10
SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 1994
0-16690
(Commission File Number)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
(Exact name of registrant as
specified in its governing
instruments)
Delaware
(State or other jurisdiction of organization)
13-3429969
(IRS Employer Identification No.)
World Financial Center
South Tower - 14th Floor
New York, New York 10080-6114 (Address of
principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 236-
6472
N/A
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 .
WORD\LIZ\MOPP\MOP3Q.94
ML MEDIA OPPORTUNITY PARTNERS, L.P.
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
TABLE OF CONTENTS
Page
Consolidated Balance Sheets as of September 30,
1994 (Unaudited) and December 31, 1993
(Unaudited) 3-
4
Consolidated Statements of Operations for the
thirteen and thirty-nine week periods ended
September 30, 1994 (Unaudited), and September
30, 1993 (Unaudited) 5-
8
Consolidated Statements of Cash Flows for the
thirty-nine week periods ended September 30,
1994 (Unaudited), and September 30, 1993
(Unaudited) 9-
11
Notes to the Consolidated Financial Statements
for the thirty-nine week periods ended September
30, 1994 (Unaudited) 12-
22
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1994
(UNAUDITED) AND DECEMBER 31, 1993 (UNAUDITED)
September 30, December 31,
Notes 1994 1993
ASSETS:
Cash and cash
equivalents 2 $ 12,448,447 $ 4,657,815
Accounts receivable
(net of allowance for
doubtful accounts of
$268,803 at September
30, 1994 and $171,390
at December 31, 1993) 4,081,145 3,959,680
Prepaid expenses and
deferred charges
(net of accumulated
amortization of
$3,091,597 at
September 30, 1994,
and $2,711,667 at
December 31, 1993) 879,203 1,208,573
Property, plant and
equipment (net of
accumulated
depreciation of
$12,879,435 at
September 30, 1994
and $12,372,024 at
December 31, 1993) 2 5,837,558 5,723,402
Intangible assets (net
of accumulated
amortization of
$21,419,794 at
September 30, 1994
and $20,481,214 at
December 31, 1993) 2 35,837,261 36,454,624
Investment in joint
ventures and common
stock 1,261,666 1,261,666
Other assets 3,422,607 867,723
TOTAL ASSETS $ 63,767,887 $ 54,133,483
(Continued on the following
page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED BALANCE SHEETS AS OF SEPTEMBER 30, 1994
(UNAUDITED)
AND DECEMBER 31, 1993 (UNAUDITED)
(continued)
September 30, December 31,
Notes 1994 1993
LIABILITIES AND
PARTNERS' DEFICIT:
Liabilities:
Borrowings 2 $ 42,999,804 $
42,999,804
Accounts payable and
accrued liabilities 13,417,733
8,711,807 Net liabilities of
discontinued
operations-Cable
television systems 2,3 --
113,678,564
Total Liabilities 56,417,537
165,390,175 Minority interest 93,513
99,854
Partners' Deficit:
General Partners:
Capital contributions,
net of offering
expenses 1 1,019,428
1,019,428
Cumulative loss (926,367)
(2,112,501)
93,061
(1,093,073) Limited Partners:
Capital contributions,
net of offering
expenses (112,147.1
Units of Limited
Partnership Interest) 1 100,914,316
100,914,316 Tax allowance cash
distribution (2,040,121)
(2,040,121)
Cumulative loss (91,710,419)
(209,137,668)
7,163,776
(110,263,473) Total Partners' Deficit 7,256,837
(111,356,546)
TOTAL LIABILITIES AND
PARTNERS' DEFICIT $ 63,767,887 $
54,133,483
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30,
1994 (UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
Thirteen Weeks Thirty-Nine Weeks
September 30, September 30, September 30, September
30,
1994 1993 1994 1993
Operating
Re-
venues: $ 3,584,848 $ 3,921,285 $10,672,052 $13,889,218
Operating Expenses:
Property
opera-
ting
expenses 1,760,599 2,449,029 5,033,404 10,624,592
General
and
adminis-
trative 1,024,066 697,373 3,221,601 1,566,910
Depre-
ciation
and
amorti-
zation 639,587 685,305 1,859,503 2,047,833
Manage-
ment fees 786,155 768,354 2,361,408 2,305,062
Loss on
write-
down of
assets -- -- --
515,800
4,210,407 4,600,061 12,475,916 17,060,197
Operating
loss from
con-
tinuing
opera-
tions (625,559) (678,776) (1,803,864 (3,170,979
) )
Other
(Expense)
Income:
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30,
1994 (UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
(continued)
Thirteen Weeks Thirty-Nine Weeks
September 30, September 30, September 30,
September 30, 1994 1993
1994 1993
Interest
expense (1,313,946) (1,267,602) (3,890,163) (2,531,736)
Interest
income 301,292 33,283 349,747 115,927
Other
expenses (116,785 (29,425) (187,303) (118,506)
)
(1,129,439 (1,263,744) (3,727,719) (2,534,315)
)
Loss from
con-
tinuing
oper-
ations
before
equity in
loss of
joint
venture
and
minority
interest (1,754,998) (1,942,520) (5,531,583)
(5,705,294)
Equity in
loss of
joint
venture
and
minority
interest (480) -- (648)
(1,262,809)
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED
SEPTEMBER 30, 1994 (UNAUDITED) AND SEPTEMBER 30, 1993
(UNAUDITED)
(continued)
Thirteen Weeks Thirty-Nine Weeks
September 30, September 30, September 30,
September 30, 1994 1993
1994 1993
Loss from
con-
tinuing
oper-
ations (1,755,478) (1,942,520) (5,532,231)
(6,968,103)
Discon-tinu
ed opera-
tions:
Loss from discontinued
operations of:
Cable tele-
vision
systems
segment
-- (3,688,867) (6,784,982)
(17,800,854)
Business
informa-
tion
services
segment -- -- --
(792,808)
Gain on
sale of
discon-
tinued
cable
televi-
sion
segment 600,000 -- 600,000 -
- - - -
Loss before
extra-
ordinary
item
(1,155,478) (5,631,387) (11,717,213)
(25,561,765)
(continued on the following page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THIRTEEN AND THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30, 1994
(UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
(continued)
Thirteen Weeks Thirty-Nine Weeks
September 30, September 30, September 30,
September 30, 1994 1993
1994 1993
Extra-ordin
ary item
130,330,596 -- 130,330,596 -
- - - -
NET INCOME/
(LOSS)
$129,175,118 $ (5,631,387) $118,613,383
$(25,561,765)
Per Unit of
Limited
Part-
nership
Interest:
Loss from
con-
tinuing
oper-
ations $ (15.49) $ (17.15) $ (48.84) $
(61.51)
Gain/-(Loss
) from
discon-
tinued
oper-
ations
5.30 (32.56) (54.59)
(164.14)
Extra-ordin
ary item
$ 1,150.51 $ -- $ 1,150.51 $ -
- - - -
NET INCOME/
(LOSS)
$ 1,140.32 $ (49.71) $ 1,047.08 $
(225.65)
Number of
Units 112,147.1 112,147.1 112,147.1
112,147.1
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30, 1994
(UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
September 30, September
30, 1994
1993
Cash flows from
operating activities:
Net loss $118,613,383
$(25,561,765)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and
amortization 1,859,503
2,047,833
Bad debt reserve
adjustment 97,413
34,245
Equity in loss of joint
venture and minority (648)
1,262,809
interest
Gain on disposition of
Maryland Cable (130,330,596
- - - --
)
Gain on sale of Windsor (600,000)
- - - --
Loss on writedown of
assets --
515,800
Change in operating
assets and liabilities:
Decrease in accounts
receivable 1,276,955 333,941
(Increase)/Decrease in
prepaid expenses and
deferred charges (50,560) 12,535
(Increase)/Decrease in (2,800,630) 3,376,628
other assets
(continued on the following
page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30, 1994
(UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
(continued)
September 30, September 30,
1994 1993
Increase/(Decrease) in
accounts payable and
accrued liabilities 4,705,926 (1,140,223)
Increase in net
liabilities of
discontinued operations 6,784,982 18,593,661
Net cash used in operating
activities (444,272) (524,536)
Cash flows from investing
activities:
Proceeds received to date
for Maryland Cable
disposition 9,231,536 --
Purchase of property,
plant and equipment (675,415) (1,025,441)
Increase in intangible
assets (321,217) --
Net cash provided by/(used
in) investing activities 8,234,904 (1,025,441)
Cash flows from financing
activities:
Principal payments on
bank loans -- (633,854)
Net cash used in
financing activities --
(633,854)
(continued on the following
page)
ML MEDIA OPPORTUNITY PARTNERS, L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30, 1994
(UNAUDITED) AND SEPTEMBER 30, 1993 (UNAUDITED)
(continued)
September 30, September 30,
1994 1993
Net increase/(decrease) in
cash and cash equivalents 7,790,632 (2,183,831)
Cash and cash equivalents
at beginning of period 4,657,815
7,637,846
Cash and cash equivalents
at end of period 12,448,447 $
5,454,015
Cash paid for interest $ 2,511,322 $
1,720,984
See Notes to Consolidated Financial Statements (Unaudited).
ML MEDIA OPPORTUNITY PARTNERS, L.P.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THIRTY-NINE WEEK PERIODS ENDED SEPTEMBER 30, 1994
(UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ML Media Opportunity Partners, L.P. (the "Partnership"), was
formed and the Certificate of Limited Partnership was filed
under the Delaware Revised Uniform Limited Partnership Act on
June 23, 1987. Operations commenced on March 23, 1988 with the
first closing of the sale of units of limited partnership
interest. Media Opportunity Management Partners (the "General
Partner") is a joint venture, organized as a general
partnership under New York law, between RP Opportunity
Management, L.P., a limited partnership under Delaware law, and
ML Opportunity Management Inc., a Delaware corporation and an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc.
The General Partner was formed for the purpose of acting as
general partner of the Partnership. The General Partner's
total capital contribution was $1,132,800 at December 31, 1993
which represents 1% of the total Partnership capital
contributions.
Pursuant to the terms of the Amended and Restated Agreement of
Limited Partnership, the General Partner is liable for all
general obligations of the Partnership to the extent not paid
by the Partnership. The limited partners are not liable for
the obligations of the Partnership in excess of the amount of
their contributed capital.
The purpose of the Partnership is to acquire, finance, hold,
develop, improve, maintain, operate, lease, sell, exchange,
dispose of and otherwise invest in and deal with media
businesses and direct and indirect interests therein.
Certain 1993 items have been reclassified to conform to 1994
presentation.
In the opinion of the General Partner, the financial statements
include all adjustments necessary to reflect fairly the results
of the interim periods presented. All adjustments are of a
normal recurring nature, except as disclosed in Note 3.
Additional information, including the audited year end 1993
Financial Statements and the Summary of Significant Accounting
Policies, is included in the Partnership's filing on Form 10-K
for the year ended December 31, 1993 on file with the
Securities and Exchange Commission.
Statement of Financial Accounting Standards No. 112
Effective January 1, 1994, the Partnership adopted Statement of
Financial Accounting Standards No. 112, "Employers' Accounting
for Postemployment Benefits" ("SFAS No. 112"). The effect of
the adoption of SFAS No. 112 was not material to the
Partnership's financial position or results of operations.
2. Liquidity
At September 30, 1994, the Partnership had $12,448,447 in cash
and cash equivalents, of which $1,660,865 was limited for use
at the operating level and $10,787,582 was the Partnership's
working capital. The Partnership expects to make a cash
distribution to Partners from its working capital of
approximately $9.1 million at the end of November, 1994.
The Partnership is in the process of selling or disposing of a
significant portion of its investments. The Partnership
consummated the disposition of Maryland Cable on September 30,
1994 and the sale of the Windsor Cable Systems on May 18, 1994.
In addition, the Partnership expects to consummate the sale of
WMXN-FM in early 1995, subject to regulatory approval. The
status of all of the Partnership's investments is discussed in
more detail below.
Disposition of Maryland Cable
On September 30, 1994, the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan") was consummated. Pursuant to the Prepackaged Plan,
Maryland Cable and Holdings were liquidated into Maryland Cable
Partners, L.P., a newly formed limited partnership ("Newco").
As a result of the liquidation, Newco acquired all of the
assets of Maryland Cable, subject to all of the liabilities of
Maryland Cable that were not discharged pursuant to the
Prepackaged Plan.
Under the Prepackaged Plan, the Partnership received a 4.9%
interest in Newco in satisfaction of (i) the $3,600,000 in
subordinated promissory notes held by the Partnership, plus
accrued interest thereon, (ii) the $5,379,833 in deferred
management fees payable to the Partnership, and (iii) certain
other amounts payable to the Partnership. The Partnership
immediately exercised its right to sell its 4.9% interest in
Newco to Water Street Corporate Recovery Fund I, L.P. (the
holder of 85% of the outstanding principal amount of the 15-
3/8% Subordinated Discount Notes due 1998 of Maryland Cable)
and certain other holders of the Notes for an aggregate price
of $2,846,423. Upon the consummation of the Prepackaged Plan,
ML Cable Partners, which is 99% owned by the Partnership,
received payment in full of the unpaid portion of the
$6,830,000 participation in the senior bank debt of Maryland
Cable held by ML Cable Partners, together with accrued interest
thereon. In addition, MultiVision Cable TV Corp. received a
payment of $500,000 in partial settlement of severance and
other costs relating to the termination of MultiVision as
manager of the Maryland Cable cable systems. The Partnership
recognized a gain for financial reporting purposes on the
disposition of Maryland Cable of approximately $130 million,
which is classified as an extraordinary gain on the
Partnership's Statements of Operations.
Included in this gain is a $450,000 management fee which the
Partnership is entitled to receive for managing the Maryland
Cable Systems from January 1, 1994 through September 30, 1994,
which fee is payable on or before November 30, 1994.
Sale of Windsor
On May 18, 1994, the Partnership completed the sale of the
assets of the Windsor Systems to Tar River Communications Inc.
("Tar
River") for $3,443,200, subject to post-closing adjustments.
At closing, the Partnership repaid the $2,050,058 of principal
and interest then due under the Windsor Note, as required by
the terms of the Windsor Note. In addition, as required by the
Asset Purchase Agreement with Tar River, at closing, $342,160
was placed into two separate escrow accounts to cover the
potential costs of improving pole attachments as well as other
possible post-closing expenses. A significant portion of the
remaining $1,050,982 of sale proceeds will be used to cover
certain preclosing liabilities to third parties, as well as the
final closing costs of the transaction, such as legal fees.
The Partnership recognized a gain of $600,000 for financial
reporting purposes on the sale of the Windsor Systems.
Pending Sale of WMXN-FM
During the first three quarters of 1994, revenues generated by
WMXN-FM, combined with the station's cash balances, were
sufficient to cover its operating costs (before management
fees).
The Partnership entered into an Option Agreement, effective
January 25, 1994, with US Radio, Inc. ("US Inc."), a Delaware
corporation, and an affiliated entity, US Radio, L.P. ("US
Radio"), a Delaware limited partnership, neither of which is
affiliated with the Partnership. Pursuant to the Option
Agreement, the Partnership granted US Inc. an option (the
"Call") to purchase substantially all of the assets of WMXN-FM
(the "Assets") for a cash price of $3.5 million at any time
prior to January 15, 1995. Also pursuant to the Option
Agreement, US Inc. granted the Partnership the option (the
"Put") to sell the Assets to US Inc. for a cash price of $3.5
million at any time (a) within 30 days after the expiration of
the Call or (b) within 30 days of the termination by the
Partnership of the LMA (see below) as a result of a material
breach of the LMA by US Radio. On September 23, 1994, US Inc.
exercised the Call. On October 24, 1994, the Partnership and
US Radio of Norfolk, Inc. ("US Norfolk"), an affiliate of US
Inc. to which US Inc. assigned its option to purchase WMXN-FM,
filed an application with the FCC requesting assignment of the
license of WMXN-FM from the Partnership to US Norfolk. The
Partnership expects that the sale will close in the first
quarter of 1995. However, the acquisition of WMXN-FM by US
Norfolk is subject to the prior approval of the FCC. There can
be no assurance that the sale of WMXN-FM will be consummated.
Effective January 31, 1994, the Partnership entered into a Time
Brokerage Agreement (the "LMA") with US Radio. The LMA calls
for the Partnership to make broadcasting time available on WMXN-
FM to US Radio and for US Radio to provide radio programs to be
broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange
for providing broadcasting time to US Radio, the Partnership
will receive a monthly fee approximately equal to its cost of
operating WMXN-FM. The LMA will continue until the
consummation of the acquisition of WMXN-FM by US Norfolk.
TCS
As of September 30, 1994, TCS was in default of covenants under
its note agreements and failed to make three scheduled
principal payments totaling $1.65 million due February 28,
1994, May 31, 1994 and August 31, 1994. In addition, TCS
expects to default on the majority of its scheduled principal
payments for the remainder of 1994 as well as in 1995. TCS
engaged in negotiations with its note holders regarding a
potential restructuring of TCS's note agreements, but was
unsuccessful in
its efforts. The Partnership therefore engaged Furman Selz
Incorporated to assist it in marketing the TCS television
stations. It is the Partnership's intention to actively pursue
a sale of the TCS television stations; however, the Partnership
may not be able to reach a final agreement with potential
purchasers on terms acceptable to the Partnership. During the
process of marketing the TCS television stations, while TCS
remains in default, the note holders have the option to
exercise their rights under the notes, which rights include the
right to foreclose on the stock of the operating subsidiaries
that own the three TCS stations, but not the other assets of
the Partnership. Whether or not the Partnership is able to sell
the TCS television stations, it is unlikely that the
Partnership will recover more than a nominal amount of its
investment in TCS. As of and for the thirty-nine week period
ended September 30, 1994, TCS represented 75% of the
Partnership's total assets and 96% of the Partnership's
operating revenues.
Paradigm
Paradigm and/or BBAD are not currently producing television
programs and the Partnership has not advanced any funds to
Paradigm and/or BBAD since the second quarter of 1992. The
Partnership has agreed in principle with Associates on the
terms of an agreement under which Paradigm would retain the
three television movies and the series developed by it, and the
other projects and program concepts developed by Paradigm
and/or BBAD would be assigned to Associates, and Paradigm would
retain a percentage interest in all such projects and concepts.
In any event, the Partnership will most likely recover only a
nominal portion, if any, of its original investment in Paradigm
and/or BBAD. Due in part to the Partnership's unwillingness to
advance additional funds to fund the continuing operating
losses and possible winding down of Paradigm's and BBAD's
operating activities, the Partnership recorded in the second
quarter of 1993 a writedown of approximately $516,000 of
certain assets of Paradigm and BBAD to reduce the Partnership's
net investment to a net realizable value of zero.
GCC
As of June 30, 1994, the Partnership's 351,665 shares in GCC
represented an ownership percentage equal to approximately
4.2%. On January 20, 1994, the majority stockholders of GCC and
certain holders of interest in MARKETS Cellular Limited
Partnership ("Markets"), and PN Cellular, Inc. ("PNCI")
executed a Memorandum of Intention (the "Memorandum") pursuant
to which the parties thereto expressed their intent to effect a
proposed business combination of GCC and Markets.
The Partnership signed an Exchange Agreement and Plan of Merger
("Agreement"), dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, the Partnership exchanged
its shares in GCC for an equal number of shares in Western
Wireless Corporation ("WWC"), a new company which was organized
to own the equity interest of GCC and Markets. Following the
consummation of the business combination on July 29, 1994, WWC
became the owner of 100% of the partnership interests in
Markets and approximately 95% of the outstanding common stock
of GCC. WWC holds and operates cellular licenses covering
approximately 5.2 million net pops (defined as the population
in an area covered by a cellular franchise) including pending
acquisitions.
The Partnership's shares represent approximately 2.4% of WWC.
The parties have entered into a stockholders agreement
containing
certain restrictions on transfer, registration rights and
corporate governance provisions.
Investments and EMP, Ltd.
During the first three quarters of 1994 Investments, EMP, Ltd.
and their affiliates were reliant on their operating
activities, cash balances and/or additional funding from ALP
Enterprises to fund their continuing operations. The
Partnership elected not to advance further funds to
Investments, EMP, Ltd., or their affiliates beyond those funds
already advanced.
Effective August 12, 1994, the Partnership and EMP, Ltd.
restructured the ownership of EMP, Ltd. and certain of its
subsidiaries in order to enable EMP, Ltd. to attract additional
capital from ALP Enterprises and other third parties. In the
restructuring, based on certain representations from EMP, Ltd.
and ALP Enterprises, the Partnership sold to Clarendon and ALP
Enterprises for nominal consideration the Partnership's shares
in EMP, Ltd. Simultaneously, the Partnership and EMP, Ltd.
entered into an agreement whereby EMP, Ltd.'s 10% interest in
Teletext was transferred, together with a 350,000 loan
(approximately $543,000 at then-current exchange rates) from
EMP, Ltd. to a newly formed entity, MV Technology Limited
("MVT"). After the transfer, the Partnership owns 13.8% of the
issued common shares of MVT, while EMP, Ltd. owns the remaining
86.2%. MVT's sole purpose is to manage its 10% interest in
Teletext. The Partnership has the right to require EMP, Ltd.
to purchase the Partnership's interest in MVT at any time
between December 31, 1994 and December 31, 1997. EMP, Ltd. has
the right to require the Partnership to sell the Partnership's
interest in MVT to EMP, Ltd. at any time between September 30,
1995 and September 30, 1998. MVT will pay an annual fee to
EMP, Ltd. for management services provided by EMP, Ltd. in the
oversight of MVT's investment in Teletext. Following the
restructuring, the Partnership no longer has any interest in
EMP, Ltd. It is unlikely the Partnership will recover its $2
million investment in Investments either from Investments or
from MVT.
IMP/Intelidata
Effective July 1, 1993, the Partnership entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. As a result of these transactions, the Partnership
recorded a writedown of approximately $364,000 of certain
assets of IMPLP/IMPI/Intelidata in the second quarter of 1993
to reduce the Partnership's net investment to a net realizable
value of zero.
Subsequent to the sale of the businesses, the Partnership
advanced net additional funds totaling approximately $0.1
million to IMPLP/IMPI and Intelidata to fund cash shortfalls
resulting from the pre-sale claims of certain creditors. The
Partnership anticipates that it may be required to make
additional such advances to IMPLP/IMPI and Intelidata during
1994 and 1995. The total of any Partnership obligations to
fund such advances, including certain contractual obligations,
is not currently anticipated to exceed the amount of the
writedown. It is unlikely the Partnership will recover any of
its investments in IMPLP/IMPI/Intelidata.
Summary
In summary of the Partnership's liquidity status, of the
approximately $10.8 million that the Partnership has available
for working capital, approximately $9.1 million will be
distributed to Partners at the end of November, 1994. The
remaining approximately $1.7 million may be utilized to support
anticipated funding needs, or possible restructurings, as
appropriate, of its investments. The Partnership has no
contractual commitment to advance funds to any of these
investments.
3. DISCONTINUED OPERATIONS
Cable Television Systems Segment
Due to the disposition of Windsor and Maryland Cable (see Note
2), the Partnership has presented its Cable Television Systems
Segment (comprised of Maryland Cable and Windsor) as
discontinued operations. The December 31, 1993 Consolidated
Balance Sheet and the September 30, 1993 Consolidated Statement
of Operations and Consolidated Statement of Cash Flows, have
been restated to present such discontinued operations.
The net liabilities of discontinued operations on the
Consolidated Balance Sheet are comprised of the following:
As of As of
September 30, December 31,
1994 1993
Property, plant and
equipment, net $ -- $ 45,342,432
Intangible assets, net 85,521,053
--
Other assets 6,153,656
--
Borrowings -- (242,623,751)
Other liabilities -- (8,071,954)
Net liabilities of
discontinued operations $ -- $(113,678,564)
Any losses incurred by this segment subsequent to March 31,
1994 had been deferred and have since been included in the gain
on deposition in the quarter ended September 30, 1994.
Summarized results of discontinued operations of this segment
on the Consolidated Statements of Operations are as follows:
Thirteen Weeks Thirty-Nine
Weeks
September 30, September 30, September 30, September
30, 1994 1993 1994 1993
Operating
Revenues $ -- $11,312,099 $10,714,539 $
33,880,016
Less:
Operating
Expenses -- 11,136,413 8,873,666
32,983,554
Operating
Income -- 175,686 1,840,873
896,462
Other
Expenses,
net -- (3,864,553) (8,625,855)
(18,697,316)
Loss from
dis-
continued
oper-
ations $ -- $(3,688,867) $(6,784,982)
$(17,800,854)
Business Information Services Segment
Effective July 1, 1993, the Partnership sold the business and
assets of IMPLP/IMPI and Intelidata (the Business Information
Services Segment). The results of the Business Information
Services Segment have been reported separately in the September
30, 1993 Consolidated Statements of Operations as discontinued
operations. Summarized results of the discontinued operations
of this segment are as follows:
Thirteen Weeks Thirty-Nine Weeks
September September September
September
30, 1994 30, 1993 30, 1994 30,
1993
Operating
Revenues $ -- $ -- $ -- $
975,321
Less:
Operating
Expenses -- -- --
1,406,677
Operating Loss
-- -- --
(431,356)
Other Income,
net -- -- --
2,548
Write-down of
assets -- -- --
(364,000)
Loss from
discontinued
operations $ -- $ -- $ --
$(792,808)
There were no net liabilities from the discontinued operations of
the Business Information Services Segment as of September 30,
1994 and as of December 31, 1993.
4. TCS
The Partnership consolidated TCS as of March 26, 1993, the date it
received regulatory approval for the restructuring of the ownership
of TCS. Through March 25, 1993, the Partnership utilized the equity
method of accounting for TCS. The following data was prepared to
illustrate the effects of TCS on the operations of the Partnership:
Thirteen Weeks Thirty-Nine Weeks
September September September September
30, 1994 30, 1993 30, 1994 30, 1993
Total
Revenues -
TCS $3,455,828 $ 3,243,379 $10,236,864 $
6,671,653
Total
Expenses -
TCS (4,508,545) (3,784,255) (13,146,812)
(8,128,451)
Equity in
loss of
joint
venture -
TCS -- -- --
(1,288,838)
Net Loss -
TCS $(1,052,717) $ (540,876) $(2,909,948)
$(2,745,636)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
At September 30, 1994, Registrant had $12,448,447 in cash and
cash equivalents, of which $2,211,440 was limited for use at the
operating level and $10,237,007 was Registrant's working
capital. Registrant expects to make a cash distribution to
Partners from its working capital of approximately $9.1 million
at the end of November, 1994.
Registrant is in the process of selling or disposing of a
substantial portion of its investments. Registrant consummated
the disposition of Maryland Cable on September 30, 1994 and the
sale of the Windsor Cable Systems on May 18, 1994. In addition,
Registrant expects to consummate the sale of WMXN-FM in early
1995, subject to regulatory approval. The status of all of
Registrant's investments is discussed in more detail below.
In summary of Registrant's liquidity status, of the
approximately $10.2 million that Registrant has available for
working capital, approximately $9.1 million will be distributed
to Partners at the end of November, 1994. The remaining
approximately $1.1 million may be utilized to support
anticipated funding needs or possible restructurings, as
appropriate, of its investments. Registrant has no contractual
commitment to advance funds to any of its investments.
Disposition of Maryland Cable
On September 30, 1994, the Amended Prepackaged Plan of
Reorganization of Maryland Cable and Holdings (the "Prepackaged
Plan") was consummated. Pursuant to the Prepackaged Plan,
Maryland Cable and Holdings were liquidated into Maryland Cable
Partners, L.P., a newly formed limited partnership ("Newco").
As a result of the liquidation, Newco acquired all of the assets
of Maryland Cable, subject to all of the liabilities of Maryland
Cable that were not discharged pursuant to the Prepackaged Plan.
Under the Prepackaged Plan, Registrant received a 4.9% interest
in Newco in satisfaction of (i) the $3,600,000 in subordinated
promissory notes held by Registrant, plus accrued interest
thereon, (ii) the $5,379,833 in deferred management fees payable
to Registrant, and (iii) certain other amounts payable to
Registrant. Registrant immediately exercised its right to sell
its 4.9% interest in Newco to Water Street Corporate Recovery
Fund I, L.P. (the holder of 85% of the outstanding principal
amount of the 15-3/8% Subordinated Discount Notes due 1998 of
Maryland Cable) and certain other holders of the Notes for an
aggregate price of $2,846,423. Upon the consummation of the
Prepackaged Plan, ML Cable Partners, which is 99% owned by
Registrant, received payment in full of the unpaid portion of
the $6,830,000 participation in the senior bank debt of Maryland
Cable held by ML Cable Partners, together with accrued interest
thereon. In addition, MultiVision Cable TV Corp. received a
payment of $500,000 in partial settlement of severance and other
costs relating to the termination of MultiVision as manager of
the Maryland Cable Systems. Registrant recognized a gain for
financial reporting purposes on the disposition of Maryland
Cable of approximately $130 million which is classified as an
extraordinary gain on Registrant's Statements of Operations.
Included in this gain is a $450,000 management fee which
Registrant is entitled to receive for managing the Maryland
Cable Systems from January 1, 1994 through September 30, 1994,
which fee is payable on or before November 30, 1994.
Sale of Windsor
On May 18, 1994, Registrant completed the sale of the assets of
the Windsor Systems to Tar River Communications Inc. ("Tar
River") for $3,443,200, subject to post-closing adjustments. At
closing, Registrant repaid the $2,050,058 of principal and
interest then due under the Windsor Note, as required by the
terms of the Windsor Note. In addition, as required by the
Asset Purchase Agreement with Tar River, at closing, $342,160
was placed into two separate escrow accounts to cover the
potential costs of improving pole attachments as well as other
possible post-closing expenses. A significant portion of the
remaining $1,050,982 of sale proceeds will be used to cover
certain preclosing liabilities to third parties, as well as the
final closing costs of the transaction, such as legal fees.
Registrant recognized a gain on the sale of Windsor of $600,000
for financial reporting purposes.
Pending Sale of WMXN-FM
During the first three quarters of 1994, revenues generated by
WMXN-FM, combined with the station's cash balances, were
sufficient to cover its operating costs (before management
fees).
Registrant entered into an Option Agreement, effective January
25, 1994, with US Radio , Inc. ("US Inc."), a Delaware
corporation, and an affiliated entity, US Radio, L.P. ("US
Radio"), a Delaware limited partnership, neither of which is
affiliated with Registrant. Pursuant to the Option Agreement,
Registrant granted US Inc. an option (the "Call") to purchase
substantially all of the assets of WMXN-FM (the "Assets") for a
cash price of $3.5 million at any time prior to January 15,
1995. Also pursuant to the Option Agreement, US Inc. granted
Registrant the option (the "Put") to sell the Assets to US Inc.
for a cash price of $3.5 million at any time (a) within 30 days
after the expiration of the Call or (b) within 30 days of the
termination by Registrant of the LMA (see below) as a result of
a material breach of the LMA by US Radio. On September 23,
1994, US Inc. exercised the Call. On October 24, 1994,
Registrant and US Radio of Norfolk, Inc. ("US Norfolk"), an
affiliate of US Inc. to which US Inc. assigned its option to
purchase WMXN-FM, filed an application with the FCC requesting
assignment of the license of WMXN-FM from Registrant to US
Norfolk. Registrant expects that the sale will close in the
first quarter of 1995. However, the acquisition of WMXN-FM by
US Norfolk is subject to the prior approval of the FCC. There
can be no assurance that the sale of WMXN-FM will be
consummated.
Effective January 31, 1994, Registrant entered into a Time
Brokerage Agreement (the "LMA") with US Radio. The LMA calls
for Registrant to make broadcasting time available on WMXN-FM to
US Radio and for US Radio to provide radio programs to be
broadcast on WMXN-FM, subject to certain terms and conditions,
including the rules and regulations of the FCC. In exchange for
providing broadcasting time to US Radio, Registrant will receive
a monthly fee approximately equal to its cost of operating WMXN-
FM. The LMA will continue until the consummation of the
acquisition of WMXN-FM by US Norfolk.
TCS
As of September 30, 1994, TCS was in default of covenants under
its note agreements and failed to make three scheduled principal
payments totaling $1.65 million due February 28, 1994, May 31,
1994 and August 31, 1994. In addition, TCS expects to default
on the majority of its scheduled principal payments for the
remainder of 1994 as well as in 1995. TCS engaged in
negotiations with its note holders regarding a potential
restructuring of TCS's note agreements, but was unsuccessful in
its efforts. Registrant therefore engaged Furman Selz
Incorporated to assist it in marketing the TCS television
stations. It is Registrant's intention to actively pursue a
sale of the TCS television stations; however, Registrant may not
be able to reach a final agreement with potential purchasers on
terms acceptable to Registrant. During the process of marketing
the TCS television stations, while TCS remains in default, the
note holders have the option to exercise their rights under the
notes, which rights include the right to foreclose on the stock
of the operating subsidiaries that own the three TCS stations,
but not the other assets of Registrant. Whether or not
Registrant is able to sell the TCS television stations, it is
unlikely that Registrant will recover more than a nominal amount
of its investment in TCS. As of and for the thirty-nine week
period ended September 30, 1994, TCS represented 75% of
Registrant's total assets and 96% of Registrant's operating
revenues.
Paradigm
Paradigm and/or BBAD are not currently producing television
programs, and Registrant has not advanced any funds to Paradigm
and/or BBAD since the second quarter of 1992. Registrant has
agreed in principle with Associates on the terms of an agreement
under which Paradigm would retain the three television movies
and the series developed by it, and the other projects and
program concepts developed by Paradigm and/or BBAD would be
assigned to Associates for further development at Associates'
expense, while Paradigm would retain a percentage interest in
all such projects and concepts. In any event, Registrant will
most likely recover only a nominal portion, if any, of its
original investment in Paradigm and/or BBAD. Due in part to
Registrant's unwillingness to advance additional funds to fund
the continuing operating losses and possible winding down of
Paradigm's and BBAD's operating activities, Registrant recorded
in the second quarter of 1993 a writedown of approximately
$516,000 of certain assets of Paradigm and BBAD to reduce
Registrant's net investment to a net realizable value of zero.
GCC
As of June 30, 1994, Registrant's 351,665 shares in GCC
represented an ownership percentage equal to approximately 4.2%.
On January 20, 1994, the majority stockholders of GCC and
certain holders of interest in MARKETS Cellular Limited
Partnership
("Markets"), and PN Cellular, Inc. ("PNCI") executed a
Memorandum of Intention (the "Memorandum") pursuant to which the
parties thereto expressed their intent to effect a proposed
business combination of GCC and Markets.
Registrant signed an Exchange Agreement and Plan of Merger
("Agreement"), dated July 20, 1994, to which the majority
stockholders of GCC and the majority owners of Markets are
parties. Pursuant to the Agreement, Registrant exchanged its
shares in GCC for an equal number of shares in Western Wireless
Corporation ("WWC"), a new company which was organized to own
the equity interest of GCC and Markets. Following the
consummation of the business combination on July 29, 1994, WWC
became the owner of 100% of registrant interests in Markets and
approximately 95% of the outstanding common stock of GCC. WWC
holds and operates cellular licenses covering approximately 5.2
million net pops (defined as the population in an area covered
by a cellular franchise) including pending acquisitions.
Registrant's shares represent approximately 2.4% of WWC. The
parties have entered into a stockholders agreement containing
certain restrictions on transfer, registration rights and
corporate governance provisions.
Investments and EMP, Ltd.
During the first three quarters of 1994, Investments, EMP, Ltd.
and their affiliates were reliant on their operating activities,
cash balances and/or additional funding from ALP Enterprises to
fund their continuing operations. Registrant elected not to
advance further funds to Investments, EMP, Ltd., or their
affiliates beyond those funds already advanced by Registrant.
Effective August 12, 1994, Registrant and EMP, Ltd. restructured
the ownership of EMP, Ltd. and certain of its subsidiaries in
order to enable EMP, Ltd. to attract additional capital from ALP
Enterprises and other third parties. In the restructuring,
based on certain representations from EMP, Ltd. and ALP
Enterprises, Registrant sold to Clarendon and ALP Enterprises
for nominal consideration Registrant's shares in EMP, Ltd.
Simultaneously, Registrant and EMP, Ltd. entered into an
agreement whereby EMP, Ltd.'s 10% interest in Teletext was
transferred, together with a 350,000 loan (approximately
$543,000 at then-current exchange rates) from EMP, Ltd. to a
newly formed entity, MV Technology Limited ("MVT"). After the
transfer, Registrant owns 13.8% of the issued common shares of
MVT, while EMP, Ltd. owns the remaining 86.2%. MVT's sole
purpose is to manage its 10% interest in Teletext. Registrant
has the right to require EMP, Ltd. to purchase Registrant's
interest in MVT at any time between December 31, 1994 and
December 31, 1997. EMP, Ltd. has the right to require
Registrant to sell Registrant's interest in MVT to EMP, Ltd. at
any time between September 30, 1995 and September 30, 1998. MVT
will pay an annual fee to EMP, Ltd. for management services
provided by EMP, Ltd. in the oversight of MVT's investment in
Teletext. Following the restructuring, Registrant no longer has
any interest in EMP, Ltd. In any event, it is unlikely that
Registrant will recover its $2 million investment in Investments
either from Investments or from MVT.
IMP/Intelidata
Effective July 1, 1993, Registrant entered into three
transactions to sell the business and assets of IMPLP/IMPI and
Intelidata. As a result of these transactions, Registrant
recorded a writedown of approximately $364,000 of certain assets
of IMPLP/IMPI/Intelidata in the second quarter of 1993 to reduce
the Partnership's net investment to a net realizable value of
zero.
Subsequent to the sale of the businesses, Registrant advanced
net additional funds totaling approximately $0.1 million to
IMPLP/IMPI and Intelidata to fund cash shortfalls resulting from
the pre-sale claims of certain creditors. The Partnership
anticipates that it may be required to make additional such
advances to IMPLP/IMPI and Intelidata during 1994 and 1995. The
total of any Partnership obligations to fund such advances,
including certain contractual obligations, is not currently
anticipated to exceed the amount of the writedown. It is
unlikely that the Partnership will recover any of its
investments in IMPLP/IMPI/Intelidata.
Results of Operations
For the thirteen week periods ended September 30, 1994 and
September 30, 1993:
For the thirteen week period ended September 30, 1994,
Registrant had net income of approximately $129.2 million. This
was comprised of an extraordinary gain of approximately $130.3
million (due to the disposition of Maryland Cable on September
30, 1994) and a gain on the disposition of the Windsor Systems
of $0.6 million, partially offset by a loss from continuing
operations of approximately $1.7 million.
For the thirteen week period ended September 30, 1993,
Registrant had a net loss of approximately $5.6 million. This
was comprised of a loss from discontinued operations of
approximately $3.7 million and a loss from continuing operations
of approximately $1.9 million.
Registrant's loss from continuing operations in the third
quarter of 1994 of approximately $1.7 million was comprised
primarily of the following components: (1) Registrant's combined
loss recognized from its investments in TCS, Paradigm and WMXN-
FM of approximately $1.1 million; and (2) management fees and
other general and administrative expenses; partially offset by
interest income.
Consolidated operating revenue decreased from approximately $3.9
million in the third quarter of 1993 to approximately $3.6
million in the third quarter of 1994 primarily as a result of:
The winding down of Paradigm and/or BBAD, which resulted in
reduced program production activity (a decrease of approximately
$0.2 million in revenues); and a decline in revenue of
approximately $0.3 million at WMXN-FM due to the implementation
on January 31, 1994 of the LMA (refer to "Liquidity and Capital
Resources" above), which generally reduced the amount of
operating revenue reported by the station. These decreases were
partially offset by an increase of approximately $0.2 million at
TCS due primarily to increased political revenue in Columbus,
Georgia and St. Joseph, Missouri.
Consolidated property operating expenses decreased from
approximately $2.4 million in the third quarter of 1993 to
approximately $1.8 million in the third quarter of 1994 as a
result of decreases of approximately: $0.7 million at Paradigm,
due to reduced program production activity; and $0.3 million at
WMXN-FM due to the implementation on January 31, 1994 of the
LMA, which generally reduced the amount of operating expenses
reported by the station. The decreases were partially offset by
an increase of approximately $0.3 million at TCS primarily due
to increased expenses for news and higher sales commissions due
to
increased revenues.
Consolidated general and administrative expenses increased from
approximately $.7 million for the third quarter of 1993 to
approximately $1.0 million for the third quarter of 1994. This
increase was primarily as a result of an increase of
approximately $0.3 million at TCS.
Depreciation and amortization expense and interest expense
remained flat from the third quarter of 1993 to the third
quarter of 1994.
For the thirty-nine week periods ended September 30, 1994 and
September 30, 1993:
For the thirty-nine week period ended September 30, 1994,
Registrant had net income of approximately $118.6 million. This
was comprised of an extraordinary gain of approximately $130.3
million (due to the disposition of Maryland Cable on September
30, 1994) and a gain on the sale of the Windsor Systems of $0.6
million, partially offset by a loss from discontinued operations
of approximately $6.8 million and a loss from continuing
operations of approximately $5.5 million.
For the thirty-nine week period ended September 30, 1993,
Registrant had a net loss of approximately $25.6 million. This
was comprised of a loss from discontinued operations of
approximately $18.6 million and a loss from continuing
operations of approximately $7.0 million.
Registrant's loss from continuing operations for the first three
quarters of 1994 of approximately $5.5 million was comprised
primarily of the following components: (1) Registrant's combined
loss recognized from its investments in TCS, Paradigm and WMXN-
FM of approximately $3.1 million; and (2) management fees and
other general and administrative expenses; partially offset by
interest income.
Consolidated operating revenue decreased from approximately
$13.9 million for the first three quarters of 1993 to
approximately $10.7 million for the first three quarters of 1994
primarily as a result of decreases of approximately $5.9 million
at Paradigm/BBAD, due to reduced program production activity;
and $0.9 million at WMXN-FM due to the implementation on January
31, 1994 of the LMA (refer to "Liquidity and Capital Resources"
above), which generally reduced the amount of operating revenue
reported by the station. These decreases were partially offset
by an increase of approximately $3.6 million at TCS due
primarily to the consolidation of TCS's operations in the first
thirty-nine weeks of 1994, while the first quarter of 1993
reflected TCS's operations under the equity method of
accounting.
Consolidated property operating expenses decreased from
approximately $10.6 million for the first three quarters of 1993
to approximately $5.0 million for the first three quarters of
1994 primarily as a result of decreases of approximately: $6.8
million at Paradigm, due to reduced program production activity;
and $0.7 million at WMXN-FM due to the implementation on January
31, 1994 of the LMA, which generally reduced the amount of
operating expenses reported by the station. These decreases
were partially offset by an increase of approximately $1.9
million at TCS due to the consolidation of TCS's operations in
the first thirty-nine weeks of 1994, while the first quarter of
1993 reflected TCS's operations under the equity method of
accounting.
Consolidated general and administrative expenses increased from
approximately $1.6 million for the first three quarters of 1993
to approximately $3.2 million for the first three quarters of
1994. This increase was primarily as a result of an increase of
approximately $1.8 million due to the consolidation of TCS's
operations for the first three quarters of 1994, (the equity
method of accounting was utilized for TCS in the first quarter
of 1993) partially offset by a decrease of approximately $0.2
million at WMXN (due to the implementation on January 31, 1994
of the LMA, which generally reduced the amount of general and
administrative expenses reported by the station).
Depreciation and amortization expense decreased to approximately
$1.9 million in the first thirty-nine weeks of 1994 from
approximately $2.0 million in the first thirty-nine weeks of
1993. This decrease in depreciation expense of approximately
$0.1 million was comprised of increases or decreases at
Registrant's properties which were immaterial, both individually
and in the aggregate.
Interest expense increased from $2.5 million for the first three
quarters of 1993 to approximately $3.9 million for the first
three quarters of 1994. This increase resulted primarily from
the consolidation of TCS's operations for the first three
quarters of 1994 (the equity method of accounting was utilized
for TCS in the first quarter of 1993).
In previous periods, Registrant discussed in greater depth the
results of operations of Maryland Cable, because prior to its
disposition, Maryland Cable represented Registrant's major
operating property. However, following the disposition of
Maryland Cable on September 30, 1994, Registrant will no longer
discuss the results of operations of Maryland Cable.
PART II - OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
Reference is hereby made to Part I Item 1. Financial Statements
Footnote 2. Liquidity.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
During the period covered by this report, Registrant filed with
the Securities and Exchange Commission a Current Report on Form
8K dated October 17, 1994. This Current Report contained
details regarding the consummation of the Amended Prepackaged
Plan of Reorganization of Maryland Cable Corp. and Maryland
Cable Holdings Corp.
10.01 Asset purchase agreement between ML Media Opportunity
Partners, L.P. and US Radio of Norfolk, Inc. dated
October 26, 1994.
10.02 Agreement between ML Media Opportunity Partners, L.P., MV
Technology Limited, ALP Enterprises Inc., European Media
Partners Limited, and others dated August 12, 1994.
10.03 Share sale agreement between ML Media Opportunity
Partners, L.P., ALP Enterprises, Inc., European Media
Partners Limited, and others dated August 12, 1994.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: RP Opportunity Management, L.P.
General Partner
By: IMP Opportunity Management Inc.
Dated: November 14, 1994 /s/ I. Martin Pompadur
I. Martin Pompadur
Director and President
(principal executive officer)
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
ML MEDIA OPPORTUNITY PARTNERS, L.P.
By: Media Opportunity Management
Partners
General Partner
By: ML Opportunity Management Inc.
Dated: November 14, 1994 /s/ Kevin K. Albert
Kevin K. Albert
Director and President
Dated: November 14, 1994 /s/ Robert F. Aufenanger
Robert F. Aufenanger
Director and Executive
Vice President
Dated: November 14, 1994 /s/ David G. Cohen
David G. Cohen
Treasurer
(principal financial officer
and principal accounting
officer)
16
DATED August 12, 1994
(1) ML MEDIA OPPORTUNITY PARTNERS LP
(2) ALP ENTERPRISES INC
(3) PETER CLARK
(4) CHRISTOPHER TURNER
(5) EUROPEAN MEDIA PARTNERS LIMITED
SHARE SALE AGREEMENT
Denton Hall
Five Chancery Lane
Clifford's Inn
London EC4A 1BU
THIS AGREEMENT is made on August 12, 1994
BETWEEN:
(1) ML MEDIA OPPORTUNITY PARTNERS LP ("the Vendor") a limited
partnership having its principal office at 350 Park
Avenue, New York, New York 10022, United States of
America.
(2) ALP ENTERPRISES INC ("ALP") a company registered in
California and having its principal office at 9220 Sunset
Boulevard, Suite 220, Los Angeles, California 90069.
(3) PETER CLARK of Woodstock, Farm Lane, Purley, Surrey ("Mr
Clark") and CHRISTOPHER TURNER of Broom Lea Cottage,
Albury Heath, Surrey GU5 9DD ("Mr Turner") as partners in
a partnership known as the Clarendon Partnership.
(4) EUROPEAN MEDIA PARTNERS LIMITED ("the Company") a company
registered in England and Wales under number 1762921
whose registered office is at 25a Foubert's Place, London
W1V 1HE
ALP, Mr Clark and Mr Turner are hereinafter jointly referred
to as the Purchasers. Mr Clark and Mr Turner are hereinafter
jointly referred to as the "Clarendon Partners".
WHEREAS:
(A) In 1993 it became apparent to the Directors of the Company
that the funding requirements of the Company and its
subsidiaries had been underestimated and that in order for
the Company to survive and have any chance of growing,
additional capital was required for the Company. In
addition, ALP, the major funding shareholder, was not
prepared to invest further sums which would
disproportionately benefit the Vendor as a passive
shareholder.
(B) Accordingly, after discussions it was agreed that as at
31st December 1993 the only asset of the Company and its
subsidiaries of any potential substantial value was its
investment in shares in Teletext (as hereinafter defined)
which held the public Teletext License. It was therefore
agreed that arrangements would be put in place to preserve
the Vendor's position in that investment, whilst removing
them from the other activities of the Company and thus
allowing ALP to provide further funds and guarantees as
appropriate for the development of the business of the
Company.
(C) The Vendor is currently the beneficial owner of the Sale
Shares (as hereinafter defined). As part of these
arrangements the Vendor has agreed to sell and the
Purchasers have respectively agreed to buy the Sale Shares
on the terms and conditions hereinafter contained
NOW IT IS HEREBY AGREED as follows:
1. Interpretation
1.1 In this Agreement, the following expressions shall have
the meanings set out below unless otherwise specifically
provided or unless there be something in the subject
matter or context inconsistent therewith:
"Accounts Date": 31st December 1993;
"the ALP Sale Shares": 71 ordinary shares of 10p each in
the capital of the Company presently registered in the
name of the Vendor;
"the Clarendon Sale Shares": 79 ordinary shares of 10p
each in the capital of the Company presently registered in
the name of the Vendor;
"Completion": the completion of the sale and purchase of
the Sale Shares hereunder;
"Delta": Delta Ventures Limited, a company registered in
England and Wales under number 2772983;
"MVT": MV Technology Limited, a company registered in
England and Wales under no. 2842948;
"the Sale Shares": the ALP Sale Shares and the Clarendon
Sale Shares;
"Teletext": Teletext Holdings Limited, a company
registered in England and Wales under number 2645083
having its registered office at 101 Farm Lane, London SW6;
1.2 Words importing one gender shall be treated as importing
any gender, words importing individuals shall be treated
as importing corporations and vice versa, words importing
the singular shall be treated as importing the plural and
vice versa, and words importing the whole shall be treated
as including a reference to any part thereof.
1.3 Clause and paragraph headings are inserted for ease of
reference only and shall not affect construction.
1.4 References to recitals, clauses, sub-clauses, paragraphs
and schedules are to the recitals, clauses, sub-clauses,
paragraphs and the schedules of or to this Agreement.
2. Sale and Purchase
2.1 The Vendor as beneficial owner shall sell and ALP shall
buy with effect from Completion the ALP Sale Shares
together with any dividends, distributions and rights
declared, paid, created or arising after the date hereof
free from all claims, charges, liens, encumbrances,
options, rights of pre-emption or equities.
2.2 The Vendor as beneficial owner shall sell and the
Clarendon Partners shall buy with effect from Completion
the Clarendon Sale Shares together with any dividends,
distributions and rights declared, paid, created or
arising after the date hereof free from all claims,
charges, liens, encumbrances, options, rights of pre-
emption or equities.
2.3 The Purchasers shall not be obliged to complete the
purchase of any of the Sale Shares unless the purchase of
all the Sale Shares is completed simultaneously in
accordance with this Agreement.
3. Consideration
3.1 The consideration for the sale and purchase of the ALP
Sale Shares shall be the payment by ALP to the Vendor of
the sum of L7.10p payable in cash on Completion.
3.2 The consideration for the sale and purchase of the
Clarendon Sale Shares shall be the payment by the
Clarendon Partners to the Vendor of the sum of L7.90
payable in cash on Completion.
4. Completion
4.1 Completion shall take place immediately after signature of
this Agreement at such place as may be agreed between the
Vendor and the Purchasers.
4.2 At Completion the Vendor shall deliver to ALP:
(a) transfers in respect of the ALP Sale Shares duly
executed by the Vendor thereof in favor of ALP or its
nominee; and
(b) a certificate for the ALP Sale Shares and any other
documents which may be required to give good title to
the ALP Sale Shares and to enable ALP to procure
registration of the same in its name.
4.3 Subject to the Vendor complying with its obligations under
Clause 4.2 ALP shall pay to the Vendor at Completion the
consideration specified in clause 3.1.
4.4 At Completion the Vendor shall deliver to the Clarendon
Partners:
(a) transfers in respect of the Clarendon Sale Shares
duly executed by the Vendor thereof in favor of the
Clarendon Partners or their nominee; and
(b) a certificate for the Clarendon Sale Shares and any
other documents which may be required to give good
title to the Clarendon Sale Shares and to enable
Clarendon to procure registration of the same in its
name.
4.5 Subject to the Vendor complying with its obligations under
Clause 4.4 the Clarendon Partners shall pay to the Vendor
at Completion the consideration specified in clause 3.2.
5. Warranties
5.1 Subject to clause 5.2 each of Mr Clark, Mr Turner and the
Company hereby severally warrant to the Vendor as follows:-
(a) that the audited financial statements of the Company
for the period ending on the Accounts Date and which
are attached at schedule I do fairly represent the
financial position of the Company as at the Accounts
Date and the result of its operations to that date
and have been compiled in accordance with generally
accepted accounting principles in the United Kingdom;
(b) that the budget of the Company and its subsidiaries
for the financial year ending on December 31st 1994
attached at schedule II, which has been prepared on
the assumption that:
(i) no further financial commitment will be made to
Teletext and no commitment made to Delta and
that no repayment of capital, dividend or other
distribution by Teletext or Delta will be
received by the Company (or any of its
subsidiaries); and
(ii) no new investments will be made by the Company
(or any of its subsidiaries) in businesses or
companies or in any new assets of material
significance relative to the Company and its
subsidiaries
represented at the Accounts Date a reasonable
estimate of the projected performance of the existing
businesses of the Company and its subsidiaries during
1994 based on the assumptions referred to above;
(c) that we believe in good faith that the value of the
Company and its subsidiaries:
(i) excluding the value of any investment in shares
in Teletext at the date hereof and the
repayment of capital received by the Company
from Teletext on or around 20th March 1994;
(ii) excluding the value of the Company's indirect
investment in shares in Delta;
(iii) assuming repayment of the loan made by ALP to
Carousel Limited of L650,000 plus interest and
the amount of any other facilities (including
any amount paid by ALP as a consequent of any
guarantee provided by ALP) which may or may have
been provided to the Company or any of its
subsidiaries by ALP after the Accounts Date but
which have not been utilized as described in (iv)
below;
(iv) excluding the value of any assets (which for the
avoidance of doubt shall include TV programs,
film, video and other productions) or businesses
which may be or have been acquired, developed or
created by the Company or any of its subsidiaries
at any time after the Accounts Date;
(v) excluding any amount of rent which may be due by
Pavilion Limited to their landlords but which may
be forgiven up to an amount of L128,000; and
(vi) excluding the effect on the Company and its
subsidiaries or any of them of any event, matter
or thing which has happened since the Accounts
Date including without limitation, the successful
application by Talk Radio UK Limited for the
Independent National Radio Channel 3 franchise and
the consequent publicity for the Company and its
subsidiaries
at the Accounts Date and at all times up to and
including the 30th September 1995 will not exceed the
sum of L603,180, being the amount of capital contributed
by ALP to the Company as at the Account Date. For the
avoidance of doubt this amount excludes
the facilities used to acquire shares in Teletext which
facilities were provided by ALP by way of loan.
(d) that we believe in good faith that the post tax profits
of the Company and its subsidiaries (excluding any
repayment of capital, dividend or distribution received
from Teletext or Delta and any other income received (or
payments made) from any of the assets, facilities,
investments or matters referred to in sub-clause (c)
above) to 30th September 1995 would be insufficient to
repay to ALP the sum of L603,180;
(e) that the Company's investment in shares in Delta (via
its wholly owned subsidiary MediaVentures International
Limited) took place on 14th January 1994;
(f) that at the date hereof the Company beneficially owns
250,000 ordinary shares of L1 each in the capital of
Teletext and 100,000 8% cumulative redeemable preference
shares of L1 each which shares represent at the date
hereof 10% of the issued share capital of Teletext;
(g) that at the date hereof the 150 ordinary shares of 10p
each in the capital of MVT registered in the name of
MLMOP represent 13.8% of the issued ordinary shares in
MVT and the only other shares in MVT in issue are 100
Redeemable Preference Shares of L1 having the rights set
out in the Articles (the relevant articles being
attached at schedule III).
5.2 Subject to clause 6:
(a) The aggregate liability of the Clarendon Partners under
this clause 5.1(a)-(d) shall not exceed the sum of
L15,000.
(b) The liability of the Company under clause 5.1(a)-(d)
shall not exceed L100,000.
5.3 No claim may be made against the Clarendon Partners or either
of them or the Company (as the case may be) under this
Agreement unless notice in writing of the claim including
details of the basis of the claim and the amount of the claim
has been received by the Clarendon Partners or the Company
(as the case may be) before the second anniversary of the
date of this Agreement.
6. Liability of the Company pursuant to Clause 5
6.1 ALP and the Clarendon Partners have been advised that payment
by the Company of any amount due from the Company under
Clause 5 would constitute unlawful financial assistance
pursuant to S.151 Companies Act 1985 if the directors of the
Company considered it necessary, in their reasonable opinion,
at the date of this Agreement to make provision for any
contingent liability under clause 5 in its accounts, which
payment exceeded 1% of the net assets of the Company at that
time. The directors of the Company, in consultation with
their auditors consider that no such provision is necessary.
6.2 However, as further comfort to the Company in giving the
warranties contained in clause 5, ALP and the Clarendon
Partners have agreed with the Company as follows:
(i) in the event that any payment is due by the Company
under clause 5 in excess of 1% of its net assets at the
date of this Agreement (or such other amount as may, be
determined by senior corporate counsel on request by the
Company) ("the lawful amount"), each of ALP and the
Clarendon Partners agree that on the request of the
Company they will (whether in their capacity as
shareholders or directors of the Company) so far as may
be in their power and as soon as reasonably practicable
thereafter comply with the provisions of S.155-158
Companies Act 1985 so that as much of any payment due
from the Company pursuant to clause 5 as is lawfully
possible may be made out of distributable profits of the
Company; and
(ii) in the event that the amount of the Company's payment
pursuant to clause 5 exceeds the aggregate of the lawful
amount and the amount of the distributable profits of
the Company then available and used for such purpose
("the Shortfall"), the Clarendon Partners undertake to
the Company that they will on demand pay to the Company
as a gift the amount of the Shortfall.
7. Waiver of Pre-emption Rights
Each of the Vendor and the Purchasers hereby irrevocably
waive (and will procure the waiver by any nominee of) all and
any rights of pre-emption to which any of them (or any
nominee) may be entitled under the articles of association of
the Company, by agreement, by statute or otherwise in respect
of any transfer of the Sale Shares contemplated by this
Agreement.
8. English Law
This Agreement shall be governed by and construed in
accordance with English law and the parties hereby submit to
the non-exclusive jurisdiction of the English Courts.
AS WITNESS the hands of the parties' representatives on the date
stated above
SIGNED by )
for and on behalf of )
ML MEDIA OPPORTUNITY )/s/ I. Martin Pompadur
PARTNERS LP )
SIGNED by )
for and on behalf of )/s/ Au L. Sertn
ALP ENTERPRISES INC )
SIGNED by )
PETER CLARK )/s/ Peter A. Clark
SIGNED by )
CHRISTOPHER TURNER )/s/ Christopher Turner
SIGNED by )
for and on behalf of )/s/ Peter A. Clark
EUROPEAN MEDIA PARTNERS )
LIMITED )
SCHEDULE I
Audited Accounts of EMP
SCHEDULE II
Budget for year to December 31ST
1994 SCHEDULE III
Rights attaching to the Redeemable Preference Shares
The rights attaching to the Redeemable Preference Shares are as
follows:
(A) The Redeemable Preference Shares shall have no right to
dividends.
(B) The Redeemable Preference Shares shall on winding up or
other repayment of capital entitle the holders to have the
assets of the Company available for distribution among the
members applied, in priority to any other class of shares,
in paying to them pari passu the capital paid on such
shares.
(C) The Redeemable Preference Shares shall not confer the right
to any further or other participation in the profits or
assets of the Company.
(D) The Redeemable Preference Shares shall entitle the holders
to receive notice of but not to
(a) vote at any general meeting upon any resolution
(other than a resolution which varies or is deemed to
vary the rights attached to the Redeemable Preference
Shares; or
(b) attend at any general meeting unless the business of
the meeting includes the consideration of a resolution
upon which the holders of the Redeemable Preference
Shares are entitled to vote.
(E) subject to the provisions of the Act the Company may redeem
the Redeemable Preference Shares (in whole or in part) at
any time during the period commencing on 1st January 1996
and ending on 31st December 2000 and shall redeem any
Redeemable Preference Shares then in issue on 31st December
2000 and on redemption the following shall apply:
(i) the Company shall redeem the Redeemable Preference
Shares at par;
(ii) the Company shall give to the relevant holders notice
in writing not less than 30 days prior to any date
fixed by the Company for redemption of the Redeemable
Preference Shares and the notice shall fix a time and
place which shall be the registered office or
principal place of business of the Company in the
United Kingdom for such redemption;
(iii)at the time and place so fixed each holder of
Redeemable Preference Shares shall be bound to
surrender the certificate or certificates for the
Redeemable Preference Shares so held or an indemnity
in respect thereof in such terms as the Company may
reasonably require and upon such surrender the Company
shall pay to each holder the amount due in respect of
such redemption and in the case of a partial
redemption issue a new certificate for the Redeemable
Preference Shares not redeemed;
(iv) if any holder of Redeemable Preference Shares shall
fail or refuse to surrender the certificate or
certificates for such Redeemable Preference Shares or
shall fail or refuse to accept the redemption monies
payable in respect thereof the monies payable to such
holder shall be set aside and held by the Company in
trust for such holder but without interest or further
obligation whatsoever;
(v) no Redeemable Preference Shares redeemed by the Company
shall be capable of re-issue. Upon redemption of any
Redeemable Preference Shares the directors may convert
the authorized preference share capital created as a
consequence of such redemption into shares of any
other class of share capital into which the authorized
share capital of the Company is or may at that time be
divided of a like nominal amount (as nearly as may be)
as the shares of such class then in issue or into
unclassified shares of the same nominal amount as the
Redeemable Preference Shares.
(F) Any redemption of the Redeemable Preference Shares may be
effected out of the accumulated profits of the Company, out
of the proceeds of a fresh issue of shares made for the
purpose of such redemption or in any other manner resolved
by the Directors and for the time being permitted by law.
4
ASSET PURCHASE AGREEMENT
October 26, 1994
The parties to this agreement are ML Media Opportunity
Partners, L.P., a Delaware limited partnership (the "Seller"),
and US Radio of Norfolk, Inc., a Virginia corporation (the
"Buyer").
The Seller owns and operates radio station WMXN-FM,
Norfolk, Virginia (the "Station"). The Seller and US Radio,
L.P., an affiliate of the Buyer ("US Radio"), entered into a
Time Brokerage Agreement (the "LMA Agreement") dated January
25, 1994 and US Radio assigned its rights and obligations under
the LMA Agreement to Buyer on September 23, 1994. Pursuant to
the LMA Agreement the Seller has made the facilities of the
Station available to US Radio and then to Buyer for broadcast
of its programming and has provided the commercial time on the
Station to US Radio and then to Buyer for sale to advertisers.
Subject to the prior consent of the Federal Communications
Commission (the "Commission"), the Seller desires to sell
substantially all of the assets relating to the Station to the
Buyer, and the Buyer desires to purchase those assets, on the
terms and conditions contained in this agreement.
Accordingly, it is agreed as follows:
1. Sale and Purchase of Assets.
1.1 Sale of Assets to Buyer. At the Closing
referred to in section 3.1, the Seller shall sell and assign
to the Buyer,
and the Buyer shall purchase and acquire from the Seller, all
of the business of the Seller relating to the Station and all
of the assets of the Seller used exclusively in the operations
of the Station (excluding only the assets referred to in
section 1.2) as those assets exist on the Closing Date referred
to in
section 3.1, except that the FCC Licenses (as defined in
section 1.1(a)) shall be assigned to USR of Norfolk FM-2, Inc.,
a Nevada corporation under common control with Buyer. Except
as otherwise provided in section 1.2, the assets of the Station
to be sold and assigned (collectively, the "Assets") include,
but are not limited to, the following:
WORD\LIZ\MOPP\PURCHASE.AGR
(a) all broadcast licenses (the "FCC Licenses")
for the Station issued by the Commission and any other permits
and authorizations (and applications for any of them) relating
to the operation of the Station, including, but not limited to,
those listed on schedule 1.1(a);
(b) all equipment (including computers and
office equipment), transmitting towers, transmitters, supplies,
vehicles, furniture, fixtures and leasehold improvements, and
all other tangible personal property, wherever located, which
is owned by the Seller and used exclusively in the operation of
the Station, 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
including, but not limited to, the items listed on
schedule 1.1(b) (the "Equipment");
(c) all rights of the Seller under the
following leases, commitments and other agreements relating to
the operations of the Station, to the extent that those rights
relate to the period after the Closing Date, (i) if the LMA
Agreement has been terminated due to a breach by Buyer, all
commitments and other agreements relating to the sale (for cash
or trade) of advertising time entered into by Seller in the
ordinary course of business at commercially reasonable rates
provided that no such agreement shall have a term longer than
six weeks and that with respect to any trade agreements (a) the
aggregate rate card value as of the Closing Date of unused time
exchanged for products or services pursuant to "barter" and
"trade" agreements entered into by Seller relating to the
Station shall not exceed $5,000, (b) the time under the
agreement shall be immediately preemptible for cash time sales,
and (c) the agreement shall require air time on a run of
schedule basis, (ii) the leases, commitments and other
agreements listed on schedule 4.12, and (iii) any other leases,
commitments and other agreements relating to the business of
the Station that are entered into in accordance with the
provisions of section 6.2 between the date of this agreement
and the Closing Date;
(d) all promotional materials, trademarks,
trade names, logos, copyrights (including registrations and
applications for registration of any of them), jingles, slogans
and other tangible and intangible personal property (including,
but not limited to, the trademarks, trade names and logos
listed on schedule 1.1(d)), all of the Seller's rights to use
the call letters "WMXN", together with the good will of the
businesses associated with those trademarks, trade names, logos
and copyrights, and all customer lists, trade secrets and
business plans used in connection with the operation of the
Station; and
(e) all files, logs and business records of
every type and nature and data relating to the operations of
the Station, including, but not limited to, public inspection
files, political files, FCC applications, programming
information and studies, technical information and engineering
data, news and advertising studies or consulting reports, sales
correspondence, lists of advertisers, promotional materials,
and credit and sales records, other than account books of
original entry and general ledgers; provided, however, that (1)
the Buyer shall maintain and make available to the Seller for a
period of six years copies of any such records that the Seller
may require for preparation of its income tax returns, audited
financial statements or other similar purposes, and (2) the
Seller shall maintain and make available to the Buyer for a
period of six years any records relating to the Station
excluded from the sale to Buyer.
1.2 Excluded Assets. The following assets used in
the operations of the Station shall be retained by the Seller
and shall not be sold or assigned to the Buyer:
(a) all cash, bank accounts, certificates of
deposit, commercial paper, treasury bills and notes and all
other marketable securities as of 12:01 AM on the Closing Date;
(b) any accounts receivable (the "Accounts
Receivable"), of the Station for broadcast time and services
provided by the Seller (and not by the Buyer pursuant to the
LMA Agreement) prior to 12:01 AM on the Closing Date in
existence on the Closing Date (except that any amounts included
in accounts receivable with respect to "barter" transactions or
"trade" agreements shall not be excluded from the sale);
(c) any lease, commitment or other agreement as
to which consent to assignment is required but cannot be
obtained or that Buyer has not agreed to assume pursuant to
section 1.1(c);
(d) the account books of original entry and
general ledgers and all partnership records of the Seller,
including minute books, tax returns and transfer books;
(e) the Seller's interest in its 401(k)
Retirement Plan; and
(f) all the assets of the Seller located at or
used in connection with the Norwalk, Connecticut headquarters
office of Fairfield Communications, Inc., which provides
financial and accounting services to the Seller (other than any
business records to be sold and assigned to the Buyer pursuant
to section 1.1(e)).
2. Purchase Price.
2.1 Deposit. Upon execution of this agreement, the
Buyer is delivering to Kalil & Co. Inc. ("Escrow Agent") to be
held in escrow pursuant to the Escrow Agreement attached as
Exhibit 2.1 an irrevocable letter of credit in the amount of
$175,000 from Chemical Bank (the "Letter of Credit"), to be
held subject to the following:
(a) If the purchase of the Assets under this
agreement is not consummated as a result of a material breach
by the Buyer of any of its obligations under this agreement and
the Seller shall not be in breach of any of its material
obligations under this agreement, the Seller shall be entitled
to take the Letter of Credit from escrow (it being understood
that the Letter of Credit will be returned to the Buyer if the
Station is sold and the Seller receives $3,500,000 in proceeds
of the sale, as provided in section 4 of the Option Agreement
(the "Option Agreement") dated January 25, 1994 among US Radio,
Inc. (which assigned its rights and obligations under the
Option Agreement to the Buyer), the Seller and US Radio, L.P.
The parties acknowledge that if this agreement is not
consummated as a result of Buyer's material breach and Seller
elects not to avail itself of the remedy provided in section 4
of the Option Agreement, Seller would be entitled to
compensation, the extent of which would be extremely difficult
and impractical to ascertain. To avoid this problem, the
parties agree that if this agreement is not consummated due to
the default of Buyer and Seller does not elect to avail itself
of the remedy provided in section 4 of the Option Agreement,
Seller shall be entitled to retain the proceeds of the Letter
of Credit as liquidated damages, provided that Seller is not in
material default and has otherwise complied in all material
respects with its obligations under this agreement. The parties
agree that in such event the proceeds of the Letter of Credit
shall constitute liquidated damages and shall be in lieu of any
other relief to which Seller might otherwise be entitled due to
Buyer's wrongful failure to consummate this agreement. The
foregoing three sentences shall be inapplicable if Seller
elects to avail itself of the remedy provided in section 4 of
the Option Agreement, and if Buyer breaches its obligations
under section 4 of the Option Agreement, Buyer shall indemnify
Seller against all loss, liability, damage or expense incurred
by Seller as a result of the breach and Buyer may apply the
proceeds of the Letter of Credit in payment thereof.
(b) If the purchase of the Assets under this
agreement is not consummated for any reason other than as set
forth in section 2.1(a), or the Seller is in breach of any of
its material obligations under this agreement or the Station is
sold pursuant to section 4 of the Option Agreement, the Seller
shall not be entitled to draw on the Letter of Credit and,
promptly after the termination of this agreement, the Letter of
Credit shall be returned by the Escrow Agent to the Buyer. At
the Closing, the Letter of Credit shall be returned by the
Escrow Agent to the Buyer.
2.2 Amount and Payment of Consideration. The
aggregate consideration for the Assets shall be paid at the
Closing as follows:
(a) at the Closing, the Buyer shall pay to the
Seller, by wire transfer of immediately available funds, an
amount equal to $3,500,000, as adjusted pursuant to section
8.3; and
(b) at the Closing, the Buyer shall assume, and
shall agree to pay, perform and discharge all of the
obligations of the Seller relating to the operations of the
Station that arise after 12:01 AM on the Closing Date under
those leases, commitments and other agreements relating to the
operations of the Station assigned to the Buyer pursuant to
section 1.1(c).
2.3 Limitation on Assumption of Liabilities. Except
as specifically provided in section 2.2(b), the Buyer shall not
assume or be responsible for any liabilities or obligations of
the Seller relating to the operations of the Station and the
Seller shall pay, perform and discharge all such liabilities
and obligations.
2.4 Allocation. The purchase price for the Assets
shall be allocated to the Assets and the Noncompetition
Agreement referred to in section 6.17 in accordance with an
allocation schedule to be prepared pursuant to Section 1060 of
the Internal Revenue Code and mutually agreed upon by Seller
and Buyer. Seller and Buyer shall use such allocation for tax
(including without limitation preparation of IRS Form 8594),
accounting, and all other purposes. If Seller and Buyer have
not agreed upon the allocation prior to the Closing Date, the
Closing shall take place as scheduled and any dispute shall be
resolved by a qualified media appraiser mutually acceptable to
Seller and Buyer, whose decision shall be final and whose fees
and expenses shall be paid one-half by Seller and one-half by
Buyer. If the allocation must be determined by a media
appraiser, Seller and Buyer agree to cooperate in good faith so
that such appraisal may be completed as expeditiously as
practicable.
3. Closing.
3.1 Date of Closing. The Closing under this
agreement shall take place at the offices of Proskauer Rose
Goetz & Mendelsohn, 1585 Broadway, New York, New York on a date
mutually agreed to by the Buyer and the Seller which is within
five business days after the conditions specified in sections
7.1(c) and 7.2(d) have been fulfilled (or waived). The date on
which the Closing is held is referred to in this agreement as
the "Closing Date". At the Closing, the parties shall execute
and deliver the documents referred to in section 8.
3.2 Outside Date for Closing. If the Closing has
not occurred within 180 days after the date of the filing
referred to in section 6.1 (which period may be extended by
Buyer or Seller by notice to the other given prior to the end
of the 180-day period until 30 days after such time as the
applications filed
with the Commission pursuant to section 6.1 shall have been
granted or denied and such action has become a Final Order (as
defined in section 7.1)), the Seller or the Buyer may terminate
this agreement by notice to the other; upon such termination,
(a) the Escrow Agent shall return the Letter of Credit to the
Buyer and neither of the parties shall have any liability of
any kind arising out of this agreement other than for any
liability resulting from its breach of this agreement prior to
termination, and (b) the provisions of section 4 of the Option
Agreement shall become applicable.
4. Representations and Warranties by the Seller.
As indicated above, pursuant to the LMA Agreement,
the Seller has made the facilities of the Station available to
US Radio and then to Buyer for broadcast of its programming and
has provided the commercial time on the Station to US Radio and
then to Buyer for sale to advertisers. Pursuant to the LMA, US
Radio had and Buyer has certain obligations and
responsibilities with respect to the operation of the Station.
Notwithstanding anything to the contrary in this agreement,
there shall be excluded from the Seller's representations and
warranties and covenants and agreements under this agreement
the results of any action or inaction by US Radio or Buyer
pursuant to the LMA Agreement. Subject to the foregoing, the
Seller represents and warrants to the Buyer as follows:
4.1 Seller's Organization and Authority. The Seller
is a limited partnership duly organized, validly existing and
in good standing under the law of the State of Delaware. The
Seller has the full partnership power and authority to enter
into and to perform this agreement and to own and operate the
Station. The addresses of Seller's chief executive office and
of all places where any of the tangible personal property
included in the Assets is now located, or has been located
during the past six (6) months, are listed in schedule 4.1.
Except as set forth in schedule 4.1, since May 1989, Seller
has not 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 Assets.
4.2 Authorization of Agreement. The execution,
delivery and performance of this agreement by the Seller has
been duly authorized by all necessary partnership action of the
Seller, and this agreement constitutes a valid and binding
obligation of the Seller enforceable against the Seller in
accordance with its terms, except as may be limited by
bankruptcy, insolvency or other similar laws affecting the
enforcement of creditors' rights in general and subject to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
4.3 Consents of Third Parties. Subject to receipt
of the consents and approvals referred to in schedule 4.3, the
execution, delivery and performance of this agreement by the
Seller will not (i) conflict with the certificate of limited
partnership or the partnership agreement of the Seller and will
not conflict with, or result in a breach or termination of or
constitute a default under, any lease, agreement, commitment or
other instrument, or any order, judgment or decree to which the
Seller is a party or by which the Seller is bound, or to which
any of the Assets is subject, except for conflicts, breaches,
terminations or defaults that are not in the aggregate material
to the Seller's performance of this agreement and to the
operations of the Station; (ii) constitute a violation by the
Seller of any law applicable to the Seller or the Station; or
(iii) result in the creation of any lien, claim, charge or
encumbrance ("Lien") upon any of the Assets. No consent,
approval or authorization of, or designation, declaration or
filing with, any governmental authority is required on the part
of the Seller in connection with the execution, delivery and
performance of this agreement, except for the filing with the
Commission referred to in section 6.1.
4.4 Title to Assets. Except as set forth on
schedule 4.4, the Seller has, and at the Closing the Buyer will
receive, good and marketable title to all of the Assets free
and clear of any Lien (except for the lien, if any, of current
taxes not yet due and payable).
4.5 FCC Licenses. The Seller lawfully obtained and
lawfully holds the FCC Licenses and all other material permits
and authorizations necessary for the operations of the Station,
and each of the FCC Licenses is, and all such permits and
authorizations are, in full force and effect, and are subject
to no conditions or restrictions other than those which appear
on their face. The FCC Licenses comprise all of the FCC
licenses, permits and authorizations necessary for the Seller
to own and operate the Station as currently operated. Schedule
1.1(a) contains a true and complete list of the FCC Licenses
currently in effect and all such permits and authorizations
currently in effect necessary for the operation of the Station
(showing, in each case, the expiration date), true and correct
copies of which have been delivered by the Seller to the Buyer.
Except as set forth on schedule 4.5, no application, action or
proceeding is pending for the renewal or modification of any of
the FCC Licenses or any of such permits or authorizations, and
no application, action or proceeding is pending or, to the best
of the Seller's knowledge, threatened that may result in the
denial of the application for renewal, the revocation,
modification, nonrenewal or suspension of any of the FCC
Licenses or any of such permits or authorizations, the issuance
of a cease-anddesist order, or the imposition of any
administrative or judicial sanction with respect to the Station
that may materially adversely affect the rights of the Buyer
under any such FCC Licenses, permits or authorizations.
4.6 Call Letters. The Station has the right to the
use of its call letters, viz., "WMXN", pursuant to the rules
and regulations of the Commission.
4.7 Operations of the Station. The Station is being
operated by the Seller in all material respects in accordance
with the FCC Licenses, in compliance with the Communications
Act of 1934 and the rules and regulations thereunder and in all
material respects in compliance with all applicable federal,
state and local laws, rules, regulations and policies.
4.8 Financial Statements. The Seller has previously
delivered to the Buyer the unaudited balance sheets of the
Station as of December 31, 1992 and September 30, 1993, and the
related unaudited statements of operations. These financial
statements have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis
and fairly present in all material respects the financial
position and the results of operations of the Station as of the
dates and for the periods indicated.
4.9 Absence of Certain Changes. From September 30,
1993 the Seller has operated the business of the Station in the
usual and ordinary course and substantially consistent with its
past practice with respect to the Station (except that the
Seller entered into the LMA Agreement), and, except as set
forth on schedule 4.9:
(a) the Seller did not, with respect to the
Station, enter into any transaction or incur any liability or
obligation that was entered into or incurred other than in the
ordinary course of the business of the Station;
(b) the Seller did not sell or transfer any of
the assets of the Station other than in the ordinary course of
business consistent with past practice; and
(c) the Seller did not incur any indebtedness
with respect to the Station other than indebtedness to trade
creditors incurred in the ordinary course of business.
4.10 Intangible Assets. Schedule 1.1(d) contains a
complete list of the trademarks, trade names, logos, jingles,
slogans and other intellectual property used by the Seller in
the operation of the Station. The Seller owns, free and clear
of any Liens, each of the trademarks, trade names, logos,
jingles, slogans and other intellectual property listed on
schedule 1.1(d). To the best of the Seller's knowledge, the
Seller is not operating the Station in a manner that infringes
in any material respect any patent, copyright, trademark or
other intellectual property right of any third party or
otherwise violates in any material respect the rights of any
third party, and no claim has been made or threatened against
it alleging any such violation. To the best of the Seller's
knowledge, there has been no material violation by others of
any right of the Seller in any trademark, trade name, logo,
jingle, slogan or other intellectual property right used in the
operation of the Station.
4.11 Litigation; Compliance with Laws. Except as
set forth on schedule 4.11, there is no claim, litigation,
proceeding or governmental investigation pending or, to the
knowledge of the Seller, threatened, or any order, injunction
or decree outstanding, against the Seller or the Assets, which
if adversely determined might (i) have a material adverse
effect on the Assets or the operations of the Station, (ii)
delay approval by the Commission of the transactions
contemplated by this agreement, or (iii) prevent the
consummation of the transactions contemplated by this
agreement. The Seller is in compliance in all material
respects with all laws, regulations and ordinances and all
other requirements of any governmental body or court relating
to the Assets or the operations of the Station, and no notice
has been received by the Seller or its partners, officers or
directors alleging any violation thereof.
4.12 List of Agreements, etc. Schedules 4.12 and
4.13 together contain, with respect to agreements relating to
the Station entered into by or on behalf of the Seller, a
complete list of: (a) all commitments and other agreements for
the purchase of any materials, supplies or equipment; (b) all
notes and agreements relating to any indebtedness of the
Seller; (c) all leases or other rental agreements under which
the Seller is either lessor or lessee; (d) all employment and
consulting agreements to which the Seller is a party; (e) all
collective bargaining agreements to which the Seller is a
party; and (f) all other agreements, commitments and
understandings (written or oral) that require payment or
performance by Seller.
4.13 Agreements Regarding Employees. Except as set
forth in schedule 4.13, the Seller is not a party to nor bound
by with respect to the employees of the Station any fringe
benefit
or other non-cash compensation plan, or any pension, thrift,
annuity, retirement, stock option, stock purchase, savings,
profit sharing or deferred compensation plan or agreement, or
any bonus, vacation, holiday, severance, sick leave, group
insurance, health or other personal insurance or other
incentive or benefit contract, plan or arrangement. Except as
set forth on
schedule 4.13, no employee of the Seller is represented by any
union or other collective bargaining agent and there are no
collective bargaining or other labor agreements with respect to
any such employee.
4.14 Status of Agreements. Except as set forth on
schedule 4.14, the Seller is not in default, and, to the best
of the Seller's knowledge, no other party is in default under
any agreement referred to in section 4.12 or 4.13, nor to the
best of Seller's knowledge has any event occurred that, with
the lapse of time or the election by either party would result
in a default under any of those agreements, in any case where
such default would have a material adverse effect upon the
operation of the Station. Those agreements whose stated
duration extends beyond the Closing Date will, at the Closing,
be in full force and effect, unimpaired by any acts or
omissions of Seller, Seller's employees or agents, or Seller's
partners.
4.15 Equipment. The Equipment, together with any
improvements and additions thereto and replacements thereof
less any retirements or other dispositions as permitted by this
agreement between the date hereof and the Closing Date, will,
at the Closing, be all the tangible personal property used in
or necessary for the lawful operation of the Station as
presently operated by Seller. All Equipment is serviceable, in
reasonably good operating condition (reasonable wear and tear
excepted), and is not in imminent need of repair or
replacement. All items of transmitting and studio equipment
included in the Equipment (i) have been maintained in a manner
consistent with generally accepted standards of good
engineering practice, and (ii) will permit the Station to
operate in accordance with the terms of the FCC Licenses.
4.16 Real Property. The only real property
interests (the "Real Property") relating to the operation of
the Station is the lease of the studio space (the "Studio
Space") located at Riverside Corporate Center, 240 Corporate
Boulevard, Suite 105, Norfolk, Virginia, and the lease of space
on the tower for the Station's antenna (the "Antenna Space")
and space (the "Transmitter Space") in the transmitter building
(the "Transmitter Building") located at 5414 Nansemond Parkway,
Suffolk, Virginia. ML Media has valid and subsisting leasehold
interests for the Studio Space and the Antenna Space and the
Transmitter Space. The Real Property is all of the real estate
used in or necessary for the lawful operation of the Station as
presently operated by Seller. Seller has and, after the
Closing the Buyer will have, full legal and practical access to
the Real Property. There are no encroachments upon the
Transmitter Building by any buildings, structures, or
improvements located on adjoining real estate. To the best of
Seller's knowledge, the Transmitter Building does not encroach
upon adjoining real estate, and the Transmitter Building is
constructed in conformity with all "set-back" lines, easements
and other restrictions or rights of record, and all applicable
building and 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 the
Studio Space, the Antenna Space or the Transmitter Building.
To the best of Seller's knowledge, there are no structural
defects in the towers, structures and other improvements on
which the Antenna is located or in the
Transmitter Building. The lease pursuant to which ML Media
leases the space for the Antenna Space and the Transmitter
Space (or a memorandum thereof) will be duly recorded in the
land records of the jurisdiction where such real estate is
located prior to the Closing.
4.17 Environmental Protection. Neither the
ownership nor operation of the Station or the Assets by Seller
violates in any material respect any law or regulation of any
governmental authority relating to pollution or protection of
the environment, including without limitation any law or
regulation relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into ambient air,
surface water, groundwater, land or other environmental media
("Environmental Law"). "Hazardous Substances" means any
hazardous or toxic waste, substance or material, as those or
similar terms are defined in or for purposes of any applicable
federal, state or local Environmental Law, and including
without limitation any asbestos or asbestos-related products,
oils or petroleum-derived compounds, CFCs, or PCBs. Without
limiting the generality of the foregoing, (i) no Hazardous
Substances are located on or about the Studio Space, the
Antenna Space or the Transmitter Space in quantities that
violate applicable law in any material respect or could result
in any material liability of Seller to any third party, and the
Studio Space, the Antenna Space and the Transmitter Space have
not previously been used by Seller or, to the best of Seller's
knowledge, any other person for the manufacture, refining,
treatment, storage, or disposal of any Hazardous Substances;
(ii) no Hazardous Substances are being or have been by Seller,
or to the best of Seller's knowledge, by any third person,
emitted, discharged or released, directly or indirectly, into
the environment from the Studio Space, the Antenna Space or the
Transmitter Space in quantities that violate applicable law in
any material respect or could result in any material liability
of Seller to any third party; (iii) to the best of its
knowledge, Seller is not liable for cleanup or response costs
with respect to any present or past emission, discharge, or
release of any Hazardous Substances from the Studio Space, the
Antenna Space or the Transmitter Space; and (iv) 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.
4.18 Insolvency Proceedings. No insolvency
proceedings of any character, including without limitation
bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting
the Seller or the Assets are pending or threatened. The Seller
has not made an assignment for the benefit of creditors or
taken any action with a view to, or that would constitute a
valid basis for, the institution of any such insolvency
proceedings. On the Closing Date, Seller (i) will have
sufficient capital to carry on its business and transactions as
then carried on, (ii) will be able to pay its debts as they
mature or become due, and (iii) will own assets the fair market
value of which will be greater than the sum of all liabilities
of Seller not specifically assumed by US Radio pursuant to the
terms of this agreement.
4.19 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 transactions contemplated by this
agreement 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.
5. Representations and Warranties by the Buyer
The Buyer represents and warrants to the Seller as
follows:
5.1 The Buyer. The Buyer is a corporation duly
organized and validly existing and in good standing under the
law of the state of Virginia and has the full power and
authority to enter into and perform this agreement in
accordance with its terms.
5.2 Authorization of Agreement. The execution,
delivery and performance of this agreement by the Buyer have
been duly authorized by all necessary corporate action of the
Buyer and this agreement constitutes the valid and binding
obligation of the Buyer enforceable against it in accordance
with its terms, except as may be limited by bankruptcy,
insolvency or other similar laws affecting the enforcement of
creditors' rights in general and subject to general principles
of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
5.3 Consents of Third Parties. The execution,
delivery and performance of this agreement by the Buyer will
not (a) conflict with the certificate of incorporation or by-
laws of the Buyer and will not conflict with or result in the
breach or termination of, or constitute a default under, any
lease, agreement, commitment or other instrument, or any order,
judgment or decree to which the Buyer is a party or by which
the Buyer is bound, except for conflicts, breaches,
terminations or defaults that are not in the aggregate material
to the Buyer's performance of this agreement or (b) constitute
a violation by the Buyer of any law or regulation applicable to
it. No consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority is
required on the part of the Buyer in connection with the
execution, delivery and performance of this agreement, except
for the filings with the Commission referred to in section 6.1.
5.4 Litigation. There is no claim, litigation,
proceeding or governmental investigation pending or, to the
best of the Buyer's knowledge, threatened, or any order,
injunction or decree outstanding, against the Buyer or any of
its affiliates that would prevent the consummation of the
transactions contemplated by this agreement.
5.5 Buyer's Qualification. To the best of its
knowledge, the Buyer is legally, financially and otherwise
qualified under the rules and regulations of the Commission and
the Communications Act of 1934, as amended, to become the
owner, operator and licensee of the Station.
5.6 Financial Capability. The Buyer has the
financial resources necessary to consummate the transactions
contemplated by this agreement.
6. Further Agreements of the Parties.
6.1 Filings with the Commission. As soon as
practicable, but in no event later than 15 days after the date
of this agreement, the parties shall file with the Commission
an application or applications requesting consent to the
transactions contemplated by this agreement; the parties shall
with due diligence take all reasonable steps necessary to
expedite the processing of the application or applications and
to secure such consent or approval. Any Commission filing fees
shall be borne 50% by Seller and 50% by Buyer and each party
shall bear its own costs and expenses (including the fees and
disbursements of its counsel) in connection with the
preparation of the portion of any such application to be
prepared by it and in connection with the processing of that
application.
6.2 Operations of the Station. From the date of
this agreement through the Closing Date, subject to the terms
of the LMA Agreement, the Seller shall (i) maintain all of the
FCC Licenses in full force and effect, (ii) not enter into any
lease, agreement or other commitment that would have to be
listed on schedule 4.12 or 4.13 without the prior written
consent of the Buyer, (iii) operate the Station in the normal
and usual manner and in material compliance with all applicable
laws, regulations and orders of the Commission and other
governmental authorities, (iv) use the Assets only for the
operation of the Station, maintain the Assets in substantially
their present condition (reasonable wear and tear in normal use
and damage due to unavoidable casualty excepted) and promptly
give Buyer written notice of any unusual or materially adverse
developments of which it has knowledge with respect to the
Assets or the business or operations of the Station, (v) except
to the extent assumed pursuant to the LMA Agreement, perform
all agreements listed in schedules 4.12 and 4.13 without
default and pay all accounts payable in a timely manner;
provided, however, that Seller may dispute, in good faith and
through appropriate proceedings, any alleged obligation of
Seller, and (vi) not: (a) sell or otherwise dispose of any
Assets except in the ordinary course of business and only if
any property disposed of is replaced by property of like or
better value, quality and utility prior to Closing; or (b)
cancel, terminate, modify, amend, or renew any of the
agreements listed in schedules 4.12 and 4.13 without Buyer's
prior written consent.
6.3 No Control. Between the date of this agreement
and the Closing Date, the Buyer shall not, directly or
indirectly, control, supervise or direct, or attempt to
control, supervise or direct, the operations of the Station,
but, subject to the terms of the LMA Agreement, such operations
shall be solely the responsibility of the Seller and shall be
in its complete discretion.
6.4 Expenses. Each party shall bear its own
expenses incurred in connection with the negotiation and
preparation of this agreement and in connection with all
obligations required to be performed by it under this
agreement, except where specific expenses have been otherwise
allocated by this agreement.
6.5 Access to Information. Prior to the Closing,
the Buyer and its representatives may make such investigation
of the property, assets and businesses of the Station as it may
desire, and the Seller shall give to the Buyer and to its
counsel, accountants and other representatives, upon reasonable
notice, full access during normal business hours throughout the
period prior to the Closing to all of the assets, books,
commitments, agreements, records and files of the Seller
relating to the Station and the Seller shall furnish to the
Buyer during that period all documents and copies of documents
and information concerning the businesses and affairs of the
Station as the Buyer reasonably may request. The Buyer shall
hold, and shall cause its representatives to hold, all such
information and documents and all other information and
documents delivered pursuant to this agreement confidential
and, if the purchase and sale
contemplated by this agreement is not consummated for any
reason, shall return to the Seller all such information and
documents and any copies as soon as practicable, and shall not
disclose any such information (that has not previously been
disclosed by a party other than the Buyer) to any third party
unless required to do so pursuant to a request or order under
applicable laws and regulations or pursuant to a subpoena or
other legal process. The Buyer's obligations under this section
shall survive the termination of this agreement.
6.6 Consents; Assignment of Agreements. The Seller
shall use reasonable efforts (but shall not be required to make
any payment) to obtain at the earliest practicable date all
consents and approvals referred to in schedule 4.3. If, with
respect to any lease, commitment or agreement to be assigned to
the Buyer, a required consent to the assignment is not obtained
(and, accordingly, pursuant to section 1.2(c), the lease,
commitment or agreement is excluded from the sale to the
Buyer), the Seller shall keep it in effect and shall use
reasonable efforts to give the Buyer the benefit of it to the
same extent as if it had been assigned, and the Buyer shall
perform the Seller's obligations under the agreement but only
to the extent that the Buyer receives the benefits to which the
Seller is entitled under such agreement; provided, however,
that if the required consent to the assignment of the studio
lease is not obtained, the Buyer shall have no obligation with
respect to the studio lease. Nothing in this agreement shall be
construed as an attempt to assign any agreement or other
instrument that is by its terms nonassignable without the
consent of the other party.
6.7 Sales Taxes; FCC Fees. The Buyer and the Seller
shall each pay 50% of any state or local sales and use taxes
payable in connection with the sale of the Assets.
6.8 Brokerage Fees. The Seller shall pay the
brokerage fee in the amount of $160,000 payable to Kalil & Co.,
Inc., arising in connection with the transactions contemplated
by this agreement, pursuant to the separate agreement between
the Seller and Kalil & Co., Inc. The Seller and the Buyer
shall indemnify and hold each other harmless against any claim
by any broker or finder based on any agreement or understanding
alleged to have been made by the Seller or the Buyer, as the
case may be.
6.9 Further Assurances. At any time and from time
to time after the Closing, each of the parties shall, without
further consideration, execute and deliver to the other such
additional instruments and shall take such other action as the
other may request to carry out the transactions contemplated by
this agreement. For a period of three years after the Closing,
each party shall grant the other reasonable access during
normal business hours upon reasonable prior notice to the books
and records of that party for the purpose of complying with any
applicable law or governmental rule or request relating to the
period during which the other party operated the Station.
6.10 Damage.
(a) Risk of Loss. The risk of loss or damage
to the 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 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, the 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,
the Closing shall be postponed, with prior consent of the
Commission if necessary, for such reasonable period of time
(not to exceed one hundred eighty (180) days) as is necessary
for Seller to repair, replace or restore the lost or damaged
property to its former condition. If the damaged property
cannot be repaired, replaced or restored within the 180-day
period Buyer may elect, by notice to Seller within 15 days
after the end of the 180-day period, to terminate this
agreement or to close and accept the Assets as is (in which
event Seller shall assign to Buyer the right to any insurance
proceeds with respect to the loss or damage).
(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. If, prior to the
Closing, the Station is not operated at its licensed operating
parameters for more than seventy-two (72) hours (or, in the
event of force majeure or utility failure affecting generally
the market served by the Station, ninety-six (96) 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
the Closing shall be held as scheduled, and the Seller shall
assign to the Buyer any proceeds of the business interruption
insurance maintained by the Seller. Seller shall maintain in
force the business interruption insurance described on exhibit
6.10(b).
(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 acceptable 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.
6.11 Administrative Violations. If Seller receives
any finding, order, complaint, citation or notice prior to the
Closing which states that any aspect of the Station's
operations violates or may violate any rule, regulation or
order of the Commission or of any other governmental authority
(an "Administrative Violation"), including without limitation
any rule, regulation or order concerning environmental
protection, the employment of labor, or equal employment
opportunity, Seller shall promptly notify Buyer of the
Administrative Violation, use reasonable efforts to remove or
correct the Administrative Violation, and be responsible for
the payment of all costs associated therewith, including any
fines or back pay that may be assessed.
6.12 Bulk Sales Act. Seller shall indemnify and
hold
Buyer harmless against any cost or expense, including without
limitation reasonable legal fees, incurred by Buyer as a result
of the failure to comply with any applicable Bulk Sales Act.
6.13 [Intentionally Omitted]
6.14 Occupancy Certificates. At the Closing, Seller
shall use reasonable efforts to 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 by Seller prior to the Closing and by Buyer after
the Closing. No proceedings to amend, cancel, or revoke any
such Occupancy Certificates shall be pending or threatened as
of the Closing Date.
6.15 Discharge of Liens. At the Closing, Seller
shall
deliver to Buyer, at Seller's expense, a report prepared by
Hylind InfoQuest, Inc. (or similar firm reasonably acceptable
to Buyer) showing the results of searches of such lien, tax,
judgment, and litigation records, together with such duly
executed termination statements, releases, and satisfaction
pieces as are appropriate to demonstrate that the Assets are
being conveyed to Buyer free and clear of all liens, security
interests, and encumbrances except as specifically permitted by
this agreement or otherwise consented to by Buyer in writing.
The record searches described in the report shall have taken
place not more than fifteen (15) days prior to the Closing
Date.
6.16 Estoppel Certificates. Seller shall use
reasonable efforts to deliver to Buyer at the Closing: (i) a
certificate executed by the other party to each contract
designated with an asterisk on schedule 4.12, dated no more
than fifteen (15) days prior to the Closing Date, stating (A)
that such contract is in full force and effect and has not been
amended or modified, (B) the date to which all rent and other
payments due thereunder have been paid, and (C) that Seller is
not in default under such contract, and that no event has
occurred that, with notice or the passage of time or both,
would constitute a default thereunder by Seller; and (ii) such
lessor's consents, fee owner's consents, and mortgagee's
estoppel and nondisturbance agreements with respect to the Real
Property as are reasonably requested by Buyer.
6.17 Noncompetition Agreement. Seller and I. Martin
Pompadur and George Sosson shall execute and deliver to Buyer a
Noncompetition Agreement, dated the Closing Date, in the form
attached hereto as Exhibit 6.17.
7. Conditions Precedent to Closing.
7.1 Conditions Precedent to the Obligations of the
Buyer. The Buyer's obligation to consummate the purchase under
this agreement is subject to the fulfillment, at or prior to
the Closing, of each of the following conditions (any of which
may be waived in writing by the Buyer):
(a) all representations and warranties of the
Seller under this agreement shall be true at and as of the time
of the Closing with the same effect as though those
representations and warranties had been made again at and as of
that time, with such exceptions as do not in the aggregate have
a material adverse effect on the operations of the Station;
(b) the Seller shall have performed and
complied in all material respects with all obligations,
covenants and conditions required by this agreement to be
performed or complied with by it prior to or at the Closing;
(c) the Commission shall have given all
requisite approvals and consents, without any condition or
qualification materially adverse to the Buyer or the operations
of the Station, to the assignment of the FCC Licenses to the
Buyer and the acquisition of control of the Station by the
Buyer as provided in this agreement and such approvals shall
have become a Final Order (as defined below);
(d) the Seller shall have duly received,
without any condition materially adverse to the Buyer, all
consents and approvals referred to in schedule 7.1(d);
(e) there shall not be in effect an injunction
or restraining order issued by a court of competent
jurisdiction in an action or proceeding against the
consummation of the transactions contemplated by this
agreement;
(f) the Buyer shall have been furnished with a
certificate of an officer of the general partner of the Seller,
dated the Closing Date, in form and substance satisfactory to
the Buyer, certifying to the fulfillment of the conditions set
forth in sections 7.1(a) through 7.1(e);
(g) if the environmental audit conducted by
Buyer pursuant to section 9(a) of the Option Agreement reveals
any condition that Seller is required to remedy pursuant to
that section, then such condition shall have been remedied to
the extent required by that section; and
(h) the title commitment described in section
9(b) of the Option Agreement shall be in effect on the Closing
Date, with no exceptions other than those described in the
original title commitment and other exceptions that do not
materially impair the use of the Antenna Space or the
Transmitter Space or have a material adverse effect on the
value of the lease of the Antenna Space and the Transmitter
Space.
For purposes of this agreement, "Final Order" shall
mean action by the Commission which (a) has not been vacated,
reversed, stayed, set aside, annulled or suspended, and (b)
with respect to which no appeal, request for stay, or petition
for rehearing, reconsideration or review by any party or by the
Commission on its motion, is pending, and as to which the time
for filing any such appeal, request, petition, or similar
document for the reconsideration or review by the Commission on
its own motion under the express provisions of the
Communications Act of 1934 and the rules and regulations of the
Commission, has expired (or if any such appeal, request,
petition or similar document has been filed, a Commission order
has been upheld in a proceeding pursuant thereto and no
additional review or reconsideration may be sought).
7.2 Conditions Precedent to the Obligations of the
Seller. The Seller's obligations to consummate the sale under
this agreement are subject to the fulfillment, at or prior to
the Closing, of each of the following conditions (any of which
may be waived in writing by the Seller):
(a) payment by the Buyer of the amount payable
at the Closing in accordance with section 2.2(a);
(b) all representations and warranties of the
Buyer under this agreement shall be true at and as of the time
of the Closing with the same effect as though those
representations and warranties had been made at and as of that
time, with such exceptions as do not in the aggregate have a
material adverse effect on the ability of the Buyer to
consummate the transactions contemplated by this agreement;
(c) the Buyer shall have performed and complied
in all material respects with all obligations, covenants and
conditions required by this agreement to be performed or
complied with by it prior to or at the Closing;
(d) the Commission shall have given all
requisite approvals and consents, without any condition or
qualification materially adverse to the Seller, to the
assignment of the FCC Licenses to the Buyer and the acquisition
of control of the Station by the Buyer as provided in this
agreement, and such approvals shall have become a Final Order;
(e) here shall not be in effect an injunction
or restraining order issued by a court of competent
jurisdiction in an action or proceeding against the
consummation of the transactions contemplated by this
agreement; and
(f) the Seller shall have been furnished with a
certificate of an officer of the Buyer, dated the Closing Date,
in form and substance satisfactory to the Seller, certifying to
the fulfillment of the conditions set forth in sections 7.2(a)
through 7.2(e).
8. Transactions at the Closing.
8.1 Documents to be Delivered by the Seller. At the
Closing, the Seller shall deliver to the Buyer the following:
(a) such bills of sale, assignments or other
instruments of transfer and assignment, all in form and
substance reasonably satisfactory to the Buyer and its counsel,
to sell and assign the Assets to the Buyer (except that the FCC
Licenses shall be assigned to USR of Norfolk FM-2, Inc.);
(b) an opinion of Proskauer Rose Goetz &
Mendelsohn, counsel to the Seller, dated the Closing Date, in
substantially the form of exhibit 8.1(b);
(c) an opinion of Wiley, Rein & Fielding,
Communications counsel to the Seller, dated the Closing Date,
in substantially the form of exhibit 8.1(c);
(d) a copy of resolutions authorizing the
execution, delivery and performance of this agreement by the
Seller, and a certificate of the secretary or assistant
secretary of the general partner of the Seller, dated the
Closing Date, that such resolutions were duly adopted and are
in full force and effect;
(e) the originals or copies of all contracts,
leases, agreements, commitments and trademark registrations to
be assigned to the Buyer under this agreement;
(f) he certificate referred to in section
7.1(f);
(g) copies of all consents and approvals
received pursuant to section 6.6; and
(h) such other documents as the Buyer may
reasonably request.
8.2 Documents to be Delivered by the Buyer. At the
Closing, the Buyer shall deliver to the Seller the following:
(a) wire transferred funds in the amount
provided in section 2.2(a);
(b) instruments, in form and substance
reasonably satisfactory to the Seller and its counsel, pursuant
to which the Buyer shall assume the obligations of the Seller
to be assumed by the Buyer pursuant to section 2.2(b);
(c) an opinion of Arent Fox Kintner Plotkin &
Kahn, counsel to the Buyer, dated the Closing Date, in
substantially the form of exhibit 8.2(c);
(d) a copy of resolutions authorizing the
execution, delivery and performance of this agreement by the
Buyer, and a certificate of the secretary or an assistant
secretary of the Buyer, dated the Closing Date, that such
resolutions were duly adopted and are in full force and effect;
(e) the certificate referred to in
section 7.2(f); and
(f) such other documents as the Seller may
reasonably request.
8.3 Prorations. Subject to the provisions of the
LMA Agreement and the allocation of income and expenses
thereunder, which shall be controlling to the extent
inconsistent with this section 8.3, Seller shall be entitled to
all income attributable to, and shall be responsible for all
expenses arising out of, the business of the Station until
11:59 p.m. on the Closing Date, and Buyer shall be entitled to
all income attributable to, and shall be responsible for all
expenses arising out of, the business of the Station after
11:59 p.m. on the Closing Date. All overlapping items of
income or expense, including the following, shall be prorated
or reimbursed, as the case may be, as of 11:59 p.m. on the
Closing Date (the "Prorations"):
(a) Prepaid expenses and deposits made prior to
the Closing, as permitted by the terms hereof, for or in
connection with goods or services where all or part of such
goods or services have not been received or used as of the
Closing Date (e.g., rents paid in advance for a rental period
extending beyond the Closing Date);
(b) Liabilities customarily accrued, arising
from expenses incurred but unpaid as of the Closing;
(c) Taxes and utility charges related to the
Station or in respect of any of the Assets;
(d) Deposits made and unearned prepayments
received by Seller in connection with any contract assumed by
Buyer; and
(e) All other items normally prorated in the
sale of the assets of a business and of a radio broadcast
station in particular. Prorations shall be made, insofar as
feasible, at the Closing and shall be paid by way of adjustment
to the purchase price for the Assets. As to the Prorations
that cannot be made at the Closing, the parties shall, within
ninety (90)
days after the Closing Date, make and pay all such Prorations.
If the parties are unable to agree upon all such Prorations
prior to the expiration of that 90-day period, then any
disputed items shall be referred to a firm of independent
certified public accountants, mutually acceptable to Seller and
Buyer, 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 accountants. If
the amount of any real or personal property tax to be prorated
is not known on the Closing Date, such tax shall be apportioned
on the basis of the most recent tax assessment. As soon as the
new tax rate and valuation can be ascertained, there shall be a
reapportionment and adjustment with respect to such tax even
though that final proration and adjustment may take place more
than ninety (90) days after the Closing Date.
9. Survival of Representations and Warranties;
Indemnification.
9.1 Survival. All representations and warranties by
the Seller and the Buyer in this agreement shall survive the
Closing. However, there shall not be any liability for
misrepresentation or breach of warranty, except to the extent
that notice of a claim is asserted in writing and delivered to
the party or parties to be charged not later than one year
after the Closing; provided, however, that the Seller's
representations and warranties in sections 4.4, 4.10, 4.16,
4.17 and 4.18 and Buyer's indemnification rights with respect
thereto shall survive for two (2) years after the Closing.
9.2 Indemnification. Subject to sections 9.1 and
9.3, the Seller shall indemnify and hold harmless the Buyer
against all loss, liability, damage or expense (including
reasonable fees and expenses of counsel), that the Buyer may
suffer, sustain or become subject to as a result of (a) any
misrepresentation by the Seller or breach by the Seller of any
warranties, covenants or other agreements contained in this
agreement, (b) the failure by the Seller to perform any of its
obligations under this agreement, (c) any failure to comply
with the applicable Bulk Sales Law, (d) all liabilities of
Seller not assumed by Buyer, and (e) any claims by third
parties against Buyer attributable to Seller's operation of the
Station prior to Closing; provided, however, that the Seller
shall not be liable for misrepresentation or breach of any
warranty, covenant or agreement under this agreement, unless
the aggregate amount of the loss, liability, damage and expense
incurred as a result of all such misrepresentations and
breaches of warranty, covenant or agreement exceeds the sum of
$35,000 and then only for the amount in excess of $35,000. The
Buyer shall indemnify and hold harmless the Seller against all
loss, liability, damage or expense (including reasonable fees
and expenses of counsel) that the Seller may suffer, sustain or
become subject to as a result of any misrepresentation by the
Buyer or breach by the Buyer of any warranties, covenants or
other agreements contained in this agreement.
9.3 Conditions of Indemnification for Third Party
Claims. The obligations and liabilities of the parties under
this agreement with, as a result of, or relating to claims of
third parties (individually, a "Third Party Claim" and
collectively "Third Party Claims"), shall be subject to the
following terms and conditions:
(a) The party entitled to be indemnified
hereunder (the "Indemnified Party") shall give the party
obligated to provide the indemnity (the "Indemnifying Party")
prompt notice of any Third Party Claim, and the Indemnifying
Party may undertake the defense of that claim by
representatives chosen by it. Any such notice of a Third Party
Claim shall identify with reasonable specificity the basis for
the Third Party Claim, the facts giving rise to the Third Party
Claim, and the amount of the Third Party Claim (or, if such
amount is not yet known, a reasonable estimate of the amount of
the Third Party Claim). The Indemnified Party shall make
available to the Indemnifying Party copies of all relevant
documents and records in its possession.
(b) If the Indemnifying Party, within a
reasonable time after notice of any such Third Party Claim,
fails to assume the defense in accordance with section 9.3(a),
the Indemnified Party shall (upon further notice to the
Indemnifying Party) have the right to undertake the defense,
compromise or settlement of the Third Party Claim, subject to
the right of the Indemnifying Party to assume the defense of
such Third Party Claim at any time prior to settlement,
compromise or final determination thereof, provided, however,
that at the time of the assumption of defense the Indemnifying
Party shall reimburse the Indemnified Party for its reasonable,
actual, documented out-ofpocket expenses incurred prior to the
assumption of defense by the Indemnifying Party.
(c) Anything in this section 9.3 to the
contrary notwithstanding, (i) the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any Third Party Claim or consent to the entry of
judgment which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to the
Indemnified Party of an unconditional release from all
liability in respect of the Third Party Claim; and (ii) if
there is a reasonable probability that a claim may materially
and adversely affect the Indemnified Party other than as a
result of money damages or other money payments, the
Indemnified Party shall have the right, at its own cost and
expense, to participate in the defense of the Third Party Claim
(control of the defense to remain with the Indemnifying Party).
10. Termination.
10.1 Termination. Except with respect to provisions
which expressly survive termination, this agreement may be
terminated:
(a) by written agreement of the Buyer and the
Seller;
(b) by the Buyer or the Seller by notice to the
other, if at any time prior to the Closing Date any event shall
have occurred or any state of facts shall exist that renders
any of the conditions to the Buyer's or the Seller's, as the
case may be, obligations as provided in this agreement
incapable of fulfillment; or
(c) by the Seller or the Buyer, if the
Commission designates for a hearing the application for
Commission consent contemplated by this agreement.
10.2 Liability. The termination of this agreement
under section 10.1(b) or (c) shall not relieve any party of any
liability for breach of this agreement prior to the date of
termination.
10.3 Return of Letter of Credit. In the event of
termination pursuant to this section, the Letter of Credit
shall be returned to the Buyer.
11. Miscellaneous.
11. Notices. Any notice or other communication
under this agreement shall be in writing and shall be
considered given when delivered personally or by FAX, one day
after being given to a recognized overnight delivery service or
four days after being mailed by registered mail, return receipt
requested, to the parties at the addresses set forth below (or
at such other address as a party may specify by notice to the
other):
if to the Buyer, to it at:
US Radio of Norfolk, Inc.
1234 Market Street
Philadelphia, Pennsylvania 19107
Attention: Ragan A. Henry, Chairman
and Chief Executive Officer
with a copy to:
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, N.W.
Washington, D.C. 20036
Attention: Marilyn D. Sonn,
Esq.
if to the Seller, to it at:
ML Media Opportunity Partners,
L.P. 350 Park Avenue
16th Floor
New York, New York 10022
Attention: I. Martin Pompadur
with a copy to:
Proskauer Rose Goetz & Mendelsohn
1585 Broadway
New York, New York 10036
Attention: Bertram A. Abrams,
Esq.
11.2 Finders. Each of the Buyer and the Seller
represents and warrants to the other that, except as set forth
in section 6.8, it has not retained or dealt with any broker or
finder in connection with the transactions contemplated by this
agreement.
11.3 Entire Agreement. This agreement, including
the schedules and exhibits, together with the Option Agreement,
contain a complete statement of all the arrangements between
the parties with respect to its subject matter, supersede any
previous agreement among them relating to that subject matter,
and cannot be changed or terminated orally.
11.4 Headings. The section headings of this
agreement are for reference purposes only and are to be given
no effect in the construction or interpretation of this
agreement.
11.5 Governing Law. This agreement shall be
governed by and construed in accordance with the law of the
Commonwealth of Virginia, without reference to its rules as to
choice of law, and the Communications Act of 1934 to the extent
applicable.
11.6 Separability. If any provision of this
agreement is invalid or unenforceable, the balance of this
agreement shall remain in effect.
11.7 Assignment. No party may assign any of its
rights or delegate any of its duties under this agreement
without the consent of the other; provided, however, that the
Buyer may assign this agreement to any corporation or
partnership that is controlled, directly or indirectly, by the
Buyer or Ragan A. Henry, provided, that (a) such entity makes
the representations and warranties in section 5, and (b) such
assignment does not delay the Closing.
11.8 Publicity. Except as required by applicable
law, no party shall issue any press release or other public
statement regarding the transactions contemplated by this
agreement without consulting with the other.
11.9 Specific Performance. The Seller acknowledges
that the Station is of a special, unique and extraordinary
character, and that any breach of this agreement by the Seller
could not be compensated for by damages. Accordingly, if the
Seller breaches its obligations under this agreement the Buyer
shall be entitled, in addition to any other remedies that it
may have, subject to obtaining approval of the Commission, to
enforcement of this agreement by a decree of specific
performance requiring the Seller to fulfill its obligations
under this agreement. As an alternative to seeking specific
performance the Buyer shall have the right to terminate this
agreement in the event of a material breach or default by the
Seller, in which event it shall be entitled to the return of
the Letter of Credit. The Buyer may, at its option, pursue any
other remedies that are available to the Buyer at law or equity
in the event of Seller's material breach or default.
ML MEDIA OPPORTUNITY PARTNERS,
L.P.
BY: MEDIA OPPORTUNITY MANAGEMENT
PARTNERS
BY: RP OPPORTUNITY MANAGEMENT,
L.P.
BY: IMP OPPORTUNITY MANAGEMENT,
INC.
By: s/ I. Martin Pompadur
US RADIO OF NORFOLK, INC.
By: s/ Ragan A. Henry
I. Martin Pompadur and George L. Sosson hereby agree
to execute the Noncompetition Agreement referred to in section
6.17.
s/ I. Martin Pompadur
I. Martin Pompadur
s/ George L. Sosson
George L.
Sosson
-8DATED
August 12, 1994
(1) ML MEDIA OPPORTUNITY PARTNERS LP
(2) MV TECHNOLOGY LIMITED
(3) CHRISTOPHER TURNER
(4) PETER CLARK
(5) ALP ENTERPRISES INC
(6) EUROPEAN MEDIA PARTNERS LIMITED
AGREEMENT
Denton Hall
Five Chancery
Lane
Clifford's Inn
London EC4A
1BU
THIS AGREEMENT is made on August 12, 1994
BETWEEN:
(1) ML MEDIA OPPORTUNITY PARTNERS LP ("MLMOP") a limited
partnership having its principal office at 350 Park
Avenue, New York, New York 10022, United States of
America
(2) MV TECHNOLOGY LIMITED ("the Company") a company
registered in England and Wales under number 2842948 and
having its principal office at 25a Foubert's Place,
London W1V 1HE
(3) PETER CLARK of Woodstock, Farm Lane, Purley, Surrey ("Mr
Clark") and CHRISTOPHER TURNER of Broom Lea Cottage,
Albury Heath, Surrey GU5 9DD ("Mr Turner") as partners in
a partnership known as the Clarendon Partnership.
(4) ALP ENTERPRISES INC ("ALP") a company registered in
California and having its principal office at 9220 Sunset
Boulevard, Suite 220, Los Angeles, California, 90069
(5) EUROPEAN MEDIA PARTNERS LIMITED ("EMP") a company
registered in England and Wales under number 1762921 and
having its principal office at 25a Foubert's Place, London
W1V 1HE
(1) MLMOP and EMP (jointly hereinafter defined as "the MVT
Shareholders") own the entire issued share capital of the
Company.
(2) ALP, Mr Clark and Mr Turner (hereinafter jointly referred
to as the "EMP Shareholders") own the entire issued share
capital of EMP.
(3) MVT owns 250,000 ordinary shares of L1 each and 100,000 8%
cumulative redeemable preference shares of L1 each ("the
Teletext Shares") in the capital of Teletext.
(4) The MVT Shareholders and the EMP Shareholders have agreed
to enter into this Agreement to regulate certain matters
relating to the Company.
NOW IT IS HEREBY AGREED as follows:-
1. Definitions:-
"Associate": any company which is a subsidiary of or
holding company of or is a subsidiary of a holding company
of the Company or any other company which is an
"associate" of any of the above companies within the
meaning of Section 435 of the Insolvency Act 1986;
"Teletext": Teletext Holdings Limited, a company
registered in England and Wales under number 2645083 whose
registered office is at 25a Foubert's Place, London W1V
1HE;
"Shareholders Agreement": an agreement dated 20th March
1992 between EMP, Teletext, Associated Newspapers Holdings
Limited and Philips Electronics UK Limited as amended from
time to time;
"the MLMOP Shares": all the shares in the capital of the
Company owned (whether legally or beneficially) by MLMOP.
2. Business of the Company
The business of the Company shall be to acquire the
Teletext Shares and to hold the benefit, subject to the
burden, of the Shareholders Agreement ("the Business").
3. Management Information
3.1 The EMP Shareholders and EMP hereby undertake to use their
powers in relation to the Company to procure that the
Company shall:
(a) at all times keep true, accurate and up to date books
and records of all the affairs of the Company;
(b) at all reasonable times make available to the MVT
Shareholders and their duly authorized
representatives
full and complete access (including copying facilities) to the
books, records, accounts and documents of the Company;
(c) supply to each MVT Shareholder such information
relating to the Company and to Teletext as it may
reasonably require and without prejudice to the
foregoing shall keep the MVT Shareholders fully and
promptly informed as to all material developments
regarding the financial and business affairs of
Teletext and the Company; and
(d) as and when received by the Company, EMP or the EMP
Shareholders, send to each of the MVT Shareholders
copies of:-
(i) any unaudited management accounts of
Teletext;
(ii) audited consolidated accounts of Teletext;
(iii) annual budget and business plan of Teletext;
(iv) any other information received by the
Company, EMP or the EMP Shareholders,
pursuant to the Shareholders Agreement.
4. Restrictions on the Company's Activities
4.1 The EMP Shareholders and EMP shall procure that the
Company shall not without the prior written approval of
MLMOP:
(a) increase or reduce the authorized or issued share
capital of the Company or consolidate, sub-divide,
purchase, redeem or cancel any of such share capital
or alter any right pertaining to any share or class
of shares in such capital;
(b) issue, allot any share or security or grant or create
any option or right to acquire any share or security
in the capital of the Company;
(c) take or permit or suffer the taking of any step to
have the Company voluntarily or compulsorily wound up
or voluntarily to take advantage of any provisions of
the Insolvency Act 1986 or similar legislation;
(d) alter or add to any of the provisions of the Company's
Memorandum of Association or the Articles;
(e) make any material change in the nature of the
Business;
(f) acquire any shares, securities or other interest in
any company or business or incorporate or promote any
company or permit any subsidiary to issue or allot
any share or security or grant or create any option
or right to acquire any share or security except to
the Company;
(g) sell the Teletext Shares to any member of the Company
or to any Associate;
(h) borrow any money other than the amount to be borrowed
from EMP pursuant to a loan agreement between EMP and
the Company dated on or about the date hereof.
5. Put and Call Option
5.1 In consideration of the sum of L1 now paid by MLMOP to EMP
(receipt of which is hereby acknowledged) EMP hereby
grants to MLMOP the exclusive option to require EMP to
purchase the MLMOP Shares at the Option Price (which shall
be calculated in accordance with clause 5.7) from MLMOP on
the following terms ("the Put Option").
5.2 The Put Option may be exercised on one occasion only at
any time between 31st December 1994 and 31st December
1997 in respect of all (but not part) of the MLMOP Shares
at the Option Price by MLMOP giving to EMP not less than
21 days' notice in writing to expire before 31st December
1997.
5.3 In consideration of the sum of L1 now paid by EMP to
MLMOP (receipt of which is hereby acknowledged) MLMOP
hereby grants to EMP the exclusive option to purchase the
MLMOP Shares from MLMOP at the Option Price (which shall
be calculated in accordance with clause 5.7) on the
following terms ("the Call Option").
5.4 The Call Option may be exercised on one occasion at any
time between 30th September 1995 and 30th September 1998
in respect of all (but not part) of the MLMOP Shares by
EMP giving to MLMOP not less than 21 days' notice in
writing of this Agreement to expire on or before 30th
September 1998.
5.5 Completion of the exercise of the Put Option or the Call
Option shall take place forthwith upon the later of the
date (or if such date is not a business day, on the next
following business day) of the expiry of the notice
referred to in Clause 5.2 or 5.4 respectively above or 7
days after the determination by the independent firm of
accountants in accordance with clause 5.7 at such place
as the parties may agree.
5.6 On completion of the Call Option or the Put Option (as
the case may be):
(a) EMP shall pay or procure the payment to MLMOP (or as
MLMOP may direct) of the Option Price;
(b) MLMOP shall deliver to EMP transfers in respect of
the MLMOP Shares duly signed and completed in favor
of EMP together with the certificate(s) therefor.
5.7 The Option Price shall be such sum per MLMOP Share as may
be agreed between EMP and MLMOP, or, in default of such
agreement within 14 days of the date of the notice served
pursuant to clause 5.2 or 5.4, as shall be certified by
an independent firm of accountants (whose costs shall be
paid in the proportions determined by such firm or if not
so determined by EMP and MLMOP equally) appointed by the
parties or, in default of agreement between them within
28 days of such notice, by the President for the time
being of the Institute of Chartered Accountants in
England and Wales having taken all relevant
circumstances into account as being the value per MLMOP
Share calculated by reference to the following formula:
(A - B)
C = D
Where
A = the value of the Teletext Shares established on the
principles set out in clause 11.4.3 of the Shareholders
Agreement;
B = the amount of any loan incurred by the Company in relation
to the Teletext Shares which remains outstanding;
C = the number of ordinary shares in the capital of the Company
in issue;
D = the value per MLMOP Share.
In so certifying the said accountants shall be considered to be
acting as experts and not as arbitrators and their decision
shall be final and binding on the relevant parties. For the
purposes of any such certificate or valuation EMP and the
Company shall permit the said accountants to have access to
such information as they may consider reasonably necessary in
order to give their certificate and shall use their reasonable
endeavors to procure the provision of similar information in
relation to Teletext.
5.8 The MLMOP Shares shall be sold by MLMOP pursuant to the
Call Option or the Put Option as beneficial owner free
from all liens, mortgages, charges, pledges, options,
encumbrances, equities and third party interests of
whatever nature and together with all rights and benefits
attached thereto on or after the date of the exercise.
6. Waiver of Pre-emption Rights
Each of MLMOP and EMP hereby irrevocably waive (and will
procure the waiver by any nominee of) all and any rights
of pre-emption to which any of them (or any nominee) may
be entitled under the articles of association of the
Company, by agreement, by statute or otherwise in respect
of any transfer of the MLMOP Shares contemplated by this
Agreement.
7. Duration
Unless otherwise agreed the provisions of this Agreement
shall cease to bind the parties hereto on the date on
which either EMP or MLMOP cease to hold any shares in the
capital of the Company.
8. Governing Law
This Agreement shall be governed by and construed in
accordance with English law and the parties hereby submit
to the non-exclusive jurisdiction of the English Courts.
AS WITNESS the hands of the parties representatives on the date
stated above.
Signed by /s/ I. Martin Pompadur
for and on behalf of
ML Media Opportunity Partners LP
in the presence of
Signed by /s/Antn
for and on behalf of
MV Technology Limited
in the presence of
Signed by /s/ Christopher Turner
Christopher Turner
in the presence of
Signed by /s/ Peter Clark
Peter Clark
in the presence of
Signed by /s/ Jim L. Speri
for and on behalf of
ALP Enterprises Inc
in the presence of
Signed by /s/ Christopher Turner
for and on behalf of
European Media Partners Limited
in the presence of
