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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported)
OCTOBER 11, 1996 (SEPTEMBER 27, 1996)
-------------------------------------
PREMIERE RADIO NETWORKS, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-20065 95-4083971
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
15260 VENTURA BOULEVARD, SUITE 500, LOS ANGELES, CALIFORNIA 91403
(Address of principal executive offices, including ZIP code)
Registrant's telephone number, including area code (818)377-5300
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ITEM 2. ACQUISITION(S) OR DISPOSITION(S) OF ASSETS
ACQUISITION OF THE ASSETS OF PHILADELPHIA MUSIC WORKS
On September 27, 1996 the Premiere Radio Networks, Inc. (the "Company")
acquired substantially all of the assets of Philadelphia Music Works, Inc.
(herein, "PMW") for total consideration of $635,000, consisting of $435,000
in cash and $200,000 in a 6.5% interest, two-year promissory note. Further,
additional consideration of up to $700,000 may be payable depending upon the
audience levels delivered by PMW. The purchase price was determined by arms
length negotiations.
Based in Philadelphia, Pennsylvania, PMW is in the business of producing
and distributing custom jingles to third party radio station affiliates in
exchange for commercial broadcast time, and directly to advertisers for cash.
The assets of PMW acquired by the Company consist principally of intellectual
properties and other intangibles, including a library of over 6,000 jingles,
third-party radio station affiliate broadcast contracts, and copyrights. The
Company did not assume any pre-acquisition accounts payable or other obligations
of PMW, except for certain commitments under real property and equipment leases.
The acquisition of PMW will be accounted for by the Company as a purchase,
and was financed entirely through existing working capital of the Company.
Separately, on September 27, 1996 the Company amended and restated an
August 29, 1995 agreement pursuant to which it entered into future commitments
to acquire licenses to three (3) production music libraries from Canary
Productions, Inc. ("Canary"), which is wholly-owned by Andrew Mark, President of
the Company's Broadcast Music Works Division. Under the amended and restated
agreement, the Company has entered into future commitments to acquire one (1)
additional production music library, four (4) production music libraries in
total, from Canary. The licenses to the production music libraries will be
acquired by the Company, one each year during the next four years, for a
purchase price that will be based upon a formula of a multiple of earnings of
each such library.
ACQUISITION OF THE ASSETS OF CUTLER PRODUCTIONS, INC. AND SJM PRODUCTIONS, INC.
On October 1, 1996, the Company consummated an agreement which became
effective as of September 30, 1996, pursuant to which it acquired substantially
all of the assets of Cutler Productions, Inc. and SJM Productions, Inc.
(collectively, "Cutler") for consideration consisting of $8,500,000 cash. The
purchase price was determined by arms length negotiations.
Based in Tarzana, California, Cutler is an independent creator, producer
and distributor of comedy, entertainment and music related radio programs and
services. Cutler distributes its programs and services to third party radio
station affiliates in exchange for commercial broadcast time. The assets of
Cutler acquired by the Company consist principally of intellectual properties
and other intangibles, including third-party radio station affiliate broadcast
contracts, a library of programs and program rights,
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and copyrights. The Company did not assume any pre-acquisition accounts payable
or other obligations of Cutler, except for certain commitments under real
property and equipment leases. The acquisition of Cutler will be accounted for
by the Company as a purchase, and was financed entirely through existing working
capital of the Company. Also, Ronald Cutler, a 100% shareholder of Cutler prior
to the above transaction, will be employed by the Company as President of the
Company's Cutler Productions Division under a three (3) year employment
contract.
ITEM 5. OTHER EVENTS
ACQUISITION OF MINORITY INTEREST IN NEWSTRACK JOINT VENTURE
On March 20, 1995, the Company entered into a joint venture agreement
with Marketing Research Partners, Inc. ("MRPI") to nationally syndicate
Newstrack, a research service jointly developed by the Company and MRPI (the
"Newstrack Joint Venture"). The Newstrack Joint Venture commenced operations
on or about September 1, 1995 with the Company holding a 75% interest and
MRPI holding a 25% interest.
Effective September 3, 1996, the Company acquired the remaining 25%
minority interest from MRPI for $303,188. The purchase price was determined by
arms length negotiations. The acquisition of the 25% minority interest in the
Newstrack Joint Venture will be accounted for by the Company as a purchase, and
was financed entirely through existing working capital of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS(ES) ACQUIRED
Audited and/or unaudited financial information, as required, will be filed
by subsequent amendment within forty-five (45) days hereof. With respect to the
acquisition of the assets of Cutler, the Company intends to provide audited
financial statements only with respect to Cutler's most recently completed
fiscal year ending December 31, 1995 and unaudited financial statements for its
fiscal year ending December 31, 1994 in a subsequent amendment. With respect to
the acquisitions of the minority interest in the Newstrack Joint Venture and the
assets of PMW, the Company does not intend to provide such audited financial
statements in a subsequent amendment as these transactions are individually and
in the aggregate insignificant.
(b) PRO FORMA FINANCIAL INFORMATION
Pro forma financial information, as required, will be filed by subsequent
amendment within forty-five (45) days hereof.
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(c) EXHIBITS PAGE
Exh 10.18 Agreement Re: Purchase of interest in
Newstrack Joint Venture and Revision of Prior
Call-Out Research Agreements for Newstrack
and Mediabase dated September 3, 1996 6
Exh 10.19 Purchase and Sale Agreement by and
between Premiere Radio Networks, Inc. as Buyer
and Philadelphia Music Works, Inc. as Seller
as of September 27, 1996 14
Exh 10.20 Amended and Restated Agreement
Re: Acquisition of Licenses of the Four
Music Libraries from Canary Productions,
Inc. dated September 27, 1996 36
Exh 10.21 Purchase and Sale Agreement by and be-
tween Premiere Radio Networks, Inc. as Buyer
and Cutler Productions, Inc. and SJM Productions,
Inc. as Sellers as of September 30, 1996 41
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* Enclosed herewith.
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SIGNATURE
Pursuant to the rules of Section 12 of the Securities Exchange Act of 1934,
the registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
PREMIERE RADIO NETWORKS, INC.
By:/s/ Daniel M. Yukelson
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Daniel M. Yukelson, Vice President
/Finance and Chief Financial Officer,
and Secretary
Date: OCTOBER 11, 1996
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September 3, 1996
Mr. Joseph Heslet
President
Marketing/Research Partners, Inc.
7981 168th Avenue, N.E.
Redmond, Washington 98052
Re: PURCHASE OF INTEREST IN NEWSTRACK JOINT VENTURE AND REVISION OF
PRIOR CALL-OUT RESEARCH AGREEMENTS FOR NEWSTRACK AND MEDIABASE
Dear Joe:
The purpose of this letter is to set forth the basic terms of an agreement
between Premiere Radio Networks, Inc. ("PRNI") and Marketing/Research Partners,
Inc. ("MRPI") with respect to (I.) the purchase by PRNI of MRPI's twenty-five
percent (25%) share ("MRPI Share") of the Newstrack Joint Venture ("Newstrack
JV"), and (ii.) the amendment of prior MRPI agreements to perform call-out
research services for PRNI with respect to Mediabase Research ("MPRN") and the
Newstrack JV.
AMENDMENT OF PRIOR CALL-OUT AGREEMENTS AND CANCELLATION OF NEWSTRACK JOINT
VENTURE AGREEMENT AND CONSIDERATION
The effect of this letter agreement will be to cancel the Newstrack JV
agreement dated March 20, 1995 ("JV Agreement") and amend any prior agreements
with respect to the call-out research services currently being undertaken with
respect to the Newstrack JV and MPRN effective on June 30, 1996 in exchange for
consideration consisting of the following: (I.) $261,250.00 cash, (ii.)
cancellation of the $35,000.00 note payable dated August 10, 1995 ("Note")
effective on June 30, 1996, (iii.) forgiveness of unpaid accrued interest on the
Note through June 30, 1996 in the amount of $1,254.17, (iv.) $31,250.00 cash
relating to a payment for MPRN call-out services, (v.) $56,816.00 net book value
of equipment of the Newstrack JV as of June 30, 1996, (vi.) $75,000.00 of PRNI
trade credits less amounts utilized as of the date hereof (which MRPI has
previously been granted access to), (vii) prepaid asset of the Newstrack JV of
$44,167.00 and (viii.) a payment of $12,617.93 described below. The total
amount of consideration contemplated by this agreement is $473,188.10.
MRPI hereby acknowledges that PRNI had funded the Newstrack JV with a
payment of $66,250.00 cash on or about April 29, 1996 which was paid by the
Newstrack JV to MRPI as a
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prepayment for call-out research services related to Newstrack (of which
$44,167.00 cash was remaining as a pre-payment on the books and records of the
Newstrack JV as of June 30, 1996). Furthermore, MRPI acknowledges that PRNI has
paid $12,617.93 to MRPI (see Exhibit A). The remaining consideration shall be
delivered to MRPI by PRNI at closing on or about the date hereof.
Upon consummation of this agreement, MRPI understands that it shall no
longer retain any ownership or other interest in the intellectual property of
"Newstrack"or any by-products (other than MRPI's own research methodologies and
database of its respondents which shall remain the property of MRPI). MRPI
further acknowledges that the Newstrack JV shall cease to exist as a separate
entity and PRNI shall no longer be obligated to fund the Newstrack JV.
Furthermore, PRNI understands and acknowledges that MRPI shall no longer be
obligated under the note as of June 30, 1996 and that MRPI shall own all
Newstrack JV property and equipment currently in its possession.
SCOPE OF CALL-OUT RESEARCH SERVICES TO BE PERFORMED BY MRPI FOR NEWSTRACK AND
MPRN
The scope of call-out research services to be performed by MRPI for
Newstrack and MPRN are described in detail on Exhibits B and C attached hereto
and on Exhibit B of the JV Agreement (as amended by Exhibit C attached hereto).
In general, MRPI shall provide such call-out research services for a period
equal to but not greater than (I.) one and a half (1.5) years, or (ii.) until
the number of call-out research telephone calls conducted by MRPI in accordance
with the parameters set forth on Exhibit C attached hereto and Exhibit B of the
JV Agreement with respect to Newstrack is equal to 25,000 calls and the number
of calls conducted by MRPI in accordance with the parameters set forth on
Exhibit B with respect to MPRN is equal to 16,200 calls.
The amount and price of calls shall be subject to adjustment as negotiated
in good faith between PRNI and MRPI in the event there is a material change in
scope (including changes in the duration of calls, changes in the markets
covered, etc.) of the call-out research made or to be made at the request of
PRNI. Should there be a change in scope requiring fewer calls for or reduced
call-out research efforts with respect to either or both of Newstrack and/or
MPRN, then PRNI, at its discretion, may allocate the remaining calls or call-out
research efforts between either of the two services.
ALLOCATION OF CONSIDERATION
In consideration for PRNI's willingness to prepay the above-described
amounts to MRPI in connection with call-out research services described herein
and in consideration for PRNI's willingness to remit the monies which may be
owed to MRPI in connection with Item 14., "Purchase Option", set forth in JV
Agreement, MRPI has agreed to provide call-out research services to PRNI at its
cost which approximates 50% of the amounts previously charged for call-out
research services to PRNI and the Newstrack JV.
The following shall be the amount of the consideration allocable to
call-out research services agreed to between PRNI and MRPI:
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No. of Amount Total
Calls Per Call Discount Amount*
----- -------- -------- -------
Newstrack - cash 25,000 $6.00 50% $ 75,000.00
Newstrack - barter 25,000 $1.20 50% 15,000.00
Mediabse - barter 16,200 $2.78 50% 22,500.00
Mediabase - cash 16,200 $7.10 50% 57,500.00
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$ 170,000.00
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* - The amount per week is $1,298.00 and $1,374.00 with respect to
Newstrack and Mediabase, respectively.
The balance of the consideration, or $303,188.10 shall be allocated to
PRNI's purchase of MRPI's 25% share of the Newstrack JV as follows:
Covenant not to compete $ 10,000.00
Newstrack intellectual property 255,688.10
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265,688.10
Barter credits 37,500.00
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Total purchase price $ 303,188.10
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COVENANT NOT TO COMPETE
In order to induce PRNI to enter into this agreement, MRPI hereby agrees to
not compete with PRNI to the extent set forth in this section.
MRPI agrees, for a period of two (2) years from the date hereof, that it or
Jared Stehney and Joseph Heslet shall not, directly or indirectly, own, manage,
operate, actively participate in the operation of, advise, consult or be
employed by an entity other than PRNI that syndicates the results of weekly
topic-tracking research and software for use by News/Talk radio stations on a
barter basis in North America. MRPI agrees that the time scope and geographic
limitations set forth hereof are reasonable, are properly required for the
adequate protection of the business of PRNI; and that in the event such time
limitation and geographic scope is deemed to be unreasonable by a final decision
of a court of competent jurisdiction, MRPI agrees to submit to such revision or
modification thereof as said court shall deem reasonable.
MRPI agrees that a breach of this section will cause irreparable injury and
damage to PRNI, and that the remedies at law for any such breach would be
inadequate. In addition to any other rights and remedies to which PRNI may be
entitled should MRPI breach this section, then PRNI shall be entitled to
injunctive relief in addition to its actual provable damages.
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RIGHT OF FIRST REFUSAL
MRPI shall have the right of first refusal to continue providing the
call-out research and fielding information to PRNI with respect to Newstrack.
MRPI shall have ten (10) business days to match any bona fide offer submitted by
a third party in writing to PRNI (which offer shall be transmitted to MRPI for
evaluation). If MRPI matches the third party offer both in terms of price,
scope, and service quality, PRNI shall be obligated to select MRPI to continue
providing call-out research and fielding. The term of such services shall be at
least equal to the term contemplated by any third party bona fide offer that is
submitted. The right of first refusal, however, shall not apply in the event
PRNI performs such call-out research and fielding services internally.
CANCELLATION OF CALL-OUT RESEARCH SERVICE AND CROSS-COLLATERALIZATION
Either MRPI or PRNI may cancel their agreement with respect to call-out
research services by notification in writing via certified mail, facsimile or
overnight courier to the other party with 60 days written notice.
In the event PRNI or MRPI cancel their agreement(s) with respect to
call-out research services provided, or if MRPI is unable to perform the
call-out research services under this agreement for any reason, MRPI shall
refund to PRNI the value of any unrealized call-out research services. The
amount of such refund shall be determined by the greater of (I.) the number of
calls which are remaining multiplied by the amount charged by MRPI for such
calls set forth in this agreement above, or (ii.) the number of weeks remaining
within the one-year period.
If MRPI is unable to refund the amounts owed to PRNI, PRNI may, upon
notification to MRPI, offset and recoup the amount of the unrealized advances
paid under this agreement for call-out research services against amounts which
may be owed, if any, for uncompleted calls or call-our services, against amounts
which may be owed by PRNI to MRPI under the Network Radio Sales Agreement dated
February 1, 1996 by and between MRPI and PRNI.
ENTIRE AGREEMENT
This agreement and its exhibits constitutes the entire agreement between
PRNI and MRPI with respect to the cancellation of, and PRNI's purchase of MRPI's
25% interest in the Newstrack JV; and with respect to call-out research services
to be provided by MRPI for MPRN and Newstrack. This agreement is binding upon
the assigns and successors of each of PRNI and MRPI. This agreement shall be
governed by the laws of the State of California.
This agreement shall be binding and shall inure to the benefit of the
parties hereto and their respective successors and assigns.
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Very truly yours,
Premiere Radio Networks, Inc.
/s/ Harold S. Wrobel
Harold S. Wrobel
Senior Vice President
AGREED:
Marketing/Research Partners, Inc. Premiere Radio Networks, Inc.
/s/ Joseph Heslet /s/ Harold S. Wrobel
- ----------------------------- -----------------------------
Joseph Heslet, President Harold S. Wrobel, Senior Vice
President
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PREPAYMENT CHECK NO. 14614 $12,617.93
EXHIBIT A
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CALL-OUT RESEARCH STUDY PARAMETERS - MEDIABASE
EXHIBIT B
MEDIABASE
Six formats are tested fifty (50) weeks per year. Respondents are P-1's to
the format being tested. The geographic area surveyed is the New York, Chicago,
Atlanta, Dallas, and Los Angeles ARB MSA's. Respondents are played song hook
tapes provided by Premiere Radio Networks, Inc. And asked to rate the songs. The
number of hooks on each tape is fifty (50) for CHR, AOR, Alternative, A/C,
Country, and Urban formats. Oldies, 70's, and Classic are 100. Respondents can
be used a maximum of three times over the course of a three month period. Test
results are modemed to Premiere.
TOTAL # #
FORMAT DEMOGRAPHIC SAMPLE MALE FEMALE
HIT 18-34 50 17 33
AOR 18-34 50 17 33
ALTERNATIVE 18-34 50 33 17
A/C 25-44 50 25 25
COUNTRY 25-44 50 17 33
URBAN 18-34 50 25 25
Three formats are tested six (6) times throughout the year:
TOTAL # #
FORMAT DEMOGRAPHIC SAMPLE MALE FEMALE
OLDIES 35-54 100 50 50
70's 35-54 100 50 50
CLASSIC 35-54 100 50 50
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CALL-OUT RESEARCH PARAMETERS - NEWSTRACK
EXHIBIT C
NEWSTRACK
Each market is surveyed a total of 25 weeks throughout the course of the year.
Respondents must cume a news or talk radio station. The number of respondents
per market per week is fifty (50). Respondents are read a list of twenty (20)
news topics and asked to tell if they want to hear that topic more, the same, or
less on the radio. In addition questions about personalities in the market are
asked, along with eight (8) topics of the week. All topics and names of
personalities are provided by Premiere. The markets are:
GROUP 1 GROUP 2
New York Boston
Washington D.C. Miami
Tampa Philadelphia
St. Louis Dallas
Houston Detroit
Pittsburgh Chicago
Minneapolis Cleveland
Denver Seattle
San Francisco San Diego
Phoenix Los Angeles
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PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PREMIERE RADIO NETWORKS, INC.
AS BUYER
AND
PHILADELPHIA MUSIC WORKS, INC.
AS SELLER
AS OF SEPTEMBER 27, 1996
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PURCHASE AND SALE AGREEMENT
This Agreement dated this 27th day of September, 1996 is by and between Premiere
Radio Networks, Inc. ("Premiere"), a Delaware corporation, and Philadelphia
Music Works, Inc. ("PMW"), a Pennsylvania corporation.
WHEREAS, PMW desires to sell to Premiere all of the Assets (as later defined
herein) and the business and goodwill related thereto, and Premiere desires to
purchase said Assets, business and goodwill and interest from PMW.
NOW, THEREFORE, in consideration of the mutual promises and undertakings herein,
and for other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"AQH LEVEL" shall mean the average quarter hour audience level for radio
listeners in the "persons 12+" demographic category as measured by the Arbitron
Ratings Company with respect to radio station affiliates under contract to
utilize the PMW Jingle Service in exchange for commercial broadcast time.
"ASSETS" shall mean the assets to be transferred to Premiere hereunder, as
more fully specified in Section 2.2.
"CLOSING" shall have the meaning set forth in Section 2. 1.
"CLOSING DATE" shall have the meaning set forth in Section 2. 1.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 5.5.
"MATERIAL PMW AGREEMENTS" shall have the meaning set forth in Section 5.14.
"NON-COMPETITION AGREEMENT(S)" shall mean the agreement in the form of
EXHIBIT B to be fully executed and delivered to Premiere at the Closing.
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"PERSONAL PROPERTY" shall mean all tangible personal property owned, leased
or held by PMW and used or useful in the present conduct of the business and
operations of PMW.
"PHYSICAL INVENTORY" shall mean all compact discs and/or audio tape reels
of PMW jingles and miscellaneous materials including, but not limited to,
written lyrics and music all which are owned or held by PMW and are used or
useful in the present conduct of the business and operations of PMW.
"PREMIERE" shall have the meaning set forth in the introduction to this
Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
"PMW" shall have the meaning set forth in the introduction to this
Agreement.
"PMW JINGLE SERVICE" shall mean the custom and customizable jingle packages
exploited to radio stations including, but not limited to, the "America's Best
Jingles Plus," the "America's Best Jingles," and the "Premiere Jingle Service"
packages.
ARTICLE 2
PURCHASE OF ASSETS
2.1. CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
occur within five business days following the fulfillment of all conditions to
Closing contained in Articles 6 and 7 hereof, unless waived by the party
entitled to do so (the "Closing Date").
2.2. TRANSFER OF ASSETS. On the Closing Date, PMW shall sell, assign,
transfer and convey to Premiere, and Premiere shall purchase all right, title
and interest in and to the assets, tangible and intangible (including the
business of PMW as a going concern), owned or held by PMW wherever located and
used in the conduct of the business and operations of PMW, includiung, but not
limited to the following (collectively, the "Assets"):
(a) all Intellectual Property;
(b) all Material PMW Agreements and other contracts or agreements
entered into by PMW in connection with the operation of PMW;
(c) all computer programs, software and programming materials of
whatever form or nature owned by PMW and used or intended for use on or by PMW,
including intellectual property contained in PMW's web page;
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(d) all files, records, books of account and logs relating to the
operations of PMW reasonably requested by Premiere, including, without
limitation, programming information and studies, advertising studies or
consulting reports, marketing and demographic data, sales correspondence,
promotional materials, credit and sales reports;
(e) all Personal Property;
(f) all goodwill of PMW;
(g) all other assets of whatever kind or nature, excluding accounts
receivables and cash.
2.3. ABSENCE OF CONSENT. Notwithstanding the foregoing, there shall not be
assigned to Premiere any Material PMW Agreement or any other contract, lease or
agreement by which PMW is bound, if an attempted assignment thereof without the
consent of the other party or parties thereto would constitute a breach thereof
or in any way adversely affect the rights of PMW thereunder and such consent is
not obtained, or if an attempted assignment would be ineffective or would affect
the rights of PMW thereunder so that Premiere would not, in fact, receive the
benefits thereof. PMW covenants and agrees that the beneficial interest in and
to any such agreement shall, to the extent permitted by the relevant agreement
and/or by law, pass to Premiere, and PMW covenants and agrees: (a) that it will
hold and declare that it holds all such agreements in trust for the benefit of
Premiere, its successors and assigns, from and after the Closing Date; (b) to
use all reasonable efforts to obtain and secure any and all consents and
approvals that may be necessary to effect such assignment or assignments of the
same; (c) to make or complete such assignment or assignments as soon as
reasonably possible; and (d) to cooperate with Premiere in any other reasonable
arrangement designed to provide for actions necessary to enable PMW to fulfill
any such agreements until an effective assignment thereof to Premiere can be
obtained, and the parties agree to cooperate and take all necessary actions,
including accountings between parties, to assure that Premiere shall receive all
of such benefits, rights, obligations and duties under such agreements. The
provisions of this Section 2.3 do not constitute a waiver of the conditions to
Closing contained in Article 6 hereof.
2.4. PURCHASE PRICE. PMW hereby agrees to sell to Premiere and Premiere
hereby agrees to buy from PMW all rights, title and interest in PMW for the
purchase price of Six Hundred Thirty-five Thousand Dollars ($635,000) payable as
follows:
(a) Fifteen Thousand Dollars ($15,000) on or about September 6,
1996 as a deposit which shall be refunded to Premiere in the event this
Agreement is not consummated,
(b) Four Hundred Twenty Thousand Dollars ($420,000) on the
Closing Date by wire transfer, and
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(c) Two Hundred Thousand Dollars ($200,000) in the form of a
promissoiry note (the "Promissory Note") attached hereto as Exhibit A.
2.5 ADDITIONAL PURCHASE CONSIDERATION. In addition to the $635,000
consideration payable in Section 2.4 above, up to Seven Hundred Thousand Dollars
($700,000) of additonal purchase consideration may be payable as follows (herein
the "PMW AQH Consideration"):
(a) One Hundred Twenty-Five Thousand Dollars ($125,000) upon
sustaining an AQH Level for the PMW Jingle Service of at least 600,000 for a
minimum period of three (3) months; plus
(b) One Hundred Twenty-Five Thousand Dollars ($125,000) upon
sustaining an AQH Level for the PMW Jingle Service of at least 1,200,000 for a
minumum period of three (3) months; plus
(c) One Hundred Twenty-Five Thousand Dollars ($125,000) upon
sustaining an AQH Level for the PMW Jingle Service of at least 1,800,000 for a
minimum period of three (3) months; plus
(d) One Hundred Twenty-Five Thousand Dollars ($125,000) upon
sustaining an AQH Level for the PMW Jingle Service of at least 2,400,000 for a
minimum period of three (3) months; plus
(e) One Hundred Thousand Dollars ($100,000) upon sustaining an
AQH Level for the PMW Jingle Service of at least 3,000,000 for a minimum period
of three (3) months; plus
(f) One Hundred Thousand Dollars ($100,000) upon sustaining an
AQH Level for the PMW Jingle Service of at least 3,600,000 for a minimum period
of three (3) months.
The PMW AQH Consideration shall be payable only within the first three (3)
years subsequent to Closing provided, however, that an extension of three (3)
months shall be provided only in order to facilitate sustaining by the PMW
Jingle Service of the appropriate AQH Level for the minimum three (3) month
period. For example, should the PMW Jingle Service achieve an AQH Level of
3,000,000 two years and eleven months subsequent to Closing, PMW shall be
granted two additional months (therefore, thirty-eight months in total) to allow
for the minimum "sustaining period" of three (3) months required for the PMW AQH
Consideration. Premiere shall pay the PMW AQH consideration only one time for
reaching the threshold or AQH Level set forth above.
Further, in determining the AQH Level, the parties shall at the appropriate
time, as necessary, agree to a reasonable allocation of the AQH Level in
instances where the PMW Jingle Service is sold in combination with the services
of Broadcast Results Group ("BRG"), except that the AQH Level of KIIS-FM
associated with the contract for the services of BRG dated July1, 1996, shall
be specifically excluded in determining the AQH Level.
Premiere, at its sole option, may pay to PMW up to fifty percent (50%) of
the PMW AQH Consideration, in shares of Premiere's Class A common stock having a
fair market value equal to that portion
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of the PMW AQH Consideration. The fair market value of Premiere's Class A
common stock shall be equal to the average of the last reported sale price for
Premiere's Class A common stock on the exchange (i.e., NASDAQ) on which the
Class A common stock is then traded for the ten (10) trading day period ending
one (1) trading day prior to the end of the applicable minimum three (3) month
period.
2.6. AGREEMENTS REGARDING COMMON STOCK. The following terms shall apply to
any Class A common stock issued to PMW:
(a) All Class A common stock will be "restricted stock" within the
meaning of Rule 144 of the Securities Act of 1933, as amended.
(b) If PMW proposes to sell any of the Class A common stock, in the
market, PMW shall give Premiere notice that it intends to sell Class A common
stock in the market and state the minimum price at which it intends to sell such
Class A common stock. Premiere will have five (5) business days in which to
elect whether or not to purchase the Class A common stock at the price set forth
in the notice. If Premiere declines to purchase the Class A common stock, then
PMW may, for a period of thirty days, sell such Class A common stock in a market
limit order at or above the price set forth in the notice. This paragraph
2.6.(b) will again apply to any Class A common stock not sold within such thirty
day period.
(c) If PMW proposes to sell any Class A common stock in a private
sale, PMW shall give Premiere notice of its intent to sell the Class A common
stock and the price at which such Class A common stock will be sold. Premiere
will have five business days in which to elect whether or not to purchase the
Class A common stock at the price set forth in the notice. If Premiere declines
to purchase the Class A common stock, then PMW may sell such Class A common
stock in a private sale for a price no less than that set forth in such notice.
This paragraph 2.6.(c), will again apply to any Class A common stock not sold
within such thirty day period.
(d) PMW may, subject to applicable laws, use the Class A common stock
as collateral for margin loans notwithstanding paragraphs 2.6.(b) and 2.6.(c)
hereof, provided that Premiere shall have a right to purchase any Class A common
stock which might be sold by a lender.
(e) The restrictions contained in paragraphs 2.6.(b) and 2.6.(c)
hereof shall not apply to transfers by PMW to their respective shareholders,
provided that any transfers by such shareholders shall be subject to such
restrictions.
2.7. LIMITATION ON PMW AQH CONSIDERATION. The PMW AQH Consideration shall
be offset and reduced by the cumulative amounts paid by Premiere to PMW with
respect to the AVB Purchase Price, the Choice Cuts Purchase Price, the Canary
Purchase Price and/or the Prime Cuts Purchase Price (collectively, the "Library
Purchase Price") only to the extent the PMW AQH Consideration has not previously
reduced the Library Purchase Price pursuant to Section 2 of that certain amended
and restated letter agreement between Premiere and PMW dated as of September __,
1996 ("Letter Agreement"). For
<PAGE>
example, if (a) the Adjusted Cash Flow as defined in the Letter Agreement for
the period of January 1, 1997 through December 31, 1997 is $1,500,000, (b) the
AQH Level is 550,000, (c) no PMW AQH consideration has been paid, and (d) the
Canary Purchase Price was $100.00, the following additional consideration i.e.,
(AVB Purchase Price) would be paid to PMW under Section 2.b. of the Letter
Agreement:
Adjusted Cash Flow $ 1,500,000
Multiple X 2.2
$ 3,300,000
Less:
Agreed upon amount ( 3,233,000)
Canary Purchase Price ( 100)
PMW AQH Consideration ( 0)
--------------
Paid to PMW--AVB Purchase Price $ 66,900
--------------
--------------
Further, if the AQH Level later equals or exceeds 600,000 (but is less than
1,200,000) for a three-month period, then the PMW AQH Consideration shall be
$58,100 ($125,000 less $66,900).
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1. ASSUMPTION OF LIABILITIES. At the Closing, Premiere shall assume and
agree to perform and discharge and indemnify PMW against any and all obligations
of PMW arising after the Closing under (i) any of the Material PMW Agreements
and (ii) under any contracts, agreements, leases, licenses and undertakings of
PMW set forth on Schedule 3.1 hereto.
3.2. LIMITATION. Except as specifically set forth in this Agreement,
Premiere shall not assume and shall have no liability or obligation whatsoever,
whether accrued, absolute, contingent or otherwise, any liabilities or
obligations of PMW whether due or to become due, with respect to the following
(collectively, "Excluded Liabilities"): (i) any federal, state, local or sales
taxes relating to periods prior to the Closing Date or to the asset sale
contemplated herein; (ii) any existing, pending or threatened litigation,
arbitrations, or other legal or administrative proceedings against PMW, whether
or not disclosed to Premiere; (iii) any liabilities, trade payables or accruals,
including any unpaid and accrued sick leave and vacation of PMW employees; (iv)
any liabilities attributable to the operations of PMW prior to the Closing; and
(v) any liabilities not specifically assumed hereunder. Further, Premiere shall
assume only PMW's allocable share of its office lease set forth on Schedule 5.14
hereto. PMW agrees to discharge, promptly when due, all of the Excluded
Liabilities.
3.3. PRORATIONS. The following items with respect to the Assets and the
business of PMW shall be prorated as of the Closing Date with PMW being
responsible for and receiving the benefit of such items
<PAGE>
to the extent that they relate to the period ending on the Closing Date and
Premiere being responsible for and receiving the benefits of such items to the
extent that they relate to periods from and after the Closing Date:
(a) rents and other payments due under leases of real property
assigned to Premiere, as and when collected, and rents and other payments
payable by PMW under leases assumed by Premiere;
(b) real estate and personal property taxes applicable to the tax
year in which the Closing occurs which shall be prorated on the basis of a 365
day year based on the most recent real estate and personal property tax bills
received by PMW;
(c) water charges, sewer rents, electricity, steam, gas and other
like utility charges which shall be prorated based on the number of days before
and from and after the Closing Date covered by bills paid;
(d) periodically recurring governmental and quasi-governmental fees
for licenses, or permits relating to the Assets which are transferable and which
are properly transferred to Premiere in respect to the Assets, or any part
thereof;
(e) payments made in the ordinary course of business consistent with
past practice relating to leases, contracts and agreements assigned to and
assumed by Premiere;
(f) other expenses paid or due in the ordinary course of business
consistent with past practices which relate to the Assets and the business being
transferred to Premiere.
Within Ninety (90) days after the Closing Date, Premiere and PMW shall
give written notice to the other of any payment, receipt and allocation of any
of the foregoing items, and PMW shall reimburse Premiere or Premiere shall
reimburse PMW, as the case may be, the net amount owed to the other. Such
notice shall include copies of applicable invoices and, as necessary,
calculation of amount which has been prorated.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PREMIERE
Premiere represents and warrants to PMW as follows:
4.1. ORGANIZATION AND STANDING. Premiere is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite authority to own its property and assets and to conduct
its business as proposed to be conducted under this Agreement.
<PAGE>
4.2. AUTHORIZATION AND BINDING OBLIGATION. Premiere has all necessary
power and authority to enter into and perform its obligations under this
Agreement and the transactions contemplated hereby, and Premiere's execution,
delivery and performance of this Agreement have been duly and validly authorized
by all necessary action on its part. This Agreement has been duly executed and
delivered by Premiere and constitutes its valid and binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
creditors' rights or equitable principles generally.
4.3. ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. The
execution, delivery and performance of this Agreement by Premiere: (a) do not
require the consent of any third party; (b) will not violate any provision of
Premiere's articles of incorporation or by-laws; (c) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or ruling
of any governmental authority to which Premiere is a party or is bound; and (d)
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a default under or
accelerate or permit the acceleration of any performance required by the terms
of any agreement, instrument, license or permit to which Premiere is now
subject.
4.4. BANKRUPTCY. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting Premiere are
pending or, to the knowledge of Premiere, threatened, and Premiere has not made
and presently does not intend to make any assignment for the benefit of
creditors or taken any action in contemplation of, the institution of such
insolvency proceedings.
4.5. LITIGATION. To the best of Premiere's knowledge, there is no claim,
litigation, proceeding or investigation pending or threatened which seeks to
enjoin or prohibit, or otherwise questions the validity of, any action taken or
to be taken in connection with this Agreement.
4.6. DISCLOSURE. To the best of Premiere's knowledge, none of this
Agreement or any certificate or other document delivered in connection with the
transactions contemplated by this Agreement contains any untrue statement of
material fact or omits any statement of material fact necessary to make any
statement contained herein or therein not misleading.
ARTICLE 5
REPRESENTATION AND WARRANTIES AND COVENANTS OF PMW
PMW represents and warrants to Premiere as follows:
5.1. ORGANIZATION AND STANDING. PMW is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania and has all necessary corporate power and authority to own, lease
and operate the Assets and to carry on the businesses of PMW as now being
conducted and as proposed to be conducted. PMW is duly qualified to do business
and is in good standing in any state in which the operation of PMW requires it
to be so qualified in each jurisdiction where the
<PAGE>
ownership of its assets or the nature of its business where the failure to be
qualified and/or in good standing would have a material adverse effect on PMW.
5.2. AUTHORIZATION AND BINDING OBLIGATION. PMW has all necessary power and
authority to enter into and perform its obligations under this Agreement and the
transactions contemplated hereby, and PMW's execution, delivery and performance
of this Agreement have been duly and validly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by PMW
and constitutes its binding obligation, enforceable in accordance with its
terms, except as limited by laws affecting the enforcement of creditors' rights
or equitable principles generally.
5.3. ABSENCE OF CONFLICTING AGREEMENT OR REQUIRED CONSENTS. The execution,
delivery and performance of this Agreement by PMW (a) do not require the consent
of any third party, except as otherwise detailed on one of the Schedules (b)
will not violate any provisions of PMW's articles of incorporation or By-Laws;
(c) to PMW's knowledge will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority to
which PMW is a party or by which it or the Assets are bound; (d) will not,
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a material default under
any agreement, instrument, license or permit to which PMW or the Assets are now
subject; and (e) will not result in the creation of any lien, charge or
encumbrance on any of the Assets.
5.4. PERSONAL PROPERTY. All Personal Property used or useful in the
operation of PMW shall be included as part of the Assets transferred from PMW to
Premiere, as detailed on Schedule 5.4. All Physical Inventory to be transferred
to Premiere is detailed in Schedule 5.4(a). All agreements between aff;iliated,
third-party radio stations and PMW, and all agreements between foreign
subdistributors and PMW are detailed in Schedule 5.4(b).
5.5. INTELLECTUAL PROPERTY. PMW has good and marketable title in and to
all copyrights, trademarks, trade names, service marks, licenses, permits,
jingles, privileges, and other similar intangible property rights and interests
applied for, issued to or owned by PMW, or under which PMW is licensed or
franchised, which are used or useful in the present conduct of the businesses
and operations of the PMW ("Intellectual Property"). Attached hereto as
Schedule 5.5 is a list of all such Intellectual Property rights. PMW has no
knowledge of any threatened or pending proceeding or litigation affecting or
with respect to any Intellectual Property. PMW has received no notice alleging
infringement of the rights of any third party to Intellectual Property or
unlawful use of such property. PMW has the right to use the Intellectual
Property and to conduct the business and operations of PMW as now conducted and
has not granted any licenses or other rights and has no obligation to grant
licenses or other rights with respect thereto to any party.
5.6. PERSONNEL INFORMATION.
<PAGE>
(a) SCHEDULE 5.6 contains a true and complete list of all persons
employed at or in connection with the operation of PMW, their title or job
responsibility, and a description of all compensation arrangements (including
bonus arrangements) and employee benefit plans or arrangements applicable to
such employees. PMW has no knowledge that any employee identified on SCHEDULE
5.6 currently plans to terminate employment, whether by reason of the
transactions contemplated by this Agreement or otherwise.
(b) To its knowledge, PMW has complied in connection with the
operation of PMW in all material respects with all laws relating to the
employment of labor, including, without limitation, those laws relating to
safety, health, wages, hours, unemployment insurance, workers' compensation, and
equal employment opportunity.
(c) PMW is not a party to or bound by any employee pension benefit
plan within the meaning of Section 3(2a) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"),and covering or regarding the
employees set forth on SCHEDULE 5.6 whether or not such plan is otherwise exempt
from the provisions of ERISA, and no employee or spouse of an employee
identified on SCHEDULE 5.6 is entitled to any benefits that would be payable
pursuant to any employee pension benefit plan. Except as provided on Schedule
5.6, PMW has no fixed or contingent liability or obligation to any person now or
formerly employed at PMW, including, without limitation, pension or thrift
plans, individual or supplemental pension or accrued compensation arrangements,
contributions to hospitalization or other health or life insurance programs,
incentive plans, bonus arrangements and vacation, sick leave, disability and
termination arrangements or policies, including workers compensation policies.
Premiere shall not assume or hereby become obligated to pay any debt, obligation
or liability arising from PMW's employee benefit plans, or any other employment
arrangement, and coverage under such plans and arrangements shall remain the
responsibility of PMW.
5.7. LITIGATION. Except as set forth on SCHEDULE 5.7, PMW is not subject
to any judgement, award, order, writ, injunction, arbitration decision or decree
pertaining to the operation of PMW, ownership of the Assets or the validity
thereof. Except as set forth on SCHEDULE 5.7, there is no litigation,
proceeding or investigation pending or, to the best of PMW's knowledge,
threatened against PMW or relating to PMW or the Assets in any federal, state or
local court, or before any administrative agency, arbitrator or other tribunal
authorized to resolve disputes. There is no claim, litigation, proceeding or
investigation pending or, to the best of PMW's knowledge, threatened against
PMW, which might have a material adverse effect upon the business, assets or
condition (financial or otherwise) of PMW or which seeks to enjoy or prohibit,
or otherwise questions validity of, any action taken or to be taken in
connection with this Agreement.
5.8. COMPLIANCE WITH LAWS. To the best of its knowledge PMW has operated
and is operating in material compliance with all laws, regulations and
governmental orders pertaining to the operation of PMW or ownership of the
Assets, and its present use of the Assets does not violate any law, regulation
or order in any material respect. PMW has not received any notice asserting any
noncompliance with any applicable statute, rule or regulation, in connection
with the business or operation of PMW.
<PAGE>
5.9. BANKRUPTCY. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting PMW or any of
the Assets, are pending or, to the knowledge of PMW, threatened, and PMW has not
made and presently does not intend to make any assignment for the benefit of
creditors or file any petition in bankruptcy and has not taken and presently
does not intend to take any action which would constitute the basis for the
institution of such insolvency proceedings. PMW is not aware of any fact or
circumstance which would cause any of the Assets or the business of PMW become
subject to the jurisdiction of any bankruptcy court or proceeding.
5.10. DISCLOSURE. None of this Agreement or any certificate of other
document delivered in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact.
5.11. OPERATION OF PMW. PMW has operated PMW in the ordinary and
normal course of business and in the manner that is customary with its past
practices from June 30, 1996 through the Closing Date.
5.12. ABSENCE OF UNDISCLOSED LIABILITIES. The unaudited cash basis
balance sheets of PMW at December 31, 1995 and June 30, 1996 and the related
unaudited, cash basis income statements (including footnotes thereto) for the
periods then ended, present fairly in all material respects the cash basis
financial position and results of operations of PMW on each such date or for the
applicable periods then ended, as the case may be. The foregoing financial
statements are sometimes referred to herein as the "Financials." Except as and
to the extent reflected or reserved against in the Financials, or disclosed in
any Schedules hereto, PMW had no liabilities or obligations as of the dates
thereof (other than obligations of continued performance under the Material PMW
Agreements and other commitments and arrangements incident to the normal conduct
of business which are terminable at will), known or unknown, secured or
unsecured (whether accrued, absolute, contingent or otherwise), including,
without limitation, tax liabilities due or to become due. Since June 30, 1996,
except as and to the extent reflected or reserved against in the Financials or
disclosed in any Schedule hereto, PMW has incurred no liabilities or obligations
other than (i) current liabilities incurred in the ordinary course of business
which in the aggregate do not have a material adverse effect on the financial
position or operations of PMW, or (ii) in connection with the transactions
contemplated hereby.
5.13. ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1995,
except as described in Schedule 5.13 hereto, there has not occurred any event or
condition which has or may be expected to have a material adverse effect on the
properties, assets, liabilities (whether absolute, contingent, accrued or
otherwise), condition (financial or otherwise), results of operations, business,
affairs or prospects of PMW concerning PMW and, without limiting the generality
of the foregoing, PMW has not (a) incurred any obligation or liability, secured
or unsecured (whether accrued, absolute, contingent or otherwise), whether due
or to become due, except current liabilities in the ordinary course of business;
(b) discharged or satisfied any lien or encumbrance, or paid any obligation or
liability, except current liabilities becoming due in the ordinary course of
business; (c) mortgaged, pledged, or subjected to lien, charge, security
interest or other
<PAGE>
encumbrance any of the Assets; (d) sold, transferred, licensed or otherwise
disposed of any of the Assets other than in the ordinary course of business
consistent with past practice; (e) increased the compensation payable or to
become payable by it to any of its directors, officers, employees or agents
whose total compensation for services rendered after any such increase is at an
annual rate of more than $30,000, or made any bonus, percentage of compensation
or other like benefit accruing to or for the credit of any such directors,
officers, employees or agents of the PMW; (f) terminated or received any notice
of termination of any contract, lease, trademark, patent, copyright or trade
name protection or other agreement; (g) suffered any damage, destruction or loss
(whether or not covered by insurance) adversely affecting the Assets; (h)
suffered any taking or seizure of all or any part of the Assets by condemnation
or eminent domain; (i) experienced any material change in its relations with its
dealers, distributors, customers, employees, agents or consultants; acquired any
capital stock or other securities of any corporation or any interest in any
business enterprise, or otherwise made any loan or advance to or investment in
any person, firm or corporation; (k) made any capital expenditures or capital
additions exceeding $10,000 singularly or $50,000 in the aggregate; (1)
instituted, settled or agreed to settle any litigation, action or proceeding
before any court or governmental body affecting its financial condition, its
property or its business operations involving a claim in excess of $5,000; (m)
made any purchase commitment in excess of normal, ordinary and usual
requirements, or made any material change in its selling, pricing, or personnel
practices; (n) made any change in accounting principles or methods, or in the
manner of keeping books, accounts and records of the PMW; (o) entered into any
transaction other than in the ordinary course of business; (p) changed the
authorized or issued capital stock of the PMW, increased its funded
indebtedness, or made any declaration, setting aside or payment of any dividend
or any other distribution in respect of its capital stock; or (q) entered into
any agreement or made any commitment to do any of the things described in the
preceding subsections (a) through (p) of this Section 5.13.
5.14. EQUIPMENT LEASES AND CONTRACTS. Except as disclosed on Schedule
5.14 hereto, PMW is not a party to, nor are the Assets bound by, any executory
agreements (including dealer and distributor agreements), purchase orders (other
than purchase commitments for supplies in the ordinary course of business),
bailment agreements, equipment leases, commitments, contracts, employment
agreements, warranties, guarantees, understandings or other agreements (a) which
involve or may involve the annual payment of more than $2,500, (b) which are of
a duration in excess of twelve (12) months from the date of execution thereof,
or (c) to which any stockholder, officer, director or employee of PMW are a
party in any capacity, which is not being extinguished by said Closing Date
(said agreements, together with the Real Property Leases, being referred to
herein collectively as the "Material PMW Agreements"); true and correct copies
of each of the Material PMW Agreements have been delivered to Premiere and each
of them is in full force and effect, with an expiration date as set forth on
Schedule 5.14, have not been amended or modified except as set forth on Schedule
5.14, and constitute the entire agreement between the parties thereto with
respect to the subject matter thereof to the best of PMW's knowledge. No party
to any Material PMW Agreement is in material default thereunder, nor is PMW
aware of any fact or circumstances with respect to any Material PMW Agreement
which upon notice or lapse of time could give rise to a material default
thereunder.
5.15. REAL PROPERTY LEASES. The real property leases listed on
Schedule 5.15 hereto (the "Real Property Leases") constitute all leases, whether
written or oral, to which any of the PMW or their affiliates
<PAGE>
are a party and which are necessary or required in connection with PMW
(including any real property owned by one or more of the shareholders or any
affiliate of PMW); true and correct copies of each of the written Real Property
Leases have been delivered to Premiere. PMW has valid and enforceable leasehold
interests in such real property, free and clear of all liens and encumbrances.
Each such lease affords PMW, as the case may be peaceful and undisturbed
possession of the premises covered thereby, and there exists no event of default
or event, occurrence, condition or act (including the transactions contemplated
by this Agreement) which, with the giving of notice, the lapse of time or the
happening of any further event or condition, would become a material default
under such lease, give rise to a right in the lessor to terminate the lease or
render the lessee liable to incur any expenditure under such lease. In the
event any such lease requires the lessee to exercise an option to renew in order
to continue the term thereof, PMW has properly exercised such option to renew.
To the best knowledge of PMW, each such real property and improvements thereon
may lawfully be used in connection with the business of PMW and is in compliance
with all applicable laws, rules, regulations and ordinances of all federal,
state, municipal and other governmental authorities including, but not limited
to, zoning, building, health, safety and environmental laws, and PMW has not
received any notices of violations with respect thereto.
5.16. MACHINERY AND EQUIPMENT. The machinery and equipment of PMW is
in good operating condition and in a state of good repair sufficient for the
conduct of normal operations. PMW's assets and properties (including leased
property) are adequate to enable PMW to conduct its business as now being
conducted. PMW is not aware of any major capital expenditure that will be
required within one year from the date of this Agreement that is not consistent
with past practices.
5.17. LICENSES. PMW possesses all material patents, franchises,
permits, licenses, music library rights, certificates and consents required from
any governmental authority or any other person necessary to enable PMW to carry
on its business as now conducted and to own and operate its properties
(including leased property) as now owned and operated and all such patents,
franchises, permits, licenses, certificates and consents will remain in full
force and effect following consummation of the transactions contemplated by this
Agreement. Attached hereto as Schedule 5.17 is a true and complete list of all
such patents, franchises, permits, licenses, certificates and consents. All
such patents, franchises, permits, licenses, certificates and consents are fully
transferable.
5.18. TITLE TO ASSETS. Except as disclosed on Schedule 5.18 hereto,
all of the Assets will, on the Closing Date, be owned by PMW, free and clear of
all mortgages, liens, security interests, pledges, charges and other
encumbrances whatsoever, and the sale to Premiere of the Assets will not give
rise to any lien, security interest, pledge, encumbrance or charge thereon. The
Assets constitute all of the assets necessary to operate the business as it is
now being operated.
5.19. FILINGS, ETC. PMW, to the best of its knowledge, (a) has filed
all federal, state and local tax returns required by law in the legally
prescribed time and manner, and paid all taxes, assessments and penalties due
and payable; (b) has made all payments required by any governmental program of
workers' social security or unemployment compensation; (c) has withheld and paid
over to the appropriate
<PAGE>
governmental authority all amounts required by law to be withheld from the wages
or salaries of employees; (d) is not liable for any arrears of wages or any
taxes or penalties for failure to comply with any of the foregoing; and (e) has
paid or will pay over to the appropriate governmental authority all sales or use
taxes referable to the PMW operations due as of the Closing Date, and has made
or will make provisions for payment of all such taxes accrued as of such date,
but not yet due. There are no claims pending or, to the best knowledge of PMW,
threatened against PMW for past due taxes, nor are there any outstanding waivers
or agreements by the Company for the extension of the time for the assessment of
any tax.
5.20. INSURANCE. Attached hereto as Schedule 5.20 is a true and
complete list of all insurance policies in force with respect to the Assets and
the business of the PMW and the annual premiums payable thereon. In the opinion
of PMW, all such policies are adequate to insure the risks arising in the normal
course of business. PMW is not now, and on the Closing Date will not be, in
default in any respect under any such policy, and PMW shall continue such
policies in force and effect through the Closing Date.
ARTICLE 6
CONDITIONS PRECEDENT TO PREMIERE'S OBLIGATION TO CLOSE AND
CONDUCT AND TRANSACTIONS PRIOR TO CLOSING
The obligations of Premiere hereunder are, at its option, subject to
satisfaction or waiver, at or prior to the Closing Date, of each of the
following conditions:
6.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of PMW shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.
(b) All of the terms, covenants and conditions to be complied with
and performed by PMW on or prior to Closing Date shall have been complied with
or performed in all material respects.
6.2. ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which Premiere in good faith believes would render it unlawful,
as of the Closing Date, to effect the transactions contemplated by this
Agreement in accordance with its terms.
6.3. PAYMENT OF INDEBTEDNESS: FINANCING STATEMENTS. PMW shall be prepared
to deliver the Assets to Premiere at Closing free and clear of all liens or
encumbrances.
6.4. NON-COMPETITION AGREEMENT. PMW, Andrew Mark and Kenneth Gross shall
have executed and delivered the Non-Competition Agreement to Premiere.
<PAGE>
6.5. EMPLOYMENT AGREEMENT. Execution of employment agreements between
Andrew Mark, Arnold J. Andron, and Premiere, in substantially the form attached
hereto as Schedule 6.5.
ARTICLE 7
CONDITIONS PRECEDENT TO PMW'S OBLIGATION TO CLOSE
The obligations of PMW hereunder are, at their option, subject to
satisfaction, at or prior to the Closing Date, of each of the following
conditions:
7.1. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Premiere shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.
(b) All the terms, covenants and conditions to be complied with and
performed by Premiere on or prior to the Closing Date shall have been complied
with or performed in all material respects.
ARTICLE 8
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1. DOCUMENTS TO BE DELIVERED BY PMW. At Closing, PMW shall deliver to
Premiere the following:
(a) instruments of conveyance and transfer, including all relevant
Bills of Sale, in form and substance reasonably satisfactory to counsel to
Premiere, effecting the sale, transfer, assignment and conveyance of the Assets
to Premiere, including, but not limited to, the following:
(i) assignments of all Intellectual Property; and
(ii) all books, records, logs, customer lists and similar assets
to be assigned to Premiere pursuant to Article 2;
(b) the executed Non-Competition Agreements of PMW, Andrew Mark, and
Kenneth Gross;
(c) resolutions of the Board of Directors and shareholders of PMW
authorizing this Agreement, and a certificate from the Secretary stating that
such resolutions are in full force and effect and have not been rescinded as of
the Closing Date.
<PAGE>
(d) Employment Agreements of Andrew Mark, and James Andron.
8.2. DOCUMENTS TO BE DELIVERED BY PREMIERE. At the Closing, Premiere shall
deliver to PMW the following:
(a) Four Hundred Fifty-FIve Thousand Dollars ($455,000) cash pursuant
to Section 2.4(b);
(b) the Promissory Note; and
(c) resolutions of the Board of Directors of Premiere or its
designee(s) authorizing this Agreement, and a certificate from the Secretary
stating further stating that such resolutions are in full force and effect and
have not been rescinded as of the Closing Date.
ARTICLE 9
FEES AND EXPENSES
9.1. EXPENSES. Each party hereto shall be solely responsible for all costs
and expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1. INDEMNIFICATION BY PMW. Through and including February 28,
1998, PMW shall indemnify, defend and hold Premiere harmless against and with
respect to, and shall reimburse Premiere for:
(a) any and all losses, direct and indirect, liabilities, or damages
resulting from any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or obligation by PMW contained herein or in any certificate,
document, or instrument delivered to Premiere hereunder;
(b) any and all liabilities or obligations of PMW not assumed by
Premiere pursuant to the terms of this Agreement; including the Excluded
Liabilities
(c) any and all losses, liabilities, or damages resulting from the
operation or ownership of PMW by PMW prior to the Closing Date;
(d) any and all losses, liabilities or damages resulting from any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated by this Agreement;
<PAGE>
(e) any and all actions, suits, proceedings, claims, demands,
assessments, judgements, costs, and expenses, including reasonable legal fees
and expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the foregoing or incurred in
investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
10.2. INDEMNIFICATION BY PREMIERE. Through and including February 28,
1998, Premiere shall indemnify and hold PMW harmless against and with respect
to, and shall reimburse PMW for:
(a) any and all losses, direct or indirect, liabilities, or damages
resulting from any misrepresentation, breach of warranty, or nonfulfillment of
any covenant or obligation by Premiere contained herein or in any certificate,
document, or instrument delivered to PMW hereunder;
(b) any and all losses, liabilities or damages arising after the
Closing Date in connection with the operations of PMW after the Closing Date;
and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to impose the imposition thereof, or in
enforcing this indemnity.
10.3. LIMITATION ON INDEMNIFICATION. In the absence of fraud by PMW or
its officers, directors or agents, the sole method by which Premiere may satisfy
any claims for indemnification hereunder shall be to offset the amount
outstanding under the Promissory Note, or any other payments which may become
due under Section 2 or under that certain Letter Agreement between Premiere and
PMW dated September 27, 1996; and PMW shall not be liable for any amounts in
excess of the principal amount of the Promissory Note. In the event of fraud by
PMW or its officers, directors or agents, Premiere shall be entitled to all
available rights and remedies, whether legal or equitable, and the limitations
contained in the foregoing sentence shall not be applicable.
ARTICLE 11
ALLOCATION OF PURCHASE PRICE
Premiere and PMW agree that the purchase price shall be allocated as
follows, for tax purposes:
Equipment and inventory: $ 10,000
Covenant not to compete: $ 25,000
Intellectual property: $ 600,000
Premiere and PMW further agree that any PMW AQH consideration shall be
allocated entirely to intellectual property.
<PAGE>
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 EVENTS OF TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(i) by the mutual consent of PMW and Premiere;
(ii) by Premiere, if PMW breaches in any material respect any of
their representations, warranties, covenants or agreements contained in this
Agreement;
(iii)by PMW, if Premiere breaches in any material respect any of
its representations, warranties, covenants or agreements contained in this
Agreement;
(iv) by either Premiere or PMW, if any of the conditions to
Closing is not fulfilled (or waived by the party for whose benefit the
conditions exist) on or prior to the Closing Date;
(v) by either Premiere or PMW, if the Closing has not occurred
on or prior to January 1, 1997.
12.2. EFFECT OF TERMINATION. In the event that either party shall
elect to terminate this Agreement pursuant to any provision contained herein
expressly giving such party the right to terminate this Agreement, this
Agreement shall forthwith terminate and have no further effect, and neither
party shall have any further obligation or liability. Notwithstanding the
foregoing, the termination of this Agreement pursuant to any provision hereof
shall not relieve any party of any liability for a breach of any representation
or warranty, or nonperformance of any covenant or obligation hereunder, and any
such termination shall not be deemed to be a waiver of any available remedy for
any such breach or nonperformance.
ARTICLE 13
OTHER PROVISIONS
13.1. EMPLOYEE MATTERS. Immediately prior to the consummation of the
transactions contemplated hereby, PMW shall terminate all its employees.
Premiere may, but shall not be obligated to, employ any such employees following
the Closing. PMW shall be responsible for all severance, accrued vacation and
sick leave, and other payments made to employees of PMW as a result of the
transactions contemplated hereby or the termination of any employees. Any
employees hired by Premiere shall be subject to Premiere's policies, procedures
and practices.
13.2. BENEFITS AND ASSIGNMENT. This agreement shall be binding upon
and shall incur to the benefit of the parties hereto and their respective
successors and assigns. Neither Premiere or PMW may
<PAGE>
assign this Agreement without the prior written consent of the other parties
hereto except that Premiere may assign its rights under this Agreement to
another entity under common control with Premiere without the consent of PMW.
13.3. ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
13.4. ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take promptly, or cause to be taken, all actions and to do promptly, or cause to
be done promptly, all things necessary, proper or advisable under applicable
laws to consummate and make effective the transactions contemplated by the
Agreement, and to satisfy all of the conditions to the Closing to be satisfied
by such waivers, consents and approvals from all applicable governmental
entities and third parties, and effecting all necessary registrations and
filings. Each of the parties hereto agrees not to take any action or fail to
take any action that would be likely to cause any representation or warranty
contained in this Agreement to cease to be true or accurate or that would be
reasonably likely to prevent the performance of any covenant or the satisfaction
of an condition contained in this Agreement.
13.5. CHOICE OF LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its principles of conflict of law.
13.6. ARBITRATION. Any dispute arising out of or relating to this
Agreement or the breach, termination or validity thereof, which has not been
resolved by a meeting of the executive officers of the parties, shall be finally
settled by arbitration conducted in accordance with AAA Commercial Arbitration
Rules by three independent and impartial arbitrators, of whom each party shall
appoint one and judgment upon the award rendered by the arbitrators may be
entered by any court having jurisdiction thereof. The place of arbitration
shall be Los Angeles.
13.7. NOTICES. Any notice, demand or request required or permitted to
be given under the provisions of this Agreement shall be in writing, addressed
to the following addresses, or to such other address as any party may request,
<PAGE>
To Premiere:
PREMIERE RADIO NETWORKS, INC.
15260 Ventura Boulevard, Fifth Floor
Sherman Oaks, CA 91403-5339
Attention: Harold S. Wrobel
Copy to:
Jeffrey Soza, Esq.
Christensen, White, Miller, Fink, Jacobs, Glaser & Shapiro, LLP
2121 Avenue of the Stars, Suite 1800
Los Angeles, CA 90067
To PMW:
Philadelphia Music Works, Inc.
P.O. Box 209202
Bryn Mawr, PA 19010
Attention: Kenneth Gross
Copy to:
Philadelphia Investment Banking Company:
P.O. Box 209
Villanova, PA 19085
Attention: Kenneth Gross
and shall be deemed to have been duly delivered and received (i) on the date of
personal delivery, or (ii) on the date of a signed receipt, if sent by an
overnight delivery service, but only if sent in the same manner to all persons
entitled to receive notice or a copy.
13.8. EXERCISE OF PURCHASE OPTION AND CANCELLATION OF SALES
REPRESENTATION AGREEMENT. Premiere and PMW agree that the consummation of the
transactions contemplated hereby shall terminate that certain Network Radio
Sales Representation Agreement dated August 12, 1996.
13.9. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
<PAGE>
13.10. FURTHER ASSURANCES. PMW shall at any time and from time to time
after the Closing execute and deliver to Premiere such further conveyances,
assignments and other written assurances as Premiere may reasonably request in
order to vest and confirm in Premiere (or its assigns) the title and rights to
and in all of the Assets to be intended to be transferred, assigned and conveyed
hereunder. In addition, PMW shall provide to Premiere subsequent to Closing
with the unaudited, accrual basis balance sheet and income statement at December
31, 1995 and for the twelve-month period then ended, and the unaudited, accrual
basis balance sheets and income statements as of the Closing Date and September
30, 1995, and for the periods then ended.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
PHILADELPHIA MUSIC WORKS, INC. PREMIERE RADIO NETWORKS, INC.
By: /s/ Kenneth Gross By: /s/ Harold S. Wrobel
-------------------------------- -------------------------------
Name: Kenneth Gross Name: Harold Wrobel
Title: President Title: Sr. Vice President/
Business and Legal Affairs
<PAGE>
September 27, 1996
Canary Productions, Inc.
10 Balligomingo Road
West Conshohocken, PA 19428
Attention: Mr. Andrew Mark
RE: ACQUISITION OF MUSIC LIBRARIES
Dear Andrew:
This letter sets forth the amended and restated terms upon which Premiere
Radio Networks, Inc. ("Premiere") will purchase a ninety-nine (99) year
exclusive license for the United States and its territories to all radio
broadcast and Internet usage rights ("License") of Canary Productions, Inc.
("CP") to the Canary, Audio Visual Broadcast ("AVB"), Choice Cuts and Prime
Cuts music libraries.
This letter shall amend and supersede in all respects the letter dated
August 29, 1995 setting forth the terms upon which Premiere, among other things,
was to purchase a 99 year exclusive license for the U.S. to all radio broadcast
and Internet usage rights of CP to the Canary, AVB and Choice Cuts music
libraries.
Capitalized terms used in this letter, unless otherwise defined herein,
shall have the meanings set forth in Article 1 and Section 2 of that certain
Purchase and Sale Agreement between Premiere and PMW dated as of September 27,
1996 ("Purchase Agreement").
1. RIGHTS TO BE ACQUIRED BY PREMIERE. Premiere shall acquire certain
rights ("Rights") rights of CP, to the Canary, AVB, Choice Cuts and Prime Cuts
music libraries. The Rights of each library shall include all rights licensed
to Premiere pursuant to those certain amended license agreements dated September
27, 1996 (collectively, the "Library Rights") executed by the parties
concurrently herewith, which agreements provide, among other things, that
Premiere shall have a one year, two year, three and four year license for the
Canary, AVB, Choice Cuts and Prime Cuts libraries, respectively.
2. PURCHASE PRICE. The purchase price for the libraries shall be as
follows:
a. CANARY LIBRARY. The purchase price for the Canary library
License (the "Canary Purchase Price") shall be an amount equal to the greater of
(i) $100.00, and (ii) the difference between (A) 2.5 times the sum of (1) the
portion of the Adjusted Cash Flow (as defined herein) of Premiere's combined
Broadcast Results Group and Philadelphia Music Works Division (the "BRG
Division") for the period of September 1, 1995 to December 31, 1995 and (2)
two-thirds (2/3) of Adjusted Cash Flow for the period January 1, 1996 to
December 31, 1996 (which shall be attributable and apportioned to the Canary
library
<PAGE>
pursuant to Section 2.e. below), minus (B) $3,280,000, minus (C) the cumulative
"PMW AQH Consideration," if any.
b. AVB LIBRARY. The purchase price for the AVB library License (the
"AVB Purchase Price") shall be an amount equal to the greater of (i) of $100.00,
and (ii) the difference between (A) 2.2 times the portion of the Adjusted Cash
Flow of the BRG Division for the period of January 1, 1997 to December 31, 1997
(which shall be attributable and apportioned to the AVB library pursuant to
Section 2.e. below), minus (B) the sum of (1) $3,233,000 plus (2) the Canary
Purchase Price minus (C) the cumulative "PMW AQH Consideration," if any.
c. CHOICE CUTS LIBRARY. The purchase price for the Choice Cuts
library License (the "Choice Cuts Purchase Price") shall be equal to the greater
of (i) $100.00, and (ii) the difference between (A) 1.9 times the portion of the
Adjusted Cash Flow of the BRG Division for the period of January 1, 1998 to
December 31, 1998 (which shall be attributable and apportioned to the Choice
Cuts library pursuant to Section 2.e. below), minus (B) the sum of (1)
$3,227,000 plus (2) the AVB Purchase Price and plus (3) the Canary Purchase
Price minus (C) the cumulative "PMW AQH Consideration," if any.
d. PRIME CUTS LIBRARY. The purchase price for the Prime Cuts
Library License (the "Prime Cuts Purchase Price") shall be equal to the greater
of (i) $100.00, and (ii) the difference between (A) 1.9 times the portion of the
Adjusted Cash of the BRG Division for the period of January 1, 1999 to December
31, 1999 (which shall be attributable and apportioned to the Prime Cuts Library
pursuant to Section 2.e. below, minus (B) the sum of (1) $3,177,000 plus (2) the
AVB Purchase Price, (3) the Canary Purchase Price, and (4) the Choice Cuts
Purchase Price, minus (C) the PMW AQH Consideration, if any.
e. DEFINITION OF ADJUSTED CASH FLOW. For purposes of determining
the Canary Purchase Price, the AVB Purchase Price, the Choice Cuts Purchase
Price, and the Prime Cuts Purchase Price, the parties hereto have stipulated
that the Adjusted Cash Flow attributable to the applicable library shall be
calculated based upon the applicable library's share of the difference between
(i) the earnings before interest, taxes and depreciation of the BRG Division
less (ii) capital expenditures incurred by such division and less the aggregate
excess, if any, of the fair market value of Premiere's common stock over the
exercise price of the stock options granted to Doug Reed, Andrew Mark and Arnold
J. Andron pursuant to certain employment agreements dated August 29, 1995,
September 1, 1996 and September 27, 1996, respectively, each determined in
accordance with generally accepted accounting principles consistently applied.
In calculating the earnings of the BRG Division, the BRG Division shall pay
Premiere a 25% sales commission on advertising sales and a reasonable amount for
legal, accounting and other expenses that are consolidated into Premiere. Once
the applicable libraries' share of Adjusted Cash Flow is determined in
comparison to the Adjusted Cash Flow of BRG as a whole, the multiple to be
applied in determining the purchase price of any of the Library Rights shall be
adjusted proportionately. For example, if the Adjusted Cash Flow attributable
to AVB during the period of January 1, 1997 through December 31, 1997 comprises
twenty percent (20%) of the total Adjusted Cash Flow of BRG, the 2.2 times
multiple shall be adjusted proportionately such that it is equal to 11.0 times
(or 2.2 times multiple divided by 20%).
f. ADJUSTMENT TO PURCHASE PRICE. If Andrew Mark shall not be
employed by Premiere on the date of the closing of the purchase and sale of the
Canary library, the AVB library, the Choice Cuts Broadcast library or the Prime
Cuts library, then the applicable purchase price shall be reduced by one-half;
provided, however, that there shall not be any adjustment to any purchase price
if the Employment Agreement dated September 1, 1996 between Premiere and Andrew
Mark shall be terminated without cause, or due to the death, or total disability
of Mark.
<PAGE>
g. PAYMENT OF PURCHASE PRICES. The Canary Purchase Price, the AVB
Purchase Price, the Choice Cuts Purchase Price and the Prine Cuts Purchase Price
shall each be paid in cash at the applicable closing; provided, however, that at
the closings of the Choice Cuts and Canary libraries Premiere shall have the
option of delivering shares of Premiere's Class A common stock having a fair
market value equal to the purchase price in lieu of cash; provided further that
at the closing of the AVB and Prime Cuts libraries, CP shall have the option to
receive shares of a class of Premiere's Class A common stock selected by
Premiere having a fair market value equal to the purchase price in lieu of cash.
The fair market value of Premiere's Class A common stock shall equal the average
of the last reported sale price for Premiere's Class A common stock on the
exchange (or NASDAQ) on which the Class A common stock is then traded for the
twenty business day period ending five business days prior to the applicable
closing.
h. SECURITY INTEREST. Upon execution of the License, Canary's
obligation under each respective License shall be secured by a first priority
security interest in the assets and other rights licensed to Premiere pursuant
to the applicable license agreements.
i. OTHER. Upon payment of the Canary Purchase Price, the AVB
Purchase Price, the Choice Cuts Purchase Price and the Prime Cuts Purchase
Price; for consideration of one dollar ($1.00) at any time during the term of
the ninety-nine (99) year License, Premiere may, at its option, purchase the
exclusive rights (rather than lease) consisting of the U.S. radio broadcast and
Internet usage rights of CP to the Canary, AVB, Choice Cuts and Prime Cuts
libraries. Furthermore, in the event there is any dispute concerning the
licensed rights or in the event of Canary's bankruptcy or insolvency, Canary
shall have no right to interfere with the ninety-nine (99) year License.
3. AGREEMENTS REGARDING CLASS A COMMON STOCK. The following terms shall
apply to any Class A Class A common stock issued to CP:
a. All Class A common stock will be "restricted stock" within the
meaning of Rule 144 of the Securities Act of 1933, as amended.
b. If CP proposes to sell any of the Class A common stock, in the
market, CP shall give Premiere notice that it intends to sell Class A common
stock in the market and state the minimum price at which it intends to sell such
Class A common stock. Premiere will have five business days in which to elect
whether or not to purchase the Class A common stock at the price set forth in
the notice. If Premiere declines to purchase the Class A common stock, then CP
may, for a period of thirty days, sell such Class A common stock in a market
limit order at or above the price set forth in the notice. This paragraph 3.b.
will again apply to any Class A common stock not sold within such thirty day
period.
c. If CP proposes to sell any Class A common stock in a private
sale, CP shall give Premiere notice of its intent to sell the Class A common
stock and the price at which such common stock will be sold. Premiere will have
five business days in which to elect whether or not to purchase the common stock
at the price set forth in the notice. If Premiere declines to purchase the
Class A common stock, then CP may sell such Class A common stock in a private
sale for a price no less than that set forth in such notice. This paragraph
3.c. will again apply to any Class A common stock not sold within such thirty
day period.
d. CP may, subject to applicable laws, use the Class A common stock
as collateral for margin loans notwithstanding paragraphs 3.b. and 3.c. hereof,
provided that Premiere shall have a right to purchase any Class A common stock
which might be sold by a lender.
<PAGE>
e. The restrictions contained in paragraphs 3.b. and 3.c. hereof
shall not apply to transfers by CP to their respective shareholder(s), provided
that any transfers by such shareholder(s) shall be subject to such restrictions.
4. TIMING OF CLOSINGS. The closings of the acquisitions of the libraries
shall take place as follows: (i) the closing of the purchase and sale of the
Canary library shall take place on or about April 1, 1997; (ii) the closing of
the purchase and sale of the AVB library shall take place on or about April 1,
1998; (iii) the closing of the purchase and sale of the Choice Cuts library
shall take place on or about April 1, 1999; and (iv) the closing of the purchase
and sale of the Prime Cuts library shall take place on or about April 1, 2000.
All closings shall take place at the principal executive offices of Premiere.
5. OWNERSHIP OF LIBRARIES. CP owns, and will transfer to Premiere, the
exclusive License and Library Rights to the AVB library, the Canary library ,
the Choice Cuts library and the Prime Cuts library (collectively, the "Library
Rights") free and clear of all liens, claims, encumbrances and rights of third
parties. Canary owns and will continue to own all the Library Rights which are
part of the AVB, Canary, Choice Cuts and Prime Cuts libraries and the use
thereof by CP does not and will not violate or infringe on the rights of any
third party with respect thereto. CP does not and will not have any notice of
any infringement by any third party on any of the Library Rights which are part
of the AVB, Canary, Choice Cuts or Prime Cuts libraries. The consummation of
the transactions contemplated hereby by CP does not and will not require the
consent of any third party.
6. SPECIFIC PERFORMANCE. The parties agree that the Canary library, the
AVB library, the Choice Cuts library and the Prime Cuts library are unique and
that Premiere would not have an adequate remedy at law in the event of a breach
of this agreement by CP. Accordingly, in addition to any other rights and
remedies available to it under law or equity, Premiere shall have a right to
obtain specific performance of the obligations hereunder of CP.
7. EXPENSES. Each party shall bear their own expenses in connection with
the transactions contemplated hereby.
8. RIGHT TO REVIEW CERTAIN INTELLECTUAL PROPERTY COSTS. PMW shall grant
to Premiere the right to review certain intellectual property costs incurred in
the development of the PMW Jingle Service for purposes of allocating the
consideration paid in connection with the Purchase Agreement. Based upon the
results of Premiere's review, as necessary, Premiere and PMW shall mutually
agree upon an appropriate adjustment to the purchase price for any of the
Library Rights.
9. DEFINITIVE AGREEMENT. Premiere and CP agree to negotiate in good
faith a more definitive license agreement containing additional customary terms,
conditions, representations and warranties, including but not limited to the
provisions of Sections 5.1, 5.2, 5.4, 5.5, 5.7, 5.8, 5.9, 5.10, 5.11, 5.17,
5.18, 9.1, 10.1, 10.2, 12.1, 12.2, 13.1, 13.4, 13.5 and 13.8 of that certain
Purchase and Sale Agreement dated September 27, 1996 between Premiere and
Philadelphia Music Works, Inc. (each modified as appropriate to apply to the
transactions contemplated hereby); provided, however, that if the parties are
unable to agree upon or execute a more definitive purchase agreement then such
additional terms, conditions, representations and warranties as are customary in
transactions of a type similar to those described herein shall be incorporated
herein by reference and this letter agreement (together with such additional
terms, conditions, representations and warranties) shall be deemed to be the
definitive purchase agreement and shall be binding and enforceable upon the
parties.
<PAGE>
10. CP acknowledges that it has received all amounts owed to it in that
certain Letter Agreement dated August 29, 1995. Further, CP acknowledges that
subsequent to August 29, 1995, the Choice Cuts Library was transferred to CP by
PMW.
Please acknowledge your agreement to the foregoing by signing a copy of
this letter in the spaces below and returning the executed copy to me.
Very truly yours,
/s/ Daniel M. Yukelson
Daniel M. Yukelson
Vice President
Acknowledged and Agreed:
September 27, 1996
CANARY PRODUCTIONS, INC.
/s/ Kenneth Gross
By: ________________________
Kenneth W. Gross, President
<PAGE>
PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
PREMIERE RADIO NETWORKS, INC.
AS BUYER
AND
CUTLER PRODUCTIONS, INC. AND SJM PRODUCTIONS, INC.
AS SELLERS
AS OF SEPTEMBER 30, 1996
<PAGE>
PURCHASE AND SALE AGREEMENT
This Agreement dated this 30th day of September, 1996 is by and between
Premiere Radio Networks, Inc. ("Premiere"), a Delaware corporation; and Cutler
Productions, Inc., a California corporation ("CPI"), and SJM Productions, Inc.,
a California corporation ("SJM" and collectively with CPI, "CP").
WHEREAS, CP desires to sell to Premiere all of the Assets (as later defined
herein) and the business and goodwill related thereto, and Premiere desires to
purchase said Assets, business and goodwill from CP.
NOW, THEREFORE, in consideration of the mutual promises and undertakings
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE 1
DEFINITIONS
Unless otherwise stated in this Agreement, the following terms when used
herein shall have the meanings assigned to them below (such meanings to be
equally applicable to both the singular and plural forms of the terms defined).
"ASSETS" shall mean the assets to be transferred to Premiere hereunder, as
more fully specified in Section 2.2.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 3.1
"CLOSING" shall have the meaning set forth in Section 2.1.
"CLOSING DATE" shall have the meaning set forth in Section 2.1.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section 2.2.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 5.5.
"MATERIAL CP AGREEMENTS" shall have the meaning set forth in Section 5.14.
"NON-COMPETITION AGREEMENT" shall mean the agreement in the form of EXHIBIT
A to be fully executed and delivered to Premiere at the Closing.
"PERSONAL PROPERTY" shall mean all tangible personal property owned, leased
or held by CP and used or useful in the present conduct of the business and
operations of CP.
"PHYSICAL INVENTORY" shall mean all compact discs, tapes or other recording
media containing the programs of CP and all other physical assets which are
owned and utilized by CP in the conduct of its businesses and operations.
"PREMIERE" shall have the meaning set forth in the introduction to this
Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.4.
1
<PAGE>
ARTICLE 2
PURCHASE OF ASSETS
2.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
occur simultaneously with the execution of this Agreement (the "Closing Date").
2.2 TRANSFER OF ASSETS. On the Closing Date, CPI shall sell, assign,
transfer and convey to Premiere, and Premiere shall purchase from CP, all right,
title and interest in and to the assets, tangible and intangible (including the
respective businesses of CPI and SJM, each as a going concern), owned or held by
CP wherever located and used in the conduct of the business and operations of
CP, including, but not limited to the following (collectively, the "Assets"):
(a) all Intellectual Property;
(b) all Material CP Agreements and other contracts, leases or
agreements entered into by CP or by which CP is bound in connection with the
operation of CP;
(c) all computer programs, software and programming materials of
whatever form or nature owned by CP and used or intended for use by CP;
(d) all files, records, books of account and logs relating to the
operations of CP, including, without limitation, programming information and
studies, advertising studies or consulting reports, marketing and demographic
data, sales correspondence, promotional materials, credit and sales reports to
the extent such materials exist;
(e) all Personal Property;
(f) all goodwill of CP; and
(g) all other assets of whatever kind or nature, excluding the
Excluded Assets.
2.3 EXCLUDED ASSETS.
(a) Notwithstanding anything contained in Section 2.2 or elsewhere in
this Agreement, the Assets shall not include, and Premiere shall not acquire any
right, title or interest in or to the following (the "Excluded Assets"); (i) all
cash and cash equivalents on hand as of the Closing Date and all deposits in
bank accounts whether or not such deposits have cleared; (ii) accounts
receivable and any other monies due to CP from third parties, attributable to
the operations of CP prior to the Closing Date; and (iii) any tax refund claim
or claim for insurance coverage proceeds relating to periods of operation prior
to the Closing Date. CP shall cause Ron Cutler to deliver to Premiere no later
than 10 days following the Closing Date a promissory note in a principal amount
equal to the sum of $200,000, minus the current assets being transferred to
Premiere pursuant to this Agreement, plus the amount of current liabilities
assumed by Premiere pursuant to this Agreement (excluding deferred taxes and
other deferred charges). Such promissory note shall provide for payments of
$35,000 every two weeks and shall contain such other terms and conditions
reasonably satisfactory to Premiere. For purposes of this Agreement, "current
assets" and "current liabilities" shall be determined in accordance with
generally accepted accounting principles consistently applied utilized in CP's
audited financial Statements as of December 31, 1996. Notwithstanding anything
contained herein to the contrary, the damages caused by a breach of this Section
shall not be subject to the limitation of damages contained in Section 10.4
hereof.
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2.4 ABSENCE OF CONSENT. Notwithstanding the foregoing, there shall not be
assigned to Premiere any Material CP Agreement or any other contract, lease or
agreement entered into by CP or by which CP is bound, if an attempted assignment
thereof without the consent of the other party or parties thereto would
constitute a breach thereof or in any way adversely affect the rights of CP
thereunder and such consent is not obtained, or if an attempted assignment would
be ineffective or would affect the rights of CP thereunder so that Premiere
would not, in fact, receive the benefits thereof. CP covenants and agrees that
the beneficial interest in and to any such agreement shall, to the extent
permitted by the relevant agreement and/or by law, pass to Premiere, and CP
covenants and agrees: (a) that it will hold and declare that it holds all such
agreements in trust for the benefit of Premiere, its successors and assigns,
from and after the Closing Date; (b) to use all reasonable efforts to obtain and
secure any and all consents and approvals that may be necessary to effect such
assignment or assignments of the same; (c) to make or complete such assignment
or assignments as soon as reasonably possible; and (d) to cooperate with
Premiere in any other reasonable arrangement designed to provide for actions
necessary to enable CP to fulfill any such agreements until an effective
assignment thereof to Premiere can be obtained, and the parties agree to
cooperate and take all necessary actions, including accountings between parties,
to assure that Premiere shall receive all of such benefits, rights, obligations
and duties under such agreements. In the event that CP is not able to assign
any Material CP Agreement or any other contract, lease or agreement which
constitutes part of the Assets or provide Premiere with substantially all the
benefits thereof through the term of such Material CP Agreement or other
contract, lease or agreement, there shall be an equitable adjustment to the
purchase price and CP shall pay to Premiere the amount of such purchase price
adjustment promptly following the determination thereof. The provisions of this
Section 2.4 do not constitute a waiver of the conditions to Closing contained in
Article 6 hereof.
2.5 PURCHASE PRICE. CP hereby agrees to sell to Premiere and Premiere
hereby agrees to buy from CP all rights, title and interest in CP for the
purchase price of $8,500,000 in cash on the Closing Date.
ARTICLE 3
ASSUMPTION OF LIABILITIES
3.1 ASSUMPTION OF LIABILITIES. At the Closing, Premiere shall assume and
agree to perform and discharge and indemnify CP against any and all obligations
of CP arising after the Closing under (i) any of the Material CP Agreements and
other contracts, leases or agreements of CP included as part of the Assets and
set forth on Schedule 3.1 hereto, and (ii) all liabilities incurred or
attributable to the operations of CP from and after the Closing (the "Assumed
Liabilities"). It is not the intention of either CP or Premiere that the
assumption by Premiere of the Assumed Liabilities shall in any way enlarge the
rights of third persons under any agreements or arrangements with Premiere or
CP. Nothing contained herein shall in any way prevent Premiere from contesting
in good faith any of the Assumed Liabilities with any third party obligee.
3.2 LIMITATION. Except as specifically set forth in this Agreement,
Premiere shall not assume and shall have no liability or obligation whatsoever,
whether accrued, absolute, contingent or otherwise, for any liabilities or
obligations of CP whether due or to become due, with respect to the following
(collectively, "Excluded Liabilities"): (i) any federal, state, local or sales
taxes relating to periods prior to the Closing Date or to the asset sale
contemplated herein; (ii) any existing, pending or threatened litigation,
arbitration, or other legal or administrative proceeding against CP, whether or
not disclosed to Premiere, to the extent that the facts giving rise to such
litigation, arbitration or other legal or administration proceeding existed
prior to the Closing Date, whether or not known by CP; (iii) any liabilities,
trade payables or accruals relating to periods prior to the Closing Date; (iv)
any liabilities attributable to the operations of CP prior to the Closing; and
(v) any liabilities not specifically assumed hereunder. CP agrees to discharge,
promptly when due, all of the Excluded Liabilities.
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3.3 PRORATIONS. The following items with respect to the Assets and the
business of CP shall be prorated as of the Closing Date with CP being
responsible for and receiving the benefit of such items to the extent that they
relate to the period ending on the Closing Date and Premiere being responsible
for and receiving the benefits of such items to the extent that they relate to
periods from and after the Closing Date, it being understood that any prorations
under any agreement pursuant to which services are provided to CP shall be on
the basis of the dates services were actually provided:
(a) rents and other payments due under leases of real property
assigned to Premiere, as and when collected, and rents and other payments
payable by CP under leases assumed by Premiere;
(b) real estate and personal property taxes applicable to the tax
year in which the Closing occurs which shall be prorated on the basis of a 365
day year based on the most recent real estate and personal property tax bills
received by CP;
(c) water charges, sewer rents, electricity, steam, gas and other
like utility charges which shall be prorated based on the number of days before
and from and after the Closing Date covered by bills paid;
(d) periodically recurring governmental and quasi-governmental fees
for licenses, or permits relating to the Assets which are transferable and which
are properly transferred to Premiere in respect to the Assets, or any part
thereof;
(e) payments made in the ordinary course of business consistent with
past practice relating to the Material CP Agreements and other leases, contracts
and agreements assigned to and assumed by Premiere;
(f) other expenses paid or due in the ordinary course of business
consistent with past practices which relate to the Assets and the business being
transferred to Premiere.
Within Sixty (60) days after the Closing Date, Premiere and CP shall give
written notice to the other of any payment, receipt and allocation of any of the
forgoing items, and CP shall reimburse Premiere or Premiere shall reimburse CP,
as the case may be, the net amount owed to the other. Such notice shall include
copies of applicable invoices and, as necessary, calculation of the amount which
has been prorated.
ARTICLE 4
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PREMIERE
Premiere represents and warrants to CP as follows:
4.1 ORGANIZATION AND STANDING. Premiere is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
and has all requisite authority to own its property and assets and to conduct
its business as proposed to be conducted under this Agreement.
4.2 AUTHORIZATION AND BINDING OBLIGATION. Premiere has all necessary
power and authority to enter into and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby, and Premiere's
execution, delivery and performance of this Agreement have been duly and validly
authorized by all necessary action on its part. This Agreement has been duly
executed and delivered by Premiere and constitutes its valid and binding
obligation, enforceable in accordance with its terms, except as limited by laws
affecting creditors' rights or equitable principles generally.
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4.3 ABSENCE OF CONFLICTING AGREEMENTS OR REQUIRED CONSENTS. The
execution, delivery and performance of this Agreement by Premiere: (a) do not
require the consent of any third party; (b) will not violate any provision of
Premiere's certificate of incorporation or by-laws; (c) will not violate any
applicable law, judgment, order, injunction, decree, rule, regulation or ruling
of any governmental authority to which Premiere is a party or is bound; and (d)
will not, either alone or with the giving of notice or the passage of time, or
both, conflict with, constitute grounds for termination of or result in a breach
of the terms, conditions or provisions of, or constitute a material default
under or accelerate or permit the acceleration of any performance required by
the terms of any agreement, instrument, license or permit to which Premiere is
now subject.
4.4 LITIGATION. There is no claim, litigation, proceeding or
investigation pending or, to the best of Premiere's knowledge, threatened
against Premiere which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken in connection with this Agreement.
4.5 DISCLOSURE. None of this Agreement or any certificate or other
document delivered in connection with the transactions contemplated by this
Agreement contains any untrue statement of material fact or omits any statement
of material fact necessary to make any statement contained herein or therein not
misleading.
ARTICLE 5
REPRESENTATION AND WARRANTIES AND COVENANTS OF CP
CPI and SJM, jointly and severally, represent and warrant to Premiere as
follows:
5.1 ORGANIZATION AND STANDING. Each of CPI and SJM is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California and has all necessary corporate power and authority to own, lease
and operate the Assets which it owns or leases and to carry on its respective
business as now being conducted and as proposed to be conducted. CPI and SJM
are each duly qualified to do business and in good standing in any state in
which the ownership of its assets or the nature of its business requires it to
be so qualified, except where the failure to be qualified and/or in good
standing would not have a material adverse effect on its business.
5.2 AUTHORIZATION AND BINDING OBLIGATION. Each of CPI and SJM has all
necessary power and authority to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby, and its
execution, delivery and performance of this Agreement have been duly and validly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by each of CPI and SJM and constitutes its respective
binding obligation, enforceable in accordance with its terms, except as limited
by laws affecting the enforcement of creditors' rights or equitable principles
generally.
5.3 ABSENCE OF CONFLICTING AGREEMENT OR REQUIRED CONSENTS. The execution,
delivery and performance of this Agreement by each of CPI and SJM (a) do not
require the consent of any third party, except as otherwise detailed on one of
the SCHEDULES hereto (which consents shall be obtained prior to the Closing);
(b) will not violate any provisions of its respective articles of incorporation
or by-laws; (c) will not violate any applicable law, judgment, order,
injunction, decree, rule, regulation or ruling of any governmental authority to
which it is a party or by which it or any of the Assets owned by it are bound;
(d) will not, either alone or with the giving of notice or the passage of time,
or both, conflict with, constitute grounds for termination of or result in a
breach of the terms, conditions or provisions of, or constitute a material
default under or accelerate or permit the acceleration of any performance
required by the terms of any agreement,
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instrument, license or permit to which it or any of the Assets owned by it are
now subject; and (e) will not result in the creation of any lien, charge or
encumbrance on any of the Assets.
5.4 PERSONAL PROPERTY. All Personal Property used or useful in the
operation of CPI shall be included as part of the Assets transferred from CP to
Premiere. All Personal Property and Physical Inventory to be transferred to
Premiere is described in SCHEDULE 5.4(a). All agreements between affiliated,
third-party radio stations and any of CPI or SJM and all agreements between
foreign subdistributors and any of CPI or SJM are described in SCHEDULE 5.4(b).
5.5 INTELLECTUAL PROPERTY. Each of CPI and SJM has good and marketable
title in or otherwise has the right to use all copyrights, trademarks, trade
names, service marks, licenses, permits, jingles, privileges, and other similar
intangible property rights and interests which are used in the present conduct
of its respective business and operations ("Intellectual Property"). Attached
hereto as SCHEDULE 5.5 is a list of all such Intellectual Property rights. Such
schedule indicates which items are owned and which are used pursuant to licenses
or other rights to use the Intellectual Property. There are no pending, or to
the best knowledge of CPI or SJM, threatened proceedings or litigation affecting
or relating to any Intellectual Property. None of CPI or SJM has received
notice alleging infringement of the rights of any third party to Intellectual
Property or unlawful use of such property.
5.6 PERSONNEL INFORMATION.
(a) SCHEDULE 5.6 contains a true and complete list of all persons
employed by CP as of September 30, 1996 and a description of all compensation
arrangements (including bonus arrangements) and employee benefit plans or
arrangements applicable to such employees. None of CPI or SJM has any knowledge
that any employee identified on SCHEDULE 5.6 currently plans to terminate
employment, whether by reason of the transactions contemplated by this Agreement
or otherwise.
(b) To its knowledge, each of CPI and SJM has complied in connection
with the operation of CP in all material respects with all laws relating to the
employment of labor, including, without limitation, those laws relating to
safety, health, wages, hours, unemployment insurance, workers' compensation, and
equal employment opportunity.
(c) Other than as set forth on SCHEDULE 5.6, none of CPI or SJM is
party to or bound by any employee pension benefit plan within the meaning of
Section 3(2)(a) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"),and covering or regarding the employees set forth on SCHEDULE
5.6 whether or not such plan is otherwise exempt from the provisions of ERISA,
and no employee or spouse of an employee identified on SCHEDULE 5.6 is entitled
to any benefits that would be payable pursuant to any employee pension benefit
plan. Except as provided on SCHEDULE 5.6, none of CPI or SJM has any fixed or
contingent liability or obligation to any person now or formerly employed by any
of them, including, without limitation, pension or thrift plans, individual or
supplemental pension or accrued compensation arrangements, contributions to
hospitalization or other health or life insurance programs, incentive plans,
bonus arrangements and vacation, sick leave, disability and termination
arrangements or policies, including workers compensation policies. Premiere
shall not assume or hereby become obligated to pay any debt, obligation or
liability arising from CP's employee benefit plans, or any other employment
arrangement, and coverage under such plans and arrangements shall remain the
responsibility of CP; provided that employees of CP shall receive credit for
years of service for purposes of vacation and participation in Premiere's health
insurance plan and 401(k) plan; provided further, that Premiere shall not be
obligated to deposit any additional funds into its 401(k) plan in order to
provide CP employees with credit for years of service.
5.7 LITIGATION. Except as set forth on SCHEDULE 5.7, neither CPI nor SJM
is subject to any judgment, award, order, writ, injunction, arbitration decision
or decree pertaining to the operation of CP,
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ownership of the Assets or the validity thereof. Except as set forth on
SCHEDULE 5.7, there is no litigation, proceeding or investigation pending or, to
the best of CPI's and SJM's knowledge, threatened against either of them or
relating to CP or the Assets in any federal, state or local court, or before any
administrative agency, arbitrator or other tribunal authorized to resolve
disputes, or which seeks to enjoin or prohibit, or otherwise questions the
validity of, any action taken or to be taken in connection with this Agreement.
5.8 COMPLIANCE WITH LAWS. To the best of its knowledge each of CPI and
SJM has operated and is operating in material compliance with all laws,
regulations and governmental orders pertaining to the operation of CP or
ownership of the Assets, and its present use of the Assets does not violate any
law, regulation or order in any material respect. Neither CPI nor SJM has
received any notice asserting any noncompliance with any applicable statute,
rule or regulation, in connection with the business or operations of CP.
5.9 BANKRUPTCY. No insolvency proceedings of any character, including
without limitation, bankruptcy, receivership, reorganization, composition or
arrangement with creditors, voluntary or involuntary, affecting CP or any of the
Assets, are pending or, to the knowledge of CPI or SJM, threatened, and neither
CPI nor SJM has made and presently does not intend to make any assignment for
the benefit of creditors or file any petition in bankruptcy and has not taken
and presently does not intend to take any action which would constitute the
basis for the institution of such insolvency proceedings. Neither CPI nor SJM
is aware of any fact or circumstance which would cause any of the Assets or the
business of CP to become subject to the jurisdiction of any bankruptcy court or
proceeding.
5.10 DISCLOSURE. None of this Agreement or any certificate or other
document delivered in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits any
statement of material fact necessary to make any statement contained herein or
therein not misleading; provided that neither CPI nor SJM is making any
representation or warranty relating to the informational memorandum relating to
CP distributed by Greif & Co.
5.11 OPERATION OF CP. Since June 30, 1996 CP has operated its business in
the ordinary and normal course of business and in the manner that has been
customary during the period since CP acquired ownership of CP. Since June 30,
1996 CP has used reasonable efforts to preserve the business and organization of
CP, and to keep available without entering into any binding agreement, the
services of those of CP's employees the loss of which could reasonably be
expected to have a material adverse effect on CP or its business, and to
preserve the goodwill of CP's customers and others having business relationships
with CP.
5.12 ABSENCE OF UNDISCLOSED LIABILITIES. The unaudited cash basis balance
sheets of CP at June 30, 1996 and the related unaudited, cash basis income
statements (including footnotes thereto) for the periods then ended, present
fairly in all material respects the cash basis financial position and results of
operations of CP as of each such date. The foregoing financial statements are
sometimes referred to herein as the "Financials." Except as and to the extent
reflected or reserved against in the Financials, or disclosed in any Schedules
hereto, CP had no liabilities or obligations as of the dates thereof (other than
obligations of continued performance under the Material CP Agreements and other
commitments and arrangements incident to the normal conduct of business which
are terminable at will), known or unknown, secured or unsecured (whether
accrued, absolute, contingent or otherwise), including, without limitation, tax
liabilities due or to become due. Since June 30, 1996, except as and to the
extent reflected or reserved against in the Financials or disclosed in any
Schedule hereto, CP has incurred no material liabilities or obligations other
than (i) current liabilities incurred in the ordinary course of business which
in the aggregate do not have a material adverse effect on the financial position
or operations of CP, or (ii) in connection with the transactions contemplated
hereby.
5.13 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1996, except as
described in SCHEDULE 5.13 hereto, there has not occurred any event or condition
which has a material adverse effect on the
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properties, assets, liabilities (whether absolute, contingent, accrued or
otherwise), financial condition, results of operations, business, affairs of CP
concerning CP and, without limiting the generality of the foregoing, CP has not
(a) incurred any obligation or liability, secured or unsecured (whether accrued,
absolute, contingent or otherwise), whether due or to become due, except current
liabilities in the ordinary course of business;(b) mortgaged, pledged, or
subjected to lien, charge, security interest or other encumbrance any of the
Assets;(c) sold, transferred, licensed or otherwise disposed of any of the
Assets other than in the ordinary course of business consistent with past
practice;(d) increased the compensation payable or to become payable by it to
any of its directors, officers, employees or agents whose total compensation for
services rendered after any such increase is at an annual rate of more than
$30,000, or made any bonus, percentage of compensation or other like benefit
accruing to or for the credit of any such directors, officers, employees or
agents of CP;(e) terminated or received any notice of termination of any
material contract, lease, trademark, patent, copyright or trade name protection
or other agreement;(f) suffered any damage, destruction or loss (whether or not
covered by insurance) adversely affecting the Assets (other than normal wear and
tear);(g) suffered any taking or seizure of all or any part of the Assets by
condemnation or eminent domain;(h) experienced any material adverse change in
its relations with its dealers, distributors, customers, employees, agents or
consultants;(i) acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or otherwise made any
loan or advance to or investment in any person, firm or corporation;(j) made any
capital expenditures or capital additions exceeding $10,000 singularly or
$50,000 in the aggregate;(k) instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body affecting
its financial condition, its property or its business operations;(l) made any
purchase commitment in excess of normal, ordinary and usual requirements, or
made any material change in its selling, pricing, or personnel practices;(m)
made any change in accounting principles or methods, or in the manner of keeping
books, accounts and records of CP;(n) entered into any transaction other than in
the ordinary course of business;(o) entered into any agreement or made any
commitment to do any of the things described in the preceding subsections (a)
through (n) of this Section 5.13.
5.14 EQUIPMENT LEASES AND CONTRACTS. Except as disclosed on SCHEDULE 5.14
hereto, CP is not a party to, nor are the Assets bound by, any executory
agreements (including dealer and distributor agreements), purchase orders (other
than purchase commitments for supplies in the ordinary course of business),
bailment agreements, equipment leases, commitments, contracts, employment
agreements, warranties, guarantees, understandings or other agreements (a) which
involve or may involve the annual payment of more than $2,500, (b) which are of
a duration in excess of twelve (12) months from the date of execution thereof,
or (c) to which any stockholder, officer, director or employee of CP are a party
in any capacity, which is not being extinguished on or before the Closing Date
(said agreements, together with the Real Property Leases, being referred to
herein collectively as the "Material CP Agreements"); true and correct copies of
each of the Material CP Agreements have been delivered to Premiere and each of
them is in full force and effect, with an expiration date as set forth on
SCHEDULE 5.14, have not been amended or modified except as set forth on SCHEDULE
5.14, and constitute the entire agreement between the parties thereto with
respect to the subject matter thereof. CPI and SJM are not, and to the best
knowledge of CPI and SJM no third party to any Material CP Agreement is in
material default thereunder, nor is CPI or SJM aware of any fact or
circumstances with respect to any Material CP Agreement which upon notice or
lapse of time could give rise to a material default thereunder.
5.15 REAL PROPERTY LEASES. The real property leases listed on SCHEDULE
5.15 hereto (the "Real Property Leases") constitute all leases, whether written
or oral, to which any of CP or their affiliates are a party and which are
necessary or required in connection with CP (including any real property owned
by one or more of the shareholders or any affiliate of CP); true and correct
copies of each of the written Real Property Leases have been delivered to
Premiere. CP has valid and enforceable leasehold interests in such real
property, free and clear of all liens and encumbrances. To the best knowledge
of CPI and SJM there exists no event of default or event, occurrence, condition
or act (including the transactions contemplated by this Agreement) which, with
the giving of notice, the lapse of time or the happening of any further event or
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condition, would become a material default under such lease, give rise to a
right in the lessor to terminate the lease or render the lessee liable to incur
any expenditure under such lease. In the event any such lease requires the
lessee to exercise an option to renew in order to continue the term thereof, CP
has properly exercised such option to renew. To the best knowledge of CPI and
SJM, each such real property and improvements thereon may lawfully be used in
connection with the business of CP and is in compliance with all applicable
laws, rules, regulations and ordinances of all federal, state, municipal and
other governmental authorities including, but not limited to, zoning, building,
health, safety and environmental laws, and CP has not received any notices of
violations with respect thereto.
5.16 MACHINERY AND EQUIPMENT. The machinery and equipment used in the
business of CP is in adequate operating condition, subject to normal wear and
tear, and in a state of good repair sufficient for the conduct of normal
operations. CP's assets and properties (including leased property) are adequate
to enable CP to conduct its business as now being conducted. CP is not aware of
any major capital expenditure that will be required within one year from the
date of this Agreement that is not consistent with past practices.
5.17 LICENSES. CP possesses all material patents, franchises, permits,
licenses, music library rights, certificates and consents required from any
governmental authority or any other person necessary to enable CP to carry on
its business as now conducted and to own and operate its properties (including
leased property) as now owned and operated and all such patents, franchises,
permits, licenses, certificates and consents will remain in full force and
effect following consummation of the transactions contemplated by this
Agreement. Attached hereto as SCHEDULE 5.17 is a true and complete list of all
such patents, franchises, permits, licenses, certificates and consents. All
such patents, franchises, permits, licenses, certificates and consents may be
transferred to Premiere.
5.18 TITLE TO ASSETS. Except as disclosed on SCHEDULE 5.18 hereto, all of
the Assets are owned by CP, free and clear of all mortgages, liens, security
interests, pledges, charges and other encumbrances whatsoever. Premiere will
acquire title to the Assets free and clear of all mortgages, liens, security
interests, pledges, charges and other encumbrances whatsoever.
5.19 FILINGS, ETC. CP (a) has filed all federal, state and local tax
returns required by law in the legally prescribed time and manner, and paid all
taxes, assessments and penalties due and payable; (b) has made all payments
required by any governmental program of workers' social security or unemployment
compensation; (c) has withheld and paid over to the appropriate governmental
authority all amounts required by law to be withheld from the wages or salaries
of employees; (d) is not liable for any arrears of wages or any taxes or
penalties for failure to comply with any of the foregoing; and (e) has paid or
will pay over to the appropriate governmental authority all sales or use taxes
referable to the CP operations due as of the Closing Date, and has made or will
make provisions for payment of all such taxes accrued as of such date, but not
yet due. There are no claims pending or, to the best knowledge of CPI or SJM,
threatened against either of them for past due taxes, nor are there any
outstanding waivers or agreements by CPI or SJM for the extension of the time
for the assessment of any tax.
5.20 INSURANCE. Attached hereto as SCHEDULE 5.20 is a true and complete
list of all insurance policies in force with respect to the Assets and the
business of the CP and the annual premiums payable thereon. CP is not now, and
on the Closing Date will not be, in default in any respect under any such
policy, and CP shall continue such policies in force and effect through the
Closing Date.
5.21 ACCESS TO RECORDS. Prior to the execution of this Agreement, CP has
made available to Premiere and its representatives for their examination the
books and records of CP, including, without limitation, computer data and
records (the "Records"). No changes or additions to the Records have been made
from the date the Records were first made available to Premiere and the
representatives and nothing which should be set forth in the Records, if
prepared in the ordinary course of business, occurred from the
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date such Records were first made available to Premiere or its representatives,
except for such changes, additions or events which have been made or have
occurred, as the case may be, in the ordinary course of the business of CP
consistent with the prior practice of CP or which have otherwise been disclosed
in writing to CP.
ARTICLE 6
CONDITIONS PRECEDENT TO PREMIERE'S OBLIGATION TO CLOSE
The obligation of Premiere to consummate the transactions contemplated
herein are subject to the satisfaction or waiver, at or prior to the Closing, of
each of the following conditions:
6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of CPI and SJM shall be true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date.
(b) All of the terms, covenants and conditions to be complied with
and performed by CP on or prior to Closing Date shall have been complied with or
performed in all material respects.
(c) CP shall have obtained all consents and authorizations required
to be obtained prior to the Closing.
6.2 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against,
any party hereto which Premiere in good faith believes would render it unlawful
to effect the transactions contemplated by this Agreement in accordance with its
terms.
6.3 WORKING CAPITAL. CP shall have minimum working capital of at least
$200,000.
6.4 NON-COMPETITION AGREEMENT. CPI, SJM and Ron Cutler shall have
executed and delivered the Non-Competition Agreement substantially in the form
attached hereto as SCHEDULE 6.4.
6.5 EMPLOYMENT AGREEMENT. Ron Cutler and Premiere shall have executed and
delivered the Employment Agreement in substantially the form attached hereto as
SCHEDULE 6.5 (the "Employment Agreement").
ARTICLE 7
CONDITIONS PRECEDENT TO CP'S OBLIGATION TO CLOSE
The obligations of CP to consummate the transactions contemplated herein
are subject to the satisfaction or waiver, at or prior to the Closing, of each
of the following conditions:
7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) All representations and warranties of Premiere shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.
(b) All the terms, covenants and conditions to be complied with and
performed by Premiere on or prior to the Closing Date shall have been complied
with or performed in all material respects.
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(c) CP shall have obtained all consents set forth on SCHEDULE 5.3
hereto.
7.2 ADVERSE PROCEEDINGS. No suit, action, claim or governmental
proceeding shall be pending against, and no order, decree or judgment of any
court, agency or other governmental authority shall have been rendered against
any party hereto which CP in good faith believes would render it unlawful to
effect the transactions contemplated by this Agreement in accordance with its
terms.
7.3 EMPLOYMENT AGREEMENT. Ron Cutler and Premiere shall have executed and
delivered the Employment Agreement.
ARTICLE 8
DOCUMENTS TO BE DELIVERED AT THE CLOSING
8.1 DOCUMENTS TO BE DELIVERED BY CP. At Closing, CP shall deliver to
Premiere the following:
(a) instruments of conveyance and transfer, including all relevant
Bills of Sale, in form and substance reasonably satisfactory to counsel to
Premiere, effecting the sale, transfer, assignment and conveyance of the Assets
to Premiere, including, but not limited to, assignments of all Intellectual
Property;
(b) all books, records, logs, customer lists and similar assets to be
assigned to Premiere pursuant to Article 2;
(c) the executed Non-Competition Agreements of CPI, SJM and Ron
Cutler;
(d) copies of resolutions of the Board of Directors and shareholders
of CP authorizing the execution and delivery of this Agreement, and the
performance by CP of its obligations hereunder and a certificate of the
Secretary of CP stating that such resolutions are in full force and effect and
have not been modified or rescinded as of the Closing Date; and
(e) Employment Agreement of Ron Cutler.
8.2 DOCUMENTS TO BE DELIVERED BY PREMIERE. At the Closing, Premiere shall
deliver to CP the following:
(a) Eight Million Five Hundred Thousand Dollars ($8,500.000) cash
pursuant to Section 2.5;
(b) Employment Agreement of Ron Cutler; and
(c) Resolutions of the Board of Directors of Premiere (or a committee
thereof) authorizing the execution and delivery of this Agreement and the
performance by Premiere of its obligations hereunder and a certificate of the
Secretary or an Assistant Secretary of Premiere stating that such resolutions
are in full force and effect and have not been modified or rescinded as of the
Closing Date.
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ARTICLE 9
FEES AND EXPENSES
9.1 EXPENSES. Each party hereto shall be solely responsible for all costs
and expenses incurred by it in connection with the negotiation, preparation and
performance of and compliance with the terms of this Agreement.
ARTICLE 10
INDEMNIFICATION
10.1 INDEMNIFICATION BY CP. Through and including December 31, 1997 CP
shall indemnify, defend and hold Premiere harmless from and against and with
respect to, and shall reimburse Premiere for the following (collectively, the
"CP Indemnified Liabilities"):
(a) any and all liabilities or obligations of CP not assumed by
Premiere pursuant to the terms of this Agreement; including the Excluded
Liabilities
(b) any and all losses, liabilities, or damages resulting from the
operation or ownership of CP by CP prior to the Closing Date;
(c) any and all losses, liabilities or damages resulting from any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated by this Agreement;
(d) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs, and expenses, including reasonable legal fees and
expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.2 INDEMNIFICATION BY PREMIERE. From and after the Closing, Premiere
shall indemnify and hold CP harmless against and with respect to, and shall
reimburse CP for:
(a) any and all liabilities or obligations of CP assumed by Premiere
pursuant to the terms of this Agreement, including the Assumed Liabilities;
(b) any and all losses, liabilities or damages arising after the
Closing Date in connection with the operations of CP after the Closing Date; and
(c) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including reasonable legal fees and
expenses, incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnity.
10.3 RIGHT TO DEFEND, ETC. If the facts giving rise to any indemnification
under this Section 10 shall involve any claim or demand by any person against
any of the indemnified parties (an "Indemnified Claim"), the indemnifying party
shall be entitled to notice of such Indemnified Claim. If the indemnified party
shall fail to provide the indemnifying party with notice of such Indemnified
Claim prior to the time by which the interests of the indemnifying party would
be materially prejudiced as a result of its failure to have received such
notice, the amount of any indemnification to be paid to such indemnified party
with respect to such Indemnified Claim shall be reduced by the amount of any
loss actually sustained by the indemnifying party as a result of such prejudice.
The indemnifying party shall be entitled (without prejudice to the right of
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the indemnified party to participate at its own expense through counsel of its
own choosing in the defense or prosecution of such Indemnified Claim; PROVIDED
that such participation shall not affect the right of the indemnifying party to
control such defense or prosecution on behalf of the indemnified party) to
defend or prosecute such Indemnified Claim at its or their expense and through
counsel reasonably satisfactory to the indemnified party. At any time following
written notice from the indemnified party, the indemnifying party may assume the
defense or prosecution of such Indemnified Claim by providing a written
undertaking of their agreement to assume the defense or prosecution of such
Indemnified Claim at their sole cost and expense in accordance with this
Agreement; PROVIDED, HOWEVER, that any indemnifying party may defend or
prosecute such Indemnified Claim with reputable attorneys of its own choosing
until it shall have received the foregoing notice from the indemnifying party;
PROVIDED, FURTHER, that if the defendants in any action shall include the
indemnifying party and the indemnified party, and any such indemnified party
shall have reasonably concluded that counsel selected by the indemnifying party
has a conflict of interest which under the Rules of Professional Conduct of the
California Bar Association would prohibit the representation because of the
availability of different or additional defenses to any such indemnified party,
such indemnified party shall have the right to select separate counsel
reasonably acceptable to the indemnifying party to participate in the defense of
such Indemnified Claim on its behalf, at the expense of the indemnifying party,
it being understood, however that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys at any time for such
indemnified party. The indemnified party shall cooperate fully in the defense
of any Indemnified Claim hereunder and shall make available to the party
assuming such defense pertinent information under such indemnified party's
control relating thereto, but shall be entitled to be reimbursed for all costs
and expenses incurred by the indemnified party in connection therewith.
10.4 LIMITATION ON LIABILITY OF CP. Notwithstanding anything contained in
this Agreement to the contrary, CP shall not be obligated to Premiere for any CP
Indemnified Liabilities, or for any other liability of any kind arising under
this Agreement, whether by indemnity or otherwise, (i) until such time as the
total sum of all such liabilities shall exceed $150,000 and only then to the
extent of amounts in excess of $75,000, and (i) the maximum amount which CP
shall be obligated to Premiere for any and all such liabilities shall not exceed
$1,500,000; provided however that the foregoing limitation shall not apply to
any matters relating to Too Lunar Productions, a California general partnership.
10.5 RIGHT TO SETTLE OR COMPROMISE CLAIMS. No indemnifying party will,
without the prior written consent of the indemnified party, settle or compromise
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought under this Section 10, unless such settlement or
compromise includes a full and unconditional release of each such indemnified
party from all liability arising out of such claim, action, suit or proceeding,
reasonably satisfactory in form and substance to such indemnified party. No
indemnified party will, without the prior written consent of the indemnifying
party, settle or compromise any pending or threatened claim, action, suit or
proceeding in respect of which indemnification may be sought under this Section
10.
10.6 SUBROGATION. If any indemnified party receives payment or other
indemnification with respect to any claim or demand by any third person against
an indemnified party, the indemnifying party shall be subrogated to the extent
of such payment or indemnification to all rights in respect of the subject
matter of such claim to which the indemnified party may be entitled, to
institute appropriate action for the recovery thereof, and the indemnified party
agrees to provided reasonable levels of assistance and cooperation to such
subrogated party, in enforcing such rights.
ARTICLE 11
ALLOCATION OF PURCHASE PRICE
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Premiere and CP agree that the purchase price shall be allocated as follows: (i)
$100,000 shall be allocated to the covenant not to compete; (ii) an amount equal
to its book value, net of depreciation and amortization, shall be allocated to
equipment and inventory (including, without limitation all recordings, CDs,
disks, tapes and the like, of previously aired programs); (iii) an amount equal
to the Premiere Receivables shall be allocated to the Premiere Receivables; and
(iv) the balance of the purchase price shall be allocated to intellectual
property (including all patents, copyrights, trademarks, tradenames, service
marks, etc., radio program formats, and all goodwill associated therewith).
ARTICLE 12
TERMINATION OF AGREEMENT
12.1 EVENTS OF TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time prior to the
Closing Date:
(i) by the mutual consent of CP and Premiere;
(ii) by Premiere, if CP breaches in any material respect any of
their representations, warranties, covenants or agreements contained in
this Agreement;
(iii)by CP, if Premiere breaches in any material respect any of
its representations, warranties, covenants or agreements contained in this
Agreement;
(iv) by either Premiere or CP, if any of the conditions to
Closing is not fulfilled (or waived by the party for whose benefit the
conditions exist) on or prior to the Closing Date; or
(v) by either Premiere or CP, if the Closing has not occurred on
or prior to October 15, 1996.
12.2 EFFECT OF TERMINATION. In the event that either party shall elect to
terminate this Agreement pursuant to any provision contained herein expressly
giving such party the right to terminate this Agreement, this Agreement shall
forthwith terminate and have no further effect, and neither party shall have any
further obligation or liability. Notwithstanding the foregoing, the termination
of this Agreement pursuant to any provision hereof shall not relieve any party
of any liability for a breach of any representation or warranty, or
nonperformance of any covenant or obligation hereunder, and any such termination
shall not be deemed to be a waiver of any available remedy for any such breach
or nonperformance.
ARTICLE 13
OTHER PROVISIONS
13.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the parties contained herein shall survive for 18 months from the
date hereof and no claim may be made for any breach after such date.
Notwithstanding the foregoing, in the event of any claim by CP against Premiere
under this Agreement, Premiere may use as an affirmative defense against such
claims any claim against CP specifically relating to the subject matter of the
claim by CP which would have been barred through the application of Section 10.1
or this Section 13.1.
13.2 EMPLOYEE MATTERS. Immediately prior to the consummation of the
transactions contemplated hereby, CP shall terminate all its employees.
Premiere agrees to extend offers of employment to those of
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CP's employees set forth on SCHEDULE 5.6 at no less than their present salary as
set forth on SCHEDULE 5.6. In addition, Premiere shall grant pay increases to
those CP employees identified on SCHEDULE 5.6 hereto which have been promised
pay increases. Such pay increases shall be in such amounts and be effective on
the dates set forth on SCHEDULE 5.6; provided however, that nothing contained
herein shall interfere with Premiere's right to terminate any CP employee
following the Closing. Premiere also agrees that employees of CP shall receive
credit for years of service for purposes of vacation and participation in
Premiere's health insurance plan and 401(k) plan; provided, however, that
Premiere shall not be obligated to deposit any additional funds into its 401(k)
plan in order to provide CP employees with credit for years of service. CP
shall be responsible for all severance and other payments made to employees of
CP as a result of the transactions contemplated hereby or the termination of any
employees. Any employees hired by Premiere shall be subject to Premiere's
policies, procedures and practices.
13.3 ACCESS TO INFORMATION. From the date hereof through the Closing Date,
CP shall provide Premiere and its representatives with reasonable access to all
records and information relating to CP and its business and will permit such
persons to have access to all of the properties and records of CP during
reasonable business hours in order that Premiere may have full opportunity to
make such investigations as it shall desire of the affairs of CP
13.4 NO SOLICITATION. Prior to the Closing, CP will not and it shall cause
its shareholder not to take, authorize or permit any of their representatives to
take, directly or indirectly, any action to solicit, encourage, receive,
negotiate, assist or otherwise facilitate (including by furnishing confidential
information with respect to CP or permitting access to the assets or properties
and books and records of CP) any offer or inquiry from any person concerning any
business combination involving CP or a purchase of securities or assets of CP.
If CP or a shareholder (or any person acting for or on their behalf) receives
from any person any offer, inquiry or informational request referred to above,
CP shall promptly advise such person, by written notice, of the terms of this
Section and will promptly, orally and in writing, advise Premiere of such offer,
inquiry or request and delivery of a copy of such notice to Premiere.
13.5 BENEFITS AND ASSIGNMENT. This agreement shall be binding upon and
shall incur to the benefit of the parties hereto and their respective successors
and assigns. Neither Premiere or CP may assign this Agreement without the prior
written consent of the other parties hereto except that Premiere may assign its
rights under this Agreement to another entity under common control with Premiere
without the consent of CP.
13.6 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules
hereto embody the entire agreement and understanding of the parties hereto and
supersede any and all prior agreements, arrangements and understandings relating
to the matters provided for herein. No amendment, waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement shall be
effective unless evidenced by an instrument in writing signed by the party
against whom enforcement of any waiver, amendment, change, extension or
discharge is sought.
13.3. ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take promptly, or cause to be taken, all actions and to do promptly, or cause to
be done promptly, all things necessary, proper or advisable under applicable
laws to consummate and make effective the transactions contemplated by the
Agreement, and to satisfy all of the conditions to the Closing to be satisfied
by such waivers, consents and approvals from all applicable governmental
entities and third parties, and effecting all necessary registrations and
filings. Each of the parties hereto agrees not to take any action or fail to
take any action that would be likely to cause any representation or warranty
contained in this Agreement to cease to be true or accurate or that would be
reasonably likely to prevent the performance of any covenant or the satisfaction
of an condition contained in this Agreement.
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13.4. CHOICE OF LAW. The construction and performance of this
Agreement shall be governed by the laws of the State of California without
regard to its principles of conflict of law.
13.5. DISPUTE RESOLUTION. Any controversy or claim arising out of or
relating to this Agreement, or any breach thereof, shall be settled by the
appointment of a retired judge of the Superior or Appellate courts of California
who shall act pursuant to Section 638(1) of the California Code of Civil
Procedure "to try any and all of the issues in an action or proceeding, whether
of fact or of law, and to report a state of decision thereon." The parties
stipulate to the use of the reference procedure and agree that the Superior
Court of Los Angeles County of the State of California may issue such orders as
are necessary to implement the parties' intent that any such controversy or
claim shall be resolved through the use of the reference procedure. THE PARTIES
EACH HEREBY WAIVE THE RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY CONTROVERSY
OR CLAIM ARISING OUT OF THIS AGREEMENT OR THE BREACH HEREOF.
(a) The parties shall be entitled to discovery as provided in the
California Code of Civil Procedure. However, the referee may regulate the
extent and scope of such discovery based upon the nature of the
controversy, the amounts involved and the expected benefits from any
discovery.
(b) If the parties are unable to agree on the appointment of a retired
judge to serve as a referee, then the court shall appoint a retired judge
to act as the referee.
(c) The referee shall apply applicable substantive law and the rules
of evidence set forth in the California Evidence Code and applicable case
authority. The parties shall not be required to file formal pleadings and
shall take other steps as may be appropriate and necessary to assure that
any controversy be resolved as efficiently and expeditiously as possible.
(d) The decision reached by the referee shall be entered as a judgment
of the Superior Court appointing the referee and such decision shall be
fully appealable.
(e) All fees and expenses of the referee shall be initially borne on a
pro rata basis by the parties, but shall be recoverable by the prevailing
party.
13.6 NOTICES. Any notice, demand or request required or permitted to be
given under the provisions of this Agreement shall be in writing, addressed to
the following addresses, or to such other address as any party may request,
To Premiere:
PREMIERE RADIO NETWORKS, INC.
15260 Ventura Boulevard
Fifth Floor
Sherman Oaks, CA 91403-5339
Attention: Stephen C. Lehman
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Copy to:
Harold Wrobel, Esq.
Premiere Radio Networks, Inc.
15260 Ventura Boulevard
Fifth Floor
Sherman Oaks, CA 91403-5339
To CP:
Cutler Productions, Inc. and SJM Productions, Inc.
18425 Burbank Boulevard
Tarzana, CA 91356
Attention: Mr. Ron Cutler
Copy to:
Scott W. Alderton, Esq.
Troop, Meisinger, Steuber & Pasich, LLP
10940 Wilshire Blvd.
Los Angeles, CA 90024-3902
and shall be deemed to have been duly delivered and received (i) on the date of
personal delivery, or (ii) on the date of a signed receipt, if sent by an
overnight delivery service, but only if sent in the same manner to all persons
entitled to receive notice or a copy.
13.7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
13.8. FURTHER ASSURANCES. CP shall at any time and from time to time
after the Closing execute and deliver to Premiere such further conveyances,
assignments and other written assurances as Premiere may reasonably request in
order to vest and confirm in Premiere (or its assigns) the title and rights to
and in all of the Assets to be intended to be transferred, assigned and conveyed
hereunder.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
CUTLER PRODUCTIONS, INC. PREMIERE RADIO NETWORKS, INC.
By: /s/ Ron Cutler By: /s/ Harold S. Wrobel
---------------------- -----------------------
Name: Ron Cutler Name: Harold Wrobel
Title: President Title: Sr. Vice Pres./Legal
SJM PRODUCTIONS, INC.
By: /s/ Ron Cutler
----------------------
Name: Ron Cutler
Title: President
The undersigned hereby guarantees (i) the obligations of CP to remit a
portion of the purchase price under the circumstances set forth in Section 2.4
hereof, and (ii) the obligations of CP under Section 10.4 hereof. The
undersigned further agrees that any claim or controversy between Premiere and
the undersigned arising from the foregoing obligations shall be settled in
accordance with Section 13.5 hereof. THE UNDERSIGNED HEREBY WAIVES THE RIGHT TO
TRIAL BY JURY IN CONNECTION WITH ANY CONTROVERSY OR CLAIM ARISING OUT OF THE
FOREGOING OBLIGATIONS.
/s/ Ron Cutler
- ---------------------------
Ron Cutler
