<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File
September 30, 1994 Number 0-14702
INFINITY BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-2766282
_______________________________ ____________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 MADISON AVENUE, NEW YORK, NY 10022
________________________________________
(Address of principal executive offices)
(212)750-6400
_____________
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 27,825,433 shares of Class A Common Stock, 3,845,154
shares of Class B Common Stock and 496,114 shares of Class C
Common Stock as of November 4, 1994.
</PAGE>
<PAGE>
INFINITY BROADCASTING CORPORATION
INDEX
Page
No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets............ 1
Consolidated Statements of Operations.. 3
Consolidated Statements of Stockholders'
Equity................................. 4
Consolidated Statements of
Cash Flows............................. 5
Notes to Consolidated Financial
Statements............................. 6
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations.................. 9
Part II.
Item 6. Exhibits and Reports on Form 8-K....... 12
i
</PAGE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
_______ ____________________
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<CAPTION>
Sept. 30, Dec. 31,
1994 1993
___________ ________
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,615 $ 9,913
Receivables, net 67,909 57,249
Prepaid expenses and other
current assets 2,483 2,978
--------- ---------
Total Current Assets 80,007 70,140
Property and equipment, net 22,966 18,749
Intangible assets, net 452,398 277,047
Other assets 11,003 12,104
--------- ---------
$ 566,374 $ 378,040
========= =========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
1
</PAGE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED
(Dollars in thousands)
<CAPTION>
Sept. 30, Dec. 31,
1994 1993
___________ ________
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable and other accrued expenses $ 14,307 $ 12,841
Accrued compensation 4,158 3,236
Accrued interest 5,599 7,776
Income taxes 7,844 7,477
Other current liabilities 17,171 5,888
Current portion of long-term debt 22,312 22,312
---------- ---------
Total Current Liabilities 71,391 59,530
---------- ---------
Long-term debt, less current portion 521,438 342,750
---------- ---------
Stockholders' equity (deficiency):
Preferred stock, $0.01 par value:
1,000,000 shares authorized, none issued - -
Class A Common Stock, $.002 par value:
75,000,000 shares authorized; 28,377,585
shares issued and outstanding in 1993
and 28,550,816 shares in 1994. 57 57
Class B Common Stock, $.002 par value:
17,500,000 shares authorized; issued
and outstanding 3,990,621 shares in
1993 and 1994. 8 8
Class C Common Stock, $.002 par value:
30,000,000 shares authorized; issued
and outstanding 496,114 shares in 1993
and 1994. 1 1
Additional paid-in capital 260,068 259,748
Retained earnings (deficit) (264,978) (284,054)
__________ __________
(4,844) (24,240)
Less treasury stock at cost, 845,000 shares (21,611) -
__________ __________
Total stockholders' equity (deficiency) (26,455) (24,240)
__________ __________
$ 566,374 $ 378,040
========== ==========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
2
</PAGE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands except per share amounts)
<CAPTION>
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1994 1993 1994 1993
__________ __________ __________ ___________
<S> <C> <C> <C> <C>
Total Revenues $ 85,470 $ 63,155 $ 219,506 $ 164,476
Less agency commissions 10,829 7,999 27,988 21,119
__________ __________ ___________ ___________
Net revenues 74,641 55,156 191,518 143,357
Station operating expenses
excluding depreciation
and amortization 37,469 28,645 101,332 77,471
Depreciation and
amortization 12,272 10,084 34,322 28,902
Corporate general and
administrative expenses 1,367 1,349 3,786 3,635
__________ __________ ___________ ___________
Total operating expenses 51,108 40,078 139,440 110,008
__________ __________ ___________ ___________
Operating income 23,533 15,078 52,078 33,349
__________ __________ ___________ ___________
Other income (expense)
Interest expense (11,809) (8,914) (32,715) (28,138)
Interest income 28 32 117 442
__________ __________ ___________ ___________
Earnings before
income taxes 11,752 6,196 19,480 5,653
Income taxes 202 202 404 405
__________ __________ ___________ ___________
Net income 11,550 5,994 19,076 5,248
========== ========== =========== ===========
Net income per share $ .26 $ .13 $ .43 $ .13
========== ========== =========== ===========
Average shares and
equivalents 44,923,919 45,433,647 44,834,242 39,937,193
========== ========== =========== ===========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
3
</PAGE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(In thousands)
<CAPTION>
Class A Class B Class C Add'l Retained
Common Stock Common Stock Common Stock Paid-in Earnings Treasury Stock
____________ ____________ ____________ _______ ________ ______________
Shares Amt Shares Amt Shares Amt Capital (Deficit) Shares Amt Total
______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Dec.
31, 1993 28,378 $ 57 3,991 $ 8 496 $ 1 $259,748 $(284,054) 0 0 $(24,240)
Net loss for the
three months
ended March 31,
1994 (3,864) (3,864)
Issuance of Class
A Common Stock 108 53 53
______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____
Balance at March 31,
1994 (Unaudited) 28,486 $ 57 3,991 $ 8 496 $ 1 $259,801 $(287,918) 0 0 $(28,051)
Net income for the
three months
ended June 30,
1994 11,390 11,390
Issuance of Class
A Common Stock 8 1 1
Treasury Stock
Acquired 525 (12,198) (12,198)
______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____
Balance at June 30,
1994 (Unaudited) 28,494 $ 57 3,991 $ 8 496 $ 1 $259,802 $(276,528) 525 $(12,198) $(28,858)
Net income for three
months ended Sept.
30, 1994 11,550 11,550
Issuance of Class A
Common Stock 57 266 266
Treasury Stock
Acquired 320 (9,413) (9,413)
______ ___ ______ ___ ______ ___ _______ _________ ______ ________ _____
Balance at Sept. 30,
1994 (Unaudited) 28,551 $ 57 3,991 $ 8 496 $ 1 $260,068 $(264,978) 845 (21,611) $(26,455)
====== ==== ===== ==== ===== ==== ======== ========== === ======== =========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
4
</PAGE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1993
(In thousands)
<CAPTION>
Sept. 30, Sept. 30,
1994 1993
________ __________
<S> <C> <C>
Net cash flow from (used in)
operating activities:
Net income $ 19,076 $ 5,248
Depreciation and amortization 34,322 28,902
Amortization of deferred financing costs 1,332 1,157
_________ _________
54,730 35,307
Increase in receivables (10,660) (12,597)
Decrease (increase) in other current assets 495 (2,363)
Increase in accounts payable
and accrued expenses 2,755 2,232
Decrease in accrued interest (2,177) (5,108)
Increase in other current liabilities 11,283 4,947
Other, net 244 (678)
_________ __________
Net cash flow from operating activities 56,670 21,740
_________ __________
Investing Activities:
Capital expenditures 1,213 1,585
Acquisitions:
Intangibles 206,725 121,372
Property and Equipment 5,920 -
_________ __________
Net cash used for investing activities 213,858 122,957
_________ __________
Cash provided (required) before
financing activities (157,188) (101,217)
========= ==========
Financing Activities:
Borrowings under debt agreements 227,000 125,000
Reduction of debt (48,312) (123,125)
Proceeds from issuance of stocks 320 100,149
Financing costs (1,707) -
Repurchase of Class A Common Stock (21,611) -
Other, Net 1,200 -
_________ __________
Net financing activities 156,890 102,024
Decrease (increase) in cash and cash
equivalents 298 (807)
_________ __________
Total financing activities $ 157,188 $ 101,217
========= ==========
See accompanying Notes to Consolidated Financial Statements.
</TABLE>
5
</PAGE>
<PAGE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management the unaudited interim
financial statements contain all adjustments, consisting of
normal recurring accruals, necessary to present fairly the
financial position, results of operations and cash flows for
the periods presented.
Interim periods are not necessarily indicative of results
to be expected for the year. It is suggested that these
financial statements be read in conjunction with the
Consolidated Financial Statements and the notes thereto of the
Company for the year ended December 31, 1993.
The consolidated financial statements include the
accounts of the Company and its subsidiaries, which are all
wholly owned. All significant intercompany balances and
transactions have been eliminated in consolidation.
Earnings per common share are based on the weighted
average number of common shares and common equivalent shares
outstanding during the period.
Effective August 9, 1993, the Company declared a three-
for-two stock split in the form of a stock dividend payable on
August 16, 1993 to shareholders of record at the close of
business on August 9, 1993. Effective November 12, 1993, the
Company declared another three-for-two stock split in the form
of a stock dividend payable on November 19, 1993 to
shareholders of record at the close of business on November
12, 1993. The accompanying financial statements reflect the
effect of the stock dividends.
2. Public Stock Offering
On May 13, 1993, the Company and certain holders of
warrants exercisable for shares of the Company's Class A
Common Stock sold through a public offering 8,148,814 shares
of Class A Common Stock, resulting in net proceeds to the
Company of approximately $100 million. The net proceeds from
this offering were used to pay down bank borrowings under the
Company's bank credit agreement (the "Credit Agreement").
6
</PAGE>
<PAGE>
3. Acquisitions
On February 1, 1993, the Company completed the
acquisition of the assets of WZGC-FM (Atlanta), WZLX-FM
(Boston) and WUSN-FM (Chicago) from Cook Inlet Radio Partners,
L.P. and Cook Inlet Radio License Partnership, L.P. for a
total purchase price of approximately $100 million.
On September 1, 1993, the Company completed the
acquisition of WIP-AM, an all-sports radio station serving
Philadelphia, from Spectacor Broadcasting, L.P. for
approximately $17.4 million.
In February 1994, the Company completed the acquisition
of Los Angeles radio station KRTH-FM from Beasley FM
Acquisition Corp. for approximately $116 million.
In June 1994, the Company completed the acquisition of
Washington, D.C. radio stations WPGC-AM/FM from Cook Inlet
Radio Partners, L.P. and Cook Inlet Radio License Partnership,
L.P. for approximately $60 million.
In June 1994, the Company completed the acquisition of
Detroit radio station WXYT-AM from Fritz Broadcasting, Inc.
for approximately $23 million.
The purchase price of the above acquisitions was funded
by borrowings under the Credit Agreement.
The operating results of these acquisitions are included
in the Company's consolidated results of operations from the
date of acquisition. The following unaudited pro forma
summary presents the consolidated results of operations as if
the acquisitions had occurred as of the beginning of 1994 and
1993, after giving effect to certain adjustments, including
amortization of intangibles and interest expense on the
acquisition debt. These pro forma results have been prepared
for comparative purposes only and do not purport to be
indicative of what would have occurred had the acquisitions
been made as of those dates or of results which may occur in
the future.
7
</PAGE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months Ended Sept. 30,
1994 1993
_________ __________
(Unaudited)
<S> <C> <C>
Net revenues.................. $ 204,404 $ 180,043
Net income (loss)............. 18,643 784
Net income (loss) per common
share......................... .42 .02
</TABLE>
On September 12, 1994, the Company entered into an
agreement to acquire Dallas/Ft. Worth radio station KLUV-FM
from TK Communications, Inc. for approximately $51 million.
The purchase price will be funded by borrowings under the
Credit Agreement.
On February 3, 1994, the Company, Unistar Communications
Group, Inc. ("Unistar") and Westwood One, Inc. ("Westwood
One") completed the purchase by Westwood One of the radio
network business of Unistar for approximately $101.3 million.
Westwood One is the nation's largest producer and distributor
of nationally sponsored radio programs. In connection with
transaction, an affiliate of the Company received 5 million
newly issued shares of common stock of Westwood One for $3 per
share (which represents approximately 16.45% of the issued and
outstanding capital stock of Westwood One) and an option to
purchase an additional 3 million shares of Westwood One's
common stock at a purchase price of $3 per share, subject to
certain vesting requirements. In connection with the
transactions, the Company's Chief Executive Officer and Chief
Financial Officer became the Chief Executive Officer and Chief
Financial Officer, respectively, of Westwood One pursuant to
a management agreement between the Company and Westwood One.
Under the management agreement, the Company is entitled to receive
a base management fee and additional warrants to acquire up to
1.5 million shares of Westwood One's Common Stock at a
purchase price from $3 to $5 per share in the event that
Westwood One's Common Stock trades above certain target price
levels. In September 1994, pursuant to such provision, the Company
received a warrant to purchase 500,00 shares of Westwood One's Common
Stock at an exercise price of $3 per share.
8
</PAGE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THIRD QUARTER OF 1994 COMPARED TO THIRD QUARTER OF 1993
Net revenues for the third quarter of 1994 were
$74,641,000 as compared to $55,156,000 for the third quarter
of 1993, an increase of approximately $19,485,000 or 35%. The
increase was due principally to higher advertising revenues at
the Company's stations, and the acquired stations. On a pro
forma basis, assuming the above acquisitions had occurred as
of the beginning of 1993, net revenues for the third quarter
of 1994 would have increased by approximately 11%.
Station operating expenses excluding depreciation and
amortization for the third quarter of 1994 were $37,469,000 as
compared to $28,645,000 for the third quarter of 1993, an
increase of $8,824,000 or approximately 31%. The increase was
principally due to the acquired stations, expenses associated
with higher revenues and higher programming expenses. On a
pro forma basis, assuming the above acquisitions had occurred
as of the beginning of 1993, station operating expenses for
the third quarter of 1994 would have increased by
approximately 8%.
Depreciation and amortization expense for the third
quarter of 1994 was approximately $12,272,000 as compared to
$10,084,000 for the third quarter of 1993, an increase of
approximately $2,188,000 or 22%. The increase was principally
due to the depreciation and amortization expense associated
with the acquired stations.
Operating income for the third quarter of 1994 was
$23,533,000 as compared to $15,078,000 for the third quarter
of 1993, an increase of approximately $8,455,000 or 56%. The
increase was due principally to improved results at the
Company's radio stations.
Net financing expense (defined as interest expense less
interest income) for the third quarter of 1994 was $11,781,000
as compared to $8,882,000 for the third quarter of 1993, an
increase of approximately $2,899,000 or 33%. The increase was
due principally to additional borrowings in connection with
the acquired stations.
Net income for the third quarter of 1994 was $11,550,000
as compared to $5,994,000 for the third quarter of 1993, an
increase of approximately $5,556,000 or 93%.
9
</PAGE>
<PAGE>
NINE MONTHS ENDED SEPTEMBER 30, 1994 AS COMPARED TO NINE
MONTHS ENDED SEPTEMBER 30, 1993
Net revenues for the nine months ended September 30, 1994
were $191,518,000 as compared to $143,357,000 for the nine
months ended September 30, 1993, an increase of approximately
34%. The increase was due principally to higher advertising
revenues at the Company's stations, and the acquired stations.
On a pro forma basis, assuming the above acquisitions had
occurred as of the beginning of 1993, net revenues for the
first nine months of 1994 would have increased by
approximately 14%.
Station operating expenses excluding depreciation and
amortization for the nine months ended September 30, 1994 were
$101,332,000 as compared to $77,471,000 for the nine months
ended September 30, 1993, an increase of 31%. The increase
was principally due to the acquired stations, expenses
associated with higher revenues and higher programming
expenses. On a pro forma basis, assuming the above
acquisitions had occurred as of the beginning of 1993, station
operating expenses for the nine months ended 1994 would have
increased by approximately 11%.
Depreciation and amortization expense for the first nine
months of 1994 was $34,322,000 as compared to $28,902,000 for
the first nine months of 1993, an increase of approximately
$5,420,000 or 19%. The increase was due to the depreciation
and amortization expense associated with the acquired
stations.
Operating income for the first nine months of 1994 was
$52,078,000 as compared to $33,349,000 for the first nine
months of 1993, an increase of approximately 56%. The
increase was due principally to improved results at the
Company's radio stations.
Net financing expense (defined as interest expense less
interest income) for the first nine months of 1994 was
$32,598,000 as compared to $27,696,000 for the first nine
months of 1993, an increase of approximately 18%. The
increase was due principally to additional interest expense
associated with the additional borrowings incurred to finance
the acquired stations.
Income taxes for the first nine months of 1994 were
$404,000, representing principally state and local income taxes,
as compared to $405,000 for the first nine months of 1993. No
federal income taxes have been provided as a result of available
tax loss carryforwards.
10
</PAGE>
<PAGE>
Net income for the first nine months of 1994 was
$19,076,000 ($0.43 per share) as compared to $5,248,000
(0.13 per share) for the first nine months of 1993, an
increase of approximately $13,828,000.
LIQUIDITY AND CAPITAL RESOURCES
_______________________________
For the first nine months of 1994, net cash flow from
operating activities was approximately $56,670,000, as
compared to $21,740,000 for the first nine months of 1993, an
increase of approximately $34,930,000. The increase was
principally due to improved earnings in 1994 offset in part by
higher working capital requirements for the acquired stations.
The operating cash flow was used principally to pay down debt
and purchase treasury stock. During the nine months ended
September 30, 1994, the Company purchased 845,000 shares of
its Class A Common Stock at a total cost of approximately
$21.6 million.
During the first nine months of 1994, the Company
borrowed approximately $227 million under the Credit Agreement
to finance the acquisition and working capital of the acquired
radio stations.
As of September 30, 1994, the Company had undrawn
borrowing capacity of approximately $79 million under the
Credit Agreement.
11
</PAGE>
<PAGE>
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
Number Description of Exhibit
2(a) __ Asset Purchase Agreement, dated as of August 15,
1992, between Cook Inlet Radio Partners, L.P. and
Cook Inlet Radio License Partnership, L.P. and
Infinity Broadcasting Corporation of Chicago,
Infinity Broadcasting Corporation of Atlanta,
Infinity Broadcasting Corporation of Boston and the
Company. (This exhibit can be found as Exhibit
2(c) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1992 (File
No. 0-14702) and is incorporated herein by
reference.)
2(b) __ Asset Purchase Agreement, dated as of September 25,
1992, between Spectacor Broadcasting, L.P. and
Infinity Broadcasting Corporation of Philadelphia.
(This exhibit can be found as Exhibit 2(d) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended September 30, 1992 (File No. 0-14702)
and is incorporated herein by reference.)
2(c) __ Purchase Agreement, dated as of June 16, 1993,
among Beasley FM Acquisition Corp., Infinity
Broadcasting Corporation of California and the
Company. (This exhibit can be found as Exhibit
2(e) to the Company's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1993 (File No. 0-
14702) and is incorporated herein by reference.)
2(d) __ Asset Purchase Agreement, dated as of October 4,
1993, between Cook Inlet Radio Partners, L.P. and
Cook Inlet Radio License Partnership, L.P. and
Infinity Broadcasting Corporation of Maryland and
the Company. (This exhibit can be found as Exhibit
2(f) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993 (File No.
0-14702) and is incorporated herein by reference.)
2(e) __ Asset Purchase Agreement, dated as of March 8,
1994, by and between Fritz Broadcasting, Inc.,
Infinity Broadcasting Corporation of Detroit and
the Company. (This exhibit can be found as Exhibit
2(h) to the Company's Annual Report on Form 10-K
for the year ended December 31, 1993 (File No. 0-
14702) and is incorporated herein by reference.
12
</PAGE>
<PAGE>
2(f) __ Asset Purchase Agreement, dated as of September 12,
1994, by and between TK Communications, Inc. and
Infinity Broadcasting Corporation of Dallas,
including a list of omitted schedules and an
undertaking by the Company to furnish supplementally a copy
of any such omitted schedule to the Securities and
Exchange Commission upon request.
4(a) __ Amended and Restated Credit Agreement, dated as of
June 7, 1994, between the Company and the banks that
are signatories thereto. (This exhibit can be found
as Exhibit 4(a) to the Company's Report on Form 8-K
filed on July 5, 1994 (File No. 0-14702) and is
incorporated herein by reference.)
4(b) __ Security Agreement, dated as of June 7, 1994, by and
among the Company, its subsidiaries and the banks
that are signatories thereto. (This exhibit can be
found as Exhibit 4(b) to the Company's Report on
Form 8-K filed on July 5, 1994 (File No. 0-14702)
and is incorporated herein by reference.)
10(a) __ Sixth Amendment to the Employment Agreement, dated
as of September 10, 1990, between the Company
and Mel Karmazin, effective as of March 30, 1994
(This exhibit can be found as Exhibit 10(a) to the
Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1994 (File No. 0-14702) and
is incorporated herein by reference.)
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K, dated July
5, 1994, with the Securities and Exchange Commission and
the National Association of Securities Dealers, Inc.
reporting in response to Items 2 and 7 of the Form 8-K.
The Company filed a Report on Form 8-K/A, dated
September 6, 1994, with the Securities and Exchange
Commission and the National Association of Securities
Dealers, Inc. reporting in response to Item 7 of the
Form 8-K filed on July 5, 1994. The Report on Form 8-K/A
contained the financial statements of WPGC FM & AM at
March 31, 1994, and December 31, 1993 and 1992.
13
</page>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto
duly authorized.
INFINITY BROADCASTING CORPORATION
(Registrant)
/s/ Farid Suleman
_________________________________
Farid Suleman,
Vice President-Finance/
Chief Financial Officer
Dated: November 11, 1994
14
</page>
<PAGE>
EXECUTION COPY
_________________________________________________________
ASSET PURCHASE AGREEMENT
by and between
TK COMMUNICATIONS, INC.
as "Seller"
and
INFINITY BROADCASTING CORPORATION OF DALLAS
as "Buyer"
for
KLUV-FM, DALLAS, TEXAS
Dated as of September 12, 1994
_________________________________________________________
</page>
<PAGE>
TABLE OF CONTENTS
_________________
PAGE
Index to Exhibits and Schedules. . . . . . . . . . . . . . . . . . . . . .v
ARTICLE 1 ASSETS TO BE CONVEYED. . . . . . . . . . . . . . . . . . . . . 1
1.1. Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Station Assets . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE 2 PURCHASE PRICE . . . . . . . . . . . . . . . . . . . . . . . . 4
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . 4
2.2. Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE 3 ASSUMPTION OF OBLIGATIONS. . . . . . . . . . . . . . . . . . . 4
3.1. Assumption of Obligations. . . . . . . . . . . . . . . . . . . 4
3.2. Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE 4 REQUIRED CONSENTS. . . . . . . . . . . . . . . . . . . . . . . 5
4.1. FCC Application. . . . . . . . . . . . . . . . . . . . . . . . 5
4.2. Compliance with HSRA . . . . . . . . . . . . . . . . . . . . . 6
4.3. Other Governmental Consents. . . . . . . . . . . . . . . . . . 6
ARTICLE 5 PRORATIONS; ACCOUNTS RECEIVABLE. . . . . . . . . . . . . . . . 6
5.1. Proration of Income and Expenses . . . . . . . . . . . . . . . 6
5.2. Trade Agreements . . . . . . . . . . . . . . . . . . . . . . . 7
5.3. Payment of Proration Items . . . . . . . . . . . . . . . . . . 7
5.4. Accounts Receivable. . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . . 9
6.1. Organization and Standing. . . . . . . . . . . . . . . . . . . 9
6.2. Authorization and Binding Obligation . . . . . . . . . . . . . 9
6.3. FCC Qualifications . . . . . . . . . . . . . . . . . . . . . . 9
6.4. Absence of Conflicting Agreements or Required Consents . . . . 9
6.5. Absence of Litigation. . . . . . . . . . . . . . . . . . . . . 10
</page>
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ARTICLE 7 REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . 10
7.1. Organization and Standing. . . . . . . . . . . . . . . . . . . 10
7.2. Authorization and Binding Obligation . . . . . . . . . . . . . 10
7.3. Absence of Conflicting Agreements or Required Consents . . . . 11
7.4. FCC Authorizations . . . . . . . . . . . . . . . . . . . . . . 11
7.5. Title to and Condition of Real Property. . . . . . . . . . . . 12
7.6. Title to and Condition of Personal Property. . . . . . . . . . 13
7.7. Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.8. Personnel Information. . . . . . . . . . . . . . . . . . . . . 14
7.9. Intellectual Property. . . . . . . . . . . . . . . . . . . . . 15
7.10. Litigation. . . . . . . . . . . . . . . . . . . . . . . . 16
7.11. Compliance With Laws. . . . . . . . . . . . . . . . . . . 16
7.12. Interests in Clients, Suppliers, Etc. . . . . . . . . . . 16
7.13. Financial Statements; Budget. . . . . . . . . . . . . . . 17
7.14. Insurance . . . . . . . . . . . . . . . . . . . . . . . . 17
7.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.16. Bankruptcy. . . . . . . . . . . . . . . . . . . . . . . . 18
7.17. Environmental Matters . . . . . . . . . . . . . . . . . . 18
7.18. UCC Financing Statements. . . . . . . . . . . . . . . . . 18
7.19. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 8 COVENANTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . 19
8.1. Notification . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 9 COVENANTS OF SELLER. . . . . . . . . . . . . . . . . . . . . . 19
9.1. Interim Operation. . . . . . . . . . . . . . . . . . . . . . . 19
9.2. Access to Station. . . . . . . . . . . . . . . . . . . . . . . 22
9.3. No Solicitation. . . . . . . . . . . . . . . . . . . . . . . . 22
9.4. Financial Statements . . . . . . . . . . . . . . . . . . . . . 22
9.5. Notification . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.6. Third-Party Consents . . . . . . . . . . . . . . . . . . . . . 23
9.7. Estoppel Certificates. . . . . . . . . . . . . . . . . . . . . 24
9.8. Environmental Audit. . . . . . . . . . . . . . . . . . . . . . 24
9.9. Payment of Indebtedness; Financing Statements. . . . . . . . . 24
</page>
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ARTICLE 10 JOINT COVENANTS . . . . . . . . . . . . . . . . . . . . . 25
10.1. Conditions. . . . . . . . . . . . . . . . . . . . . . . . 25
10.2. Pre-Closing Efforts . . . . . . . . . . . . . . . . . . . 25
10.3. Control of Station. . . . . . . . . . . . . . . . . . . . 25
10.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . 25
10.5. Continued Employment of Station Employees . . . . . . . . 25
10.6. Risk of Loss. . . . . . . . . . . . . . . . . . . . . . . 27
10.7. Reversal Agreement.. . . . . . . . . . . . . . . . . . . . . 28
10.8. Closing Covenant. . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 11 CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . 28
11.1. Representations, Warranties and Covenants . . . . . . . . 28
11.2. Governmental Consents . . . . . . . . . . . . . . . . . . 29
11.3. Third-Party Consents. . . . . . . . . . . . . . . . . . . 29
11.4. Adverse Proceedings . . . . . . . . . . . . . . . . . . . 29
11.5. Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE 12 CONDITIONS PRECEDENT TO SELLER'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . 29
12.1. Representations, Warranties and Covenants . . . . . . . . 29
12.2. Governmental Consents . . . . . . . . . . . . . . . . . . 30
12.3. Adverse Proceedings . . . . . . . . . . . . . . . . . . . 30
12.4. Deliveries. . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 13 DOCUMENTS TO BE DELIVERED AT THE CLOSING. . . . . . . . . 30
13.1. Documents to be Delivered by Seller . . . . . . . . . . . 30
13.2. Documents to be Delivered by Buyer. . . . . . . . . . . . 31
ARTICLE 14 TRANSFER TAXES; FEES AND EXPENSES . . . . . . . . . . . . 32
14.1. Transfer Taxes and Similar Charges. . . . . . . . . . . . 32
14.2. Governmental Filing or Grant Fees . . . . . . . . . . . . 32
14.3. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 32
</page>
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ARTICLE 15 BROKER'S COMMISSION OR FINDER'S FEE . . . . . . . . . . . 32
15.1. Buyer's Representation and Agreement to Indemnify . . . . 32
15.2. Seller's Representation and Agreement to Indemnify. . . . 33
ARTICLE 16 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . 33
16.1. Indemnification by Seller . . . . . . . . . . . . . . . . 33
16.2. Indemnification by Buyer. . . . . . . . . . . . . . . . . 34
16.3. Procedure for Indemnification . . . . . . . . . . . . . . 35
16.4. Limitations . . . . . . . . . . . . . . . . . . . . . . . 36
16.5. Survival of Representations, Warranties and Covenants . . 36
ARTICLE 17 TERMINATION RIGHTS. . . . . . . . . . . . . . . . . . . . 37
17.1. Termination . . . . . . . . . . . . . . . . . . . . . . . 37
17.2. Liability . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE 18 REMEDIES UPON DEFAULT . . . . . . . . . . . . . . . . . . 38
18.1. Default by Seller . . . . . . . . . . . . . . . . . . . . 38
18.2. Default by Buyer. . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 19 OTHER PROVISIONS. . . . . . . . . . . . . . . . . . . . . 39
19.1. Publicity . . . . . . . . . . . . . . . . . . . . . . . . 39
19.2. Benefit and Assignment. . . . . . . . . . . . . . . . . . 39
19.3. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 39
19.4. Headings. . . . . . . . . . . . . . . . . . . . . . . . . 40
19.5. Computation of Time.. . . . . . . . . . . . . . . . . . . 40
19.6. Governing Law . . . . . . . . . . . . . . . . . . . . . . 40
19.7. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 40
19.8. Counterparts. . . . . . . . . . . . . . . . . . . . . . . 41
19.9. Further Assurances. . . . . . . . . . . . . . . . . . . . 41
ARTICLE 20 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 42
</page>
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EXHIBITS AND SCHEDULES
EXHIBITS
________
A. Opinion of Seller's Counsel
B. Opinion of Buyer's Counsel
C. Reversal Agreement
SCHEDULES
_________
1.2(a) Station Licenses
1.2(b) Real Property
1.2(c) Tangible Personal Property
1.2(d) Contracts
1.2(f) Intellectual Property
6.3 Buyer's FCC Exceptions
6.4 Buyer's Required Consents
6.5 Buyer's Litigation
7.3 Seller's Required Consents
7.8 Employee List and Compensation; Past Labor Disputes
7.10 Pending Claims and Litigation
7.12 Interests in Clients, Suppliers, Etc.
7.13(a) Financial Statements
7.13(b) 1994 Budget
7.14 Insurance Policies
7.18 UCC Financing Statements
</page>
<PAGE>
ASSET PURCHASE AGREEMENT
________________________
This ASSET PURCHASE AGREEMENT (this "Agreement"), made
as of the 12th day of September, 1994, is by and between TK COMMUNICATIONS,
INC., a Pennsylvania corporation ("Seller"), and INFINITY BROADCASTING
CORPORATION OF DALLAS, a Delaware corporation ("Buyer").
RECITALS
________
Seller is the licensee of and operates radio broadcast station KLUV-FM,
Dallas, Texas (the "Station"), pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
Seller and Buyer have agreed that Seller will sell and Buyer will
acquire substantially all of the assets used, useful or necessary in the
operation of the Station on the terms and subject to the conditions set forth
in this Agreement.
Therefore, the parties agree as follows:
ARTICLE 1
ASSETS TO BE CONVEYED
_____________________
1.1. Closing. Subject to Section 17.1 hereof and except as otherwise
mutually agreed upon by Seller and Buyer, the closing of this transaction (the
"Closing") shall take place on a date designated by Buyer within fifteen (15)
business days after the last of the conditions specified in Sections 11.2 and
12.2 hereof has been fulfilled (or waived by the party entitled to waive such
condition). The Closing shall be held at 10:00 a.m. (Washington, D.C. time)
in the offices of Leventhal, Senter & Lerman, 2000 K Street, N.W., Suite 600,
Washington, D.C. or at such place as the parties may otherwise agree.
1.2. Station Assets. At the Closing, Seller shall sell, assign,
transfer and convey to Buyer, and Buyer shall purchase from Seller, all of the
assets, real, personal and mixed, tangible and intangible (including the
business of the Station as a going concern), owned or held by Seller and used,
useful or necessary in the conduct of the business and operation of the
Station, including all such property acquired by Seller between the date
hereof and the Closing Date (but
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excluding the assets specified in Section 1.3), including,
but not limited to, the following:
(a) all of Seller's right, title and interest in and to the
licenses, permits and other authorizations issued by any governmental
authority and used, useful or necessary in the conduct of the business
and operation of the Station, including the Station Licenses listed in
Schedule 1.2(a), the call letters "KLUV-FM" and any applications for
_______________
such licenses, permits and authorizations;
(b) all of Seller's right, title and interest in and to all
real property, including leasehold interests and easements, used, useful
or necessary in the conduct of the business and the operation of the
Station, including the Real Property listed in Schedule 1.2(b), together
_______________
with any additions thereto between the date hereof and the Closing Date;
(c) all equipment, office furniture and fixtures, office
materials and supplies, inventory, spare parts, motor vehicles and other
tangible personal property of every kind and description, owned, leased
or held by Seller and used, useful or necessary in the conduct of the
business and operation of the Station, including the items listed in
Schedule 1.2(c), except to the extent such property is disposed of or
_______________
consumed in accordance with Section 9.1(b);
(d) subject to the provisions of Article 3 hereof, all of
Seller's rights under and interest in all Contracts, including the
Contracts listed in Schedule 1.2(d) hereto;
(e) all programs and programming materials of whatever form or
nature owned by Seller and used or intended for use on or by the
Station;
(f) all of Seller's right, title and interest in and to the
trademarks, trade names, service marks, franchises, copyrights,
including registrations and applications for registration of any of
them, jingles, logos, slogans, licenses, permits and privileges owned
or held by Seller and used, useful or necessary in the conduct of the
business and operation of the Station, including those listed in
Schedule 1.2(f);
_______________
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(g) all files, records, books of account, computer programs and
software and logs relating to the operation of the Station, including,
without limitation, payable records, receivable records,
invoices, statements, traffic material, programming information and
studies, technical information and engineering data, news and
advertising studies and consultants' reports, ratings reports,
marketing and demographic data, sales correspondence, lists of
advertisers, promotional materials, credit and sales reports, budgets,
financial reports and projections, sales, operating and business plans,
filings with the FCC and original executed copies of all written
Contracts to be assigned hereunder; and
(h) all of Seller's rights under manufacturers' and vendors'
warranties relating to items included in the Station Assets and all
similar rights against third parties relating to items included in the
Station Assets to the extent contractually assignable.
The assets to be transferred to Buyer hereunder are hereinafter
collectively referred to as the "Station Assets." The Station Assets shall be
transferred to Buyer free and clear of all debts, Liens (other than Permitted
Liens), claims and liabilities.
1.3. Excluded Assets. The Station Assets shall not include the
following:
(a) Seller's books and records as pertain to the corporate
organization, existence or capitalization of Seller, and duplicate
copies of such records as are necessary to enable Seller to file tax
returns and reports;
(b) all cash, cash equivalents or similar type investments
of Seller, such as certificates of deposit, Treasury bills, and other
marketable securities on hand and/or in banks;
(c) all accounts receivable arising out of the operation of
the Station for services performed or provided prior to the Effective
Time (the "Accounts Receivable"), but specifically excluding any
amounts owing in connection with advertisements or programs to be
broadcast at and after the Effective Time;
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(d) all Contracts of insurance, except for any rights that may be
assigned pursuant to Section 10.6 of this Agreement (Risk of Loss); and
(e) all pension, profit sharing or cash or deferred (Section 401(k))
plans and trusts and any other employee benefit plan or arrangement and
the assets thereof, if any.
ARTICLE 2
PURCHASE PRICE
2.1. Purchase Price. The total consideration to be paid by Buyer for
the Station Assets (the "Purchase Price") shall be Fifty Million One Hundred
Thousand Dollars ($50,100,000). The Purchase Price shall be payable by Buyer
at Closing by wire transfer of immediately available federal funds to an
account at a domestic U.S. bank or other financial institution pursuant to
wire instructions that Seller shall deliver to Buyer at least two (2) business
days prior to Closing.
2.2. Allocation. Buyer shall arrange for an appraisal of the value of
the tangible assets included in the Station Assets. The appraisal shall be
completed within one hundred eighty (180) days after the Closing, and, based
upon such appraisal, Buyer shall prepare an initial draft of IRS Form 8594.
Buyer shall forward such form to Seller for its approval, which shall not be
unreasonably withheld. If the parties reach an agreement on the contents of
IRS Form 8594, Buyer and Seller shall each file the IRS Form 8594 finally
agreed upon by the parties with their respective federal income tax return for
the tax year in which the Closing occurs.
ARTICLE 3
ASSUMPTION OF OBLIGATIONS
3.1. Assumption of Obligations. Subject to the provisions of this
Article 3 and Article 5 of this Agreement, Buyer shall assume and undertake to
pay, satisfy or discharge: (a) the liabilities, obligations and commitments
of Seller arising and accruing after the Closing Date under the Contracts
listed in Schedule 1.2(d) and the Time Sales Agreements; (b) the liabilities,
obligations and commitments of Seller arising and accruing after the Closing
Date under other Contracts entered into between the date of this Agreement and
the Closing Date in
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<PAGE>
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accordance with Section 9.1(f); (c) the liabilities and
obligations of Seller to the Transferred Employees as provided in Section
10.5; (d) obligations arising under the Station Licenses after the Closing
Date; and (e) Permitted Liens.
3.2. Limitation. Except as set forth in Section 3.1 hereof, Buyer
expressly does not, and shall not, assume or be deemed to assume, under this
Agreement or otherwise by reason of the transactions contemplated hereby, any
liabilities, obligations or commitments of Seller of any nature whatsoever.
Without limiting the generality of the foregoing, Buyer shall not assume or be
liable for any liability or obligation of Seller (a) arising out of any
litigation, proceeding or claim by any person or entity relating to the
business or operation of the Station prior to the Closing Date, whether or not
such litigation, proceeding or claim is pending, threatened or asserted
before, on or after the Closing Date, or (b) under any employment contract,
collective bargaining agreement, insurance, pension, retirement, deferred
compensation, incentive bonus or profit sharing or employee benefit plan or
trust, except to the extent such agreement is specifically included in the
Contracts listed on Schedule 1.2(d).
ARTICLE 4
REQUIRED CONSENTS
4.1. FCC Application. The assignment of the Station Licenses as
contemplated by this Agreement is subject to the prior consent and approval of
the FCC. No later than five (5) business days after the date of this
Agreement, Buyer and Seller shall file the FCC Application. Seller and Buyer
shall thereafter prosecute the FCC Application with all reasonable diligence
and otherwise use their best efforts to obtain the grant of the FCC
Application as expeditiously as practicable; provided, however, that neither
Seller nor Buyer shall have any obligation to satisfy any complainant or the
FCC by taking any steps which would have a material adverse effect upon Seller
or Buyer or upon any affiliated entity, but neither the expense nor
inconvenience to a party of defending against a complainant or an inquiry by
the FCC shall be considered a material adverse effect on such party. If the
FCC Consent imposes any condition on any party hereto, such party shall use
its best efforts to comply with such condition; provided, however, that no
party shall be required to comply with any condition that would have a material
adverse effect upon it or any affiliated entity. If reconsideration or judicial
review is sought with respect to the FCC Consent, the party affected shall
vigorously oppose such efforts for reconsideration or judicial review; provided,
</page>
<PAGE>
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however, that nothing herein shall be construed to limit
either party's right to terminate this Agreement pursuant to Article 17
hereof.
4.2. Compliance with HSRA. Each party shall make or cause to be made
in a timely fashion, and in any event within thirty (30) days following the
date of this Agreement, all filings which are required in connection with the
transactions contemplated hereby under the HSRA, and shall furnish to the
other party all information that the other reasonably requests in connection
with such filings. The transfer of the Station Assets hereunder is
conditioned upon the expiration of the applicable waiting period under the
HSRA without the institution or threat of any action with respect to the
consummation of the transactions contemplated hereunder.
4.3. Other Governmental Consents. Promptly following the execution of
this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any other requests for approval or waiver that are
required from such governmental authorities in connection with the
transactions contemplated hereby and shall diligently and expeditiously
prosecute, and shall cooperate fully with each other in the prosecution of,
such requests for approval or waiver and all proceedings necessary to secure
such approvals and waivers.
ARTICLE 5
PRORATIONS; ACCOUNTS RECEIVABLE
5.1. Proration of Income and Expenses. All income and expenses arising
from the conduct of the business and operation of the Station shall be
prorated between Buyer and Seller as of the Effective Time in accordance with
GAAP. Such prorations shall be based upon the principle that Seller shall be
entitled to all income earned and shall be responsible for all liabilities and
obligations accruing in connection with the operation of the Station until the
Effective Time, and Buyer shall be entitled to all income earned and be
responsible for such liabilities and obligations accruing thereafter. Such
prorations shall include, without limitation, all ad valorem, real estate and
other property taxes (but excluding taxes arising by reason of the transfer of
the Station Assets as contemplated hereby, which shall be paid as set forth in
Article 14 of this Agreement), business and license fees, music and other
license fees (including any retroactive adjustments thereof), wages and
salaries of employees (including accruals up to the Closing Date for bonuses,
commissions, sick leave, vacation and severance pay and related payroll
taxes), utility expenses, liabilities and obligations
</page>
<PAGE>
-7-
under all Contracts to be assumed by Buyer (other than Trade Agreements), rents
and similar prepaid and deferred items and all other expenses attributable to
the ownership and operation of the Station. Trade Agreements shall be prorated
only to the extent provided in Section 5.2 of this Agreement. To the extent
not known, real estate taxes shall be apportioned on the basis of taxes
assessed for the preceding year, with a reapportionment as soon as the new tax
rate and valuation can be ascertained.
5.2. Trade Agreements. Liabilities and obligations under Trade
Agreements shall be prorated in favor of Buyer to the extent that the
liability of the Station for air time under such agreements as of the
Effective Time exceeds by more than Fifty Thousand Dollars ($50,000) the fair
market value of the property to be received by Buyer under such agreements
after the Effective Time. The liability of the Station for unperformed time
under a Trade Agreement as of the Effective Time shall be valued according to
the Station's rate card as of the date of this Agreement. Buyer shall not be
obligated to make any proration in favor of Seller with respect to Trade
Agreements, notwithstanding that the fair market value of property to be
received by Buyer exceeds the liability for unperformed time.
5.3. Payment of Proration Items. Within sixty (60) days following the
Closing Date, Seller shall deliver to Buyer a schedule of its proposed
prorations (which shall set forth in reasonable detail the basis for those
determinations) (the "Proration Schedule"). The Proration Schedule shall be
conclusive and binding upon Buyer unless Buyer provides Seller with written
notice of objection (the "Notice of Disagreement") within thirty (30) days
after Buyer's receipt of the Proration Schedule, which notice shall state the
prorations of expenses proposed by Buyer (the "Buyer's Proration Amount").
Seller shall have fifteen (15) days from receipt of a Notice of Disagreement
to accept or reject Buyer's Proration Amount. If Seller rejects Buyer's
Proration Amount, and the amount in dispute exceeds five thousand dollars
($5,000), the dispute shall be submitted within ten (10) days to the Dallas,
Texas, office of Deloitte & Touche (the "Referee") for resolution, such
resolution to be made within thirty (30) days after submission to the Referee
and to be final, conclusive and binding on Seller and Buyer. Buyer and Seller
agree to share equally the cost and expenses of the Referee, but each party
shall bear its own legal and other expenses, if any. If the amount in dispute
is equal to or less than five thousand dollars ($5,000), such amount shall be
divided equally between Buyer and Seller. Payment by Buyer or Seller, as the
case may be, of the proration amounts determined pursuant to this Section 5.3
shall be due fifteen (15) days after the last to occur of (i) Buyer's
acceptance of the Proration Schedule or failure to give Seller a timely Notice
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<PAGE>
-8-
of Disagreement; (ii) Seller's acceptance of Buyer's Proration Amount or
failure to reject Buyer's Proration Amount within fifteen (15) days of receipt
of a Notice of Disagreement; (iii) Seller's rejection of Buyer's Proration
Amount in the event the amount in dispute equals or is less than five thousand
dollars ($5,000); and (iv) notice to Seller and Buyer of the resolution of the
disputed amount by the Referee in the event that the amount in dispute exceeds
five thousand dollars ($5,000). Any payment required by Seller to Buyer or by
Buyer to Seller, as the case may be, under this Section 5.3 shall be paid by
wire transfer of immediately available federal funds to the account of the
payee with a financial institution in the United States as designated by
Seller in the Proration Schedule or by Buyer in the Notice of Disagreement (or
by separate notice in the event that Buyer does not send a Notice of
Disagreement). If either Buyer or Seller fails to pay when due any amount
under this Section 5.3, interest on such amount will accrue from the date
payment was due to the date such payment is made at a per annum rate equal to
the Prime Rate plus two percent (2%), and such interest shall be payable upon
demand.
5.4. Accounts Receivable. On the Closing Date, Seller will assign the
Accounts Receivable to Buyer for purposes of collection only. Buyer will
collect the Accounts Receivable as Seller's agent in the same manner and with
the same diligence that Buyer uses to collect its own accounts receivable for
a period of one hundred twenty (120) days following the Closing Date (the
"Collection Period"); provided, that Buyer shall not be obligated to institute
litigation, employ any collection agency, legal counsel or other third party,
or take any other extraordinary means of collection. Within ten (10) business
days after the Closing Date, Seller shall deliver to Buyer a complete and
detailed statement of each Account Receivable, including a statement showing
all commissions owing with respect to such receivables, if any (the
"Receivable Statement"). Neither Seller nor its agents will make any
solicitation of such Accounts Receivable for collection purposes nor will
Seller or its agents institute litigation for the collection of any Accounts
Receivable during the Collection Period, except with respect to Accounts
Receivable returned to Seller for collection as set forth below. By the tenth
(10th) day of each month during the Collection Period, Buyer shall pay to
Seller all amounts collected by Buyer on the Accounts Receivable during the
previous calendar month. Buyer may deduct from such collections (a) any
commissions which may be due with respect to the Accounts Receivable (as
indicated on the Receivable Statement) and, if so, shall promptly notify
Seller of the deduction and remit such commissions to the appropriate person
and (b) any amount due to Buyer under this Agreement for which payment has not
been made. All amounts received by Buyer from account debtors included among
the Accounts Receivable
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<PAGE>
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shall be applied first to the Accounts Receivable, unless the account debtor
specifically disputes a receivable or instructs that the payment be otherwise
applied. If during the Collection Period an account debtor disputes an account
included among the Accounts Receivable, Buyer may return that account to Seller
for collection. At the conclusion of the Collection Period, any remaining
Accounts Receivable shall be reassigned to Seller and thereafter Buyer shall
have no further obligation with respect to the Accounts Receivable.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
6.1. Organization and Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and, as of the Closing Date, will be qualified to do business in the State of
Texas.
6.2. Authorization and Binding Obligation. Buyer has all necessary
power and authority to enter into and perform under this Agreement and the
transactions contemplated hereby, and Buyer's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Buyer and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
6.3. FCC Qualifications. To Buyer's knowledge, there are no facts
which, under the Communications Act of 1934, as amended, or the existing
rules, regulations and policies of the FCC, would disqualify Buyer as assignee
of the Station Licenses or require a waiver of any FCC rule, regulation or
policy, except as disclosed on Schedule 6.3.
6.4. Absence of Conflicting Agreements or Required Consents. Except
as set forth in Article 4 with respect to FCC and other governmental consents
or as disclosed on Schedule 6.4, the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby by
Buyer: (a) do and will not require the consent or waiver of any third party;
(b) do and will not violate any provisions of Buyer's certificate of
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incorporation or bylaws; (c) do and will not violate any applicable law,
judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which any Buyer is a party; and (d) do and will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under any
agreement, instrument, license or permit to which Buyer is now subject.
6.5. Absence of Litigation. Except as set forth in Schedule 6.5, there
is no claim, litigation, proceeding or investigation pending or, to the best
of Buyer's knowledge, threatened against Buyer which seeks to enjoin or
prohibit, or which otherwise questions the validity of, any action taken or to
be taken in connection with this Agreement.
6.6. Financing. Subject to Schedule 6.4, Buyer's obligations hereunder
are not subject to a contingency based on the availability or suitability of
financing.
ARTICLE 7
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
7.1. Organization and Standing. Seller is a corporation duly formed,
validly existing and in good standing under the laws of the State of
Pennsylvania, and has all necessary corporate power and authority to own,
lease and operate the Station Assets and to carry on the business of the
Station as now being conducted and as proposed to be conducted by Seller
between the date hereof and the Closing Date.
7.2. Authorization and Binding Obligation. Seller has all necessary
power and authority to enter into and perform this Agreement and the
transactions contemplated hereby, and Seller's execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action on its part. This Agreement has been duly executed and
delivered by Seller and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights or equitable principles generally.
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7.3. Absence of Conflicting Agreements or Required Consents. Except as
set forth in Article 4 with respect to FCC and other governmental consents and
except as set forth on Schedule 7.3, the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
by Seller (a) do and will not require the consent of any third party (except
with respect to Contracts as disclosed in Schedule 1.2(d)); (b) do and will
not violate any provisions of Seller's articles of incorporation or bylaws;
(c) do and will not violate any applicable law, judgment, order, injunction,
decree, rule, regulation or ruling of any governmental authority to which
Seller is a party or by which it or the Station Assets are bound; (d) do and
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a
breach of the terms, conditions or provisions of, or constitute a default
under any Contract, agreement, instrument, license or permit to which either
Seller or the Station Assets are now subject; and (e) do and will not result
in the creation of any lien, charge or encumbrance on any of the Station
Assets.
7.4. FCC Authorizations.
(a) Schedule 1.2(a) contains a true and complete list of the Station
Licenses, including their expiration dates, and there are no other licenses,
permits or other authorizations from governmental or regulatory authorities
required for the lawful conduct of the business and operation of the Station
in the manner and to the full extent it is now conducted. Seller has
delivered to Buyer true and complete copies of the Station Licenses, including
any and all amendments and other modifications thereto. The Station Licenses
and other licenses, permits and authorizations listed in Schedule 1.2(a) were
validly issued and are validly held by Seller, are in full force and effect
and are unimpaired by any act or omission of Seller, its shareholders,
officers, directors, employees or agents, and except as disclosed in Schedule
1.2(a), none is subject to any restriction or condition which would limit in
any respect the full operation of the Station as now operated. Seller has no
reason to believe that the FCC will not renew the Station Licenses in the
ordinary course.
(b) Except as disclosed in Schedule 1.2(a), there are no applications,
complaints or proceedings pending or, to the best of Seller's knowledge,
threatened before the FCC relating to the business or operation of the Station
or that may result in the revocation, modification, non-renewal or suspension
of any of the Station Licenses, the denial of any pending application or the
imposition of any fines, forfeitures, or other administrative actions by the
FCC with respect to the
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<PAGE>
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Station or its operation other than proceedings affecting the broadcasting
industry generally. Except as disclosed in Schedule 1.2(a), Seller is not
subject to any outstanding judgment or order of the FCC relating to the
Station. The Station is being operated in material compliance with the terms
and conditions of the Station Licenses, the underlying construction permits,
the Communications Act of 1934, as amended, and all rules, regulations and
policies of the FCC. Since the Station's most recent renewal of its main
broadcast license: (i) All ownership reports, employment reports and other
reports and documents required to be filed by Seller with the FCC have been
timely filed; (ii) such items as are required to be placed in the Station's
local public files have been placed in such files without material exception;
and (iii) all proofs of performance and measurements that are required to be
made by Seller with respect to the Station's transmission facilities have been
completed and filed at the Station. All information contained in the
ownership reports, employment reports and proofs of performance described
above is true, complete and correct in all material respects.
(c) To the best knowledge of Seller, there are no facts which, under the
Communications Act of 1934, as amended, or the existing rules and regulations
of the FCC, would disqualify Seller as the assignor of the Station Licenses.
7.5. Title to and Condition of Real Property.
(a) Schedule 1.2(b) contains descriptions of all of Seller's real
property interests, including leasehold interests and easements, and a
description of all leasehold improvements, necessary to conduct or used or
useful in the business or operation of the Station (the "Real Property"). The
Real Property listed in Schedule 1.2(b) includes all such properties necessary
to conduct the business and operation of the Station as now conducted.
(b) Seller owns a valid and subsisting interest as lessee under the
leased Real Property free and clear of all Liens except for (i) Liens held by
Seller's senior lenders to be released or terminated at the Closing and (ii)
the lessor's interest in such lease.
(c) Seller owns no Real Property.
(d) Any improvements to the Real Property conform in all material
respects to all lease restrictions, restrictive covenants, building codes, and
federal, state and local laws, regulations and ordinances, and the Real
Property is zoned for the various purposes for which it is currently being
used. Such improvements are in good working condition and repair, are
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<PAGE>
-13-
insurable at standard rates, and comply in all material respects with the
rules and regulations of the FCC and all other applicable federal, state and
local statutes, ordinances, rules and regulations. Seller has no knowledge of
any pending, threatened or contemplated action to take by eminent domain or
otherwise to condemn any part of the Real Property. The transmitting towers,
guy anchors, transmitter buildings and related improvements used by Seller in
the operation of the Station are located entirely on the Real Property.
7.6. Title to and Condition of Personal Property. Schedule 1.2(c)
contains a list of the principal items (and a summary description of the other
items) of tangible personal property owned, leased or held by Seller and used
in the conduct of the business and operation of the Station ("Personal
Property"). Except as described in Schedule 1.2(c), Seller has good and
marketable title to all Personal Property (and to all other tangible personal
property and assets to be transferred to Buyer hereunder) free and clear of
all Liens (except for (i) Liens held by Seller's senior lenders to be released
or terminated at the Closing; and (ii) Liens for current taxes not yet due and
payable). Except as described in Schedule 1.2(c), all of the items of
tangible personal property and facilities included in the Station Assets are
in good operating condition and repair (reasonable wear and tear excepted),
are insurable at standard rates, have been properly maintained, are performing
satisfactorily and in accordance with standards of good engineering practice
and are available for immediate use in the conduct of the business and
operation of the Station. All such tangible personal property and facilities
are in compliance in all material respects with the rules and regulations of
the FCC and with all other applicable federal, state and local statutes,
ordinances, rules and regulations. The Personal Property listed in Schedule
1.2(c) includes all such properties necessary to conduct the business and
operation of the Station on a stand-alone basis.
7.7. Contracts.
(a) Schedule 1.2(d) lists all Contracts as of the date of this
Agreement, including Trade Agreements and leases for Real Property, other than
(i) Time Sales Agreements (unless such Time Sales Agreement has a stated value
in excess of Twenty Thousand Dollars ($20,000), prepayment has been received,
or the term exceeds three (3) months in which case such Time Sales Agreement
is included on Schedule 1.2(d)) and (ii) the employment arrangements with the
Station's employees described in Section 1.3(e).
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(b) Except for Time Sales Agreements (other than Time Sales
Agreements required to be listed on Schedule 1.2(d)), Seller has delivered to
Buyer true and complete copies of all written Contracts, or true and complete
memoranda describing all oral Contracts, including all amendments and other
modifications thereto, and all liabilities and obligations under such
Contracts can be ascertained from such copies or memoranda. Except as
disclosed in Schedule 1.2(d), all Contracts are in full force and effect and
are valid, binding and enforceable by Seller in accordance with their
respective terms, except as limited by laws affecting creditors' rights or
equitable principles generally. Seller has complied in all material respects
with all Contracts, and no default exists under any of the Contracts that
would permit the other party to terminate. Seller has not granted or been
granted any waiver or forbearance with respect to any of the Contracts. To
the best of Seller's knowledge, no other contracting party is in default under
any of the Contracts. Except as set forth in Schedule 1.2(d), Seller has full
legal power and authority to assign its rights under the Contracts 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 or
continuity of any of the Contracts. The Contracts listed on Schedule 1.2(d)
include all those necessary to conduct the business and operation of the
Station as now conducted.
7.8. Personnel Information.
(a) Schedule 7.8 contains a true and complete list of all persons
employed at the Station, each such person's job title or the capacity in which
employed, and a description of all compensation including bonus arrangements
and employee benefit plans or arrangements applicable to each such employee.
Seller is not a party to any agreement, written or oral, with salaried or
non-salaried employees of the Station except as described on Schedule 1.2(d).
Except as described on Schedule 7.8, Seller has no knowledge that any key
employee (i.e., general manager, sales manager, program director, or any
full-time on-air employee) at the Station currently plans to terminate
employment, whether by reason of the transactions contemplated by this
Agreement or otherwise.
(b) Seller is not a party to any collective bargaining agreement
covering any of its employees at the Station. Seller is not a party to any
Contract with any labor organization, nor has 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 of Seller's
employees at the Station. Seller has no knowledge of any organizational
effort currently being made or threatened by or on behalf of any labor union
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with respect to the employees of Seller at the Station. There are no unfair
labor practice charges pending against Seller; there are no pending or, to the
best of Seller's knowledge, threatened strikes or arbitration proceedings
involving labor matters affecting Seller; and, except as disclosed on Schedule
7.8, Seller has not experienced any strikes, work stoppage or other
significant labor difficulties of any nature at the Station.
(c) Seller is not a party to or bound by any employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), whether or not such plan is otherwise
exempt from the provisions of ERISA, and no employee or spouse of an employee
is entitled to any benefits that would be payable pursuant to any such plan.
Except as described on Schedule 7.8, Seller has no fixed or contingent
liability or obligation to any person now or formerly employed at the Station,
including, without limitation, pension or thrift plans, individual or
supplemental pension or accrued compensation arrangements, contributions to
hospitalization or other health or life insurance programs, incentive plans,
bonus arrangements and vacation, sick leave, disability and termination
arrangements or policies, including workers' compensation policies. Buyer
shall not assume or hereby become obligated to pay any debt, obligation or
liability arising from Seller's employee benefit plans, or any other
employment arrangement, except as specifically provided in Section 3.1, and
coverage under such plans and arrangements, if any, shall be the sole
responsibility of Seller.
(d) Seller has complied with all laws relating to employment, including,
without limitation, laws relating to safety, health, equal employment
opportunity, wages, hours, collective bargaining, unemployment insurance,
workers' compensation, pension, welfare and benefit plans (including ERISA)
and the payment and withholding of income, social security, unemployment,
disability and similar taxes. To Seller's knowledge, there is no dispute
between Seller and any of its past or present employees (nor any job
applicant) related to discrimination, compensation, severance pay, vacation or
pension benefits, except as disclosed in Schedule 7.10.
7.9. Intellectual Property. Schedule 1.2(f) lists all copyrights,
trademarks, trade names, service marks, licenses, patents, permits, jingles,
privileges, and other similar intangible property rights and interests
(exclusive of those required to be listed in other Schedules hereto) applied
for, issued to or owned by Seller, or under which Seller is licensed or
franchised, and used or useful in the conduct of the business and operation of
the Station ("Intellectual Property"), all of which rights and interests are
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issued to or owned by Seller, or if licensed or franchised to Seller, are
valid and uncontested. Seller has delivered to Buyer copies of all documents,
if any, establishing such rights, licenses or other authority. There is no
pending or, to the best of Seller's knowledge, threatened proceeding or
litigation affecting or with respect to the Intellectual Property. Seller has
received no notice and has no knowledge of any infringement or unlawful use of
such property. The properties listed in Schedule 1.2(f) include all such
properties necessary to conduct the business and operation of the Station as
now conducted.
7.10. Litigation. Seller is not subject to any judgment, award, order,
writ, injunction, arbitration decision or decree that relates to the Station
or that might affect Seller's ability to perform under this Agreement. Except
as disclosed on Schedule 7.10, there is no claim, litigation, proceeding or
investigation pending or, to the best of Seller's knowledge, threatened in any
federal, state or local court, or before any administrative agency, arbitrator
or other tribunal authorized to resolve disputes that relates to the Station,
that might have a material adverse effect upon the business, assets or
condition (financial or otherwise) of the Seller or the Station or that seeks
to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken in connection with this Agreement.
7.11. Compliance With Laws. Seller has operated and is operating in
substantial compliance with all laws, regulations and governmental orders
applicable to the conduct of the business and operation of the Station, and
its present use of the Station Assets does not violate any such laws,
regulations or orders in any material respect. Seller has not received any
notice asserting any noncompliance with any applicable statute, rule or
regulation, in connection with the business or operation of the Station.
7.12. Interests in Clients, Suppliers, Etc. Except as disclosed in
Schedule 7.12, neither Seller nor any of its shareholders, officers,
directors, or Affiliates possesses, directly or indirectly, any financial
interest in, or is a partner, director, officer or employee of, any
partnership, corporation, firm, association or business organization which is
a client, supplier, customer, lessor, lessee or competitor of the Station or
has a banking relationship involving the Station. Ownership of securities of
a company whose securities are registered under the Securities Exchange Act of
1934 not in excess of five percent (5%) of any class of such securities shall
not be deemed to be a financial interest for purposes of this Section 7.12.
All Real Property, Personal Property, Contracts and Intellectual Property
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used, useful or necessary in the business or operation of the Station are
owned, leased or held by Seller, and no Affiliate of Seller owns or leases
property or is a party to any lease or agreement affecting or relating to the
operation of the Station.
7.13. Financial Statements; Budget.
(a) Schedule 7.13(a) contains true and complete copies of the Financial
Statements as of the date of this Agreement. Except as disclosed on Schedule
7.13(a), the Financial Statements have been and will be prepared in accordance
with GAAP, subject in the case of monthly statements to normal year-end
adjustments. The Financial Statements do and will accurately reflect and
present fairly the financial position and the results of the operations of the
Station on a stand-alone basis as of the dates and for the periods indicated.
Between December 31, 1993 and the date of this Agreement, there has been no
material adverse change in the business, property, assets, liabilities,
condition (financial or otherwise) or prospects of the Station, and to
Seller's knowledge (as of the date of this Agreement) no such change is
imminent. Except for the transactions contemplated herein, Seller has
operated the Station in the ordinary and normal course of business since
December 31, 1993. Except for (a) liabilities as and to the extent reflected
or reserved against in the Financial Statements, (b) liabilities incurred
since December 31, 1993, in the ordinary and normal course of business, and
(c) Seller's senior debt, which will not be assumed by Buyer, Seller has no
liabilities or obligations of any nature, whether accrued, absolute,
contingent or otherwise, relating to the Station.
(b) Schedule 7.13(b) contains Seller's month-by-month budget for the
Station for fiscal year 1994 (the "1994 Budget").
(c) Seller does not reasonably anticipate incurring capital
expenditures during the next twelve (12) months in excess of Sixty Thousand
Dollars ($60,000).
7.14. Insurance. Schedule 7.14 contains copies of binders for all
insurance policies held by Seller relating to the business, properties and
employees of the Station. All such insurance policies are in full force and
effect.
7.15. Taxes. Seller has duly, timely and in the required manner filed
all federal, state, local and foreign income, franchise, sales, use, property,
excise, payroll and other tax returns and forms required to be filed, and has
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-18-
paid in full or discharged all taxes, assessments, excises, interest,
penalties, deficiencies and losses required to be paid. No event has occurred
which could impose on Buyer any liability for any taxes, penalties or interest
due or to become due from Seller from any taxing authority.
7.16. Bankruptcy. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Seller or any
of the Station Assets, are pending or threatened, and Seller has not 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.
7.17. Environmental Matters. To the best of Seller's knowledge, (a) no
Hazardous Substance (i) is or has been used, treated, stored, disposed of,
released, spilled, generated, manufactured, transported or otherwise handled
on the Real Property or (ii) has otherwise come to be located on or under the
Real Property, (b) the Real Property and all operations on the Real Property
are in compliance with all Environmental Laws, and (c) Seller has obtained all
environmental, health and safety permits necessary for the operation of the
Station, and all such permits are in full force and effect, and Seller is in
compliance with the terms and conditions of all such permits. No outstanding
liens have been placed on the Real Property under any Environmental Laws.
Seller has not received any written notice, and is not aware, of any
administrative or judicial investigations, proceedings or actions with respect
to violations, alleged or proven, of Environmental Laws by Seller or any
tenants of Seller, or otherwise involving the Real Property or the operations
conducted on the Real Property. The Real Property and all operations
conducted on the Real Property are in compliance with all federal and state
statutes and regulations relating to Asbestos, and to the best of Seller's
knowledge, no Asbestos-Containing Material is present in any of the
improvements on the Real Property or is otherwise located on the Real
Property. No underground storage tank, whether in use or closed, and no PCB
is present on or under the Real Property. No PCB is used in the Personal
Property.
7.18. UCC Financing Statements. All of the Station Assets are and have
been located in the State of Texas since the Station Assets were acquired by
Seller. To the best of Seller's knowledge, all financing statements filed by
any party with respect to the Station Assets are listed in Schedule 7.18.
7.19. Disclosure. None of this Agreement or any certificate or other
document delivered in connection with the transactions contemplated by this
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Agreement contains any untrue statement of a material fact or omits any
statement of material fact necessary to make any statement contained herein or
therein not misleading.
ARTICLE 8
COVENANTS OF BUYER
8.1. Notification. Buyer shall notify Seller of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against Buyer which challenges the transactions
contemplated hereby, including any challenges to the FCC Application. With
respect to challenges to the FCC Application, the provisions of Section 4.1
shall apply. With respect to the other types of challenges, Buyer shall use
reasonable and diligent efforts to remove any such impediment to the
transactions contemplated by this Agreement.
ARTICLE 9
COVENANTS OF SELLER
9.1. Interim Operation. Between the date of this Agreement and the
Closing Date, except as expressly permitted by this Agreement or with the
prior written consent of Buyer:
(a) Seller shall conduct the business and operation of the
Station solely in the ordinary and normal course of business, with the
intent of preserving the ongoing operations and assets of the Station;
(b) Seller shall not sell, assign, lease or otherwise
transfer or dispose of any of the Station Assets, except for assets
consumed or disposed of in the ordinary course of business, in which
event the same shall be replaced with assets of equal or greater value
and utility, and the Station's inventories of spare parts and
expendable supplies shall be maintained at levels consistent with past
practices;
(c) Seller shall not create, assume or permit to exist any
claim, liability, mortgage, lien, pledge, condition, charge, or
encumbrance of any nature whatsoever upon the Station Assets, except
for those in existence on the date of this Agreement, all of which will
be removed on or prior to the Closing Date unless they are to be
assumed by Buyer under Section 3.1 of this Agreement;
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(d) Seller shall operate the Station in material compliance
with the FCC's rules and regulations and the Station Licenses and with
all other laws, regulations, rules and orders, and shall not cause or
permit by any act, or failure to act, any of the Station Licenses to
expire, be surrendered, adversely modified, or otherwise terminated or
the FCC to institute any proceeding for the suspension, revocation or
adverse modification of any of the Station Licenses, or fail to
prosecute with due diligence any pending application to the FCC;
(e) Seller shall not waive any material right under any
Contract or relating to the Station or the Station Assets;
(f) Seller shall not enter into or renew (i) any Contract
(other than a Times Sales Agreement, a Trade Agreement or an employment
agreement) that involves payment by or to Seller of Twenty Thousand
Dollars ($20,000) or more, (ii) any Contract (other than a Times Sales
Agreement, a Trade Agreement or an employment agreement) for a term
extending beyond the Closing Date and having a duration of three (3)
months or more, (iii) any Time Sales Agreement or Trade Agreement that
specifies volume discounts, special rates or bonuses or having a
duration inconsistent with past practices, or (iv) any employment
agreement providing for annual compensation in excess of Forty Five
Thousand Dollars ($45,000) or for a term extending beyond the Closing
Date and having a duration of three (3) months or more, except for a
renewal on substantially similar terms of an employment agreement in
effect as of the date of this Agreement for a period of no more than
one (1) year;
(g) 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 when such liabilities
and obligations become due, except to the extent such liabilities or
obligations are being contested in good faith (in which case funds
shall be set aside for any such contested amount as part of the
prorations process under Section 5.1 of this Agreement);
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(h) Except for any bonuses to be paid by Seller in
connection with this transaction, Seller shall not increase or agree to
increase the compensation, bonuses or other benefits for employees of
the Station, except as may be required under Contracts disclosed in
Schedules 1.2(d) or consistent with past employee compensation and
promotion practices, and shall pay all commissions due with respect to
accounts receivable in accordance with past practices;
(i) Seller shall, consistent with its past personnel
practices, use its reasonable efforts to maintain the employment at the
Station and to renew the existing employment contracts of the employees
listed on Schedule 7.8;
(j) Seller shall, consistent with past practices, use its
reasonable efforts to preserve the operations, organization and
reputation of the Station intact, to preserve the goodwill and business
of the Station's advertisers, suppliers, and others having business
relations with the Station, and to continue to conduct financial
operations of the Station, including their credit and collection
policies, with no less effort, as in the prior conduct of the business
of the Station;
(k) Seller shall remove, cure, correct and repair prior to
the Closing any deficiencies in the assets being sold under this
Agreement and any violations under applicable statutes, rules,
regulations, engineering standards or building, fire or zoning laws or
regulations, which are inconsistent with Seller's representations,
warranties and covenants contained in this Agreement;
(l) Seller shall maintain monthly cash advertising and
promotional expenditures for the Station at levels that are consistent
with past practices and at least equal to the budgeted monthly
expenditures set forth in the 1994 Budget regardless of whether the
Closing occurs in 1994 or 1995;
(m) Seller shall make capital improvements reasonably
required to continue the operations of the Station consistent with past
practices;
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(n) Seller shall maintain insurance policies on the Station
and the Station Assets comparable to those policies described in
Schedule 7.14; and
(o) Seller shall maintain the Station's books and records
in accordance with GAAP, provided that Seller will not be required to
prepare a balance sheet for the Station.
9.2. Access to Station. Between the date of this Agreement and the
Closing Date, Seller shall give Buyer and Buyer's counsel, accountants,
engineers and other representatives, reasonable access during normal business
hours to all of Seller's properties, records and employees relating to the
Station, including the data underlying the Financial Statements necessary for
Buyer's accountants to prepare audited statements for the Station, and shall
furnish Buyer with all information related to the Station that Buyer
reasonably requests. The rights of Buyer under this Section shall not be
exercised in such a manner as to interfere unreasonably with the business of
the Station.
9.3. No Solicitation. Between the date of this Agreement and the
Closing, neither Seller nor any Affiliate of Seller 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 all or any
substantial amount of the Station Assets, any interest in the Station, or any
substantial interest in Seller, 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. Seller shall promptly notify Buyer in writing if any such offer or
proposal is made to it after the date of this Agreement and shall advise Buyer
of the identity of the person making such offer or proposal and of the content
of such offer or proposal.
9.4. Financial Statements.
(a) Within twenty (20) days of the end of each month until the Closing
Date, Seller shall deliver to Buyer Seller's unaudited statements of revenue
and expenses for the Station for the month then ended.
(b) Within forty-five (45) days after the end of Seller's fiscal year,
Seller shall deliver to Buyer unaudited statements of income and cash flow for
the Station for such fiscal year, and the related balance sheets as of the end
</page>
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of such fiscal year. Within one hundred twenty (120) days after the end of
Seller's fiscal year, Seller shall deliver to Buyer the financial statements
referred to in the foregoing sentence certified by independent certified
public accountants. All financial statements furnished pursuant to this
Section shall be prepared in accordance with GAAP, subject to normal year-end
adjustments, shall be true and complete to the best of Seller's knowledge and
shall fairly represent the results of operation of the Station on a
stand-alone basis for the period covered by such statements.
(c) Seller shall furnish to Buyer any and all other information
customarily prepared by Seller concerning the financial condition of the
Station that Buyer may request.
9.5. Notification. (a) Seller shall notify Buyer of any litigation,
arbitration or administrative proceeding pending or, to its knowledge,
threatened against the Station or Seller with respect to the Station or that
challenges the transactions contemplated hereby, including any challenges to
the FCC Application. With respect to challenges to the FCC Application, the
provisions of Section 4.1 shall apply. With respect to other types of
challenges Seller shall use its reasonable and diligent efforts to take such
steps as may be necessary to remove any such impediment to the transactions
contemplated by this Agreement.
(b) Seller shall notify Buyer if the regular broadcast transmission of
the Station from its main broadcasting antenna at full authorized effective
radiated power is interrupted or impaired between the hours of 6 a.m. and
midnight for a period of more than three (3) consecutive hours or for an
aggregate of six (6) hours in any continuous two (2) day period or twelve (12)
hours in any single thirty (30) day period.
(c) Between the date of this Agreement and the Closing, Seller shall
keep Buyer reasonably informed of all material operational matters and
business developments with respect to the Station and its market including
competitive changes.
9.6. Third-Party Consents. Between the date of this Agreement and the
Closing Date, Seller shall use reasonable efforts to obtain at its own expense
the consent of any third parties necessary for the assignment to Buyer of any
Contract to be assigned hereunder.
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9.7. Estoppel Certificates. Between the date of this Agreement and the
Closing Date, Seller shall use reasonable efforts to obtain estoppel
certificates from any landlord with respect to the Real Property or other
lessor of any Station Asset that Buyer requests, provided that Buyer shall not
be required to make any payment or provide other compensation for such
certificate except to the extent necessary to cure a default under any such
lease. Each estoppel certificate shall identify with specificity the lease,
and any amendments or modifications thereto, and the amount of the monthly
payments due thereunder, and shall contain the landlord's or lessor's
certification for the benefit of Buyer that the lease is in full force and
effect, that there are no uncured defaults with respect to such lease and that
Seller has been and is in full compliance with all of Seller's obligations
thereunder.
9.8. Environmental Audit. Within sixty (60) days of the date of this
Agreement, Buyer may cause a Phase I environmental audit of the Real Property
to be conducted by a company selected by Buyer and at Buyer's expense. If
such environmental audit discloses the presence of any Hazardous Substance on
the Real Property, Seller shall at its own expense promptly remove such
Hazardous Substance and otherwise bring the Real Property into compliance with
Environmental Laws, and to the extent reasonably necessary the parties will
extend the date for closing to permit Seller to complete such remediation;
provided, that if the cost of remediation would exceed Five Hundred Thousand
Dollars $500,000), Seller may give Buyer notice at least thirty (30) days
prior to the Closing that Seller does not intend to perform remediation.
Within fifteen (15) days after receipt of such notice from Seller, Buyer shall
give Seller notice of Buyer's election of one of the following: (a) to accept
the Real Property as is, together with a reduction of the Purchase Price of
Five Hundred Thousand Dollars ($500,000); or (b) to exclude the affected Real
Property from the Station Assets and to reduce the Purchase Price by Five
Hundred Thousand Dollars ($500,000); or (c) to terminate this Agreement.
9.9. Payment of Indebtedness; Financing Statements. Seller shall
secure the release of all Liens on the Station Assets other than Permitted
Liens and shall deliver to Buyer at the Closing releases or terminations under
the Uniform Commercial Code and any other applicable federal, state or local
statutes or regulations of any financing or similar statements filed against
any Station Assets in (a) the jurisdictions in which the Station Assets are
and have been located since such Station Assets were acquired by Seller, and
(b) any other location specified or required by applicable federal, state or
local statutes or regulations.
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ARTICLE 10
JOINT COVENANTS
10.1. Conditions. If any event should occur between the date hereof and
the Closing, either within or without the control of any party hereto, which
would prevent fulfillment of the conditions upon the obligations of any party
to consummate the transactions contemplated by this Agreement, the parties
shall use their reasonable efforts to cure the event as expeditiously as
possible.
10.2. Pre-Closing Efforts. Between the date of this Agreement and the
Closing, each party shall use its reasonable efforts to cause the fulfillment
at the earliest practicable date of all of the conditions to the obligations
of the other party to consummate the sale and purchase under this Agreement.
Neither party shall take any action which is materially inconsistent with its
obligations under this Agreement or that would materially hinder or delay the
consummation of the transactions contemplated by this Agreement.
10.3. Control of Station. Between the date of this Agreement and the
Closing, Buyer shall not, directly or indirectly, control, supervise or direct
the operations of the Station. Such operations shall be the sole
responsibility of Seller and, subject to the provisions of Article 9, shall be
in its complete discretion.
10.4. Confidentiality. Buyer and Seller shall each keep confidential
all information obtained by it with respect to the other in connection with
this Agreement, and if the transactions contemplated hereby are not
consummated for any reason, each shall return to the other, without retaining
a copy thereof, any schedules, documents or other written information,
including all financial information, obtained from the other in connection
with this Agreement and the transactions contemplated hereby, except where
such information is known or available through other lawful sources or where
such party is advised by counsel that its disclosure is required in accordance
with applicable law.
10.5. Continued Employment of Station Employees. (a) On the Closing
Date, all employees of the Station identified on Schedule 7.8 to the extent
____________
then employed by Seller (and any replacements hired in accordance with Section
9.1) shall become employees of the Buyer ("Transferred Employees"). The terms
and conditions of Buyer's employment of the Transferred Employees shall be
at-will employment in at least the same positions, for at least the same
direct cash compensation, with medical insurance coverage effective
immediately as of the Closing and such other benefits as Buyer deems
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appropriate; provided, however, that Buyer shall have no obligation (except as
________ _______
required by law) to provide immediate medical insurance coverage for
pre-existing conditions and shall be entitled to terminate any Transferred
Employee after the Closing; and provided, further, that Buyer shall comply
________ _______
with the terms of any Contract relating to any Transferred Employee listed on
Schedule 1.2(d) and assumed by Buyer pursuant to Section 3.1.
_______________
(b) Except to the extent required by law, Buyer shall not be required to
employ any employee who, on the Closing Date, shall be suffering from any
temporary or permanent disability of a nature which prevents such employee
even with reasonable accommodation from fully performing the essential
functions of his or her employment duties, and such employee shall not be
deemed to be a Transferred Employee hereunder. On the Closing Date, Seller
shall provide Buyer with a list of any employees identified on Schedule 7.8
known by Seller to be so disabled at such time.
(c) Except as otherwise expressly set forth herein, Seller shall be
solely responsible for all salaries and other compensation which will or may
become payable to any Transferred Employee in respect of any period of
employment by Seller prior to the Closing Date, and Buyer shall be solely
responsible for any salaries and other compensation which will or may become
payable to any Transferred Employee in respect of any period on and after the
Closing Date.
(d) Buyer and Seller agree that, pursuant to the "Alternative Procedure"
provided in Section 5 of the Revenue Procedure 87-77, 1984-2 C.B. 753, (i)
Seller and Buyer shall report on a predecessor/successor basis as set forth
therein, (ii) Seller shall be relieved from filing a Form W-2 with respect to
any employee of Seller who becomes employed by Buyer, and (iii) Buyer shall
undertake to file a W-2 for each such employee for the year that includes the
Closing Date (including the portion of such year that such employee was
employed by the Seller). Seller agrees to provide Buyer with all payroll and
employment related information with respect to each employee of Seller who
becomes employed by Buyer pursuant to this Agreement.
(e) Buyer agrees to prepare for Seller and, where permitted, to file on
Seller's behalf, any federal, state or local employment-related tax reports or
information reports (including Internal Revenue Service Form W-2, W-3, 940,
941, 1042, 1042S, 1096 and 1099) that Seller may be required to file following
the Closing Date (but that were not due to be filed on or prior to the Closing
</page>
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Date) for each employee of Seller who becomes employed by Buyer pursuant to
this Agreement with respect to any employment period on or before the Closing
Date.
(f) For purposes of determining the amount of any entitlement of any
Transferred Employee under Buyer's vacation policy, Buyer will take into
account and credit such Transferred Employee's length of service with Seller
as well as with Buyer, and Buyer will also assume responsibility for the
accrued but unused vacation of all Transferred Employees. Seller shall make
reasonable efforts to require Transferred Employees to use their vacation time
for 1994 prior to the Closing Date in accordance with current Station policy,
which does not allow the accrual of unused vacation time from one year to the
next. In any event, however, as part of the proration process described in
Section 5.1, Seller shall make a payment to Buyer equal to the value of the
unused vacation entitlements of the Transferred Employees. Buyer shall not
assume any obligations under Seller's sick leave or severance policies, except
for such obligations set forth in written Contracts being assumed by Buyer.
(g) No provisions of this Agreement shall create any third party
beneficiary rights of any employee or former employee (including any
beneficiary or dependent thereof) of Seller in respect of continued employment
(or resumed employment) with Seller or with Buyer.
(h) Seller shall cooperate with Buyer in all reasonable respects in
connection with Buyer's employment of the Transferred Employees. Without
limiting the generality of the foregoing, for a period commencing on the date
of this Agreement and ending two (2) years following the Closing Date, neither
Seller nor any of its Affiliates shall directly or indirectly, through any
agent, on behalf of another company or otherwise, solicit the employment of or
hire any Transferred Employees.
10.6. Risk of Loss. The risk of loss or damage to the Station Assets
prior to the Effective Time shall be upon Seller. Seller shall repair,
replace and restore any damaged or lost Station Asset to its prior condition
as soon as possible and in no event later than the Effective Time; provided,
however, that Seller shall have no obligation to repair, replace or restore a
damaged or lost Station Asset that is obsolete if no replacement asset is
necessary or useful for the continued operation of the Station consistent with
past practice. If Seller is unable or fails to restore or replace a lost or
damaged Station Asset prior to the Closing and the cost of such restoration or
replacement would exceed Five Hundred Thousand Dollars ($500,000), Buyer may
elect (a) to terminate this Agreement pursuant to Article 17 hereof, (b) to
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consummate the transactions contemplated by this Agreement on the Closing
Date, in which event Seller shall assign to Buyer at Closing Seller's rights
under any insurance policy or pay over to Buyer all proceeds of insurance
covering such Station Asset's damage, destruction or loss, or (c) delay the
Closing Date until a date within fifteen (15) days after Seller gives written
notice to Buyer of completion of the restoration or replacement of such
Station Asset. If Seller is unable or fails to restore or replace any lost or
damaged Station Asset prior to the Closing Date and the cost of such
restoration or replacement would be Five Hundred Thousand Dollars ($500,000)
or less, Seller shall reimburse Buyer for the cost of restoration or
replacement of such asset. If the delay in the Closing Date under this
Section would cause the Closing to fall at any time after the period permitted
by the FCC Consent, Seller and Buyer shall file an appropriate request with
the FCC for an extension of time within which to complete the Closing.
10.7. Reversal Agreement. In the event that the Closing occurs prior
to the FCC Consent becoming a Final Order, at the Closing, Seller and Buyer
each shall execute and deliver, and Seller shall cause Seller's Shareholder to
execute and deliver, the Reversal Agreement.
10.8. Closing Covenant. On the Closing Date, Seller shall transfer,
convey, assign and deliver to Buyer the Station Assets as provided in Article
1 of this Agreement, and Buyer shall deliver to Seller the Purchase Price as
provided in Section 2.1 of this Agreement.
ARTICLE 11
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
11.1. Representations, Warranties and Covenants.
(a) All representations and warranties of Seller made in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date, except for changes in the
representations and warranties set forth in Section 7.8(a) to the extent
consistent with Section 9.1.
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(b) All of the terms, covenants and conditions to be complied with and
performed by Seller on or prior to Closing Date shall have been complied with
or performed in all material respects.
11.2. Governmental Consents. The conditions specified in Article 4 of
this Agreement shall have been satisfied, and the FCC Consent shall have
become a Final Order; provided, that the requirement that the FCC Consent
shall have become a Final Order shall not apply if no issues have been raised
before or by the FCC, by petition to deny, informal objection, or otherwise,
about the qualifications of Seller to be an FCC licensee.
11.3. Third-Party Consents. Seller shall have obtained and shall have
delivered to Buyer all third-party consents that may be required for
assignment of the Contracts identified on Schedule 1.2(d) with an asterisk as
a material contract, without any condition adverse to Buyer.
11.4. Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered
against, any party hereto that Buyer in good faith, based upon a written
opinion of counsel, believes would render it unlawful, as of the Closing Date,
to effect the transactions contemplated by this Agreement in accordance with
its terms.
11.5. Deliveries. Seller shall have made or stand willing to make all
the deliveries required under Section 13.1.
ARTICLE 12
CONDITIONS PRECEDENT TO SELLER'S OBLIGATION TO CLOSE
The obligations of Seller hereunder are, at its option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
12.1. Representations, Warranties and Covenants.
(a) All representations and warranties made by Buyer in this Agreement
shall be true and complete in all material respects on and as of the Closing
Date as if made on and as of that date.
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(b) All the terms, covenants and conditions to be complied with and
performed by Buyer under this Agreement on or prior to the Closing Date shall
have been complied with or performed in all material respects.
12.2. Governmental Consents. The conditions specified in Article 4 of
this Agreement shall have been satisfied.
12.3. Adverse Proceedings. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto that Seller in good faith, based upon a written opinion of
counsel, believes would render it unlawful, as of the Closing Date, to effect
the transactions contemplated by this Agreement in accordance with its terms.
12.4. Deliveries. Buyer shall have made or stand willing to make all
the deliveries required under Section 13.2.
ARTICLE 13
DOCUMENTS TO BE DELIVERED AT THE CLOSING
13.1. Documents to be Delivered by Seller. At the Closing, Seller shall
deliver to Buyer the following:
(a) a certificate of an officer of Seller, dated the
Closing Date, in form and substance reasonably satisfactory to Buyer,
certifying to the fulfillment of the conditions set forth in Sections
11.1 through 11.5 hereof;
(b) instruments of conveyance and transfer, in form and
substance reasonably satisfactory to counsel to Buyer, effecting the
sale, transfer, assignment and conveyance of the Station Assets to
Buyer, including, but not limited to, the following:
(i) assignments of the Station Licenses;
(ii) bills of sale for all Personal Property;
(iii) assignments of the Contracts; and
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(iv) assignments of all intangible personal property
including all books, records, logs and similar assets;
(c) the Reversal Agreement duly executed by Seller and Seller's
Shareholder unless at the time of Closing the FCC Consent shall have
become a Final Order;
(d) resolutions of the board of directors and shareholders
of Seller, authorizing the execution, delivery and performance of this
Agreement, certified by the secretary of the Seller;
(e) an opinion of Seller's counsel, dated the Closing Date,
substantially in the form of Exhibit A; and
(f) such other documents as may reasonably be requested by
Buyer's counsel.
13.2. Documents to be Delivered by Buyer. At the Closing, Buyer shall
deliver to Seller the following:
(a) a certificate of an officer of Buyer, dated the Closing Date, in
form and substance reasonably satisfactory to Seller, certifying to the
fulfillment of the conditions specified in Sections 12.1 through 12.4 hereof;
(b) resolutions of the board of directors and shareholders of Buyer,
authorizing the execution, delivery and performance of this Agreement,
certified by the secretary of the Buyer;
(c) instruments, in form and substance reasonably satisfactory to Seller
and its counsel, pursuant to which Buyer assumes obligations, liabilities and
commitments as provided in Article 3;
(d) the Reversal Agreement duly executed by Buyer unless at the time of
Closing the FCC Consent shall have become a Final Order;
(e) opinions of Buyer's counsel, dated the Closing Date, substantially
in the form of Exhibit B;
_________
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(f) immediately available wire-transferred federal funds as provided in
Section 2.1; and
(g) such other documents as may reasonably be requested by Seller's
counsel.
ARTICLE 14
TRANSFER TAXES; FEES AND EXPENSES
14.1. Transfer Taxes and Similar Charges. Except as set forth in
Sections 14.2 and 14.3 hereof, all costs of transferring the Station Assets in
accordance with this Agreement, including recordation, transfer and
documentary taxes and fees, and any excise, sales or use taxes, shall be borne
by Seller.
14.2. Governmental Filing or Grant Fees. Any filing or grant fees
imposed by any governmental authority, the consent of which is required for
the transactions contemplated hereby, including all filing fees incurred
pursuant to Article 4, shall be borne equally by Buyer and Seller.
14.3. Expenses. Each party hereto shall be solely responsible for and
shall pay all costs and expenses incurred by it in connection with the
negotiation, preparation and performance of and compliance with the terms of
this Agreement.
ARTICLE 15
BROKER'S COMMISSION OR FINDER'S FEE
15.1. Buyer's Representation and Agreement to Indemnify. Buyer
represents and warrants to Seller that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor have they or any person or entity acting on their behalf
taken any action on which a claim for any such payment could be based. Buyer
further agrees to indemnify and hold Seller harmless from and against any and
all claims, losses, liabilities and expenses (including reasonable attorneys'
fees) arising out of a claim by any person or entity based on any such
arrangement or agreement made or alleged to have been made by Buyer.
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15.2. Seller's Representation and Agreement to Indemnify. Seller
represents and warrants to Buyer that, except for Seller's agreement with Star
Media Group, Inc., neither it nor any person or entity acting on its behalf
has agreed to pay a commission, finder's fee or similar payment in connection
with this Agreement or any matter related hereto to any person or entity, nor
have they or any person or entity acting on their behalf taken any action on
which a claim for any such payment could be based. Seller agrees that it shall
be solely responsible for the payment of any fee due to Star Media Group, Inc.
Seller further agrees to indemnify and hold Buyer harmless from and against
any and all claims, losses, liabilities and expenses (including reasonable
attorneys' fees) arising out of a claim by any person or entity based on any
such arrangement or agreement made or alleged to have been made by Seller.
ARTICLE 16
INDEMNIFICATION; SURVIVAL
16.1. Indemnification by Seller. Notwithstanding the Closing, Seller
hereby agrees, subject to Section 16.4, to indemnify, defend and hold Buyer
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or
nonfulfillment of any covenant or obligation by Seller contained herein or in
any certificate, document or instrument delivered to Buyer hereunder;
(b) Any and all obligations of Seller not assumed by Buyer pursuant to
the terms of this Agreement;
(c) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station prior to the Effective Time, including
but not limited to any and all liabilities arising under the Station Licenses
or the Contracts which relate to events occurring prior to the Effective Time;
(d) Any and all losses, liabilities or damages resulting from any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated by this Agreement;
(e) Any and all losses, liabilities or damages resulting from the
litigation listed on Schedule 7.10;
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(f) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(g) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Buyer, which such interest shall accrue (i) in the case of a
reimbursable expense, from the date of payment of such expense by Buyer, and
(ii) in the case of any other losses, from the date of the incurrence of such
loss by Buyer, until in either case the date of reimbursement by Seller.
16.2. Indemnification by Buyer. Notwithstanding the Closing, Buyer
hereby agrees, subject to Section 16.4, to indemnify and hold the Seller
harmless against and with respect to, and shall reimburse the Seller for:
(a) Any and all losses, direct or indirect, liabilities, or damages
resulting from any untrue representation, breach of warranty, or
nonfulfillment of any covenant or obligation by Buyer contained herein or in
any certificate, document or instrument delivered to Seller hereunder;
(b) Any and all losses, liabilities or damages resulting from the
operation or ownership of the Station by Buyer on and after the Effective
Time, including but not limited to any and all liabilities arising under the
Station Licenses or the Contracts assigned to Buyer which relate to events
occurring after the Effective Time;
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees
and expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity, subject to the notice and opportunity to remedy
requirements of Section 16.3 hereof; and
(d) Interest at the Prime Rate on any reimbursable expense or loss
incurred by Seller, which such interest shall accrue (i) in the case of a
reimbursable expense, from the date of payment of such expense by Seller, and
(ii) in the case of any other losses, from the date of incurrence of such loss
by Seller, until in either case the date of reimbursement by Buyer.
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16.3. Procedure for Indemnification. The procedure for indemnification
shall be as follows:
(a) The party seeking indemnification under this Article 16 (the
"Claimant") shall give notice to the party from whom indemnification is sought
(the "Indemnitor") of any claim, whether solely between the parties or brought
by a third party, specifying (i) the factual basis for the claim, and (ii) the
amount of the claim. If the claim relates to an action, suit or proceeding
filed by a third party against Claimant, notice shall be given by Claimant
within fifteen (15) business days after written notice of the action, suit or
proceeding was given to Claimant. In all other circumstances, notice shall be
given by Claimant within thirty (30) business days after Claimant becomes, or
should have become, aware of the facts giving rise to the claim.
Notwithstanding the foregoing, Claimant's failure to give Indemnitor timely
notice shall not preclude Claimant from seeking indemnification from
Indemnitor except to the extent that Claimant's failure has materially
prejudiced Indemnitor's ability to defend the claim or litigation.
(b) With respect to claims between the parties, following receipt of
notice from the Claimant of a claim, the Indemnitor shall have thirty (30)
business days to make any investigation of the claim that the Indemnitor deems
necessary or desirable. For the purposes of this investigation, the Claimant
agrees to make available to the Indemnitor and/or its authorized
representatives the information relied upon by the Claimant to substantiate
the claim. If the Claimant and the Indemnitor cannot agree as to the validity
and amount of the claim within the 30-day period (or any mutually agreed upon
extension thereof), the Claimant may seek appropriate legal remedy.
(c) With respect to any claim by a third party as to which the Claimant
is entitled to indemnification hereunder, the Indemnitor shall have the right
at its own expense to participate in or assume control of the defense of the
claim, and the Claimant shall cooperate fully with the Indemnitor, subject to
reimbursement for actual out-of-pocket expenses incurred by the Claimant as
the result of a request by the Indemnitor. If the Indemnitor elects to assume
control of the defense of any third-party claim, the Claimant shall have the
right to participate in the defense of the claim as its own expense. If the
Indemnitor does not elect to assume control or otherwise participate in the
defense of any third party claim, Claimant may, but shall have no obligation
to, defend or settle such claim or litigation in such manner as it deems
appropriate, and in any event Indemnitor shall be bound by the results
obtained by the Claimant with respect to the claim (by default or otherwise)
and shall promptly reimburse Claimant for the amount of all expenses
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(including the amount of any judgment rendered), legal or otherwise, incurred
in connection with such claim or litigation. The Indemnitor shall be
subrogated to all rights of the Claimant against any third party with respect
to any claim for which indemnity was paid.
16.4. Limitations. Neither Seller nor Buyer shall have any obligation
to the other party for any matter described in Section 16.1 or Section 16.2,
as the case may be, except upon compliance by the other party with the
provisions of this Article 16, particularly Section 16.3. Neither party shall
be required to indemnify the other party under this Article 16 for any breach
of any representation or warranty contained in this Agreement unless (a)
written notice of a claim under this Article 16 was received by the party
within the pertinent survival period specified in Section 16.5, and (b) unless
the aggregate amount of all claims against the party to which the other party
(as a Claimant) is entitled to be indemnified exceeds Fifty Thousand Dollars
($50,000), in which case such party's responsibility to indemnify shall extend
to all claims including the $50,000 "basket" amount. The foregoing $50,000
"basket" amount shall not be applicable to any indemnification obligations
resulting from or for third party claims. Except in connection with
indemnification of third party claims, neither party shall have any liability
to the other party under any circumstances for punitive or exemplary damages.
16.5. Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, indemnities and agreements contained
in this Agreement or in any certificate, document or instrument delivered
pursuant to this Agreement are and will be deemed and construed to be
continuing representations, warranties, covenants, indemnities and agreements
and shall survive the Closing for a period of one (1) year after the Closing
Date, except for (a) agreements under Section 10.4 of this Agreement, which
shall survive the Closing indefinitely, and (b) indemnification obligations
resulting from or for third party claims, which shall survive the Closing for
a period of one (1) month after the last day of the longest applicable
statutory limitation period. No claim may be brought under this Agreement or
any other certificate, document or instrument delivered pursuant to this
Agreement unless written notice describing in reasonable detail the nature and
basis of such claim is given on or prior to the last day of the applicable
survival period. In the event such a notice is given, the right to
indemnification with respect thereto shall survive the applicable survival
period until such claim is finally resolved and any obligations thereto are
fully satisfied. Any investigation by or on behalf of any party hereto shall
</page>
<PAGE>
-37-
not constitute a waiver as to enforcement of any representation, warranty,
covenant or agreement contained herein.
ARTICLE 17
TERMINATION RIGHTS
17.1. Termination.
(a) This Agreement may be terminated by either Buyer or Seller, if the
party seeking to terminate is not in material default or breach of this
Agreement, upon written notice to the other upon the occurrence of any of the
following:
(i) if, on or prior to the Closing Date, the other party
defaults in any material respect in the observance or in the due and
timely performance of any of its covenants or agreements contained
herein;
(ii) if the FCC denies the FCC Application or any part
thereof or designates any part of it for a trial-type hearing;
(iii) if there shall be in effect any judgment, final
decree or order that would prevent or make unlawful the Closing; or
(iv) if the Closing has not occurred by June 15, 1995,
unless the delay in the Closing results from an election under Section
10.6 (Risk of Loss) to defer the Closing.
(b) This Agreement may be terminated by Buyer, upon written notice to
Seller,
(i) if Buyer elects to terminate pursuant to Section 10.6
(Risk of Loss) or Section 9.8 (Environmental Audit); or
(ii) if the broadcast transmission of the Station from
its main broadcasting antenna at full authorized power is interrupted
or impaired between the hours of 6 a.m. - midnight for a period of
more than thirty-six (36) consecutive hours or for an aggregate of
seventy-two (72) hours in any seven (7) day period, provided that this
Agreement may not be terminated by Buyer if the interruption or
</page>
<PAGE>
-38-
impairment is caused by an Act of God and the Station is able to
resume service within the above time frames with the Station's
auxiliary antenna.
17.2. Liability. The termination of this Agreement under Section 17.1
hereof shall not relieve any party of any liability for breach of this
Agreement prior to the date of termination.
ARTICLE 18
REMEDIES UPON DEFAULT
18.1. Default by Seller. Seller recognizes that, in the event Seller
defaults in the performance of its obligations under this Agreement prior to
or at the Closing, monetary damages alone will not be adequate. Buyer shall
therefore be entitled in such event to obtain specific performance of the
terms of this Agreement and, in addition, to obtain money or other damages
arising from Seller's default to the extent not cured by Seller's specific
performance, provided that in the event that Buyer obtains Seller's specific
performance, the total amount of additional damages recoverable by Buyer under
this Section 18.1 shall not exceed One Million Dollars ($1,000,000). In the
event, however, that Buyer is unable to obtain Seller's specific performance,
Buyer shall be entitled to recover money or other damages resulting from
Seller's default (including costs and expenses incurred by Buyer in the
preparation and negotiation of this Agreement and in contemplation of the
Closing hereunder), provided that the total amount of damages recoverable by
Buyer under this Section 18.1 in such circumstances shall not exceed Five
Million Dollars ($5,000,000). In any action to enforce the provisions of this
Agreement, Seller shall waive the defense that there is an adequate remedy at
law or equity and agree that Buyer shall have the right to obtain specific
performance of the terms of this Agreement without being required to prove
actual damages, post bond or furnish other security. In addition, Buyer shall
be entitled to obtain from Seller court costs and reasonable attorneys' fees
incurred by it in enforcing its rights hereunder, plus interest at the Prime
Rate on the amount of any judgment obtained against Seller from the date of
default until the date of payment of the judgment. As a condition to seeking
specific performance, Buyer shall not be required to have tendered the
Purchase Price specified in Section 2.1 of this Agreement, but shall be ready,
willing and able to do so and to perform its other closing obligations in all
material respects. In no circumstances shall Buyer be entitled to recover
punitive or exemplary damages.
</page>
<PAGE>
-39-
18.2. Default by Buyer. If the transactions contemplated by this
Agreement are not consummated as a result of Buyer's wrongful failure to close
hereunder, and Seller is not also in material breach hereunder, Seller shall
be entitled to payment of Two Million Five Hundred Thousand Dollars
($2,500,000) as liquidated damages in full settlement of any damages of any
nature or kind that Seller may suffer or allege to suffer as the result
thereof. It is understood and agreed that the amount of liquidated damages
represents Buyer's and Seller's reasonable estimate of actual damages and does
not constitute a penalty. Recovery of liquidated damages under this Section
18.2 shall be the sole and exclusive remedy of Seller against Buyer for breach
of or failure to consummate this Agreement and shall be applicable regardless
of the actual amount of damages sustained. In addition, Seller shall be
entitled to obtain from Buyer court costs and reasonable attorneys' fees
incurred by it in enforcing its rights hereunder, plus interest at the Prime
Rate on the amount of any judgment obtained against Buyer from the date of
default until the date of payment of the judgment. As a condition to
obtaining liquidated damages, Seller shall not be required to have tendered
the Station Assets but shall be required to demonstrate that it is willing and
able to do so and to perform its other closing obligations in all material
respects.
ARTICLE 19
OTHER PROVISIONS
19.1. Publicity. Except as required by applicable law or with the other
party's express written consent, no party to this Agreement nor any affiliate
of any party shall issue any press release or make any public statement (oral
or written) regarding the transactions contemplated by this Agreement.
19.2. Benefit and Assignment. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor Seller may assign this Agreement
without the prior written consent of the other parties hereto except that
Buyer may assign its rights (but not its obligations) under this Agreement to
an Affiliate of Buyer.
19.3. Entire Agreement. This Agreement and the exhibits and schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings
relating to the matters provided for herein. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
</page>
<PAGE>
-40-
Agreement shall be effective unless evidenced by an instrument in writing
signed by the party against whom enforcement of any waiver, amendment, change,
extension or discharge is sought.
19.4. Headings. The headings set forth in this Agreement are for
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
19.5. Computation of Time. If after making computations of time
provided for in this Agreement, a time for action or notice falls on Saturday,
Sunday or a Federal holiday, then such time shall be extended to the next
business day.
19.6. Governing 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 law.
19.7. Notices. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, addressed
to the following addresses, or to such other address as any party may request
in writing.
If to Seller:
TK Communications, Inc.
110 Southeast Sixth Street
Suite 1601
Ft. Lauderdale, Florida 33301
Attention: Mr. John F. Tenaglia
Telephone: 305-525-8500
Facsimile: 305-462-4949
With a copy to:
Dow, Lohnes & Albertson
1255 23rd Street, N.W.
Suite 500
Washington, D.C. 20037
Attention: Thomas J. Hutton, Esq.
Telephone: 202-857-2738
Facsimile: 202-857-2900
</page>
<PAGE>
-41-
If to Buyer:
Infinity Broadcasting Corporation of Dallas
600 Madison Avenue
New York, New York 10022
Attention: Mr. Mel Karmazin
Telephone: 212-750-6400
Facsimile: 212-888-2959
With a copy to:
Leventhal, Senter & Lerman
2000 K Street, N.W.
Suite 600
Washington, D.C. 20006-1809
Attention: Steven A. Lerman, Esq.
Telephone: 202-429-8970
Facsimile: 202-293-7783
Any such notice, demand or request shall be deemed to have been duly delivered
and received (i) on the date of personal delivery, or (ii) on the date of
transmission, if sent by facsimile (but only if a hard copy is also sent by
overnight courier), or (iii) on the date of receipt, if mailed by registered
or certified mail, postage prepaid and return receipt requested, or (iv) on
the date of a signed receipt, if sent by an overnight delivery service, but
only if sent in the same manner to all persons entitled to receive notice or a
copy.
19.8. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.
19.9. Further Assurances. Seller shall at any time and from time to
time after the Closing execute and deliver to Buyer such further conveyances,
assignments and other written assurances as Buyer may reasonably request in
order to vest and confirm in Buyer (or their assignees) the title and rights
to and in all of the Station Assets to be and intended to be transferred,
assigned and conveyed hereunder.
</page>
<PAGE>
-42-
ARTICLE 20
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined).
"Accounts Receivable" shall have the meaning set forth in Section
1.3(c).
"Affiliate" shall mean any person or entity that is controlling,
controlled by or under common control with the named person or entity.
"Agreement" shall mean this Asset Purchase Agreement, including the
exhibits and schedules hereto.
"Asbestos" shall mean any and all varieties of materials included in the
definition of "asbestos" under any federal or state law or regulation relating
to the protection of human health or the environment.
"Asbestos-Containing Material" shall mean any material containing more
than one (1) percent Asbestos by weight.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Buyer's Proration Amount" shall have the meaning set forth in Section
5.3.
"Business Day," whether or not capitalized, shall mean every day of the
week excluding Saturdays, Sundays and Federal holidays.
"Claimant" shall have the meaning set forth in Section 16.3(a).
"Closing" shall have the meaning set forth in Section 1.1 hereof.
"Closing Date" shall mean the date on which the Closing is completed.
"Collection Period" shall have the meaning set forth in Section 5.4
hereof.
</page>
<PAGE>
-43-
"Contracts" shall mean any and all of the contracts, agreements
(including Time Sales Agreements, Trade Agreements, and employment
agreements), leases, commitments and understandings, options, rights and
interests, written or oral, of Seller or to which Seller is a party, relating
to the conduct of the business and operations of the Station.
"Effective Time" shall mean 12:01 a.m., Washington, D.C. time, on the
Closing Date.
"Environmental Laws" shall mean all applicable local, state and federal
statutes and regulations relating to the protection of human health or the
environment including the FCC's regulations concerning radio frequency
radiation.
"ERISA" shall have the meaning set forth in Section 7.8(c).
"FCC" shall mean the Federal Communications Commission.
"FCC Application" shall mean the application or applications that Seller
and Buyer must file with the FCC requesting its consent to the assignment of
the Station Licenses.
"FCC Consent" shall mean the action by the FCC granting the FCC
Application.
"Final Order" shall mean action by the FCC (i) which has not been
vacated, reversed, stayed, set aside, annulled or suspended, (ii) with respect
to which no timely appeal, request for stay or petition for rehearing,
reconsideration or review by any party or by the FCC on its own motion, is
pending, and (iii) as to which the time for filing any such appeal, request,
petition, or similar document or for the reconsideration or review by the FCC
on its own motion under the Communications Act of 1934, as amended, and the
rules and regulations of the Commission, has expired.
"Financial Statements" shall mean (i) the unaudited balance sheet for
the Station as of December 31, 1993, and the related statements of income and
expenses of the Station for the fiscal year then ended (including the notes to
such financial statements), (ii) the unaudited monthly balance sheets and
related statements of income and expenses of the Station for the months of
January through July 1994, and (iii) the financial statements to be furnished
pursuant to Section 9.4.
</page>
<PAGE>
-44-
"GAAP" shall mean generally accepted accounting principles, consistently
applied.
"Hazardous Substance" shall mean any and all hazardous or toxic
substances, materials or wastes as defined or listed under the Resource
Conservation and Recovery Act, the Toxic Substances Control Act, the
Comprehensive Environmental Response, Compensation and Liability Act or any
comparable state statute or any regulation promulgated under any of such
federal or state statutes. "Hazardous Substance" shall not include ordinary
quantities of consumer or commercial products used in the normal course of
broadcast station operations, including grounds and building operation and
maintenance; provided, that such products have been properly stored, handled
and disposed of in accordance with applicable law.
"HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the regulations adopted thereunder.
"Indemnitor" shall have the meaning set forth in Section 16.3(a).
"Intellectual Property" shall have the meaning set forth in Section 7.9.
"Liens" shall mean mortgages, deeds of trust, liens, pledges, collateral
assignments, security interests, leases, subleases, conditional sales
agreements, encumbrances or other defects of title.
"1994 Budget" shall have the meaning set forth in Section 7.13(b).
"Notice of Disagreement" shall have the meaning set forth in Section 5.3.
"PCB" shall mean polychlorinated biphenyl.
"Permitted Liens" shall mean (i) Liens on account of taxes or other
governmental charges that are not yet due and payable or that are being
contested in good faith by appropriate proceedings, and (ii) other Liens
imposed by law (such as materialmen's, mechanics', carriers', workmen's and
repairmen's Liens) arising in the ordinary course of business, provided that
the amounts secured by such Liens are prorated between Buyer and Seller under
Section 5.1 and do or will not interfere in any material respect with Buyer's
use of the Station Assets.
</page>
<PAGE>
-45-
"Personal Property" shall have the meaning set forth in Section 7.6.
"Prime Rate" shall mean a per annum rate equal to the "prime rate" as
published in the Money Rates column of the Eastern Edition of The Wall Street
Journal (or the average of such rates if more than one rate is indicated).
"Proration Schedule" shall have the meaning set forth in Section 5.3.
"Purchase Price" shall have the meaning set forth in Section 2.1.
"Real Property" shall have the meaning set forth in Section 7.5(a).
"Receivable Statement" shall have the meaning set forth in Section 5.4.
"Referee" shall have the meaning set forth in Section 5.3.
"Reversal Agreement" shall mean the Reversal Agreement among Seller, the
Seller's Shareholders and Buyer substantially in the form of Exhibit C to this
Agreement.
"Seller" shall have the meaning set forth in the preamble to this
Agreement.
"Seller's Knowledge" shall mean the knowledge of any one or more of the
following persons: any officer or director of Seller or the general manager
or chief engineer of the Station.
"Seller's Shareholder" shall mean John Tenaglia.
"Station" shall have the meaning set forth in the Recitals to this
Agreement.
"Station Assets" shall have the meaning set forth in Section 1.2.
"Station Licenses" shall mean the licenses, permits and other
authorizations, including any temporary waiver or special temporary
</page>
<PAGE>
-46-
authorization, issued by the FCC to Seller in connection with the conduct of
the business and operation of the Station.
"Time Sales Agreements" shall mean contracts entered into in the
ordinary course of business of the Station for the sale or sponsorship of
broadcast time on the Station for cash.
"Trade Agreements" shall mean Contracts for the sale of advertising time
for consideration other than cash.
"Transferred Employees" shall have the meaning set forth in Section
10.5.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the date first written above.
SELLER:
TK COMMUNICATIONS, INC.
By:
_____________________________________
Name:
______________________________
Title:
_____________________________
BUYER:
INFINITY BROADCASTING CORPORATION OF DALLAS
By:
_____________________________________
Name:
______________________________
Title:
_____________________________
</page>
<PAGE>
-47-
Infinity Broadcasting Corporation, a Delaware corporation
("Infinity"), hereby unconditionally guarantees to Seller the full payment and
performance of the obligations of Buyer under Section 18.2 (Remedies Upon
Default by Buyer) of this Agreement (the "Obligations"), whether secured or
unsecured (and whether before or after the occurrence of any bankruptcy,
insolvency, reorganization, arrangement, receivership or similar proceeding,
and including, without limitation, all post-petition interest, at the
applicable default rate or rates, whether or not allowed as a claim in any
such proceeding), and all costs and expenses incurred by Seller in enforcing
the Obligations, whether or not suit is instituted. Nothing except the full
performance and indefeasible payments in full, in cash, of the Obligations
shall release Infinity from this guaranty. Infinity represents, warrants and
agrees that: (i) this guaranty is a legal, valid and binding obligation of
Infinity, enforceable in accordance with its terms, except as limited by laws
affecting creditors' rights or equitable principles generally; (ii) Infinity
has all necessary power and authority to enter into and perform this guaranty;
(iii) this guaranty does not conflict with, constitute grounds for termination
of or result in a breach of the terms, conditions or provisions of, or
constitute a default under any agreement, instrument, license or permit to
which Infinity is subject; and (iv) Infinity's execution, delivery and
performance of this guaranty has been duly authorized by all necessary action
on its part.
INFINITY BROADCASTING CORPORATION
By:
___________________________________
Name:
____________________________
Title:
___________________________
</page>
<PAGE>
EXHIBIT A
FORM OF OPINION OF SELLER'S COUNSEL
</page>
<PAGE>
FORM OF OPINION OF SELLER'S COUNSEL
[Closing Date]
Infinity Broadcasting Corporation of Dallas
600 Madison Avenue
New York, New York 10022
Attention: Mr. Mel Karmazin
Ladies and Gentlemen:
We have acted as counsel to TK Communications, Inc., a Pennsylvania
corporation ("Seller"), in connection with the negotiation, preparation,
execution and delivery of that certain Asset Purchase Agreement by and between
you and Seller dated as of September , 1994 (the "Agreement"). We are
furnishing this opinion to you pursuant to Section 13.1(e) of the Agreement.
Capitalized terms used herein without specific definition shall have same
meaning as in the Agreement.
In furnishing this opinion, we have made such investigations and have
examined such documents and records as we have deemed relevant and necessary
for purposes of furnishing this opinion. These documents and records include
the following:
(a) the Agreement;
(b) the Schedules to the Agreement;
(c) the Articles of Incorporation and By-Laws of Seller;
(d) the Unanimous Written Consents of the Board of Directors and
Stockholders of Seller; and
(e) certain records of the FCC relating to the Station, as described below.
In our examination, we have assumed the genuineness of all signatures, the
authenticity of all original documents and the conformity to authentic
original documents of all documents that are certified, conformed, or
photocopies. We have also assumed the due authorization, execution, and
delivery of the Agreement by you, and that the Agreement is enforceable
</page>
<PAGE>
Infinity Broadcasting Corporation of Dallas
[Closing Date]
Page -2-
against you in accordance with its terms, and that you are not in material
breach of any of your obligations under the Agreement.
With respect to questions of fact material to the opinions expressed herein,
we have relied solely, without any independent inquiry, verification or
examination by us, upon (a) written and oral statements of officers of Seller,
(b) certificates of certain public officials with respect to the factual
matters stated therein, and (c) our review on , 1994 of the
________________
publicly available files of the FCC in Washington, D.C. No inference as to
our independent knowledge of any other factual matters should be drawn from
our representation of Seller. Where in this opinion the phrase "to our
knowledge," "known to us" or like language is used, it shall mean that we have
relied on the matters set forth in the first sentence of this paragraph and
the actual knowledge of the attorneys in our firm who have substantial
responsibility for Seller's legal matters handled by this firm, and it shall
not include any knowledge of any other attorneys within our firm or any
constructive or imputed notice of any matters or items of information. In
addition, we have assumed that the FCC's publicly available files were
complete and accurately maintained and indexed at the time of their
examination by us.
We have not conducted a field investigation of the assets or business of
Seller, have not undertaken an independent evaluation of the technical aspects
of the operation of such assets or business and have relied on Seller's
description of the Station and its operation. Accordingly, we express no
opinion regarding matters that we would not know about without physically
inspecting the assets or business of the Station and its actual compliance
with legal, regulatory and technical standards which may be applicable.
We are admitted to practice law in the District of Columbia. For purposes of
giving the opinion expressed in paragraph 3, we have assumed with your
permission that the laws of the State of New York are identical in all
respects to the applicable laws of the District of Columbia. We express no
opinion as to matters governed by any laws other than those of the
jurisdiction in which we are admitted to practice, the general corporate law
of the Commonwealth of Pennsylvania, the rules and regulations of the FCC and
the federal laws of the United States of America, insofar as such laws apply.
</page>
<PAGE>
Infinity Broadcasting Corporation of Dallas
[Closing Date]
Page -3-
We express no opinion as to conflicts of law rules or any other laws, rules or
regulations.
On the basis of the foregoing and in reliance thereon, and subject to the
limitations, qualifications and exceptions set forth herein, we are of the
opinion that:
1. Seller is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Pennsylvania, and has all requisite
corporate power and authority to own, lease, and operate its properties, and
to carry on its business as now being conducted and as proposed to be
conducted, and to enter into and perform the Agreement.
2. The Agreement has been duly authorized by all necessary corporate
action on the part of Seller (including all necessary approvals by
shareholders of Seller) and has been executed and delivered by duly authorized
officer of Seller.
3. The Agreement constitutes a legal, valid, and binding obligation of
Seller, enforceable against Seller in accordance with its terms.
4. The execution and delivery by Seller of the Agreement and performance
by Seller of its obligations thereunder, and Seller's consummation of the
transactions contemplated thereby, do not (a) violate, conflict with, or
result in the breach of any provision of the Articles of Incorporation or
By-Laws of Seller; (b) to our knowledge, violate any order, writ, judgment,
injunction, award, decree, rule, regulation, or ruling of an governmental
authority against or binding upon Seller; (c) to our knowledge, violate or
result in the breach of any of the terms of, or constitute (or with notice or
lapse of time or both, constitute) a default under any Agreement, instrument,
license, or permit to which Seller is now subject.
5. To our knowledge, (a) there are no insolvency proceedings of any
character pending or threatened against Seller, including without limitation
bankruptcy, receivership, reorganization, composition or arrangement with
creditors, voluntary or involuntary, and (b) Seller has not made any
assignment for the benefit of creditors, or taken any action in contemplation
</page>
<PAGE>
Infinity Broadcasting Corporation of Dallas
[Closing Date]
Page -4-
of, or which would constitute the basis for, the institution of any insolvency
proceedings.
6. To our knowledge, there is no claim, litigation, proceeding or
governmental investigation pending or threatened, or any order, injunction or
decree outstanding, against the Seller that would prevent the consummation of,
or impair Seller's ability to consummate, the transactions contemplated by the
Agreement.
7. Seller validly holds the Station Licenses listed at Schedule 1.2(a) to
the Agreement pursuant to Final Orders of the FCC. Such Station Licenses are
in full force and effect and are for the full license term customarily issued
to a broadcast radio station licensed within the State of Texas. The Station
Licenses are not subject to any condition except for conditions applicable to
broadcast radio licenses generally or reflected on the face of the copies of
the authorizations delivered by Seller to Buyer pursuant to Section 7.4(a) of
the Agreement. None of the Station Licenses is the subject of a pending
license renewal application. Seller has all necessary authority from the FCC
to use the call sign KLUV-FM. To our knowledge, based solely upon an inquiry
of Seller's officers, the Station Licenses constitute all FCC licenses,
permits and authorizations necessary for Seller's operation of the Station in
the manner in which we have been advised it is currently being operated.
8. The FCC Consent has been granted [and has become a Final Order].
9. To the best of our knowledge, based on inquiry of and representations
made by officers of Seller, an inquiry of lawyers who have substantial
responsibility for Seller's legal matters handled by this firm, and a review
of the public records of the FCC available as of [date]:
(a) there is no unsatisfied adverse FCC order, decree or ruling
outstanding against Seller relating to the Station or any of the Station
Licenses;
(b) there is no proceeding (including any rulemaking proceeding),
complaint or investigation against Seller relating to the Station or any
</page>
<PAGE>
Infinity Broadcasting Corporation of Dallas
[Closing Date]
Page -5-
of the Station Licenses pending or threatened before the FCC (including
any pending judicial review of such an action by the FCC) except for
proceedings affecting the radio broadcast industry generally to which
Seller is not a specific party;
(c) Seller is not a party to any complaint, action or other proceeding at
the FCC relating to the Station or any of the Station Licenses, including
complaints against other licensees or applicants, but excluding
rulemakings of general applicability or other proceedings affecting the
radio broadcast industry generally to which Seller is not a specific
party; and
(d) Schedule 1.2(a) to the Agreement includes all applications of Seller
on behalf of the Station or with respect to the Station Licenses now
pending before the FCC.
With respect to the opinions expressed herein, we advise you that with
respect to the enforceability of the Agreement, (A) such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, and other
similar laws of general application relating to or affecting the rights and
remedies of creditors generally and (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defense and the discretion of any court before which any proceeding therefor
may be brought.
We do not render any opinion with respect to any matter except as
specifically set forth herein. This opinion is being delivered solely to you
and may not be delivered to or relied upon by any other party other than your
lenders in connection with this transaction. This opinion is rendered as of
the date hereof, and we have not undertaken to supplement our opinion with
respect to factual matters or changes in the laws that may hereafter occur.
Very truly yours,
DOW, LOHNES & ALBERTSON
</page>
<PAGE>
EXHIBIT B
FORM OF OPINION OF BUYER'S COUNSEL
</page>
<PAGE>
FORM OF OPINION OF BUYER'S
COUNSEL ON NON-FCC MATTERS
[Closing Date]
TK Communications, Inc.
_________________________
Ladies and Gentlemen:
We have reviewed the Asset Purchase Agreement, dated as of September ___,
1994 (the "Agreement"), by and between TK Communications, Inc., a Pennsylvania
corporation ("Seller"), and Infinity Broadcasting Corporation of Dallas, a
Delaware corporation ("Buyer"). Capitalized terms used in this opinion
without definition have the respective meanings ascribed to them in the
Agreement.
We have also examined and relied upon the representations and warranties
as to factual matters contained in or made pursuant to the Agreement and in
certificates of officers of Buyer and upon the originals, or copies certified
or otherwise identified to our satisfaction, of such records, documents,
certificates and other instruments, and have made such other investigations,
as in our judgment are necessary or appropriate to enable us to render the
opinion expressed below.
Based upon the foregoing, we are of the following opinion:
1. Buyer is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware and has all requisite
corporate power and authority to own and operate its properties, to carry on
its business as now conducted and to enter into and perform the Agreement.
2. The Agreement has been duly authorized by all necessary corporate action
on the part of Buyer. The Agreement has been duly executed and delivered by
Buyer.
3. The Agreement constitutes the legal, valid and binding obligation of
Buyer enforceable against it in accordance with its terms, except that such
enforceability may be limited by applicable bankruptcy, insolvency,
</page>
<PAGE>
TK Communications, Inc.
[Closing Date]
Page -2-
reorganization, moratorium and similar laws of general application relating to
or affecting the rights and remedies of creditors and the application of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4. The execution and delivery by Buyer of the Agreement and the performance
by Buyer of its obligations thereunder will not (a) violate, conflict with, or
result in the breach of any provision of the certificate of incorporation or
by-laws of Buyer; (b) to our knowledge, violate any order, writ, judgment,
injunction, award, decree, rule, regulation or ruling of any governmental
authority against or binding upon Buyer; (c) to our knowledge, violate or
result in the breach of any of the terms of, or constitute (or with notice or
lapse of time or both, would constitute) a default under any material
agreement, instrument, license or permit to which Buyer is now a party, except
for any such violation, conflict, breach or default that would not reasonably
be expected to have a material adverse effect on Buyer's ability to consummate
the transactions contemplated by the Agreement.
5. To our knowledge, (a) there are no insolvency proceedings of any
character pending against Buyer, including, without limitation, proceedings
relating to bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, and (b) Buyer has not
made any assignment for the benefit of creditors, or taken any formal
corporate action in contemplation of the institution of any insolvency
proceedings.
6. To our knowledge, there is no claim, litigation, proceeding or
governmental investigation pending or threatened, or any order, injunction or
decree outstanding, against Buyer or any of its affiliates that would prevent
the consummation of, or materially impair Buyer's ability to consummate, the
transactions contemplated by the Agreement, except that we express no opinion
as to any proceedings that may be pending or threatened by or before the
Federal Communications Commission.
For the purposes of giving the opinions expressed in paragraphs 5 and 6,
we have relied exclusively on a certificate of an officer of Buyer.
</page>
<PAGE>
TK Communications, Inc.
[Closing Date]
Page -3-
We express no opinion in this letter as to the law of any jurisdiction
other than the federal law of the United States (excluding the Communications
Act of 1934, as amended, the rules and regulations promulgated thereunder, and
actions and decisions of the Federal Communications Commission taken in
accordance therewith), the law of the State of New York and the General
Corporation Law of the State of Delaware.
We are delivering this opinion to you pursuant to Section 13.2(e) of the
Agreement, and no persons other than you are entitled to rely on this opinion.
Very truly yours,
</page>
<PAGE>
FORM OF OPINION OF BUYER'S COUNSEL ON FCC MATTERS
[Closing Date]
TK Communications, Inc.
_______________________
_______________________
Ladies and Gentlemen:
We have acted as counsel to Infinity Broadcasting Corporation of Dallas, a
Delaware corporation ("Buyer"), in connection with the negotiation,
preparation, execution and delivery of that certain Asset Purchase Agreement
by and between you and Buyer dated as of September ___, 1994 (the
"Agreement"). We are furnishing this opinion to your pursuant to Section
13.2(d) of the Agreement. Except as otherwise specified herein, capitalized
terms used herein which are defined in the Agreement shall have the same
meanings herein as therein.
In connection with this opinion, we have assumed the genuineness of
signatures on documents, the conformity to the originals of all copies
examined by or submitted to us as photocopies or conformed copies, and the
authenticity of the originals of such latter documents. As to questions of
fact in connection with this opinion, we have relied upon an examination of
our own files and records and examination of the public records of the FCC
available as of __________ ____, 199__. We have also relied upon
representations made by Buyers to the FCC and upon certificates of fact of
officers of Buyers as we have deemed necessary. As used herein, the term "to
our knowledge" shall mean to our actual knowledge without further
investigation other than described in this paragraph. You should be aware
that records of the FCC that are public as a matter of law may not be publicly
available as a matter of fact. Furthermore, there may be records of matters
pending at the FCC that are not available for inspection by the public as a
matter of law.
This opinion is limited to matters arising under the Federal Communications
Act of 1934, as amended (the "Act"), and the rules, regulations and published
policies of the FCC, and we express no opinion as to any other laws except as
specifically stated herein.
</page>
<PAGE>
TK Communications, Inc.
[Closing Date]
Page -2-
1. Based upon and subject to the foregoing and to the further limitations
set forth hereinafter, we are of the opinion that the FCC Consent has been
granted [and has become a Final Order].
2. To our knowledge, there is no claim, litigation, proceeding or
governmental investigation pending or threatened, or any order, injunction or
decree outstanding, against Buyer that would prevent the consummation of, or
impair Buyer's ability to consummate the transactions contemplated by the
Agreement.
The opinion set forth above is as of the date hereof. We assume no
obligation to advise you of changes which may thereafter be brought to our
attention. Our opinion is based on statutory laws, agency rules, regulations
and policies, and judicial decisions that are effective on the date hereof,
and we do not opine with respect to any law, regulation, rule or governmental
policy which may be enacted or adopted after the date hereof, nor do we assume
any responsibility to advise you of future changes in our opinion.
This opinion is delivered solely to you and is solely for your benefit in
connection with the above transaction. This opinion may not be quoted or
relied upon for any purpose by any person other than the addressee hereof.
Very truly yours,
LEVENTHAL, SENTER & LERMAN
By ______________________
A Partner
</page>
<PAGE>
EXHIBIT C
FORM OF REVERSAL AGREEMENT
REVERSAL AGREEMENT
This Reversal Agreement ("Agreement"), dated as of [the Closing Date],
is by and among TK Communications, Inc., a Pennsylvania corporation
("Seller"), John F. Tenaglia ("Seller's Shareholder"), and Infinity
Broadcasting Corporation of Dallas, a Delaware corporation ("Buyer"), and is
made with reference to that certain Asset Purchase Agreement dated as of
September ___ , 1994 (the "Purchase Agreement"), by and between Buyer and
Seller.
The Purchase Agreement provides for the sale of FM radio broadcast
station KLUV-FM, Dallas, Texas (the "Station"). On ______________, 199___,
the Federal Communications Commission ("FCC") granted its consent to a
transfer of control of the licenses for the Station from certain shareholders
of Seller to Seller's Shareholder. On ______________, 199__, the FCC granted
its consent (the "FCC Order") to the assignment of the Station Licenses (as
defined in the Purchase Agreement) from Seller to Buyer pursuant to the
Purchase Agreement. As of the date of this Agreement, the FCC Order has not
yet become a Final Order (as defined in the Purchase Agreement).
Nevertheless, as provided in the Purchase Agreement, the parties desire to
proceed with the Closing (as defined in the Purchase Agreement) in accordance
with the terms and conditions of the Purchase Agreement. This Agreement sets
forth the agreement of the parties as to the procedures that they will follow
in the event that the FCC Order is reversed, rescinded, vacated, set aside or
annulled and Buyer is ordered by Final Order to return the Station Licenses to
Seller or Seller's Shareholder on issues unrelated to Seller's or Seller's
Shareholder's qualifications to be an FCC licensee (an "FCC Reversal"). (A
Final Order requiring Buyer to divest the Station Licenses to a party other
than Seller or Seller's Shareholder or an affiliate of Seller's Shareholder
shall not be considered an FCC Reversal for the purposes of this Agreement.)
Accordingly, in consideration of the foregoing and the mutual promises
and covenants set forth below, the parties agree as follows:
</page>
<PAGE>
-2-
1. Definitions.
All capitalized terms used but not defined in this Agreement
shall have the meanings assigned to them in the Purchase Agreement.
2. Procedures in the Event of an FCC Reversal.
(a) Reconveyance. Seller and Seller's Shareholder agree that in
the event of an FCC Reversal, Seller's Shareholder or a company owned by him
will accept the reconveyance by Buyer of the Station Assets (as defined below)
and will assume any and all liabilities, obligations or commitments related to
the Station of the type assumed by Buyer pursuant to the Purchase Agreement
arising and accruing after the closing of the reconveyance of the Station
Assets (the "FCC Reversal Closing"). "Station Assets" shall mean the assets
then owned or held by Buyer and used or held for use in the conduct of the
business and operations of the Station of the type constituting the Station
Assets (as defined in the Purchase Agreement) assigned by Seller to Buyer at
the Closing pursuant to the Purchase Agreement; provided that Buyer shall have
no obligation to assign the Station Licenses to Seller's Shareholder if the
FCC has revoked or rescinded or otherwise ruled that Seller's Shareholder is
unqualified to hold such licenses. In the event that Seller's Shareholder
directs the reconveyance to a company owned by him, all references herein to
"Seller's Shareholder" shall refer to such affiliate, as appropriate.
(b) Purchase Price in the Event of an FCC Reversal. In the
event of a reconveyance of the Station Assets to Seller's Shareholder pursuant
to Section 2(a) following an FCC Reversal, neither Seller nor Seller's
Shareholder shall have any obligation to refund the Purchase Price (as defined
in the Purchase Agreement). Rather, Seller's Shareholder agrees to pay Buyer
an amount (the "Reversal Purchase Price") to be computed and payable as
follows:
(i) The Reversal Purchase
Price will be due and payable to Buyer in
immediately available funds at the earlier
of the date of (A) Seller's Shareholder's
</page>
<PAGE>
-3-
due and timely election to retain the
Station Assets (as provided in clause (ii)
below) and (B) the sale of the Station
Assets by Seller's Shareholder to an
unaffiliated third party (as provided in
clause (iii) below); provided, however,
________ _______
that if after an FCC Reversal the FCC
Application remains pending (even if
designated for an evidentiary hearing), the
Reversal Purchase Price shall not be due
and the time periods for Seller's
Shareholder to elect to retain the Station
or to sell it to an unaffiliated third party
(as provided in clauses (ii) and (iii)
below) shall be tolled until either (x) the
_
FCC Application has been granted and
such grant has become a Final Order, in
which event Seller's Shareholder shall
reconvey the Station Assets to Buyer and
this Agreement shall be terminated (as
provided in Section 6 below), or (y) the
_
FCC Application has been denied and
such denial has become a Final Order, in
which event the parties shall proceed as
provided in clauses (ii) and (iii) of this
Section 2(b).
(ii) If Seller's Shareholder
elects to retain the Station Assets after the
FCC Reversal Closing, the Reversal
Purchase Price shall be the fair market
value of the Station Assets (assuming a
sale of assets as of the FCC Reversal
Closing on terms and conditions similar
to those in the Purchase Agreement,
including an agreement containing non-
competition and non-solicitation
provisions customary in the industry) as
determined by the agreement of two
nationally recognized appraisers with
experience in the broadcast industry, one
to be selected by Seller's Shareholder and
one by Buyer. The appraisal process shall
be initiated by notice (the "Appraisal
Notice") from Seller's Shareholder to
Buyer within thirty (30) days of the FCC
Reversal Closing, which notice shall
contain Seller's Shareholder's selection of
its appraiser. Within thirty (30) days of
Buyer's receipt of the Appraisal Notice,
Buyer shall give Seller's Shareholder
notice of the appraiser selected by Buyer.
Buyer and Seller's Shareholder shall each
</page>
<PAGE>
-4-
pay the costs of their respective
appraisers. Seller's Shareholder's
election to retain the Station Assets shall
be made by written notice to Buyer within
thirty (30) days after completion of the
appraisal and shall be accompanied by a
contemporaneous wire transfer of the
Reversal Purchase Price.
Notwithstanding anything to the contrary
in this Agreement, Seller's Shareholder
shall not be entitled to elect to retain the
Station Assets unless the appraisers have
reached an agreement on the fair market
value of the Station Assets within ninety
(90) days of the Appraisal Notice.
(iii) If Seller's Shareholder does
not elect to retain the Station Assets in
accordance with the provisions of clause
(ii) above, then Seller's Shareholder shall
proceed to use its reasonable and diligent
efforts to cause the Station Assets to be
sold, subject, during the period of
eighteen (18) months following the FCC
Reversal Closing, to Buyer's approval of
the terms and conditions of any sale.
Should Buyer fail to approve any
proposed sale of the Station Assets during
the period of eighteen (18) months
following the FCC Reversal Closing,
Seller's Shareholder shall thereafter be
free to sell the Station Assets to an
unaffiliated third party at its reasonable
discretion. In either case, Seller's
Shareholder shall accept any offer to
purchase the Station Assets brought to the
Seller's Shareholder by Buyer unless
Seller's Shareholder has previously timely
and duly elected to retain the Station
Assets. In the event of a sale of the
Station Assets to an unaffiliated third
party, the Reversal Purchase Price shall
be the total consideration received by
Seller's Shareholder from the unaffiliated
third party for the Station Assets
(including any consideration for a
covenant not to compete, consulting
agreement or other arrangement entered
into in connection with such sale) less the
</page>
<PAGE>
-5-
expenses reasonably incurred by Seller's
Shareholder in connection with such sale,
including but not limited to a broker's
commission paid to an independent
broker or brokerage firm. Failure to sell
the Station Assets under this clause (iii)
shall not be deemed an election to retain
the Station Assets under clause (ii).
(iv) Between the date of the
FCC Reversal Closing and payment of the
Reversal Purchase Price, Seller's
Shareholder agrees to pay Buyer ninety-
five percent (95%) of the amount of the
Available Cash Flow (as defined below),
and Buyer agrees that Seller's Shareholder
may retain five percent (5%) of the
Available Cash Flow for its own account.
To the extent practicable, Seller's
Shareholder shall make such payments to
Buyer on a monthly basis. "Available
Cash Flow" shall mean for any period the
net income of the Station computed on a
stand-alone basis, after payment of any
applicable taxes (other than any income
tax on the five percent (5%) of Available
Cash Flow retained by Seller's
Shareholder, which Seller's Shareholder
shall be responsible for paying),
determined in accordance with GAAP,
plus the aggregate amount of all non-cash
items (including depreciation and
amortization) deducted in computing
such net income, minus the aggregate
amount of all non-cash items included in
computing such net income, and minus
the aggregate amount of capital
expenditures made during such period.
(v) Seller's Shareholder's
obligations under this Agreement in the
event of an FCC Reversal shall be
secured by the grant to Buyer of a first
priority security interest in the Station
Assets (and, to the extent permitted by
law, the Station Licenses), and Seller's
Shareholder agrees not to grant or permit,
directly or indirectly, any other security
interests or liens against the Station
</page>
<PAGE>
-6-
Assets or the Station Licenses. Buyer
shall have no recourse against Seller's
Shareholder for default under this
Agreement beyond its actual damages,
plus all costs and expenses reasonably
incurred by Buyer in enforcing its rights
under this Agreement, not to exceed in the
aggregate the fair market value of the
Station Assets.
(c) No Prorations in the Event of an FCC Reversal. In lieu of
prorating income and expenses as of the FCC Reversal Closing, Seller's
Shareholder shall collect all accounts receivable and pay all accounts payable
arising out of the operation of the Station prior to the FCC Reversal Closing
to the extent that adequate funds are available from operation of the Station
(or are made available by Buyer) and shall treat such cash received or paid
with respect to income and expense accruing prior to the FCC Reversal Closing
as income or expense of the Station for purposes of calculating Available Cash
Flow; provided, however, that to the extent that the total of all accounts
payable exceeds the total of all accounts receivable as of the FCC Reversal
Closing, Buyer shall provide Seller's Shareholder with funds at the FCC
Reversal Closing to pay such excess amount. Furthermore, notwithstanding the
first sentence of Section 2(a), Seller's Shareholder agrees to assume all
Trade Agreements in existence as of the FCC Reversal Closing.
(d) Operation in the Ordinary Course. During the period between
the FCC Reversal Closing and payment of the Reversal Purchase Price in full,
Seller's Shareholder agrees to operate the business of the Station in
accordance with the affirmative and negative covenants set forth on Annex A
hereto. Notwithstanding anything herein to the contrary, during such period,
Buyer shall not directly or indirectly control, supervise, or direct, or
attempt to control, supervise or direct the operation of the Station; such
operations shall be the sole responsibility of Seller's Shareholder.
(e) Indemnification. In the event of an FCC Reversal, Buyer
shall indemnify, defend and hold Seller and Seller's Shareholder harmless from
and against and with respect to, and shall reimburse Seller and Seller's
</page>
<PAGE>
-7-
Shareholder for, any deficits incurred in operating the Station in accordance
with the terms of this Agreement during the period between the FCC Reversal
Closing and payment of the Reversal Purchase Price except for losses resulting
from Seller's and/or Seller's Shareholder willful misconduct or gross
negligence. Buyer shall fund any such deficits on a monthly basis, and
Seller's Shareholder shall have no obligation to borrow or utilize his own
funds (other than funds generated from the operation of the Station) under
this Agreement. Buyer shall be obligated to indemnify Seller or Seller's
Shareholder under this Section 2(e) only to the extent that such losses cannot
be funded from revenues arising from operation of the Station.
(f) Documentation. In the event of an FCC Reversal, the parties
shall negotiate in good faith, execute and deliver such documents and
instruments and perform such other acts as may be necessary for the complete
implementation of this Agreement.
3. Operation of Station by Buyer.
Nothing herein shall be construed to limit in any way the full
powers of Buyer on and after the Closing Date to operate the Station as Buyer
sees fit until an FCC Reversal Closing. Buyer shall be entitled to retain all
revenues and profits earned during the period between the Closing and an FCC
Reversal Closing.
4. FCC Matters.
(a) Seller or Seller's Shareholder and Buyer shall, each at its
own cost and expense, vigorously and diligently oppose any petition for
reconsideration or review or any request for stay or appeal filed with respect
to the FCC Order to the extent that any such petition or request applies to
Seller, Seller's Shareholder or Buyer, as the case may be, and shall take all
actions necessary or appropriate to obtain denial of any such petition for
reconsideration, stay, review and/or appeal. The parties will also continue
to prosecute the FCC Application in the event that it is designated for
evidentiary hearing by the FCC following the Closing, and shall thereafter
exhaust all available administrative and judicial appellate remedies in the
event that the FCC Application is denied following such evidentiary hearing.
It is the intent of the parties that each will use its best efforts to
persuade the FCC, first, to permit Buyer to retain the Station Licenses but if
such efforts are unsuccessful, then next, to permit Buyer to sell the Station
Licenses to a third party, and finally, if such efforts are unsuccessful, to
reconvey the Station Licenses to Seller's Shareholder. The procedures set
forth in Section 2 for reconveyance of the Station Assets shall apply only if
</page>
<PAGE>
-8-
Buyer is unable to retain the Station Assets (including the Station Licenses)
or convey such Station Assets to a third party.
(b) The parties agree to prepare and execute any and all
required applications, documents and instruments for filing with the FCC in
order to enable the parties to comply with either an FCC Reversal or the terms
of this Agreement, and any other applications, agreements or instruments
necessary to implement the provisions of this Agreement, including, without
limitation, such applications as may be required under the HSRA.
5. Expenses.
Except as otherwise provided herein, all expenses involved in the
implementation of this Agreement in the event of an FCC Reversal shall be
borne by Buyer, treated as an ordinary operating expense of the Station for
purposes of calculating Available Cash Flow, or treated as an expense of sale
of the Station Assets, as appropriate, except that if Seller's Shareholder
elects to retain the Station Assets, Seller's Shareholder shall be responsible
for all expenses incurred by it in connection with such transaction. 6.
Termination.
This Agreement shall terminate on the date that the FCC Order
becomes a Final Order.
7. Severability.
If any term, covenant, condition or provision of this Agreement,
or the application thereof to any party or circumstance shall to any extent be
held invalid or unenforceable by an administrative order, the remainder of
this Agreement or the application of such term or provision to parties or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby and each term, covenant, condition or provision
of this Agreement shall be valid and be enforced to the fullest extent
permitted by law, provided that such invalid or unenforceable provision shall
be curtailed, limited or eliminated only to the extent necessary to remove
such invalidity or unenforceability with respect to the applicable law as it
shall then be applied.
</page>
<PAGE>
-9-
8. Notices.
All notices, requests, demands or other communications relating
to this Agreement shall be in writing and shall be given in accordance with
Section 19.7 of the Purchase Agreement.
9. Choice of Law.
This Agreement shall be governed by the laws of the State of New
York, without regard to its principles of conflicts of law.
10. Counterparts.
This Agreement may be signed in multiple counterparts, which
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the day and year first above written.
TK COMMUNICATIONS, INC.
By:___________________________
Title:________________________
SELLER'S SHAREHOLDER:
______________________________
John F. Tenaglia
INFINITY BROADCASTING CORPORATION
OF DALLAS
By:___________________________
Title:________________________
</page>
<PAGE>
-10-
Infinity Broadcasting Corporation, a Delaware corporation, hereby
unconditionally guarantees to Seller's Shareholder the full payment and
performance of the obligations of Buyer under Section 2(e) (Indemnification)
of this Agreement (the "Obligations"), whether secured or unsecured (and
whether before or after the occurrence of any bankruptcy, insolvency,
reorganization, arrangement, receivership or similar proceeding, and
including, without limitation, all post-petition interest, at the applicable
default rate or rates, whether or not allowed as a claim in any such
proceeding), and all costs and expenses incurred by Seller's Shareholder in
enforcing the Obligations, whether or not suit is instituted. Nothing except
the full performance and indefeasible payments in full, in cash, of the
Obligations shall release Infinity from this guaranty. Infinity represents,
warrants and agrees that: (i) this guaranty is a legal, valid and binding
obligation of Infinity, enforceable in accordance with its terms, except as
limited by laws affecting creditors' rights or equitable principles generally;
(ii) Infinity has all necessary power and authority to enter into and perform
this guaranty; (iii) this guaranty does not conflict with, constitute grounds
for termination of or result in a breach of the terms, conditions or
provisions of, or constitute a default under any agreement, instrument,
license or permit to which Infinity is subject; and (iv) Infinity's execution,
delivery and performance of this guaranty has been duly authorized by all
necessary action on its part.
INFINITY BROADCASTING CORPORATION
By:______________________________
Name:____________________________
Title:___________________________
</page>
<PAGE>
ANNEX A TO
REVERSAL AGREEMENT
__________________
COVENANTS OF SELLER'S SHAREHOLDER
_________________________________
1. Interim Operation. Between the date of the FCC Reversal Closing and
payment in full of the Reversal Purchase Price, except as expressly permitted
by this Agreement or with the prior written consent of Buyer:
(a) Seller's Shareholder shall conduct the business and
operation of the Station solely in the ordinary and normal course of
business consistent with past operations by Buyer, with the intent of
preserving the ongoing operations and assets of the Station;
(b) Seller's Shareholder shall not sell, assign,
lease or otherwise transfer or dispose of any of the Station Assets,
except for assets consumed or disposed of in the ordinary course of
business, in which case the same shall be replaced with assets of
equal or greater value and utility, and the Station's inventories of
spare parts and expendable supplies shall be maintained at levels
consistent with Buyer's past practices;
(c) Seller's Shareholder shall not create, assume or
permit to exist any claim, liability, mortgage, lien, pledge,
condition, charge, or encumbrance of any nature whatsoever upon the
Station Assets, except for those in existence at the FCC Reversal
Closing;
(d) Seller's Shareholder shall operate the Station
in accordance with the FCC's rules and regulations and the Station
Licenses and with all other laws, regulations, rules and orders, and
shall not cause or permit by any act, or failure to act, any of the
Station Licenses to expire, be surrendered, adversely modified, or
otherwise terminated or the FCC to institute any proceeding for the
suspension, revocation or adverse modification of any of the Station
Licenses, or fail to prosecute with due diligence any pending
application to the FCC;
</page>
<PAGE>
-2-
(e) Seller's Shareholder shall not waive any
material right under any Contract or relating to the Station or the
Station Assets;
(f) Seller's Shareholder shall not enter into or
renew (i) any Contract (other than a Times Sales Agreement, a Trade
Agreement or an employment agreement) that involves payment by or to
Seller's Shareholder of Twenty Thousand Dollars ($20,000) or more (ii)
any Contract (other than a Times Sales Agreement, a Trade Agreement or
an employment agreement) having a duration of three (3) months or
more, (iii) any Time Sales Agreement or Trade Agreement that specifies
volume discounts, special rates or bonuses or having a duration
inconsistent with past practices, or (iv) any employment agreement
providing for annual compensation in excess of Forty Five Thousand
Dollars ($45,000) or having a duration of three (3) months or more
except for a renewal on substantially similar terms of an employment
agreement in effect as of the date of the FCC Reversal Closing for a
period of no more than one (1) year;
(g) Seller's Shareholder shall timely make all
payments required to be paid under any Contract when due and otherwise
pay all liabilities and satisfy all obligations when such liabilities
and obligations become due;
(h) Seller's Shareholder shall not increase or agree
to increase the compensation, bonuses or other benefits for employees
of the Station, except as may be required under Contracts assumed by
Seller's Shareholder pursuant to Section 2(a) of the Agreement or
consistent with Buyer's past employee compensation and promotion
practices;
(i) Seller's Shareholder shall, in accordance with
Buyer's past personnel practices and policies, use reasonable efforts
to maintain the employment at the Station and to renew the existing
employment contracts of the employees identified by Buyer on a
schedule to be provided at the FCC Reversal Closing;
(j) Seller's Shareholder shall use reasonable
efforts to preserve the operations, organization and reputation of the
</page>
<PAGE>
-3-
Station intact, to preserve the goodwill and business of the Station's
advertisers, suppliers, and others having business relations with the
Station, and to continue to conduct financial operations of the
Station, including their credit and collection policies, with no less
effort, as in Buyer's prior conduct of the business of the Station;
(k) Seller's Shareholder shall maintain monthly cash
advertising and promotional expenditures for the Station at levels
that are consistent with Buyer's past practices;
(l) Seller's Shareholder shall make capital
improvements for the Station consistent with Buyer's past practices;
(m) Seller's Shareholder shall maintain insurance
policies on the Station and the Station Assets comparable to the
insurance maintained by Buyer prior to the FCC Reversal Closing; and
(n) Seller's Shareholder shall maintain the
Station's books and records in accordance with GAAP.
2. Access to Station. Between the date of the FCC Reversal
Closing and payment of the Reversal Purchase Price in full, Seller's
Shareholder shall give Buyer and Buyer's counsel, accountants, engineers and
other representatives, reasonable access during normal business hours to all
of Seller's Shareholder's properties, records and employees relating to the
Station, including the financial data necessary for Buyer's accountants to
prepare audited statements for the Station, and shall furnish Buyer with all
information related to the Station that Buyer reasonably requests. The rights
of Buyer under this Section shall not be exercised in such a manner as to
interfere unreasonably with the business of the Station.
3. Financial Statements. Within twenty (20) days of the end of
each month until payment of the Reversal Purchase Price in full, Seller's
Shareholder shall deliver to Buyer unaudited statements of revenue and
expenses for the Station for the month then ended, along with a balance sheet
as of the end of such month. Seller's Shareholder shall furnish to Buyer any
and all other information customarily prepared by Seller's Shareholder
concerning the financial condition of the Station that Buyer may request.
</page>
<PAGE>
-4-
4. Notification.
(a) Seller's Shareholder shall notify Buyer of any material
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the Station or Seller's Shareholder with respect
to the Station.
(b) Between the date of the FCC Reversal Closing and payment
of the Reversal Purchase Price in full, Seller's Shareholder shall notify
Buyer if the regular broadcast transmission of the Station from its main
broadcasting antenna at full authorized effective radiated power is
interrupted or impaired between the hours of 6 a.m. and midnight for a period
of more than three (3) consecutive hours or for an aggregate of six (6) hours
in any continuous two (2) day period or twelve (12) hours in any single thirty
(30) day period.
(c) Between the date of the FCC Reversal Closing and payment
of the Reversal Purchase Price in full, Seller's Shareholder shall keep Buyer
reasonably informed of all material operational matters and business
developments with respect to the Station.
5. No Inconsistent Action. Seller's Shareholder shall not take
any action which is materially inconsistent with its obligations under this
Agreement or that would hinder or delay the consummation of the transactions
contemplated by this Agreement.
</page>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000792863
<NAME> INFINITY BROADCASTING CORP
<MULTIPLIER> 1000
<S> <C>
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