UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from _______to _______
Commission file number 0-16841
OSBORN COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1142367
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification No.)
130 Mason Street, Greenwich, Connecticut 06830
(Address of principal executive offices) (Zip Code)
(203) 629-0905
Registrant's telephone number, including area code
________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No______
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE LAST FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes______ No______
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of the
issuer's classes of common stock, as of the latest practicable
date.
Outstanding
Class at August 4, 1995
Common stock, $.01 par value 5,252,688
Non-voting common stock, $.01 par value -
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
(1) Consolidated Balance Sheets at June 30, 1995 (unaudited)
and December 31, 1994
(2) Consolidated Statements of Operations for the three and
six months ended June 30, 1995 and 1994 (unaudited)
(3) Consolidated Statements of Cash Flows for the six months
ended June 30, 1995 and 1994 (unaudited)
(4) Consolidated Statement of Changes in Stockholders'
Equity for the six months ended June 30, 1995 (unaudited)
(5) Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
June 30, December 31,
1995 1994
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $8,658,057 $6,368,473
Accounts receivable, less allowance
for doubtful accounts of
$431,705 in 1995 and $370,102 in 1994 5,598,908 5,435,792
Distribution receivable - 2,264,552
Note receivable - 1,620,455
Inventory 1,170,765 1,080,647
Prepaid expenses and other current assets 969,702 782,544
Total current assets 16,397,432 17,552,463
Investment in affiliated companies 535,913 535,913
Property, plant and equipment, at cost,
less accumulated depreciation of
$17,297,788 in 1995 and $15,945,361 in 1994 15,952,338 16,442,810
Intangible assets, net of accumulated
amortization of $15,028,873 in 1995
and $13,308,848 in 1994 42,917,121 44,418,927
Other noncurrent assets 120,843 216,373
Total assets $75,923,647 $79,166,486
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $4,172,315 $3,787,528
Accrued wages and sales commissions 203,418 304,781
Accrued interest payable 152,704 1,944,787
Accrued income taxes 492,405 535,489
Current portion of long-term debt 2,700,000 2,700,000
Total current liabilities 7,720,842 9,272,585
Long-term debt 48,402,647 48,313,905
Deferred income taxes 2,135,047 2,035,047
Other noncurrent liabilities 317,891 263,107
Commitments and contingencies - -
Stockholders' equity:
Preferred stock, par value $.01 per share;
authorized 5,000,000 shares, none issued
and outstanding - -
Common stock, par value $.01 per share;
authorized 7,425,000 shares, issued and
outstanding shares: 5,262,688 and 5,252,688,
respectively, in 1995; 5,369,747 and
5,359,747, respectively, in 1994 52,527 53,598
Non-voting common stock, par value $.01
per share; authorized 75,000 shares, none
issued and outstanding - -
Additional paid-in capital 39,539,975 40,181,258
Accumulated deficit (22,245,282) (20,953,014)
Total stockholders' equity 17,347,220 19,281,842
Total liabilities and stockholders' equity $75,923,647 $79,166,486
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three and six months ended June 30, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three months ended Six months ended
June 30, June 30,
1995 1994 1995 1994
Net revenues 9,128,860 $7,077,906 $16,800,455 $12,127,609
Operating expenses:
Selling, technical and program 3,167,607 1,828,088 6,052,500 3,378,835
Direct programmed music and
entertainment 1,842,105 2,056,853 3,375,289 3,387,081
General and administrative 1,883,821 1,355,237 3,759,461 2,649,536
Depreciation and amortization 1,460,704 1,086,034 2,916,735 2,115,982
Corporate expenses 423,762 1,073,645 849,377 1,447,105
Total operating expenses 8,777,999 7,399,857 16,953,362 12,978,539
Operating income (loss) 350,861 (321,951) (152,907) (850,930)
Other income (expense) 125,347 (323,171) 1,898,979 (253,631)
Interest expense 1,433,490 802,019 2,847,010 1,355,321
Loss before income taxes (957,282) (1,447,141) (1,100,938) (2,459,882)
Provision for income taxes 98,125 57,793 191,330 101,249
Loss before extraordinary item (1,055,407) (1,504,934) (1,292,268) (2,561,131)
Extraordinary item:
Loss on debt extinguishment - (436,329) - (436,329)
Net loss ($1,055,407)($1,941,263) ($1,292,268)($2,997,460)
Earnings per common share:
Loss before extraordinary item ($0.20) ($0.28) ($0.25) ($0.48)
Loss on extinguishment of debt - (0.08) - (0.08)
Net loss per common share ($0.20) ($0.36) ($0.25) ($0.56)
Weighted average common shares
outstanding 5,252,688 5,376,347 5,259,194 5,376,220
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
(Unaudited)
<TABLE>
<S> <C> <C>
1995 1994
Cash flows from operating activities:
Cash received from clients $16,384,135 $11,747,282
Cash paid to vendors and employees (13,777,275) (9,160,391)
Interest received 245,345 142,983
Interest paid (4,430,333) (1,647,892)
Income taxes paid (134,414) (55,589)
Net cash (used in) provided by
operating activities (1,712,542) 1,026,393
Cash flows from investing activities:
Distributions from affiliated companies 3,918,186 -
Payments for business acquisitions - (20,373,365)
Proceeds from note receivable 1,620,455 166,243
Capital expenditures (771,472) (256,558)
Expenditures for intangible assets (218,219) (1,926,570)
Reclassification of other noncurrent assets 95,530 14,732
Net cash provided by (used in)
investing activities 4,644,480 (22,375,518)
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 48,450,163
Proceeds from issuance of stock warrant - 1,774,837
Proceeds from exercise of stock options - 6,000
Purchase and retirement of treasury stock (642,354) -
Principal payments on long-term debt and
notes payable - (22,559,656)
Net cash used in financing activities (642,354) 27,671,344
Net increase in cash and cash equivalents 2,289,584 6,322,219
Cash and cash equivalents at beginning of period 6,368,473 1,321,175
Cash and cash equivalents at end of period $8,658,057 $7,643,394
Reconciliation of net loss to net cash
(used in) provided by operating activities:
Net loss ($1,292,268) ($2,997,460)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 2,916,735 2,115,982
Loss on extinguishment of debt - 436,329
Write-off of registration statement costs - 397,583
Deferred income taxes 100,000 -
Non-cash interest expense 208,760 -
Decrease in accounts receivable (163,116) (181,000)
Increase in inventory (90,118) (351,845)
Distributions from affiliated companies (1,653,634) -
Increase in prepaid expenses and other
current assets (187,158) 121,554
Increase (decrease) in accounts payable
and accrued expenses 384,787 1,769,642
Increase (decrease) in accrued wages
and sales commissions (101,363) (37,481)
Increase (decrease) in accrued interest payable (1,792,083) (292,571)
Decrease in accrued income taxes (43,084) 45,660
Total adjustments (420,274) 4,023,853
Net cash (used in) provided by operating
activities ($1,712,542) $1,026,393
Schedule of non-cash investing activities:
Acquisition of radio station through the
assumption of long-term debt - $2,464,181
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 30, 1995
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Voting Non-voting Additional
Par Par paid-in Accumulated
Shares value Shares value capital deficit
Balance at December
31, 1994 5,359,747 $53,598 - - $40,181,258 ($20,953,014)
Purchase and
retirement of treasury
stock (107,059) (1,071) - - (641,283) -
Net loss - - - - - (1,292,268)
Balance at June
30, 1995 5,252,688 $52,527 - - $39,539,975 ($22,245,282)
</TABLE>
See accompanying notes.
<PAGE>
OSBORN COMMUNICATIONS CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The financial information included herein is unaudited;
however, such information reflects all adjustments (consisting
solely of normal recurring adjustments) that are, in the opinion
of management, necessary for a fair presentation of the financial
position, results of operations, and cash flows for the interim
periods presented. Common share information for the 1994 periods
have been restated to reflect the 1-for-2 reverse stock split
effected on July 11, 1994.
2. On June 30, 1994, the Company, through wholly-owned
subsidiaries, acquired substantially all the assets of three FM
and one AM radio stations for an aggregate of $20.0 million plus
transaction costs. The acquisition included radio stations WKSF-
FM/WWNC-AM, Asheville, North Carolina; WOLZ-FM, Ft. Myers,
Florida; and WFKS-FM, Daytona Beach/Palatka, Florida. On August
1, 1994, the Company, through a wholly-owned subsidiary, acquired
substantially all the assets of radio stations WQEN-FM/WAAX-AM,
Gadsden, Alabama for $1.75 million plus transaction costs. The
Gadsden market is adjacent to the Anniston market, in which the
Company owns and operates its television station. The Company
applied for a waiver from the Federal Communications Commission's
("FCC") regulations prohibiting ownership of radio and television
stations in the same market. The FCC granted the waiver in
August 1995. Prior to the FCC's ruling on the waiver
application, the Gadsden radio stations were placed in a trust
which operated the stations on the Company's behalf.
The acquisitions have been accounted for as purchases.
Accordingly, the purchase price of each acquisition has been
allocated to the assets based upon their fair values at the date
of acquisition. The results of operations of the Asheville, Ft,
Myers and Daytona Beach/Palatka radio stations are included in
the Company's consolidated results of operations from the dates
of acquisition. The results of operations of the Gadsden radio
stations are included in the Company's consolidated results of
operations since January 1, 1995. The consolidated balance sheet
at December 31, 1994 has been restated to reflect the Gadsden
acquisition under the purchase method of accounting. Prior to
the FCC's ruling on the waiver application, the Gadsden
acquisition had been accounted for under the equity method of
accounting.
3. On March 30, 1994, Atlantic City Broadcasting Corp.
("Atlantic City"), a wholly-owned subsidiary of the Company,
acquired radio station WAYV-FM, Atlantic City, New Jersey, for
consideration of approximately $2.7 million. The consideration
consisted of a $2.7 million term loan assumed by Atlantic City.
The term loan is secured by the capital stock and assets of
Atlantic City, and is otherwise non-recourse to the Company and
its other assets. The Atlantic City term loan agreement restricts
Atlantic City's ability to pay cash dividends or make other cash
distributions to the Company. The Company has agreed to sell
substantially all the assets of Atlantic City for $2.7 million.
The transaction is expected to occur in the fourth quarter of
1995, subject to FCC approval.
The acquisition has been accounted for as a purchase.
Accordingly, the purchase price of the acquisition has been
allocated to the assets based upon their fair values at the date
of acquisition. The results of operations of Atlantic City are
included in the Company's consolidated results of operations from
the date of acquisition.
4. In January 1995, the Company repurchased and subsequently
retired 107,059 unregistered shares of its common stock which
were held by an institution for $642,000.
5. In January 1995, the Company received a distribution from
Fairmont Communications Corporation of $2,265,000 which was
earned in 1994. In February 1995, the note receivable of
$1,620,000 relating to the 1988 disposition of the Toledo, Ohio
radio station and Muzak franchise was received.
6. On June 30, 1994, the Company entered into credit agreements
totalling $50.0 million with World Subordinated Debt Partners,
L.P. The proceeds were used to fund the acquisition of six radio
stations (see Note 2); to repay the Company's existing long-term
debt; to fund transaction expenses; and to provide working
capital. The debt repayments resulted in an extraordinary loss
on the extinguishment of debt of $436,000.
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
On June 30, 1994, the Company acquired substantially all the
assets of three FM and one AM radio stations for an aggregate of
$20.0 million plus transaction costs. The acquisition included
radio stations WKSF-FM/WWNC-AM, Asheville, North Carolina; WOLZ-
FM, Ft. Myers, Florida; and WFKS-FM, Daytona Beach/Palatka,
Florida. On August 1, 1994, the Company acquired substantially
all the assets of radio stations WQEN-FM/WAAX-AM, Gadsden,
Alabama for $1.75 million plus transaction costs. The Gadsden
market is adjacent to the Anniston market, in which the Company
owns and operates its television station. The Company applied
for a waiver from the Federal Communications Commission's ("FCC")
regulations prohibiting ownership of radio and television
stations in the same market. The FCC granted the waiver in August
1995. Prior to the FCC's ruling on the waiver application, the
Gadsden radio stations were placed in a trust which operated the
stations on the Company's behalf.
On March 30, 1994, Atlantic City Broadcasting Corp. ("Atlantic
City"), a wholly-owned subsidiary of the Company, acquired radio
station WAYV-FM, Atlantic City, New Jersey, for consideration of
approximately $2.7 million. The consideration consisted of a $2.7
million term loan assumed by Atlantic City. The term loan is
secured by the capital stock and assets of Atlantic City and is
otherwise non-recourse to the Company and its other assets. The
Company has agreed to sell substantially all the assets of
Atlantic City for $2.7 million. The transaction is expected to
occur in the fourth quarter of 1995, subject to FCC approval.
The acquisitions have been accounted for as purchases.
Accordingly, the purchase price of each acquisition has been
allocated to the assets based upon their fair values at the dates
of acquisition. The results of operations of Asheville, Ft.
Myers, Daytona Beach/Palatka and Atlantic City are included in
the Company's consolidated results of operations from the
acquisition dates. The results of operations of the Gadsden radio
stations are included in the Company's consolidated results of
operations since January 1, 1995. The consolidated balance sheet
at December 31, 1994 has been restated to reflect the Gadsden
acquisition under the purchase method of accounting. Prior to
the FCC's ruling on the waiver application, the Gadsden
acquisition had been accounted for under the equity method of
accounting.
Results of Operations
Three months ended June 30, 1995 and 1994
Net revenues of $9,129,000 in the second quarter of 1995
represent a 29% increase from 1994 quarterly net revenues of
$7,078,000. The increase is primarily attributable to the radio
stations acquired during 1994. For businesses owned and operated
for a comparable period in 1995 and 1994, net revenues remained
stable. For broadcasting properties operated for comparable
periods, net revenues increased 5%, to $3,594,000 in the second
quarter of 1995 from $3,414,000 in 1994. The Anniston television
station's revenues declined slightly, although the prior year
included significant revenue from political advertising which
typically occurs in election years. The Company's concert and
entertainment businesses experienced a decrease in net revenue
from the prior year primarily due to the scheduling of fewer
performances by popular acts in the second quarter of 1995. Net
revenues for the programmed music division increased from
$2,028,000 in 1994 to $2,131,000 in 1995, which represents a 5%
increase. The increase reflects increased equipment sales in Ft.
Myers.
Total operating expenses increased 19%, from $7,400,000 in 1994
to $8,778,000 in 1995. The increase is primarily attributable
to the radio stations acquired during 1994, partially offset by
reductions in corporate expenses of $650,000. Corporate expenses
in 1994 included nonrecurring charges of approximately $500,000,
primarily related to the relocation of the Company's corporate
headquarters to Greenwich, Connecticut, severance costs, a new
employment agreement for the Company's president and chief
executive officer, and the installation of new management at the
healthcare cable television business. For businesses owned and
operated for a comparable period in 1995 and 1994, total
operating expenses remained stable. Increases in operating
expenses for the Company's broadcasting and programmed music
businesses were offset by the lower level of activity in the
concert and entertainment operations.
Operating cash flow (operating income before depreciation,
amortization and corporate expenses) increased 22%, to $2,235,000
in 1995 from $1,838,000 in 1994. The increase is primarily
attributable to the radio stations acquired during 1994.
Operating cash flow for businesses owned and operated for a
comparable period in both years remained stable. Increases for
comparable broadcasting and programmed music properties were
offset by the lower level of activity in the concert and
entertainment operations. EBITDA (earnings before interest,
taxes, depreciation and amortization) of $1,812,000 in the second
quarter of 1995 increased 137%, from $764,000 in 1994.
Operating income of $351,000 in 1995 compares to an operating
loss of $322,000 in 1994. Interest expense increased to
$1,433,000 in 1995 from $802,000 in 1994 due to the greater level
of debt resulting from the 1994 acquisitions (see Liquidity and
Capital Resources). Interest expense in 1995 includes $105,000
of non-cash interest relating to deferred financing cost and debt
discount amortization. Other income (expense) in 1994 includes
approximately $400,000 of costs associated with the registration
statement filed by the Company in March 1994 and withdrawn in
July 1994.
Results of operations in 1994 include an extraordinary loss on
the early extinguishment of debt of $436,000, or $0.08 per share.
Loss before extraordinary item of $1,055,000, or $0.20 per share,
decreased from $1,505,000, or $0.28 per share, in 1994. Net loss
of $1,055,000 in 1995, or $0.20 per share, compares to net loss
of $1,941,000, or $0.36 per share, in 1994. Per share amounts
for 1994 are adjusted for the 1-for-2 reverse stock split
effected in July 1994.
Six months ended June 30, 1995 and 1994
Net revenues of $16,800,000 in the first half of 1995 represent a
39% increase from 1994 first half net revenues of $12,128,000.
The increase is primarily attributable to the radio stations
acquired during 1994. For businesses owned and operated for a
comparable period in 1995 and 1994, net revenues increased 4%.
For broadcasting properties operated for comparable periods, net
revenues increased 6%, to $6,208,000 in the first half of 1995
from $5,837,000 in 1994. The increase is primarily attributable
to strong performance at the Company's Wheeling, Jackson, and
Atlantic City radio stations. The Anniston television station's
revenues remained stable, although the prior year included
significant revenue from political advertising which typically
occurs in election years. The Company's concert and entertainment
businesses experienced a decrease in net revenue from the prior
year primarily due to the scheduling of fewer performances by
popular acts in the first half of 1995. Net revenues for the
programmed music division increased 9%, from $3,832,000 in 1994
to $4,190,000 in 1995.
Total operating expenses increased 31%, from $12,979,000 in 1994
to $16,953,000 in 1995. The increase is primarily attributable
to the radio stations acquired during 1994, partially offset by
reductions in corporate expenses of $598,000. For businesses
owned and operated for a comparable period in 1995 and 1994,
total operating expenses increased 5%. The increase in
operating expenses for comparable properties is attributable to
the increased level of business at the Company's broadcasting and
programmed music operations.
Operating cash flow increased 33%, to $3,613,000 in 1995 from
$2,712,000 in 1994. The increase is primarily attributable to the
radio stations acquired during 1994. Operating cash flow for
businesses owned and operated for a comparable period in both
years increased modestly. The increase for comparable properties
is attributable to improved operations at the Company's
broadcasting and programmed music franchises, partially offset by
the lower level of activity at the concert and entertainment
businesses and lower operating cash flow at the hospital cable
television business. EBITDA increased 119%, to $2,764,000 in
1995 from $1,265,000 in 1994.
Operating loss decreased 82%, to $153,000 in 1995 from $851,000
in 1994. Other income of $1,899,000 in 1995 includes a
distribution from Northstar Television Group of $1,572,000 (see
Management Agreements). Other expense in 1994 includes
approximately $400,000 of costs associated with the registration
statement filed by the Company in March 1994 and withdrawn in
July 1994. Interest expense increased to $2,847,000 in 1995 from
$1,355,000 in 1994 due to the greater level of debt resulting
from the 1994 acquisitions (see Liquidity and Capital Resources).
Interest expense in 1995 includes $209,000 of non-cash interest
relating to deferred financing cost and debt discount
amortization.
Results of operations in 1994 include an extraordinary loss on
the early extinguishment of debt of $436,000, or $0.08 per share.
Loss before extraordinary item of $1,292,000, or $0.25 per share,
decreased from $2,561,000, or $0.48 per share, in 1994. Net loss
of $1,292,000 in 1995, or $0.25 per share, compares to net loss
of $2,997,000, or $0.56 per share, in 1994. Per share amounts
for 1994 are adjusted for the 1-for-2 reverse stock split
effected in July 1994.
Liquidity and Capital Resources
Cash flows from operating activities
In 1995, net cash used by operating activities was $1,713,000,
compared to net cash provided by operating activities of
$1,026,000 in 1994 (see "Results of Operations"). The difference
is primarily attributable to the amount and timing of interest
payments, partially offset by improved operations.
Cash flows from investing activities
The Company received distribution payments in the first quarter
of 1995 from Fairmont Communications Corporation and Northstar
Television Group totalling $3,918,000 (see Management Agreements
and Results of Operations). The note receivable of $1,620,000
relating to the 1988 disposition of the Toledo, Ohio radio
station and Muzak franchise was received in the first quarter of
1995. In the second quarter of 1994, the Company acquired four
radio stations for approximately $20.4 million.
In addition to debt service requirements, the Company's remaining
liquidity demands will be for capital expenditures and to meet
working capital needs. The Company made capital expenditures of
$771,000 and $257,000 in the first six months of 1995 and 1994,
respectively, which are primarily attributable to equipment
installations related to its programmed music franchises and in
1995, improvements to technical facilities of certain of the
stations acquired in 1994.
For the remainder of 1995, capital expenditures made by the
Company's wholly-owned businesses will be a function of the
number of installations by the programmed music franchises, as
well as routine expenditures for the Company's broadcasting
properties. The Company expects to make additional capital
expenditures as necessary for the stations purchased in 1994.
Capital expenditures for Osborn Healthcare will continue to be a
function of the number of new hospitals serviced.
Cash flows from financing activities
In January 1995, the Company repurchased and subsequently retired
107,059 unregistered shares of its common stock which were held
by an institution for $642,000. Also in January 1995, the
Company paid $107,000 for the common shares repurchased in
December 1994.
Long-term debt
Long-term debt to total capitalization increased between December
31, 1994 and June 30, 1995 from 73% to 75%. Long-term debt
includes $2.7 million of debt, net of unamortized debt discount
of $700,000, associated with the Atlantic City radio station.
This debt is secured by the capital stock and assets of Atlantic
City, and is otherwise non-recourse to the Company or its other
assets. The Atlantic City term loan agreement restricts Atlantic
City's ability to pay cash dividends or make other cash
distributions to the Company. The Company has agreed to sell
the Atlantic City radio station, subject to FCC approval. The
debt will be repaid with the proceeds from the sale.
Working capital
At June 30, 1995, cash and cash equivalents totalled $8,658,000,
compared to $6,368,000 at December 31, 1994. Working capital
increased $397,000, from $8,280,000 to $8,677,000, during the
period.
The Company believes that cash flows from operations and existing
funds will be sufficient to meet the Company's current cash
requirements for the foreseeable future. It is not possible to
ascertain the effect on the Company's liquidity that would result
from potential future acquisitions, dispositions or debt
repayments. The Company expects to evaluate all viable forms of
financing when examining potential future acquisitions or its
capital structure. This could take the form of, among other
things, additional sales of stock or notes, bank and/or
institutional borrowings, or seller financing, as well as
internally generated funds.
The Company is currently negotiating with a commercial bank to
refinance its existing long-term debt. The refinancing, which is
anticipated to occur in the third quarter of 1995, is expected to
result in lower leverage, reduced interest expense and the
cancellation of purchase rights with respect to 676,000 of the
1,014,000 warrant shares issued as a result of the 1994
refinancing. The repayment of the existing indebtedness will
result in an extraordinary loss on the early extinguishment of
debt of approximately $3.9 million.
Management Agreements
The Company currently owns 25% of the stock of Fairmont
Communications Corporation ("Fairmont"). Fairmont is currently
managed by the Company pursuant to a management agreement, for
which the Company receives an annual management fee of $125,000
plus reimbursement of out-of-pocket expenses and allocated
overhead costs. In August 1992, Fairmont filed for protection
from its creditors under Chapter 11 of the U.S. Bankruptcy Code.
In September 1993, Fairmont emerged from Chapter 11 upon approval
by the bankruptcy court of a plan of reorganization (the "Plan").
The Plan provides for the sale of Fairmont's assets, distribution
of proceeds in accordance with the Plan, and subsequent
liquidation of Fairmont. All of Fairmont's stations were sold by
the second quarter of 1994. The Company will continue to manage
Fairmont pursuant to the amended management agreement which
expires upon the liquidation of Fairmont, which is expected to
occur in 1995.
The Company held a 32% interest in Northstar Television Group,
Inc. ("Northstar") and managed Northstar's four television
stations pursuant to a management agreement in return for
reimbursement of out-of-pocket expenses and allocated overhead
costs. In 1994, Northstar's creditors and equity investors
reached an agreement with respect to restructuring Northstar's
highly leveraged capital structure pursuant to which, among other
things, the Company received a portion of accrued and unpaid
management fees and will retain an economic interest. The
Company's management agreement with Northstar terminated
following the restructuring. In January 1995, three of
Northstar's four television stations were sold and the Company
received a distribution of approximately $1.6 million (see
Results of Operations).
Osborn Healthcare
The Company's credit agreements allow for additional investment
in Osborn Healthcare by the Company of up to $2.5 million, of
which approximately $500,000 has been invested.
Seasonality
For broadcasting properties, the first quarter is expected to
reflect the lowest revenues and net income of the year, while the
fourth quarter has historically had the highest revenues and net
income. This is due in part to increases in retail advertising
in the fall in preparation for the holiday season, with a
subsequent reduction of business after the holidays.
The Company's entertainment properties are expected to reflect
the lowest revenues and net income of the year in the first
quarter due to the planned scheduling of the most popular
performers during the peak spring, summer and fall seasons. Also,
the Company's country music festival, Jamboree in the Hills,
takes place in the third quarter.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities Holders
The annual meeting of shareholders was held on May 16, 1995.
Frank D. Osborn, Brownlee O. Currey, Jr., H. Anthony Ittleson,
Edward G. Nelson, William G. Spears, and Robert K. Zelle were re-
elected as the six directors of the Company.
The tabulation of votes cast for each director is as follows:
Votes For Votes Against Votes Abstained
F.D. Osborn 3,672,694 375 -
B.O. Currey, Jr. 3,672,694 375 -
H.A. Ittleson 3,672,694 375 -
E.G. Nelson 3,672,694 375 -
W.G. Spears 3,672,694 375 -
R.K. Zelle 3,672,694 375 -
The shareholders approved the selection of Ernst & Young LLP as
the Company's independent auditors for the year ended December
31, 1995. The tabulation of votes cast for the selection of
Ernst & Young LLP is as follows:
Votes For Votes Against Votes Abstained
3,672,090 804 175
Item 5. Other information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Assets Purchase Agreement dated as of June 9, 1995 by
and between Atlantic City Broadcasting Corp. and Atlantic-Allur, Inc.
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
OSBORN COMMUNICATIONS CORPORATION
(Registrant)
Date: August 8, 1995 /s/ Frank D. Osborn
(Signature)
Frank D. Osborn
President and Chief Executive Officer
Date: August 8, 1995 /s/ Thomas S. Douglas
(Signature)
Thomas S. Douglas
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 8,658,057
<SECURITIES> 0
<RECEIVABLES> 6,030,613
<ALLOWANCES> 431,705
<INVENTORY> 1,170,765
<CURRENT-ASSETS> 16,397,432
<PP&E> 33,250,126
<DEPRECIATION> 17,297,788
<TOTAL-ASSETS> 75,923,647
<CURRENT-LIABILITIES> 7,720,842
<BONDS> 48,402,647
0
0
<COMMON> 52,527
<OTHER-SE> 17,294,693
<TOTAL-LIABILITY-AND-EQUITY> 75,923,647
<SALES> 16,800,455
<TOTAL-REVENUES> 16,800,455
<CGS> 0
<TOTAL-COSTS> 16,953,362
<OTHER-EXPENSES> (1,898,979)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,847,010
<INCOME-PRETAX> (1,100,938)
<INCOME-TAX> 191,330
<INCOME-CONTINUING> (1,292,268)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,292,268)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> 0
</TABLE>
___________________________________________________________
ASSETS PURCHASE AGREEMENT
dated as of June 9th, 1995
by and between
ATLANTIC CITY BROADCASTING CORP.
(Seller)
and
ATLANTIC-ALLUR, INC.
(Buyer)
___________________________________________________________
<PAGE>
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE OF ASSETS
1.1 Transfer of Assets............................. 1
1.2 Excluded Assets................................ 3
1.3 Accounts Receivable............................ 4
1.4 Liabilities to be Assumed...................... 4
1.5 Purchase Price................................. 4
1.6 Allocation of Purchase Price................... 4
1.7 Escrow Deposit................................. 5
ARTICLE II CLOSING AND TERMINATION
2.1 Closing........................................ 5
2.2 Transactions at the Closing.................... 5
2.3 Proration of Income and Expenses............... 7
2.4 Termination.................................... 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Due Incorporation.............................. 10
3.2 Authority; No Conflict......................... 11
3.3 Government Authorizations...................... 11
3.4 Compliance with Regulations.................... 12
3.5 Personal Property.............................. 12
3.6 Real Property.................................. 13
3.7 Real Estate Contracts.......................... 13
3.8 Consents....................................... 14
3.9 Contracts...................................... 14
3.10 Environmental................................. 14
3.11 Intellectual Property......................... 15
3.12 Financial Statements.......................... 16
3.13 Personnel Information; Labor Contracts........ 16
3.14 Employee Benefit Plans........................ 16
3.15 Litigation.................................... 16
3.16 Compliance with Laws.......................... 17
3.17 Insurance..................................... 17
3.18 Instruments of Conveyance; Good Title......... 18
3.19 Absence of Certain Changes.................... 18
3.20 Insolvency Proceedings........................ 19
3.21 Location of Assets............................ 19
3.22 Citizenship................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Due Incorporation.............................. 20
4.2 Authority; No Conflict......................... 20
4.3 Consents....................................... 20
4.4 Litigation..................................... 20
4.5 Compliance with Laws........................... 21
4.6 Qualification.................................. 21
4.7 Financing...................................... 21
ARTICLE V COVENANTS OF SELLER
5.1 Continued Operation of Station................. 21
<PAGE>
5.2 Financial Obligations.......................... 21
5.3 Reasonable Access.............................. 22
5.4 Maintenance of Assets.......................... 22
5.5 Notification of Developments................... 22
5.6 Updated Financial Statements................... 22
5.7 Encumbrances................................... 22
5.8 Assignment of Assets........................... 22
5.9 Commission Licenses and Authorizations......... 23
5.10 Technical Equipment........................... 23
5.11 Compensation Increases........................ 23
5.12 Sale of Broadcast Time........................ 23
5.13 Insurance..................................... 23
5.14 Negotiations with Third Parties............... 23
5.15 Third Party Consents.......................... 23
5.16 Normal Operation.............................. 23
ARTICLE VI JOINT COVENANTS OF BUYER AND SELLER
6.1 Assignment Application
6.2 Performance.................................... 24
6.3 Conditions..................................... 24
6.4 Confidentiality................................ 24
6.5 Cooperation.................................... 25
6.6 Consents to Assignment......................... 25
6.7 Bulk Sales Laws................................ 26
6.8 Employee Matters............................... 26
ARTICLE VII CONDITIONS TO OBLIGATIONS OF BUYER
7.1 Commission Approvals........................... 26
7.2 Performance.................................... 27
7.3 Representations and Warranties................. 27
7.4 Consents....................................... 27
7.5 Opinions of Counsel............................ 27
7.6 Covenant Not to Compete........................ 27
7.7 Cash Flow Contingency.......................... 28
7.8 Environmental Audit............................ 28
7.9 Occupancy Certificate...........................28
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLER
8.1 Performance.................................... 29
8.2 Representations and Warranties................. 29
8.3 Government Approvals........................... 29
8.4 Opinion of Counsel............................. 29
8.5 Escrow Agreement............................... 29
ARTICLE IX INDEMNIFICATION
9.1 Indemnification by Seller...................... 29
9.2 Indemnification by Buyer....................... 30
9.3 Notification of Claims......................... 30
ARTICLE X MISCELLANEOUS
10.1 Damage and Failure of Transmissions........... 31
10.2 Assignment.................................... 33
10.3 Survival of Representations................... 33
10.4 Brokerage..................................... 33
10.5 Expenses of the Parties....................... 33
<PAGE>
10.6 Entire Agreement.............................. 34
10.7 Headings...................................... 34
10.8 Governing Law................................. 34
10.9 Counterparts.................................. 34
10.10 Notices...................................... 34
10.11 Specific Performance......................... 35
10.12 Arbitration.................................. 35
10.13 Consent to Jurisdiction...................... 36
10.14 Further Assurances........................... 36
10.15 Public Announcements......................... 36
10.16 Amendments................................... 36
10.17 Schedules.................................... 37
<PAGE>
Page 1
ASSETS PURCHASE AGREEMENT
THIS ASSETS PURCHASE AGREEMENT (the "Agreement") is
entered
into this 9th day of June, 1995 by and between ATLANTIC CITY
BROADCASTING
CORP., a corporation formed under the laws of the State of
Delaware
("Seller"), and ATLANTIC-ALLUR INC., a corporation formed under
the laws
of the State of Delaware ("Buyer").
R E C I T A L S
WHEREAS, Seller owns and operates and has been duly
licensed by
the Federal Communications Commission (the "FCC" or the
"Commission") to
operate radio station WAYV(FM), Atlantic City, New Jersey on 95.1
MHz
(the "Station");
WHEREAS, Seller desires to sell to Buyer, and Buyer
desires to
purchase, the assets utilized in connection with the operation of
the
Station, and Seller and Buyer further desire that Seller assign
to Buyer
the licenses and other authorizations issued to Seller by the
Commission
for the purpose of operating the Station;
NOW, THEREFORE, for good and valuable consideration,
the
receipt and sufficiency of which are hereby acknowledged, the
parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 TRANSFER OF ASSETS. Seller agrees to assign,
transfer,
convey and deliver to Buyer and Buyer agrees to acquire, accept
and
receive from Seller, on the Closing Date, all of Seller's right,
title
and interest in and to the following assets relating to the
Station (the
"Station Assets") free and clear of all liens and encumbrances:
(a) LICENSES AND AUTHORIZATIONS. All licenses,
permits
and other authorizations issued by the FCC or any other state or
federal
government or agency thereof pertaining to the Station,
including,
without limitation, those licenses, permits or authorizations
listed in
Section 1.1(a) of the disclosure schedule delivered by Seller to
Buyer
and dated of even date herewith (the "Disclosure Schedule"),
together
with any renewals, extensions or modifications thereof and
additions
thereto made between the date of this Agreement and the Closing
Date (the
"Licenses"). The Licenses include the right to use the call
letters of
the Station, including but not limited to the call letters
WAYV(FM).
<PAGE>
Page 2
(b) TANGIBLE PERSONAL PROPERTY. All of the
tangible
personal property or fixtures owned by Seller and used or useable
in the
operation of the Station, including, without limitation, the
property
listed in Section 1.1(b) of the Disclosure Schedule together with
all
additions, modifications or replacements thereto made in the
ordinary
course of business between the date of this Agreement and the
Closing
Date, as hereafter defined (the "Personal Property").
(c) REAL ESTATE CONTRACTS. All of the leasehold
interests in real property leased by Seller and used by the
Station,
including all material agreements, leases, and contracts of
Seller
relating to the tower, transmitter, studio site, and offices of
the
Station (the "Real Estate Contracts"), as described in Section
1.1(c) of
the Disclosure Schedule. Buyer shall assume, pay and perform all
obligations under such Real Estate Contracts arising after the
Closing
Date.
(d) INTELLECTUAL PROPERTY. All of Seller's
right, title
and interest in all trade names, copyrights, trademarks, service
marks,
slogan, logos, patents, patent applications or other similar
rights
relating to or used in the operation of the Station including,
but not
limited to, those listed in Section 1.1(d) of the Disclosure
Schedule,
together with any necessary additions or modifications thereto
between
the date hereof and the Closing Date (the "Intellectual
Property").
(e) LEASES AND CONTRACTS. All leases, contracts,
agreements and franchises relating to the operation of the
Station (other
than contracts for the sale of broadcast time and leases for real
property) listed and identified in Section 1.1(e) of the
Disclosure
Schedule and those leases, contracts, agreements and franchises
described
in Section 1.1(h) of this Agreement (the "Contracts"). Buyer
shall
assume, pay and perform all obligations under such Contracts
arising
after the Closing Date.
(f) CONTRACTS FOR SALE OF BROADCAST TIME. All
contracts
for the sale of broadcast time on the Station that are to be in
effect on
the Closing Date (the "Broadcast Agreements"), including any
contract for
the sale of time pursuant to which payment is to be received in
whole or
in part in services, merchandise or other non-cash considerations
("Trade
Agreements"). Broadcast Agreements in effect as of the date
hereof are
set forth on Section 1.1(f) of the Disclosure Schedule. Buyer
shall
assume, pay and perform all obligations under the Broadcast
Agreements
arising after the Closing Date, PROVIDED, HOWEVER, that Buyer
shall be
obligated to assume only those Broadcast Agreements and Trade
Agreements
that were entered into at the Station's then-prevailing rates and
that
have terms consistent with the Station's past practice in the
ordinary
course of business.
<PAGE>
Page 3
(g) OPERATING AND BUSINESS RECORDS. All files,
records,
logs, public file materials, engineering records, program
materials and
other business records of Seller pertaining to the operation of
the
Station, including but not limited to those required to be
maintained and
kept under the rules of the Commission, and such other files and
records
as Buyer shall reasonably require for the continuing business and
operation of the Station. Seller shall have the right to
reasonable
access to such business records that Seller delivers to Buyer
under this
Section 1.1(g) upon Seller's request for five years after the
Closing
Date.
(h) FUTURE CONTRACTS. All leases, contracts,
agreements
and franchises entered into between the date hereof and the
Closing Date
(the "Post-signing Contracts") in connection with the business
and
operation of the Station in accordance with the provisions of
Section 5.2.
(i) INVENTORY AND COMPUTER SOFTWARE. All of
Seller's
items of inventory related to the business of the Station,
including,
without limitation, broadcast programs, as well as all computer
software
used or useable by the Station.
(j) OTHER RIGHTS AND PRIVILEGES. Any and all
other
franchises, materials, supplies, easements, rights-of-way,
licenses, and
other rights and privileges of Seller relating to and used,
useable or
necessary in the operation of the Station.
(k) INTANGIBLE PROPERTY. All of Seller's right,
title
and interest in and to the goodwill and other intangible assets
used or
useful in or arising from the business of the Station, including
but not
limited to all customer lists, trade secrets, and sales,
operating and
business plans (the "Intangible Property").
1.2 EXCLUDED ASSETS. There shall be excluded from the
sale
transaction described herein the following assets relating to the
Station:
(a) CASH AND DEPOSITS. Cash-on-hand or in banks
(or
their equivalents) and other investments belonging to Seller.
(b) PROPERTY CONSUMED. All property of the
Station
disposed of or consumed (including ordinary wear and tear) in the
ordinary course of business between the date hereof and the
Closing Date.
(c) EXPIRED LEASES, CONTRACTS AND AGREEMENTS.
All
contracts described in Sections 1.1(e), (f) and (h) to the
Disclosure
Schedule that are terminated or will have expired prior to the
Closing
Date in the ordinary course of business.
<PAGE>
Page 4
(d) PENSION AND PROFIT-SHARING PLANS. All
pension and
profit-sharing plans, trusts established thereunder and assets
thereof,
if any, of Seller.
(e) OTHER ASSETS. Those assets, if any, listed
in
Section 1.2(g) of the Disclosure Schedule.
1.3 ACCOUNTS RECEIVABLE. Buyer agrees to purchase
from Seller
all outstanding accounts receivable of Seller that are less than
120 days
past due (the "Receivables") with regard to the operation of the
Station as
of the Closing Date for an amount (in addition to the Purchase
Price set forth
in Section 1.5) equal to eighty percent (80%) of the face value
of such
Receivables; PROVIDED, HOWEVER, that in the event Buyer collects
amounts in
excess of eighty percent (80%) of the stated amount of such
Receivables,
including receivables that are 120 days past due, during the six-
month period
following the Closing Date, Buyer shall remit to Seller an amount
equal
to fifty percent (50%) of such excess (the "Excess Receivable
Amounts").
The remittance of such excess shall be made within 15 days after
the end
of the six-month period in which such excess is collected
following the
Closing Date. Buyer shall use commercially reasonable efforts to
collect
the Receivables and shall provide Seller with monthly reports in
respect
of the collection of such Receivables for up to six months
following the
Closing Date.
1.4 LIABILITIES TO BE ASSUMED. Buyer assumes no
liabilities
or obligations of Seller of any nature whatsoever, contingent or
otherwise, except for post-closing obligations related to Real
Estate
Contracts, Contracts, Broadcasting Agreements, Trade Agreements
and Post-
signing Contracts (collectively, the "Assumed Contracts")
assigned to and
specifically assumed by Buyer.
1.5 PURCHASE PRICE. In consideration of Seller's
performance
of this Agreement and the sale, assignment, transfer, conveyance
and
delivery of the Station Assets to Buyer free and clear of all
liens and
encumbrances, Buyer shall pay to Seller on the Closing Date, by
wire
transfer, the sum of Two Million Seven Hundred Thousand Dollars
($2,700,000.00) (the "Purchase Price").
1.6 ALLOCATION OF PURCHASE PRICE. Buyer and Seller
agree that
the Purchase Price shall be allocated among the Station Assets
prior to
the Closing Date and to cooperate in all respects with regard to
such
allocation. Buyer and Seller agree to use such allocation in
completing
and filing Internal Revenue Service Form 8594 for federal income
tax
purposes. Buyer and Seller further agree that they shall not
take any
position inconsistent with such allocation upon examination of
any
return, in any refund claim, in any litigation, or otherwise. If
Buyer
and Seller are unable to agree on such allocation, they shall
hire an
<PAGE>
Page 5
appraiser to make such allocation, the cost of which appraisal
shall be
borne equally by Seller and Buyer.
1.7 ESCROW DEPOSIT.
(a) As security for Buyer's failure to Close and
as an
inducement for Seller to perform its obligations hereunder Buyer
shall
deposit within five (5) days of the date of this Agreement with
W. Lawrence Patrick, Patrick Communications Corp., Ellicott City,
Maryland (the "Escrow Agent") in a separate account maintained
for such
purpose, an amount equal to $135,000 (the "Escrow Deposit") which
Escrow
Deposit shall be held and disbursed by the Escrow Agent as
follows:
(i) upon Closing, the Escrow Deposit shall be delivered to Seller
in
partial satisfaction of the amounts required to be paid by Buyer
to
Seller; (ii) in the event the Commission does not approve the
transaction
within the contracted time period the Escrow Deposit shall be
returned to
Buyer; and (iii) in the event the Commission does approve the
transaction, and the Closing does not take place after such
approval
because of a material default of Seller hereunder, or (iv)
subject to
Section 10.1, in all other events the Escrow Deposit shall be
delivered
to Seller; PROVIDED, HOWEVER, that the failure of Buyer to
deliver the
Escrow Deposit as contemplated herein shall render this Agreement
inoperative.
ARTICLE II
CLOSING AND TERMINATION
2.1 CLOSING. The purchase and sale of the Station
Assets
contemplated by this Agreement (the "Closing") shall take place
at 10:00
a.m. on a mutually agreed upon day within five (5) days after the
Commission's approval of the Assignment Application, as defined
in
Section 6.1 below, becomes a Final Order, or such other time and
at such
place as shall be mutually agreed upon by the parties (the
"Closing
Date"). For purposes of this Agreement, a "Final Order" shall
mean any
action of the Commission which has not been reversed, stayed,
enjoined,
set aside, annulled or suspended and with respect to which no
requests
are pending for administrative or judicial review,
reconsideration,
appeal or stay, and the time for filing any such requests and the
time
for the Commission to set aside the action on its own motion
shall have
expired. Buyer may, at its sole election, waive the requirement
that the
Commission's approval of the Assignment Application shall have
become a
Final Order.
2.2 TRANSACTIONS AT THE CLOSING.
(a) At the Closing, Seller shall deliver to Buyer
the
following:
<PAGE>
Page 6
(i) assignments of the Licenses and other
pertinent
authorizations transferring the same to the Buyer in
customary form
and substance;
(ii) the certificates contemplated by Sections
7.2,
7.3 and the affidavit contemplated by Section 3.22;
(iii) a copy of the resolutions of the board of
directors of Seller authorizing the execution, delivery and
performance of this Agreement and the Escrow Agreement, and
the
consummation of the transactions contemplated hereby and
thereby,
together with a certificate of the Secretary of Seller,
dated as of
the Closing Date, that such resolutions were duly adopted
and are in
full force and effect;
(iv) a bill of sale and all other appropriate
documents and instruments assigning to Buyer good and
marketable
title to the Station Assets free and clear of any security
interests, mortgages, liens, pledges, attachments,
conditional sales
contracts, claims, charges or encumbrances of any kind
whatsoever;
(v) written consents of the respective
lessors,
landowners, and any other persons or entities whose consents
may be
required to permit Seller to assign or Buyer to assume the
material
liabilities, contracts, leases, licenses, understandings and
agreements constituting the Assumed Contracts;
(vi) evidence satisfactory to Buyer's counsel
that no
financing statements or other liens or encumbrances are
outstanding
on the Station Assets;
(vii) all files, records, logs, and program
materials
relating to the Station;
(viii) the opinion of counsel for Seller, dated
the
Closing Date, as described in Section 7.5;
(ix) assignments to Buyer of all the Assumed
Contracts
(including assignment of the Real Estate Contracts in
recordable
form); and
(x) If the lease of the transmitter site has
not been
recorded prior to Closing, Seller shall deliver to Buyer at
closing
a memorandum thereof in recordable form executed by Seller
and the
landlord.
(xi) such other documents and instruments as
Buyer may
reasonably request to consummate the transactions
contemplated
hereby.
<PAGE>
Page 7
(b) At the Closing, Buyer shall deliver or cause
to be
delivered to Seller the following:
(i) the Purchase Price;
(ii) Eighty percent of the face value of the
Receivables, as described in Section 1.3;
(iii) a copy of the resolutions of the board of
directors of Buyer authorizing the execution, delivery and
performance of this Agreement, and the consummation of the
transactions contemplated hereby together with a certificate
of the
Secretary of Buyer dated as of Closing Date, that such
resolutions
were duly adopted and are in full force and effect;
(iv) the certificates contemplated by Sections
8.1 and
8.2;
(v) the opinion of counsel for Buyer, dated
the
Closing Date, as described in Section 8.4; and
(vi) such other documents and instruments as
Seller
may reasonably request to consummate the transactions
contemplated
hereby.
2.3 PRORATION OF INCOME AND EXPENSES. All income and
revenues
arising from the operations of the Station up to and including
11:59 p.m.
(the "Cut-Off Time") of the day prior to the Closing Date, and
all costs
and expenses arising from the operations of the Station up to and
including 11:59 p.m. of the operations of the day prior to the
Closing
Date, will be prorated between Buyer and Seller so that Seller
(a) shall
be entitled to receive all income and revenues and all refunds,
and
(b) shall be responsible for all expenses, costs, liabilities and
obligations allocable to the conduct of the business and the
operation of
the Station for the period prior to the Cut-Off Time; and Buyer
(x) shall
be entitled to receive all income and revenues and all refunds
and
(y) shall be responsible for all expenses, costs, liabilities and
obligations allocable to the conduct of the business and the
operation of
the Station for the period after the Cut-Off Time. All income
and
revenues and costs and expenses arising from the conduct of the
business
and operation of the Station shall be allocated to the period
during
which the service to which such income and revenue is
attributable was
performed. Items to be apportioned pursuant to this paragraph
shall
include the following:
(i) all personal property taxes, real estate
taxes, water
taxes, ad valorem, and other property taxes or assessments on or
with
respect to the assets and property interests to be transferred or
assigned to Buyer hereunder;
<PAGE>
Page 8
(ii) business and license fees including any FCC
Regulatory Fees (and any retroactive adjustments thereof), music
license
fees, commissions, wages, salaries and benefits of employees
(including
accruals up to the Cut-Off Time for insurance premiums, bonuses,
commissions, sick pay, vacation and severance pay and the like
and
related payroll taxes) and similarly prepaid and deferred items;
(iii) liabilities and obligations under all
Broadcast
Agreements and any negative balances under the Trade Agreements
to be
assigned and assumed hereunder;
(iv) sewer rents and charges for water,
electricity and
other utility expenses and fuel;
(v) property and equipment rentals, applicable
copyright
or other fees, sales and other charges; and
(vi) rents, additional rents and similar prepaid
and
deferred items, taxes and other items payable under any lease,
contract,
commitment or other agreement or arrangement to be assigned and
assumed
hereunder and all other income and expenses attributable to the
ownership
and operation of the Station.
Taxes to be apportioned pursuant to this Section 2.3 shall be
apportioned
in proportion to (x) the number of days in the taxable period
before and
including the Cut-Off Time and (y) the number of days in the
taxable
period after the Cut-Off Time. No apportionment shall be made
pursuant
to this Section of any federal, state, foreign or local income
taxes.
Any tax refunds or rebates accruing before the Cut-Off Time for
taxes
that were paid prior to Closing shall remain the property of
Seller,
whether such refund is paid before or after the Closing Date.
(a) TIME FOR PAYMENT. The prorations and
adjustments
contemplated by this Section 2.3, to the extent practicable,
shall be
made on the Closing Date. Not less than three (3) Business Days
prior to
the Closing Date, Seller shall submit to Buyer a written estimate
of
adjustments and prorations to be made in accordance with this
Article.
Prior to the Closing, Buyer and Seller will attempt in good faith
to
agree on an amount of any adjustment and proration payment to be
made on
the Closing Date. As to those prorations and adjustments not
capable of
being ascertained on the Closing Date, an adjustment and
proration shall
be made within 90 days of the Closing Date.
(b) DISPUTE RESOLUTION. In the event of any
disputes
between the parties as to such adjustments, the amounts not in
dispute
shall nonetheless be paid at the time provided in Section 2.3(a)
and such
disputes shall be determined by an independent certified public
accountant
<PAGE>
Page 9
mutually acceptable to the parties whose determination shall
be final, and the fees and expenses of such accountant shall be
paid one-
half by Seller and one-half by Buyer.
2.4 TERMINATION.
(a) Notwithstanding anything to the contrary
contained in
this Agreement, this Agreement may be terminated at any time by:
(i) the mutual written consent of the parties
hereto;
(ii) either Buyer or Seller if the Closing
does not
occur before March 31, 1996, provided, however, that the
party
seeking termination under this Section 2.3(a)(ii) shall not
have
prevented the Closing from occurring;
(iii) either Buyer or Seller if the Assignment
Application is not granted within nine (9) months from the
date the
Form 314 is placed on Commission public notice (through no
fault of
the terminating party) or is denied by the Commission by a
Final
Order or is designated for hearing by the Commission;
(iv) Buyer, if any of the conditions set forth
in
Article VII shall have become incapable of fulfillment, and
shall
not have been waived by Buyer, of if Seller shall have
breached in
any material respect any of its representations, warranties
or
obligations hereunder and such breach shall not have been
cured in
all material respects or waived prior to the earlier of the
Closing
and fifteen (15) days after the Buyer has given notice to
Seller of
such breach; or
(v) Seller, if any of the conditions set
forth in
Article VIII shall have become incapable of fulfillment, and
shall
not have been waived by Seller, or if Buyer shall have
breached in
any material respect any of its representations, warranties
or
obligations hereunder and such breach shall not have been
cured in
all material respects or waived prior to the earlier of
Closing and
fifteen (15) days after the Buyer has given notice to Seller
of such
breach.
(b) In the event of the termination of this
Agreement by
Buyer or Seller pursuant to this Section 2.4, written notice
thereof
shall promptly be given to the other party and, except as
otherwise
provided herein, the transactions contemplated by this Agreement
shall be
terminated, without further action by any party. Nothing in this
Section
2.4 shall be deemed to release any party from any liability for
any
breach by such party of the
<PAGE>
Page 10
terms and provisions of this Agreement or to impair the right of
Buyer to
compel specific performance of Seller of its obligations under
this
Agreement.
(c) A party shall be deemed to be in default
under this
Agreement only if such party has materially breached or failed to
perform
its obligations hereunder, and non-material breaches or failures
shall
not be grounds for declaring a party to be in default, postponing
the
Closing, or terminating this Agreement.
(d) The time for Commission approval provided in
Section
2.4(a)(iii) notwithstanding, either party may terminate this
Agreement
upon written notice to the other, if, for any reason, the
Assignment
Application is designated for hearing by the Commission,
PROVIDED,
HOWEVER, that written notice of termination must be given within
twenty
(20) days after release of the Hearing Designation Order and that
the
party giving such notice is not in default and has otherwise
complied
with its obligations under this Agreement. Upon termination
pursuant to
this Section, the parties shall be released and discharged from
any
further obligation hereunder and the Escrow Deposit shall be
returned to
the Buyer.
(e) It is further PROVIDED, HOWEVER, that no
party may
terminate this Agreement if such party is in default hereunder,
or if a
delay in any decision or determination by the Commission
respecting the
Assignment Application has been caused or materially contributed
to
(i) by any failure of such party to furnish, file or make
available to
the Commission information within its control; (ii) by the
willful
furnishing by such party of incorrect, inaccurate or incomplete
information to the Commission; and (iii) by any other action
taken by
such party for the purpose of delaying the Commission's decision
or
determination respecting the Assignment Application. Upon such
termination for failure of the Commission to act, the parties
shall be
released and discharged from any further obligation hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows:
3.1 DUE INCORPORATION. Seller is a corporation duly
organized, validly existing and in good standing under the laws
of the
State of Delaware, and is duly qualified to do business in and is
in good
standing in the State of New Jersey. Seller has the corporate
power and
authority to own and to operate the Station and the Station
Assets.
<PAGE>
Page 11
3.2 AUTHORITY; NO CONFLICT. The execution and
delivery of
this Agreement and the Escrow Agreement have been duly and
validly
authorized and approved by the board of directors of Seller, and
Seller
has the corporate power and authority to execute, deliver and
perform
this Agreement and the Escrow Agreement and to consummate the
transactions contemplated hereby and thereby. Neither such
execution,
delivery or performance nor compliance by Seller with the terms
and
provisions hereof, or with respect to the Escrow Agreement, will
(assuming receipt of all necessary approvals from the Commission)
conflict with or result in a breach of any of the terms,
conditions or
provisions of (a) the Certificate of Incorporation or Bylaws of
Seller,(b) any law, judgment, order, injunction, decree,
regulation or
ruling of any court or other governmental authority to which
Seller is
subject or applicable to Seller or the Station, or (c) any
material
agreement, lease or contract, written or oral, to which Seller is
subject. This Agreement shall constitute the valid and binding
obligation of Seller with respect to the terms hereof,
enforceable in
accordance with its terms subject to Commission approval of the
transactions contemplated hereby.
3.3 GOVERNMENT AUTHORIZATIONS. Section 1.1(a) of the
Disclosure Schedule contains a true and complete list of all the
Licenses, which Licenses and government authorizations of any
kind held
or used in the operation of the Station all of which are
sufficient for
the lawful conduct of the business and operation of the Station
in the
manner and to the full extent they are currently conducted.
Seller is
the authorized legal holder of the Licenses, none of which is
subject to
any restriction or condition which would limit in any material
respect
the full operation of the Station as now operated. There are no
material
applications, complaints or proceedings pending or, to the best
of
Seller's knowledge, threatened as of the date hereof before the
Commission or any other governmental authority relating to the
business
or operations of the Station, other than proceedings which
generally
affect the broadcasting industry as a whole, and other than
reports and
forms filed in the ordinary course of the Station's business.
Seller has
delivered to Buyer true and complete copies of the Licenses,
including
any and all material additions, amendments and other
modifications
thereto. The Licenses and authorizations are in good standing,
are in
full force and effect and are unimpaired by any act or omission
of Seller
or its officers, directors or employees; and the operation of the
Station
is in accordance with the Licenses and the underlying
construction
permits. No proceedings are pending or, to the knowledge of
Seller, are
threatened which may result in the revocation, modification, non-
renewal
or suspension of any of the Licenses, the denial of any pending
applications, the issuance of any cease and desist order, the
imposition
of any administrative actions by the Commission with respect
<PAGE>
Page 12
to the Licenses or which may affect Buyer's ability to continue
to operate
the Station as it is currently operated. Seller has taken no
action which,
to its knowledge, could lead to revocation or non-renewal of the
Licenses, nor omitted to take any action which, by reason of its
omission, could lead to revocation of the Licenses. All material
reports, forms and statements required to be filed with the
Commission
with respect to the Station since Seller has owned WAYV(FM) have
been
filed and are complete and accurate. Without limiting the
generality of
the foregoing, all ownership reports, renewal applications, equal
employment opportunity reports and other reports and documents
required
to be filed by Seller with the FCC have been properly filed. To
the best
of Seller's knowledge no proceedings are now pending before any
governmental authority with respect to the Station. Since Seller
has
owned WAYV(FM) the FCC's renewal of the Station Licenses has not
been
challenged by a petition to deny, or by a competing application.
Seller
has not entered into any agreement with any community group,
governmental
authority or other third party restricting programming or other
aspects
of the operation of the Station which would or could restrict
Buyer's
discretion to operate the Station when licensed to Buyer, and
there has
been no material dispute with any community group, governmental
authority
or other third party as to the manner of operation of the
Station.
Seller knows no facts relating to the Station that would cause
the FCC to
deny its consent to the assignment of the Station Licenses to
Buyer
hereunder. To the knowledge of Seller, there are no material
facts
which, under the Communications Act of 1934, as amended, or the
existing
rules and regulations of the Commission, would disqualify Seller
as
assignor, in connection with the Assignment Application.
For purposed of this Section, the term "material" shall
mean
any application, complaint, petition, or other proceeding which
could
result in a fine, forfeiture, short term renewal or revocation or
non-
renewal of the Licenses or otherwise imperil the Licenses.
3.4 COMPLIANCE WITH REGULATIONS. The operation of the
Station
is in compliance in all material respects with (i) all standards
of good
engineering practice, (ii) all applicable engineering standards
required
to be met under Commission rules, and (iii) all other applicable
rules,
regulations, requirements and policies of the Commission and all
other
applicable governmental authorities, including, but not limited
to, ANSI
Radiation Standards, to the extent required to be met under
applicable
Commission rules and regulations; and there are no existing
material
claims, citation or notice of any governmental authority known to
Seller
to the contrary.
3.5 PERSONAL PROPERTY. Except for those assets
subject to
lease agreements, Seller owns and has good and
<PAGE>
Page 13
marketable title in all material respects to the Personal
Property, and none
of the Personal Property on the Closing Date will be subject to
any security
interest, mortgage, pledge, conditional sales agreement or other
lien or
encumbrance. The Personal Property is all the tangible personal
property
used in or necessary for the lawful operation of the Station as
presently
operated by Seller. Except as specifically indicated to the
contrary in
Section 1.1(b) of the Disclosure Schedule, all Personal Property
is
serviceable and in good operating condition (reasonable wear and
tear
excepted). All items of transmitting and studio equipment
included in
the Personal Property (i) have been maintained in a manner
consistent
with generally accepted standards of good engineering practice
and
(ii) permit the Station to operate in accordance with the terms
of the
Licenses.
3.6 REAL PROPERTY. Neither Seller nor any affiliate
of Seller
owns any real property used in connection with the operation of
the
Station.
3.7 REAL ESTATE CONTRACTS.
(a) Section 1.1(c) of the Disclosure Schedule
contains a
true and complete list and summary of all the Real Estate
Contracts.
Seller has a valid leasehold interest in the real property
subject to the
Real Estate contracts. The present use by the Station of all
real
property leased pursuant to the Real Estate Contracts conforms in
all
material respects with all applicable building, zoning, land use,
environmental and other laws, ordinances, codes, orders and
regulations,
and, to the knowledge of Seller, all other governmental
regulations.
(b) As of the date hereof, Seller has complied
in all
material respects with all of the Real Estate Contracts and has
not
received or given written notice of any default thereunder from
or to any
of the other parties thereto. Seller shall use reasonable
efforts to
obtain valid and binding third-party consents, if any are
necessary, from
all required third parties to the Real Estate Contracts to be
conveyed
and assigned to Buyer as part of the Station Assets.
(c) The real property subject to the Real Estate
Contracts is all of the real property used in or necessary for
the lawful
operation of the Station as presently operated by Seller. Seller
has
and, after Closing, Buyer will have, full legal and practical
access to
such real property. There are no encroachments upon such real
property
by any buildings, structures, or improvements located on
adjoining real
estate. None of the buildings, structures, or improvements that
are
constructed on the real property and used in the present
operation of the
Station (including without limitation all guy wires and guy
anchors)
encroaches upon adjoining real estate, and all
<PAGE>
Page 14
such buildings, structures, and improvements are constructed in
conformity
with all "set-back" lines, easements and other restrictions or
rights of
record, and all applicable building or safety codes and zoning
ordinances.
There are no pending or, to the best of Seller's knowledge,
threatened
condemnation or eminent domain proceedings that may affect such
real property.
To the best of Seller's knowledge, there are no structural
defects in the
towers, buildings, structures and other improvements located on
such real
property that are used in the operation of the Station. The Real
Estate
Contracts (or memoranda thereof) have been duly recorded in the
land
records of the jurisdictions where such real estate is located,
or will
be so recorded prior to Closing.
3.8 CONSENTS. No consent, approval, authorization or
order
of, or registration, qualification or filing with, any court,
regulatory
authority or other governmental body is required for the
execution,
delivery and performance by Seller of this Agreement or the
Escrow
Agreement to which it is a party, other than approval by the
Commission
of the Assignment Application as contemplated hereby. Except as
set
forth in Section 3.8 of the Disclosure Schedule, no consent of
any other
party (including, without limitation, any party to any Real
Estate
Contract or Contract) is required for the execution, delivery and
performance by Seller of this Agreement or the Escrow Agreement.
3.9 CONTRACTS. Section 1.1(e) of the Disclosure
Schedule
contains a true and complete list of all material Contracts, and
Section
1.1(f) contains a true and complete list of all Broadcast
Agreements,
Trade Agreements and Post-signing Contracts. Seller has
delivered to
Buyer true and complete copies of all written Contracts,
Broadcast
Agreements, Trade Agreements and Post-signing Contracts in the
possession
of Seller, including any and all amendments and other
modifications to
same. As of the date hereof, all of the Assumed Contracts are in
full
force and effect. Seller has complied in all material respects
with all
the Assumed Contracts, and to the knowledge of Seller no other
contracting party is in material default under any of same. The
Assumed
Contracts include all agreements to which Seller is a party or by
which
it is bound relating to the ownership or operation of the
Station.
3.10 ENVIRONMENTAL. As of the date hereof, Seller has
not
unlawfully disposed of any Hazardous Waste in a manner which has
caused,
or could cause, Buyer to incur a material liability under
applicable law
in connection therewith; and Seller warrants that the technical
equipment
included in the Personal Property does not contain any Hazardous
Waste,
including any Polychlorinated Biphenyls ("PCBs") that are
required by law
to be removed, or if any equipment does contain Hazardous Waste,
including any PCBs, that such equipment is stored
<PAGE>
Page 15
and maintained in compliance with applicable law. As of the date
hereof,
Seller has complied in all material respects with all federal,
state and
local environmental laws, rules and regulations applicable to the
Station
and its operations, including but not limited to the Commission's
guidelines
regarding RF radiation. Without limiting the generality of the
foregoing, (i) no Hazardous Waste has been disposed of by Seller
on the
real property subject to the Real Estate Contracts, (ii) no
"underground
storage tank" (as that term is defined in regulations promulgated
by the
federal Environmental Protection Agency) is used in the operation
of the
Station or is located on such real property; (iii) to the best of
Seller's knowledge, no Hazardous Waste is located on or about
such real
property and such real property has not previously been used for
the
manufacture, refining, treatment, storage, or disposal of any
Hazardous
Waste; (iv) to the best of Seller's knowledge, none of the soil,
ground
water, or surface water of such real property is contaminated by
any
Hazardous Waste and there is no reasonable potential for such
contamination from neighboring real estate, (v) to the best of
Seller's
knowledge, no Hazardous Waste is being emitted, discharged or
released
from such real property, directly or indirectly, into the
environment;
and (vi) to the best of Seller's knowledge, Seller is not liable
for
cleanup or response costs with respect to any present or past
emission,
discharge, or release of any Hazardous Waste. As used herein,
the term
"Hazardous Waste" shall mean all materials regulated by any
federal,
state, local or foreign laws relating to pollution or protection
of human
health or the environment (including, without limitation, ambient
air,
surface water, ground water, land surface or subsurface strata).
If
Seller learns between the date of this Agreement and the Closing
Date
that Seller is in breach of the representation and warranty set
forth in
this Section 3.10, Seller shall begin remedial action promptly
and shall
use reasonable best efforts to complete such remedial action to
the
satisfaction of Buyer before the Closing Date. Buyer shall not
be
obligated to close until any such condition is corrected.
3.11 INTELLECTUAL PROPERTY. Section 3.11 of the
Disclosure
Schedule is a true and complete list of all the material
Intellectual
Property used in connection with the operation of the Station,
all of
which are in good standing and uncontested. Such Intellectual
Property
has been duly registered in, filed with, or issued by the
appropriate
offices within all jurisdictions where such registration, filing
or
issuance is necessary to protect such Intellectual Property from
infringement, including, without limitation, the United States
Copyright
Office and the United States Patent and Trademark Office. Seller
has not
granted any license or other rights with respect to such
Intellectual
Property. Seller has not received any written notice and has no
knowledge of any infringement or unlawful use of the Intellectual
Property and Seller has not
<PAGE>
Page 16
violated or infringed any patent, trademark, trade secret or
copyright held by
others or any license, authorization or permit held by it.
3.12 FINANCIAL STATEMENTS. Section 3.12 of the
Disclosure
Schedule contains a copy of the unaudited statements of income,
and the
related balance sheets for Seller for the period after Seller
acquired
the Station through April 30, 1995 (the "Financial Statements").
The
Financial Statements have been prepared in all material respects
in
accordance with generally accepted accounting principles and in
accordance with the policies and procedures of the Seller
applicable
thereto, consistently applied. The Financial Statements present
fairly
the financial condition and results of operations of the Station
for the
periods indicated in all material respects.
3.13 PERSONNEL INFORMATION; LABOR CONTRACTS.
(a) Section 3.13 of the Disclosure Schedule
contains a
true and complete list of all persons employed at the Station as
of the
date hereof, including the date of hire, a description of
material
compensation arrangements and a list of any and all material
agreements
affecting such persons. Seller has provided Buyer with copies of
all
such agreements.
(b) Seller is not a party to any contract with
any labor
organization, nor has Seller agreed to recognize any union or
other
collective bargaining unit, nor has any union or other collective
bargaining unit been certified as representing any of Seller's
employees.
Seller has no knowledge of any organizational effort currently
being made
or threatened by or on behalf of any labor union with respect to
employees of the Station. During the past two years, Seller has
not
experienced any strikes, work stoppages, grievance proceedings,
claims of
unfair labor practices filed, or other significant labor
difficulties of
any nature.
(c) Seller has complied in all material respects
with
all laws relating to the employment of labor, including, without
limitation, the Employee Retirement Income Security Act of 1974,
as
amended ("ERISA"), and those laws relating to wages, hours,
collective
bargaining, unemployment insurance, workers' compensation, equal
employment opportunity and the payment and withholding of taxes.
3.14 EMPLOYEE BENEFIT PLANS. Seller maintains no
employee
benefit plan (as that term is defined in Section 3(3) of ERISA).
3.15 LITIGATION. Except as set forth in Section 3.15
of the
Disclosure Schedule, Seller is not subject to any judgment,
award, order,
writ, injunction,
<PAGE>
Page 17
arbitration decision or decree, and there is no litigation,
proceeding or
investigation pending or, to the best of Seller's knowledge,
threatened
against Seller or the Station in any federal, state or local
court, or before
any administrative agency or arbitrator (including, without
limitation, any
proceeding which seeks the forfeiture of, or opposes the renewal
of, any of
the Licenses), or before any other tribunal duly authorized to
resolve
disputes, which would reasonably be expected to have any material
adverse
effect upon the Station Assets or which seeks to enjoin or
prohibit, or
otherwise questions the validity of, any action taken or to be
taken
pursuant to or in connection with this Agreement. In particular,
but
without limiting the generality of the foregoing, except as set
forth in
Section 3.15 of the Disclosure Schedule, there are no
applications, complaints
or proceedings pending or, to the best of Seller's knowledge,
threatened
before the Commission or any other governmental organization with
respect
to the business or operation of the Station which would
reasonably be
expected to have any material adverse effect upon the Station
Assets,
other than applications, complaints or proceedings which affect
the broadcast
industry generally.
3.16 COMPLIANCE WITH LAWS. Seller is in compliance in
all
material respects with, and has not received any notice asserting
any
non-compliance with, any applicable statute, rule or regulation
(federal,
state or local) whether or not related to the business or
operation of
the Station, non-compliance with which would have a material
adverse
effect on the Station Assets. Seller is not in default with
respect to
any judgment, order, injunction or decree of any court,
administrative
agency or other governmental authority or to any other tribunal
duly
authorized to resolve disputes in any respect material to the
transactions contemplated hereby. Neither any shareholder of
Seller or
any entity which shares an officer, director, shareholder or
partner with
Seller, nor any parent or subsidiary corporation of Seller has
had an
adverse finding made or final action taken by any court or
administrative
body in a civil or criminal preceding relating to (1) a felony,
(2) a
mass media related antitrust or unfair competition claim, (3)
criminal
violations involving false statements or dishonesty,
(4) misrepresentation to any governmental unit resulting in civil
or
criminal violations, or (5) employment discrimination, nor to the
best of
Seller's knowledge is any such proceeding threatened or in
progress.
3.17 INSURANCE. Section 3.17 of the Disclosure
Schedule
contains a true and complete list of all Seller's insurance
policies.
All such policies are in full force and effect and Seller has
received no
notice of cancellation with respect thereto.
<PAGE>
Page 18
3.18 INSTRUMENTS OF CONVEYANCE; GOOD TITLE. The
instruments
to be executed by Seller and delivered to Buyer at Closing,
conveying the
Station Assets to Buyer, will be in a form sufficient to transfer
good
and marketable title to the Station Assets free and clear of all
liens,
pledges, collateral assignments, security interests, capital or
financing
leases, easements, covenants, restrictions and encumbrances or
other
defects of title except: (i) the lien of any real estate or
personal
property taxes that will not become due until after the Closing
Date and
that will be prorated between Seller and Buyer; and (ii) the
permitted
encumbrances listed in Section 3.18 of the Disclosure Schedule
(the
"Permitted Encumbrances").
3.19 ABSENCE OF CERTAIN CHANGES. Except as disclosed
in
Section 3.19 of the Disclosure Schedule, between the Balance
Sheet Date
and the date of this Agreement there has not been:
(a) Any material adverse change in the Station
Assets;
(b) Any change in the manner in which Seller
conducts
its business and operations other than changes in the ordinary
and usual
course of business consistent with past practice;
(c) Any amendment to the Certificate of
Incorporation or
Bylaws of Seller;
(d) Any material contract or commitment, to
which Seller
is a party, entered into, modified or terminated, except in the
ordinary
and usual course of business;
(e) Any creation or assumption of any mortgage,
pledge
or other lien or encumbrance upon any of the Station Assets
except in the
ordinary and usual course of business;
(f) Any sale, assignment, lease, transfer, or
other
disposition of any of the Station Assets, except in the ordinary
and
usual course of business;
(g) The incurring of any material liabilities or
obligations, except items incurred in the ordinary and usual
course of
business; for purposes of this Section, loss or damage shall be
deemed
"material" if the reasonable cost to repair, replace, or restore
the lost
or damaged property exceeds Five Thousand Dollars ($5,000.00).
(h) The write-off or determination to write off
as
uncollectible any accounts receivable or portion thereof, except
for
write-offs in the ordinary course of business consistent with
past
practice;
<PAGE>
Page 19
(i) The cancellation of any debts or claims, or
waiver
of any rights, having an aggregate value in excess of $10,000;
(j) The disposition, lapse or termination of any
Intellectual Property;
(k) The increase or promise to increase the rate
of
commissions, fixed salary or wages, draw, bonus or other
compensation
payable to any employee of Seller, except in the ordinary and
usual
course of business consistent with past practice; or
(l) Any change in any method of accounting or
accounting
practice used by Seller.
3.20 INSOLVENCY PROCEEDINGS. No insolvency
proceedings of any
character including, without limitation, bankruptcy,
receivership,
reorganization, composition or arrangement with creditors,
voluntary or
involuntary, affecting Seller or the Station Assets are pending
or, to
Seller's knowledge, threatened, and Seller has made no assignment
for the
benefit of creditors, nor taken any action with a view to, or
which would
constitute the basis for, the institution of any such insolvency
proceedings.
3.21 LOCATION OF ASSETS. The addresses of Seller's
chief
executive office and all of Seller's additional places of
business, and
of all places where any of the tangible personal property
included in the
Station Assets is now located, or has been located during the
past six
(6) months, are listed in Section 3.21 of the Disclosure
Schedule.
Except as set forth in Section 3.21 of the Disclosure Schedule,
during
the past five (5) years, Seller has not nor, to the best of
Seller's
knowledge, has any prior owner of the Station been known by or
used any
corporate, partnership, fictitious or other name in the conduct
of the
Station's business or in connection with the use or operation of
the
Station Assets.
3.22 CITIZENSHIP. Seller is not a "foreign person" as
defined
in Section 1445(f)(3) of the Internal Revenue Code. On the
Closing Date,
Seller will deliver to Buyer an affidavit to that effect,
verified as
true and sworn to under penalty of perjury by a duly authorized
officer
of Seller. The affidavit shall also set forth Seller's name,
address,
taxpayer identification number, and such additional information
as may be
required to exempt the Transaction from the withholding
provisions of
Section 1445 of the Internal Revenue Code. Buyer shall have the
right to
furnish copies of the affidavit to the Internal Revenue Service.
<PAGE>
Page 20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 DUE INCORPORATION. Buyer is a corporation duly
organized,
validly existing and in good standing under the laws of the State
of
Delaware, and as of the Closing Date shall be duly qualified to
do
business in and be in good standing in the State of New Jersey.
4.2 AUTHORITY; NO CONFLICT. The execution and
delivery of
this Agreement and the Escrow Agreement have been duly and
validly
authorized and approved by the board of directors of Buyer, and
Buyer has
the corporate power and authority to execute, deliver and perform
this
Agreement and the Escrow Agreement and to consummate the
transactions
contemplated hereby and thereby. The execution, delivery,
performance
hereof, and compliance by Buyer with the terms and provisions
hereof, or
with respect to the Escrow Agreement, thereof, will not (assuming
receipt
of all necessary approvals from the Commission) conflict with or
result
in a breach of any of the terms, conditions or provisions of (a)
the
Certificate of Incorporation or Bylaws of Buyer, (b) any
judgment, order,
injunction, decree, regulation or ruling of any court or other
governmental authority to which Buyer is subject, or (c) any
material
agreement, lease or contract, written or oral, to which Buyer is
subject.
This Agreement will constitute the valid and binding obligation
of Buyer
with respect to the terms hereof, subject to Commission approval
of the
transactions contemplated hereby.
4.3 CONSENTS. No consent, approval, authorization or
order
of, or registration, qualification or filing with, any court,
regulatory
authority or other governmental body is required for the
execution,
delivery and performance by Buyer of this Agreement or the Escrow
Agreement, other than the approval by the Commission of the
Assignment
Application as contemplated hereby. Except as set forth in
Section 4.3
of the Disclosure Schedule, no consent of any other party is
required for
the execution, delivery and performance by Buyer of this
Agreement or the
Escrow Agreement.
4.4 LITIGATION. There is no litigation, proceeding or
investigation pending or, to the best of Buyer's knowledge,
threatened
against Buyer in any federal, state or local court, or before any
administrative agency or arbitrator, or before any other tribunal
duly
authorized to resolve disputes, that would reasonably be expected
to have
any material adverse effect upon the ability of Buyer to perform
its
obligations hereunder, or that seeks to enjoin or prohibit, or
otherwise
questions the validity of,
<PAGE>
Page 21
any action taken or to be taken pursuant to or in connection with
this
Agreement.
4.5 COMPLIANCE WITH LAWS. Buyer is not in default
with
respect to any judgment, order, injunction or decree of any
court,
administrative agency or other governmental authority or of any
other
tribunal duly authorized to resolve disputes in any respect
material to
the transactions contemplated hereby. Buyer is not in violation
of any
law, regulation or governmental order, the violation of which
would have
a material adverse effect on Buyer's ability to perform its
obligations
pursuant to this Agreement.
4.6 QUALIFICATION. To the best of Buyer's knowledge,
Buyer is
legally, technically and financially qualified to be the assignee
of the
Licenses and the other Station Assets, and, prior to the Closing
Date,
Buyer will exercise its best efforts to refrain from doing any
act which
would disqualify Buyer from being the assignee of the Licenses
and the
other Station Assets.
4.7 FINANCING. Buyer possesses adequate financial
resources
necessary to fund the transactions contemplated by this
Agreement.
ARTICLE V
COVENANTS OF SELLER
Between the date of this Agreement and the Closing
Date, Seller
shall have complete control of the Station and its operations,
and Seller
covenants as follows with respect to such period:
5.1 CONTINUED OPERATION OF STATION. Seller shall
continue to
operate the Station under the terms of the Licenses in the manner
in
which the Station has been operated heretofore, in the usual and
ordinary
course of business, in conformity with all material applicable
laws,
ordinances, regulations, rules and orders, and in a manner so as
to
preserve and foster the goodwill and business relationships of
the
Station and Seller, including, without limitation, relationships
with
advertisers, suppliers, customers, and employees. Seller shall
file with
the Commission and any other applicable governmental authority
all
material applications and other documents required to be filed in
connection with the continued operation of the Station.
5.2 FINANCIAL OBLIGATIONS. Seller shall continue to
conduct
the financial operations of the Station, including its credit and
collection policies, in the ordinary course of business with the
same
effort, to the same extent, and in the same manner, as in the
prior
<PAGE>
Page 22
conduct of the business of the Station; and shall continue to pay
and
satisfy all expenses, liabilities and obligations arising in the
ordinary
course of business in accordance with past accounting practices.
Seller
shall not enter into or amend any contracts or commitments
involving
expenditures by Seller in an aggregate amount in excess of
$10,000
without the prior written consent of Buyer.
5.3 REASONABLE ACCESS. Seller shall provide Buyer,
and
representatives of Buyer, with reasonable access during normal
business
hours to the Station and shall furnish such additional
information
concerning the Station as Buyer from time to time may reasonably
request.
5.4 MAINTENANCE OF ASSETS. Seller shall maintain the
Personal
Property and all other tangible assets in their present good
operating
condition, repair and order, reasonable wear and tear in ordinary
usage
excepted. Seller shall not waive or cancel any claims or rights
of
substantial value, transfer or otherwise dispose of any Personal
Property, or permit to lapse or dispose of any right to the use
of any
Intellectual Property.
5.5 NOTIFICATION OF DEVELOPMENTS. Seller shall notify
Buyer
of any problems or developments with respect to the Station
Assets or
operation of the Station; and provide Buyer with prompt written
notice of
any change in any of the information contained in the
representations and
warranties made herein or in the Disclosure Schedule or any other
documents delivered in connection with this Agreement.
5.6 UPDATED FINANCIAL STATEMENTS. As soon as
practicable but
in any event within 21 days of the end of each month, Seller
shall, at
its own expense, deliver to Buyer an unaudited statement of
revenue and
expenses of the Station for the month then ended. Such statement
shall
be true and complete to the best of Seller's knowledge, and shall
fairly
represent the results of the operation of the Station for the
period
covered by such statement.
5.7 ENCUMBRANCES. Seller shall not suffer or permit
the
creation of any mortgage, conditional sales agreement, security
interest,
lease, lien, hypothecation, deed of trust or pledge, encumbrance,
restriction, liability, charge, or imperfection of title with
respect to
the Station Assets.
5.8 ASSIGNMENT OF ASSETS. Seller shall not sell,
assign,
lease or otherwise transfer or dispose of any Station Assets,
whether now
owned or hereafter acquired, except for retirements in the normal
and
usual course of business or in connection with the acquisition of
similar
property or assets, as provided for herein.
<PAGE>
Page 23
5.9 COMMISSION LICENSES AND AUTHORIZATIONS. Seller
shall not
by any act or omission surrender, modify adversely, forfeit or
fail to
renew under regular terms the Licenses, cause the Commission or
any other
governmental authority to institute any proceeding for the
revocation,
suspension or modification of any such License, or fail to
prosecute with
due diligence any pending applications with respect to the
Licenses at
the Commission or any other applicable governmental authority.
5.10 TECHNICAL EQUIPMENT. Seller shall repair,
maintain or
replace, as necessary, the technical equipment transferred
hereunder in
accordance with the normal standards of maintenance applicable in
the
broadcast industry.
5.11 COMPENSATION INCREASES. Seller shall not permit
any
increase in the rate of commissions, fixed salary or wages, draw
or other
compensation payable to any employees of Seller except in the
ordinary
course of business and shall notify Buyer of any such increase.
5.12 SALE OF BROADCAST TIME. Seller shall not enter
into,
extend or renew any Broadcast Agreement not consistent with the
usual and
ordinary course of business, provided, however, that Seller shall
not
enter into, extend or renew any Broadcast Agreement exceeding
$10,000 in
amount without the prior consent of Buyer unless such Broadcast
Agreement
is terminable on 30 days' notice. Seller shall not enter into
any Trade
Agreement exceeding $10,000 in the aggregate.
5.13 INSURANCE. Seller shall maintain at all times
between
the date hereof and the Closing Date, all policies listed in
Section 3.17
of the Disclosure Schedule or else replace such policies with
comparable
policies.
5.14 NEGOTIATIONS WITH THIRD PARTIES. Seller shall
not,
before Closing or the termination of this Agreement, enter into
discussions with respect to any sale or offer of the Station, any
Station
Assets or any stock of Seller to any third party, nor shall
Seller offer
the Station, any Station Assets or any stock of Seller to any
third
party.
5.15 THIRD PARTY CONSENTS. Seller shall use its
commercially
reasonable efforts to obtain the consents listed in Section 3.8
of the
Disclosure Schedule.
5.16 NORMAL OPERATION. Seller shall operate the
Station in
the normal and usual manner, consistent with the rules,
regulations, and
policies of the Commission, and conduct the Station's business
only in
the ordinary course. To the extent consistent with such
operations,
Seller shall use its reasonable efforts to: (i) maintain the
present
character and entertainment format of the Station and the
<PAGE>
Page 24
quality of its programs; (ii) preserve the present business
organization and
makeup of the Station; (iii) preserve the Station's present
customers, audience
rankings, and business relations; (iv) satisfy Seller's
obligations under
the Trade Agreements; and (v) continue to make expenditures and
engage in
activities designed to promote the Station and stimulate the
purchase of
advertising time on the Station in a manner consistent with
Seller's
practice during the twelve (12) month period immediately
preceding the
date of this Agreement.
ARTICLE VI
JOINT COVENANTS OF BUYER AND SELLER
Buyer and Seller covenant and agree that between the
date
hereof and the Closing Date, they shall act in accordance with
the
following:
6.1 ASSIGNMENT APPLICATION. As promptly as
practicable after
the date of this Agreement, and in no event later than ten (10)
days
after execution of this Agreement, Seller and Buyer shall join in
and
file an application on FCC Form 314 with the Commission
requesting its
consent to the assignment of the Licenses from Seller to Buyer
(the
"Assignment Application"). Seller and Buyer agree to prosecute
the
Assignment Application with all reasonable diligence and to use
their
best efforts to obtain prompt Commission grant of the Assignment
Application filed at the Commission.
6.2 PERFORMANCE. Buyer and Seller shall perform all
acts
required of them under this Agreement and refrain from taking or
omitting
to take any action that would violate their representations and
warranties hereunder or render same inaccurate as of the Closing
Date.
6.3 CONDITIONS. If any event should occur, either
within or
without the control of any party hereto, which would prevent
fulfillment
of the conditions placed upon the obligations of any party hereto
to
consummate the transactions contemplated by this Agreement, the
parties
hereto shall use their best efforts to cure the event as
expeditiously as
possible.
6.4 CONFIDENTIALITY. Buyer and Seller shall each keep
confidential all information they obtain with respect to any
other party
hereto in connection with this Agreement and the negotiations
preceding
this Agreement, and will use such information solely in
connection with
the transactions contemplated by this Agreement. If the
transactions
contemplated hereby are not consummated for any reason, each
party hereto
shall return to the party so providing, without retaining a copy
thereof,
any schedules, documents or other written information obtained
from the
party so
<PAGE>
Page 25
providing such information in connection with this Agreement and
the transactions contemplated hereby. Notwithstanding the
foregoing, no
party shall be required to keep confidential or return any
information
which (i) is known or available through other lawful sources,
(ii) is or
becomes publicly known through no fault of the receiving party or
its
agents, (iii) is required to be disclosed pursuant to an order or
request
of a judicial or governmental authority (provided the disclosing
party is
given reasonable prior notice), or (iv) is developed by the
receiving
party independently of the disclosure by the disclosing party.
6.5 COOPERATION. Buyer and Seller shall cooperate
fully and
with each other in taking any actions to obtain the required
consent of
any governmental instrumentality or any third party necessary or
helpful
to accomplish the transactions contemplated by this Agreement;
PROVIDED,
HOWEVER, that no party shall be required to take any action which
would
have a material adverse effect upon it or any entity affiliated
with it.
6.6 CONSENTS TO ASSIGNMENT. To the extent that any
Contract,
Broadcast Agreement, Trade Agreement, Real Estate Contract or
other
contract identified in the Disclosure Schedule that is to be
assigned
under this Agreement is not capable of being sold, assigned,
transferred,
delivered or subleased without the waiver or consent of any third
person
withholding same (including a government or governmental unit),
or if
such sale, assignment, transfer, delivery or sublease or
attempted sale,
transfer, delivery or sublease would constitute a breach thereof
or a
violation of any law or regulation, this Agreement and any
assignment
executed pursuant hereto shall not constitute a sale, assignment,
transfer, delivery or sublease or an attempted sale, assignment,
transfer, delivery or sublease thereof. In those cases where
consents,
assignments, releases and/or waivers have not been obtained at or
prior
to the Closing Date to the transfer and assignment to Buyer of
such
contracts, Buyer may in its sole discretion elect to have this
Agreement
and any assignments executed pursuant hereto, to the extent
permitted by
law, constitute an equitable assignment by Seller to Buyer of all
of
Seller's rights, benefits, title and interest in and to such
contracts,
and where necessary or appropriate, Buyer shall be deemed to be
Seller's
agent for the purpose of completing, fulfilling and discharging
all of
Seller's rights and liabilities arising after the Closing Date
under such
contracts. Seller shall use its reasonable best efforts to
provide Buyer
with the benefits of such contracts (including, without
limitation,
permitting Buyer to enforce any rights of Seller arising under
such
contracts), and Buyer shall, to the extent Buyer is provided with
the
benefits of such contracts, assume, perform and in due course pay
and
discharge all debts, obligations and liabilities of Seller under
such
contracts.
<PAGE>
Page 26
6.7 BULK SALES LAWS. Seller shall be responsible for
compliance with the provisions of the "bulk sales" or similar
laws of any
state applicable to this transaction. Seller agrees to indemnify
Buyer
and hold it harmless against any and all claims, losses, damages,
liabilities, costs and expenses incurred by Buyer or any
affiliate as a
result of any failure to comply with any "bulk sales" or similar
laws.
6.8 EMPLOYEE MATTERS. Until the Closing Date, all
Station's
employees remain the employees of the Seller and Seller shall
have full
authority and control over such employees and their actions, and
Buyer
shall not assume the status of an employer or a joint employer
of, or
incur or be subject to any liability or obligation of an employer
with
respect to, any such employees unless and until actually hired by
Buyer.
Seller shall comply with the provisions of the Worker Adjustment
and
Retraining and Notification Act and similar laws, if applicable,
and
shall be solely responsible for any and all liabilities,
penalties,
fines, or other sanctions that may be assessed or otherwise due
under
such laws on account of this transaction and the dismissal or
termination
of any Station employees by Seller, unless Buyer has not complied
with
its obligations hereunder. Buyer may, after Closing, employ
those of
Seller's employees as Buyer may elect on terms and conditions
determined
by Buyer in Buyer's sole discretion. Buyer shall, no later than
five (5)
business days before the statutory date for employee
notification,
deliver to Seller a list of those of Seller's employees Buyer
will
employ. Buyer shall credit each of those employees with his or
her
accrued vacation time and sick leave through the Closing Date,
and shall
receive a proration credit equal to the value of the accrued
vacation
time and sick leave so assumed by Buyer based upon those
employees' pay
rates as of the Closing Date. Seller shall remain solely
responsible for
all severance pay, accrued vacation time and sick leave of those
of
Seller's employees who do not enter into Buyer's employ after
Closing.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF BUYER
The performance of the obligations of the Buyer
hereunder is
subject, at the election of the Buyer, to the following
conditions
precedent:
7.1 COMMISSION APPROVALS. Notwithstanding anything
herein to
the contrary, the consummation of this Agreement is conditioned
upon
(a) the Commission shall have granted the Assignment Application
and such
grant shall have become a Final Order, and (b) compliance by the
parties
with the conditions, if any, imposed by the Commission in
connection with
the grant of the Assignment
<PAGE>
Page 27
Application (provided that neither party shall be required to
accept or comply
with any condition which would be unreasonably burdensome or
which would have
a materially adverse effect upon it). All required governmental
filings shall
have been made, and all requisite governmental approvals for the
consummation
of the transactions contemplated hereby shall have been granted
and become
Final Orders. The Licenses shall be in unconditional full force
and effect,
shall be valid for the balance of the current license term
applicable
generally to radio stations licensed to communities located in
the State
of New Jersey, and shall be unimpaired by any acts or omissions
of
Seller's employees or agents, or Seller.
7.2 PERFORMANCE. The Station Assets shall have been
transferred to Buyer by Seller, and all of the terms, conditions
and
covenants to be complied with or performed by Seller on or before
the
Closing Date shall have been duly complied with and performed in
all
material respects, and Buyer shall have received from Seller a
certificate or certificates to such effect, in form and substance
reasonably satisfactory to Buyer.
7.3 REPRESENTATIONS AND WARRANTIES. The
representations and
warranties of Seller to Buyer shall be true, complete and correct
in all
material respects as of the Closing Date with the same force and
effect
as if then made, and Buyer shall have received from Seller a
certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Buyer.
7.4 CONSENTS. Seller shall have received all consents
(including landlords' consents to the assignments of the leases
for the
studio and tower sites) specified in Section 3.8 of the
Disclosure
Schedule, such that Buyer will, after Closing, enjoy all of the
rights
and privileges of Seller under the Assumed Contracts subject only
to the
present obligations of Seller hereunder.
7.5 OPINIONS OF COUNSEL. Seller shall have delivered
to Buyer
an opinion of Paul, Weiss, Rifkind, Wharton & Garrison, counsel
to
Seller, in the form attached hereto as Exhibit A. In addition,
Seller
shall have delivered to Buyer a written opinion of Haley, Bader &
Potts,
Seller's FCC counsel, dated as of the Closing Date, in the form
attached
hereto as Exhibit B.
7.6 COVENANT NOT TO COMPETE. Seller shall have
obtained and
delivered to Buyer, executed agreements containing covenants not
to
compete from each of Frank D. Osborn and Atlantic City
Broadcasting Corp.
in the form attached hereto as Exhibit C.
<PAGE>
Page 28
7.7 CASH FLOW CONTINGENCY. Positive broadcast cash
flow (not
including any projected savings from duopoly operations) shall
have been
attained for the twelve (12) month period immediately preceding
the
Closing Date. For purposes of this provision, "cash flow" means
the net
income (loss) of the Station, excluding extraordinary items,
determined
in accordance with generally accepted accounting principles
applied on a
consistent basis, PLUS depreciation and amortization, interest
expense,
corporate overhead unrelated to Station operations, taxes on
income and
profits, non-recurring expenses, and all other non-cash charges,
LESS
interest and other non-Station non-operating issue income, and
all other
non-cash income. It is understood that unrelated Station
overhead and
the Osborn management fees are sums which are not necessary for
day-to-
day Station operation.
7.8 ENVIRONMENTAL AUDIT. Buyer shall have the right,
at
Buyer's option, to conduct a Phase I environmental assessment of
the real
property subject to the Real Property Contracts prior to Closing.
This
environmental assessment shall be conducted by a qualified
environmental
engineer or consulting firm in accordance with Part X of the
Federal
National Mortgage Association's Delegated Underwriting and
Servicing
Guide. In the event that Buyer elects to conduct such an
environmental
assessment, no environmental condition on or affecting such real
property
shall be revealed as a result of the environmental assessment
that would
either (i) materially impair the use of such real property for
the
continued operation of the Station as operated by Seller on the
Closing
Date, or (ii) subject Buyer to any material liability for fines,
penalties, or cleanup or response costs if Buyer consummates this
Agreement; PROVIDED HOWEVER, that this condition shall be deemed
satisfied if any such environmental condition is remedied prior
to
Closing. Buyer shall commission and pay for any environmental
assessments. Buyer's failure to commission the environmental
assessment
in time to permit its completion prior to the Closing Date shall
be
deemed a waiver of this condition and shall not be grounds for
terminating this Agreement or postponing the Closing.
7.9 OCCUPANCY CERTIFICATES. At Closing, Seller shall
deliver
to Buyer true and complete copies of any certificates of
occupancy,
certificates of land use compliance, or equivalent instruments
("Occupancy Certificates") issued by the appropriate governmental
authority, that are required to permit the present use of the
real
property subject to the Real Property Contracts by Seller prior
to
Closing and by Buyer after Closing. No proceedings to amend,
cancel, or
revoke any such Occupancy Certificates shall be pending or
threatened as
of the Closing Date. If no Occupancy Certificate is required to
continue
the present use of such real property after Closing, then Seller
shall
deliver to Buyer a written
<PAGE>
Page 29
opinion of Seller's counsel, dated the Closing Date, to that
effect, which
opinion shall explain why no occupancy certificate is required
and shall
include the citation of any applicable statute or regulation.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLER
The performance of the obligations of Seller hereunder
is
subject, at the election of Seller, to the following conditions
precedent:
8.1 PERFORMANCE. All of the terms, conditions and
covenants
to be complied with or performed by Buyer on or before the
Closing Date
shall have been duly complied with and performed in all material
respects, and Seller shall have received from Buyer a certificate
or
certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.2 REPRESENTATIONS AND WARRANTIES. The
representations and
warranties of Buyer to Seller shall be true, complete and correct
in all
material respects as of the Closing Date with the same force and
effect
as if then made, and Seller shall have received from Buyer a
certificate
or certificates to such effect, in form and substance reasonably
satisfactory to Seller.
8.3 GOVERNMENT APPROVALS. All required governmental
filings
shall have been made and all requisite governmental approvals for
the
consummation of the transactions contemplated hereby shall have
been
granted.
8.4 OPINION OF COUNSEL. Buyer shall have delivered to
Seller
an opinion of Pepper & Corazzini, counsel to Buyer, in the form
attached
hereto as Exhibit D.
8.5 ESCROW AGREEMENT. Seller and Buyer shall have
entered
into an Escrow Agreement substantially in the form attached
hereto as
Exhibit E.
ARTICLE IX
INDEMNIFICATION
9.1 INDEMNIFICATION BY SELLER. From and after the
Closing
Date, Seller agrees to and shall indemnify, defend and hold Buyer
harmless, and shall reimburse Buyer for and against any and all
actions,
losses, expenses, damages, liabilities, taxes, penalties or
assessments,
judgments and costs (including reasonable legal expenses related
thereto)
resulting from or arising out of any liabilities of any kind or
nature,
absolute or contingent,
<PAGE>
Page 30
relating to or arising from (i) any breach, misrepresentation, or
violation of
any of Seller's representations, warranties, covenants, or other
obligations
contained in this Agreement; (ii) all liabilities of Seller not
assumed by
Buyer; and (iii) any claims by third parties against Buyer
attributable to
Seller's operation of the Station prior to Closing.
Notwithstanding anything
else in this Agreement, Buyer shall have no other recourse to
Seller, its
shareholders, officers, directors or any other party with respect
to
indemnification or otherwise except (i) Buyer shall have the
right to
offset any amount of indemnity against the Excess Receivable
Amounts
described in Section 1.3 and (ii) Buyer shall have the right to
assert a
claim for Seller's assets after the Closing Date in any action,
suit or
proceeding to recover any indemnity hereunder; PROVIDED, HOWEVER,
that
Buyer shall have no right to claim Seller's assets pursuant to
the
foregoing clause (ii) in the event the enforcement of such claim
would
prevent Seller from meeting any third-party obligation of Seller.
9.2 INDEMNIFICATION BY BUYER. From and after the
Closing
Date, Buyer agrees to and shall indemnify, defend and hold Seller
harmless, and shall reimburse Seller for and against any and all
actions,
losses, expenses, damages, liabilities, taxes, penalties or
assessments,
judgments and costs (including reasonable legal expenses related
thereto), resulting from or arising out of any liabilities of any
kind or
nature, absolute or contingent, relating to or arising from the
business
and operation of the Station (i) prior to the Closing Date and
which have
been assumed by Buyer and (ii) subsequent to the Closing Date.
9.3 NOTIFICATION OF CLAIMS.
(a) A party entitled to be indemnified pursuant
to
Sections 9.1 or 9.2 (the "Indemnified Party") shall notify the
party
liable for such indemnification (the "Indemnifying Party") in
writing of
any claim or demand which the Indemnified Party has determined
has given
or could give rise to a right of indemnification under this
Agreement.
Subject to the Indemnifying Party's right to defend in good faith
third
party claims as hereinafter provided, the Indemnifying Party
shall
satisfy its obligations under this Article IX within thirty (30)
days
after the receipt of a written notice thereof from the
Indemnified Party.
(b) If the Indemnified Party shall notify the
Indemnifying Party of any claim or demand pursuant to Section
9.3(a), and
if such claim or demand relates to a claim or demand asserted by
a third
party against the Indemnified Party which the Indemnifying Party
acknowledges is a claim or demand for which it must indemnify or
hold
harmless the Indemnified Party under Sections 9.1 or 9.2, the
Indemnifying Party shall have the right to employ
<PAGE>
Page 31
counsel acceptable to the Indemnified Party to defend any such
claim or demand
asserted against the Indemnified Party. The Indemnified Party
shall have the
right to participate in the defense of any such claim or demand.
The
Indemnifying Party shall notify the Indemnified Party in writing,
as promptly
as possible (but in any case before the due date for the answer
or response
to a claim) after the date of the notice of claim given by the
Indemnified Party to the Indemnifying Party under Section 9.3(a)
of its
election to defend in good faith any such third party claim or
demand.
So long as the Indemnifying Party is defending in good faith any
such
claim or demand asserted by a third party against the Indemnified
Party,
the Indemnified Party shall not settle or compromise such claim
or
demand. The Indemnified Party shall make available to the
Indemnifying
Party or its agents all records and other materials in the
Indemnified
Party's possession reasonably required by it for its use in
contesting
any third party claim or demand. Whether or not the Indemnifying
Party
elects to defend any such claim or demand, the Indemnified Party
shall
have no obligations to do so. Upon payment of any claim or
demand
pursuant to this Article IX, the Indemnifying Party shall, to the
extent
of payment, be subrogated to all rights of the Indemnified Party.
ARTICLE X
MISCELLANEOUS
10.1 DAMAGE AND FAILURE OF TRANSMISSIONS.
(a) RISK OF LOSS. The risk of loss or damage to
the
Station Assets shall be upon Seller at all times prior to
Closing. In
the event of material loss or damage, Seller shall promptly
notify Buyer
thereof and use its best efforts to repair, replace or restore
the lost
or damaged property to its former condition as soon as possible.
If the
cost of repairing, replacing or restoring any lost or damaged
property is
Five Thousand Dollars ($5,000) or less, and Seller has not
repaired,
replaced or restored such property prior to the Closing Date,
Closing
shall occur as scheduled and Seller shall pay to Buyer the amount
necessary to restore the lost or damaged property to its former
condition. If the cost to repair, replace, or restore the lost
or
damaged property exceeds Five Thousand Dollars ($5,000), and
Seller has
not repaired, replaced or restored such property prior to the
Closing
Date, Buyer may, at its option:
(1) elect to consummate the Closing in which
event Seller
shall pay to Buyer the amount necessary to restore the lost or
damaged
property to its former condition or against such obligation shall
assign
to Buyer all of Seller's rights under any applicable insurance
policies;
or
<PAGE>
Page 32
(2) elect to postpone the Closing, with prior
consent of
the Commission if necessary, for such reasonable period of time
(not to
exceed ninety (90) days) as is necessary for Seller to repair,
replace or
restore the lost or damaged property to its former condition.
If, after
the expiration of that extension period the lost or damaged
property has
not been fully repaired, replaced or restored, Buyer may
terminate this
Agreement, in which event the Escrow Deposit and all interest
earned
thereon shall be returned to Buyer and the parties shall be
released and
discharged from any further obligation hereunder.
(b) FAILURE OF BROADCAST TRANSMISSIONS. Seller
shall
give prompt written notice to Buyer if any of the following (a
"Specified
Event") shall occur: (i) the transmission of the regular
broadcast
programming of the Station in the normal and usual manner is
interrupted
or discontinued and the Station is unable to broadcast pursuant
to its
auxiliary power for more than four (4) hours; or (ii) the Station
is
operated at less than its licensed antenna height above average
terrain
or at less than ninety percent (90%) of its licensed effective
radiated
power for more than four (4) hours. If, prior to Closing, the
Station is
not operated at its licensed operating parameters for more than
twenty-
four (24) hours (or, in the event of FORCE MAJEURE or utility
failure
affecting generally the market served by the Station, forty-eight
(48)
hours, whether or not consecutive, during any period of thirty
(30)
consecutive days, or if there are three (3) or more Specified
Events each
lasting more than four (4) consecutive hours, then Buyer may, at
its
options, terminate this Agreement. In the event of termination
of this
Agreement by Buyer pursuant to this paragraph, the Escrow Deposit
together with all interest thereon shall be returned to Buyer and
the
parties shall be released and discharged from any further
obligation
hereunder.
(c) RESOLUTION OF DISAGREEMENTS. If the parties
are
unable to agree upon the extent of any loss or damage, the cost
to
repair, replace or restore any lost or damaged property, the
adequacy of
any repair, replacement, or restoration of any lost or damaged
property,
or any other matter arising under this Section, the disagreement
shall be
referred to a qualified consulting communications engineer
mutually
accepted to Seller and Buyer who is a member of the Association
of
Federal Communications Consulting Engineers, whose decision shall
be
final, and whose fees and expenses shall be allocated between and
paid by
Seller and Buyer, respectively, to the extent that such party
does not
prevail on the disputed matters decided by the engineer.
<PAGE>
Page 33
10.2 ASSIGNMENT.
(a) This Agreement shall not be assigned or
conveyed by
either party hereto to any other person or entity without the
prior
written consent of the other parties hereto; PROVIDED, HOWEVER,
that
Buyer may assign this Agreement without Seller's prior consent to
one or
more corporations or other entities controlling, controlled by,
or under
common control with Buyer. Subject to the foregoing, this
Agreement
shall be binding and shall inure to the benefit of the parties
hereto,
their successors and assigns.
(b) Notwithstanding anything to the contrary set
forth
herein, Buyer may assign and transfer to any entity providing
financing
for the transactions contemplated by this Agreement (or any
refinancing
of such financing) as security for such financing all of the
interest,
rights and remedies of Buyer with respect to this Agreement and
the
Escrow Agreement, and Seller shall expressly consent to such
assignment.
Any such assignment will be made for collateral security purposes
only
and will not release or discharge Buyer from any obligations it
may have
pursuant to this Agreement. Notwithstanding anything to the
contrary set
forth herein, Buyer may (i) authorize and empower such financing
sources
to assert, either directly or on behalf of Buyer, any claims
Buyer may
have against Seller under this Agreement and (ii) make,
constitute and
appoint one agent bank in respect of such financing (and all
officers,
employees and agents designated by such agent) as the true and
lawful
attorney and agent-in-fact of Buyer for the purpose of enabling
the
financing sources to assert and collect any such claims.
10.3 SURVIVAL OF REPRESENTATIONS. The representations
and
warranties contained in this Agreement and in the Ancillary
Agreements
shall survive the Closing for a period of six (6) months.
10.4 BROKERAGE. Seller and Buyer warrant and
represent to one
another that, with the exception of Larry Patrick, broker for the
Seller,
there has been no broker or agent in any way involved in the
transactions
contemplated hereby and that no one other than Larry Patrick is
or will
be entitled to any fee or other compensation in the nature of a
brokerage
fee or finder's fee as a result of the Closing hereunder. Seller
shall
be wholly responsible for any brokerage or other fee due to Larry
Patrick.
10.5 EXPENSES OF THE PARTIES. It is expressly
understood and
agreed that all expenses of preparing this Agreement and of
preparing and
prosecuting the Assignment Application with the Commission, and
all other
expenses, whether or not the transactions contemplated hereby are
consummated, shall be borne solely by the party who shall have
incurred
the same and the other party shall have no
<PAGE>
Page 34
liability in respect thereto, except as otherwise provided
herein. All costs
of transferring the Station Assets in accordance with this
Agreement, including
recordation, transfer and documentary taxes and fees, and any
excise, sales or
use taxes, shall be borne equally by Seller and Buyer. Any
filing or grant
fees imposed by any governmental authority the consent of which
is
required for the transactions contemplated hereby shall be borne
equally
by Seller and Buyer.
10.6 ENTIRE AGREEMENT. This Agreement, together with
any
related Schedules or Exhibits, contains all the terms agreed upon
by the
parties with respect to the subject matter herein, and supersedes
all
prior agreements and understandings among the parties and may not
be
changed or terminated orally. No attempted change, termination
or waiver
of any of the provisions hereof shall be binding unless in
writing and
signed by the party against whom the same is sought to be
enforced.
10.7 HEADINGS. The headings set forth in this
Agreement have
been inserted for reference only and shall not be deemed to limit
or
otherwise affect, in any manner, or be deemed to interpret in
whole or in
part, any of the terms or provisions of this Agreement. Unless
otherwise
specified herein, the section references contained herein refer
to
sections of this Agreement.
10.8 GOVERNING LAW. This Agreement shall be construed
and
enforced in accordance with the internal laws of the State of New
York.
10.9 COUNTERPARTS. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall
be
deemed an original, but all of such shall constitute one and the
same
instrument.
10.10 NOTICES. Any notices or other communications
shall be in
writing and shall be considered to have been duly given when
deposited
into first class, certified mail, postage prepaid, return receipt
requested, delivered personally (which shall include delivery by
Federal
Express or other recognized overnight courier service that issues
a
receipt or other confirmation of delivery) or delivered via
facsimile
machine;
IF TO SELLER:
Mr. Frank D. Osborn
Osborn Communications Corp.
130 Mason Street
Greenwich, CT 06830
Fax: (203) 629-1749
Phone: (203) 629-0905
<PAGE>
Page 35
With a copy to:
Robert M. Hirsh
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, NY 10019-6064
IF TO BUYER:
Ragan A. Henry
Atlantic-Allur, Inc.
1234 Market Street
Suite 1940
Philadelphia, PA 19107
Fax: (215) 563-2910
Phone: (215) 563-9947
With a copy to:
Gregg P. Skall
Pepper & Corazzini
200 Montgomery Building
1776 K Street, N.W.
Washington, D.C. 20006
Any party may at any time change the place of receiving
notice
by giving notice of such change to the other as provided herein.
10.11 SPECIFIC PERFORMANCE. Seller acknowledges that
the
Station is of a special, unique and extraordinary character and
that
damages are inadequate to compensate Buyer for Seller's breach of
this
Agreement. Accordingly, in the event of a material breach by
Seller of
its representations, warranties, covenants and agreements under
this
Agreement, Buyer may seek a decree of specific performance
requiring
Seller to fulfill its obligations under this Agreement, and
Seller agrees
to waive its defense that an adequate remedy at law exists.
10.12 ARBITRATION. Other than with respect to
Sections 2.3(b)
9.1 and 10.1(c) hereof, any dispute arising out of or related to
this
Agreement that Seller and Buyer are unable to resolve by
themselves shall
be settled by arbitration in New York, N.Y., by a panel of three
arbitrators. In such event, Seller and Buyer shall each
designate one
disinterested arbitrator, and the two arbitrators so designated
shall
select the third arbitrator. The persons selected as arbitrators
need
not be professional arbitrators, and persons such as lawyers,
accountants, brokers, and bankers shall be acceptable. Before
undertaking to resolve the dispute, each arbitrator shall be duly
sworn
faithfully and fairly to hear and examine the matters in
controversy and
to make a just award according to the best of his or her
understanding.
The arbitration hearing shall be conducted in accordance with
<PAGE>
Page 36
the rules of the American Arbitration Association. The written
decision of a
majority of the arbitrators shall be final and binding on Seller
and
Buyer. The costs and expenses of the arbitration proceeding
shall be
done especially by Seller and Buyer, PROVIDED, HOWEVER, that each
party
shall bear the expense of its own counsel, experts, witnesses,
and
preparation of proofs. Judgment on the award, if it is not paid
within
thirty (30) days, may be entered in any court having jurisdiction
over
the matter. No action at law or suit in equity based upon any
claim
arising out of or related to this Agreement shall be instituted
in any
court by Seller or Buyer against the other except (i) an action
to compel
arbitration pursuant to this Section, (ii) an action to enforce
the award
of the arbitration panel rendered in accordance with this
Section, or
(iii) a suit for specific performance pursuant to Section 10.11.
10.13 CONSENT TO JURISDICTION. Seller and Buyer
hereby submit
to the nonexclusive jurisdiction of the courts of the State of
New York
and the federal courts of the United States of America located in
such
state solely in respect of the interpretation and enforcement of
the
provisions hereof and of the documents referred to herein, and
hereby
waive, and agree not to assert, as a defense in any action, suit
or
proceeding for the interpretation or enforcement hereof or of any
such
document, that they are not subject thereto or that such action,
suit or
proceeding may not be brought or is not maintainable in said
courts or
that this Agreement or any of such documents may not be enforced
in or by
said courts or that the Station property is exempt or immune from
execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or
proceeding
is improper.
10.14 FURTHER ASSURANCES. Seller and Buyer agree to
execute
all such documents and take all such actions after the Closing
Date as
any other party shall reasonably request in connection with
carrying out
and effectuating the intent and purpose hereof and all
transactions and
things contemplated by this Agreement, including, without
limitation, the
execution and delivery of any and all confirmatory and other
documents in
addition to those to be delivered on the Closing Date and all
actions
which may reasonably be necessary or desirable to complete the
transactions contemplated hereby.
10.15 PUBLIC ANNOUNCEMENTS. No public announcement
(including
an announcement to employees) or press release concerning the
transactions provided for herein shall be made by either party
without
the prior approval of the other party, except as required by law.
10.16 AMENDMENTS. At any time prior to the Closing,
this
Agreement may be amended with the written consent of the Seller
and the
Buyer.
<PAGE>
Page 37
10.17 SCHEDULES. Any schedules not delivered at the
signing of
this Agreement shall be subject to the approval of Buyer within
five (5)
days of the delivery of such schedule; PROVIDED, HOWEVER that
Buyer's
approval of such schedule shall not be unreasonably withheld.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed or
have
caused this Agreement to be executed by a duly authorized officer
on the
day and year first above written.
SELLER
ATLANTIC CITY BROADCASTING CORP.
----------------------------
BY: Frank D. Osborn
TITLE: President
BUYER
ATLANTIC-ALLUR, INC.
----------------------------
BY: Ragan A. Henry
TITLE: Chairman
