pursuant hereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior oral or written agreements, commitments or
understandings with respect to such matters, including, without limitation, the
Letter of Intent dated as of January 11, 1999. No amendment, modification or
discharge of this Agreement shall be valid or binding unless set forth in
writing and duly executed by the parties hereto.
15.9. SEVERABILITY.
If any part of any provision of this Agreement or any other
contract, agreement, document or writing given pursuant to or in connection with
this Agreement shall be invalid or unenforceable under applicable law, such part
shall be ineffective to the extent of such invalidity or unenforceability only,
without in any way affecting the remaining parts of such provisions or the
remaining provisions of said contract, agreement, document or writing.
<PAGE> 49
15.10. HEADINGS.
The headings of the sections and subsections contained in
this Agreement are inserted for convenience only and do not form a part or
affect the meaning, construction or scope thereof.
15.11. GOVERNING LAW.
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed under and in accordance with the laws of the State of Delaware,
excluding the choice of law rules thereof.
15.12. SIGNATURE IN COUNTERPARTS.
This Agreement may be executed in separate counterparts,
none of which need contain the signatures of all parties, each of which shall be
deemed to be an original, and all of which taken together constitute one and the
same instrument.
<PAGE> 50
IN WITNESS WHEREOF, each of the parties hereto has executed
this Asset Purchase Agreement, or has caused this Asset Purchase Agreement to be
duly executed and delivered in its name on its behalf, all as of the day and
year first above written.
SELLERS
ONE-ON-ONE SPORTS LICENSE OF ILLINOIS, L.L.C
By: One-On-One Sports Radio of Illinois, L.L.C.
By: One-On-One Sports Radio Stations, Inc.
By:
--------------------------------------------
Christopher J. Brennan
President
ONE-ON-ONE SPORTS RADIO OF ILLINOIS, L.L.C.
By: One-On-One Sports Radio Stations, Inc.
By:
--------------------------------------------
Christopher J. Brennan
President
BUYER
RADIO UNICA CORP.
By:
--------------------------------------------
Joaquin F. Blaya
Chairman and Chief Executive Officer
<PAGE> 51
ONE-ON-ONE SPORTS, INC.
JOINDER AGREEMENT
As a material inducement for Buyer to enter into the foregoing
Asset Purchase Agreement of even date herewith and for other valuable
consideration, the receipt and adequacy of which are hereby acknowledged,
One-On-One Sports, Inc., a Delaware corporation ("Parent") and the ultimate
parent of each Seller, hereby joins in and agrees to be bound by the provisions
of the Asset Purchase Agreement as they relate to Sellers. In addition, Parent
acknowledges and agrees that (i) any claim of Buyer arising under the Asset
Purchase Agreement or under any other Transaction Document may be asserted
against Parent and (ii) Parent shall be jointly and severally liable under the
Asset Purchase Agreement and the other Transaction Documents for any default in
the performance of the obligations of Sellers under such documents or for the
breach by either Seller of any representation, warranty, covenant or agreement
contained in such documents to the extent of Sellers' liability.
Parent represents and warrants to Buyer as follows: (a) Parent
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware; (b) Parent has all requisite power and authority
to execute and deliver this Joinder Agreement and to consummate the transactions
contemplated hereby; (c) the execution, delivery and performance of this Joinder
Agreement and the consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate proceedings on the part
of Parent and no other corporate proceedings or actions on the part of Parent,
its board of directors or its shareholders is necessary therefor; and (d) this
Joinder Agreement constitutes a valid and binding agreement and obligation of
Parent, enforceable in accordance with its terms.
Dated as of this ___, day of _________, 1999.
ONE-ON-ONE SPORTS, INC.
By:
-----------------------------
Name: Christopher J. Brennan
Title: President
<PAGE> 1
Exhibit 10.31
TIME BROKERAGE AGREEMENT
THIS TIME BROKERAGE AGREEMENT ("Agreement"), dated as of February 22,
1999, is made and entered into by and between Radio Unica Corp., a Delaware
corporation ("Unica"), and One-On-One Sports Radio of Illinois, L.L.C., a
Delaware limited liability company ("One-On-One Radio").
WHEREAS, One-On-One Sports License of Illinois, L.L.C. ("One-On-One
License") is the licensee of radio station WIDB(AM), Chicago, Illinois,
operating at 950 kHz (the "Station"); and
WHEREAS, One-On-One License is a subsidiary of One-On-One Radio; and
WHEREAS, Unica, One-On-One License and One-On-One Radio have entered
into that certain Asset Purchase Agreement, dated as of February 22, 1999 (the
"Asset Purchase Agreement"), pursuant to which Unica has agreed to buy and
One-On-One License and One-On-One Radio have agreed to sell certain of the
assets of the Station; and
WHEREAS, One-On-One Radio desires to make available to Unica
substantially all of the broadcasting time on the Station; and
WHEREAS, Unica is engaged in the business of radio broadcasting and
desires to avail itself of the Station's available broadcast time from the
Operational Commencement Date (as defined herein) until the Closing Date (as
defined in the Asset Purchase Agreement).
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, Unica and One-On-One Radio agree as
follows:
1. COMMENCEMENT DATE AND FACILITIES.
Commencing 12:01 a.m. on Saturday, May 15, 1999 (the "Operational
Commencement Date"), One-On-One Radio shall broadcast, or cause to be broadcast,
over the Station transmission facilities, certain programming, consisting of
programs, announcements and advertising (the "Programming"), originating at
Unica's studio and delivered to One-On-One Radio by Unica in compliance with the
provisions of Section 5(a) of this Agreement. Unica shall deliver the
Programming to One-On-One Radio's transmitting facilities at Unica's exclusive
cost, by means reasonably acceptable to One-On-One Radio. The period from the
Operational Commencement Date to the termination of this Agreement is the
"Operating Period."
<PAGE> 2
2. TERM.
This Agreement is effective immediately and, unless sooner terminated,
extended or renewed as hereinafter provided, shall end on the Closing Date (as
defined in the Asset Purchase Agreement) or upon the termination of the Asset
Purchase Agreement pursuant to Section 13.1 thereof (the "Term").
3. PAYMENTS BY UNICA.
(a) In addition to any fees and costs Unica incurs in producing,
providing and delivering the Programming (including those costs payable by Unica
pursuant to Section 3(c) and Section 9 hereof), Unica hereby agrees to pay
One-On-One Radio during the Term commencing on the Operational Commencement Date
a monthly fee of (i) $120,000 for the period prior to July 1, 1999 and (ii)
$140,000 for each month beginning on or after July 1, 1999. Amounts payable by
Unica to One-On-One Radio pursuant to this Agreement shall be payable in advance
without notice or demand on May 15, 1999 and thereafter on the first business
day of each month during the Term. In the event that the Term includes any
partial month, the monthly fee for such month shall be prorated accordingly and
the difference between such prorated amount and the amount actually paid by
Unica to One-On-One Radio for such month shall be paid to Unica on the Closing
Date (the "Refund").
(b) Payments will be made by check delivered to One-On-One Radio at
1935 Techny Rd., Suite 18, Northbrook, Illinois 60062, or such other address as
One-On-One Radio may select pursuant to Section 27 hereof, provided that, if
One-On-One Radio has given wire transfer instructions to Unica, Unica shall be
required to make all payments by wire transfer of funds to the account specified
by One-On-One Radio.
(c) Unica shall be solely responsible for and shall pay in a timely
manner all direct and indirect costs incurred by Unica in producing, providing
and delivering the Programming including, but not limited to, (i) program costs,
(ii) sales costs, (iii) Station advertising and promotion costs, (iv) costs
related to Unica's audio lines to One-On-One Radio's transmitting facilities,
(v) salaries, payroll taxes, insurance, health benefits and related costs of
personnel employed by Unica in connection with the Programming supplied to
One-On-One Radio, sales and promotion of radio time and, (vi) income, gross
receipts, sales, personal property, and other taxes of any nature whatsoever and
costs related to Unica's programming of the Station.
(d) The failure of One-On-One Radio to demand or insist upon timely and
full payment of any payment due hereunder shall not constitute a waiver of
Unica's obligations under this Section 3.
<PAGE> 3
4. PAYMENTS BY ONE-ON-ONE RADIO.
One-On-One Radio shall be solely responsible for and shall pay in a
timely manner the following costs of the Station: (i) rents, utilities,
insurance and maintenance costs relating to the Station's tower and transmitter
site facilities; (ii) One-On-One Radio's operating expenses, including
telephone, sale or delivery and postal service expenses relating to the Station;
(iii) the salaries, payroll taxes, insurance, health benefits and related costs
of personnel employed by One-On-One Radio in the operation of the Station
following the Operational Commencement Date; and (iv) income, gross receipts,
sales, personal property, excise or any other taxes of any nature whatsoever
pertaining to the Station's transmitter facilities and costs related to the
production and broadcast of material supplied by One-On-One Radio pursuant to
Section 5(b) of this Agreement ("One-On-One Radio Programming").
5. PROGRAMS.
(a) During the Operating Period, Unica shall furnish or cause to be
furnished, at its own cost, material in broadcast-ready form for broadcast on
the Station pursuant to this Agreement at all times other than the times of the
One-On-One Radio Programming, and all such Unica programs shall accord with the
Communications Act of 1934, as amended (as so amended, the "Act"), and all other
applicable statutes and Federal Communications Commission ("FCC") policies and
requirements. All rights, including, without limitation, all ownership rights
and rights of use, relating to the Programming shall belong exclusively to
Unica, and One-On-One Radio shall have no rights of any kind in or to such
programs and hereby disclaims all rights thereto.
(b) One-On-One Radio reserves the following periods to present
One-On-One Radio Programming: Sunday mornings from 6:00 a.m. to 10:00 a.m. Upon
reasonable notice from One-On-One Radio, Unica instead of One-On-One Radio shall
program those hours.
6. EMPLOYMENT.
(a) One-On-One Radio shall be solely responsible for, and shall
indemnify Unica, its directors, officers, employees, contractors, agents, or
affiliates from and against, all claims, costs, losses, liability, damages, and
other expenses (including reasonable professional fees and disbursements)
relating to, salaries, taxes, insurance, severance, bonuses and other benefits
or obligations due or payable to: (i) all personnel used in the production of
One-On-One Radio Programming hereunder or necessary to fulfill One-On-One
Radio's obligations hereunder; and (ii) all employees of One-On-One Radio.
<PAGE> 4
(b) Unica shall be solely responsible for, and shall indemnify
One-On-One Radio, its directors, officers, employees, contractors, agents or
affiliates from and against, all claims, costs, losses, liability, damages, and
other expenses (including reasonable professional fees and disbursements)
relating to, salaries, taxes, insurance, severance, bonuses, and other benefits
or obligations due or payable to: (i) all personnel used in the production of
the Programming hereunder or necessary to fulfill Unica's obligations hereunder;
and (ii) all employees of Unica.
7. HANDLING OF MAIL AND PUBLIC FILE.
To the extent that either One-On-One Radio or Unica receives or handles
mail, cables, telecopies, telephone calls or other communications in connection
with any material broadcast over the Station during the term of this Agreement,
the party promptly shall (a) advise the other, in writing, of any public or FCC
complaint or inquiry concerning the Programming or the One-On-One Radio
Programming, or both and (b) deliver to the other a copy of any written
communications from the public or the FCC. Unica also shall deliver to
One-On-One Radio copies of all operating and programming information relating to
Unica necessary to maintain the public file and other records required to be
kept by FCC regulations, rules and policies. During the term of this Agreement,
Unica, as to the Programming, also shall maintain and deliver to the Station and
One-On-One Radio such records and information required by the FCC to be placed
in the public inspection file of the Station relating to the broadcast of
political programming and advertisements, in accordance with the provisions of
Sections 73.1943 and 73.3526 of the FCC's rules, and pertaining to the broadcast
of sponsored programming addressing political issues or controversial issues of
public importance, in accordance with the provisions of Section 73.1212 of the
FCC's rules. Unica also shall consult with One-On-One Radio concerning the
Programming to ensure that the Station is compliant with the Act and all other
applicable statutes and the rules, regulations and policies of the FCC, as
announced from time to time, with respect to the carriage of political
advertisements and programming (including, without limitation, the rights of
candidates and, as appropriate, others to "equal opportunities") and the charges
permitted therefor. Such consultations shall take place, without limitation, at
least 75 days prior to any primary, and at least 90 days prior to any general,
election. Unica shall provide to the Station such documentation relating to the
Programming as One-On-One Radio reasonably shall request. In particular, and
without limitation, Unica shall immediately provide to One-On-One complete
records of all requests for broadcast time made by or on behalf of any candidate
for public office, together with information concerning the disposition of such
requests and the charges made. One-On-One Radio shall be responsible for
providing the personnel necessary to maintain a complete public file (as
required by the FCC) and to compile and file all required quarterly
issues/programs lists for the Station.
<PAGE> 5
8. MAINTENANCE OF EQUIPMENT.
(a) The transmitter equipment and antennas used for the Station's
broadcasts owned by One-On-One Radio (the "Transmission Equipment") shall be
maintained by One-On-One Radio in a condition consistent with good engineering
practices and in compliance in all material respects with the Act and all other
applicable rules, regulations and technical standards of the FCC. One-On-One
Radio shall maintain power and modulation of the Station broadcasts in a manner
consistent with One-On-One Radio's past practices. All capital expenditures
reasonably required to maintain the technical quality of the Station's
Transmission Equipment and its compliance with applicable laws and regulations
shall be made at the sole expense and in the sole discretion of One-On-One
Radio.
(b) All equipment necessary for the delivery of the Programming shall
be paid for and/or maintained by Unica in a condition consistent with good
engineering practices and in compliance in all material respects with the Act
and all other applicable rules, regulations and technical standards of the FCC.
All capital expenditures reasonably required to maintain the technical quality
of the broadcast equipment and its compliance with applicable laws and
regulations shall be made at the sole expense and in the sole discretion of
Unica.
9. RESPONSIBILITY FOR PRODUCTION EXPENSES.
Unica shall pay for all costs associated with producing, providing and
delivering the Programming and sale of radio time, all fees to ASCAP, BMI and
SESAC and any other music licensing organization, attributable to the
Programming and any other copyright fees attributable to the Programming. Unica
shall pay any costs associated with any affiliation with any network.
<PAGE> 6
10. CONTROL OF THE STATION.
During the term of this Agreement, One-On-One Radio shall maintain
control over the Station's technical facilities and Unica agrees that it will
permit One-On-One Radio to take any and all steps necessary to maintain such
control continuously throughout the term of this Agreement. One-On-One Radio and
Unica acknowledge and agree that One-On-One Radio's responsibility to retain
control is an essential element of the continuing validity and legality of this
Agreement. One-On-One Radio shall provide and pay for: (a) a General Manager of
the Station, who shall report solely to, and be accountable solely to,
One-On-One Radio and who shall direct the day-to-day operations of the Station;
and (b) such other engineering, programming and other personnel as are necessary
to fulfill One-On-One Radio's obligations under this Agreement. One-On-One Radio
shall retain control, said control to be reasonably exercised, over the
policies, programming and operations of the Station, including, without
limitation, the right to decide whether to accept or reject any programming or
advertisements, and the right to take any other actions necessary to comply with
the laws of the United States and the rules, regulations and policies of the
FCC. One-On-One Radio shall maintain its main studio within the Station's
principal community contour and Unica shall take such actions as One-On-One
Radio may reasonably request to ensure such requirements are met. Unica shall
not represent, warrant or hold itself out as the Station's owner and shall sell
all advertising time and enter into all agreements in its own name. One-On-One
Radio reserves the right to refuse to broadcast any program or programs
containing matter which is, or in the reasonable opinion of One-On-One Radio may
be, violative of any right, law, or governmental rule, regulation or policy.
11. SPECIAL EVENTS.
One-On-One Radio has the right to reject any of the Programming and to
substitute on a temporary basis a program that, in the reasonable opinion of
One-On-One Radio, is of greater local or national importance. One-On-One Radio
confirms that no Programming shall be rejected on the basis of Programming
performance or ratings, advertiser reaction or the availability of alternative
programming (including, but not limited to, sporting events or paid programming)
that One-On-One Radio believes to be more profitable or more attractive. In the
event of such rejection and substitution, One-On-One Radio shall give Unica
written notice of such rejection and substitution, and the reasons therefor, at
least three (3) weeks in advance of the scheduled broadcast, or as soon
thereafter as possible (including an explanation of the cause of any lesser
notice). In the event of such preemption, Unica shall receive a payment credit
in an amount equal to the loss of revenue by Unica during the time its
Programming was pre-empted, which shall equal the loss of the Station's local
and national revenues and the Station's allocation of Radio Unica network
revenues. The Station's allocation of Radio Unica network revenues shall be
equal to the percentage of Radio Unica network revenues that is the same
percentage determined by dividing the Hispanic population of the Chicago market
by the total Hispanic population reached by the Radio Unica network.
12 FORCE MAJEURE.
Any failure or impairment (I.E., failure to broadcast at Station's full
authorized power) of facilities or any delay or interruption in broadcast
programs, or failure at any time to furnish facilities, in whole or in part, for
broadcasting, due to any acts of God, strikes or threats thereof or FORCE
MAJEURE or due to any other causes beyond the reasonable control of One-On-One
Radio or Unica shall not constitute a breach of this Agreement and One-On-One
Radio or Unica, as the case may be, will not be liable to the other party hereto
therefor, provided such party uses reasonable diligence to correct such failure
or impairment as soon as is reasonably possible.
<PAGE> 7
13 STATION'S IDS.
One-On-One Radio hereby grants to Unica an exclusive license to use
such call letters and other identifiers as are currently used or in the future
may be used by the Station (the "Station's Licensed Identifiers") in connection
with the broadcast of Unica's programs on the Station, but for no other purpose.
The license granted herein shall expire on the Closing Date or upon the
expiration or earlier termination of this Agreement. Unica shall use the
Station's Licensed Identifiers in Unica's programming in a manner consistent
with the use thereof by One-On-One Radio in broadcasts of the Station
immediately prior to the Operational Commencement Date during the entire term of
this Agreement and as may be required by the Act or the rules, regulations and
policies of the FCC. In addition, One-On-One Radio agrees, at Unica's cost, to
cooperate with Unica in applying for a change or changes in the Station's call
sign in accordance with the terms of the Asset Purchase Agreement, so long as
such new call sign is not offensive or contrary to the public interest.
14 PAYOLA.
Unica shall provide One-On-One Radio with payola affidavits,
substantially in the form attached hereto as Attachment A, signed by such of
Unica's employees and at such times as One-On-One Radio may reasonably request
in writing, and shall notify One-On-One Radio promptly of any violations it
learns of relating to the Act, including Sections 317 and 508 thereof.
15 COMPLIANCE WITH LAW AND OTHER AGREEMENTS.
Unica and One-On-One Radio shall, throughout the term of this
Agreement, comply in all material respects with the Act, the rules, regulations
and policies of the FCC, the terms of the Station's FCC licenses and all other
laws and regulations applicable to the conduct of the Station's business.
<PAGE> 8
16 INDEMNIFICATION; WARRANTY.
Each party (as the case may be, the "Indemnitor") shall indemnify and
hold harmless the other party (as the case may be, the "Indemnitee"), its
directors, officers, employees, agents and affiliates, from and against any and
all liability, including without limitation all reasonable attorneys fees,
arising out of or incident to the programming furnished by the Indemnitor, any
breach of this Agreement by the Indemnitor or the conduct of the Indemnitor, its
directors, officers, employees, contractors, agents or affiliates. Without
limiting the generality of the foregoing, Indemnitor shall indemnify and hold
and save the Indemnitee, its directors, officers, employees, agents and
affiliates harmless against liability for libel, slander, infringement of
trademarks, trade names, or program titles, violation of rights of privacy, and
infringement of copyrights and proprietary rights resulting from the programming
furnished by the Indemnitor.
17 EVENTS OF DEFAULT.
Each of the following shall constitute an "Event of Default" under this
Agreement:
17.1. DEFAULT IN COVENANTS. Unica's or One-On-One Radio's material
non-observance or material non-performance of any covenant or agreement
contained herein, (PROVIDED, HOWEVER, that such default shall not constitute an
Event of Default hereunder unless such default is not cured within twenty (20)
business days after delivery of written notice thereof to the breaching party by
the non-breaching party), except that a default in payment by Unica must be
cured within two (2) business days after delivery of notice (by telephone,
facsimile or otherwise) thereof to the Chief Financial Officer of Unica; or
17.2. BREACH OF REPRESENTATION. Unica's or One-On-One Radio's material
breach of any representation or warranty herein, or in any certificate or
document furnished pursuant to the provisions hereof, which shall prove to have
been false or misleading in any material respect, as of the time made or
furnished, and not cured within twenty (20) business days after delivery of
written notice thereof to the breaching party by the non-breaching party; or
17.3. INSOLVENCY. The voluntary filing by Unica or One-On-One Radio (or
an involuntary filing with respect to Unica or One-On-One Radio not vacated
within ninety (90) days after such filing) of a petition for reorganization or
dissolution under federal bankruptcy laws or under substantially equivalent
state laws.
18 TERMINATION.
18.1. TERMINATION UPON AN EVENT OF DEFAULT. Either party may terminate
this Agreement by written notice to the other party upon the occurrence of an
Event of Default; provided, however, that the party serving such notice shall
not then be in default of its obligations under this Agreement.
<PAGE> 9
18.2 EFFECT OF TERMINATION. Upon termination of this Agreement pursuant
to this Section 18, each party shall be free to pursue any and all remedies
available at law, in equity or otherwise. One-On-One Radio, in addition to its
other legal and equitable rights and remedies under this Agreement or under
applicable law, shall be entitled immediately to cease making available to Unica
any further broadcast time or broadcast transmission and facilities, and all
amounts accrued or payable to One-On-One Radio prior to the date of termination
which have not been paid shall be immediately due and payable. Unica, in
addition to its other legal and equitable rights and remedies under this
Agreement or under applicable law, shall be entitled immediately to cease
providing any further Programming to be broadcast on the Station, and any
amounts which have been prepaid to One-On-One Radio beyond the termination date
shall be immediately due and payable to Unica.
18.3. LIABILITIES UPON TERMINATION. Unica shall pay all debts and
obligations resulting from its use of the Station's air time and transmission
facilities, including, without limitation, accounts payable and net barter
balances relating to the period on and after the Operational Commencement Date
and prior to the termination of this Agreement and shall be entitled to the
revenues and other credits for that period.
18.4. SPECIFIC PERFORMANCE. In addition to Unica's rights of
termination hereunder (and in addition to any other remedies available to it or
provided under law), Unica may seek specific performance of this Agreement, in
which case One-On-One Radio shall waive the defense of an adequate remedy at law
and interpose no opposition, legal or otherwise, as to the propriety of specific
performance as a remedy hereunder.
19 REVENUES.
Unica shall receive all revenues attributable to the Programming aired
on the Station on and from the Operational Commencement Date and for the period
thereafter during the Term of this Agreement.
20 REPRESENTATIONS, WARRANTIES AND COVENANTS.
20.1 Unica represents and warrants to, and covenants with, One-On-One
Radio that:
(a) This Agreement has been duly executed and delivered by Unica, and
constitutes its valid and binding obligation, enforceable against it in
accordance with its terms, except as limited by laws affecting the enforcement
of creditor's rights generally or equitable principles. Unica has all necessary
corporate power and authority to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been duly and validly
authorized by all necessary corporate action on Unica's part.
(b) No consent of any other party and no consent, license, approval or
authorization of, or exemption by, or filing, restriction or declaration with,
any governmental authority, bureau, agency or regulatory authority, is required
in connection with the execution, delivery or performance by Unica of this
Agreement, except that One-On-One License is required to file a copy of this
Time Brokerage Agreement with the FCC.
<PAGE> 10
(c) The execution, delivery and performance of this Agreement will not
violate any provision in Unica's certificate of incorporation or by-laws, nor
will it constitute or result in the breach of any term, condition or provision
of, or constitute a default under, or accelerate or permit the acceleration of
any performance required by, any agreement or other instrument to which Unica is
a party or by which any part of its property is bound, or violate any law,
regulations, judgment or order binding upon Unica.
(d) No proceeding is pending or, to the knowledge of Unica, threatened
against Unica before any court, government agency or arbitral tribunal that
would enjoin or prohibit, or which otherwise questions the validity of, any
action taken or to be taken in connection with this Agreement.
(e) Unica shall present Programming which shall serve the needs and
interests of the Station's service area. Consistent with this obligation, during
the term of this Agreement, Unica shall utilize a Spanish-talk format for its
Programming.
20.2 One-On-One Radio represents and warrants to, and covenants with,
Unica that:
(a) This Agreement has been duly executed and delivered by One-On-One
Radio, and constitutes its valid and binding obligation, enforceable against it
in accordance with its terms, except as limited by laws affecting the
enforcement of creditor's rights generally or equitable principles. One-On-One
Radio has all necessary limited liability company power and authority to enter
into and perform its obligations under this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement have been duly and validly authorized by all necessary limited
liability company action on One-On-One Radio's part.
(b) No consent of any other party and no consent, license, approval or
authorization of, or exemption by, or filing, restriction or declaration with,
any governmental authority, bureau, agency or regulatory authority, is required
in connection with the execution, delivery or performance by One-On-One Radio of
this Agreement, except that One-On-One License is required to file a copy of
this Time Brokerage Agreement with the FCC.
(c) The execution, delivery and performance of this Agreement will not
violate any provision of One-On-One Radio's articles of incorporation or
by-laws, nor will it constitute or result in the breach of any term, condition
or provision of, or constitute a default under, or accelerate or permit the
acceleration of any performance required by any agreement or other instrument to
which One-On-One Radio is a party or by which any part of its property is bound,
or violate any law, regulation, judgment or order binding upon One-On-One Radio.
<PAGE> 11
(d) No proceeding is pending or, to the knowledge of One-On-One Radio,
threatened against One-On-One Radio before any court, governmental agency or
arbitral tribunal that would enjoin or prohibit, or which otherwise questions
the validity of, any action taken or to be taken in connection with this
Agreement.
(e) During the Term of this Agreement, One-On-One Radio will hold all
licenses and other permits and authorizations necessary for the operation of the
Station, and such licenses, permits and authorizations are and will be in full
force and effect throughout the Term of this Agreement. There is not pending, or
to One-On-One Radio's knowledge, threatened, any action by the FCC or by any
other party to revoke, cancel, suspend, refuse to renew or modify adversely any
of such licenses, permits or authorizations. To the best of One-On-One Radio's
knowledge, One-On-One Radio is not in violation of any statute, ordinance, rule,
regulation, policy, order or decree of any federal, state or local entity, court
or authority having jurisdiction over it or the Station, which would have an
adverse effect upon One-On-One Radio, its assets, the Station or upon One-On-One
Radio's ability to perform this Agreement. One-On-One Radio shall not take any
action or omit to take any action which would have an adverse impact upon
One-On-One Radio, its assets, the Station or upon One-On-One Radio's ability to
perform this Agreement. All reports and applications required to be filed with
the FCC or any other governmental body during the Term of this Agreement will be
filed in a timely and complete manner. One-On-One Radio has, and throughout the
Term of this Agreement will maintain, good title to, or rights by license, lease
or other agreement to use, all of the assets and properties used in the
operation of the Station. During the Term of this Agreement, One-On-One Radio
shall not dispose of, transfer, assign or pledge any of such assets and
properties, except with the prior written consent of Unica, if such action would
adversely affect One-On-One Radio's performance hereunder or the business and
operations of One-On-One Radio or the Station permitted hereby.
21 MODIFICATION AND WAIVER.
No modification or waiver of any provision of this Agreement shall in
any event be effective unless the same shall be in writing and signed by the
parties, and then such waiver and consent shall be effective only in the
specific instance and for the purpose for which given.
<PAGE> 12
22 DELAY IN EXERCISE OF REMEDIES; REMEDIES CUMULATIVE.
No failure or delay on the part of One-On-One Radio or Unica in
exercising any right or power hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of One-On-One Radio and Unica herein
provided are cumulative and are not exclusive of any right or remedies which
they may otherwise have.
23 CONSTRUCTION.
This Agreement shall be construed in accordance with the internal
substantive (that is, without reference to conflict of) laws of the State of
Delaware and the obligations of the parties hereto are subject to all Federal,
state or municipal laws or regulations now or hereafter in force and to the
regulations and policies of the FCC and all other governmental bodies or
authorities presently or hereafter duly constituted. The parties believe that
the terms of this Agreement meet all of the requirements of current FCC policy
for time brokerage agreements for radio stations and agree that they shall
negotiate in good faith to meet any FCC concern with respect to this Agreement
if they are incorrectly interpreting current FCC policy or if FCC policy as
hereafter modified so requires. If the parties cannot agree to a modification or
modifications deemed necessary by either party to meet FCC requirements, the
termination provisions of Section 18 above shall apply. The parties further
agree that they will make all required filings with the FCC with respect to this
Agreement.
24 HEADINGS.
The headings contained in this Agreement are included for convenience
only and no such heading shall in any way alter the meaning of any provision.
25 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective permitted successors and assigns, including,
without limitation, any permitted transferees or assignees of any kind of the
FCC licenses for the Station.
26 COUNTERPART SIGNATURES.
This Agreement may be signed in one or more counterparts, each of which
shall be deemed a duplicate original, binding on the parties hereto
notwithstanding that the parties are not signatory to the same original or the
same counterpart.
<PAGE> 13
27 NOTICES.
Any notice required hereunder shall be in writing and any payment,
notice or other communications shall be deemed given when delivered by hand or
one (1) day after deposit with a recognized overnight courier for overnight
delivery and addressed as follows:
(a) if to Unica:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attn: Joaquin F. Blaya
with a required copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
1440 New York Avenue, N.W.
Washington, D.C. 20005
Attn: John C. Quale, Esq.
(b) If to Unica's Chief Financial Officer:
Radio Unica Corp.
8400 N.W. 52nd Street
Suite 101
Miami, Florida 33166
Attn: Steve Dawson
Tel: 305-463-5020
Fax: 305-463-5022
(c) If to One-On-One Radio:
One-On-One Sports License of Florida, L.L.C.
1935 Techny Rd., Suite 18
Northbrook, Illinois 60062
Attention: Christopher J. Brennan
with a required copy to:
Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Gregory S. Murray
and
Fletcher, Heald & Hildreth, P.L.C.
1300 N. 17th Street, Eleventh Floor
Arlington, Virginia 22209
Attention: Richard Hildreth
or such other address as the addressee may have specified in a notice
duly given to the sender as provided herein.
<PAGE> 14
28 ENTIRE AGREEMENT.
This Agreement and the Asset Purchase Agreement embody the entire
agreement between the parties regarding the subject matter hereof and there are
no other agreements, representations, warranties, or understandings, oral or
written, between them with respect to the subject matter hereof. No alteration,
modification or change of this Agreement shall be valid unless it is embodied in
a written instrument signed by both of the parties.
29 SEVERABILITY AND ASSIGNMENT.
If any provision or provisions contained in this Agreement are held to
be invalid, illegal or unenforceable, this shall not affect any other provision
hereof, and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision or provisions had not been contained herein, provided
that the benefits afforded each party hereunder are not materially changed.
Neither party may assign this Agreement without the prior written consent of the
other party and any purported assignment without such consent shall be null and
void and of no legal force or effect, provided that either party may assign this
Agreement if it would constitute a pro forma assignment (on Form 316) under
Section 73.3540(f) of the FCC's rules.
30 NO JOINT VENTURE.
The parties agree that nothing herein shall constitute a joint venture
or a principal-agent relationship between them. The parties acknowledge that
call letters, trademarks and other intellectual property shall at all times
remain the property of the respective parties and that neither party shall
obtain any ownership interest in the other party's intellectual property by
virtue of this Agreement.
31 ACCESS TO RECORDS.
Each of One-On-One Radio and Unica agrees to permit the other party
hereto and its agents and representatives access to all books and records
relating to the operation of the Station that may be in its possession.
<PAGE> 15
32 BENEFICIARIES.
Nothing in this Agreement, express or implied, is intended to confer on
any person other than the parties hereto and their respective successors and
assigns any rights, remedies, obligations, or liabilities under or by reason of
this Agreement.
33 FURTHER ASSURANCES.
Subject to the terms and conditions herein provided, each of the
parties hereto agrees to use its commercially reasonable efforts to take or
cause to be taken all such further actions, and to do, or cause to be done, all
things necessary, proper or advisable in order to fully effectuate the purposes,
terms and conditions of this Agreement.
<PAGE> 16
A-1
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
RADIO UNICA CORP.
By:
-------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
ONE-ON-ONE SPORTS RADIO OF ILLINOIS,L.L.C.
By: One-On-One Sports Radio Stations, Inc.
By: Name: Christopher J. Brennan
-------------------------------------------
Title: President
<PAGE> 17
ATTACHMENT A
FORM OF PAYOLA AFFIDAVIT
City of _______________________ )
County of ____________________ ) SS:
State of ______________________ )
ANTI-PAYOLA/PLUGOLA AFFIDAVIT
________________________________, being first duly sworn, deposes and says as
follows:
1. He/She is ___________________________ for __________________________.
Position
2. He/She has acted in the above capacity since __________________________.
3. No matter has been broadcast by Station WIDB on frequency 950 kHz for which
service, money or other valuable consideration has been directly or
indirectly paid, or promised to, or charged, or accepted, by him/her from any
person, which matter at the time so broadcast has not been announced or
otherwise indicated as paid for or furnished by such person.
4. So far as he/she is aware, no matter has been broadcast by Station WIDB on
frequency 950 kHz for which service, money, or other valuable consideration
has been directly or indirectly paid, or promised to, or charged, or accepted
by Station WIDB on frequency 950 kHz or by any independent contractor engaged
by Station WIDB on frequency 950 kHz in furnishing programs, from any person,
which matter at the time so broadcast has not been announced or otherwise
indicated as paid for or furnished by such person.
-------------------------------
Affiant
Subscribed and sworn to before me this __ day of __________, 19__.
- --------------------------------------
Notary Public
My Commission expires:
-----------------
<PAGE> 1
Exhibit 10.32
SECOND SUPPLEMENTAL INDENTURE
This SECOND SUPPLEMENTAL INDENTURE (this "Supplemental
Indenture"), dated as of January 14, 1999, among Radio Unica Corp., a Delaware
corporation (the "Company"), Radio Unica of New York, Inc., a Delaware
corporation ("RUNY"), Radio Unica of New York License Corp., a Delaware
corporation ("RUNY License"), Radio Unica of Dallas, Inc., a Delaware
corporation ("RUD"), Radio Unica of Dallas License Corp., a Delaware corporation
("RUD License"), Radio Unica of Phoenix, Inc., a Delaware corporation ("RUP"),
Radio Unica of Phoenix License Corp., a Delaware corporation ("RUP License") and
Wilmington Trust Company, a Delaware banking corporation, as trustee (the
"Trustee"). RUNY, RUNY License, RUD, RUD License, RUP and RUP License are each,
directly or indirectly, wholly owned subsidiaries of the Company and are
collectively referred to herein as the Additional Guarantors.
WITNESSETH
WHEREAS, the Company, the guarantors named therein and the
Trustee have heretofore executed an indenture (the "Indenture"), dated as of
July 27, 1998, providing for the issuance of an aggregate principal amount at
maturity of $158,088,000 of the Company's 11 3/4% Senior Discount Notes due 2006
(the "Notes");
WHEREAS, the Company, the additional guarantors named therein
and the Trustee have heretofore executed a First Supplemental Indenture, dated
as of September 11, 1998, in connection with the closing of the transactions
contemplated by the Stock Purchase Agreement, dated as of June 10, 1998, among
the Company, Joaquin F. Blaya, and Blaya, Inc.;
WHEREAS, each of the Additional Guarantors became a Restricted
Subsidiary (as defined in the Indenture) of the Company as of January 14, 1999;
WHEREAS, Section 10.03 of the Indenture requires that the
Company cause any Person (as defined in the Indenture) which becomes a
Restricted Subsidiary (other than a Foreign Restricted Subsidiary (as defined in
the Indenture)) to execute a supplemental indenture pursuant to which such
Restricted Subsidiary shall guarantee the obligations of the Company under the
Notes and the Indenture; and
WHEREAS, pursuant to Sections 8.01 and 10.03 of the Indenture,
the Trustee is authorized to execute and deliver this Supplemental Indenture and
Section 8.01 of the Indenture provides that the Company may amend the Indenture
without notice to or consent of any Noteholder to add a Guarantor;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the
<PAGE> 2
Company, the Additional Guarantors and the Trustee mutually covenant and agree
for the equal and ratable benefit of the holders of the Notes as follows:
1. DEFINITIONS. (a) Capitalized terms used herein without definition
shall have the meaning assigned to them in the Indenture.
(b) For all purposes of this Supplemental Indenture,
except as otherwise herein expressly provided or unless the context otherwise
requires: (i) the terms and expressions used herein shall have the same meanings
as corresponding terms and expressions used in the Indenture; and (ii) the words
"herein," "hereof" and "hereby" and other words of similar import used in this
Supplemental Indenture refer to this Supplemental Indenture as a whole and not
to any particular section hereof.
2. AGREEMENT TO GUARANTEE. Each of the Additional Guarantors hereby
agrees, jointly and severally with all other Guarantors under the Indenture, to
guarantee the obligations of the Company under the Notes and the Indenture in
accordance with Article 10 of the Indenture with the same effect and to the same
extent as if each Additional Guarantor had been named in the Indenture as a
Guarantor. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Notes heretofore or
hereafter authenticated and delivered shall be bound hereby.
3. GOVERNING LAW. This Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. The Additional Guarantors agree to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Supplemental Indenture.
4. TRUSTEE MAKES NO REPRESENTATION. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
5. COUNTERPARTS. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. EFFECT OF HEADINGS. The Section headings herein are for convenience
only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
RADIO UNICA CORP.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF NEW YORK, INC.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF NEW YORK LICENSE CORP.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF DALLAS, INC.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF DALLAS LICENSE CORP.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF PHOENIX, INC.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
RADIO UNICA OF PHOENIX LICENSE CORP.
By:
------------------------------------------
Name: Joaquin F. Blaya
Title: Chairman and Chief Executive Officer
WILMINGTON TRUST COMPANY, as
Trustee
By:
------------------------------------------
Name: Bruce L. Bisson
Title: Vice President
<PAGE> 1
Exhibit 21.1
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP
CODE AND TELEPHONE
STATE OR OTHER I.R.S. NUMBER, INCLUDING AREA
JURISDICTION OF PRIMARY STANDARD EMPLOYER OF REGISTRANTS
EXACT NAME OF REGISTRANT AS INCORPORATION OR INDUSTRIAL IDENTIFICATION PRINCIPAL EXECUTIVE
SPECIFIED IN ITS CHARTER ORGANIZATION CLASSIFICATION CODE- NUMBER OFFICES
- ----------------------------- --------------------------- ------------------- -------------- -------------------------
<S> <C> <C> <C> <C>
BLAYA, INC. Delaware 513111 65-0803106 8400 N.W. 52nd St.
Suite 101
ORO SPANISH BROADCASTING,
INC. California 513111 94-2678874 8400 N.W. 52nd St.
Suite 101
RADIO UNICA NETWORK, INC. Delaware 513111 65-0812484 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF DALLAS
LICENSE CORP. Delaware 513111 65-0886886 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF DALLAS, INC. Delaware 513111 58-2435950 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF HOUSTON
LICENSE CORP. Delaware 513111 65-0857122 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF LOS ANGELES
LICENSE CORP. Delaware 513111 52-2114088 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF LOS ANGELES,
INC. Delaware 513111 65-0812486 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF MIAMI
LICENSE CORP. Delaware 513111 52-2114091 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF MIAMI, INC. Delaware 513111 65-0813271 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF NEW YORK
LICENSE CORP. Delaware 513111 65-0886888 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF NEW YORK,
INC. Delaware 513111 58-2435951 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF PHOENIX
LICENSE CORP. Delaware 513111 65-0886885 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF PHOENIX, INC. Delaware 513111 86-0935114 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF SAN ANTONIO,
INC. Delaware 513111 65-0812485 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF SAN
FRANCISCO LICENSE CORP. Delaware 513111 52-2114089 8400 N.W. 52nd St.
Suite 101
RADIO UNICA OF SAN
FRANCISCO, INC. Delaware 513111 65-0813274 8400 N.W. 52nd St.
Suite 101
RADIO UNICA SALES CORP. Florida 513111 65-0788821 8400 N.W. 52nd St.
Suite 101
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF RADIO UNICA CORP. FOR YEAR ENDED DECEMBER 31, 1998 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 38,894,144
<SECURITIES> 0
<RECEIVABLES> 1,232,402
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 57,738,547
<PP&E> 11,769,654
<DEPRECIATION> 0
<TOTAL-ASSETS> 123,505,573
<CURRENT-LIABILITIES> 4,871,411
<BONDS> 105,029,128
0
38,266,437
<COMMON> 1
<OTHER-SE> (26,303,394)
<TOTAL-LIABILITY-AND-EQUITY> 123,505,573
<SALES> 8,218,043
<TOTAL-REVENUES> 8,218,043
<CGS> 0
<TOTAL-COSTS> 28,196,739
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,038,483)
<INCOME-PRETAX> (24,283,221)
<INCOME-TAX> 2,446,745
<INCOME-CONTINUING> (21,836,476)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21,836,476)
<EPS-PRIMARY> (2,438.47)
<EPS-DILUTED> (2,438.47)
</TABLE>
