<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1994
Commission File No. 1-8283
GREAT AMERICAN COMMUNICATIONS COMPANY
Incorporated under the laws of Florida
IRS Employer Identification No. 59-2054850
One East Fourth Street, Cincinnati, Ohio 45202
Phone: (513) 562-8000
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 and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes X No
--- ---
As of May 1, 1994, there were 10,153,672 shares of Class A Common
Stock and 1,163,524 shares of Class B Common Stock outstanding.
EXHIBIT INDEX Page 18
Page 1 of 20
<PAGE> 2
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY - 10-Q
PART I
FINANCIAL INFORMATION
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
BALANCE SHEET
(Dollars in Thousands)
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
ASSETS
------
Current assets:
Cash and short-term investments $ 12,767 $ 4,789
Trade receivables, less allowance for
doubtful accounts of $2,053 and $2,010 42,952 48,294
Broadcast program rights 13,486 15,910
Prepaid and other current assets 3,844 3,355
-------- --------
Total current assets 73,049 72,348
Broadcast program rights, less current portion 11,857 11,368
Property and equipment, net 59,085 60,660
Contracts, broadcasting licenses and other
intangibles, less accumulated amortization
of $4,227 and $0 569,850 574,878
Deferred charges and other assets 35 315
-------- --------
$713,876 $719,569
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt $ 25,000 $ 23,500
Accounts payable, accrued expenses and
other current liabilities 32,037 31,924
Broadcast program rights fees payable 13,786 15,439
-------- --------
Total current liabilities 70,823 70,863
Broadcast program rights fees payable,
less current portion 8,637 8,468
Deferred income taxes 76,333 77,152
Long-term debt, less current maturities 406,632 409,068
Other liabilities 14,615 15,430
-------- --------
Total liabilities 577,040 580,981
Shareholders' equity:
Class A Common Stock, $.01 par value;
500,000,000 shares authorized;
10,153,672 shares outstanding 101 101
Class B Common Stock $.01 par value; 125,000,000
shares authorized; 1,163,524 shares outstanding 12 12
Capital in excess of par value 138,475 138,475
Accumulated deficit from January 1, 1994 (1,752) -
-------- --------
Total shareholders' equity 136,836 138,588
-------- --------
$713,876 $719,569
======== ========
<FN>
See notes to financial statements.
</TABLE>
Page 2
<PAGE> 3
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY - 10-Q
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF OPERATIONS
(In Thousands, Except Per Share Amounts)
<CAPTION>
Predecessor
Three months Three months
ended ended
March 31, March 31,
1994 1993
--------- ---------
<S> <C> <C>
Net revenues: |
Television broadcasting $34,542 | $30,878
Radio broadcasting 13,907 | 12,697
------- | -------
48,449 | 43,575
------- | -------
Costs and expenses: |
Operating expenses 17,242 | 17,200
Selling, general and administrative 15,765 | 14,929
Corporate general and administrative expenses 1,158 | 980
Depreciation and amortization 7,091 | 7,088
------- | -------
41,256 | 40,197
------- | -------
Operating income 7,193 | 3,378
|
Other income (expense): |
Interest expense (9,762) | (15,487)
Minority interest - | (7,901)
Investment income 56 | 88
Miscellaneous, net (439) | 173
------- | -------
(10,145) | (23,127)
------- | -------
Loss before income taxes (2,952) | (19,749)
|
|
Federal income tax benefit (1,200) | -
------- | -------
Loss before extraordinary items (1,752) | (19,749)
|
|
Extraordinary items, net of tax - | (837)
------- | -------
NET LOSS ($ 1,752) | ($20,586)
======= | =======
PER SHARE DATA (Primary and Fully Diluted): |
Loss before extraordinary items ($0.15) | *
|
Net loss (0.15) | *
|
Average common shares 11,397 | *
<FN>
* Share amounts are not relevant due to the effects of GACC's reorganization.
See notes to financial statements.
</TABLE>
Page 3
<PAGE> 4
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIT)
(in Thousands)
<CAPTION>
Stated Value
------------------ Capital Total
Class A Class B In Excess Accumu- Shareholders'
Common Common of Par lated Equity
Stock Stock Value Deficit (Deficit)
-------- ------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
Predecessor:
-----------
Balances, December 31, 1992 $567 $ - $270,324 ($609,920) ($339,029)
Net loss - - - (20,586) (20,586)
---- ---- -------- -------- --------
Balances March 31, 1993 $567 $ - $270,324 ($630,506) ($359,615)
==== ==== ======== ======== ========
- -------------------------------------------------------------------------------------------------------------------------------
Reorganized GACC:
-----------------
Balances, December 31, 1993 $101 $ 12 $138,475 $ - $138,588
Net Loss - - - (1,752) (1,752)
---- ---- -------- -------- --------
Balances, March 31, 1994 $101 $ 12 $138,475 ($ 1,752) $136,836
==== ==== ======== ======== ========
<FN>
See notes to financial statements.
</TABLE>
Page 4
<PAGE> 5
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY - 10-Q
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
(In Thousands)
<CAPTION>
Predecessor
Three months Three months
ended ended
March 31, March 31,
1994 1993
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ($ 1,752) | ($20,586)
Adjustments: |
Depreciation and amortization 7,091 | 7,088
Non-cash interest expense - | 2,576
Other non-cash adjustments (primarily non-cash dividends |
on the preferred stock of a former subsidiary) - | 7,949
Extraordinary loss related to the restructuring - | 837
Decrease in trade receivables 5,342 | 6,649
Decrease in broadcast program rights, |
net of fees payable 451 | 422
Increase (decrease) in accounts payable, accrued expenses |
and other liabilities (370) | 4,252
Decrease in deferred income taxes (819) | -
Other 337 | 679
-------- | -------
10,280 | 9,866
-------- | -------
INVESTING ACTIVITIES: |
Purchases of real estate, property and equipment (1,330) | (942)
Other (4) | (1,692)
-------- | -------
(1,334) | (2,634)
-------- | -------
|
FINANCING ACTIVITIES: |
Retirements and refinancing of long-term debt (196,318) | (14,837)
Additional long-term borrowings 195,350 | -
-------- | -------
(968) | (14,837)
-------- | -------
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 7,978 | (7,605)
|
Cash and short-term investments at beginning of period 4,789 | 25,076
-------- | -------
|
Cash and short-term investments at end of period $ 12,767 | $17,471
======== | =======
|
<FN>
See notes to financial statements.
</TABLE>
Page 5
<PAGE> 6
GREAT AMERICAN COMMUNICATIONS COMPANY - 10-Q
NOTES TO FINANCIAL STATEMENTS
A. ACCOUNTING POLICIES
BASIS OF PRESENTATION The accompanying financial statements for Great
American Communications Company ("GACC") are unaudited, but GACC
believes that all adjustments (consisting only of normal recurring
accruals, unless otherwise disclosed herein) necessary for fair
presentation have been made. The results of operations for interim
periods are not necessarily indicative of results to be expected for
the year. The financial statements have been prepared in accordance
with the instructions to Form 10-Q and therefore do not include all
information and footnotes necessary to be in conformity with generally
accepted accounting principles. Significant intercompany balances and
transactions have been eliminated. Certain reclassifications have been
made to conform to the current year's presentation.
As a result of GACC's emergence from Bankruptcy and its adoption of
fresh-start reporting as of December 31, 1993, GACC's statements of
operations, changes in shareholders' equity and cash flows for periods
subsequent to December 31, 1993 are generally not comparable to prior
periods and are separated by a line. For purposes of the financial
statements, the term "Predecessor" refers to GACC prior to its
reorganization.
All acquisitions have been treated as purchases. The accounts and
results of operations of companies since their formation or
acquisition are included in the consolidated financial statements.
At May 1, 1994, American Financial Corporation and its Chairman, Carl
H. Lindner, (collectively "AFC") owned 3,683,001 shares (32.5%) of
GACC's outstanding Common Stock, including the Class A and Class B
Common Stock.
BROADCAST PROGRAM RIGHTS The rights to broadcast non-network programs
on GACC's television stations are stated at cost, less accumulated
amortization. These costs are charged to operations on a
straight-line basis over the contract period or on a per showing
basis, whichever results in the greater aggregate amortization.
PROPERTY AND EQUIPMENT Property and equipment are based on cost and
depreciation is calculated primarily using the straight-line method.
Depreciable lives are: land improvements, 8-20 years; buildings and
improvements, 8-20 years; operating and other equipment, 3-20 years;
and leasehold improvements, over the life of the lease.
CONTRACTS, BROADCASTING LICENSES AND OTHER INTANGIBLES Contracts,
broadcasting licenses and other intangibles represent the excess of
the value of the broadcast stations over the values of their net
tangible assets, and is attributable to FCC licenses, network
affiliation agreements and other contractual or market related
factors. Reorganization value in excess of amounts allocable to
identifiable assets represents the excess of the estimated fair value
of GACC at the time of the reorganization over the estimated fair
value allocated to its net identifiable assets. Intangible assets are
being amortized on a straight-line basis over an average of 34 years.
DEBT DISCOUNT AND EXPENSE Debt discount is being amortized over the
life of the related debt obligations primarily by the interest method.
Costs of issuance are capitalized and are amortized over the life of
the related debt obligations primarily on the straight-line method.
Page 6
<PAGE> 7
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
NOTES TO FINANCIAL STATEMENTS - CONTINUED
INCOME TAXES GACC files a consolidated Federal income tax return
which includes all 80% or more owned subsidiaries. Deferred income tax
assets and liabilities are determined based on differences between
financial reporting and tax bases and are measured using enacted tax
rates. Deferred tax assets are recognized if it is more likely than
not that a benefit will be realized.
EARNINGS (LOSS) PER SHARE Primary and fully-diluted earnings (loss)
per share are based upon the weighted average number of common shares
and give effect to common equivalent shares (dilutive options)
outstanding during the respective periods. As a result of the
effects of the reorganization, per share data for periods ending on
or prior to December 31, 1993 have been rendered meaningless and,
therefore, omitted from the accompanying Financial Statements.
STATEMENT OF CASH FLOWS For cash flow purposes, "investing
activities" are defined as making and collecting loans and acquiring
and disposing of debt or equity instruments and property and
equipment. "Financing activities" include obtaining resources from
owners and providing them with a return on their investments,
borrowing money and repaying amounts borrowed. All other activities
are considered "operating". Short-term investments for purposes of
the Financial Statements are those which had a maturity of three
months or less when acquired.
<TABLE>
B. LONG-TERM DEBT Long-term debt consisted of the following (in thousands):
<CAPTION>
March 31, December 31,
1994 1993
----------- ------------
<S> <C> <C>
GACC:
9-3/4% Senior Subordinated Notes
due February 2004, less unamortized
discount of $4,618 (imputed interest rate 10.13%) $195,382 $ -
14% Senior Extendable Notes due June 2001 - 77,568
-------- --------
195,382 77,568
Subsidiaries:
Guaranteed by GACC:
Bank credit facility 215,250 220,000
Other:
13% Senior Subordinated Notes of Great American
Broadcasting Company due May 2001 - 111,500
9-1/2% Notes due December 1999 (secured) 17,500 17,500
Other obligations 3,500 6,000
-------- --------
236,250 355,000
-------- --------
Total long-term debt 431,632 432,568
Less current maturities (25,000) (23,500)
-------- --------
$406,632 $409,068
======== ========
</TABLE>
On February 18, 1994, GACC refinanced the 14% Senior Extendable Notes
initially due 2001 and Great American Broadcasting Company's 13%
Senior Subordinated Notes due 2001 through the issuance of $200
million principal amount of 9-3/4% Senior Subordinated Notes due 2004.
No gain or loss was recognized by GACC on the transaction.
Page 7
<PAGE> 8
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
NOTES TO FINANCIAL STATEMENTS - CONTINUED
At March 31, 1994, the sinking-fund payments on long term debt of
GACC'S subsidiaries for the remainder of 1994 and the next five years
are as follows: remainder of 1994 - $16.3 million; 1995 - $27.5
million; 1996 - $20 million; 1997 - 26 million; 1998 - $129 million;
and 1999 - $17.5 million. The sinking fund payments due in 1998
include a $114 million payment in December 1998 for the final maturity
of the bank credit facility, exclusive of any payments under a cash
sweep feature. The cash sweep feature of the bank credit facility
contains a provision whereby, in addition to mandatory scheduled
principal payments beginning in 1994, GACC's cash on hand at the end
of any fiscal year in excess of $7.5 million must be used to prepay
the bank credit facility in March of the following fiscal year.
C. SHAREHOLDERS' EQUITY GACC is authorized to issue 500 million shares
of Class A Common Stock, $.01 par value, 125 million shares of Class B
Common Stock, $.01 par value and 9.5 million shares of Serial
Preferred Stock, $.01 par value. Class A Common shares are entitled
to one vote for each share held of record; Class B shares are entitled
to one vote for every five shares held of record. Class A and Class B
Common shares will vote together as a single class on all matters
requiring shareholders approval. The Class A and Class B shares are
entitled to the same treatment per share in the event of any dividend,
distribution, split-up or recapitalization. Class B shares are
convertible (on a one-for-one basis) into Class A shares if such
conversion does not violate the Communications Act of 1934, as
amended, or the rules, regulations or policies of the FCC promulgated
thereunder. The preferred stock may have such preferences and other
rights and limitations as the Board of Directors may designate with
respect to each series.
D. EXTRAORDINARY ITEMS Extraordinary items for the first quarter of 1993
consisted of expenses incurred in connection with the restructuring.
E. SUBSEQUENT EVENT On May 4, 1994, GACC's operating subsidiary, Great
American Television and Radio Company, Inc., entered into agreements
for the sale of four of its network affiliated television stations to
entities affiliated with New World Communications Group, Incorporated
("New World") for $360 million. The sale price includes warrants
valued at $10 million which would give GACC the right for five years
to purchase five million common shares of New World at $15 per share.
The four stations to be sold are located in Phoenix, Birmingham,
Kansas City and Greensboro/High Point. GACC expects to use the
proceeds to fund future acquisitions of broadcast stations and to
reduce long-term debt. The transactions are subject to, among other
things, the approval of the FCC and the individual station sale
closings are expected to occur during the fourth quarter of 1994.
Page 8
<PAGE> 9
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
GENERAL
- -------
The following is a discussion of certain factors affecting GACC's results of
operations for the three month period ended March 31, 1994 and its liquidity
and capital resources. This discussion should be read in conjunction with
GACC's Financial Statements beginning on page 2. For purposes of the following
discussion, the term "Predecessor" refers to GACC prior to its emergence from
Chapter 11 bankruptcy.
As a result of GACC's emergence from Bankruptcy and its adoption of fresh-start
reporting as of December 31, 1993, GACC's results of operations for periods
ending after December 31, 1993 will not be comparable to prior periods.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
GACC is a holding company and depends on advances, dividends and tax
allocation payments from its operating subsidiary, Great American Television
and Radio Company, Inc. ("GATR"), to meet its expenditures for administrative
expenses and debt service obligations. Restrictions in GATR's debt agreements
limit the amount of distributions GATR may make to GACC. All such
distributions would be prohibited if GACC or its subsidiaries were not in
compliance with the agreements. At December 31, 1993 and March 31 and May 1,
1994, GACC and its subsidiaries were in compliance with such agreements and
sufficient funds were available to meet GACC's administrative and debt service
expenditures.
The debt instruments of GACC and its subsidiaries also limit the
amount of additional debt that can be incurred. Under the most restrictive of
these covenants the additional debt capacity of GACC and its subsidiaries was
$10 million at March 31, 1994.
On February 18, 1994, GACC refinanced the 14% PIK Notes initially due
2001 and the 13% Senior Subordinated Notes due 2001 of its subsidiary, Great
American Broadcasting Company, through the issuance of $200 million of 9-3/4%
Senior Subordinated Notes due 2004.
Operating cash flow is expected to be sufficient to meet expenditures
for operations (including capital expenditures), administrative expenses and
debt service. Although GATR's bank credit facility requires a final maturity
principal payment of $114 million in December 1998, (exclusive of any excess
cash sweeps prior to that date), GACC plans to significantly reduce this
payment through the use of the proceeds from the sale of four of its television
stations. On May 4, 1994, GATR entered into agreements for the sale of four of
its network affiliated television stations to entities affiliated with New
World Communications Group, Incorporated ("New World") for $350 million in cash
and warrants to purchase for five years 5,000,000 common shares of New World at
$15 per share. The television stations to be sold are located in Phoenix,
Birmingham, Kansas City and Greensboro/High Point. Proceeds from the sale are
also intended to be used to fund future acquisitions of broadcast stations.
Until such time as such acquisitions are identified and completed, the net
proceeds will be invested in short-term securities. Pro forma financial
information, which gives effect to the transaction, is presented in Part II,
Item 5 "Other Information" beginning on page 12 of this Form 10-Q.
The expansion of the radio group while achieving and maintaining
manageable debt levels is GACC's top priority - and (1) would be made possible
by the sale to New World. GACC expects to pursue the acquisition of additional
stations in its present markets and stations in markets where it does not
currently own stations. Prior to the sale of the television stations, GATR
entered into agreements to purchase additional stations in Sacramento and
Cincinnati. The pending acquisition of these two stations will be funded, in
part, by the sale or pending sale of radio stations in Milwaukee, Detroit and
Denver.
Page 9
<PAGE> 10
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
------------------------------------------------------------
RESULTS OF OPERATIONS
The financial results of GACC's business are seasonal. Broadcast revenues are
generally higher in the second and fourth calendar quarters than in the first
and third quarters.
The amount of broadcast advertising time available for sale by GACC's stations
is relatively fixed, and by its nature cannot be stockpiled for later sale.
Therefore, the primary variables affecting revenue levels are the demand for
advertising time, the viewing or listening audience of the station and the
entry of new stations in the marketplace. The major variable costs of
operation are programming (entertainment, news and sports), sales costs related
to revenues and promotional costs. The success of the programming determines
the audience levels and therefore affects revenue.
GACC's management believes that operating income before depreciation and
amortization is helpful in understanding cash flow generated from its
broadcasting operations that is available for debt service, capital
expenditures and taxes, and in comparing operating performance of GACC's
broadcast stations to other broadcast stations. Operating income before
depreciation and amortization should not be considered an alternative to net
income as an indicator of GACC's overall performance.
<TABLE>
Net revenues and operating income are shown below (in thousands):
<CAPTION>
Predecessor
Three months Three months
ended ended
March 31, March 31,
1994 1993
------------ ------------
<S> <C> <C>
Net revenues
------------ |
Television broadcasting: |
Local $19,164 | $16,511
National 13,618 | 12,717
Other 1,760 | 1,650
------- | -------
Total 34,542 | 30,878
------- | -------
|
|
Radio broadcasting: |
Local 11,610 | 10,464
National 2,158 | 1,878
Other 139 | 355
------- | -------
Total 13,907 | 12,697
------- | -------
|
Total Net Revenues 48,449 | 43,575
|
|
Operating, selling, general and |
administrative expenses (33,007) | (32,129)
|
Corporate general and administrative |
expenses (1,158) | (980)
------- | -------
|
Operating Income Before Depreciation |
and Amortization 14,284 | 10,466
|
|
Depreciation and amortization (7,091) | (7,088)
------- | -------
|
Operating income $ 7,193 | $ 3,378
======= | =======
</TABLE>
Page 10
<PAGE> 11
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - CONTINUED
------------------------------------------------------------
THREE MONTHS ENDED MARCH 31, 1994 COMPARED TO MARCH 31, 1993
Television revenues increased $3.7 million (12%) during the first quarter of
1994 compared to the same period a year ago and radio revenues increased $1.2
million (10%) compared to the first quarter last year. The revenue increases
were due to several factors including: the expanding economy's effect on
advertising expenditures; improved ratings at several stations; and sales
efforts.
Operating, selling, general and administrative expenses increased $878,000 (3%)
during the period compared to last year due largely to increased selling and
promotion expenses.
Operating income increased $3.8 million, more than doubling last year's first
quarter operating income, due primarily to the revenue increases mentioned
earlier.
OUTLOOK - SECOND QUARTER 1994
The demand for advertising time continues to outpace last year's levels and
GACC expects to report increased revenues and operating income for the quarter
ended June 30, 1994 compared to the same period in 1993. Because revenues are
seasonal (higher in the second and fourth quarters and lower in the first and
third quarters) and most expenses are incurred ratably over the year, revenue
increases in the second quarter will not result in percentage increases in
operating income as large as those reported for the first quarter of 1994.
OTHER INCOME (EXPENSE) INFORMATION
- ----------------------------------
Interest expense decreased $5.7 million (37%) during the first quarter compared
to the same period a year ago due primarily to reduced debt levels resulting
from GACC's reorganization in December 1993.
INCOME TAXES
- ------------
GACC has substantial net operating loss carryforwards, a substantial portion of
which are presently unavailable to offset future taxable income. GACC's
ability to utilize such operating loss carryforwards has been substantially
restricted based upon tax rules governing availability of net operating loss
carryforwards following certain changes in ownership.
Page 11
<PAGE> 12
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
PART II
OTHER INFORMATION
ITEM 5
Other Information
-----------------
ACQUISITION OR DISPOSITION OF ASSETS
- ------------------------------------
On May 4, 1994, GACC entered into agreements with entities affiliated with New
World Communications Group, Incorporated ("New World") whereby GACC agreed to
sell its network affiliated television stations in Birmingham, Alabama,
Greensboro/Highpoint, North Carolina, Kansas City, Missouri, and Phoenix,
Arizona. GACC is to receive $350 million in cash and a warrant (valued at $10
million) to purchase for five years 5,000,000 shares of New World common stock
at $15 per share. GACC estimates that it will record a net gain totaling
approximately $50 million on the transactions which are currently expected to
be consummated during the fourth quarter of 1994.
PRO FORMA FINANCIAL INFORMATION
- -------------------------------
The following pro forma balance sheet as of March 31, 1994 gives effect to the
proposed sale as if such sale had occurred on March 31, 1994.
The following pro forma statements of operations for the three months ended
March 31, 1994 and the year ended December 31, 1993 give effect to the proposed
sale as if such sale had occurred as of the beginning of the respective periods
presented. A gain on disposition is not reflected in the pro forma statements
of operations.
The pro forma information contained herein is based on the historical financial
statements of GACC, adjusted to reflect the effects of the reorganization
completed in December 1993, the refinancing completed in February 1994 and the
proposed television station sale transactions. The sale and pending sales of
radio stations and the pending purchases of radio stations is not included in
the pro forma financial statements because these transactions are not material
individually and in the aggregate the adjustments offset each other.
Page 12
<PAGE> 13
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA BALANCE SHEET (UNAUDITED)
March 31, 1994
(In Thousands)
<CAPTION>
Pro Forma Adjustments
(Note B)
---------------------------
Historical Operations Divestiture Pro Forma
Statements Divested Adjustments Results
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and short-term investments $ 12,767 $ - $ 88,200 $100,967
Trade receivables, net 42,952 - - 42,952
Broadcast program rights 13,486 (7,030) - 6,456
Prepaid expenses and other
current assets 3,844 (913) - 2,931
------- -------- ------- --------
Total current assets 73,049 (7,943) 88,200 153,306
Broadcast program rights,
less current portion 11,857 (7,001) - 4,856
Property and equipment net 59,085 (34,151) - 24,934
Contracts, licenses and other
intangibles, net 569,850 (238,356) (39,555) 291,939
Deferred charges and other assets 35 (23) 10,000 10,012
-------- -------- -------- --------
$713,876 ($287,474) $ 58,645 $485,047
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt $ 25,000 $ - ($23,500) $ 1,500
Accounts payable, accrued expenses and
other current liabilities 32,037 - - 32,037
Broadcast program rights fees payable 13,786 (6,837) - 6,949
-------- -------- -------- --------
Total current liabilities 70,823 (6,837) (23,500) 40,486
Broadcast program rights fees payable,
less current portion 8,637 (5,701) - 2,936
Deferred income taxes 76,333 - (47,155) 29,178
Long-term debt, less current portion 406,632 - (196,500) 210,132
Other liabilities 14,615 - - 14,615
-------- -------- -------- --------
577,040 (12,538) (267,155) 297,347
Shareholders' Equity:
Common stock, including capital
in excess of par value 138,588 - - 138,588
Retained earnings (accumulated
deficit) from January 1, 1994 (1,752) - 50,864 49,112
-------- -------- -------- --------
Total shareholders' equity 136,836 - 50,864 187,700
-------- -------- -------- --------
$713,876 ($ 12,538) ($216,291) $485,047
======== ======== ======== ========
<FN>
See notes to unaudited pro forma financial statements.
</TABLE>
Page 13
<PAGE> 14
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
Three Months Ended March 31, 1994
(In Thousands, Except Per Share Amounts)
<CAPTION>
Pro Forma Adjustments
(Note C)
--------------------------
Historical Operations Divestiture Pro Forma
Statements Divested Adjustments Results
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues:
Television broadcasting $34,542 ($21,577) $ - $12,965
Radio broadcasting 13,907 - - 13,907
------- ------- ------ -------
48,449 (21,577) - 26,872
------- ------- ------ -------
Costs and expenses:
Operating expenses 17,242 (8,096) - 9,146
Selling, general, and
administrative 15,765 (5,219) - 10,546
Corporate general and
administrative 1,158 - - 1,158
------- ------- ------ -------
34,165 (13,315) - 20,850
------- ------- ------ -------
Operating income before depreciation
and amortization 14,284 (8,262) - 6,022
Depreciation and amortization 7,091 (3,608) - 3,483
------- ------- ------ -------
Operating income 7,193 (4,654) - 2,539
Other income (expense):
Interest expense (9,762) - 4,100 (5,662)
Investment income 56 - 1,200 1,256
Miscellaneous, net (439) (23) - (462)
------- ------- ------ -------
(10,145) (23) 5,300 (4,868)
------- ------- ------ -------
Loss before income taxes (2,952) (4,677) 5,300 (2,329)
Provision (benefit) for Federal
income taxes (1,200) - 500 (700)
------- ------- ------ -------
NET LOSS ($ 1,752) ($ 4,677) $4,800 ($ 1,629)
======= ======= ====== =======
PER SHARE DATA (Primary and Fully
Diluted):
Net loss ($0.15) ($0.14)
Average common shares 11,397 11,397
<FN>
See notes to unaudited pro forma financial statements.
</TABLE>
Page 14
<PAGE> 15
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
Year Ended December 31, 1993
(In Thousands, Except Per Share Amounts)
<CAPTION>
Pro Forma
Adjustments Pro Forma Adjustments
for Reorgan- (Note C)
Predecessor ization & ---------------------------
Historical Refinancing Operations Divestiture Pro Forma
Statements (Note C) Divested Adjustments Results
---------- ------------ ---------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Net revenues:
Television broadcasting $139,576 $ - ($85,571) $ - $ 54,005
Radio broadcasting 65,592 - - - 65,592
-------- ------- ------- ------- --------
205,168 - (85,571) - 119,597
-------- ------- ------- ------- --------
Costs and expenses:
Operating expenses 71,730 - (32,682) - 39,048
Selling, general and
administrative 61,925 - (19,189) - 42,736
Corporate, general and
administrative 3,411 - - - 3,411
-------- ------- ------- ------- --------
137,066 - (51,871) - 85,195
-------- ------- ------- ------- --------
Operating income before
depreciation and
amortization 68,102 - (33,700) - 34,402
Depreciation and
amortization 28,119 451 (14,310) - 14,260
-------- ------- ------- ------- --------
Operating income 39,983 (451) (19,390) - 20,142
Other income (expense):
Interest expense (64,942) 28,590 - 15,000 (21,352)
Minority interest (26,776) 26,776 - - -
Investment income 305 - - 3,900 4,205
Miscellaneous, net (494) - (57) - (551)
-------- ------- ------- ------- --------
(91,907) 55,366 (57) 18,900 (17,698)
-------- ------- ------- ------- --------
Earnings (loss) before
reorganization items
and income taxes (51,924) 54,915 (19,447) 18,900 2,444
Reorganization items (14,872) 14,872 - - -
-------- ------- ------- ------- --------
Earnings (loss) before
income taxes (66,796) 69,787 (19,447) 18,900 2,444
Provision (benefit) for
Federal income taxes - 2,400 - (900) 1,500
-------- ------- ------- ------- --------
EARNINGS (LOSS) BEFORE
EXTRAORDINARY ITEMS ($ 66,796) $67,387 ($19,447) $19,800 $ 944
======== ======= ======= ======= ========
PER SHARE DATA (Primary and
Fully Diluted):
Earnings (loss) before
extraordinary items * $0.08
Average common shares * 11,397
<FN>
* Share data is not meaningful due to the effects of GACC's reorganization.
See notes to unaudited pro forma financial statements.
</TABLE>
Page 15
<PAGE> 16
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
A. DESCRIPTION OF TRANSACTION On May 4, 1994, GACC's operating subsidiary,
Great American Television and Radio Company, Incorporated entered into
agreements for the sale of four of its network affiliated television stations
to entities affiliated with New World Communications Group, Incorporated ("New
World") for $350 million in cash and a warrant which would entitle GACC to
purchase for five years, 5,000,000 common shares of New World at $15 per share.
The four television stations to be sold are located in Phoenix, Birmingham,
Kansas City and Greensboro/High Point. GACC intends to use the proceeds from
the sale to reduce long-term debt and fund future acquisitions of broadcast
stations. GACC estimates that it will record a net gain of approximately $50
million on the transactions which are expected to be consummated during the
fourth quarter of 1994.
The terms of GACC's bank credit agreement currently require all excess proceeds
from asset sales not reinvested in additional broadcast properties to be used
to reduce the balance of the bank credit facility. Although management expects
that GACC may be permitted by the banks to prepay a portion of the 9-3/4%
Senior Subordinated Notes from the proceeds of the television station sales,
the following pro forma adjustments are based upon retirement of bank debt.
Upon completion of the transaction, GACC would also be required to retire the
9-1/2% Notes due 1999 secured by the assets of the Greensboro/High Point
television station and a promissory note secured by the Phoenix station's
building.
B. PRO FORMA ADJUSTMENTS TO BALANCE SHEET The pro forma adjustments for
operations divested represent the assets sold to and liabilities assumed by the
buyer. The pro forma divestiture adjustments to the March 31, 1994 balance
sheet are as follows (in thousands):
<TABLE>
<S> <C>
Gross proceeds $360,000
Proceeds received in warrants to purchase five
million shares of New World common stock at $15
per share (10,000)
Estimated cash income taxes related to the sale (40,000)
Estimated cash expenses related to the sale (1,800)
--------
Net proceeds $308,200
========
Assumed use of proceeds:
Retirement of debt $220,000
Short-term investments 88,200
--------
Total assumed use of proceeds $308,200
========
Gain on disposition, net of taxes of $32,400,
assuming sale occurred March 31, 1994 $ 50,864
========
Reduction in intangibles (reorganization value in
excess of amounts allocable to identifiable
assets) attributable to utilization of
pre-reorganization net operating loss
carryforwards $ 39,555
========
Reduction in deferred income taxes related to
difference between financial reporting and tax
bases of assets sold $ 47,155
========
</TABLE>
Page 16
<PAGE> 17
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
C. PRO FORMA ADJUSTMENTS TO STATEMENTS OF OPERATIONS For purposes of
presenting the pro forma effects of the sale of GACC's four television
stations, the operations divested as shown in the pro forma statements of
operations represent the results of those stations during the periods
presented. Management anticipates that there will be additional reductions in
corporate general and administrative expenses as a result of the transaction
however, such reductions have yet to be quantified and, accordingly, are not
reflected herein.
The reductions in interest expense reflect the effects of long-term debt
assumed to be retired with the proceeds from the sale. Although management
intends to use the net proceeds from the transaction to acquire additional
broadcast stations, such acquisitions have not been identified. Until such
time, GACC intends to invest the net proceeds of the transaction in short-term
securities. Average interest rates earned on GACC's short-term investments for
the three months ended March 31, 1994 and the year ended December 31, 1993 were
3.5% and 3.0%, respectively. Accordingly, a pro forma adjustment to investment
income has been reflected in the pro forma statements of operations for the
periods presented to show the effects of investment of the net proceeds in
short-term securities. The gain on disposition and the related tax effects of
the transaction have not been reflected in the pro forma statements of
operations.
<TABLE>
The pro forma divestiture adjustments to the statements of operations are as
follows (in thousands):
<CAPTION>
Three Months
Ended Year Ended
March 31, 1994 December 31,1993
-------------- ----------------
<S> <C> <C>
1. Elimination of operations divested:
Net revenues ($21,577) ($85,571)
Operating costs 8,096 32,682
Selling, general and administrative
expenses 5,219 19,189
Depreciation and amortization 3,608 14,310
Miscellaneous, net (23) (57)
2. Interest expense reduction based upon
GACC's interest rates in effect for
the periods presented after assumed
debt reduction* 4,100 15,000
3. Changes in investment income from
temporary investment of net sales
proceeds based upon short-term
interest rates in effect for the
periods presented, after assumed
debt reduction 1,200 3,900
4. Decrease (increase) in provision for
Federal income taxes resulting from
effects of sale transactions (500) 900
------- -------
PRO FORMA DECREASE IN NET LOSS $ 123 $ 353
======= =======
<FN>
*Assumes that, in addition to retirement of the 9-1/2% Notes due 1999 and the
Phoenix promissory note, the balance of the bank credit facility is reduced by
$200.5 million. The weighted average effective Eurodollar interest rate for GACC's
bank debt was 6.4% for each of the periods presented.
</TABLE>
The pro forma statement of operations for 1993 includes adjustments to reflect
the effects of GACC's reorganization and refinancing completed in December
1993 and February 1994, respectively, as if such transactions had occurred as
of the beginning of 1993.
Page 17
<PAGE> 18
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
ITEM 6
Exhibits and Reports on Form 8-K
--------------------------------
a) Exhibits: 10.1 Asset Purchase Agreement by and between Great
American Television and Radio Company, Inc. and New
World Communiciations Group Incorporated dated as of
May 4, 1994.
10.2 Form of Warrant granted to Great American
Television and Radio Company, Inc. from New
World Communications Group Incorporated dated
as of May 4, 1994.
11.1 Computation of Loss Per Common Share.
b) Reports on Form 8-K :
Date of Event Event Reported
- ------------- --------------
February 18, 1994 Redemption of GACC's 14% Senior Extendable
Notes initially due June 30, 2001, prepayment
of the 13% Senior Subordinated Notes due May
15, 2001 of its wholly-owned subsidiary,
Great American Broadcasting Company, and
issuance of GACC's $200 million principal
amount of 9-3/4% Senior Subordinated Notes
due February 15, 2004.
Page 18
<PAGE> 19
GREAT AMERICAN COMMUNICATIONS COMPANY 10-Q
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GREAT AMERICAN COMMUNICATIONS COMPANY
May 13, 1994 BY: GREGORY C. THOMAS
-------------------------
Gregory C. Thomas
Executive Vice President and
Chief Financial Officer
Page 19
<PAGE> 1
EXHIBIT 10.1
------------
================================================================================
ASSET PURCHASE AGREEMENT
by and between
GREAT AMERICAN TELEVISION AND RADIO COMPANY, INC.
and
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
dated as of
May 4, 1994
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE 1
Certain Definitions . . . . . . . . . . . . . . . . . 1
Section 1.1 "Action" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 "Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 "Antitrust Laws" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.4 "Business Condition" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.5 "Closing" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.6 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.7 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.8 "Communications Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.9 "Controlled Group Liability" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.11 "ERISA Affiliate" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.12 "FTC" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.13 "Government Authority" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.14 "HSR Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.15 "IRS" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.16 "Liabilities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.17 "person" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.18 "Purchase Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.19 "Securities Act" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.20 "Stations' Businesses" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.21 "Subsidiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1.22 "Warrant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 2
Sale of Assets; Closing . . . . . . . . . . . . . . . . 4
Section 2.1 Assets to Be Acquired. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Assumption of Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.4 Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.5 Closing Pro Ration and Adjustment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 2.6 Additional Closing Deliveries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.7 Time and Place of Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.9 Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 3
Representations and Warranties of Seller . . . . . . . . . . . . 16
Section 3.1 Incorporation; Authorization; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 3.2 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.3 Undisclosed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 3.4 FCC Authorizations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.5 Ownership and Condition of Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.6 Real Properties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.7 Absence of Certain Changes of Events. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.9 Intellectual Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
<PAGE> 3
ii
<TABLE>
<S> <C>
Section 3.10 Licenses, Approvals, Other Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.11 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.12 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.13 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.15 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.16 No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 3.18 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.19 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3.20 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 4
Representations and Warranties of Buyer . . . . . . . . . . . . . . 27
Section 4.1 Incorporation; Authorization; etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.2 Brokers, Finders, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.3 Licenses, Approvals, Other Authorizations, Consents, Reports, etc. . . . . . . . . . . . . . . . . 28
Section 4.4 Seller's Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 5
Covenants of Seller Pending the Closing Date . . . . . . . . . . . . . 28
Section 5.1 Maintenance of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.2 Organization, Good Will, Promotion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.3 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.4 Access to Facilities, Files and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.5 Disclosure Schedules; Buyer's Review; Representations and Warranties. . . . . . . . . . . . . . . . 31
Section 5.6 Application for Commission Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.7 Third-Party Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.8 Notice of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.9 Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.10 Consummation of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Notice of Certain Developments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.13 Environmental Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 6
Covenants of Buyer Pending the Closing Date . . . . . . . . . . . . . 35
Section 6.1 Application for Commission Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 6.2 Confidential Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.3 Consummation of Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.4 Notice of Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.5 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.6 Control of the Stations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.7 WARN Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 6.8 Actions With Respect to the Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
</TABLE>
<PAGE> 4
iii
<TABLE>
<S> <C>
ARTICLE 7
Employee Benefits . . . . . . . . . . . . . . . . . . . . . 38
Section 7.1 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.2 Non-Solicitation of Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.3 Active Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 8
Tax Matters . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.2 Tax Indemnification by Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.3 Tax Indemnity and Covenant by Buyer. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.4 Filing Responsibility. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.5 Refunds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 8.6 Cooperation and Exchange of Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.7 Certain Payroll Withholding Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 8.8 Purchase Price Allocation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.9 Real and Personal Property Tax Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.10 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 9
Conditions to the Obligations of Seller . . . . . . . . . . . . . . . 43
Section 9.1 Representations, Warranties, Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.2 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.4 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.5 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.6 Division of Kansas City Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.7 Employment Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.8 Warrant. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 10
Conditions to the Obligations of Buyer . . . . . . . . . . . . . . . 45
Section 10.1 Representations, Warranties, Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.2 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.3 Opinion of Counsel. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 10.4 Damage to the Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.5 FCC Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.6 No Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.7 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 10.8 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.9 Release of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.10 Affiliation Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE 11
Survival; Indemnification . . . . . . . . . . . . . . . . . . . 47
Section 11.1 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
<PAGE> 5
iv
<TABLE>
<S> <C>
Section 11.2 Indemnification by Buyer or Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 11.3 Third-Party Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 11.4 Environmental Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 11.5 Assignment of Insurance Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE 12
Termination . . . . . . . . . . . . . . . . . . . . . . . 50
Section 12.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 12.2 Procedure and Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 12.3 Adjustment to Purchase Price of KSAZ. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
ARTICLE 13
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.1 Corporate Name. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.2 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.4 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 13.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.7 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 13.8 Headings; Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.9 Amendments and Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.10 Interpretation; Absence of Presumption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 13.11 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.12 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.13 Specific Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
</TABLE>
<PAGE> 6
THIS ASSET PURCHASE AGREEMENT (the AGREEMENT"), dated as of May 4,
1994, is made by and among GREAT AMERICAN TELEVISION AND RADIO COMPANY, INC.,
an Ohio corporation ("SELLER"), and NEW WORLD COMMUNICATIONS GROUP
INCORPORATED, a Delaware corporation ("BUYER").
RECITALS:
WHEREAS, Seller is the licensee of television stations KSAZ (formerly
KTSP-TV Channel 10, Phoenix, Arizona ("KSAZ"), WDAF-TV, Channel 4, Kansas City,
Missouri ("WDAF"), WBRC, Channel 6, Birmingham, Alabama, ("WBRC"), and WGHP-TV,
Channel 8, Greensboro-High Point-Winston-Salem, North Carolina ("WGHP")
pursuant to certain authorizations issued by the Federal Communications
Commission (the "FCC"), operates KSAZ, WDAF, WBRC and WGHP (individually, a
"STATION" and collectively, the "STATIONS") and owns or leases certain assets
used in connection with the operation of the Stations; and,
WHEREAS, Seller desires to sell, assign and transfer the Stations, the
FCC authorizations for the Stations and the assets and business of the Stations
as described below, and Buyer desires to acquire the Stations, the FCC
authorizations for the Stations, and the assets and business of the Stations as
described below (the "Asset Purchase"), all on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE 1
CERTAIN DEFINITIONS
As used in this Agreement the following terms (not defined elsewhere
in this Agreement) shall have the following respective meanings:
Section 1.1 "ACTION" shall mean any actual or threatened action, suit,
arbitration, inquiry, proceeding or investigation by or before any Government
Authority.
Section 1.2 "AFFILIATE" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended
(the "1934 ACT"), and as in effect on the date hereof.
<PAGE> 7
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Section 1.3 "ANTITRUST LAWS" shall mean and include the Sherman Act,
as amended, the Clayton Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal and state statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines designed or
intended to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade.
Section 1.4 "BUSINESS CONDITION" shall mean the assets, liabilities,
results of operations and condition (financial or otherwise) of any of the
Stations' Businesses taken individually or of the Stations' Businesses taken as
a whole, as the context may require.
Section 1.5 "CLOSING" shall mean the meeting at which the Asset
Purchase occurs.
Section 1.6 "CLOSING DATE" shall mean three business days after the
date on which the conditions set forth in Articles 8 and 9 shall be satisfied
or duly waived, or if Seller and Buyer mutually agree on a different date, the
date upon which they have mutually agreed.
Section 1.7 "CODE" shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.
Section 1.8 "COMMUNICATIONS ACT" shall mean the Communications Act of
1934, as amended, and the rules, regulations and policies of the FCC
promulgated thereunder.
Section 1.9 "CONTROLLED GROUP LIABILITY" shall have the meaning set
forth in Section 7.1(b).
Section 1.10 "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended, and any successor thereto.
Section 1.11 "ERISA AFFILIATE" shall mean, with respect to any
entity, trade or business, any other entity, trade or business that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same "controlled group" as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.
Section 1.12 "FTC" shall mean the Federal Trade Commission.
Section 1.13 "GOVERNMENT AUTHORITY" shall mean any government or
state (or any subdivision thereof) of or in the United States, or any agency,
authority, bureau, commission, department or similar body or instrumentality
thereof, or any governmental court or tribunal.
<PAGE> 8
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Section 1.14 "HSR ACT" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
Section 1.15 "IRS" shall mean the Internal Revenue Service.
Section 1.16 "LIABILITIES" shall mean, as to any person or entity,
all debts, adverse claims, liabilities and obligations, direct, indirect,
absolute or contingent of such person or entity, whether accrued, vested or
otherwise, whether in contract, tort, strict liability or otherwise and whether
or not actually reflected, or required by generally accepted accounting
principles to be reflected, in such person's or entity's balance sheets or
other books and records, including, without limitation, (i) obligations arising
under any law, rule or regulation of any Government Authority or imposed by any
court or any arbitrator of any kind; (ii) obligations arising in connection
with products sold by, or in connection with services provided by, or under
contracts, agreements (whether written or oral), leases, commitments or
undertakings of, such person or entity; (iii) all indebtedness or liability of
such person or entity for borrowed money, or for the purchase price of property
or services (including trade obligations); (iv) all obligations of such person
or entity as lessee under leases, capital or other; (v) liabilities of such
person or entity in respect of plans covered by Title IV of ERISA, or otherwise
arising in respect of plans for employees or former employees or their
respective families or beneficiaries; (vi) reimbursement obligations of such
person or entity in respect of letters of credit; (vii) all obligations of such
person or entity arising under acceptance facilities; (viii) all liabilities of
other persons or entities directly or indirectly guaranteed, endorsed (other
than for collection or deposit in the ordinary course of business) or
discounted with recourse by such person or entity or with respect to which the
person or entity in question is otherwise directly or indirectly liable; (ix)
all obligations secured by any Lien (as defined herein) on property of such
person or entity, whether or not the obligations have been assumed; (x) all
other items which have been or in accordance with generally accepted accounting
principles would be, included in determining total liabilities on the liability
side of the balance sheet; and (xi) any and all other obligations.
Section 1.17 "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust, unincorporated
organization, other form of business or legal entity or Government Authority.
Section 1.18 "PURCHASE PRICE" shall mean $350,000,000 and the
Warrant, subject to adjustment pursuant to Sections 2.4(c), 2.5, 5.13 and 12.3
hereof and allocated among the Stations in accordance with Exhibit 2.9.
<PAGE> 9
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Section 1.19 "SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
Section 1.20 "STATIONS' BUSINESSES" shall mean the businesses
currently conducted by the Stations, taken as a whole, including the assets and
operations thereof and certain Liabilities thereof, to be sold or assumed
pursuant to this Agreement.
Section 1.21 "SUBSIDIARY" of any person shall mean any corporation of
which at least a majority of the outstanding capital stock having voting power
under ordinary circumstances to elect directors of such corporation shall at
the time be held, directly or indirectly, by such person, by such person and
one or more subsidiaries of such person.
Section 1.22 "WARRANT" shall mean the warrant having the terms,
conditions, rights and attributes agreed upon by Buyer and Seller,
substantially in the form attached as Exhibit 1.22 hereto.
ARTICLE 2
SALE OF ASSETS; CLOSING
Section 2.1 ASSETS TO BE ACQUIRED. Subject to the satisfaction or
waiver in writing of the conditions set forth herein and to the other terms,
conditions and provisions hereof, at the Closing, Seller shall sell, convey,
assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire,
accept and pay for, all of Seller's right, title and interest in all of the
properties, assets and other rights (excluding the Excluded Assets as defined
herein) owned or leased by, licensed to or used by, Seller on the Closing Date
and used in the Stations' Businesses (collectively, the "ASSETS").
The Assets shall include but not be limited to the following:
(a) all licenses, permits and other authorizations issued
by the FCC to Seller with respect to any of the Stations, or any auxiliary or
supportive transmitting and/or receiving facility associated with the Stations,
together with all of Seller's rights thereunder (the "FCC AUTHORIZATIONS"),
including, without limitation, any auxiliary transmitting or receiving
facilities associated with the Stations (including "boosters" and "repeaters")
and all of Seller's rights thereunder, those set forth on SCHEDULE 2.1(A) to
this Agreement, and all applications therefor, together with any renewals,
extensions, or modifications thereof and additions thereto;
<PAGE> 10
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(b) (excluding the Excluded Assets) all equipment,
machinery, vehicles, furniture, fixtures, transmitting towers, transmitters,
antennae, office materials and supplies, spare parts and other tangible
personal property of every kind and description owned as of the date of this
Agreement by Seller and used in connection with the Stations' Businesses,
including, without limitation, those set forth on SCHEDULE 2.1(B) to this
Agreement, and any additions, improvements, replacements and alterations
thereto made between the date of this Agreement and the Closing Date;
(c) (excluding the Excluded Assets) all land, leaseholds,
easements and other interests of every kind and description in real property,
buildings, transmitting towers and antennae (to the extent that they constitute
fixtures or other interests in real property and thus fall outside the
description in Section 2.1(b) above) and improvements thereon owned, leased or
used by Seller in the Stations' Businesses, including, without limitation,
those set forth on SCHEDULE 2.1(C) to this Agreement, and those acquired
between the date hereof and the Closing Date by Seller as permitted by this
Agreement;
(d) all orders and agreements now existing, or entered
into in the ordinary course of business between the date hereof and the Closing
Date, for the sale of advertising time on the Stations for cash and all trade,
barter and similar agreements for the sale of advertising time on the Stations
other than for cash (excluding Program Contracts) which are listed on SCHEDULE
2.1(D) and all such agreements entered into after the date of such Schedule in
the ordinary course of business, to the extent the foregoing have not been
performed as of the Closing Date;
(e) all film, program licenses, agreements and contracts
listed on SCHEDULE 2.1(E) under which Seller is authorized to broadcast film
product or programs on the Stations, including, without limitation, (i) all
cash and non-cash (barter) program contracts and (ii) any other such program
contracts as may be entered into between the date of such Schedule and the
Closing Date; PROVIDED, HOWEVER, that if any such program contract: (x)
represents a Liability to the Station that is party thereto in excess of One
Hundred Thousand Dollars ($100,000); or (y) has a term exceeding one (1) year,
Buyer shall have consented in writing (which consent shall not be unreasonably
withheld or delayed) to Seller entering into such program contract
(collectively, the "PROGRAM CONTRACTS"). As used in this Agreement, "CONTRACT"
means any agreement, arrangement, commitment, or understanding, written or
oral, expressed or implied, to which the Stations or Seller with respect to the
Stations are a party or are bound;
(f) all contracts related to the Stations' Businesses,
including contracts listed on SCHEDULE 2.1(F) to this Agreement (other than
contracts that constitute Excluded Assets), together
<PAGE> 11
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with all such contracts as may be entered into in the ordinary course of
business of any Station between the date of such Schedule and the Closing Date
as permitted by this Agreement, to the extent not performed as of the Closing
Date (collectively, "OTHER CONTRACTS"); PROVIDED, HOWEVER, that any such Other
Contract involving (i) a national advertising sales representation agreement,
(ii) a rating agency agreement or (iii) lease obligations, in each case,
involving (x) a Liability to the Station that is a party thereto in excess of
One Hundred Thousand Dollars ($100,000) or (y) a term exceeding two (2) years,
Buyer shall have consented in writing (which consent shall not be unreasonably
withheld or delayed) to Seller entering into such Other Contract;
(g) (excluding the Excluded Assets) all trademarks,
service marks, patents, trade names, jingles, slogans, logotypes, and other
similar intangible assets (or rights therein) owned or used by any Seller in
connection with the Stations' Businesses as of the date hereof, including,
without limitation, Seller's rights to use the call letters KSAZ, WDAF, WBRC
and WGHP and any related names and phrases and those registered trademarks set
forth on SCHEDULE 2.1(G) to this Agreement, and those acquired between the date
hereof and the Closing Date;
(h) (excluding the Excluded Assets) all programs and
programming materials and elements of whatever form or nature owned by Seller
and used or intended for use in connection with the Stations' Businesses as of
the date hereof, whether recorded on tape or any other substance or intended
for live performance, and whether completed or in planning or production, and
all related common-law and statutory copyrights owned by or licensed to Seller
and used in connection with the business and operations of the Stations,
together with all such programs, materials, elements, and copyrights acquired
between the date hereof and the Closing Date;
(i) all FCC logs and similar records that relate to the
operation of the Stations;
(j) all files, books and other records of Seller relating
to the operation of the Stations, including, without limitation, all written
technical information, employment records, data, specifications, research and
development information, engineering drawings, manuals, computer programs,
tapes and software relating to the Stations' Businesses, other than account
books of original entry (copies of which shall be provided to Buyer) and other
than duplicate copies of such files and records, if any, that are maintained at
the corporate offices of Seller or any direct or indirect parent of Seller for
tax and accounting purposes and other than files, books and records relating
solely to court proceedings and the settlement thereof as to which any Seller
is under a legal or contractual obligation of confidentiality (the "SEALED
FILES");
<PAGE> 12
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(k) all of Seller's goodwill in and going concern value
of the Stations;
(l) all of Seller's right, title and interest in, to and
under the network affiliation agreements to which the Stations are parties or
under any renewals thereof or replacement therefor;
(m) to the extent transferable under applicable law, all
franchises, approvals, permits, licenses, orders, registrations, certificates,
variances and similar rights obtained from governments and governmental
agencies relating to the Stations' Businesses; and,
(n) all claims, causes of action, choses in action,
rights of recovery, rights of setoff, rights of recoupment, deposits, reserves
and prepaid expenses (other than those relating to Excluded Assets or
Liabilities which are not Assumed Liabilities), which shall be pro rated or
adjusted as provided in Section 2.5.
Section 2.2 EXCLUDED ASSETS. Notwithstanding any other provision of
this Agreement to the contrary, all of Seller's right, title and interest in
all of the following properties, assets and other rights (the "EXCLUDED
ASSETS") shall be excluded from the Assets and retained by Seller:
(a) copies of business records included in the Assets,
including, without limitation, those files, books and other records referred to
in Sections 2.1(i) and 2.1(j) above, that Seller reasonably deems necessary to
obtain in order to prepare any tax return or other filing or report required to
be made by Seller pursuant to this Agreement or otherwise to be made on or
after the Closing Date;
(b) any trademarks, service marks, trade names, jingles,
slogans, logotypes and other similar intangible assets (or rights therein)
incorporating the "Great American" name or any cognate thereof together with
any trademarks, service marks, trade names, jingles, slogans, logotypes or
similar intangible assets (or rights therein) incorporating the "WDAF" call
sign and used in radio broadcasting;
(c) any assets of any Station Employee Benefit Plan or
any other employee benefit plan and any rights under any plan or agreement
relating to employee benefits, employment or compensation to be retained by
Seller in accordance with the provisions of Article 7;
(d) any rights of Seller or the Stations which are
contingent on the satisfaction of liabilities that are Non-Assumed
<PAGE> 13
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Liabilities, except to the extent that any such rights relate to any of the
Assets;
(e) any assets of Seller or the Stations which are
related to any Non-Assumed Liabilities, except to the extent that any such
assets relate to any of the Assets;
(f) all cash, certificates of deposit and cash
equivalents;
(g) all accounts, notes and accounts receivable of Seller
relating to or arising out of the business and operations of the Stations prior
to the Closing;
(h) those assets, including tangible personal property and
interests in real property, employed by Seller in the operation of its Kansas
City, Missouri radio stations WDAF and KYYS and in the operation of Seller's
teleport facility and which are not principally used in the operation of any
Station (the "Kansas City Radio and Teleport Properties");
(i) all rights, demands, claims, Actions and causes of
action (whether for personal injuries or property, consequential or other
damages of any kind) (collectively, "CLAIMS") which Seller or the Stations may
have on, or after, the date hereof, against any Government Authority for refund
or credit of any type to which Seller is entitled pursuant to Section 8.5(a)
hereof for periods prior to the Closing; and,
(j) all Claims which Seller or the Stations may have
against any person with respect to, or which are related to, any Non-Assumed
Liabilities or Excluded Assets.
Section 2.3 ASSUMPTION OF LIABILITIES. (a) The Assets shall be sold
and conveyed to Buyer free and clear of all liens, claims, mortgages, security
interests, pledges, claims, charges and encumbrances of any nature whatsoever
(collectively, "LIENS") except Liens set forth on SCHEDULE 2.3(A)(I) hereto
(collectively, "PERMITTED LIENS"). On and after the Closing Date, Buyer will
assume and discharge only those Liabilities of Seller relating to the Assets or
the Stations' Businesses specified on Schedule 2.3(a)(ii) hereto, and which
shall include all Liabilities with respect to those contracts subject to the
Assignment and Assumption Agreement together with Liability for one half (1/2)
of the amount of any transfer or sales taxes incurred in connection with the
transactions contemplated hereby (collectively, the "ASSUMED LIABILITIES").
Except as set forth in this Section 2.3, Buyer hereby assumes no other
Liabilities of Seller (including, without limitation, no Liabilities, claims or
Actions alleging or relating to any tort, product liability, environmental
liability, Taxes, or breach of contract or otherwise seeking damages and
relating to the
<PAGE> 14
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operation of the Stations prior to the Closing Date, and no Liabilities
relating to the Excluded Assets (the Liabilities of Seller which are not
assumed by Buyer pursuant to this Agreement are hereinafter collectively
referred to as the "NON-ASSUMED LIABILITIES")).
Notwithstanding any provision herein to the contrary, Buyer shall be
solely liable for the prompt and full discharge of the Assumed Liabilities and
also for any Liability arising from, or in connection with, the conduct of the
Stations' Businesses or the ownership of the Stations or the Assets acquired by
Buyer after the consummation of the transactions contemplated hereby,
including, without limitation, any such Liabilities arising by reason of any
violation or claimed violation by Buyer, by acts or events or omissions arising
or occurring after the Closing, of any federal, state or local law, rule,
regulation, ordinance or any requirement of any Government Authority
(collectively, the "BUYER'S POST-CLOSING LIABILITIES").
(b) Without limiting the generality of Section 2.3(a) and
notwithstanding any other provision hereof, each of the following is a
Non-Assumed Liability of Seller which Buyer does not assume:
(i) any of Seller's obligations hereunder;
(ii) any Liabilities that are materially
inconsistent with Seller's representations and warranties in this
Agreement or in any Schedule or certificate delivered hereunder;
(iii) any Liability of Seller arising from
indebtedness for borrowed money or long-term debt of Seller;
(iv) any Liability of Seller arising from, or in
connection with, the conduct of the Stations' Businesses or the
ownership of the Stations or the Assets by Seller prior to the
consummation of the transactions contemplated hereby at the Closing,
including, without limitation, any such Liabilities arising by reason
of any violation or claimed violation by Seller, by acts or events or
omissions arising or occurring prior to the Closing, of any federal,
state or local law, rule, regulation, ordinance or any requirement of
any Government Authority, other than any such Liability which Buyer
has expressly assumed as an Assumed Liability;
(v) any Liability of Seller for Taxes owed to any
Taxing Authority (other than transfer or sales taxes incurred in
connection with the transactions contemplated hereby, the liability
for which shall be borne in equal proportions by Buyer and Seller);
<PAGE> 15
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(vi) any Liability of Seller arising out of or
related to past, present or future litigation involving Seller or
Seller as the owner and operator of or the Stations' Business prior to
the Closing, whether the relevant cause of action accrues before or
after the Closing, except to the extent Buyer has expressly assumed
such Liability as an Assumed Liability or has indemnified Seller
against such Liability in Article 11;
(vii) any Liability in respect of any contract to
which Seller is a party or beneficiary which is not a contract subject
to the Assignment and Assumption Agreement (as defined below);
(viii) any liability under any Station Employee
Benefit Plan;
(ix) any Controlled Group Liability;
(x) any Liability arising out of the employment
or termination of employment, in either case prior to the Closing, of
any person employed in the Stations' Businesses (but excluding any
liability arising out of any action or failure to act on the part of
Buyer);
(xi) any Liability that represents any amounts
past due or contractually due prior to the Closing Date on any
contract subject to the Assignment and Assumption Agreement;
(xii) any Liability of Seller or any present or
former director or officer of Seller arising from any claim, Action or
proceeding, including, without limitation, any derivative Action,
brought by or on behalf of any present or former holder of any debt
or equity security of Seller or by any lender to Seller, including,
without limitation, any Liability arising from any indemnification,
reimbursement or advance in connection therewith; and,
(xiii) any Liability of Seller which is not an
Assumed Liability under Section 2.3(a).
Notwithstanding any provision herein to the contrary, Buyer
shall not assume or become liable in any manner for any Liability or obligation
of Seller, and Seller shall remain responsible for any and all Liabilities of
Seller, other than the Assumed Liabilities.
Section 2.4 CONSIDERATION. (a) Simultaneously with the Buyer's final
acceptance of Seller's initial Disclosure Schedules pursuant to Section 5.5,
Buyer shall pay to Chase Manhattan Bank, which shall serve as escrow agent
("Escrow Agent") under the Escrow
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Agreement of even date herewith in substantially the form of Exhibit 2.4(a)
("Escrow Agreement"), the sum of Fifteen Million Dollars ($15,000,000) (the
"Deposit"). The Deposit shall be held and disbursed pursuant to the terms and
conditions of the Escrow Agreement.
(b) Subject to the terms and conditions hereof, at the
Closing, the Escrow Agent shall release the Deposit to Seller and Buyer shall
(A) pay to Seller the remainder of the cash portion of the Purchase Price by
wire transfer of immediately available funds to the account specified in
writing by Seller, (B) assume the Assumed Liabilities pursuant to an Assignment
and Assumption Agreement in substantially the form of Exhibit 2.4(b)(i) hereto
(the "Assignment and Assumption Agreement"), (C) specifically assume the
obligation to provide advertising or promotional time to Seller's radio
stations in Kansas City, Missouri, Tampa/St. Petersburg, Florida, Atlanta,
Georgia and Phoenix, Arizona pursuant to the Advertising Time Agreements in
substantially the form of Exhibit 2.4(b)(ii); and (D) at the Closing with
respect to Station KSAZ, deliver the Warrant to Seller. In the event that
Buyer assigns its rights to acquire a Station or Stations pursuant to Section
2.8 hereof, it shall be a condition precedent to such assignment that the
consideration being paid to Seller pursuant to this Agreement shall be
allocated among the Stations in a manner mutually agreeable to Seller and
Buyer.
(c) In the event that the Closing with respect to the
three (3) Stations other than Station WBRC does not occur on or before November
4, 1994 and Seller is not then in breach of its covenants under this Agreement,
the Purchase Price for any of the three (3) Stations other than Station WBRC
with respect to which a Closing shall not then have occurred, shall be adjusted
upwards (but not downwards) to the extent that the unadjusted Purchase Price is
less than the sum of nine (9) times the twelve (12) month trailing operating
cash flow for any such Station as of November 4, 1994 (calculated in accordance
with Seller's historical practices). In the event that the Closing with
respect to Station WBRC does not occur on or before February 4, 1995 and Seller
is not then in breach of its covenants under this Agreement, the Purchase Price
for Station WBRC shall be adjusted upwards (but not downwards) to the extent
that the unadjusted Purchase Price is less than the sum of nine (9) times the
twelve (12) month trailing operating cash flow for Station WBRC as of February
4, 1995 (calculated in accordance with Seller's historical practices). For
purposes of this Section 2.4(c), "operating cash flow" shall mean the sum of:
(i) operating income reported on the statement of operation for the Station(s)
for such period (all as prepared in accordance with United States generally
accepted accounting principles) and (ii) the aggregate amount of depreciation
and non-cash amortization of intangibles for such period, all as calculated in
accordance with Seller's historical practices. Nothing in this Section 2.4(c)
<PAGE> 17
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shall be deemed to conflict with Seller's rights to an adjusted purchase price
for KSAZ in the circumstances set forth in Section 12.3 below. Notwithstanding
the foregoing, no adjustment to the Purchase Price shall be made pursuant to
this Section 2.4(c) if the delay beyond the dates referred to herein is caused
by any action or failure to act on the part of Seller which both (i) is
reasonably likely to cause such delay and (ii) constitutes a breach of any
provision of this Agreement.
Section 2.5 CLOSING PRORATION AND ADJUSTMENT. (a) On the Closing
Date, the Purchase Price shall be either increased or decreased by the
adjustments called for under the following subparagraphs (b) and (c) of this
Section 2.5. Final adjustments shall be made after the Closing Date pursuant
to the provisions of this Section 2.5.
(b) Except as otherwise expressly provided for in this
Section 2.5, all income and expenses arising from the Stations' Businesses
shall be pro rated between Buyer and Seller as of the Closing Date in
accordance with generally accepted accounting principles and the principles
that (i) Seller shall receive all revenues and all refunds to Seller and
deposits of Seller held by third parties and shall be responsible for all
expenses and costs allocable to the conduct of the Stations' Businesses for the
period prior to the Closing Date and (ii) Buyer shall receive all revenues and
shall be responsible for all costs and expenses allocable to the conduct of the
Stations' Businesses on the Closing Date and for the period thereafter. Such
prorations shall include, without limitation, all ad valorem, real and personal
property taxes and assessments (but excluding transfer and sales taxes arising
by reason of the transfer of the Assets as contemplated hereby, the liability
for which shall be borne in equal proportions by Buyer and Seller) (although
current installments of assessments shall be pro rated between Buyer and Seller
as of the Closing Date, subsequent unpaid installments of assessments, if any,
shall be assumed by Buyer), business and license fees, wages and salaries of
employees (including accruals for bonuses, commissions and vacation pay),
charges for utilities, water/sewer and natural gas, time sales agreements,
property and equipment rentals and all other income and expenses attributable
to the ownership and operation of the Stations' Businesses. The prorations and
adjustments required pursuant to this Section 2.5(b) shall be made pursuant to
the protocol attached hereto as Exhibit 2.5-1. For the purpose of determining
the prorations and adjustments required pursuant to this Section 2.5(b), Seller
shall deliver to Buyer, not less than three (3) days prior to the Closing Date,
certificates in the form of Exhibit 2.5-2 attached hereto (the "PRORATION
CERTIFICATES"), to be signed at Closing by appropriate officers of Seller which
specifies Seller's good faith estimate of the dollar amount of the prorations
and adjustments under this Section 2.5(b). At Closing, the Purchase Price
payable under Section 2.4 hereof shall be
<PAGE> 18
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decreased to the extent Seller owes Buyer funds or increased to the extent
Buyer owes Seller funds, based upon the amount set forth in the Prorations
Certificates.
(c) Within sixty (60) days after the Closing Date, Seller
shall deliver to Buyer certificates (the "CLOSING CERTIFICATES") to be signed
by appropriate officers of Seller setting forth any proposed changes (in
accordance with generally accepted accounting principles and the principles set
forth in subparagraph (b) above) in adjustments or payments made at the Closing
pursuant to subparagraphs (b) and (c) of this Section 2.5.
(d) If Buyer shall conclude that the Closing Certificates
do not accurately reflect the changes to be made to the adjustments made as of
the Closing pursuant to subparagraphs (b) or (c) of this Section 2.5, Buyer
shall, within thirty (30) days after its receipt of Seller's Closing
Certificates, furnish Seller with a written statement setting forth, with
appropriate supporting documentation, any discrepancy or discrepancies believed
in good faith to exist (the "DISCREPANCY STATEMENT"). If Buyer notifies Seller
of its acceptance of Seller's Closing Certificate, or if Buyer otherwise fails
to deliver a Discrepancy Statement within the thirty (30) day period specified
in the immediately preceding sentence, Seller's determination of the Purchase
Price shall be conclusive and binding on the parties as of the last day of such
thirty-day period.
(e) Seller and Buyer shall attempt jointly to resolve any
discrepancy within fifteen (15) days after receipt by Seller of the Discrepancy
Statement, which resolution, if achieved, shall be binding upon all parties to
this Agreement and not subject to dispute or review. If Seller and Buyer
cannot resolve the discrepancy to their mutual satisfaction within such fifteen
(15) day period, Buyer and Seller shall, within the following ten (10) days,
jointly designate a nationally known independent public accounting firm (other
than Ernst & Young or Price Waterhouse) to be retained to review the Closing
Certificates together with Buyer's Discrepancy Statement and any other relevant
documents. The cost of retaining such independent public accounting firm shall
be borne equally by Seller on the one hand and Buyer on the other hand. Such
firm shall report its conclusions in writing to Buyer and Seller and such
conclusions as to adjustments pursuant to subparagraphs (b) and (c) of this
Section 2.5 shall be conclusive and binding on all parties to this Agreement
and not subject to dispute or review.
(f) If, as a result of the final determination of
adjustments pursuant to this Section 2.5, (A) Buyer is determined to owe an
amount to Seller, Buyer shall pay such amount thereof to Seller, in immediately
available funds, within five (5) days of the date of such final determination,
and (B) if Seller is determined
<PAGE> 19
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to owe an amount to Buyer, Seller shall pay such excess to Buyer, in
immediately available funds, within five (5) days of the date of such final
determination.
(g) On the third business day of each of the first six
(6) calendar months following the Closing Date, Buyer shall deliver to Seller
an amount equal to the total amount collected in the prior calendar month by
Buyer in respect of accounts receivable of the Stations' Businesses outstanding
as of the Closing Date. Buyer shall simultaneously provide Seller with
reasonably detailed information with respect to the amounts so collected,
including information as to the invoices to which a payment relates and any
material correspondence from the account debtor. Account debtors shall be
presumed, in the absence of a writing stating that a payment is to be related
to specific invoices, to be paying the oldest invoices first. Buyer shall
collect such accounts receivable for the benefit of Seller in good faith using
its customary collection measures but shall not be obligated to commence
litigation or incur legal costs in such collection efforts. Buyer shall have
no further rights or obligations with respect to such accounts receivable of
Seller after the end of the first six (6) calendar months after the Closing.
Section 2.6 ADDITIONAL CLOSING DELIVERIES. (a) In addition to the
other things required to be done hereby, at the Closing, Seller shall deliver,
or cause to be delivered, to Buyer the following: (i) a duly executed Bill of
Sale in substantially the form of Exhibit 2.6 (which shall contain only the
representations and warranties set forth in this Agreement), (ii) certificates
dated the Closing Date and validly executed on behalf of Seller to the effect
that the conditions set forth in Sections 9.1, 9.1(a), and 10.1 have been
satisfied, (iii) warranty deeds (limited or general, as the case may be)
covering the Real Properties (unless Seller acquired Real Property by means of
a quitclaim or other deed, in which event Seller shall tender quitclaim or
other deeds), (iv) assignments of the Real Property Leases that have been
received as of the Closing Date, (v) an affidavit from each grantor of a Real
Property to the effect that such grantor is not a "foreign person" or a
"foreign corporation" as such terms are defined in Section 1445 of the Code,
(vi) an affidavit from each grantor of a Real Property with respect to title
matters if and to the extent reasonably requested by Buyer's title insurance
company, (vii) all other documents required to transfer title to the Assets,
(viii) a copy of the resolutions of the board of directors of Seller, or
similar enabling document, authorizing the execution, delivery and performance
hereof by Seller, and a certificate of its secretary or assistant secretary,
dated as of the Closing Date, that such resolutions were duly adopted and are
in full force and effect, (ix) evidence or copies of any consents, approvals,
orders, qualifications or waivers required pursuant to Section 10.7, and (x) a
duly executed certificate as required by Section 1445 of the
<PAGE> 20
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Code and the regulations thereunder to establish an exemption from withholding
with respect to the transfer of Assets by Seller.
(b) In addition to the payment of the Purchase Price and
the other things required to be done hereby, at the Closing, Buyer shall
deliver, or cause to be delivered, to Seller the following: (i) a certificate
dated the Closing Date and validly executed on behalf of Buyer to the effect
that the condition set forth in Sections 9.1, 9.1(a), and 10.1 shall have been
satisfied, (ii) a copy of the resolutions of the board of directors of Buyer,
or similar enabling document, authorizing the execution, delivery and
performance hereof by Buyer, and a certificate of its secretary or assistant
secretary, dated as of the Closing Date, that such resolutions were duly
adopted and are in full force and effect, (iii) evidence or copies of any
consents, approvals, orders, qualifications or waivers required pursuant to
Section 9.2, and (iv) if not previously delivered to Seller, all other
certificates, documents, instruments and writings required pursuant hereto to
be delivered by or on behalf of Buyer at or before the Closing.
Section 2.7 TIME AND PLACE OF CLOSING. The Closing shall take place
on the Closing Date at 10:00 A.M., Cincinnati time at the offices of Keating,
Muething & Klekamp, 1800 Provident Tower, One East Fourth Street, Cincinnati,
Ohio 45202. However, if pursuant to the last sentence of Section 10.5 multiple
Closings are held with respect to the Stations, the Closings shall take place
at such times and locations as the parties shall mutually agree.
Section 2.8 ASSIGNMENT. Seller acknowledges Buyer's intention to
assign its right to purchase one (1) or more of the Stations. Such an
assignment shall be permitted hereunder within the first thirty (30) days after
this Agreement has been executed and delivered if (but only if) all of the
following conditions have been satisfied: (i) Buyer is not then in breach of
any of its obligations under this Agreement; (ii) there is no material fact or
condition then known to Buyer with respect to the proposed assignee, its
principal stockholders, other investors or management that, if known by the
FCC, would make approval of transfer of the FCC Authorizations with respect to
the Station or Stations involved less likely to occur or would materially delay
such approval; (iii) the consideration being paid to Seller hereunder shall be
allocated in writing among the Stations in a manner mutually agreeable to
Seller and Buyer; and (iv) the proposed assignee executes and delivers a
writing in form and substance reasonably acceptable to Seller assuming Buyer's
obligations hereunder with respect to the Station or Stations involved. No
assignment shall relieve Buyer of any of its obligations hereunder. Buyer
hereby assumes the risk of delay in Closing that any such assignment may
occasion.
Section 2.9 ALLOCATION. Seller and Buyer agree to allocate the
consideration paid for the Assets among the Assets for all
<PAGE> 21
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purposes (including financial accounting and Tax purposes) in accordance with
the allocation schedule to be attached hereto as Exhibit 2.9 (the "Allocation
Schedule"). If the parties are unable to agree on the Allocation Schedule, a
third-party appraiser, the cost of which shall be borne equally by Buyer and
Seller, shall resolve the allocation of the consideration to any items with
respect to which there is a dispute between the parties. In the event that the
Purchase Price shall be adjusted pursuant to Section 2.4(b), the Allocation
Schedule shall be appropriately modified, on such basis as Buyer and Seller
shall reasonably agree, to reflect such adjustment. Seller and Buyer will each
file all Tax Returns, including IRS Form 8594, in a manner consistent with the
Allocation Schedule. Neither Seller nor Buyer shall, after filing IRS Form
8594, revoke or amend IRS Form 8594 without the written consent of the other.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the Disclosure Schedules referred to in this
Article 3 (the final versions of which (together with true and correct copies
of all agreements, permits or documents referred to therein) shall be delivered
by Seller to Buyer within fifteen (15) business days after the date this
Agreement is executed and delivered and which may be updated as and to the
extent set forth in Section 5.5 hereof), Seller hereby represents and warrants
to Buyer as follows:
Section 3.1 INCORPORATION; AUTHORIZATION; ETC. (a) Seller is a
corporation validly existing and in good standing under the laws of the State
of Ohio. Seller is duly qualified to do business and is in good standing as a
foreign corporation in each state where it owns or operates a Station and is
not required to be qualified in any other jurisdiction in connection with the
Stations' Businesses except where the failure to be so qualified would not
materially adversely affect the conduct of any of the Stations' Businesses,
taken individually. Seller has full corporate power and authority to carry on
the Stations' Businesses as they are now being conducted, and to own, lease and
operate the Assets owned, leased and being operated by it. Other than joint
promotional activities with national or local advertisers, local radio stations
and other entities entered into in the ordinary course of the Stations'
Businesses, Seller is not a participant in any joint venture or partnership
with any other person or entity with respect to any Station or the Assets.
(b) Seller has full corporate power to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of
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Seller's obligations hereunder has been duly and validly authorized by all
necessary corporate proceedings on the part of Seller and no other corporate
proceedings or actions on the part of Seller, its board of directors or
stockholders is necessary therefor. Except as disclosed in Schedule 3.1(b),
the execution, delivery and performance by Seller of this Agreement will not
(i) violate any provision of Seller's Articles of Incorporation or Regulations,
(ii) violate any provision of, or be an event that is (or with the passage of
time will result in) a violation of, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or lapse of
time or both) any obligation under, or result in the imposition of any Lien
upon or the creation of a security interest in any of the Assets pursuant to,
any mortgage, Lien, lease, agreement, instrument, order, arbitration award,
judgment, injunction or decree to which Seller is a party or by which it is
bound, or (iii) violate or conflict with any statute, rule or regulation
applicable to Seller or any of its properties or assets or any other material
restriction of any kind or character to which Seller is subject. This
Agreement has been duly executed and delivered by Seller, and, assuming the due
execution and delivery hereof by Buyer, this Agreement constitutes the legal,
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.
Section 3.2 FINANCIAL STATEMENTS. (a) Attached as Exhibit 3.2 are
true and complete copies of the internal financial statements (which reflect
cash flows) of the Stations' Businesses as at December 31, 1993 and March 31,
1994 (the "FINANCIAL STATEMENTS"). The Financial Statements have been prepared
in accordance with United States generally accepted accounting principles
consistently applied by Seller.
(b) Other than by omitting the materials and disclosures
found in the notes to financial statements prepared in accordance with United
States generally accepted accounting principles, the balance sheets included in
the Financial Statements fairly present in all material respects the financial
position of the Stations' Businesses, and the statements of operations included
in the Financial Statements fairly present in all material respects the results
of operations of the Stations' Businesses for the periods set forth therein.
Section 3.3 UNDISCLOSED LIABILITIES. Except as disclosed in Schedule
3.3 and except as reflected, reserved against or otherwise disclosed in the
Financial Statements, the Stations' Businesses did not have, at March 31, 1994
or December 31, 1993 any material liabilities or obligations, whether accrued,
absolute, contingent or otherwise affecting the Assets or the Stations,
individually or as a whole, that would be required to be reflected on the
Financial Statements in accordance with United States generally accepted
<PAGE> 23
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accounting principles consistently applied by Seller and which were not so
reflected.
Section 3.4 FCC AUTHORIZATIONS. Seller is the holder of all rights
in and to the FCC Authorizations listed under its name in Schedule 2.1(a) to
this Agreement. Schedule 2.1(a) sets forth a true and complete list of any and
all pending applications filed with the FCC by Seller relating to any Station.
The FCC Authorizations listed on Schedule 2.1(a) constitute all of the licenses
and authorizations required under the Communications Act or the current rules,
regulations, and policies of the FCC for and/or used in the business and
operation of the Stations as currently operated. The FCC Authorizations are in
full force and effect and are unimpaired by any act or omission of Seller or
any officers, directors, employees or agents of Seller. Except as disclosed in
Schedule 3.4, there is not pending or, to the knowledge of Seller threatened,
any action by or before the FCC to revoke, cancel, rescind, modify, or refuse
to renew in the ordinary course any of the FCC Authorizations. Except as
disclosed in Schedule 3.4, there is not now pending any investigation, by or
before the FCC, or any order to show cause, notice of violation, notice of
apparent liability, or notice of forfeiture or complaint by, before or with the
FCC against Seller or any of its officers, directors, stockholders or
affiliates with respect to the Stations nor, to Seller's knowledge, are any of
the foregoing threatened. Each Station is operating in compliance in all
material respects with the FCC Authorizations, the Communications Act, and the
current rules, regulations, and policies of the FCC. Seller has timely filed
all reports, forms and statements required to be filed by Seller with the FCC.
There are no other licenses, permits or authorizations from Governmental
Authorities that are required for the lawful conduct of the business and
operations of the Stations as currently conducted not possessed by Seller
except for immaterial local business licenses. Except as set forth on Schedule
3.4, Seller has not received any written notice with respect to the Stations'
FCC Authorizations or the Stations' compliance with the Communications Act that
might cause the FCC not to consent to the assignment by Seller of the Stations'
FCC Authorizations as contemplated by this Agreement.
Section 3.5 OWNERSHIP AND CONDITION OF ASSETS. Except as otherwise
set forth on Schedule 3.5, as of the Closing Date Seller will own or lease all
assets used in or for the operation of the Stations in the manner operated by
Seller on the date hereof. The tangible assets included in the Assets and the
improvements on the Leased Property owned or leased by Seller included in the
Station Assets are, taken as a whole, in good operating condition and repair
and are adequate for the purposes for which they are currently used by Seller.
Seller has good and marketable title to the tangible assets and personal
property included in the Assets, and all such assets and personal property are
free and clear of all
<PAGE> 24
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Liens of any nature whatsoever except for (i) Permitted Liens and (ii) the
Liens set forth on Schedule 3.6, all of which Liens set forth on Schedule 3.6
shall be discharged and removed on the Closing Date. Upon consummation of the
Asset Purchase at the Closing, as contemplated by this Agreement, Seller will
deliver to Buyer good title to the Assets free and clear of any Liens, except
for Permitted Liens.
Section 3.6 REAL PROPERTIES. (a) Schedule 2.1(c) sets forth (i) a
list and legal description of all real properties or interests in real property
owned by Seller (individually, a "REAL PROPERTY" and collectively, the "REAL
PROPERTIES"), and (ii) each lease or other agreement (including any easements)
under which Seller leases or has, or on the Closing Date will have, rights in
any real property (the "REAL PROPERTY LEASES"). Except as set forth on
Schedule 2.1(c), Seller does not own or hold any real property or any option to
acquire any real property or interest therein. Seller has delivered to Buyer
true and complete copies of the Real Property Leases. There are no amendments
or modifications to any of the Real Property Leases, except as set forth on
Schedule 2.1(c).
(b) Except as disclosed in Schedule 3.6, Seller has good and
marketable title to all of the Real Properties and has a valid and subsisting
leasehold interest in all the real property which is the subject of each of the
Real Property Leases (individually a "LEASED PROPERTY" and collectively, the
"LEASED PROPERTIES"), free and clear of all Liens of any nature whatsoever,
except for Permitted Liens and Liens identified on Schedule 3.6 that will be
discharged and removed on the Closing Date. Except for the Real Property
Leases indicated on Schedule 2.1(c) hereto as being unexecuted, each of the
Real Property Leases is a legal, valid and binding agreement of the Seller
enforceable in accordance with its terms. Except as set forth on Schedule
2.1(c) and except for the rights of the users of the Kansas City Radio and
Teleport Properties, none of the Real Properties or the Leased Properties is
subject to any lease, sublease, license or other agreement in which Seller
grants to any other person any right to the use, occupancy or enjoyment of the
Real Properties or the Leased Properties or any part thereof. The Real
Properties and the Leased Properties together constitute all interests in real
property necessary to operate the Stations in the manner that they have been
operated by Seller prior to the Closing.
(c) No event has occurred under any of the Real Property
Leases that, with the lapse of time or the giving of notice or both, would
constitute a default by Seller thereunder and there are no offsets by Seller or
any other party thereto. Seller is in compliance in all material respects with
each of the Real Property Leases.
<PAGE> 25
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(d) Except as set forth on Schedule 2.1(c), no consents are
required with respect to the transfer and assignment by Seller to Buyer of the
Real Property Leases.
(e) Except as set forth on Schedule 3.6, the Real Properties
and all structures and appurtenances thereto owned by Seller comply in all
material respects with all applicable laws, ordinances and regulations, rules,
regulations, orders and permits of all Governmental Authorities, and no written
notice of violation of any such laws, rules, regulations, orders or permits has
been received by Seller.
(f) Except as set forth on Schedule 3.6, there are (i) no
actual or pending impositions or assessments for public improvements with
respect to any Real Property or Leased Property for which Seller would be
liable, and (ii) no improvements constructed or planned that would be paid for
by means of public assessments upon any Real Property or Leased Property for
which Seller would be liable. Seller has not received any actual notice and,
to Seller's knowledge, there is no pending, threatened or contemplated
condemnation proceeding affecting any Real Property or Leased Property or any
part thereof or of any sale or any disposition of any Real Property or any
Leased Property or any portion thereof in lieu of condemnation.
Section 3.7 ABSENCE OF CERTAIN CHANGES OF EVENTS. Since March 31,
1994, Seller has not:
(a) disposed of any material assets or business related
to or used in any of the Stations' Businesses;
(b) suffered any extraordinary losses or any material
damage, destruction or other casualty losses with respect to any of the Assets,
or waived any rights of substantial value;
(c) conducted the Stations' Businesses in any manner
materially inconsistent with its past practices;
(d) had, individually or in the aggregate, any material
adverse change in the Business Condition of any of the Stations; or
(e) had any actual or threatened cancellation or
non-renewal of material agreements related to the Stations' Businesses or
material adverse change in the relationship with any of the significant
counterparties to such material agreements.
Section 3.8 LITIGATION; ORDERS. Except as disclosed in Schedule 3.8,
there are no lawsuits, actions, administrative or arbitration or other
proceedings or governmental investigations pending or threatened against Seller
that would reasonably be expected to, individually or in the aggregate, have a
material
<PAGE> 26
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adverse effect on the Assets, the Assumed Liabilities or the Stations'
Businesses, or which questions the validity of this Agreement or any action
taken or to be taken in connection herewith. Except as disclosed in Schedule
3.8, there are no judgments or outstanding orders, injunctions, decrees,
stipulations or awards (whether rendered by a court or administrative agency,
or by arbitration) against Seller or any of its properties or businesses that
would reasonably be expected to, individually or in the aggregate, have a
material adverse effect on the Business Condition of the Stations or that would
prohibit the consummation of the transactions contemplated hereby.
Section 3.9 INTELLECTUAL PROPERTY. Schedule 2.1(g) to this Agreement
sets forth a correct and complete list of all registered trademarks, service
marks and trade names (other than such as are Excluded Assets) owned by Seller
with respect to the Stations all of which are, except as set forth on Schedule
3.9, valid, in good standing and uncontested. Except as set forth on Schedule
3.9, Seller possesses adequate rights, licenses or other authority to use all
call letters, copyrights, patents, trademarks and trade names necessary to
conduct the business of each Station in all material respects as presently
conducted by Seller. Except as set forth on Schedule 3.9, Seller has not
received any notice with respect to any alleged infringement or unlawful or
improper use of any copyright, patent, trademark, trade name, or other
intangible property right owned or alleged to be owned by others and used in
connection with any Station. Except as disclosed on Schedule 3.9, Seller has
not granted any licenses or other rights to any copyright, patent, trademark,
trade name, logotype, jingle or slogan used in connection with any Station and
included in the Assets.
Section 3.10 LICENSES, APPROVALS, OTHER AUTHORIZATIONS. Schedule 3.10
includes all material licenses, permits, franchises and other authorizations of
any Government Authority possessed by or granted to Seller (the "LICENSES").
Except as disclosed in Schedule 3.10, all such Licenses are in full force and
effect. As of the date hereof except as disclosed in Schedule 3.8, no
proceeding is pending or, to Seller's knowledge, threatened seeking the
revocation or limitation of any such license, permit, franchise or other
authorization that, individually or in the aggregate, would reasonably be
expected to have a material adverse effect on the Stations' Business.
Section 3.11 LABOR MATTERS. Schedule 3.11 lists, as of the date
hereof, all collective bargaining agreements with labor unions or associations
representing employees of the Stations. As of the date hereof, no material
work stoppage against the Stations is pending or, to Seller's knowledge,
threatened, and no such stoppage has occurred during the last two (2) years.
Except as set forth in Schedule 3.11, as of the date hereof, none of the
Stations is
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involved in or, to Seller's knowledge, threatened with any labor dispute,
arbitration, lawsuit or administrative proceeding relating to labor matters
involving the employees of the Stations, and none of the Stations have been
involved in any such matters during the last two years.
Section 3.12 COMPLIANCE WITH LAWS. The conduct of the business of the
Stations' Businesses complies in all material respects with all federal, state
and local statutes, laws, regulations, ordinances, rules, judgments, orders or
decrees applicable thereto.
Section 3.13 MATERIAL CONTRACTS. (a) Schedules 2.1(c), 2.1(d),
2.1(e) and 2.1(f) to this Agreement set forth, as of the respective dates set
forth thereon, true and complete lists of the following, as to which each
Station or Seller with respect to any Station is a party:
(i) any television network affiliation agreements;
(ii) contracts evidencing time sales to advertisers or
advertising agencies which are "trade" or "barter" transactions which
require the furnishing of advertising time on any Station at any time
after the Closing Date;
(iii) any barter obligations or commitments to suppliers of
programming;
(iv) sales agency or advertising representation contracts;
(v) all licenses and contracts under which Seller is
authorized to broadcast on any Station film or taped programming
supplied by others (including, without limitation, all commitments
which are not yet the subject of executed license agreements),
including all cash and non-cash (barter) arrangements;
(vi) leases of personal property which involve annual
payments of more than $25,000 individually;
(vii) contracts not made in the ordinary and usual course
of business;
(viii) guaranties or accommodations;
(ix) any contracts which are not terminable without
penalty upon notice of thirty (30) days or less or which require
payments during the period prior to cancellation of more than $25,000
individually;
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(x) consulting or similar contracts; and
(xi) any other material contracts.
(b) Each of the contracts listed in Schedules 2.1(c), 2.1(d),
2.1(e) and 2.1(f) is valid and is in full force and effect and there is no
default by Seller with respect thereto.
(c) Except as disclosed on Schedule 3.13, Seller is not a
party to any contracts for construction or the purchase of capital improvements
on the date hereof, and on the Closing Date will not be a party to any such
contract which has not been fully performed and paid for.
(d) Except as disclosed on Schedule 3.13, Seller is not a
party to any agreement outside the ordinary course of business which obligates
it to provide advertising time on any Station on or after the Closing Date as a
result of the failure of the Station to satisfy specified ratings or any other
performance criteria, guarantee or similar representation or warranty with
respect to any advertising broadcast by the Station.
Section 3.14 INSURANCE. The material properties and assets of Seller
which are of an insurable character and are used or useful in the Stations'
Businesses are insured against loss or damage by fire or other risks, and
Seller maintains liability insurance, to the extent and in the manner and
covering such risks as is customary for companies engaged in a business similar
to the Stations' Businesses or owning assets similar to the Assets. Set forth
on Schedule 3.14 is a true, correct and complete schedule of all insurance
policies or binders of insurance or programs of self-insurance which relate to
the Stations' Businesses and the Assets. Except as set forth on Schedule 3.14,
the coverage under each such policy and binder is in full force and effect, and
no notice of cancellation or nonrenewal with respect to, or disallowance of any
claim under, any such policy or binder has been received by Seller.
Section 3.15 CONSENTS. Except for any required premerger notification
and related filings with the FTC and the Department of Justice pursuant to the
HSR Act or any filings with the FCC, no consent, approval, authorization or
order of (or registration or filing with) any court or other Government
Authority is required in connection with the execution, delivery or performance
by Seller of this Agreement or in connection with the transactions contemplated
hereby (including transfer of any or all of the Assets), other than those which
will be obtained by Seller prior to the Closing.
Section 3.16 NO DEFAULTS. Except as set forth on Schedule 3.16,
Seller has not received notice of any default nor is it in default in any
material respect under any material agreement (including, without limitation,
any note, loan or borrowing
<PAGE> 29
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agreement), commitment, arrangement, lease, insurance policy or other material
instrument to which it is a party or to or by which it may be subject or bound,
or under which it, any of the Assets or any of the Stations' Businesses
receives benefits. Each of the foregoing material agreements, commitments,
arrangements, leases, insurance policies and other material instruments is the
legal, valid and binding obligation of Seller enforceable in accordance with
their terms, and, except as set forth on Schedule 3.16, no material defenses,
offsets or counterclaims have been asserted (to Seller's knowledge) by any
party thereto in connection therewith, nor has Seller waived any substantial
right with respect thereto.
Section 3.17 ENVIRONMENTAL MATTERS. (a) For purposes of this Section
3.17, the following definitions shall be applicable:
(i) "APPLICABLE ENVIRONMENTAL LAWS" shall mean any and
all laws, statutes, regulations, administrative and judicial
interpretations thereof of the United States or of any state or other
authority having jurisdiction over the Stations or the Assets or any
portion thereof, all as in effect and as interpreted on the date of
this Agreement, that relate to the prevention, abatement and
elimination of pollution and/or protection of the environment,
including, but not limited to, the federal Comprehensive Environmental
Response, Compensation, and Liability Act, the Resource Conservation
and Recovery Act, the Clean Water Act, the Safe Drinking Water Act,
the Toxic Substances Control Act, and the Hazardous Materials
Transportation Act, together with all state statutes serving any
similar or related purposes.
(ii) "HAZARDOUS SUBSTANCE" means any substance now or
hereafter designated pursuant to Section 307(a) and 311(b)(2)(A) of
the federal Clean Water Act, 33 USCA Section Section 1317(a),
1321(b)(2)(A), Section 112 of the federal Clean Air Act, 42 USCA
Section 3412, Section 3001 of the federal Resource Conversation and
Recovery Act, 42 USCA Section 6921, Section 7 of the Federal Toxic
Substances Control Act, 15 USCA Section 2606, or Section 101(14) and
Section 102 of the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 USCA Section Section 9601(14), 9602, as
amended by the Superfund Amendments and Reorganization Act of 1986.
(b) (i) Since the date Seller acquired same, the Assets have
been used by Seller for their current business operations and for no
other purposes. At no time have the Assets been used by anyone for
the generation, use, handling, storage, transport, processing,
treatment or disposal of Hazardous Substances in violation of
Applicable Environmental Laws or as a landfill or other waste disposal
site.
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(ii) There are no underground storage tanks on the Real
Property of Seller in violation of Applicable Environmental laws.
(iii) None of the improvements owned or used by Seller on
its Real Property contain any asbestos, nor does any equipment owned
or used by Seller on its Real Property contain any polychlorinated
biphenyls in violation of Applicable Environmental laws.
(iv) No Hazardous Substances exist on Seller's Real
Property in violation of Applicable Environmental Laws.
(v) No residual contamination exists on or under Seller's
Real Property and Assets, or affecting any natural resources therein,
in violation of Applicable Environmental Laws and no contamination
exists on or under Seller's Real Property and Assets, or affecting any
natural resources therein, arising in connection with the generation,
use, handling, storage, transport, processing, treatment or disposal
of any Hazardous Substances, regardless whether any of such activities
were undertaken in accordance with Applicable Environmental Laws.
(vi) Seller, the Assets, and the Stations' Businesses,
respectively, are in compliance in all material respects with all
Applicable Environmental Laws (which compliance includes, but is not
limited to, the possession by Seller, the Assets and the Stations'
Businesses of all material permits and other governmental
authorizations required under Applicable Environmental laws, and
compliance with terms and conditions thereof).
(vii) There are no agreements, consent orders, decrees,
judgments, license or permit conditions, or other directives of
Governmental Authorities, that are based on or arise out of Applicable
Environmental Laws and relate to the future use of the Assets or the
Stations' Businesses or that require any material change in the
present condition of the Assets or the Stations' Businesses.
(viii) There are no Actions, suits, claims or proceedings
seeking money damages, injunctive relief, remedial action or other
remedy pending or threatened relating to a violation or noncompliance
with any Applicable Environmental Laws; or the disposal, discharge or
release of Hazardous Substances; or exposure to any other solid
wastes, pollutants, chemical substances, noises or vibrations to the
extent the same arise from the condition of the Assets or the
Stations' Businesses or Seller's ownership or use of the Assets or the
Stations' Businesses.
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(ix) Seller has given to pertinent Government Authorities
all notices required pursuant to Applicable Environmental Laws.
Except as listed on Schedule 3.17, Seller has not prior to the date
hereof received any order or notice of violation or noncompliance
from, or been the subject of any regulatory audit or investigation
(other than any periodic investigation or inspection of a routine
nature) by, any Governmental Authority in connection with ownership or
operation of the Stations' Businesses.
(x) No consent or approval is needed from any
Governmental Authority under any Applicable Environmental Laws or the
transfer of the Assets from Seller to Buyer; and neither the execution
of this Agreement nor the closing of the transactions contemplated
hereby will violate any Applicable Environmental Laws.
Section 3.18 COMPENSATION. Except as set forth on Schedule 3.18 or as
would be permitted by Section 5.1(b), since April 1, 1994, Seller has not
entered into any employment or similar contract with, or made any increase in
the compensation payable or to become payable by it to, any employee of any of
the Stations' Businesses and has not contributed or made any commitment to, or
representation that it will, contribute any amounts to any bonus or other
employee benefits plan, severance plan or collective bargaining agreement in
respect of employees of any of the Stations' Businesses, other than as required
by law or by the terms of any such plan as in effect on April 1, 1994 and since
April 1, 1994. Except as required by law or by the terms of any such plan as
in effect on April 1, 1994 or as disclosed on Schedule 3.18 or as would be
permitted by Section 5.1(b), Seller has not otherwise altered any employee
benefits, severance plan or collective bargaining agreement or the funding
thereof.
Section 3.19 DISCLOSURE. No representations or warranties by Seller
in this Agreement and no document, certificate, or other writing furnished or
to be furnished by Seller or any of its representatives pursuant to the
provisions hereof or in connection with the transactions contemplated hereby,
contains or will contain any untrue statement of material fact or omits or will
omit to state any material fact necessary to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
Section 3.20 BROKERS, FINDERS, ETC. Seller has not employed any
broker, finder, consultant or other intermediary in connection with the Asset
Purchase who would have a valid claim for a fee or commission from Buyer in
connection with such transactions.
ARTICLE 4
<PAGE> 32
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REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
Section 4.1 INCORPORATION; AUTHORIZATION; ETC. Buyer is a
corporation validly existing and in good standing under the laws of the State
of Delaware. Buyer has full corporate power to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement, the performance of Buyer's obligations hereunder and the
consummation of the transactions contemplated hereby by Buyer have been duly
and validly authorized by the board of directors of Buyer and no other
corporate proceedings or actions on the part of Buyer, its board of directors
or stockholders are necessary therefor. The execution, delivery and
performance of this Agreement will not (i) violate any provision of the charter
or by-laws or similar organizational instrument of Buyer or any of its
Affiliates, (ii) violate any provision of, or be an event that is (or with the
passage of time will result in) a violation of, or result in the acceleration
of or entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any obligation under, or result in the imposition of any
Lien upon or the creation of a security interest in any of Buyer's or any of
its Affiliates' assets or properties pursuant to, any mortgage, Lien, lease,
agreement, instrument, order, arbitration award, judgment, injunction or decree
to which Buyer or any of its Affiliates is a party or by which Buyer or any of
its Affiliates is bound, or (iii) violate or conflict with any statute, rule or
regulation applicable to Buyer, any of its Affiliates or any of their
properties or assets or any other material restriction of any kind or character
to which Buyer or any of its Affiliates is subject, that, in the case of
clauses (ii) and (iii), would, individually or in the aggregate, have a
material adverse effect on the assets or financial condition of Buyer or would
prevent the Asset Purchase. This Agreement has been duly executed and
delivered by Buyer, and, assuming the due execution hereof by Seller, this
Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting the rights and remedies of creditors generally and to general
principles of equity (regardless of whether in equity or at law).
Section 4.2 BROKERS, FINDERS, ETC. Buyer has not employed, and is
not subject to the valid claim of, any broker, finder, consultant or other
intermediary in connection with the transactions contemplated hereby who would
have a valid claim for a fee or commission from Seller in connection with such
transactions.
<PAGE> 33
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Section 4.3 LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. Schedule 4.3 contains a list of all registrations, filings,
applications, notices, consents, approvals, orders, qualifications or waivers
required to be made, filed, given or obtained by Buyer or any of its Affiliates
with, to or from any person in connection with the consummation of the Asset
Purchase except for those that become applicable solely as a result of the
specific regulatory status of Seller.
Section 4.4 SELLER'S CAPITALIZATION. The capitalization of Seller as
of the date hereof, including all shares of stock, common and preferred, all
instruments convertible into or exchangeable for shares of capital stock and
all rights to require shares of capital stock is as set forth in Schedule 4.4
attached hereto.
ARTICLE 5
COVENANTS OF SELLER PENDING THE CLOSING DATE
Seller covenants and agrees that from the date hereof to and including
the Closing Date:
Section 5.1 MAINTENANCE OF BUSINESS. Seller shall continue to carry
on each Station's business and operations, maintain and repair its facilities
and equipment, maintain its inventory of supplies, parts and other materials
and keep its books of account, records, and files, in each case in the ordinary
course of business consistent with past practice. Seller shall continue to
operate each Station in accordance with the terms of the FCC Authorizations and
in compliance in all material respects with all applicable laws and FCC rules
and regulations. Seller will promptly execute any necessary applications for
renewal of the FCC Authorizations, without conditions. Seller will deliver to
Buyer, within ten (10) business days after filing, copies of any reports,
applications or responses to the FCC related to the Stations which are filed
between the date of this Agreement and the Closing Date. Seller will maintain
in full force and effect through the Closing Date property damage, liability,
and other insurance with respect to the Assets and the Stations' Businesses
providing coverage against such risks and in at least the amounts as provided
by the insurance policies currently maintained by Seller to the extent
reasonably available to Seller.
After the date hereof and prior to the Closing Date, except as
otherwise permitted by the last paragraph of this Section 5.1, Seller will not,
without the prior written consent of Buyer:
(a) Except as required to separate the Kansas City Radio and
Teleport Properties from the Assets used in the business of
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Station WDAF-TV, sell, lease, transfer, or agree to sell, lease, or transfer
any Assets;
(b) Enter into any contract of employment, collective
bargaining agreement or other labor contract, permit any increases or changes
in the compensation or benefits of any employees of any Station or otherwise
hire any employee, except for annual salary increases in the ordinary course of
business not exceeding five percent (5%) of the compensation previously paid to
such person and except as otherwise required by applicable law;
(c) Except in the ordinary course of business, enter into,
renew, renegotiate, modify, amend, or terminate any existing time sales
contracts with respect to any Station or incur any receivables;
(d) Enter into, amend or modify any contract, license or
other agreement under which Seller is authorized to broadcast programming on
any Station that: (i) represents a Liability in excess of One Hundred Thousand
Dollars ($100,000); or (ii) is for a term of more than one (1) year, unless any
such contract will be and is fully performed and satisfied by Seller prior to
the Closing Date, or any program barter transaction that represents a Liability
in excess of Twenty-Five Thousand Dollars ($25,000) which requires the
furnishing of advertising time on any Station or any payments at any time after
the Closing Date;
(e) Enter into, amend or modify any contract, license or
other agreement involving (i) a national advertising sales representation
agreement, (ii) a rating agency agreement or (iii) lease obligations, in each
case, that: (x) represents a Liability in excess of One Hundred Thousand
Dollars ($100,000); or (y) is for a term of more than two (2) years, unless any
such contract will be and is fully performed and satisfied by Seller prior to
the Closing Date;
(f) Apply to the FCC for any construction permit that would
materially restrict any Station's present operations, or make any material
change in any Station's buildings, leasehold improvements, or fixtures;
(g) Except as required to separate the Kansas City Radio and
Teleport Properties from the Assets used in the business of Station WDAF-TV,
sell, assign or create any right, title or interest in or to the Real Property
or the Real Property Leases;
(h) Fail to make the capital expenditures in respect of the
Stations' Businesses at approximately the aggregate levels for all the Stations
set forth in the Capital Budgets previously provided by Seller to Buyer and
attached hereto as Exhibit 5.1(g); PROVIDED, that this Section 5.1(g) shall not
obligate Seller to
<PAGE> 35
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make any particular capital expenditure set forth in the Capital Budgets;
(i) Make any change in the accounting policies applicable to
the Stations' Businesses, including, without limitation, any change in the
methods or rates of depreciation or amortization applicable to the Stations'
Businesses; or
(j) Take or permit to be taken any actions that would
result in Seller, the Assets or the Stations' Businesses being in violation of
any Applicable Environmental Laws, or omit to take any action necessary to be
taken to prevent Seller, the Assets or any of the Stations' Businesses form
becoming in violation of Applicable Environmental Laws.
At Seller's discretion, on or prior to the Closing Date,
Seller shall perform and pay all of its pre-Closing Liabilities under the
contracts included in the Station Assets, so that all payments required to be
made pursuant to such contracts as of the Closing Date shall have been made on
or prior to the Closing Date except to the extent any unpaid or prepaid
Liabilities are included in calculating adjustments to the Purchase Price
pursuant to Section 2.5.
Section 5.2 ORGANIZATION, GOOD WILL, PROMOTION. Seller (a) shall use
best efforts to preserve the business organization of each Station intact,
retain substantially as at present each Station's employees, and preserve the
goodwill of each Station's suppliers, customers and others having business
relations with it and (b) shall make expenditures for promotion of each Station
in the ordinary course of business consistent with past practices.
Section 5.3 REPORTS. Seller will provide Buyer with copies of each
of the following with respect to each Station between the date hereof and the
Closing Date: (a) all year-end and quarterly financial statements or reports,
including each Station's balance sheet and related statement of income (which
reflect cash flows); (b) all monthly financial statements and monthly trade
and/or barter statements; (c) weekly sales reports; (d) monthly accounts
receivable aging reports; and (e) if requested by Buyer, any other internal
operating reports and statements related to any Station which are prepared by
Seller in the ordinary course of business. Seller agrees to provide the
foregoing to Buyer within thirty (30) days after the end of the applicable year
or period in the case of year-end and quarterly financial statements, and
within fifteen (15) days after the end of each month in the case of monthly
financial statements.
Section 5.4 ACCESS TO FACILITIES, FILES AND RECORDS. Upon the
request of Buyer, Seller shall from time to time give, or cause to be given, to
the officers, employees, accountants, counsel,
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environmental consultants and representatives of Buyer (i) full access to all
facilities, property, accounts, books, bank statements, deeds, title papers,
insurance policies, licenses, agreements, contracts, commitments, records and
files of every character (other than the Sealed Files), equipment, machinery,
fixtures, furniture, vehicles, notes and accounts payable and receivable, and
inventories related to the Stations, and (ii) all such other information
concerning the affairs of the Stations as Buyer may request. Buyer or its
representatives may interview the employees of Seller during normal business
hours at the Station where such employee is employed.
Section 5.5 DISCLOSURE SCHEDULES; BUYER'S REVIEW; REPRESENTATIONS AND
WARRANTIES. (a) Buyer acknowledges that for business and legal reasons,
Seller has not been able to compile final versions of the Disclosure Schedules
referred to in Article 3 hereof (together with copies of the documents referred
to therein) prior to the date of this Agreement. Seller covenants that it
shall deliver to Buyer final versions of these Disclosure Schedules (together
with copies of the documents referred to therein) within fifteen (15) business
days after the execution and delivery of this Agreement. Buyer shall have
fifteen (15) business days to review these final version disclosure Schedules
and to determine in the good faith exercise of its business judgment whether
the items referenced therein are acceptable to Buyer. If Buyer, after
reasonable consultation with Seller, determines in the good faith exercise of
its business judgment that the items referred to in the final versions of the
Disclosure Schedules are not acceptable, Buyer may terminate this Agreement on
five (5) business days written notice to Seller and, except with respect to
Sections 5.9 and 6.2 hereof, neither party shall have any further obligations
to the other hereunder.
(b) Seller shall give detailed written notice to Buyer
promptly upon the occurrence of any event that would cause or constitute a
material breach or would have caused a material breach had such event occurred
or been known to Seller prior to the date hereof, of any representations or
warranties of Seller contained in this Agreement or in any Schedule referred to
herein. Notwithstanding the foregoing, Seller shall have the right from time
to time after the date hereof to update the final versions of the Disclosure
Schedules to reflect changes in the Assets or Business Condition of a Station
since the date hereof until ten (10) days before the scheduled time of Closing
for such Station. Updated Disclosure Schedules shall be promptly furnished to
Buyer, which shall have five (5) business days to review these updated
Disclosure Schedules and to determine in the good faith exercise of its
business judgment that any items referred to therein are acceptable to Buyer.
If any such items are not acceptable to Buyer, Buyer may terminate this
Agreement on written notice thereof to Seller and, except with respect to
Sections 5.9 and 6.2 hereof,
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neither party shall have any further obligations to the other hereunder and
Buyer shall have the Deposit returned to it (so long as Buyer is not then in
material default hereunder).
Section 5.6 APPLICATION FOR COMMISSION CONSENT. As promptly as
practicable after the date of this Agreement, and in no event later than
fourteen (14) days after the date hereof, Seller will deliver to Buyer for
filing with the FCC the assignor's portion of such applications as are required
by the FCC requesting its written consent to the assignment of the FCC
Authorizations for the Stations (and any extension or renewals thereof); which
applications shall be in form and substance acceptable for filing with the FCC.
Seller will diligently take, or cooperate in the taking of, all steps that are
necessary, proper, or desirable to expedite the preparation of such
applications and their prosecution to a favorable conclusion. Seller will
promptly provide Buyer with a copy of any pleading, order, or other document
served on it relating to such applications.
Section 5.7 THIRD-PARTY CONSENTS. Using its best efforts, Seller
will cooperate with Buyer in its efforts to obtain, or cause to be obtained,
prior to the Closing Date consents to the assignment to and assumption by Buyer
of all licenses, leases, and other contracts and instruments and rights of
Seller included in the Assets that require the consent of any third party by
reason of the transactions contemplated by this Agreement, which such consents
shall provide that Buyer is only assuming obligations which arise on and after
the Closing under licenses, leases, contracts and instruments and that Buyer
shall be solely liable for such post-closing obligations. Seller will request
estoppel certificates, in a form supplied by Buyer which will conform with the
requirements of the Real Property Leases, if any, from the landlords under the
Real Property Leases. Using its best efforts, Seller shall cooperate with
Buyer in its efforts to cause any required consents to assignment of the Real
Property Leases and, if requested, by Buyer, any other consents, to be in
recordable form.
Section 5.8 NOTICE OF PROCEEDINGS. Seller will promptly notify Buyer
in writing upon becoming aware of any order or decree or any complaint praying
for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or upon receiving any
notice from any court or Governmental Authority of its intention to institute
an investigation into, or institute a suit or proceeding to restrain or enjoin
the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transactions if consummated. Seller
will use all reasonable efforts to contest, defend and resolve any such suit,
proceeding or injunction brought against Seller, and to cause any temporary
restraining order or preliminary injunction against such consummation to be
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lifted, promptly, so as to permit the consummation of the transactions
contemplated hereby.
Section 5.9 CONFIDENTIAL INFORMATION. Seller shall not, at any time,
disclose to third parties any confidential information either received from
Buyer or its agents in the course of investigating, negotiating, and completing
the transactions contemplated by this Agreement, or, following Closing, any
confidential information relating to the Assets. Nothing shall be deemed to be
confidential information that: (a) is known to Seller at the time of its
disclosure to Seller; (b) becomes publicly known or available other than
through disclosure by Seller; (c) is received by Seller from a third party not
actually known by Seller to be bound by a confidentiality agreement with or
obligation to Buyer; or (d) is independently developed by Seller.
Notwithstanding the foregoing provisions of this Section 5.9, Seller may
disclose such confidential information (i) to the extent required or deemed
advisable to comply with applicable laws, rules, regulations and legal process,
(ii) to its officers, directors, employees, representatives, financial
advisors, attorneys, accountants, and agents with respect to the transactions
contemplated hereby, and (iii) to any Governmental Authority in connection with
the transactions contemplated hereby. Seller agrees that if it discloses any
such confidential information to its officers, directors, employees or
representatives, Seller shall be responsible for any breach of this Section 5.9
by any such person or entity.
Section 5.10 CONSUMMATION OF AGREEMENT. Seller shall use best efforts
to fulfill and perform all conditions and obligations on its part to be
fulfilled and performed under this Agreement, and to cause the transactions
contemplated by this Agreement to be fully carried out.
Section 5.11 NOTICE OF CERTAIN DEVELOPMENTS. Seller shall give prompt
written notice to Buyer (a) if the Assets shall have suffered damage on account
of fire, explosion or other cause of any nature which is sufficient to prevent
operation of any Station for four continuous hours or more and (b) if the
regular broadcast transmission of any Station in the normal and usual manner in
which it heretofore has been operating is interrupted for a period of four
continuous hours or more.
Section 5.12 HSR ACT. As soon as possible after the date hereof, but
in no event later than fifteen (15) days after the date hereof, Seller shall
cause their ultimate parent to prepare and file all documents with the FTC and
the Department of Justice as is required to comply with the HSR Act and
thereafter shall cause their ultimate parent to promptly furnish all materials
thereafter requested by any of the regulatory agencies having jurisdiction over
such filings.
<PAGE> 39
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Section 5.13 ENVIRONMENTAL INSPECTIONS.
(a) Buyer shall have the right to cause the Real Properties
to be inspected for the presence of Hazardous Substances and friable asbestos.
Such inspection shall be performed at Buyer's sole cost by an environmental
inspection firm selected by Buyer (the "Inspection Firm"). Any invasive
testing or sampling, including, without limitation, testing of soil, ground or
surface water, at any of the Real Properties shall be conducted by the
Inspection Firm only following reasonable advance written notice to Seller and
without any unreasonable interference with the conduct of Seller's business.
(b) If the Inspection Firm's report identifies the presence
of any Hazardous Substance on any of the Real Properties the remediation of
which is required by Applicable Environmental Laws as reasonably determined by
Buyer and Seller, Seller shall pay to Buyer at the Closing, as an adjustment to
the cash portion of the Purchase Price, an amount equal to the costs estimated
by a qualified contractor selected by Seller and approved by Buyer (which
approval shall not be unreasonably withheld or delayed) to remediate such
substances to the extent required (but to no greater extent) by such Applicable
Environmental Laws. For so long as the cost of any remediation plan shall be
for the account of Seller, Seller shall have control over the design and
implementation of any necessary remediation plan, whether or not such
remediation occurs before or after the Closing with respect to the Station(s)
involved.
(c) If the Inspection Firm's report reveals the presence of
friable asbestos at any of the Real Properties and recommends the removal,
encapsulation or other treatment of such asbestos (collectively, "Asbestos
Remediation"), then Seller shall pay to Buyer at the Closing, as an adjustment
to the cash portion of the Purchase Price, an amount equal to the cost of such
Asbestos Remediation, as estimated by a qualified asbestos remediation firm
selected by Seller and approved by Buyer (which approval shall not be
unreasonably withheld or delayed) to remediate such substances to the extent
required (but to no greater extent) by such Applicable Environmental Laws. For
so long as the cost of any remediation plan shall be for the account of Seller,
Seller shall have control over the design and implementation of any necessary
remediation plan, whether or not such remediation occurs before or after the
Closing with respect to the Station(s) involved.
(d) Notwithstanding anything herein to the contrary, Seller
shall in no event be required to pay to Buyer in excess of Five Hundred
Thousand Dollars ($500,000) in the aggregate for the cost of all Hazardous
Substance remediation pursuant to Section 5.13(b) and of all Asbestos
Remediation pursuant to Section 5.13(c). If it is reasonably estimated by
Buyer and Seller that
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such costs shall exceed Five Hundred Thousand Dollars ($500,000) in the
aggregate (the "Estimated Excess Remediation Costs"), Buyer shall have the
option (i) to terminate this agreement upon five (5) business days written
notice to Seller, whereupon (except with respect to Sections 5.9 and 6.2
hereof), neither party shall have any further obligations to the other
hereunder and Buyer shall have the Deposit returned to it (so long as Buyer is
not then in material default hereunder), or (ii) to consummate the transactions
provided for in this Agreement and to accept the adjustment of the cash portion
of the Purchase Price as provided in this Section 5.13. If Buyer chooses to
consummate the transactions provided for in this Agreement pursuant to the
foregoing clause (ii), Buyer shall have no further claim against Seller for the
amount of the Estimated Excess Remediation Costs, under Section 3.17 or
otherwise, with respect to the environmental condition or violation of
Applicable Environmental Laws with respect to which the foregoing Purchase
Price adjustment was made, PROVIDED that nothing in this Section 5.13(d) shall
in any way affect Buyer's right to seek indemnification under this Agreement
with respect to remediation costs relating to any environmental condition or
violation with respect to which the reasonable estimate hereunder was less than
Five Hundred Thousand Dollars ($500,000) or was not made but the actual
liability in respect of which exceeded such estimates, if any.
ARTICLE 6
COVENANTS OF BUYER PENDING THE CLOSING DATE
Buyer covenants and agrees that from the date hereof to and including
the Closing Date:
Section 6.1 APPLICATION FOR COMMISSION CONSENT. As promptly as
practicable after the date of this Agreement, and in no event later than twenty
(20) days after the date hereof, Buyer will complete and give to Seller a fully
executed copy of its portion of such applications as are required to the FCC
requesting its written consent to the assignment of the FCC Authorizations for
the Stations (and any extension or renewals thereof); which applications shall
be in form and substance acceptable for filing with the FCC. Buyer will
diligently take, or cooperate in the taking of, all steps that are necessary,
proper, or desirable to expedite the preparation of such applications and their
prosecution to a favorable conclusion. Buyer will promptly provide Seller with
a copy of any pleading, order, or other document served on it relating to such
applications.
Section 6.2 CONFIDENTIAL INFORMATION. Buyer shall not, at any time
prior to the Closing Date, disclose to third parties any confidential
information received from Seller or its agents in the
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course of investigating, negotiating, and performing the transactions
contemplated by this Agreement. 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 Seller; or (d)
is independently developed by Buyer. Notwithstanding the foregoing provisions
of this Section 6.2, Buyer may disclose such confidential information (i) to
the extent required or deemed advisable to comply with applicable laws, rules,
regulations and legal process, (ii) to its officers, directors, employees,
representatives, financial advisors, attorneys, accountants, agents and
potential sources of financing with respect to the transactions contemplated
hereby, and (iii) to any Government Authority in connection with the
transactions contemplated hereby or in connection with Buyer's obligations not
set forth in Section 6.2. Buyer agrees that if it discloses any such
confidential information to its officers, directors, employees,
representatives, financial advisors, attorneys, accountants, agents or
potential sources of financing, Buyer shall be responsible for any breach of
this Section 6.2 by any such person or entity.
Section 6.3 CONSUMMATION OF AGREEMENT. Buyer shall use all
reasonable efforts to fulfill and perform all conditions and obligations on its
part to be fulfilled and performed under this Agreement, and to cause the
transactions contemplated by this Agreement to be fully carried out. Buyer
agrees to cooperate with Seller in connection with obtaining consents to the
assignment to or assumption by Buyer of the Station Assets, including without
limitation the licenses, leases and other contracts included therein, and to
execute such assumption instruments with respect to the Assumed Liabilities as
may be required in connection with obtaining such consents, to supply available
information reasonably requested by any third party whose consent is required
in connection with the transactions contemplated hereby or whose consent is
required to the assignment of Program Contracts; PROVIDED, HOWEVER, that
nothing herein shall be deemed to require Buyer to make any material payments
to obtain such consents or to assume any liabilities other than the Assumed
Liabilities.
Section 6.4 NOTICE OF PROCEEDINGS. Buyer will promptly notify Seller
in writing upon becoming aware of any order or decree or any complaint praying
for an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereunder, or upon receiving any
notice from any court or Governmental Authority of its intention to institute
an investigation into, or institute a suit or proceeding to restrain or enjoin,
the consummation of this Agreement or such transactions, or to nullify or
render ineffective this Agreement or such transac-
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tions if consummated. Buyer will use all reasonable efforts to contest, defend
and resolve any such suit, proceeding or injunction brought against Buyer, and
to cause any temporary restraining order or preliminary injunction against such
consummation to be lifted promptly, so as to permit the consummation of the
transactions contemplated hereby.
Section 6.5 HSR ACT. As soon as possible after the date hereof, but
in no event later than fifteen (15) days after the date hereof, Buyer shall
cause its ultimate parent to prepare and file all documents with the FTC and
the Department of Justice as is required to comply with the HSR Act and shall
thereafter cause its ultimate parent to promptly furnish all materials
thereafter requested by any of the regulatory agencies having jurisdiction over
such filings.
Section 6.6 CONTROL OF THE STATIONS. Prior to the Closing, Buyer
shall not, directly or indirectly, control, supervise, or direct the
programming, personnel, or other operations of the Stations absent any required
approval of the FCC; PROVIDED, HOWEVER, that Seller shall abide by the specific
covenants set forth in Article 5 of this Agreement.
Section 6.7 WARN ACT. Buyer shall take any and all actions, if any
(and Buyer hereby assumes sole responsibility, as between Seller and Buyer,
with respect to such actions), required to be taken with respect to employees
of the Stations under federal or state laws relating to mass layoffs or plant
closings, including (without limitation) the federal Worker Adjustment and
Retraining Notification Act.
Section 6.8 ACTIONS WITH RESPECT TO THE WARRANT. If, after the date
hereof and prior to issuance of the Warrant, Buyer shall take any action which,
if the Warrant had been issued and outstanding as of the date of any such
action, would have required an adjustment in the exercise price of the Warrant
or in the number of shares purchasable upon exercise of the Warrant, then the
exercise price of the Warrant or such number of shares shall be adjusted upon
issuance of the Warrant to give effect to the adjustment which would have been
required as a result of any such action.
ARTICLE 7
EMPLOYEE BENEFITS
Section 7.1 EMPLOYEE BENEFIT PLANS. (a) Schedule 7.1(a) lists all
material compensation and benefit plans, contracts and arrangements (other than
routine administrative procedures or government-required programs) in effect as
of the date hereof
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including all pension, profit sharing, savings and thrift, bonus, incentive or
deferred compensation, severance pay and medical and life insurance plans in
which any current or former employees of the Stations' Businesses or their
respective dependents (collectively, "STATION EMPLOYEES") participate
(collectively, "STATION EMPLOYEE BENEFIT PLANS"). Copies of all plan
documents, summary plan descriptions, trust agreements, employee handbooks and
other written material relating to the Station Employee Benefit Plans have been
made available to Buyer. The Station Employee Benefit Plans shall not become
plans of Buyer, nor shall Buyer have any liability or obligation under any
Station Employee Benefit Plan.
(b) With respect to any Station Employee Benefit Plan which
is a defined contribution plan intended to qualify under Section 401(a) of the
Code, a favorable determination letter as to the qualification under Section
401(a) of the Code has been issued and the related trust has been determined to
be exempt from taxation under Section 501(a) of the Code and no event has
occurred that could affect the qualified status of any such plan. Seller does
not now sponsor, maintain, contribute to or have an obligation to contribute
to, and has not at any time since September 2, 1974, sponsored, maintained,
contributed to or been obligated to contribute to, any single employer,
multiple employer or multiemployer pension plan subject to the provisions of
Section 302 or Title IV of ERISA or Section 412 or 4971 of the Code. No
liability currently exists, and under no circumstances could Seller or any of
its ERISA Affiliates incur a liability pursuant to the provisions of Title I,
II or IV of ERISA or Section 412, 4971 or 4980B of the Code (a "Controlled
Group Liability") that could become a liability of Buyer after the consummation
of the transactions contemplated by this Agreement. Without limiting the
generality of the foregoing, neither Seller nor any of its ERISA Affiliates has
engaged in any transaction described in Section 4069 or Section 4204 of ERISA.
(c) Nothing in this Article 7 shall be deemed to constitute a
warranty or representation on the part of Seller, this Article 7 being included
for purposes of information only. No information provided in or pursuant to
this Article 7 shall be the basis for any claim by Buyer under Section 3.19 of
this Agreement. Further, nothing in this Article 7 shall be in derogation of
Buyer's right to indemnification with respect to Controlled Group Liabilities.
Section 7.2 NON-SOLICITATION OF EMPLOYEES. Seller agrees that it
will not, for a period of two (2) years following the Closing Date in respect
of any Station, without the prior written consent of the Buyer, whether
directly or indirectly, employ, whether as an employee, officer, director,
agent, consultant or independent contractor, or solicit the employment of, any
person who is at that time an employee, representative or officer of any
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of the Stations' Businesses and who was prior to the Closing an employee of
Seller at one of the Stations.
Section 7.3 ACTIVE EMPLOYEES. Buyer shall offer to employ: (i) each
person who is actively employed by Seller in the Stations' Businesses as of the
Closing Date, effective as of the Closing, and (ii) each person who is on
approved short-term leave of absence from such employment as of the Closing
Date, effective upon the termination of his or her leave of absence in
accordance with the terms of such leave as in effect as of the Closing Date,
(collectively, "Active Employees"), in each case on such terms and conditions
as Buyer determines. Seller shall use reasonable efforts to encourage all
Active Employees to accept such offers. On or before the thirtieth day before
the Closing Date, Seller shall supply Buyer with a list of individuals who are
reasonably expected to be Active Employees as of the Closing Date, together
with their positions and basic rates of compensation, and shall deliver an
updated list immediately before the Closing. Buyer shall not become the
employer of, nor shall it assume any Liability to or in connection with, any
employee or former employee of Seller who is not an Active Employee or who does
not accept Buyer's offer of employment and actually begin active employment
with Buyer (a "Nonhired Employee"). In addition, Buyer shall not assume any
Liability to or in connection with any person who is an Active Employee and who
accepts Buyer's offer of employment and actually begins active employment with
Buyer (which shall be deemed to occur on the date on which any Closing with
respect to any Station occurs) (a "Hired Employee"), that arises out of or
otherwise relates to periods before such person begins active employment with
Buyer. Without limiting the generality of the foregoing, Seller shall be
solely responsible for (a) any claims for severance pay, workers compensation,
medical benefits, life insurance, or other insured or uninsured welfare
benefits of any kind incurred by any Hired Employee before he or she begins
active employment with Buyer or incurred by any Nonhired Employee at any time
and (b) the provision of health continuation coverage required by Part 6 of
Title I of ERISA and Section 4980B of the Code to employees or former employees
of Seller who become eligible for such coverage before the Closing Date or as a
result of the transactions contemplated by this Agreement. Persons who have
claims for payments or benefits based upon their status as a beneficiary or
dependent of an employee shall be treated as being an employee.
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ARTICLE 8
TAX MATTERS
Section 8.1 GENERAL. (a) Each of Seller and the Stations'
Businesses has filed (or received extensions of the period for filing) all Tax
Returns that it was required to file. No claim has been made by an authority
in a jurisdiction where any of the Seller and the Stations' Businesses does not
file Tax Returns that it is or may be subject to taxation by that jurisdiction.
There are no Liens on any of the Assets that arose in connection with any
failure (or alleged failure) to pay any Tax.
(b) Seller and the Stations' Businesses have withheld and
paid all Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(c) None of Seller and the Stations' Businesses is or has
been a United States real property holding corporation within the meaning of
Code Section 897(c)(1)(A)(ii) during the applicable period specified in Code
Section 897(c)(1)(A)(ii).
Section 8.2 TAX INDEMNIFICATION BY SELLER. Seller shall be liable
for, and shall hold Buyer and its subsidiaries and any successor corporations
thereto or affiliates thereof harmless from and against any and all Taxes for
any taxable period ending on or before the Closing Date due or payable by
Seller or the Stations' Businesses and Taxes allocable to such periods (other
than sale or transfer taxes incurred pursuant to the transactions contemplated
hereby, which shall be borne equally by Seller and Buyer).
Section 8.3 TAX INDEMNITY AND COVENANT BY BUYER. Buyer shall be
liable for, and shall hold Seller and the Seller Indemnified Parties harmless
from and against any and all Taxes for any taxable period beginning on or after
the Closing Date, due or payable with respect to the Stations' Businesses.
Section 8.4 FILING RESPONSIBILITY. (a) Seller shall prepare and
file the following Returns with respect to the Stations' Businesses:
(i) all Income Tax Returns for any taxable period ending
on or before the Closing Date; and
(ii) all other Returns required to be filed (taking into
account extensions) with respect to operations prior
to the Closing Date.
Section 8.5 REFUNDS. (a) Seller shall be entitled to any refunds or
credits of Taxes attributable to or arising in taxable
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periods ending on or before the Closing Date with respect to the Stations'
Businesses.
(b) Buyer shall be entitled to any refunds or credits of
Taxes attributable to or arising in taxable periods beginning (or deemed
pursuant to Section 8.5(a) to begin) on or after the Closing Date with respect
to the Stations' Businesses.
Section 8.6 COOPERATION AND EXCHANGE OF INFORMATION. (a) As soon as
practicable following Seller's written request, from and after the Closing
Date, Buyer shall provide Seller with such cooperation and shall deliver to
Seller such information and data concerning the pre-Closing operations of the
Stations' Businesses and make available such knowledgeable employees of the
Stations' Businesses as Seller may reasonably request, including providing the
information and data required by customary tax and accounting questionnaires in
order to enable Seller to complete and file all Returns which it may be
required to file with respect to the operations and business of the Stations'
Businesses through the Closing Date or to respond to audits by any Taxing
Authorities with respect to such operations and other wise to enable Seller to
satisfy its internal accounting, tax and other legitimate requirements.
(b) For a period of five (5) years after the Closing Date or
such longer period as may be required by law, Buyer shall retain, and neither
destroy nor dispose of, all Returns, books and records (including computer
files) of, or with respect to the activities of, the Stations' Businesses for
all taxable periods ending on or prior to the Closing Date.
(c) Buyer and Seller and their respective Affiliates shall
cooperate in the preparation of any Returns relating in whole or in part to
taxable periods ending on or before or including the Closing Date that are
required to be filed after such date.
Section 8.7 CERTAIN PAYROLL WITHHOLDING MATTERS. Seller agrees to
transfer to Buyer any records relating to withholding and payment of income and
unemployment taxes (federal, state and local) and FICA taxes with respect to
wages paid to those employees of Seller who become employees of Buyer
immediately after the Closing Date (the "Transferred Employees") by Seller
during the calendar year in which the Closing takes place (including, without
limitation, Forms W-4, Employee's Withholding Allowance Certificate). Buyer
agrees to provide Transferred Employees with Forms W-2, Wage and Tax Statement,
for the calendar year in which the Closing takes place setting forth the wages
paid and taxes withheld with respect to Transferred Employees for the calendar
year in which the Closing takes place by Seller and Buyer as predecessor and
successor employers, respectively, as provided by Revenue Procedure 84-77. To
the extent permitted by applicable
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law, Buyer shall have the right, effective as of the Closing Date, to assume
the state unemployment experience of Seller insofar as it relates to the
Stations' Businesses; PROVIDED, that such assumption does not materially
adversely affect Seller's state unemployment experience.
Section 8.8 PURCHASE PRICE ALLOCATION. Unless otherwise agreed in
writing by Seller and Buyer, Seller and Buyer shall (i) reflect the specific
Assets purchased and sold hereunder in their books for tax reporting purposes
in accordance with the Allocation Schedule, (ii) file all Tax Returns
(including Form 8594) in accordance with and based upon such allocation and
(iii) take no position in any Tax Return, tax proceeding, tax audit or
otherwise which is inconsistent with such allocation.
Section 8.9 REAL AND PERSONAL PROPERTY TAX PRORATIONS. All real
property Taxes imposed with respect to the Assets for the taxable period
beginning before and ending after the Closing Date shall be apportioned as of
the Closing Date in accordance with Section 164(d) of the Code. All personal
property, motor vehicle (including road use) and ad valorem Taxes, water
changes and sewer rent, charges or assessments levied or imposed upon the
Assets by any Governmental Authority for the taxable period beginning before
and ending after the Closing Date shall be apportioned or prorated on a per
diem basis between Buyer and Seller as of 11:59 p.m., Eastern Standard Time, on
the day before the Closing Date. If the Closing Date shall occur before the
tax rate for the year of Closing is fixed by the appropriate Governmental
Authority, the apportionment described herein shall be upon the basis of the
tax rate for the preceding year applied to the latest assessed valuation and
shall be readjusted promptly after such Taxes are known. Such obligation to
readjust shall survive the Closing.
Section 8.10 DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings ascribed to them below:
(a) "DETERMINATION" means a "determination" as defined by
Section 1313(a) of the Code.
(b) "INCOME TAXES" means all taxes based upon or measured
by income.
(c) "RETURNS" means returns, reports and forms required
to be filed with any domestic or foreign taxing authority, including
any amendments thereto.
(d) "TAXES" means (i) all taxes (whether federal, state,
local or foreign) based upon or measured by income and any other
taxes, charges, fees, registration fees, revenue permit fees, levies
or other assessments whatsoever, including, without limitation, gross
receipts, franchise profits, sales,
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use, occupation, value added, ad valorem, transfer, franchise,
withholding, payroll, employment, environmental (including taxes under
Section 59A of the Code), social security (or similar), disability,
unemployment contributions, alternative or add-on minimum, estimated,
excise, or property taxes, together with any interest, penalties or
additions to tax imposed with respect thereto and (ii) any obligations
under any agreements or arrangements with respect to any Taxes
described in clause (i) above.
(e) "TAX LAWS" means the Code, federal, state, county, local,
or foreign laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
(f) "TAXING AUTHORITY" means any Government Authority having
jurisdiction over the assessment, determination, collection, or other
imposition of Tax.
(g) Nothing in this Article 8 shall be deemed to constitute a
warranty or representation on the part of Seller, this Article 8 being
included primarily for purposes of information. No information
provided in or pursuant to this Article 8 shall be the basis for a
claim by Buyer under Section 3.19 of this Agreement. However, nothing
in the foregoing sentence shall be in derogation of the parties'
respective rights to enforce the covenants contained in this Article
8, including, without limitation, those contained in Sections 8.2,
8.3, 8.4 and 8.5.
ARTICLE 9
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to
the fulfillment of the following conditions prior to or at the Closing Date
(any of which may be waived at the option of Seller):
Section 9.1 REPRESENTATIONS, WARRANTIES, COVENANTS. (a) Each of the
representations and warranties of Buyer contained in this Agreement and in the
Warrant shall have been true and accurate as of the date when made and shall be
deemed to be made again on and as of the Closing Date and shall be true and
accurate in all material respects on the Closing Date;
(b) Buyer shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by it prior to or at the Closing Date (other than the delivery by
Buyer of the Purchase Price);
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(c) Buyer shall have delivered to Seller a certificate of an
officer of Buyer, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Sections 9.1, 9.1(a), and 10.1; and
(d) Buyer shall have delivered to Seller a certificate of an
officer of Buyer, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 9.1(b).
Section 9.2 PROCEEDINGS. (a) No order to restrain, prohibit, or
enjoin the consummation of this Agreement or the transactions contemplated
hereby shall have been issued; and (b) no Governmental Authority shall have
instituted any Action or proceeding seeking to restrain, prohibit, or enjoin
this Agreement or the transactions contemplated hereby.
Section 9.3 OPINION OF COUNSEL. Seller shall have received an
opinion of Buyer's counsel, dated the Closing Date, as to the matters set forth
in Schedule 9.3 hereto, in form and substance reasonably satisfactory to Seller
and its counsel.
Section 9.4 FCC CONSENT. Subject to the last sentence of Section
10.5, all FCC consents and approvals contemplated by this Agreement shall have
been granted.
Section 9.5 HSR ACT. The waiting period under the HSR Act shall have
expired or been terminated with respect to the transactions contemplated hereby
and there shall not be outstanding any order of a court restraining the
transactions contemplated hereby or thereby.
Section 9.6 DIVISION OF KANSAS CITY ASSETS. Seller and Buyer shall
have agreed to a separation, to their mutual satisfaction after consultation
with one another, of the Kansas City Radio and Teleport Properties from the
assets being sold to Buyer and relating to Station WDAF,including subdividing
the real estate parcel currently utilized both by Station WDAF, radio stations
WDAF and KYYS and Seller's teleport facility, entering into leases for certain
uses of Station WDAF's transmitter tower by Seller's radio stations WDAF and
KYYS, and entering into a facilities agreement with respect to use by radio
stations WDAF and KYYS and the Seller's teleport facility of certain space in
Station WDAF's facility during an eight (8) month transition period after the
Closing with respect to that Station.
Section 9.7 EMPLOYMENT MATTERS. Buyer shall have entered into
employment agreements with the general managers of each of the Stations
consistent with the terms of the side letter previously delivered by Seller to
Buyer.
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Section 9.8 WARRANT. At the Closing involving Station KSAZ, Buyer
shall have tendered the Warrant.
ARTICLE 10
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to
the fulfillment of the following conditions prior to or at the Closing Date
(any of which may be waived at the option of Buyer):
Section 10.1 REPRESENTATIONS, WARRANTIES, COVENANTS. (a) Each of the
representations and warranties of Seller contained in this Agreement (as
qualified or limited by the Disclosure Schedules accepted by Buyer pursuant to
Section 5.5(a) without regard to any updates thereto pursuant to Section
5.5(b)) shall have been true and accurate as of the date when made and, except
for representations and warranties that specify a particular date (including
"the date hereof") in the applicable provision (which shall have been true and
accurate on such date), shall be deemed to be made again on and as of the
Closing Date, and (as qualified or limited by the Disclosure Schedules accepted
by Buyer pursuant to Section 5.5(a) or updates accepted by Buyer pursuant to
Section 5.5(b) shall be true and accurate in all material respects on the
Closing Date;
(b) Seller shall have performed and complied with each and
every covenant and agreement required by this Agreement to be performed or
complied with by Seller prior to or at the Closing Date, other than delivery to
Buyer of the instruments conveying the Station Assets to Buyer (giving effect
to updates to the Disclosure Schedules made and accepted pursuant to Section
5.5(b) hereof);
(c) Seller shall have delivered to Buyer a certificate of an
officer of Seller, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 10.1(a); and
(d) Seller shall have delivered to Buyer a certificate of an
officer of Seller, dated the Closing Date, certifying to the fulfillment of the
conditions set forth in Section 10.1(b).
Section 10.2 PROCEEDINGS. (a) No order to restrain, prohibit, or
enjoin the consummation of this Agreement or the transactions contemplated
hereby shall have been issued; and (b) no Governmental Authority shall have
instituted any Action or proceeding seeking to restrain, prohibit, or enjoin
this Agreement or the transactions contemplated hereby.
Section 10.3 OPINION OF COUNSEL. Buyer shall have received an opinion
or opinions of Seller's counsel, Keating, Muething & Klekamp, as to the matters
set forth in SCHEDULE 10.3(A), and an
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opinion of Seller's special communications counsel, Koteen & Naftalin, as to
the matters set forth in SCHEDULE 10.3(B) hereto, each dated the Closing Date
and in form and substance reasonably satisfactory to Buyer and its counsel.
Section 10.4 DAMAGE TO THE ASSETS. The Station Assets shall not have
suffered damage on account of fire, explosion, or other cause of any nature
that is sufficient to prevent operation of any one of more Stations or the
transmission of the signal for any one or more Stations at least seventy-five
percent (75%) of its authorized power for more than three (3) days for any
individual Station or more than six (6) days in the aggregate for all Stations;
PROVIDED that if Buyer elects to waive the condition set forth in this Section
10.4 and consummate the Closing, then Buyer shall be entitled to collect and
receive on behalf of Seller or Seller shall pay to Buyer the proceeds of any
insurance payable to Seller on account of such damages which have not been
applied to the repair thereof, in each case other than proceeds payable or
received pursuant to business interruption or loss of income policies in
respect of any period prior to the Closing.
Section 10.5 FCC CONSENT. Subject to the last sentence of this
Section 10.5, all FCC consents and approvals as contemplated by this Agreement
shall have been granted and shall have become final without any condition or
qualification materially adverse to Buyer or the operation of any Station by
Buyer. For purposes of this Agreement, "FINAL" shall mean action by the FCC as
to which no further steps (including those of appeal or certiorari) can be
taken in any action or proceeding to review, modify, or set the determination
aside, whether under Section 402 or 405 of the Communications Act, the rules
and regulations of the FCC or otherwise. Notwithstanding any other provision
of this Agreement to the contrary, if all FCC consents and approvals
contemplated by this Agreement shall have been granted and have become final
and all other conditions precedent outlined in Articles 9 and 10 hereof with
respect to a Station or Stations have been met, Buyer shall be obligated to
close on such Station or Stations if Seller so elects (but nothing in any such
Closing with respect to less than all the Stations shall relieve Seller or
Buyer of their obligations hereunder with respect to the other Station or
Stations).
Section 10.6 NO MATERIAL ADVERSE CHANGE. There shall not have been a
material adverse change after the date of this Agreement in the Business
Condition of any Station taken individually or the Stations taken as a whole.
Section 10.7 CONSENTS. Buyer shall have obtained on or prior to the
Closing, in form and substance reasonably satisfactory to Buyer and Seller, (a)
any necessary consents to the assignment of the Real Property Leases to Buyer,
(b) estoppel certificates from the landlords under the Property Leases, (c) any
necessary consents
<PAGE> 52
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to the assignment of any easements or other interests in real property to
Buyers, (d) any necessary consents to assignment of Program Contracts pursuant
to this Agreement from the third parties, and (e) any other consents which the
Buyer reasonably believes are necessary or desirable for either the
transactions contemplated by this Agreement or the conduct of the Stations'
Business.
Section 10.8 HSR ACT. The waiting period under the HSR Act shall have
expired or been terminated with respect to the transactions contemplated hereby
and there shall not be outstanding any order of a court restraining the
transactions contemplated hereby or thereby.
Section 10.9 RELEASE OF LIENS. Seller shall have taken such
actions as Buyer reasonably deems necessary to release all but Permitted Liens
on the Assets.
Section 10.10 AFFILIATION AGREEMENTS. Seller shall have obtained (i)
the consent of CBS to the assignment to Buyer of Seller's existing affiliation
agreement in respect of KSAZ, (ii) a renewal of Seller's affiliation agreements
with ABC in respect of each of WGHP and WBRC and with NBC in respect of WDAF,
in each case on substantially the same terms as Seller's existing network
affiliation agreements in respect of such Stations, (iii) ABC's consent to the
assignment to Buyer of the renewed affiliation agreements in respect of WGHP
and WBRC and (iv) NBC's consent to the assignment to Buyer of the renewed
affiliation agreement in respect of WDAF.
ARTICLE 11
SURVIVAL; INDEMNIFICATION
Section 11.1 SURVIVAL. All representations, warranties and (except as
provided by the penultimate sentence of this Section) covenants and agreements
of the parties contained in this Agreement, including indemnity or
indemnification agreements contained herein, or in any Schedule hereto, or any
certificate, document or other instrument delivered in connection herewith
shall survive the Closing until the second anniversary of the Closing. No
Action or proceeding may be brought with respect to any of the representations
and warranties, or any of the covenants or agreements which survive until the
second anniversary of the Closing, unless written notice thereof, setting forth
in reasonable detail the claimed misrepresentation or breach of warranty or
breach of covenant or agreement, shall have been delivered to the party alleged
to have breached such representation or warranty or such covenant or agreement
prior to the second anniversary of the Closing. Notwithstanding the foregoing,
Seller's indemnification
<PAGE> 53
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obligations in respect of any breach of the representations and warranties set
forth in Section 3.17 hereof, or any related Schedule, or other certificate,
document or instrument delivered in connection therewith, shall survive the
Closing until the sixth anniversary of the Closing. Those covenants or
agreements that contemplate or may involve actions to be taken or obligations
in effect after the Closing shall survive in accordance with their terms, and
the covenants contained in Sections 8.2, 8.3, 8.4 and 8.5 shall survive until
the expiration of the applicable statute of limitations. Other than as set
forth in Articles 9 and 10 hereof, indemnification pursuant to this Article
shall be the exclusive remedy for any breach of representations and warranties
or of any covenant or agreement in this Agreement by either party. In the
event that there is more than one (1) Closing hereunder, the warranty,
representation, covenant and agreement survival period for the Station or
Stations with respect to which a Closing is held shall commence with the date
of such Closing. Nothing in any subsequent Closing with respect to another
Station or Stations shall be deemed to extend the applicable survival period
for the Station or Stations as to which a Closing or Closings were earlier
held.
Section 11.2 INDEMNIFICATION BY BUYER OR SELLER. (a) From and after
the Closing Date, Buyer shall indemnify and hold harmless Seller, Seller's
Affiliates, each of their respective directors, officers, employees and agents,
and each of the heirs, executors, successors and assigns of any of the
foregoing (collectively, the "SELLER INDEMNIFIED PARTIES") (i) from and against
any and all damages, claims, losses, expenses, costs, obligations, and
liabilities including, without limiting the generality of the foregoing,
liabilities for all reasonable attorneys' fees and expenses (including, but not
limited to, attorney and expert fees and expenses incurred to enforce the terms
of this Agreement (collectively, "LOSS AND EXPENSES") suffered, directly or
indirectly, by any Seller Indemnified Party by reason of, or arising out of,
(i) any breach of representation or warranty made by Buyer pursuant to this
Agreement, (ii) any failure by Buyer to perform or fulfill any of its covenants
or agreements set forth in this Agreement, (iii) any failure by Buyer to pay,
perform or discharge any Assumed Liabilities specifically assumed by Buyer
under this Agreement, (iv) Buyer's Post-Closing Liabilities (excluding those
liabilities or obligations arising out of Excluded Assets or contracts not
included in the Assumed Liabilities). Notwithstanding any other provision of
this Agreement to the contrary, in no event shall Losses and Expenses include a
party's incidental or consequential damages.
(b) From and after the Closing Date, Seller shall indemnify
and hold harmless Buyer, Buyer's Affiliates, each of their respective
directors, officers, employees and agents, and
<PAGE> 54
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each of the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "BUYER INDEMNIFIED PARTIES") from and against any and all
Loss and Expense, suffered, directly or indirectly, by any Buyer Indemnified
Party by reason of, or arising out of, (i) any breach of representation or
warranty made by Seller pursuant to this Agreement and any statements made in
any certificate delivered pursuant to this Agreement, (ii) any failure by
Seller to perform or fulfill any of its covenants or agreements set forth in
this Agreement, (iii) any failure by Seller to pay, perform or discharge any
liabilities or obligations of Seller or any Station not assumed by Buyer
pursuant to this Agreement and any other obligations or liabilities of any
Station or Seller relating to any period prior to the Closing other than the
Assumed Liabilities, (iv) any Controlled Group Liability, or (v) any
litigation, proceeding, or claim by any third party relating to the Stations'
Businesses prior to the Closing Date (except to the extent, and only to the
extent, such litigation, claim or proceeding relates to a period after the
Closing). Notwithstanding any other provision of this Agreement to the
contrary, in no event shall Losses and Expenses include a party's incidental or
consequential damages.
(c) Except with respect to third-party claims being
defended in good faith or claims for indemnification with respect to which
there exists a good faith dispute, the indemnifying party shall satisfy its
obligations hereunder within 30 days of receipt of the indemnified party's
notice of a claim under this Article 11.
Section 11.3 THIRD-PARTY CLAIMS. If a claim by a third party is made
against an indemnified party (I.E., a Seller Indemnified Party or a Buyer
Indemnified Party), and if such indemnified party intends to seek indemnity
with respect thereto under this Article, such indemnified party shall promptly
notify the indemnifying party in writing of such claims setting forth such
claims in reasonable detail. The indemnifying party shall have twenty (20)
days after receipt of such notice to undertake, through counsel of its own
choosing and at its own expense, the settlement or defense thereof, and the
indemnified party shall cooperate with it in connection therewith; PROVIDED,
HOWEVER, that the indemnified party may participate in such settlement or
defense through counsel chosen by such indemnified party, provided that the
fees and expenses of such counsel shall be borne by such indemnified party.
The indemnified party shall not pay or settle any claim which the indemnifying
party is contesting. Notwithstanding the foregoing, the indemnified party
shall have the right to pay or settle any such claim, provided that in such
event it shall waive any right to indemnity therefor by the indemnifying party.
If the indemnifying party does not notify the indemnified party within twenty
(20) days after the receipt of the indemnified party's notice of a claim of
indemnity hereunder that it elects to undertake the defense thereof, the
indemnified party shall have the right to contest,
<PAGE> 55
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settle or compromise the claim but shall not thereby waive any right to
indemnity therefor pursuant to this Agreement.
Section 11.4 ENVIRONMENTAL CLAIMS. Notwithstanding anything to the
contrary in this Article 11, in the event that any claim, Action, suit,
proceeding or investigation is commenced or instituted against Buyer within six
years following the Closing by any person or Governmental Authority in respect
of any violation or non-compliance with any Applicable Environmental Law, Buyer
shall have the right to join or implead Seller or counterclaim against Seller
in any such Action, suit, proceeding or investigation or commence an Action to
recover amounts payable to third parties in respect of any violation or
non-compliance or allegations thereof occurring during any period prior to the
Closing Date. Nothing in this Agreement, including this Article 11, shall
constitute a waiver or release by Buyer of any rights or claims against Seller
in any Action, suit, proceeding or investigation against Buyer referred to in
the preceding sentence.
Section 11.5 ASSIGNMENT OF INSURANCE CLAIMS. The Seller covenants and
agrees that, pursuant to the request of Buyer, it will assign to Buyer any
assignable rights of recovery it may have under any insurance policy in respect
of any loss suffered by Buyer in respect of any of the Assets and that Buyer
shall thereupon be subrogated to the rights of Seller in respect of any such
assignable insurance claim.
ARTICLE 12
TERMINATION
Section 12.1 TERMINATION. This Agreement may be terminated at any
time prior to the Closing by:
(a) the mutual consent of Seller and Buyer;
(b) by either Seller or Buyer if the FCC has denied the
assignment of the FCC Authorizations contemplated by this Agreement in a final
order;
(c) pursuant to Section 5.5 or 5.13; or
(d) either Seller or Buyer if the Closing with respect to
any of the four (4) Stations has not occurred by the close of business on May
4, 1995 and if the failure to consummate the Asset purchase on or before such
date did not result from the failure by the party seeking termination of this
Agreement to fulfill any undertaking or commitment provided for herein that is
required to be fulfilled prior to Closing.
<PAGE> 56
- 51 -
Section 12.2 PROCEDURE AND EFFECT OF TERMINATION. Subject to the
provisions of Section 12.3, in the event of termination of this Agreement by
either or both of Seller and Buyer pursuant to Section 12.1, written notice
thereof shall forthwith be given by the terminating party to the other party
hereto, and this Agreement shall thereupon terminate and become void and have
no effect, and the transactions contemplated hereby shall be abandoned without
further action by the parties hereto, except that the provisions of Section
13.5 shall survive the termination of this Agreement; PROVIDED, HOWEVER, that
such termination shall not relieve any party hereto of any liability for any
willful breach of this Agreement; and PROVIDED FURTHER, that if this Agreement
is terminated after a Closing shall have occurred with respect to one (1) or
more of the Stations but with respect to fewer than all of the Stations, then
this Agreement shall (notwithstanding the foregoing) terminate and become void
and have no effect only with respect to the Stations as to which no Closing
shall have occurred and shall remain in full force and effect with respect to
any Stations as to which a Closing shall have occurred. If this Agreement is
terminated as provided herein all filings, applications and other submissions
made hereunder shall, to the extent practicable, be withdrawn from the persons
to which they were made.
Section 12.3 ADJUSTMENT TO PURCHASE PRICE OF KSAZ. If this Agreement
is terminated by virtue of Section 12.1(d) after Station KSAZ has been acquired
by Buyer, but without each of the other Stations having also been acquired,
then, within ten (10) days after demand therefor, Buyer shall pay Seller in
immediately available federal funds, an additional consideration for Station
KSAZ, an amount equal to the product of Eight Million Dollars ($8,000,000)
multiplied by a fraction, the numerator of which is the aggregate amount of the
Purchase Price allocated pursuant to the Allocation Schedule to any of the
stations which have not been acquired by Buyer as of the date of termination
hereof pursuant to section 12.1(d), and the denominator of which is Two Hundred
Sixteen Million Nine Hundred Thousand Dollars ($216,900,000). Notwithstanding
the foregoing, no adjustment to the Purchase Price shall be made pursuant to
this Section 12.3 if the delay beyond the dates referred to herein is caused by
any action or failure to act on the part of Seller which both (i) is reasonably
likely to cause such delay and (ii) constitutes a breach of any provision of
this Agreement.
<PAGE> 57
- 52 -
ARTICLE 13
MISCELLANEOUS
Section 13.1 CORPORATE NAME. Buyer acknowledges that, from and after
the Closing Date, Seller has the absolute and exclusive proprietary right to
all names, marks, trade names and trademarks (collectively "NAMES")
incorporating "Great American", by itself or in combination with any other
Name, and that none of the rights thereto or goodwill represented thereby or
pertaining thereto are being transferred hereby or in connection herewith.
Buyer agrees that from and after the Closing Date it will not, nor will it
permit any of its Affiliates to, use any name, phrase or logo incorporating any
of the Names in or on any of its literature, sales materials or products or
otherwise in connection with the sale of any products or services; PROVIDED,
HOWEVER, that Buyer may continue to use any printed materials that are included
in the Assets on the Closing Date and that bear a name, phrase or logo
incorporating any Name if (and only if) the printed materials be "stickered" to
obscure the Name(s), until the supplies thereof existing on the Closing Date
have been exhausted.
Section 13.2 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party. Copies of executed
counterparts transmitted by telecopy, telefax or other electronic transmission
service shall be considered original executed counterparts for purposes of this
Section, provided receipt of copies of such counterparts is confirmed.
Section 13.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio without reference to
the choice of law principles thereof.
Section 13.4 ENTIRE AGREEMENT. This Agreement (including agreements
incorporated herein) and the Schedules and Exhibits hereto contain the entire
agreement between the parties with respect to the subject matter hereof and
there are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to herein. Except for
Sections 11.2 and 11.3, which are intended to benefit, and to be enforceable
by, any of the Seller Indemnified Parties and the Buyer Indemnified Parties, as
the case may be, this Agreement is not intended to confer upon any person not a
party hereto (and their successors and assigns) any rights or remedies
hereunder.
Section 13.5 EXPENSES. Except as set forth in this Agreement, whether
or not the Asset Purchase is consummated, all legal and other costs and
expenses incurred in connection with this
<PAGE> 58
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Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses.
Section 13.6 NOTICES. All notices and other communications hereunder
shall be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to the
extent receipt is confirmed, telecopy, telefax or other electronic transmission
service to the appropriate address or number as set forth below. Notices to
Seller shall be addressed to:
Great American Communications Company
One East Fourth Street
Cincinnati, Ohio 45202-3713
Attention: Samuel J. Simon, Esq.
Telecopy Number: (513)
with a required copy to:
Keating, Muething & Klekamp
1800 Provident Tower
One East Fourth Street
Cincinnati, Ohio 45202
Attention: Edward E. Steiner, Esq.
Telecopy Number: (513) 579-6457
or at such other address and to the attention of such other person as Seller may
designate by written notice to Buyer. Notices to Buyer shall be addressed to:
New World Communications
Group Incorporated
3200 Windy Hill Road
Suite 1100 - West
Marietta, Georgia 30067
Attention: Chief Financial Officer
Telecopy Number: (404) 563-9600
with a required copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: Adam O. Emmerich, Esq.
Telecopy Number: (212) 403-2000
or at such other address and to the attention of such other person as Buyer may
designate by written notice to Seller.
Section 13.7 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and
<PAGE> 59
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their respective successors and permitted assigns. In the event that, at any
time prior to the sixth anniversary of the Closing, Seller shall sell or
transfer all or substantially all its assets either to Great American
Communications Company ("GACC") or any subsidiary (direct or indirect) of GACC,
the indemnification obligations of Seller under this Agreement shall, by virtue
of such sale or transfer and without need of any further documentation, also
become the indemnification obligations of such transferee; PROVIDED, HOWEVER,
that nothing in this sentence shall be deemed to extend in time such
indemnification obligations.
Section 13.8 HEADINGS; DEFINITIONS. The Section, Article and other
headings contained in this Agreement are inserted for convenience of reference
only and will not affect the meaning or interpretation of this Agreement. All
references to Sections or Articles contained herein mean Sections or Articles
of this Agreement unless otherwise stated. All capitalized terms defined
herein are equally applicable to both the singular and plural forms of such
terms.
Section 13.9 AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Either party hereto may, only by an instrument in writing, waive
compliance by the other party hereto with any term or provision hereof on the
part of such other party hereto to be performed or complied with. The waiver
by any party hereto of a breach of any term or provision hereof shall not be
construed as a waiver of any subsequent breach.
Section 13.10 INTERPRETATION; ABSENCE OF PRESUMPTION. (a) For the
purposes hereof, (i) words in the singular shall be held to include the plural
and vice versa and words of one gender shall be held to include the other
genders as the context requires, (ii) the terms "hereof", "herein", and
"herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole (including all of the Schedules
and Exhibits hereto) and not to any particular provision of this Agreement, and
Article, Section, paragraph, Exhibit and Schedule references are to the
Articles, Sections, paragraphs, Exhibits and Schedules to this Agreement unless
otherwise specified, (iii) the word "including" and words of similar import
when used in this Agreement shall mean "including, without limitation," unless
the context otherwise requires or unless otherwise specified, (iv) the word
"or" shall not be exclusive, and (v) provisions shall apply, when appropriate,
to successive events and transactions.
(b) This Agreement shall be construed without regard to any
presumption or rule requiring construction or interpretation
<PAGE> 60
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against the party drafting or causing any instrument to be drafted.
Section 13.11 SEVERABILITY. Any provision hereof which is invalid or
unenforceable shall be ineffective to the extent of such invalidity or
unenforceability, without affecting in any way the remaining provisions hereof.
Section 13.12 FURTHER ASSURANCES. Seller and Buyer agree that, from
time to time, whether before, at or after the Closing Date, each of them will,
and will cause their respective Affiliates to, execute and deliver such further
instruments of conveyance and transfer and take such other action as may be
necessary to carry out the purposes and intents hereof.
Section 13.13 SPECIFIC PERFORMANCE. Buyer and Seller each
acknowledge that, in view of the uniqueness of the Stations, the parties hereto
would not have an adequate remedy at law for money damages in the event that
this Agreement were not performed in accordance with its terms, and therefore
agree that the parties hereto shall be entitled to specific enforcement of the
terms hereof in addition to any other remedy to which the parties hereto may be
entitled, at law or in equity.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
GREAT AMERICAN TELEVISION AND
RADIO COMPANY, INC.
By:_________________________________
Name:_______________________________
Title:______________________________
NEW WORLD COMMUNICATIONS GROUP
INCORPORATED
By:_________________________________
Name:_______________________________
Title:______________________________
165132.7
<PAGE> 1
EXHIBIT 10.2
------------
WARRANT SHARES
_______________ _______________
| | | |
| No. WD- | | *5,000,000* |
|_______________| |_______________|
THIS WARRANT AND THE SHARES OF CLASS A COMMON STOCK PURCHASABLE HEREUNDER HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE SOLD, OFFERED
FOR SALE, ASSIGNED, PLEDGED, ENCUMBERED OR OTHERWISE TRANSFERRED OR DISPOSED OF
UNLESS REGISTERED OR QUALIFIED UNDER SAID ACT AND APPLICABLE STATE SECURITIES
LAWS OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH
ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS. NEITHER THE OFFERING OF THIS
SECURITY NOR OF THE SHARES OF CLASS A COMMON STOCK ISSUABLE HEREUNDER HAS BEEN
REVIEWED OR APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR BY ANY
STATE'S SECURITIES COMMISSIONER OR ADMINISTRATOR AND ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
NEW WORLD COMMUNICATIONS GROUP INCORPORATED
CLASS D WARRANT
---------------
For value received, NEW WORLD COMMUNICATIONS GROUP
INCORPORATED, a Delaware corporation (the "COMPANY"), hereby grants to GREAT
AMERICAN TELEVISION AND RADIO COMPANY, INC. or its registered assigns
(collectively, the "REGISTERED HOLDER") the right to purchase from the Company
Five Million (5,000,000) shares of the Company's Class A Common Stock, $.01 par
value per share (collectively referred to as "WARRANT SHARES" and individually
as "WARRANT SHARE" as the same may be adjusted from time to time in accordance
with Parts 2 and 3 hereof), at a price per share of $15.00 (the "INITIAL
EXERCISE PRICE"), subject to adjustment as provided herein. Certain
capitalized terms used herein are defined in Part 4 hereof. The amount and
kind of securities purchasable pursuant to the rights granted hereunder and the
purchase price for such securities are subject to adjustment pursuant to the
provisions contained in this Class D Warrant (this "WARRANT"). Reference is
hereby made to the further provisions of this Warrant set forth below, and such
further provisions shall for all purposes have the same effect as though fully
set forth herein.
<PAGE> 2
IN WITNESS WHEREOF, the Company has caused this Warrant to be
signed and attested by its duly authorized officers.
DATED:
NEW WORLD COMMUNICATIONS GROUP
INCORPORATED
By:____________________________
Attest:_______________________
-2-
<PAGE> 3
This Warrant is subject to the following provisions:
Part 1. Exercise of Warrant.
-------------------
1A. EXERCISE PERIOD. On the terms and subject to the
conditions of Part 1 hereof, the Registered Holder may exercise, in whole or in
part, the purchase rights represented by this Warrant at any time after
____________ __, 19941 (the "DATE OF ISSUANCE") to and including ____________
__, ____2 (the "EXERCISE PERIOD").
1B. Exercise Procedure.
------------------
(i) This Warrant will be deemed to have been exercised when
the Company has received all of the following items (the "EXERCISE TIME"):
(a) a completed Exercise Agreement, as described in
subsection 1C below, executed by the Person exercising the purchase
rights represented by this Warrant (the "PURCHASER");
(b) this Warrant;
(c) if this Warrant is not registered in the name of the
Purchaser, an Assignment or Assignments in the form set forth below
evidencing the assignment of this Warrant to the Purchaser, if the
Registered Holder shall have complied with the provisions set forth in
Part 6 hereof;
(d) a check payable to the Company in an amount equal to
the product of the Exercise Price (as such term is defined in Part 2
hereof) multiplied by the number of shares of Class A Common Stock
being purchased upon such exercise; and
(e) evidence reasonably satisfactory to the Company that
such Purchaser does not constitute a Foreign Entity (including,
without limitation, a legal opinion from counsel reasonably
satisfactory to the Company to the effect that such Purchaser does not
constitute a Foreign Entity) or, if such Purchaser is a Foreign
Entity, evidence reasonably satisfactory to the Company that such
Purchaser's exercise of the Warrant is permitted by applicable law and
by the Company's Certificate of Incorporation and By-Laws.
____________________
1 Insert actual date of issuance.
2 Insert fifth anniversary of actual date of issuance.
-1-
<PAGE> 4
(ii) If a Registered Holder exercises this Warrant in part,
the Company will execute and deliver to such holder a new Warrant, representing
the right to receive, upon exercise thereof, the number of Warrant Shares
issuable upon the exercise of this Warrant less the number of Warrant Shares
issued upon such partial exercise of this Warrant, and otherwise containing the
same terms and conditions set forth herein.
(iii) Certificates for shares of Class A Common Stock
purchased upon exercise of this Warrant will be delivered by the Company to the
Purchaser within five (5) business days after the date of the Exercise Time.
(iv) The Class A Common Stock issuable upon the exercise of
this Warrant will be deemed to have been issued to the Purchaser at the
Exercise Time, and the Purchaser will be deemed for all purposes to have become
the record holder of such Class A Common Stock at the Exercise Time.
(v) The issuance of certificates for shares of Class A Common
Stock upon exercise of this Warrant will be made without charge to the
Registered Holder or the Purchaser for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such exercise and the
related issuance of shares of Class A Common Stock.
(vi) The Company will at all times reserve and keep available
out of its authorized but unissued shares of Class A Common Stock, solely for
the purpose of issuance upon exercise of this Warrant, such number of shares of
Class A Common Stock as are issuable upon exercise of this Warrant. All shares
of Class A Common Stock which are so issuable will, when issued, be duly and
validly issued, fully paid and non-assessable and free from all taxes, liens
and charges. The Company will take all such actions as may be necessary and
within its power to assure that all such shares of Class A Common Stock may be
so issued without violation of any applicable law or governmental regulation or
any requirements of any domestic securities exchange upon which shares of Class
A Common Stock may be listed (except for official notice of issuance which will
be transmitted by the Company upon issuance).
1C. EXERCISE AGREEMENT. Upon the exercise of this Warrant,
the Exercise Agreement will be substantially in the form set forth below. Such
Exercise Agreement will be dated the actual date of execution thereof.
1D. FRACTIONAL SHARES. If a fractional share of Class A
Common Stock would, but for the provisions of subsection 1D, be issuable upon
exercise of the rights represented by this Warrant, the Company may, at its
option, within five (5) business days after the date of the Exercise Time,
deliver
-2-
<PAGE> 5
to the Purchaser a check payable to the Purchaser in lieu of such fractional
share in an amount equal to the difference between the current market price
(determined pursuant to subsection 2J) of such fractional share as of the date
of the Exercise Time and the Exercise Price of such fractional share.
1E. SHARE LEGENDS. Each certificate for shares of Class A
Common Stock or other security issued upon exercise of this Warrant, unless at
the time of exercise such securities are registered under the Securities Act of
1933, as amended (the "SECURITIES ACT"), shall bear the following legend:
This security has not been registered under the Securities Act
of 1933, as amended, or under the securities laws of any state
or other jurisdiction and may not be sold, offered for sale,
assigned, pledged, encumbered or otherwise transferred or
disposed of unless registered or qualified under said Act and
applicable state securities laws or unless New World
Communications Group Incorporated receives an opinion of
counsel reasonably satisfactory to New World Communications
Group Incorporated that registration, qualification or other
such actions are not required under any such laws. The
offering of this security has not been reviewed or approved by
the Securities and Exchange Commission or by any state's
securities commissioner or administrator and any
representation to the contrary is a criminal offense.
Any certificate issued at any time in exchange or substitution
for any certificate bearing such legend shall also bear such legend unless, in
the opinion of counsel to the Company, the securities represented thereby are
no longer subject to restrictions on resale under the Securities Act or any
state securities law.
Part 2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES.
In order to prevent dilution of the rights granted under this Warrant, the
Initial Exercise Price shall be subject to adjustment from time to time,
without duplication, as provided in this Part 2 (such price or such price as
last adjusted pursuant to the terms hereof, as the case may be, is herein
called the "EXERCISE PRICE"), and the number of shares of Class A Common Stock
obtainable upon exercise of this Warrant shall be subject to adjustment from
time to time, without duplication, as provided in this Part 2; PROVIDED,
HOWEVER, that in no event shall the Company be required to
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make any adjustment if the issuance, sale or other transaction is a Permitted
Issuance (as defined below).
2A. STOCK DIVIDENDS. If and whenever on or after the Date of
Issuance the Company shall declare a dividend or other distribution on shares
of Common Stock which is payable in Common Stock, the Exercise Price in effect
immediately prior to the declaration of such dividend or distribution shall be
reduced to the quotient obtained by dividing (a) the product of (x) the number
of shares of Common Stock outstanding immediately prior to such declaration,
multiplied by (y) the then effective Exercise Price, by (b) the total number of
shares of Common Stock outstanding immediately after such dividend or other
distribution is paid. The registered holder of each Warrant shall thereafter
be entitled to purchase, at the Exercise Price resulting from such adjustment,
the number of shares of Common Stock (calculated to the nearest whole share)
obtained by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock purchasable pursuant hereto
immediately prior to such adjustment and dividing the product thereof by the
Exercise Price resulting from such adjustment. Such adjustment shall become
effective immediately after the opening of business on the day following the
date fixed for the determination of holders of record of Common Stock entitled
to receive such dividend or other distribution.
2B. STOCK SPLITS AND REVERSE SPLITS. If and whenever on
or after the Date of Issuance outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Exercise Price
in effect at the opening of business on the day immediately prior to the
day upon which such subdivision becomes effective shall be proportionately
reduced and the number of Warrant Shares purchasable pursuant to this Warrant
immediately prior to such subdivision shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall be combined into a
smaller number of shares of Common Stock, the Exercise Price in effect at the
opening of business on the day immediately prior to the day upon which such
combination becomes effective shall be proportionately increased and the number
of Warrant Shares purchasable upon the exercise of this Warrant immediately
prior to such combination shall be proportionately reduced, such reduction or
increase, as the case may be, to become effective immediately after the opening
of business on the following the day upon which such subdivision or combination
becomes effective.
2C. RECLASSIFICATION OF STOCK. The reclassification of
Common Stock into securities including securities other than Common Stock
(other than any
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reclassification upon a consolidation or merger to which subsection 3D below
applies) shall be deemed to involve (x) a distribution of such securities other
than Common Stock to all holders of Common Stock (and the effective date of
such reclassification shall be deemed to be the date of issuance of such
securities within the meaning of subsection 2E below), and (y) a subdivision
or combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of
shares of Common Stock outstanding immediately thereafter (and the effective
date of such reclassification shall be deemed to be "the day upon which such
subdivision becomes effective" and "the day upon which such combination becomes
effective" as the case may be, within the meaning of subsection 2B above.)
2D. RIGHTS, OPTIONS, WARRANTS AND CONVERTIBLE SECURITIES.
If and whenever on or after the Date of Issuance the Company shall issue
rights, options, or warrants or shall issue securities convertible or
exchangeable for shares of Common Stock ("Convertible Securities") to all
holders of its outstanding Common Stock, without any charge to such holders,
entitling them to subscribe for or purchase shares of Common Stock (other than
pursuant to a dividend reinvestment plan) at a price per share which is lower
at the record date fixed for the determination of stockholders entitled to
receive such rights, options, warrants or Convertible Securities (the "RECORD
DATE") than the then current market price per share of Common Stock (as defined
in subsection 2J below) the number of Warrant Shares thereafter purchasable
upon the exercise of each Warrant shall be determined by multiplying the number
of Warrant Shares theretofore purchasable upon exercise of each Warrant by a
fraction, of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the Record Date of such rights,
options, warrants or Convertible Securities plus the number of additional
shares of Common Stock offered for subscription or purchase, and of which the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date with respect to such rights, options,
warrants or Convertible Securities plus the number of shares of Common Stock
which the aggregate offering price of the total number shares of Common Stock
so offered would purchase at the then current market price per share (as
defined in subsection 2J below) of Common Stock. Such adjustment shall be made
whenever such rights, options, warrants or Convertible Securities are issued,
and shall become effective immediately after the opening of business on the day
following the Record Date with respect to such rights, options, warrants or
Convertible Securities. Upon the foregoing adjustment having been made, the
Exercise Price payable upon exercise of each Warrant shall be adjusted by
multiplying such Exercise Price in effect immediately prior to such adjustment
by a fraction, of which the numerator shall be the number of Warrant Shares
purchasable upon the exercise
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<PAGE> 8
of each Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares purchasable immediately
thereafter. For the purpose of this subsection 2D, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company or issuable pursuant to warrants held in or issued to
treasury but shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock.
2E. EXTRAORDINARY EVENTS. If and whenever on or after
the Date of Issuance the Company shall distribute to all holders of its shares
of Common Stock evidences of its indebtedness or assets (excluding cash
dividends or distributions payable out of consolidated earnings or earned
surplus and the extraordinary events referred to in subsections 2A through 2D,
inclusive, above) or rights, options or warrants, or convertible or
exchangeable securities containing the right to subscribe for or purchase
evidences of such indebtedness or assets (collectively, the "EXTRAORDINARY
DISTRIBUTIONS"), then in each case the Exercise Price shall be reduced by
multiplying the Exercise Price in effect immediately prior to the close of
business on the date of issuance of such distribution by a fraction, of which
the numerator shall be the then current market price per share of Common Stock
(as defined in subsection 2J below) on the date of such distribution, less the
then fair value (as determined by the Board of Directors of the Company, whose
good faith determination shall be conclusive) of the portion of the assets or
evidences of indebtedness so distributed and of which the denominator shall be
the then current market price per share of Common Stock. Upon any such
adjustment of the Exercise Price hereunder, the number of shares of Common
Stock acquirable upon exercise of this Warrant will be adjusted to the number
of shares determined by multiplying the Exercise Price in effect immediately
prior to such adjustment by the number of shares of Common Stock acquirable
upon exercise of this Warrant immediately prior to such adjustment and dividing
the product thereof by the Exercise Price resulting from such adjustment. Such
adjustment shall be made whenever any such distribution is made, and shall
become effective immediately prior to the opening of business on the day
following the date of issuance of such distribution.
2F. SALE OF CONVERTIBLE SECURITIES. If and whenever on
or after the Date of Issuance the Company shall issue or sell Convertible
Securities, there shall be determined the price per share for which shares of
Common Stock are issuable upon the conversion or exchange thereof, such
determination to be made by dividing (a) the total amount received or
receivable by the Company as consideration for the issue or sale of such
Convertible Securities, plus the average of the maximum and minimum aggregate
amount of additional
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<PAGE> 9
consideration, if any, payable to the Company upon the conversion or exchange
of all such Convertible Securities by (b) the maximum number of shares of
Common Stock of the Company issuable upon conversion or exchange of all of such
Convertible Securities; and such issue or sale shall be deemed to be an issue
or sale for cash (as of the date of issue or sale of such Convertible
Securities) of such maximum number of shares of Common Stock at the price per
share so determined.
If such Convertible Securities shall by their terms provide
for an increase or increases, with the passage of time, in the amount of
additional consideration, if any, payable to the Company, or in the rate of
exchange, upon the conversion or exchange thereof, the adjusted Exercise Price
shall, forthwith up any such increase becoming effective, be readjusted (but to
no greater extent than originally adjusted) to reflect the same.
2G. RIGHTS, WARRANTS, OPTIONS -- COMMON STOCK. If and
whenever on or after the Date of Issuance the Company shall grant any rights,
warrants or options to subscribe for, purchase or otherwise acquire shares of
Common Stock (collectively, the "RIGHTS"), there shall be determined the
minimum price per share for which a share of Common Stock is issuable upon the
exercise of all such rights, warrants or options, such determination to be made
by dividing (a) the total amount, if any, received or receivable by the Company
as consideration for the granting of such rights, warrants or options, plus the
average of the maximum and minimum aggregate amount of additional consideration
payable to the Company upon the exercise of such rights, warrants or options by
(b) the maximum number of shares of Common Stock of the Company issuable upon
the exercise of all such rights, warrants or options, and the granting of all
such rights, warrants or options shall be deemed to be an issue or sale for
cash (as of the date of the granting of such rights, warrants or options) of
such maximum number of shares of Common Stock at the price per share so
determined.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of time, in the amount
of additional consideration payable to the Company upon the exercise thereof,
the adjusted Exercise Price shall, forthwith upon any such increase becoming
effective, be readjusted (but to no greater extent than originally adjusted) to
reflect same.
2H. RIGHTS, WARRANTS, OPTIONS -- CONVERTIBLE SECURITIES.
If and whenever on or after the Date of Issuance the Company shall grant any
rights, warrants or options to subscribe for, purchase or otherwise acquire
Convertible Securities (collectively, the "CONVERTIBLE RIGHTS"), such
Convertible Securities shall be deemed, for the purposes of
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<PAGE> 10
subsection 2F to have been issued and sold (as of the actual date of issue or
sale of such Convertible Securities) for the total amount received or
receivable by the Company as consideration for the granting of such rights,
warrants or options plus the average of the maximum and minimum aggregate
amount of additional consideration, if any, payable to the Company upon the
exercise of all such rights, warrants or options.
If such rights, warrants or options shall by their terms
provide for an increase or increases, with the passage of time, in the amount
of additional consideration payable to the Company upon the exercise thereof,
the adjusted Exercise Price shall, forthwith upon any such increase becoming
effective, be readjusted (but to no greater extent than originally adjusted) to
reflect the same.
2I. SALES BELOW MARKET PRICE. If and whenever on or
after the Date of Issuance the Company shall issue or sell its shares of Common
Stock or be deemed to have issued or sold Common Stock in accordance with the
provisions of subsections 2F, 2G or 2H above, for the consideration per share
which is below the then current market price per share (as defined in
subsection 2J) for its shares of Common Stock (unless the provisions of
subsection 2A, 2B, 2C, 2D or 2E shall be applicable (in which event this
subsection 2I shall not apply), the following provisions shall apply. An
Adjusted Fair Market Value shall be computed (to the nearest cent, a half cent
or more being considered a full cent) by dividing:
(i) the sum of (x) the result obtained by
multiplying the number of shares of Common Stock of the
Company outstanding immediately prior to such issue or sale by
the then current market price as defined in subsection 2J
below, plus (y) the consideration, if any, received or deemed
received by the Company upon such issue or sale, by
(ii) the number of shares of Common Stock of the
Company outstanding immediately after such issue or sale.
The resulting number shall be deemed to be the Adjusted Fair
Market Value per share. Thereafter, the Exercise Price shall be adjusted to be
equal to the product of the Exercise Price in effect immediately prior to such
actions, multiplied by a fraction the numerator of which is the Adjusted Fair
Market Value per share and the denominator of which is the current market price
per share immediately prior to such actions as determined in subsection 2J
below. Upon any such adjustment of the Exercise Price hereunder, the number of
shares of Common Stock acquirable upon exercise of this Warrant will be
adjusted to the number of shares de-
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<PAGE> 11
termined by multiplying the Exercise Price in effect immediately prior to such
adjustment by the number of shares of Common Stock acquirable upon exercise of
this Warrant immediately prior to such adjustment and dividing the product
thereof by the Exercise Price resulting from such adjustment.
The provisions of this subsection 2I shall not apply to an
issuance or sale of shares of the Company's Common Stock in connection with an
underwritten public offering, UNLESS the underwritten public offering is in the
form of a rights offering to holders of Company capital stock to acquire shares
of Common Stock for a consideration per share that is below the then current
market price per share or is in the form of a transaction exempted from
registration in the United States under Regulation S and in which shares of
Common Stock are sold for a consideration per share that is seven and one-half
percent (7.5%) or more below the then current market price per share.
2J. COMPUTATION BASIS. For the purposes of any
computation under subsections 2D, 2E 2I, the current market price per share of
Common Stock at any date shall be the average of the daily closing prices for
the twenty (20) consecutive trading days before the date of such computation;
PROVIDED, HOWEVER that, if the "ex" date for the event in question is on or
prior to the date in question, the closing price for each trading day on or
after such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value on the date in question (as determined in good faith
by the Board of Directors whose determination shall be conclusive) of such
number or amount of the Convertible Securities or other Extraordinary
Distribution being distributed to a holder of one share of Common Stock. The
term "ex" date means the first date on which the Common Stock trades regular
way on the relevant exchange or in the relevant market from which the closing
price was obtained without the right to receive such issuance or distribution.
The closing price for each day shall be the last reported sales price regular
way or, in case no reported sale takes place on such day, the average of the
closing bid and asked prices regular way for such day, in each case on the New
York Stock Exchange or, if the Common Stock is not listed or admitted to
trading on the New York Stock Exchange on the principal national securities
exchange on which the shares of Common Stock are listed or admitted to trading
or, it not listed or admitted to trading on any national securities exchange,
the average of the closing bid and asked prices of the Common Stock in the
over-the-counter market as reported by the National Association of Securities
Dealers Automated Quotations National Market System (or any comparable system)
or, if the Common Stock is not quoted on such National Market System (or any
comparable system), the average of the closing bid and
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<PAGE> 12
asked prices in the over-the-counter market as furnished by any New York Stock
exchange member firm selected form time to time by the Board of Directors for
that purpose or, in the absence of such quotations, such other method of
determining market value as the Board of Directors shall from time to time in
good faith deem to be fair. In the absence of one or more such quotations, the
Company shall determine the current market price on the basis of such
quotations as it considers appropriate.
2K. DEMINIMIS RULE. No adjustment in the number of
Warrant Shares purchasable hereunder shall be required unless such adjustment
would require an increase or decrease of at least one percent (1%) in the
number of Warrant Shares purchasable upon the exercise of each Warrant;
provided, however, that any adjustments which by reason of this subsection 2K
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations shall be made to the nearest
one-thousandth of a share.
2L. NO ADJUSTMENT REQUIRED. No adjustment in the number
of Warrant Shares purchasable upon the exercise of each Warrant need be made
under subsections 2D and 2E if the Company issues or distributes to each
registered Holder of Warrants the rights, options, warrants, or convertible or
exchangeable securities, or evidence of indebtedness or assets referred to in
those paragraphs which each registered Holder of Warrants would have been
entitled to receive had the Warrants been exercised prior to the happening of
such event or the record date with respect thereto. No adjustment in the
number of Warrant Shares purchasable upon the exercise of each Warrant need be
made for sales of Warrant Shares pursuant to a Company plan for reinvestment of
dividends or interest. No adjustment need be made for a change in the par
value of the Warrant Shares. To the extent that the issuance of any employee
stock option is a Permitted Issuance, no such adjustment need be made in
respect of the issuance and subsequent exercise of employee stock options to
purchase shares of Common Stock. No adjustment will be made upon the actual
issuance of any shares of Common Stock or other assets, securities or
properties upon the direct or indirect exercise, conversion or exchange of any
Convertible Security, Extraordinary Distribution, Right or Convertible Right or
of any security for which an adjustment was contemplated pursuant to subsection
2I (including upon any exercise, conversion or exchange of any security
subsequently issuable upon such exercise, conversion or exchange)
(collectively, the "INITIAL SECURITIES") (regardless of whether any adjustment
was actually required to be made in connection with the issuance of such
Initial Security).
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<PAGE> 13
2M. DEFINITION OF "COMMON STOCK". For the purpose of
this Part 2, the term "shares of Common Stock" shall mean (i) the class of
stock designated as the Common Stock of the Company at the date of this
Agreement, or (ii) any other class of stock resulting from successive changes
or reclassification of such shares consisting solely of changes in par value,
or from par value to no par value, or from no par value to par value. In the
event that at any time, as a result of an adjustment made pursuant to
subsection 2C above, the registered Holders shall become entitled to purchase
any shares of the Company other than shares of Common Stock, thereafter the
number of such other shares so purchasable upon exercise of each Warrant and
the Exercise Price of such shares shall be subject to adjustment from time to
time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Warrant Shares contained in subsections 2A
through 2I, inclusive, above, and the provisions of Part 3 with respect to the
Warrant Shares, shall apply on like terms to any such other shares. For all
purposes of Part 2 (including the defined terms used in such Part but excluding
the determination of the class of Class A Common Stock issuable upon exercise
hereof), all shares of Class A Common Stock and of Class B Common Stock shall
be treated as shares of Common Stock without regard to class and all shares of
Common Stock of whatever class issuable upon exercise of any warrant of the
Company or any other Person which is exercisable at an exercise price of $.01
per share of Common Stock (or other nominal exercise price or otherwise having
terms substantially equivalent to the terms of the New Class C Warrants of the
Company or the Class A Warrants, Series 2, of the Company) (the "EQUIVALENT
WARRANTS") and (without duplication) the Equivalent Warrants shall be treated
(x) as shares of Common Stock and (y) as if they were issued and outstanding
shares of Common Stock.
2N. CONSEQUENCES TO EXPIRATION. Upon the expiration of
any rights, options, warrants or conversion or exchange privileges, if any
thereof shall not have been exercised, the Exercise Price and the number of
shares of Common Stock purchasable upon the exercise of each Warrant shall,
upon such expiration, be readjusted and shall thereafter be such as it would
have been had it been originally adjusted (or had the original adjustment not
been required, as the case may be) as if (A) the only shares of Common Stock so
issued were the shares of Common Stock, if any, actually issued or sold upon
the exercise of such rights, options, warrants or conversion or exchange rights
and (B) such shares of Common Stock, if any, were issued or sold for the
consideration, if any, actually received by the Company for the issuance, sale
or grant of all such rights, options, warrants or conversion or exchange rights
whether or not exercised; provided, further, that no such readjustment shall
have the effect of increasing the Exercise Price by an amount
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in excess of the amount of the adjustment initially made in respect to the
issuance, sale of grant of such rights, options, warrants or conversion or
exchange rights.
Part 3. DETERMINATION OF CONSIDERATION. Upon any issuance or
sale for a consideration other than cash, or a consideration part of which is
other than cash, of any shares of Common Stock or Convertible Securities or any
rights or options to subscribe for, purchase or otherwise acquire any shares of
Common Stock or Convertible Securities, the amount the consideration other than
cash received by the Company shall be deemed to be the fair value of such
consideration, as determined in good faith by the Board of Directors of the
Company. In case any shares of Common Stock or Convertible Securities or any
rights, options or warrants to subscribe for, purchase or otherwise acquire any
shares of Common Stock or Convertible Securities shall be issued or sold
together with other shares, stock or securities or other assets of the Company
for a consideration which covers both, the consideration for the issue or sale
of such shares of Common Stock or Convertible Securities or such rights or
options shall be deemed to be the portion of such consideration allocated
thereto in good faith by the Board of Directors of the Company.
Part 3A. VOLUNTARY ADJUSTMENT BY THE COMPANY. The
Company may at its option, at any time during the term of the Warrants, reduce
the then current Exercise Price to any amount deemed appropriate by the Board
of Directors of the Company.
Part 3B. NOTICE OF ADJUSTMENT. Whenever the number of
Warrant Shares purchasable upon the exercise of each Warrant or the Exercise
Price of such Warrant Shares is adjusted, as herein provided, the Company shall
promptly mail by first class mail, postage prepaid, to each Registered Holder
notice of such adjustment or adjustments and shall deliver such registered
Holders a certificate of a firm of independent public accountants selected by
the Board of Directors of the Company (who may be the regular accountants
employed by the Company) setting forth the number of Warrant Shares purchasable
upon the exercise of each Warrant and the Exercise Price of such Warrant Shares
after such adjustment, setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such adjustment was
made. Such certificate shall, in the absence of manifest error, be conclusive
evidence of the correctness of such adjustment.
Part 3C. NO ADJUSTMENT OF DIVIDENDS. Except as
provided in Part 2, no adjustment in respect of any dividends shall be made
during the term of a Warrant or upon the exercise of a Warrant.
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Part 3D. PRESERVATION OF PURCHASE RIGHTS ON ACCOUNT OF
RECLASSIFICATION, CONSOLIDATION, ETC. In case of any consolidation of the
Company with or merger of the Company into another corporation or in case of
any sale, transfer or lease to another corporation of all or substantially all
the property of the Company, the Company or such successor or purchasing
corporation, as the case may be, shall execute an instrument providing that
each Registered Holder shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such action to purchase upon
exercise of each Warrant the kind and amount of shares and other securities and
property which he would have owned or have been entitled to receive after the
happening of such consolidation, merger, sale, transfer or lease had such
Warrant been exercised immediately prior to such action; provided, however,
that no adjustment in respect of dividends, interest or other income on or from
such shares or other securities and property shall be made during the term of a
Warrant or upon the exercise of a Warrant. The Company shall mail by first
class mail, postage prepaid, to each Registered Holder, notice of the execution
of any such agreement. Such agreement shall provide for adjustments, which
shall be as nearly equivalent as may be practicable to the adjustments provided
for in Part 2 and this Part 3. The provisions of this subsection 3D shall
similarly apply to successive consolidations, mergers, sales, transfers or
leases.
Part 3E. STATEMENT ON WARRANTS. Irrespective of any
adjustments in the Exercise Price or the number or kind of shares purchasable
upon the exercise of the Warrants, Warrants theretofore or thereafter issued
may continue to express the same price and number and kind of shares as are
stated in the Warrants initially issuable pursuant to the Agreement.
Part 4. DEFINITIONS. The following terms have the meanings
set forth below:
"CLASS A COMMON STOCK" means the Class A Common Stock, $.01
par value per share, of the Company.
"CLASS B COMMON STOCK" means the Class B Common Stock, $.01
par value per share, of the Company.
"COMMON STOCK" means, collectively, the Class A Common Stock
and the Class B Common Stock (subject to Part 2M hereof).
"COMMON STOCK DEEMED OUTSTANDING" means, at any given time,
the number of shares of Common Stock actually outstanding at such time, plus
the number of shares of Common Stock deemed to be outstanding pursuant to Parts
2 and 3 hereof.
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<PAGE> 16
"FOREIGN ENTITY" means any entity that individually, or in
combination with other entities, is prohibited under section 310 of the
Communications Act of 1934, as amended, from owning certain interests in a
broadcast station license, including, without limitation:
(i) an alien or the representative of an alien;
(ii) a foreign government or the representative of a
foreign government; and
(iii) a corporation organized under the laws of any foreign
government.
"PERMITTED ISSUANCES" means any securities of the Company
issued upon exercise or conversion of (i) any security of the Company or of any
other Person which is issued and outstanding on the Date of Issuance, (ii) any
Equivalent Warrant which, if such Equivalent Warrant had instead been Common
Stock, would not have resulted in any adjustments to this Warrant, (iii) any
security which is itself a Permitted Issuance, (iv) any Warrants issued in
respect of or in exchange for this Warrant, or (v) any securities issued to
employees of the Company or to employees of any of its affiliates pursuant to a
plan and in the ordinary course of the Company's business. For purposes of
this definition only, "Date of Issuance" shall mean May 4, 1994.
"PERSON" means an individual, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
"WARRANTS" means, collectively, all of the Class D Warrants
issued by the Company.
Part 5. NO VOTING RIGHTS; LIMITATIONS OF LIABILITY. This
Warrant will not entitle the holder hereof to any voting rights or other rights
as a stockholder of the Company. No provision hereof, in the absence of
affirmative action by the Registered Holder to purchase Class A Common Stock,
and no enumeration herein of the rights or privileges of the Registered Holder
shall give rise to any liability of such holder for the Exercise Price of Class
A Common Stock acquirable by exercise hereof or as a stockholder of the
Company.
Part 6. WARRANT TRANSFERABLE. Subject to the transfer
conditions referred to in the legend endorsed hereon, this Warrant and all
rights hereunder are transferable, in whole or in part, without charge to the
Registered Holder, upon surrender of this Warrant with a properly exe-
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<PAGE> 17
cuted Assignment (in the form set forth below) at the principal office of the
Company. The new holder of this Warrant shall not be deemed to be the
Registered Holder until such time as this Warrant and a properly executed
Assignment, is presented to the Company and a new certificate of warrant is
issued by the Company.
Part 7. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS.
This Warrant is exchangeable, upon the surrender hereof by the Registered
Holder at the principal office of the Company, for new Warrants of like tenor
representing in the aggregate the rights to receive the number of shares of
Class A Common Stock issuable upon the exercise of this Warrant, and each of
such new Warrants will represent such portion of such rights as is designated
by the Registered Holder at the time of such surrender. The date the Company
initially issues this Warrant set forth in Part 1 hereof will be deemed to be
the "DATE OF ISSUANCE" hereof regardless of the number of times new
certificates representing the unexpired and unexercised rights formerly
represented by this Warrant shall be issued.
Part 8. REPLACEMENT. Upon receipt of evidence reasonably
satisfactory to the Company (an affidavit of the Registered Holder will be
satisfactory) of the ownership and the loss, theft, destruction or mutilation
of any certificate evidencing this Warrant, and in the case of any such loss,
theft or destruction, upon receipt of indemnity reasonably satisfactory to the
Company or, in the case of any such mutilation upon surrender of such
certificate, the Company will execute and deliver in lieu of such certificate a
new certificate of like kind representing the same rights represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
Part 9. WARRANT AGENT. The Company may, in its discretion,
appoint a warrant agent to act as its agent in connection with the issuance,
transfer and exchange of the Class D Warrants.
Part 10. NOTICES. Except as otherwise expressly
provided herein, all notices referred to in this Warrant will be in writing and
will be delivered personally or by mail, and will be deemed to have been given
when so delivered or mailed (i) to the Company, at its principal executive
offices and (ii) to the Registered Holder of this Warrant, at such Registered
Holder's address as it appears in the records of the Company.
Part 11. AMENDMENT AND WAIVER. Except as otherwise
provided herein, the provisions of this Warrant may be amended and the Company
may take any action prohibited in
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<PAGE> 18
this Warrant, or omit to perform any act required to be performed by it, only
if the Company has obtained the written consent of the Registered Holders of
Class D Warrants, representing a majority of the shares of Class A Common Stock
issuable upon exercise of all such Class D Warrants; provided that without the
written consent of the Registered Holder of this Warrant, no such amendment
shall in any event affect the number of shares of Class A Common Stock issuable
upon the exercise of this Warrant, nor require the payment of any sum not
otherwise payable in connection with any such exercise.
Part 12. DESCRIPTIVE HEADINGS; GOVERNING LAW. The
descriptive headings of the several parts and paragraphs of this Warrant are
inserted for convenience only and do not constitute a part of this Warrant.
The construction, validity and interpretation of this Warrant will be governed
by the internal law, and not the conflicts law, of Delaware.
Part 13. WARRANT LEGENDS. Any certificate issued from
time to time in respect of all or a portion of this Warrant, whether upon
partial exercise hereof, or upon transfer, exchange or replacement hereof,
shall bear the legend set forth on the face hereof unless in the opinion of
counsel to the Company neither this Warrant nor any Warrant Shares are subject
to restrictions on resale under the Securities Act or any state securities law.
-16-
<PAGE> 19
EXERCISE AGREEMENT
------------------
To: NEW WORLD COMMUNICATIONS GROUP INCORPORATED
Dated:
The undersigned, pursuant to the provisions set forth in the
attached Class D Warrant (Certificate No. WD-______), hereby irrevocably elects
to exercise the purchase right represented by such Class D Warrant for ___
shares of Class A Common Stock of New World Communications Group Incorporated,
a Delaware corporation (the "COMPANY"), covered by such Class D Warrant and
makes payment herewith in full therefor at the price per share provided by such
Class D Warrant.
Signature
________________________________________
Address
__________________________________________
-1-
<PAGE> 20
ASSIGNMENT
----------
FOR VALUE RECEIVED, _______________ hereby sells, assigns and
transfers all of the rights of the undersigned under the attached Class D
Warrant (Certificate No. WD_____) with respect to ___ number of shares of Class
A Common Stock of New World Communications Group Incorporated, a Delaware
corporation, covered thereby set forth below, unto:
Names of Assignee Address No. of Shares
- ----------------- ------- -------------
The Assignee must present this Assignment to the Company to
become the Registered Holder of the above-referenced Class D Warrant.
Dated: Signature
________________________________________
________________________________________
Witness
__________________________________________
The following abbreviations, when used in the inscription on
the face of this Certificate, shall be construed as though they were written
out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants
in common
UNIF GIFT MIN ACT - ________________________
Custodian ____________________
(Cust)
(Minor)
under Uniform Gifts to Minors Act
__________________
(State)
Additional abbreviations may also be used though not in the above list.
-2-
<PAGE> 1
<TABLE>
GREAT AMERICAN COMMUNICATIONS COMPANY AND SUBSIDIARIES
EXHIBIT 11.1 - COMPUTATION OF LOSS PER COMMON SHARE
(In thousands, except per share amounts)
<S> <C>
Computation of primary and fully diluted earnings (loss) per common share:
- --------------------------------------------------------------------------
Loss before extraordinary items ($1,752)
Earnings (loss) from extraordinary items -
-------
Net loss used to calculate primary and fully diluted loss per share ($1,752)
=======
Shares used in calculation of per share data:
Weighted average Class A common shares 10,154
Weighted average Class B common shares 1,163
Dilutive effect of assumed exercise of certain stock options for the
purchase of Class A common shares 80
-------
Weighted average common shares used to calculate primary and fully
diluted loss per share 11,397
=======
Primary and fully diluted loss per common share:
Loss before extraordinary items ($0.15)
Net Loss (0.15)
</TABLE>
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