SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
---------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1995 Commission file number 0-13020
WESTWOOD ONE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-3980449
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
9540 WASHINGTON BOULEVARD
CULVER CITY, CA 90232
(Address of principal executive offices)
(310) 204-5000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE ON
TITLE OF EACH CLASS WHICH REGISTERED
- ------------------- ------------------------
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
COMMON STOCK
(Title of Class)
SEVEN YEAR COMMON STOCK PURCHASE WARRANTS
(Title of Class)
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of Common Stock held by non-affiliates as of
March 15, 1996 was approximately $458 million.
As of March 15, 1996, 30,986,604 shares (excluding 607,395 treasury shares)
of Common Stock were outstanding and 351,733 shares of Class B Stock were
outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant's definitive proxy statement for its annual
meeting of shareholders (which will be filed with the Commission within 120 days
of the registrant's last fiscal year end) are incorporated in Part III of this
Form 10-K.
<PAGE>
PART I
ITEM 1. BUSINESS
GENERAL
Westwood One, Inc. (the "Company" or "Westwood One") is a leading producer and
distributor of nationally sponsored radio programs and is the nation's second
largest radio network. In addition, the Company owns and operates Westwood One
Broadcasting Services, Inc. ("WBS"), which provides local traffic, news, sports
and weather programming to radio stations and other media outlets in New York,
Chicago, Los Angeles and Philadelphia. Westwood One is managed by Infinity
Broadcasting Corporation pursuant to a five-year Management Agreement which
expires on February 3, 1999.
The Company's principal source of revenue is selling radio time to advertisers
through one of three operating divisions: Westwood One Radio Networks, Westwood
One Entertainment (the "Network Divisions"), and effective March 1996, WBS. The
Company generates revenue principally by its Network Divisions entering into
radio station affiliation agreements to obtain audience and commercial spots and
then selling the spots to national advertisers. WBS generates revenue
principally by selling audience it obtains from radio stations and other media
outlets where it has operations to local as well as national advertisers. The
Company is strategically positioned to provide a broad range of programming and
services which both deliver audience to advertisers and news, talk, sports, and
entertainment programs to radio stations.
Westwood One Radio Networks offers radio stations three traditional news
services, CNN Radio, NBC Radio Network and the Mutual Broadcasting System, plus
youth-oriented network news and entertainment programming from The Source, in
addition to eight 24-hour satellite-delivered continuous play music formats and
weekday and weekend news and entertainment features and programs.
Westwood One Entertainment produces music, sports, talk and special event
programming. These programs include: countdown shows; music and interview
programs; live concert broadcasts; major sporting events (principally covering
the NFL, Notre Dame football and other college football and basketball games);
live, personality intensive talk shows; and exclusive satellite simulcasts with
HBO and other cable networks.
The Company's programs are broadcast in every radio market in the United States
measured by The Arbitron Ratings Company ("Arbitron"), the leading rating
service, as well as being broadcast internationally.
WBS provides radio stations and other media outlets, including television and
cable companies, with local traffic, news, sports and weather programming in New
York, Chicago, Los Angeles and Philadelphia.
Westwood One, through its Divisions, enables national advertisers to purchase
advertising time and to have their commercial messages broadcast on radio
stations throughout the United States, reaching demographically defined
listening audiences. The Company delivers both of the major demographic groups
targeted by national advertisers: the 25 to 54-year old adult market and the 12
to 34-year-old youth market. The Company currently sells advertising time to
over 300 national advertisers, including each of the 25 largest network radio
advertisers. Radio stations are able to obtain quality programming from Westwood
One to meet their objective of attracting larger listening audiences and
increasing local advertising revenue. Westwood One, through the development of
internal programming as well as through acquisitions, has developed an extensive
tape library of previously aired programs, interviews, live concert
performances, news and special events.
INDUSTRY BACKGROUND
Radio Broadcasting
As of January 1, 1996, there were approximately 9,750 commercial radio stations
in the United States.
A radio station selects a style of programming ("format") to attract a target
listening audience and thereby attract commercial advertising directed at that
audience. There are many formats from which a station may select, including
news, talk, sports and various types of music and entertainment programming.
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The diversity in program formats has intensified competition among stations for
local advertising revenue. A radio station has two principal ways of effectively
competing for these revenues. First, it can differentiate itself in its local
market by selecting and successfully executing a format targeted at a particular
audience thus enabling advertisers to place their commercial messages on
stations aimed at audiences with certain demographic characteristics. A station
can also broadcast special programming, sporting events or national news
product, such as supplied by Westwood One, not available to its competitors
within its format. National programming broadcast on an exclusive geographic
basis can help differentiate a station within its market, and thereby enable a
station to increase its audience and local advertising revenue.
Radio Advertising
Radio advertising time can be purchased on a local, regional or national basis.
Local purchases allow an advertiser to select specific radio stations in chosen
geographic markets for the broadcast of commercial messages. However, this
process can be expensive and inefficient. Local and regional purchases are
typically best suited for an advertiser whose business or ad campaign is in a
specific geographic area. Advertising purchased from a radio network is one
method by which an advertiser gets its commercial messages to a specific
demographic audience, achieving national coverage on a cost efficient basis. In
addition, an advertiser can choose to emphasize their message in a certain
market or markets by supplementing a national purchase with local and/or
regional purchases.
In recent years the increase in the number of program formats has led to more
demographically specific listening audiences, making radio an attractive,
alternative medium for national advertisers. In addition, nationally broadcast
news, concerts and special event programming have made radio an effective medium
of reach (size of listening audiences) as well as frequency (number of exposures
to the target audience).
To verify audience delivery and demographic composition, specific measurement
information is available to national advertisers by independent rating services
such as Arbitron and Statistical Research, Inc.'s RADAR. These rating services
provide demographic information such as the age and sex composition of the
listening audiences. Consequently, national advertisers can verify that their
advertisements are being heard by their target listening audience.
BUSINESS STRATEGY
Westwood One's Network Divisions provide targeted radio audiences and commercial
spots to national advertisers through its recognized programming and other
network products. The Company, through its various radio networks, produces and
distributes quality programming to radio stations seeking to increase their
listening audience and improve local and national advertising revenue. The
Company sells advertising time within its programs to national advertisers
desiring to reach large listening audiences nationwide with specific demographic
characteristics.
In February 1994, the Company acquired Unistar Radio Networks, Inc. ("Unistar")
for $101,300,000 plus expenses along with the following additional transactions
(see Notes 4, 7, 8 and 9 to Consolidated Financial Statements):
(a) the sale by the Company to Infinity Network, Inc. ("INI"), a
wholly-owned subsidiary of Infinity Broadcasting Corporation
("Infinity"), of 5,000,000 shares of the Company's Common Stock and a
warrant to purchase up to an additional 3,000,000 shares of Common
Stock at an exercise price of $3.00 per share, for a total purchase
price of $15,000,000;
(b) a Management Agreement between the Company and Infinity pursuant to
which (a) the Chief Executive Officer of Infinity, currently Mel
Karmazin, became the Chief Executive Officer of the Company, (b) the
Chief Financial Officer of Infinity, currently Farid Suleman, became
the Chief Financial Officer of the Company and (c) Infinity began
managing the business and operations for an annual base fee of
$2,000,000 (adjusted for inflation), an annual cash bonus (payable in
the event of meeting certain financial targets) and additional
warrants to acquire up to 1,500,000 shares of Common Stock exercisable
after the Company's Common Stock reaches certain market prices per
share.
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(c) a Voting Agreement providing for the reconstitution of the Board of
Directors into a nine-member Board and the voting of Norman Pattiz's
shares of the Company's Common Stock and Class B Stock and the shares
of the Common Stock held by INI.
In 1996, the Company expanded its strategy to include providing local traffic,
news, sports and weather programming to radio stations and other media outlets
in selected cities across the United States. In March 1996, WBS acquired the
operating assets of New York Shadow Traffic Limited Partnership, Chicago Shadow
Traffic Limited Partnership, Los Angeles Shadow Traffic Limited Partnership, and
Philadelphia Express Traffic Limited Partnership (collectively "Shadow Traffic")
for $20,000,000 plus expenses, subject to an adjustment based on future cash
flow (See Note 17 to Consolidated Financial Statements). In addition, WBS has
options to acquire the Shadow operations in other cities.
Radio Programming
The Company produces and distributes 24-hour continuous play formats, regularly
scheduled and special syndicated programs, including exclusive live concerts,
music and interview shows, national music countdowns, lifestyle short features,
news broadcasts, talk programs, sporting events, and sports features.
The Company controls most aspects of production of its programs, therefore being
able to tailor its programs to respond to current and changing listening
preferences. The Company produces regularly scheduled short-form programs
(typically 5 minutes or less), long-form programs (typically 60 minutes or
longer) and 24-hour continuous play formats. Typically, the short-form programs
are produced at the Company's in-house facilities located in Culver City,
California, New York, New York and Arlington, Virginia. The long-form programs
include shows produced entirely at the Company's in-house production facilities
and recordings of live concert performances and sports events made on location.
The 24-hour continuous play formats are produced at the Company's facilities in
Valencia, California.
Westwood One also produces and distributes special event syndicated programs. In
1995 the Company produced and distributed numerous special event programs,
including exclusive broadcasts of REM, Page and Plant and an HBO simulcast of
the Rock'N Roll Hall of Fame concert.
Westwood One obtains most of the programming for its concert series by recording
live concert performances of prominent recording artists. The agreements with
these artists often provide the exclusive right to broadcast the concerts
worldwide over the radio (whether live or pre-recorded) for a specific period of
time. The Company may also obtain interviews with the recording artist and
retain a copy of the recording of the concert and the interview for use in its
radio programs and as additions to its extensive tape library. The agreements
provide the artist with master recordings of their concerts and nationwide
exposure on affiliated radio stations. In certain cases the artists may receive
compensation.
Westwood One's syndicated programs are produced at its in-house production
facilities. The Company determines the content and style of a program based on
the target audience it wishes to reach. The Company assigns a producer, writer,
narrator or host, interviewer and other personnel to record and produce the
programs. Because Westwood One controls the production process, it can refine
the programs' content to respond to the needs of its affiliated stations and
national advertisers. In addition, the Company can alter program content in
response to current and anticipated audience demand.
The Company produces and distributes eight 24-hour continuous play formats
providing music, news and talk programming for Country, Hot Country, Adult
Contemporary, Soft AC, Oldies, Adult Standards, Adult Rock and Roll and the 70's
formats. Using its production facilities in Valencia, California, the Company
provides all the programming for stations affiliated with each of these formats.
Affiliates compensate the Company for these formats by providing the Company
with a portion of their commercial air time and, in most cases, cash fees.
The Company believes that its tape library is a valuable asset for its future
programming and revenue generating capabilities. The library contains previously
broadcast programs, live concert performances, interviews, daily news programs,
sports and entertainment features, Capitol Hill hearings and other special
events. New programs can be created and developed at a low cost by excerpting
material from the library.
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Affiliated Radio Stations
Westwood One's radio network business strategy is to provide for the programming
needs of radio stations by supplying to radio stations programs and services
that individual stations may not be able to produce on their own. The Company
offers radio stations a wide selection of regularly scheduled and special event
syndicated programming as well as 24-hour continuous play formats. These
programs and formats are completely produced by the Company and, therefore, the
stations have no production costs. Typically, each program is offered for
broadcast by the Company exclusively to one station in its geographic market,
which assists the station in competing for audience share in its local
marketplace. In addition, except for news programming, Westwood One's programs
contain available commercial air time that the stations may sell to local
advertisers. Westwood One typically distributes promotional announcements to the
stations and places advertisements in trade and consumer publications to further
promote the upcoming broadcast of its programs.
Westwood One's networks enter into affiliation agreements with radio stations.
In the case of news and current events programming, the agreements commit the
station to broadcast only the advertisements associated with these programs and
allows the station flexibility to have the news headlined by their newscasters.
The other affiliation agreements require a station to broadcast the Company's
programs and to use a portion of the program's commercial slots to air national
advertisements and any related promotional spots. With respect to the 24-hour
formats, the Company may also receive a fee from the affiliated stations for the
right to broadcast the formats. Radio stations in the top 200 national markets
may also receive compensation for airing national advertising spots.
Affiliation agreements specify the number of times and the approximate daypart
each program and advertisement may be broadcast. Westwood One requires that each
station complete and promptly return to the Company an affidavit
(proof-of-performance) that verifies the time of each broadcast. Affiliation
agreements for Westwood One's entertainment programming are non-cancelable for
26 weeks and are automatically renewed for subsequent 26-week periods, if not
canceled 30 days prior to the end of the existing contract term. Affiliation
agreements for Westwood One's news and current events programming generally run
for a period of at least one year, are automatically renewable for subsequent
periods and are cancelable by either the Company or the station upon 90 days'
notice.
The Company has a number of people responsible for station relations and
marketing its programs to radio stations. Station relationships are managed
geographically to allow the marketing staff to concentrate on specific
geographical regions. This enables the Company's staff to develop and maintain
close, professional relationships with radio station personnel and to provide
them with quick programming assistance.
National Advertisers
Westwood One provides national advertisers with a cost-effective way to
communicate their commercial messages to large listening audiences nationwide
that have specific demographic characteristics. An advertiser can obtain both
frequency (number of exposures to the target audience) and reach (size of
listening audience) by purchasing advertising time in the Company`s programs. By
purchasing time in programs directed to different formats, advertisers can be
assured of obtaining high market penetration and visibility as their commercial
messages will be broadcast on several stations in the same market at the same
time. The Company supports its national sponsors with promotional announcements
and advertisements in trade and consumer publications. This support promotes the
upcoming broadcasts of Company programs and is designed to increase the
advertisers' target listening audience.
The Company sells its commercial time to advertisers either as "bulk" or
"flighted" purchases. Bulk purchases are long-term contracts (26 to 52 weeks)
that are sold "up-front" (early advertiser commitments for national broadcast
time). Flighted purchases are contracts for a specific, short-term period of
time (one to six weeks) that are sold at or above prevailing market prices.
Advertising prices vary significantly based on prevailing market conditions.
Generally, the contracts provide that advertising orders are firm and
non-cancelable. The Company's strategy for growth in advertising revenue is to
increase the amount of advertising time sold on the usually more profitable
flighted basis, to increase revenue of the non-RADAR rated programs, and to
increase audience size for news, talk and current events programming.
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Local Traffic and Information Programming
In 1996, the Company expanded its business to include the production and
distribution of local traffic, news, sports and weather programming in selected
metropolitan areas (initially New York, Chicago, Los Angeles and Philadelphia).
The programming is produced in facilities rented by the Company in those
metropolitan areas. Local traffic information is obtained through the
utilization of strategically placed cameras overlooking portions of major
freeways, monitoring police radio bands, phone calls from drivers, and through
patrolling freeways with rented aircraft.
COMPETITION
The Company operates in a very competitive environment. In marketing its
programs to national advertisers, the Company directly competes with other radio
networks as well as with independent radio syndication producers and
distributors. In addition, Westwood One competes for advertising revenue with
network television, cable television, print and other forms of communications
media. The Company believes that the high quality of its programming and the
strength of its station relations and advertising sales forces enable it to
compete effectively with other forms of communication media. Westwood One
markets its programs to radio stations, including affiliates of other radio
networks, that it believes will have the largest and most desirable listening
audience for each of its programs. The Company often has different programs
airing on a number of stations in the same geographic market at the same time.
The Company believes that in comparison with any other independent radio
syndication producer and distributor or radio network it has a more diversified
selection of programming from which national advertisers and radio stations may
choose. In addition, the Company both produces and distributes programs, thereby
enabling it to respond more effectively to the demands of advertisers and radio
stations.
The increase in the number of program formats has led to increased competition
among local radio stations for audience. As stations attempt to differentiate
themselves in an increasingly competitive environment, their demand for quality
programming available from outside programming sources increases. This demand
has been intensified by high operating and production costs at local radio
stations and increased competition for local advertising revenue.
WBS, in the metropolitan areas in which it operates, competes for advertising
revenue with local print and other forms of communications media. The Company's
principal competitor providing local traffic, news, sports and weather
programming is Metro Networks.
GOVERNMENT REGULATION
Radio broadcasting and station ownership are regulated by the FCC. Westwood One,
as a producer and distributor of radio programs, is generally not subject to
regulation by the FCC. Shadow Traffic utilizes FCC regulated frequencies
pursuant to licenses issued by the FCC.
EMPLOYEES
On March 15, 1996, Westwood One had 566 full-time employees, including a
domestic advertising sales force of 69 people. In addition, the Company
maintains continuing relationships with approximately 58 independent writers,
program hosts, technical personnel and producers. Certain employees at the
Mutual Broadcasting System, NBC Radio Networks, and Unistar Radio Networks are
covered by collective bargaining agreements. The Company believes relations with
its employees and independent contractors are good.
ITEM 2. PROPERTIES
The Company owns a 7,600 square-foot building in Culver City, California in
which its production facilities are located; a 14,000 square-foot building and
an adjacent 10,000 square-foot building in Culver City, California which
contains administrative, sales and marketing offices, and storage space; and a
7,700 square-foot unoccupied building in Culver City. In addition, the Company
leases offices in New York; Chicago; Detroit; Dallas; Philadelphia; Arlington,
Virginia and Valencia, California.
The Company believes that its facilities are more than adequate for its current
level of operations.
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ITEM 3. LEGAL PROCEEDINGS
- None -
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the Company's shareholders during the
fourth quarter of the year ended December 31, 1995.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER MATTERS
On March 1, 1996 there were approximately 315 holders of record of the Company's
Common Stock, several of which represent "street accounts" of securities
brokers. Based upon the number of proxies requested by brokers in conjunction
with its shareholders' meeting on June 13, 1995, the Company estimates that the
total number of beneficial holders of the Company's Common Stock exceeds 4,500.
The Company's Common Stock has been traded in the over-the-counter market under
the NASDAQ symbol WONE since the Company's initial public offering on April 24,
1984. The following table sets forth the range of high and low last sales prices
on the NASDAQ/National Market System, as reported by NASDAQ, for the Common
Stock for the calendar quarters indicated.
1995 HIGH LOW
- ---- ---- ---
First Quarter 13 1/8 9 3/4
Second Quarter 15 1/8 12 1/8
Third Quarter 19 3/8 14 3/4
Fourth Quarter 17 3/4 13 3/4
1994
- ----
First Quarter 10 1/2 7 5/8
Second Quarter 87 /8 7 1/8
Third Quarter 11 3/8 7 11/16
Fourth Quarter 11 1/4 7 5/8
No cash dividend was paid on the Company's stock during 1995 or 1994, and the
payment of dividends is restricted by the terms of its loan agreements.
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ITEM 6. SELECTED FINANCIAL DATA
(IN THOUSANDS EXCEPT PER SHARE DATA)
The table below summarizes selected consolidated financial data of the Company
for each of the last five fiscal years:
OPERATING RESULTS FOR YEAR ENDED:
<TABLE>
<CAPTION>
December 31, November 30,
-------------------- -----------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET REVENUES $145,729 $136,340 $84,014 $86,376 $93,170
OPERATING AND CORPORATE COSTS,
EXCLUDING DEPRECIATION AND AMORTIZATION 112,661 112,198 69,821 85,415 77,046
DEPRECIATION AND AMORTIZATION 13,753 18,160 16,384 19,661 22,055
OPERATING INCOME (LOSS) 19,315 5,982 (2,191) (18,700) (5,931)
INCOME (LOSS) FROM CONTINUING OPERATIONS 9,685 (2,730) (8,682) (21,397) (10,004)
(LOSS) FROM DISCONTINUED OPERATIONS - - (15,227) (2,721) (6,778)
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM 9,685 (2,730) (23,909) (24,118) (16,782)
EXTRAORDINARY GAIN (LOSS) - (590) - - 25,618
NET INCOME (LOSS) $9,685 ($3,320) ($23,909) ($24,118) $8,836
INCOME (LOSS) PER SHARE:
Primary:
Continuing Operations $ .28 ($ .09) ($ .57) ($1.44) ($ .67)
Discontinued Operations - - ( 1.01) ( .18) ( .46)
------- -------- -------- -------- -------
Income (Loss) Before Extraordinary Item .28 ( .09) ( 1.58) ( 1.62) ( 1.13)
Extraordinary Item - ( .02) - - 1.73
------- ------- ------- ------- -------
Net Income (Loss) $ .28 ($ .11) ($1.58) ($1.62) $ .60
======= ======= ======= ======= =======
Fully diluted:
Continuing Operations $ .28 ($ .09) ($ .57) ($1.44) ($ .30)
Discontinued Operations - - ( 1.01) ( .18) ( .28)
------- ------- ------- ------ -------
Income (Loss) Before Extraordinary Item .28 ( .09) ( 1.58) ( 1.62) ( .58)
Extraordinary Item - ( .02) - - 1.06
------- ------- ------- ------ -------
Net Income (Loss) $ .28 ($ .11) ($1.58) ($1.62) $ .48
======= ======= ======= ======= =======
BALANCE SHEET DATA AT:
December 31, November 30,
--------------------- ------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
CURRENT ASSETS $41,885 $46,157 $32,987 $51,091 $46,126
WORKING CAPITAL 6,563 7,685 (1,503) (11,942) 10,200
TOTAL ASSETS 245,595 260,112 152,067 295,740 322,561
LONG-TERM DEBT 107,943 115,443 51,943 146,622 169,083
TOTAL SHAREHOLDERS' EQUITY 94,123 95,454 55,151 75,204 98,765
</TABLE>
- ----------------
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements to expense the costs as
incurred. The effect of this change in accounting method does not
materially affect the comparability of the information reflected herein.
Results for the year ended December 31, 1994 include Unistar from the time it
was acquired in February 1994.
No cash dividend was paid on the Company's Common Stock during the periods
presented above.
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Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
In August 1994, the Company changed its fiscal year end from November 30 to
December 31 effective with the fiscal year ending December 31, 1994.
Accordingly, in the following discussion "1995" and "1994" will refer to the
calendar years 1995 and 1994, and "1993" will refer to the fiscal year ended
November 30, 1993.
On February 3, 1994 the Company completed the acquisition of all of the issued
and outstanding capital stock of the Unistar Radio Networks, Inc. ("Unistar").
The acquisition was accounted for as a purchase, and accordingly, the operating
results of Unistar are included with those of the Company from the date of
acquisition.
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements and income taxes. In order to conform
to predominate current industry practice, capitalized station affiliation
agreements will be expensed as incurred. The cumulative effect of the change in
accounting for station affiliation expenses in December 1993 was an expense of
$4,344, or $.23 per share. SFAS No. 109 "Accounting for Income Taxes" was
adopted by the Company in December 1993. The Company elected not to restate
prior year's financial statements. Adopting SFAS No. 109 did not affect the
December 1993 or 1994 results.
In 1993, the Company classified the results of operations from Radio & Records
and its Los Angeles and New York radio stations as discontinued operations. The
Company disposed of these assets during 1993.
RESULTS OF OPERATIONS
Westwood One derives substantially all of its revenue from the sale of
advertising time to advertisers. Net revenues increased 7% to $145,729 in 1995
from $136,340 in 1994 and increased 62% in 1994 from $84,014 in 1993. The
increases in 1995 and 1994 net revenues were primarily a result of the purchase
of Unistar in February 1994.
Operating costs and expenses excluding depreciation and amortization increased
1% to $106,685 in 1995 from $105,389 in 1994 and increased 61% in 1994 from
$65,353 in 1993. The 1995 increase was primarily attributable to the purchase of
Unistar, partially offset by reductions in affiliate compensation expenses. The
1994 increase was primarily attributable to the purchase of Unistar and higher
programming expenses resulting from the production of additional programs.
Depreciation and amortization decreased 24% to $13,753 in 1995 from $18,160 in
1994 and increased 11% in 1994 from $16,384 in 1993. The 1995 decrease was
primarily a result of lower amortization of programming costs and rights from
lower levels of capitalized costs. The increase in depreciation and amortization
expense in 1994 was primarily a result of the purchase of Unistar, partially
offset by lower amortization of programming costs and rights and lower
amortization as a result of the Company's December 1, 1993 change in its method
of accounting for capitalized station affiliation agreements.
Corporate general and administrative expenses increased 36% to $5,976 in 1995
from $4,404 in 1994 and decreased 1% in 1994 from $4,468 in 1993. The increase
in 1995 was primarily a result of fees attributable to the Infinity Management
Agreement and higher compensation for the Company's chairman. The nominal
decrease in 1994 is a result of across-the-board expense cuts, partially offset
by fees attributable to the Infinity Management Agreement.
As a result of the purchase of Unistar, the Company accrued restructuring costs
of $2,405 in the first quarter of 1994 principally relating to the consolidation
of certain facilities and operations.
Operating income increased 223% to $19,315 in 1995 from $5,982 in 1994 and
increased $8,173 in 1994 from an operating loss of $2,191 in 1993. The dramatic
improvement in 1995 is attributable to the acquisition of Unistar and lower
amortization of programming costs and rights, partially offset by higher
corporate general and administrative expenses. The improvement in 1994 is
attributable to the acquisition of Unistar and cost savings resulting from
operating synergies from the Unistar acquisition, partially offset by higher
depreciation and amortization expense as a result of the Unistar acquisition.
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Interest expense was $9,524, $8,802 and $6,551 in 1995, 1994 and 1993,
respectively. The increase in 1995 was primarily attributable to twelve months'
interest in the current year for debt obtained as a result of the Unistar
acquisition and higher interest rates, partially offset by lower debt levels as
a result of repaying $12,500 in debt in the current year and the 1994 conversion
of 9% Senior Debentures to Common Stock. The 1994 increase is principally
attributable to higher debt levels as a result of the acquisition of Unistar,
partially offset by the elimination of interest expense on the Company's 9%
Senior Debentures due to their conversion to Common Stock. Other income is
principally comprised of investment income.
Income (loss) from continuing operations increased $12,415 to $9,685 ($.28 per
share) from 1994's loss of $2,730 ($.09 per share) and the 1994 loss decreased
69% from 1993's loss of $8,682 ($.57 per share).
Loss on discontinued operations, net of income tax benefit, was $3,140 in 1993.
The loss represents the operating performance of discontinued operations through
March 1, 1993.
The $12,087 provision for loss on disposal of discontinued operations included
estimated future costs and operating results of the discontinued assets from
March 1, 1993 until the date of disposition.
In connection with the refinancing of its senior debt facility, the Company
recorded an extraordinary loss of $590 ($.02 per share).
Net income increased $13,005 to $9,685 ($.28 per share) from a net loss of
$3,320 ($.11 per share) in 1994 and the 1994 net loss decreased 86% in 1994 from
$23,909 ($1.58 per share) in 1993.
Weighted average shares outstanding increased 17% to 34,310 in 1995 from 29,414
in 1994 and 94% in 1994 from 15,153 in 1993. The 1995 increase is primarily
attributable to the full year impact of share issuances made in 1994 (conversion
of 9% Senior Debentures and sale of 5,000 shares to a subsidiary of Infinity).
The 1994 increase in weighted average shares is primarily attributable to the
conversion of its 9% Senior Debentures into approximately 8,864 shares of Common
Stock and the sale of 5,000 shares of Common Stock to a subsidiary of Infinity.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company's cash and cash equivalents were $256, a
decrease of $2,183 from December 31, 1994. In addition, the Company had
available borrowings under its loan agreement of $17,500.
For 1995, net cash from operating activities was $24,223, an increase of $21,778
from 1994. The increase was primarily attributable to higher cash flow from
operations. In 1994, net cash from operating activities was much lower due to
high working capital requirements as a result of the acquisition of Unistar. Net
cash used by investing activities was $2,890 principally due to the purchase of
capital equipment. Consequently, cash provided before financing activities was
$21,333.
The Company has been authorized by its Board of Directors to repurchase up to
$40,000 of its Common Stock through December 31, 1996. During 1995, the Company
purchased 607 shares of the Company's Common Stock and 500 warrants for a total
cost of $14,475. In addition, the Company prepaid $12,500 of its long-term debt.
On March 1, 1996, the Company purchased the operating assets of New York Shadow
Traffic Limited Partnership, Chicago Shadow Traffic Limited Partnership, Los
Angeles Shadow Traffic Limited Partnership, and Philadelphia Express Traffic
Limited Partnership (collectively "Shadow Traffic") for $20,000 plus expenses,
subject to an adjustment based on the future cash flow of Shadow Traffic. The
acquisition will be financed using the Company's existing cash and available
bank borrowings.
Management believes that the Company's cash, available borrowings and
anticipated cash flow from operations will be sufficient to finance current and
forecasted operations over the next 12 months.
10
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and the related notes and schedules of the
Company are indexed on page F-1 of this Report, and attached hereto as pages F-1
through F-15 and by this reference incorporated herein.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
11
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after then end of the Company's fiscal year.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
This information is incorporated by reference to the Company's definitive
proxy statement to be filed pursuant to Regulation 14A not later than 120 days
after the end of the Company's fiscal year.
12
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) DOCUMENTS FILED AS PART OF THIS REPORT ON FORM 10-K
1. Financial statements and schedules to be filed thereunder are indexed
on page F-1 hereof.
2. Exhibits
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.1 Certificate of Incorporation of Registrant. (1)
3.2 Agreement of Merger. (1)
3.3 Certificate of Amendment of Certificate of Incorporation, as filed on
October 10, 1986. (2)
3.4 Certificate of Amendment of Certificate of Incorporation, as filed on
October 9, 1986. (3)
3.5 Certificate of Amendment of Certificate of Incorporation, as filed on
March 23, 1987. (3)
3.6 Certificate of Correction of Certificate of Amendment, as filed on March
31, 1987 at 10:00 a.m. (3)
3.7 Certificate of Correction of Certificate of Amendment, as filed on March
31, 1987 at 10:01 a.m. (3)
3.8 Bylaws of Registrant as currently in effect. (15)
4 Form of Indenture for 6 3/4% Convertible Subordinated Debentures
(including the form of the Debenture). (2)
4.1 Warrant Agreement dated August 27, 1990 between Registrant and Security
Pacific National Bank, as Warrant Agent. (7)
*10.1 Employment Agreement and Registration Rights Agreement, dated October 18,
1993, between Registrant and Norman J. Pattiz. (13)
*10.2 First Amendment to Employment Agreement, dated January 26, 1994 between
Registrant and Norman J. Pattiz. (13)
*10.3 Second Amendment to Employment Agreement,dated February 2, 1994, between
Registrant and Norman J. Pattiz. (15)
*10.4 Employment Agreement, dated June 1, 1995, between Registrant and Gregory
P. Batusic.
*10.5 Employment Agreement, dated April 10, 1995, between Registrant and
Jeffrey Lawenda.
10.6 Form of Indemnification Agreement Between Registrant and its Directors
and Executive Officers. (4)
10.7 Credit Agreement, dated February 1, 1994, between Registrant and The
Chase Manhattan Bank (National Association) and Co-Agents. (15)
10.8 Amendment No. 1 to the Credit Agreement, dated August 12, 1994, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.9 Amendment No. 2 to the Credit Agreement, dated August 31, 1994, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.10 Amendment No. 3 to the Credit Agreement, dated February 23, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents. (15)
10.11 Amendment No. 4 to the Credit Agreement, dated April 6, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents.
10.12 Amendment No. 5 to the Credit Agreement, dated December 1, 1995, between
Registrant and The Chase Manhattan Bank (National Association) and
Co-Agents.
10.13 Purchase Agreement dated as of August 24, 1987, between Registrant and
National Broadcasting Company, Inc. (5)
10.14 Stock Purchase Agreement, dated November 4, 1993, between Registrant and
Unistar Communications Group, Inc., Unistar Radio Network, Inc., and
Infinity Broadcasting Corporation. (12)
10.15 Securities Purchase Agreement, dated November 4, 1993, between Registrant
and Infinity Network, Inc. (12)
*10.16 Management Agreement, dated as of February 4, 1994, between Registrant
and Infinity Broadcasting Corporation. (12)
*10.17 Voting Agreement, dated as of February 4, 1994, among Registrant,
Infinity Network, Inc., Infinity Broadcasting Corporation and Norman J.
Pattiz. (12)
13
<PAGE>
10.18 Asset Purchase Agreement, dated March 4, 1996, between Westwood One
Broadcasting Services, Inc. and Chicago Shadow Traffic Limited
Partnership, New York Shadow Traffic Limited Partnership, Los Angeles
Shadow Traffic Limited Partnership, Philadelphia Express Traffic Limited
Partnership, City Traffic Corp., Express Traffic Corp. and Alan
Markowitz.
10.19 Westwood One, Inc. 1989 Stock Incentive Plan. (10)
10.20 Amendments to the Westwood One, Inc. Amended 1989 Stock Incentive Plan.
(14)
10.21 Lease, dated July 19, 1989, between First Ball Associates Limited
Partnership and Westwood One, Inc., relating to Arlington, Virginia
offices. (6)
10.22 Lease, dated June 18, 1990, between Broadway 52nd Associates and Unistar
Communications Group, Inc. relating to New York, New York offices. (15)
10.23 Lease, dated December 18, 1991, between Valencia Paragon Associates,
Ltd., and Unistar Communications Group, Inc. relating to Valencia,
California offices. (15)
10.24 Digital Audio Transmission Service Agreement, dated June 5, 1990, between
Registrant and GE American Communications, Inc. (8)
10.25 Transmission Service Agreement, dated May 28, 1993, between IDB
Communications Group, Inc. and Unistar Radio Networks, Inc. (15)
10.26 Stipulation of Settlement of Class Action Law Suit. (6)
10.27 Agreement for Cancellation of Loan Documents, Guarantees and Securities
Purchase Documents, dated as of November 19, 1993 between Registrant,
Westwood One Stations Group, Inc., Westwood One Stations-LA, Inc., Radio
& Records, Inc. and Westinghouse Electric Corporation. (13)
22 List of Subsidiaries
24 Consent of Independent Accountants
27 Financial Data Schedule
**********************
* Indicates a management contract or compensatory plan.
(1) Filed as an exhibit to Registrant's registration statement on Form S-1
(File Number 2-98695) and incorporated herein by reference.
(2) Filed as an exhibit to Registrant's registration statement on Form S-1
(Registration Number 33-9006) and incorporated herein by reference.
(3) Filed as an exhibit to Registrant's Form 8 dated March 1, 1988 (File Number
0-13020), and incorporated herein by reference.
(4) Filed as part of Registrant's September 25, 1986 proxy statement (File
Number 0-13020) and incorporated herein by reference.
(5) Filed an exhibit to Registrant's current report on Form 8-K dated September
4, 1987 (File Number 0-13020) and incorporated herein by reference.
(6) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1989 (File Number 0-13020) and incorporated
herein by reference.
(7) Filed as an exhibit to Registrant's Quarterly report on Form 10-Q for the
quarter ended August 31, 1990 (File Number 0-13020) and incorporated herein
by reference.
(8) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1990 (File Number 0-13020) and incorporated
herein by reference.
(9) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1991 (File Number 0-13020) and incorporated
herein by reference.
(10) Filed as part of Registrant's March 27, 1992 proxy statement (File Number
0-13020) and incorporated herein by reference.
(11) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1992 (File Number 0-13020) and incorporated
herein by reference.
(12) Filed as part of Registrant's January 7, 1994 proxy statement (File Number
0-13020) and incorporated herein by reference.
(13) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the
fiscal year ended November 30, 1993 (File Number 0-13020) and incorporated
herein by reference.
(14) Filed as an exhibit to Registrant's July 20, 1994 proxy statement (File
Number 0-13020) and incorporated herein by reference.
(15) Filed as an exhibit to Registrant's Annual Report on Form 10-K for the year
ended December 31, 1994 (File Number 0-13020) and incorporated herein by
reference.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the fourth quarter of 1995.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
WESTWOOD ONE, INC.
March 27, 1996 By /s/ FARID SULEMAN
-------------------------------
Farid Suleman
Director, Secretary and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
PRINCIPAL EXECUTIVE OFFICER:
/s/ MEL A KARMAZIN
- ---------------------------- Director, President
Mel A. Karmazin Chief Executive Officer March 27, 1996
PRINCIPAL FINANCIAL OFFICER AND
CHIEF ACCOUNTING OFFICER:
/s/ FARID SULEMAN
- ------------------------------- Director, Secretary and March 27, 1996
Farid Suleman Chief Financial Officer
Additional Directors:
/s/ NORMAN J. PATTIZ
- ------------------------------ Chairman of the Board of March 27, 1996
Norman J. Pattiz Directors
/s/ DAVID L. DENNIS
- ------------------------------ Director March 27, 1996
David L. Dennis
/s/ GERALD GREENBERG
- ------------------------------ Director March 27, 1996
Gerald Greenberg
/s/ PAUL G. KRASNOW
- ------------------------------ Director March 27, 1996
Paul G. Krasnow
/s/ STEVEN A. LERMAN
- ------------------------------ Director March 27, 1996
Steven A. Lerman
/s/ ARTHUR E. LEVINE
- ------------------------------ Director March 27, 1996
Arthur E. Levine
/s/ JOSEPH B. SMITH
- ------------------------------ Director March 27, 1996
Joseph B. Smith
15
<PAGE>
WESTWOOD ONE, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
PAGE
----
1. CONSOLIDATED FINANCIAL STATEMENTS
--Report of Independent Accountants F-2
--Consolidated Balance Sheets at December 31, 1995 and 1994 F-3
--Consolidated Statements of Operations for the years ended
December 31, 1995 and 1994, November 30, 1993 and the month
ended December 31, 1993 F-4
--Consolidated Statements of Shareholders' Equity for the
years ended December 31, 1995 and 1994, November 30, 1993
and the month ended December 31, 1993 F-5
--Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1994, November 30, 1993 and the
month ended December 31, 1993 F-6
--Notes to Consolidated Financial Statements F-7 - F-14
2. FINANCIAL STATEMENT SCHEDULES:
IX. --Short-term Borrowings F-15
All other schedules have been omitted because they are not applicable, the
required information is immaterial, or the required information is included
in the consolidated financial statements or notes thereto.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS
OF WESTWOOD ONE, INC.
In our opinion, the consolidated financial statements listed in the index to
consolidated financial statements and financial statement schedules on page F-1
present fairly, in all material respects, the financial position of Westwood
One, Inc. and its subsidiaries at December 31, 1995 and 1994, and the results of
their operations and their cash flows for each of the two fiscal years in the
period ended December 31, 1995, the one month ended December 31, 1993 and for
the fiscal year ended November 30, 1993, in conformity with generally accepted
accounting principles. 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 of these
statements in accordance with generally accepted auditing standards which
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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in the Notes to Consolidated Financial Statements, effective
December 1, 1993 the Company changed its accounting policy for capitalized
station affiliation agreements and adopted Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes".
PRICE WATERHOUSE LLP
Century City, California
February 5, 1996
F-2
<PAGE>
<TABLE>
<CAPTION>
WESTWOOD ONE, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
December 31,
------------
1995 1994
---- ----
ASSETS
------
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $ 256 $ 2,439
Accounts receivable, net of allowance for doubtful accounts
of $2,157 (1995) and $1,645 (1994) 36,591 37,631
Other current assets 5,038 6,087
--------- ---------
Total Current Assets 41,885 46,157
PROPERTY AND EQUIPMENT, NET 15,632 16,748
INTANGIBLE ASSETS, NET 184,441 191,287
OTHER ASSETS 3,637 5,920
--------- ---------
TOTAL ASSETS $ 245,595 $ 260,112
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 14,468 $ 15,325
Accrued expenses and other liabilities 14,675 12,947
Amounts payable to affiliates 6,179 5,200
Current maturities of long-term debt -- 5,000
--------- ---------
Total Current Liabilities 35,322 38,472
LONG-TERM DEBT 107,943 115,443
OTHER LIABILITIES 8,207 10,743
--------- ---------
TOTAL LIABILITIES 151,472 164,658
--------- ---------
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Preferred stock: authorized 10,000,000 shares, none outstanding -- --
Common stock, $.01 par value: authorized, 117,000,000 shares;
issued and outstanding, 31,507,027 (1995) and 30,652,652 (1994) 315 307
Class B stock, $.01 par value: authorized, 3,000,000 shares:
issued and outstanding, 351,733 (1995 and 1994) 4 4
Additional paid-in capital 157,547 159,727
Accumulated deficit (54,899) (64,584)
--------- ---------
102,967 95,454
Less treasury stock, at cost; 607,395 shares (1995) (8,844) --
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 94,123 95,454
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 245,595 $ 260,112
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
Month Ended Year Ended
Year Ended December 31, December 31, November 30,
----------------------
1995 1994 1993 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
GROSS REVENUES $169,598 $158,780 $6,887 $98,357
Less Agency Commissions 23,869 22,440 970 14,343
------- ------- ------- -------
NET REVENUES 145,729 136,340 5,917 84,014
------- ------- ------- -------
Operating Costs and Expenses Excluding
Depreciation and Amortization 106,685 105,389 5,411 65,353
Depreciation and Amortization 13,753 18,160 1,243 16,384
Corporate General and Administrative Expenses 5,976 4,404 245 4,468
Restructuring Costs - 2,405 - -
------- ------- ------- -------
126,414 130,358 6,899 86,205
------- ------- ------- -------
OPERATING INCOME (LOSS) 19,315 5,982 (982) (2,191)
Interest Expense 9,524 8,802 381 6,551
Other Income (389) (290) (3) (60)
------- ------- ------- -------
INCOME (LOSS) BEFORE INCOME TAXES, DISCONTINUED
OPERATIONS, EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 10,180 (2,530) (1,360) (8,682)
INCOME TAXES 495 200 - -
------- ------- ------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS 9,685 (2,730) (1,360) (8,682)
(LOSS) ON DISCONTINUED OPERATIONS, NET
OF INCOME TAX BENEFIT - - - (3,140)
PROVISION FOR (LOSS) ON DISPOSAL OF
DISCONTINUED OPERATIONS - - - (12,087)
------- ------- ------- -------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM AND
CUMULATIVE EFFECT OF ACCOUNTING CHANGE 9,685 (2,730) (1,360) (23,909)
EXTRAORDINARY ITEM - (LOSS) ON RETIREMENT OF DEBT - (590) - -
CUMULATIVE EFFECT OF ACCOUNTING CHANGE - - (4,344) -
------- ------- ------- -------
NET INCOME (LOSS) $9,685 ($3,320) ($5,704) ($23,909)
======= ======= ======= =======
INCOME (LOSS) PER SHARE:
Continuing Operations $ .28 ($ .09) ($ .07) ($ .57)
Discontinued Operations - - - ( 1.01)
------- ------- ------- -------
Income (Loss) Before Extraordinary Item and Cumulative
Effect of Accounting Change .28 ( .09) ( .07) ( 1.58)
Extraordinary Item - ( .02) - -
------- ------- ------- -------
.28 ( .11) ( .07) ( 1.58)
Cumulative Effect of Accounting Change - - ( .23) -
------- ------- ------- -------
Net Income (Loss) $ .28 ($ .11) ($ .30) ($1.58)
======= ======= ======= =======
WEIGHTED AVERAGE SHARES OUTSTANDING 34,310 29,414 19,051 15,153
======= ======= ======= =======
Pro Forma Amounts Assuming the New Accounting
Method is Applied Retroactively:
Income (Loss) Before Extraordinary Item $9,685 ($2,730) ($1,360) ($23,142)
Net Income (Loss) 9,685 (3,320) (1,360) (23,142)
Income (Loss) Per Share:
Income (Loss) Before Extraordinary Item $ .28 ($ .09) ($ .07) ($1.53)
Net Income (Loss) .28 ( .11) ( .07) ( 1.53)
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
Common Stock Class B Stock Additional Treasury Stock
------------ ------------- Paid-in Accumulated --------------
Shares Amount Shares Amount Capital (Deficit) Shares Amount
------ ------ ------ ------ ------- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT NOVEMBER 30, 1992 .......... 14,663 $ 147 352 $ 4 $ 106,704 ($ 31,651) -- --
Net loss for fiscal 1993 ............. -- -- -- -- -- (23,909) -- --
Amortization of deferred compensation -- -- -- -- 281 -- -- --
Issuance of common stock under
stock option plans ................. 680 7 -- -- 1,381 -- -- --
Conversion of Senior Debentures to
common stock ....................... 591 6 -- -- 2,062 -- -- --
Issuance of common stock to 401-K plan 46 -- -- -- 119 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT NOVEMBER 30, 1993 .......... 15,980 160 352 4 110,547 (55,560) -- --
Net loss for December 1993 ........... -- -- -- -- -- (5,704) -- --
Issuance of common stock under
stock option plans ................. 179 2 -- -- 366 -- -- --
Conversion of Senior Debentures to
common stock ....................... 3,542 35 -- -- 12,530 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1993 .......... 19,701 197 352 4 123,443 (61,264) -- --
Net loss for 1994 .................... -- -- -- -- -- (3,320) -- --
Issuance of common stock and
warrants ........................... 5,000 50 -- -- 15,933 -- -- --
Issuance of common stock under
stock option plans ................. 629 7 -- -- 1,169 -- -- --
Conversion of Senior Debentures to
common stock ....................... 5,322 53 -- -- 19,170 -- -- --
Issuance of common stock to 401-K plan 1 -- -- -- 12 -- -- --
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1994 .......... 30,653 307 352 4 159,727 (64,584) -- --
Net income for 1995 .................. -- -- -- -- -- 9,685 -- --
Issuance of common stock under
stock option plans ................. 754 7 -- -- 3,215 -- -- --
Issuance of common stock under
warrants ........................... 100 1 -- -- 236 -- -- --
Purchase and cancellation of warrant . -- -- -- -- (5,631) -- -- --
Purchase of treasury stock ........... -- -- -- -- -- -- 607 8,844
--------- --------- --------- --------- --------- --------- --------- ---------
BALANCE AT DECEMBER 31, 1995 .......... 31,507 $ 315 352 $ 4 $ 157,547 ($ 54,899) 607 $ 8,844
========= ========= ========= ========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
WESTWOOD ONE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Month Ended Year Ended
Year Ended December 31, December 31, November 30,
-----------------------
1995 1994 1993 1993
---- ---- ---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income (loss) $ 9,685 ($ 3,320) ($ 5,704) ($ 23,909)
Adjustments to reconcile net loss to net cash provided by operating
activities before cash payments related to extraordinary item:
Depreciation and amortization 13,753 18,160 1,243 17,372
Extraordinary item - loss on retirement of debt -- 590 -- --
Cummulative effect of accounting change -- -- 4,344 --
Loss on disposal of discontinued operations -- -- -- 12,087
Other, principally capitalized programming costs and rights (206) (677) 11 (3,625)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 1,040 (19,191) 1,088 (2,239)
Decrease (increase) in prepaid assets (430) (377) (197) 209
Increase (decrease) in accounts payable and accrued
liabilities 381 7,510 (95) (2,189)
--------- --------- --------- ---------
Net cash provided by (used for) operating activities before cash
payments related to extraordinary item 24,223 2,695 690 (2,294)
Cash payments related to extraordinary item -- (250) -- --
--------- --------- --------- ---------
Net Cash Provided By (Used For) Operating Activities 24,223 2,445 690 (2,294)
--------- --------- --------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Acquisition of companies (Unistar in 1994) (994) (108,181) (72) (1,217)
Capital expenditures (1,229) (1,487) (296) (2,270)
Proceeds (cash payments) related to sales of discontinued
operations (73) (576) (229) 88,062
Proceeds related to sale of unconsolidated subsidary -- -- -- 10,372
Other (39) 551 (19) 200
--------- --------- --------- ---------
Net Cash Provided By (Used For) Investing Activities (2,335) (109,693) (616) 95,147
--------- --------- --------- ---------
CASH PROVIDED (USED) BEFORE
FINANCING ACTIVITIES 21,888 (107,248) 74 92,853
--------- --------- --------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Debt repayments (12,500) (14,515) (4,133) (104,071)
Borrowings under debt arrangements -- 110,000 -- 7,000
Issuance of common stock 3,459 16,126 368 1,507
Repurchase of common stock and warrants (14,475) -- -- --
Deferred financing costs (555) (2,038) (63) (309)
Issuance of subordinated debentures -- -- -- 433
--------- --------- --------- ---------
NET CASH PROVIDED BY (USED FOR)
FINANCING ACTIVITIES (24,071) 109,573 (3,828) (95,440)
--------- --------- --------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (2,183) 2,325 (3,754) (2,587)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,439 114 3,868 6,455
--------- --------- --------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 256 $ 2,439 $ 114 $ 3,868
========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
F - 6
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of all wholly-owned
subsidiaries.
REVENUE RECOGNITION
Revenue is recognized when commercial advertisements are broadcast.
CASH EQUIVALENTS
The Company considers all highly liquid instruments purchased with a maturity of
less than three months to be cash equivalents. The carrying amount of cash
equivalents approximates fair value because of the short maturity of these
instruments.
DEPRECIATION
Depreciation is computed using the straight line method over the estimated
useful lives of the assets.
MEASUREMENT OF INTANGIBLE ASSET IMPAIRMENT
At each balance sheet date, the Company determines whether an impairment of
Intangible Assets has occurred based upon expectations of nondiscounted
broadcast cash flow. Broadcast Cash Flow is based on the consolidated statement
of operations, calculated by subtracting from net revenue, operating costs and
expenses excluding depreciation and amortization. To date, the Company has not
experienced an impairment in any of its intangible assets. However, should such
an impairment exist, the impairment will be measured as the amount by which the
carrying amount of the asset exceeds its fair value, as defined by Statement of
Financial Accounting Standards No. 121 (FAS 121), "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of".
INCOME TAXES
Effective December 1, 1993, the Company implemented, on a prospective basis,
Statement of Financial Accounting Standards No. 109 (FAS 109), "Accounting for
Income Taxes" which requires the use of the asset and liability method of
financial accounting and reporting for income taxes. The adoption of FAS109 did
not affect reported earnings. Under FAS 109, deferred income taxes reflect the
tax impact of temporary differences between the amount of assets and liabilities
recognized for financial reporting purposes and the amounts recognized for tax
purposes.
EARNINGS (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of common
shares and common equivalent shares (where inclusion of such equivalent shares
would not be anti-dilutive) outstanding during the year.
PERVASIVENESS OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and revenue and expenses during the reporting period.
Actual results may differ from those estimates.
RECLASSIFICATION
Certain amounts have been reclassified to be comparable to the 1995
presentation.
F-7
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 - ACCOUNTING CHANGE:
Effective December 1, 1993, the Company changed its method of accounting for
capitalized station affiliation agreements to expense these costs as incurred.
The Company believes this method is preferable and conforms to the predominant
current industry practice, including Unistar. Accordingly, the Company
recognized the cumulative effect of the change as of December 1, 1993. The
non-cash charge to earnings was an expense of $4,344, or $.23 per share and has
been reflected in the financial statements for the month of December 1993.
NOTE 3 - CHANGE IN FISCAL YEAR:
In the third quarter of 1994, the Company changed its fiscal year end from
November 30 to December 31 effective with the fiscal year ending December 31,
1994. The accompanying financial statements include audited statements of
operations, shareholders' equity and cash flows for the one month transition
period ended December 31, 1993.
NOTE 4 - ACQUISITION OF UNISTAR RADIO NETWORKS, INC.:
On February 3, 1994, the Company completed the acquisition of all of the issued
and outstanding capital stock of Unistar Radio Networks, Inc. ("Unistar") for
$101,300 plus expenses. The acquisition was accounted for as a purchase.
Accordingly, the operating results of Unistar are included with those of the
Company from the date of acquisition. Based on management's estimates, the
purchase price has been allocated to the fair value of assets and liabilities
acquired. The excess of cost over net assets of acquired company resulting from
the transaction ($92,464) is being amortized over 40 years.
NOTE 5 - PROPERTY AND EQUIPMENT:
Property and equipment is recorded at cost and is summarized as follows at:
<TABLE>
DECEMBER 31,
------------------
1995 1994
<C> <C>
Land............................................................ $ 3,378 $ 3,378
Recording and studio equipment.................................. 15,906 15,813
Buildings and leasehold improvements............................ 7,574 7,573
Furniture and equipment......................................... 5,788 5,664
Transportation equipment........................................ 587 690
Construction-in-progress........................................ 347 -
------- ------
33,580 33,118
Less: Accumulated depreciation and amortization................ 17,948 16,370
------ -------
Property and equipment, net............................ $15,632 $16,748
======= =======
</TABLE>
Depreciation expense was $2,340 in 1995, $3,238 in 1994 and $2,111 in 1993.
F-8
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 6 - INTANGIBLE ASSETS:
Intangible assets are summarized as follows at:
<TABLE>
DECEMBER 31,
-----------------
1995 1994
---- ----
<S> <C> <C>
Goodwill, less accumulated amortization of $20,572 (1995) and
$16,334 (1994)..................................................... $148,967 $153,205
Acquired station affiliation agreements, less accumulated
amortization of $4,823 (1995) and $3,382 (1994).................... 18,956 21,025
Other intangible assets, less accumulated amortization of $5,082
(1995) and $4,543 (1994)........................................... 16,518 17,057
-------- --------
Intangible assets, net....................................... $184,441 $191,287
======== ========
</TABLE>
Intangible assets, except for acquired station affiliation agreements, are
amortized on a straight-line basis over 40 years.
Station affiliation agreements are comprised of values assigned to agreements
acquired as part of the purchase of radio networks and are amortized using an
accelerated method over 40 years. The period of amortization is evaluated
periodically to determine whether a revision to the estimated useful life is
warranted.
NOTE 7 - DEBT:
Long-term debt consists of the following at:
<TABLE>
DECEMBER 31,
--------------------
1995 1994
---- ----
<S> <C> <C>
Revolving Credit Facility/Term Loans................................ $ 92,500 $105,000
6 3/4% Convertible Subordinated Debentures maturing 2011............ 15,443 15,443
-------- --------
107,943 120,443
Less current maturities............................................. - 5,000
-------- --------
$107,943 $115,443
======== ========
</TABLE>
The Company's amended senior loan agreement with a syndicate of banks, lead by
Chase Manhattan Bank, provides for a $125,000 revolving credit facility (the
"Facility"), which is subject to mandatory quarterly reductions. The Facility is
available until June 30, 2002. At December 31, 1995, the Company had available
borrowings under the Facility of $110,000. Interest is payable at the prime rate
plus an applicable margin of up to 1.5% or LIBOR plus an applicable margin of up
to 2.5%, at the Company's option. Based on the Company's Total Debt Ratio, the
applicable margins may be reduced to as low as 0% for prime rate loans and 1.0%
for LIBOR loans. At December 31, 1995, the applicable margins were 0% and 1.0%,
respectively. At December 31, 1995, the Company had borrowed $92,500 at 6.82%
under the Facility. The Facility is secured by substantially all the Company's
assets and contains covenants relating to dividends, liens, indebtedness,
capital expenditures and interest coverage and leverage ratios. As a matter of
policy, the Company does not engage in derivative trading. As part of the
Facility, the Company is required to enter into interest rate protection
agreements. Accordingly, the Company has entered into two interest rate
protection agreements under which the Company's interest rate on $50,000 of
borrowings under the Facility will not exceed 7% (based on the current margin).
The agreements are effective from July and August 1995 thru July and August
1996, with each covering $25,000 of borrowings.
F-9
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The 6 3/4% Convertible Subordinated Debentures ("Debentures") are unsecured and
subordinated in right of payment to senior indebtedness. Interest on the
Debentures is payable semiannually on April 15 and October 15. The Debentures
are convertible at any time prior to maturity, unless previously redeemed, into
shares of common stock of the Company at the conversion price of $24.58 per
share, subject to adjustment upon the occurrence of certain events.
The aggregate maturities of long-term debt for the next five fiscal years and
thereafter, pursuant to the Company's debt agreements as in effect at December
31, 1995, are as follows:
YEAR
1997................................. $ 12,500
1998................................. 17,500
1999................................. 17,500
2000................................. 17,500
Thereafter........................... 42,943
-------
$107,943
========
With the exception of the Company's Debentures, the fair value of short and
long-term debt approximates its carrying value. The fair value of the Debentures
at December 31, 1995 was approximately $13,744, based on its quoted market
price.
NOTE 8 - SHAREHOLDERS' EQUITY:
The authorized capital stock of the Company consists of Common stock, Class B
stock and Preferred stock. Common stock is entitled to one vote per share while
Class B stock is entitled to 50 votes per share.
In connection with the Company's purchase of Unistar, the Company sold 5 million
shares of common stock and a warrant to purchase up to an additional 3 million
shares of common stock at an exercise price of $3.00 per share (subject to
certain vesting conditions) to a wholly-owned subsidiary of Infinity
Broadcasting Corporation for $15,000.
As part of a settlement relating to class action lawsuits filed against the
Company, warrants to purchase 3,000,000 shares of the Company's common stock at
$17.25 per share were issued. The warrants expire on September 4, 1997. Warrants
not exercised may be redeemable under certain circumstances at $1.00 per
warrant.
NOTE 9 - STOCK OPTIONS:
The Company has stock option plans established in 1989 which provide for the
granting of options to directors, officers and key employees to purchase stock
at its market value on the date the options are granted. There are 4,800,000
shares authorized under the 1989 Plan, as amended. Options granted generally
become exercisable after one year in 20% increments per year and expire within
ten years from the date of grant.
F-10
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Information concerning options outstanding under the Plans is as follows for the
year ended:
<TABLE>
DECEMBER 31,
----------------------
1995 1994
---- ----
<S> <C> <C>
Shares authorized under option plans at end of period 4,800,000 4,800,000
Exercisable at end of period.......................................... 574,125 608,750
-at exercise prices per share...................................... $1.81-$9.75 $1.63-$5.38
Exercised during the period........................................... 304,375 629,000
-at exercise prices per share...................................... $1.63-$5.38 $1.63-$3.00
Granted during the period............................................. 675,000 630,000
-at exercise prices per share...................................... $12.75-$14.50 $7.50-$9.75
Canceled during the period............................................ 20,625 91,875
Expired during the period............................................. - 50,000
Available for new stock options at end of period...................... 977,750 1,632,125
</TABLE>
As part of a Management Agreement between the Company and Infinity Broadcasting
Corporation ("Infinity"), a subsidiary of Infinity was given warrants to acquire
up to 1,500,000 shares of common stock at prices ranging between $3.00 and $5.00
per share, subject to adjustment, which are exercisable after the Company's
common stock reaches certain market prices per share. At December 31, 1995,
500,000 warrants were exercisable at $4.00 per share (see Note 11 - Related
Party Transactions).
On December 1, 1986, the Chairman of the Board was granted options not covered
by the Plans to acquire 525,000 shares of common stock, which vested ratably
over a seven-year term or immediately upon a change in control of the Company.
The options became exercisable at the fair market value of the common stock, as
defined, on the date of vesting. During 1995, options to acquire 450,000 shares
were exercised at prices ranging from $1.67 to $9.38. At December 31, 1995,
options covering 75,000 shares were exercisable at $16.31 per share.
NOTE 10 - INCOME TAXES:
The Company has approximately $80,000 of available U.S. net operating loss
carryforwards for tax purposes, which begin to expire in 2002. Utilization of
the carryforwards is dependent upon future taxable income and the absence of any
significant changes in the stock ownership of the Company. For financial
purposes, a valuation allowance of $20,639 has been recorded to offset the
deferred tax assets related to those carryforwards.
F-11
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities on the Company's balance
sheet and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities follow:
DECEMBER 31,
-------------------
1995 1994
---- ----
Deferred tax liabilities:
Affiliation agreements............................. $ 8,475 $ 9,143
Purchase accruals.................................. 7,956 8,207
Other.............................................. 1,643 3,726
------- -------
Total deferred tax liabilities................... 18,074 21,076
------- -------
Deferred tax assets:
Net operating loss................................. 30,695 32,650
Accrued liabilities and reserves................... 6,673 6,953
Tax credits (AMT and ITC).......................... 1,345 1,047
------ ------
Total deferred tax assets........................ 38,713 40,650
------ ------
Valuation allowance.................................. 20,639 19,574
------- ------
Total deferred income taxes.......................... $ - $ -
======= ======
The components of the provision (benefit) for income taxes related to continuing
operations is summarized as follows:
YEAR ENDED
----------------------------
DECEMBER 31, NOVEMBER 30,
------------ ------------
Current payable: 1995 1994 1993
---- ---- ----
Federal.................................... $ 280 $ 70 $ -
State...................................... 215 130 -
------ ------ -----
Total income tax expense................... $ 495 $ 200 $ -
====== ====== =====
NOTE 11 - RELATED PARTY TRANSACTIONS:
In connection with the acquisition of Unistar, the Company sold 5,000,000 shares
of the Company's common stock and a warrant to purchase up to an additional
3,000,000 shares to a subsidiary of Infinity (See Note 8) and entered into a
Management Agreement with Infinity. Pursuant to the Management Agreement, the
Company paid or accrued expenses aggregating $2,709 to Infinity in 1995 ($1,849
in 1994). In November 1995, the Company entered into a transaction with a
subsidiary of Infinity that effectively eliminated, for financial reporting
purposes, its obligation under the Management Agreement for $3.00 incentive
warrants covering 500,000 common shares. The net cost of this transaction was
$5,631.
In addition, several of Infinity's radio stations are affiliated with the
Company's radio networks and the Company purchases several programs from
Infinity. During 1995 the Company incurred expenses aggregating approximately
$14,657 for Infinity affiliations and programs ($12,159 in 1994).
F-12
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 12 - RESTRUCTURING COSTS:
As a result of the Company's February 1994 acquisition of Unistar, the Company
consolidated certain facilities and operations. Accordingly, the Company
recorded (and paid) an expense for the estimated restructuring charges,
including the costs of facility consolidations ($865), eliminating programs
($426), and employee separations, relocations and related costs ($1,114).
NOTE 13 - COMMITMENTS AND CONTINGENCIES:
The Company has various non-cancelable, long-term operating leases for office
space and equipment. In addition, the Company is committed under various
contractual agreements to pay for talent, broadcast rights, research, certain
digital audio transmission services and the Management Agreement with Infinity.
The approximate aggregate future minimum obligations under such operating leases
and contractual agreements for the five years after December 31, 1995, are set
forth below:
YEAR
----
1996.............................................. $20,961
1997.............................................. 15,660
1998.............................................. 12,595
1999.............................................. 10,548
2000.............................................. 6,775
-------
$66,539
=======
NOTE 14 - SUPPLEMENTAL CASH FLOW INFORMATION:
Supplemental Information on cash flows, including amounts from discontinued
operations, and non-cash transactions is summarized as follows:
<TABLE>
<CAPTION>
YEAR ENDED
--------------------------------------
DECEMBER 31, NOVEMBER 30,
-------------------- ------------
Cash paid for: 1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Interest...................................... $9,597 $7,763 $16,580
Income taxes.................................. 326 125 31
Non-cash investing and financing activities:
Conversion of Senior Debentures
to common stock.............................. - 19,223 2,068
Disposition of discontinued operations........... - - 19,474
</TABLE>
For the one month ended December 31, 1993, $12,565 of Senior Debentures were
converted to common stock.
NOTE 15 - DISCONTINUED OPERATIONS:
At the end of the Company's first fiscal quarter of 1993, the Company classified
the results of operations from Radio & Records and its two radio stations as
discontinued operations. These three businesses collateralized the Company's
debt with Westinghouse Electric Corporation ("WEC"). In June 1993 the Company
completed the sales of its radio stations, and used the net proceeds from the
sales to retire a substantial portion of its WEC debt. On November 1, 1993, WEC
acquired the outstanding stock of Radio & Records and the net assets of Westwood
One Stations Group for the remaining balance of the WEC debt, accrued interest
and any other potential claims. Accordingly, the historical net loss of the
F-13
<PAGE>
WESTWOOD ONE, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company's owned-and-operated radio stations and Radio & Records have been
reported separately from continuing operations, and the prior periods were
restated (including an allocation of interest of $7,043 for fiscal 1993). The
Company made a provision for the loss on the disposition of these assets
including estimated future costs and operating results from March 1, 1993 until
the date of disposition, of $12,087. Revenue from discontinued operations for
fiscal 1993 was $22,282.
NOTE 16 - QUARTERLY RESULTS OF OPERATIONS (UNAUDITED):
The following is a tabulation of the unaudited quarterly results of operations.
The quarterly results are presented for the years ended December 31, 1995 and
1994.
(In thousands, except per share data)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH FOR THE
QUARTER QUARTER QUARTER QUARTER YEAR
------- ------- ------- ------- -------
1995
----
<S> <C> <C> <C> <C> <C>
Net revenues....................................... $31,421 $37,558 $38,305 $38,445 $145,729
Operating income................................... 45 6,738 6,451 6,081 19,315
Net income (loss).................................. (2,492) 4,235 4,099 3,843 9,685
Net income (loss) per share ....................... $ (0.08) $ 0.12 $ 0.12 $ 0.11 $ 0.28
1994
----
Net revenues....................................... $26,052 $36,151 $36,491 $37,646 $136,340
Operating income (loss)............................ (5,622) 4,341 4,010 3,253 5,982
Income (loss) before extraordinary item............ (7,416) 2,183 1,658 845 (2,730)
Net income (loss) ................................. (8,006) 2,183 1,658 845 (3,320)
Income (loss) per share:
Before extraordinary item........................ (0.29) 0.07 0.05 0.02 (0.09)
Net income (loss) ............................... $ (0.32) $ 0.07 $ 0.05 $ 0.02 $ (0.11)
</TABLE>
NOTE 17 - SUBSEQUENT EVENT (UNAUDITED):
On March 1, 1996 the Company acquired the operating assets of New York Shadow
Traffic Limited Partnership, Chicago Shadow Traffic Limited Partnership, Los
Angeles Shadow Traffic Limited Partnership, and Philadelphia Express Traffic
Limited Partnership (collectively "Shadow Traffic") for $20,000 plus expenses,
subject to an adjustment based on the future cash flow of Shadow Traffic. The
acquisition will be accounted for as a purchase and, accordingly, Shadow
Traffic's results of operations will be included in the consolidated statement
of operations from the date the acquisition is consummated. The acquisition will
be financed using existing cash and available bank borrowings.
F-14
<PAGE>
WESTWOOD ONE, INC.
SCHEDULE IX
CONSOLIDATED SHORT-TERM BORROWINGS
(IN THOUSANDS)
<TABLE>
MAXIMUM AVERAGE WEIGHTED
AMOUNT AMOUNT AVERAGE
CATEGORY OF BALANCE WEIGHTED OUT- OUT- INTEREST
AGGREGATE AT AVERAGE STANDING STANDING RATE
SHORT-TERM END OF INTEREST DURING THE DURING THE DURING THE
BORROWINGS PERIOD RATE PERIOD PERIOD PERIOD
- ------------ ------- -------- ---------- ---------- ----------
Year Ended
December 31,
1994:
<C> <C> <C> <C> <C>
Note payable $ - - $2,657 $ 139 8.4%
Year Ended
November 30,
1993:
Note payable 6,448 8.3% 7,248 4,399 8.2
</TABLE>
Notes: Short-term borrowings during the years covered by this schedule consist
of loans made under various established credit lines. The average amount
outstanding during each period was computed by dividing the average outstanding
principal balance by 365 days. The weighted average interest rate during each
period was computed by dividing the actual interest expense on such borrowings
by the average amount outstanding during that period. The Company did not have
any short-term borrowings in 1995.
F-15
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made and entered into as of the 1st day of June 1995, by and
between WESTWOOD ONE RADIO, INC., a California corporation (hereinafter referred
to as "Westwood" or "Company") and Gregory P. Batusic (hereinafter referred to
as "Employee").
1. EMPLOYMENT
Westwood hereby engages and employs Employee to render services to
Westwood as President of Company's Westwood One Entertainment
Division, in which capacity Employee shall render such services as
are customarily rendered by and required by such a position.
Westwood further engages and employs Employee to render services
exclusively for Westwood. Employee shall report directly to the
Company's CEO.
2. TERM OF EMPLOYMENT
The term of this Employment Agreement shall commence on June 1,
1995, and shall continue for a period of two (2) and one-half
(1/2) years from such date (the "Term") in accordance with the
provisions hereof. This Agreement may be terminated earlier by
Company at any time pursuant to Section 7 below.
3. COMPENSATION
Westwood agrees to pay and Employee agrees to accept during the
Term of this Agreement the following:
A. During the period beginning June 1, 1995 and ending May
31, 1996, the sum of Three Hundred Fifty Thousand Dollars
($350,000.00) as base salary, payable in accordance with
Company's standard payroll procedures.
1
<PAGE>
B. During the period beginning June 1, 1996 and ending May
31, 1997, the sum of Four Hundred Thousand Dollars
($400,000.00) as base salary, payable in accordance with
Company's standard payroll procedures.
C. During the period beginning June 1, 1997 and ending
December 31, 1997, the sum of Two Hundred Thirty-Three
Thousand Three Hundred Thirty-Three Dollars and Thirty-One
Cents ($233,333.31) as base salary, payable in accordance
with the Company's standard payroll procedures.
D. Employee shall be entitled to an annual bonus to equal to
one-third (1/3) of Employee's base salary in the event that
Company's Entertainment Division meets pre-determined cash
flow objectives for each of Company's fiscal years (1995,
1996 and 1997) during the term of this Employment Agreement.
Such bonus shall be payable only if Employee is employed by
Company, pursuant to the terms of this Agreement, as of
December 31st of each year. The annual bonus and the cash
flow objective are subject to approval by the CEO.
4. BENEFITS
Employee shall receive all the benefits currently available to
senior executives of Westwood. Employee recognizes the right of
Westwood to change, amend or terminate any of the aforementioned
employee benefit programs at any time. Company shall provide
employee a supplemental group term policy so that when combined
with the Company's currently provided life insurance benefit,
Employee shall have a total of Five Hundred Thousand Dollars
($500,000.00) in life insurance coverage. Such coverage is subject
to Employee taking a physical examination, if required, and shall
not exceed Two Thousand Five Hundred Dollars ($2,500.00) per year
in premium payments. Employee shall also be provided a company car
(currently acknowledged to be a Corvette) and Company shall pay
for all reasonable expenses in connection therewith including all
gas, maintenance, repairs and insurance. Employee shall be
eligible for a grant of stock options to purchase the Company's
common stock. The amount of stock options, if any, will be awarded
based on Employees performance, which will be determined by the
2
<PAGE>
Compensation Committee of the Board of Directors upon
recommendation of the CEO of the Company.
5. REIMBURSEMENT FOR EXPENSES
The Company shall reimburse the Employee for all reasonable,
receipt- supported, business expenses incurred by him in
accordance with Company policies in effect from time to time, upon
his submission of all necessary expense reports requested by the
Company.
6. NON-COMPETITION/UNFAIR COMPETITION
During the term of this Agreement, Employee shall not knowingly,
directly or indirectly, engage or participate in any business that
is in competition with any business of Westwood. The foregoing
obligation of Employee not to compete with Westwood shall not
prohibit Employee from owning or purchasing any corporate
securities of any corporation that are regularly traded on a
recognized stock exchange or over-the-counter market so long as
Employee does not own, in the aggregate, five percent (5%) or more
of the voting equity securities of any such corporation.
Westwood treats certain information, including, but not limited
to, information about its radio stations, affiliated radio
stations, marketing programs, or radio programs, as confidential
information (the "Confidential Information"). Employee
acknowledges and agrees that, during or after the term of his
employment, the sale or unauthorized use or disclosure of any
Confidential Information obtained by him during his employment
with Westwood constitute unfair competition. Employee promises and
agrees not to engage in unfair competition with Westwood during,
or after, the term of this Agreement.
7. TERMINATION
A. TERMINATION FOR CAUSE, Westwood may terminate this
Agreement for cause, as hereinafter defined, with or without
notice, at any time. If Employee is terminated for cause, he
3
<PAGE>
shall be entitled to compensation which has accrued up to the
date of termination, but Employee shall not be entitled to
any severance or other payment whatsoever. The term "Cause"
as used herein shall include, but not be limited to, the
following: (1) the continued incapacity for three (3) months
or more of Employee to perform Employee's duties under this
Agreement. The term "incapacity" shall mean any physical,
mental or other disability rendering Employee incapable of
fully performing the services required to be performed by him
hereunder; (2) willful, habitual, or substantial neglect of
duties by Employee; (3) any material breach of this
Agreement; (4) dishonesty and/or theft which results in
significant harm to the Company; (5) use or possession of
illegal drugs in the United States during working hours; (6)
use of alcohol during working hours (except for moderate
consumption of alcohol during business entertainment in the
discharge of Employee's duties); (7) unethical business
conduct; (8) negligence in the performance of duties likely
to cause or actually causing personal injury or property
damage; (9) failure to comply with any rules or regulation of
Westwood or any conduct inconsistent with the policies,
procedures, or best interest of Westwood; (10) excessive
absenteeism; and (11) Employee's failure or refusal to
perform the services required of Employee under this
Agreement for a period of two (2) or more days for reasons
other than vacation, illness, accident, injury, incapacity or
authorized leave of absence.
B. Westwood may terminate this Agreement without cause, for
any reason, at its discretion, upon written notice to
Employee. In such an event, Company, at its option, shall pay
Employee an amount equal to the lessor of fifty-two (52)
weeks of Employee's base salary, or the remaining period of
this Agreement, payable as and when such base salary would
have been due had Employee continued to render services.
Section 6 of this Agreement shall apply so long as Employee
continues to receive the base salary. In the event that
Employee is terminated pursuant to the terms of this Section
7.B, and Employee has been granted stock options, the stock
options will remain in effect during the period for which
Company continues to compensate Employee.
4
<PAGE>
C. The Company may also immediately terminate this Agreement
in the event of the death of the Employee or if he becomes
disabled, which is defined as the Employee not being able to
perform his regular duties hereunder for a period of three
(3) consecutive months.
8. RESTRICTIVE COVENANTS
A. RIGHT OF FIRST REFUSAL If Employee receives or makes a
bona fide offer from or to a third party to engage Employee's
services upon termination or expiration of the Term, thereby
preventing the extension or renewal of this Agreement,
Employee agrees that he will not accept such offer or enter
into such an arrangement before notifying the Company of all
the terms upon which such offer has been made. Notice to the
Company of any such bona fide offer must be in writing and
must set forth all substantial and material details of the
offer, the identity of the offerer and offeree and must
include the offeree's written acknowledgment of the
willingness to accept such offer. Upon notification, the
Company shall have four (4) weeks in which to elect to engage
Employee's services upon at least the same monetary terms
offered by such other party. Company shall not be required to
match any non-monetary terms of such offer. In the event that
the foregoing four (4) week period, or any part thereof,
occurs after the expiration of this Agreement, then Employee
will continue to receive compensation based on the base
salary paid to Employee as of the expiration date, until said
four (4) week period expires. Subject to Company's sole
discretion, Employee may be required to continue to render
services to the Company in accordance with terms of this
Agreement, during any part of the four (4) week period which
occurs after the expiration of the Agreement.
If the Company does not match any offer of which Employee
duly notifies the Company and the offeree does not thereafter
accept such offer, the terms of this paragraph shall apply to
any subsequent offer received by or made by Employee.
B. COVENANT NOT TO COMPETE Upon the termination of Employee's
employment for cause under this Agreement, Employee agrees
that for a period of ninety (90) days from the date of
5
<PAGE>
termination, Employee will not enter into any employment or
other agreement, directly or indirectly, with any person or
entity who is a direct competitor of Company in the network
or syndicated radio industry or reveal in any manner, any
information concerning the Company's operations. Employee
will receive compensation for the ninety (90) day period
based on the base salary in effect at the time of
termination. This provision will not apply if Employee is
terminated without cause.
C. RENEWAL Thirteen weeks prior to the expiration of this
Agreement, the Company and Employee will enter into
negotiations to extend the terms of this Agreement. If
Company determines not to renew, Employee will receive a
severance amount equal to thirteen (13) weeks of Employees's
base salary compensation and the date of termination will be
the expiration date of this Agreement. This provision does
not apply if Company's decision not to renew was based on
declining to match a bona fide offer as set forth in Section
8.A above.
9. NOTICES
All notices which any party may be required or may desire to give
under or in connection with this Agreement shall be in writing and
shall be sent either: (i) by personal delivery or reputable
overnight courier, in which case the notice shall be deemed
received upon the earlier of actual receipt as evidence by the
records of such delivery service or courier, or one (1) business
day after deposit with such delivery service or courier; or (ii)
by certified United States mail, return receipt requested, postage
prepaid, in which case the notice shall be deemed received on the
earlier of actual receipts or three (3) business days after
deposit in the United States mail; or (iii) by telecopy or
facsimile transmission, in which case the notice shall be deemed
received upon confirmation of such transmission. All notices shall
be delivered as follows:
6
<PAGE>
To Employee: Gregory P. Batusic
32 Millbrook Road
Stamford, CT 06902
FAX: (212) 641-2185
If To Employer: Mel Karmazin
Westwood One Radio, Inc.
1675 Broadway
New York, New York
FAX: (212) 247-0385
With Copies To: Business and Legal Affairs
Westwood One, Inc.
9540 Washington Boulevard
Culver City, CA 90232
FAX: (310) 840-4053
Any party may change its address for purposes of this Section by giving the
other party written notice of the new address in the manner set forth above.
10. ASSIGNMENT
The Company shall have the right to assign this Agreement, in
whole or in part, to any person or entity who succeeds to
ownership of Company or to any of the Company's affiliated
entities or to any other party provided, however, that no such
assignment shall relieve the Company of any obligations hereunder.
Employee agrees and acknowledges that he may not assign this
Agreement or any of his rights hereunder under any circumstances.
11. MISCELLANEOUS
A. The waiver by either party of a breach of any provision of
this Agreement by the other party shall not operate or be
7
<PAGE>
construed as a waiver of any subsequent breach by that party.
No waiver shall be valid unless in writing, executed by the
party or its duly authorized representative.
B. This Agreement and all rights, obligations and liabilities
arising under it shall be construed and enforced in
accordance with the laws of the State of New York.
C. Any provision in this Agreement which may be prohibited by
law shall be ineffective to the extend of such prohibition
without invalidating the remaining provisions of this
Agreement.
D. The parties mutually acknowledge that this Agreement
constitutes the complete and exclusive statement of the
agreement between them in regards to their employment
relationship, and supersedes any prior proposals,
commitments, or representations of any kinds, whether oral or
written, with respect to such relationship.
E. This Agreement may be amended only by an instrument in
writing executed by the parties or their duly authorized
representatives.
F. The parties hereby agree that the headings contained in
this Agreement are for reference only and are not intended to
form part of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WESTWOOD ONE RADIO, INC. GREGORY P. BATUSIC
"WESTWOOD" "EMPLOYEE"
By:/s/ MEL KARMAZIN By:/s/GREGORY P. BATUSIC
------------------------ ----------------------
Mel Karmazin Gregory P. Batusic
1675 Broadway 32 Millbrook Road
New York, NY 10019 Stamford, CT 06902
8
EMPLOYMENT AGREEMENT
This Agreement is made and entered into as of the 10th day of April, 1995,
by and between WESTWOOD ONE RADIO NETWORKS, INC., a Delaware corporation
(hereinafter referred to as "Westwood" or "Company") and Jeff Lawenda
(hereinafter referred to as "Employee").
1. EMPLOYMENT
Westwood hereby engages and employs Employee to render services to
Westwood as President of Company's Westwood One Radio Networks Division,
in which capacity Employee shall render such services as are customarily
rendered by and required by such a position. Westwood further engages and
employs Employee to render services exclusively for Westwood. Employee
shall report directly to the Company's CEO.
2. TERM OF EMPLOYMENT
The term of this Employment Agreement shall commence on April 10, 1995,
and shall continue for a period of two (2) years from such date (the
"Term") in accordance with the provisions hereof. This Agreement may be
terminated earlier by Company at any time pursuant to Section 7 below.
3. COMPENSATION
Westwood agrees to pay and Employee agrees to accept during the Term of
this Agreement the following:
A. During the period beginning April 10, 1995 and ending April 9,
1996, the sum of Three Hundred Fifty Thousand Dollars
($350,000.00) as base salary, payable in accordance with
Company's standard payroll procedures.
1
<PAGE>
B. During the period beginning April 10, 1996 and ending April 9,
1997, the sum of Four Hundred Thousand Dollars ($400,000.00) as
base salary, payable in accordance with Company's standard
payroll procedures.
C. Employee shall be entitled to an annual bonus equal to one-third
(1/3) of Employee's base salary in the event that Company's Radio
Networks Division meets pre-determined cash flow objectives for
each of Company's fiscal years (1995 and 1996) during the term of
this Employment Agreement. Such bonus shall be payable only if
Employee is employed by Company, pursuant to the terms of this
Agreement, as of December 31st of each year. The annual bonus and
the cash flow objectives are subject to approval by the CEO.
4. BENEFITS
Employee shall receive all the benefits currently available to senior
executives of Westwood. Employee recognizes the right of Westwood to
change, amend or terminate any of the aforementioned employee benefit
programs at any time. Westwood will also provide Employee with a
$650,000.00 life insurance policy above and beyond the life insurance
policy currently available to Employee under Westwood's benefit programs;
provided that Employee is insurable as determined by Westwood's insurance
provider or provider's designee. Employee shall be entitled to One
Thousand Dollars ($1,000.00) per month for reasonable business related
expenses for transportation and parking. Employee shall also be eligible
for a grant of stock options to purchase the Company's common stock. The
amount of stock options, if any, will be awarded based on Employees
performance, which will be determined by the Compensation Committee of the
Board of Directors upon recommendation of the CEO of the Company.
5. REIMBURSEMENT FOR EXPENSES
The Company shall reimburse the Employee for all reasonable,
receiptsupported, business expenses incurred by him in accordance with
Company policies in effect, from time to time, upon his submission of all
necessary expense reports requested by the Company. It is understood by
the parties that for medical reasons, the Company will allow Employee to
fly "First Class" on all pre-approved business trips.
2
<PAGE>
6. NON-COMPETITION/UNFAIR COMPETITION
During the term of this Agreement, Employee shall not knowingly, directly
or indirectly, engage or participate in any business that is in
competition with any business of Westwood. The foregoing obligation of
Employee not to compete with Westwood shall not prohibit Employee from
owning or purchasing any corporate securities of any corporation that are
regularly traded on a recognized stock exchange or over-the-counter market
so long as Employee does not own, in the aggregate, five percent (5%) or
more of the voting equity securities of any such corporation.
Westwood treats certain information, including, but not limited to,
information about its radio stations, affiliated radio stations, marketing
programs, or radio programs, as confidential information (the
"Confidential Information"). Employee acknowledges and agrees that, during
or after the term of his employment, the sale or unauthorized use or
disclosure of any Confidential Information obtained by him during his
employment with Westwood constitute unfair competition. Employee promises
and agrees not to engage in unfair competition with Westwood during, or
after, the term of this Agreement.
7. TERMINATION
A. TERMINATION FOR CAUSE, Westwood may terminate this Agreement for
cause, as hereinafter defined, with or without notice, at any
time. If Employee is terminated for cause, he shall be entitled
to compensation which has accrued up to the date of termination,
but Employee shall not be entitled to any severance or other
payment whatsoever. The term "Cause" as used herein shall
include, but not be limited to, the following: (1) the continued
incapacity for thirteen (13) weeks or more of Employee to perform
Employee's duties under this Agreement. The term "incapacity"
shall mean any physical, mental or other disability rendering
Employee incapable of fully performing the services required to
be performed by him hereunder; (2) willful, habitual, or
substantial neglect of duties by Employee; (3) any material
breach of this Agreement; (4) dishonesty; (5) theft: (6) use or
possession of illegal drugs during working hours; (7) use of
alcohol during working hours (except for moderate consumption of
alcohol during business entertainment in the discharge of
Employee's duties); (8) unethical business conduct; (9)
negligence in the performance of duties likely to cause or
actually causing personal injury or property damage; (10)
excessive absenteeism or tardiness; and (11) Employee's failure
3
<PAGE>
or refusal to perform the services required of Employee under
this Agreement for a period of two (2) or more days for reasons
other than vacation, illness, accident, injury, incapacity or
authorized leave of absence.
If at any time Employee fails to perform fully any one or more of
the obligations hereunder, or in the event of breach by Employee
of any representation, warranty, term, obligation or condition of
this Agreement, Westwood shall have the right at its sole option,
in addition to the rights set forth in this Agreement and any
other right at law or in equity, (i) to discipline employee, by
suspension from work and/or suspension or reduction in pay or
otherwise and/or; (ii) to withhold such amount as may be
appropriate from any compensation due or to be due to Employee,
to reimburse Westwood for any damages, direct or indirect,
(Including, but not limited to, reasonable legal fees and other
expenses) which Employee's failure and/or breach has caused
and/or; (iii) extend the Term of this Agreement for a period
equal to that of the non-performance.
B. Westwood may terminate this Agreement without cause, for any
reason, at its discretion, upon written notice to Employee. In
such an event, Company, at its option, shall pay Employee an
amount equal to the lessor of fifty-two (52) weeks of Employee's
base salary, or the remaining period of this Agreement, payable
as and when such base salary would have been due had Employee
continued to render services. Section 6 of this Agreement shall
apply so long as Employee continues to receive the base salary.
4
<PAGE>
C. The Company may also immediately terminate this Agreement in the
event of the death of the Employee or if he becomes disabled,
which is defined as the Employee not being able to perform his
regular duties hereunder for a period of three (3) consecutive
months.
8. RESTRICTIVE COVENANTS
A. RIGHT OF FIRST REFUSAL If Employee receives or makes a bona fide
offer from or to a third party to engage Employee's services in
the network or syndicated radio industry upon termination or
expiration of the Term, thereby preventing the extension or
renewal of this Agreement, Employee agrees that he will not
accept such offer or enter into such an arrangement before
notifying the Company of all the terms upon which such offer has
been made. Notice to the Company of any such bona fide offer must
be in writing and must set forth all substantial and material
details of the offer, the identity of the offerer and offeree and
must include the offeree's written acknowledgment of the
willingness to accept such offer. Upon notification, the Company
shall have two (2) weeks in which to elect to engage Employee's
services upon at least the same monetary terms offered by such
other party. Company shall not be required to match any
non-monetary terms of such offer.
If the Company does not match any offer of which Employee duly
notifies the Company and the offeree does not thereafter accept
such offer, the terms of this paragraph shall apply to any
subsequent offer received by or made by Employee.
B. COVENANT NOT TO COMPETE Upon the termination of Employee's
employment under this agreement for cause, Employee agrees that
for a period of ninety (90) days from the date of termination,
Employee will not enter into any employment or other agreement,
directly or indirectly, with any person or entity who is a direct
or indirect competitor of Company in the network or syndicated
radio industry, or reveal in any manner, any information
concerning the Company's operations. This provision will not
apply if Employee is terminated without cause.
5
<PAGE>
C. RENEWAL Thirteen weeks prior to the expiration of this Agreement,
the Company and Employee will enter into negotiations to extend
the terms of this Agreement. If Company determines not to renew,
Employee will receive a severance amount equal to thirteen (13)
weeks of Employee's base salary compensation and the date of
termination will be the expiration date of this Agreement. This
provision does not apply if Company's decision not to renew was
based on declining to match a bona fide offer as set forth in
Section 8.A above.
9. NOTICES
All notices which any party may be required or may desire to give under or
in connection with this Agreement shall be in writing and shall be sent
either: (i) by personal delivery or reputable overnight courier, in which
case the notice shall be deemed received upon the earlier of actual
receipt as evidence by the records of such delivery service or courier, or
one (1) business day after deposit with such delivery service or courier;
or (ii) by certified United States mail, return receipt requested, postage
prepaid, in which case the notice shall be deemed received on the earlier
of actual receipts or three (3) business days after deposit in the United
States mail; or (iii) by telecopy or facsimile transmission, in which case
the notice shall be deemed received upon confirmation of such
transmission. All notices shall be delivered as follows:
To Employee: Jeff Lawenda
One Buttonhook Road
Chappaqua, NY 10514
Fax: (212) 247-1630
If To Employer: Mel Karmazin
Westwood One Radio Networks, Inc.
1675 Broadway
New York, New York
FAX: (212) 247-0385
6
<PAGE>
Any party may change its address for purposes of this Section by giving
the other party written notice of the new address in the manner set forth
above.
10. ASSIGNMENT
The Company shall have the right to assign this Agreement, in whole or in
part, to any person or entity who succeeds to ownership of Company or to
any of the Company's affiliated entities or to any other party provided,
however, that no such assignment shall relieve the Company of any
obligations hereunder. Employee agrees and acknowledges that he may not
assign this Agreement or any of his rights hereunder under any
circumstances.
11. MISCELLANEOUS
A. The waiver by either party of a breach of any provision of this
Agreement by the other party shall not operate or be construed as
a waiver of any subsequent breach by that party. No waiver shall
be valid unless in writing, executed by the party or its duly
authorized representative.
B. This Agreement and all rights, obligations and liabilities
arising under it shall be construed and enforced in accordance
with the laws of the State of New York.
C. Any provision in this Agreement which may be prohibited by law
shall be ineffective to the extend of such prohibition without
invalidating the remaining provisions of this Agreement.
D. The parties mutually acknowledge that this Agreement constitutes
the complete and exclusive statement of the agreement between
them in regards to their employment relationship, and supersedes
any prior proposals, commitments, or representations of any
kinds, whether oral or written, with respect to such
relationship.
7
<PAGE>
E. This Agreement may be amended only by an instrument in writing
executed by the parties or their duly authorized representatives.
F. The parties hereby agree that the headings contained in this
Agreement are for reference only and are not intended to form
part of the Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
WESTWOOD ONE Jeff Lawenda
RADIO NETWORKS, INC.
"WESTWOOD" "EMPLOYEE"
By:/s/MEL KARMAZIN By:/s/JEFF LAWENDA
--------------------- ---------------------
Mel Karmazin Jeff Lawenda
1675 Broadway One Buttonhook Road
New York, NY 10019 Chappaqua, NY 10514
8
CONFORMED COPY
AMENDMENT NO. 4
AMENDMENT NO. 4 dated as of April 6, 1995, between WESTWOOD
ONE, INC., a corporation duly organized and validly existing under the laws of
the State of Delaware (the "Company"); each of the Subsidiaries of the Company
identified under the caption "SUBSIDIARY GUARANTORS" on the signature pages
hereto (individually, a "Subsidiary Guarantor" and, collectively, the
"Subsidiary Guarantors"); each of the Banks party to the Credit Agreement
referred to below; BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as
Co-Agents for said Banks (individually, a "Co-Agent" and, collectively, the
"Co-Agents"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for
said Banks (in such capacity, together with its successors in such capacity, the
"Administrative Agent").
The Company, the Subsidiary Guarantors, the lenders party
thereto (individually, a "Bank" and, collectively, the "Banks"), the Co-Agents
and the Administrative Agent are parties to a Credit Agreement dated as of
February 1, 1994 (as heretofore amended, the "Credit Agreement"), providing,
subject to the terms and conditions thereof, for loans to be made by said Banks
to the Company in an aggregate principal amount not exceeding $125,000,000. The
Company, the Subsidiary Guarantors and the Banks wish to amend the Credit
Agreement in certain respects, and accordingly, the parties hereto hereby agree
as follows:
Section 1. Definitions. Except as otherwise defined in this
Amendment No. 4, terms defined in the Credit Agreement are used herein as
defined therein.
Section 2. Amendments. Upon the execution and delivery hereof
by the Company, each of the Subsidiary Guarantors and the Majority Banks, but
effective as of the date hereof, the Credit Agreement shall be amended as
follows:
Amendment No. 4
<PAGE>
2
A. General. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to "this Agreement" (and
indirect references such as "hereunder", "hereby", "herein" and "hereof") shall
be deemed to be references to the Credit Agreement as amended hereby.
B. Prepayments, Etc. Section 3.03 of the Credit Agreement
shall be amended by deleting the proviso at the end thereof and substituting the
following therefor:
"; provided that, if the Company so elects in the related
notice of prepayment referred to in clause (a) above, all or that part
(as specified by the Company in such notice) of any amount required by
clause (b) above to be applied as follows:
(i) if the date of such prepayment is prior to the
Principal Payment Date falling nearest to August 31, 1996, the
amount of such prepayment shall be applied first to the
installments of the Term Loans falling due prior to the
Principal Payment Date falling nearest to August 31, 1996 in
the direct order of the maturities thereof and then to the
remaining installments of the Term Loans in the inverse order
of the maturities thereof;
(ii) if the date of such prepayment is on or after
the Principal Payment Date falling nearest to August 31, 1996
and prior to the Principal Payment Date falling nearest to
November 30, 1996, such prepayment shall be applied to the
installments of the Term Loans in the inverse order of the
maturities thereof; and
(iii) if the date of such prepayment is on or after
the Principal Payment Date falling nearest to November 30,
1996, such prepayment shall be applied to the installments of
the Term Loans in the direct order of the maturities thereof
(except that no such
Amendment No. 4
<PAGE>
3
installment scheduled to be paid following the date 270 days
after the date of such prepayment may be prepaid as provided
in this clause (iii))."
C. Restricted Payments. Section 8.09 of the Credit Agreement
shall be amended by (1) deleting "and" at the end of paragraph (f) thereof, (2)
deleting the period at the end of paragraph (g) thereof and substituting "; and"
therefor, and (3) adding the following paragraph (h) reading in its entirety as
follows:
"(h) payments made by the Company in respect of the purchase
by the Company of any of its capital stock during the period prior to
December 31, 1996 in an aggregate amount not exceeding $15,000,000."
Section 3. Representations and Warranties. The Company and
the Subsidiary Guarantors represent and warrant to the Banks that the
representations and warranties set forth in Section 7 of the Credit Agreement
are true and complete on the date hereof as if made on and as of such date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date) and as if each reference in said
Section 7 to "this Agreement" included reference to this Amendment No. 4.
Section 4. Miscellaneous. Except as herein provided, the
Credit Agreement shall remain unchanged and in full force and effect. This
Amendment No. 4 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 4 by signing any such
counterpart. This Amendment No. 4 shall be governed by, and construed in
accordance with, the law of the State of New York.
Amendment No. 4
<PAGE>
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 4 to be duly executed and delivered as of the day and year first
above written.
WESTWOOD ONE, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
SUBSIDIARY GUARANTORS
WESTWOOD ONE RADIO, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
MUTUAL BROADCASTING SYSTEM, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
WESTWOOD NATIONAL RADIO CORPORATION
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
WESTWOOD ONE SATELLITE SYSTEMS,
INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
Amendment No. 4
<PAGE>
5
WESTWOOD ONE STATIONS-NYC, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
WESTWOOD ONE STATIONS GROUP, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
NATIONAL RADIO NETWORK, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
THE SOURCE, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
TALKNET, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
KM RECORDS, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
Amendment No. 4
<PAGE>
6
WESTWOOD ONE STATIONS-LA, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
UNISTAR RADIO NETWORKS, INC.
By /s/ Farid Suleman
----------------------------------
Chief Financial Officer
BANKS
THE CHASE MANHATTAN BANK (NATIONAL
ASSOCIATION), as a Bank and as
Administrative Agent
By /s/ John P. White
----------------------------------
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
as a Bank and a Co-Agent
By /s/ Lisa Gallagher
----------------------------------
Title: Director
Amendment No. 4
<PAGE>
7
BANK OF MONTREAL,
as a Bank and a Co-Agent
By /s/ Gretchen Shugart
----------------------------------
Title: Director
CIBC INC.
By /s/ Harold Birk
----------------------------------
Title: Vice President
BANK OF AMERICA ILLINOIS
By /s/ Amy Trapp
----------------------------------
Title: Vice President
SOCIETY NATIONAL BANK
By /s/ Paul S. Nestvold
----------------------------------
Title: Officer
Amendment No. 4
AMENDMENT NO. 5
AMENDMENT NO. 5, dated as of December 1, 1995, between
WESTWOOD ONE, INC., a corporation duly organized and validly existing under the
laws of the State of Delaware (the "COMPANY"), each of the Subsidiaries of the
Company identified under the caption "SUBSIDIARY GUARANTORS" on the signature
pages hereto (individually, a "SUBSIDIARY GUARANTOR" and, collectively, the
"SUBSIDIARY GUARANTORS"); each of the Banks party to the Credit Agreement
referred to below; BANK OF MONTREAL and THE FIRST NATIONAL BANK OF BOSTON, as
Co-Agents for said Banks (individually, a "CO-AGENT" and, collectively, the
"CO-AGENTS"); and THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION), as agent for
said Banks (in such capacity, together with its successors in such capacity, the
"ADMINISTRATIVE AGENT").
The Company, the Subsidiary Guarantors, the lenders party
thereto (individually, a "BANK" and, collectively, the "BANKS"), the Co-Agents
and the Administrative Agent are parties to a Credit Agreement dated as of
February 1, 1994 (as heretofore amended, the "CREDIT AGREEMENT"), providing,
subject to the terms and conditions thereof, for loans to be made by said Banks
to the Company in an aggregate principal amount not exceeding $125,000,000. The
Company, the Subsidiary Guarantors and the Banks wish to amend the Credit
Agreement in certain respects, and, accordingly, the parties hereto hereby agree
as follows:
1. DEFINITIONS. Except as otherwise defined in this Amendment
No. 5, terms defined in the Credit Agreement are used herein as defined therein.
2. AMENDMENTS. Upon the execution and delivery hereof by the
Company, each of the Subsidiary Guarantors and the Majority Banks, but effective
as of January 1, 1996, the Credit Agreement shall be amended as set forth in
paragraph E below. The Credit Agreement shall be amended as set forth in
paragraphs B, C, D and F below upon execution and delivery hereof by the
Company, each of the Subsidiary Guarantors and each of the Banks and
satisfaction of the following conditions precedent:
Amendment No. 5
---------------
<PAGE>
2
(i) The Term Loans, together with all accrued and unpaid
interest thereon and any amounts payable pursuant to Section 5.05 of
the Credit Agreement, shall have been paid in full.
(ii) The Administrative Agent shall have received a
certificate of the Secretary or an Assistant Secretary of the Company
certifying that attached thereto is a true and complete copy of
resolutions duly adopted by the board of directors of the Company
authorizing the execution, delivery and performance of this Amendment
No. 5 and the Credit Agreement as amended hereby.
(iii) The Administrative Agent shall have received, for
the account of each Bank, a duly executed Revolving Credit Note meeting
the requirements of this Agreement and reflecting the Revolving Credit
Commitments as amended hereby. The Administrative Agent shall promptly
deliver such Revolving Credit Notes to the Banks, and, promptly
following their receipt thereof, the Banks shall deliver to the Company
their existing Revolving Credit Notes, marked "superseded".
A. GENERAL. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to "this Agreement" (and
indirect references such as "hereunder", "hereby", "herein" and "hereof") shall
be deemed to be references to the Credit Agreement as amended hereby.
B. CERTAIN DEFINED TERMS. (i) Section 1.01 of the Credit
Agreement shall be amended by changing the definitions of the terms "Commitment
Termination Date", "Quarterly Dates", "Revolving Credit Banks: and "Revolving
Credit Commitments" to read in their entireties as follows:
"`COMMITMENT TERMINATION DATE' shall mean the
Quarterly Date falling on or nearest to June 30, 2002.
`QUARTERLY DATES` shall mean the last Business Day of
March, June, September and December in each year, the first of
which shall be December 31, 1995.
Amendment No. 5
---------------
<PAGE>
3
`REVOLVING CREDIT BANKS' shall mean (a) on the date
of Amendment No. 5 to this Agreement, the Banks having
Revolving Credit Commitments as specified on Schedule I hereto
under the heading "Revolving Credit Commitments" and (b)
thereafter, the Banks from time to time holding Revolving
Credit Loans and, if any Revolving Credit Commitments are then
in effect, Revolving Credit Commitments (after giving effect
to any assignments thereof pursuant to Section 12.06(a)
hereof).
`REVOLVING CREDIT COMMITMENTS' shall mean, with
respect to each Revolving Credit Bank, the obligation of such
Bank to make Revolving Credit Loans in an aggregate principal
amount at any one time outstanding up to, but not exceeding
(a) in the case of a Revolving Credit Bank that is a party to
this Agreement as of the date of Amendment No. 5 to this
Agreement, the amount set forth opposite the name of such Bank
on Schedule I hereto under the heading "Revolving Credit
Commitments" and (b) in the case of any other Revolving Credit
Bank, the aggregate amount of the Revolving Credit Commitments
of other Revolving Credit Banks acquired by it pursuant to
Section 12.06(a) hereof (in each case, as the same may be
reduced from time to time pursuant to Section 2.03 hereof or
increased or reduced from time to time pursuant to said
Section 12.06(a))."
(ii) Section 1.01 of the Credit Agreement shall be amended by changing
paragraphs (a) and (b) of the definition of "Applicable Margin" to read in their
entireties as follows:
"(a) with respect to Base Rate Loans, 1.50% at all
times when the Total Debt Ratio is greater then 5.00 to 1,
1.00% at all times when the Total Debt Ratio is greater than
4.00 to 1 and less than or equal to 5.00 to 1, 0.50% at all
times when the Total Debt Ratio is greater than 3.50 to 1 and
less than or equal to 4.00 to 1 and 0% at all times when the
Total Debt Ratio is less than or equal to 3.50 to 1; and
(b) with respect to Eurodollar Loans, 2.50% at all
times when the Total Debt Ratio is greater than 5.00 to 1,
2.00% at all times when the Total Debt Ratio is greater than
Amendment No. 5
---------------
<PAGE>
4
4.00 to 1 and less than or equal to 5.00 to 1, 1.50% at all
times when the Total Debt Ratio is greater than 3.50 to 1 and
less than or equal to 4.00 to 1 and 1.00% at all times when
the Total Debt Ratio is less than or equal to 3.50 to 1."
C. MANDATORY REVOLVING CREDIT COMMITMENT REDUCTIONS. Section
2.03(b)(iii) of the Credit Agreement shall be amended by adding the following
new sentence at the end thereof:
"In addition, the Revolving Credit Commitments shall be
reduced on each Quarterly Date occurring in each calendar year set
forth below by one-fourth (or, in the case of 2002, one-half) of the
amount set forth opposite such year below (with each such reduction
being applied ratably to the Revolving Credit Commitments of the Banks
according to the amounts of their respective Revolving Credit
Commitments):
Year Amount
---- ------
1996 $ 15,000,000
1997 15,000,000
1998 17,500,000
1999 17,500,000
2000 17,500,000
2001 15,000,000
2002 12,500,000."
D. MANDATORY PREPAYMENTS. Section 3.04(d) of the Credit
Agreement shall be amended by deleting said Section in its entirety.
E. RESTRICTED PAYMENTS. Section 8.09(h) of the Credit
Agreement shall be amended to read in its entirety as follows:
Amendment No. 5
---------------
<PAGE>
5
"(h) payments made by the Company on or subsequent to
January 1, 1995 in respect of Restricted Payments of a type
described in clauses (a) and (b) of the definition of such
term in an aggregate amount not exceeding the sum of (x)
$40,000,000 plus (y) the aggregate amount of net cash proceeds
received by the Company subsequent to January 1, 1995 from
Equity Issuances ("net cash proceeds" being deemed to mean,
with respect to any Equity Issuance, the aggregate amount of
cash received by the Company in respect thereof net of
expenses incurred by the Company in connection therewith),
PROVIDED that both before and after giving effect to each such
Restricted Payment no Default shall have occurred and be
continuing."
F. SCHEDULE I. Schedule I to this Credit Agreement shall be
amended to read in its entirety as set forth on Schedule I to this Amendment No.
5.
3. REPRESENTATIONS AND WARRANTIES. The Company and the
Subsidiary Guarantors represent and warrant to the Banks that the
representations and warranties set forth in Section 7 of the Credit Agreement
are true and complete on the date hereof as if made on and as of such date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specified date) and as if each reference in said
Section 7 to "this Agreement" included a reference to this Amendment No. 5.
4. MISCELLANEOUS. Except as herein provided, the Credit
agreement shall remain unchanged and in full force and effect. This Amendment
No. 5 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument, and any of the parties
hereto may execute this Amendment No. 5 by signing any such counterpart. This
Amendment No. 5 shall be governed by, and construed in accordance with, the law
of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment No. 5 to be duly executed and delivered as of the day and year first
above written.
Amendment No. 5
---------------
<PAGE>
6
WESTWOOD ONE, INC.
By /s/FARID SULEMAN
-----------------------------
Title: CHIEF FINANCIAL OFFICER
SUBSIDIARY GUARANTORS
WESTWOOD ONE RADIO, INC.
MUTUAL BROADCASTING SYSTEM, INC.
WESTWOOD NATIONAL RADIO CORPORATION
WESTWOOD ONE SATELLITE SYSTEMS, INC.
WESTWOOD ONE STATIONS-NYC, INC.
WESTWOOD ONE STATIONS GROUP, INC.
NATIONAL RADIO NETWORK, INC,
THE SOURCE, INC.
TALKNET, INC.
KM RECORDS, INC.
WESTWOOD ONE STATIONS-LA, INC.
UNISTAR RADIO NETWORKS, INC.
By /s/ FARID SULEMAN
-----------------------------
Title: CHIEF FINANCIAL OFFICER
BANKS
THE CHASE MANHATTAN BANK (NATIONAL ASSOCIATION),
as a Bank and as Administrative Agent
By /s/ JOHN P. WHITE
---------------------------
Title: VICE PRESIDENT
THE FIRST NATIONAL BANK OF BOSTON, as a Bank
and a Co-Agent
By /s/ LISA C. GALLAGHER
---------------------------
Title: MANAGING DIRECTOR
Amendment No. 5
---------------
<PAGE>
7
BANK OF MONTREAL, as a Bank and a Co-Agent
By /s/ YVONNE BOS
------------------------
Title: MANAGING DIRECTOR
CIBC INC.
By /s/ HAROLD BIRK
------------------------
Title: VICE PRESIDENT
BANK OF AMERICA ILLINOIS
By /s/ CARL F. SALAS
-----------------------
Title: VICE PRESIDENT
SOCIETY NATIONAL BANK
By /s/ PAUL S. NESTVOLD
------------------------------
Title: ASSISTANT VICE PRESIDENT
Amendment No. 5
---------------
<PAGE>
8
SCHEDULE I
----------
Commitments
-----------
Term Revolving
Name of Bank Loan Commitment Credit Commitment
------------ --------------- -----------------
The Chase Manhattan Bank ............... 0 $ 26,705,617.98
Bank of Montreal ....................... 0 $ 21,500,000.00
The First National Bank of Boston ...... 0 $ 21,500,000.00
CIBC Inc. .............................. 0 $ 17,200,000.00
Bank of America Illinois ............... 0 $ 8,600,000.00
Society National Bank .................. 0 $ 14,494,382.02
---------------
$110,000,000.00
===============
Amendment No. 5
---------------
ASSET PURCHASE AGREEMENT
By and Among
WESTWOOD ONE BROADCASTING SERVICES, INC.
CHICAGO SHADOW TRAFFIC LIMITED PARTNERSHIP
NEW YORK SHADOW TRAFFIC LIMITED PARTNERSHIP
LOS ANGELES SHADOW TRAFFIC LIMITED PARTNERSHIP
PHILADELPHIA EXPRESS TRAFFIC LIMITED PARTNERSHIP
CITI TRAFFIC CORP.
EXPRESS TRAFFIC CORP.
and
ALAN MARKOWITZ
Dated as of March 1, 1996
<PAGE>
<TABLE>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I DEFINITIONS....................................................................................1
ARTICLE II PURCHASE OF ASSETS...........................................................................12
2.1 Closing...........................................................................................12
2.2 Transfer of Assets................................................................................12
2.3 Excluded Assets...................................................................................14
2.4 Initial Purchase Price; Payment...................................................................15
2.5 Allocation of Purchase Price......................................................................15
ARTICLE III ASSUMPTION OF OBLIGATIONS...................................................................15
3.1 Assumption of Obligations.........................................................................15
3.2 Limitation........................................................................................16
ARTICLE IV ADJUSTMENTS TO INITIAL PURCHASE PRICE........................................................17
4.1 First Adjustment of Initial Purchase Price........................................................17
4.2 Second Adjustment of Initial Purchase Price.......................................................19
4.3 Dispute Resolution................................................................................21
ARTICLE V GOVERNMENTAL CONSENTS.........................................................................23
5.1 Compliance with HSRA..............................................................................23
5.2 Other Governmental Consents.......................................................................23
5.3 FCC Applications..................................................................................24
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER......................................................24
6.1 Organization and Standing.........................................................................24
6.2 Authorization and Binding Obligation..............................................................24
6.3 Absence of Conflicting Agreements or Required Consents............................................25
6.4 Litigation........................................................................................25
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF SELLERS AND MARKOWITZ.....................................25
7.1 Organization and Standing.........................................................................25
7.2 Authorization and Binding Obligation..............................................................26
7.3 Absence of Conflicting Agreements or Required Consents............................................26
7.4 Governmental Authorization........................................................................26
7.5 Real Property.....................................................................................27
7.6 Title to and Condition of Personal Property.......................................................29
7.7 Intellectual Property.............................................................................29
7.8 Contracts.........................................................................................30
7.9 Personnel Information.............................................................................31
7.10 Employee Benefit Plans............................................................................31
- i -
<PAGE>
7.11 Litigation........................................................................................32
7.12 Compliance with Laws..............................................................................32
7.13 Transaction with Affiliates.......................................................................33
7.14 Financial Statements; Adjusted Current Assets.....................................................33
7.15 Absence of Changes or Events......................................................................33
7.16 Insurance.........................................................................................33
7.17 Taxes.............................................................................................34
7.18 Bankruptcy........................................................................................34
7.19 Environmental Matters.............................................................................34
7.20 Financing Statements..............................................................................35
7.21 The Assets........................................................................................35
7.22 Subsidiaries......................................................................................35
7.23 Broker or Finder's Fee............................................................................35
7.24 Overhead Costs....................................................................................35
7.25 Purchase for Investment...........................................................................35
7.26 Disclosure........................................................................................36
ARTICLE VIII COVENANTS OF SELLERS AND MARKOWITZ.........................................................36
8.1 Conduct of Business...............................................................................36
8.2 Access and Information Prior to the Closing.......................................................37
8.3 Notification......................................................................................38
8.4 No Inconsistent Action............................................................................38
8.5 No Solicitation...................................................................................38
8.6 Financial Statements..............................................................................38
8.7 Estoppel Certificates; Consent and Waiver.........................................................39
8.8 Employee Matters..................................................................................39
8.9 Installation of Cameras...........................................................................40
8.10 Name Change; Post-Closing Use of Trademarks.......................................................40
ARTICLE IX ADDITIONAL COVENANTS.........................................................................40
9.1 Reasonable Commercial Efforts.....................................................................40
9.2 Renewal of Contracts..............................................................................41
9.3 Treatment of Books and Records....................................................................41
9.4 Post-Closing Restriction on Buyer.................................................................41
9.5 Activities of Markowitz in the First, Second and Third Tier Radio Markets; Non-Competes...........44
9.6 Special Call Rights...............................................................................45
ARTICLE X POST-CLOSING SERVICES.........................................................................45
10.1 Overhead Services.................................................................................45
10.2 General Marketing Services........................................................................46
10.3 Termination.......................................................................................46
10.4 Fees and Expenses.................................................................................47
10.5 Billing and Payment...............................................................................47
ARTICLE XI RIGHTS REGARDING SECOND TIER RADIO MARKETS...................................................47
11.1 Put and Call Rights...............................................................................47
11.2 Terms of Put or Call..............................................................................48
11.3 Termination of Put and Call Rights................................................................49
- ii -
<PAGE>
ARTICLE XII RIGHTS REGARDING THIRD TIER RADIO MARKETS...................................................49
12.1 Put and Call Rights...............................................................................49
12.2 Terms of Put or Call..............................................................................50
12.3 Termination of Put and Call Rights................................................................51
ARTICLE XIII CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE........................................52
13.1 Representations, Warranties and Covenants.........................................................52
13.2 Governmental Consents.............................................................................52
13.3 Third-Party Consents..............................................................................53
13.4 Employment Agreement..............................................................................53
13.5 Adverse Proceedings...............................................................................53
13.6 Payment of Indebtedness; Financing Statements.....................................................53
13.7 Transitional Agreement............................................................................54
13.8 Deliveries........................................................................................54
ARTICLE XIV CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE........................................54
14.1 Representations, Warranties and Covenants.........................................................54
14.2 Governmental Consents.............................................................................55
14.3 Adverse Proceedings...............................................................................55
14.4 Transitional Agreement............................................................................55
14.5 Employment Agreement..............................................................................55
14.6 Deliveries........................................................................................55
ARTICLE XV THE CLOSING..................................................................................56
15.1 Documents to be Delivered by Sellers and Markowitz................................................56
15.2 Documents to be Delivered by Buyer................................................................57
ARTICLE XVI TRANSFER TAXES; FEES AND EXPENSES...........................................................58
16.1 Transfer Taxes and Similar Charges................................................................58
16.2 Expenses..........................................................................................58
ARTICLE XVII SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS......................................58
ARTICLE XVIII INDEMNIFICATION...........................................................................59
18.1 Indemnification by Sellers and Markowitz..........................................................59
18.2 Indemnification by Buyer..........................................................................60
18.3 Indemnification Procedures........................................................................61
18.4 Offset............................................................................................62
18.5 Exclusive Remedy..................................................................................62
ARTICLE XIX TERMINATION RIGHTS..........................................................................63
19.1 Termination.......................................................................................63
19.2 Liability.........................................................................................63
ARTICLE XX REMEDIES UPON DEFAULT........................................................................63
ARTICLE XXI OTHER PROVISIONS............................................................................64
21.1 Confidentiality...................................................................................64
- iii -
<PAGE>
21.2 Publicity.........................................................................................65
21.3 Benefit and Assignment............................................................................65
21.4 Acquisition of Partnership Interests..............................................................65
21.5 Entire Agreement..................................................................................66
21.6 Headings..........................................................................................66
21.7 Choice of Law.....................................................................................66
21.8 Arbitration Procedures............................................................................66
21.9 Notices...........................................................................................67
21.10 Counterparts......................................................................................68
21.11 Further Assurances................................................................................68
EXHIBITS
A. Form of Opinions of Counsel to Sellers and Markowitz
B. Form of Opinions of Counsel to Buyer
C. Form of Surety Agreement
SCHEDULES
1.20 Buyout Allocation
1.98 Third Tier Radio Markets
2.3(e) Certain Excluded Assets
6.3 Buyer's Required Consents
7.1 Sellers' Organization & Standing
7.3 Sellers' Required Consents
7.4(a) Non-Transferrable Governmental Approvals
7.4(b) Material Governmental Approvals
7.5 Real Property
7.6 Personal Property
7.7 Intellectual Property
7.8 Contracts
7.9 Personnel Information
7.10 Employee Benefit Plans
7.11 Litigation Involving Sellers
7.12 Compliance with Laws
7.13 Transactions with Affiliates
7.14 Financial Statements
7.15 Absence of Changes or Events
7.16 Insurance
7.20 Financing Statements
7.22 Subsidiaries
8.10 Camera Installation
13.3 Third-Party Consents
13.4 Employment Agreement
- iv -
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), made as of
the 1st day of March, 1996, is by and among Westwood One Broadcasting Services,
Inc., a Delaware corporation ("Buyer"), Chicago Shadow Traffic Limited
Partnership ("CSTLP"), New York Shadow Traffic Limited Partnership ("NYSTLP"),
Los Angeles Shadow Traffic Limited Partnership ("LASTLP"), Philadelphia Express
Traffic Limited Partnership ("PETLP"), Citi Traffic Corp. ("Citi"), Express
Traffic Corp. ("Express"; Express, Citi, PETLP, CSTLP, NYSTLP and LASTLP are
referred to herein individually as a "Seller" and collectively as the "Sellers")
and Alan Markowitz ("Markowitz").
RECITALS
WHEREAS, Sellers own and desire to sell the Assets and the
Business (as such terms and other capitalized terms used herein without
definition are defined in Article I hereof) on the terms and subject to the
conditions herein provided; and
WHEREAS, Buyer desires to purchase, as a going concern, the
Assets and the Business, on the terms herein provided.
NOW, THEREFORE, it is agreed as follows:
ARTICLE I
DEFINITIONS
Unless otherwise stated, the following terms when used herein
have the meanings assigned to them below.
1.1 "Accounts" shall have the meaning set forth in Section
2.4 hereof.
1.2 "Adjustment Balance" has the meaning set forth in Section
4.2(b)(iii) hereof.
1.3 "Adjusted Closing Statement" has the meaning set forth in
Section 4.3(d) hereof.
1
<PAGE>
1.4 "Adjusted Contingent Payment Income Statement" has the
meaning set forth in Section 4.3(d) hereof.
1.5 "Adjusted Current Assets" means the excess of (i) cash,
cash accounts receivables (less the reserve for doubtful accounts) and prepaid
expenses of the Business over (ii) the accounts payable, accrued expenses and
deferred income of the Business, in all cases as reflected on the Adjusted
Closing Statement.
1.6 "Adjusted Profits" shall mean the net income, if any, of
the Business as reflected on the Adjusted Contingent Payment Income Statement.
1.7 "Adjusted Profits Multiple" means, subject to the last
sentence of Section 4.2(b)(i), the product of (a) the Adjusted Profits TIMES (b)
six.
1.8 "Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
1.9 "Applicable Law" means all applicable provisions of all
(i) constitutions, treaties, statutes, laws (including, but not limited to, the
common law), rules, regulations, ordinances, codes or orders of any Governmental
Authority and (ii) orders, decisions, rulings, injunctions, judgments, awards
and decrees or consents of or agreements with any Governmental Authority.
1.10 "Arbitrator" shall have the meaning set forth in Section
4.3(b) hereof.
1.11 "Assets" means the assets to be transferred to Buyer
hereunder, as more specifically described in Section 2.2 hereof.
1.12 "Audited Balance Sheet" shall have the meaning set forth
in Section 4.1(b)(i) hereof.
1.13 "Audited Income Statement" shall have the meaning set
forth in Section 4.2(b)(i) hereof.
1.14 "Base Amount" means $2,881,873.
1.15 "Board" has the meaning set forth in Section 21.8
hereof.
2
<PAGE>
1.16 "Business" means the Local Content Radio Programming
Businesses currently conducted by Sellers in the Chicago, New York City, Los
Angeles and Philadelphia Radio Markets, and all such Local Content Radio
Programming Businesses as are conducted in such Radio Markets at any time
hereafter by Sellers, to and including the Closing Date.
1.17 "Business Day", whether or not initially capitalized,
shall mean every day of the week excluding Saturdays, Sundays and Federal
holidays.
1.18 "Buyer's Contingent Payment" has the meaning set forth
in Section 4.2(b)(ii) hereof.
1.19 "Buyer's Purchase Price Adjustment" has the meaning set
forth in Section 4.1(b)(ii) hereof.
1.20 "Buyout Allocation" means, with respect to any Second
Tier Radio Market or Third Tier Radio Market, as the case may be, the amount set
forth opposite such Radio Market on SCHEDULE 1.20 hereto.
1.21 "Buyout Amount" means, with respect to any Second Tier
Radio Market or Third Tier Radio Market, as the case may be, the greatest of (i)
the product of (x) the consolidated net income for such Radio Market during the
most recently completed twelve-month period preceding the date such Buyout
Amount is paid, calculated using the same methodology which is employed to
calculate the Adjusted Profits of the Business, TIMES (y) six, (ii) the sum of
(x) the Buyout Allocation applicable to such Radio Market PLUS (y) the
out-of-pocket expenses set forth in the Start-Up Cost Certificate applicable to
such Radio Market and (iii) in the case of any Second Tier Radio Market or Third
Tier Radio Market which has been profitable during the six-month period most
recently completed prior to the delivery of the Buyout Notice with respect to
such Radio Market, the product of (x) the projected net income for such Radio
Market for the twelve-month period following the date of the delivery of such
Buyout Notice, as such net income is reflected on the Projection Certificate for
such Radio Market, times (y) six.
1.22 "Buyout Notice" has the meaning set forth in Section
9.4(c) hereof.
1.23 "Carryover Amount" means, as of any date of
determination, the sum of (i) the portion of the Buyer's Purchase Price
Adjustment, if any, not paid in cash under Section 4.1(b)(ii) hereof, PLUS (ii)
the portion of the Buyer's Contingent Payment, if any, not paid in cash under
Section 4.2(b)(ii) hereof, MINUS (iii) the Utilized Amount as of such date of
determination, together with interest on such sum from the date of delivery of
the Closing Statement to Markowitz under Section 4.1(b)(i) hereof through the
date of such determination, calculated at a rate of 10% per annum, compounded
annually.
3
<PAGE>
1.24 "Citi" has the meaning set forth in the preamble to this
Agreement.
1.25 "Closing" has the meaning set forth in Section 2.1
hereof.
1.26 "Closing Date" means the date on which the Closing
occurs.
1.27 "Closing Statement" has the meaning set forth in Section
4.1(b)(i) hereof.
1.28 "Code" means the Internal Revenue Code of 1986, as
amended.
1.29 "Computer Programs" means all computer software,
firmware, programs and source disks, program documentation, tapes, manuals,
forms, guides and other materials with respect thereto.
1.30 "Contingent Payment Balance" has the meaning set forth
in Section 4.2(b)(iii) hereof.
1.31 "Contingent Payment Income Statement" has the meaning
set forth in Section 4.2(b)(i) hereof.
1.32 "Contracts" means (i) all contracts, agreements and
purchase orders for the sale, purchase or barter of programming, goods or
services or any combination of the foregoing, relating to the Assets or the
Business, (ii) all leases for the use of Personal Property, (iii) all Real
Property Leases relating to the Business, (iv) all Trade Agreements relating to
the Business and (v) all other contracts and agreements of whatever nature which
pertain to the Assets or the Business, including, but not limited to, those
purchase orders, leases, barter agreements and other agreements and contracts
set forth on SCHEDULES 7.5 AND 7.8 to this Agreement, PROVIDED that the term
Contracts shall not include any of the Excluded Assets or any Plan.
4
<PAGE>
1.33 "Disputed Amount" has the meaning set forth in Section
9.4(d) hereof.
1.34 "Disputed Item" has the meaning set forth in Section
4.3(b) hereof.
1.35 "Employment Agreement" shall have the meaning set forth
in Section 13.4.
1.36 "Environmental Laws" shall mean all applicable local,
state and federal statutes and regulations relating to the protection of human
health or the environment.
1.37 "Environmental Liabilities and Costs" means all Losses,
whether direct or indirect, known or unknown, current or potential, past,
present or future, imposed by, under or pursuant to Environmental Laws,
including, without limitation, all Losses related to remedial actions, and all
reasonable fees, disbursements and expenses of counsel, experts, personnel and
consultants based on, arising out of or otherwise in respect of: (i) the
ownership or operation of (x) the Assets through the Closing Date by any Seller
or any of its predecessors or Affiliates or (y) any other assets, equipment or
facilities owned, leased or operated at any time by any Seller or any of its
predecessors or Affiliates at any time; (ii) the environmental conditions on,
under, above, or about (x) the Assets existing on the Closing Date or (y) any
other assets, equipment or facilities owned, leased or operated at any time by
any Seller, or any of its predecessors or Affiliates; and (iii) expenditures
necessary to cause any of the Assets to be in compliance with any and all
requirements of Environmental Laws as of the Closing Date, including, without
limitation, all environmental permits issued under or pursuant to such
Environmental Laws, and reasonably necessary to make full economic use of the
Assets.
1.38 "Excluded Assets" has the meaning set forth in Section
2.3 hereof.
1.39 "Excluded Liabilities" has the meaning set forth in
Section 3.2 hereof.
1.40 "Express" has the meaning set forth in the preamble to
this Agreement.
1.41 "Existing Employees" has the meaning set forth in
Section 8.9(b) hereof.
1.42 "Financial Statements" means the audited balance sheet
for the Business as of December 31, 1995, together with the related statements
of operations and cash flows for the fiscal year then ended, certified by the
New Jersey office of Ernst & Young.
5
<PAGE>
1.43 "FCC" means the Federal Communications Commission.
1.44 "FCC Applications" has the meaning set forth in Section
5.3 hereof.
1.45 "First Tier Markets" means the Chicago, Los Angeles, New
York City and Philadelphia Radio Markets.
1.46 "GAAP" means United States generally accepted accounting
principles.
1.47 "Government Approvals" has the meaning set forth in
Section 7.4 hereof.
1.48 "Governmental Authority" means any nation or government,
any state or other political subdivision thereof, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, but not limited to, any government
authority, agency, department, board, commission or instrumentality of the
United States, any State of the United States, or any political subdivision
thereof, and any tribunal or arbitrator(s) of competent jurisdiction, and any
self-regulatory organization.
1.49 "Hazardous Substance" means asbestos-containing material
and any and all hazardous or toxic substances, materials or wastes as defined or
listed under the Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Comprehensive Environmental Response, Compensation and
Liability Act or any comparable state statute or any regulation promulgated
under any of such federal or state statutes.
1.50 "HSRA" means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the regulations adopted thereunder.
1.51 "Initial Purchase Price" has the meaning set forth in
Section 2.4 hereof.
1.52 "Intellectual Property" means United States (federal and
state) and foreign trademarks, service marks, trade names, trade dress,
copyrights, and similar rights, including registrations and applications to
register or renew the (federal and state) registration of any of the foregoing,
the United States and foreign letters patent and patent applications, and
inventions, processes, designs, formulae, trade secrets, jingles, know-how,
confidential business and technical information, Computer Programs, data and
documentation, and all similar intangible property rights, tangible embodiments
of any of the foregoing (in any medium including electronic media), and licenses
or permits to use any of the foregoing.
6
<PAGE>
1.53 "Intellectual Property Assets" has the meaning set forth
in Section 7.7 hereof.
1.54 "Liens" has the meaning set forth in Section 2.2 hereof.
1.55 "Local Content Radio Programming Business" means the
provision of local news, sports, traffic and weather programming to radio
stations and other media outlets under arrangements whereby the provider of such
programming can sell advertising which is broadcast by such radio station or
other media outlet in connection with such radio station's or media outlet's
broadcast of such programming.
1.56 "Losses" has the meaning set forth in Section 18.1
hereof.
1.57 "Markowitz" has the meaning set forth in the preamble to
this Agreement.
1.58 "NASDAQ" means the quotation system of the National
Association of Security Dealers, Inc.
1.59 "Other Services" has the meaning set forth in Section
10.2 hereof.
1.60 "Overhead Charge" means the sum of (i) $350,000 plus
(ii) all salary and benefits allocable to any employee during the Profit
Measuring Period who is hired by Buyer pursuant to Michael D'Ambrose's exercise
of his rights under the Employment Agreement.
1.61 "Overhead Services" has the meaning set forth in Section
10.1 hereof.
1.62 "Owned Real Property" means all real property and
interests in real property owned by any Seller and used in or held for use in
connection with the Business, together with all easements and other
appurtenances for the benefit thereof.
1.63 "Permitted Encumbrances" has the meaning set forth in
Section 13.6 hereof.
1.64 "Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
1.65 "Personal Property" has the meaning set forth in Section
7.6 hereof.
1.66 "Pennsylvania Lease" means the lease agreement between
555 Associates and PETLP, dated January 31, 1992, as amended.
7
<PAGE>
1.67 "Plan" has the meaning set forth in Section 7.10 hereof.
1.68 "Profit Measuring Period" means the period of March 1,
1996 through February 28, 1997.
1.69 "Projection Certificate" has the meaning set forth in
Section 9.4(c) hereof.
1.70 "Purchase Price" has the meaning set forth in Section
2.4 hereof.
1.71 "Radio Market" means, with respect to a given geographic
location, such geographic location or radio market as established from time to
time by Arbitron Radio Market Reports.
1.72 "Real Property Leases" means the leases, subleases,
licenses and occupancy agreements, including any amendments thereto, pursuant to
which any Seller or any Affiliate of any Seller is the lessee, sublessee,
licensee or occupant of real property used in, held for use in connection with,
necessary for the conduct of, or otherwise material to, the Business or the
Assets, together with all easements and other appurtenances for the benefit
thereof.
1.73 "Second Tier Adjusted Profits" means the consolidated
net income of the Second Tier Business, calculated using the same methodology
which is employed to calculate the Adjusted Profits of the Business, during the
most recently completed twelve calendar month period prior to the Second Tier
Closing Date.
1.74 "Second Tier Assets" means all rights, titles and
interests in, to and under all of the assets, real, personal and mixed, tangible
and intangible, owned or held by Markowitz or any Affiliate of Markowitz and
used, useful or necessary in the conduct of the Second Tier Business, as
described more specifically in the Second Tier Purchase Agreement, but excluding
those assets that are excluded therein.
1.75 "Second Tier Business" means the Local Content Radio
Programming Businesses conducted by Markowitz or an Affiliate of Markowitz in
the Second Tier Radio Markets prior to the Second Tier Closing Date.
1.76 "Second Tier Call Notice" has the meaning set forth in
Section 11.1(b) hereof.
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1.77 "Second Tier Closing Date" has the meaning set forth in
Section 11.2(a) hereof.
1.78 "Second Tier Initial Purchase Price" means an amount
equal to the product of (I) the Second Tier Adjusted Profits TIMES (ii) six.
1.79 "Second Tier Purchase Agreement" has the meaning set
forth in Section 11.2(a) hereof.
1.80 "Second Tier Put Notice" has the meaning set forth in
Section 11.1(a) hereof.
1.81 "Second Tier Radio Markets" means the District of
Columbia, Houston, San Diego, Baltimore and San Francisco Radio Markets.
1.82 "Sellers" has the meaning set forth in the preamble to
this Agreement.
1.83 "Sellers' Contingent Payment" has the meaning set forth
in Section 4.2(b)(iii) hereof.
1.84 "Sellers' Purchase Price Adjustment" has the meaning set
forth in Section 4.1(b)(iii) hereof.
1.85 "Service Costs" has the meaning set forth in Section
10.4 hereof.
1.86 "Service Recipient" means an Affiliate of Markowitz
engaged in the Local Content Radio Programming Businesses in any Second Tier
Radio Market or any Third Tier Radio Market.
1.87 "Services" has the meaning set forth in Section 10.2
hereof.
1.88 "Start-Up Cost Certificate" has the meaning set forth in
Section 9.4(c) hereof.
1.89 "Tax" shall mean any federal, state, local or foreign
income, alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental (including taxes under Section
59A of the Code), real property, personal property, ad valorem, occupancy,
license, occupation, employment, payroll, social security, disability,
unemployment, workers' compensation, withholding, estimated or similar tax,
duty, fee, assessment or other governmental charge or deficiencies thereof
(including all interest and penalties thereon and additions thereto).
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1.90 "Third Tier Adjusted Profits" means, with respect to any
Third Tier Business and Third Tier Assets, the consolidated net income of such
Third Tier Business, calculated using the same methodology which is employed to
calculate the Adjusted Profits of the Business, during the most recently
completed twelve month period preceding the Third Tier Closing Date relating to
such Third Tier Business and Third Tier Assets.
1.91 "Third Tier Assets" means, with respect to any Third
Tier Radio Market, all rights, titles and interests in, to and under all of the
assets, real, personal and mixed, tangible and intangible, owned or held by
Markowitz or any Affiliate of Markowitz and used, useful or necessary in the
conduct of the Third Tier Business in such Third Tier Radio Market, as described
more specifically in the Third Tier Purchase Agreement with respect to such
Third Tier Radio Market, but excluding those assets that are excluded therein.
1.92 "Third Tier Business" means, with respect to any Third
Tier Radio Market, the Local Content Radio Programming Business conducted by
Markowitz or any Affiliate of Markowitz in such Third Tier Radio Market prior to
the Third Tier Closing Date with respect to such Third Tier Radio Market.
1.93 "Third Tier Call Notice" has the meaning set forth in
Section 12.1(b) hereof.
1.94 "Third Tier Closing Date" means, with respect to any
sale of any Third Tier Radio Market pursuant to Article XII hereof, the date of
the closing of the transactions contemplated by the Third Tier Purchase
Agreement for such sale.
1.95 "Third Tier Initial Purchase Price" means, with respect
to the Third Tier Assets and Third Tier Business relating to any Third Tier
Radio Market, an amount equal to the product of (i) the Third Tier Adjusted
Profits for such Third Tier Business TIMES (ii) six.
1.96 "Third Tier Purchase Agreement" has the meaning set
forth in Section 12.2(a) hereof.
1.97 "Third Tier Put Notice" has the meaning set forth in
Section 12.1(a) hereof.
1.98 "Third Tier Radio Markets" means the Radio Markets
listed on SCHEDULE 1.98.
1.99 "Trade Agreements" means Contracts for the sale of
advertising time for consideration other than cash.
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1.100 "Utilized Amount" means, as of any date of
determination, the aggregate amount, if any, of the Carryover Amount previously
offset against (w) the Sellers' Contingent Payment under Section 4.2(b)(iii)
hereof, (x) any Buyout Amount under Section 9.4(c) hereof, (iii) the Second Tier
Initial Purchase Price under Section 11.2(b) hereof and (iv) any Third Tier
Initial Purchase Price under Section 12.2(b) hereof.
1.101 "Westwood" means Westwood One, Inc.
1.102 "Westwood Stock" means the common stock of Westwood,
par value $.01 per share.
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ARTICLE II
PURCHASE OF ASSETS
2.1 CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the purchase of the Assets and the Business (the
"Closing") shall take place on March 4, 1996, or on such other date as the
parties may agree. The Closing shall be held at 10:00 a.m. in the offices of
Debevoise & Plimpton, 875 Third Avenue, New York, New York 10022, or at such
other place or time as the parties may agree.
2.2 TRANSFER OF ASSETS. On the Closing Date, Sellers shall
sell, assign, transfer and convey (or cause to be sold, assigned, transferred or
conveyed) to Buyer or to one or more Affiliates of Buyer designated by Buyer in
writing to Sellers at least five Business Days prior to the Closing Date, and
Buyer or one or more of such designated Affiliates of Buyer shall purchase from
Sellers, as a going concern, the Assets and the Business. As used herein,
"Assets" means all rights, titles and interests in, to and under all of the
assets, real, personal and mixed, tangible and intangible, owned or held by any
Seller or any Affiliate of any Seller and used, useful or necessary in the
conduct of the Business, including all such property acquired by any Seller or
any Affiliate of any Seller between the date hereof and the Closing Date, but
excluding the Excluded Assets. The term Assets shall include, but not be limited
to, the following:
(a) all cash, accounts, notes receivable, trade receivables
and prepaid expenses arising out of or relating to the Business;
(b) all right, title and interest in all Real Property Leases
(except the Pennsylvania Lease), together with any additions thereto
between the date hereof and the Closing Date;
(c) all licenses, permits and other authorizations issued to
any Seller by any governmental authority and used, useful or necessary in
the conduct of the Business, together with any additions thereto (including
renewals or modifications of such licenses, permits and authorizations and
applications therefor) between the date hereof and the Closing Date, in
each case to the extent the same is transferrable;
(d) all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts and other tangible personal
property of every kind and description, owned, leased or held by any Seller
or any Affiliate of any Seller and used, useful or necessary in the conduct
of the Business, including the items listed in SCHEDULE 7.6, together with
any replacements thereof and additions thereto made between the date hereof
and the Closing Date;
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(e) subject to the provisions of Article III hereof, all of
each Seller's and each Seller's Affiliates' rights under and interest in
all Contracts, including the Contracts listed in SCHEDULES 7.5 AND 7.8,
together with all of each Seller's and each Seller's Affiliates' rights
under and interest in all Contracts entered into or acquired by such Seller
or such Affiliate between the date hereof and the Closing Date in
accordance with this Agreement;
(f) all programs and programming materials of whatever form
or nature owned by any Seller or any Affiliate of any Seller relating to
the Business;
(g) all of each Seller's and each Seller's Affiliates' rights
in and to the Intellectual Property Assets, including those listed in
SCHEDULE 7.7, together with any additions thereto between the date hereof
and the Closing Date;
(h) all of each Seller's and each Seller's Affiliates' files,
records, books of account, and logs relating to the Business, including,
without limitation, receivable records and statements, programming
information and studies, technical information and engineering data, news
and advertising studies or consulting reports, marketing and demographic
data, sales correspondence, lists of advertisers, promotional materials,
credit and sales reports, and copies of all written Contracts to be
assigned hereunder, other than any such documents relating to any employee
or former employee of the Business that does not become an Existing
Employee;
(i) all of each Seller's and each Seller's Affiliates' rights
under manufacturers' and vendors' warranties relating to items included in
the Assets and all similar rights against third parties relating to items
included in the Assets to the extent contractually assignable; and
(j) all goodwill and all other rights, properties and assets
of any character whatsoever which are owned by any Seller or any Affiliate
thereof in connection with the Business and which are not otherwise
described in nor expressly excluded by the terms of this Agreement.
The Assets shall be transferred to Buyer free and clear of
all debts, liens, security interests, mortgages, pledges, judgments, trusts,
adverse claims, liabilities, encumbrances and other impairments of title (the
"Liens"), other than Permitted Encumbrances.
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2.3 EXCLUDED ASSETS. The Assets shall not include, and Buyer
shall not purchase from Sellers, any of the following (collectively, the
"Excluded Assets"):
(a) all books and records that any Seller is required by law
to retain, and all payables records and invoices, provided that, at Buyer's
request, Sellers shall provide Buyer, at Sellers' expense, with copies of
such records covering the period that Sellers conducted the Business;
(b) all books, records, and other intangible assets related
solely to any Sellers' internal partnership matters and not related to the
Business;
(c) all claims, rights, and interest in and to any refunds
for federal, state, or local franchise, income, or other taxes or fees of
any nature whatsoever for periods prior to the Closing Date;
(d) all Contracts of insurance;
(e) all of the assets listed on SCHEDULE 2.3(E) hereto; and
(f) subject to clause (a) of Section 3.1 hereof, all Plans,
including, without limitation, all employment agreements or arrangements
with the persons listed in SCHEDULE 7.9 hereto, and all labor agreements,
together with all assets, trusts and other funding arrangements with
respect thereto.
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2.4 INITIAL PURCHASE PRICE:PAYMENT. In consideration for the
sale, conveyance, transfer and assignment of the Assets by Sellers to Buyer, at
the Closing Buyer will pay to Sellers an aggregate amount of $20,000,000 (the
"Initial Purchase Price"; the Initial Purchase Price, as adjusted under Sections
4.1 and 4.2 hereof, the "Purchase Price"). Buyer shall pay the Initial Purchase
Price by wire transfers of immediately available funds to accounts (the
"Accounts") at banks or other financial institutions designated by Sellers to
Buyer at least two Business Days before the Closing Date.
2.5 ALLOCATION OF PURCHASE PRICE. The Initial Purchase Price,
as adjusted upward or downward by the adjustment of the Initial Purchase Price
under Section 4.1 hereof (such amount the "Allocation Total"), shall be
allocated for all purposes (including tax and financial accounting purposes) as
set forth in this Section 2.5 among the Assets. Not later than 45 days after
receipt by Sellers of the Closing Statement, Buyer will provide Sellers with an
allocation of the Allocation Total among the Assets. Such allocation shall be
controlling on the parties hereto for all purposes of this Agreement. The
Allocation Total shall be allocated among the Assets based upon the fair market
values of the Assets as of the Closing Date as reasonably determined in good
faith by Buyer provided that a maximum amount of $100,000 will be allocated to
the covenant not to compete in Section 9.5 hereof. In connection with Buyer's
work on such allocation, the parties will cooperate with one another and provide
one another with such information as any other party shall reasonably request.
Buyer, Sellers and Markowitz each agree to report the federal, state and local
income and other Tax consequences of the transactions contemplated herein in a
manner consistent with such allocation and not to take any position inconsistent
therewith upon examination of any tax return, in any refund claim, in any
litigation, investigation or otherwise.
ARTICLE III
ASSUMPTION OF OBLIGATIONS
3.1 ASSUMPTION OF OBLIGATIONS. Subject to the provisions of
this Article III, Buyer shall assume and undertake to pay, satisfy or discharge
the following (collectively, the "Assumed Liabilities"): (a) the accounts
payable and deferred obligations, including, barter payables, of the Business,
in each case to the extent (and only to the extent) that such obligations are
expressly reflected on the face of the Adjusted Closing Statement, (b) accrued
compensation and other payroll items in respect of employees of the Business who
accept Buyer's offer of employment as described in Section 8.9(a) hereof, in
each case to the extent (and only to the extent) that such obligations are
expressly reflected on the face of the Adjusted Closing Balance Sheet, (c) all
deferred income relating to prepaid advertising to the extent (and only to the
extent) such deferred income is expressly reflected on the face of the Adjusted
Closing Statement, (d) all liabilities, obligations or commitments of Sellers
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arising or accruing after the Closing Date under (i) the Contracts listed on
SCHEDULES 7.5 AND 7.8 hereto, and (ii) any contracts entered into by any Seller
in the ordinary course of the Business that are not required to be set forth on
such Schedules because of the dollar thresholds set forth in the representations
and warranties corresponding thereto and (e) all liabilities, obligations and
commitments of Sellers arising or accruing after the Closing Date relating to
the Business under leases, contracts, licenses, arrangements, agreements and
other arrangements entered into by Sellers between the date of this Agreement
and the Closing Date in accordance with this Agreement. Nothing contained in
this Agreement shall require Buyer to pay, perform or discharge any Assumed
Liability so long as it shall in good faith contest or cause to be contested the
amount or validity thereof and shall have indemnified and have held harmless
Sellers with respect thereto.
3.2 LIMITATION. Except as expressly set forth in Section 3.1
hereof, Buyer expressly does not, and shall not, assume or be deemed to assume,
under this Agreement or otherwise by reason of the transactions contemplated
hereby, any liabilities, obligations or commitments of Markowitz or any Seller
of any nature whatsoever, whether known or unknown, contingent or otherwise
(collectively, the "Excluded Liabilities"). Without limiting the generality of
the foregoing, Buyer shall not assume or be liable for any liability, obligation
or responsibility of Markowitz or any Seller arising out of or relating to (a)
the breach of any Contract prior to the Closing, whether or not such breach is
threatened or asserted before, on or after the Closing Date, (b) any contractual
liabilities, obligations or commitments to the extent such liability does not
relate to the conduct of the Business, (c) any legal, accounting, transactional,
brokerage or other expense relating to this Agreement or the transactions
contemplated hereunder, (d) except to the extent expressly provided in clause
(a) of Section 3.1 hereof, any Plan or other contract or arrangement in respect
of employment or termination of employment, collective bargaining or other labor
agreement or employee or retiree compensation or benefit plan, program,
arrangement, trust or other funding vehicle entered into, established or
maintained for the benefit of any person employed by any Seller at any time
prior to the Closing, whether or not any such liability, obligation or
responsibility relates to any claim, event or occurrence existing or arising
before, on or after the Closing Date, (e) any litigation, proceeding or claim by
any person or entity relating to the Business as conducted prior to the Closing,
whether or not such litigation, proceeding or claim is pending, threatened or
asserted before, on or after the Closing Date, including, without limitation,
those litigations listed on SCHEDULE 7.11 hereto, or (f) any liability for Taxes
(whether imposed on any Seller, any of their Affiliates, or otherwise) arising
with respect to the Business or the ownership of the Assets, on or before the
Closing, or the sale of the Assets to Buyer, whenever such Taxes become due or
payable.
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ARTICLE IV
ADJUSTMENTS TO INITIAL PURCHASE PRICE
4.1 FIRST ADJUSTMENT OF INITIAL PURCHASE PRICE. (a) The
Initial Purchase Price will be subject to adjustment, as described in this
Section 4.1.
(b) (i) As soon as practicable after the Closing Date (but in
no event later than 60 days following the Closing Date), Buyer will prepare
and deliver to Markowitz, as the representative of Sellers, a statement of
the consolidated current assets and current liabilities of the Business as
of immediately preceding the Closing (the "Closing Statement"). In
connection with the preparation of the Closing Statement, Buyer and its
authorized representatives, including Buyer's independent public
accountants, will have the right to review the information used in the
preparation of the Financial Statements, including, but not limited to, all
existing workpapers of the accountants which compiled such statements. The
Closing Statement shall be prepared in accordance with GAAP and the
principles, procedures and elections within GAAP utilized by Sellers in the
preparation of the audited balance sheet (the "Audited Balance Sheet")
included in the Financial Statements, except that the Closing Statement
shall include a liability, calculated in accordance with GAAP, for all
accrued but unpaid vacation in respect of all Existing Employees.
Simultaneously with its delivery of the Closing Statement to Markowitz,
Buyer will deliver to Markowitz, as the representative of Sellers, Buyer's
calculation of the Adjusted Current Assets.
(ii) In the event that the Base Amount exceeds the Adjusted
Current Assets (the amount of such excess, the "Buyer's Purchase Price
Adjustment"), within 45 days after the date of receipt by Sellers of the
Closing Statement, Markowitz and Sellers shall, subject to Section 4.3
hereof, either (x) jointly and severally pay to Buyer by wire transfer in
immediately available funds an amount equal to the Buyer's Purchase Price
Adjustment or (y) deliver to Buyer a notice, signed by Markowitz, stating
that Markowitz has elected to allow Buyer to recover the Buyer's Purchase
Price Adjustment by crediting the Buyer's Purchase Price Adjustment against
(A) the Sellers' Contingent Payment, if any, in the manner set forth in
Section 4.2(b)(iii) hereof, (B) the Buyout Amount in the manner set forth
in Section 9.4(c) hereof, (C) the Second Tier Initial Purchase Price in the
manner set forth in Section 11.2(b) hereof and/or (D) any Third Tier
Initial Purchase Price in the manner set forth in Section 12.2(b) hereof.
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In the event Sellers and Markowitz neither pay such Buyer's Purchase Price
Adjustment nor deliver such notice to Buyer within such 45-day period,
Markowitz and Sellers shall be deemed to have delivered to Buyers the
certificate provided for in clause (y) of the immediately preceding
sentence of this Section 4.1(b)(ii).
(iii) In the event that the Adjusted Current Assets exceed
the sum of (x) the Base Amount plus (y) $500,000 (the amount of such
excess, the "Sellers' Purchase Price Adjustment"), within 45 days after the
date of receipt by Sellers of the Closing Statement, Buyer shall, subject
to Sections 4.3 and 18.4 hereof, pay to Sellers an amount equal to the sum
of (i) 60% of the Sellers' Purchase Price Adjustment plus (ii) that portion
of the Adjustment Balance, if any, that Buyer does not elect to pay by
delivering Westwood Stock to Sellers pursuant to the next sentence of this
Section 4.1(b)(iii), by wire transfer of immediately available funds to the
Accounts. Buyer shall have the right, at its sole option, to pay up to 40%
of the Sellers' Purchase Price Adjustment (such amount, the "Adjustment
Balance") by delivering such number of shares of Westwood Stock, rounded up
or down to the nearest whole share, as have a value equal to that portion
of Sellers' Purchase Price Adjustment Buyer so chooses to pay by delivering
such Westwood Stock. For purposes of this Section 4.1(b)(iii), each share
of Westwood Stock shall be valued based upon a per share price equal to the
average of the closing price of the Westwood Stock, as reported on NASDAQ,
for the ten trading days preceding the second Business Day prior to the
date the Sellers' Purchase Price Adjustment is made.
(iv) Subject to Section 4.3 hereof, the Closing Statement
delivered by Buyer to Markowitz shall be final, binding and conclusive on
the parties hereto.
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4.2 SECOND ADJUSTMENT OF INITIAL PURCHASE PRICE. (a) The
Initial Purchase Price, as adjusted under Section 4.1 hereof, will be subject to
further adjustment, as described in this Section 4.2.
(b) (i) Subject to the last sentence of this Section
4.2(b)(i), within 60 days after the end of the Profit Measuring Period,
Buyer will prepare and deliver to Markowitz, as the representative of
Sellers, an income statement of the Business for the Profit Measuring
Period (the "Contingent Payment Income Statement"). The Contingent Payment
Income Statement shall be prepared in accordance with GAAP and the
principles, procedures and elections within GAAP utilized by Sellers in the
preparation of the audited income statement (the "Audited Income
Statement") included in the Financial Statements, except (A) all interest
expenses and interest income of the Business shall be excluded from such
Statement, (B) all federal, state and local income Tax expenses of the
Business shall be excluded from such Statement, (C) all depreciation and
amortization expenses and interest income of the Business shall be excluded
from such Statement, EXCEPT for depreciation expense attributable to any
equipment that is acquired by Buyer in the ordinary course of business
after the Closing Date, which equipment shall be depreciated on a
straight-line basis over the useful life of the equipment in question, (D)
no income or expense will be recognized in such Statement with respect to
any barter arrangements of the Business , (E) no expense of Westwood for
indirect corporate charges (such as internal charges for accounting,
marketing, finance, management, administration, human resources and legal)
shall be included in such Statement, (F) no costs, expenses or other
charges incurred by Sellers in connection with the transactions
contemplated by this Agreement, including, without limitation, accounting
and legal costs, shall be included in such Statement, (G) no expense
consisting of any salary or bonus paid to any Existing Employee shall be
included in such Statement to the extent, and only to the extent, that such
salary or bonus expense exceeds such employee's bonus and salary for the
calendar year preceding the Closing Date plus a customary raise unless such
expense has been authorized in writing by Michael D'Ambrose, (H) no expense
constituting a non-recurring expense, and no income constituting
non-recurring income (in each case, as determined in accordance with GAAP),
shall be included in such Statement and (I) such Statement shall include
the Overhead Charge in respect of all corporate level overhead charges of
the Business during the Profit Measuring Period. Simultaneously with its
delivery of the Contingent Payment Income Statement, Buyer will deliver to
Markowitz Buyer's calculation of the Adjusted Profits and the Adjusted
Profits Multiple. Notwithstanding anything in this Agreement to the
contrary, if Buyer pays any Buyout Amount to Markowitz or any Affiliate of
Markowitz pursuant to Section 9.4 hereof prior to the end of the Profit
Measuring Period, Buyer shall not be required to prepare or deliver the
Contingent Payment Income Statement, the Adjusted Profits Multiple shall be
deemed for all purposes of this Agreement to be $34,800,000, and the
dispute mechanisms in Section 4.3 shall not apply to such deemed Adjusted
Profit Multiple.
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(ii) In the event that the Adjusted Profits Multiple is less
than $20,000,000 (such deficit, the "Buyer's Contingent Payment"),
Markowitz and Sellers shall, subject to Section 4.3 hereof, either (x)
jointly and severally pay to Buyer by wire transfer in immediately
available funds an amount equal to the Buyer's Contingent Payment, such
payment to be made within 30 days of Markowitz's receipt of the Contingent
Payment Income Statement, or (y) deliver to Buyer a notice, signed by
Markowitz, stating that Sellers and Markowitz have elected to allow Buyer
to recover the Buyer's Contingent Payment by crediting such payment against
(A) any Buyout Amount in the manner set forth in Section 9.4(c) hereof, (B)
the Second Tier Initial Purchase Price in the manner set forth in Section
11.2(b) hereof and/or (C) any Third Tier Initial Purchase Price in the
manner set forth in Section 12.2(b) hereof. In the event Markowitz and
Sellers neither pay such amount to Buyer nor deliver such notice to Buyer
within such 30-day period, Markowitz and Sellers shall be deemed to have
delivered to Buyer the certificate provided for in clause (y) of the
immediately preceding sentence of this Section 4.2(b)(ii).
(iii) In the event that the Adjusted Profits Multiple is more
than $20,000,000 (such excess, as it may be adjusted pursuant to the next
sentence of this Section 4.2(b)(iii), the "Sellers' Contingent Payment"),
Buyer, subject to Sections 4.3 and 18.4 hereof, shall pay to Sellers an
amount equal to the sum of (i) 60% of the Sellers' Contingent Payment plus
(ii) that portion of the Contingent Payment Balance, if any, that Buyer
does not elect to pay by delivering Westwood Stock to Sellers pursuant to
the next sentence of this Section 4.2(b)(iii), by wire transfer of
immediately available funds to the Accounts. Buyer shall have the right, at
its sole option, to pay up to 40% of the Sellers' Contingent Payment (such
amount, the "Contingent Payment Balance") by delivering such number of
shares of Westwood Stock, rounded up or down to the nearest whole share, as
have a value equal to that portion of Sellers' Contingent Payment Buyer so
chooses to pay by delivering such Westwood Stock. For purposes of this
Section 4.2(b)(iii), each share of Westwood Stock shall be valued based
upon a per share price equal to the average of the closing price of the
Westwood Stock, as reported on NASDAQ, for the ten trading days preceding
the second Business Day prior to the date the Sellers' Contingent Payment
is made. Notwithstanding the foregoing, the Sellers' Contingent Payment
shall be reduced by the Carryover Amount, if any, at the time such Sellers'
Contingent Payment is paid.
(iv) Subject to Section 4.3 hereof, the Contingent Payment
Income Statement delivered by Buyer to Markowitz shall be final, binding
and conclusive on the parties hereto.
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4.3 DISPUTE RESOLUTION. (a) This Section will govern
resolution of any disputes between Buyer and Sellers regarding the calculations
on the Closing Statement, the Contingent Payment Income Statement, or both.
(b) Markowitz will have the right, with Sellers' independent
public accountant, to review the information used in the preparation of the
Closing Statement or the Contingent Payment Income Statement, as the case
may be, and to discuss such information and the preparation and review
thereof with the personnel of Buyer responsible therefor. Markowitz may
dispute items reflected on the Closing Statement or the Contingent Payment
Income Statement, as the case may be, only on the basis that such amounts
(i) resulted from mechanical errors of computation or (ii) were not arrived
at in accordance with the applicable accounting provisions of Section
4.1(b)(i) or 4.2(b)(i) hereof, as the case may be. In the event Markowitz
so disagrees with any item on the Closing Statement or the Contingent
Payment Income Statement, as the case may be, Markowitz shall, within 45
days after receipt of such Closing Statement or Contingent Payment Income
Statement, as the case may be, give Buyer notice of such disagreement
specifying the items in dispute (any such item a "Disputed Item") and
setting forth his proposed adjustments. If the parties and their respective
accountants are unable to agree on a resolution within 15 days after
delivery of such notice of disagreement, then the parties will submit such
dispute to Deloitte & Touche (the "Arbitrator"), certified public
accountants. The Arbitrator shall, within 30 days after such submission,
determine and report to the parties upon the Disputed Items and such report
shall be final, binding and conclusive on the parties with respect to such
Disputed Items.
(c) Any fees, expenses and costs of the Arbitrator for the
services described in Section 4.3(b) with respect to the Closing Statement
or the Contingent Payment Income Statement, as the case may be, shall be
allocated among Markowitz and Sellers, on the one hand, and Buyer, on the
other, in the same proportion that the aggregate amount of all of the
Disputed Items on the Closing Statement or the Contingent Payment Income
Statement, as the case may be, that are submitted to the Arbitrator and are
unsuccessfully disputed by Markowitz, bear to the total amount of all of
the Disputed Items on the Closing Statement or the Contingent Payment
Income Statement, as the case may be. Markowitz and Sellers shall bear all
such fees, costs and disbursements of the Arbitrator with respect to its
work on the Closing Statement or the Contingent Payment Income Statement,
as the case may be, if this Section 4.3 results in no adjustment being made
to any Disputed Item on such statement. Buyer, on the one hand, and
Markowitz and Sellers, on the other, shall each reimburse the other to the
extent the other pays more than the amount so required pursuant to the
preceding sentence.
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(d) The term "Adjusted Closing Statement", as used herein,
shall mean (x) the Closing Statement delivered by Buyer to Markowitz
pursuant to Section 4.1(b)(i) hereof, in the event Markowitz does not
dispute any item on the Closing Statement within 45 days after receipt
thereof, or (y) the definitive Closing Statement resulting from the
determinations made by the Arbitrator, in accordance with this Section 4.3
(in addition to those items theretofore agreed to by Buyer and Markowitz),
in the event Markowitz does dispute any such item. The term "Adjusted
Contingent Payment Income Statement", as used herein, shall mean (x) the
Contingent Payment Income Statement delivered by Buyer to Sellers pursuant
to Section 4.2(b)(i) hereof, in the event Markowitz does not dispute any
item on the Contingent Payment Income Statement within 45 days after
receipt thereof, or (y) the definitive Contingent Payment Income Statement
resulting from the determinations made by the Arbitrator in accordance with
this Section 4.3 (in addition to those items theretofore agreed to by Buyer
and Markowitz), in the event Markowitz does dispute any such item.
(e) Payment of the Buyer's Purchase Price Adjustment, the
Sellers' Purchase Price Adjustment, the Buyer's Contingent Payment or the
Sellers' Contingent Payment, as the case may be, shall be delayed until the
final resolution of all disputes regarding such adjustment or payment as
provided in this Section 4.3, upon which event such adjustment or payment
shall be paid in accordance Section 4.1(b)(ii), 4.1(b)(iii), 4.2(b)(ii) or
4.2(b)(iii) hereof, as the case may be, within 10 days thereafter,
together, in each case, with interest on such amount from the period
Markowitz first received the Closing Statement or the Contingent Payment
Income Statement, as the case may be, through the date such payment is
made, calculated at a rate of 10% per annum, compounded annually.
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ARTICLE V
GOVERNMENTAL CONSENTS
5.1 COMPLIANCE WITH HSRA. Buyer and Sellers shall make or
cause to be made in a timely fashion all filings which are required in
connection with the transactions contemplated hereby under the HSRA, and shall
furnish to the other party all information that the other reasonably requests in
connection with such filings.
5.2 OTHER GOVERNMENTAL CONSENTS. Promptly following the
execution of this Agreement, the parties shall prepare and file with the
appropriate Governmental Authorities any requests for approval or waiver not
referred to in Section 5.1 that are required from such Governmental Authorities
in connection with the transactions contemplated hereby and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such requests for approval or waiver and all proceedings
necessary to secure such approvals and waivers. All such governmental approvals
and waivers not referred to in Section 5.1 are listed in SCHEDULE 7.3.
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5.3 FCC APPLICATIONS. The assignment of the FCC licenses
listed in SCHEDULE 7.4(b) as contemplated by this Agreement is subject to the
prior consent and approval of the FCC. No later than seven (7) Business Days
after the date of the Agreement, Sellers and Buyer shall file applications ("FCC
Applications") to assign all of the FCC licenses listed in SCHEDULE 7.4(b)
(other than FCC license KLC-635 issued to Group W Radio, Inc.) which are used by
Sellers in the operation of the Business from Sellers to Buyer. Sellers and
Buyer shall thereafter prosecute the FCC Applications with all reasonable
diligence and otherwise use their best efforts to obtain grant of the FCC
Applications as expeditiously as practicable; provided, however, that neither
Sellers nor Buyer shall have any obligation to satisfy any complainant or the
FCC by taking any steps which would have a material adverse effect upon Sellers
or Buyer or upon any affiliated entity, but neither the expense or inconvenience
to a party of defending against a complainant or an inquiry by the FCC shall be
considered a material adverse effect on such party. If reconsideration or
judicial review is sought with respect to the consent to the FCC Applications,
the party affected shall vigorously oppose such efforts for reconsideration or
judicial review.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
6.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
6.2 AUTHORIZATION AND BINDING OBLIGATION. Buyer has all
necessary corporate power and authority to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby, and
Buyer's execution, delivery and performance of this Agreement have been duly and
validly authorized by all necessary corporate action on its part. This Agreement
has been duly executed and delivered by Buyer and constitutes its valid and
binding obligation, enforceable against it in accordance with its terms, except
as limited by laws affecting the enforcement of creditors' rights generally or
equitable principles.
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6.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except as set forth in Article V with respect to governmental consents or
disclosed in SCHEDULE 6.3, the execution, delivery and performance of this
Agreement by Buyer: (a) does not require the consent of any third party; (b)
will not violate any provision of Buyer's articles of incorporation or by-laws;
(c) will not violate any Applicable Law to which Buyer is bound; and (d) will
not, either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a material
breach of the terms, conditions or provisions of, or constitute a material
default under or accelerate or permit the acceleration of any performance
required by the terms of any agreement, instrument, license or permit to which
Buyer is now subject, except for any such conflict, termination, breach, default
or acceleration which would not impair Buyer's ability to perform its
obligations under this Agreement.
6.4 LITIGATION. There is no claim, litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken by Buyer in connection with this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
OF SELLERS AND MARKOWITZ
Sellers and Markowitz jointly and severally represent and
warrant to Buyer as follows:
7.1 ORGANIZATION AND STANDING. Each Seller (other than Citi
and Express) is a limited partnership duly formed, validly existing and in good
standing under the laws of the applicable jurisdiction set forth in SCHEDULE
7.1. Citi is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of New Jersey. Express is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Pennsylvania. Each Seller is duly qualified to do business in, and is
in good standing in the applicable jurisdictions set forth in SCHEDULE 7.1,
which are all the jurisdictions where the character of the properties or assets
such Seller leases, owns or operates, or the conduct of the portion of the
Business it conducts, requires such qualification, except where the failure to
be so qualified would not have a material adverse effect on the portion of the
Business conducted by such Seller. Each Seller (other than Citi and Express) has
all necessary partnership or corporate power and authority, as the case may be,
to own, lease and operate the Assets owned, leased or operated by it and to
carry on the Business conducted by it.
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7.2 AUTHORIZATION AND BINDING OBLIGATION. Each Seller (other
than Citi and Express) has all necessary partnership power and authority to
enter into and perform its obligations under this Agreement and the transactions
contemplated hereby and each of Citi and Express has all necessary corporate
power and authority to enter into and perform its obligations under this
Agreement and the transactions contemplated hereby. Each Seller's execution,
delivery and performance of this Agreement has been duly and validly authorized
by all necessary partnership action on its part. This Agreement has been duly
executed and delivered by each Seller and Markowitz. This Agreement constitutes
the valid and binding obligation of each Seller and Markowitz, enforceable
against each such Person in accordance with its terms, except as limited by laws
affecting the enforcement of creditors' rights generally or equitable
principles.
7.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except for the requirements of the HSRA or as specifically disclosed in SCHEDULE
7.3, 7.5 OR 7.8, the execution, delivery and performance of this Agreement by
each Seller and Markowitz (a) does not require the consent of any third party;
(b) will not violate any provision of any Seller's agreement of limited
partnership charter or by-laws, as the case may be; (c) will not violate any
Applicable Law to which any Seller or Markowitz is a party or by which it or the
Assets are bound; (d) will not, either alone or with the giving of notice or the
passage of time, or both, conflict with, constitute grounds for termination of
or result in a breach of the terms, conditions or provisions of, or constitute a
default under, any Contract, instrument, license or permit to which any Seller,
Markowitz or the Assets are subject; (e) will not result in the creation of any
Lien on any of the Assets; and (f) will not result in the acceleration of any
obligation under or the creation of any new liability under any Plan.
7.4 GOVERNMENTAL AUTHORIZATION. Except as set forth on
SCHEDULE 7.4(a), all FCC licenses held or used by Sellers and all licenses,
permits and other authorizations issued to any Seller by any governmental or
regulatory authority and used, useful or necessary in the conduct of the
Business (collectively, the "Governmental Approvals") are transferrable to Buyer
on the Closing Date, subject only to the receipt of any applicable consents
listed on SCHEDULE 7.3. SCHEDULE 7.4(b) is a true and complete list of all FCC
licenses held or used by Sellers and all other material Governmental Approvals.
Except as set forth in Schedule 7.4(b) there are no FCC licenses or Governmental
Approvals required for the lawful conduct of the Business in the manner and to
the full extent that it is now conducted. Sellers are the valid and legal
holders of each of the material Governmental Approvals, and none is subject to
any restriction or condition which limits in any material respect the conduct of
the Business. Sellers have delivered to Buyer true and complete copies of all
FCC licenses and all the material Governmental Approvals, including any and all
amendments and other modifications to such items. Except as may be set forth in
SCHEDULE 7.4(b), there has been no violation, cancellation, suspension,
revocation or default of any material Governmental Authority or any notice of
violation, cancellation, suspension, revocation, default or dispute affecting
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any material Governmental Approval. The FCC licenses and other material
Governmental Approvals listed on SCHEDULE 7.4(b) were validly issued to and are
validly held by Sellers, are in full force and effect and are unimpaired by any
act or omission of Sellers and, except as disclosed on SCHEDULE 7.4(b), none is
subject to any restriction or condition which would limit in any respect the
full operation of the Business as it is now operating. Sellers have no reason to
believe that the FCC will not renew the FCC licenses in the ordinary course.
Except as disclosed on SCHEDULE 7.4(b), there are no applications, complaints or
proceedings pending or to the best of Sellers' knowledge, threatened, before the
FCC relating to the Business or that may result in the revocation, modification,
non-renewal or suspension of any of the FCC licenses or the imposition of any
fines, forfeitures or other administrative actions by the FCC with respect to
the Business or its operation.
7.5 REAL PROPERTY. (a) SCHEDULE 7.5 PART (a) contains a
complete and correct list of all Real Property Leases, setting forth the
address, landlord and tenant for each Real Property Lease, describing all
improvements leased pursuant to each Real Property Lease, listing the expiration
date of and the current annual rent paid under each Real Property Lease and
whether such Real Property Lease contains any renewal or purchase options. There
is no Owned Real Property and no Seller occupies any real property other than
that listed on SCHEDULE 7.5 PART (a).
(b) The improvements upon each parcel of real property leased
by any Seller and the current use and operation of such real property
conforms in all material respects to all restrictive covenants, conditions,
easements, building, subdivision and similar codes and federal, state and
local laws, regulations, rules, orders and ordinances and no Seller has
received any notice of any material violation or claimed violation of any
such restrictive covenant, condition or easement, or any building,
subdivision or similar code, or any federal, state or local law,
regulation, rule, order or ordinance. To each Seller's and Markowitz's
knowledge, the premises which are the subject of the Real Property Leases
are zoned for the purposes for which they are currently being used by the
applicable Seller. Each Seller's improvements on the real property premises
which are the subject of the Real Property Leases to which such Seller is a
party are in good working condition and repair. No Seller has any knowledge
of or has received notice of any pending, threatened, or contemplated
action to take by eminent domain or otherwise to condemn any portion of any
premises which are the subject of the Real Property Leases. To each
Seller's and Markowitz's knowledge, there exists no writ, injunction,
decree, order or judgment, nor any litigation, pending or threatened,
relating to the ownership, use, lease, occupancy or operation of any of the
premises which are the subject of the Real Property Leases.
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(c) Each Real Property Lease is legal, valid, binding,
enforceable and in full force and effect with respect to the Seller that is
a party thereto. No Seller nor, to Sellers' or Markowitz's knowledge, any
other party is in default, violation or breach under any Real Property
Lease, and no event has occurred and is continuing that constitutes or,
with notice or the passage of time or both, would constitute a default,
violation or breach thereunder. No amount payable under any Real Property
Lease is past due. No Seller has received any notice of a default, offset
or counterclaim under any Real Property Lease or any other communication
asserting non-compliance with any Real Property Lease. Each Seller has the
exclusive right to use and occupy the premises leased under each Real
Property Lease to which such Seller is a party. Each Seller enjoys peaceful
and undisturbed possession of the premises leased by such Seller under each
Real Property Lease to which it is a party. Except as set forth on SCHEDULE
7.5 PART(c), the Real Property Leases are free and clear of all Liens,
covenants, easements, restrictions, conditions, encroachments and rights of
way, recorded or unrecorded, subleases, charges, and other claims and
encumbrances, except for lessors' interests in the Real Property Leases.
Sellers have delivered to Buyer, complete and correct copies of the Real
Property Leases, together, in the case of any subleases or similar
occupancy agreements, with copies of all overleases.
(d) Except as disclosed in SCHEDULE 7.5 PART (d), each Seller
has full legal power and authority to assign its rights under each Real
Property Lease to which it is a party to Buyer in accordance with this
Agreement on terms and conditions no less favorable than those in effect on
the date hereof, and such assignment will not affect the validity,
enforceability and continuity of any such lease.
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7.6 TITLE TO AND CONDITION OF PERSONAL PROPERTY. SCHEDULE 7.6
lists all tangible personal property owned, leased or held by Sellers and used
or useful in the conduct of the Business (the "Personal Property"). Except as
described in SCHEDULE 7.6 hereto, Sellers have valid title to all Personal
Property (and to all other Assets to be transferred to Buyer hereunder) free and
clear of any Lien. Except as described in SCHEDULE 7.6 hereto, all of the
material items of tangible personal property and facilities included in the
Assets are in good operating condition and repair and are adequate for the
purposes for which they are being used in the Business. All such tangible assets
are in compliance in all material respects with all applicable federal, state
and local statutes, ordinances, rules and regulations. The Personal Property
listed in SCHEDULE 7.6 includes all such properties necessary to conduct the
Business as it is presently being conducted.
7.7 INTELLECTUAL PROPERTY. Except as set forth on SCHEDULE
7.7, SCHEDULE 7.7 contains a complete and correct list and description of all
Intellectual Property which is used or useful in the Business (the "Intellectual
Property Assets"). Each Intellectual Property Asset is either owned or validly
licensed by a Seller and SCHEDULE 7.7 identifies which Intellectual Property
Assets are so owned and which are so licensed. Sellers have delivered to Buyer
copies of all material documents and true and complete memoranda describing the
terms of any oral agreements regarding Intellectual Property Assets, if any,
establishing such rights, licenses or other authority. No Seller or Affiliate
thereof has any knowledge of any pending or threatened proceeding or litigation
affecting, or with respect to, the Intellectual Property Assets. Each Seller is
in compliance in all material respects with the terms of any license of an
Intellectual Property Asset and no Seller or Affiliate thereof has received any
notice or has any knowledge of any infringement or unlawful use of the
Intellectual Property Assets. The conduct of the Business does not infringe the
rights of any third party in respect of any Intellectual Property. Except as
disclosed in SCHEDULE 7.7, each Intellectual Property Asset owned by any Seller
is owned free and clear of any Lien. No Seller or Affiliate thereof has sold,
licensed or otherwise disposed of any of the Intellectual Property Assets to any
Person and no Seller or Affiliate thereof has agreed to indemnify any Person for
any patent, trademark or copyright infringement. The Intellectual Property
Assets listed in SCHEDULE 7.7 include all Intellectual Property which is used in
useful to or necessary to the Business. SCHEDULE 7.7 lists all of the
Intellectual Property Assets which have been duly registered with, filed in or
issued by, as the case may be, the United States Patent and Trademark Office and
United States Copyright Office or other filing offices.
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7.8 CONTRACTS. (a) SCHEDULE 7.8 lists all Contracts as of the
date of this Agreement (except Real Property Leases which are listed in SCHEDULE
7.5) which have an unexpired term of more than 6 months or provide for future
aggregate payments in excess of $25,000.
(b) Sellers have delivered to Buyer true and complete copies
of all written Contracts, or true and complete memoranda describing the
terms of all oral Contracts, listed in SCHEDULES 7.5 AND 7.8, and all
liabilities and obligations under such Contracts can be ascertained from
such copies or memoranda. Each Contract to be assumed by Buyer hereunder
pursuant to Section 3.1 is valid, binding and enforceable by the Seller
party thereto in accordance with its respective terms. Sellers have
complied in all material respects with all Contracts to be assumed by Buyer
hereunder pursuant to Section 3.1 and are not in default under any of the
Contracts to be assumed by Buyer hereunder pursuant to Section 3.1. Sellers
have not granted or been granted any waiver or forbearance with respect to
any of the Contracts. To Sellers' and Markowitz's knowledge, no other
contracting party is in default under any of the Contracts to be assumed by
Buyer hereunder pursuant to Section 3.1. Except as set forth in SCHEDULES
7.3, 7.5 AND 7.8, each Seller has full legal power and authority to assign
its respective rights under the Contracts to be assumed by Buyer hereunder
pursuant to Section 3.1 to Buyer in accordance with this Agreement on terms
and conditions no less favorable than those in effect on the date hereof,
and such assignment will not require the consent of any third party or
affect the validity, enforceability and continuity of any of the Contracts
to be assumed by Buyer hereunder pursuant to Section 3.1. The Contracts to
be assumed by Buyer hereunder pursuant to Section 3.1 include all those
necessary to conduct the Business as presently conducted.
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7.9 PERSONNEL INFORMATION. (a) SCHEDULE 7.9 contains a true
and complete list of all persons employed, and a description of all
compensation, including bonus arrangements, and employee and retiree benefit
plans or arrangements applicable to such employees, other than employee benefit
plans or arrangements included in SCHEDULE 7.10. No Seller is a party to any
agreement or arrangement, written or oral, with salaried or non-salaried
employees except as described in SCHEDULES 7.9 AND 7.10.
(b) Except as disclosed in SCHEDULES 7.9 AND 7.10, no Seller
is a party to any contract or agreement with any labor organization, nor
has any Seller agreed to recognize any union or other collective bargaining
unit, nor has any union or other collective bargaining unit been certified
as representing any employees of any Seller. No Seller has any knowledge of
any organizational effort currently being made or threatened by or on
behalf of any labor union with respect to any employees of any Seller.
There are no unfair labor practice charges pending against any Seller;
there are no pending or threatened strikes, arbitration proceedings
involving labor matters or other labor disputes affecting any Seller; and
no Seller has experienced any strikes, work stoppages or other significant
labor difficulties of any nature in the past two years.
(c) Each Seller has complied in all material respects with
all laws relating to the employment or termination of employment of labor,
including, without limitation, those laws relating to safety, health, labor
relations, wages, hours, collective bargaining, unemployment insurance,
workers' compensation, equal employment opportunity and payment and
withholding of taxes.
7.10 EMPLOYEE BENEFIT PLANS. SCHEDULES 7.9 AND 7.10,
together, set forth a correct and complete list of each employee or retiree
benefit or compensation plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or compensation,
bonus, incentive, deferral, equity based, severance, termination, retention,
change in control, employment or other similar program, agreement, arrangement,
trust or other funding arrangement, whether or not subject to the provisions of
ERISA, to which any Seller is a party or by which any Seller is bound or that is
or has been established or maintained or in respect of which any Seller has ever
had any obligation to contribute (each, a "Plan"). Except pursuant to a Plan, no
Seller has any fixed or contingent liability or obligation to or in respect of
any person now or formerly employed by any Seller or any beneficiary or
dependent of any such person, including, without limitation, in respect of
pension or thrift benefits or payments, individual or supplemental pension
benefits or payments or compensation arrangements, contributions to
hospitalization or other health, life or other welfare benefits, incentive
benefits or payments, bonus benefits or payments or vacation, sick leave,
disability and severance, termination retention or change in control benefits or
payments, including workers' compensation. No trade or business (whether or not
incorporated) is or has been as of any date within the preceding 6 years been
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treated as a single employer together with any Seller pursuant to Section 414 of
the Code. No Seller has incurred or reasonably expects to incur (either directly
or indirectly, including as a result of any indemnification obligation) any
liability that could become a liability of Buyer or, following the Closing,
remain a liability of the Business under or pursuant to Title I or IV of ERISA
or the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and no event, transaction or condition has
occurred or exists which could result in any such liability to Buyer or the
Business on or after the Closing. Each of the Plans has been operated and
administered in all respects in accordance with all Applicable Laws, including
but not limited to ERISA and the Code.
7.11 LITIGATION. Except as set forth in SCHEDULE 7.11, there
is no claim, litigation, proceeding or investigation pending or, to Sellers' and
Markowitz's knowledge, threatened, against or affecting any of the Assets or the
Business which, if adversely determined, is reasonably likely to have a material
adverse effect on the Business, or which seeks to enjoin or prohibit, or
otherwise questions the validity of, any action taken or to be taken in
connection with this Agreement.
7.12 COMPLIANCE WITH LAWS. Each Seller has operated and is
operating the Business in material compliance with all Applicable Laws, and its
use of the Assets does not violate any Applicable Laws in any material respect.
Except as set forth in SCHEDULE 7.12, no Seller or Markowitz has received any
notice asserting any noncompliance with any Applicable Law in connection with
the Business or the Assets.
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7.13 TRANSACTION WITH AFFILIATES. Except as disclosed on
SCHEDULE 7.13, all Assets used, useful or necessary in the Business are owned,
leased or held by one or more Seller. No Affiliate of any Seller (other than
another Seller) owns any Assets or is a party to any Contract.
7.14 FINANCIAL STATEMENTS; ADJUSTED CURRENT ASSETS. SCHEDULE
7.14 contains true and complete copies of the Financial Statements. The
Financial Statements have been prepared in accordance with GAAP consistently
applied. The Financial Statements fairly present the financial condition and the
results of the operations of the Business as of the dates and for the periods
indicated. Since December 31, 1995, there has been no material adverse change in
the business, operations, property, assets, liabilities or condition (financial
or otherwise) of the Business. Except for (a) liabilities as and to the extent
reflected or reserved against on the balance sheet of the Business as of
December 31, 1995 included in the Financial Statements, and (b) liabilities
incurred since December 31, 1995, in the ordinary and normal course of business,
no Seller has any liabilities or obligations of any nature, whether accrued,
absolute, contingent or otherwise, relating to the Assets or the Business,
except as disclosed in this Agreement or SCHEDULE 7.14.
7.15 ABSENCE OF CHANGES OR EVENTS. Except as disclosed in
SCHEDULE 7.15, since December 31, 1995, the Business has been conducted in all
material respects only in the ordinary course and no Seller has, except in the
ordinary course of business, purchased, sold, assigned or transferred any of the
Assets.
7.16 INSURANCE. The Assets are insured against loss, damage
or injury in amounts listed in SCHEDULE 7.16, which shows all insurance policies
held by each Seller relating to the Business, together with the policy limits,
the type of coverage, the location of the property covered, annual premium,
premium payment dates and expiration date of each of the policies. Copies of all
such insurance policies have been furnished to Buyer. All such insurance
policies are in full force and effect.
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7.17 TAXES. Each Seller has duly filed all Tax returns and
forms required to be filed by such Seller, and has paid in full or discharged
all Taxes required to be paid except for Taxes contested in good faith or
believed in good faith not to be due and payable. No Seller is currently under
audit with respect to Taxes by any Governmental Authority and no Governmental
Authority is now asserting in writing against any Seller any deficiency or claim
for Taxes. No event has occurred that could impose on Buyer any liability for
any Taxes due or to become due from any Seller from any taxing authority.
7.18 BANKRUPTCY. No insolvency proceedings of any character,
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
any Seller or any of the Assets, are pending or threatened, and no Seller has
made any assignment for the benefit of creditors or taken any action in
contemplation of or which would constitute the basis for the institution of such
insolvency proceedings.
7.19 ENVIRONMENTAL MATTERS. (a) Each Seller's operation and
use of each Real Property Lease is in compliance in all material respects with
all Environmental Laws. Sellers have obtained all material environmental, health
and safety permits necessary for the operation of the Business, and all such
permits are in full force and effect and Sellers are in compliance in all
material respects with the terms and conditions of each such permit. There are
no outstanding Liens on any Seller's interest in any of the Real Property Leases
under any Environmental Laws. No Seller has received any notice, or is aware of,
any administrative or judicial investigations, proceedings or actions with
respect to material violations, alleged or proven, of Environmental Laws by any
Seller or any tenants or subtenants of any Seller, or otherwise involving the
Real Property Leases or the operations conducted on the property subject to the
Real Property Leases.
(b) There has been no release (nor, to the best of each
Seller's knowledge, is there any substantial threat of a release) of any
Hazardous Substance at or from the Real Property Leases in amounts or
concentrations requiring remediation under or that would violate current
Environmental Laws in any material respect. There are no Hazardous Substances
present on the Real Property Leases except for ordinary quantities of properly
stored Hazardous Substances found in consumer or commercial products that are
used in the normal course of the Business. There are no underground storage
tanks, or underground piping associated with such tanks, on the property subject
to the Real Property Leases.
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7.20 FINANCING STATEMENTS. The Assets are and have been
located in the states of California, Illinois, New Jersey, New York and
Pennsylvania since they were acquired by Sellers. All financing statements filed
by any party with respect to the Assets are listed in SCHEDULE 7.20.
7.21 THE ASSETS. Except for the Excluded Assets, the Assets,
taken as a whole, constitute all of the properties and assets (A) used or held
for use in connection with the Business and (b) required for the continued
conduct of the Business. Except for any Permitted Encumbrances, the Assets will
be transferred to Buyer at the Closing free and clear of any Lien.
7.22 SUBSIDIARIES. Except as set forth on SCHEDULE 7.22, none
of CSTLP, NYSTLP, LASTLP or PETLP owns, directly or indirectly, any shares of
capital stock or other equity interest (or any other interest convertible into
an equity interest) in any corporation, partnership, joint venture or other
entity, or has any commitment to contribute to the capital of, make loans to, or
share in the losses of, any enterprise.
7.23 BROKER OR FINDER'S FEE. No Seller or Markowitz has
incurred any liability to any broker, finder or agent for any fees, commissions
or similar compensation with respect to the transactions contemplated by this
Agreement.
7.24 OVERHEAD COSTS. The Overhead Charge represents Sellers'
and Markowitz's good faith estimate of the corporate level overhead charges that
will be incurred by the Business during the Profit Measuring Period.
7.25 PURCHASE FOR INVESTMENT. Each Seller is purchasing any
shares of Westwood Stock issued to it by Buyer pursuant to this Agreement for
its own account and not directly or indirectly with a view to, or for sale in
connection with any distribution thereof, other than, in the case of each Seller
which is a partnership, for distribution to the limited partners of such
partnership. Each Seller is an Accredited Investor within the meaning of
Regulation D under the Securities Act.
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7.26 DISCLOSURE. To each Seller's knowledge, none of this
Agreement or any certificate or other document delivered by Sellers to Buyer as
expressly required by this Agreement contains any untrue statement of a material
fact or omits any statement of a material fact necessary to make any statement
contained herein or therein not misleading.
ARTICLE VIII
COVENANTS OF SELLERS AND MARKOWITZ
8.1 CONDUCT OF BUSINESS. Except as provided in this Article
VIII, from the date hereof until the Closing, Sellers and Markowitz, jointly and
severally, covenant and agree that Sellers shall conduct the Business in the
ordinary and normal course of business, consistent with Sellers' past practices
and with the intent of preserving the ongoing operations and Assets of the
Business. Without limiting the generality of the foregoing, except as expressly
permitted by this Agreement or with the prior written consent of Buyer:
(a) No Seller shall sell, assign, lease or otherwise transfer
or dispose of any of the Assets, unless the same shall be replaced with
assets of equal or greater value and utility, and each Seller's inventories
of spare parts and expendable supplies, if any, shall be maintained at
levels consistent with past practices;
(b) No Seller shall create, assume or permit to exist any
Lien upon the Assets, except for those in existence on the date of this
Agreement, all of which will be removed on or prior to the Closing Date;
(c) Each Seller shall operate the Business in all material
respects in accordance with Applicable Law, and shall not cause or permit
by any act, or failure to act, any of the Governmental Approvals to expire,
be surrendered, adversely modified, or otherwise terminated;
(d) Each Seller shall not waive any material right under any
Contract or license relating to the Assets or the Business;
(e) No Seller shall enter into or renew any Contract to be
assumed by Buyer hereunder pursuant to Section 3.1 other than in a manner
consistent with the past practices of the Business;
(f) Each Seller shall timely make all payments required to be
paid under any Contract to be assumed by Buyer when due and otherwise pay
all liabilities and satisfy all obligations within 60 days of invoice;
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(g) No Seller shall increase or modify or agree to increase
or modify the compensation, bonuses or other benefits or perquisites of any
employee of the Business, except in the ordinary course of business,
consistent with past practice;
(h) Each Seller and Markowitz shall use their respective best
efforts to preserve the operations, organization and reputation of the
Business intact, to preserve the goodwill and business of each Seller's
advertisers, programming, suppliers, and others having business relations
with it, and to continue to conduct financial operations of each Seller,
including its credit and collection policies, with no less effort, as
heretofore;
(i) Each Seller shall remove, cure, correct and repair prior
to the Closing (to the extent within such Seller's control) any material
deficiencies in the Assets being sold under this Agreement;
(j) Each Seller shall maintain the insurance policies on the
Business and the Assets listed in SCHEDULE 7.16 or their equivalent; and
(k) Each Seller shall maintain its books and records in
accordance with GAAP and the principles, procedures and elections utilized
by Sellers in the preparation of the audited financial statements included
in the Financial Statements.
8.2 ACCESS AND INFORMATION PRIOR TO THE CLOSING. Between the
date of this Agreement and the Closing Date, each Seller shall give Buyer and
Buyer's counsel, accountants, engineers and other representatives reasonable
access during normal business hours to all of such Seller's Assets, properties,
records and employees relating to the Business, including the data underlying
the Financial Statements, and shall furnish Buyer with all information that
Buyer reasonably requests concerning the Assets and the Business, in each case
after reasonable prior notice. The rights of Buyer under this Section shall not
be exercised in such a manner as to interfere unreasonably with the conduct of
the Business.
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8.3 NOTIFICATION. (a) Each Seller and Markowitz shall notify
Buyer of any litigation, arbitration or administrative proceeding pending or, to
its actual knowledge, threatened against any Seller which challenges the
transactions contemplated hereby or which could have a material adverse effect
upon any Seller, the Assets or the Business.
(b) Between the date of this Agreement and the Closing, each
Seller and Markowitz shall keep Buyer reasonably informed of all material
operational matters and business developments known to Markowitz or any
Seller with respect to the Business and its market including any
competitive changes.
8.4 NO INCONSISTENT ACTION. No Seller or Markowitz shall take
any action which is inconsistent with its obligations under this Agreement or
that would hinder or delay the consummation of the transactions contemplated by
this Agreement.
8.5 NO SOLICITATION. None of Seller, any Affiliate of Seller,
Markowitz or any Affiliate of Markowitz shall directly or indirectly (a)
solicit, initiate or encourage submission of any proposal or offer from any
Person relating to any acquisition or purchase of the Business, any Assets, any
Second Tier Business, any Second Tier Assets, any Third Tier Business or any
Third Tier Assets (other than the sale of assets in the ordinary course of
business consistent with past practices), or any equity interest in, any Seller
or any other Affiliate of Markowitz which conducts any such Second Tier Business
or Third Tier Business or holds any such Third Tier Assets or Third Tier
Business, or (b) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, or otherwise cooperate in
any way, or assist or participate in, facilitate or encourage, any effort or
attempt by any Person to do or seek any of the foregoing. Each Seller and
Markowitz shall promptly notify Buyer in writing if any such offer or proposal
is made to it or any of its Affiliates.
8.6 FINANCIAL STATEMENTS. Within 30 days after the end of
each month until the Closing Date, Sellers shall deliver to Buyer unaudited
consolidated statements of revenue and operations for the Business for the month
then ended, along with a balance sheet of the Business as of the end of such
month. All financial statements furnished pursuant to this Section shall fairly
represent the financial condition and the results of operations as of the dates
and for the periods covered by such statements, subject to normal year-end
adjustments. Each Seller shall furnish to Buyer any and all other information
customarily prepared by such Seller concerning its financial condition that
Buyer may reasonably request.
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8.7 ESTOPPEL CERTIFICATES; CONSENT AND WAIVER. Each Seller
shall use all reasonable commercial efforts to obtain estoppel certificates
containing customary provisions and consents and waivers from any landlord with
respect to the Real Property Leases or other lessor of any Asset that Buyer
requests at least 15 business days before the Closing Date.
8.8 EMPLOYEE MATTERS. (a) Each Seller shall use all
reasonable efforts to cause the employees employed in the Business to make
available their employment services to Buyer. For a period of two years
following the Closing Date, neither Seller shall, nor shall permit any of their
respective Affiliate's to, solicit, offer to employ or retain the services of or
otherwise interfere with the relationship of Buyer or any of its Affiliates with
any Person employed by or otherwise engaged to perform services for Buyer or any
such Affiliate in connection with the operation of the Business.
(b) Effective as of the Closing Date, Buyer shall offer
employment to substantially all employees who are then actively employed by
a Seller in the operation of the Business at wage or salary levels, as
applicable, and with employee benefits that are substantially comparable to
the benefits provided to employees under the Plans as in effect on the date
hereof. Those employees who accept such offers of employment effective as
of the Closing Date shall be referred to herein as the "Existing
Employees". Effective as of the Closing Date, the Buyer shall assume the
liability of the Sellers in respect of the Existing Employees for accrued
but unpaid salaries, wages, vacation and sick pay and 1996 incentive
compensation, but only to the extent such liability constitutes an Assumed
Liability pursuant to clause (a) of Section 3.1 hereof. Subject to clause
(a) of Section 3.1 hereof, the Sellers shall, jointly and severally, remain
responsible for payment of any and all retention, change in control,
severance, termination or other similar compensation or benefits which are
or may become payable to any employee or former employee of the Business,
including the Existing Employees, in connection with the consummation of
the transactions contemplated by this Agreements, including, without
limitation, any liability, obligation or commitment in respect of any claim
of any such employee or former employee of actual or constructive
termination of employment.
(c) From and after the Closing, each Seller shall honor, pay
and perform each and every liability, obligation and commitment in respect
of each Existing Employee and the beneficiaries and dependents thereof
under each Plan, including, without limitation, each such liability,
obligation and commitment in respect of benefits, rights or entitlements
under any such Plan accrued as of the Closing Date or, in the case of
health and other welfare benefits, relating to events or conditions
occurring or existing as of, or confinements or treatments commencing prior
on or to, the Closing Date, subject in the case of any such liability for
compensation or other payroll items, to clause (a) of Section 3.1 hereto.
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8.9 INSTALLATION OF CAMERAS. Prior to the Closing, Sellers
shall use their reasonable efforts to install the traffic cameras at the
locations and at the times described in SCHEDULE 8.10.
8.10 NAME CHANGE; POST-CLOSING USE OF TRADEMARKS. Within 30
days of the Closing, each Seller and each Affiliate of Markowitz shall change
its name to eliminate the words "Shadow Traffic", "Express Traffic" or any
derivatives thereof. From and after the Closing Date, no Seller and no Affiliate
of Markowitz shall use any of the trademarks listed on SCHEDULE 7.7 hereof nor
any derivatives thereof in the conduct of such Seller's or such Affiliate's
respective business, except pursuant to the license agreement referred to in
Sections 13.9 and 14.5 hereof.
ARTICLE IX
ADDITIONAL COVENANTS
Buyer, each Seller and Markowitz covenant and agree that for
the applicable periods set forth below, they shall act in accordance with the
following:
9.1 REASONABLE COMMERCIAL EFFORTS. Prior to the Closing, each
party shall use its reasonable commercial efforts to cause the fulfillment at
the earliest practicable date of all of the conditions to the obligations of the
other party to consummate the sale and purchase under this Agreement.
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9.2 RENEWAL OF CONTRACTS. Prior to the Closing, each Seller
shall use its reasonable efforts to renew any Contract to be assumed by Buyer
hereunder pursuant to Section 3.1 which by its terms expires or terminates
between the date of this Agreement and the Closing Date, provided that any such
renewal shall be on terms and conditions consistent with the past practices of
the Business.
9.3 TREATMENT OF BOOKS AND RECORDS. For a period of three
years after the Closing Date, at least 30 days prior to discarding or destroying
any books or records relating to the Assets that are being sold hereunder, Buyer
shall give Markowitz notice of its intended action and an opportunity for
Markowitz to retain any of the books or records proposed to be discarded or
destroyed by Buyer. Prior to the destruction of any such books or records,
Sellers and Markowitz shall have the right, upon reasonable advance request, to
have access to such books and records during normal business hours to enable any
of them to fulfill the Tax and ordinary course partnership obligations of
Sellers.
9.4 POST-CLOSING RESTRICTION ON BUYER. (a) Subject to
Sections 9.4(b) and 9.4(c) hereof, Buyer covenants and agrees that from and
after the Closing Date it will not conduct, directly or indirectly through any
Affiliate (other than Infinity Broadcasting Corporation or any wholly-owned
subsidiary of Infinity Broadcasting Corporation), any Local Content Radio
Programming in any Second Tier Radio Market or Third Tier Radio Market, in each
case to the extent (and only to the extent) that the advertising inventory for
such Local Content Radio Programming consists primarily of ten second
advertising units, PROVIDED that the foregoing provision shall have no
application to and shall not be deemed to limit in any way any Local Content
Radio Programming Business in any Second Tier Radio Market or Third Tier Radio
Market that Buyer is conducting, directly or indirectly through any Affiliate,
as of the date of this Agreement.
(b) The covenants set forth in Section 9.4(a) hereof shall
terminate (i) with respect to each Second Tier Radio Market, upon the first
to occur of (A) the first anniversary of the Second Tier Closing Date, (B)
the expiration (without exercise) of the put and call arrangements with
respect to the Second Tier Assets set forth in Section 11.1 hereof and (C)
Buyer's payment of the Buyout Amount with respect to such Second Tier Radio
Market under Section 9.4(c) hereof and (ii) with respect to any Third Tier
Radio Market, upon the first to occur of (V) the first anniversary of the
Third Tier Closing Date with respect to such Third Tier Radio Market, (W)
the expiration (without exercise) of the put and call arrangements with
respect to such Third Tier Radio Market set forth in Section 12.1 hereof,
(X) Markowitz's failure to comply with any of the covenants in Section 9.5
hereof with respect to such Third Tier Radio Market, (Y) Markowitz's
decision to cease to conduct Local Content Radio Programming Business in
such Third Tier Radio Market pursuant to the third sentence of Section
9.5(a) hereof and (Z) Buyer's payment of the Buyout Amount with respect to
such Third Tier Radio Market under Section 9.4(c) hereof.
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(c) At any time following the Closing Date, Buyer may, by
delivering a written notice to Markowitz (the "Buyout Notice"), terminate
the covenants set forth in Section 9.4(a) hereof with respect to any of the
Second Tier Radio Markets or Third Tier Radio Markets by paying the Buyout
Amount applicable to such Radio Market to Markowitz, such payment to be
made on such date as Buyer specifies in the Buyout Notice. Any Buyout
Amount otherwise payable by Buyer to Markowitz under this Section 9.4(c)
shall be reduced by an amount equal to the Carryover Amount on the date
such Buyout Amount is paid. Upon delivery of any Buyout Notice, Markowitz
shall promptly provide Buyer with a certificate (a "Start-Up Cost
Certificate") setting forth all of Markowitz's and his Affiliates'
out-of-pocket expenses, if any, incurred in connection with fulfilling the
applicable covenants set forth in Section 9.5(a) hereof for the period from
the Closing Date to the date such Buyout Notice is delivered to Markowitz,
together with reasonable supporting documentation of such costs. In
addition, upon delivery of any Buyout Notice with respect to any Radio
Market which has been profitable during the six-month period most recently
completed prior to the delivery of such Buyout Notice, Markowitz shall
promptly provide Buyer with a certificate containing a projected net income
statement for such Radio Market for the twelve-month period following the
delivery of such Buyout Notice (a "Projection Certificate"). Each
Projection Certificate shall be prepared in good faith by Markowitz, shall
be consistent with the past performance of the business in such Radio
Market and shall employ the methodology described in Section 4.1(b)(i)
applicable to the preparation of the Contingent Payment Income Statement
for the Business. Buyer shall have the right to dispute any Start-Up Cost
Certificate or Projection Certificate in the manner set forth in Section
9.4(d) hereof.
(d) Buyer shall have the right to dispute any amount listed
on any Start-Up Cost Certificate or the net income calculation listed on
any Projection Certificate, as the case may be (each a "Disputed Amount").
If Buyer is unable to reach an agreement with Markowitz regarding each such
Disputed Amount within 15 days of the delivery of the applicable
certificate, Buyer and Markowitz shall submit the dispute regarding each
such Disputed Amount to arbitration using the procedures set forth in
Section 21.8 hereof. In any such arbitration, the Board shall determine and
report upon each such Disputed Amount and such report shall be final,
binding and conclusive on Buyer and Markowitz with respect to each such
Disputed Amount, PROVIDED that if, after giving effect to the Board's
resolution of any Disputed Amount relating to the net income reflected on
any Projection Certificate, the net income for the applicable Radio Market
would not vary from the calculation of such net income as reflected on the
applicable Projection Certificate by 10% or more, then the calculation of
such net income as reflected on such Projection Certificate shall be final,
binding and conclusive on Buyer and Markowitz for all purposes of this
Section 9.4.
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(e) Buyer may pay up to 40% of any Buyout Amount by
delivering Westwood Stock to Markowitz, such Westwood Stock to be valued
based on a per share price equal to the average of the Closing Price of
Westwood Stock, as reported on NASDAQ, for the ten trading days preceding
the Second Business day before such Buyout Amount is paid.
(f) Simultaneously with Buyer's payment of the Buyout Amount
for any Second Tier Radio Market or Third Tier Radio Market, Markowitz
shall transfer all of the assets and businesses used in the Local Content
Radio Programming Business used in such Radio Market to Buyer, free and
clear of all Liens and without any additional cost to Buyer other than the
payment of the Buyout Amount with respect to such Radio Market. The
non-purchase price related terms and conditions with respect to such
transfer shall be comparable to the terms and conditions that would have
applied to such transfer were it made pursuant to the applicable provisions
of Section 11.2 or 12.2 hereof, as the case may be. Upon the receipt of any
Buyout Notice from Buyer, Buyer and Markowitz shall use and shall cause
their Affiliates to use their respective best efforts to negotiate, execute
and deliver to Buyer a transfer agreement under which all of such assets
will be delivered to Buyer in accordance with the two immediately preceding
sentences.
(g) Buyer acknowledges that the covenants contained in this
Section 9.4 hereof were a material and necessary inducement for Sellers and
Markowitz to agree to the transactions contemplated hereby, and that Buyer
will realize significant monetary benefit from these transactions, that
violations of any of the covenants contained in Section 9.4(a) hereof will
cause irreparable and continuing damage to Sellers and Markowitz, that
Sellers and Markowitz shall be entitled to injunctive or other equitable
relief from any court of competent jurisdiction restraining any further
violation of such covenants and that such injunctive relief shall be
cumulative and in addition to any other rights or remedies to which Sellers
and Markowitz may be entitled.
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9.5 ACTIVITIES OF MARKOWITZ IN THE FIRST, SECOND AND THIRD
TIER RADIO MARKETS; NON-COMPETES. (a) Markowitz shall use his best efforts to
establish, develop and operate a Local Content Radio Programming Business in
each of the Third Tier Radio Markets consistent with the timetable for such
Third Tier Radio Markets set forth on SCHEDULE 1.1. Upon commencement of any
Local Content Radio Programming Business in any Third Tier Radio Market,
Markowitz shall promptly deliver a notice to Buyer specifying the date on which
such business commenced in such Third Tier Radio Market. Notwithstanding the
foregoing, Markowitz shall have the right upon 30 days advance notice to Buyer
to cease to operate the Local Content Radio Programming Business in any Third
Tier Radio Market if such business, in Markowitz's reasonable good faith
judgment, is, and will continue to be, financially unprofitable.
(b) Markowitz shall neither conduct nor be associated with
(as a director, officer, employee, equity holder, partner or otherwise) any
Local Content Radio Programming Business in any First Tier Radio Market
from and after the Closing Date. In addition, Markowitz shall neither
conduct nor be associated with (as a director, officer, employee, equity
holder, partner or otherwise) any Local Content Radio Programming Business
in any Second Tier Radio Market or Third Tier Radio Market prior to the
earlier of (i) the expiration of the put and call arrangements with respect
to such market under Article XII or XIII hereof, as the case may be, and
(ii) the Second Tier Closing Date or Third Tier Closing Date with respect
to such market, as the case may be, except, in each case, through an
Affiliate that will be subject to the applicable put and call provisions
set forth in Articles XII and XIII hereof; provided that, notwithstanding
the foregoing, the covenants set forth in this Section 9.5(b) shall
continue in effect forever with respect to any Third Tier Radio Market in
which Markowitz ceases to operate a Local Content Radio Programming
Business as permitted under the third sentence of Section 9.5(a) hereof.
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9.6 SPECIAL CALL RIGHTS. In the event Markowitz exercises his
right pursuant to the third sentence of Section 9.5(a) hereof to cease to
operate a Local Content Radio Programming Business in any Third Tier Radio
Market, Buyer may, at any time thereafter, by delivering notice to Markowitz,
require Markowitz to transfer all of the assets and businesses used in such
Local Content Radio Programming Business in such Third Tier Radio Market to
Buyer, free and clear of all Liens and without cost to Buyer. The other terms
and conditions of any such transfer shall be comparable to the terms and
conditions of this Agreement with respect to the First Tier Markets. Upon the
receipt of any such notice from Buyer, Markowitz shall use and shall cause his
Affiliates to use their respective best efforts to negotiate, execute and
deliver to Buyer a transfer agreement under which all of such assets will be
delivered to Buyer in accordance with the two immediately preceding sentences.
ARTICLE X
POST-CLOSING SERVICES
10.1 OVERHEAD SERVICES. Upon the reasonable advance request
of Markowitz, Buyer, subject to the applicable terms and conditions set forth in
this Article X, will provide to each Service Recipient designated by Markowitz
such (i) accounting, audit support and tax services, (ii) employee payroll
services and (iii) personnel services as are specifically requested by Markowitz
(collectively, the "Overhead Services"). Notwithstanding anything in this
Article X to the contrary, Buyer shall be obligated to provide Overhead Services
only to the extent such services are utilized by such Service Recipient solely
in connection with its Local Content Radio Programming Business in one of more
of the Second Tier Radio Markets or Third Tier Radio Markets.
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10.2 GENERAL MARKETING SERVICES. (a) Upon the reasonable
request of Markowitz, Buyer, subject to the applicable terms and conditions set
forth in this Article X, will provide to each Service Recipient designated by
Markowitz such (i) sales and marketing support, (ii) legal services and (iii)
general managerial services as are specifically requested by Markowitz (the
"Other Services"; and together with the Overhead Services, the "Services").
Notwithstanding anything in this Article X to the contrary, Buyer shall be
obligated to provide Other Services only to the extent (x) it employs
individuals who are available to, and capable of, providing such Services, (y)
the Other Services can be provided without disrupting Buyer's conduct of its
ongoing business operations and (z) such services are utilized by such Service
Recipient solely in connection with its Local Content Radio Programming Business
in one or more of the Second Tier Radio Markets or Third Tier Radio Markets.
(b) Without limiting the generality of Section 10.2(a), each
of Markowitz and his Affiliates, on the one hand, and Buyer, on the other hand,
will discuss the implementation of joint marketing activities to prospective
national and regional advertising accounts for the Local Content Radio
Programming Business conducted by Buyer in the First Tier Markets and by
Markowitz and his Affiliates in the Second Tier Radio Markets and the Third Tier
Radio Markets. The parties will conduct such joint marketing activities subject
to mutual agreement on the nature and terms of such activities. All such joint
marketing efforts will be conducted under Buyer's name.
10.3 TERMINATION. Buyer's obligation to provide the Services
shall commence on the Closing Date and shall terminate (a) in the case of any
Service Recipient engaged in any Local Content Radio Programming Business in any
Second Tier Radio Market, upon the earliest to occur of (i) the Second Tier
Closing Date, (ii) the expiration of the put and call rights described in
Section 11.1 hereof with respect to the Second Tier Assets and (iii) Markowitz's
failure to perform his covenant in Section 9.5 hereof with respect to the Second
Tier Radio Market in which such Service Recipient operates, and (b) in the case
of any Service Recipient engaged in any Local Content Radio Programming Business
in any of the Third Tier Radio Markets, upon the earliest to occur of (w) the
Third Tier Closing Date with respect to the Third Tier Radio Market in which
such Service Recipient operates, (x) the expiration of the put and call rights
described in Section 12.1 hereof with respect to the Third Tier Radio Market in
which such Service Recipient operates, (y) Markowitz's failure to perform his
covenant in Section 9.5 hereof with respect to the Third Tier Radio Market in
which such Service Recipient operates and (z) Markowitz's ceases to conduct
Local Content Radio Programming Business in the Third Tier Radio Market in which
such Service Recipient operates pursuant to the third sentence of Section 9.5(a)
hereof.
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10.4 FEES AND EXPENSES. Buyer shall be reimbursed at cost
with respect to each Service provided by Buyer pursuant to this Article X
(collectively the "Service Costs"). Without limiting the generality of the
foregoing, with respect to any Service, the Service Costs shall include (i) all
salary and employee benefit costs attributable to those employees of Buyer who
provide such Service for the periods of time during which such employees provide
such Service and (ii) all other out-of-pocket costs incurred by Buyer in
connection with providing such Service or maintaining administrative records
relating to such Service.
10.5 BILLING AND PAYMENT. No later than 30 Business Days
after the end of each calendar month during which any Services are rendered, or
in the case of the first monthly statement to be provided hereunder, no later
than 45 days after the Closing Date, Buyer will deliver to Markowitz a statement
showing all of the Service Costs for such calendar month. Upon request, Buyer
will provide Markowitz with reasonable supporting documentation of such Service
Costs. Sellers and Markowitz, jointly and severally, shall be responsible for
paying each such statement in full within 15 days of receipt. Without limiting
any other right of Buyer, payments made later than 15 days shall accrue simple
interest at 10% per annum (or such lesser rate as may be the legal maximum rate
of interest).
ARTICLE XI
RIGHTS REGARDING SECOND TIER RADIO MARKETS
11.1 PUT AND CALL RIGHTS. (a) Subject to Section 11.3 hereof,
at any time during the 30 day period beginning on the third anniversary of the
Closing Date, Markowitz may, by delivering notice to Buyer (the "Second Tier Put
Notice"), require Buyer to purchase all of the Second Tier Assets and the Second
Tier Business from Markowitz or any Affiliate of Markowitz for the Second Tier
Initial Purchase Price and on the other terms and conditions set forth in
Section 11.2. If, prior to the 30th day following the third anniversary of the
Closing, Markowitz has not (i) previously delivered the Second Tier Put Notice
or (ii) delivered a written notice to Buyer stating that he does not wish to
deliver the Second Tier Put Notice, Markowitz shall be deemed to have delivered
the Second Tier Put Notice to Buyer on the 30th day following the third
anniversary of the Closing Date.
(b) Subject to Section 11.3 hereof, at any time during the 30
day period beginning on the third anniversary of the Closing Date, Buyer may, by
delivering notice to Markowitz (the "Second Tier Call Notice"), require
Markowitz to sell all of the Second Tier Assets and the Second Tier Business to
Buyer for the Second Tier Initial Purchase Price and on the other terms and
conditions set forth in Section 11.2 hereof.
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11.2 TERMS OF PUT OR CALL. (a) Upon delivery of the Second
Tier Put Notice or the Second Tier Call Notice, as the case may be, Buyer and
Markowitz shall each use their respective best efforts to promptly negotiate an
asset purchase agreement (the "Second Tier Purchase Agreement") for the Second
Tier Assets and Second Tier Business that, subject to the last sentence of this
Section 11.2(a), conforms in all material respects to the terms and conditions
of this Agreement with respect to the sale and purchase of the Assets and the
Business. Without limiting the generality of the foregoing, the Second Tier
Purchase Agreement shall contain (i) a purchase price adjustment based on the
difference between the audited adjusted current assets of the Second Tier
Business as of the closing under the Second Tier Purchase Agreement (the "Second
Tier Closing Date") compared to an amount equal to the revenues for such Second
Tier Business during the two completed months immediately prior to the Second
Tier Closing Date, (ii) a second purchase price adjustment based on the audited
adjusted pre-tax profits of the Second Tier Business during the first full 12
calendar months following the Second Tier Closing Date compared to the Second
Tier Adjusted Profits, and (iii) representations, warranties, covenants,
conditions and indemnities with respect to the Second Tier Assets and the Second
Tier Business that are comparable in all material respects to the like
representations, warranties, covenants, conditions and indemnities agreed to by
Buyer and Sellers herein with respect to the Assets and the Business.
Notwithstanding the foregoing, unlike this Agreement, the Second Tier Purchase
Agreement shall provide that (A) Buyer may offset any amounts owed to it
pursuant to Section 18.1 hereof against the Second Tier Initial Purchase Price,
or any purchase price adjustment it must make in favor of the seller thereunder,
(B) any purchase price adjustment must be paid by Buyer or the seller
thereunder, as the case may be, in cash within 90 days following the definitive
determination of such purchase price adjustment, (C) Buyer may pay up to 40% of
the Second Tier Initial Purchase Price, and any purchase price adjustment, by
delivering Westwood Stock, to such seller and (D) in the event that Buyer elects
to pay any portion of the Second Tier Initial Purchase Price by delivering such
Westwood Stock, (i) each share of Westwood Stock shall be valued based on a per
share price equal to the average of the closing price of Westwood Stock, as
reported on NASDAQ, for the ten trading days preceding the second Business Day
before the Second Tier Closing Date and (ii) Buyer and such seller shall make
appropriate and conventional representations and warranties to each other with
respect to such Westwood Stock.
(b) The Second Tier Purchase Agreement shall provide that the
Second Tier Initial Purchase Price shall be reduced by an amount equal to the
Carryover Amount at the time the Second Tier Initial Purchase Price is paid and
shall be appropriately adjusted to reflect any transfer of any Second Tier
Assets or Second Tier Businesses pursuant to Section 9.4 hereof.
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11.3 TERMINATION OF PUT AND CALL RIGHTS. Notwithstanding
anything in this Agreement to the contrary, all put and call rights of the
parties under Sections 11.1(a) and 11.1(b) hereof with respect to any Second
Tier Radio Market shall expire and terminate and have no further force or effect
immediately upon Buyer's delivery of a Buyout Notice with respect to such Second
Tier Radio Market under Section 9.4(c) hereof.
ARTICLE XII
RIGHTS REGARDING THIRD TIER RADIO MARKETS
12.1 PUT AND CALL RIGHTS. (a) Subject to Section 12.3 hereof,
at any time during the 30-day period beginning on the third anniversary of the
commencement by Markowitz or any of his Affiliates of any Local Content Radio
Programming Business in any of the Third Tier Radio Markets, Markowitz may, by
delivering a notice to Buyer (a "Third Tier Put Notice"), require Buyer to
purchase the Third Tier Assets and the Third Tier Business relating to such
Third Tier Radio Market for the Third Tier Initial Purchase Price applicable to
such Third Tier Business and Third Tier Assets and on the other terms and
conditions provided in Section 12.2 hereof. If, prior to the 30th day following
the commencement by Markowitz or any of his Affiliates of any Local Content
Radio Programming Business in any Third Tier Radio Market, Markowitz has not (i)
previously delivered a Third Tier Put Notice with respect to such Third Tier
Radio Market or (ii) delivered a written notice to Buyer stating that he does
not wish to deliver a Third Tier Put Notice with respect to such Third Tier
Radio Market, Markowitz shall be deemed to have delivered such Third Tier Put
Notice with respect to such Third Tier Radio Market on the 30th day following
the third anniversary of the commencement by Markowitz or any of his Affiliates
of such Local Content Radio Programming Business in such Third Tier Radio
Market.
(b) Subject to Section 12.3 hereof, at any time during the 30
day period beginning on the third anniversary of the commencement by Markowitz
or any of his Affiliates of any Local Content Radio Programming Business in any
Third Tier Radio Market, Buyer may, by delivering a written notice to Markowitz
(a "Third Tier Call Notice"), require Markowitz to sell all of the Third Tier
Assets and the Third Tier Business relating to such Third Tier Radio Market to
Buyer for the Third Tier Initial Purchase Price applicable to such Third Tier
Business and Third Tier Assets and on the other terms and conditions provided in
Section 12.2 hereof.
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12.2 TERMS OF PUT OR CALL. (a) Upon delivery of a Third Tier
Put Notice or a Third Tier Call Notice, as the case may be, with respect to any
Third Tier Radio Market, Buyer and Markowitz shall each use their respective
best efforts to promptly negotiate an asset purchase agreement (each such
agreement, a "Third Tier Purchase Agreement") for all of the Third Tier Assets
and Third Tier Business for such Third Tier Radio Market, which Third Tier
Purchase Agreement shall, subject to the last sentence of this Section 12.2(a),
conform in all material respects to the terms and conditions of this Agreement
with respect to the sale and purchase of the Assets and the Business. Without
limiting the generality of the foregoing, such Third Tier Purchase Agreement
shall contain (i) a purchase price adjustment based on the difference between
the audited adjusted current assets of the Third Tier Business and Third Tier
Assets for such Third Tier Radio Market as of the closing under such Third Tier
Purchase Agreement (a "Third Tier Closing Date") compared to an amount equal to
the revenues for such Third Tier Business during the two completed months
immediately prior to such Third Tier Closing Date, (ii) a second purchase price
adjustment based on the audited pre-tax adjusted profits of the Third Tier
Business and Third Tier Assets for such Third Tier Radio Market during the first
full 12 calendar months following such Third Tier Closing Date compared to the
adjusted profits of such Third Tier Business and Third Tier Assets utilized for
calculating the Third Tier Initial Purchase Price under such Third Tier Purchase
Agreement and (iii) representations, warranties, covenants, conditions and
indemnities with respect to the Third Tier Business and the Third Tier Assets
for such Third Tier Radio Market that are comparable in all material respects to
the like representations, warranties, covenants, conditions and indemnities
agreed to by Buyer and Sellers herein with respect to the Assets and the
Business. Notwithstanding the foregoing, each Third Tier Purchase Agreement
shall provide that (A) Buyer may offset any amounts owed to it under the
indemnification provisions of this Agreement, the Second Tier Purchase Agreement
or any other Third Tier Purchase Agreement against the Third Tier Initial
Purchase Price under such Third Tier Purchase Agreement, or any purchase price
adjustment Buyer must make in favor of the seller thereunder, (B) any purchase
price adjustment thereunder must be paid by Buyer or the seller, as the case may
be, within 90 days following the definitive determination of such purchase price
adjustment, (C) Buyer may pay up to 40% of the purchase price thereunder, and
any purchase price adjustment, by delivering Westwood Stock, to such seller and
(D) in the event that Buyer elects to pay any portion of any Third Tier Initial
Purchase Price by delivering Westwood Stock, (i) each share of Westwood Stock
shall be valued based on a per share price equal to the average of the closing
price of Westwood Stock, as reported on NASDAQ, for the ten trading days
preceding the second day before such Third Tier Closing Date and (ii) Buyer and
such seller shall make appropriate and conventional representations and
warranties to each other with respect to such Westwood Stock.
(b) Each Third Tier Purchase Agreement shall also provide
that the Third Tier Initial Purchase Price under such Third Tier Purchase
Agreement shall be reduced by an amount equal to the Carryover Amount at the
time such Third Tier Initial Purchase Price is paid.
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12.3 TERMINATION OF PUT AND CALL RIGHTS. Notwithstanding
anything in this Agreement to the contrary, in the event Markowitz exercises his
right pursuant to the third sentence of Section 9.5(a) hereof to cease to
operate a Local Content Radio Programming Business in any Third Tier Radio
Market, the put and call rights of the parties under Sections 12.1(a) and
12.1(b) hereof with respect to such Local Content Radio Programming Business
shall expire and terminate and have no further force or effect. In addition,
notwithstanding anything in this Agreement to the contrary, all put and call
rights of the parties under Sections 12.1(a) and 12.1(b) hereof with respect to
all Third Tier Radio Markets shall expire and terminate and have no further
force or effect immediately upon Buyer's delivery of the Buyout Notice with
respect to such Third Tier Radio Market under Section 9.4(c) hereof.
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ARTICLE XIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer hereunder are, at its option,
subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
13.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All
representations and warranties of Sellers and Markowitz made in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date (it being understood that in applying the
provision of this Section 13.1(a) to any such representation and warranty, any
separate qualification as to materiality or material adverse effect contained in
any such representation or warranty shall be disregarded).
(b) All of the terms, covenants and conditions to be complied
with and performed by any Seller or Markowitz on or prior to Closing Date shall
have been complied with or performed.
13.2 GOVERNMENTAL CONSENTS. (a) The conditions specified in
Article V of this Agreement shall have been satisfied, any applicable waiting
period under the HSRA shall have expired or been earlier terminated without
receipt of any objection or the commencement or threat of any litigation by any
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
(b) The FCC shall either (i) have granted special temporary
authority or authorities permitting Buyer to utilize all of the FCC licenses
listed on SCHEDULE 7.4(b) (other than FCC license KLC-635 issued to Group W
Radio, Inc.) in the same manner and to the same extent used by Sellers in their
operation of the Business, or (ii) Sellers and Buyers shall have entered into
such other arrangements satisfactory to Buyer permitting Buyer to enjoy the
benefits of such FCC licenses until such time as the FCC has granted the FCC
Applications.
(c) Sellers shall (i) have obtained consents from all third
parties and Governmental Authorities that are necessary to permit Buyer to
utilize the technical facilities listed on Schedule 7.4(b) in the same manner
and to the same extent that such facilities are used by Sellers in operation of
the Business, or (ii) Sellers shall provide technical facilities comparable to
those listed on SCHEDULE 7.4(b) to permit Buyer to operate the Business in the
same manner and to the same extent as the Business is presently operated by
Sellers.
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13.3 THIRD-PARTY CONSENTS. Sellers shall have obtained and
shall have delivered to Buyer all third-party consents listed on SCHEDULE 13.3
hereto, without any condition materially adverse to Buyer.
13.4 EMPLOYMENT AGREEMENT. Buyer shall have entered into an
employment agreement (the "Employment Agreement") with Michael D'Ambrose, in the
form set forth on SCHEDULE 13.4 hereto.
13.5 ADVERSE PROCEEDINGS. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any governmental
authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
13.6 PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. Except
for Permitted Encumbrances, as defined below, Sellers shall secure the release
of all Liens on the Assets and the Business, including those Liens listed in
SCHEDULE 7.20, and shall deliver evidence of the filing of such releases to
Buyer at Closing, including but not limited to, releases or terminations under
the Uniform Commercial Code and any other applicable federal, state or local
statutes or regulations of any financing or similar statements filed against any
Assets in (a) the jurisdictions in which the Assets are and have been located
since such Assets were acquired by a Seller, and (b) any other location
specified or required by applicable federal, state or local statutes or
regulations.
"Permitted Encumbrances" shall consist only of liens for
Taxes, assessments, water and sewer charges, license fees, and all other fees,
special assessments and charges assessed or imposed by a public body upon the
Assets or any part thereof or the operation thereof, provided such fees,
assessments or taxes are not yet due and payable.
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13.7 TRANSITIONAL AGREEMENT. Affiliates of Markowitz shall
have entered into a Transitional Agreement, in form and substance reasonably
satisfactory to Buyer, under which Affiliates of Markowitz shall be permitted to
use the words "Shadow Traffic" and "Express Traffic", and certain agreed upon
intellectual property and other programming material included in the Assets, in
connection with their Local Content Radio Programming Business in the Second and
Third Tier Radio Markets.
13.8 DELIVERIES. Sellers shall have made all the deliveries
set forth in Section 15.1 hereof.
ARTICLE XIV
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
The obligations of Sellers and Markowitz are, at their
option, subject to satisfaction, at or prior to the Closing Date, of each of the
following conditions:
14.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All
representations and warranties of Buyer in Article VI hereof shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date (it being understood and agreed that in applying the
provision of this Section 14.1(a) to any such representation and warranty, any
separate qualification as to materiality or material adverse effect contained in
any such representation or warranty shall be disregarded).
(b) All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed.
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14.2 GOVERNMENTAL CONSENTS. The conditions specified in
Article V of this Agreement shall have been satisfied and any applicable waiting
period under the HSRA shall have expired or been earlier terminated without
receipt of any objection or the commencement or threat of any litigation by any
Governmental Authority of competent jurisdiction to restrain the consummation of
the transactions contemplated by this Agreement.
14.3 ADVERSE PROCEEDINGS. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any Governmental
Authority of competent jurisdiction which questions the validity or legality of
this Agreement or any action taken or to be taken in connection herewith or the
consummation of the transactions contemplated hereby. No injunction or other
order issued by a court of competent jurisdiction restraining or prohibiting the
consummation of the transactions contemplated by this Agreement shall be in
effect.
14.4 TRANSITIONAL AGREEMENT. Buyer shall have entered into a
Transitional Agreement, in form and substance reasonably satisfactory to
Markowitz, under which Affiliates of Markowitz in the Second Tier Radio Market
and the Third Tier Radio Markets shall be permitted to use the words "Shadow
Traffic" and "Express Traffic", and certain agreed upon intellectual property
and other programming materials included in the Assets, in connection with their
Local Content Radio Programming Business in the Second and Third Tier Radio
Markets.
14.5 EMPLOYMENT AGREEMENT. Buyer shall have entered into the
Employment Agreement with Michael D'Ambrose.
14.6 DELIVERIES. Buyer shall have made all the deliveries set
forth in Section 15.2 hereof.
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ARTICLE XV
THE CLOSING
15.1 DOCUMENTS TO BE DELIVERED BY SELLERS AND MARKOWITZ. At
the Closing, Sellers shall deliver or cause to be delivered to Buyer the
following:
(a) certificates of each Seller and Markowitz, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer,
certifying to the fulfillment of the conditions set forth in Section 13.1
hereof;
(b) opinion of the Sellers' and Markowitz's counsel, dated
the Closing Date, substantially in the form of EXHIBIT A;
(c) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the sale,
transfer, assignment and conveyance of the Assets and the Business to
Buyer, including, but not limited to, the following:
(i) assignments of the Real Property Leases together with any
consents necessary to permit such assignments;
(ii) assignments or bills of sale, as appropriate, for the
Intellectual Property Assets;
(iii) bills of sale for all Personal Property;
(iv) assignments of the Contracts;
(v) assignments of all intangible personal property,
including all books, records, logs and similar assets which do not
constitute Excluded Assets;
(d) certified resolutions of the board of directors of the
general partner of each Seller, authorizing the execution, delivery and
performance of this Agreement;
(e) the Employment Agreement pursuant to Section 13.4;
(f) an affidavit to the effect that each Seller is not a
"foreign person" within the meaning of Section 1445 of the Code;
(g) the transitional agreement pursuant to Section 13.8
hereof; and
(h) such other documents as may reasonably be requested by
Buyer's counsel.
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15.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing,
Buyer shall deliver or cause to be delivered to Sellers the following:
(a) certificate of Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to Seller, certifying to the fulfillment
of the conditions specified in Section 14.1 hereof;
(b) immediately available wire-transferred funds and/or
Westwood Stock registered in the name of Sellers as provided in Section 2.4
hereof;
(c) instruments, in form and substance reasonably
satisfactory to Seller and its counsel, pursuant to which Buyer assumes the
obligations, liabilities and commitments as provided in Section 3.1 hereof;
(d) opinions of counsel to Buyer, dated the Closing Date,
substantially in the form of EXHIBIT B;
(e) certified resolutions of the board of directors of Buyer,
authorizing the execution, delivery and performance of this Agreement; and
(f) a guarantee agreement of Westwood, substantially in the
form of EXHIBIT C hereto;
(g) the transitional agreement pursuant to Section 14.4
hereof; and
(h) such other documents as may be reasonably requested by
the Sellers' and Markowitz's counsel.
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ARTICLE XVI
TRANSFER TAXES; FEES AND EXPENSES
16.1 TRANSFER TAXES AND SIMILAR CHARGES. Except as provided
otherwise in this Agreement, all costs of transferring the Assets and the
Business in accordance with this Agreement, including: (a) governmental filing
or grant fees, including, without limitation, the HSRA filing fee, (b)
recordation, transfer and documentary taxes and fees, (c) any excise, sales, use
or personal property taxes related to the purchase and sale of the Assets, and
(d) all costs related to the transfer of the premises which are the subject of
the Real Property Leases, including but not limited to related transfer taxes,
if any.
16.2 EXPENSES. Except as provided otherwise in this
agreement, each party hereto shall be solely responsible for all costs and
expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
ARTICLE XVII
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Except as otherwise specifically set forth herein, the
representations, warranties and covenants contained in this Agreement or in any
certificate, document or instrument delivered pursuant to this Agreement shall
survive the Closing and continue in effect for 24 months thereafter. Any
investigation by or on behalf of any party hereto shall not constitute a waiver
as to enforcement of any representation, warranty or covenant. No action or
proceeding may be brought with respect to any of such representations and
warranties unless written notice thereof, setting forth in reasonable detail the
claimed breach of representation or warranty, shall have been delivered prior to
the second anniversary of the Closing to the party alleged to have breached such
representation or warranty.
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ARTICLE XVIII
INDEMNIFICATION
18.1 INDEMNIFICATION BY SELLERS AND MARKOWITZ. (a) GENERAL.
Notwithstanding the Closing, each Seller and Markowitz, jointly and severally,
covenant and agree to defend, indemnify and hold harmless Buyer, its Affiliates
and the partners, officers, directors, employees, agents, advisers and
representatives of each such Person from and against, and pay or reimburse each
such Person for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
any Seller or Markowitz herein, other than the representation and
warranty made in the third sentence of Section 7.6 hereof, or in
any certificate, document or instrument delivered to Buyer
hereunder (in each case, without taking into account any
qualification as to the materiality or material adverse effect
contained in such representations or warranties);
(ii) any inaccuracy of the representation and warranty made
by each Seller and Markowitz in the third sentence of Section 7.6
hereof;
(iii) any failure of any Seller or Markowitz to perform any
covenant or agreement hereunder or fulfill any other obligation in
respect hereof;
(iv) any failure to obtain any of the consents to the
assignment of any of the Contracts listed on SCHEDULES 3.1, 7.5
AND 7.8 hereto.
(v) any failure of Sellers to obtain final, non-appealable
orders from the FCC consenting to the FCC Applications or the
failure of Sellers to obtain any consents from any third parties
or other Governmental Authorities necessary to permit Buyer to
utilize all of the technical facilities used by Sellers in the
conduct of the Business;
(vi) any Excluded Liability;
(vii) any litigation or other matter listed or described on
SCHEDULE 7.11 hereto;
(viii) any action taken by Michael D'Ambrose with respect to
any Second Tier Radio Market or Third Tier Radio Market at any
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time when such Radio Market is not owned by Buyer or an Affiliate
of Buyer;
(ix) all Environmental Liabilities and Costs; and
(x) any failure of any Seller to comply with applicable bulk
sales laws (in consideration of which indemnification obligation
Buyer hereby waives compliance by the Sellers with any applicable
bulk sales laws).
(b) LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
in Section 18.1(a) of this Agreement to the contrary, to the extent
indemnification is sought under clauses (i) or (ii) of Section 18.1 hereof,
Sellers and Markowitz shall not be required to provide any such
indemnification until the aggregate amount of Losses resulting from or
arising out of the matters referred to in such clauses exceeds $200,000, in
which event Sellers and Markowitz shall only be required to indemnify Buyer
with respect to the aggregate amount of such Losses that exceed $200,000.
18.2 INDEMNIFICATION BY BUYER. (a) GENERAL. Notwithstanding
the Closing, Buyer covenants and agrees to defend, indemnify and hold harmless
each Seller, its Affiliates and the partners, officers, directors, employees,
agents, advisers and representatives of each such Person from and against, and
pay or reimburse each such Person for, any and all Losses resulting from or
arising out of:
(i) any inaccuracy in any representation or warranty made by
Buyer herein or in any certificate, document or instrument
delivered to any Seller hereunder (in each case, without taking
into account any qualification as to materiality or material
adverse effect contained in such representations or warranties);
(ii) any failure of Buyer to perform any covenant or
agreement hereunder or fulfill any other obligation in respect
hereof;
(iii) any liability, obligation or commitment of any Seller
expressly assumed by Buyer under Section 3.1 hereof; and
(iv) the ownership of the Assets or the conduct of the
Business subsequent to the Closing Date, including, without
limitation, any action taken by Michael D'Ambrose with respect to
any First Tier Radio Market in accordance with the Employment
Agreement, except, in each case, to the extent such Loss is an
Excluded Liability.
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(b) LIMITATIONS ON INDEMNIFICATION. Notwithstanding anything
in Section 18.2(a) of this Agreement to the contrary, to the extent
indemnification is sought under clause (i) of Section 18.2 hereof, Buyer
shall not be required to provide any such indemnification until the
aggregate amount of Losses resulting from or arising out of the matters
referred to in such clause (i) exceeds $200,000, in which event Buyer shall
only be required to indemnify Sellers and Markowitz with respect to the
aggregate amount of such Losses that exceed $200,000.
18.3 INDEMNIFICATION PROCEDURES. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom, provided that (a)
the counsel for the Indemnifying Party who shall conduct the defense of such
claim or litigation shall be reasonably satisfactory to the Indemnified Party,
(b) the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (c) the omission by any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any claim subject to indemnification hereunder or any proposed settlement of
any such claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party's tax liability or, if Buyer is the Indemnified Party, the
ability of Buyer to conduct the Business, or that the Indemnified Party may have
available to it one or more defenses or counterclaims that are inconsistent with
one or more of those that may be available to the Indemnifying Party in respect
of such claim or any litigation relating thereto, the Indemnified Party shall
have the right at all times to take over and assume control over the defense,
settlement, negotiations or litigation relating to any such claim at the sole
cost of the Indemnifying Party, provided that if the Indemnified Party does so
take over and assume control, the Indemnified Party shall not settle such claim
or litigation without the written consent of the Indemnifying Party, such
consent not to be unreasonably withheld. In the event that the Indemnifying
Party does not accept the defense of any matter as above provided, the
Indemnified Party shall have the full right to defend against any such claim or
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demand and shall be entitled to settle or agree to pay in full such claim or
demand. Notwithstanding the foregoing, the Indemnifying Party shall still
provide indemnification to the Indemnified Party. In any event, the Indemnifying
Party and the Indemnified Party shall cooperate in the defense of any claim or
litigation subject to this Section 18.3 and the records of each shall be
available to the other with respect to such defense.
18.4 OFFSET. Without limiting the liability of Sellers and
Markowitz under this Article XVIII or Buyer's other remedies, Buyer shall be
entitled (a) to withhold from any amounts payable under Section 4.1(b)(iii) or
4.2(b)(iii) hereof or from any Buyout Amount, any amount of indemnity claimed by
Buyer under Section 18.1 pending final resolution as to the amount of indemnity
owed by Sellers and Markowitz and (b) to offset any amounts due it under Section
18.1 against any amounts payable by Buyer to Sellers under Section 4.1(b)(iii)
or 4.2(b)(iii) hereof or from any Buyout Amount.
18.5 EXCLUSIVE REMEDY. The indemnification provisions of this
Article XVIII shall be the sole and exclusive remedy of the parties against one
another with respect to any claim for monetary relief under this Article XVIII.
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ARTICLE XIX
TERMINATION RIGHTS
19.1 TERMINATION. (a) This Agreement may be terminated by
either Buyer on the one hand or Markowitz on the other, if the party seeking to
terminate (and in the case of Markowitz, each Seller) is not in material default
or breach of this Agreement, upon written notice to the other upon the
occurrence of any of the following:
(i) if the Closing has not occurred by March 30, 1996;
(ii) the failure of the condition set forth in Section 13.9
hereof; or
(iii) if there shall be in effect any final judgment, final
decree or order that would prevent or make unlawful the Closing.
19.2 LIABILITY. The termination of this Agreement under
Section 19.1 shall not relieve any party of any liability for breach of this
Agreement prior to the date of termination.
ARTICLE XX
REMEDIES UPON DEFAULT
Each Seller and Markowitz recognizes that, in the event any
Seller or Markowitz defaults in the performance of its obligations to close
under this Agreement, monetary damages alone will not be adequate. Therefore,
unless Buyer is in default in the performance of its obligations to close under
this Agreement, Buyer shall be entitled, in addition to bringing an action for
indemnification under Article XVIII hereof, to obtain specific performance of
the terms of this Agreement. In any action to enforce specifically the
performance of this Agreement, each Seller and Markowitz shall waive the defense
that there is another adequate remedy at law or equity and agrees that Buyer
shall have the right to obtain specific performance of Sellers' and Markowitz's
obligations to close under the terms of this Agreement without being required to
prove actual damages, post bond or furnish other security other than to pay the
full Initial Purchase Price and otherwise perform its closing obligations. In
addition, Buyer shall be entitled to obtain from Sellers and Markowitz, jointly
and severally, court costs and reasonable attorneys' fees incurred by it in
enforcing its rights hereunder, plus interest at the Delaware statutory rate on
the amount of any judgment obtained against any Seller or Markowitz from the
date of default by such Seller or Markowitz until the date of payment of the
judgment. As a condition to seeking specific performance, Buyer shall not be
required to have tendered the Initial Purchase Price specified in Section 2.4 of
this Agreement, but shall be required to demonstrate that it is ready, willing
and able to do so and to perform its other closing obligations in all material
respects.
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ARTICLE XXI
OTHER PROVISIONS
21.1 CONFIDENTIALITY. Each Seller, Markowitz and Buyer shall
keep confidential and not use or disclose any information previously or
hereafter obtained by it pursuant to this Agreement (the party receiving such
information is hereinafter referred to as the "Receiving Party") with respect to
the other or such other's partners, parents, subsidiaries, affiliates, or other
related entities (the party, or such party's partners, parents, subsidiaries,
affiliates, or other related entities, with respect to which the information
relates is hereinafter referred to as the "Disclosing Party") in connection with
this Agreement and the negotiations preceding this Agreement, including, without
limitation information provided pursuant to Section 8.2 hereof (such information
is hereinafter referred to as the "Confidential Information"), and the Receiving
Party will use such Confidential Information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, the Receiving Party
shall either return to the Disclosing Party, without retaining a copy thereof,
or destroy any schedules, documents or other written information constituting
Confidential Information (or prepared based upon such Confidential Information)
in connection with this Agreement and the transactions contemplated hereby and
the negotiations preceding this Agreement. Without limiting the generality of
the foregoing, the Receiving Party shall be permitted to disclose any
Confidential Information to such of its partners, Affiliates, officers,
directors, employees, agents, lenders and representatives (collectively,
"Agents") as have a need to know such Confidential Information, provided such
Agents shall be informed that disclosure of such Confidential Information by
such Agents would be in contravention hereof. Notwithstanding the foregoing, the
Receiving Party shall not be required to keep confidential or return any
information which (i) is known or available through other lawful sources, not
bound by a confidentiality agreement with the Disclosing Party, or (ii) is or
becomes publicly known other than as a result of the disclosure by the Receiving
Party or its Agents, or (iii) is required to be disclosed pursuant to an order
or request or a judicial or governmental authority (provided the Disclosing
Party is given reasonable prior written notice), or (iv) is developed by the
Receiving Party independently of, and is not based upon, the Confidential
Information.
64
<PAGE>
21.2 PUBLICITY. Except as required by Applicable Law or with
the other parties' express written consent, no party to this Agreement nor any
Affiliate of any party shall issue any press release or make any public
statement (oral or written) regarding this Agreement or the transactions
contemplated by this Agreement.
21.3 BENEFIT AND ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor any Seller may assign this Agreement
without the prior written consent of Buyer, in the case of any such assignment
by any Seller, or Markowitz, in the case of any such assignment by Buyer except
that (i) Buyer may assign its rights and obligations under this Agreement to any
of its Affiliates in the manner set forth in Section 2.2 of this Agreement,
PROVIDED that any such assignment shall not relieve Buyer from any of its
obligations under this Agreement and (ii) Buyer may assign its rights under
Article XVIII of this Agreement to any lender which provides financing in
connection with the consummation of this Agreement.
21.4 ACQUISITION OF PARTNERSHIP INTERESTS. Notwithstanding
anything in this Agreement to the contrary, the parties hereto agree that Buyer
may, by delivering notice to Markowitz at any time prior to the Closing Date,
require Sellers and Markowitz to execute an amendment to this Agreement pursuant
to which Buyer shall purchase all of the outstanding partnership interests of
one or more of CSTLP, NYSTLP, LASTLP and PETLP rather than purchasing the
portion of the Assets held by such Sellers. Sellers and Markowitz shall use
their respective best efforts to cause all other holders of the outstanding
partnership interests of such Sellers to execute and deliver such amendment. Any
such amendment (i) will not alter any of the financial, risk-shifting or other
non-structural terms of this Agreement regarding Buyer's purchase of the
Business and (ii) shall include provisions which are customary in purchase
agreements for the purchase of partnership interests.
65
<PAGE>
21.5 ENTIRE AGREEMENT. This Agreement and the exhibits and
schedules hereto embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No amendment, waiver
of compliance with any provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any amendment, waiver or consent is
sought.
21.6 HEADINGS. The headings set forth in this Agreement are
for convenience only and will not control or affect the meaning or construction
of the provisions of this Agreement.
21.7 CHOICE OF LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to its principles of conflict of laws, and the state and federal courts of New
York shall have exclusive jurisdiction over any controversy or claim arising out
of or relating to this Agreement.
21.8 ARBITRATION PROCEDURES. Any dispute arising out of
Section 9.4(d) hereof shall be submitted to the decision of a Board of
Arbitration composed of two arbitrators and an umpire (hereinafter referred to
as the "Board"). The members of the Board shall be disinterested in the matter
at issue. Buyer and Markowitz shall each appoint an arbitrator and the two
arbitrators shall choose an umpire before instituting the hearing. If Buyer or
Markowitz, as the case may be, fails to appoint its arbitrator within 15 days
after being requested to do so by the other party, the other party shall also
appoint the second arbitrator. If the two arbitrators fail to agree upon the
appointment of an umpire within 15 days after their nominations the umpire shall
be appointed by the American Arbitration Association. The claimant shall submit
its initial brief within 10 days from appointment of the umpire. The respondent
shall submit its brief within 10 days after receipt of the claimant's brief and
the claimant shall submit a reply brief within 10 days after receipt of the
respondent's brief. The Board shall make its decision within 20 days following
the termination of the hearings unless the parties consent to an extension. The
majority decision of the Board shall be final and binding upon all parties to
the proceeding. Each party shall bear the expense of its own arbitrator. Except
as provided in the immediately preceding sentence, all other costs and expenses
in connection with each arbitration proceeding, including all expenses of the
umpire, shall be allocated among Buyer and Markowitz in the same proportion that
the aggregate amount of all of the Disputed Amounts that are submitted to the
Board in such arbitration and are unsuccessfully disputed by Buyer, bear to the
total amount of all of the Disputed Amounts submitted to the Board in such
arbitration.
66
<PAGE>
21.9 NOTICES. All notices, requests, demands, letters,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if (a)
delivered personally, (b) mailed, certified or registered mail with postage
prepaid, (c) sent by next-day or overnight mail or delivery or (d) sent by fax,
as follows:
To any Seller or Markowitz:
Mr. Alan Markowitz
Shadow Broadcast Services
555 East City Line Avenue
Bala Cynwyd, Pennsylvania 19004
Phone: (610) 667-4000
Fax: (610) 660-8997
With a copy to:
Blank, Rome, Comisky & McCauley
210 Lake Drive
Suite 200
Cherry Hill, New Jersey 08002
Attention: A. Fred Ruttenberg, Esq.
Phone: (609) 779-3600
Fax: (609) 779-7647
To Buyer:
Westwood One Broadcasting Services, Inc.
c/o Westwood One, Inc.
9540 Washington Blvd.
Culver City, CA 90232
Phone:
Fax:
With copies to:
Mr. Farid Suleman
Infinity Broadcasting Corporation
600 Madison Avenue
New York, New York 10022
Phone: (212) 750-6400
Fax: (212) 888-2959; and
67
<PAGE>
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
Phone: (212) 909-6226
Fax: (212) 909-6836
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, (y) if
by next-day or overnight mail or delivery, on the day delivered or (z) if by
fax, on the next day following the day on which such fax was sent, provided that
a copy is also sent by certified or registered mail.
21.10 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
21.11 FURTHER ASSURANCES. Each Seller and Markowitz shall at
any time and from time to time after the Closing execute and deliver to Buyer
such further conveyances, assignments and other written assurances as Buyer may
reasonably request in order to vest and confirm in Buyer (or its assignees) the
title and rights to and in all of the Assets and the Business to be and intended
to be transferred, assigned and conveyed hereunder.
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
WESTWOOD ONE BROADCASTING
SERVICES, INC.
By:/s/ FARID SULEMAN
--------------------------
Name: Farid Suleman
Title:Chief Financial Officer
CHICAGO SHADOW TRAFFIC
LIMITED PARTNERSHIP
By: Citi Traffic Corp., its
general partner
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
NEW YORK SHADOW TRAFFIC
LIMITED PARTNERSHIP
By: Citi Traffic Corp., its
general partner
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
LOS ANGELES SHADOW TRAFFIC
LIMITED PARTNERSHIP
By: Citi Traffic Corp., its
general partner
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
PHILADELPHIA EXPRESS TRAFFIC
LIMITED PARTNERSHIP
By: Express Traffic Corp., its
general partner
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
CITI TRAFFIC CORP.
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
EXPRESS TRAFFIC CORP.
By:/s/ ALAN MARKOWITZ
--------------------------
Name: Alan Markowitz
Title:President
69
WESTWOOD ONE, INC.
LIST OF SUBSIDIARIES
WESTWOOD ONE RADIO, INC.
MUTUAL BROADCASTING SYSTEM, INC.
WESTWOOD ONE RADIO NETWORKS, INC.
WESTWOOD NATIONAL RADIO CORPORATION, INC.
NATIONAL RADIO NETWORK, INC.
THE SOURCE, INC.
TALKNET, INC.
WESTWOOD ONE SATELLITE SYSTEMS, INC.
KM RECORDS, INC.
WESTWOOD ONE STATIONS GROUP, INC.
WESTWOOD ONE STATIONS - L.A., INC.
WESTWOOD ONE STATIONS - NYC, INC.
WESTWOOD ONE BROADCASTING SERVICES, INC.
EXHIBIT 22
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectuses
constituting part of the Registration Statements on Form S-8 (No.33-57637,
No. 33-28849 and No. 33-64666) of Westwood One, Inc., of our report dated
February 5, 1996 appearing on page F-2 of this Form 10-K.
PRICE WATERHOUSE LLP
Century City, California
February 5, 1996
EXHIBIT 24
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 256
<SECURITIES> 0
<RECEIVABLES> 36,591<F1>
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 41,885
<PP&E> 15,632<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 245,595
<CURRENT-LIABILITIES> 35,322
<BONDS> 107,943
0
0
<COMMON> 315<F3>
<OTHER-SE> 94,123
<TOTAL-LIABILITY-AND-EQUITY> 245,595
<SALES> 0
<TOTAL-REVENUES> 145,729<F4>
<CGS> 0
<TOTAL-COSTS> 106,685<F5>
<OTHER-EXPENSES> 19,729<F6>
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,524
<INCOME-PRETAX> 10,180
<INCOME-TAX> 495
<INCOME-CONTINUING> 9,685
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,685
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
<FN>
<F1>REFLECTED NET OF THE ALLOWANCE FOR DOUBTFUL ACCOUNTS.
<F2>REFLECTED NET OF ACCUMULATED DEPRECIATION AND AMORTIZATION.
<F3>COMPRISED OF COMMON STOCK AND CLASS B STOCK.
<F4>COMPRISED OF NET REVENUES.
<F5>COMPRISED OF OPERATING COSTS AND EXPENSES EXCLUDING DEPRECIATION AND
AMORTIZATION.
<F6>COMPRISED OF DEPRECIATION AND AMORTIZATION, AND CORPORATE GENERAL AND
ADMINISTRATIVE EXPENSES.
</FN>
</TABLE>
