<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant To Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1995 Commission file number 0-14702
INFINITY BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-2766282
(State of incorporation) (I.R.S. Employer Identification No.)
600 Madison Avenue
New York, New York 10022
(Address of principal executive offices)
(212) 750-6400
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of Each Class Which Registered
Class A Common Stock, New York Stock Exchange
par value $.002 per share
Securities registered pursuant to Section 12(g) of the Act:
10-3/8% Senior Subordinated Notes Due 2002
(Title of class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by D o.) Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Sec. 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 14, 1996 was approximately $2,027,918,626. As of
March 14, 1996, 78,203,141 shares of Class A Common Stock, excluding 4,191,218
treasury shares, 8,319,045 shares of Class B Common Stock, and 1,116,257 shares
of Class C Common Stock were outstanding.
Documents Incorporated By Reference -- The registrant's definitive
proxy statement (to be filed pursuant to Regulation 14A) is incorporated by
reference into Part III of the Form 10-K for the fiscal year ended December 31,
1995.
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TABLE OF CONTENTS
PART I
ITEM 1. BUSINESS............................................... 1
ITEM 2. PROPERTIES............................................. 12
ITEM 3. LEGAL PROCEEDINGS...................................... 12
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.... 12
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS......................... 13
ITEM 6. SELECTED FINANCIAL DATA................................ 14
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS................. 15
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............ 17
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE................. 17
PART III
The information required in this Part is incorporated by
reference from the registrant's definitive proxy
statement (to be filed pursuant to Regulation 14A).. 18
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.....
ITEM 11. EXECUTIVE COMPENSATION.................................
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT..........................................
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.........
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K......................................... 18
SIGNATURES............................................. 24
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PART I
ITEM 1. BUSINESS
BACKGROUND
Infinity Broadcasting Corporation (the "Company" or "Infinity") is one
of the largest owners and operators of radio stations in the United States. It
is the only company able to offer advertisers a radio listening audience in each
of the nation's top ten radio revenue markets. The Company serves markets
accounting for approximately $3.0 billion in radio advertising revenues,
representing approximately 28% of the total radio advertising expenditures in
the United States in 1995. Upon the completion of the Granum Acquisition and the
KYCW-FM Disposition as described below, Infinity would own and operate 45 radio
stations serving 14 of the nation's largest radio markets.
Since Infinity acquired its first radio station in May 1973, it has
expanded by acquiring and developing underperforming stations in the nation's
largest media markets, where the greatest proportion of radio advertising
dollars is spent. The Company believes that its presence in large markets makes
it attractive to advertisers and that the overall diversity of its stations
reduces its dependence on any single station, local economy or advertiser.
In each of its markets, the Company attracts a specific demographic
group by targeting its program format and hiring popular on-air talent. The
Company's stations serve diverse target demographics through a broad range of
programming formats such as rock, oldies, news/talk, adult contemporary,
all-sports and country. The Company's overall programming strategy in part is to
acquire significant on-air talent and broadcasting rights for sports franchises.
The diversity of station and market characteristics, combined with the
Company's acquisition and operating strategies, have enabled the Company to
achieve consistent growth in revenues and operating cash flow (as used in this
Form 10-K, the term "operating cash flow" means operating income plus
depreciation and amortization).
The Company was incorporated in 1972 in Delaware and first issued
shares of its common stock to the public in June 1986. In August 1988, the
Company became privately held as a result of a merger with a company whose
stockholders were the Company's principal stockholders and executive officers at
the time. The Company was the surviving corporation in the merger. On February
5, 1992, the Company sold shares of Class A Common Stock through an initial
public offering (the "Common Stock IPO").
The Company also manages, pursuant to a management agreement, and has
an investment in Westwood One, Inc. ("Westwood One"). Westwood One is America's
largest producer and distributor of radio programming and the parent company of
the NBC Radio Networks, Mutual Broadcasting System, and Westwood One Radio
Networks. The Company's award-winning News, Sports, Talk and Entertainment
programming, along with its 24-hour satellite formats and CNN Radio, air on over
6,000 radio stations around the world.
<PAGE>
RECENT DEVELOPMENTS
On January 16, 1996 the Company completed the acquisition of radio
stations KYNG-FM and KSNN-FM in Dallas-Fort Worth, KFRC-FM, KFRC-AM and KYCY-FM
in San Francisco, WYCD-FM in Detroit and KYCW-FM in Seattle from various
entities affiliated with Alliance Broadcasting, Inc. for approximately $275
million, plus costs (the "Alliance Acquisition"). On February 7, 1996, the
Company entered into an agreement to sell its Seattle radio station KYCW-FM for
approximately $26 million (the "KYCW-FM Disposition").
On March 26, 1996, the Company completed the acquisition of all of the
outstanding stock of TDI Worldwide, Inc. for approximately $300 million (the
"TDI Acquisition"). TDI is one of the largest out-of-home media company in the
U.S., operating some 100 franchises in approximately 60 markets. The majority of
TDI's U.S. franchises are in large metropolitan areas, including New York, Los
Angeles, Atlanta, Washington, Philadelphia, Chicago, San Francisco, Dallas,
Minneapolis and Phoenix. TDI sells space on various medium including buses,
trains, train platforms and terminals throughout commuter rail systems, on
painted billboards, on thirty-sheet billboards and on phone booths. TDI also has
the franchise to manage advertising space within the London Underground and on
certain London buses and has the exclusive rights to all transit advertising in
Ireland.
On March 4, 1996, the Company entered into an agreement to acquire 12
radio stations owned by various subsidiaries of Granum Holdings, L.P. for
approximately $410 million (the "Granum Acquisition"). The radio stations are
KRBV-FM, KHVN-AM and KOAI-FM in Dallas-Fort Worth, WBOS-FM and WOAZ-FM in
Boston, WCAO-AM and WXYV-FM in Baltimore, WAOK-AM and WVEE-FM in Atlanta,
WHOO-AM, WHTQ-FM and WMMO-FM in Orlando. Upon completion of the Granum
Acquisition, the Company will be required to divest one FM station in Dallas in
order to comply with the recently enacted 1996 Telecommunications Law. See
"Business--Federal Regulation of Radio Broadcasting--Ownership Matters",
appearing elsewhere in this Report.
On March 18, 1996, the Company declared a three-for-two stock split in
the form of a stock dividend payable on April 11, 1996, to holders of record on
March 28, 1996.
The Company continues to seek opportunities for expansion through the
acquisition of additional radio stations and out-of-home media companies.
Pursuant to the 1996 Telecommunications Act, the Federal Communications
Commission's national and local multiple ownership rules were revised to
completely eliminate national ownership limitations and substantially relax the
restrictions on local multiple ownership. See "Business--Federal Regulation of
Radio Broadcasting" appearing elsewhere in this Report.
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<TABLE>
GENERAL
The following table sets forth certain information about the Company's
radio stations:
<CAPTION>
1995
Radio 1995 Stations With
Revenue Radio Target Rankings In
Market Market Target(3) Demographics Target
STATION MARKET STATION FORMAT RANK(1) REVENUES(2) DEMOGRAPHICS RANK(4) DEMOGRAPHICS
- ------- ------ -------------- ---- -------- ------------ ---- ------------
($ Millions)
<S> <C> <C> <C> <C> <C> <C> <C>
KROQ-FM (5) Los Angeles, CA Rock 1 $476.2 Men 18-34 2 42
KRTH-FM Los Angeles, CA Oldies 1 476.2 Persons 25-54 4T 42
WXRK-FM New York, NY Rock 2 428.0 Men 18-34 2 37
WZRC-AM New York, NY - (14) 2 428.0 - (14) - - (14)
WFAN-AM New York, NY All Sports 2 428.0 Men 25-54 4 40
WJMK-FM/ Chicago, IL Oldies/Talk 3 319.0 Persons 25-54 5 32
WJJD-AM
WUSN-FM Chicago, IL Country 3 319.0 Persons 25-54 4 32
KVIL-FM/ Dallas/ Adult Contemporary/ 4 200.1 Women 25-54 1 32
KDMM-AM (6) Ft. Worth, TX Nostalgia
KLUV-FM Dallas/ Oldies 4 200.1 Persons 25-54 5T 30
Ft. Worth, TX
KYNG-FM Dallas/ Young Country 4 200.1 Persons 25-54 7 30
Ft. Worth, TX
KSNN-FM (7) Dallas/ Country 4 200.1 Persons 25-54 23 30
Ft. Worth, TX
KRBV-FM/ * Dallas/ Urban Contemporary 4 200.1 Persons 25-54 1 30
KHVN-AM * Ft. Worth, TX
KOAI-FM * Dallas/ Smooth Jazz 4 200.1 Persons 25-54 4 30
Ft. Worth, TX
KOME-FM (8) San Francisco/ Rock 5/43 (15) 198.0/ Men 18-34 5/2 48/15
San Jose, CA 37.2
KFRC-AM/FM San Francisco, CA Oldies 5 198.0 Persons 25-54 4 48
KYCY-FM San Francisco, CA Young Country 5 198.0 Persons 25-54 16 48
WJFK-FM (9) Washington, D.C. Personality 6 193.8 Men 25-54 1 32
WPGC-FM/AM Washington, D.C. Contemporary/ 6 193.8 Persons 18-34 1 30
(10) Urban Contemporary
WYSP-FM Philadelphia, PA Rock 7 186.0 Men 18-34 1 22
WIP-AM Philadelphia, PA All Sports 7 186.0 Men 25-54 3 22
KXYZ-AM Houston, TX Spanish Language 8 180.5 Persons 18-49 - -
WBCN-FM Boston, MA Rock 9 171.0 Men 18-34 1 27
WZLX-FM Boston, MA Rock 9 171.0 Men 25-54 1 30
WBOS-FM * Boston, MA Rock 9 171.0 Men 25-54 15 30
WOAZ-FM * Boston, MA Smooth Jazz 9 171.0 Persons 25-54 12 30
WZGC-FM Atlanta, GA Rock 10 170.0 Men 25-54 5 21
WAOK-AM/ * Atlanta, GA Urban Contemporary 10 170.0 Persons 25-54 1 20
WVEE-FM *
WOMC-FM Detroit, MI Oldies 11 166.8 Persons 25-54 5 30
WXYT-AM Detroit, MI News/Talk 11 166.8 Persons 25-54 15 30
WYCD-FM Detroit, MI Young Country 11 166.8 Persons 25-54 9T 30
KYCW-FM (12) Seattle, WA Young Country 13 123.0 Persons 25-54 13 32
WLIF-FM Baltimore, MD Adult 19 78.9 Women 25-54 4 22
Contemporary
WJFK-AM Baltimore, MD Personality 19 78.9 Men 25-54 9 22
WCAO-AM/ * Baltimore, MD Urban Contemporary 19 78.9 Persons 25-54 2 21
WXYV-FM *
WQYK-FM/AM Tampa/ Country/Talk 21 78.5 Persons 25-54 1 25
(13) St. Petersburg, FL
WHOO-AM * Orlando, FL Big Band 26 62.6 Persons 35+ 6 25
WHTQ-FM * Orlando, FL Rock 26 62.6 Men 25-54 3 25
WMMO-FM * Orlando, FL Adult Contemporary 26 62.6 Persons 25-54 7 25
<FN>
Notes to This Table Appear on the Following Page.
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Notes to Table on Preceding Page:
1. Markets ranked by radio advertising revenues according to Duncan's Radio
Market Guide (1996 ed.).
2. Radio advertising revenues according to Duncan's Radio Market Guide (1996
ed.).
3. Target demographics rank by Fall 1995 Arbitron Radio Market Reports.
4. Number of stations in each market with rankings in the Company's target
demographics for such market, based on the Fall 1995 Arbitron Radio Market
Reports.
5. KROQ-FM is licensed to the community of Pasadena, California.
6. KVIL-FM is licensed to the community of Highland Park, Texas. KDMM-AM is
licensed to the community of Highland Park, Texas.
7. KSNN-FM is licensed to the community of Arlington, Texas.
8. KOME-FM is licensed to the community of San Jose, California.
9. WJFK-FM is licensed to the community of Manassa, Virginia.
10. WPGC-FM/AM are licensed to the community of Morningside, Maryland.
11. Not included in Arbitron rankings because the Company does not subscribe to
the Arbitron rankings in Houston.
12. The Company has entered into an agreement to sell KYCW-FM.
13. WQYK-FM is licensed to the community of St. Petersburg, Florida, and
WQYK-AM is licensed to the community of Seffner, Florida.
14. Effective July 7, 1995, the Company entered into a Time Brokerage Agreement
with Radio Korea New York, Inc. ("RKNY"), pursuant to which the Company will
make substantially all of the programming time on WZRC-AM available to RKNY for
its Korean language programming for a period of one year.
15. San Francisco and San Jose have radio revenue market ranks of 5 and 43,
respectively, and KOME-FM's rankings within target demographics in those
markets are 5 and 2, respectively.
* The Company has agreed to acquire the station, subject to approval by the
Federal Communications Commission.
</FN>
</TABLE>
Company Strategy
RADIO
The Company's overall strategy is to own and operate radio stations in
the nation's largest radio revenue markets. The Company believes that its
presence in large markets makes it attractive to advertisers and that the
overall diversity of its stations reduces its dependence on any single station,
local economy or advertiser. The Company also believes that by serving major
markets, it is able to attract highly skilled management, employees and on-air
talent.
In developing its stations, the Company takes a variety of actions to
improve a station's operating cash flow, including instituting strict financial
reporting requirements and cost controls, directing
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promotional activities, developing programming to improve the station's appeal
to a targeted audience group and enhancing advertising sales efforts. In
particular, the Company emphasizes increasing local advertising revenues in
order to reduce dependence on national advertising revenues.
In operating its stations, the Company concentrates on the development
of strong decentralized local management, which is responsible for the
day-to-day operations of the station. Local management, in cooperation with
corporate management, is responsible for developing programming. Corporate
management is responsible for long-range planning, establishing policies and
procedures, maximizing cost savings where centralized purchasing is appropriate,
resource allocation and maintaining overall control of the stations.
The overall mix of a station's programming is designed to fit each
station's specific format and serve its local community. The Company's overall
programming strategy includes acquiring significant on-air talent and sports
franchises for its radio stations. The Company believes that this strategy, in
addition to developing loyal audiences for its radio stations, enables the
Company to obtain additional revenues, including revenues from syndicating such
programming franchises to other radio stations. In addition to its regular
programming, all of the Company's stations provide non-entertainment
programming, such as news and public affairs broadcasts.
The Company expects to continue to acquire radio stations with strong
growth potential in the major markets, subject to the Communications Act of
1934, as amended (the "Communications Act"), and Federal Communications
Commission (the "FCC") rules, which impose certain limits on the maximum number
of radio stations the Company can own in the same geographic market. Limits on
the number of radio stations which the Company can own on a nationwide basis
were recently eliminated by the Telecommunications Act of 1996. See
"Business--Federal Regulation of Radio Broadcasting--Ownership Matters",
appearing elsewhere in this Report. Other than as described in this Report, the
Company has no present agreements or arrangements to acquire or sell any radio
stations.
The Company's affiliation with Westwood One enables it to expand its
presence in the radio program distribution business while simultaneously
enhancing the programming lineups of Westwood One.
OUT-OF-HOME
TDI is one of the largest out-of-home media company in the U.S.,
operating some 100 franchises in approximately 60 markets. The Company is based
in New York with 30 branch offices throughout the U.S., U.K. and Republic of
Ireland.
The majority of TDI's U.S. franchises are in large metropolitan areas,
including New York, Los Angeles, Atlanta, Washington, Philadelphia, Chicago, San
Francisco, Dallas, Minneapolis and Phoenix. TDI sells space on the exterior and
interior of buses, inside trains, on train platforms and terminals throughout
commuter rail systems, on painted billboards, on thirty-sheet billboards, and on
phone booths.
TDI also has the franchise to manage advertising space within the
London Underground and on certain London buses and has expanded its U.K. bus
business by acquiring new franchises outside of London Effective December 1,
1995, TDI acquired the exclusive rights to all transit advertising in Ireland.
Historically, TDI's success rate in renewing its franchise agreements
is well in excess of 90%. Most franchises are for a minimum of five years,
involving the payment of a percentage of revenues to
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the relevant transit authority, subject to a guaranteed minimum payment. In a
few franchises TDI pays a flat fee to the transit authority. TDI continues to
bid and obtain new franchise business, recently adding an exterior bus contract
in Atlanta in advance of the 1996 Olympics as well as buses in San Antonio,
Texas.
Advertising
The Company believes that radio and out-of-home advertising in general
is one of the more efficient, cost-effective means for advertisers to reach
specific demographic groups.
Advertising rates charged by radio stations are based primarily on a
station's ability to attract audiences in the demographic groups targeted by
advertisers (as measured by rating service surveys quantifying the number of
listeners tuned to the station at various times), on the number of stations in
the market competing for the same demographic group and on the supply of and
demand for radio advertising time. Rates are generally highest during morning
and evening drive-time hours.
Transit advertising rates are established by several criteria: reach
(number of people exposed to an ad campaign) and frequency (number of times
exposed within the time frame of a campaign). Research tools enable
geo-demographic mapping of consumers based on lifestyle habits, thus enabling
advertisers to structure ad programs to specific targets.
Radio station revenues are derived substantially from local, regional
and national advertising. Local and regional sales generally are made by a
station's sales staff. National sales are made by "national rep" firms, which
specialize in radio advertising sales on the national level. These firms are
compensated on a commission-only basis. Most advertising contracts are
short-term, generally running for only a few weeks.
Transit and outdoor revenues are derived from a combination of
national, regional and local sales made by internal sales staff. In major
markets, national account executives sell national advertisers multi- market
programs utilizing various out-of-home properties. Dedicated sales teams are
responsible for handling all regional and local business.
Competition
Radio broadcasting is a competitive business. The Company's radio
stations compete for listeners and advertising revenues directly with other
radio stations within their markets. Radio stations compete for listeners
primarily on the basis of program content and by hiring on-air talent which
appeals to a particular demographic group. By building a strong listenership
base comprised of a specific demographic group in each of its markets, the
Company is able to attract advertisers seeking to reach these listeners.
The rights to transit advertising franchises are exclusive in each
market; therefore, competition within the specific transit category is limited.
Other media, including broadcast television, cable television,
newspapers, magazines, direct mail, coupons and billboard advertising also
compete with the Company's businesses for advertising revenues.
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Seasonality
The Company's revenues vary throughout the year. As is generally the
case in the radio, as well as in out-of-home advertising industries, the
Company's first quarter generally reflects the lowest revenues for each year.
Employees
As of December 31, 1995, the Company had approximately 803 full-time
employees and approximately 252 part-time employees. Certain employees at the
Company's stations in New York, Los Angeles, Chicago, Philadelphia, and Boston,
totalling approximately 186, are represented by unions. The Company believes
that its relations with its employees and their unions are good.
The Company employs several high-profile on-air personalities with
large loyal audiences in their respective markets. The Company generally enters
into employment agreements with its on-air talent and commissioned sales
representatives to protect its interests in those relationships that it believes
to be valuable. The Company has entered into employment agreements with its
chief executive officer (see "Executive Compensation--Employment Agreements",
appearing in Part III of this Report, which is incorporated by reference) and
with all of its high-profile on-air personalities.
Federal Regulation of Radio Broadcasting
The ownership, operation and sale of radio stations, including those
licensed to the Company, are subject to the jurisdiction of the FCC, which
engages in extensive and changing regulation of the radio broadcasting industry
under authority granted by the Communications Act. Among other things, the FCC
assigns frequency bands for broadcasting; determines the particular frequencies,
locations and operating power of stations; issues, renews, revokes and modifies
station licenses; determines whether to approve changes in ownership or control
of station licenses; regulates equipment used by stations; adopts and implements
regulations and policies that directly or indirectly affect the ownership,
operation and employment practices of stations; regulates program content
(including indecent and obscene program material) and has the authority to
impose penalties for violations of its rules or the Communications Act.
The following is a brief summary of certain provisions of the
Communications Act, including amendments thereto recently effectuated by the
Telecommunications Act of 1996 (the "1996 Telecom Act"), and of specific FCC
regulations and policies. Reference should be made to the Communications Act,
FCC rules and the public notices and rulings of the FCC for further information
concerning the nature and extent of federal regulation of broadcast stations.
7
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The following table sets forth certain information on each of the
Company's radio stations:
<TABLE>
<CAPTION>
Expiration
Date of Date of FCC
STATION MARKET ACQUISITION FREQUENCY AUTHORIZATION
<S> <C> <C> <C> <C>
WXRK-FM New York, NY............... 11/81 92.3 MHz 06/01/98
WZRC-AM New York, NY............... 11/81 1480 KHz 06/01/98
WFAN-AM New York, NY............... 04/92 660 KHz 06/01/98
KROQ-FM Los Angeles, CA............ 09/86 106.7 MHz 12/01/97
KRTH-FM Los Angeles, CA............ 02/94 101.1 MHz 12/01/97
WJMK-FM Chicago, IL................ 07/84 104.3 MHz 12/01/96
WJJD-AM Chicago, IL................ 07/84 1160 KHz 12/01/96
WUSN-FM Chicago, IL................ 02/93 99.5 MHz 12/01/96
KOME-FM San Jose/San Francisco, CA. 05/73 98.5 MHz 12/01/97
KYCY-FM San Francisco, CA.......... 01/96 93.3 MHz 12/01/97
KFRC-AM San Francisco, CA.......... 01/96 610 KHz 12/01/97
KFRC-FM San Francisco, CA.......... 01/96 99.7 MHz 12/01/97
WYSP-FM Philadelphia, PA........... 11/81 94.1 MHz 08/01/98
WIP-AM Philadelphia, PA........... 09/93 610 KHz 08/01/98
WOMC-FM Detroit, MI................ 04/88 104.3 MHz 10/01/96
WXYT-AM Detroit, MI................ 06/94 1270 KHz 10/01/96
WYCD-FM Detroit, MI................ 01/96 99.5 MHz 10/01/96
KSNN-FM Dallas/Ft. Worth, TX....... 01/96 94.9 MHz 08/01/97
KVIL-FM Dallas/Ft. Worth, TX....... 07/87 103.7 MHz 08/01/97
KDMM-AM Dallas/Ft. Worth, TX....... 07/87 1150 KHz 08/01/97
KLUV-FM Dallas/Ft. Worth, TX....... 04/95 98.7 MHz 08/01/97
KYNG-FM Dallas/Ft. Worth, TX....... 01/96 105.3 MHz 08/01/97
KRBV-FM Dallas/Ft. Worth, TX....... Pending 100.3 MHz 08/01/97
KHVN-AM Dallas/Ft. Worth, TX....... Pending 970 KHz 08/01/97
KOAI-FM Dallas/Ft. Worth, TX....... Pending 107.5 MHz 08/01/97
WJFK-FM Washington, DC............. 12/86 106.7 MHz 10/01/02
WPGC-FM Washington, DC............. 06/94 95.5 MHz 10/01/02
WPGC-AM Washington, DC............. 06/94 1580 KHz 10/01/02
KXYZ-AM Houston, TX................ 06/83 1320 KHz 08/01/97
WBCN-FM Boston, MA................. 02/79 104.1 MHz 04/01/98
WZLX-FM Boston, MA................. 02/93 100.7 MHz 04/01/98
WBOS-FM Boston, MA................. Pending 92.9 MHz 04/01/98
WOAZ-FM Boston, MA................. Pending 99.5 MHz 04/01/98
WZGC-FM Atlanta, GA................ 02/93 92.9 MHz 04/01/96
WAOK-AM Atlanta, GA................ Pending 1380 KHz 04/01/96
WVEE-FM Atlanta, GA................ Pending 103.3 MHz 04/01/96
WLIF-FM Baltimore, MD.............. 05/89 101.9 MHz 10/01/02
WJFK-AM Baltimore, MD.............. 05/89 1300 KHz 10/01/02
WCAO-AM Baltimore, MD.............. Pending 600 KHz 10/01/02
WXYV-FM Baltimore, MD.............. Pending 102.7 MHz 10/01/02
WQYK-FM Tampa/St. Petersburg, FL... 12/86 99.5 MHz 02/01/96
WQYK-AM Tampa/St. Petersburg, FL... 11/87 1010 KHz 02/01/96
WHOO-AM Orlando, FL................ Pending 990 KHz 02/01/96
WHTQ-FM Orlando, FL................ Pending 96.5 MHz 02/01/96
WMMO-FM Orlando, FL................ Pending 98.9 MHz 02/01/96
KYCW-FM Seattle, WA (Sale Pending). 01/96 96.5 MHz 02/01/98
<FN>
1. Some stations are licensed to a different community located within the
market which they serve.
</FN>
</TABLE>
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LICENSE RENEWAL. Under the 1996 Telecom Act, radio broadcasting
licenses are granted for maximum terms of eight years. They are subject to
renewal upon application to the FCC. Under the 1996 Telecom Act, the FCC shall
adopt regulations which will implement a "two-step" renewal procedure, pursuant
to which competing applications for an incumbent licensee's frequency will be
explicitly prohibited, and the FCC shall grant the incumbent licensee's renewal
application if it finds that (a) the incumbent licensee has served the public
interest, convenience and necessity; (b) the incumbent licensee has not engaged
in any serious violations of the Communications Act or the FCC's rules; and (c)
there have been no other violations by the incumbent licensee of the
Communications Act or the FCC's rules which, taken together, would constitute a
pattern of abuse. If, based upon a review of the incumbent licensee's renewal
application, or of other facts that are brought to the Commission's attention in
a petition to deny or other third party filing, the FCC is unable to make the
foregoing findings, the incumbent licensee is entitled to a full evidentiary
hearing to establish that it is entitled to renewal. If, following the
evidentiary hearing, the FCC determines that the incumbent licensee has failed
to meet the basic requirements for renewal and that no mitigating factors
justify the imposition of a sanction less than denial of renewal (such as, for
example, a "short" term renewal or the imposition of forfeitures), the FCC is
obligated to deny the renewal application. Should such denial become final
following judicial review, the FCC may thereafter entertain applications for the
incumbent licensee's frequency. The 1996 Telecom Act makes these provisions
retroactively applicable to renewal applications filed after May 1, 1995. The
FCC intends to initiate a rule-making proceeding during 1996 to implement these
procedures.
OWNERSHIP MATTERS. The Communications Act prohibits the assignment of a
license or the transfer of control of a broadcast licensee without the prior
approval of the FCC. In determining whether to grant or renew a broadcast
license, the FCC considers a number of factors pertaining to the licensee,
including compliance with the Communications Act's limitations on alien
ownership, compliance with various rules limiting common ownership of broadcast,
cable and newspaper properties, and the "character" of the licensee and those
persons holding "attributable" interests therein.
Under the Communications Act, broadcast licenses may not be granted to
any corporation having more than 20% of its issued and outstanding capital stock
owned or voted by aliens (including non-U.S. corporations), foreign governments
or their representatives (collectively, "Aliens"). The Communications Act also
prohibits a corporation, without FCC waiver, from holding a broadcast license if
that corporation is controlled, directly or indirectly, by another corporation,
more than one-fourth of the issued and outstanding capital stock of which is
owned or voted by Aliens. The FCC has issued interpretations of existing law
under which these restrictions in modified form apply to other forms of business
organizations, including partnerships. As a result of these provisions, in the
absence of a waiver, the Company, which serves as a holding company for its
various radio station subsidiaries, cannot have more than 25% of its stock owned
or voted by Aliens.
Certain merchant banking partnerships (the "Lehman Investors")
affiliated with Lehman Brothers Holdings, Inc. hold shares of the Company's
capital stock and warrants exercisable for additional shares. See "Security
Ownership of Certain Beneficial Owners and Management", appearing in Part III of
this Report which is incorporated by reference. Certain of the Lehman Investors
and certain limited partners in the Lehman Investors may be deemed to be Aliens
or controlled by Aliens or their representatives under the Communications Act.
Such Lehman Investors own and vote less than 1% of the Company's issued and
outstanding capital stock. Assuming the exercise of the warrants held by such
Lehman Investors, approximately 9.7% and 5.4% of the Company's issued and
outstanding capital stock would be owned and voted, respectively, by such Lehman
Investors. The warrants held by the Lehman Investors can only be exercised by
the Lehman Investors to the extent such exercise would not cause the Company to
violate the Communications Act's limitations on Alien ownership or control.
Under the 1996 Telecom Act, the Commission's national and local
multiple ownership rules were revised. The FCC's former rules prohibited the
Company from owning, operating or controlling, directly or
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<PAGE>
indirectly, more than twenty AM and twenty FM radio stations in the United
States; the 1996 Telecom Act completely eliminated national ownership
limitations. In addition, the 1996 Telecom Act substantially relaxed
restrictions on local radio multiple ownership (often referred to as the
"duopoly" rules). Under the new law, which was implemented by the FCC in March
of 1996, in markets with fourteen or fewer radio stations, the Company is
permitted to own up to a total of five radio stations, no more than three of
which may be FM, so long as the Company's owned radio stations represent less
than fifty percent of the radio stations in the market; in markets with between
fifteen and twenty-nine radio stations, the Company will be permitted to own up
to a total of six radio stations, no more than four of which may be FM; in
markets with between thirty and forty-four radio stations, the Company will be
permitted to own up to a total of seven radio stations, no more than four of
which may be FM; and in markets with forty-five or more radio stations, the
Company may own up to a total of eight radio stations, no more than five of
which may be FM. All of the Company's current holdings are consistent with these
new local multiple ownership restrictions. Upon the completion of the Granum
Acquisition, the Company will be required to divest one FM station in Dallas in
order to comply with the 1996 Telecom Act.
The Communications Act and FCC rules also generally limit the common
ownership, operation, or control of a radio broadcast station and a television
broadcast station serving the same geographic market and of a radio broadcast
station and a daily newspaper serving the same geographic market. Under these
rules, absent waivers, the Company would not be permitted to acquire any
newspaper or television broadcast station (other than low-power television) in a
geographic market in which it now owns any radio broadcast
properties. However, the FCC's policies, as modified by the 1996 Telecom Act,
provide for the liberal grant of waivers of the rule prohibiting ownership of
radio and television stations in the same geographic market in the top 50
television markets if certain other conditions are satisfied. The FCC has also
indicated that it intends to hold a rule making proceeding looking toward
liberal grant of waivers of the rule prohibiting common ownership of a radio
station and a newspaper in the same market in large markets.
The FCC generally applies its ownership limits to "attributable"
interests held by an individual, corporation, partnership or other association.
In the case of corporations holding broadcast licenses, the interests of
officers, directors and those who, directly or indirectly, have the right to
vote 5% or more of the corporation's stock (or 10% or more of such stock in the
case of insurance companies, mutual funds, bank trust departments and certain
other passive investors that are holding stock for investment purposes only) are
generally attributable, as are positions of an officer or director of a
corporate parent of a broadcast licensee. Currently, none of the Company's
officers, directors or stockholders has an attributable interest in any company
licensed to operate broadcast stations other than the Company.
LOCAL MARKETING AGREEMENTS. Over the past several years, a number of
radio stations have entered into what have commonly been referred to as "Local
Marketing Agreements", or "LMAs". While these agreements may take varying forms,
under a typical LMA, separately owned and licensed radio stations agree to enter
into cooperative arrangements of varying sorts, subject to compliance with the
requirements of the antitrust laws and the FCC's rules and policies, including
the requirement that the licensee of each station maintain independent control
over the programming and station operations of its own stations. The most
prevalent type of LMA is a time brokerage agreement among two separately-owned
radio stations serving a common service area, whereby the licensee of one
station programs substantial portions of the broadcast day on the other
licensee's station, subject to ultimate editorial and other controls being
exercised by the latter licensee, and sells advertising time during such program
segments. The FCC has held that such agreements involving radio stations are not
contrary to the Communications Act, provided that the licensee of the station
that is being substantially programmed by another entity maintains complete
responsibility for, and control over, the operations of its broadcast station,
and assures compliance with applicable FCC rules and policies. The Company
maintains LMA arrangements with respect to its stations WZRC-AM in New York City
and KYCW-FM in Seattle.
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The FCC's rules provide that a station brokering more than 15% of the
weekly broadcast time of another station serving the same market will be
considered to have an attributable ownership interest in the brokered station
for purposes of the FCC's multiple ownership rules. As a result, under these
rules, a broadcast station will not be permitted to enter into an LMA or time
brokerage agreement giving it the right to program more than 15% of the
broadcast time, on a weekly basis, of another local station that it could not
own under the FCC's local ownership rules. The FCC's rules also prohibit a
broadcast licensee from simulcasting more than 25% of its programming on another
station in the same broadcast service (i.e., AM-AM or FM-FM), whether it owns
that other station or has a time brokerage or LMA arrangement with it, where the
brokered and brokering stations serve substantially the same geographic area.
PROGRAMMING AND OPERATION. The Communications Act requires broadcasters
to serve the "public interest". Since the late 1970s, the FCC gradually has
relaxed or eliminated many of the more formalized procedures it developed to
promote the broadcast of certain types of programming responsive to the needs of
a station's community of license. However, licensees continue to be required to
present programming that is responsive to community problems, needs and
interests and to maintain certain records demonstrating such responsiveness.
Complaints from listeners concerning a station's programming often will be
considered by the FCC when it evaluates renewal applications of a licensee,
although such complaints may be filed at any time. Stations also must follow
various rules promulgated under the Communications Act that regulate, among
other things, political advertising, the broadcast of obscene or indecent
material, sponsorship identifications, the advertisement of contests and
lotteries, and technical operations, including limits on radio frequency
radiation. In addition, licensees must develop and implement affirmative action
plans designed to promote equal employment opportunities, and must submit
reports to the FCC with respect to these matters on an annual basis and in
connection with renewal applications. Licensees must also annually file reports
concerning any changes in the ownership of a licensee or certain entities with
ownership interests in a licensee.
Failure to observe these or other rules and policies can result in the
imposition of various sanctions, including monetary forfeitures, the grant of
"short" (less than the full eight-year) renewal terms or, for particularly
egregious violations, the denial of a license renewal application or the
revocation of a license.
On September 1, 1995, the Company entered into a Settlement Agreement
with the FCC and the United States Department of Justice pursuant to which all
outstanding indecency proceedings and pending complaints involving programming
aired or originated by the Company's stations were vacated or dismissed and the
FCC's records concerning them were expunged. The Company admitted no guilt or
liability in connection with these proceedings, nor did it concede in any way
that the material focused upon therein by the FCC was legally indecent. Pursuant
to the Settlement Agreement, the Company agreed to make voluntary contributions
to the United States Treasury in the total amount of $1,715,000.
In late September, 1995, the National Hispanic Media Coalition ("NHMC")
filed a "Petition for Revocation of License" requesting the FCC to initiate a
revocation proceeding against the Company's station WXRK due to comments made
during the Howard Stern Show concerning the death of Selena Quintanilla Perez.
The Petition contends that the comments were "racist and indecent". On November
29, 1995, the Company filed an Opposition to the Petition, demonstrating that
the Petition is procedurally defective, substantively without merit and that, in
any event, the FCC is contractually precluded from initiating any proceeding
based upon the cited broadcasts pursuant to the terms of the September 1, 1995
Settlement Agreement described in the preceding paragraph.
PROPOSED CHANGES. The Congress and the FCC have under consideration,
and may in the future consider and adopt, new laws, regulations and policies
regarding a wide variety of matters that could, directly or indirectly, affect
the operation and ownership of the Company's radio broadcast properties. Such
matters include, for example, proposals to impose spectrum use or other
governmentally imposed fees upon licensees;
11
<PAGE>
the FCC's equal employment opportunity rules and other matters relating to
minority and female involvement in the broadcasting industry including
enhancement of ownership opportunities; proposals to change rules relating to
political broadcasting; proposals to change the thresholds, benchmarks or
concepts applicable to attributing ownership interests in broadcast media;
proposals to permit lenders to take a security interest in FCC licenses;
technical and frequency allocation matters, including those relative to the
implementation of digital audio broadcasting on both a satellite and terrestrial
basis, spectrum for which has been allocated by the FCC; proposals to permit
expanded use of FM translator stations; proposals to restrict or prohibit the
advertising of beer, wine and other alcoholic beverages on radio; and changes to
broadcast technical requirements and frequency allocation matters. The Company
cannot predict whether any such proposed changes will be adopted nor can it
judge in advance what impact, if any, any such proposed changes might have on
its business. In addition, the Company cannot predict what other changes might
be considered in the future, nor can it judge in advance what impact, if any,
such other changes might have on its business.
ITEM 2. PROPERTIES
The Company's corporate headquarters are located in midtown Manhattan.
The types of properties required to support each of the Company's radio stations
include offices, studios, transmitter sites and antenna sites. A station's
studios are generally housed with its offices in downtown or business districts.
The transmitter sites and antenna sites are generally located so as to provide
maximum market coverage.
With the exception of the Company's Houston radio station and a Boston
and a Detroit station, the studios and offices of the Company's stations, as
well as its corporate headquarters in New York City, are located in leased
facilities with lease terms that expire in one to ten years. The Company owns or
leases its transmitter and antenna sites, with lease terms that expire in one to
thirteen years.
The Company does not anticipate any difficulties in renewing those
leases that expire within the next five years or in leasing other space, if
required.
No one property is material to the Company's overall operations. The
Company believes that its properties are in good condition and suitable for its
operations; however, the Company continually looks for opportunities to upgrade
its properties.
The Company owns substantially all of the equipment used in its radio
broadcasting business.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to certain litigation in the ordinary course of
business that management does not believe to be material to the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the
fourth quarter of 1995.
12
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
Shares of the Company's Class A Common Stock, par value $.002 per share
(the "Class A Shares"), have been quoted on the New York Stock Exchange, under
the symbol INF since June 22, 1995. Prior to such date, the Company's Class A
shares were quoted on the NASDAQ National Market System. The following table
sets forth, for the calendar quarters indicated, the high and low sales prices
of the Class A Shares on the New York Stock Exchange from June 22, 1995 and on
the NASDAQ National Market System prior thereto, as reported in published
financial sources.
YEAR HIGH LOW
1994:
First Quarter ......................... 15.00 11.11
Second Quarter......................... 12.45 9.00
Third Quarter.......................... 14.67 10.67
Fourth Quarter......................... 14.11 12.22
1995:
First Quarter.......................... 19.11 13.45
Second Quarter......................... 25.00 17.22
Third Quarter.......................... 25.09 19.59
Fourth Quarter......................... 25.67 19.92
1996:
First Quarter (through March 14, 1996). 30.00 23.25
The above table gives effect to the stock splits effected by the
Company.
There is no public trading market for the Company's Class B Common
Stock, $.002 per share (the "Class B Shares"), or its Class C Common Stock,
$.002 per share (the "Class C Shares").
As of March 14, 1996, there were approximately 7,000 holders of Class A
Shares, eight holders of record of the Class B Shares and four holders of record
of the Class C Shares.
The Company has never paid dividends on its shares of common stock, and
it is not anticipated that any dividends will be paid on any shares of any class
of the Company's common stock in the foreseeable future.
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ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial information for the Company
presented below under the captions "Statement of Operations Data" and "Balance
Sheet Data" for, and as of the end of, each of the years in the five-year period
ended December 31, 1995, is derived from the Company's Consolidated Financial
Statements. This selected consolidated financial information should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto and with "Management's Discussion and Analysis of Financial Condition
and Results of Operations", appearing elsewhere in this Report.
<TABLE>
INFINITY BROADCASTING CORPORATION
(In thousands, except per share amounts)
<CAPTION>
YEAR ENDED DECEMBER 31,
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Statement of Operations and Other
Data: 1
Total revenues. . . . . . . . . . . . . . $135,278 $171,843 $234,240 $313,359 $372,429
Net revenues . . . . . . . . . . . . . . . 117,959 150,230 204,522 274,120 325,706
Station operating expenses
excluding depreciation and
amortization. . . . . . . . . . . . . . . 61,207 81,707 109,601 143,249 167,285
-------- -------- -------- -------- --------
Station operating income excluding
depreciation and amortization . . . . 56,752 68,523 94,921 130,871 158,421
Depreciation and amortization. . . . . 25,582 28,926 38,853 46,606 50,482
Corporate general and
administrative expenses. . . . . . . . 3,698 4,182 4,836 5,633 6,135
-------- -------- -------- --------- ---------
Operating income . . . . . . . . . . . . 27,472 35,415 51,232 78,632 101,804
Operating cash flow . . . . . . . . . . 53,054 64,341 90,085 125,238 152,286
Interest expense, net . . . . . . . . . . 51,492 38,238 36,291 44,529 43,998
Net earnings (loss) before
extraordinary items . . . . . . . . . . (24,026) (9,432) 14,335 33,213 54,503
Net earnings (loss) per share
before extraordinary items . . . . . (.73) (.13) .15 .33 .53
Cash dividends declared per
common share. . . . . . . . . . . . . - - - - -
Weighted average number of shares
outstanding 2. . . . . . . . . . . . . . 33,110 70,502 93,083 100,709 102,903
DECEMBER 31,
1991 1992 1993 1994 1995
---- ---- ---- ---- ----
Balance Sheet Data: 1
Total assets. . . . . . . . . . . . . . . . $212,383 $271,952 $378,040 $562,153 $594,456
Long-term debt (including current
portion). . . . . . . . . . . . . . . . . 406,138 380,625 365,062 531,750 267,384
Stockholders' equity (deficiency). . . (222,030) (138,734) (24,240) (25,525) 273,992
Working capital . . . . . . . . . . . . . (4,709) 4,656 10,610 28,877 55,285
<FN>
1. The historical consolidated financial results for the Company are not
comparable from year to year because of the acquisition of various
broadcasting properties by the Company during the periods covered. See
"Business--Background" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations", appearing elsewhere in this
Report.
2. See Notes 1(f) and 2 of the Notes to the Company's Consolidated Financial
Statements, appearing elsewhere in this Report.
</FN>
</TABLE>
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<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Net revenues for the year ended December 31, 1995 were $325,706,000 as
compared to $274,120,000 for the year ended December 31, 1994, an increase of
approximately 19%. The increase was due principally to higher advertising
revenues at most of the Company's stations and the acquisitions of radio
stations KRTH- FM (Los Angeles) in February 1994, WPGC-AM/FM (Washington, D.C.)
and WXYT-AM (Detroit) in June 1994 (collectively the "1994 Acquisitions") and
the acquisition of KLUV-FM (Dallas/Ft. Worth) in April 1995. On a pro forma
basis, assuming the above acquisitions had occurred as of the beginning of 1994,
net revenues for the year ended December 31, 1995 would have increased by
approximately 12%.
Station operating expenses (excluding depreciation and amortization)
for the year ended December 31, 1995 were $167,285,000 as compared to
$143,249,000 for the year ended December 31, 1994, an increase of approximately
17%. The increase was due principally to the above acquisitions, 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 1994,
station operating expenses in 1995 would have increased by approximately 10%.
Depreciation and amortization expense for the year ended December 31,
1995 was $50,482,000 as compared to $46,606,000 for the year ended December 31,
1994, an increase of approximately $3,876,000 or 8%. The increase was due to the
depreciation and amortization expense associated with the above acquisitions.
Operating income for the year ended December 31, 1995 was $101,804,000
as compared to $78,632,000 for the year ended December 31, 1994, an increase of
approximately 29%. 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 year ended December 31, 1995 was $43,998,000 as compared to
$44,529,000 for the year ended December 31, 1994, a decrease of approximately
1%. The decrease was due to lower debt levels, in part as a result of the
proceeds of approximately $269,000,000 from a public offering of 12,750,000
shares of the Company's Common Stock in October 1995.
Income taxes, consisting principally of state and local income taxes,
for the year ended December 31, 1995 were $1,588,000 as compared to $890,000 for
the year ended December 31, 1994, an increase of $698,000. No federal income
taxes have been provided as a result of available tax loss carryforwards.
Net earnings for the year ended December 31, 1995 was $54,503,000
($0.53 per share) as compared to $33,213,000 ($0.33 per share) for the year
ended December 31, 1994, an increase of approximately $21,290,000 or 64%.
In December 1995, the Financial Accounting Standards Board issued
Statement No. 123, "Accounting for Stock-Based Compensation" ("SFAS 123"),
effective for years beginning after December 15, 1995. Under SFAS 123, the
Company may elect either a "fair value" based method or the current "intrinsic
value" based method of accounting for its stock-based compensation arrangements.
If the Company were to elect the "intrinsic value" based method, the Company
would be required to disclose in the footnotes to the financial
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<PAGE>
statements net income and earnings per share computed under the "fair value"
based method. The Company will elect the "intrinsic value" based method.
Accordingly, the adoption of SFAS 123 will not impact the Company's reported
results of operations or financial condition.
Year Ended December 31, 1994 Compared to Year Ended December 31, 1993
Net revenues for the year ended December 31, 1994 were $274,120,000 as
compared to $204,522,000 for the year ended December 31, 1993, an increase of
approximately 34%. The increase was due principally to higher advertising
revenues at most of the Company's stations and the 1994 Acquisitions. On a pro
forma basis, assuming the 1994 Acquisitions had occurred as of the beginning of
1993, net revenues for the year ended December 31, 1994 would have increased by
approximately 14%.
Station operating expenses (excluding depreciation and amortization)
for the year ended December 31, 1994 were $143,249,000 as compared to
$109,601,000 for the year ended December 31, 1993, an increase of approximately
31%. The increase was due principally to the above acquisitions, 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 in 1994 would have increased by approximately 11%.
Depreciation and amortization expense for the year ended December 31,
1994 was $46,606,000 as compared to $38,853,000 for the year ended December 31,
1993, an increase of approximately $7,753,000 or 20%. The increase was due to
the depreciation and amortization expense associated with the above
acquisitions.
Operating income for the year ended December 31, 1994 was $78,632,000
as compared to $51,232,000 for the year ended December 31, 1993, an increase of
approximately 53%. 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 year ended December 31, 1994 was $44,529,000 as compared to
$36,291,000 for the year ended December 31, 1993, an increase of approximately
23%. The increase was due principally to additional borrowings in connection
with the above acquisitions as well as higher interest rates during 1994.
Income taxes, consisting principally of state and local income taxes,
for the year ended December 31, 1994 were $890,000 as compared to $606,000 for
the year ended December 31, 1993, an increase of $284,000. No federal income
taxes have been provided as a result of available tax loss carryforwards.
Net earnings for the year ended December 31, 1994 was $33,213,000
($0.33 per share) as compared to $14,335,000 ($0.15 per share) for the year
ended December 31, 1993, an increase of approximately $18,878,000 or 132%.
16
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31, 1995, net cash flow from operating
activities was approximately $86,138,000 as compared to $73,944,000 for the year
ended December 31, 1994, an increase of approximately $12,194,000 or 16%. The
increase was principally due to higher earnings in 1995 partially offset by
higher working capital requirements.
The net cash flow from operating activities of approximately
$86,138,000 together with proceeds of approximately $269,852,000 from a public
offering of the Company's Common Stock were used principally to finance
acquisitions of approximately $53,000,000, purchase treasury stock of
$24,838,000 million and repay debt of approximately $264,366,000.
In April 1995, the Company acquired Dallas, Ft. Worth radio station
KLUV-FM from TK Communications, Inc. for approximately $51 million, plus costs.
In January 1996, the Company completed the acquisition of the Alliance
stations for approximately $275 million. The purchase price was financed by bank
borrowings .
In March 1996, the Company completed the acquisition of all of the
outstanding stock of TDI Worldwide, Inc. for approximately $300 million. The
purchase price was financed by bank borrowings of approximately $230 million and
through the issuance of approximately 2.4 million newly issued shares of Class
A Common Stock.
The Company intends to borrow funds in order to complete the Granum
Acquisition, offset in part by proceeds from the KYCW-FM Disposition.
As of March 27, 1996, the Company has approximately $132,000,000
available under its bank credit agreement for acquisitions and general
corporate purposes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information called for by this Item is included on Pages F-1
through F-15 of this Report on Form 10-K and is incorporated herein by
reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The information called for by this Item is not applicable.
17
<PAGE>
PART III
The information required in this Part is incorporated by reference from
the registrant's definitive proxy statement (to be filed pursuant to Regulation
14A).
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K
(a) 1. Financial Statements.
2. Financial Statement Schedules.
The financial statements and schedule listed in the index to the
Consolidated Financial Statements of the Company that appears on Page 25 of this
Report on Form 10-K are filed as part of this Report.
3. Exhibits
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
2(a) Securities Purchase Agreement, dated as of September 30, 1991,
by and among the Company, Michael A. Wiener, Gerald Carrus,
Mel Karmazin, and Shearson Lehman Hutton Capital Partners II,
L.P., Shearson Lehman Hutton Merchant Banking Portfolio
Partnership L.P., Shearson Lehman Hutton Offshore Investment
Partnership L.P., and Shearson Lehman Hutton Offshore
Investment Partnership Japan L.P. (collectively, the "Lehman
Investors"). (This exhibit can be found as Exhibit 2(a) to the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1991 (File No. 0-14702) and is incorporated
herein by reference.)
2(b) Asset Purchase Agreement, dated as of August 15, 1992, between
Cook Inlet Radio Partners, L.P., Cook Inlet Radio License
Partnership, L.P., 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(c) 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(d) 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(e) 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.)
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<PAGE>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
2(f) 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 fiscal year ended December 31, 1993 (File No.
0-14702) and is incorporated herein by reference.)
2(g) Asset Purchase Agreement, dated as of September 12, 1994, by
and between TK Communications, Inc. and Infinity Broadcasting
Corporation of Dallas. (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, 1994 (File No. 0-14702) and is
incorporated herein by reference.)
2(h) Purchase Agreement, dated September 22, 1995, among each of
the entities identified in Schedule 1.0(a) thereto, Alliance
Broadcasting, L.P., each of the entities identified in
Schedule 1.0(b) thereto, Infinity Broadcasting Corporation of
Los Angeles and the Company. (This exhibit can be found as
Exhibit 2(a) to the Company's Report on Form 8-K, dated
September 27, 1995 (File No. 0-14702) and is incorporated
herein by reference.)
2(i) Stock Purchase Agreement, dated as of February 22, 1996, by
and among the Company, William M. Apfelbaum, each of the other
stockholders of TDI Worldwide, Inc. identified on Schedule 4.2
thereto, 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.
2(j) Stock Purchase Agreement, dated as of March 3, 1996, between
the Company and Granum Holdings L.P., 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.
3(a) Restated Certificate of Incorporation of the Company, as
amended October 22, 1993. (This exhibit can be found as
Exhibit 3 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.)
3(b) Certificate of Amendment of Restated Certificate of
Incorporation, filed on August 9, 1995. (This exhibit can be
found as Exhibit 3(b) to the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995 (File No.
0-14702) and is incorporated herein by reference.)
3(c) Amended and Restated By-Laws of the Company. (This exhibit can
be found as Exhibit 3(b) to the Company's Registration
Statement on Forms S-1 and S-3 (Registration No. 33-46118) and
is incorporated herein by reference.)
4(a) Indenture, dated as of March 24, 1992, between the Company and
Bank of Montreal Trust Company, as Trustee. (This exhibit can
be found as Exhibit 4(c) to the Company's Registration
Statement on Form S-3 (Registration No. 33-61348) and is
incorporated herein by reference.)
4(b) Second Amended and Restated Credit Agreement, dated as of
December 22, 1994, between the Company and each of the lenders
identified under the caption "Banks" on the signature pages
thereof (the "Banks"), The Chase Manhattan Bank (National
Association), as Administrative Agent for the Banks, Bank of
America Illinois, Bank of Montreal, The Bank of New York,
Chemical Bank, Compagnie Financiere de CIC et de L'Union
Europeenne, The First National Bank of Boston and National
Westminster Bank USA, as co-agents for the Banks, and Chemical
Bank, as collateral agent for the Banks, including the form of
the separate Amended and Restated Loan Agreements, between
each of Hemisphere Broadcasting Corporation, Sagittarius
Broadcasting Corporation, Infinity Broadcasting Corporation of
Boston and Infinity Broadcasting Corporation of California and
The Chase Manhattan Bank (National Association) as
Administrative Agent, attached thereto as Exhibit B. (This
exhibit can be found as Exhibit 4(b) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1994 (File No. 0-14702) and is incorporated herein by
reference.)
19
<PAGE>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
4(c) Amendment No. 1 dated as of June 23, 1995, to the Second
Amended and Restated Credit Agreement, dated as of December
22, 1994, between the Company and the banks that are
signatories thereto. (This exhibit can be found as Exhibit
10.01 to the Company's Registration Statement of Form S-3
(Registration No. 33-61081) and is incorporated herein by
reference.)
4(d) Second Amended and Restated Security Agreement, dated as of
December 22, 1994, between the Company, each of the
subsidiaries of the Company identified under the caption
"Subsidiaries" on the signature pages thereof, and Chemical
Bank, as collateral agent for the Banks. (This exhibit can be
found as Exhibit 4(c) to the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1994 (File No.
0-14702) and is incorporated herein by reference.)
4(e) Amended and Restated Stockholders' Agreement, dated as of
February 5, 1992, among the Company, Michael A. Wiener, Gerald
Carrus, Mel Karmazin and the Lehman Investors. (This exhibit
can be found as Exhibit 4(j) to the Company's Registration
Statement on Forms S-1 and S-3 (Registration No. 33-46118) and
is incorporated herein by reference.)
4(f) Warrant Certificate, dated January 28, 1992, certifying that
Shearson Lehman Hutton Capital Partners II L.P. is the owner
of warrants to purchase 2,366,949 shares of Class C Common
Stock, par value $.002 per share, of the Company. (This
exhibit can be found as Exhibit 4(l) to the Company's
Registration Statement on Forms S-1 and S-3 (Registration No.
33-46118) and is incorporated herein by reference.)
4(g) Warrant Certificate, dated January 28, 1992, certifying that
Lehman Brothers Merchant Banking Portfolio Partnership L.P. is
the owner of warrants to purchase 3,481,590 shares of Class C
Common Stock, par value $.002 per share, of the Company. (This
exhibit can be found as Exhibit 4(m) to the Company's
Registration Statement on Forms S-1 and S-3 (Registration No.
33-46118) and is incorporated herein by reference.)
4(h) Warrant Certificate, dated December 14, 1993, certifying that
Shearson Lehman Hutton Offshore Investment Partnership L.P. is
the owner of warrants to purchase 769,465 shares of Class C
Common Stock, par value $.002 per share, of the Company. (This
exhibit can be found as Exhibit 4(j) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 (File No. 0-14702) and is incorporated herein by
reference.)
4(i) Warrant Certificate, dated December 14, 1993,
certifying that Shearson Lehman Hutton Offshore Investment
Partnership Japan L.P. is the owner of warrants to purchase
2,317,522 shares of Class C Common Stock, par value $.002 per
share, of the Company. (This exhibit can be found as Exhibit
4(k) to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993 (File No. 0-14702) and is
incorporated herein by reference.)
4(j) Securities Exchange Agreement, dated as of January 28, 1992,
among the Company and the Lehman Investors. (This exhibit can
be found as Exhibit 4(p) to the Company's Registration
Statement on Forms S-1 and S-3 (Registration No. 33-46118) and
is incorporated herein by reference.)
10(a)* Employment Agreement, dated as of December 30, 1985, between
the Company and Michael -- A. Wiener. (This exhibit can be
found as Exhibit 10(a) to the Company's Registration Statement
on Form S-1 (Registration No. 33-5190) and is incorporated
herein by reference.)
10(b)* Employment Agreement, dated as of December 30, 1985, between
the Company and Gerald -- Carrus. (This exhibit can be found
as Exhibit 10(b) to the Company's Registration Statement on
Form S-1 (Registration No. 33-5190) and is incorporated herein
by reference.)
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
item 14(c) of Form 10-K.
20
<PAGE>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
10(c)* Employment Agreement, dated as of September 10, 1990, between
the Company and Mel Karmazin. (This exhibit can be found as
Exhibit 28(a) to the Company's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1990 (File No. 0-14702)
and is incorporated herein by reference.)
10(d)* First Amendment, dated September 30, 1991, to the Employment
Agreement, dated as of September 10, 1990, between the Company
and Mel Karmazin. (This exhibit can be found as Exhibit 10(d)
to the Company's Registration Statement on Forms S-1 and S-3
(Registration No. 33-44568) and is incorporated herein by
reference.)
10(e)* Second Amendment, dated February 4, 1992, to the Employment
Agreement, dated as of September 10, 1990, between the Company
and Mel Karmazin. (This exhibit can be found as Exhibit 10(e)
to the Company's Registration Statement on Forms S-1 and S-3
(Registration No. 33-46118) and is incorporated herein by
reference.)
10(f)* Third Amendment, effective as of June 14, 1993, to the
Employment Agreement, dated as of September 10, 1990, between
the Company and Mel Karmazin. (This exhibit can be found as
Exhibit 10(a) 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.)
10(g)* Fourth Amendment, effective as of August 16, 1993, to the
Employment Agreement, dated as of September 10, 1990, between
the Company and Mel Karmazin. (This exhibit can be found as
Exhibit 10(b) 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.)
10(h)* Fifth Amendment, effective as of November 19, 1993, to the
Employment Agreement, dated as of September 10, 1990, between
the Company and Mel Karmazin. (This exhibit can be found as
Exhibit 10(d) 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.)
10(i)* Sixth Amendment, effective as of March 30, 1994, to the
Employment Agreement, dated as of September 10, 1990, between
the Company and Mel Karmazin. (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.)
10(j)* Seventh Amendment, effective as of May 19, 1995, to the
Employment Agreement, dated September 10, 1990, between the
Company and Mel Karmazin. (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, 1995 (File No. 0-14702) and is
incorporated herein by reference.)
10(k)* The Company's Stock Option Plan, amended and restated as of
August 16, 1993. (This exhibit can be found as Exhibit 10(j)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 (File No. 0-14702) and is
incorporated herein by reference.)
10(l)* Amendment, effective as of November 19, 1993, to the Company's
Stock Option Plan, as amended and restated as of August 16,
1993. (This exhibit can be found as Exhibit 10(k) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (File No. 0-14702) and is incorporated
herein by reference.)
10(m)* Amendment, adopted March 30, 1994, to the Company's Stock
Option Plan, as amended and restated as of August 16, 1993.
(This exhibit can be found as Exhibit 10(l) to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1993 (File No. 0-14702) and is incorporated herein by
reference.)
10(n)* Amendment, dated as of June 15, 1995, to the Company's Stock
Option Plan.
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
item 14(c) of Form 10-K.
21
<PAGE>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
10(o)* The Company's Deferred Share Plan, amended and restated as of
August 16, 1993. (This exhibit can be found as Exhibit 10(m)
to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1993 (File No. 0-14702) and is
incorporated herein by reference.)
10(p)* Amendment, effective as of November 19, 1993, to the Company's
Deferred Share Plan, as amended and restated as of August 16,
1993. (This exhibit can be found as Exhibit 10(n) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (File No. 0-14702) and is incorporated
herein by reference.)
10(q)* Amendment, dated as of June 15, 1995, to the Company's
Deferred Share Plan, as amended and restated as of August 16,
1993.
10(r)* The Company's Cash Bonus Compensation Plan, adopted on March
30, 1994. (This exhibit can be found as Exhibit 10(o) to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1993 (File No. 0-14702) and is incorporated
herein by reference.)
10(s)* Indemnity Agreement, dated as of February 27, 1986, between
the Company and Michael A. Wiener. (This exhibit can be found
as Exhibit 10(f) to the Company's Registration Statement on
Form S-1 (Registration No. 33-5190) and is incorporated herein
by reference.)
10(t)* Indemnity Agreement, dated as of February 27, 1986, between
the Company and Gerald Carrus. (This exhibit can be found as
Exhibit 10(g) to the Company's Registration Statement on Form
S-1 (Registration No. 33-5190) and is incorporated herein by
reference.)
10(u)* Indemnity Agreement, dated as of February 7, 1986, between the
Company and Mel Karmazin. (This exhibit can be found as
Exhibit 10(h) to the Company's Registration Statement on Form
S-1 (Registration No. 33-5190) and is incorporated herein by
reference.)
10(v)* Indemnity Agreement, dated as of June 22, 1987, between the
Company and Farid Suleman. (This exhibit can be found as
Exhibit 10(j) to the Company's Registration Statement on Form
S-1 (Registration No. 33-15285) and is incorporated herein by
reference.)
10(w)* Indemnity Agreement, dated as of February 4, 1992, between the
Company and Steven A. Lerman. (This exhibit can be found as
Exhibit 10(l) to the Company's Registration Statement on Forms
S-1 and S-3 (Registration No. 33-46118) and is incorporated
herein by reference.)
10(x)* Indemnity Agreement, dated as of November 9, 1992, between the
Company and Alan R. Batkin. (This exhibit can be found as
Exhibit 10(m) to the Company's Report on Form 10-K for the
year ended December 31, 1992 (File No. 0-14702) and is
incorporated herein by reference.)
10(y)* Indemnity Agreement, dated as of October 18, 1994, between the
Company and Jeffrey Sherman. (This exhibit can be found as
Exhibit 10(v) to the Company's Report on Form 10-K for the
year ended December 31, 1994 (File No. 0-14702) and is
incorporated herein by reference.)
10(z)* Stock Option Agreement, dated as of June 27, 1988, between the
Company, as successor to WCK, and Mel Karmazin. (This exhibit
can be found as Exhibit (c)(2) to the Statement on Schedule
13E-3 filed pursuant to Rule 13e-3 by WCK, the Management
Investors (Michael A. Wiener, Gerald Carrus and Mel Karmazin)
and the Company and is incorporated herein by reference.)
10(aa)* Amendment Agreement, dated as of August 2, 1988, to Stock
Option Agreement dated as of June 27, 1988, between the
Company, as successor to WCK, and Mel Karmazin. (This exhibit
can be found as Exhibit 9(c)(7) to Amendment No. 3 to Schedule
14D-1 filed by the Company as successor to WCK and is
incorporated herein by reference.)
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
item 14(c) of Form 10-K.
22
<PAGE>
Exhibit
NUMBER DESCRIPTION OF EXHIBIT
10(bb)* Amendment No. 1 to Stock Option Agreement, dated as of October
14, 1988, between the Company and Mel Karmazin. (This exhibit
can be found as Exhibit 4(l) to the Company's Annual Report on
Form 10-K for the year ended December 25, 1988 (File No.
0-14702) and is incorporated herein by reference.)
10(cc)* Warrant Certificate, dated September 30, 1991, certifying that
Mel Karmazin is the owner of warrants to purchase shares of
Class A Common Stock, par value $.002 per share, of the
Company. (This exhibit can be found as Exhibit 10(p) to the
Company's Registration Statement on Forms S-1 and S-3
(Registration No. 33-46118) and is incorporated herein by
reference.)
10(dd) Amended and Restated Credit Agreement, Purchase and Release
Agreement, dated as of February 3, 1994, among Unistar Radio
Networks, Inc. (formerly known as Unistar Holdings, Inc.),
UCGI, Inc. (formerly known as Unistar Communications Group,
Inc.), TMRG, Inc. (formerly known as The Market Research
Group, Inc.), The Chase Manhattan Bank (National Association),
as lender and as agent, the Company and Novastar, Inc. (This
exhibit can be found as Exhibit 10(dd) to the Company's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993 (File No. 0-14702) and is incorporated herein by
reference.)
10(ee) Securities Purchase Agreement, dated as of November 4, 1993,
between Westwood One, Inc. and Infinity Network Inc. (This
exhibit can be found as Exhibit 10(b) 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.)
10(ff) Stock Purchase Agreement, dated as of November 4, 1993, among
UCGI, Inc. (formerly known as Unistar Communications Group,
Inc.), Unistar Radio Networks, Inc., the Company and Westwood
One,Inc. and Infinity Network Inc. (This exhibit can be found
as Exhibit 10(a) to the Company's Report on Form 8-K filed on
November 17, 1993 (File No. 0-14702) and is incorporated
herein by reference.)
10(gg) Management Agreement, dated as of February 3, 1994, between
Westwood One, Inc. and the Company. (This exhibit can be found
as Exhibit 10(gg) to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 1993 (File No. 0-14702)
and is incorporated herein by reference.)
21 Subsidiaries of the Company.
23 Consent of KPMG Peat Marwick LLP, Independent Certified
Public Accountants.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the fourth
quarter of the fiscal year covered by this Report.
* Denotes management contract or compensatory plan or
arrangement required to be filed as an exhibit pursuant to
item 14(c) of Form 10-K.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on the 27th day of
March, 1996.
INFINITY BROADCASTING CORPORATION
/s/ MICHAEL A. WIENER
BY..............................
Michael A. Wiener,
CO-CHAIRMAN OF THE BOARD
OF DIRECTORS AND SECRETARY
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Michael A. Wiener March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Michael A. Wiener Date
Co-Chairman of the Board of
Directors and Secretary
/s/ Gerald Carrus March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Gerald Carrus Date
Chairman of the Board
of Directors and Treasurer
/s/ Mel Karmazin March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Mel Karmazin Date
Director, President, and
Chief Executive Officer
/s/ Farid Suleman March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Farid Suleman Date
Director, Vice President--Finance,
and Chief Financial Officer
/s/ James A. Stern March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
James A. Stern Date
Director
/s/ James L. Singleton March 27, 1996
. . . . . . . . . . . . . . . . . . . . . .
James L. Singleton Date
Director
/s/ Steven A. Lerman March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Steven A. Lerman Date
Director
/s/ Alan R. Batkin March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Alan R. Batkin Date
Director
/s/ Jeffrey Sherman March 27, 1996
. . . . . . . . . . . . . . . . . . . . . . .
Jeffrey Sherman Date
Director
- -------------------
* Mr. Suleman also performs the functions of Chief Accounting Officer
24
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
COVERED BY INDEPENDENT AUDITORS' REPORT
(Item 14(a)1)
PAGE
Independent Auditors' Report........................................ F-1
Consolidated balance sheets as of December 31, 1994 and 1995........ F-2
Consolidated statements of earnings for each of the years in
the three-year period ended December 31, 1995.................... F-3
Consolidated statements of changes in stockholders' equity
(deficiency) for each of the years in the three-year period
ended December 31, 1995.......................................... F-4
Consolidated statements of cash flows for each of the years in
the three-year period ended December 31, 1995.................... F-5
Notes to consolidated financial statements.......................... F-6
Financial statement schedule for each of the years in the
three-year period ended December 31, 1995
II Valuation and qualifying accounts................................ F-15
All other schedules have been omitted because the required information
either is not applicable or is shown in the consolidated financial statements or
notes thereto.
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Infinity Broadcasting Corporation:
We have audited the consolidated financial statements of Infinity Broadcasting
Corporation and subsidiaries as listed in the accompanying index. In connection
with our audits of the consolidated financial statements, we also audited the
financial statement schedule as listed in the accompanying index. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Infinity
Broadcasting Corporation and subsidiaries as of December 31, 1994 and 1995, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles. Also in our opinion, the related financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
KPMG PEAT MARWICK LLP
New York, New York
February 6, 1996, except as to Notes 2 and 3,
which are as of March 26, 1996
F-1
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Dec. 31, Dec. 31,
1994 1995
------ -----
(Dollars In Thousands)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,720 $ 20,340
Receivables (less allowance of $1,535 in 1994
and $2,139 in 1995). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76,549 86,720
Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . . . . . . 536 1,305
------- -------
Total Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84,805 108,365
------- -------
Property and equipment at cost (net of accumulated
depreciation of $10,729 in 1994 and $14,676 in 1995). . . . . . . . . . . . . . . . . . . 22,288 20,561
Intangible assets (net of accumulated amortization of
$120,950 in 1994 and $147,158 in 1995) . . . . . . . . . . . . . . . . . . . . . . . .. . 441,187 451,220
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13,873 14,310
------- -------
$562,153 $594,456
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities:
Accounts payable and other accrued expenses . . . . . . . . . . . . . . . . . . . . $ 16,035 $ 18,392
Accrued compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,142 6,799
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,605 7,131
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,927 4,866
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,219 15,892
------ --------
Total Current Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,928 53,080
------ --------
Long-term debt, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 531,750 267,384
Commitments and contingencies
Stockholders' equity (deficiency):
Preferred stock, $.01 par value: 1,000,000 shares authorized; none issued. . . . - -
Class A Common Stock, $.002 par value: 200,000,000 shares authorized;
64,730,100 shares issued in 1994 and 78,142,278 shares
issued in 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129 156
Class B Common Stock, $.002 par value: 17,500,000 shares authorized; issued
and outstanding 8,651,597 shares in 1994 and 8,325,047 shares in 1995. . . . 18 17
Class C Common Stock, $.002 par value: 30,000,000 shares authorized; issued
and outstanding 1,116,257 shares in 1994 and 1995. . . . . . . . . . . . . . . . . . 2 2
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 260,011 529,837
Retained earnings (deficit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (250,841) (196,338)
-------- --------
9,319 333,674
Less treasury stock at cost, 2,934,900 shares in 1994 and 4,191,218 shares
in 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(34,844) ( 59,682)
------- --------
Total stockholders' equity (deficiency) . . . . . . . . . . . . . . . . . . . . . (25,525) 273,992
--------- --------
$562,153 $594,456
======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
F-2
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
<CAPTION>
YEAR ENDED DECEMBER 31,
1993 1994 1995
---- ---- ----
(Dollars and Shares in Thousands
Except per share amounts)
<S> <C> <C> <C>
Total revenues. . . . . . . . . . . . . . . . . . . . . . .$234,240 $313,359 $ 372,429
Less agency commissions. . . . . . . . . . . . . . . . 29,718 39,239 46,723
--------- --------- ---------
Net revenues. . . . . . . . . . . . . . . . . . . . . 204,522 274,120 325,706
------- -------- ---------
Station operating expenses excluding depreciation and
amortization. . . . . . . . . . . . . . . . . . . . . . 109,601 143,249 167,285
Depreciation and amortization . . . . . . . . . . . . . . 38,853 46,606 50,482
Corporate general and administrative expenses . . . . . 4,836 5,633 6,135
---------- --------- ----------
153,290 195,488 223,902
--------- -------- --------
Operating income . . . . . . . . . . . . . . . . . . . . 51,232 78,632 101,804
-------- --------- --------
Other income (expense)
Interest expense . . . . . . . . . . . . . . . . . . . . (36,776) (44,689) (44,385)
Interest income. . . . . . . . . . . . . . . . . . . . . 485 160 387
Other expense . . . . . . . . . . . . . . . . . . . . . . - - (1,715)
---------- ---------- ---------
Earnings before income taxes. . . . . . . . . . . . . . . 14,941 34,103 56,091
Income taxes. . . . . . . . . . . . . . . . . . . . . . . . 606 890 1,588
-------- --------- ---------
Net earnings . . . . . . . . . . . . . . . . . . . . . . . $ 14,335 $ 33,213 $ 54,503
======== ======== ========
Net earnings per common share. . . . . . . . . . . . . . $ 0.15 $ 0.33 $ .53
========= ======== =========
Weighted average shares outstanding. . . . . . . . . . . 93,083 100,709 102,903
========= ======== =========
<FN>
See accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
F-3
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
Years Ended December 31, 1993, 1994 and 1995
(In Thousands)
<CAPTION>
Class A Class B Class C
COMMON STOCK COMMON STOCK COMMON STOCK
SHARES AMT SHARES AMT SHARES AMT
------ --- ------ --- ------ ---
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1992 32,639 $65 9,022 $18 11,821 $24
Net earnings - - - - - -
Exercise of Warrants 3,780 8 305 - 95 -
Issuance of Deferred Shares - - 1,341 3 - -
Issuance of Class A Common
Stock 14,944 30 - - - -
Conversion of Class B and
Class C Common Stock to
Class A Common Stock 12,488 25 (1,688) (3) (10,800) (22)
------ --- ------- --- ------- ---
Balance at December 31, 1993 63,851 128 8,980 18 1,116 2
Net earnings - - - - - -
Issuance of Class A Common
Stock 550 1 - - - -
Conversion of Class B Common
Stock to Class A Common
Stock 328 - (328) - - -
Treasury Stock acquired - - - - - -
------- --- ------ --- ------ ----
Balance at December 31, 1994 64,729 129 8,652 18 1,116 2
Net earnings - - - - - -
Issuance of Class A Common
Stock 13,086 26 - - - -
Conversion of Class B Common
Stock to Class A Common
Stock 327 1 (327) (1) - -
Treasury Stock acquired - - - - - -
------- --- ------ --- ------ ----
Balance at December 31, 1995 78,142 $156 8,325 $17 1,116 $2
====== ==== ===== === ====== ==
</TABLE>
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
Years Ended December 31, 1993, 1994 and 1995
(In Thousands)
<CAPTION>
Add'l Retained TREASURY STOCK
Paid-in Earnings
CAPITAL (DEFICIT) TOTAL
SHARES AMT
------ ---
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1992 $159,548 $(298,389) - - $(138,734)
Net earnings - 14,335 - - 14,335
Exercise of Warrants 10,075 - - - 10,083
Issuance of Deferred Shares (2) - - - 1
Issuance of Class A Common
Stock 90,045 - - - 90,075
Conversion of Class B and
Class C Common Stock to
Class A Common Stock - - - - -
----------- ----------- -------- ---------- -----------
Balance at December 31, 1993 259,666 (284,054) - - (24,240)
Net earnings - 33,213 - - 33,213
Issuance of Class A Common
Stock 345 - - - 346
Conversion of Class B Common
Stock to Class A Common
Stock - - - - -
Treasury Stock acquired - - 2,935 $(34,844) (34,844)
---------- ----------- ----- -------- --------
Balance at December 31, 1994 260,011 (250,841) 2,935 (34,844) (25,525)
Net earnings - 54,503 - - 54,503
Issuance of Class A Common
Stock 269,826 - - - 269,852
Conversion of Class B Common
Stock to Class A Common
Stock - - - - -
Treasury Stock acquired - - 1,256 (24,838) (24,838)
---------- ----------- ------ ------- -------
Balance at December 31, 1995 $529,837 $(196,338) 4,191 $(59,682) $273,992
======== ========= ===== ======== ========
<FN>
See accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
F-4
<PAGE>
<TABLE>
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
YEARS ENDED DECEMBER 31,
1993 1994 1995
---- ---- ----
(Dollars In Thousands)
<S> <C> <C> <C>
Net cash flow from operating activities:
Net earnings . . . . . . . . . . . . . . . . . . . . . . . . . $ 14,335 $ 33,213 $ 54,503
Depreciation and amortization. . . . . . . . . . . . . . . . 38,853 46,606 50,482
Amortization of deferred financing costs . . . . . . . . . 1,330 2,338 2,056
--------- -------- ---------
54,518 82,157 107,041
Increase in receivables. . . . . . . . . . . . . . . . . . . . (14,867) (19,300) (10,171)
Decrease (increase) in other current assets. . . . . . . . (897) 2,442 (769)
Increase (decrease) in accounts payable and accrued
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 3,906 6,550 (47)
Increase (decrease) in accrued interest . . . . . . . . . . 821 1,829 (2,474)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . (700) 266 (7,442)
--------- ---------- ---------
Net cash flow from operating activities . . . . . . . . . . . 42,781 73,944 86,138
--------- --------- ---------
Investing activities:
Capital expenditures . . . . . . . . . . . . . . . . . . . . . 1,901 1,606 2,789
Acquisitions:
Property and equipment . . . . . . . . . . . . . . . . . 4,000 5,920 200
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . 117,372 206,725 52,800
Less liabilities . . . . . . . . . . . . . . . . . . . . . . . (2,430) (10,331) (2,415)
-------- --------- ---------
Net cash used for investing activities . . . . . . . . . . . . 120,843 203,920 53,374
--------- --------- ---------
Cash provided (required) before financing activities . . . (78,062) (129,976) 32,764
========= ========= =========
Financing activities:
Borrowings under debt agreements . . . . . . . . . . . . 126,000 230,000 56,000
Reduction of debt. . . . . . . . . . . . . . . . . . . . . . . (141,563) (63,312) (320,366)
Proceeds from issuance of stock. . . . . . . . . . . . . . 100,159 346 269,852
Deferred financing costs. . . . . . . . . . . . . . . . . . . - (5,607) (792)
Repurchase of Class A Common Stock. . . . . . . . . . - (34,844) (24,838)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . - 1,200 -
--------- ---------- ----------
Net cash provided by (used for) financing activities. . . . 84,596 127,783 (20,144)
Decrease (increase) in cash and cash equivalents. . . (6,534) 2,193 (12,620)
--------- ---------- ---------
Total cash provided by (used for) financing activities. . . $ 78,062 $ 129,976 $ (32,764)
======== ========= =========
<FN>
See accompanying Notes to Consolidated Financial Statements
</FN>
</TABLE>
F-5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
(a) PRINCIPLES OF CONSOLIDATION AND PRESENTATION
The consolidated financial statements include the accounts of the
Company and its wholly-owned radio broadcasting subsidiaries. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect reported
amounts and related disclosures. Actual results could differ from those
estimates.
(b) REVENUE RECOGNITION
Revenues are recognized when advertisements are aired.
(c) PROPERTY AND EQUIPMENT
Depreciation is provided on a straight line basis over estimated useful
lives.
(d) INTANGIBLE ASSETS
Intangible assets including goodwill are being amortized over their
estimated useful lives. No amortization period exceeds 40 years. The Company
periodically evaluates the value of its intangible assets and if the costs of
such assets are in excess of associated expected operating cash flows, the
related assets are written down to fair value.
(e) INCOME TAXES
The Company and its subsidiaries file a consolidated Federal income tax
return.
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109 (FAS 109), "Accounting for Income Taxes" which
requires the use of the asset and liability method of financial accounting and
reporting for income taxes. Deferred income taxes reflect the impact of
temporary differences between the amount of assets and liabilities recognized
for financial reporting purposes and the amounts recognized for tax purposes. In
accordance with Statement of Financial Accounting Standards No. 109 the deferred
taxes are measured by applying currently enacted tax laws.
(f) EARNINGS PER SHARE
Earnings (loss) per common share are based on the weighted average
number of common shares and common equivalent shares (where inclusion of such
equivalent shares would not be anti-dilutive) outstanding during the year.
(g) CASH EQUIVALENTS
Cash equivalents include certificates of deposit and commercial paper
with maturities of one month or less.
F-6
<PAGE>
Note 2. Public Stock Offerings and Stock Dividends
On May 13, 1993, the Company sold through a public offering shares of
Class A Common Stock, resulting in net proceeds to the Company of approximately
$100 million.
On 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.
Effective May 12, 1995, the Company declared a three-for-two stock
split in the form of a stock dividend payable on May 19, 1995 to shareholders of
record at the close of business on May 12, 1995.
On August 8, 1995, the Company amended its Restated Certificate of
Incorporation to increase the number of authorized shares of Class A Common
Stock to 200,000,000.
On October 24, 1995, the Company, through a public offering sold
12,750,000 shares of Class A Common Stock, resulting in proceeds to the Company
of approximately $269 million.
On March 18, 1996, the Company declared a three-for-two stock split in
the form of a stock dividend payable on April 11, 1996 to holders of record on
March 28, 1996. The accompanying consolidated financial statements reflect the
effect of all of the above stock dividends.
Note 3. Acquisitions
In February 1993, the Company acquired 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, plus costs. In September 1993, the Company acquired
WIP-AM, an all-sports radio station serving Philadelphia, from Spectacor
Broadcasting, L.P. for approximately $17.4 million, plus costs.
In February 1994, the Company acquired Los Angeles radio station
KRTH-FM from Beasley FM Acquisition Corp. for approximately $116 million, plus
costs. In June 1994, the Company acquired 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 $61 million, plus assumption of certain
liabilities and costs. In June 1994, the Company acquired Detroit radio station
WXYT-AM from Fritz Broadcasting, Inc. for approximately $23 million, plus costs.
In April 1995, the Company acquired Dallas/Ft. Worth radio station
KLUV-FM from TK Communications, Inc. for approximately $51 million, plus costs.
The above acquisitions have been accounted for by the purchase method
of accounting. The purchase price has been allocated to the assets acquired,
principally intangible assets, and the liabilities assumed based on their
estimated fair values at the date of acquisition. The excess of purchase price
over the estimated fair values of the net assets acquired has been recorded as
goodwill.
F-7
<PAGE>
Note 3. Acquisitions--(Continued)
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 1994 and 1995 acquisitions had occurred as of the beginning
of 1994 and 1995, after giving effect to certain adjustments, including
amortization of intangible assets 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.
YEAR ENDED DECEMBER 31,
1994 1995
---- ----
(Unaudited)
Net revenues. . . . . . . . . . . $293,838 $327,648
Net earnings. . . . . . . . . . . 29,620 53,366
Net earnings per common share. . . .29 .52
On February 3, 1994, the Company, Unistar Communications Group, Inc.
("UCG") Unistar Radio Networks, Inc. ("Unistar") and Westwood One, Inc.
("Westwood One") consummated the purchase by Westwood One of Unistar, for
approximately $101.3 million. In connection with this transaction, an affiliate
of the Company received 5 million newly issued shares of common stock of
Westwood One for $3 per share and a warrant 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. The Company manages Westwood One
pursuant to a management agreement which provides for a base management fee plus
a bonus based on achieving cash flow targets and additional warrants to acquire
shares of Westwood One's common stock in the event that Westwood One's common
stock trades above certain target price levels. In September 1994 and August
1995, pursuant to such provision, the Company received a warrant to purchase
500,000 shares of Westwood One's common stock at an exercise price of $3 per
share and 500,000 shares at an exercise price of $4 per share, respectively. In
December 1995, the Company received approximately $5,593,750 as a result of
Westwood One's purchase and cancellation of the Company's warrant exercisable at
$3 per share. The Company accounts for its investment in Westwood One on the
equity basis.
On January 16, 1996 the Company completed the acquisition of radio
stations KYNG-FM and KSNN-FM in Dallas, KFRC-FM, KFRC-AM and KYCY-FM in San
Francisco, WYCD-FM in Detroit and KYCW-FM in Seattle from various entities
affiliated with Alliance Broadcasting, Inc. for approximately $275 million, plus
costs. The purchase price was financed by bank borrowings. On February 7, 1996,
the Company entered into an agreement to sell its Seattle radio station KYCW-FM
for approximately $26 million.
On March 26, 1996, the Company completed the acquisition of all of the
outstanding stock of TDI Worldwide, Inc., a leading seller of advertising space
on buses and transit systems, for approximately $300 million. The purchase price
was financed by bank borrowings of approximately $230 million and through the
issuance of approximately 2.4 million newly issued shares of Class A Common
Stock.
On March 4, 1996, the Company entered into an agreement to acquire 12
radio stations owned by various subsidiaries of Granum Holdings, L.P. for
approximately $410 million. The radio stations are KRBV-FM, KHVN-AM and KOAI-FM
in Dallas-Fort Worth, WBOS-FM and WOAZ-FM in Boston, WCAO-AM and WXYV-FM in
Baltimore, WAOK-AM and WVEE-FM in Atlanta, WHOO-AM,
F-8
<PAGE>
WHTQ-FM and WMMO-FM in Orlando. Upon the completion of the Granum Acquisition,
the Company will be required to divest one FM station in Dallas in order to
comply with the 1996 Telecom Act.
Note 4. Property and Equipment
A summary of property and equipment, at cost, for the years ended
December 31, 1994 and 1995 follows:
1994 1995
---- ----
(In Thousands)
Machinery, equipment and fixtures. . . $23,765 $24,845
Land, buildings and improvements . . . 9,252 10,392
-------- --------
$33,017 $35,237
======= =======
For the years ended December 31, 1993, 1994 and 1995 depreciation
expense was $4,791,000, $3,983,000 and $4,714,000.
Note 5. Long-Term Debt
Long-term debt at December 31, 1994 and 1995 consists of the following:
1994 1995
---- ----
(In Thousands)
Bank Borrowings (a) . . . . . . . . . . . . . . $331,750 $ 84,750
10 3/8% Subordinated Debentures due 2002 (b) . 200,000 182,634
--------- ---------
$531,750 $267,384
======== ========
(a) On December 22, 1994, the Company and its subsidiaries amended and
restated its existing Credit Agreement to provide for aggregate
borrowings of up to $700 million, including an acquisition facility of
$250 million. As of December 31, 1995, the Company had additional
borrowings available under the facility of approximately $615 million.
Under the terms of a Security Agreement among the Company, its
subsidiaries, and one of the banks acting as collateral agent,
substantially all of the assets of the Company and its subsidiaries, as
well as the stock of the Company's subsidiaries, are pledged to secure
borrowings under the Credit Agreement.
The Credit Agreement provides for quarterly principal payments
beginning September 1998, and also permits voluntary prepayments in
whole or in part at any time.
Under the Credit Agreement, interest is payable quarterly, based on the
(i) prime rate or (ii) London Interbank Offer Rate.
F-9
<PAGE>
Note 5. Long-Term Debt--(Continued)
In the normal course of business, the Company enters into a variety of
interest rate protection agreements, options and swaps, in order to
limit its exposure due to adverse fluctuations in interest rates. These
instruments are executed with credit worthy financial institutions. As
a matter of policy the Company does not engage in derivatives trading.
Generally, payments and receipts associated with financial instruments
used to manage interest rate risk are recognized along with the effects
of associated transactions. As of December 31, 1995, the Company has
entered into various interest rate protection agreements under which
the Company's interest rate on $185 million of borrowings under the
Credit Agreement is fixed at between 4.8% and 7% per annum, plus
applicable margin.
(b) At December 31, 1995, the fair value of the Company's 10 3/8% Senior
Subordinated Notes was estimated to be $196,332,000 based on the quoted
market prices for the same issue.
The scheduled maturities of long-term debt for the next five years and
after are as follows:
YEAR ENDING DECEMBER AMOUNT
(In Thousands)
1996............................. $ 0
1997............................. 0
1998............................. 10,594
1999............................. 12,713
2000............................. 14,831
After 2000....................... 229,246
----------
$267,384
For years ended 1993, 1994 and 1995, the Company paid cash for interest
of $34,625,000, $40,522,000 and $44,802,000, respectively.
During 1995, the Company registered with the Securities and Exchange
Commission, pursuant to a shelf registration statement, $500 million in
aggregate principal amount of its debt securities.
Note 6. Employee and Other Post Retirement Benefit Plans
The Company has a qualified 401(k) profit sharing plan covering
substantially all of its non-union full-time employees. For the years ended
December 31, 1993, 1994 and 1995, no contributions to this plan were made by the
Company.
The Company does not provide any post retirement health care and life
insurance benefits to its employees and, accordingly, has no liabilities for
such benefits.
F-10
<PAGE>
Note 7. Income Taxes
The provision for income taxes for the years ended December 31, 1993,
1994 and 1995, consisting of current state and local taxes, was $606,000,
$890,000 and $1,588,000, respectively. No federal income taxes were provided in
1993, 1994 and 1995 as a result of available net loss carryforwards.
Additionally, the value of the deferred tax asset resulting from the net
operating loss carryforwards was offset by a valuation allowance of equal
amount.
At December 31, 1995, the Company had net operating loss carryforwards
for federal income tax purposes which expire from 2003 to 2008 of approximately
$32 million.
For the years ended December 31, 1993, 1994 and 1995, the Company paid
cash for income taxes of $135,000, $429,000 and $3,620,000, respectively.
Note 8. Employee Stock Plans
EMPLOYEE STOCK OPTION PLAN. The Company's 1988 Employee Stock Option
Plan as amended provides for a grant of options to purchase 10,494,788 shares of
the Company's Class A Common Stock and 1,771,875 shares of Class B Common Stock.
The options are exercisable in equal amounts generally over five years from the
date of grant. At December 31, 1994 and 1995, options for approximately
7,800,000 shares of Class A Common Stock had been cumulatively granted and
options for 2,712,486 and 3,671,693 shares, respectively, were exercisable.
EMPLOYEE DEFERRED SHARE PLAN. The Deferred Share Plan permits the grant
of up to 541,443 Class A Deferred Shares and 1,761,681 Class B Deferred Shares
to executives or other key employees of the Company.
The following is a table summarizing the changes during the years ended
December 31, 1994 and 1995 in options and deferred shares outstanding:
CLASS A COMMON STOCK
Deferred Exercise
Shares and Price Per
OPTIONS SHARE
Outstanding as of December 31, 1993 . . . . .. . 5,493,038 .001-12.67
Granted/Issued. . . . . . . . . . . . . . . . . . 2,313,320 9.45-12.67
Canceled . . . . . . . . . . . . . . . . . . . . (15,188) 3.46
Exercised. . . . . . . . . . . . . . . . . . . . (553,233) .06-3.90
---------- ------------
Total outstanding as of December 31,1994 . 7,237,937
Granted/Issued . . . . . . . . . . . . . . . . . -
Canceled . . . . . . . . . . . . . . . . . . . . (65,813) 3.90-11.55
Exercised. . . . . . . . . . . . . . . . . . . . (335,528) .06-12.45
---------- ===========
Total outstanding as of December 31, 1995. 6,836,596
==========
F-11
<PAGE>
Note 8. Employee Stock Plans--(Continued)
During 1988, the Company issued options with an exercise price of $.012
per share to an officer of the Company to purchase 4,742,996 shares of the
Company's Class B Common Stock. Through the year ended 1995, options to purchase
379,556 shares were exercised.
In addition, the Company issued 253,125 options in 1993, 168,750
options in 1994 and 265,689 options and 29,705 Deferred Shares in 1995 to
purchase shares of Class B Common Stock at an exercise price per share of $4.11,
$11.33, $14.05 and $.002 per share, respectively.
Note 9. Stockholders' Equity
Each share of Class A Common Stock and each share of Class C Common
Stock is entitled to one vote per share. Each share of Class B Common Stock is
generally entitled to ten votes per share. Shares of Class B Common Stock and
Class C Common Stock, at the option of the holder, may be converted at any time
into an equal number of shares of Class A Common Stock. Each share of Class B
Common Stock and Class C Common Stock automatically converts into one share of
Class A Common Stock upon the sale, gift, or other transfer of such share to any
person other than an associate of the Company (as defined) and upon certain
other events.
The Company has reserved 72,989 shares of Class A Common Stock, with an
exercise price of $.001 and 20,104,934 shares of Class C Common Stock with an
exercise price of $.001 for issuance upon the exercise of certain warrants and
options outstanding as of December 31, 1995.
Note 10. Related Party Transactions
As of December 31, 1995, the Company had accounts receivable from
Westwood One amounting to approximately $4,550,324.
Note 11. Commitments and Contingencies
The Company and its subsidiaries occupy certain office space and
transmitting facilities under lease agreements expiring at various dates through
2008. Management expects that in the normal course of business, leases that
expire will be renewed or replaced by other leases. Most leases provide for
escalation of rent based on increases in the Consumer Price Index and/or real
estate taxes.
The following is a summary of the future minimum rental commitments
under existing leases:
YEAR ENDING DECEMBER 31, AMOUNT
(In Thousands)
1996 ..................................$ 4,750
1997 ..................................... 3,864
1998 ......................................3,538
1999 ......................................3,249
2000 ......................................2,585
After 2000................................ 5,966
---------
$ 23,952
F-12
<PAGE>
Note 11. Commitments and Contingencies--(Continued)
Rent expense applicable to such leases amounted to approximately
$3,079,000, $3,876,000 and $4,363,000 for the years ended December 31, 1993,
1994 and 1995, respectively.
At December 31, 1995, the Company is committed to the purchase of
broadcast rights for various sports events and other programming including
on-air talent, aggregating approximately $184 million. The aggregate
payments related to these commitments are as follows:
AMOUNT
(In Thousands)
1996 ...........................................$ 50,540
1997 .............................................50,484
1998 .............................................32,831
1999 .......................................... 28,285
2000 ...........................................$ 21,810
--------
$183,950
Note 12. Intangible and Other Assets
Intangible assets at cost, as of December 31, 1994 and 1995, include:
1994 1995
---- ----
(In Thousands)
FCC Licenses. . . . . . . . . . . $318,671 $370,394
Goodwill. . . . . . . . . . . . . 152,724 152,724
Covenants not to compete . . . . . 60,000 45,000
Favorable leasehold interest. . . 30,742 30,260
--------- ---------
$562,137 $598,378
======== ========
For the years ended December 31, 1993, 1994 and 1995 amortization
expense was $34,062,000, $42,623,000 and $45,768,000.
Other assets include principally deferred financing costs and are
amortized over the term of the financing.
F-13
<PAGE>
<TABLE>
Note 13. Quarterly Financial Data (Unaudited)
<CAPTION>
First Second Third Fourth
QUARTER QUARTER QUARTER QUARTER YEAR
(In Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
1995
Net revenues. . . . . . . . . . . . $62,327 $84,564 $84,098 $94,717 $325,706
Station operating expenses . . . 37,326 40,790 41,008 48,161 167,285
Operating income. . . . . . . . . 12,185 29,923 28,261 31,435 101,804
Net earnings. . . . . . . . . . . . 505 17,195 15,921 20,882 54,503
Net earnings per share . . . . . . .01 .17 .16 .19 .53
Dividends per share . . . . . . . - - - - -
1994
Net revenues. . . . . . . . . . . . $48,183 $68,694 $74,641 $82,602 $274,120
Station operating expenses . . . 30,362 33,501 37,469 41,917 143,249
Operating income. . . . . . . . . 6,201 22,344 23,533 26,554 78,632
Net earnings (loss) . . . . . . . . (3,864) 11,390 11,550 14,137 33,213
Net earnings (loss) per share. . (0.04) 0.11 0.11 0.14 0.33
Dividends per share . . . . . . . - - - - -
1993
Net revenues. . . . . . . . . . . . $35,165 $53,036 $55,156 $61,165 $204,522
Station operating expenses . . . 22,797 26,029 28,645 32,130 109,601
Operating income. . . . . . . . . 3,026 15,245 15,078 17,883 51,232
Net earnings (loss) . . . . . . . . (6,430) 5,684 5,994 9,087 14,335
Net earnings (loss) per share. . (0.09) 0.06 0.06 0.09 0.15
Dividends per share . . . . . . . - - - - -
</TABLE>
F-14
<PAGE>
<TABLE>
SCHEDULE II
INFINITY BROADCASTING CORPORATION AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended December 31, 1993, 1994, and 1995
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
---------- -------- ---------- -------- --------
Balance at Charged to Charged to Balance at
Beginning Costs and Other End of
DESCRIPTION OF PERIOD EXPENSES ACCOUNTS DEDUCTIONS PERIOD
(In Thousands)
<S> <C> <C> <C> <C> <C>
1993
Allowance for Doubtful Accounts . . . . $ 882 $ 852 $- $707 $1,027
===== ===== === ==== ======
1994
Allowance for Doubtful Accounts . . . . $1,027 $1,441 $- $933 $1,535
====== ====== === ==== ======
1995
Allowance for Doubtful Accounts . . . . $1,535 $1,410 $- $806 $2,139
====== ====== === ==== ======
</TABLE>
F-15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ACQUISITION OF STOCK
OF
TDI WORLDWIDE, INC.
STOCK PURCHASE AGREEMENT
Dated as of February 22, 1996
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS..............................................1
ARTICLE II
PURCHASE OF SHARES.......................................9
2.1 Purchase and Sale of Shares.........................9
2.2 Closing............................................10
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER.................11
3.1 Organization and Standing..........................11
3.2 Authorization and Binding Obligation...............11
3.3 Absence of Conflicting Agreements or
Required Consents..................................12
3.4 Litigation.........................................12
3.5 Financial Statements and Reports...................12
3.6 Stock Issuance.....................................13
3.7 Purchase for Investment............................13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS...............13
4.1 Authorization and Binding Obligation...............13
4.2 Title to Shares....................................14
4.3 Capital Stock......................................14
4.4 Articles of Incorporation; By-laws;
Minute Books.......................................14
4.5 Consents; No Conflict..............................15
4.6 Governmental Approvals and Authorizations..........15
4.7 Compliance with Laws...............................16
4.8 Real Property......................................16
4.9 Title to and Condition of Personal Property........19
4.10 Intellectual Property.............................19
4.11 Contracts.........................................20
4.12 Major Advertisers.................................21
4.13 Personnel Information.............................21
4.14 Employee Benefit Plans............................22
4.15 Litigation........................................24
4.16 Transaction with Affiliates.......................24
4.17 Financial Statements, etc.........................24
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4.18 Absences of Undisclosed Liabilities...............25
4.19 Absence of Changes or Events......................25
4.20 Insurance.........................................27
4.21 Taxes.............................................27
4.22 Environmental Matters.............................28
4.23 Financing Statements..............................29
4.24 Subsidiaries......................................29
4.25 Broker or Finder's Fee............................29
4.26 Purchase for Investment, etc......................29
4.27 Bank Accounts.....................................30
ARTICLE V
COVENANTS OF SELLERS....................................30
5.1 Information Prior to Closing.......................30
5.2 Conduct of Business................................30
5.3 Third-Party Consents...............................33
5.4 Renewal of Contracts...............................33
5.5 No Inconsistent Action.............................34
5.6 No Solicitation....................................34
5.7 Financial Statements...............................34
5.8 Estoppel Certificates; Consent and Waiver..........34
5.9 Limitation on Covenants............................35
ARTICLE VI
COVENANTS OF BUYER......................................35
6.1 Employee Benefits..................................35
6.2 Replacement Letters of Credit......................36
6.3 Third-Party Consents...............................36
6.4 Indemnification of Officers and Directors..........36
6.5 Adjustment Event...................................36
6.6 Books and Records..................................36
6.7 Rule 144...........................................37
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION
TO CLOSE................................................37
7.1 Representations, Warranties and Covenants..........37
7.2 Governmental Consents..............................38
7.3 Third-Party Consents...............................38
7.4 Sellers' Certificate...............................38
7.5 Employment Agreement...............................38
7.6 Adverse Proceedings................................38
7.7 Payment of Indebtedness; Financing
Statements.........................................39
7.8 Cole/TDI Aviation, LLC.............................39
7.9 Current Assets.....................................39
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7.10 FIRPTA Certificates...............................40
7.11 Resignation of Directors..........................40
7.12 Releases..........................................40
7.13 Escrow Note; Escrow Agreement.....................41
7.14 Deliveries........................................41
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION
TO CLOSE................................................41
8.1 Representations, Warranties and Covenants..........41
8.2 Governmental Consents..............................41
8.3 Adverse Proceedings................................41
8.4 Available Funds....................................42
8.5 Escrow Note; Escrow Agreement......................42
8.6 Deliveries.........................................42
ARTICLE IX
THE CLOSING.............................................42
9.1 Documents to be Delivered by Sellers...............42
9.2 Documents to be Delivered by Buyer.................43
ARTICLE X
TRANSFER TAXES; FEES AND EXPENSES.......................44
10.1 Transfer Taxes and Similar Charges................44
10.2 Expenses..........................................44
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS...............................................44
ARTICLE XII
INDEMNIFICATION.........................................44
12.1 Indemnification by Sellers........................44
12.2 Indemnification by Buyer..........................46
12.3 Limitation on Indemnity Obligation................47
12.4 Procedures for Certain Claims.....................48
12.5 Third-Party Claims................................51
12.6 The Sellers' Representative.......................53
12.7 Limitation on Claims..............................54
12.8 Special Limitations...............................54
12.9 Exclusive Remedy..................................54
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ARTICLE XIII
TERMINATION RIGHTS......................................55
13.1 Termination.......................................55
13.2 Liability.........................................55
ARTICLE XIV
REMEDIES UPON DEFAULT...................................55
ARTICLE XV
OTHER PROVISIONS........................................56
15.1 Confidentiality...................................56
15.2 Legend............................................57
15.3 Publicity.........................................57
15.4 Compliance with HSRA..............................57
15.5 Benefit and Assignment............................57
15.6 No Third-Party Beneficiaries......................58
15.7 Entire Agreement..................................58
15.8 Waiver............................................58
15.9 Headings..........................................58
15.10 Choice of Law....................................59
15.11 Notices..........................................59
15.12 Counterparts.....................................60
15.13 Further Assurances...............................60
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SCHEDULES
1.24 Financing Charge Amount Exclusions
2.1 Financing Charge Statement
4.2 Title to Shares
4.3 Capital Stock
4.5 Consents; No Conflicts
4.6 Governmental Approvals and Authorizations
4.8 Real Property
4.9 Title to Personal Property
4.10 Intellectual Property
4.11 Contracts
4.12 Major Advertisers
4.13 Personnel Information
4.14 Employee Benefit Plans
4.15 Litigation
4.16 Transaction with Affiliates
4.17 Financial Statements
4.19 Absence of Changes or Events
4.20 Insurance
4.21 Taxes
4.22 Environmental Matters
4.23 Financing Statements
4.24 Subsidiaries
4.27 Bank Accounts
5.2(b) Conduct of Business
5.8 Estoppel Certificates
7.3 Third-Party Consents
7.9 Statement of Net Adjusted Current Assets
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement"), made as of
the 22nd day of February, 1996, is by and among Infinity Broadcasting
Corporation, a Delaware corporation ("Buyer"), William M. Apfelbaum
("Apfelbaum") and each of the other stockholders of TDI Worldwide, Inc., a
Delaware corporation ("TDI"), listed on SCHEDULE 4.2 hereto (together with
Apfelbaum, "Sellers").
RECITALS
WHEREAS, Sellers collectively own all of the issued and
outstanding shares of the Class A Stock and the Class B Stock (as such terms and
other capitalized terms used herein without definition are defined in Article I
hereof);
WHEREAS, Sellers wish to sell all of the Class A Stock and the
Class B Stock to Buyer, and Buyer wishes to purchase such Class A Stock and
Class B Stock from Sellers, on the terms and subject to the conditions herein
provided; and
WHEREAS, the Board of Directors of Buyer has approved the
purchase of the Class A Stock and the Class B Stock from Sellers on the terms
and subject to the conditions herein provided.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise stated, the following terms when used herein
have the meanings assigned to them below.
1.1 "Affiliate" means a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
1.2 "Apfelbaum" has the meaning set forth in the
preamble to this Agreement.
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1.3 "Applicable Law" means all applicable provisions of all
(I) constitutions, treaties, statutes, laws (including, but not limited to, the
common law), rules, regulations, ordinances, codes or orders of any Governmental
Authority and (II) orders, decisions, rulings, injunctions, judgments, awards
and decrees or consents of or agreements with any Governmental Authority.
1.4 "Billboard Lease" means any lease of real property
providing for annual payments of $75,000 or more, including any amendments
thereto, on which one or more billboards owned by TDI or any Subsidiary are
located.
1.5 "Business Day," whether or not initially capitalized,
means every day of the week excluding Saturdays, Sundays and federal holidays.
1.6 "Buyer" has the meaning set forth in the
preamble to this Agreement.
1.7 "Claim" has the meaning set forth in Section
12.4 hereof.
1.8 "Class A Stock" means the Class A Common Stock, par value
$.01 per share, of TDI.
1.9 "Class B Stock" means the Class B Common Stock, par value
$.01 per share, of TDI.
1.10 "Closing" has the meaning set forth in
Section 2.2 hereof.
1.11 "Closing Date" means the date on which the
Closing occurs.
1.12 "Code" means the Internal Revenue Code of 1986, as
amended, together with all regulations and rulings issued thereunder by any
Governmental Authority.
1.13 "Computer Programs" means all computer software,
firmware, programs and source disks, program documentation, tapes, manuals,
forms, guides and other materials with respect thereto.
1.14 "Confidential Information" has the meaning
set forth in Section 15.1 hereof.
1.15 "Contracts" means, subject to the next
sentence of this definition, (I) all contracts, agreements,
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licenses, commitments and orders for the sale, purchase or barter of materials,
supplies, goods or services or any combination of the foregoing, relating to the
assets or business of TDI or any Subsidiary, (II) all Billboard Leases and other
leases for the use of personal property in connection with the assets or
business of TDI or any Subsidiary, (III) all franchise or similar agreements
relating to the business of TDI or any Subsidiary, (IV) all Real Property Leases
relating to the business of TDI or any Subsidiary, (V) all Trade Agreements
relating to the business of TDI or any Subsidiary, (VI) all partnership, joint
venture or other arrangements involving a sharing of profits or expenses
relating to the business of TDI or any Subsidiary and (VII) all other contracts
and agreements of whatever nature which pertain to the assets or business of TDI
or any Subsidiary, including, but not limited to, those franchise agreements,
purchase orders, leases, Trade Agreements and other agreements and contracts set
forth on SCHEDULES 4.8, 4.11 AND 4.13 hereto. Notwithstanding the foregoing, the
term "Contract" shall not include any (W) contract, agreement (other than any
franchise agreement), lease, license agreement, Trade Agreement or Real Property
Lease which provides for annual payments of less than $50,000 or is terminable
on not more than 30 days notice without liability to TDI or any Subsidiary, (X)
advertising contract entered into in the ordinary course of business which
provides for payments of less than $100,000 during the current term of such
advertising contract (without giving effect to any renewal or extension
thereof), (Y) Billboard Lease with an annual rent of less than $75,000, or (Z)
contract, agreement or other obligation which will be terminated without further
liability to or obligation of TDI or any Subsidiary upon payment of the
Financing Charge Amount.
1.16 "Environmental Laws" means all applicable local, state
and federal statutes and regulations relating to the protection of human health
or the environment.
1.17 "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended, together with the regulations and rulings issued thereunder
by any Governmental Authority.
1.18 "Escrow Agent" means the agent under the Escrow Agreement
which shall hold and administer the Escrow Note in accordance with Article XII
hereof and the Escrow Agreement.
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1.19 "Escrow Agreement" means an Escrow Agreement, dated as of
the Closing Date, among Buyer, Sellers and the Escrow Agent, in form and
substance satisfactory to the Sellers' Representative and Buyer.
1.20 "Escrow Note" means a non-recourse (except to the extent
of the Retained Shares referred to in such Escrow Note), non-interest bearing
promissory note of Buyer, in form and substance satisfactory to the Sellers'
Representative and Buyer, evidencing Buyer's obligation to deliver the Retained
Shares to Sellers in accordance with Section 12.4 hereof and the Escrow
Agreement.
1.21 "Exchange Act" means the Securities Exchange
Act of 1934, as amended.
1.22 "Executive Officers of TDI" means the Chairman, the
Presidents, the Executive Vice Presidents, the Senior Vice Presidents and the
Treasurer of TDI and the Subsidiaries and the Managing Director of TDI
Advertising, Ltd.
1.23 "Financial Statements" means (I) the audited consolidated
balance sheets for TDI and the Subsidiaries as of December 31, 1993, December
31, 1994 and March 31, 1995 and the related statements of operations and cash
flows for the fiscal year, then ended, certified, in each case, by Coopers &
Lybrand L.L.P. and (II) the unaudited consolidated balance sheet for TDI and the
Subsidiaries as of December 31, 1995 and the related statements of operations
and cash flows for the twelve month period then ended.
1.24 "Financing Charge Amount" means the consolidated
liability of TDI and the Subsidiaries in respect of (I) all indebtedness for
borrowed money (including the current portion of any long-term indebtedness) or
for the deferred purchase price of property (other than (X) any such amounts
included as a current liability in the determination of the Net Adjusted Current
Assets and (Y) any such amounts set forth on SCHEDULE 1.24 hereto), (II) any
other indebtedness which is evidenced by a note, bond, debenture or similar
instrument, (III) except as set forth on SCHEDULE 1.24 hereto, all interest,
fees, premiums and other charges or amounts payable of any kind with respect to
any indebtedness referred to in clauses (i) and (ii) above, including all
deferred fees and termination fees, (IV) all obligations under any lease of
property, real or personal, the obligations in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of
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the lessee (including current maturities of all such capitalized obligations)
and (V) all obligations in respect of letters of credit or acceptances issued or
created for the account of TDI or any such Subsidiary (other than the standby
letters of credit set forth on SCHEDULE 1.24 hereto).
1.25 "Financing Charge Statement" has the meaning
set forth in Section 2.1(b) hereof.
1.26 "GAAP" means United States generally accepted accounting
principles consistently applied.
1.27 "Government Approvals" has the meaning set
forth in Section 4.6 hereof.
1.28 "Governmental Authority" means any nation or government,
any state or other political subdivision there of, any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government, including, but not limited to, any government
authority, agency, board, commission, court, department or instrumentality of
the United States, any State of the United States, the United Kingdom, the
Republic of Ireland or any political subdivision thereof, and any tribunal or
arbitrator(s) of competent jurisdiction, and any self-regulatory organization.
1.29 "Hambro" means Hambro Group Investments
Limited, an England corporation.
1.30 "Hazardous Substance" means asbestos-containing material
and any and all hazardous or toxic sub stances, materials or wastes as defined
or listed under the Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Comprehensive Environmental Response, Compensation and
Liability Act or any comparable state statute or any regulation promulgated
under any of such federal or state statutes.
1.31 "HSRA" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations adopted thereunder.
1.32 "Infinity Reports" has the meaning set forth
in Section 3.5 hereof.
1.33 "Infinity Stock" means Class A Common Stock, par value
$.002 per share, of Buyer hereof.
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1.34 "Initial Purchase Price" has the meaning set
forth in Section 2.1(a) hereof.
1.35 "Intellectual Property" means United States (federal and
state) and foreign trademarks, service marks, trade names, trade dress,
copyrights, and similar rights, including registrations and applications to
register or renew the registration of any of the foregoing, the United States
and foreign letters patent and patent applications, and inventions, processes,
designs, formulae, trade secrets, jingles, know-how, confidential business and
technical information, Computer Programs, data and documentation, and all
similar intangible property rights, tangible embodiments of any of the foregoing
(in any medium including electronic media), and licenses or permits to use any
of the foregoing.
1.36 "Intellectual Property Assets" has the
meaning set forth in Section 4.10 hereof.
1.37 "Knowledge of TDI" means the actual or constructive
knowledge of the Executive Officers of TDI and any such knowledge of TDI shall
be deemed to be the knowledge of all Sellers other than Teachers and Hambro.
For purposes of the foregoing, an Executive Officer of TDI shall be deemed to
have constructive knowledge of any fact or thing if, in light of such Executive
Officer's position or responsibilities with respect to TDI and the Subsidiaries,
he or she should have known of such fact or thing.
1.38 "Liens" means all debts, liens, security interests,
mortgages, pledges, judgments, trusts, adverse claims, liabilities, encumbrances
and other impairments of title, other than, in the case of Sections 4.5, 4.8,
4.9, 4.10, 4.22 and 5.2(b)(v) hereof only, any encumbrances relating to any
property or asset which do not materially impair or adversely effect the use for
which such property or asset is currently utilized or the value of such property
or asset.
1.39 "Liquidated Liability Amount" means an amount equal to
$500,000, which amount represents Sellers' good faith estimate of TDI's
liability with respect to the multiemployer plan withdrawal liability described
on SCHEDULE 4.14 hereto.
1.40 "Losses" has the meaning set forth in
Section 12.1 hereof.
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1.41 "Material Adverse Effect" means a material adverse effect
on the business, assets, properties, liabilities, revenues, costs and expenses,
income before provision for income taxes, operations or condition, financial or
otherwise, of TDI and the Subsidiaries, taken as a whole. In determining whether
any individual event would result in a Material Adverse Effect, notwithstanding
that such event does not of itself have such effect, a Material Adverse Effect
shall be deemed to have occurred if the cumulative effect of such event and all
other then existing events would result in a Material Adverse Effect.
1.42 "Multiemployer Plan" has the meaning set
forth in Section 4.14 hereof.
1.43 "Net Adjusted Current Assets" means the excess of (I)
cash, accounts receivable (less the allowance for doubtful accounts) and prepaid
expenses over (II) transit franchise payable, accounts payable and other current
liabilities (excluding interest and fees with respect to any long-term
indebtedness or capitalized obligations included in the Financing Charge
Amount), in each case, as determined in accordance with GAAP and in a manner
consistent with the preparation of the Financial Statements.
1.44 "NYSE" means The New York Stock Exchange.
1.45 "Owned Real Property" means all real property and
interests in real property owned by TDI or any Subsidiary (other than any real
property on which any bill board is located), together with all easements and
other appurtenances for the benefit thereof.
1.46 "Permitted Encumbrances" has the meaning set
forth in Section 7.7 hereof.
1.47 "Person" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
1.48 "Plan" has the meaning set forth in Section
4.14 hereof.
1.49 "Prospective Claim" has the meaning set
forth in Section 12.4(a)(iii) hereof.
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1.50 "Purchase Price" has the meaning set forth
in Section 2.1(c) hereof.
1.51 "Real Property Lease" means any lease, sub lease, license
and occupancy agreement (other than any Billboard Lease) providing for annual
payments of more than $50,000, including any amendments thereto, pursuant to
which TDI or any Subsidiary is the lessee, sublessee, licensee or occupant of
real property used in, held for use in connection with, necessary for the
conduct of, or otherwise material to, the business of TDI or any Subsidiary,
together with all easements and other appurtenances for the benefit thereof.
1.52 "Representatives" has the meaning set forth
in Section 15.1 hereof.
1.53 "Retained Shares" has the meaning set forth
in Section 2.2(e) hereof.
1.54 "SEC" means the Securities and Exchange Commission.
1.55 "Securities Act" means the Securities Act of
1933, as amended.
1.56 "Sellers" has the meaning set forth in the preamble to
this Agreement.
1.57 "Sellers' Representative" has the meaning set forth in
Section 12.6(a) hereof.
1.58 "Services Agreements" has the meaning set
forth in Section 4.13(a) hereof.
1.59 "Shares" means the Class A Stock and the Class B Stock.
1.60 "Statement of Net Adjusted Current Assets" has the
meaning set forth in Section 7.9 hereof.
1.61 "Stock Portion" has the meaning set forth in
Section 2.2(c) hereof.
1.62 "Subsidiary" means any corporation, partner ship, limited
liability company or other entity of which TDI owns, directly or indirectly, at
least a majority of the securities or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the
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board of directors or other persons performing similar functions of such
corporation, partnership, limited liability company or other entity, including,
without limitation, LDI, Limited, TDI Advertising, Ltd., British Transport
Advertising, Ltd., BTA Buses Limited, Outdoor Images Limited
and TDI-Metro Limited.
1.63 "Tax" means any federal, state, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company, franchise,
unincorporated business, capital stock, profits, windfall profits, gross
receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental (including taxes under Section
59A of the Code), real property, personal property, ad valorem, occupancy,
license, occupation, employment, payroll, social security, disability,
unemployment, workers' compensation, withholding, estimated or similar tax,
duty, fee, assessment or other govern mental charge or deficiencies thereof
(including all interest and penalties thereon and additions thereto).
1.64 "TDI" has the meaning set forth in the preamble to this
Agreement.
1.65 "Teachers" means Teachers Insurance and Annuity
Association of America.
1.66 "Trade Agreements" means Contracts for the sale of
advertising for consideration other than cash.
1.67 "Transferring Employees" has the meaning set forth in
Section 6.1(a) hereof.
ARTICLE II
PURCHASE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. (a) Subject to the terms and
conditions hereof, Sellers will sell the Shares to Buyer, and Buyer will
purchase the Shares from Sellers, for an aggregate purchase price equal to
$300,000,000 (the "Initial Purchase Price"), subject to adjustment as provided
in Section 2.1(c) hereof.
(b) At least five Business Days prior to the Closing Date, TDI
shall deliver a statement setting forth TDI's good faith calculation of the
Financing Charge Amount as of the Closing Date, together with reasonable
supporting
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documentation with respect to such calculation (such statement, the "Financing
Charge Statement"). The Financing Charge Statement (I) shall be in the form of
SCHEDULE 2.1 hereto, which sets forth Sellers' good faith calculation of the
Financing Charge Amount as of December 31, 1995, and (II) shall be in substance
reasonably satisfactory to Buyer.
(c) The Initial Purchase Price shall be reduced by (I) the
Financing Charge Amount and (II) the Liquidated Liability Amount (as adjusted,
the "Purchase Price") and shall be payable at the Closing in the manner set
forth in Sections 2.2(c), 2.2(d) and 2.2(e) hereof.
2.2 CLOSING. The closing of the sale and purchase of the
Shares (the "Closing") shall take place at the offices of Debevoise & Plimpton,
875 Third Avenue, New York, New York 10022 at 10:00 a.m. on the next Business
Day that is fifteen days after the condition set forth in Section 7.3 hereof has
been satisfied (or waived by Buyer), or on such other date as the parties may
agree to in writing. At the Closing:
(a) Each Seller shall deliver to Buyer, free and clear of all
Liens, one or more certificates representing the number and class of
Shares set forth opposite such Seller's name under the appropriate
column on SCHEDULE 4.2 hereto, in negotiable form and duly endorsed in
blank or accompanied by stock powers or other instruments of transfer
duly executed in blank by such Seller, and accompanied by all requisite
stock transfer stamps;
(b) Buyer will pay to each Seller, in the manner set forth in
Sections 2.2(c), 2.2(d) and 2.2(e) hereof, the portion of the Purchase
Price set forth opposite such Seller's name on SCHEDULE 4.2 hereto;
(c) Subject to Section 2.2(e) hereof, Buyer shall pay to each
Seller an amount equal to 25% of the Purchase Price applicable to such
Seller (the "Stock Portion") by delivering to such Seller such number
of shares of Infinity Stock, rounded up or down to the nearest whole
share, as have a value equal to the Stock Portion applicable to such
Seller. For purposes of this Section 2.2(c), each share of Infinity
Stock shall be valued based upon a per share price equal to the average
closing price of the Infinity Stock as reported on NYSE for the twenty
Business Days ending two Business Days prior to the Closing Date;
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(d) Buyer shall pay to each Seller an amount equal to the
difference between (I) the Purchase Price applicable to such Seller and
(II) the Stock Portion applicable to such Seller by wire transfer of
immediately available funds to an account at a bank or other financial
institution designated by such Seller to Buyer at least three Business
Days before the Closing Date; and
(e) Notwithstanding anything in Section 2.2(c) hereof to the
contrary, Buyer shall retain $10,000,000 of the aggregate Purchase
Price payable to Sellers by withholding from the Stock Portion
otherwise payable to Sellers pursuant to Section 2.2(c) hereof, on a
proportionate basis, such number of shares of Infinity Stock as have a
value, as determined in the same manner as set forth in the last
sentence of Section 2.2(c) hereof, equal to $10,000,000 (such retained
shares, the "Retained Shares"). The Retained Shares shall be retained
by Buyer as partial security for amounts potentially owed to it by
Sellers under Article XII hereof and shall only be delivered to Sellers
by Buyer as provided in Section 12.4 hereof and the Escrow Agreement.
Buyer shall deliver the Escrow Note to the Escrow Agent at the Closing
to evidence its obligation to deliver the Retained Shares to Sellers in
the manner set forth in Section 12.4 hereof and the Escrow Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 ORGANIZATION AND STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.2 AUTHORIZATION AND BINDING OBLIGATION. Buyer has all
necessary corporate power and authority to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby, and,
on or before the Closing Date, Buyer's execution, delivery and performance of
this Agreement will have been duly and validly authorized by all necessary
corporate action on its part. On or before the Closing Date, this Agreement will
have been duly execu-
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ted and delivered by Buyer and, upon such execution and delivery, will
constitute its valid and binding obligation, enforceable against it in
accordance with its terms, except as limited by laws affecting the enforcement
of creditors' rights generally or equitable principles.
3.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS.
Except for the requirements of the HSRA, the execution, delivery and performance
of this Agreement by Buyer: (A) will not violate any provision of Buyer's
articles of incorporation or by-laws; (B) will not violate any Applicable Law to
which Buyer is bound; and (C) will not, either alone or with the giving of
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a material breach of the terms, conditions or
provisions of, or constitute a material default under, or accelerate or permit
the acceleration of any performance required by the terms of any agreement,
instrument, license or permit to which Buyer is now subject, except for any such
conflict, termination, breach, default or acceleration which would not impair
Buyer's ability to perform its obligations under this Agreement.
3.4 LITIGATION. There is no claim, litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge, threatened, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken by Buyer in connection with this Agreement.
3.5 FINANCIAL STATEMENTS AND REPORTS. Buyer has filed all
required forms, reports and documents with the SEC required to be filed by it
pursuant to the Securities Act and the Exchange Act, and the rules and
regulations promulgated thereunder, all of which have complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act and such rules and regulations. Buyer has previously furnished to Sellers
copies of all such forms, reports and documents filed by Buyer with the SEC
since January 1, 1994 (hereinafter collectively referred to as the "Infinity
Reports"). None of the Infinity Reports, including, without limitation, any
financial statements or schedules included therein, at the time filed, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of Buyer included in the Infinity Reports
were prepared in accordance with GAAP applied on a
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consistent basis (except as otherwise noted in such financial statements) and
present fairly the financial position, results of operations, cash flows and
changes in financial position of Buyer and its consolidated subsidiaries as of
the dates or the periods indicated, subject, in the case of unaudited interim
consolidated financial statements, to normal year-end adjustments.
3.6 STOCK ISSUANCE. The Infinity Stock to be issued pursuant
to this Agreement has been duly authorized for issuance and when issued and
delivered by Buyer in accordance with the provisions of this Agreement will be
validly issued, fully paid and non-assessable and listed on the NYSE. The
issuance of Infinity Stock under this Agreement will not be subject to any
preemptive or similar rights.
3.7 PURCHASE FOR INVESTMENT. Buyer is acquiring the Shares for
its own account and not directly or indirectly with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller severally represents and warrants to Buyer as to
the matters set forth in Sections 4.1, 4.2 and 4.26 hereof and the matters set
forth in Sections 4.5 and 4.25 and the fourth sentence of Section 4.22(a) hereof
to the extent pertaining to such Seller. In addition, with respect to all of the
other representations and warranties in this Article IV, each Seller (other than
Teachers and Hambro) jointly and severally represents and warrants to Buyer as
follows:
4.1 AUTHORIZATION AND BINDING OBLIGATION. Such Seller
has all necessary power and authority (or, in the case of Hambro and Teachers
all necessary corporate power and authority) to enter into and perform its
obligations under this Agreement and the transactions contemplated hereby. Such
Seller's execution, delivery and performance of this Agreement has been duly and
validly authorized by all necessary action on its part and this Agreement has
been duly executed and delivered by such Seller. This Agreement constitutes the
valid and binding obligation of such Seller, enforceable against such Seller in
accordance with its
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terms, except as limited by laws affecting the enforcement of creditors' rights
generally or equitable principles.
4.2 TITLE TO SHARES. Except as set forth on SCHEDULE 4.2
hereto, such Seller owns the number of Shares set forth opposite such Seller's
name under the appropriate column on SCHEDULE 4.2 hereto beneficially and of
record, free and clear of all Liens, and, upon the delivery of and payment for
such Shares at the Closing as provided for in this Agreement, Buyer will acquire
good and valid title to all such Shares being sold to it by such Seller, free
and clear of all Liens, other than any Liens created by or on behalf of Buyer.
Except as set forth on SCHEDULE 4.3 hereto, such Seller's transfer of such
Shares is not subject to preemptive or similar rights on the part of any Person.
4.3 CAPITAL STOCK. SCHEDULE 4.3 hereto lists all of the issued
and outstanding capital stock and other equity interests of TDI and the
Subsidiaries. All such issued and outstanding capital stock and other equity
interests of TDI and the Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable. Except as set forth in SCHEDULE 4.3
hereto, no subscriptions, options, warrants, calls, conversions or other rights,
agreements, commitments, arrangements or understandings of any kind obligating
TDI, any Subsidiary or such Seller, contingently or otherwise, to issue or sell,
or cause to be issued or sold, any capital stock or other equity interest of TDI
or any Subsidiary, or securities convertible into or exchange able for any
capital stock or other equity interest of TDI or any Subsidiary, are
outstanding, and no authorization therefor has been given. Except as set forth
in SCHEDULE 4.3 hereto, there are no outstanding contractual obligations of TDI
or any Subsidiary to repurchase, redeem or otherwise acquire any of its
outstanding capital stock or other equity interests.
4.4 ARTICLES OF INCORPORATION; BY-LAWS; MINUTE BOOKS. True and
complete copies of the articles of incorporation, by-laws and other
organizational documents of TDI and each Subsidiary, as amended to and including
the date hereof, have been delivered to Buyer. Neither TDI nor any Subsidiary is
in violation of any provision of its articles of incorporation, by-laws or other
organizational documents. The stock books and stock transfer records of TDI and
each Subsidiary, true and complete copies of which have been made available to
Buyer, contain true and complete records of all issuances and transfers of Class
A Stock, Class B Stock, capital stock and other equity interests of TDI and the
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Subsidiaries. The minute books of TDI and each Subsidiary, which have been made
available to Buyer, correctly reflect in all material respects (I) all corporate
actions taken by the stockholders of each such entity that such stockholders
were required by Applicable Law to take, (II) all corporate actions taken by the
Board of Directors of each such entity that such Board of Directors was required
by Applicable Law to take and (III) all other corporate actions taken by the
stockholders and the Board of Directors of each such entity (other than TDI
Outdoor, Inc. and TDI International, Inc., as to which no corporate minutes
exist) from the date of its formation to and including the date hereof.
4.5 CONSENTS; NO CONFLICT. Except for the requirements of the
HSRA or as specifically disclosed in SCHEDULE 4.5 OR 4.6 hereto, (A) none of
such Seller, TDI or any Subsidiary is required to obtain the consent, authoriza
tion or approval of any third party (other than Government Approvals which are
covered in Section 4.6 hereof) as a condition to the consummation of this
Agreement by such Seller and (B) neither the execution, delivery or performance
of this Agreement by such Seller or the consummation of the transactions
contemplated hereby will (I) conflict with, result in a breach of or constitute
a default under the articles of incorporation, by-laws or other organizational
documents of such Seller, TDI or any Subsidiary, (II) conflict with, result in
a breach of, contravene or constitute a default under, or be an event which with
the giving of notice or passage of time or both will become a material default
under, any Applicable Law, Contract or other agreement or commitment to which
such Seller, TDI or any Subsidiary is a party or by which any of them (or any of
their properties or assets) is subject or bound, (III) result in the creation
of, or give any party the right to create, any Lien upon the property or assets
of TDI or any Subsidiary or (IV) terminate or modify in any material respect,
give any third party the right to terminate or modify in any material respect,
or result in the vesting or acceleration of any amount or benefit paid or
payable under, the provisions or terms of any Contract.
4.6 GOVERNMENTAL APPROVALS AND AUTHORIZATIONS. Except as set
forth in SCHEDULE 4.6 hereto and except for the requirements of the HSRA, all
approvals, permits, qualifications, authorizations, licenses, franchises, con
sents, orders, registrations or other approvals (collectively, the
"Governmental Approvals") of all Governmental Authorities which are necessary in
order to permit TDI and the Subsidiaries to carry on their respective businesses
or
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for the lawful consummation by such Seller of this Agreement have been obtained
and are in full force and effect, except where the failure to obtain or maintain
any such Govern mental Approval in full force and effect would not cause a
Material Adverse Effect. Each of the Governmental Approvals is listed on
SCHEDULE 4.6 hereto and TDI has delivered to Buyer true and complete copies of
all such Governmental Approvals, including any and all amendments and other modi
fications to such items. There has been no material violation, cancellation,
suspension, revocation or default of any Governmental Approval or any notice of
violation, cancellation, suspension, revocation, default or dispute affecting
any Governmental Approval, and, to the Knowledge of TDI, no basis exists for any
such action, including, without limitation, as a result of the consummation of
the transactions contemplated by this Agreement.
4.7 COMPLIANCE WITH LAWS. Neither TDI nor any Subsidiary is in
conflict with or in violation or breach of or default under (A) any Applicable
Law (except for conflicts, violations or breaches that would not cause a
Material Adverse Effect) or (B) any provision of its organizational documents
and neither TDI nor any Subsidiary has received any written notice or, to the
Knowledge of TDI, any other notice alleging any such conflict, violation, breach
or default.
4.8 REAL PROPERTY. (a) SCHEDULE 4.8 PART (A) hereto contains a
complete and correct list of all Owned Real Property, together with a legal
description of each parcel of Owned Real Property with a fair market value in
excess of $100,000, including a summary description of the buildings, structures
and other improvements located on each such Owned Real Property with such value
in excess of $100,000. Except as set forth in SCHEDULE 4.8 PART (A) hereto, TDI
and the Subsidiaries, as the case may be, have good and marketable fee title in
the Owned Real Property, including the buildings, structures and other
improvements thereon, free and clear of all Liens, except for utility and
similar easements that would not individually or in the aggregate materially
impair or adversely effect the use for which such Owned Real Property is
currently utilized or the value of such Owned Real Property. TDI has delivered
to Buyer true and correct copies of any title insurance commitments, title
insurance policies and surveys in TDI's or any Subsidiary's possession relating
to each parcel of Owned Real Property with a value in excess of $100,000.
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(b) SCHEDULE 4.8 PART (B) hereto contains a complete and
correct list of all Real Property Leases, setting forth the address, landlord
and tenant for each Real Property Lease, describing all improvements leased
pursuant to each Real Property Lease, listing the expiration date of, the
current annual rent paid under each Real Property Lease and whether such Real
Property Lease contains any renewal or purchase options. Except for the Owned
Real Property, the Real Property Leases and the Billboard Leases, no real
property is used or occupied by TDI or any Subsidiary.
(c) SCHEDULE 4.8 PART (C) hereto contains a complete and
correct list of all Billboard Leases, setting forth the address, landlord and
tenant for each Billboard Lease, listing the expiration date of, the current
annual rent paid under each Billboard Lease.
(d) Except as set forth on SCHEDULE 4.8 PART (D) hereto, the
improvements upon each parcel of Owned Real Property and the current use and
operation of such real property conforms in all material respects to all restric
tive covenants, conditions, easements, building, subdivision and similar codes
and federal, state and local laws, regulations, rules, orders and ordinances
and neither TDI nor any Subsidiary has received any written notice of any
violation or claimed violation of any such restrictive covenant, condition or
easement, or any building, subdivision or similar code, or any federal, state or
local law, regulation, rule, order or ordinance. Except as set forth on SCHEDULE
4.8 PART (D) hereto, the Owned Real Property is zoned for the purposes for which
it is currently being used by TDI or the Subsidiaries, as the case may be. The
improvements on the Owned Real Property are in good working condition and
repair.
(e) Except as set forth on SCHEDULE 4.8 PART (E) hereto, to
the Knowledge of TDI, the improvements upon each parcel of real property leased
by TDI or any Subsidiary, as the case may be, and the current use and operation
of such real property conforms in all material respects to all restrictive
covenants, conditions, easements, building, subdivision and similar codes and
federal, state and local laws, regulations, rules, orders and ordinances and
neither TDI nor any Subsidiary has received any written notice of any violation
or claimed violation of any such restrictive covenant, condition or easement, or
any building, sub division or similar code, or any federal, state or local law,
regulation, rule, order or ordinance. Except as set forth on SCHEDULE 4.8 PART
(E) hereto, to the Knowledge of
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TDI, the premises which are the subject of the Real Property Leases are zoned
for the purposes for which they are currently being used by TDI or the
Subsidiaries, as the case may be. To the Knowledge of TDI, the improvements on
the real property premises which are the subject of the Real Property Leases are
in good working condition and repair.
(f) Neither TDI nor any Subsidiary has any knowledge of or has
received written notice of any pending, threatened, or contemplated action to
take by eminent domain or otherwise to condemn any portion of the Owned Real
Property or any portion of any premises which are the subject of the Real
Property Leases. There exists no writ, injunction, decree, order or judgment,
nor any litigation, pending or to the Knowledge of TDI, threatened, relating to
the ownership, use, lease, occupancy or operation of the Owned Real Property or
any of the premises which are the subject of the Real Property Leases.
(g) Each Real Property Lease and Billboard Lease is legal,
valid, binding, enforceable and in full force and effect. None of TDI, any
Subsidiary or, to the Knowledge of TDI, any other party is in material default,
violation or breach under any Real Property Lease or Billboard Lease, and no
event has occurred and is continuing that constitutes or, with notice or the
passage of time or both, would constitute a material default, violation or
breach thereunder. No material amount payable under any Real Property Lease or
Billboard Lease is past due. Neither TDI nor any Subsidiary has received any
written notice of a material default, offset or counterclaim under any Real
Property Lease or Billboard Lease or any other communication asserting
non-compliance with any Real Property Lease or Billboard Lease. TDI and the
Subsidiaries, as the case may be, have the exclusive right to use and occupy the
premises leased under each Real Property Lease or Billboard Lease to which TDI
or any Subsidiary, as the case may be, is a party. TDI and the Subsidiaries
enjoy peaceful and undisturbed possession of the premises leased by TDI and the
Subsidiaries, as the case may be, under each Real Property Lease. Except as set
forth on SCHEDULE 4.8 PART (G) hereto, the Owned Real Property, the Real
Property Leases and the Billboard Leases are free and clear of all Liens, except
for lessors' interests in the Real Property Leases and the Billboard Leases. TDI
has delivered to Buyer, complete and correct copies of the Real Property Leases,
together, in the case of any subleases or similar occupancy agreements, with
copies of all overleases.
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4.9 TITLE TO AND CONDITION OF PERSONAL PROPERTY. (a) TDI and
each of the Subsidiaries has good and valid title to all tangible personal
property which it owns, including all tangible personal property reflected in
the Financial Statements as being owned by TDI or such Subsidiary, as the case
may be, except for tangible personal property disposed of in the ordinary course
of business since December 31, 1995, in each case free and clear of all Liens,
except as set forth on SCHEDULE 4.9 hereto. Except as set forth in SCHEDULE 4.9
hereto, the tangible personal property of TDI and the Subsidiaries is, in the
aggregate, all of the tangible personal property required to conduct the
business of TDI and the Subsidiaries as presently conducted. TDI and the
Subsidiaries have maintained all such material tangible personal property in
good repair, working order and operating condition, subject only to ordinary
wear and tear.
(b) Upon transfer of the Shares on the Closing Date, Buyer
will own, directly or indirectly, all assets, properties, rights, franchises,
claims and agreements of every kind and description necessary to conduct the
businesses and operations of TDI and the Subsidiaries as they are presently
conducted.
4.10 INTELLECTUAL PROPERTY. SCHEDULE 4.10 hereto contains a
complete and correct list and description of all Intellectual Property which is
used or useful in the business of TDI and the Subsidiaries as presently
conducted (the "Intellectual Property Assets"). Each Intellectual Property Asset
is either owned or validly licensed by TDI or the Subsidiaries and SCHEDULE 4.10
hereto identifies which Intellectual Property Assets are so owned, which are so
licensed and which entity is the owner or licensee of each such Intellectual
Property Asset. TDI has delivered to Buyer copies of all material documents and
true and complete memoranda describing the terms of any oral agreements re
garding Intellectual Property Assets, if any, establishing such rights, licenses
or other authority. There is no pending or, to the Knowledge of TDI, threatened
proceeding or litigation affecting, or with respect to, the Intellectual
Property Assets. TDI and each Subsidiary are in material compliance with the
terms of any license of an Intellectual Property Asset and no such Seller, TDI
or any Subsidiary has received any written notice of, and to the Knowledge of
TDI there is not, any infringement or unlawful use of the Intellectual Property
Assets. The conduct of the business of TDI and the Subsidiaries as presently
conducted does not infringe in any material respect with the rights of
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any third party in respect of any Intellectual Property. Except as disclosed in
SCHEDULE 4.10 hereto, each Intellectual Property Asset owned by TDI and the
Subsidiaries is owned free and clear of all Liens. Neither TDI nor any
Subsidiary has sold, licensed or otherwise disposed of any of the Intellectual
Property Assets to any Person and neither TDI nor any Subsidiary has agreed to
indemnify any Person for any patent, trademark or copyright infringement. The
Intellectual Property Assets listed in SCHEDULE 4.10 hereto include all
Intellectual Property which is used in, useful to or necessary to the business
of TDI and the Subsidiaries as presently conducted. SCHEDULE 4.10 hereto lists
all of the Intellectual Property Assets which have been registered with, filed
in or issued by, as the case may be, the United States Patent and Trademark
Office and United States Copyright Office or other filing offices, domestic or
foreign.
4.11 CONTRACTS. (a) SCHEDULE 4.11 hereto lists all Contracts
as of the date of this Agreement, except Real Property Leases which are listed
in SCHEDULE 4.8 PART (B) hereto, Billboard Leases which are listed in SCHEDULE
4.8 PART (C) hereto, employment agreements and other Contracts which are listed
on SCHEDULE 4.13 hereto, Plans which are listed in SCHEDULE 4.14 hereto and the
policies relating to insurance which are listed on SCHEDULE 4.20 hereto.
(b) TDI has delivered (or, in the case of advertising
Contracts, made available) to Buyer true and complete copies of all written
Contracts and true and complete memoranda describing the terms of all oral
Contracts, listed in SCHEDULES 4.11 hereto, together with a complete and correct
copy or description, as the case may be, of all amendments thereto. All material
liabilities and obligations under such Contracts can be ascertained from such
copies or memoranda. Each Contract is valid, in full force and effect, binding
and enforceable by TDI or the Subsidiary party thereto, as the case may be, in
accordance with its respective terms. TDI and the Subsidiaries have complied in
all material respects with the terms of all Contracts, including, without
limitation, all such terms requiring the filing of statements (financial or
otherwise) and the payment of any amounts, and are not in default under any
Contract. Neither TDI nor any Subsidiary has granted or been granted any waiver
or forbearance with respect to any of the Contracts. To the Knowledge of TDI, no
other contracting party is in default under any of the Contracts. The Contracts
which are listed in SCHEDULES 4.8 PART (B), PART (C), 4.11 AND 4.13 hereto,
together with those con
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tracts, agreements, commitments or similar
understandings not required to be listed on such Schedules because of any
applicable dollar or temporal thresholds contained in the definition of
Contracts, include all those Contracts, agreements, commitments and similar
understandings necessary to conduct the business of TDI and the Subsidiaries as
presently conducted.
4.12 MAJOR ADVERTISERS. (a) SCHEDULE 4.12 hereto sets forth
for the calendar year ended December 31, 1995, (I) the names and addresses of
the twenty largest advertisers of TDI and the Subsidiaries (based on the
aggregate value of services ordered from TDI and the Subsidiaries by such
advertisers during such year) and (II) the amount for which each such customer
was invoiced during such year. Except as set forth on SCHEDULE 4.12 hereto,
neither TDI nor any Subsidiary has received any written or any other notice, and
neither TDI nor any Subsidiary has any reason to believe, that any such
advertiser of TDI or any Subsidiary (1) has ceased, or will cease, to use the
services of TDI or any Subsidiary, (2) has materially reduced, or will
materially reduce, the use of the services of TDI or any Subsidiary or (3) has
sought, or is seeking, to materially reduce the price it will pay for the
services of TDI or any Subsidiary, except to the extent that any such cessation
or reduction would not have a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 4.12 hereto, and except
for advertisers, which are subject to the representation and warranty in
Section 4.12(a) hereof, neither TDI nor any Subsidiary has received any written
or any other notice, and neither TDI nor any Subsidiary has any reason to
believe, that any Person with whom TDI or any Subsidiary does business will not
continue to do business with TDI or any Subsidiary after the Closing Date on
terms and conditions substantially the same as those prevailing during the past
12 months, except for any such non-continuation which would not have a Material
Adverse Effect. TDI and the Subsidiaries believe that their relations with
Persons material to the conduct of their business are good.
4.13 PERSONNEL INFORMATION. (a) SCHEDULE 4.13 hereto contains
a true and complete list of (I) all individuals employed by TDI or any
Subsidiary and all directors, sales representatives, independent contractors and
other personnel providing services to TDI or any Subsidiary in connection with
the operation of the business thereof as of December 31, 1995, and, (II)
together with Schedule 4.14 hereto, all employment, consulting and other
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service or compensatory plans, contracts and arrangements, other than any such
plan, contract or arrangement (X) which may be terminated upon no more than
thirty days' notice without any liability or obligation of TDI or any Subsidiary
or (Y) which provides for annual payments not exceeding $50,000 in the aggregate
(the "Services Agreements"). TDI has provided or made available to Buyer true
and complete copies of all Services Agreements.
(b) Except as set forth in SCHEDULE 4.13 OR 4.14 hereto,
neither TDI nor any Subsidiary is a party to or bound by any collective
bargaining or other labor agreement, and there are no labor unions or other
organizations representing, purporting to represent or attempting to represent
any employees employed by TDI or any Subsidiary. TDI has provided to Buyer true
and complete copies of each collective bargaining or other labor agreement
listed on SCHEDULE 4.13 hereto. Except as set forth on SCHEDULE 4.13 PART (C)
hereto, since January 1, 1993, there has not occurred or, to the Knowledge of
TDI, been threatened any material strike, slowdown, picketing, work stoppage,
concerted refusal to work overtime or other similar labor activity with respect
to any employees or former employees of TDI or any Subsidiary. Except as set
forth on SCHEDULE 4.13 PART (C) hereto, there are no labor disputes currently
subject to any grievance procedure, arbitration or litigation and there is no
representation petition pending or, to the Knowledge of TDI, threatened with
respect to any employee of TDI or any Subsidiary. TDI and each Subsidiary have
each complied in all material respects with all Applicable Laws pertaining to
the employment or termination of employment of its respective employees,
including, without limitation, all such Applicable Laws relating to labor
relations, equal employment opportunities, fair employment practices, pro
hibited discrimination or distinction and other similar employment activities.
4.14 EMPLOYEE BENEFIT PLANS. SCHEDULES 4.13 AND 4.14 hereto
contain a true and complete list of each employee benefit plan, within the
meaning of Section 3(3) of ERISA, and each other employment, severance,
retention, change in control, incentive or deferred compensation, stock or other
equity based, retirement, welfare, fringe benefit or other similar plan,
program, agreement, understanding, arrangement, trust or other funding
arrangement, whether or not subject to the provisions of ERISA, which is (X)
maintained or contributed to by TDI or any Subsidiary or to which TDI or any
Subsidiary is a party or is obligated to contribute or by which TDI or any
Subsidiary is bound and
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(Y) under which any employee, former employee or retiree of TDI or any
Subsidiary is eligible to participate or derive a benefit, other than any such
plan, program, agreement, understanding, arrangement, trust or other funding
arrangement (A) which may be terminated upon no more than thirty days' notice
without any liability or obligation of TDI or any Subsidiary or (B) which
provides for annual payments not exceeding $50,000 in the aggregate (together
with the Services Agreements, the "Plans"). No trade or business (whether or not
incorporated) is or has been as of any date within the preceding six years
treated as a single employer together with TDI or any Subsidiary pursuant to
Section 414 of the Code. Except as set forth on SCHEDULE 4.14 hereto, (A)
neither TDI nor any Subsidiary has incurred or reason ably expects to incur
(either directly or indirectly, including as a result of any indemnification
obligation) any material liability or obligation under or pursuant to Title I or
IV of ERISA or the penalty, excise tax or joint and several liability provisions
of the Code relating to employee pension benefit plans and, to the Knowledge of
TDI, no event, transaction or condition has occurred or exists which could
result in any such liability of TDI, any Subsidiary or, following the Closing,
Buyer, (B) each Plan intended to be qualified under section 401(a) of the Code,
and the trust (if any) forming a part thereof, has received a favorable
determination letter from the Internal Revenue Service as to its qualification
under the Code and, to the Knowledge of TDI, no material fact or condition
exists which could reasonably be expected to result in the disqualification of
any such Plan, (C) except for the asserted with drawalliability under the Local
No. 65 Pension Plan (estimated to be approximately $500,000), there are no
material pending or, to the Knowledge of TDI, threatened claims by or on behalf
of any of the Plans, by or on behalf of any employee or former employee of TDI
or any Subsidiary or otherwise involving any such Plan or the assets of any Plan
(other than routine claims for benefits), (D) to the Knowledge of TDI, except as
disclosed with respect to the Local No. 65 Pension Plan, no condition exists and
no event has occurred with respect to any Plan that is a multiemployer plan (as
defined in Section 4001(a)(3) of ERISA) (a "Multiemployer Plan") which presents
a material risk of the incurrence by TDI or any Subsidiary of any material
complete or partial withdrawal liability under Subtitle E of Title IV of ERISA
and (E) to the Knowledge of TDI, no Multiemployer Plan is in "reorganization" or
"insolvent" within the meaning of Section 4241 or 4245 of ERISA, respectively.
Each of the Plans has been operated and administered in all material respects in
accordance with all Applicable Laws,
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including but not limited to ERISA and the Code. No Plan is a "multiple employer
plan" within the meaning of section 4063 or 4064 of ERISA. All material
contributions required to have been made by TDI and each Subsidiary to or in
respect of any Plan pursuant to Applicable Law (including, without limitation,
ERISA and the Code) have been made within the time prescribed thereby. With
respect to each Plan that is subject to the minimum funding requirements of
section 412 of the Code or section 302 of ERISA, other than a Multiemployer
Plan, the "accumulated benefit obligations," within the meaning of the Financial
Accounting Standards Board Statement No. 87, under each such Plan, determined as
of December 31, 1995 on the basis of reasonable actuarial assumptions, did not
exceed the fair market value of the assets of such Plan, determined as of
December 31, 1995, by more than $150,000. TDI has provided or made available to
Buyer true and complete copies of all written Plans; descriptions of all
unwritten Plans; and all trust, other funding arrangements and other materials
documents in respect thereof.
4.15 LITIGATION. Except as set forth in SCHEDULE 4.15 hereto,
there is no claim, litigation, proceeding or investigation pending or, to the
Knowledge of TDI, threatened, against or affecting the business or any of the
assets of TDI or any Subsidiary or which seeks to enjoin or prohibit, or
otherwise questions the validity of, any action taken or to be taken in
connection with this Agreement.
4.16 TRANSACTION WITH AFFILIATES. Except as set forth in
SCHEDULE 4.16 hereto, no Affiliate of TDI or of a Subsidiary (other than another
Subsidiary) owns any assets used, useful or necessary in the business of TDI and
the Subsidiaries as presently conducted or is a party to any Contract other than
employment contracts set forth in SCHEDULE 4.13 hereto.
4.17 FINANCIAL STATEMENTS, ETC. (a) SCHEDULE 4.17 hereto
contains true and complete copies of the Financial Statements. The Financial
Statements have been prepared in accordance with GAAP consistently applied from
period to period. The Financial Statements accurately reflect and fairly present
the financial condition, position, results of operations, cash flows and
changes in financial position of TDI and the Subsidiaries as of the dates and
for the periods indicated. Except to the extent expressly reserved against in
the Statement of Net Adjusted Current Assets, the accounts and notes receivable
reflected in such Statement of Net Adjusted Current Assets will be
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good and collectible free and clear of any Liens, and will have arisen only from
bonafide transactions in the ordinary course of business of TDI and the
Subsidiaries.
(b) The Financing Charge Statement will contain a true and
correct calculation of the Financing Charge Amount as of the Closing Date in
accordance with GAAP.
(c) As of (I) December 31, 1995 and (II) the Closing Date, the
Net Adjusted Current Assets are, and will be, respectively, at least
$10,000,000.
4.18 ABSENCES OF UNDISCLOSED LIABILITIES. Except as disclosed
in the schedules hereto and except for (A) liabilities as and to the extent
reflected or reserved against on the consolidated balance sheet of TDI and the
Subsidiaries as of December 31, 1995 included in the Financial Statements, (B)
immaterial liabilities incurred since December 31, 1995, in the ordinary course
of business, consistent with past practice, of TDI and the Subsidiaries, (C)
ordinary course liabilities incurred since December 31, 1995, under any
contract, agreement, commitment or similar understanding not required to be
disclosed on any Schedule to this Agreement because of any applicable dollar or
temporal threshold contained in this Agreement, and (D) liabilities incurred by
TDI or any Subsidiary since the date of this Agreement under any Contract
entered into or renewed or permitted by Section 5.2(b)(viii) hereof, neither TDI
nor any Subsidiary has any liabilities or obligations of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due.
4.19 ABSENCE OF CHANGES OR EVENTS. Except as disclosed in
SCHEDULE 4.19 hereto or as expressly permitted by this Agreement, since December
31, 1995, there has not been any material adverse change in the business, opera
tions, property, assets, liabilities or condition (financial or otherwise) of
TDI and the Subsidiaries considered as a whole. Without limiting the foregoing,
except as set forth on SCHEDULE 4.19 hereto, since December 31, 1995, none of
TDI or any Subsidiary has:
(a) except as expressly permitted in accordance with Section
6.8 hereof, purchased, sold or leased, or agreed to purchase, sell or
lease, any material asset;
(b) granted or committed to grant any bonus,
commission or other form of incentive compensation or
increased or committed to increase the compensation or
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fees payable to or in respect of any employee, director, officer, sales
representative, independent contractor, consultant or Affiliate of TDI
or any Subsidiary except as set forth on SCHEDULE 4.13 hereto or to the
extent required under the express terms of any employment or collective
bargaining agreements as in effect on the date hereof;
(c) entered into, adopted or amended, or committed to enter
into, adopt or amend, any employment, consulting, retention,
change-in-control, severance, collective bargaining, bonus or other
incentive compensation, profit-sharing, health or other welfare, stock
option or other equity, pension, retirement, vacation, severance,
deferred compensation or other employment, compensation or benefit
plan, policy, agreement, trust, fund or arrangement for the benefit of
any employee, officer, director, sales representative, independent
contractor, agent, consultant or Affiliate of TDI or any Subsidiary
(whether or not legally binding);
(d) made any loans to any Person other than advances for
salary or expenses to Transferring Employees in amounts less than
$5,000 individually or $50,000 in the aggregate;
(e) written off any receivables except in the ordinary course
of business, consistent with past practices;
(f) declared, made, set aside or paid any divid end,
distribution, or payment on, or any purchase or redemption of, any
Class A Stock, Class B Stock, capital stock or other equity interests
of TDI or any Subsidiary, or made any commitment therefor;
(g) issued or sold any Class A Stock, Class B Stock, capital
stock or other equity interests of TDI or any Subsidiary, or any
subscriptions, options, warrants, calls, conversions or other rights,
agreements, commitments, arrangements or understandings of any kind
obligating TDI, any Subsidiary or any Seller, contingently or
otherwise, to issue or sell, or cause to be issued or sold, any capital
stock or other equity interest of TDI or any Subsidiary;
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(h) made any material change (for book or Tax purposes) in
any method of accounting or accounting practice;
(i) suffered the loss of any key employee or key independent
contractor or, other than in the ordinary course of business,
consistent with past practice, retained any new key employees or
independent contractors; or
(j) entered into any material transaction not in the ordinary
course of business or agreed (whether or not in writing) to do any of
the foregoing.
4.20 INSURANCE. The assets owned by TDI and the Subsidiaries
are insured against loss, damage or injury in amounts listed in SCHEDULE 4.20
hereto, which shows all insurance policies held by TDI and the Subsidiaries
relating to the business of TDI and the Subsidiaries, including, without
limitation, keyman life insurance policies, if any, on TDI's or any Subsidiary's
executive officers, together with the policy limits, the type of coverage, the
location of the property covered, annual premium, premium payment dates and
expiration date of each of the policies. Copies of all such insurance policies
have been furnished to Buyer. All such insurance policies are in full force and
effect and all premiums due thereon have been paid. To the Knowledge of TDI, the
insurance coverage provided by such policies is adequate for the business
engaged in by TDI and each of the Subsidiaries.
4.21 TAXES. Except as set forth in SCHEDULE 4.21 hereto, TDI
and each Subsidiary have duly filed all Tax returns and forms required to be
filed, and have paid in full or discharged all Taxes required to be paid other
than Taxes that are being contested in good faith by appropriate proceedings and
for which adequate reserves have been established in accordance with GAAP. All
such Tax returns or forms are true and correct in all material respects. Neither
TDI nor any Subsidiary is currently under audit with respect to Taxes by any
Governmental Authority and no Governmental Authority is now asserting in writing
against TDI or any Subsidiary any deficiency or claim for Taxes. Except as set
forth on SCHEDULE 4.21 hereto, none of TDI and the Subsidiaries (A) is or has
been a member of any consolidated, combined, unitary or similar group for Tax
purposes, (B) is bound by any Tax sharing, allocation or similar agreement, (C)
has at any time filed a consent under section 341(f) of the Code, and (D) will
as a result of the trans
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actions contemplated by this Agreement make or become
obligated to make any parachute payment as defined in section 280G of the Code.
Buyer shall not be required to withhold or deduct any amount of Tax in
connection with the transactions contemplated by this Agreement.
4.22 ENVIRONMENTAL MATTERS. (a) Except as set forth on
SCHEDULE 4.22 PART (A) hereto, TDI's and each Subsidiary's operation and use of
the Owned Real Property and the premises which are the subject of the Real
Property Leases are in compliance in all material respects with all
Environmental Laws. TDI and the Subsidiaries have obtained all material
environmental, health and safety permits necessary for the operation of the
business of TDI and the Subsidiaries as presently conducted, and all such
permits are in full force and effect and TDI and each Subsidiary are in
compliance with the terms and conditions of each such permit. There are no
outstanding Liens on any interest in any of the Owned Real Property or Real
Property Leases under any Environmental Laws. No Seller, TDI or any Subsidiary
has received any notice of, nor to the Knowledge of TDI is there, any
administrative or judicial investigations, proceedings or actions with respect
to material violations, alleged or proven, of Environmental Laws by TDI or any
Subsidiary or any of their respective tenants or subtenants, or otherwise
involving the Owned Real Property or the Real Property Leases or the operations
conducted on the premises subject to the Real Property Leases.
(b) Except as set forth on SCHEDULE 4.22 PART (B) hereto,
there has been no release (nor, to the Knowledge of TDI, is there any
substantial threat of a release) of any Hazardous Substance at or from the Owned
Real Property or the premises which are the subject of the Real Property Leases
in amounts or concentrations requiring remediation under or that would violate
current Environmental Laws. Except as set forth on SCHEDULE 4.22 PART (B)
hereto, there are no Hazardous Substances present on the Owned Real Property or
the premises which are the subject of Real Property Leases except for ordinary
quantities of properly stored Hazardous Substances found in consumer or
commercial products that are used in the normal course of the business of TDI
and the Subsidiaries. Except as set forth on SCHEDULE 4.22 PART (B) hereto,
there are no underground storage tanks, or underground piping associated with
such tanks, on the Owned Real Property or on the premises which are the subject
of the Real Property Leases.
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4.23 FINANCING STATEMENTS. The material assets owned by TDI
and the Subsidiaries are and have been located in the states of Arizona,
California, Florida, Georgia, Illinois, Louisiana, Minnesota, New Jersey, New
York, Pennsylvania, Tennessee, Texas and the District of Columbia and in England
and Ireland, since they were acquired by TDI or any Subsidiary. All financing
statements and similar instruments filed by any party with respect to such
assets are listed in SCHEDULE 4.23 hereto.
4.24 SUBSIDIARIES. Except as set forth on SCHEDULE 4.24
hereto, neither TDI nor any Subsidiary owns, directly or indirectly, any shares
of capital stock or other equity interests (or any interest convertible into
capital stock or other equity interest) in any corporation, partner ship, joint
venture, limited liability company or other entity, or has any commitment to
contribute to the capital of, make loans to, or share in the losses of, any
enterprise. TDI conducts no business operations directly or indirectly other
than the business operations conducted through the Subsidiaries and has no
material assets or liabilities other than the capital stock or other equity
interests of the Subsidiaries.
4.25 BROKER OR FINDER'S FEE. None of such Seller, TDI or any
Subsidiary has incurred any liability to any broker, finder or agent for any
fees, commissions or similar compensation with respect to the transactions
contemplated by this Agreement, except for fees payable to the First National
Bank of Boston which shall be paid on the Closing Date as part of the Financing
Charge Amount.
4.26 PURCHASE FOR INVESTMENT, ETC. (a) Such Seller is
purchasing the shares of Infinity Stock issued to such Seller by Buyer pursuant
to this Agreement for such Seller's own account and not directly or indirectly
with a view to, or for sale in connection with, any distribution thereof. Such
Seller acknowledges that (I) the Infinity Stock has not been registered under
the Securities Act, (II) the Infinity Stock may not be resold unless such
Infinity Stock is subsequently registered under the Securities Act or an
exemption from such registration is available, (III) restrictive legends in the
form set forth in Section 14.2 hereof shall be placed on the certificates
representing the Infinity Stock and (IV) a notation shall be made in the
appropriate records of Buyer indicating that the Infinity Stock is subject to
restrictions on transfer and appropriate stop-transfer instructions will be
issued to Buyer's stock transfer agent with respect to the Infinity Stock.
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(b) Such Seller is an "Accredited Investor" within the meaning
of Regulation D under the Securities Act and such Seller's residence is set
forth in SCHEDULE 4.2 hereto. In addition, (I) such Seller has been granted the
opportunity to ask questions of, and receive answers from, representatives of
Buyer concerning Buyer and the terms and conditions of the purchase of Infinity
Stock and to obtain any additional information that such Seller deems necessary,
(II) such Seller's knowledge and experience in financial business matters is
such that such Seller is capable of evaluating the merits and risk of the
investment in Infinity Stock and (III) such Seller has carefully reviewed the
terms and provisions of this Agreement and has evaluated the restrictions and
obligations contained herein.
4.27 BANK ACCOUNTS. SCHEDULE 4.27 hereto sets forth a complete
and correct list containing the names of each bank in which TDI and each
Subsidiary has an account or safe deposit or lock box, the account or box
number, as the case may be, and the name of every person authorized to draw
thereon or having access thereto.
ARTICLE V
COVENANTS OF SELLERS
5.1 INFORMATION PRIOR TO CLOSING. During the period from the
date hereof to the Closing Date, Sellers will cause TDI to make the management
of TDI and the Subsidiaries available to Buyer and its authorized represen
tatives and provide Buyer and its accountants, legal counsel and other
authorized representatives reasonable access during normal business hours to,
and permit such Persons to review, the properties, books, Contracts, accounts
and records of TDI and the Subsidiaries, and to provide such other information
to Buyer and its authorized representatives as shall have been reasonably
requested by Buyer or such authorized representatives concerning TDI or any
Subsidiary. The rights of Buyer under this Section shall not be exercised in
such a manner as to interfere unreasonably with the conduct of the business of
TDI or any Subsidiary.
5.2 CONDUCT OF BUSINESS. (a) During the period
from the date hereof to the Closing Date, Sellers, jointly
and severally, covenant and agree to cause TDI and the
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Subsidiaries to carry on their businesses in, and only in, the ordinary course
of business, in substantially the same manner as heretofore conducted, and to
use their reasonable commercial efforts to preserve intact their present
business organization, keep available the services of their present officers and
significant employees, sales agents and independent contractors, and preserve
their relationships with customers, suppliers and others having business deal
ings with them, to the end that their goodwill and going business shall be
maintained following the Closing.
(b) Without limiting the generality of the foregoing, except
as expressly permitted by this Agreement or with the prior written consent of
Buyer or except as set forth on SCHEDULE 5.2(B) hereto, Sellers, jointly and
severally, covenant and agree that they will not permit TDI or any Subsidiary to
do or agree to do, on or after the date hereof, any of the following, on or
before the Closing:
(i) Amend their respective certificates of incorporation,
by-laws or other organizational documents;
(ii) Issue, sell, transfer, assign, pledge, convey or dispose
of, any capital stock or equivalent equity interests, including,
without limitation, any subscriptions, options, warrants, calls,
conversions or other rights, agreements, commitments, arrangements or
understandings of any kind obligating TDI, any Subsidiary or such
Seller, contingently or otherwise, to issue or sell, or cause to be
issued or sold, any capital stock or other equity interest of TDI or
any Subsidiary;
(iii) Declare any dividend or make any distribution with
respect to their capital stock or equivalent equity interests;
(iv) Sell, assign, lease or otherwise transfer or dispose of
any material assets, unless the same shall be replaced with assets of
equal or greater value and utility;
(v) Create, assume or permit to exist any Lien upon their
assets, except for those in existence on the date of this Agreement and
except for those additional Liens created in the ordinary course of
business consistent with past practice, all of which Liens will be
removed on or prior to the Closing Date;
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(vi) Cause or permit by any act, or failure to act, any of the
Governmental Approvals to expire, be surrendered, adversely modified,
or otherwise terminated, except in the ordinary course of business
consistent with past practice;
(vii) Waive any right under any Contract or license relating
to their assets or business as presently conducted, except in the
ordinary course of business consistent with past practice;
(viii) Enter into or renew any Contract other than in the
ordinary course of business consistent with the past practices of the
business of TDI or any Subsidiary, except TDI may (I) renew any of the
stand-by Letters of Credit listed on SCHEDULE 1.24 hereto and (II)
enter into employment agreements in form and substance satisfactory to
Buyer attached to SCHEDULE 5.2(B) hereto with certain officers of TDI
listed on SCHEDULE 5.2(B) hereto (such employment agreements to have
three year terms and to contain a covenant not to compete covering such
three year period and an additional three year period following the
termination of such employment agreement);
(ix) Fail to timely make all payments required to be paid
under any Contract when due and otherwise pay all liabilities and
satisfy all obligations, in each case in a manner consistent with past
practice;
(x) Fail to maintain their inventories of spare parts and
expendable supplies, if any, at levels consistent with past practice;
(xi) Increase or modify or agree to increase or modify the
compensation, bonuses or other benefits or perquisites for any of the
employees of the business of TDI or any Subsidiary, except in the
ordinary course of business consistent with past practice pursuant to
any employment agreements, Plans or collective bargaining agreements as
set forth in Section 4.13 or 4.14 hereof;
(xii) Fail to remove, cure, correct and repair prior to the Closing
(to the extent within such Person's control) any material deficiencies
in their assets and any material violations under applicable statutes,
rules, regulations, engineering standards or building, fire or zoning
laws or regulations, which are
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inconsistent with any representations, warranties or
covenants contained in this Agreement;
(xiii) Fail to maintain consistent with past practices and good
business judgment insurance policies on the business of TDI and the
Subsidiaries and their assets comparable in amount to that in effect on
the date of this Agreement;
(xiv) Fail to maintain their books and records in accordance with
GAAP; and
(xv) Take or fail to take any action that would cause any of its
representations and warranties not to be true and correct on the
Closing Date in the manner required under Section 7.1 hereof.
(c) Notwithstanding the foregoing, Sellers shall have the
right to utilize any current asset (as defined by GAAP) to satisfy (I) any
liability or obligation reflected on the Statement of Net Adjusted Current
Assets set forth on SCHEDULE 7.9 hereto to the extent (and only to the extent)
such liability or obligation was accrued on the December 31, 1995 balance sheet
included in the Financial Statements, (II) any ordinary course liability of TDI
or any Subsidiary or (III) any liability which constitutes a Financing Charge
Amount provided that, after giving effect to each such utilization, the Net
Adjusted Current Assets shall be at least $10,000,000 on the Closing Date.
5.3 THIRD-PARTY CONSENTS. Sellers, jointly and severally,
covenant and agree that they will cause TDI and each Subsidiary to use all
reasonable commercial efforts to obtain the consent of any third parties or
Governmental Authorities required to be obtained or made in connection with the
transactions contemplated by this Agreement, including, without limitation,
those consents set forth on SCHEDULE 7.3 hereto.
5.4 RENEWAL OF CONTRACTS. Sellers, jointly and severally,
covenant and agree that they will cause TDI and each Subsidiary to use all
reasonable commercial efforts to renew any Contract which by its terms expires
or terminates between the date of this Agreement and the Closing Date, provided
that any such renewal shall be on terms and conditions which are consistent with
the past practice of TDI and the Subsidiaries.
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5.5 NO INCONSISTENT ACTION. Sellers, jointly and severally,
covenant and agree that they will not permit TDI or any Subsidiary to take any
action which is inconsistent in any material respect with their obligations
under this Agreement or that would hinder or delay the consummation of the
transactions contemplated by this Agreement.
5.6 NO SOLICITATION. Sellers, jointly and severally, covenant
and agree that they will not and they will not permit TDI or any Subsidiary to,
directly or indirectly, (A) solicit, initiate or encourage submission of any
proposal or offer from any Person relating to any acquisition or purchase of
the business of TDI or any Subsidiary, any assets of TDI or any Subsidiary
(other than the sale of assets in the ordinary course of business consistent
with past practices) or any capital stock or other equity interest of TDI or
any Subsidiary or (B) participate in any discussions or negotiations regarding,
or furnish to any Person any information with respect to, or otherwise coop
erate 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. Sellers,
jointly and severally, covenant and agree that they will and will cause TDI and
each Subsidiary to promptly notify Buyer in writing if any such offer or
proposal is made.
5.7 FINANCIAL STATEMENTS. Sellers, jointly and severally,
covenant and agree that they will cause TDI and each Subsidiary to deliver to
Buyer, within 30 days after the end of each month until the Closing Date,
unaudited consolidated statements of revenue and operations for the business of
TDI and the Subsidiaries for the month then ended, along with a consolidated
balance sheet of the business of TDI and the Subsidiaries as of the end of such
month. All financial statements furnished pursuant to this Section shall be true
and complete in all material respects and fairly represent the financial
position, results of operations, cash flows and changes in financial position as
of the dates and for the periods covered by such statements. Sellers, jointly
and severally, covenant and agree that they will cause TDI and each Subsidiary
to furnish to Buyer any and all other information customarily prepared
concerning the financial condition of TDI or any Subsidiary that Buyer may
reasonably request.
5.8 ESTOPPEL CERTIFICATES; CONSENT AND WAIVER. Sellers,
jointly and severally, covenant and agree that they will cause TDI and each
Subsidiary to use all reasonable commercial efforts to obtain estoppel
certificates
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containing customary provisions and consents and waivers from any landlord with
respect to the Real Property Leases listed on SCHEDULE 5.8 hereto.
5.9 LIMITATION ON COVENANTS. Notwithstanding anything in this
Article V to the contrary, Teachers' and Hambro's responsibilities under this
Article V to cause TDI and its Subsidiaries to act or not to act shall be
limited to their power to cause or prevent such acts as stockholders of TDI.
ARTICLE VI
COVENANTS OF BUYER
6.1 EMPLOYEE BENEFITS. (a) Until the first anniversary of the
Closing Date, during the period of their employment with Buyer or any of its
subsidiaries (including TDI and the Subsidiaries), Buyer will cause to be
provided to those current employees of TDI or any of the Subsidiaries who
continue to be employed by TDI or any Subsidiary or by Buyer or any Affiliate of
Buyer immediately following the Closing (the "Transferring Employees") and, to
the extent applicable in the context, to the covered dependents and
beneficiaries of the Transferring Employees post-Closing pension, welfare and
other employee benefits which are substantially similar to those provided to
such Transferring Employees under the Plans as in effect on the date hereof.
Thereafter, Buyer will cause the Transferring Employees to be provided employee
benefits that are commercially reasonable in the industry.
(b) The service of all Transferring Employees with TDI and the
Subsidiaries prior to the Closing will be recognized and credited to them for
all purposes under any post-Closing employee benefit plan or arrangement to the
same extent and for the same purposes that prior service of other employees with
Buyer or its Affiliates is recognized and credited under such plan or
arrangement and for determining the period of employment under any vacation,
sick or other paid or unpaid time off plan.
(c) Key Transferring Employees will be entitled to participate
in and receive grants under any stock option, stock bonus or other equity-based
compensation plan of Buyer or its Affiliates on a basis which is comparable to
that afforded similarly situated employees of Buyer and its Affiliates.
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6.2 REPLACEMENT LETTERS OF CREDIT. Buyer covenants and agrees
that on or prior to the Closing Date it shall obtain replacement letters of
credit for all letters of credit required pursuant to the franchise agreements
of TDI and the Subsidiaries, provided that the aggregate face amount thereof
shall not exceed $23,000,000.
6.3 THIRD-PARTY CONSENTS. Buyer covenants and agrees that it
will (at TDI's sole expense) cooperate and use reasonable commercial efforts to
assist TDI and the Subsidiaries to obtain the consent of any third parties or
Governmental Authorities required to be obtained or made in connection with the
transactions contemplated by this Agreement.
6.4 INDEMNIFICATION OF OFFICERS AND DIRECTORS. Buyer covenants
and agrees to indemnify the current officers and directors of TDI and the
Subsidiaries after the Closing Date against all Losses for which such current
officers and directors would be entitled to indemnification under the articles
of incorporation, by-laws or insurance policies of TDI and the Subsidiaries in
effect on the date hereof, provided that, notwithstanding the foregoing, Buyer
shall have no obligation to provide any such indemnification for any Loss which
results from or arises out of any event, matter or circumstance to which Buyer
is entitled to indemnification by Sellers under Article XII hereof.
6.5 ADJUSTMENT EVENT. In the event that after the Closing
Date, the total number of outstanding shares of Infinity Stock is changed by
reason of a merger, consolidation, recapitalization, reclassification, stock
split or extraordinary stock dividend, Buyer shall cause any Retained Shares
then evidenced by the Escrow Note to be appropriately adjusted to reflect the
occurrence of such event, and all distributions of cash, securities or other
property in respect of the Retained Shares shall become part of the Retained
Shares and shall be treated in accordance with the treatment of the Retained
Shares under this Agreement and the Escrow Agreement.
6.6 BOOKS AND RECORDS. Each of Sellers and Buyer agree that,
so long as any books, records and files relating to the business, properties,
assets or operations of TDI or any Subsidiary, to the extent that they pertain
to the operation of TDI or any Subsidiary prior to the Closing Date, remain in
existence and are available, on and after the Closing Date (but in no event for
more than five years thereafter), each party (at its expense) shall have the
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right, upon reasonable prior notice, to inspect and to make copies of the same
at any time during business hours for the purpose of complying with regulatory
requirements, meeting auditing needs, or fulfilling similar obligations for
which such books, records or files are reasonably necessary.
6.7 RULE 144. Subject to the proviso at the end of this
sentence, for the period ending on the third anniversary of the Closing Date,
Buyer will file the reports required to be filed by it under the Exchange Act
and the rules and regulations adopted by the Securities and Exchange Commission
thereunder to the extent required from time to time to enable any Seller who
receives shares of Infinity Stock under this Agreement to sell such shares
without registration under the Securities Act within the limitations of the
exemption provided by (A) Rule 144 under the Securities Act, as such rule may be
amended from time to time, or (B) any successor rule or regulation hereafter
adopted by the Securities and Exchange Commission; PROVIDED that this covenant
shall have no force and effect at any time when Buyer is not a publicly traded
company.
ARTICLE VII
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:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All of the
representations and warranties of Sellers contained in or made pursuant to this
Agreement and in any schedule, instrument, certificate, agreement or document
delivered pursuant to this Agreement which are qualified in any respect as to
materiality or Material Adverse Effect shall be true and correct on the date
hereof and on and as of the Closing Date with the same effect as though such
representations and warranties had been made on the Closing Date. All other
representations and warranties contained in or made pursuant to this Agreement
and in any schedule, instrument, certificate, agreement or document delivered
pursuant to this Agreement shall be true and correct in all material respects on
the date hereof and on and as of the Closing Date with the same effect as though
such representations and warranties had been made on the Closing Date.
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(b) All of the terms, covenants and conditions to be complied
with and performed by Sellers, TDI or the Subsidiaries on or prior to Closing
Date shall have been complied with or performed.
(c) Subject only to payment of the Purchase Price, Sellers
shall have delivered to Buyer 100% of the capital stock of TDI.
7.2 GOVERNMENTAL CONSENTS. Any applicable waiting period under
the HSRA shall have expired or been earlier terminated without receipt of any
objection or the commencement or threat of any litigation by any Governmental
Authority of competent jurisdiction to restrain the consummation of the
transactions contemplated by this Agreement.
7.3 THIRD-PARTY CONSENTS. TDI and the Subsidiaries shall have
obtained and shall have delivered to Buyer all third-party consents and consents
of Government Authorities listed on SCHEDULE 7.3 hereto, without any condition
adverse to Buyer.
7.4 SELLERS' CERTIFICATE. Sellers shall have delivered to
Buyer a certificate, dated the Closing Date and signed by each such Seller, in
its capacity as a Seller, to the effect that the conditions set forth in Section
7.1 hereof have been fulfilled.
7.5 EMPLOYMENT AGREEMENT. Buyer shall be satisfied that (A)
Apfelbaum has acknowledged, in a form satisfactory to Buyer, that from and after
the Closing he will continue to honor the employment agreement, dated as of
December 22, 1989, among Apfelbaum, TDI and American Media Network, Inc., as
amended from time to time, most recently pursuant to the terms of the Letter
Agreement, dated as of November 28, 1995, to Teachers from TDI, and (B) such
employment agreement has been amended, in form and substance satisfactory to
Buyer, to extend its term for a period of five years following the Closing Date
and to provide for a covenant not to compete for the term of such employment
agreement and for a period of five years following the termination of such
employment agreement.
7.6 ADVERSE PROCEEDINGS. No action, suit, pro ceeding,
litigation or investigation shall be pending or threatened by any Governmental
Authority which questions the validity or legality of this Agreement or any
action taken or to be taken in connection herewith or the consummation of
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the transactions contemplated hereby. No injunction or other order issued by a
court of competent jurisdiction restraining or prohibiting the consummation of
the trans actions contemplated by this Agreement shall be in effect.
7.7 PAYMENT OF INDEBTEDNESS; FINANCING STATEMENTS. The
Financing Charge Amount set forth on the Financing Charge Statement shall have
been paid in full by TDI and the Subsidiaries (using funds supplied by Buyer at
the Closing; it being understood and agreed that the amount of such funds shall
equal the Financing Charge Amount). Except for Permitted Encumbrances, as
defined below, Sellers shall secure the release of all Liens of any nature
whatsoever on TDI's and the Subsidiaries' assets and business, including those
Liens listed in SCHEDULE 4.23 hereto, and shall deliver such releases to Buyer
at Closing, including but not limited to, releases or terminations under the
Uniform Commercial Code and any other applicable federal, state or local
statutes or regulations of any financing or similar statements filed against any
such assets in (A) the jurisdictions in which such assets are and have been
located since such assets were acquired by TDI or any Subsidiary, as the case
may be, and (B) any other location specified or required by applicable federal,
state or local statutes or regulations. In addition, all Liens relating to any
keyman life insurance policies on TDI's or any Subsidiary's executive officers
shall have been released.
"Permitted Encumbrances" shall consist only of (I) liens for
Taxes, assessments, water and sewer charges, license fees, and all other fees,
special assessments and charges assessed or imposed by a public body upon TDI's
or any Subsidiary's assets or any part thereof or the operation thereof,
provided such fees, assessments or taxes are not yet due and payable and (II)
other encumbrances which do not materially impair or adversely effect the use
for which the asset or business in question is currently utilized or the value
of such asset or business.
7.8 COLE/TDI AVIATION, LLC. TDI shall have caused all of its
direct and indirect equity interests in Cole/TDI Aviation, LLC to have been
conveyed, transferred and assigned to Apfelbaum as a special bonus without
liability to Buyer, TDI or any Subsidiary.
7.9 CURRENT ASSETS. On the Closing Date, Sellers shall have
delivered to Buyer a statement of Net Adjusted Current Assets as of the Closing
Date (the "Statement of Net Adjusted Current Assets"). Such statement shall be
prepared
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in accordance with GAAP (including, without limitation, proper accruals for all
employee compensation and benefit related liabilities and expenses through the
Closing), shall be in the form of SCHEDULE 7.9 hereto, shall be satisfactory in
substance to Buyer and shall reflect that Net Adjusted Current Assets equal at
least $10,000,000.
7.10 FIRPTA CERTIFICATES. Sellers shall have delivered to
Buyer a certificate of TDI satisfying the requirements of Treas. Reg. ss.
ss.1.897-2(h) and 1.1445- 2(c)(3)(i), and shall have caused TDI to comply with
the requirements set forth in Treas. Reg. ss.1.897-2(h).
7.11 RESIGNATION OF DIRECTORS. All directors of TDI and any
Subsidiary whose resignations shall have been requested by Buyer not less than
five Business Days prior to the Closing Date shall have submitted their
resignations or been removed from office effective as of the Closing Date.
7.12 RELEASES. (a) Each of the stockholders of TDI shall have
executed a release, in form and substance satisfactory to Buyer, pursuant to
which such stockholder and its Affiliates release TDI and each Subsidiary and
the present and former directors, officers, agents and employees of TDI and each
Subsidiary from any and all actions, claims, causes of action or liability of
any nature, in law or equity, known or unknown and whether or not heretofore
asserted, which such stockholder ever had, now has or hereafter can, shall or
may have against any of the foregoing for, upon or by reason of any matter,
cause or thing whatsoever from the formation of TDI and each Subsidiary to the
Closing Date, except that (I) Hambro shall not release TDI from its obligation
to Hambro referred to in Note (A)(1) of SCHEDULE 2.1(B) hereto and (II) Teachers
shall not release TDI from its obligation to Teachers under the barter agreement
referred to under item C on SCHEDULE 4.11 hereto.
(b) Each of the Executive Officers shall have executed a
release, in form and substance satisfactory to Buyer, pursuant to which such
Executive Officer waives any and all actions, claims, causes of action or
liability of any nature, in law or equity, known or unknown and whether or not
heretofore asserted, which such Executive Officer ever had, now has or hereafter
can, shall or may have against TDI or any Subsidiary for, upon or by reason of
any matter, cause or thing whatsoever arising out of any state of facts existing
prior to the Closing Date, except for any rights to indemnification to which
such Executive Officer is
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entitled pursuant to Section 6.4 hereof and except for any liability for
compensation and employee benefits pursuant to Contracts or arrangements set
forth on SCHEDULE 4.13 OR 4.14 hereto.
7.13 ESCROW NOTE; ESCROW AGREEMENT. The parties shall have
agreed on the terms and conditions of the Escrow Note and the Escrow Agreement
and Sellers and the Escrow Agent shall have each executed and delivered to Buyer
the Escrow Agreement.
7.14 DELIVERIES. Sellers shall have made all the
deliveries set forth in Section 9.1 hereof.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
The obligations of Sellers are, at their option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
8.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) All
representations and warranties of Buyer contained in or made pursuant to this
Agreement and in any schedule, instrument, certificate, agreement or document
delivered pursuant to this Agreement shall be true and correct in all material
respects on the date hereof and on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such dates (in each case, without taking into account any qualification as to
materiality contained in such representations or warranties).
(b) All the terms, covenants and conditions to be complied
with and performed by Buyer on or prior to the Closing Date shall have been
complied with or performed.
8.2 GOVERNMENTAL CONSENTS. Any applicable waiting period under
the HSRA shall have expired or been earlier terminated without receipt of any
objection or the commencement or threat of any litigation by any Governmental
Authority of competent jurisdiction to restrain the consummation of the
transactions contemplated by this Agreement.
8.3 ADVERSE PROCEEDINGS. No action, suit, proceeding,
litigation or investigation shall be pending or threatened by any Governmental
Authority of competent juris
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diction which questions the validity or legality of this Agreement or any action
taken or to be taken in connection herewith or the consummation of the
transactions contemplated hereby. No injunction or other order issued by a court
of competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
8.4 AVAILABLE FUNDS. Buyer shall have made available funds
equal to the Financing Charge Amount so as to enable Sellers to cause TDI and
the Subsidiaries to pay the Financing Charge Amount.
8.5 ESCROW NOTE; ESCROW AGREEMENT. The parties shall have
agreed on the terms and conditions of the Escrow Note and the Escrow Agreement
and Buyer shall have executed and delivered the Escrow Note to the Escrow Agent
and Buyer and the Escrow Agent shall have each executed and delivered the Escrow
Agreement.
8.6 DELIVERIES. Buyer shall have made all the
deliveries set forth in Section 9.2 hereof.
ARTICLE IX
THE CLOSING
9.1 DOCUMENTS TO BE DELIVERED BY SELLERS. At the Closing,
Sellers shall deliver or cause to be delivered to Buyer the following:
(a) certificates representing the Shares, in negotiable form
and duly endorsed in blank or accompanied by stock powers or other
instruments of transfer, as provided in Section 2.2 hereof;
(b) certificate of each Seller, dated the Closing Date, in
form and substance reasonably satisfactory to Buyer, certifying to the
fulfillment of the conditions set forth in Section 7.1 hereof;
(c) opinions of Sellers' counsel, dated the
Closing Date, in form and substance reasonably
satisfactory to Buyer;
(d) the acknowledgment and amendment referred to
in Section 7.5 hereof;
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(e) the resignations referred to in Section 7.11
hereof;
(f) the releases referred to in Section 7.12
hereof;
(g) the Escrow Agreement referred to in Section
7.13 hereof; and
(h) such other documents as may reasonably be
requested by Buyer's counsel.
9.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer
shall deliver or cause to be delivered to Sellers (or, in the case of the Escrow
Note, the Escrow Agent) the following:
(a) immediately available wire-transferred funds
and Infinity Stock registered in the name of Sellers as
provided in Section 2.2 hereof;
(b) certificate of Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to Seller, certifying to the
fulfillment of the conditions specified in Section 8.1 hereof;
(c) opinion of counsel to Buyer, dated the Closing Date, in
form and substance reasonably satisfactory to the Sellers'
Representative;
(d) the Escrow Agreement referred to in Section 8.5 hereof;
(e) the Escrow Note referred to in Section 8.5 hereof;
(f) certified resolutions of the board of directors of Buyer,
authorizing the execution, delivery and performance of this Agreement;
and
(g) such other documents as may be reasonably requested by
Sellers' counsel.
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ARTICLE X
TRANSFER TAXES; FEES AND EXPENSES
10.1 TRANSFER TAXES AND SIMILAR CHARGES. Except as provided
otherwise in this Agreement, all costs of transferring the Shares in accordance
with this Agreement, including: (A) governmental filing or grant fees,
including, without limitation, the HSRA filing fee, (B) recordation, transfer
(including, without limitation, realty transfer) and documentary taxes and fees,
shall be divided equally between Buyer on the one hand and Sellers, jointly and
severally, on the other hand, except for any applicable stock transfer taxes
which shall be the responsibility of Buyer in respect of the transfer of the
shares of Infinity Stock pursuant to this Agreement and the joint and several
responsibility of Sellers in respect of the transfer of the Shares.
10.2 EXPENSES. Except as provided otherwise in this Agreement,
each party hereto shall be solely responsible for all costs and expenses
incurred by it in connection with the negotiation, preparation and performance
of and compliance with the terms of this Agreement.
ARTICLE XI
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
Except as otherwise specifically set forth herein, the
representations, warranties and covenants contained in this Agreement or in any
certificate, document or instrument delivered pursuant to this Agreement shall
survive the Closing and continue in effect for three years thereafter. Any
investigation by or on behalf of any party hereto shall not constitute a waiver
as to enforcement of any representation, warranty or covenant.
ARTICLE XII
INDEMNIFICATION
12.1 INDEMNIFICATION BY SELLERS. (a) SEVERAL. Notwithstanding
the Closing and subject to the limitations set forth herein, each Seller,
severally, covenants and agrees to defend, indemnify and hold harmless Buyer,
its Affiliates (including, without limitation, TDI and the
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Subsidiaries following the Closing) and the officers, directors, employees,
agents, advisers and representatives of each such Person from and against, and
pay or reimburse each such Person for, any and all claims, liabilities,
obligations, losses, fines, costs, royalties, proceedings, deficiencies or
damages (whether absolute, accrued, conditional or otherwise, and whether or
not resulting from third party claims), including out-of-pocket expenses and
reason able attorneys' and accountants' fees incurred in the investigation or
defense of any of the same or in asserting any of their respective rights
hereunder (collectively, "Losses"), resulting from or arising out of any breach
or inaccuracy of any representation or warranty of such Seller set forth in
Section 4.1, 4.2 or 4.26 or in Section 4.5 or 4.25 or the fourth sentence of
Section 4.22(a) hereof insofar as the representations and warranties set forth
in such sections pertain only to such Seller.
(b) JOINT AND SEVERAL. Notwithstanding the Closing and subject
to the limitations set forth herein, including Section 12.8 hereof, each Seller,
jointly and severally, covenants and agrees to defend, indemnify and hold
harmless Buyer, its Affiliates and the officers, directors, employees, agents,
advisers and representatives of each such Person from and against, and pay or
reimburse each such Person for, any and all Losses, resulting from or arising
out of:
(i) (A) any breach of any covenant or agreement made by any
Seller under this Agreement or in any schedule hereto or any
certificate, document or other instrument delivered in connection
herewith or (B) any breach or inaccuracy of any representation or
warranty of any Seller under this Agreement or in any schedule hereto
or any certificate, document or other instrument delivered in
connection herewith (in the case of any such representation or
warranty, without taking into account any qualification as to the
materiality or Material Adverse Effect contained in such representa
tion or warranty), other than any breach or inaccuracy of any
representations or warranties referred to in Section 12.1(a) hereof;
(ii) any claim of any kind by or any liability of any kind to
any third party relating to the conduct of the business and operations
of TDI and the Subsidiaries prior to the Closing, whether or not the
Loss arising from such conduct constitutes a breach of a representa
tion or warranty hereunder by Sellers, except to the
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extent (and only to the extent) that the same (A) is reflected or
reserved against as a current liability on the face of (and not solely
in any notes to) the Statement of Net Adjusted Current Assets, (B)
comprises the Liquidated Liability Amount, (C) arises and accrues after
the Closing Date under any of the Contracts listed on SCHEDULE 4.8 PART
(B), SCHEDULE 4.8 PART (C), 4.11 OR 4.13 hereto or any contract,
agreement or commitment not required to be listed on such Schedules
because of the dollar or temporal thresholds contained in the
definition of the term "Contracts", or (D) arises and accrues under
other leases, contracts, arrangements or understandings entered into
between the date of this Agreement and the Closing Date in the ordinary
course of business and in accordance with the terms of this Agreement;
(iii) any of the interest rate protection agreements or any
of the foreign exchange protection agreements entered into by TDI or
any Subsidiary listed on SCHEDULE 4.11 hereto;
(iv) any liability with respect to the multiemployer plan
withdrawal liability described in SCHEDULE 4.14 hereto in excess of
$500,000;
(v) any claim, litigation, proceeding or investigation set
forth on SCHEDULE 4.15 hereto or on a footnote thereto;
(vi) any matter set forth in Part A on Schedule 4.21 hereto;
or
(vii) any matter set forth on SCHEDULE 4.22 hereto;
PROVIDED that any Losses referred to in clauses (iii) through (vii) shall be
calculated net of any reserves in respect of such Losses expressly accrued on
the December 31, 1995 balance sheet included in the Financial Statements.
12.2 INDEMNIFICATION BY BUYER. Notwithstanding the Closing and
subject to the limitations set forth herein, Buyer covenants and agrees to
defend, indemnify and hold harmless each Seller, its Affiliates and the
officers, directors, employees, agents, advisers and representatives of each
such Person from and against, and pay or reimburse each such Person for, any and
all Losses resulting from or arising out of (A) any breach of any covenant or
agreement
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made by or on behalf of Buyer under this Agreement or in any schedule hereto or
any certificate, document or other instrument delivered in connection herewith
or any (B) breach or inaccuracy of any representation or warranty of Buyer under
this Agreement or in any schedule hereto or any certificate, document or other
instrument delivered in connection herewith (in the case of any such
representation or warranty, without taking into account any qualification as to
materiality contained in such representation or warranty).
12.3 LIMITATION ON INDEMNITY OBLIGATION. (a) Notwithstanding
anything in Section 12.1 or 12.2 hereof to the contrary, (I) to the extent
indemnification is sought under Section 12.1(a), Section 12.1(b)(i) or Section
12.2(b) hereof, Sellers or Buyer, as the case may be, shall be required to
provide indemnification only to the extent the aggregate amount of Losses
arising under Section 12.1 or 12.2 hereof, as the case may be, exceeds
$1,000,000; and (II) to the extent indemnification is sought under Section
12.1(b)(ii), Sellers shall be required to provide indemnification only to the
extent the aggregate amount of Losses arising under Section 12.1 hereof exceeds
$500,000. To the extent indemnification may be sought by Buyer under more than
one provision of Section 12.1 hereof, Buyer may elect, at it sole option, the
provisions of Section 12.1 hereof that will be applicable to such Loss.
(b) Notwithstanding anything in Section 12.1 or 12.2 hereof to
the contrary, the aggregate amount payable by Sellers with respect to any Losses
(I) under Sections 12.1(a) and 12.1(b)(i) hereof shall not exceed the greater of
(A) $10,000,000 and (B) the fair market value of the Retained Shares evidenced
by the Escrow Note at the time any such Loss is otherwise payable based upon a
per share price equal to the average closing price of the Infinity Stock as
reported on the NYSE for the twenty Business Days preceding the second Business
Day prior to the date such Loss is otherwise payable (plus the value of any
distributions in cash, securities and other property made with respect to such
Retained Shares prior to their delivery to Sellers pursuant to the Escrow Note,
other than any such distribution previously paid to Buyer) and (II) under
Section 12.1(b)(ii) hereof shall not exceed the greater of the amounts set forth
in clause (i) of this Section 12.3(b), PLUS (X) $50,000,000 if the Claim (as
defined in Section 12.4 hereof) is made on or before the six month anniversary
of the Closing Date, (Y) $35,000,000 if the Claim is made more than six months
after the Closing Date and on or before
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the first anniversary of the Closing Date and (Z) $20,000,000 if the Claim is
made after the first anniversary of the Closing Date and on or before the third
anniversary of the Closing Date and MINUS, in the case of each of clauses (x),
(y) and (z) of this Section 12.3(b), any amount actually paid by Sellers
pursuant to Sections 12.1(a) and 12.1(b)(i) hereof.
(c) Notwithstanding anything in Section 12.1 or 12.2 hereof to
the contrary, the aggregate amount of Losses payable by Buyer under Section 12.2
shall not under any circumstances exceed $10,000,000.
(d) In the event that Buyer shall be entitled to
indemnification for any Loss under this Article XII at any time when the
Retained Shares, as valued as set forth below, are sufficient to compensate
Buyer for such Loss, Buyer shall, before being entitled to make a demand for any
cash payment from Sellers pursuant to this Article XII, direct the Escrow Agent
to make a notation on the Escrow Note reducing the number of Retained Shares
represented by the Escrow Note by such number of shares as have a value equal to
such Loss, based upon a per share price equal to the average closing price of
the Infinity Stock as reported on the NYSE for the twenty Business Days
preceding the second Business Day prior to the date on which such direction to
the Escrow Agent is given.
(e) In the event that the Retained Shares represented by the
Escrow Note are insufficient to satisfy Sellers' indemnification obligations
under this Article XII, Sellers shall, subject to Section 12.3(b) hereof, remain
obligated to indemnify Buyer pursuant to this Article XII.
12.4 PROCEDURES FOR CERTAIN CLAIMS. In the case of any claim
for indemnification asserted by a party entitled to indemnification under this
Agreement (a "Claim") and subject to Section 12.5 hereof with respect to claims
asserted by a third party, the parties hereto shall follow the procedures set
forth in this Section 12.4 with respect to all Claims.
(a) PROCEDURES FOR CLAIMS BY BUYER.
(i) At any time on or before the third anniversary of the
Closing Date, Buyer may give notice to the Sellers' Representative of
any Claim. Such notice shall include reasonably detailed information
about the nature and factual basis for such Claim and
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the basis for the calculation of the amount claimed, if the amount of
the Claim is readily ascertainable.
(ii) Buyer and the Sellers' Representative shall consult in good
faith with a view to agreeing on the validity of such Claim and on the
amount of such Claim. If they so agree, Buyer and the Sellers'
Representative shall give a joint notice to the Escrow Agent instruc
ting the Escrow Agent to make a notation on the Escrow Note reducing
the number of Retained Shares represented by the Escrow Note by such
number of shares as have a value equal to such Claim based upon a per
share price equal to the average closing price of the Infinity Stock as
reported on the NYSE for the twenty Business Days preceding the second
Business Day prior to the date of such joint notice.
(iii) Claims shall be made in respect of matters as to which actual
Losses have been paid or incurred; PROVIDED, HOWEVER, that if on the
date that is the third anniversary of the Closing Date there shall
exist pending or threatened claims, unasserted possible claims and/or
other potential liabilities or expenses which, if resolved adversely
would result in a Loss (a "Prospective Claim", which shall include any
third-party claim that remains unresolved pursuant to Section 12.5
hereof), then, notwithstanding that actual Losses have not theretofore
been paid or incurred, Buyer may give notice thereof (if not previously
given) to the Sellers' Representative. Such notice shall include
reasonably detailed information about each such Prospective Claim and
information known to Buyer regarding the timing and course of future
resolution thereof. Following the third anniversary of the Closing
Date, Buyer and the Sellers' Representative shall consult with one
another with a view to agreeing on the number of Retained Shares, if
any, represented by the Escrow Note which shall then be delivered to
Sellers, on a proportionate basis, and the number of such shares which
shall remain subject to the Escrow Note and held by the Escrow Agent
with respect to all Prospective Claims. If, at any time after the 30th
day following the third anniversary of the Closing Date, Buyer and the
Sellers' Representative have not delivered to the Escrow Agent a joint
instruction to the effect of the foregoing with respect to all
Prospective Claims, then either Buyer or the Sellers' Representative
may refer the matter to arbitration and the arbitrator if requested by
either party, shall be
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authorized to structure an award to the effect of the foregoing
allocation. Nothing in this subsection (iii) shall prevent Buyer from
making a Prospective Claim at any time prior to the third anniversary
of the Closing Date.
(iv) Any arbitration pursuant to subsection (iii) above shall be
administered by the American Arbitration Association and conducted in
accordance with the then applicable Securities Arbitration Rules of the
American Arbitration Association.
(v) The decision of the arbitrators with respect to the number, if
any, of the Retained Shares which shall be released from escrow and
delivered to Sellers pending resolution of all Prospective Claims shall
be final and binding on Buyer and Sellers (and judgment may be entered
thereon) and shall not be subject to appeal to, or review of any kind
by, any court or tribunal, PROVIDED, HOWEVER, that either Buyer or the
Sellers' Representative may take action in any court of competent
jurisdiction to enforce such decision. Not withstanding anything in
this Section 12.4(a) to the contrary, the arbitration award shall apply
only to the number of Retained Shares which shall remain subject to the
Escrow Note and held in escrow pursuant to the Escrow Agreement after
the third anniversary of the Closing Date pending resolution of all
Prospective Claims and shall not be binding or utilized in any forum by
any party in determining the actual Losses incurred by Buyer which
shall only be resolved upon agreement of the parties hereto or by a
court of law.
(vi) The Escrow Agent shall be instructed in a joint instruction
of Buyer and the Sellers' Representative to deliver the number of
Retained Shares represented by the Escrow Note to the Sellers' Repre
sentative following the making of any and all reductions to the number
of Retained Shares represented by the Escrow Note pursuant to Section
12.3(d) hereof, this Section 12.4(a) or the Escrow Agreement, on the
later to occur of (A) the third anniversary of the Closing Date and (B)
the resolution of all matters relating to all Prospective Claims. The
Sellers' Representative shall deliver such Retained Shares, prorata to
Sellers, in accordance with the percentages set forth on SCHEDULE 4.2
hereto; PROVIDED that Buyer shall have no liability to any Seller for
any failure of the
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Sellers' Representative to so deliver such Retained Shares.
(b) PROCEDURES FOR CLAIMS BY SELLERS.
(i) At any time on or before the third anniversary of the
Closing Date, the Sellers' Representative may give notice to Buyer of
any Claim. Such notice shall include reasonably detailed information
about the nature and factual basis for such Claim and the basis for the
calculation of the amount claimed.
(ii) Buyer and the Sellers' Representative shall consult in good
faith with a view to agreeing on the validity of such Claim and on the
amount of such Claim. If they so agree, Buyer shall pay the amount of
such Claim to the Sellers' Representatives who shall distribute such
amounts to Sellers on a proportionate basis.
(iii) Claims shall be made in respect of matters as to which actual
Losses have been paid or incurred; PROVIDED, HOWEVER, that if on the
third anniversary of the Closing Date there shall exist a Prospective
Claim, then, notwithstanding that actual Losses have not theretofore
been paid or incurred, the Sellers' Representative may give notice
thereof to Buyer. Such notice shall include reasonably detailed
information about such Prospective Claim and information known to
Sellers' Representative regarding the timing and course of future
resolution thereof. Buyer and the Sellers' Representative shall consult
with one another with a view to agreeing on an amount in full
settlement of the Prospective Claim.
12.5 THIRD-PARTY CLAIMS. In addition to the provisions of
Section 12.4 hereof, in the case of any Claim asserted by a third party against
a party entitled to indemnification under this Agreement (the "Indemnified
Party"), notice shall be given by the Indemnified Party to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and the Indemnified Party shall permit the Indemnifying Party (at the
expense of such Indemnifying Party) to assume the defense of any claim or any
litigation resulting therefrom, provided that (I) the counsel for the Indemnify
ing Party who shall conduct the defense of such claim or litigation shall be
reasonably satisfactory to the Indemni-
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fied Party, (II) the Indemnified Party may participate in such defense at such
Indemnified Party's expense, and (III) the omission by any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is materially damaged as a result of such failure to
give notice. Notice to the Sellers' Representative pursuant to this Section 12.5
shall constitute actual notice to all Sellers. Except with the prior written
consent of the Indemnified Party, no Indemnifying Party, in the defense of any
such claim or litigation, shall consent to entry of any judgment or order,
interim or otherwise, or enter into any settlement that provides for injunctive
or other nonmonetary relief affecting the Indemnified Party or that does not
include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any pro posed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
tax liability or, if Buyer is the Indemnified Party, the ability of Buyer to
conduct the business of TDI and the Subsidiaries as presently conducted, or that
the Indemnified Party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand and shall be entitled
to settle or agree to pay in full such claim or demand. Notwithstanding the
foregoing, the Indemnifying Party shall still provide indemnification to the
Indemnified Party. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 12.5 and the
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records of each shall be available to the other with respect
to such defense.
12.6 THE SELLERS' REPRESENTATIVE. (a) Notwithstanding
anything in this Agreement to the contrary, all rights of Sellers under Sections
12.4 and 12.5 hereof shall be exercisable exclusively by Apfelbaum, and Buyer
shall be entitled to deal exclusively with Apfelbaum in respect of all such
rights, including, without limitation, the giving of all notices pursuant to
Sections 12.4 and 12.5 hereof, unless Sellers owning a majority of the Class A
Stock and Class B Stock immediately prior to the Closing shall notify Buyer in
writing that Buyer shall thereafter deal exclusively with Joel M. Rudenstein or
another specified individual (but not more than one individual) for purposes of
this Article XII. Apfelbaum or such other specified individual who may be
appointed pursuant to this Section 12.6(a) to act as representative of Sellers
in place of Apfelbaum shall be referred to herein as the "Sellers'
Representative".
(b) The Sellers' Representative shall not be liable to Sellers
for any action taken or omitted by him or her in good faith and in no event
shall the Sellers' Representative be liable or responsible to Sellers except for
his or her own gross negligence, bad faith or willful misconduct. Sellers agree
that Sellers shall be liable, jointly and severally, to hold the Sellers'
Representative harmless from, and to indemnify and reimburse the Sellers'
Representative for, all claims, liabilities, losses and expenses (including
out-of-pocket and incidental expenses reasonably incurred and reasonable legal
fees) arising in connection with any action, suit or claim arising under this
Agreement, provided that the Sellers' Representative has not acted with gross
negligence, bad faith or willful misconduct with respect to any of the events
relating to such claims, liabilities, losses or expenses. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Sellers'
Representative, acting in his or her capacity as the representative of Sellers,
but not in his or her individual capacity as a Seller, be responsible or liable
to Sellers for special, indirect or consequential loss or damages of any kind
(including but not limited to lost profits), regardless of the form of action.
No indemnification by Sellers under this Section 12.6(b) shall reduce or
otherwise limit in any respect Sellers' other indemnification obligations under
this Article XII.
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12.7 LIMITATION ON CLAIMS. In case any event shall occur which
would otherwise entitle any party to assert any claim for indemnification
hereunder, no Loss shall be deemed to have been sustained by such party to the
extent of (a) any tax savings actually realized by such party with respect
thereto, or (b) any proceeds received by such party from any insurance policies
with respect thereto, net of any increase in premiums or other costs associated
with such insurance recovery.
12.8 SPECIAL LIMITATIONS. Notwithstanding anything in this
Agreement to the contrary, the indemnification obligations of Teachers and
Hambro shall be joint and several only to the extent of the greater of the
amounts set forth in clause (i) of Section 12.3(b) hereof; thereafter, each of
Teachers and Hambro shall be severally liable for its prorata share (based on
its proportionate ownership of the Shares immediately prior to the Closing) of
any Losses in excess of the greater of the amounts set forth in such clause (i)
of Section 12.3(b) hereof; PROVIDED that, in no event shall either Teachers or
Hambro be liable pursuant to this Agreement for an amount greater than its pro
rata share of the Purchase Price. Once all of the Retained Shares have been used
to satisfy the Sellers' indemnification obligations under this Agreement, any
Seller may satisfy any additional indemnification obligation hereunder in
respect of any Loss by delivering to Buyer shares of Infinity Stock constituting
a portion of the Stock Portion having a value (together with the value of all
payments of all other Sellers) equal to such Loss, such value to be based upon a
per share price equal to the average closing price of the Infinity Stock as
reported on the NYSE for the twenty Business Days preceding the second Business
Day prior to the date on which such indemnification payment is made.
12.9 EXCLUSIVE REMEDY. The indemnification provisions of this
Article XII shall be the sole and exclusive remedy of the parties against one
another with respect to any Loss under this Agreement.
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ARTICLE XIII
TERMINATION RIGHTS
13.1 TERMINATION. (a) This Agreement may be terminated by
Buyer, on the one hand, or Sellers, on the other hand, if the party seeking to
terminate (and in the case of Sellers, each Seller) is not in material default
or breach of this Agreement, upon written notice to the other upon the
occurrence of any of the following:
(i) if the Closing has not occurred by November 30, 1996; or
(ii) if there shall be in effect any final judgment, final
decree or order that would prevent or make unlawful the Closing.
13.2 LIABILITY. The termination of this Agreement under
Section 13.1 hereof shall not relieve any party of any liability for breach of
this Agreement prior to the date of termination.
ARTICLE XIV
REMEDIES UPON DEFAULT
Each Seller recognizes that, in the event any Seller defaults
in the performance of its obligations to close under this Agreement, monetary
damages alone will not be adequate. Therefore, unless Buyer is in default in the
performance of its obligations to close under this Agreement, Buyer shall be
entitled, in addition to bringing an action for indemnification under Article
XII hereof, to obtain specific performance of the terms of this Agreement. In
any action to enforce specifically the performance of this Agreement, each
Seller shall waive the defense that there is another adequate remedy at law or
equity and agrees that Buyer shall have the right to obtain specific performance
of Sellers' obligations to close under the terms of this Agreement without being
required to prove actual damages, post bond or furnish other security other than
to pay the full Purchase Price and otherwise perform its closing obligations. In
addition, Buyer shall be entitled to obtain from Sellers, jointly and severally,
court costs and reasonable attorneys' fees incurred by it in enforcing its
rights hereunder, plus interest at the Delaware statutory rate on the amount of
any judgment obtained
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against any Seller from the date of default by such Seller 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 required to demonstrate that it is ready,
willing and able to do so and to perform its other closing obligations in all
material respects.
ARTICLE XV
OTHER PROVISIONS
15.1 CONFIDENTIALITY. Each Seller and Buyer shall keep
confidential and not use or disclose any information previously or hereafter
obtained by it pursuant to this Agreement (the party receiving such information
is hereinafter referred to as the "Receiving Party") with respect to the other
or such other's parents, subsidiaries, affiliates or other related entities (the
party, or such party's parents, subsidiaries, affiliates or other related
entities, with respect to which the information relates is hereinafter referred
to as the "Disclosing Party") in connection with this Agreement and the
negotiations preceding this Agreement, including, without limitation
information provided pursuant to Section 5.1 hereof (such information is
hereinafter referred to as the "Confidential Information"), and the Receiving
Party will use such Confidential Information solely in connection with the
transactions contemplated by this Agreement, and if the transactions
contemplated hereby are not consummated for any reason, the Receiving Party
shall either return to the Disclosing Party, without retaining a copy thereof,
or destroy any schedules, documents or other written information constituting
Confidential Information (or prepared based upon such Confidential Information)
in connection with this Agreement and the transactions contemplated hereby and
the negotiations preceding this Agreement. Without limiting the generality of
the foregoing, the Receiving Party shall be permitted to disclose any
Confidential Information to such of its Affiliates, officers, directors,
employees, agents, lenders and representatives (collectively, "Representa
tives") as have a need to know such Confidential Information, provided such
Representatives shall be informed that disclosure of such Confidential
Information by such Representatives would be in contravention hereof. Notwith
standing the foregoing, the Receiving Party shall not be required to keep
confidential or return any information which (I) is known or available through
other lawful
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sources, not bound by a confidentiality agreement with the Disclosing Party, or
(II) is or becomes publicly known other than as a result of the disclosure by
the Receiving Party or its Representatives or (III) is required to be disclosed
pursuant to an order or request of a judicial or governmental authority or a
self-regulatory body, including the National Association of Insurance
Commissioners, or pursuant to any law or regulation in any jurisdiction
(provided the Disclosing Party is given reasonable prior written notice), or
(IV) is developed by the Receiving Party independently of, and is not based
upon, the Confidential Information.
15.2 LEGEND. Each certificate representing shares of Infinity
Stock issued to any Seller shall bear upon its face the following legends:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), AND MAY NOT BE OFFERED, SOLD, ASSIGNED, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF UNLESS AND UNTIL
REGISTERED UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS OR UNLESS SUCH OFFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION, TRANSFER OR OTHER DISPOSITION IS EXEMPT FROM
REGISTRATION AND IN EACH CASE IS OTHERWISE IN COMPLIANCE WITH
THE ACT AND SUCH LAWS."
15.3 PUBLICITY. Except as required by Applicable Law or with
the other parties' express written consent, no party to this Agreement nor any
Affiliate of any party shall issue any press release or make any public
statement (oral or written) regarding this Agreement or the transactions
contemplated by this Agreement.
15.4 COMPLIANCE WITH HSRA. Buyer and Sellers shall make or
cause to be made in a timely fashion all filings which are required in
connection with the transactions contemplated hereby under the HSRA, and shall
furnish to the other party all information that the other reasonably requests in
connection with such filings.
15.5 BENEFIT AND ASSIGNMENT. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns. Neither Buyer nor any Seller may assign this
Agreement without the prior written consent of Buyer, in the case of any such
assignment by any Seller, and of the
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Sellers' Representative, in the case of any such assignment by Buyer, except
that (I) Buyer may assign its rights and obligations under this Agreement to any
of its Affiliates, PROVIDED that any such assignment shall not relieve Buyer
from any of its obligations under this Agreement and (II) Buyer may assign its
rights under Article XII hereof to any lender which provides financing in
connection with the consummation of this Agreement.
15.6 NO THIRD-PARTY BENEFICIARIES. Except as provided in
Sections 6.4, 12.1, 12.2 and 15.5 hereof with respect to indemnification,
nothing in this Agreement shall confer any rights upon any Person other than the
parties hereto and their respective heirs, successors and permitted assigns.
15.7 ENTIRE AGREEMENT. This Agreement and the exhibits and
schedules hereto embody the entire agreement and understanding of the parties
hereto and supersede any and all prior agreements, arrangements and
understandings relating to the matters provided for herein. No amendment, waiver
of compliance with any provision or condition hereof or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any amendment, waiver or consent is
sought.
15.8 WAIVER. At any time prior to the Closing Date, the
parties hereto may (I) extend the time for performance of any obligations or
other acts of the other parties hereto, (II) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (III) waive any compliance with any of the agreements or
conditions contained herein. Any agreement on the part of any party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.
15.9 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.
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15.10 CHOICE OF LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of New York without regard
to its principles of conflict of laws, and the state and federal courts of New
York shall have exclusive jurisdiction over any controversy or claim arising out
of or relating to this Agreement.
15.11 NOTICES. All notices, requests, demands, letters,
waivers and other communications required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if (A)
delivered personally, (B) mailed, certified or registered mail with postage
prepaid, (C) sent by next-day or overnight mail or delivery or (D) sent by fax,
as follows:
To any Seller:
TDI Worldwide, Inc.
275 Madison Avenue
New York, New York 10016
Attention: Mr. William M. Apfelbaum
Phone: (212) 559-1100
Fax: (212) 661-8960
With a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: William Bush, Esq.
Phone: (212) 318-3307
Fax: (212) 752-5958
Dechert Price & Rhoads
477 Madison Avenue
New York, New York 10022
Attention: Ronald R. Jewell, Esq.
Phone: (212) 326-3500
Fax: (212) 308-2041
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Kenneth Blackman, Esq.
Phone: (212) 859-8000
Fax: (212) 859-4000
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Teachers Insurance and Annuity
Association of America
730 Third Avenue
New York, New York 10017
Attention: Timothy F. Hodgdon, Esq.
Phone: (212) 916-4270
Fax: (212) 916-6980
To Buyer:
Infinity Broadcasting Corporation
600 Madison Avenue
New York, New York 10022
Attention: Mr. Farid Suleman
Phone: (212) 750-6400
Fax: (212) 888-2959
With a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
Phone: (212) 909-6226
Fax: (212) 909-6836
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(W) if by personal delivery on the day after such delivery, (X) if by certified
or registered mail, on the fifth Business Day after the mailing thereof, (Y) if
by next-day or overnight mail or delivery, on the day delivered or (Z) if by
fax, on the next day following the day on which such fax was sent, provided that
a copy is also sent by certified or registered mail.
15.12 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.
15.13 FURTHER ASSURANCES. Each 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
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order to vest and confirm in Buyer (or its assignees) the title and rights to
and in all of the Shares to be and intended to be sold, conveyed, transferred
and assigned hereunder.
61
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first written above.
INFINITY BROADCASTING CORPORATION
By:________________________
Name:
Title:
---------------------------
William M. Apfelbaum
---------------------------
Donald R. Allman
---------------------------
Joel M. Rudenstein
---------------------------
Tina K. Haut
---------------------------
Seymour W. Zises
---------------------------
Geoffrey R. Handler
---------------------------
William F. Murphy
---------------------------
Jodi A. Yegelwel
---------------------------
Eric M. Solomon
62
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HAMBRO GROUP INVESTMENT
By:________________________
Name:
Title:
TEACHERS INSURANCE AND
ANNUITY ASSOCIATION
By:________________________
Name:
Title:
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STOCK PURCHASE AGREEMENT
between
INFINITY BROADCASTING CORPORATION
and
GRANUM HOLDINGS L.P.
Dated as of March 3, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I: DEFINITIONS............................................ 1
ARTICLE II: PURCHASE AND SALE OF STOCK............................ 7
2.1 General.............................................. 7
2.2 Stock Purchase Price; Adjustments.................... 7
2.3 Payment of the Stock Purchase Price.................. 12
2.4 Delivery of the Stock................................ 12
2.5 Delivery by the Seller............................... 12
2.6 Delivery by the Buyer................................ 13
ARTICLE III: CLOSING.............................................. 14
ARTICLE IV: REPRESENTATIONS AND WARRANTIES........................ 14
4.1 Representations and Warranties of the Seller......... 14
4.2 Representations and Warranties of the Buyer.......... 37
4.3 Survival of Representations and Warranties........... 39
4.4 Limitation on Remedies........................... 39
4.5 Schedules............................................ 40
4.6 No Implied Representation............................ 40
ARTICLE V: COVENANTS AND TRANSACTIONS PRIOR TO CLOSING............ 40
5.1 Access to Information Concerning Properties and
Records; Confidentiality......................... 40
5.2 Conduct of the Businesses of the Companies and the
Subsidiaries Prior to the Closing Date........... 42
5.3 Antitrust Laws....................................... 44
5.4 Applications for FCC Consents........................ 45
5.5 Employee Benefit Matters......................... 47
5.6 Credit Agreement..................................... 50
5.7 Notification......................................... 50
5.8 No Inconsistent Action .............................. 51
5.9 Non-Solicitation..................................... 51
5.10 Financial Statements............................ 51
5.11 Repair of Assets.................................... 53
5.13 Commitments for Financing....................... 55
5.14 Further Actions..................................... 55
ARTICLE VI: CONDITIONS PRECEDENT.................................. 56
6.1 Conditions Precedent to Obligations of Parties....... 56
6.2 Conditions Precedent to Obligation of the Buyer...... 56
6.3 Conditions Precedent to the Obligation of the
Seller........................................... 58
ARTICLE VII: ASSUMPTION OF CERTAIN OBLIGATIONS
AND LIABILITIES; INDEMNIFICATION........... 59
7.1 Assumption and Indemnification....................... 59
7.2 Procedure............................................ 60
7.3 Payment.............................................. 62
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PAGE
ARTICLE VIII: MISCELLANEOUS....................................... 62
8.1 Termination and Abandonment.......................... 62
8.2 Fees and Expenses.................................... 64
8.3 No Control by the Buyer.............................. 64
8.4 Transfer Taxes....................................... 64
8.5 Notices.............................................. 64
8.6 Entire Agreement..................................... 65
8.7 Binding Effect; Benefit.............................. 66
8.8 Assignability........................................ 66
8.9 Amendment and Modification; Waiver................... 66
8.10 Public Announcements................................ 67
8.11 Knowledge....................................... 68
8.13 Section Headings.................................... 68
8.14 Counterparts........................................ 68
8.15 Applicable Law...................................... 68
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Schedules
Schedule 1.1 Stations
Schedule 1.2 Subisidiaries
Schedule 4.1(a) Jurisdiction of Organization - Companies
Schedule 4.1(c) Authorized Capital
Schedule 4.1(c)(i) Liens on Stock -Companies
Schedule 4.1(c)(ii) Outstanding Options, Warrants, Etc. - Companies
Schedule 4.1(e)(i) Liens on Stock - Subsidiaries
Schedule 4.1(e)(ii) Outstanding Options, Warrants, Etc.-Subsidiaries
Schedule 4.1(f) Conflicts; Consents
Schedule 4.1(h) Tax Matters
Schedule 4.1(i)(i) FCC Licenses
Schedule 4.1(i)(ii) Pending Applications with FCC
Schedule 4.1(i)(iii) Proceedings or Complaints at FCC
Schedule 4.1(j) Insurance Policies
Schedule 4.1(k)(i) Owned Real Property
Schedule 4.1(k)(ii) Leased Real Property
Schedule 4.1(k)(iii) Liens on Real Property
Schedule 4.1(k)(iv) Liens on Assets
Schedule 4.1(k)(v) Ownership Exceptions
Schedule 4.1(m) Legal Proceedings
Schedule 4.1(o) Undisclosed Liabilities
Schedule 4.1(p) Changes or Events
Schedule 4.1(q)(i) Employee Benefit Plans, Agreements
Schedule 4.1(q)(v) Contributions, Etc. Under Benefit Plans
Schedule 4.1(q)(ix) Increases in Compensation
Schedule 4.1(s) Affiliate Transactions
Schedule 4.1(t)(i) Material Contracts
Schedule 4.1(t)(ii) Material Contracts Not Valid or Binding
Schedule 4.1(t)(iii) Consents under Material Contracts
Schedule 4.1(u) Collective Bargaining Agreements
Schedule 4.2(d) Buyer's Qualifications as Licensee
Schedule 5.5 Cause
iii
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of March 3, 1996, between
Infinity Broadcasting Corporation, a Delaware corporation (the "BUYER"), and
Granum Holdings L.P., a Delaware limited
partnership (the "SELLER").
WHEREAS, the Seller is the owner, beneficially and of record,
of all of the outstanding capital stock (the "STOCK") of GCI Atlanta Holdings,
Inc., GCI Baltimore Holdings, Inc., GCI Texas Holdings, Inc., GCI Orlando
Holdings, Inc., GCI Dallas Holdings, Inc. and GCI Boston Holdings, Inc.
(individually, the "COMPANY" and collectively, the "COMPANIES") which,
respectively, are the direct and indirect parent corporations of the
Subsidiaries (as hereinafter defined). The Subsidiaries own and operate the
Stations (as hereinafter defined); and
WHEREAS, the Stock constitutes all of the outstanding
capital stock of the Companies; and
WHEREAS, the Buyer desires to purchase from the Seller, and
the Seller desires to sell to the Buyer, all of the Stock upon the terms and
subject to the conditions set forth herein (the sale and purchase of the Stock
being referred to herein as the "STOCK PURCHASE").
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I: DEFINITIONS
As used in this Agreement, the following terms have the
following meanings:
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"AFFILIATE" when used with respect to another Person shall mean any
Person controlling, controlled by or under common control with such Person.
"ANTITRUST DIVISION" means the Antitrust Division of the
U.S. Department of Justice.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or other
day on which banks are required or authorized by law to be closed in New York,
New York.
"CLOSING" shall have the meaning ascribed to it in Article
III.
"CLOSING DATE" shall have the meaning ascribed to it in
Article III.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMUNICATIONS ACT" shall mean the Communications Act of
1934, as amended.
"COMPANY PLANS" shall have the meaning ascribed to it in
Section 4.1(q).
"CREDIT AGREEMENT" means the Credit Agreement, dated as of March 31,
1995, among Granum Finance Partnership, certain other Granum companies referred
to therein, each of the lenders signatory thereto and The Chase Manhattan Bank
(National
Association), as agent.
"DEFERRED INCOME TAXES" means deferred tax assets or liabilities
(current or long-term) recorded in accordance with generally accepted accounting
practices on a balance sheet; PROVIDED that the term Deferred Income Taxes shall
not include any deferred tax asset or liability which arises from the
2
<PAGE>
application of purchase price accounting to the acquisitions
pursuant to the Summit Agreement.
"ENVIRONMENTAL LAWS" shall have the meaning ascribed to it
in Section 4.1(r).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"FCC" means the Federal Communications Commission.
"FCC CONSENT" shall have the meaning ascribed to it in
Section 6.1(b).
"FCC LICENSES" shall have the meaning ascribed to it in
Section 4.1(i).
"FCC RULES" means the rules, regulations and written policies of the
FCC promulgated by the FCC under the Communications Act.
"FINAL ORDER" means an order of the FCC if:
(a) the order of the FCC has not been reversed, stayed,
enjoined, set aside, annulled or suspended;
(b) no request for stay, petition for reconsideration, application for
review or appeal or SUA SPONTE action of the FCC with comparable effect is
pending with respect to the order; and
(c) the normally applicable time for filing any such request, petition
or appeal or for the taking of any such SUA SPONTE action has expired.
"FTC" means the U.S. Federal Trade Commission.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
3
<PAGE>
"INTELLECTUAL PROPERTY" means patents, patent applications, trademarks,
tradenames, service marks, copyright registrations or copyright applications.
"LEASED REAL PROPERTY" means the land, buildings and structures leased
by any Company or any Subsidiary as lessee and listed in Schedule 4.1(k)(ii)
hereto under the name of such Company or Subsidiary, including any additions
thereto or substitutions therefor.
"LIEN" means any mortgage, pledge, security interest, option, adverse
claim, encumbrance, lien, claim or charge of any kind, whether voluntarily
incurred or arising by operation of law or otherwise.
"LONG-TERM LIABILITIES" means any long-term liabilities (other than
Deferred Income Taxes that are non-current liabilities) required to appear on a
balance sheet of the Companies and the Subsidiaries prepared in accordance with
generally accepted accounting practices.
"MATERIAL ADVERSE EFFECT" means any effect that is materially adverse
to the business, results of operations or financial condition of the Companies
and the Subsidiaries, taken as a whole.
"MATERIAL CONTRACTS" shall have the meaning ascribed to it
in Section 4.1(t).
"OWNED REAL PROPERTY" means the land, buildings and structures owned by
any Company or any Subsidiary and listed on Schedule 4.1(k)(i) under the name of
such Company or such
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<PAGE>
Subsidiary, including any additions thereto or substitutions therefore.
"PERMITTED LIENS" shall have the meaning ascribed to it in
Section 4.1(k).
"PERSON" means and includes any natural person, corporation, limited
liability company, partnership, limited partnership, firm, joint venture,
association, joint-stock company, trust, business trust, unincorporated
organization, governmental or regulatory body, or other entity of whatever
nature.
"STATIONS" means the radio stations listed on Schedule 1.1
hereto.
"STOCK PURCHASE" shall have the meaning ascribed to it in
the recitals.
"STOCK PURCHASE PRICE" shall have the meaning ascribed to it
in Section 2.2.
"SUBSIDIARY" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person; provided that the term "SUBSIDIARIES" when used with respect to
the Companies shall mean only those Persons listed on Schedule 1.2 hereto.
5
<PAGE>
"SUMMIT AGREEMENT" means the Stock Purchase Agreement, dated as of June
14, 1994, among Summit Communications Group, Inc., Summit Broadcasting Holding
Company, and Granum Communications, Inc.
"WORKING CAPITAL" means (a) cash and cash equivalents, accounts
receivables and other receivables (less the reserve for uncollectible accounts),
prepaid expenses (excluding any prepaid advertising and promotion expenses and
including prepaid taxes other than income taxes), security deposits, any other
current assets that provide economic benefit to the Companies or the
Subsidiaries after the Closing and Deferred Income Taxes recorded as a current
asset LESS (b) accounts payable, accrued expenses and current liabilities, other
accruals, salaries and commissions payable (including an accrual for all sales
commissions referred to in Schedule 4.1(p) that have not been paid at or prior
to the Closing, whether or not required by generally accepted accounting
practices), the current portion of long-term debt and Deferred Income Taxes
recorded as a current liability, all as determined in accordance with generally
accepted accounting practices, consistently applied. For the purposes of the
definition of Working Capital, (i) net barter receivables shall not exceed
$50,000 and (ii) the Seller will maintain a reserve for accounts receivable
consistent with past practice but in no event shall such such reserve be less
than the lesser of 4.7% of such accounts and $679,000. All of the accounts
receivable on the Closing Date Balance Sheet will to the knowledge of the Seller
6
<PAGE>
and the Company be good and collectible and free and clear of any
Liens.
ARTICLE II: PURCHASE AND SALE OF STOCK
2.1 GENERAL. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date, the Seller agrees to sell to
the Buyer, and the Buyer agrees to purchase from the Seller, the Stock.
2.2 STOCK PURCHASE PRICE; ADJUSTMENTS. (a) The total
consideration for the sale and transfer of the Stock shall be (i) FOUR HUNDRED
TEN MILLION DOLLARS ($410,000,000) plus (ii) the amount of the Estimated Working
Capital (as defined below) plus (iii) the estimated aggregate amount of Deferred
Income Tax Assets (as defined below) minus (iv) the aggregate amount of Deferred
Income Tax Liabilities (as defined below) minus (v) the aggregate amount of the
Estimated Long-Term Liabilities (as defined below), if any, (collectively, the
"STOCK PURCHASE PRICE"), payable as set forth in Section 2.3 and subject to
adjustment as provided in Section 2.2(b).
(b) (i) The Seller shall, at least two Business Days prior to
the Closing, cause to be prepared and delivered to the Buyer a statement (the
"PRELIMINARY STATEMENT") setting forth the estimated calculations (which
calculations shall be reasonably satisfactory to the Buyer) of the Working
Capital of the Companies and the Subsidiaries (the "ESTIMATED WORKING CAPITAL"),
the amount of the Long-Term Liabilities (the "ESTIMATED LONG-TERM LIABILITIES"),
the amount of the Deferred Income Taxes recorded as a non-current asset (the
"DEFERRED INCOME TAX ASSET") and the
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amount of the Deferred Income Taxes recorded as a non-current liability (the
"DEFERRED INCOME TAX LIABILITY"), each as of the close of business of the
Companies and the Subsidiaries on the Closing Date. Such calculations shall be
prepared on a basis consistent with the December 31, 1994 balance sheet of
Seller included in the Financial Statements (as defined in Section 4.1(g)) and
as specifically provided in this Agreement.
(ii) Within 90 calendar days after the Closing, the
Seller shall cause to be prepared and delivered to the Buyer (i) a balance sheet
of the Companies and the Subsidiaries (the "CLOSING DATE BALANCE SHEET"),
prepared in accordance with generally accepted accounting principles,
consistently applied and (ii) a statement (the "STATEMENT") setting forth the
Working Capital, the amount of the Long-Term Liabilities, the amount of the
non-current Deferred Income Tax Asset and the amount of the non-current Deferred
Income Tax Liability, each as of the close of business of the Companies and the
Subsidiaries on the Closing Date. At the same time, the Seller shall also cause
to be prepared and delivered to the Buyer a statement (the "ADJUSTMENT
STATEMENT") setting forth the calculation of the sum of (a) the Working Capital
as shown on the Statement minus the Estimated Working Capital as shown on the
Preliminary Statement, (b) the non-current Deferred Income Tax Asset as shown on
the Statement minus the estimated non-current Deferred Income Tax Asset, (c) the
Estimated Long-Term Liabilities minus the Long-Term Liabilities as shown on the
Statement, (d) the estimated non-current Deferred Income Tax Liability minus the
non-current
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Deferred Income Tax Liability (such sum, which might be a negative number,
referred to hereinafter as the "ADJUSTMENT AMOUNT"). The Buyer shall provide the
Seller with access to the relevant books and records and employees of each of
the Companies to the extent required to prepare the Closing Date Balance Sheet,
the Statement and the Adjustment Statement.
(iii) After receipt of the Closing Date Balance Sheet,
the Statement and the Adjustment Statement, the Buyer will have 30 calendar days
to review the Closing Date Balance Sheet, the Statement and the Adjustment
Statement together with the workpapers used in their preparation. Unless the
Buyer delivers written notice to the Seller setting forth the specific items
disputed by the Buyer, on or prior to the thirtieth day after its receipt of the
Closing Date Balance Sheet, the Statement and the Adjustment Statement, the
Buyer will be deemed to have accepted and agreed to the Closing Date Balance
Sheet, the Statement and the Adjustment Statement and such agreement will be
final and binding. If the Buyer so notifies the Seller of its objections to any
of the Closing Date Balance Sheet, the Statement or the Adjustment Statement,
the Buyer and the Seller will, within 30 days following the notice (the
"RESOLUTION PERIOD"), attempt to resolve their differences. Any resolution by
the Buyer and the Seller during the Resolution Period as to any disputed amounts
will be final, binding and conclusive. If the Buyer and the Seller do not
resolve all disputed items by the end of the Resolution Period, then all items
remaining in dispute will be submitted within 30 days after the expiration of
the Resolution
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Period to the New York office of Ernst & Young LLP or such other independent
accounting firm of national reputation mutually acceptable to the Buyer and the
Seller (the "NEUTRAL AUDITOR"). If the Buyer and the Seller are at any time
unable to agree on the Neutral Auditor, then the Buyer and the Seller will each
have the right to request the American Arbitration Association to appoint the
Neutral Auditor. All fees and expenses relating to the work, if any, to be
performed by the Neutral Auditor will be borne (i) by the Buyer in the same
proportion that the aggregate amount of all of the objections on the Closing
Date Balance Sheet, the Statement and the Adjustment Statement that are
submitted by the Buyer to the Neutral Auditor and are unsuccessfully disputed by
the Buyer, bear to the total amount of all of such objections and (ii) by the
Seller in the same proportion that the aggregate amount of all of the objections
on the Closing Date Balance Sheet, the Statement and the Adjustment Statement
that are submitted by the Buyer to the Neutral Auditor and are successfully
disputed by the Buyer, bear to the total amount of all of such objections. The
Buyer and the Seller shall reimburse the other to the extent the other pays more
than the amount so required pursuant to the preceding sentence. The Neutral
Auditor will deliver to the Buyer and the Seller a written determination (such
determination to include a work sheet setting forth all material calculations
used in arriving at such determination and to be based solely on information
provided to the Neutral Auditor by the Seller, the Companies and the Buyer) of
the disputed items within 30 days of receipt of the disputed
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items, which determination will be final, binding and conclusive. The final,
binding and conclusive Closing Date Balance Sheet, Statement and Adjustment
Statement, which either are agreed upon by the Buyer and the Seller or are
delivered by the Neutral Auditor in accordance with this Section 2.2(b), will be
the "CONCLUSIVE BALANCE SHEET," the "CONCLUSIVE STATEMENT" and the "CONCLUSIVE
ADJUSTMENT STATEMENT," respectively.
(iv) If the Adjustment Amount as shown on the
Conclusive Adjustment Statement is a negative number, then the Stock Purchase
Price will be reduced by such amount, and the Seller shall pay to the Buyer an
amount in cash equal to the absolute value of such Adjustment Amount. If the
Adjustment Amount as shown on the Conclusive Adjustment Statement is a positive
number, then the Stock Purchase Price will be increased by such amount, and the
Buyer shall pay to the Seller an amount in cash equal to such Adjustment Amount.
All payments to be made pursuant to this Section 2.2(b)(iv) will be made on the
second Business Day following the date on which the Buyer and the Seller agree
to, or the Neutral Auditor delivers, the Conclusive Balance Sheet, the
Conclusive Statement and the Conclusive Adjustment Statement. Any payment
required to be made by the Seller or the Buyer pursuant to this Section
2.2(b)(iv) shall bear interest from the Closing Date through the date of payment
at a rate of interest equal to the prime rate per annum publicly announced from
time to time by Chase Manhattan Bank, N.A. at its principal office in New York
City, and shall be payable by wire transfer of immediately available funds to an
account or accounts designated
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by the party entitled to receive such funds prior to the date when such payment
is due.
2.3 PAYMENT OF THE STOCK PURCHASE PRICE. On the terms and
subject to the conditions of this Agreement, payment of the Stock Purchase Price
shall be made at the Closing on the Closing Date by delivery to the Seller of
the Stock Purchase Price by wire transfer of immediately available funds to an
account or accounts designated by the Seller to the Buyer no less than two
Business Days prior to the Closing Date.
2.4 DELIVERY OF THE STOCK. On the terms and subject to the
conditions of this Agreement, the Seller shall, at the Closing on the Closing
Date, transfer, assign and deliver to the Buyer or its designee certificates
evidencing the Stock. Such certificates evidencing the Stock shall be duly
endorsed in blank, or be accompanied by stock transfer powers duly executed in
blank, with all necessary stock transfer tax stamps affixed thereto and
cancelled. The Seller shall sell the Stock to the Buyer free and clear of all
Liens, except for any encumbrances created by or on behalf of the Buyer or any
of its Affiliates.
2.5 DELIVERY BY THE SELLER. At the Closing on the
Closing Date, the Seller shall deliver or cause to be delivered
to the Buyer:
(a) The certificates, legal opinions and the release
referred to in Section 6.2(c), 6.2(d), 6.2(f) and 6.2(h);
(b) The written resignations of all officers and directors
requested by Buyer pursuant to Section 6.2(g).
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(c) Copies of the resolutions of the general partners of the
Seller certified by an authorized person as being correct and complete
and then in full force and effect, authorizing the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby;
(d) The minute books, corporation seals and stock
transfer records of the Companies and the Subsidiaries; and
(e) If there is no Final Order with respect to the transfer of
the Stations, a Reversal Agreement (as defined in Section 6.1(c)),
executed on behalf of the Seller.
2.6 DELIVERY BY THE BUYER. At the Closing on the
Closing Date, the Buyer shall deliver or cause to be delivered to the Seller:
(a) The certificate and legal opinions referred to in
Section 6.3(c) and 6.3(d);
(b) Copies of the resolutions of the board of directors of the
Buyer certified by the secretary or assistant secretary thereof as
being correct and complete and then in full force and effect,
authorizing the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; and
(c) If there is no Final Order with respect to the transfer of
the Stations, a Reversal Agreement (as defined in Section 6.1(c)),
executed on behalf of the Buyer.
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ARTICLE III: CLOSING
Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
8.1 hereof, subject to the provisions of Article VI, the closing with respect to
the purchase and sale of the Stock (the "CLOSING") shall take place at the
offices of Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York
10017, or such other place, time and date as the parties may agree. The actual
time and date of the Closing are herein referred to as the "CLOSING DATE".
ARTICLE IV: REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents and warrants to the Buyer as follows:
(a) DUE ORGANIZATION OF THE SELLER AND THE COMPANIES. The
Seller is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each of the Companies is duly
organized, validly existing and in good standing under the laws of the state set
forth opposite its name on Schedule 4.1(a) hereto. Accurate and complete copies
of the certificates of incorporation, including all amendments thereto and
restatements thereof, and bylaws of each Company have been delivered to the
Buyer. Accurate and complete copies of the corporate minutes and the stock
record books of the Companies have been delivered to the Buyer. Complete and
accurate records with respect to the issuance, transfer, redemption and
cancellation of shares of capital stock
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of the Companies are contained in the stock record books which have been
delivered to the Buyer.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The Seller has
all requisite power and authority to enter into this Agreement and to perform
its obligations hereunder. The execution, delivery and performance by the Seller
of this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by all necessary action on the part of the
Seller, and no other action on the part of the Seller is necessary for the
execution, delivery and performance by the Seller of this Agreement and the
consummation by it of the transactions contemplated hereby. This Agreement has
been duly executed and delivered by the Seller and, assuming due authorization,
execution and delivery by the Buyer, is a legal, valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms, except
to the extent limited by bankruptcy, insolvency, reorganization, moratorium or
other laws relating to or affecting creditors' rights generally and by general
equity principles regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(c) CAPITALIZATION. The authorized, issued and outstanding
capital stock of each of the Companies and each of the Subsidiaries is as set
forth on Schedule 4.1(c) hereto. Each of the shares constituting the Stock is
duly authorized, validly issued, outstanding, fully paid and nonassessable and
owned by the Seller. The Stock constitutes all of the issued and
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outstanding capital stock of the Companies. The Seller owns beneficially and of
record, the Stock, free and clear of any Liens, other than as set forth on
Schedule 4.1(c)(i) hereto. Except as set forth on Schedule 4.1(c)(ii) hereto,
there are no outstanding existing or authorized subscriptions, options,
warrants, calls, rights or any other agreements of any character obligating the
Seller or any of the Companies to issue or sell any shares of the capital stock
of the Companies or any securities convertible into such capital stock, and
there are no voting trusts or other agreements or understandings with respect to
the voting of the Stock.
(d) GOOD TITLE. Upon consummation of the Stock Purchase at the
Closing, as contemplated by this Agreement, the Seller will deliver to the Buyer
valid title to the Stock free and clear of any Liens, except for any
encumbrances created by or on behalf of the Buyer or any of its Affiliates.
(e) SUBSIDIARIES. (i) Each Subsidiary is duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
organization and is duly qualified to do business as a foreign corporation and
is in good standing in the state in which the Stations which it owns are
located. Accurate and complete copies of the certificates of incorporation or
articles of incorporation, as the case may be, including all amendments thereto
and restatements thereof, and bylaws of each Subsidiary have been delivered to
the Buyer. Accurate and complete copies of the corporate minutes and the stock
record books of the Subsidiaries have been delivered to the Buyer.
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Complete and accurate records with respect to the issuance, transfer, redemption
and cancellation of shares of capital stock of the Subsidiaries are contained in
the stock record books which have been delivered to the Buyer. Except as set
forth on Schedule 4.1(e)(i) hereto, all of the outstanding shares of capital
stock or other equity interests of each Subsidiary have been duly authorized,
validly issued and are fully paid and nonassessable and are owned by one or more
of the Companies or another Subsidiary free and clear of all Liens. Except as
indicated in Schedule 4.1(e)(ii) hereto, there are no outstanding, existing or
authorized subscriptions, options, warrants, calls, rights or any other
agreements of any character obligating the Seller, any of the Companies or any
of the Subsidiaries to issue or sell any shares of the capital stock of the
Subsidiaries or any securities convertible into such capital stock, and there
are no voting trusts or other agreements or understandings with respect to the
voting of the capital stock of the Subsidiaries.
(ii) Granum Finance Partnership, a New York general
partnership ("GRANUM FINANCE"), the only general partners of which are the
Companies, has engaged in no activities or operations and has no assets or
liabilities except those related to entering into the Credit Agreement and the
transactions contemplated thereby. An accurate and complete copy of the
partnership agreement of Granum Finance has been delivered to the Buyer.
(f) NO CONFLICT; CONSENTS. Except as set forth on
Schedule 4.1(f) hereto and except for any consent, approval,
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filing or notice that would not, if not given or made, or any violation,
conflict, breach, termination, default or acceleration which (in the case of
(i), (ii) or (iv)) does not have a material adverse effect on any of the
Companies, the execution, delivery and performance by the Seller of this
Agreement and the consummation by it of the transactions contemplated hereby
will not either alone or with the passage of time or both: (i) violate any
provision of any law, rule, regulation, order, judgment or decree applicable to
the Seller, any of the Companies or any of the Subsidiaries; (ii) require any
consent or approval of, or filing with or notice to, any governmental or
regulatory authority under any provision of any law applicable to the Seller,
any of the Companies or any of the Subsidiaries, except for any consent,
approval, filing or notice requirements which become applicable solely as a
result of the specific regulatory status of the Buyer or any of its Affiliates
or which the Buyer or any of its Affiliates are otherwise required to obtain;
(iii) violate the organizational documents of the Seller, any of the Companies
or any of the Subsidiaries; and (iv) require any consent, approval or notice
under, and will not conflict with, or result in the breach or termination of, or
constitute a default under, or result in the acceleration of the performance by
the Seller, any of the Companies or any of the Subsidiaries under, any Material
Contract, indenture, mortgage, deed of trust, lease, license, franchise,
contract, agreement or other instrument to which the Seller, any of the
Companies or any of the Subsidiaries
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is a party or by which any of them, or any of their assets, are bound or
encumbered.
(g) FINANCIAL STATEMENTS. The Seller heretofore has delivered
to the Buyer (i) a copy of the audited consolidated balance sheets of the Seller
as at December 31, 1994, 1993 and 1992 and the unaudited consolidated balance
sheet as at September 30, 1995 (such balance sheets and any notes thereto being
referred to herein as the "SELLER BALANCE SHEETS"), the audited consolidated
income statements of the Seller for each year in the three-year period ended
December 31, 1994 and the unaudited consolidated income statement of the Seller
for the nine-month period ended September 30, 1995 (such income statements and
any notes thereto being referred to herein as the "SELLER INCOME STATEMENTS")
and the audited consolidated statement of cash flows for each of the three-years
ended December 31, 1994, 1993 and 1992 (the "SELLER CASH FLOW STATEMENTS") and
(ii) a copy of the unaudited balance sheets for the Companies as at December 31,
1994 and for the nine-month period ended September 30, 1995 (only if the Company
was owned by the Seller at such time) (such balance sheets and any notes thereto
being referred to herein as the "COMPANIES BALANCE SHEETS") and unaudited income
statements of the Companies for the year ended December 31, 1994 and September
30, 1995 (or for the period for which a Company was owned by the Seller, if
shorter) (collectively with any notes thereto and the Companies Balance Sheets,
the Seller Balance Sheets, the Seller Income Statements and the Seller Cash Flow
Statements, the "FINANCIAL STATEMENTS"). The Financial
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Statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as may be indicated in the
notes thereto. The Financial Statements accurately reflect the books, records
and accounts of the Seller and the Companies, as applicable, in all material
respects and present fairly in all material respects as of the dates and for the
periods stated therein the financial condition and results of operations of the
Seller or the Companies taken as a whole, as applicable, except that the
September 30, 1995 financial statements are subject to normal year-end
adjustments, none of which will be material and normal adjustments related to
the acquisitions under the Summit Agreement.
(h) TAX MATTERS. (a) With respect to the Companies and their
respective Subsidiaries, except as set forth in Schedule 4.1(h), (i) all Tax
Returns (as defined below) with respect to Taxes (as defined below) that are
required to be filed by or with respect to the Companies (or their respective
Subsidiaries) have been (and as of the Closing Date will have been), in all
material respects, accurately prepared and duly and properly filed, (ii) all
Taxes shown to be due on the Tax Returns referred to in clause (i) and all other
material Taxes payable by the Companies (or their respective Subsidiaries)
(whether or not requiring the filing of any Tax Return) have been (and as of the
Closing Date will have been) paid or adequately accrued for, (iii) none of the
Tax Returns referred to in clause (i) have been examined by the Internal Revenue
Service or the appropriate state, local or foreign taxing authority, (iv) all
material
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deficiencies asserted or assessments made for Taxes against the Companies (or
their respective Subsidiaries) have been paid in full, (v) no issues have been
raised by any taxing authority in respect of Taxes that may be payable by the
Companies (or their respective Subsidiaries), (vi) no extensions or waivers of
statutes of limitation have been given or requested by or with respect to any
Taxes of the Companies (or their respective Subsidiaries), and (vii) there are
no pending audits relating to Taxes of the Companies (or their respective
Subsidiaries). The representations made herein in respect of any Subsidiary
refer only to periods during which any Company or Seller owned such Subsidiary.
With respect to any Subsidiary, the term Taxes shall include only Taxes arising
with respect to the operation of the Subsidiary after it was acquired by a
Company or the Seller and the term Tax Return shall refer to Tax Returns
required to filed in respect of such Taxes. The Seller further represents that
(x) GCI Atlanta Holdings, Inc., GCI Baltimore Holdings, Inc. and GCI Texas
Holdings, Inc. (collectively, the "INDEMNITEES"), are each entitled (and will
not as a result of the Stock Purchase, cease to be entitled on the same terms)
to the benefits of (i) the indemnity set forth in Sections 12.1(d) and 12.1(e)
of the Summit Agreement and recourse for breaches of the representations and
warranties set forth in Section 4.17 of the Summit Agreement and (ii) the Stock
Escrow Agreement and the Cash Escrow Agreement, each dated as of May 2, 1995, by
and among Time Warner Inc., Granum Communications, Inc., Summit Communications
Group, Inc. ("SUMMIT"), certain stockholders of Summit identified on the
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signature page thereto, and United States Trust Company of New York and (y) to
the knowledge of Seller and the Companies, the payments under the indemnity and
escrow agreements described in clause (x) would be sufficient to discharge any
Taxes for which the Indemnitees and their respective Subsidiaries would be
liable relating to periods prior to the acquisition of such Indemnitees by the
Seller.
(b) No Tax is required to be withheld pursuant to
Section 1445 of the Code as a result of the transfers
contemplated by this Agreement.
(c) "Taxes" shall mean all federal, state, local, and foreign
taxes or similar duties or charges, including, without limitation, income,
employment, unemployment, withholding, social security, real property, personal
property, excise, sales, use and franchise taxes, levies, assessments, imports,
duties, licenses and registration fees and charges of any nature whatsoever,
including interest, penalties and additions with respect thereto any interest in
respect of such additions or penalties. "Tax Returns" shall mean all returns or
reports required to be filed by or with respect to the Companies (or their
respective Subsidiaries).
(i) FCC LICENSES. The Subsidiaries validly hold all licenses
and authorizations (collectively, the "FCC LICENSES") pursuant to Final Orders
(except as disclosed in Schedule 4.1(i)(ii)), as are necessary to operate the
Stations as they are currently operated. Schedule 4.1(i)(i) hereto lists all FCC
Licenses as are necessary to operate the Stations as they are
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currently operated, having the expiration dates indicated therein, each of which
is in full force and effect. Each Station is being operated in all material
respects in accordance with the terms and conditions of the FCC Licenses
applicable to it and in accordance with the FCC Rules and the Communications
Act. Except as disclosed in Schedule 4.1(i)(iii), no proceedings are pending or,
to the knowledge of the Seller, any of the Companies or any of the Subsidiaries,
are threatened which may result in the revocation, modification, non-renewal or
suspension of any of the FCC Licenses, the issuance of any cease and desist
order or the imposition of any material fines, forfeitures or other
administrative actions by the FCC with respect to the Stations or their
operation, other than proceedings affecting the radio broadcasting industry in
general. There are not any unsatisfied or otherwise outstanding forfeiture
notices issued by the FCC with respect to any Station or its operation.
Except as disclosed on Schedule 4.1(i)(ii), the Seller does
not have any pending applications at the FCC relating to the FCC Licenses or the
Stations. None of the Seller, any Company or any Subsidiary is a party to any
proceeding or complaint at the FCC except as disclosed on Schedule 4.1(i)(iii).
To the best knowledge of the Seller, the Companies and the Subsidiaries, there
is no reason that the FCC Licenses will not be renewed in the ordinary course,
and there are no facts that, under the Communications Act or the FCC Rules,
would disqualify any of them as transferors of the FCC Licenses. All reports or
documents required since the acquisition of the Stations by the Seller, the
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Companies and the Subsidiaries to be filed with the FCC with respect to the
Stations have been filed; all material items as are required to be placed in the
Stations' local public files have been placed in such files; and all information
contained in the foregoing documents is true, complete and correct in all
material respects.
(j) INSURANCE. The Seller has in effect with respect to the
Stations the policies of insurance listed on Schedule 4.1(j). Such policies are
in full force and effect and all premiums due have been paid in full.
(k) TITLE TO PROPERTY; LIENS AND ENCUMBRANCES. (i) Schedule
4.1(k)(i) lists all Owned Real Property having a value in excess of $100,000 and
used in the operation of the Stations and the Companies and the Subsidiaries
have good and marketable title to such Owned Real Property. Schedule 4.1(k)(ii)
lists all leases relating to Leased Real Property. Each of the Companies and the
Subsidiaries owns a valid and subsisting interest as lessee under the Leased
Real Property and except as set forth on Schedule 4.1(k)(iii) hereto, all such
Owned Real Property and Leased Real Property is free and clear of all Liens
except (i) statutory Liens arising or incurred in the ordinary course of
business with respect to which the underlying obligations are not delinquent or
the validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves for monies owed are reflected on the
Financial Statements in accordance with generally accepted accounting
principles, (ii) Liens for taxes not yet delinquent or the validity of which are
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being contested in good faith by appropriate proceedings and for which adequate
reserves are reflected on the Financial Statements in accordance with generally
accepted accounting principles, (iii) Liens which constitute valid leases or
subleases from any of the Companies to third parties on Owned Real Property or
Leased Real Property that is not used in the operations of the Stations and (iv)
Liens and defects in title that are not material to the lessee (the types of
Liens identified in clauses (i) through (iv) above being herein referred to as
"PERMITTED LIENS").
(ii) All improvements on the Owned Real Property and Leased
Real Property are in compliance with applicable zoning and land use laws,
ordinances and regulations in all respects necessary to conduct the operation of
the Stations operating thereon as presently conducted, except for any instances
of non-compliance which do not and will not in the aggregate have a material
adverse effect on the owner or lessee of such Owned Real Property or Leased Real
Property, respectively. All such improvements are in good working condition and
repair, are insurable at standard rates, and comply in all material respects
with the FCC Rules and all other applicable federal, state and local statutes,
ordinances and regulations. All of the transmitting towers, ground radials, guy
anchors, transmitter buildings and related improvements located on the Owned
Real Property are located entirely in the Owned Real Property.
(iii) None of the Seller, any of the Companies or any
of the Subsidiaries has any knowledge of any pending, threatened
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or contemplated action to take by eminent domain or otherwise to condemn any
part of the Owned Real Property or the Leased Real Property.
(iv) Except as specified on Schedule 4.1(k)(iv) and except for
Permitted Liens, each of the Companies and the Subsidiaries, as applicable, has
good title to the assets owned by it including, without limitation, all
leasehold interests applicable to the Stations, free and clear of all Liens. All
tangible personal property owned by any of the Companies or the Subsidiaries is
in a good state of repair and operating condition subject to normal repair,
maintenance and replacement. The technical equipment constituting a part of such
assets is in a good state of repair and operating condition (ordinary wear and
tear excepted) and comply in all material respects with all applicable FCC
Rules, the Communications Act and all other applicable laws, rules, regulations
and ordinances. Except as set forth on Schedule 4.1(k)(v), the Companies own,
directly or indirectly, all assets, properties, rights, franchises, claims and
agreements of every kind and description used to conduct the businesses and
operations of the Companies and the Subsidiaries as they are presently
conducted.
(l) PATENTS, TRADEMARKS, TRADENAMES, SERVICE MARKS AND
COPYRIGHTS. Other than the call letters relating to each of the
Stations, there is no material Intellectual Property owned,
licensed or used by or registered in the name of any of the
Companies or the Subsidiaries which apply to the Stations. To
the knowledge of the Seller and the Companies, each of the
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Companies and the Subsidiaries owns, free and clear of all Liens, and without
infringement on the rights of others, all right and interest in, and right and
authority to use in connection with the conduct of the business of the
respective Stations as presently conducted, all Intellectual Property used in
such business and there are not outstanding or, to the knowledge of the Seller,
threatened judicial or adversary proceedings with respect thereto.
(m) LEGAL PROCEEDINGS. Except as described on Schedule 4.1(m)
hereto, there is no claim, legal action, decree, judgment, order, arbitration or
other proceeding, suit or governmental investigation pending, or to the
knowledge of the Seller, the Companies or the Subsidiaries, threatened, against
any Company or any Subsidiary which, individually or in the aggregate, is
expected to have a Material Adverse Effect or which, as of the date hereof,
seeks to enjoin or prohibit or otherwise question the validity of any action to
be taken by the Seller in connection with this Agreement.
(n) CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY
REQUIREMENTS. None of the Seller, the Companies or the Subsidiaries is in
violation of, or in default with respect to, any order, law, rule or regulation
of any federal, state, municipal or governmental department, commission, board,
bureau, agency or instrumentality which affects the Companies or the
Subsidiaries, except where the violation or default would not give rise,
individually or in the aggregate, to a Material
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Adverse Effect or would not give any third party the right to enjoin the
transactions contemplated by this Agreement.
(o) ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
(a) reflected or reserved against in the Financial Statements or incurred in the
ordinary course of business since September 30, 1995, or (b) disclosed in
Schedule 4.1(o), the Companies and the Subsidiaries, taken as a whole, have no
material liabilities, commitments, indebtedness or obligations of any nature,
whether absolute, accrued, contingent or otherwise, and whether due or to become
due except for ordinary course contractual liabilities.
(p) ABSENCE OF CHANGES OR EVENTS. Except as disclosed in
Schedule 4.1(p), since September 30, 1995, the business of the Stations has been
conducted in all material respects only in the ordinary course and none of the
Seller, the Companies or the Subsidiaries have, except in the ordinary course of
business or except for transfers to any other Company or Subsidiary, purchased,
sold, assigned or transferred any of the assets of the Stations or made or
obligated itself in any way to make any increase in the compensation, incentive,
opportunity or benefits payable to any employee of the Stations, except for
regular periodic employee pay raises consistent with past practice. (q) EMPLOYEE
BENEFIT PLANS. (i) Schedule 4.1(q)(i) lists each "employee benefit plan" (within
the meaning of section 3(3) of ERISA), and each bonus, incentive or deferred
compensation, severance, termination, employment, retention, change of control,
stock option or other equity-based,
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performance or other employee or retiree benefit or compensation plan, program,
arrangement, agreement, policy or understanding, that provides or may provide
benefits or compensation in respect of any employee or former employee of any of
the Companies or the Subsidiaries or the beneficiaries or dependents of any such
employee or former employee or under which any such employee or former employee
is or may become eligible to participate or derive a benefit and that is or has
been entered into, maintained or established by any of the Companies or the
Subsidiaries or any other trade or business, whether or not incorporated, which,
together with any of the Companies or the Subsidiaries, is treated as a single
employer under section 414 of the Code (such other trades and businesses
hereinafter referred to as the "Related Persons"), or to which any of the
Companies, the Subsidiaries or Related Persons contributes or is obligated or
required to contribute (collectively, the "Company Plans"). The Seller has
provided or made available to the Buyer true and complete copies of all written
Company Plans; to the extent such documents exist, will provide promptly all
trust agreements or other funding arrangements; the two most recent actuarial
and trust reports; the two most recent Forms 5500 and all schedules thereto; the
most recent IRS determination letter; current summary plan descriptions; and any
actuarial study of any post- employment life or medical benefits provided under
any such Company Plan.
(ii) Each Company Plan intended to be qualified under section
401(a) of the Code, and the trust (if any) forming a part
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thereof, has received a favorable determination letter from the Internal Revenue
Service as to its qualification under the Code and to the effect that each such
trust is exempt from taxation under section 501(a) of the Code, and to the
knowledge of the Seller and the Companies, neither the Companies nor the
Subsidiaries have taken any action since the date of such determination letter
that could be reasonably likely to have a material adverse effect on such
qualification or tax-exempt status.
(iii) Each Company Plan has been operated and administered and
is in compliance with the terms of such Company Plan and all applicable laws,
rules and regulations, except in the case of any failures so to operate,
administer or comply that, individually or in the aggregate, would not
reasonably be expected to result in a material liability or obligation of any of
the Companies or the Subsidiaries.
(iv) No "reportable event" (as such term is used in section
4043 of ERISA), "prohibited transaction" (as such term is used in section 406 of
ERISA or section 4975 of the Code) or "accumulated funding deficiency" (as such
term is used in section 412 or 4971 of the Code) has heretofore occurred with
respect to any Company Plan, except where the liabilities arising out of any
such event, individually or in the aggregate, would not reasonably be expected
to result in a material liability or obligation of any of the Companies or the
Subsidiaries.
(v) Except as set forth on Schedule 4.1(q)(v), none of
the Companies nor any Subsidiaries has contributed to any
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"multiemployer plan" (within the meaning of section 3(37) of ERISA) and none of
the Companies, the Subsidiaries nor any of the Related Persons has incurred any
withdrawal liability which remains unsatisfied.
(vi) The termination of, or withdrawal from, any Company Plan
or multiemployer plan to which any of the Companies or any Subsidiaries
contributes, on or prior to the Closing Date, will not subject any of the
Companies or any Subsidiaries to any material liability under Title IV of ERISA.
(vii) Neither the Seller, any of the Companies, any of the
Subsidiaries nor any of the Related Persons has incurred (either directly or
indirectly, including as a result of any indemnification obligation) any
material liability under or pursuant to Title IV of ERISA (other than
contributions to any Company Plan or premiums payable to the PBGC, in each case,
in the ordinary course of business) or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans and,
to the best knowledge of the Seller, no event, transaction or condition has
occurred or exists which could result in any such liability to any of the
Companies or the Subsidiaries or, following the Closing, the Buyer.
(viii) There are no pending or, to the best knowledge of the
Seller, threatened claims by or on behalf of any of the Company Plans, by any
current or former employee or otherwise involving any such Company Plan or the
assets of any Company Plan (other than routine claims for benefits) which, if
adversely determined, could result in a material liability.
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(ix) Except as set forth on Schedule 4.1(q)(ix), the
consummation of the transactions contemplated by this Agreement will not cause
an increase in the amount of compensation or benefits or the acceleration of the
vesting or timing of payment of any compensation or benefits payable to or in
respect of any current or former employee of any of the Companies or the
Subsidiaries.
(r) ENVIRONMENTAL MATTERS. (i) Except as would not reasonably
be expected to result individually or in the aggregate in any material liability
under any Environmental Law, all operations and uses by the Company of the Owned
Real Property and the Leased Real Property are in compliance with all currently
applicable environmental statutes, ordinances, regulations and orders relating
to the protection of the environment (collectively, "ENVIRONMENTAL LAWS"). The
Companies and Subsidiaries have obtained all permits necessary under
Environmental Laws for the operation of the Stations, and all such permits are
in full force and effect and the Companies and the Subsidiaries are in
compliance with the terms and conditions of all such permits. There are no
outstanding Liens on the Seller's or the Companies' interest in any of the Owned
Real Property or, to the knowledge of the Sellers or the Companies, the Leased
Real Property under any Environmental Laws. None of the Seller, the Companies or
the Subsidiaries has received any notice of, or is otherwise aware of, any
administrative or judicial investigations, proceedings or actions with respect
to violations, alleged or proven, of any Environmental Laws by the
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Seller, the Companies or the Subsidiaries or any tenants or subtenants of any of
the Seller or the Companies or the Subsidiaries, or otherwise involving such
Owned Real Property or such Leased Real Property or the operations conducted on
or in such Owned Real Property or such Leased Real Property.
(ii) To the knowledge of the Seller or the Companies, and
except as would not reasonably be expected to result individually or in the
aggregate in any material liability under any Environmental Law, the Owned Real
Property and the Leased Real Property is in compliance with all Environmental
Laws and there has been no release (nor, to the knowledge of any of the Seller
or the Companies, is there any substantial threat of a release) of any hazardous
substance at or from such Owned Real Property or such Leased Real Property in
amounts or concentrations requiring remediation under or that would violate
current Environmental Laws. To the knowledge of the Seller or the Companies,
there are no hazardous substances present on such Owned Real Property or Leased
Real Property except for ordinary quantities of properly stored hazardous
substances found in consumer or commercial products that are used in the normal
course of broadcast station operations, including grounds and building operation
and maintenance, or except as otherwise present in material compliance with
Environmental Laws or as would not reasonably be expected to result individually
or in the aggregate in any material liability under any Environmental Law. To
the knowledge of the Seller or the Companies, there are no underground storage
tanks, or underground piping associated with
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such tanks, at such Owned Real Property or such Leased Real Property.
(s) AFFILIATE TRANSACTIONS. Except as disclosed in Schedule
4.1(s), none of the Seller, the Companies or the Subsidiaries and any of their
respective partners, stockholders, officers, directors or Affiliates possesses,
directly or indirectly, any financial interest in, or is a partner, directors,
officer or employee of, any partnership, corporation, firm, association or
business organization which is a client, supplier, customer, lessor, lessee or
competitor of any of the Stations or has a banking or other material contractual
relationship with any of the Stations.
(t) MATERIAL CONTRACTS. Except for (i) contracts or
commitments for the sale of advertising time (other than those referred to in
clause (ii)) entered into in the ordinary course of business involving not more
than $50,000 (except that with respect to GCI Atlanta Holdings, Inc. and its
Subsidiaries, such amount shall be not more than $100,000), (ii) trade or barter
agreements entered into after the date of this Agreement involving not more than
$25,000 per year, and (iii) contracts or commitments (other than those referred
to in clauses (i) and (ii)) involving not more than $25,000 per year
individually or in a series of related agreements, Schedule 4.1(t)(i) lists all
contracts, agreements, leases, and licenses, as to which any Company or any
Subsidiary is a party or by which any of them is bound, including, without
limitation, all collective bargaining agreements and employment agreements and
consulting agreements
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providing for compensation in excess of $150,000 of salary per year. Such
contracts are collectively referred to herein as "MATERIAL CONTRACTS". The
Seller is not a party to any contracts, agreements, leases or licenses that
relate to the operations of the Stations except those agreements relating to the
compensation of managers that are not Transferred Employees (as hereinafter
defined). The Seller has delivered to the Buyer copies of all such Material
Contracts. Except as set forth on Schedule 4.1(t)(ii) hereto, each Material
Contract is valid and binding (except to the extent that the invalidity or
nonbinding nature of any Material Contract would not have a material adverse
effect on any Company) and is in full force and effect in accordance with its
terms and none of the Seller, any Company or any Subsidiary has granted any
material waivers or forebearances thereunder and none of the Seller, any Company
or any Subsidiary, or to the knowledge of the Seller or any Company of
Subsidiary, any third party, is in material default in the performance of any of
its obligations under any such Material Contract and no event or circumstance
has occurred which, with the giving of notice or the lapse of time or both,
would constitute a material default by the Seller, any Company or any Subsidiary
under any Material Contract. Except as indicated on Schedule 4.1(t)(iii), the
Stock may be sold without the consent of any party to any Material Contract and
such sale will not affect the validity or enforceability of any such Material
Contract or cause any material change in the substantive terms thereof.
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(u) PERSONNEL INFORMATION. The Seller will provide the Buyer
within ten days of the date of this Agreement, a true and complete list setting
forth the names of the employees of each of the Stations and the amount of each
such employee's hourly compensation or yearly salary, as applicable, and such
list will be comparable, in all material respects, to the information previously
disclosed to the Buyer regarding such employees. Except as set forth on Schedule
4.1(u), none of the Seller, the Companies or the Subsidiaries is a party to any
contract or agreement with any labor organization, nor has any of the Seller,
any of the Companies or any of the Subsidiaries 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 the Seller's, any of the
Companies' or any of the Subsidiaries' employees at any of the Stations. None of
the Seller, any of the Companies or any of the Subsidiaries has any knowledge of
any organizational effort currently being made or threatened by or on behalf of
any labor union with respect to employees of any of the Stations. There are no
unfair labor practice charges pending against the Seller, any of the Companies
or any of the Subsidiaries; there are no pending or, to the knowledge of the
Seller, any of the Companies or any of the Subsidiaries, threatened strikes,
arbitration proceedings involving labor matters or other labor disputes
affecting the Seller, any of the Companies or any of the Subsidiaries or the
Stations and none of the Seller, the Companies or the Subsidiaries has
experienced any strikes, work
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stoppages or other significant labor difficulties of any nature
at any of the Stations in the past two years.
(ii) The Seller, the Companies and the Subsidiaries have
complied in all material respects with all laws relating to the employment of
labor, including, without limitation, those laws relating to safety, health,
wages, hours, collective bargaining, unemployment insurance, workers'
compensation, equal employment opportunity and payment of withholding of taxes.
(v) BROKERS, FINDERS, ETC. No broker, finder, consultant or
other intermediary is or will be entitled to any broker's or finder's fee or any
other commission or similar fee in connection with the transactions contemplated
by this Agreement except Morgan Stanley & Co. Incorporated ("MORGAN STANLEY"),
whose fees and expenses will be paid by the Seller in accordance with the
Seller's agreement with such firm and payment of which shall be confirmed by
Morgan Stanley at the Closing.
4.2 REPRESENTATIONS AND WARRANTIES OF THE BUYER. The
Buyer represents and warrants to the Seller as follows:
(a) DUE ORGANIZATION AND POWER OF THE BUYER. The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The Buyer has all
requisite corporate power and authority to enter into this Agreement and perform
its obligations hereunder. The execution, delivery and performance by the Buyer
of this Agreement and the consummation by it of the transactions contemplated
hereby have been duly authorized by its Board of
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Directors, and no other corporate action on the part of the Buyer is necessary
for the execution, delivery and performance by the Buyer of this Agreement and
the consummation by it of the transactions contemplated hereby. This Agreement
has been duly executed and delivered by the Buyer and, assuming due
authorization, execution and delivery by the Seller, is a legal, valid and
binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except to the extent limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting creditors'
rights generally and by general equity principles, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(c) NO CONFLICT. Except for any consent, approval, filing or
notice that would not, if not given or made, or any violation, conflict, breach,
termination, default or acceleration which does not, materially impair the
ability of the Buyer to consummate the transactions contemplated hereby and
except for the consent of the lenders under the Buyer's senior credit facility,
the execution, delivery and performance by the Buyer of this Agreement and the
consummation by it of the transactions contemplated hereby: (i) will not violate
any provision of any law, rule, regulation, order, judgment or decree applicable
to the Buyer; (ii) will not require any consent or approval of, or filing or
notice to, any governmental or regulatory authority under any provision of any
law applicable to the Buyer, except for the requirements of the HSR Act and
except for the FCC Consent and, except for any consent, approval, filing or
notice
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requirements which become applicable solely as a result of the specific
regulatory status of the Seller or which the Seller or any of its affiliates are
otherwise required to obtain; (iii) will not violate any provision of the
Certificate of Incorporation or By Laws (or equivalent organizational documents)
of the Buyer; and (iv) will not require any consent, approval or notice under,
and will not conflict with, or result in the breach or termination of, or
constitute a default under, or result in the acceleration of the performance by
the Buyer under, any indenture, mortgage, deed of trust, lease, license,
franchise, contract, agreement or other instrument to which the Buyer is a party
or by which it or any of its assets is bound or encumbered.
(d) QUALIFICATIONS AS LICENSEE. Subject to the matters
described on Schedule 4.2(d), (i) to the best knowledge of Buyer there are no
facts that, under the Communications Act or the FCC Rules, would disqualify it
as a transferee of the FCC Licenses and (ii) the Buyer knows of no reason
related to the Buyer why the FCC would not approve the transfer of control of
the FCC Licenses to the Buyer.
4.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations and warranties of the Seller and the Buyer contained in this
Article IV shall not survive the Closing.
4.4 LIMITATION ON REMEDIES. Following the Closing, the Seller
shall have no liability in respect of any of the representations and warranties
contained herein (or in respect of the certificate delivered pursuant to Section
6.2(c) hereof insofar as such certificate relates to such representations and
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warranties), whether for damages or otherwise and whether arising in contract,
tort or equity or in any other way whatsoever. The Buyer shall not have any
right after the Closing in respect of any of the representations and warranties
of the Seller to rescind, terminate or cancel this Agreement or the Stock
Purchase.
4.5 SCHEDULES. Any matter that is disclosed in a Schedule
hereto in such a way as to make its relevance to the information called for by
another Schedule hereto readily apparent shall be deemed to have been included
in such other Schedule, notwithstanding the omission of an appropriate cross
reference thereto.
4.6 NO IMPLIED REPRESENTATION. The Seller is not making any
representation or warranty whatsoever, express or implied, except those
representations and warranties of the Seller contained in this Agreement or in
any Schedule hereto and the Buyer acknowledges and agrees that it has not relied
on or been induced to enter into this Agreement by any representation or
warranty other than those expressly set forth in Section 4.1 hereof.
ARTICLE V: COVENANTS AND TRANSACTIONS PRIOR TO CLOSING
5.1 ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS;
CONFIDENTIALITY. During the period commencing on the date hereof and ending on
the Closing Date, the Seller shall and shall cause the Companies and the
Subsidiaries to, upon reasonable request, afford to the Buyer, its counsel,
accountants, engineers, appraisers and other authorized
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representatives and its lenders reasonable access during normal business hours
to the properties, equipment, books, accounts, contracts, documents and records
of the Companies, the Subsidiaries and the Stations, their businesses and
properties, to the extent that doing so does not materially disrupt or interfere
with the operations of the Stations, and the Companies shall, within a
reasonable period of time, furnish or cause to be furnished to the Buyer and its
representatives all existing data and information concerning the business and
properties of the Stations as the Buyer may reasonably request. Without limiting
the generality of the foregoing, the Buyer shall be given such access to the
financial records of the Companies as is necessary for the Buyer to satisfy
itself as to the form and substance of the Closing Balance Sheet. All requests
for information shall be submitted only to Herb McCord, Peter Ferrara, Michael
Weinstein, Morgan Stanley or Simpson Thacher & Bartlett. The Buyer will not
initiate or maintain contact with any employee of the Seller, the Companies or
the Subsidiaries without the Seller's prior consent, such consent not to be
unreasonably withheld or delayed. Prior to the Closing, the Seller will also
provide the Buyer with a complete and correct list containing the names of each
bank in which each Company and the Subsidiary has an account or safe deposit or
lock box, the account or box number, as the case may be, and the name of every
person authorized to draw thereon or having access thereto. Subject to Section
5.4(c), the Buyer shall keep, and shall cause its agents, attorneys, employees
and representatives to keep, confidential all information obtained by
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the Buyer with respect to the Stations in accordance with the Confidentiality
Agreement (the "CONFIDENTIALITY AGREEMENT") dated February 26, 1996 by and
between the Buyer and Granum Communications, Inc. shall survive and is hereby
incorporated by
this reference.
5.2 CONDUCT OF THE BUSINESSES OF THE COMPANIES AND THE
SUBSIDIARIES PRIOR TO THE CLOSING DATE. The Seller agrees that, except as
permitted, required or specifically contemplated by this Agreement or as
otherwise consented to or approved in writing by the Buyer, during the period
commencing on the date hereof and ending at the Closing Date:
(a) the business of the Companies and the Subsidiaries
shall be conducted only in the ordinary course consistent
with past practices;
(b) the Subsidiaries will continue to operate the Stations in
accordance with the terms of the FCC Licenses and in compliance with
all applicable laws and FCC Rules consistent with past practices;
(c) none of the Companies or the Subsidiaries will
amend its organizational documents;
(d) no Company or Subsidiary will (i) make any change in the
number of shares of its capital stock authorized, issued or outstanding
or grant or issue any option, warrant or other right to purchase, or
convert any obligation into, shares of its capital stock or (ii)
purchase or redeem any shares of its capital stock or any other
security;
(e) the Seller will use its, and will cause the Companies and
the Subsidiaries to use their, reasonable efforts to preserve intact
the operations, organization and reputation of the Companies and the
Subsidiaries, to keep available the services of the Companies' present
officers and key employees, and to preserve the good will and business
of the suppliers, advertisers and others having business relationships
with the Companies and the Subsidiaries;
(f) the Companies and the Subsidiaries will pay or
otherwise satisfy obligations (cash and barter) of each
Station on a basis consistent with past practices;
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(g) the Companies and the Subsidiaries will maintain
its respective assets in the same condition (ordinary wear
and tear excepted) as at the date hereof;
(h) none of the Companies or the Subsidiaries will
remove or make any significant alterations to any of its
assets;
(i) the Companies and the Subsidiaries will timely make all
payments required to be paid under any Material Contract when due and
otherwise pay all liabilities and satisfy all obligations within 90
days of invoice;
(j) neither the Companies nor the Subsidiaries will
declare, pay or make any dividend or other distribution;
(k) the Companies and the Subsidiaries will maintain
its books and records in accordance with generally accepted
accounting principles;
(l) none of the Companies or the Subsidiaries will introduce
any material change with respect to the operation of any Station
including, without limitation, any material changes in the broadcast
hours or in the percentages or types of programming broadcast by the
Station or any other material change in the Station's programming
policies, except such changes in the sole discretion of the Seller, the
Companies or the Subsidiaries, as applicable, exercising good faith, as
are required by the public interest;
(m) the Seller shall continue to maintain and carry
its existing insurance as described on Schedule 4.1(j)
hereto;
(n) none of the Seller, the Companies or the
Subsidiaries will alter the terms of any existing Material
Contract except for immaterial alterations;
(o) except to the extent required under existing Company Plans
as in effect on the date of this Agreement, the Companies and the
Subsidiaries will not increase or modify, or agree to increase or
modify, the compensation, bonuses or other benefits or prerequisites
for employees of any Station, except in the ordinary course of business
consistent with past practice and except for bonuses referred to in
Schedule 4.1(p);
(p) the Companies and the Subsidiaries will not incur any
obligations or sell, dispose of or transfer any of the assets of any
Station other than in the ordinary course of business consistent with
past practice; and
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(q) the Companies and the Subsidiaries will maintain
advertising and promotional expenditures for the Stations at
levels consistent with past practice.
5.3 ANTITRUST LAWS. As soon as practicable after the execution
of this Agreement, the Buyer and the Seller shall each file with the FTC and the
Antitrust Division any notifications required to be filed by themselves or their
respective "ultimate parent" companies (as such term is defined in the HSR Act
and the regulations promulgated thereunder) under the HSR Act with respect to
the transactions contemplated by this Agreement. The parties hereto will use
their respective reasonable best efforts to make such filings promptly, to
respond to any requests for additional information made by either of such
agencies and to cause the waiting periods under the HSR Act to terminate or
expire at the earliest possible date. Each party hereto shall promptly inform
the others of any material communication from the FTC, the Antitrust Division or
any other domestic or foreign governmental authority regarding the sale of the
Stock or any of the other transactions contemplated by this Agreement. If any
party hereto or any of their respective Affiliates receives a request for
additional information or documentary material from any such government or
authority with respect to the sale of the Stock or the other transactions
contemplated by this Agreement, then such party will endeavor in good faith to
make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party hereto, an appropriate response in compliance
with such request. The filing fee under the HSR Act shall be borne one-half by
the Seller and one-half by the Buyer.
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5.4 APPLICATIONS FOR FCC CONSENTS. (a) The Buyer agrees that
prior to the filing of the FCC applications referred to below, it will either
(i) assign its rights to purchase GCI Dallas or GCI Texas (as defined below) to
a trustee (the "TRUSTEE") who is independent of the Buyer within the meaning of
Section 73.3555 Note 2(e) of the FCC Rules, or (ii) agree to assign to the
Trustee one of the other FM radio stations in the Dallas/Fort Worth market
controlled by the Buyer. Within ten Business Days after the date of this
Agreement (and the Buyer shall use its reasonable best efforts to make such
filing within seven Business Days), the Seller, the Buyer and the Trustee shall
file complete applications with the FCC seeking its approval of and consent to
the transactions contemplated by this Agreement, consistent with the preceding
sentence, and the Seller and the Buyer shall each use its best efforts to cause
the FCC to extend the effectiveness of any such consents until all such consents
have been granted. The Buyer and the Seller shall cooperate with each other in
the preparation of such applications and shall take all steps necessary for the
expeditious grant of such approvals and consents. Should the Buyer or the Seller
become aware of facts which could reasonably be expected to materially and
adversely affect or materially delay the issuance of such consents, such party
shall promptly notify the other party in writing. The Seller and the Buyer
covenant to take all steps necessary to permit the consummation of the
transactions contemplated by this Agreement under the FCC Rules and the Buyer
shall consummate and cause the Trustee to consummate the
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transactions with the Trustee contemplated in the first sentence of this
Section. Each party shall bear its own costs and expenses (including the fees
and disbursements of its counsel) in connection with the preparation of the
portion of the FCC application to be prepared by it and in connection with the
processing of the FCC application. FCC application fees shall be borne equally
by the Seller and the Buyer.
(b) Notwithstanding anything set forth herein to the contrary,
if the condition set forth in Section 6.1(b)(i) of this Agreement has been
satisfied with respect to all Stations other than the Stations owned by GCI
Dallas Holdings, Inc. ("GCI DALLAS") and GCI Texas Holdings, Inc. ("GCI TEXAS"
and, together with GCI Dallas, the "TEXAS COMPANIES") prior to December 2, 1996,
the parties agree that, at the Seller's or the Buyer's election, there shall be
two closings as follows: (i) a closing (the "FIRST CLOSING") relating to the
Stock with respect to the Companies other than the Texas Companies for a
purchase price of $390,000,000 plus or minus the Adjustment Amount with respect
to the Companies (excluding the Texas Companies) and (ii) a closing (the "SECOND
CLOSING") relating to the Stock of the Texas Companies for a purchase price of
$20,000,000 plus or minus the Adjustment Amount with respect to the Texas
Companies (the "SECOND CLOSING PURCHASE PRICE") to occur on the second Business
Day following satisfaction of the condition set forth in Section 6.1(b)(i)
relating to the transfer of the Texas Companies, PROVIDED, HOWEVER, if the
Second Closing has not occurred on or prior to December 2, 1996, then on such
date, the Buyer shall pay
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the Seller the Second Closing Purchase Price in exchange for the Stock, at the
option of the Buyer, of either GCI Dallas or GCI Texas. If the proviso to the
preceding sentence becomes applicable, the Buyer and the Seller shall agree in
good faith on a sale of the remaining Texas Company owned by the Seller to a
third party, and the Seller shall cause the net proceeds of such sale to be paid
to the Buyer; PROVIDED that the Seller shall not be required to incur any
obligations or unreimbursed costs or expenses in connection with such sale. The
Seller shall continue to retain control of and to receive the benefits of
ownership of the Texas Companies until transfers of the related Stock thereof.
(c) During the period commencing on the date hereof and ending
on the date of the sale of the remaining Texas Company by the Seller, the Seller
shall cooperate (pursuant to written instructions by the Buyer) with the Buyer
in connection with a sale of the Texas Companies; PROVIDED that the Buyer shall
not provide any information to any potential purchaser of the Texas Companies
that is considered confidential pursuant to the terms of the Confidentiality
Agreement or the terms hereof without the prior consent of Herb McCord, which
consent shall not be unreasonably withheld.
5.5 EMPLOYEE BENEFIT MATTERS. (a) The Buyer agrees that,
during the period commencing at the Closing Date and ending on the one year
anniversary of the Closing Date, the employees of the Companies and the
Subsidiaries (other than those employees covered by a collective bargaining
agreement) will continue to be provided with employee benefit plans which in the
aggregate are
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substantially comparable to those currently provided by the Companies and the
Subsidiaries to such employees. Subject to the foregoing, nothing herein shall
prevent the amendment or termination of any such plan, program or arrangement.
(b) The Buyer shall, or shall cause the Companies or the
Subsidiaries to, promptly pay or provide when due all compensation and benefits
earned or accrued through or prior to the Closing Date as provided pursuant to
the terms of any Company Plan. The Buyer shall, or shall cause the Companies or
the Subsidiaries to, pay promptly or provide when due all compensation and
benefits required to be paid pursuant to the terms of any individual agreement
with any current or former employee or director in effect and disclosed to the
Buyer as of the date hereof. Nothing in this Agreement shall require the
continued employment of any person or prevent the Companies and/or the Buyer
from taking any action or refraining from taking any action which the Companies
could take or refrain from taking prior to the Closing Date.
(c) The Buyer shall, or shall cause the Companies or the
Subsidiaries to, be responsible for any medical, life insurance, disability and
other welfare plan expenses and benefits under the Company Plans or any plan
implemented by the Buyer after the Closing with respect to claims incurred by
employees of the Companies or the Subsidiaries who continue employment with the
Companies or the Subsidiaries after the Closing Date ("Transferred Employees")
and their covered dependents on or after the Closing Date. For purposes of this
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paragraph, a claim is deemed incurred when the services that are the subject of
the claim are performed; in the case of long-term disability benefits, when the
disability occurs; and, in the case of a hospital stay, when the employee first
enters the hospital.
(d) With respect to any welfare benefit plans (as defined in
section 3(1) of ERISA) maintained by the Buyer for the benefit of Transferred
Employees on and after the Closing Date, the Parent shall (i) cause there to be
waived any pre-existing condition limitations and (ii) give effect, in
determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, such Transferred
Employees with respect to similar plans maintained by the Companies for their
benefit immediately prior to the Closing Date.
(e) With respect to any accrued but unused vacation time to
which any Transferred Employee is entitled pursuant to a Company Plan that is a
vacation policy applicable to such Transferred Employee immediately prior to the
Closing Date (the "Vacation Policy"), the Buyer shall allow such Transferred
Employee to use such accrued vacation; PROVIDED, HOWEVER, that if the Buyer
deems it necessary to disallow such employee from taking such accrued vacation,
the Buyer shall be liable for and pay in cash to each such Transferred Employee
an amount equal to such vacation time in accordance with terms of the Vacation
Policy; PROVIDED, FURTHER, that the Buyer shall be liable for and pay in cash an
amount equal to such accrued vacation time to any Transferred Employee whose
employment terminates for any reason
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other than "cause" (as defined on Schedule 5.5 hereof) prior to the close of
business on the last calendar day of the year during which the Closing Date
occurs.
(f) The Buyer and the Seller shall each comply in all respects
with the Worker Adjustment Retraining Notification Act.
5.6 CREDIT AGREEMENT. At or prior to the Closing, the Seller
shall repay all obligations under the Credit Agreement, indebtedness for
borrowed money and purchase money mortgages and obtain releases, in form and
substance reasonably acceptable to the Buyer, removing all Liens created
pursuant to the Credit Agreement, the related pledge agreement and subsidiary
guarantee and pledge agreement, and any documents evidencing or ancillary to any
other indebtedness for borrowed money or purchase money mortgages.
5.7 NOTIFICATION. (a) The Seller and the Companies shall
notify the Buyer of any material litigation, arbitration or administrative
proceeding pending or, to its knowledge, threatened against any of the Seller,
the Companies or the Subsidiaries which challenges the transactions contemplated
hereby or which could have a Material Adverse Effect.
(b) Between the date of this Agreement and the Closing, the
Seller shall keep the Buyer reasonably informed of all material operational
matters and business developmts known to the Seller with respect to the Stations
and their respective markets, including any competitive changes.
5.8 NO INCONSISTENT ACTION. None of the Seller, the
Companies or the Subsidiaries shall take any action which is
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inconsistent with its obligations under this Agreement or that would hinder or
delay the consummation of the transactions contemplated by this Agreement. None
of the Seller, the Companies or the Subsidiaries will take any action that would
disqualify or impair any such person as an assignor of any FCC License or
licensee, owner or operator of any of the Stations.
5.9 NON-SOLICITATION. Between the date of this Agreement and
the Closing Date, none of the Seller, the Companies or the Subsidiaries nor any
Affiliate thereof shall, directly or indirectly, (i) solicit, initiate or
encourage submission of any proposal or offer from any Person relating to any
acquisition or purchase of any capital stock or assets of any Company, any
Subsidiary or any Station or any other transaction that would result in the
transfer of control of any Company, any Subsidiary or any Stations or an
investment of any kind by any Person in any Subsidiary (each an "ACQUISITION
PROPOSAL") or (ii) participate in any discussions or negotiations regarding, or
furnish to any Person any information with respect to, an Acquisition Proposal
or any of the foregoing, except to the extent required by law, or (iii)
otherwise cooperate in any way with, or assist or participate in, facilitate or
encourage, any effort or attempt by any other Person to do or seek any of the
foregoing.
5.10 FINANCIAL STATEMENTS. (a) As soon as such
financial statements become available, the Seller will deliver to
the Buyer a copy of (i) the audited consolidated balance sheet of
the Seller as at December 31, 1995, the audited consolidated
income statement and statement of cash flows of the Seller for
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the year ended December 31, 1995 and (ii) the unaudited balance sheets for the
Companies as at December 31, 1995 and unaudited income statements of the
Companies for the year ended December 31, 1995. Such financial statements shall
be prepared in accordance with generally accepted accounting principles applied
on a consistent basis, except as may be indicated in the notes thereto. Such
financial statements shall be true and complete and fairly present in all
material respects the financial condition and the results of operations of the
Seller and the Companies, taken as a whole, respectively, as of December 31,
1995 and for the year ended December 31, 1995.
(b) Within 30 days after the end of each month until the
Closing Date, the Seller shall deliver to the Buyer an unaudited statement of
the gross revenue, net revenue, expenses and cash flow for the Stations in each
of the five markets of the Seller for the month then ended, along with a balance
sheet as of the end of such month. All statements furnished pursuant to this
Section 5.10 shall present fairly in all material respects, as of the dates and
for the periods stated therein, the financial information set forth therein with
respect to the Stations taken as a whole. The Seller shall also deliver to the
Buyer regularly prepared internal pacing reports for each of the Stations every
two weeks.
(c) Subject to Section 5.4(c), the Buyer agrees to maintain
such information provided pursuant to this Section 5.10 in strict confidence
pursuant to the terms of the Confidentiality Agreement. In addition, the Buyer
shall limit access to such
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information to corporate officers of the Buyer located in its principal
executive offices in New York City and the Buyer's representatives and will not
permit any employees of any stations that compete with any of the Stations to
have access to such information.
5.11 REPAIR OF ASSETS. The Seller shall cause to be repaired,
replaced or restored any damaged or lost material asset of the Companies and
Subsidiaries to its prior condition as soon as possible and in no event later
than the Closing; PROVIDED, HOWEVER, that the Seller shall have no obligation to
cause the repair, replacement or restoration of any such damaged or lost asset
(i) that is obsolete if no replacement asset is necessary or useful for the
continued operation of the applicable Station consistent with past practice or
(ii) if the cost to repair, replace or restore such asset is less than $100,000.
If the Seller is unable or fails to repair, replace or restore any such damaged
or lost asset prior to the Closing, and the cost of such repair, replacement or
restoration would exceed $200,000, the Buyer may elect to terminate this
Agreement pursuant to Section 8.1(a)(vi) but only if (a) the Buyer shall have
provided the Seller 60 days to repair, replace or restore such asset or (b) if
such asset cannot be repaired, replaced or restored within such 60 days, the
Seller does not offer to reduce the Stock Purchase Price by the cost of
repairing, replacing or restoring such asset (less the amount of any anticipated
insurance proceeds related thereto).
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5.12 CERTAIN EXISTING LIABILITIES. (a) The Seller agrees that
(i) it will satisfy in full prior to the Closing, or provide for the
satisfaction of in a manner reasonably acceptable to the Buyer after the
Closing, all obligations to make payments under the Non-Competition Agreement,
dated as of March 31, 1995, by and between GCI Orange, Inc. and Mr. John
Tenaglia or (ii) the amount of such payments will be reflected in Working
Capital or Long-Term Liabilities on the Closing Date Balance Sheet.
(b) The Seller shall use its reasonable efforts to cause the
premises (the "EXCESS LEASED SPACE") covered by the Lease Agreement, dated
November 1, 1989, between Crown-Urban Square I, Ltd., as lessor, and
Summit-Dallas Broadcasting Corporation, as lessee, and the Lease Takeover
Agreement, dated February 24, 1989, between Sherry Lane Associates, as lessor,
and Gilmore Broadcasting Corporation, as lessee (the "TEXAS LEASES"), to be
subleased to a third party (who shall be reasonably satisfactory to the Buyer;
provided that the Buyer may not object to any party on the basis of its
creditworthiness if such creditworthiness is substantially comparable to that of
the Seller or the Buyer) for the term of such leases and pay or provide for the
payment (including by reducing the Stock Purchase Price) of any shortfall in the
lease payment obligations of the Companies under the Texas Leases after taking
into account payments under such subleases and the time value of money
discounted at the rate of 8% per annum. If the Seller has not caused the Excess
Leased Space to be subleased prior to the closing of the Texas Companies, then
it shall provide for the
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release of the lessee from the applicable Texas Lease and the assumption of the
liabilities thereunder on terms and conditions reasonably satisfactory to the
Buyer; provided that the assumption of all such liabilities by any Person that
has a creditworthiness that is substantially comparable to the Seller or the
Buyer shall be deemed to be satisfactory to the Buyer.
5.13 COMMITMENTS FOR FINANCING. The Buyer will diligently and
timely take, or cause to be taken, all necessary or appropriate action, to
obtain sufficient cash on hand to allow the Buyer to pay the Stock Purchase
Price, consummate the transactions contemplated hereby and pay related fees and
expenses of the Buyer and to obtain a consent to the transactions contemplated
hereby under its senior credit facility. Nonetheless, the obligations of the
Buyer hereunder are not subject to a contingency based on the availability or
suitability of financing.
5.14 FURTHER ACTIONS. Subject to the terms and conditions
hereof, each of the parties hereto agrees to use its reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts: (i) to obtain any licenses, permits, consents, approvals,
authorizations, qualifications and orders of governmental authorities as are
required in connection with the consummation of the transactions contemplated
hereby; (ii) to effect all necessary registrations and filings; (iii) to take
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such reasonable actions to defend any lawsuits or other legal proceedings,
whether judicial or administrative, whether brought derivatively or on behalf of
third parties (including governmental agencies or officials), challenging this
Agreement or the consummation of the transactions contemplated hereby; and (iv)
to furnish to each other such information and assistance as is reasonably
requested in connection with the foregoing.
ARTICLE VI: CONDITIONS PRECEDENT
6.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTIES. The
respective obligations of the parties hereto are subject to the satisfaction (or
waiver by each of the Seller and the Buyer) at or prior to the Closing of each
of the following conditions:
(a) NO INJUNCTION. No order of any court or any
administrative agency shall be in effect which restrains or
prohibits the transactions contemplated hereby.
(b) REGULATORY APPROVALS. (i) Subject to Section 5.4(b), the
FCC shall have entered an order or orders approving or consenting to
the transfer of control of the FCC Licenses of the Companies (the "FCC
CONSENT") and, if required by the Buyer, such order shall have become a
Final Order. The FCC Consent shall not have been dissolved, rescinded,
adversely modified, or adversely amended, and shall be in full force
and effect on the Closing Date and shall be a Final Order and (ii) all
applicable waiting periods under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been terminated.
(c) REVERSAL AGREEMENT. If the Closing with respect to any of
the Stations occurs prior to the receipt of the Final Order, the Seller
shall have executed and delivered to the Buyer a Reversal Agreement
(the "REVERSAL AGREEMENT") in form and substance reasonably
satisfactory to the parties hereto.
6.2 CONDITIONS PRECEDENT TO OBLIGATION OF THE BUYER.
The obligation of the Buyer to consummate the transactions
contemplated by this Agreement is subject to the satisfaction (or
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waiver by the Buyer) at or prior to the Closing of each of the
following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Seller contained herein shall
have been true and correct in all material respects on and as of the
date hereof; PROVIDED that any lost or damaged asset (or action related
thereto) that is the subject of the provisions of Section 5.11, shall
not be a basis for the Buyer to assert that this condition is not
satisfied.
(b) PERFORMANCE OF AGREEMENTS. The Seller shall have performed
in all material respects all obligations and agreements, and complied
in all material respects with all covenants and conditions, contained
in this Agreement to be performed or complied with by it prior to or on
the Closing Date.
(c) CERTIFICATE. The Buyer shall have received (i) a
certificate of the Seller, dated the Closing Date, executed on behalf
of the Seller by its General Partner to the effect that the conditions
specified in paragraphs (a) and (b) above have been fulfilled.
(d) LEGAL OPINIONS. The Buyer shall have received a legal
opinion from Simpson Thacher & Bartlett, dated the Closing Date, in
form reasonably satisfactory to the Buyer and (ii) a legal opinion of
Wiley, Rein & Fielding, dated the Closing Date, in form reasonably
satisfactory to the Buyer.
(e) NO MATERIAL ADVERSE CHANGE. Between the date hereof and
the Closing Date, there shall not have occurred any material adverse
change in the condition (financial or otherwise), business or results
of operations of the Companies, taken as a whole; provided that the
following shall not be deemed to constitute a material adverse change
for purposes of this Section 6.2(d): adverse effects caused by (a)
reductions in the market value of radio stations generally, including
reductions in multiples of broadcast cash flow paid for radio stations,
(b) regulatory changes or political events affecting the broadcasting
industry generally, (c) technical developments generally, (d) changes
in the financial markets, (e) general economic conditions, (f) war or
armed hostilities, (g) calamities, disasters and acts of God, (h) any
action taken by the Buyer or any of its Affiliates, including, without
limitation, any change in the operations, policies, programming or
format, at any station owned or controlled by the Buyer or such
Affiliate that is in the same market as any of the Stations, or (i) any
action taken by the Buyer, or by Seller or any of the Companies at
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the written request of the Buyer, relating to the sale or attempted
sale of the Texas Companies.
(f) FIRPTA CERTIFICATES. The Seller shall have delivered to
Buyer a certificate of the Seller satisfying the requirements of
Treas. Reg. ss. 1.1445-2(b).
(g) RESIGNATION OF DIRECTORS. All directors of any Company and
any Subsidiary whose resignations shall have been requested by Buyer
not less than five Business Days prior to the Closing Date shall have
submitted their resignations or been removed from office effective as
of the Closing Date.
(h) RELEASE. The Seller shall have executed a release, in form
and substance reasonably satisfactory to Buyer, pursuant to which the
Seller and its Affiliates release each Company and each Subsidiary and
the present and former directors, officers, agents and employees of
each Company and each Subsidiary from any and all actions, claims,
causes of action or liability of any nature, in law or equity, known or
unknown and whether or not heretofore asserted, which the Seller ever
had, now has or hereafter can, shall or may have against any of the
foregoing for, upon or by reason of any matter, cause or thing
whatsoever from the formation of each Company and each Subsidiary to
the Closing Date.
(i) RENEWAL LICENSES. The FCC shall have granted the pending
license renewal applications for the Atlanta and Orlando Stations,
without condition, and such grants shall, if required by the Buyer,
have become a Final Order.
(j) TERMINATION OF AGREEMENTS. The Seller shall have
terminated, without liability after the Closing, each of the agreements
described on Schedule 4.1(s).
6.3 CONDITIONS PRECEDENT TO THE OBLIGATION OF THE SELLER. The
obligation of the Seller to consummate the transactions contemplated by this
Agreement is subject to the satisfaction (or waiver by the Seller) at or prior
to the Closing of each of the following additional conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Buyer contained herein shall have
been true and correct in all material respects on and as of the date
hereof.
(b) PERFORMANCE OF AGREEMENTS. The Buyer shall have
performed in all material respects all obligations and
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agreements, and complied in all material respects with all covenants
and conditions, contained in this Agreement to be performed or complied
with by it prior to or on the Closing Date.
(c) CERTIFICATE. The Seller shall have received a certificate
of the Buyer, dated the Closing Date, executed on behalf of the Buyer
by its President or any Senior Vice President, to the effect that the
conditions specified in paragraphs (a) and (b) above have been
fulfilled.
(d) LEGAL OPINIONS. The Seller shall have received (i) a legal
opinion from Debevoise & Plimpton, dated the Closing Date, in form
reasonably satisfactory to the Seller and (ii) a legal opinion of
Leventhal, Senter & Lerman, dated the Closing Date, in form reasonably
satisfactory to the Seller.
ARTICLE VII: ASSUMPTION OF CERTAIN OBLIGATIONS
AND LIABILITIES; INDEMNIFICATION
7.1 ASSUMPTION AND INDEMNIFICATION. (a) The Buyer hereby
agrees to indemnify and hold the Seller and its directors, officers, partners,
employees, agents and other affiliates (other than the Companies) (collectively,
the "SELLER INDEMNIFIED PARTIES") harmless against and in respect of all losses,
liabilities, damages, costs and expenses (including costs of suit and reasonable
attorneys' fees and expenses) (collectively, "LIABILITIES"), incurred by any of
them on or after the Closing Date relating to the assets, business, operations,
conduct, products and employees (including retired employees) of the Companies
and the Subsidiaries (including any loss, liability, claim, damage or expenses
relating to the termination by the Buyer or the Companies and the Subsidiaries
after the Closing of any employee of the Companies or the Subsidiaries or any
change in the terms of employment of any employee of the Companies or the
Subsidiaries after the Closing) imposed on any Seller Indemnified Party.
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(b) The Seller hereby agrees to indemnify and hold the Buyer
and its directors, officers, employers, agents and other Affiliates (including
the Companies and the Subsidiaries after the Closing) (collectively, the "BUYER
INDEMNIFIED PARTIES") harmless against and in respect of all Liabilities
incurred by the Seller relating to the assets, business, operations, conduct,
products and employees (including retired employees) of any Affiliate of the
Seller (other than the Companies and the Subsidiaries).
(c) All Liabilities referred to in the foregoing paragraphs
(a) and (b) are collectively referred to as "INDEMNIFIED LIABILITIES" and
"INDEMNIFIED PARTY" shall mean either a Seller Indemnified Party or a Buyer
Indemnified Party.
7.2 PROCEDURE. If any claim or demand by any person is made
against an Indemnified Party, and if such Indemnified Party intends to seek
indemnity with respect thereto under this Article VI, such Indemnified Party
shall promptly notify the indemnifying party in writing of such claim or demand,
provided that the failure to so notify the indemnifying party shall not relieve
the indemnifying party from any liability which it may have hereunder unless it
is actually prejudiced thereby. The indemnifying party shall have 30 days after
receipt of such notice to undertake, conduct and control, through counsel of its
own choosing and at its own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the indemnifying party in connection
therewith; PROVIDED that the Indemnified Party may participate at its own
expense in such
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settlement or defense through counsel chosen by such Indemnified Party. The
Indemnified Party shall have the right to pay or settle any such claim; PROVIDED
that in such event it shall waive any right to indemnity therefor by the
indemnifying party. If the indemnifying party does not notify the Indemnified
Party within 30 days after the receipt of the Indemnified Party's notice of a
claim of indemnity hereunder that it elects to undertake the defense thereof,
the Indemnified Party shall have the right to contest, settle or compromise the
claim in its sole discretion and shall not thereby waive any right to indemnity
therefor pursuant to this Agreement. The indemnifying party shall not, except
with the consent of the Indemnified Party, enter into any settlement that does
not include as an unconditional term thereof the giving by the person or persons
asserting such claim to all Indemnified Parties an unconditional release from
all liability with respect to such claim or consent to entry of any judgment.
Notwithstanding the foregoing, following the Closing, the Buyer will afford, and
cause the Companies and the Subsidiaries to afford, to the Seller Indemnified
Parties and their counsel, accountants and other authorized representatives
reasonable access during normal business hours to the properties, books and
records of the Companies and the Subsidiaries (and permit the Seller Indemnified
Parties and their counsel, accountants and other authorized representatives to
make copies of such books and records at their own expense), to the extent that
such access may be reasonably required to facilitate the investigation,
litigation and final
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disposition of any claim which may have been or may be made against any Seller
Indemnified Party relating to the Companies or the Subsidiaries or any of the
transactions contemplated by this Agreement. The Seller Indemnified Parties
shall hold any such confidential information in confidence on the same terms and
subject to the same conditions applicable to Buyer in Section 5.1(b) hereof.
7.3 PAYMENT. On each occasion that an Indemnified Party shall
be entitled to indemnification or reimbursement under this Article VII, the
indemnifying party shall, at each such time, promptly pay the amount of such
indemnification or reimbursement. If the Indemnified Party shall be entitled to
indemnification under this Article VII and the indemnifying party shall not
elect to control any legal proceeding in connection therewith, the indemnifying
party shall pay upon request from time to time to the Indemnified Party an
amount equal to the Indemnified Party's costs and expenses arising as a result
of such proceeding which have not been previously reimbursed.
ARTICLE VIII: MISCELLANEOUS
8.1 TERMINATION AND ABANDONMENT.
(a) GENERAL. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time,
but not later than the Closing Date:
(i) by mutual written consent of the Buyer and the
Seller;
(ii) by the Buyer after December 2, 1996 if, through no
fault of the Buyer, the Closing shall not have occurred;
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(iii) by the Seller after December 2, 1996 if, through
no fault of the Seller, the Closing shall not have occurred;
(iv) by the Buyer if there has been a material breach
of any representation, warranty or covenant made in this
Agreement by the Seller;
(v) by the Seller if there has been a material breach
of any representation, warranty or covenant made in this
Agreement by the Buyer;
(vi) by the Buyer in accordance with Section 5.11; or
(vii) by the Buyer if (a) one or more FM Stations shall
have operated at less than one half of their full authorized effective
radiated power for a period of more than seven consecutive days or an
aggregate of ten days in any month period, (b) the Buyer shall have
used its reasonable efforts to assist the Companies in returning such
Stations to operation at full authorized effective radiated power (at
the expense of the Seller), and (c) such operation at less than one
half of full authorized effective radiated power shall result in a
reduction in broadcast cash flow that is material to all the FM
Stations taken as a whole.
(b) PROCEDURE UPON TERMINATION. In the event of the
termination and abandonment of this Agreement, written notice thereof specifying
in sufficient detail the basis for such termination (including, in respect of
any termination pursuant to clause (iv) or (v) of Section 8.1(a), reasonably
sufficient detail of the breaches of representation, warranty or covenant) shall
promptly be given to the other party hereto and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned without further
action by any of the parties hereto.
(c) SURVIVAL OF CERTAIN PROVISIONS. The respective obligations
of the parties hereto pursuant to this Section 8.1 and Sections 8.2 and 8.10
shall survive any termination of this Agreement and Sections 5.4(b) and 5.4(c)
shall survive termination of this Agreement for six months.
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8.2 FEES AND EXPENSES. Subject to Section 8.1(a)(vii), whether
or not the transactions contemplated hereby are consummated, each of the parties
hereto shall pay its own fees and expenses incident to the negotiation,
preparation and execution of this Agreement, including attorneys', accountants'
and other advisors' fees and the fees and expenses of any broker, finder or
agent retained by such party in connection with the transactions contemplated by
the Agreement.
8.3 NO CONTROL BY THE BUYER. Between the date of this
Agreement and the Closing Date, the Buyer shall not directly or indirectly
control, supervise or direct, or attempt to control, supervise or direct, the
operations of the Stations, but such operations shall be the sole responsibility
and in the complete discretion of the Seller, the Companies and the
Subsidiaries.
8.4 TRANSFER TAXES. Any transfer tax shall be borne
one-half by the Buyer and one-half by the Seller.
8.5 NOTICES. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing delivered by hand, telex, facsimile or registered letter with return
receipt requested and shall be deemed to have been duly given or made when
delivered by hand, or, in the case of telex notice, when sent, answerback
received, or, in the case of facsimile note or registered letter, when received
by the addressee, addressed as follows:
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(a) if to the Seller, to it at:
Granum Communications, Inc.
100 Wall Street
Suite 603
New York, New York 10005
Attention: Mr. Herbert W. McCord
Telephone: (212) 809-2900
Telecopy: (212) 809-4010
with a copy to:
Kohlberg Kravis Roberts & Co., L.P.
9 West 57th Street
Suite 4250
New York, New York 10019
Attention: Mr. Scott M. Stuart
Telephone: (212) 750-8300
Telecopy: (212) 750-0003
and
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Attention: John W. Carr, Esq.
Telephone: (212) 455-2000
Telecopy: (212) 455-2502
(b) if to the Buyer, to it at:
Infinity Broadcasting Corporation
600 Madison Avenue
New York, New York 10022
Attention: Mr. Farid Suleman
Telephone: (212) 750-6400
Telecopy: (212) 888-2959
with a copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Richard D. Bohm, Esq.
Telephone: (212) 909-6000
Telecopy: (212) 909-6836
or to such other persons or addresses as any party shall specify as to itself by
notice in writing to the other parties.
8.6 ENTIRE AGREEMENT. This Agreement (including the
Schedules hereto) constitutes the entire agreement between the
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parties hereto and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
8.7 BINDING EFFECT; BENEFIT. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.8 ASSIGNABILITY. This Agreement shall not be assigned by
either of the parties hereto without the prior written consent of the other
party; provided, however, that the Buyer may, without the prior written consent
of the Seller, assign all of its rights hereunder to one or more entities, 100%
of the interests in which are owned directly or indirectly by the Buyer, except
that no such assignment shall be permitted without the written consent of the
Seller if such assignment would subject the FCC application to an additional
public notice period under the FCC Rules, and provided that, notwithstanding any
such assignment, the Buyer shall remain liable to perform all of its obligations
hereunder.
8.9 AMENDMENT AND MODIFICATION; WAIVER. Subject to applicable
law, this Agreement may be amended, modified and supplemented by a written
instrument authorized and executed on behalf of the parties at any time prior to
the Closing Date with respect to any of the terms contained herein. No waiver by
any
66
<PAGE>
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
8.10 PUBLIC ANNOUNCEMENTS. Unless otherwise required by law or
any regulation or rule of any stock exchange binding upon the Seller or the
Buyer, prior to the Closing no news release or other public announcement
pertaining to the transactions contemplated by this Agreement will be made by or
on behalf of any party hereto without the prior written approval of the other
party (such consent not to be unreasonably withheld or delayed). Where any
announcement, communication or circular concerning the transactions referred to
in this Agreement is required by law or any regulation or rule of any stock
exchange it shall be made by the relevant party after consultation, where
reasonably practicable, with the other party and taking into account the
reasonable requirements (as to timing, contents and manner of making or despatch
of the announcement, communication or circular) of the other party.
67
<PAGE>
8.11 KNOWLEDGE. Whenever this Agreement makes reference to the
knowledge of (i) the Seller, such reference shall be construed to mean the
actual knowledge of Herbert McCord, Peter Ferrara, or Michael Weinstein, (ii)
the Companies or the Subsidiaries, such reference shall be construed to mean the
actual knowledge of the General Manager of the applicable Station or Stations.
8.12 NO RECOURSE. No recourse shall be available to the assets
of any natural person that is a partner or an Affiliate of any partner
(including the general partner of the Seller), or any officer, director, agent,
employee, shareholder or partner thereof for any obligations of the Seller to
the Buyer pursuant to this Agreement.
8.13 SECTION HEADINGS. The section headings contained
in this Agreement are inserted for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
8.14 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and all
of which together shall be deemed to be one and the same instrument.
8.15 APPLICABLE LAW. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance with
the laws of the State of New York without regard to conflicts of laws principles
thereof.
68
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
INFINITY BROADCASTING CORPORATION
By:______________________________
Name:
Title:
GRANUM HOLDINGS L.P.
By: Radio Associates, L.P.,
General Partner
By: KKR Associates, its
General Partner
By:______________________________
Name:
Title: General
Partner
69
<PAGE>
AMENDMENT TO THE
INFINITY BROADCASTING CORPORATION
STOCK OPTION PLAN
The Plan is amended in the manner set forth below:
i. Section 2(a) of the Plan is amended to reflect the Company's
three-for-two stock split in the form of a stock dividend, effective May 19,
1995, so that the first sentence thereof reads in its entirety as follows:
"Subject to adjustment as provided in Section 9, the aggregate number
of shares of the Class A Common Stock of the Company ("Class A Shares")
to be delivered upon exercise of all options granted under the Plan
shall be 6,996,525 and the aggregate number of shares of the Class B
Common Stock of the Company ("Class B Shares" and together with Class A
Shares, "Shares") to be delivered upon exercise of all options granted
under the Plan shall be 1,181,250."
Section 2(a) is further amended to delete the last sentence thereof.
ii. Section 7(c) of the Plan is deleted in its entirety and a new
Section 7(c) is added in lieu thereof, to read as follows:
"(c) NONTRANSFERABILITY OF AWARDS. An option shall not be transferable
otherwise than by will or by the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as
amended (or the rules thereunder), or to a Permitted Transferee;
PROVIDED that no otherwise permitted transfer shall be effective unless
the deceased Optionee's beneficiary or the representative of his estate
or the Permitted Transferee acknowledges and agrees in writing, in a
form reasonably acceptable to the Company, to be bound by the
provisions of the Plan and the Option Agreement covering such Options
as if such beneficiary or estate were the Optionee. All rights with
respect to Options granted to an Optionee under the Plan shall be
exercisable during his lifetime by such Optionee (or, if applicable, a
Permitted Transferee). Following an Optionee's death, all rights with
respect to Options that were exercisable at the time of such Optionee's
death and have not terminated shall be exercised by his designated
beneficiary or estate (or, if applicable, a Permitted Transferee). As
used in this Section 7(c), a Permitted Transferee shall be a member of
the Optionee's family or a trust or similar vehicle for the benefit of
such family members to whom or to which the Administrator shall permit
(on such terms and conditions as it shall establish) an Option to be
transferred."
<PAGE>
iii. This Amendment made by paragraph 1 hereof shall be effective as of
May 19, 1995, and the amendment made by paragraph 2 hereby shall be effective as
of June 15, 1995.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Amendment as of June 15, 1995.
INFINITY BROADCASTING CORPORATION
By:______________________________
Name: Farid Suleman
Title: VP of Finance
<PAGE>
AMENDMENT TO THE
INFINITY BROADCASTING CORPORATION
DEFERRED SHARE PLAN
The Infinity Broadcasting Corporation Deferred Share Plan (the "Plan"),
as amended and restated as of August 16, 1993, and amended as of November 19,
1993, is hereby further amended as follows to reflect the Company's
three-for-two stock split in the form of a stock dividend, effective as of May
19, 1995:
Section 3 of the Plan is amended so that the first sentence thereof
reads in its entirety as follows:
"Subject to Section 4.4, the maximum number of Class A Deferred Shares
which may be granted pursuant to the terms of the Plan shall be 360,962
and the maximum number of Class B Deferred Shares which may be granted
pursuant to the terms of the Plan shall be 1,174,454."
IN WITNESS WHEREOF, the Company has caused its duly authorized officer
to execute this Amendment as of the 15th day of June, 1995.
INFINITY BROADCASTING CORPORATION
By:_____________________________________
Name: Farid Suleman
Title: VP of Finance
<PAGE>
SUBSIDIARIES OF
INFINITY BROADCASTING CORPORATION
Percentage of Ownership
by Infinity Broadcasting
Jurisdiction Corporation ("Infinity")
NAME OF SUBSIDIARY INCORPORATION OR ITS SUBSIDIARIES
The Audio House, Inc. California 100% by Infinity
Hemisphere Broadcasting Delaware 100% by Infinity
Corporation
Infinity Broadcasting Pennsylvania 100% by Infinity
Corporation of
Pennsylvania
Sagittarius Broadcasting New York 100% by Infinity
Corporation
Hit Radio, Inc. New York 80% by Sagittarius
Broadcasting
Corporation: 20% by
Infinity
C & W Land Corporation New Jersey 100% by Hit Radio, Inc.
13 Radio Corporation Delaware 100% by Infinity
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Illinois
Infinity Broadcasting Delaware 100% by Infinity
Corporation of
Los Angeles
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Maryland
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Michigan
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Florida
<PAGE>
Infinity Broadcasting Delaware 100% by Infinity
Corporation of
Washington, D.C.
Infinity Ventures, Inc. Delaware 100% by Infinity
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Tampa
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Glendale
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Texas
Infinity Broadcasting New York 100% by Infinity
Corporation of Baltimore Broadcasting
Corporation of
Baltimore
Infinity WLIF, Inc. Maryland 100% by Infinity
Broadcasting
Corporation of
Baltimore
Infinity WLIF-AM, Maryland 100% by Infinity
Inc. Broadcasting
Corporation of
Baltimore
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Atlanta
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Boston
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Chicago
Infinity Broadcasting Delaware 100% by Infinity
Corporation of
Philadelphia
Infinity Broadcasting Delaware 100% by Infinity
Corporation of
California
<PAGE>
Infinity Network Inc. Delaware 100% by Infinity
Unistar Communication Delaware 100% by Infinity
Group, Inc.
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Detroit
Infinity Broadcasting Delaware 100% by Infinity
Corporation (WPGC-AM), Inc
Infinity Broadcasting Delaware 100% by Infinity
Corporation of Dallas
Infinity Broadcasting Delaware 100% by Infinity
Corporation of San
Francisco
Infinity Broadcasting Delaware 100% by Infinity
Corporation of
Washington
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Infinity Broadcasting Corporation:
We consent to incorporation by reference in the registration statements No.
33-45977, No. 33-56938, No. 33-55577 and No. 33-55477 on Form S-8 and in the
registration statement No. 33-61081 on Form S-3 of Infinity Broadcasting
Corporation of our report dated February 6, 1996, except as to Notes 2 and 3,
which are as of March 26, 1996, relating to the consolidated balance sheets of
Infinity Broadcasting Corporation and subsidiaries as of December 31, 1994 and
1995, and the related consolidated statements of earnings, changes in
stockholders' equity (deficiency), and cash flows for each of the years in the
three-year period ended December 31, 1995, and related schedule, which report
appears in the December 31, 1995 annual report on Form 10-K of Infinity
Broadcasting Corporation.
KPMG PEAT MARWICK LLP
New York, New York
March 25, 1996
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 20340
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<RECEIVABLES> 88859
<ALLOWANCES> 2139
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<CURRENT-ASSETS> 108365
<PP&E> 35237
<DEPRECIATION> 14676
<TOTAL-ASSETS> 594456
<CURRENT-LIABILITIES> 53080
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<OTHER-EXPENSES> 56617
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