SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
May 15, 1996
Clear Channel Communications, Inc.
(Exact name of registrant as specified in its charter)
Texas
(State of Incorporation)
1-9645 74-1787539
(Commission File Number) (I.R.S. Employer Identification No.)
200 Concord Plaza, Suite 600
San Antonio, Texas 78216
(210) 822-2828
(Address and telephone number of principal executive offices)<PAGE>
Clear Channel Communications, Inc.
Form 8-K
Item 2.(a)
On May 15, 1996, Clear Channel Communications of Memphis, Inc., a
wholly owned subsidiary of Clear Channel Communications, Inc.
(the "Company"), acquired by purchase 100% of the outstanding
common stock of US Radio, Inc. (US Radio), which owned radio
stations in Memphis, TN, Milwaukee, WI, Little Rock, AR, El Paso
TX, Reading, PA, Norfolk, VA and Raleigh NC. US Radio is not an
affiliate of the registrant.
The assets acquired consisted of items of broadcasting and
technical equipment utilized in the transmission of radio
signals, Federal Communications licenses, real property serving
as the site for broadcasting towers and other items of personal
property associated with the continuing operations of the
broadcast facilities. In addition, the accounts receivable, cash
and other assets existing as of the acquisition date pertaining
to the radio stations were acquired.
As consideration for the common stock acquired, the
Company's subsidiary paid cash of approximately $142,500,000 and
assumed various accrued expenses and accounts payable totaling
approximately $2,400,000, subject to audit verification. The
purchase price was based upon an arms-length negotiation
considering the potential cash flow generated by the stations,
consideration of the markets in which the stations are located,
management, personnel, and the overall operation of the
facilities as a going concern.
Sources of funds utilized in completing this acquisition
were provided by the Company's revolving long-term line of credit
facility by and between NationsBank of Texas, N.A., as agent, and
the registrant.
Item 2.(b)
The assets acquired by registrant's subsidiary were utilized
by US Radio for the purposes of radio broadcasting. Registrant
intends to continue such use.<PAGE>
Clear Channel Communications, Inc.
Form 8-K
Item 7.(a)-1 Historical Financial Statements
Consolidated Financial Statements
US Radio, Inc.
Years ended December 31, 1995 and 1994
with Report of Independent Auditors
Report of Independent Auditors
Board of Directors
US Radio, Inc.
We have audited the accompanying consolidated balance sheets of
US Radio, Inc. as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholders' equity, and
cash flows for the years then ended. These financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan
and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of US Radio, Inc. at December 31, 1995 and
1994 and the consolidated results of its operations and its cash
flows for the years then ended, in conformity with generally
accepted accounting principles.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
March 4, 1996
<PAGE>
US Radio, Inc.
Consolidated Balance Sheets
(In thousands (except number of shares and per share
data))
December 31,
1995 1994
Assets
Current assets:
Cash and cash equivalents $ 267 $ 1,112
Cash held in escrow -- 229
Accounts receivable--trade, less
allowance of $370 in 1995 and
$304 in 1994 6,108 4,444
Prepaid expenses 374 329
Other current assets 333 333
Current portion of long-term
notes receivable 450 263
________ ________
Total current assets 7,532 6,710
Cash held in escrow for station
purchase -- 3,500
Long-term notes receivable -- 450
Other noncurrent assets 288 585
Property and equipment, at cost:
Land and buildings 3,652 2,096
Equipment 8,997 7,017
________ ________
12,649 9,113
Accumulated depreciation (2,161) (408)
________ ________
10,488 8,705
Intangible assets:
Licenses 45,143 35,395
Goodwill 17,898 17,527
Debt issuance costs 4,636 4,003
Other 14,571 12,805
________ ________
82,248 69,730
Accumulated amortization (7,779) (1,685)
________ ________
74,469 68,045
________ ________
Total assets $92,777 $87,995
======== ========
See accompanying notes.<PAGE>
US Radio, Inc.
Consolidated Balance Sheets
(In thousands (except number of shares and per share
data))
December 31,
1995 1994
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 446 $396
Accrued interest 526 57
Accrued compensation 359 331
Accrued national representation
commission 149 92
Other accrued liabilities 1,152 630
State taxes payable 131 67
Current portion of long-term
liabilities 2,236 2,111
________ ________
Total current liabilities 4,999 3,684
Long-term liabilities, excluding
current portion 57,531 52,621
Deferred income taxes -- 365
________ ________
Total liabilities 62,530 56,670
Stockholders' equity:
Preferred Stock, $0.01 par,
10,000 shares authorized,
none issued and outstanding -- --
Class A Common Stock, $0.01 par,
1,000,000 shares authorized,
901,951 and 800,000 shares
issued and outstanding 9 8
Class B Common Stock, $0.01 par,
200,000 shares authorized,
200,000 shares issued and
outstanding 2 2
Additional paid-in capital 35,757 32,540
Accumulated deficit (5,521) (1,225)
________ ________
Total stockholders' equity 30,247 31,325
________ ________
Total liabilities and stockholders'
equity $92,777 $87,995
======== ========
See accompanying notes.
<PAGE>
US Radio, Inc.
Consolidated Statements of Operations
(In thousands)
Year ended
December 31,
1995 1994
Gross broadcast revenues $31,821 $8,402
Agency commissions 4,329 1,143
________ ________
Net broadcast revenues 27,492 7,259
Station operating expenses:
General and administrative 5,266 1,848
Technical 492 134
Programming 3,698 993
Promotion 1,314 477
Selling 4,786 1,252
________ ________
Total station operating expenses 15,556 4,704
________ ________
Station operating income before
depreciation and amortization 11,936 2,555
Corporate general and administrative 2,632 608
expenses
Depreciation and amortization 7,853 2,093
Other operating (income) expenses (51) 49
________ ________
Operating profit (loss) 1,502 (195)
Interest expense 6,021 1,425
________ ________
Loss before income taxes (4,519) (1,620)
Income tax benefit 223 395
________ ________
Net loss $(4,296) $(1,225)
======== ========
See accompanying notes.
US Radio, Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year ended
December 31,
1995 1994
Operating activities
Net loss $(4,296) $(1,225)
Adjustments to reconcile net loss
to net cash provided by
(used in) operating activities:
Depreciation and amortization 7,853 2,093
Deferred income taxes (365) (462)
Provision for losses on
accounts receivable 375 113
Other (principally amortization
of interest rate cap) 289 80
Changes in operating assets and
liabilities, net of effects
from purchase of stations:
(Increase) decrease in
accounts receivable (2,058) 156
(Increase) decrease in
prepaid expenses and other
assets (95) 82
Increase (decrease) in
payables and accrued
expenses 1,190 (1,160)
________ ________
Net cash provided by (used in)
operating activities 2,893 (323)
Investing activities
Capital expenditures (1,008) (146)
Purchase of radio stations (14,092) (2,765)
Reductions (additions) to
cash held in escrow 3,729 (3,729)
Proceeds from notes receivable 263 50
Other 132 (135)
________ ________
Net cash used in investing
activities (10,976) (6,725)
Financing activities
Net principal payments on
long-term liabilities (2,729) (67,579)
Purchase of interest rate cap -- (998)
Proceeds from issuance of
common stock 3,218 26,040
Proceeds from long-term borrowings 7,382 54,700
Debt issuance costs (633) (4,003)
________ ________
Net cash provided by financing
activities 7,238 8,160
________ ________
(Decrease) increase in cash and
cash equivalents (845) 1,112
Cash and cash equivalents:
Beginning of year 1,112 --
________ ________
End of year $ 267 $1,112
======== ========
Supplemental disclosures
Interest paid during the year $5,298 $1,342
======== ========
Income taxes paid during the year $ 77 $ --
======== ========
See accompanying notes.
US Radio, Inc.
Consolidated Statements of
Stockholders' Equity
Years ended December 31, 1995
and 1994
(In thousands (except number ofshares))
<TABLE>
Class A Class B
Common Common
Stock Class A Stock Class B Additional Total
Shares Common Shares Common Paid-In Accumulated Stockholders'
Outstanding Stock Outstanding Stock Capital Deficit Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at
December
31, 1993 100 -- -- -- $1 -- $1
Cancellation
of Common
Stock (100) -- -- -- (1) -- (1)
Sale of
Common
Stock 800,000 $8 -- -- 26,032 -- 26,040
Issuance of
Common Stock
to Purchase
Stations -- -- 200,000 $2 6,508 -- 6,510
Net Loss -- -- -- -- -- ($1,225) (1,225)
- ------------------------------------------------------------- ----------
Balance at
December
31, 1994 800,000 8 200,000 2 32,540 (1,225) 31,325
Sale of
Common
Stock 101,951 1 -- -- 3,217 -- 3,218
Net Loss -- -- -- -- -- (4,296) (4,296)
-------------------------------------------------- --------- ----------
Balance at
December
31, 1995 901,951 $9 200,000 $2 $35,757 ($5,521) $30,247
================================================== ========= ==========
See accompanying notes.
</TABLE>
US Radio, Inc.
Notes to Consolidated Financial Statements
December 31, 1995
(Dollar Amounts in Thousands)
1. Summary of Significant Accounting Policies
Organization
US Radio, Inc. (the "Company"), a Delaware corporation, was
incorporated on December 9, 1993.
The Company is a radio broadcasting company whose business is
acquiring, developing, and operating radio stations. The
operation of radio stations involves the broadcasting of
entertainment and news to an audience. The stations generate
revenue by selling time during these broadcasts to
advertisers wanting to promote their products or service to the
audience listening to the station's programming. The Company
had no operations prior to January 14, 1994 when it entered into
its first local marketing agreement "LMA"
At December 31, 1994, each share of Class A Common Stock was
entitled to one vote, and each share of Class B Common Stock was
entitled to 4.15 votes. In 1995, an additional 101,951 shares
of Class A Common Stock were issued in connection with the
purchase of stations KDDK-FM and KMJX-FM in Little Rock, AR. At
December 31, 1995, each share of Class A Common Stock is
entitled to one vote, and each share of Class B Common Stock is
entitled to 4.68 votes.
Each share of Class A Common Stock is convertible into a
single share of Class B Common Stock, at the option of the
holders of a majority of the Class A Common Stock, at any time
after the second anniversary date, September 23, 1996, or upon
the occurrence and continuation of certain other events, as
defined in the Reorganization and Placement Agreement.
Principles of Consolidation
The consolidated financial statements include the accounts of
the Company and subsidiaries, after elimination of all
significant intercompany transactions in consolidation. The
Company owns the following radio stations at December 31,
1995:<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
1. Summary of Significant Accounting Policies (continued)
Call Letters Market Acquisition Date
KHEY-AM/FM El Paso, Texas September 23, 1994
WRAW-AM/WRFY-FM Reading, Pennsylvania September 23, 1994
KJOJ-FM Freeport, Texas September 23, 1994
WQOK-FM Raleigh, North Carolina September 23, 1994
WSVY-AM/WOWI-FM Norfolk, Virginia September 23, 1994
WDIA-AM/WHRK-FM Memphis, Tennessee September 23, 1994
KPRR-FM El Paso, Texas September 26, 1994
WJCD-FM Norfolk, Virginia February 21, 1995
KDDK-FM Little Rock, Arkansas June 9, 1995
KMJX-FM Little Rock, Arkansas June 9, 1995
The consolidated financial statements reflect the results of an
LMA with respect to radio station KJOJ-AM in Conroe, Texas,
and an LMA and joint sales agreement for WSVY-FM in Norfolk,
Virginia. KPRR-FM in El Paso, Texas, was operated under an LMA
from January 14, 1994 through September 26, 1994, the date it
was purchased. Additionally, WJCD-FM (formerly WMXN-FM) in
Norfolk, Virginia was operated under an LMA from September 23,
1994 until February 21, 1995, the date it was purchased.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three
months or less when purchased are classified as cash
equivalents.
Depreciation and Amortization
For financial reporting purposes, depreciation is calculated on
the straight-line method over the estimated useful lives of the
assets (including assets recorded under capital leases)
varying from 3 to 20 years. Depreciation expense was $1,759 and
$408 for the years ended December 31, 1995 and 1994,
respectively.
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
1. Summary of Significant Accounting Policies (continued)
Depreciation and Amortization (continued)
Broadcasting licenses and goodwill are amortized on the
straight-line method over 40 years, and other intangible
assets are amortized on the straight-line method with useful
lives ranging from 1 to 40 years. These intangible assets are
carried at the lower of cost or fair value.
Debt issuance costs, consisting primarily of loan placement and
related legal fees, are being amortized over the original
life of the loans.
Intangible Assets
The carrying value of the licenses, goodwill, and other
intangible assets is reviewed on an ongoing basis. If this
review indicates that these assets are not recoverable, as
determined based on the undiscounted future cash flows of the
station acquired, the Company's carrying value of these assets is
reduced to its fair value.
Derivatives
The Company enters into interest rate cap agreements to
hedge its exposure to increasing interest rates with respect to
its senior secured debt (see Note 2). The premium paid for
these agreements is included in interest expense ratably during
the life of the agreement. Payments to be received as a result
of the cap agreement are accrued as a reduction of interest
expense. Unamortized cost of the agreements is included in
other assets.
Revenue Recognition
Revenue is recognized as commercials are broadcast based on the
standard broadcast month calendar, which consisted of 53 and 52
weeks in 1995 and 1994, respectively.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts.
Actual results could differ from the estimates and assumptions
used.<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
1. Summary of Significant Accounting Policies (continued)
Barter Transactions
The Company seeks to minimize its use of barter
transactions. In as much as barter revenue and expenses
historically are less than 5% of gross revenues, they are not
recognized in the financial statements.
Adoption of FASB 121
In March 1995, the FASB issued Statement No. 121, Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of, which requires impairment losses to be
recorded on long-lived assets used in operations when indicators
of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the
assets' carrying amount. Statement 121 also addresses the
accounting for long-lived assets that are expected to be
disposed of. The Company will adopt Statement 121 in 1996 and,
based on current circumstances, does not believe the effect of
adoption will be material.
Reclassifications
Certain prior-year amounts have been reclassified to conform to
the current presentation.
2. Long-Term Liabilities
The Company had the following long-term liabilities
outstanding at December 31:
1995 1994
Senior secured tranche A term notes $27,000 $28,000
Senior secured tranche B term notes 32,382 25,700
Revolving credit loan -- 1,000
---------- ----------
59,382 54,700
Other 385 32
---------- ----------
59,767 54,732
Less current portion 2,236 2,111
---------- ----------
$57,531 $52,621
======= =======<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
2. Long-Term Liabilities (continued)
The senior secured tranche A term notes mature on
December 31, 2001, with 23 quarterly principal payments of
increasing amounts through 2001. Interest is payable at
floating rates of interest based on the prime lending rate or
LIBOR, at the Company's choice, plus some premium. The average
rates on the tranche A notes at December 31, 1995 and 1994 was
8.94% and 8.91%, respectively.
The senior secured tranche B term notes mature on
September 30, 2003, with annual principal payments of $125 due
through 2001. The remaining principal is due in 2002 and 2003.
Interest is payable at floating rates of interest similar to
the tranche A notes. The average rates on the tranche B notes
at December 31, 1995 and 1994 was 9.90% and 9.91%, respectively.
The revolving credit loan is part of a $3,500 revolving
credit commitment which matures on December 31, 2001. Use of
these funds is limited to working capital purposes in the
ordinary course of business. Interest is payable at floating
rates of interest similar to the tranche A notes. The
average rate on the revolving credit loan at December 31, 1994
was 8.56%.
The Company also has a $34,000 acquisition credit
commitment, none of which is outstanding at December 31,
1995. Use of these funds is limited to (1) finance all or a
portion of the purchase price of station acquisitions, (2)
pay the related fees and expenses of the purchase, and (3)
finance the working capital requirements of acquired stations.
An additional 1/2 of 1% commitment fee is due on all unused
credit commitments. The amount of commitment fee charged to
interest expense was $147 and $22 for the years ended
December 31, 1995 and 1994, respectively.
Aggregate maturities of long-term liabilities for the next five
years ended December 31 are as follows: 1996--$2,236;
1997--$3,237; 1998--$3,237; 1999--$4,303; 2000--$7,497; and
thereafter--$39,257.
The Company is in compliance with all of its debt covenants,
which include certain financial ratios, restrictions on
distribution of dividends, and limits on use of working
capital.
All notes and the revolving credit loan described above are
secured collectively by all assets of the Company.<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
3. Income Taxes
Significant components of the benefit from income taxes for
the years ended December 31, are as follows:
1995 1994
Current:
Federal $ -- $--
State 142 67
---------- ----------
Total current provision 142 67
Deferred:
Federal (243) (412)
State (122) (50)
---------- ----------
Total deferred benefit (365) (462)
---------- ----------
Total income tax benefit $(223) $(395)
======= =======
The purchase of stations from US Radio, L.P. and Ragan Henry
Communications Group, L.P. generated a net deferred tax
liability of $827 at the date of acquisition.
The significant components of the Company's deferred tax
liabilities and assets at December 31, are as follows:
1995 1994
Deferred tax liabilities:
Depreciation $ -- $1,282
Amortization 2,156 --
Deferred tax assets:
Allowance for doubtful accounts 140 116
Depreciation 498 --
Amortization -- 277
Other 4 --
Net operating loss carryforwards 1,947 524
Less: valuation allowance (433) --
---------- ----------
Total deferred tax assets 2,156 917
---------- ----------
Net deferred tax (assets) liabilities $ -- $365
======= =======<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
3. Income Taxes (continued)
The Company has available net operating loss carryforwards of
approximately $5,318 for tax reporting purposes to offset future
taxable income, which expire through 2010.
4. Commitments
Under the KJOJ-AM LMA, which is cancelable at any time, the
brokered station agrees to broadcast programs presented to it
by the Company in return for specified compensation and the
Company receives advertising revenue from advertisements included
in the programming. The Company's joint sales agreement for
WSVY-FM allows for the purchase and resale of commercial time
coupled with an LMA for 20 hours of programming per week.
This agreement runs through 1998.
The stations rent studio facilities, maintain station
licenses, and rent certain equipment under noncancelable
operating leases.
Rent expense on these lease agreements and LMAs was
approximately $927 and $703 for the years ended December 31, 1995
and 1994, respectively.
Minimum payments under noncancelable operating leases,
including LMA payments, for the years ending December 31 are as
follows:
1996 $ 520
1997 450
1998 437
1999 273
2000 95
Thereafter 843
----------
Total $2,618
=======
At December 31, 1995, the Company has outstanding a $450
letter of credit issued September 15, 1995 in connection with
the asset purchase agreement for WKKV-FM in Milwaukee, Wisconsin
(see Note 9). The letter of credit was canceled on January 9,
1996, upon the completion of the acquisition of WKKV-FM.<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
5. Purchase of Stations
On September 23, 1994, an investment banking group purchased
800,000 shares of the Company's Class A Common Stock for
$26,040. Concurrently, the Company purchased most of the
assets and assumed certain liabilities of US Radio, L.P. and
Ragan Henry Communications Group, L.P. (the "Partnerships"). The
final purchase price of $78,018 included the assumption of
liabilities and the issuance of 200,000 shares of Class B Common
Stock valued at $6,510 to an entity owned by the
Partnerships, US Radio Stations, L.P.
In addition, the LMA for station KJOJ-AM and the LMA and
joint sales agreement for WSVY-FM were transferred to US
Radio, Inc. Radio station KPRR-FM in El Paso, Texas was
purchased by US Radio, Inc. on September 26, 1994 for
approximately $2,765, which included $2,493 of intangible
assets.
Radio station WJCD-FM in Norfolk, VA was purchased by the
Company on February 21, 1995 for approximately $3,705, which
included $3,266 of intangible assets. Radio stations KMJX-FM
and KDDK-FM in Little Rock, AR were purchased by the Company on
June 9, 1995 for approximately $5,021 and $5,020,
respectively. As a result of the purchases of KMJX-FM and
KDDK-FM, intangible assets were increased by $4,479 and
$3,667, respectively.
The above acquisitions were recorded by the Company using the
purchase method of accounting in accordance with Accounting
Principles Board Opinion No. 16. Accordingly, the
Company included operations of the purchased stations from the
date of acquisition, except for KPRR-FM. This station was
operated under an LMA by US Radio, Inc. prior to its
acquisition, and was included in the results of operations from
January 14, 1994 (inception of the LMA).<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
6. Derivatives
The Company has only limited involvement with derivative
financial instruments and does not use them for trading
purposes. Such instruments are generally used to manage
well-defined interest rate risks. Interest rate cap agreements
are used to reduce the potential impact of increases in
interest rates on the Company's floating rate long-term
debt. Accordingly, the Company has entered into a three-year
agreement to effectively cap the base rate on $35,000 of its
senior secured floating rate debt, to reduce the Company's risk
of incurring higher interest costs due to rising interest
rates. The interest rate cap agreement entitles the Company to
receive amounts from counter-parties on a quarterly basis
if the three month LIBOR rates rise above the fixed cap rate
of 6.5%. $333 and $83 have been charged to interest expense in
1995 and 1994, respectively, and $582 and $915 of unamortized
premium are classified as other assets at December 31, 1995 and
1994, respectively.
7. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the
fair value of each class of financial instruments for which it
is practicable to estimate that value:
Cash and Short-Term Investments
The carrying amount approximates fair value because of the
short-term maturities of those instruments.
Derivatives
The fair value of the Company's interest rate cap
agreement is not significant at December 31, 1995.
Long-Term Debt
The fair value of the Company's long-term debt is
estimated based on borrowing rates currently available to the
Company for loans with similar terms and maturities, and
approximates the carrying amount.<PAGE>
US Radio, Inc.
Notes to Consolidated Financial Statements (continued)
(Dollar Amounts in Thousands)
8. Defined Contribution Plan
The Company has a defined contribution plan in which all
employees who have completed one year of service are
eligible to participate. Plan participants may contribute up to
15% of their total compensation. The employer's
contribution is at the discretion of the Company. The
Company's contribution for the years ended December 31, 1995 and
1994 were 22.5% and 15% of the employee's contribution up to 6%
of compensation. Company contributions amounted to $44 and $26 in
1995 and 1994, respectively.
9. Subsequent Events
On September 18, 1995 the Company entered into an asset
purchase agreement to purchase WKKV-FM in Milwaukee,
Wisconsin for $9,000. The purchase occurred on January 11,
1996. The Company financed the purchase by issuing 122,888
shares of Class A Common Stock for $4,000, and borrowing
$4,420 from the acquisition credit commitment, and the
remainder from the revolving credit facility. After the
purchase, each additional share of Class A Common Stock is
entitled to one vote. As a result of such purchase, the
votes on each share of Class B Common Stock was increased to
5.3121.
On February 26, 1996, the Company entered into an agreement to
purchase WNND-FM in Raleigh, North Carolina for $7,500. On
March 1, 1996, the Company entered into an LMA for the station
through the date of the closing on the purchase. As part of the
purchase agreement, the Company paid $1,000 as a down payment
for the purchase by borrowing $700 on the revolving credit
facility and using $300 cash. The purchase is expected to close
in early summer, 1996.
On February 29, 1996, the Company gave notice of exercise of the
option to acquire KJOJ-AM in Conroe, Texas for $1,000. As part
of the purchase option agreement dated August 30, 1991, the
Company paid a $50 non-refundable earnest money deposit. The
purchase is expected to close in late summer, 1996.
On March 4, 1996, Clear Channel Communications, Inc. agreed to
purchase 100% of the outstanding Class A and Class B Common
Stock of the Company for $142,500 in cash and the assumption of
$2,400 in liabilities. Upon the closing of the transaction,
the Company is expected to operate as a wholly-owned
subsidiary of Clear Channel Communications, Inc. The
transaction is anticipated to close
upon FCC approval in late spring, 1996.<PAGE>
Item 7.(a)-2 Historical Financial Statements
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Combined Financial Statements
Year Ended December 31, 1993 and 1994 with Report of
Independent Auditors
<PAGE>
Report of Independent Auditors
The Partners
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
We have audited the accompanying combined balance sheets of Ragan
Henry Communications Group, L.P., US Radio, L.P., and US Radio
Stations, L.P. (collectively, the "Partnerships"), which are under
common control, as of December 31, 1993 and 1994, and the related
combined statements of operations and accumulated deficit and of
cash flows for the years then ended. These financial statements are
the responsibility of the Partnerships' management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
As discussed in Notes 3 and 16, the Partnerships have divested all
their operating assets in a series of transactions with certain
related and unrelated parties.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the combined financial position
of Ragan Henry Communications Group, L.P., US Radio, L.P., and US
Radio Stations, L.P. at December 31, 1993 and 1994, and the
combined results of their operations and their cash flows for the
years then ended, in conformity with generally accepted accounting
principles.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
March 10, 1995
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Combined Balance Sheets
December 31
1993 1994
___________________
(In thousands)
Assets
Current Assets:
Cash and cash equivalents $ 2,640 $ 217
Accounts receivable--trade less
allowance of $350 and $50 at
December 31, 1993 and 1994,
respectively 4,637 331
Accounts receivable--related parties 601 118
Prepaid expenses 494 42
Current portion of long-term notes
receivable 125 12
Assets of radio stations held for
sale -- 3,912
_______ _______
Total current assets 8,497 4,632
Assets of radio stations held for sale 5,242 --
Long-term notes receivable 675 --
Property and equipment, at cost:
Land and buildings 2,912 --
Equipment 7,740 --
_______ _______
10,652 --
Accumulated depreciation (5,829) --
_______ _______
4,823 --
Intangible assets:
Licenses 22,237 --
Goodwill 16,632 --
Other intangibles 14,694 --
Debt issuance costs 2,074 --
_______ _______
55,637 --
Accumulated amortization (17,894) --
_______ _______
37,743 --
_______ _______
Total assets $56,980 $4,632
======= =======
See accompanying notes.<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Combined Balance Sheets
December 31,
1993 1994
_______ _______
Liabilities and partners' deficit
Current liabilities:
Accounts payable $ 497 $ 87
Accrued interest 1,347 69
Accrued compensation 307 59
Accrued national representation
commission 102 9
Other accrued liabilities 603 37
Payable to related parties 107 14
Current portion of long-term
liabilities 285 12,199
_______ _______
Total current liabilities 3,248 12,474
Long-term liabilities, excluding
current portion 86,299 --
_______ _______
Total liabilities 89,547 12,474
Partners' deficit:
Contributed capital 23,400 26,474
Accumulated deficit (50,883) (28,817)
Accumulated distribution to
partners (5,084) (5,499)
_______ _______
Total partners' deficit (32,567) (7,842)
_______ _______
$56,980 $ 4,632
======= =======
See accompanying notes<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Combined Statements of Operations and Accumulated
Deficit
Year ended
December 31,
1993 1994
_______ _______
(In thousands)
Gross broadcast revenues $30,981 $20,562
Less: agency commissions 4,256 2,847
_______ _______
26,725 17,715
Station operating expenses:
General and administrative 6,085 4,054
Technical 585 422
Programming 3,882 2,397
Promotion 986 869
Selling 4,542 3,085
_______ _______
Total operating expenses 16,080 10,827
_______ _______
Station operating income before
depreciation and amortization 10,645 6,888
Corporate general and administrative
expenses 1,835 1,473
Depreciation and amortization 6,915 3,919
Other operating expenses 31 1,057
_______ _______
Operating income 1,864 439
Other expense (income), net:
Interest expense 7,848 5,544
Gain on sale of radio stations (968) (25,776)
Other -- 935
_______ _______
Net (loss) income before
extraordinary items (5,016) 19,736
Extraordinary gain, net -- 2,330
_______ _______
Net (loss) income (5,016) 22,066
Accumulated deficit:
Beginning of period (45,889) (50,883)
Repurchase of partnership interests 22 --
_______ _______
End of period ($50,883) ($28,817)
======= =======
See accompanying notes<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Combined Statements of Cash Flows
Year ended
December 31,
1993 1994
_______ _______
(In thousands)
Operating activities:
Net (loss) income $(5,016) $22,066
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities
Depreciation and amortization 6,915 3,919
Deferred interest 2,910 1,750
Provision for losses on accounts
receivable 360 210
Gain on sale of radio stations (968) (25,776)
Non-cash other expense -- 1,918
Non-cash extraordinary items -- (4,406)
Other 16 (65)
Changes in operating assets and
liabilities net of effects from
sale of stations:
Increase in accounts receivable (550) (667)
Increase in prepaid expenses and
other current assets (623) (939)
(Decrease) increase in accounts
payable and accrued
expenses (176) 1,418
_______ _______
Net cash provided by (used in)
operating activities 2,871 (572)
Investing activities:
Capital expenditures (282) (106)
Proceeds from sale of radio stations 17,419 (375)
Proceeds from notes receivable -- 75
_______ _______
Net cash provided by investing
activities 17,137 (406)
Financing activities:
Principal payments on long-term
liabilities (18,643) (1,030)
Repurchase of partnership interests (51) --
Distributions to partners (63) (415)
_______ _______
(18,757) (1,445)
_______ _______
Increase (decrease) in cash and
cash equivalents 1,251 (2,423)
Cash and cash equivalents:
Beginning of period 1,389 2,640
_______ _______
End of period $ 2,640 $ 217
======= =======
Supplemental disclosures:
Interest paid during the period $ 4,689 $1,573
======= =======
See accompanying notes.<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements
December 31, 1994
(Dollar Amounts in Thousands)
1. Summary of Significant Accounting Policies
Description of Activities
Ragan Henry Communications Group, L.P. ("RHCG, L.P.") was formed on
February 3, 1989 under the Revised Uniform Limited Partnership Act
of Delaware to purchase and operate radio stations. This
Partnership commenced operations on February 24, 1989. All the
stations in RHCG, L.P. were acquired in 1989.
US Radio, L.P. ("USR, L.P.") was formed on September 22, 1989 under
the Revised Uniform Limited Partnership Act of Delaware to purchase
and operate radio stations. This Partnership commenced operations
on January 1, 1990. All the stations in this Partnership were
acquired in 1990.
US Radio Stations, L.P. ("USRS, L.P.", together with RHCG, L.P. and
USR, L.P., the "Partnerships") was formed on August 9, 1994 under
the Revised Uniform Limited Partnership Act of Delaware to hold the
interests of RHCG, L.P. and US Radio, L.P. in US Radio, Inc. (see
below).
Principles of Combination
The combined financial statements include the combined accounts of
the Partnerships. The general partners of the Partnerships are
corporations wholly owned by Ragan A. Henry. The Partnerships own
KKZR-FM of Houston, TX at December 31, 1994.
On September 23, 1994, the Partnerships sold most of their assets
and transferred certain liabilities to US Radio, Inc. in exchange
for 200,000 shares of US Radio, Inc.'s Class B Common Stock (see
Note 3). The following stations previously owned by the
Partnerships were sold to US Radio, Inc.:
KHEY-AM/FM El Paso, TX
WRAW-AM/WRFY-FM Reading, PA
KJOJ-FM Freeport, TX
WQOK-FM Raleigh, NC
WOWI-FM/WSVY-AM Norfolk, VA
WDIA-AM/WHRK-FM Memphis, TN
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Principles of Combination (continued)
The 1994 combined financial statements reflect the results of
operations of these stations, the results of local marketing
agreements with respect to radio stations KJOJ-AM in Conroe, TX,
WSVY-FM in Norfolk, VA, and WMXN-FM in Norfolk, VA, from January 1,
1994 through September 23, 1994, as well as the results of
operations for KKZR-FM for the entire year, and the results of
operations of WRZR-FM in Columbus, OH from January_1, 1994 through
April 27, 1994 when the station was sold.
Radio stations WCOS-AM/FM in Columbia, SC were sold in October
1993. Radio stations WAKR-AM/WONE-FM in Akron, OH were sold in
December 1993.
All significant intercompany transactions have been eliminated in
combination.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or
less when purchased are classified as cash equivalents.
Depreciation and Amortization
For financial reporting purposes, depreciation is calculated on the
straight-line method over the estimated useful lives of the assets
(including assets recorded under capital leases) varying from 3 to
31.5 years. For income tax reporting purposes, depreciation is
calculated under the Modified Accelerated Cost Recovery System
(MACRS). Depreciation expense was $1,990 and $1,056 for the years
ended December 31, 1993 and 1994.
Broadcasting licenses, which are amortized on the straight-line
method over 10 to 25 years, and goodwill and other intangible
assets, which are amortized on the straight-line method with useful
lives ranging from 5 to 40 years, are carried at the lower of cost
or fair value.
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Depreciation and Amortization (continued)
Debt issuance costs, consisting primarily of loan placement and
related legal fees, were being amortized over the original life of
the loans prior to the early extinguishment (see Note 4).
Intangible Assets
The carrying value of the licenses and goodwill is reviewed on an
ongoing basis. If this review indicates that licenses and/or
goodwill are not recoverable, as determined based on the
undiscounted future cash flows of the station acquired, the
Partnerships' carrying value of the licenses and/or goodwill is
reduced to its fair value.
Revenue Recognition
Revenue is recognized as commercials are broadcast.
2. Long-Term Liabilities
At December 31, 1993 and 1994, the Partnerships had the following
long-term liabilities outstanding:
December 31,
1993 1994
_______ _______
US Radio, L.P.
____________
Senior Secured Variable Rate Note $26,782 $ --
Senior Secured Fixed Rate Notes 5,571 11,841
Senior Secured Deferred Interest Notes 10,757 --
Line of Credit 2,053 --
Senior Subordinated Secured Notes 24,300 --
_______ _______
69,463 11,841<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
2. Long-Term Liabilities (continued)
December 31,
1993 1994
_______ _______
Ragan Henry Communications Group, L.P.
_________________________________
Senior Secured Term Notes $ 7,617 $ --
Senior Subordinated Notes 3,354 --
Senior Line of Credit 1,750 --
CMN, L.P. 2,919 --
_______ _______
15,640 --
Other 1,481 358
_______ _______
86,584 12,199
Less current portion 285 12,199
_______ _______
$86,299 $ --
======= =======
All notes and lines of credit described above were secured
collectively by all assets of the Partnerships. The interest on the
senior secured fixed rate note is 7% at December 31, 1994. The
entire balance was settled upon the sale of KKZR-FM, which occurred
on March 1, 1995 (see Note 16).
3. Sale of Stations
In order to raise sufficient cash to satisfy the debt requirements
to its senior lenders, the Partnerships entered into a private
reorganization with an unrelated third party. Under the
reorganization, on September 23, 1994, the Partnerships sold most
of their productive assets and transferred certain liabilities to
US Radio, Inc. in exchange for common stock. The amount by which
the liabilities transferred exceeded the assets sold, $25,776, has
been recorded as a gain by the Partnerships at December 31, 1994.
As part of the reorganization, debt and accrued interest, except
$11,800 of senior debt, and the CMN, L.P. debt, was paid on
September 23, 1994. The CMN, L.P. debt and accrued interest was
treated as a capital contribution, as the amounts were no longer
payable by the Partnerships. The remaining debt was paid with the
proceeds from the sale.<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
3. Sale of Stations (continued)
of KKZR (see Note 16). The senior lenders forgave $4,903 in debt,
which has been classified as an extraordinary gain on the books of
the Partnerships. Intangible assets relating to debt issuance costs
of $838 were written off as extraordinary expense at December 31,
1994.
4. Extraordinary Items
The following are extraordinary gains (losses) for the year ended
December 31, 1994:
Forgiveness of Debt $ 4,903
Unamortized debt issuance costs (838)
Accretion of notes payable
(see Note 8) (497)
Private reorganization costs (1,238)
_______
Extraordinary gain, net $ 2,330
=======
The private reorganization costs relate to various legal and
professional fees incurred in connection with the Partnerships'
private placement reorganization.
5. Investment
The Partnerships have an investment in US Radio, Inc. in which they
own 20% of the outstanding common stock, and 51% of the voting
rights. As a result of conversion rights held by other investors,
the voting rights likely will decline to 20% in September 1996. The
Partnerships have accounted for this investment using the equity
method. The Partnerships have additional investments in BCP Radio,
L.P., and BCP Offshore Radio, L.P.
The carrying value of these investments is $-0- at December 31,
1994 (see Note 14).
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
6. Related Parties
Related party receivables at December 31, 1993 and 1994 are
comprised of the following:
December 31,
1993 1994
_______ _______
MediaComm National, Inc. $427 $ --
Ragan A. Henry 83 83
Vinrah of New Jersey, Inc. 72 20
Other 19 15
_______ _______
$601 $118
======= =======
All amounts represent advances to or expenses paid by the
Partnerships on behalf of the related parties.
Related party payables at December 31, 1993 and 1994 are comprised
of the following:
December 31,
1993 1994
_______ _______
Communications Management
National, L.P. $ 12 $12
Ragan Henry National Radio, L.P. 52 --
Wolf, Block, Schorr and
Solis-Cohen 36 --
Other 7 2
_______ _______
$107 $14
======= =======
These entities are all owned or managed by Ragan A. Henry, the CEO
and sole shareholder of the general partners of the Partnerships,
except for Wolf, Block, Schorr and Solis-Cohen, a law firm in which
Mr. Henry was a partner.
Management fees of $1,618 and $1,022 were incurred in 1993 and
1994, respectively, for accounting and management services provided
by MediaComm National, Inc., a company which is owned by Ragan A.
Henry.<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
7. Warrants
In September 1994, the Partnerships purchased outstanding warrants
from Chrysler Capital for $71, which was paid by RHCG, L.P. and
charged to other expense.
In connection with its equity financing in February 1989, RHCG,
L.P. issued to Oppenheimer & Co., Inc. a warrant to purchase a 3.5%
interest in the Partnership for a nominal amount. The warrant
becomes exercisable after the general and limited partners receive
cumulative distributions of $6,000 or upon the earlier of January
31, 1997 or the occurrence of an "exercise event," as defined in
the warrant, and otherwise expires on May 30, 1997.
In connection with its initial equity financing in April 1990, USR,
L.P. issued a warrant to Oppenheimer & Co., Inc. to purchase four
Class C interests for a nominal amount. The warrant becomes
exercisable upon the occurrence of an "exercise event," as defined
in the warrant, and expires on March 31, 1997. Upon exercise of the
warrant, the holders of the Class C interests will be entitled to
receive, in each year, an aggregate of 0.75% (0.1875% per interest)
of the cash available for distribution.
Exercise events consist primarily of a sale of all or most of the
operating assets of the stations, the maturity date of Senior
Secured Notes, or a refinancing of the Partnerships. Although an
exercise event has occurred, no warrants have been exercised as of
December 31, 1993 and 1994.
The warrant holders do not participate in distributions until the
general and limited partners of the Partnerships receive cumulative
distributions equal to their contributed capital. Accordingly, no
value has been assigned to these warrants in the financial
statements.
8. Partners' Contributed Capital
Contributed capital consists of a $459 contribution for general
partnership interests and a $26,015 contribution for limited
partnership interests at December 31, 1994 ($420 and $22,980 at
December 31, 1993) with a par value of $1 per interest. <PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
8. Partners' Contributed Capital (continued)
In 1993, $40 of partnership interests in USR, L.P. and $35 of
partnership interests in RHCG, L.P. were acquired by the
Partnerships for cash.
In 1992, $525 of Partnership interest were repurchased by US Radio,
L.P. in exchange for unsecured notes totaling $525, due together
with accrued interest at 6% per year in 2018, upon repayment of the
senior debt. The carrying value of these notes was $25 at December
31, 1993. As a result of the reorganization and payment of most of
the senior debt, the repayment of these notes was accelerated and
the carrying value was accreted to the face value and the increase
($497) was charged to extraordinary expense. The notes were
restructured so that payment would be made when KKZR was sold, or
December 31, 1996 whichever was sooner. The carrying value of the
notes is approximately $330 (including $5 of accrued interest) at
December 31, 1994, as $200 was paid in 1994.
RHCG, L.P. distributed $415 to the general partner (Ragan Henry
Broadcast Group, L.P.) in 1994.
Notes payable, including accrued interest, totaling $3,074 due from
CMN, L.P. (a related party) were canceled, and a corresponding
increase to contributed capital was recorded in 1994.
Net income or net loss of the Partnerships for each year is
allocated among the partner in accordance with the respective
partnership agreements.
9. Income Taxes
Partnerships are not taxable for federal income tax purposes, in
that all taxable income or loss and tax credits are passed through
the Partnerships to the partners. Therefore Statement of Financial
Accounting Standards No. 109 has no impact on the Partnerships.
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
9. Income Taxes (continued)
For federal income tax purposes, the Partnerships realized net
losses of approximately $3,144 and $2,920 for the years ended
December 31, 1993 and 1994, respectively. The difference between
the taxable income or loss and the income or loss recognized in
accordance with generally accepted accounting principles is due to
various permanent and temporary differences, principally
depreciation and amortization expense, bad debt expense, and other
accrued expenses not currently deductible.
10. Commitments
The Partnerships had two local marketing agreements (LMAs) in
effect during 1993 and three during 1994. Under these agreements,
the brokered station agrees to broadcast programs presented to it
by the Partnerships in return for specified compensation and the
Partnerships receive advertising revenue from advertisements
included in the programming. All LMAs have been transferred to US
Radio, Inc.
The stations rent studio facilities, maintain station licenses, and
rent certain equipment under noncancellable operating leases.
Rent expense on these leases and LMAs was approximately $652 and
$986 for the years ended 1993 and 1994, respectively.
11. Dispositions
In accordance with an amendment to the USR, L.P. loan agreement,
radio stations WCOS-AM/FM in Columbia, SC and WAKR-AM/WONE-FM in
Akron, OH were sold to unrelated parties during 1993. The aggregate
net cash proceeds were $17,419, and notes receivable of $800 were
issued by the acquiring companies, resulting in a gain on the sales
of $968.
Radio station WRZR-FM was sold to an unrelated party during 1994.
The aggregate net cash proceeds were $625, resulting in a loss on
the sale of $25.
<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
12. Assets of Radio Station Held for Sale
The assets of KKZR-FM have been classified as Assets of Radio
Station Held for Sale on the accompanying balance sheet at
December 31, 1994, which represents the only remaining operating
assets of the Partnerships (see Note 16).
13. Defined Contribution Plan
The Partnerships have a defined contribution profit sharing plan in
which all employees who have completed one year of service are
eligible to participate. Plan participants may contribute up to 15%
of their total compensation. The employers contribution is at the
discretion of the Partnerships management. The Partnerships
contribution for the year ended December 31, 1994 was 15% of the
employees' contribution up to 6% of compensation. The Partnerships'
contributions amounted to $2 in 1994.
14. Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the
fair value of each class of financial instrument for which it is
practicable to estimate that value:
Cash and Short-Term Investments
The carrying amount approximates fair value because of the short-
term maturities of those instruments.
Investments
Investments in US Radio, Inc., BCP Radio, L.P., and BCP Offshore
Radio, L.P. are carried at $-0- at December 31, 1994. The
approximate fair value of these investments is $6,265 based on the
Partnerships equity percentage in the companies at December 31,
1994.
Long Term Debt
The fair value of the Partnerships long-term debt is $11,557 based
on the payment made in March, 1995 to satisfy the outstanding
balance.<PAGE>
Ragan Henry Communications Group, L.P.
US Radio, L.P.
US Radio Stations, L.P.
Notes to Combined Financial Statements (continued)
15. Other Expense
Other operating expenses for the year ended December 31, 1994
relate to the write-off of a related party receivable from
MediaComm National, Inc.
Other non-operating expenses for the year ended December 31, 1994
include costs incurred in connection with a failed initial public
offering totaling $889.
16. Subsequent Event
On March 1, 1995, US Radio, L.P. sold Radio Station KKZR-FM to an
unrelated party for $12,000. The proceeds were used mainly to pay
the remaining senior secured fixed rate notes. Principal and
accrued interest due at the time of sale was $11,952, $11,557 was
accepted in full satisfaction of the debt, resulting in an
extraordinary gain of $395. The sale resulted in a gain of
approximately $8,000.<PAGE>
Item 7.(a)-3
US Radio, Inc.
Consolidated Balance Sheet
(unaudited)
(dollars in thousands, except per share data)
March 31,
1996
----------
Assets
Current Assets:
Cash and Cash equivalents $ 239
Accounts receivable - trade less allowance of
$360 5,602
Prepaid expenses 419
Other current assets 333
Current portion of long-term notes receivable 437
-------
Total current assets 7,030
Deposit on purchase of radio stations 1,097
Other non-current assets 166
Property and equipment, at cost:
Land and buildings 3,824
Equipment 9,852
-------
13,676
Accumulated depreciation (2,693)
-------
10,983
Intangible assets:
Licenses 50,451
Goodwill 35,371
Debt issuance costs 4,636
-------
90,458
Accumulated amortization (8,700)
-------
81,758
Total assets $101,034
=======
<PAGE>
US Radio, Inc.
Consolidated Balance Sheet
(unaudited)
(dollars in thousands, except per share data)
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 535
Accrued interest 605
Accrued compensation 310
Accrued national representation commission 161
Other accrued liabilities 1,112
Accrued payroll taxes 173
Taxes payable 131
Current portion of long-term liabilities 3,888
-------
Total current liabilities 6,915
Long-term liabilities, excluding current
portion 61,329
-------
Total liabilities 68,244
Stockholders' equity:
Preferred Stock, $0.01 par, 10,000 shares
authorized, none issued and outstanding --
Class A Common Stock, $0.01 par,
1,200,000 shares authorized, 1,024,839
shares issued and outstanding 10
Class B Common Stock, $0.01 par, 1,300,000
shares authorized, 200,000 issued and
outstanding 2
Additional paid-in capital 39,666
Accumulated deficit (6,888)
-------
Total stockholders' equity 32,790
-------
Total liabilities and stockholders'
equity $101,034
======= <PAGE>
US Radio, Inc.
Consolidated Statements of Income
(unaudited)
(in thousands)
March 31, March 31,
1996 1995
--------------------
Gross broadcast revenues $8,014 $5,720
Agency commissions 1,095 738
------- -------
Net broadcast revenues 6,919 4,982
Station operating expenses:
General and administrative 1,600 1,253
Technical 126 103
Programming 1,161 777
Promotion 322 179
Selling 1,358 942
------- -------
Total station operating expenses 4,567 3,254
------- -------
Station income before depreciation
and amortization 2,352 1,728
Corporate general and administrative
expenses 641 571
Depreciation and amortization 1,453 1,934
------- -------
Operating (loss) income 258 (777)
Other expense net:
Interest expense 1,625 1,346
Other 0 0
------- -------
Net loss before income taxes (1,367) (2,123)
Income tax expense 0 0
------- -------
Net loss (1,367) (2,123)
Accumulated deficit:
Beginning of period (5,521) (1,225)
------- -------
End of period (6,888) ($3,348)
======= ======= <PAGE>
US Radio, Inc.
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Operating activities
Net loss ($1,367) ($2,123)
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,453 1,934
Provision for losses on accounts
receivable 71 70
Other 84 81
Changes in operating assets and
liabilities
Decrease in accounts receivable 435 631
(Increase) in prepaid expenses
and other assets (6) (91)
Increase in accounts payable and
accrued expenses 264 105
------- -------
Net cash provided by operating
activities 934 607
Investing activities:
Capital expenditures (135) (389)
Purchase of radio stations (9,102) (3,500)
Deposit on purchase of radio
stations (1,097) 3,329
Principal payments on notes
receivable 13 225
------- -------
Net cash used in investing
activities (10,321) (335)
Financing activities:
Principal payments on long-term
liabilities (1,671) (802)
Proceeds from issuance of common
stock 3,910 --
Proceeds from long-term borrowings 7,120 0
Net cash provided by (used in)
financing activities 9,359 (802)
------- -------
Decrease in cash and cash
equivalents (28) (530)
Cash and cash equivalents:
Beginning of period 267 1,112
------- -------
End of period $ 239 $ 582
======= =======
Supplemental disclosures:
Interest paid during the period $ 1,487 $ 914
======= =======
Taxes paid during the period $ 0 $ 0
======= ======= <PAGE>
Item 7.(b) Pro Forma Financial Statements
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED) CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
AND US RADIO, INC.
The following pro forma condensed consolidated statements of
operations for the year ended December 31, 1995 and the three
months ended March 31, 1996 give effect to the acquisition of US
Radio, Inc., ("US Radio"). The unaudited pro forma statement of
operations is based on the historical results of operations of US
Radio and the Company, giving effect to the transaction under the
purchase method of accounting as if the transaction had been
consummated on January 1, 1995 and 1996 for the year ended December
31, 1995 and for the three months ended March 31, 1996,
respectively. The unaudited pro forma balance sheet is based on
historical financial positions of US Radio and the Company, giving
effect to the transaction under the purchase method of accounting
as if the transaction had been consummated on March 31, 1996. The
assumptions and adjustments in the accompanying notes to the pro
forma condensed consolidated statements of operations and balance
sheet are based on a preliminary purchase price allocation.
These pro forma statements may not be indicative of the results
that actually would have occurred if the acquisition had been
consummated on the dates indicated or which may be obtained in the
future. <PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC. AND SUBSIDIARIES
CLEAR CHANNEL/US RADIO COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
Year ended December 31, 1995
- ----------------------------------------------------------------- ----------
Increase
(Decrease)
CCC US Radio Income Pro
Historical(1) Historical(2) Forma Adj. (3) Pro Forma
---------- ----------- ---------- -------------
Net broadcast
revenue $243,813 $ 27,492 -- $271,305
Station operating
expenses 131,258 15,556 146,814
Depreciation and
amortization 33,769 7,853 $3,259 44,881
Corporate general and
administrative
expenses 7,414 2,632 (2,632) 7,414
----------- --------------------------- -----------
Station operating income 71,372 1,451 (627)
72,196
Interest expense 20,752 6,021 3,669 30,442
Equity in net income of,
and other income from,
nonconsolidated
affiliates 2,927 -- -- 2,927
Other income
(expense) (803) 51 -- (752)
------------ -----------------------------------------
Income (loss)
before income
taxes 52,744 (4,519) (4,296) 43,929
Income tax (expense)
/benefit (20,730) 223 1,721 (18,786)
------------ ---------------------------- ------------
Net income
(loss) $ 32,014 $ (4,296) $ (2,575) $25,143
======== ======== =========== ========
Net income
per common
share $ .91 $ .72
======== ========
Weighted average
common shares
and common share
equivalents
outstanding 35,100 35,100
======== ========
<PAGE>
Three months ended March 31, 1996
- ------------------------------------------------------------------
Increase
(Decrease)
CCC US Radio Income Pro
Historical(4) Historical(5) Forma Adj. (6) Pro Forma
----------- -----------------------------------------
Net broadcast
revenue $ 62,209 $ 6,919 $ 69,128
Station operating
expenses 38,230 4,567 42,797
Depreciation and
amortization 8,755 1,453 757 10,965
Corporate
general
and
administrative
expenses 1,674 641 (641) 1,674
----------- --------------------------- -----------
Station operating
income 13,550 258 (116) 13,692
Interest
expense 5,424 1,625 548 7,597
Equity in net
income of, and
other income from,
nonconsolidated
affiliates 875 -- -- 875
Other income
(expense) 205 -- -- 205
------------ -----------------------------------------
Income (loss)
before
income
taxes 9,206 (1,367) (664) 7,175
Income tax (expense)
/ benefit (2,968) -- 444 (2,524)
------------ ---------------------------- ------------
Net income
(loss) $ 6,238 $ (1,367) $ (220) $ 4,651
======= ======= ========= =======
Net income per
common
share $ .18 $ .13
======== ========
Weighted average
common shares
and common share
equivalents
outstanding 35,205 35,205
======== ========<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31, 1995
(1) Historical Condensed Consolidated Statement of Operations for
Clear Channel Communications, Inc. and Subsidiaries.
(2) Historical Condensed Consolidated Statement of Operations for
US Radio, Inc. acquired on May 15, 1996.
(3) Represents the pro forma effect of the acquisition of US Radio,
Inc., assuming it was acquired January 1, 1995.
Increase
(Decrease)
Income
(in Thousands)
-------------------
(a) Increase in amortization of license &
goodwill resulting from a write
up of license & goodwill and a
change in amortizable life from
40 years (US Radio) to 25 years
(CCC) $(3,259)
(b) Increase in interest expense due to a
higher amount of average debt
outstanding which was partially offset
by a lower average interest rate (6.8%
average rate for CCC for 1995) (3,669)
(c) Elimination of corporate general
and administrative expenses resulting
from the elimination of the US
Radio, Inc. corporate office 2,632
(d) Tax benefit of the US Radio, Inc. historical
loss and the tax effect of the pro forma
adjustments at the statutory tax rate for
1995 (35%) 1,721 <PAGE>
Three months ended March 31, 1996
(4) Historical Condensed Consolidated Statement of Operations for
the three months ended March 31, 1996 for Clear Channel
Communications, Inc. and Subsidiaries.
(5) Historical Condensed Consolidated Statement of Operations for
the three months ended March 31, 1996 for US Radio, Inc., acquired
on May 15, 1996.
(6) Represents the pro forma effect of the acquisition of US Radio,
Inc., assuming it was acquired January 1, 1996.
Increase
(Decrease)
Income
(in Thousands)
-------------------
(a) Increase in amortization of
license & goodwill resulting from
a write up of license & goodwill
and a change in amortizable life
from 40 years (US Radio) to 25 years
(CCC) $(757)
(b) Increase in interest expense due to a
higher amount of average debt outstanding
which was offset by a lower average interest
rate (6.1% average rate for CCC for the
three months ended March 31, 1996) (548)
(c) Elimination of corporate general
and administrative expenses resulting
from the elimination of the US
Radio, Inc. corporate office 641
(d) Tax benefit of the US Radio, Inc. historical
loss and the tax effect of the pro forma
adjustments at the statutory tax rate for
1996 (35%) 444
<PAGE>
CLEAR CHANNEL COMMUNICATIONS, INC.
CLEAR CHANNEL /US RADIO COMBINED
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
(Dollars in thousands, except per share
data)
March 31, 1996
- ----------------------------------------------------------------- ---------
US Radio Clear Channel/
Historical Historical Pro Forma US Radio
Clear Channel(7) US Radio(8) Adjustments(9) Combined Pro Forma
- -----------------------------------------------------------------
ASSETS
Current assets:
Cash and cash
equivalents $ 12,006$ 239 $ 12,245
Accounts
receivable,
net 45,325 5,602 50,927
Film rights -
current 11,340 -- 11,340
Other
current
assets -- 1,189 1,189
----------------------- -------------- ------------
Total Current
Assets 68,671 7,030 -- 75,701
Property, Plant &
Equipment 165,211 13,676 178,887
Less
accumulated
depreciation (62,224) (2,693) (64,917)
---------------------------------------- ------------
102,987 10,983 -- 113,970
Intangible assets:
Leases 1,455 1,455
Network affiliation
agreements 23,423 23,423
Licenses and
goodwill 322,682 85,822 39,391 447,895
Covenants
not-to-compete 22,972 22,972
Other intangible
assets 4,522 4,636 (4,636) 4,522
---------------------------------------- -------------
375,054 90,458 34,755 500,267
Less
accumulated
amortization (56,862) (8,700) 8,700 (56,862)
----------------------------------------- -------------
318,192 81,758 43,455 443,405
Other assets:
Film rights -
noncurrent,
net of accumulated
amortization 13,641 13,641
Equity investments
in, and
advances to,
nonconsolidated
affiliates 81,711 --- 81,711
Other assets 8,382 1,263 433 10,078
Other
investments 1,395 1,395
- ------------------------------------------------------------ ---------
TOTAL ASSETS $594,979 $101,034 $ 43,888 $739,901
======= ======= ======== =======
LIABILITIES
Current liabilities:
Accounts
payable $ 6,186 $ 535 $ 6,721
Accrued
interest 1,542 605 (605) 1,542
Accrued
expenses 5,022 1,756 6,778
Accrued income
and other
taxes 3,025 131 3,156
Current portion
of long-term
debt 3,405 3,888 (3,888) 3,405
Current portion
of film rights
liability 11,868 -- 11,868
-------------------------- ----------- ------------
Total Current
Liabilities 31,048 6,915 (4,493) 33,470
Long-Term
Debt 366,569 61,329 81,171 509,069
Film Rights Liability 15,090 -- 15,090
Deferred
Income
Taxes 5,553 -- 5,553
Minority
Interest 6,447 -- 6,447
Shareholders'
equity:
Preferred Stock --- --- --
Common
Stock,
Class A 3,461 10 (10) 3,461
Common Stock,
Class B --- 2 (2) --
Additional
paid-in
capital 91,489 39,666 (39,666) 91,489
Retained
earnings
(accumulated
deficit) 74,597 (6,888) 6,888 74,597
Other 896 --- 896
Cost of shares
held in
treasury (171) --- (171)
------------------------------------------ --------------
Total
Shareholders'
Equity 170,272 32,790 (32,790) 170,272
----------------------------------------- --------------
TOTAL LIABILITIES
AND
SHAREHOLDERS'
EQUITY $594,979 $101,034 $ 43,888 $739,901
======== ========= ======= ========
See Accompanying Notes to Unaudited Pro Forma Financial Information<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED BALANCE SHEET
March 31, 1996
(7) Historical Condensed Consolidated Balance Sheet as of March 31,
1996 for Clear Channel Communications, Inc. and Subsidiaries.
(8) Historical Condensed Consolidated Balance Sheet as of March 31,
1996 for US Radio, Inc., acquired on May 15, 1996.
(9) On May 15, 1996, the Company purchased 100% of the outstanding
shares of common stock of US Radio, Inc. for approximately $142.5
million cash and assumption of approximately $2,400,000 in current
liabilities. The transaction has been accounted for as a purchase,
and the accounts of US Radio, Inc. have been included in the
accompanying financial statements as of March 31, 1996. The
increases (decreases) in the values of the assets acquired and
liabilities assumed (as if the acquisition had been consummated
March 31, 1996) are as follows:
Increase
(Decrease)
Licenses & goodwill 39,391
Other intangible assets (4,636)
Accumulated Amortization (8,700)
Deferred tax assets (other assets) 433
Accrued interest payable (605)
Current portion of long-term debt (3,888)
Long-term debt 81,171
Common stock, Class A (10)
Common stock, Class B (2)
Additional paid-in capital (39,666)
Retained earnings (accumulated deficit) 6,888 <PAGE>
Item 7.(c)
See index to exhibits following "Signatures."
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 hereunto duly authorized.
Clear Channel Communications, Inc.
Date May 24, 1996 By /s/ L. Lowry Mays
L. Lowry Mays, President
Date May 24, 1996 By /s/ Herbert W. Hill, Jr.
Herbert W. Hill, Jr.
Vice President/Controller and
Principal Financial Officer<PAGE>
Clear Channel Communications, Inc.
Form 8-K
Item 7.(c) Index to Exhibits
(a) 3.1 -- Articles of Incorporation, as amended, of Registrant
(m) 3.11 -- Articles of Amendment to the Articles of Incorporation
of Clear Channel Communications, Inc.
(a) 4 -- Buy-Sell Agreement among Clear Channel Communications,
Inc., L. Lowry Mays, B. J. McCombs, John M. Schaefer
and John W. Barger dated May 31, 1977.
(a)10.1 -- Incentive Stock Option Plan of Clear Channel
Communications, Inc. as of January 1, 1984.
(b)10.2 -- Television Asset Purchase Agreement dated January 27,
1992, by and between Chase Broadcasting of Memphis,
Inc. and Clear Channel Television, Inc.
(b)10.3 -- Radio Asset Purchase Agreement dated January 31, 1992,
by and between Noble Broadcasting of Connecticut, Inc.
and Clear Channel Radio, Inc.
(b)10.4 -- Radio Asset Purchase Agreement dated April 19, 1992,
by and between Edens Broadcasting, Inc. and Clear
Channel Radio, Inc.
(k)10.33 -- Radio Asset Purchase Agreement dated January 31, 1993,
by and between KHFI Venture, LTD. and Clear Channel
Radio, Inc.
(l)10.34 -- Radio Asset Purchase Agreement dated December 28,
1992, by and between Westinghouse Broadcasting
Company, Inc. and Clear Channel Radio, Inc.
(c)10.5 -- Radio Asset Purchase Agreement dated December 23,
1992, by and between Inter-Urban Broadcasting of New
Orleans Partnership and Snowden Broadcasting, Inc.
(d)10.6 -- Television Asset Purchase Agreement dated August 19,
1993, by and between Television Marketing Group of
Memphis, Inc. and Clear Channel Television, Inc.
(e)10.7 -- Radio Asset Purchase Agreement April 1, 1993, by and
Capital Broadcasting of Virginia, Inc. and Clear
Channel Radio, Inc.
(f)10.8 -- Television Asset Purchase Agreement dated August 31,
1993, by and between Nationwide Communications, Inc.
and Clear Channel Television, Inc.
(g)10.9 -- Radio Asset Merger Agreement dated March 22, 1994, by
and between Metroplex Communications, Inc. and Clear
Channel Radio, Inc.
(h)10.10 -- Radio Partnership Interest Purchase Agreement dated
April 5, 1994, by and between Cook Inlet
Communications, Inc. and WCC Associates and Clear
Channel Radio, Inc.
(i)10.11 -- Television Asset Purchase Agreement September 12,1994,
by and between Heritage Broadcasting Company of New
York, Inc. and Clear Channel Television, Inc. and
Clear Channel Television Licenses, Inc.
(j)10.12 -- Radio Asset Purchase Agreement dated November 17,1994,
by and between Noble Broadcast of Houston, Inc. and
Clear Channel Radio, Inc.
(k)10.13 -- Australian Radio Network Shareholders Agreement dated
February, 1995, by and between APN Broadcasting
Investments Pty Ltd, Australian Provincial Newspapers
Holdings Limited, APN Broadcasting Pty Ltd and Clear
Channel Radio, Inc. and Clear Channel Communications,
Inc.
(l)10.14 -- $600,000,000 Amended and Restated Credit Agreement
Among Clear Channel Communications, Inc., Certain
Lenders, and NationsBank of Texas, N.A., as
Administrative Lender, dated October 19, 1995.
(m)10.15 -- Clear Channel Communications, Inc. 1994 Incentive
Stock Option Plan.
(m)10.16 -- Clear Channel Communications, Inc. 1994 Nonqualified
Stock Option Plan.
(m)10.17 -- Clear Channel Communications, Inc. Directors'
Nonqualified Stock Option Plan.
(m)10.18 -- Option Agreement for Officer
(n)10.19 -- Employment Agreement between Clear Channel
Communications, Inc. and L. Lowry Mays
10.20 -- Stock Purchase Agreement, dated as of March 4, 1996,
by and among US Radio Stations, L.P., Blackstone USR
Capital Partners L.P., Blackstone USR Offshore Capital
Partners L.P., Blackstone Family Investment
Partnership II L.P., BCP Radio L.P., BCP Offshore
Radio L.P.,, US Radio, Inc., Clear Channel
Communications of Memphis, Inc., and Clear Channel
Communications, Inc.
(a) -- Incorporated by reference to the exhibits of the
Company's Registration Statement on Form S-1(Reg. No.
289161) dated April 19, 1984.
(b) -- Incorporated by reference to the Registrant's Form 8-K
dated July 14, 1992.
(c) -- Incorporated by reference to the Registrant's Form 10-Q
dated May 12, 1993.
(d) -- Incorporated by reference to the Registrant's Form 8-K
dated September 2, 1993.
(e) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 1, 1993.
(f) -- Incorporated by reference to the Registrant's Form 8-K
dated October 27, 1993.
(g) -- Incorporated by reference to the Registrant's Form 8-K
dated October 26, 1994.
(h) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14 1994.
(i) -- Incorporated by reference to the Registrant's Form 8-K
dated December 14, 1994.
(j) -- Incorporated by reference to the Registrant's Form 8-K
dated January 13, 1995.
(k) -- Incorporated by reference to the Registrant's Form 8-K
dated May 26, 1995.
(l) -- Incorporated by reference to the Registrant's Form 10-Q
dated November 14, 1995.
(m) -- Incorporated by reference to the Registrant's Form S-8
dated November 20, 1995.
(n) -- Incorporated by reference to the Registrant's Form 10-K
dated March 29, 1996, as amended by form 10-K/A dated
April 19, 1996.
Exhibit 10.20 -- Stock Purchase Agreement, dated as of March 4,
1996, by and among US Radio Stations, L.P., Blackstone USR Capital
Partners L.P., Blackstone USR Offshore Capital Partners L.P.,
Blackstone Family Investment Partnership II L.P., BCP Radio L.P.,
BCP Offshore Radio L.P.,, US Radio, Inc., Clear Channel
Communications of Memphis, Inc., and Clear Channel Communications,
Inc.
STOCK PURCHASE AGREEMENT
dated as of March 4, 1996
by and among
US RADIO STATIONS, L.P.
BLACKSTONE USR CAPITAL PARTNERS L.P.
BLACKSTONE USR OFFSHORE CAPITAL PARTNERS L.P.
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P.,
BCP RADIO L.P.
BCP OFFSHORE RADIO L.P.
US RADIO, INC.
CLEAR CHANNEL COMMUNICATIONS OF MEMPHIS, INC.
and
CLEAR CHANNEL COMMUNICATIONS, INC.<PAGE>
TABLE OF CONTENTS
Page
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . .1
AGREEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION
1. Definitions . . . . . . . . . . . . . . . . . . . . . . . .1
1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . .1
1.02. Certain Other Defined Terms . . . . . . . . . . . . . 10
1.03. Knowledge Standard. . . . . . . . . . . . . . . . . . 11
1.04. Materiality . . . . . . . . . . . . . . . . . . . . . 11
1.05. Accounting Principles . . . . . . . . . . . . . . . . 11
SECTION 2. Sale and Purchase of Shares . . . . . . . . . . . 11
2.01. Sale of Shares. . . . . . . . . . . . . . . . . . . . 11
2.02. Purchase Price and Payment for Shares . . . . . . . . 12
2.03. Calculation of the Final Balance Sheet. . . . . . . . 14
2.04. The Closing . . . . . . . . . . . . . . . . . . . . . 15
SECTION 3. Representations and Warranties of the Company . . 16
3.01. Binding Effect. . . . . . . . . . . . . . . . . . . . 16
3.02. Existence and Power of the Company. . . . . . . . . . 16
3.03. Qualification of the Company and its Subsidiaries . . 17
3.04. Capital Stock of the Company. . . . . . . . . . . . . 17
3.05. Subsidiaries. . . . . . . . . . . . . . . . . . . . . 17
3.06. No Conflict . . . . . . . . . . . . . . . . . . . . . 18
3.07. Financial Statements. . . . . . . . . . . . . . . . . 18
3.08. Labor Matters . . . . . . . . . . . . . . . . . . . . 18
3.09. Absence of Certain Changes or Events. . . . . . . . . 19
3.10. Absence of Litigation . . . . . . . . . . . . . . . . 19
3.11. Compliance with Laws. . . . . . . . . . . . . . . . . 19
3.12. Consents, Approvals, Licenses, Etc. . . . . . . . . . 20
3.13. Personal Property . . . . . . . . . . . . . . . . . . 20
3.14. Real Property . . . . . . . . . . . . . . . . . . . . 21
3.15. Employee Benefit Matters. . . . . . . . . . . . . . . 21
3.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 21
3.17. Insurance . . . . . . . . . . . . . . . . . . . . . . 22
3.18. Material Contracts. . . . . . . . . . . . . . . . . . 22
3.19. Environmental Matters . . . . . . . . . . . . . . . . 24
SECTION 4. Representations and Warranties of the Sellers . . 25
4.01. Binding Effect. . . . . . . . . . . . . . . . . . . . 25
4.02. Existence and Power of the Sellers. . . . . . . . . . 25
4.03. Capital Stock of the Company. . . . . . . . . . . . . 25
4.04. Absence of Litigation . . . . . . . . . . . . . . . . 25
4.05. Consents, Approvals, Licenses, Etc. . . . . . . . . . 26
4.06. Brokers . . . . . . . . . . . . . . . . . . . . . . . 26
4.07. Representations and Warranties of the Company . . . . 26
SECTION 5. Representations and Warranties of the Purchaser . 26
5.01. Organization and Authority of the Purchaser . . . . . 26
5.02 No Conflict . . . . . . . . . . . . . . . . . . . . . 26
5.03. Consents, Approvals, Licenses, Etc. . . . . . . . . . 27
5.04. Absence of Litigation . . . . . . . . . . . . . . . . 27
5.05. Investment Purpose. . . . . . . . . . . . . . . . . . 27
5.06. Financing . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 6. Additional Agreements . . . . . . . . . . . . . . 28
6.01 Conduct of Business Prior to the Closing. . . . . . . 28
6.02. Access to Information . . . . . . . . . . . . . . . . 30
6.03. FCC and Other Regulatory Authorizations, Consents . . 31
6.04. Investigation . . . . . . . . . . . . . . . . . . . . 32
6.05. Company Employees . . . . . . . . . . . . . . . . . . 32
6.06. Press Release . . . . . . . . . . . . . . . . . . . . 33
6.07. Further Action. . . . . . . . . . . . . . . . . . . . 33
6.08. Indemnification . . . . . . . . . . . . . . . . . . . 33
SECTION 7. Conditions Precedent to the Obligation of Purchaser to
Purchase Shares from Sellers . . . . . . . . . . . . . . . 33
7.01. Representations and Warranties; Covenants and Agreements33
7.02. FCC Consent . . . . . . . . . . . . . . . . . . . . . 34
7.03. Third Party Consents. . . . . . . . . . . . . . . . . 34
7.04. Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . 34
7.05. Opinions of Counsel to the Sellers and the Company. . 34
7.06. Resignation of the Directors of the Company . . . . . 34
7.07. Payment of Transaction-Related Expenses . . . . . . . 34
7.08. Delivery of Closing Balance Sheet . . . . . . . . . . 34
7.09. Receipt of Certified Copies of the Articles of
Incorporation . . . . . . . . . . . . . . . . . . . . 34
7.10. Receipt of Good Standing Certificates . . . . . . . . 34
7.11. Receipt of Sales Tax Certificates . . . . . . . . . . 35
7.12. Receipt of Estoppel Certificates for Leases . . . . . 35
7.13. Receipt of Title Insurance for Owned Land . . . . . . 35
7.14. Receipt of UCC-1s . . . . . . . . . . . . . . . . . . 35
7.15. Delivery of Shares. . . . . . . . . . . . . . . . . . 35
7.16. Delivery of Releases. . . . . . . . . . . . . . . . . 35
SECTION 8. Conditions Precedent to the Obligations of the
Sellers. . . . . . . . . . . . . . . . . . . . . 35
8.01. Representations and Warranties; Covenants and Agreements36
8.02. FCC Consent . . . . . . . . . . . . . . . . . . . . . 36
8.03. Third Party Consents. . . . . . . . . . . . . . . . . 36
8.04. Hart-Scott-Rodino . . . . . . . . . . . . . . . . . . 36
8.05. Receipt of Resolutions. . . . . . . . . . . . . . . . 36
SECTION 9. Termination, Amendment and Waiver . . . . . . . . 36
9.01. Termination . . . . . . . . . . . . . . . . . . . . . 36
9.02. Effect of Termination . . . . . . . . . . . . . . . . 37
9.03. Waiver. . . . . . . . . . . . . . . . . . . . . . . . 37
9.04. Amendments. . . . . . . . . . . . . . . . . . . . . . 37
SECTION 10. General Provisions. . . . . . . . . . . . . . . . 38
10.01. Expenses. . . . . . . . . . . . . . . . . . . . . . . 38
10.02. Survival of Representations and Warranties. . . . . . 38
10.03. Severability. . . . . . . . . . . . . . . . . . . . . 38
10.04. Remedies. . . . . . . . . . . . . . . . . . . . . . . 38
10.05. Counterparts. . . . . . . . . . . . . . . . . . . . . 38
10.06. Descriptive Headings. . . . . . . . . . . . . . . . . 39
10.07. Governing Law . . . . . . . . . . . . . . . . . . . . 39
10.08. Notices . . . . . . . . . . . . . . . . . . . . . . . 39
10.09. Entire Agreement. . . . . . . . . . . . . . . . . . . 40
<PAGE>
TABLE OF EXHIBITS AND SCHEDULES
EXHIBIT A Opinion of Counsel to the Sellers
SCHEDULE 1.01 Indebtedness Schedule
SCHEDULE 3.05(a) Ownership Schedule
SCHEDULE 3.05(b) Subsidiary Schedule
SCHEDULE 3.06 Conflicts Schedule
SCHEDULE 3.07 Financial Statements Schedule
SCHEDULE 3.08 Labor Matters Schedule
SCHEDULE 3.09 Changes Schedule
SCHEDULE 3.10 Company's Litigation Schedule
SCHEDULE 3.11 License Schedule
SCHEDULE 3.12 Company's Consent Schedule
SCHEDULE 3.13 Personal Property Schedule
SCHEDULE 3.14 Real Property Schedule
SCHEDULE 3.15 Employee Benefit Schedule
SCHEDULE 3.16 Tax Schedule
SCHEDULE 3.17 Insurance Schedule
SCHEDULE 3.18 Contract Schedule
SCHEDULE 3.19 Environmental Schedule
SCHEDULE 4.03 Encumbrance Schedule
SCHEDULE 4.04 Sellers' Litigation Schedule
SCHEDULE 4.05 Sellers' Consent Schedule
SCHEDULE 6.01(a) Business Exemption Schedule
SCHEDULE 6.01(d) Renewal Schedule
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered
into as of March 4, 1996 by and among US RADIO STATIONS, L.P., a
Delaware limited partnership, BLACKSTONE USR CAPITAL PARTNERS L.P.,
a Delaware limited partnership, BLACKSTONE USR OFFSHORE CAPITAL
PARTNERS L.P., a Cayman Islands exempted limited partnership,
BLACKSTONE FAMILY INVESTMENT PARTNERSHIP II L.P., a Delaware
limited partnership, BCP RADIO L.P., a Delaware limited
partnership, and BCP OFFSHORE RADIO L.P., a Cayman Islands exempted
limited partnership (each a "Seller" and collectively, the
"Sellers"), US RADIO, INC., a Delaware corporation (the "Company"),
CLEAR CHANNEL COMMUNICATIONS OF MEMPHIS, INC., a Texas corporation
(the "Purchaser") and CLEAR CHANNEL COMMUNICATIONS, INC., a
Delaware corporation (the "Guarantor").
RECITALS:
A. Sellers own all the issued and outstanding shares of
Common Stock, par value $.01 per share issued as of the Closing
Date (the "Shares") of the Company.
B. Sellers wish to sell to the Purchaser and the
Purchaser wishes to purchase from the Sellers, the Shares, upon the
terms and subject to the conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and
the mutual covenants and agreements contained herein, the parties
to this Agreement, intending to be legally bound, hereby agree as
follows:
SECTION 1. Definitions.
1.01. Defined Terms. For the purposes of this
Agreement, the following terms have the meanings set forth below:
"Action" means any claim, action, suit, arbitration,
or proceeding by or before any Governmental Authority or
arbitrator.
"Affiliate" of any particular Person means any other
Person controlling, controlled by, or under common control with,
such particular Person, where "control" means the possession,
directly or indirectly, of the power to direct the management and
policies of a Person whether through the ownership of voting
securities, contract or otherwise.
"Affiliated Group" means any affiliated group as
defined in IRC Section 1504 that has filed a consolidated return
for federal income tax purposes (or any similar group under state,
local or foreign law) for a period during which the Company or any
of its Subsidiaries was a member.
"Approved Acquisition" means any acquisition or proposed
acquisition or local marketing agreement by the Company or its
Subsidiaries for which Purchaser Approval has been given, and shall
also include (i) the acquisition (and the local marketing
agreement) of WNND(FM), Fuquay-Varina, North Carolina, pursuant to
the Asset Purchase Agreement by and between Ceder Raleigh Limited
Partnership and US Radio of Raleigh/Durham-2, Inc., dated February
23, 1996, and (ii) the acquisition of KJOJ(AM), Conroe, Texas,
pursuant to the Purchase Option Agreement dated August 30, 1991,
between Family Group Enterprises, Inc. and US Radio, L.P., assigned
to US Radio of Houston, Inc., on September 23 1994.
"Approved Acquisition Price" means the sum of the
purchase price paid, and all other costs and expenses in fact paid,
(including but not limited to, deposits and down payments, closing
costs, capital expenditures, local marketing agreement fees,
reasonable legal fees, due diligence costs and negotiation costs)
by the Company or its Subsidiaries in connection with any Approved
Acquisitions, accreting at a rate of 10 percent per annum from the
date of such expenditures until the Closing Date, minus the net
amount (whether positive or negative) of any Operating Cash Flow in
connection with such Approved Acquisitions from the effective date
of the local marketing agreement or the closing date of the
acquisition, as the case may be, through the Closing Date.
"Barter Agreements" means all contracts for the sale of
time on the Stations other than for cash.
"Barter Balance" on a given date means the difference
between the aggregate value of time owed pursuant to the Barter
Agreements (based on the prevailing rates for cash sales) and the
aggregate value of goods and services to be received (after such
date) pursuant to the Barter Agreements.
"Books and Records" means all books of account and other
financial records pertaining to the Company and its Subsidiaries
that relate to the Business.
"Business" means all business operations and activities
conducted by the Company and its Subsidiaries.
"Business Day" means any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by
law to be closed in the City of New York.
"Cash" means the amount which would, in conformity with
GAAP, be included under "cash" on a consolidated balance sheet of
the Company and its Subsidiaries at the opening of business on the
Closing Date (including cash equivalents and marketable
securities).
"Class A Common Stock" means the Class A Common Stock,
par value $.01 per share, of the Company.
"Class B Common Stock" means the Class B Common Stock,
par value $.01 per share, of the Company.
"Closing Balance Sheet" means the preliminary,
consolidated and unaudited balance sheet for the Business, as of
the Closing Date, prepared in good faith and consistent with past
practice, by the chief financial officer of the Company and
delivered to the Purchaser no later than four (4) Business Days
before the Closing Date. Actions taken by the Purchaser after the
Closing Date shall not be accrued on the Closing Balance Sheet,
regardless of whether the Sellers or the Company have knowledge of
the Purchaser's intention to take such actions.
"Common Stock" means the Class A Common Stock and the
Class B Common Stock, collectively.
"Confidentiality Agreement" means the Confidentiality
Agreement between the Purchaser and Alex. Brown on behalf of the
Company dated as of September 20, 1995.
"Convertible Securities" means
(i) any warrants, options or other rights to
subscribe for or to acquire, directly or indirectly, Common Stock;
and
(ii) any stock or other securities convertible
into or exchangeable or exercisable for, directly or indirectly,
Common Stock.
"Credit Agreement" means that Credit Agreement dated as
of September 23, 1994, by and between the Company, US Radio
Holdings, several banks and other financial institutions and
Chemical Bank, as amended.
"Current Assets" means Cash, trade accounts receivable
net of allowances for bad debt, and prepaid expenses other than
prepaid expenses attributable to the Interest Rate Cap other than
prepaid expenses associated with Approved Acquisitions. Current
Assets does not include any portion of the Benchmark Note.
"Current Liabilities" means trade accounts payable
(excluding Transaction- Related Expenses and post-closing costs
incurred in connection with the transactions contemplated by this
Agreement), accrued compensation expense, accrued national
representation commissions, other accrued liabilities (except for
accrued interest and accounts that are assumed by Sellers pursuant
to Section 7.07 or 6.01(b)(3) herein) and taxes payable, but
excluding expenses accrued in connection with an Approved
Acquisitions.
"Encumbrance" means any security interest, pledge,
mortgage, lien, charge, adverse claim of ownership or use, or other
encumbrance of any kind.
"Environmental Laws" means any federal, state, or local
law, license, permit or regulation relating to environmental
matters, including those pertaining to land use, air, soil, surface
water, ground water (including the protection, cleanup, removal,
remediation or damage thereof), or any other environmental matter,
together with any other laws (federal, state or local) relating to
emissions, discharges or releases of any pollutant or contaminant
into ambient air, land, surface water, groundwater, personal
property or structures, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transportation, discharge or handling of any contaminant,
including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. Section 9601
et seq.), the Hazardous Material Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act
(42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
U.S.C. Section 1251 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 2601 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.), as such laws have been
amended, modified or supplemented before the date of this
Agreement.
"ERISA Affiliate" means any Person that is (or at any
relevant time was) a member of a "controlled group of corporations"
with or under "common control" with the Company or the Partnerships
as defined in Section 414(b) or (c) of the Code.
"FCC Application" means the application or applications
filed with the FCC requesting consent to the transfer of control of
the Station Licenses granted by the FCC to the Company and its
Subsidiaries as contemplated by this Agreement.
"FCC Consent" means action by the FCC granting its
consent to the FCC Application.
"Final Balance Sheet" means a consolidated balance sheet
for the Business, as of the Closing Date, prepared in accordance
with Section 2.04 hereof. Actions taken by the Purchaser after the
Closing Date shall not be accrued on the Final Balance Sheet,
regardless of whether the Sellers or the Company have knowledge of
the Purchaser's intention to take such actions.
"Final Order" means a written action or order issued by
the FCC
(i) which has not been reversed, stayed,
enjoined, set aside, annulled or suspended, and
(ii) with respect to which (x) no requests have
been filed for administrative or judicial review, reconsideration,
appeal or stay, and the time for filing such requests and for the
FCC to set aside the action on its own motion has expired, or (y)
in the event of review, reconsideration or appeal, the time for
further review, reconsideration or appeal has expired.
"GAAP" means United States generally accepted accounting
principles as of the date hereof consistently applied throughout
the specified period and in the immediately prior comparable
period.
"Government Authority" means any government, any
governmental entity, department, commission, board, agency or
instrumentality, and any court, tribunal, or judicial or arbitral
body, whether federal, state or local.
"Governmental Order" means any order, judgement,
injunction, decree, stipulation, determination or award entered by
or with any Governmental Authority.
"Hazardous Materials" means those substances which are
regulated by or form the basis of liability under any Environmental
Laws, including, without limitation, polychlorinated biphenyls
("PCBs") and asbestos.
"Historical Financial Statements" means, collectively,
the Financial Statements of the Company and its Subsidiaries or the
Partnerships and their Subsidiaries.
"HSR Act" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder.
"Indebtedness" means the all of the Company's
indebtedness and obligations for borrowed money, including interest
thereon and prepayment penalties incurred as a result of prepaying
such indebtedness on the Closing Date, if any, but excluding
breakage fees on LIBOR-based contracts of 31 days or less,
including but not limited to that evidenced by the instruments and
agreements set forth on Schedule 1.01 (the "Indebtedness
Schedule").
"Intellectual Property Rights" means all
(i) patents, patent applications, patent
disclosures and inventions;
(ii) trademarks, service marks, trade dress,
trade names, logos and corporate names and registrations and
applications for registration thereof together with all of the
goodwill associated therewith;
(iii) copyrights (registered or unregistered) and
copyrightable works and registrations and applications for
registration thereof;
(iv) computer software, data, data bases and
documentation thereof;
(v) trade secrets and other confidential
information (including, without limitation, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and
whether or not reduced to practice), know-how, manufacturing and
production processes and techniques, research and development
information, drawings, specifications, designs, plans, proposals,
technical data, copyrightable works, financial and marketing plans
and customer and supplier lists and information);
(vi) other intellectual property rights; and
(vii) copies and tangible embodiments thereof (in
whatever form or medium).
"Interest Rate Cap" means the protection purchased by
the Company and its Subsidiaries from Chemical Bank, providing for
a payment to the Company based on a $35 million notational amount
when the three-month LIBOR rate exceeds 6.5%.
"IRC" or "Code" means the Internal Revenue Code of 1986,
as amended, and any reference to any particular IRC or Code section
shall be interpreted to include any revision of or successor to
that section regardless of how numbered or classified.
"LIBOR" means the rate at which Chemical Bank is
offering United States dollar deposits in the London interbank
market, as announced from time to time, for delivery in immediately
available funds.
"Leased Real Property" means the real property used in
the Business leased by the Company and its Subsidiaries, as tenant,
together with, to the extent leased by the Company and its
Subsidiaries, all buildings and other structures, facilities or
improvements currently or hereafter located thereon, all fixtures,
systems, equipment and items of personal property of the Company or
any Subsidiary attached or appurtenant thereto, and all easements,
licenses, rights and appurtenances relating to the foregoing.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, without
limitation, any conditional sale or other title retention agreement
or lease in the nature thereof), any sale of receivables with
recourse against the Company, any Subsidiary or any Affiliate, any
filing or agreement to file a financing statement as debtor under
the Uniform Commercial Code or any similar statute other than to
reflect ownership by a third party of property leased to the
Company or its Subsidiaries under a lease which is not in the
nature of a conditional sale or title retention agreement, or any
subordination arrangement in favor of another Person (other than
any subordination arising in the ordinary course of business).
"Material Adverse Effect" means an effect which is
materially adverse to the business, financial condition or results
of operations of the Company and its Subsidiaries, or of any
Station, individually.
"Material Agreements" means those contracts, agreements
and leases to which the Company or its Subsidiaries is a party
which are listed on the Contracts Schedule and are identified
thereon as material.
"Operating Cash Flow" means, with respect to an Approved
Acquisition, station operating income before depreciation and
amortization, as reflected on the Company's income statements
consistent with past practice of the Company, excluding local
marketing agreement fees and any other items that have already been
included in the calculation of Approved Acquisition Price.
"Outstanding Indebtedness" means the aggregate principal
amount of, and accrued interest on the Company's Indebtedness on
the Closing Date.
"Owned Real Property" means the real property used in
the Business owned by the Company or its Subsidiaries, together
with all buildings and other structures, facilities or improvements
located thereon, all fixtures, systems, equipment and items of
personal property relating primarily to the Business owned by the
Company or any Subsidiary attached or appurtenant thereto and all
easements, licenses, rights and appurtenances relating to the
foregoing.
"Partnerships" means US Radio, L.P., a Delaware limited
partnership, and Ragan Henry Communications Group, L.P., a Delaware
limited partnership.
"Permitted Encumbrances" means:
(i) tax liens with respect to taxes not yet due
and payable or which are being diligently contested in good faith
by appropriate proceedings and for which appropriate reserves have
been established in accordance with generally accepted accounting
principles, consistently applied;
(ii) interests or title of a lessor as lessor
under any lease disclosed to the Purchaser in writing, or interests
of the seller of tangible personal property under an installment
sale agreement disclosed to the Purchaser in writing;
(iii) mechanics', materialmen's or contractors'
liens or Encumbrances or any similar lien or restriction, none of
which is past due and none of which materially and adversely
affects the value or use of the property to which it attaches;
(iv) easements, rights-of-way, restrictions and
other similar charges and Encumbrances on real property not
materially interfering with the conduct of the business of the
Company or any of its Subsidiaries or materially detracting from
the value or use and enjoyment of such real property; and
(v) other liens in existence on the date hereof
which are described in the Schedules to this Agreement.
"Person" means any individual, partnership, corporation,
limited liability company, association, joint stock company, trust,
joint venture, unincorporated organization or governmental entity
or department, agency or political subdivision thereof.
"Purchaser Approval" means the written approval of the
Purchaser for a specified acquisition, local marketing agreement or
other transaction by the Company or its Subsidiaries. If the
Company provides the Purchaser with notice of (i) the property to
be acquired, (ii) the proposed purchase price and all other
consideration to be given in connection with such acquisition,
(iii) an estimate of any anticipated capital expenditures to be
made by the Company or its Subsidiaries in connection with such
acquisition, and (iv) the definitive purchase agreement proposed to
be entered into, the Purchaser shall have five Business Days to
provide written notice to the Company of its approval or
disapproval of such acquisition. Purchaser Approval may be denied
by the Purchaser for any reason.
"Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force.
"Stations" means radio stations WKKV-FM, Racine,
Wisconsin; WOWI-FM, Norfolk, Virginia; WJCD-FM, Norfolk, Virginia;
WSVY(AM), Portsmouth, Virginia; WSVY-FM, Norfolk, Virginia;
WHRK-FM, Memphis, Tennessee; WDIA(AM), Memphis, Tennessee; WQOK-FM,
South Boston, Virginia; KHEY(AM), El Paso, Texas; KHEY-FM, El Paso,
Texas; KPRR-FM, El Paso, Texas; KDDK-FM, Jacksonville, Arkansas;
KMJX- FM, Conway, Arkansas; WRFY-FM, Reading, Pennsylvania;
WRAW(AM), Reading, Pennsylvania; KJOJ-FM Freeport, Texas; KJOJ(AM),
Conroe, Texas; and any radio stations acquired or operated pursuant
to Approved Acquisitions.
"Subsidiary" of any Person means any other Person of
which
(i) if a corporation, a majority of the total
voting power of shares of stock entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more
of the other Subsidiaries of such Person or a combination thereof;
or
(ii) if a partnership, association or other
business entity, a majority of the partnership or other similar
ownership interest thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more Subsidiaries
of such Person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership
interest in a partnership, association or other business entity if
such Person or Persons shall be allocated a majority of
partnership, association or other business entity gains or losses
or shall be or control any managing director or general partner of
such partnership, association or other business entity. Unless the
context indicates otherwise, any reference to a "Subsidiary" shall
mean a Subsidiary of the Company.
"Tax" or "Taxes" means federal, state, county, local,
foreign or other income, gross receipts, ad valorem, franchise,
profits, sales or use, transfer, registration, excise, utility,
environmental, communications, real or personal property, capital
stock, license, payroll, wage or other withholding, employment,
social security, severance, stamp, occupation, alternative or
add-on minimum, estimated and other taxes of any kind whatsoever
(including, without limitation, deficiencies, penalties, additions
to tax, and interest attributable thereto) whether disputed or not.
"Tax Return" means any return, information report or
filing with respect to Taxes, including any schedules attached
thereto and including any amendment thereof.
"US Radio Holdings" means US Radio Holdings, Inc., a
Delaware corporation and a direct, wholly-owned Subsidiary of the
Company.
"Wholly-Owned Subsidiary" means, with respect to any
Person, a Subsidiary of which all of the outstanding capital stock
or other ownership interests are owned by such Person or another
Wholly-Owned Subsidiary of such Person.
"Working Capital" means the excess of the Company's
Current Assets over its Current Liabilities.
1.02. Certain Other Defined Terms. The following terms
have the meanings specified in the sections set forth below:
Term Section
Agreement Preamble
Alex. Brown 3.20
Benchmark Note 2.02
Business Exemption Schedule 6.01
Changes Schedule 3.09
Closing 2.04
Closing Date 2.04
Closing Purchase Price 2.02
Company Preamble
Conflicts Schedule 3.06
Company's Consent Schedule 3.12
Contract Schedule 3.18
Employee Benefit Schedule 3.15
Encumbrance Schedule 4.03
Environmental Schedule 3.19
ERISA 3.15
Final Purchase Price 2.03
Financial Statements 3.07
Financial Statements Schedule 3.07
Guarantor Preamble
Indebtedness Schedule 1.01
Independent Accounting Firm 2.03
Labor Matters Schedule 3.08
License Schedule 3.11
Company's Litigation Schedule 3.10
Ownership Schedule 3.05
Personal Property Schedule 3.13
Preliminary Price 2.02
Purchaser Preamble
Purchaser's Accountants 2.03
Real Property Schedule 3.14
Renewal Schedule 6.01
Seller Preamble
Sellers Preamble
Sellers' Accountants 2.03
Sellers' Consent Schedule 4.05
Sellers' Litigation Schedule 4.04
Shares Preamble
Station Licenses 3.11
Subsidiary Schedule 3.05
Subsidiary Shares 3.05
Tax Schedule 3.16
Transaction-Related Expenses 7.07
Transfer Application 6.04
1.03. Knowledge Standard. When used herein, the phrase
"to the knowledge of" any Person, "to the best knowledge of" any
Person or any similar phrase shall mean, with respect to any
corporation, the actual knowledge of the officers and directors of
such corporation and any of its Subsidiaries and the general
managers of the Stations, and the knowledge of such facts that such
persons should have in the exercise of their duties after
reasonable inquiry.
1.04. Materiality. Unless a specific provision
otherwise provides, the use herein of the phrase "material,"
"materially" or any similar phrase with respect to any item or
situation shall be deemed to mean material with respect to the
Company and its Subsidiaries or any Station individually
(notwithstanding the use of the phrase "the Company or its
Subsidiaries" in any given case).
1.05. Accounting Principles. When a term is used in
this Agreement that has a meaning ascribed to it by GAAP, it shall
have the same meaning in this Agreement unless otherwise provided.
SECTION 2. Sale and Purchase of Shares.
2.01. Sale of Shares. Upon the terms and subject to the
conditions set forth in this Agreement, the Sellers agree to sell
to the Purchaser, and the Purchaser agrees to purchase from the
Sellers, the Shares.
2.02. Purchase Price and Payment for Shares.
(a) The purchase price to be paid by the Purchaser to
the Sellers for the Shares (the "Final Purchase Price") shall be an
aggregate amount equal to $140,000,000 (the "Preliminary Price") as
adjusted pursuant to this Section 2.02.
(b) Because the Final Purchase Price can not be
calculated on the date of the Closing, on the Closing Date the
Purchaser shall pay to the Sellers the Closing Purchase Price,
which shall be calculated by adjusting the Preliminary Price based
on the Closing Balance Sheet as follows (the "Closing Purchase
Price"):
(i) The Preliminary Price shall be increased (or
reduced) to the extent that the amount of Working Capital on the
Closing Balance Sheet exceeds (or is less than) the amount of
Working Capital as reflected on the Company's audited December 31,
1995 balance sheet.
(ii) The Preliminary Price shall be reduced to
the extent of Outstanding Indebtedness on the Closing Balance
Sheet.
(iii) The Preliminary Price shall be increased by
the aggregate amount of principal plus accrued but unpaid interest
and other amounts due to the Company under the terms of the
Promissory Note dated as of October 20, 1993, as between the
Company and Benchmark Radio Acquisition Fund V Limited Partnership
(the "Benchmark Note"), to the extent still outstanding on the
Closing Date. To satisfy this element of the Purchase Price
adjustment, at the option of a majority in interest of the Sellers,
the Purchaser shall either: (i) assign (without recourse) the
Benchmark Note to Sellers; or (ii) use its best efforts to collect
amounts due under the Benchmark Note and remit such amounts to the
Sellers within three Business Days of collection. The specific
terms and conditions of such collection obligation shall be set
forth in a writing to be agreed to by the parties at the Closing.
(iv) The Preliminary Price shall be reduced by
the amount by which the Company's Barter Balance on the Closing
Date, excluding Barter Balances relating to Approved Acquisitions,
is less than negative $50,000.
(v) In the event that by the Closing Date the
Company (directly or through its Subsidiaries) has entered into one
or more Approved Acquisitions, then the Preliminary Price shall be
increased by the aggregate amount of the Approved Acquisition
Price; however, if all or a portion of the funds necessary to
transact such Approved Acquisitions have been loaned to the
Company's shareholders by the Purchaser, at a rate agreed to by
such parties, then forgiveness by the Purchaser of such loans and
accrued interest thereon shall constitute satisfaction of this
Section 2.02(b)(v) to the extent of the amount of principal and
interest forgiven.
(c) At Closing, the Purchaser shall pay to each Seller
a sum equal to the product of (i) the Closing Purchase Price
divided by the total number of Shares outstanding on the Closing
Date, multiplied by (ii) the number of Shares of the Company owned
by that Seller. In no case shall the sum of such payments exceed
the Closing Purchase Price.
(d) The Final Purchase Price shall be calculated by
adjusting the Closing Purchase Price based on the Final Balance
Sheet (as defined in Section 2.03 below) as follows:
(i) The Closing Purchase Price shall be
increased (or reduced) to the extent that the amount of Working
Capital on the Final Balance Sheet exceeds (or is less than) the
amount of Working Capital on the Closing Balance Sheet.
(ii) The Closing Purchase Price shall be
increased (or reduced) to the extent that the amount of Outstanding
Indebtedness on the Final Balance Sheet is less than (or exceeds)
the amount of Outstanding Indebtedness on the Closing Balance
Sheet.
(e) Upon delivery of the Final Balance Sheet:
(i) If the Final Purchase Price is less than the
Closing Purchase Price, each Seller, or the Sellers jointly and
severally, shall pay to the Purchaser, in immediately available
funds, an amount equal to each Seller's share of such deficit pro
rata to the amount received by each Seller pursuant to 2.02(c), in
the manner provided in Section 2.04(c)(i); or
(ii) If the Final Purchase Price exceeds the
Closing Purchase Price, the Purchaser shall pay to each Seller, in
immediately available funds, an amount equal to the product of (i)
such excess divided by the total number of Shares outstanding on
the Closing Date, multiplied by (ii) the number of Shares of the
Company owned by that Seller, in the manner provided in Section
2.04(c)(i).
(f) Any payment required to be made by the Purchaser
or the Sellers pursuant to Section 2.02(e) shall bear interest from
the Closing Date through the date of payment on the basis of the
average of the daily rate of interest publicly announced from time
to time by Chemical Bank, as its base rate.
2.03. Calculation of the Final Balance Sheet.
(a) As soon as practicable (but in no event later than
60 calendar days following the Closing Date), the Purchaser shall
prepare and deliver the Final Balance Sheet to the Sellers. The
Final Balance Sheet shall be accompanied by the report thereon
(which may be audited at Purchaser's option and sole expense) of
Ernst & Young LLP, independent accountants of the Purchaser (the
"Purchaser's Accountants"), stating that the Final Balance Sheet
fairly presents the consolidated financial position of the Business
as of the Closing Date in accordance with GAAP applied on a basis
consistent with the preparation of the Historical Financial
Statements. During the preparation of the Final Balance Sheet by
the Purchaser and the period of any dispute provided for in Section
2.03(b), the Sellers shall cooperate fully with the Purchaser's
Accountants, in each case to the extent required by the Purchaser
and the Purchaser's Accountants in order to prepare the Final
Balance Sheet and to investigate the basis for any such dispute.
The Sellers and their representatives shall be given reasonable
access to the books, records, facilities and employees of the
Purchaser, including all supporting documents and auditor's work
papers used in the preparation of the Final Balance Sheet, as
necessary for it to review and confirm or dispute the Final Balance
Sheet.
(b) If not disputed by the Sellers in accordance with
this Section 2.03, the Final Balance Sheet delivered by the
Purchaser to the Sellers shall be final, binding and conclusive on
the parties hereto. By action of the holders of a majority of the
Common Stock, Sellers may dispute any amounts reflected on the
Final Balance Sheet but only on the basis that the amounts
reflected on the Final Balance Sheet were not recorded in
accordance with GAAP applied on a basis consistent with the
preparation of the Historical Financial Statements. The Sellers
shall notify the Purchaser and the Purchaser's Accountants in
writing of each disputed item, specifying the amount of each item
in dispute and setting forth, in detail, the basis for each item in
dispute, within thirty (30) Business Days of the Sellers' receipt
of the Final Balance Sheet. If the Sellers have not notified the
Purchaser of any dispute within thirty (30) Business Days of
delivery of the Final Balance Sheet, then the Final Balance Sheet
shall be deemed to be final and conclusive on the parties hereto,
and any amount that is payable under Section 2.02(e) shall be paid
by the Purchaser or the Sellers, as the case may be, in immediately
available funds, within five (5) Business Days.
(c) In the event of such a dispute, the Purchaser and
the Sellers shall negotiate in good faith to reconcile their
differences. If such dispute has not been resolved within twenty
(20) Business Days after the notice referred to in the preceding
sentence has been given, Ernst & Young LLP (the "Sellers'
Accountants") and the Purchaser's Accountants shall attempt to
reconcile their differences, and any resolution by them as to any
disputed amounts shall be final, binding and conclusive on the
parties hereto. If the Sellers' Accountants and the Purchaser's
Accountants are unable to reach a resolution, the Sellers'
Accountants and the Purchaser's Accountants shall submit the items
remaining in dispute that the Sellers shall be entitled to dispute
by the terms of this Section 2.03(b) for resolution to KPMG Peat
Marwick LLP or such independent accounting firm as may be mutually
acceptable to the Purchaser and the Sellers (the "Independent
Accounting Firm"), which shall, as promptly as practicable but in
no event later than within forty-five (45) Business Days of such
submission, determine and report to the Purchaser and the Sellers
upon such remaining disputed items, and such report shall have the
legal effect of an arbitral award and shall be final, binding and
conclusive on the Purchaser and the Sellers. The fees and
disbursements of the Independent Accounting Firm shall be allocated
between the Purchaser and the Sellers in the same proportion that
the aggregate amount of such remaining disputed items so submitted
to the Independent Accounting Firm, which is unsuccessfully
disputed by each such party (as finally determined by the
Independent Accounting Firm), bears to the total amount of such
remaining disputed items so submitted. Any amount that is payable
under Section 2.02(e), including, without limitation, any portion
thereof that is subject to dispute under this Section 2.03(b),
shall be paid by the Purchaser or the Sellers, as the case may be,
in immediately available funds, within five (5) Business Days
following the resolution of such dispute and in an amount in
accordance with such resolution.
(d) In acting under paragraph 2.03(c) of this
Agreement, the Sellers' Accountants, the Purchaser's Accountants
and the Independent Accounting Firm shall be entitled to the
privileges and immunities of arbitrators.
2.04. The Closing.
(a) Subject to the terms and conditions of this
Agreement, the sale and Purchase of the Shares contemplated hereby
shall take place at a closing (the "Closing") to be held at 10:00
a.m., local time, on the date five (5) days after the FCC Consent
has become a Final Order or seven (7) Business Days after the
Purchaser has advised the Sellers of its intent to close upon an
initial FCC Consent but in no event prior to April 30, 1996 (the
"Closing Date"), at the offices of Latham & Watkins, 885 Third
Avenue, New York, New York, or at such other time or on such other
date or at such other location as the Sellers and the Purchaser may
mutually agree upon in writing.
(b) At the Closing, the Sellers shall deliver or cause
to be delivered to the Purchaser:
(i) stock certificates evidencing all the Shares
duly endorsed in blank or accompanied by stock powers (or
equivalent documents) duly executed in blank or other appropriate
evidence of ownership and transfer as may be applicable to the
Company and reasonably acceptable to the Purchaser; and
(ii) the certificate and other documents required
to be delivered pursuant to Section 7.
(c) At the Closing, the Purchaser shall deliver to the
Sellers:
(i) the Closing Purchase Price, as calculated
pursuant to Sections 2.02 and 2.03, by wire transfer of immediately
available funds, to an account or accounts designated at least
three (3) Business Days prior to the Closing Date by the Sellers in
a written notice to the Purchaser; and
(ii) the opinions and other documents required to
be delivered pursuant to Section 8.
SECTION 3. Representations and Warranties of the Company.
The representations and warranties set forth in this
Section 3 shall not apply to Approved Acquisitions, except as
specifically provided in any particular representation and
warranty. Except as set forth in the Schedules hereto, the Company
represents and warrants to the Purchaser as follows:
3.01. Binding Effect. This Agreement has been duly
executed and delivered by the Company, and (assuming due
authorization, execution and delivery by the Purchaser) this
Agreement constitutes a valid and binding obligation of the
Company, enforceable against the Company in accordance with its
terms.
3.02. Existence and Power of the Company. The Company
and each Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has the requisite power and authority to own,
operate or lease the properties and assets now owned, operated or
leased by it and used in the Business and to carry on the Business
in all material respects as currently conducted by such Company or
Subsidiary, except for such failures which, when taken together
with all such failures, would not have a Material Adverse Effect.
The Company has all requisite corporate power and authority to
execute and deliver this agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby to
be consummated by it, including the consummation of any Approved
Acquisition.
3.03. Qualification of the Company and its Subsidiaries.
The Company and each Subsidiary is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned, operated
or leased and used in the Business or the nature of its activities
relating primarily to the Business makes such qualification
necessary, except for such failures which, when taken together with
all other such failures, would not have a Material Adverse Effect.
By the closing of any Approved Acquisition, any subsidiary the
Company formed for that Approved Acquisition shall be duly
qualified as a foreign corporation to do business, and be in good
standing, in each jurisdiction where the character of its
properties owned, operated or leased and used in connection with
the business of such Approved Acquisition or the nature of its
activities relating primarily to that business makes such
qualification necessary, except for such failures which, when taken
together with all other such failures, would not have a Material
Adverse Effect. True and complete copies of the certificate of
incorporation and bylaws (or equivalent organizational documents)
of the Company and each Subsidiary, each of the foregoing as
amended to the date of this Agreement, have been made available by
the Sellers for review by the Purchaser.
3.04. Capital Stock of the Company. The Shares
constitute all the issued and outstanding shares of capital stock
of the Company. The Shares have been duly authorized and validly
issued and are fully paid and nonassessable and were not issued in
violation of any preemptive rights. There are no Convertible
Securities or other rights, agreements, arrangements or commitments
relating to the capital stock of the Company obligating the Company
to issue or sell any shares of capital stock interests.
3.05. Subsidiaries.
(a) Except as set forth on Schedule 3.05(a) hereto,
and except for such subsidiaries as may be created in connection
with Approved Acquisitions, (the "Ownership Schedule"), and other
than the Company's Subsidiaries, as of the Closing, there will be
no other corporations, partnerships, joint ventures, associations,
Persons or other entities in which the Company or its Subsidiaries
owns, of record or beneficially, any direct or indirect equity or
other interest or any right (contingent or otherwise) to acquire
the same. Except as set forth on the Ownership Schedule, as of the
Closing, neither Company nor its Subsidiaries is a member of (nor
is any part of the Business conducted through) any partnership, nor
is the Company or its Subsidiaries participants in any joint
venture or similar arrangement.
(b) Schedule 3.05(b) hereto sets forth the name of
each Subsidiary of the Company, the jurisdiction of incorporation
of each Subsidiary, its authorized capital stock, the number and
type of its issued and outstanding shares of capital stock, and the
current ownership by the Company and its respective Subsidiaries of
such shares (collectively, the "Subsidiary Shares"). The Company
shall update Schedule 3.05(b) to include any Subsidiaries formed by
the Company to consummate an Approved Acquisition, whereupon such
Subsidiaries will be subject to the representations and warranties
of this Section 3.05(b). Except as set forth on Schedule 3.05(b)
hereto (the "Subsidiary Schedule"), the Subsidiary Shares
constitute all the issued and outstanding shares of capital stock
of the respective Subsidiaries. The Subsidiary Shares have been
duly authorized and validly issued and are fully paid and
nonassessable and were not issued in violation of any preemptive
rights. Except as set forth on the Subsidiary Schedule, there are
no Convertible Shares or other rights, agreements, arrangements or
commitments relating to the capital stock of any Subsidiary
obligating any Subsidiary to issue or sell any of its shares of
capital stock. Either the Company or another Subsidiary owns the
Subsidiary Shares issued by the respective Subsidiaries, free and
clear of all Encumbrances, except (i) as set forth on the
Subsidiary Schedule and (ii) for Encumbrances arising out of, under
or in connection with this Agreement. Except as set forth on the
Subsidiary Schedule hereto, there are no voting trusts, stockholder
agreements, proxies or other agreements in effect with respect to
the voting or transfer of the Subsidiary Shares.
3.06. No Conflict. Assuming all consents, approvals,
authorizations and other actions described in Section 3.12 have
been obtained and all filings and notifications listed on Schedule
3.12 hereto have been made, and except as may result from any facts
or circumstances relating solely to the Purchaser or as described
on Schedule 3.06 hereto (the "Conflicts Schedule"), the execution,
delivery and performance of this Agreement by the Sellers and the
Company do not and will not (a) conflict with or violate the
agreement of limited partnership of any Seller, (b) conflict with
or violate any law or Governmental Order applicable to any Seller,
the Company or any Subsidiary except as would not, individually or
in the aggregate, have a Material Adverse Effect or (c) result in
any breach of, or constitute a default (or event which with the
giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any
Encumbrance on the Shares or on any of the assets or properties
used primarily in the Business of any Company or any Subsidiary
pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
relating to such assets or properties to which any Seller, Company
or Subsidiary is a party or by which any of such assets or
properties is bound or affected, except as would not, individually
or in the aggregate, have a Material Adverse Effect.
3.07. Financial Statements.
(a) The Sellers have caused to be prepared consistent
with past practice, and delivered to the Purchaser the Company's
audited consolidated balance sheets as of December 31, 1994, and
income statement for the period then ended, and unaudited
consolidated balance sheets as of December 31, 1995 and unaudited
income statements for the period then ended (the "Financial
Statements"), copies of which are included on Schedule 3.07 hereto
(the "Financial Statements Schedule"). The Company's Financial
Statements fairly present the financial position and results of
operations of the Company, as the case may be, as of the date and
for the period covered thereby in conformity with GAAP, with only
such deviations from GAAP as are referred to in the notes thereto,
or, in the case of unaudited Financial Statements, subject to
normal year-end adjustments.
(b) Except as set forth on Schedule 1.01 hereto, the
Company has no Indebtedness as of the date hereof.
3.08. Labor Matters. Except as set forth on Schedule
3.08 hereto (the "Labor Matters Schedule"), (i) neither the Company
nor any Subsidiary is a party to any collective bargaining
agreement or other labor union contract applicable to persons
employed by such Company or Subsidiary in the Business; (ii) there
are no grievances outstanding against the Company or any Subsidiary
under any such agreement or contract which are reasonably likely to
have a Material Adverse Effect; (iii) there are no unfair labor
practice complaints pending against the Company or any Subsidiary
relating to the Business before the National Labor Relations Board
which are reasonably likely to have a Material Adverse Effect; and
(iv) the Company has no knowledge of any strikes, slowdowns, work
stoppages, lockouts, or threats thereof, by or with respect to any
employees of the Company or any Subsidiary involved in the
Business, which are reasonably likely to have a Material Adverse
Effect.
3.09. Absence of Certain Changes or Events. Since the
date of the most recent balance sheet included in the Financial
Statements, except as set forth on Schedule 3.09 hereto (the
"Changes Schedule"), there have been no changes in, or events
relating to, the Business that, individually or in the aggregate,
have had a Material Adverse Effect.
3.10. Absence of Litigation. Except as set forth on
Schedule 3.10 hereto (the "Company's Litigation Schedule"), as of
the date of this Agreement, (a) there are no Actions relating to
the Business pending or, to the Company's best knowledge,
threatened against the Company or any of its Subsidiaries or any of
the assets or properties used in the Business of the Company or any
of its Subsidiaries that, individually or in the aggregate, would
have a Material Adverse Effect or would prevent the Company from
consummating the transactions contemplated hereby and (b) the
Company, its Subsidiaries and their respective assets and
properties used in the Business are not subject to any Governmental
Order having a Material Adverse Effect.
3.11. Compliance with Laws.
(a) Neither the Company nor its Subsidiaries has
violated any law or any governmental law, rule, order or regulation
or requirement, which violation through the date hereof has had or
would reasonably be expected to have a Material Adverse Effect upon
the financial condition, operating results, assets, operations or
business prospects of the Company and its Subsidiaries and neither
the Company nor its Subsidiaries has received notice of any such
violation. To the best knowledge of the Company, the operation of
the Business by the Company and its Subsidiaries complies and has
complied in all material respects with the Communications Act of
1934, as amended, and the rules and regulations of the FCC
(including without limitation the FCC's rules and regulations
relating to the operation of transmitting and studio equipment).
(b) All of the licenses, permits, permissions and
other authorizations issued by the FCC for the operation of the
Stations, except for stations WSVY-FM, Norfolk, Virginia and
KJOJ(AM) Conroe, Texas (the "Station Licenses"), are listed on
Schedule 3.11 (the "License Schedule"), along with their expiration
dates. The Station Licenses constitute all of the governmental
licenses, permits, permissions and other authorizations used,
useful or necessary to operate the Stations as they are now
operated, and the Station Licenses issued for the operation of the
Stations are validly issued in the name of the Subsidiaries to the
extent set forth on the License Schedule. The Station Licenses are
in full force and effect; are valid for the balance of the current
license terms (as set forth on the License Schedule); are
unimpaired by any acts or omissions of the Company, its
Subsidiaries, or any of their employees, agents, officers,
directors or stockholders; and are free and clear of any
restrictions that might limit the full operation of the Stations,
other than those restrictions in the licenses and the
Communications Act and FCC rules, and have been so unimpaired for
the full current license term. There are no applications,
proceedings, investigations or complaints pending or, to the
Company's best knowledge, threatened that may have an adverse
effect on the business or operation of any of the Stations (other
than proceedings that apply to the AM or FM radio broadcast
industry generally). No renewal of any Station License would
constitute a major environmental action under Sections 1.1305 or
1.1307 of the FCC's rules. All information contained in any
pending applications for modification, extension or renewal of the
Station Licenses or other applications filed with the FCC by the
Company or any of its Subsidiaries is true, complete and accurate
in all material respects.
(c) There is not pending, or to the Company's or
Subsidiaries' best knowledge threatened, any action by or before
the FCC to revoke, suspend, cancel, rescind or modify any of the
Station Licenses (other than proceedings to amend FCC rules of
general applicability, and there is not now issued or outstanding,
or to the Company's or Subsidiaries' best knowledge pending or
threatened, by or before the FCC, any order to show cause, notice
of violation, notice of apparent liability, or notice of forfeiture
or complaint against the Company, its Subsidiaries or Sellers with
respect to any of the Stations. The Stations are operating in
compliance with the Station Licenses, the Communications Act, and
the current rules, regulations and policies of the FCC in all
material respects.
(d) All reports, filings and regulatory fees required
to be filed with the FCC by the Company or Subsidiaries with
respect to the operation of the Stations have been timely filed.
All such reports and filings are accurate and complete in all
material respects, and from the date hereof will be filed on a
timely basis. The Company or Subsidiaries maintain appropriate
local public files as required by FCC rules. The Company or its
Subsidiaries are operating only those facilities for which an
appropriate FCC license, permit or authorization has been obtained
and is in effect.
3.12. Consents, Approvals, Licenses, Etc. No permit,
consent, exemption, approval or authorization of, or declaration to
or filing with, any Governmental Authority or other Person is
required in connection with the execution, delivery and performance
by the Company of this Agreement, except (a) as set forth on
Schedule 3.12 hereto (the "Company's Consent Schedule"), (b) the
FCC Consent, and (c) the notification and waiting requirements of
the HSR Act..
3.13. Personal Property. Except as set forth on
Schedule 3.13 hereto (the "Personal Property Schedule"), or as
would not have a Material Adverse Effect: (a) the Company and its
Subsidiaries collectively own, have a valid leasehold interest in
or have legal right to use all of the tangible personal property
necessary to carry on the Business, free and clear of all
Encumbrances, except Permitted Encumbrances and Encumbrances
reflected on the Historical Financial Statements; and (b) the
Company and its Subsidiaries collectively own or have a valid
license or sublicense to use all Intellectual Property Rights,
including but not limited to call letters and station slogans and
IDs, that are necessary to carry on the Business, free and clear of
all Encumbrances, except Permitted Encumbrances and Encumbrances
reflected on the Historical Financial Statements. Schedule 3.13
contains a list of all tangible personal property used in the
Business, accurate as of the dates that appear thereon. Since the
applicable dates, no item of tangible personal property listed on
Schedule 3.13 has been sold, conveyed, or otherwise transferred
unless replaced by another item of comparable kind and quality.
3.14. Real Property. Each parcel of Owned or Leased
Real Property is owned or leased, as set forth on Schedule 3.14
hereto (the "Real Property Schedule"), as the case may be, free and
clear of all Encumbrances, except: (a) as set forth on Schedule
3.14 hereto and (b) for Permitted Encumbrances.
3.15. Employee Benefit Matters. A schedule of employee
benefits is set forth as Schedule 3.15 hereto (the "Employee
Benefit Schedule"). Neither the Company, nor its Subsidiaries has
ever maintained, sponsored or contributed to, or been obligated to
contribute to, any employee pension benefit plan as defined in
Section 3(2) of the Employee Retirement Income Security act of
1974, as amended ("ERISA"). All other employee benefit plans (as
defined in Section 3(3) of ERISA) and all benefits arrangements
that have been maintained, sponsored or contributed to by the
Company, its Subsidiaries or any ERISA Affiliate have been
maintained in compliance with their terms and, both as to form and
operation, with the requirements prescribed by any and all
statutes, orders, rules and regulations which are applicable to
such plans, including but not limited to ERISA and the Code.
Neither the Company, its Subsidiaries or any ERISA Affiliate or any
such employee benefit plan has any present or future obligation to
make any payment to or with respect to any present or former
employee of the Company, any of its Subsidiaries or any ERISA
Affiliate pursuant to any retiree medical benefit plan, or other
retiree welfare plan (within the meaning of Section 3(1) of ERISA),
and no condition exists which would prevent the Company from
amending or terminating any such employee benefit plan, including
any such welfare plan. Each such welfare plan has been operated in
compliance with the provisions of Part 6 of Title I of ERISA and
Sections 162(k) and 4980B of the Code at all times.
3.16. Taxes. Except as set forth on Schedule 3.16
hereto (the "Tax Schedule"), (a) the Company and its Subsidiaries
and each Affiliated Group has timely filed, will timely file, or
has been or will be included in, all Tax Returns required to be
filed by or on behalf of such Company or Subsidiary with respect to
Taxes for any period ending on or before the Closing Date, taking
into account any extension of time to file that has been granted to
or obtained on behalf of the Sellers or such Company or Subsidiary
or that will be so granted to or obtained, (b) such returns have
been properly prepared in all material respects, (c) all Taxes
shown to be payable on such Tax Returns have been paid or will be
paid and (d) no deficiency for any material amount of Tax has been
asserted or assessed by a taxing authority against any Company or
Subsidiary.
3.17. Insurance. All material properties and risks of
the Company and its Subsidiaries relating to the Business are
covered by valid and currently effective insurance policies or
binders of insurance or programs of self-insurance in such types
and amounts as are consistent with customary practices and
standards of companies engaged in businesses and operations similar
(including, without limitation, in size) to the Business. Each
commercial insurance policy held by the Company or its Subsidiaries
is set forth on Schedule 3.17 hereto (the "Insurance Schedule").
3.18. Material Contracts.
(a) Except as set forth on Schedule 3.18 hereto (the
"Contract Schedule") and except for contracts for the sale of time
on one or more Stations entered into in the normal course of
business at normal and customary rates and for Barter Agreements,
and except for the Company's agreement with Alex. Brown, and except
for Approved Acquisitions, and except for the Stockholders
Agreement, dated as of September 23, 1994, as among the Sellers and
the Company, which will terminate on the Closing Date, and except
for the Option Agreement, dated as of January 11, 1996, by and
among the Sellers, which will be settled on the Closing Date,
neither the Company nor its Subsidiaries is a party to or bound by
any written or oral:
(i) contract for the employment of any officer,
individual employee or other Person on a full-time, part-time,
consulting or other basis providing annual compensation in excess
of $50,000;
(ii) contract relating to loans to officers,
directors or Affiliates; or contract under which the Company or any
Subsidiary has advanced or lent any other Person amounts in the
aggregate exceeding $25,000, other than down payments and
prepayments under the Company's or such Subsidiary's ordinary
course operating agreements;
(iii) agreement or indenture relating to borrowed
money or other indebtedness or the mortgaging, pledging or
otherwise placing a Lien on any assets of the Company or its
Subsidiaries;
(iv) guarantee of any obligation;
(v) lease or agreement under which the Company
or its Subsidiaries is lessee of or holds or operates any property,
real or personal, owned by any other party, except for any lease of
real or personal property under which the aggregate annual rental
payments do not exceed $25,000;
(vi) lease or agreement under which the Company
or its Subsidiaries is lessor of or permits any third party to hold
or operate any property, real or personal, owned or controlled
by the Company or any Subsidiary, except for leases of real or
personal property under which the aggregate annual rental payments
do not exceed $25,000 individually and $50,000 in the aggregate;
(vii) group of related contracts with the same
party or group of affiliated parties the performance of which
involves consideration in excess of $125,000;
(viii)agreement under which it has granted any
Person any registration rights (including, without limitation,
demand and piggyback registration rights);
(xi) sales representation, distribution or
franchise agreement;
(x) assignment, license, indemnification or
agreement with respect to any intangible property (including, with
respect to, any Intellectual Property Rights);
(xi) contract or agreement prohibiting it from
freely engaging in any business or competing anywhere in the world;
or
(xii) any other agreement with a term of more than
six (6) months which is not terminable by the Company or any
Subsidiary upon less than 30 days' notice without penalty or which
involves a total consideration in excess of $25,000 or which in the
aggregate exceed $100,000 or is otherwise material to its
operations and business prospects.
(b) (i) All of the contracts, agreements and
instruments required to be set forth on the Contracts Schedule (the
"Contracts") are valid, binding and enforceable against the Company
or its Subsidiaries, as the case may be, and the other parties
thereto, in accordance with their respective terms; (ii) the
Company and each Subsidiary has performed in all material respects
all obligations required to be performed by them under the
Contracts (including but not limited to contracts with ASCAP, BMI
and SESAC) and are not in material default under or in material
breach of any Contract or in receipt of any claim of such default
or breach; (iii) no event has occurred which with the passage of
time or the giving of notice or both would result in a material
default, material breach or event of material noncompliance by the
Company or its Subsidiaries under any Contract; and (iv) neither
the Sellers, the Company nor any Subsidiary has knowledge of any
material breach by the other parties to any Contract.
(c) A true and correct copy of each of the written
Contracts or an accurate description of each of the oral Contracts,
together with all written amendments thereto has been supplied or
made available to the Purchaser.
3.19. Environmental Matters.
(a) Except as set forth on Schedule 3.19 (the
"Environmental Schedule") or in the "phase one" environmental
reports previously made available to the Purchaser by the Company:
(i) The property, assets and operations of the
Business are and have been in material compliance with all
applicable Environmental Laws;
(ii) there are no Hazardous Materials stored or
otherwise located in, on or under any of the property or assets of
the Company or its Subsidiaries (including the groundwater), other
than the proper storage of ordinary cleaning and office supplies;
and
(iii) to the best knowledge of the Company, there
have been no releases or threatened releases of Hazardous Materials
in, on or under any property adjoining any of the property or
assets of the Company or its Subsidiaries.
(b) None of the property, assets or operations of the
Company, or its Subsidiaries is the subject of any federal, state
or local investigation evaluating whether (i) any remedial action
is needed to respond to a release or threatened release of any
Hazardous Materials into the environment or (ii) any release or
threatened release of any Hazardous Materials into the environment
is in contravention of any Environmental Law.
(c) Neither the Company, nor any of its Subsidiaries
has received any notice or claim, nor are there pending or lawsuits
or proceedings against them, with respect to violations of an
Environmental Law or in connection with the presence of or exposure
to any Hazardous Materials in the environment or any release or
threatened release of any Hazardous Materials into the environment,
and neither the Company nor any of its Subsidiaries is or was the
owner or operator of any property which (i) pursuant to any
Environmental Law has been placed on any list of Hazardous
Materials disposal sites, including without limitation, the
"National Priorities List" or "CERCLA List," (ii) has or, to the
knowledge of the Company, had any subsurface storage tanks located
thereon; or (iii) has ever been used as or for a waste disposal
facility, a mine, a gasoline service station or a petroleum
products storage facility.
(d) Neither the Company nor its Subsidiaries has any
present or contingent liability in connection with the presence
either on or off the property or assets of the Company or its
Subsidiaries of any Hazardous Materials in the environment or any
release or threatened release of any Hazardous Materials into the
environment, except for any such contingent liability that would
not have a Material Adverse Effect on the Business, the Company or
any of its Subsidiaries.
SECTION 4. Representations and Warranties of the Sellers.
Except as set forth in the Schedules hereto, the Sellers
represent and warrant to the Purchaser as follows:
4.01. Binding Effect. This Agreement has been duly
executed and delivered by each Seller, and (assuming due
authorization, execution and delivery by the Purchaser) this
Agreement constitutes a valid and binding obligation of each
Seller, enforceable against such Seller in accordance with its
terms.
4.02. Existence and Power of the Sellers. Each Seller
is a limited partnership duly organized under the laws of its
jurisdiction of organization. Each Seller has all requisite
partnership power and authority to execute and deliver this
agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby to be consummated by it.
4.03. Capital Stock of the Company. As of the Closing,
the Sellers shall own the Shares free and clear of all
Encumbrances. As of the Closing, there are no voting trusts,
stockholder agreements, proxies or other agreements in effect with
respect to the voting or transfer of the Shares, except as set
forth on Schedule 4.03 hereto (the "Encumbrance Schedule"), and
except for the Stockholders Agreement, dated as of September 23,
1994, as among the Sellers and the Company, which will terminate on
the Closing Date, and except for the Option Agreement, dated as of
January 11, 1996, by and among the Sellers, which will be settled
on the Closing Date.
4.04. Absence of Litigation. Except as set forth on
Schedule 4.04 hereto (the "Sellers' Litigation Schedule"), as of
March 1, 1996, there are no Actions relating to the Business
pending against the Sellers that, individually or in the aggregate,
would have a materially adverse effect on the business, financial
condition or results of operations of the Company and its
Subsidiaries, taken as a whole, or would prevent the Sellers from
consummating the transactions contemplated hereby.
4.05. Consents, Approvals, Licenses, Etc. No permit,
consent, exemption, approval or authorization of, or declaration to
or filing with, any Governmental Authority or other Person is
required in connection with the execution, delivery and performance
by the Sellers of this Agreement, except (a) as set forth on
Schedule 4.05 hereto (the "Sellers' Consents Schedule"), (b) the
FCC Consent, and (c) the notification and waiting period
requirements of the HSR Act.
4.06. Brokers. Except for Alex. Brown & Sons
Incorporated ("Alex. Brown"), whose fee will be paid pursuant to
Section 7.07, no broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Sellers or the Company.
4.07. Representations and Warranties of the Company.
The Sellers, jointly and severally, represent and warrant that no
Seller (either directly or through the Company) has failed to
disclose to the Purchaser any fact that is material to the Company
and its Subsidiaries taken as a whole, nor has any Seller (either
directly or through the Company) has made any misrepresentation to
the Purchaser of any fact that is material to the Company and its
Subsidiaries taken as a whole.
SECTION 5. Representations and Warranties of the Purchaser.
The Purchaser represents and warrants to the Sellers as
follows:
5.01. Organization and Authority of the Purchaser. The
Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Nevada and has all necessary power
and authority to enter into this Agreement to carry out its
obligations hereunder and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement
by the Purchaser, the performance by the Purchaser of its
obligations hereunder and the consummation by the Purchaser of the
transactions contemplated hereby have been duly authorized by all
requisite action (including, without limitation, the requisite
approval of any direct or indirect stockholder, partner or member)
on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser and (assuming due
authorization, execution and delivery by each of the Sellers)
constitutes a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms.
5.02 No Conflict. Except as may result from any facts
or circumstances relating solely to the Sellers, the execution,
delivery and performance of this Agreement in accordance with its
terms by the Purchaser does not and will not: (a) violate or
conflict with the organizational documents of the Purchaser; (b)
conflict with or violate any Law or Governmental Order applicable
to the Purchaser, except as would not, individually or in the
aggregate, have a Material Adverse Effect on the business or
financial condition of the Purchaser or on the ability of the
Purchaser to consummate the transactions contemplated by this
Agreement; or (c) result in any breach of, or constitute a default
(or event which with the giving of notice or lapse of time, or
both, would become a default) under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of any Encumbrance on any of the assets or
properties of the Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument relating to such assets or properties to which
the Purchaser or any of its subsidiaries is a party or by which any
of such assets or properties is bound or affected, except as would
not, individually or in the aggregate, have a Material Adverse
Effect on the business or financial condition of the Purchaser or
the ability of the Purchaser to consummate the transactions
contemplated by this Agreement.
5.03. Consents, Approvals, Licenses, Etc. No permit,
consent, exemption, approval or authorization of, or declaration to
or filing with, any Governmental Authority or other Person is
required in connection with the execution, delivery and performance
by the Purchaser of this Agreement, except (a) as set forth on the
Consents Schedule, (b) the FCC Consent, and (c) the notification
and waiting period requirements of the HSR Act.
5.04. Absence of Litigation. No Action is pending or,
to the knowledge of the Purchaser, threatened against the Purchaser
which seeks to delay or prevent the consummation of the
transactions contemplated hereby or which would be reasonably
likely to materially and adversely affect or restrict the
Purchaser's ability to consummate the transactions contemplated
hereby.
5.05. Investment Purpose. The Purchaser is acquiring
the Shares solely for the purpose of investment and not with a view
to, or for offer or sale in connection with, any distribution
thereof. The Purchaser is sophisticated and knowledgeable about
the radio broadcast industry and has sufficient experience to be
able to evaluate properties of the kind owned by the Company and
its Subsidiaries.
5.06. Financing. The Purchaser has all funds necessary
to consummate the transactions contemplated by this Agreement or
has legally binding commitments from a financial institution to
provide such funds.
SECTION 6. Additional Agreements.
6.01 Conduct of Business Prior to the Closing.
(a) Between the date of this Agreement and the Closing
Date, the Sellers shall not, and shall cause the Company and its
Subsidiaries not to, conduct the Business other than in the
ordinary course and consistent with their prior practice except (i)
for such actions as contemplated by this Agreement, (ii) as
described on Schedule 6.01(a) hereto (the "Business Exemption
Schedule"), or (iii) as contemplated by an Approved Acquisition or
a local marketing agreement related thereto.
(b) Except for the actions contemplated by this
Agreement or as described on the Business Exemption Schedule,
without the prior written consent of the Purchaser, the Sellers
shall not, and shall cause the Company and its Subsidiaries not to,
prior to the Closing,
(i) change the accounting methods, principles or
practices used in respect of the Business, including, but not
limited to, changes to the Company's practices with regard to
credit approval for advertisers;
(ii) revalue any of the assets of the Business,
including, without limitation, writing off receivables, other than
in the ordinary course of business;
(iii) establish or increase the benefits payable
under any Plan or establish any new bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing or other
employee benefit plan for employees of the Company and its
Subsidiaries employed in the Business, or otherwise increase the
compensation payable or to become payable to any officers or key
employees of the Company or its Subsidiaries employed in the
Business, except in the ordinary course of the Business consistent
with past practice or as may be required by Law or applicable
collective bargaining agreements, or except for additional bonuses
to be paid by the Company in connection with the Closing, so long
as such bonuses are paid prior to the Closing Date or such bonuses
are to be paid directly by the Sellers on or after the Closing
Date, in which case such bonuses shall be treated as
Transaction-Related Expenses;
(iv) enter into any employment or severance
agreement with any Employee of the Company or its Subsidiaries
employed in the Business that would provide for annual payments to
such employee in excess of $25,000 or extend any such agreement for
more than six months;
(v) sell any of the Stations;
(vi) apply to the FCC for any construction permit
that would have the effect of restricting any of the Stations'
present operations;
or
(vii) enter into any agreement to acquire any
business, except pursuant to an Approved Acquisition, nor waive
any of the terms and conditions of the definitive agreement
relating to such Approved Acquisition as approved by the Purchaser,
without the Purchaser's prior written consent.
(c) Prior to the Closing, the Sellers shall, and shall
cause the Company and its Subsidiaries to, use their reasonable
efforts to consummate the agreement entered into with respect to
any Approved Acquisition pursuant to the terms of the agreement
entered into with respect to such Approved Acquisition.
(d) Prior to the Closing, the Sellers shall, and shall
cause the Company and its Subsidiaries to, use their reasonable
efforts to file with the FCC, in a timely fashion, all required
license renewal applications for the Stations, except for stations
WSVY-FM, Norfolk, Virginia and KJOJ(AM) Conroe, Texas, in
accordance with the dates on Schedule 6.1(d) (the "Renewal
Schedule").
(e) Prior to the Closing, the Sellers shall, and shall
cause the Company and its Subsidiaries to, use their reasonable
efforts to preserve substantially intact the business organization
of the Business, to keep available to the Purchaser the services of
the key employees of the Company and its Subsidiaries employed in
the Business and to preserve the current relationships of the
Company and its Subsidiaries with the customers and other persons
which have significant business relationships with, the Business
(but the Sellers shall have no liability to the Purchaser for the
failure to keep the services of any employees of the Company and
its Subsidiaries employed in the Business who resign from
employment by the Company and its Subsidiaries).
6.02. Access to Information.
(a) From the date of this Agreement until the Closing,
upon reasonable notice, the Sellers shall, and shall cause the
officers, employees, auditors and agents of the Sellers, the
Company and its Subsidiaries to, (i) afford the officers, employees
and authorized agents and representatives of the Purchaser
reasonable access, during normal business hours and upon reasonable
notice, to the offices, properties, books and records of the
Company and its Subsidiaries that relate to the Business and (ii)
furnish to the officers, employees and authorized agents and
representatives of the Purchaser such additional financial and
operating data and other information regarding the assets,
properties, goodwill and business of the Company and its
Subsidiaries that relate to the Business as the Purchaser may from
time to time reasonably request in order to assist the Purchaser in
fulfilling its obligations under this Agreement and to facilitate
the consummation of the transactions contemplated hereby. The
Purchaser shall not unreasonably interfere with any of the
businesses or operations of the Sellers, the Company, its
Subsidiaries or any Affiliate of the Sellers. The auditors of the
Company and its Subsidiaries shall not be obliged to make available
any work papers to any person who has not executed a customary hold
harmless agreement in respect thereof.
(b) Each party agrees that it will cooperate with and
make available to the other party, during normal business hours all
Books and Records, information and employees (without substantial
disruption of employment) retained and remaining in existence after
the Closing Date which are necessary or useful in connection with
any Tax inquiry, audit, investigation or dispute, any litigation or
investigation or any other matter requiring any such Books and
Records, information or employees for any reasonable business
purpose. The party requesting any such Books and Records,
information or employees shall bear all of the out-of-pocket costs
and expenses (including, without limitation, attorneys' fees, but
excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing such Books and
Records, information or employees. The Sellers may require certain
financial information relating to the Business for periods prior to
the Closing Date for the purpose of filing federal, state, local
and foreign Tax Returns and other governmental reports, and the
Purchaser agrees to furnish such information to the Sellers at the
Sellers' request and expense.
(c) Notwithstanding the foregoing, the Sellers shall
not be required, prior to the Closing, to disclose, or cause the
disclosure of (or provide access to any offices, properties, books
or records of the Sellers, the Company, the Subsidiaries thereof
that could result in the disclosure to such persons or others of),
any confidential information relating to trade secrets, processes
or patent or trademark applications, product development and
marketing plans or customer and product margins, nor shall the
Sellers be required to permit or cause others to permit the
officers, employees or authorized agents or representatives of the
Purchaser to copy or remove from the offices or properties of the
Sellers, the Company, or the Subsidiaries, any documents, drawings
or other materials that might reveal any such confidential
information or to photograph or sketch any part of the assets or
properties of the Sellers, the Company and the Subsidiaries.
6.03. FCC and Other Regulatory Authorizations, Consents.
(a) Within three (3) Business Days of the date of this
Agreement, each party to this Agreement agrees to join in an
application or applications to be filed with the FCC requesting its
written consent to the transfer of control of the Company from the
Sellers to the Purchaser (the "Transfer Application") and they will
diligently take all steps necessary or desirable and proper
expeditiously to prosecute such application and to obtain the FCC's
determination that grant of the Transfer Application will serve the
public interest, convenience or necessity.
(b) Each party hereto shall use its reasonable best
efforts to obtain all authorizations, consents, orders and
approvals of, and to give all notices to and make all filings with,
all Governmental Authorities other than the FCC, and with all other
third parties that may be or become necessary for its execution and
delivery of, and the performance of its obligations pursuant to,
this Agreement, and each party will cooperate fully with the other
parties in promptly seeking to obtain all such authorizations,
consents, orders and approvals, giving such notices, and making
such filings. Each party hereto agrees to make an appropriate
filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated hereby within ten
(10) Business Days of the date of this Agreement, including a
request for early termination of the notification and waiting
period requirements of the HSR Act, and to supply promptly any
additional information and documentary material that may be
requested pursuant to the HSR Act.
(c) Each party hereto shall as promptly as possible,
and in any event within two (2) Business Days, inform the other of
any material communications between such party and the Federal
Trade Commission, the Department of Justice, the Federal
Communications Commission or any other Governmental Authority
regarding this Agreement or the transactions contemplated hereby.
If any party receives a request for additional information or
documentary material from any such Governmental Authority, then
such party shall endeavor in good faith to make, or cause to be
made, as promptly as practicable and after consultation with the
other parties, an appropriate response to such request.
(d) In the event at the Closing one or more
applications for renewal of any of the Station Licenses remains
pending or any order of the FCC granting an application for renewal
of a Station License has not become a Final Order, each party
hereto agrees to abide by the procedures established in
Stockholders of CBS, Inc., FCC 95-469 (rel. Nov. 22, 1995)
Paragraphs 34-35, for processing applications for transfer of
control of a licensee during the pendency of an application for
renewal of a station license. Without limiting the generality of
the foregoing, the Company and Sellers agree to use their
reasonable best efforts to cooperate with Purchaser in the
preparation and prosecution of any such application for renewal of
a Station License, and Purchaser agrees that any interest it may
acquire in such license at Closing is subject to whatever action
the FCC may ultimately take with respect to the renewal
application. Notwithstanding anything in this Agreement to the
contrary, this Section 6.04(d) shall survive the Closing until any
order issued by the FCC with respect to a renewal application
pending, or granted but not yet final, as of the Closing becomes a
Final Order.
6.04. Investigation.
(a) The Purchaser acknowledges and agrees that it (i)
has made its own inquiry and investigation into, and, based
thereon, has formed an independent judgment concerning, the
Company, its Subsidiaries and the Business, (ii) has been furnished
with or given adequate access to such information about the
Company, its Subsidiaries and the Business as it has requested, and
(iii) will not assert any claim against the Sellers or any of their
direct or indirect partners, directors, officers, employees,
agents, stockholders, Affiliates, consultants, counsel,
accountants, investment bankers or representatives, or hold the
Sellers or any such Persons liable for any inaccuracies,
misstatements or omissions with respect to information (other than
the representations and warranties contained in this Agreement)
furnished by the Sellers or any such Persons concerning the
Sellers, the Company, its Subsidiaries and the Business.
(b) In connection with the Purchaser's investigation
of the Company, its Subsidiaries and the Business, the Purchaser
has received from the Sellers certain projections and other
forecasts for the Company, its Subsidiaries and the Business and
certain plan and budget information. The Purchaser acknowledges
that there are uncertainties inherent in attempting to make such
projections, forecasts, plans and budgets; that the Purchaser is
familiar with such uncertainties; that the Purchaser is taking full
responsibility for making its own evaluation of the adequacy and
accuracy of all estimates, projections, forecasts, plans and
budgets so furnished to it; and that the Purchaser will not assert
any claim against the Sellers or any of their direct or indirect
partners, directors, officers, employees, agents, stockholders,
Affiliates, consultants, counsel, accountants, investment bankers
or representatives; or hold the Sellers or any such Persons liable
with respect thereto. Accordingly, the Sellers make no
representation or warranty with respect to any estimates,
projections, forecasts, plans or budgets such as referred to in
this Section 6.05(b).
6.05. Company Employees. Sellers will not hire any of
the employees of the Company or its Subsidiaries other than the
general managers of the Stations for a period of two years after
the Closing Date, unless their employment has been terminated by
the Company. Sellers will not hire any of the general managers of
the Company or its Subsidiaries for a period of two years after the
Closing Date without the prior written consent of the Purchaser.
US Radio Stations, L.P. shall use its best efforts to cause its
Affiliates to abide by the agreements contained in this Section
6.05.
6.06. Press Release. The parties hereto shall issue a
mutually agreed upon press release detailing the transaction
contemplated herein on March 5, 1996.
6.07. Further Action. Subject to the terms and
conditions herein provided, each of the parties hereto covenants
and agrees to use its reasonable best efforts to deliver or cause
to be delivered such documents and other papers and to take or
cause to be taken such further actions as may be necessary, proper
or advisable under applicable laws to consummate and make effective
the transactions contemplated hereby.
6.08. Indemnification. The Sellers jointly and
severally indemnify Purchaser, Guarantor and the Company from and
against any loss arising from any claim asserted by Henry Shapiro
arising out of the September 12, 1994 recapitalization of the
Company.
SECTION 7. Conditions Precedent to the Obligation of
Purchaser to Purchase Shares from Sellers.
The obligations of the Purchaser to purchase the Shares
from the Sellers shall be subject to the satisfaction or, where
permissible, waiver by Purchaser of the following Conditions.
7.01. Representations and Warranties; Covenants and
Agreements.
(a) The representations and warranties of the Sellers
and the Company contained in this Agreement shall be true in all
material respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date (except
that any such representations and warranties that are given as of
a specified date shall be true in all material respects as of such
date) except for changes to the representations and warranties
resulting from the Company's conduct of the Business in a manner
consistent with Section 6.01 and except for such breaches or
inaccuracies that, individually or in the aggregate, would not
reasonably be expected to result in a Material Adverse Effect.
Each of the Sellers shall have delivered to the Purchaser a
certificate, dated the Closing Date and signed on its behalf by one
of its officers, to the foregoing effect with respect to the
representations and warranties of such Seller, and the Sellers
shall have delivered to the Purchaser a certificate, dated the
Closing date and signed on its behalf by one of its officers, to
the foregoing effect with respect to the representations and
warranties of the Seller and the Company.
(b) The Sellers and the Company each shall have
performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or
complied with by them on or prior to the Closing Date. Each of the
Sellers shall have delivered to the Purchaser a certificate, dated
the Closing Date and signed on its behalf by one of its officers,
to the foregoing effect with respect to the covenants and
agreements required by this Agreement to be performed or complied
with by such Seller, and the Company shall have delivered to the
Purchaser a certificate, dated the Closing Date and signed on its
behalf by one of its officers, to the foregoing effect with respect
to the covenants and agreements required by this Agreement to be
performed or complied with by the Company.
7.02. FCC Consent. The FCC Consent shall have been
obtained without any conditions materially adverse to the
Purchaser, and shall have become a Final Order unless waived by the
Purchaser.
7.03. Third Party Consents. There shall have been
obtained all consents and approvals from parties to Contracts or
other Agreements that are required in connection with the
performance by the Sellers and the Company of their respective
obligations under this Agreement, unless the consents that have not
been obtained would not individually or in the aggregate cause a
Material Adverse Effect.
7.04. Hart-Scott-Rodino. The waiting period under HSR,
including any extension thereof, shall have expired or been
terminated.
7.05. Opinions of Counsel to the Sellers and the
Company. The Purchaser shall have received the opinions of counsel
to each of the Sellers and the Company, dated the Closing Date and
addressed to the Purchaser, in the form of Exhibit A.
7.06. Resignation of the Directors of the Company. Each
of the Directors of the Company shall have tendered his resignation
as a Director of the Company, effective as of the Closing Date.
7.07. Payment of Transaction-Related Expenses. Prior to
the Closing, the Company or its Subsidiaries shall have paid all
fees and expenses due to Alex. Brown and its counsel and to the
Company's counsel and accountants due in connection with the
transactions contemplated by this Agreement (the
"Transaction-Related Expenses"), or the Sellers shall have assumed
all such Transaction-Related Expenses, which shall no longer be
liabilities of the Company or its Subsidiaries.
7.08. Delivery of Closing Balance Sheet. The chief
financial officer of the Company shall have delivered the Closing
Balance Sheet, not later than four (4) Business Days before the
Closing Date.
7.09. Receipt of Certified Copies of the Articles of
Incorporation. The Purchaser shall have received certified copies
of the articles of incorporation of each of the Company and its
Subsidiaries.
7.10. Receipt of Good Standing Certificates. The
Purchaser shall have received certificates of good standing for
each of the Company and its Subsidiaries from each jurisdiction of
their incorporation and evidence of their qualification to do
business in any state where the nature of their business makes such
qualification necessary.
7.11. Receipt of Sales Tax Certificates. The Purchaser
shall have received sales tax certificates for each of the Company
and its Subsidiaries from each jurisdiction in which the Company or
such Subsidiaries are doing business, where such certificates are
reasonably available in a timely fashion.
7.12. Receipt of Estoppel Certificates for Leases. The
Company shall have used its reasonable best efforts to obtain
estoppel certificates for each of the Company's and the
Subsidiaries Leased Real Properties.
7.13. Receipt of Title Insurance for Owned Land. The
Purchaser shall have received title insurance policies current as
of the Closing Date for all parcels of real estate that are owned
by the Company or its Subsidiaries.
7.14. Receipt of UCC-1s. The Purchaser shall have
received the results of UCC-1 searches as of a date reasonably
close to the Closing that reflects the existence of no liens other
than the liens identified on Schedules 3.13 and 3.14 hereto.
7.15. Delivery of Shares. The Sellers shall have
delivered their Shares in accordance with Section 2.04 hereof.
7.16. Delivery of Releases. The Sellers shall have
delivered releases, in form and substance reasonably satisfactory
to the Purchaser, releasing the Company from all claims arising on
or prior to the Closing Date. Ragan A. Henry shall have delivered,
and the Sellers shall have used their reasonable best efforts to
cause Donald Kidwell, Michael Driscoll, Sheila Weiss, Edward
Gallagher and Patricia Hussey to deliver, releases, in form and
substance reasonably satisfactory to the Purchaser, releasing the
Company from all claims arising on or prior to the Closing Date,
except those arising under their employment agreements and claims
for accrued compensation or for other undisputed amounts of money
owed them by the Company.
SECTION 8. Conditions Precedent to the Obligations of the
Sellers. The Obligations of the Sellers to sell their shares to
the Purchaser shall be subject to the fulfillment or, where
permissible, waiver by the Sellers of the following conditions.
8.01. Representations and Warranties; Covenants and
Agreements.
(a) The representations and warranties of the
Purchaser contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date (except that
any such representations and warranties that are given as of a
specified date shall be true in all material respects as of such
date). The Purchaser shall have delivered to the Sellers a
certificate, dated the Closing Date and signed on its behalf by one
of its officers to the foregoing effect.
(b) The Purchaser shall have performed and complied in
all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior
to the Closing Date. The Purchaser shall have delivered to the
Sellers a certificate, dated the Closing Date and signed by one of
its officers, to the foregoing effect.
8.02. FCC Consent. The FCC Consent shall have been
obtained without any conditions materially adverse to the
Purchaser.
8.03. Third Party Consents. There shall have been
obtained all consents and approvals from parties to Contracts or
other Agreements that are required in connection with the
performance by the Sellers and the Company of their respective
obligations under this Agreement, unless the consents that have not
been obtained would not individually or in the aggregate cause a
Material Adverse Effect.
8.04. Hart-Scott-Rodino. The waiting period under HSR,
including any extension thereof, shall have expired or been
terminated.
8.05. Receipt of Resolutions. The Sellers shall have
received certified copies of the resolutions of Purchaser and
Guarantor authorizing the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby.
SECTION 9. Termination, Amendment and Waiver.
9.01. Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) By the mutual written consent of the holders of a
majority the Common Stock and the Purchaser.
(b) By the holders of a majority of the Common Stock
or the Purchaser, if any Governmental Authority with jurisdiction
over such matters shall have issued a Governmental Order
restraining, enjoining or otherwise prohibiting the sale of the
Shares hereunder, and such order, decree, ruling or other action
shall have become final and unappealable. The provisions of this
Section 9.01(b) shall not be available to any party (i) if the
issuance of the Governmental Order is due to the action or inaction
or status of such party, or (ii) unless such party shall have used
its reasonable best efforts to oppose any such Governmental Order
or to have such Governmental Order vacated or made inapplicable to
the transactions contemplated by this Agreement.
(c) By either a majority of the Sellers or the
Purchaser, if the Closing shall not have occurred prior to March 4,
1997. The right to terminate this Agreement under this Section
9.01(d) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have been the
cause of, or shall have resulted in, the failure of the Closing to
occur prior to such date.
(d) By the Purchaser if there has been a materially
adverse change to the financial condition of the Company and its
Subsidiaries, taken as a whole from the condition of the Company as
of December 31, 1995.
9.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 9.01, this
Agreement shall have no further force and effect and there shall be
no liability on the part of any party hereto except (a) as set
forth in Section 10.01 and (b) that nothing herein shall relieve
any party from liability for any willful breach hereof or for
fraud. Termination of this Agreement shall not affect the
enforceability of the Confidentiality Agreement.
9.03. Waiver. At any time prior to the Closing, any
party hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive
any inaccuracies in the representations and warranties of the other
party contained herein or in any document delivered pursuant hereto
or (c) waive compliance by the other party with any of the
agreements or conditions contained herein. Any such extension or
waiver shall be valid only if set forth in an instrument in writing
signed by the party to be bound thereby.
9.04. Amendments.
(a) No failure or delay on the part of the Company,
the Sellers or the Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right, power or remedy
preclude any other or further exercise thereof or the exercise of
any other right, power or remedy. The remedies provided for herein
are cumulative and are not exclusive of any remedies that may be
available to the Company or the Purchaser at law, in equity or
otherwise.
(b) Any amendment, supplement or modification of or to
any provision of this Agreement, any waiver of any provision of
this Agreement, and any consent to any departure by the Seller from
the terms of any provision of this Agreement, shall be effective
(i) only if it is made or given in writing and signed by the Seller
and Purchaser, and (ii) only in the specific instance and for the
specific purpose for which made or given. Except where notice is
specifically required by this Agreement, no notice to or demand on
the parties to this Agreement in any case shall entitle them to any
other or further notice or demand in similar or other
circumstances.
SECTION 10. General Provisions.
10.01.Expenses.
(a) All FCC and HSR filling fees shall be paid,
one-half by the Purchaser and one-half by the Sellers,
collectively.
(b) All other costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors
and accountants incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall
have occurred.
10.02.Survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
certificate or instrument delivered pursuant to this Agreement
shall survive the Closing, except for those representations and
warranties contained in Section 4 herein which shall survive the
Closing for the duration of the statute of limitations applicable
to the claim in question.
10.03.Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of
this Agreement is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the
reminder of this Agreement.
10.04.Remedies. In the event that the transaction
contemplated by this Agreement is terminated or otherwise is not
consummated due to a material default by either party hereto, the
other party shall be entitled to all of the rights and remedies at
law or in equity and shall be entitled to recover attorney's fees
and costs.
10.05.Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, any one of which need
not contain the signatures of more than one party, but all such
counterparts taken together shall constitute one and the same
Agreement.
10.06.Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience only and do not
constitute a substantive part of this Agreement.
10.07.Governing Law. This Agreement shall be governed
by, and construed in accordance with, the internal laws of the
State of New York without giving effect to the conflict of laws
provisions thereof.
10.08.Notices. All notices, demands or other
communications to be given or delivered under this Agreement shall
be in writing and shall be deemed to have been given when delivered
personally to the recipient, the next business day when sent to the
recipient by reputable overnight courier service (charges prepaid),
three days after mailing to the recipient by certified or
registered mail, return receipt requested and postage prepaid, and
upon receipt of acknowledgement when sent by telecopy. Such
notices, demands and other communications shall be sent to all
parties to this Agreement at the addresses indicated below:
(a) If to US Radio Stations, L.P.
1234 Market Street
Suite 1940
Philadelphia, Pennsylvania 19107
FAX (215) 563-9947
Attention: Ragan A. Henry
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
FAX (202) 637-2201
Attention: James F. Rogers, Esq.
(b) If to Blackstone USR Capital Partners L.P.,
Blackstone USR Offshore Capital Partners L.P., Blackstone Family
Investment Partnership II L.P., BCP Radio L.P., or BCP Offshore
Radio L.P.
345 Park Avenue, 31st Floor
New York, New York 10154
FAX (212) 754-8725
Attention: Howard A. Lipson
With a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
FAX (202) 637-2201
Attention: James F. Rogers, Esq.
(c) If to the Purchaser and the Guarantor:
Clear Channel Communications of Memphis, Inc.
Clear Channel Communications, Inc.
200 Concord Plaza
San Antonio, Texas 78216
FAX (210)
Attention: Randall Mays
Ken Wyker, Esq.
With a copy to
Oppenheimer, Blend, Harrison & Tate
711 Navarro, 6th Floor
San Antonio, Texas 78205
FAX (210) 224-7540
Attention: J. David Oppenheimer, Esq.
or to such other address or to the attention of such other person
as the recipient party has specified by prior written notice to the
sending party.
10.09.Entire Agreement. This Agreement and the
Schedules hereto and the other Transaction Documents represent the
entire agreement between the Purchaser, on the one hand, and the
Sellers, on the other hand, with respect to the subject matter
hereof, and such agreements supersede all prior agreements between
such parties with respect to the subject matter hereof, except for
the Confidentiality Agreement, which shall be terminated at the
Closing.
IN WITNESS WHEREOF, the undersigned parties have duly
executed this Agreement as of the date first above written.
THE SELLERS:
US RADIO STATIONS, L.P.
By: US Radio, L.P.,
its General Partner
By: US Radio Group, Inc., its General
Partner
By: /s/Ragan A. Henry
Ragan A. Henry
Chairman and Chief Executive
Officer
BLACKSTONE USR CAPITAL PARTNERS L.P.
By: Blackstone Management Associates
II L.L.C.,
its General Partner
By: /s/Howard A. Lipson
Howard A. Lipson
Member
BLACKSTONE USR OFFSHORE CAPITAL
PARTNERS L.P.
By: Blackstone Management Associates
II L.L.C.,
its General Partner
By: /s/Howard A. Lipson
Howard A. Lipson
Member
BLACKSTONE FAMILY INVESTMENT
PARTNERSHIP II L.P.
By: Blackstone Management Associates
II L.L.C.,
its General Partner
By: /s/Howard A. Lipson
Howard A. Lipson
Member
BCP RADIO L.P.
By: Blackstone USR Capital Partners
L.P.,
its General Partner
By: Blackstone Management Associates
II L.L.C.,
its General Partner
By: /s/Howard A. Lipson
Howard A. Lipson
Member
BCP OFFSHORE RADIO L.P.
By: Blackstone Offshore Capital
Partners L.P., its
General Partner
By: Blackstone Management Associates
II L.L.C., its
General Partner
By: /s/Howard A. Lipson
Howard A. Lipson
Member
THE COMPANY
US RADIO, INC.
By: /s/Ragan A. Henry
Ragan A. Henry
Chairman and Chief Executive
Officer
THE PURCHASER:
CLEAR CHANNEL COMMUNICATIONS
OF MEMPHIS, INC.
By: /s/Randall T. Mays
Randall T. Mays
Vice President
THE GUARANTOR
CLEAR CHANNEL COMMUNICATIONS, INC.
By: /s/Randall T. Mays
Randall T. Mays
Vice President<PAGE>
Exhibit 21
Subsidiaries of Registrant, Clear Channel Communications, Inc.
Name State of Incorporation
Clear Channel Communications of Memphis, Inc. Texas
Clear Channel Television, Inc. Nevada
Clear Channel Radio, Inc. Nevada
Clear Channel Management, Inc. Delaware
Clear Channel Radio Licenses, Inc. Nevada
Clear Channel Television Licenses, Inc. Nevada
Clear Channel Productions, Inc. Nevada
Clear Channel Metroplex, Inc. Nevada
Clear Channel Metroplex Licenses, Inc. Nevada
Clear Channel Holdings, Inc. Nevada
CCR Houston-Nevada, Inc. Nevada
Clear Channel Real Estate Nevada<PAGE>
Exhibit 23.1 -- Consent of Ernst & Young LLP
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8) pertaining to the 1984 Incentive Stock Option
Plan of Clear Channel Communications, Inc. (No. 33-14193); the
Clear Channel Communications, Inc. Nonqualified Stock Option Plan
(No. 33-59772); and the Clear Channel Communications, Inc. 1994
Incentive Stock Option Plan, Clear Channel Communications, Inc.
1994 Nonqualified Stock Option Plan, Clear Channel Communications,
Inc. Directors' Nonqualified Stock Option Plan, and Option
Agreement for Officer (No. 33-64463) of our report dated March 4,
1996, with respect to the consolidated financial statements of US
Radio, Inc.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996<PAGE>
Exhibit 23.2 -- Consent of Ernst & Young LLP
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration
Statements (Form S-8) pertaining to the 1984 Incentive Stock Option
Plan of Clear Channel Communications, Inc. (No. 33-14193); the
Clear Channel Communications, Inc. Nonqualified Stock Option Plan
(No. 33-59772); and the Clear Channel Communications, Inc. 1994
Incentive Stock Option Plan, Clear Channel Communications, Inc.
1994 Nonqualified Stock Option Plan, Clear Channel Communications,
Inc. Directors' Nonqualified Stock Option Plan, and Option
Agreement for Officer (No. 33-64463) of our report dated March 10,
1995, with respect to the combined financial statements of Ragan
Henry Communications Group, L.P., US Radio L.P. and US Radio
Stations, L.P.
/s/ERNST & YOUNG LLP
Philadelphia, Pennsylvania
May 22, 1996
