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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ________)*
PREMIERE RADIO NETWORKS, INC.
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(Name of Issuer)
CLASS A COMMON STOCK
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(Title of Class of Securities)
740906 10 2
--------------------------------
(CUSIP Number)
Annie Kun Baker, CARLSMITH BALL WICHMAN CASE & ICHIKI, 555 S. Flower St.,
25th Floor, Los Angeles, California 90071-2326 (213) 955-1200
------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive
Notices and Communications)
January 7, 1997
------------------------------------------------------
(Date of Event which Requires Filing of this Statement
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SEC 1746 (9-88) 1 of 7
(c) 1990 Fred Landau & Co., Inc.-SEC Compliance-Financial Reporting & Forms
<PAGE> 2
SCHEDULE 13D
CUSIP No. 740906-10-2 PAGE___OF____PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
ERIC WEISS
Social Security No. ###-##-####
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [X]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
161,500
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY -0-
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 161,500
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
-0-
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
161,500
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [X]
See Items 2 & 4
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
3.79%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
SCHEDULE 13D
Filed by ERIC WEISS (reporting person)
with respect to Class A Common Stock of
Premiere Radio Networks, Inc. (Issuer)
ITEM 1. SECURITY AND ISSUER
This statement relates to Class A Common Stock ("Class A Stock") of
Premier Radio Networks, Inc., a Delaware Corporation ("Premiere"), whose
principal executive offices are located at 15260 Ventura Boulevard, Sherman
Oaks, California 90403-5339.
ITEM 2. IDENTITY AND BACKGROUND
(a) The person filing this statement is Eric Weiss. Although
Mr. Weiss has relationships with other persons relating to the Class A Stock of
Premiere, as more fully disclosed herein (see Items 4 and 6 below), Mr. Weiss
expressly disclaims the existence of a group for purposes of Section 13(d)(3) of
the Securities Exchange Act of 1934 (the "Act") and the rules promulgated
thereunder in connection with such relationships. Pursuant to Rule 13d-4 under
the Act, Mr. Weiss declares that the filing of this Schedule 13D shall not be
construed as an admission that he is, for purposes of Section 13(d) of the Act,
a beneficial owner of the shares of Premiere Class A Stock owned by Messrs.
William Lopatin and Leonard Makowka and acquired by them in connection with the
merger transaction described in Item 4 below. Notwithstanding such disclaimer,
the filing of this Schedule 13D is made by Mr. Weiss as a protective filing in
the event the Commission determines that a group does exist under its
interpretation of Section 13(d)(3) of the Act and the rules promulgated
thereunder.
(b) Mr. Weiss' business address is 15260 Ventura Boulevard, Sherman
Oaks, California 91403-5339.
(c) Mr. Weiss is the President and a director of After Midnite
Entertainment, Inc., (the "Merger Sub"), a newly formed Delaware corporation,
whose principal business is programming and syndication of country music. The
Merger Sub's address is 15260 Ventura Boulevard, Sherman Oaks, California
91403-5339.
(d) During the last five years, Mr. Weiss has not been convicted in
a criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years Mr. Weiss has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction,
nor was or is he as a result of such proceeding subject to a judgment, decree
or final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
1.
<PAGE> 4
(f) Mr. Weiss is a U.S. citizen.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
Mr. Weiss acquired 128,000 shares of Premiere Class A Stock as part of
the merger consideration in connection with the merger transaction described in
Item 4 below.
ITEM 4. PURPOSE OF TRANSACTION
THE MERGER. Mr. Weiss acquired a beneficial interest in 128,000
shares of Premiere Class A Stock in connection with the merger of After Midnite
Entertainment, Inc. ("AME"), a California corporation, with and into the Merger
Sub (the "Merger") pursuant to the terms and conditions of that certain
Agreement and Plan of Merger dated as of January 1, 1997 by and among AME, the
shareholders of AME and Premiere (the "Merger Agreement"), a copy of which is
attached as Exhibit 1 hereto. The Merger Sub is wholly owned by Premiere and
was formed for purposes of the Merger. The Closing of the Merger occurred on
January 7, 1997. The Merger became effective under the laws of Delaware on
January 9, 1997.
MERGER CONSIDERATION. Section 1.2(b) of the Merger Agreement
provides that, by virtue of the Merger, all outstanding shares of common stock
of AME shall be converted into the right to receive cash, promissory notes of
Premiere, or shares of Premiere Class A Common Stock (collectively, the "Merger
Consideration") as specifically described on Schedule 1.2(b) to the Merger
Agreement. As part of the Merger Consideration, three of the shareholders of
AME (the "Shareholders"), including Mr. Weiss, received shares of Premiere
Class A Stock (the "Merger Stock") in the following amounts:
Eric Weiss : 128,000 shares
William Lopatin : 136,000 shares
Leonard Makowka : 136,000 shares
These shares have not been registered by Premiere under the Securities
Act of 1933. However, these individuals have certain registration rights as
described in Item 6 below.
PRICE GUARANTEE. The Merger Agreement provides for a price guarantee
(the "Guarantee") with respect to the Merger Stock. Pursuant to Article 9 of
the Merger Agreement and subject to the conditions and limitations provided
therein, if on the first anniversary of the Closing Date of the Merger the fair
market value (as defined in Section 9.2 of the Merger Agreement) of the Merger
Stock is less than $16.00 per share, Premiere shall pay the Shareholders an
amount per share equal to the difference between $16.00 and the fair market
value of the Merger Stock as of the first anniversary of the Closing Date.
Such amount may, at the option of Premiere, be paid in cash or in additional
shares of Premiere Class A Stock. Premiere shall have the option of setting
off all or any part of any amount which Premiere finds in good faith to be
payable by any Shareholder under the Merger Agreement against amounts payable
to such Shareholder pursuant to the Guarantee.
2.
<PAGE> 5
STOCK OPTIONS. Pursuant to a letter agreement dated December 26,
1996 and attached as Exhibit 5 hereto (the "Letter Agreement"), Premiere
granted to Mr. Weiss certain stock options subject to the consummation of the
Merger and the vesting schedule and other terms of a Consulting Agreement to be
entered into by Premiere and Weiss in connection with the Merger. Mr. Weiss
and Premiere entered into a Consulting Agreement dated as of January 7, 1997
(attached as Exhibit 2 hereto) which provides that Mr. Weiss shall be granted
certain options under the terms of Section 6 thereof. Section 6(b) of the
Consulting Agreement provides that in connection with the agreement of Mr.
Weiss to serve on Premiere's Board of Directors (see below), Premiere shall
issue Mr. Weiss options to purchase 30,000 shares of Class A Stock at $11.00
per share (the "Director Options"). Section 6(c) of the Consulting Agreement
provides that upon the Closing of the Merger, Premiere shall grant Mr. Weiss an
additional option to purchase 40,000 shares of Class A Stock at $11.00 per
share (the "Merger Options").
Subject to and in accordance with the terms and conditions of Section
6(b), the Director Options shall vest, if at all, as follows: options to
purchase 5,000 shares shall vest on the last day of each of the six calendar
quarters following the Closing of the Merger. Subject to an in accordance with
the provisions of Section 6(c), the Merger Options shall vest as follows:
options to purchase 5,000 shares shall vest on the last day of the eight
calendar quarters following the Closing of the Merger. Sections 6(b) and 6(c)
of the Consulting Agreement are incorporated herein by this reference.
ELECTION TO THE BOARD OF PREMIERE. Pursuant to the terms of a
Designation Letter (attached as Exhibit 3 hereto) dated as of January 7, 1997
between Eric Weiss and Stephen Lehman, President and Chief Executive Officer
and a director of Premiere, Mr. Lehman has agreed to recommend that Mr. Weiss
be elected to the Board of Directors of Premiere (the "Board"), subject to the
conditions and limitations set forth in the Designation Letter. Mr. Lehman
agreed to recommend to the Board that Weiss be elected by the Board to fill a
vacancy on the Board created by the resignation of Harold Wrobel. Furthermore,
Mr. Lehman will designate Mr. Weiss for inclusion in a slate of management's
nominees for election to the Board for the next succeeding term of such office,
subject to the terms and conditions of a certain Stockholders Agreement by and
among Premiere and certain of its shareholders which authorizes such
designation by Lehman. There is no assurance that such recommendation and/or
designation of Weiss by Lehman will result in Weiss' election to the Board.
The Consulting Agreement provides that, subject to the conditions and
limitations of Section 3 (b) thereof, at any time during the term thereof when
Weiss is a member of the Board he shall be given the title of "Vice Chairman of
the Board of Directors."
Although Mr. Weiss will evaluate from time to time how he should vote,
dispose of or otherwise deal with the shares of which he is the beneficial
owner, he does not presently have any plans or proposals, other than as
indicated herein, which relate to or would result in any of the matters set
forth in Items 4(a) through 4(g) of Schedule 13D.
3.
<PAGE> 6
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a) Mr. Weiss beneficially owns 161,500 shares of Premiere Class A
Stock, constituting approximately 3.79%1 of all outstanding Premiere Class A
Stock. These shares are comprised of 161,500 shares of Class A Stock which are
personally owned by Mr. Weiss (including the 128,000 shares issued as part of
the Merger Consideration).
(b) Please see the answers to Item 7 through 11, inclusive, of the
cover page of this Schedule 13D which information is incorporated herein by
this reference.
(c) See the disclosure of transaction in shares of Premiere Class
A Stock set forth in Item 3 above.
In addition to the transaction in the shares of Premiere Class A Stock
set forth in Item 3 above, during the past sixty (60) days Mr. Weiss effected
the following transactions in Premiere Class A Stock:
<TABLE>
<CAPTION>
Date Shares Price per Share
---- ------ ---------------
<S> <C> <C>
January 14, 1997 4500 (sold) $12.00
January 15, 1997 2000 (sold) $11.875
</TABLE>
These transactions were effected in the open market.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The following agreements have been entered into by Mr. Weiss with
respect to any securities of Premiere, which agreements are attached as
Exhibits hereto and are incorporated herein by this reference:
1. Agreement and Plan of Merger referred to in Item 4 above and
attached as Exhibit 1 hereto.
______________
1 Based upon 4,256,120 shares of Class A Stock represented by the Issuer to
be outstanding as of January 13, 1997.
4.
<PAGE> 7
2. Consulting Agreement referred to in Item 4 above and attached
as Exhibit 2 hereto.
3. Letter Agreement referred to in Item 4 above and attached as
Exhibit 5 hereto.
4. Registration Rights Agreement dated as of January 7, 1997 by
and among Premiere and the Shareholders (as defined in Item 4
above) attached as Exhibit 4 hereto. The Merger Stock
(referred to in Item 4 above) consists of unregistered Class A
Stock which Mr. Weiss believes was issued by Premiere under
Section 506 of Regulation D. The Registration Rights
Agreement provides the Shareholders certain registration
rights subject to the limitation and conditions set forth in
said Agreement. Section 3 of the Agreement provides the
Shareholders piggyback registration rights exercisable prior
to the fourth anniversary of the Closing Date of the Merger;
Section 4 provides demand registration rights exercisable
after the first anniversary and prior to the fourth
anniversary of the Closing Date.
ITEM 7. MATERIALS TO BE FILED AS EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<S> <C>
1. Agreement and Plan of Merger
2. Consulting Agreement
3. Designation Letter
4. Registration Rights Agreement
5. Letter Agreement
</TABLE>
5.
<PAGE> 8
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
January 16, 1997 By: /s/ ERIC WEISS
--------------
ERIC WEISS
<PAGE> 9
EXHIBIT 1
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PREMIERE RADIO NETWORKS, INC.,
AFTER MIDNITE ENTERTAINMENT, INC.
AND THE
SHAREHOLDERS OF AFTER MIDNITE ENTERTAINMENT, INC.
AS OF JANUARY 1, 1997
- -------------------------------------------------------------------------------
<PAGE> 10
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (this "Agreement") dated as of
January 1, 1997 is by and among Premiere Radio Networks, Inc., a Delaware
corporation ("Premiere"), After Midnite Entertainment, Inc., a California
corporation (the "Company"), and the shareholders of the Company listed on the
signature pages hereto (the "Shareholders").
R E C I T A L S
WHEREAS, the Shareholders own all the outstanding capital stock of the
Company;
WHEREAS, Premiere desires to cause a merger of the Company with a
wholly owned subsidiary to be formed by Premiere under the laws of the State of
Delaware ("Merger Sub");
WHEREAS, In such merger, the Shareholders will receive cash and Class A
Common Stock of Premiere ("Premiere Class A Stock") in accordance with the
terms hereof;
A G R E E M E N T
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereby agree as follows:
ARTICLE 1
THE MERGER
1.1. Filing the Certificate of Merger. An Agreement of Merger by
and among Merger Sub and the Company, meeting the requirements of the laws of
the State of Delaware shall be executed and delivered to the Secretary of State
of Delaware for filing in accordance with the General Corporation Law of the
State of Delaware (the "GCL") on the date of the Closing (as defined herein).
The merger of the Company into Merger Sub (the "Merger") shall be given effect
upon the filing of the Agreement of Merger, and any other documents necessary
to effect the Merger in accordance with the GCL.
1.2. The Merger. At the Effective Time:
(a) The Company shall be merged with and into Merger Sub,
and the separate existence of Company shall cease. Merger Sub shall be the
surviving corporation (the "Surviving Corporation").
(b) By virtue of the Merger, each issued and outstanding
share of common stock of the Company (the "Company Stock") shall be converted
into the right to receive any of cash, promissory notes of Premiere, or shares
of Premiere Class A Stock, in each case in
1
<PAGE> 11
such amounts as are indicated on Schedule 1.2(b) (such cash, notes and Premiere
Class A Stock, the "Merger Consideration"). The parties hereto agree that all
cash included in the Merger Consideration shall be paid by wire transfer to an
account designated to Premiere as the "Shareholders Account" in writing by Eric
Weiss on or before the Closing Date (the "Shareholders Account"), and that all
obligations of Merger Sub and Premiere to pay such cash portion of the Merger
Consideration, and all other amounts of cash to be paid to any Shareholder
hereunder, shall be completely satisfied upon transfer of such amounts to the
Shareholders Account.
(c) By virtue of the Merger, each issued and outstanding
share of common stock of Merger Sub shall be converted into one share of common
stock of the Surviving Corporation.
1.3. Charter Documents; Directors and Officers after the Merger.
(a) At the Effective Time, the articles of incorporation
and bylaws of Merger Sub, as in effect immediately prior to the Effective Time,
shall be the articles of incorporation and bylaws of the Surviving Corporation
until duly altered, amended or repealed thereafter; provided that the name of
the Surviving Corporation shall be "After Midnite Entertainment, Inc."
(b) From and after the Effective Time, the members of the
Board of Directors of the Surviving Corporation shall consist of the members of
the Board of Directors of Merger Sub immediately prior to the Effective Time,
each of such individuals to serve until such individual's successor is elected
and qualified, or until such individual's earlier death, resignation or
removal.
(c) From and after the Effective Time, each officer of
Merger Sub immediately prior to the Effective Time shall be an initial officer
of the Surviving Corporation in the same capacity, until such officer's
successor is duly elected and qualified or until such officer's earlier death,
resignation or removal.
1.4. Exchange of Certificates. At the Closing (as defined herein)
each Shareholder shall present his Company Stock to Premiere and Premiere shall
deliver the Merger Consideration to each Shareholder. Following the Effective
Time each share of Company Stock shall represent solely the right to receive
the Merger Consideration as provided herein, and shall have no other rights.
1.5. Closing.
The closing of the transactions contemplated herein (the
"Closing") shall take place at 9:00 a.m., local time on January 7, 1997, or
such other date as to which the parties shall agree (the "Closing Date"), at
the offices of Christensen, Miller, Fink, Jacobs, Glaser,
2
<PAGE> 12
Weil & Shapiro, LLP, 2121 Avenue of the Stars, 18th Floor, Los Angeles,
California 90067 or at such other place and on such other date as the parties
shall agree.
ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PREMIERE
Premiere represents, warrants and covenants to the Company and the Shareholders
as follows:
2.1. 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 presently conducted.
2.2. 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.
2.3. 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.
2.4. 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.
2.5. Premiere Class A Stock; Fully Paid, Etc. The shares of
Premiere Class A Stock to be issued in the Merger will, upon issuance, be duly
authorized, validly issued, fully-paid and non-assessable, free of any
pre-emptive rights, free of any restrictions, except for restrictions on
transfer under applicable securities laws and will have been issued in
compliance with applicable securities laws.
3
<PAGE> 13
2.6. Disclosure. The Company has heretofore delivered to the
Shareholders its (i) Annual Report and any amendments thereto on Form 10-K for
the three most recent fiscal years as filed with the Commission, (ii) Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996, (iii) all proxy
statements relating to the Company's meetings of stockholders (whether annual
or special) since December 31, 1995, and (iv) all other reports or registration
statements filed by the Company with the Commission since December 31, 1995,
(the "SEC Documents"). As of their respective dates, the SEC Documents
(including all exhibits and schedules thereto and documents incorporated by
reference therein) complied as to form in all material respects with the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not false or misleading. Premiere has no actual knowledge that any
representation or warranty of the Company or any Shareholder hereunder 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, it
being expressly understood that Premiere shall not be charged with any such
actual knowledge on account of any due diligence investigation it may have
conducted with respect to the transactions contemplated hereby.
ARTICLE 3
REPRESENTATION AND WARRANTIES AND COVENANTS OF
THE COMPANY AND THE SHAREHOLDERS
The Company and the Shareholders, jointly and severally, represent, warrant and
covenant to Premiere as follows:
3.1. Organization and Standing. The Company 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 business as
now being conducted and as proposed to be conducted. The Company is duly
qualified to do business and is 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.
3.2. Capitalization; Ownership of Company Stock.
(a) The authorized capital of the Company consists of ten
thousand (10,000) shares of Company Stock, of which ten thousand (10,000)
shares are issued and outstanding. There are no outstanding options, warrants
or other agreements providing for the issuance of Company Stock. None of the
shares of Company Stock has been issued in violation of any applicable
securities laws or in violation of any rights, pre-emptive or otherwise, of any
present or past shareholder of the Company. The Company does not have any
subsidiaries.
4
<PAGE> 14
(b) Each Shareholder is the sole record and beneficial
owner of the number of shares of Company Stock set forth opposite his name on
Schedule 3.2 hereto and has, good and marketable title to such Company Stock,
free and clear of all liens, pledges, encumbrances, options, purchase rights or
otherwise.
3.3. Authorization and Binding Obligation. The Company and the
Shareholders each has all necessary power and authority to enter into and
perform its or his obligations under this Agreement and to consummate the
transactions contemplated hereby, and the execution, delivery and performance
of this Agreement have been duly and validly authorized by all necessary
action. This Agreement has been duly executed and delivered by the Company and
the Shareholders and constitutes its or his respective binding obligation,
enforceable in accordance with its terms, except as limited by laws affecting
the enforcement of creditors' rights or equitable principles generally.
3.4. Absence of Conflicting Agreement or Required Consents. The
execution, delivery and performance of this Agreement by the Company and the
Shareholders (a) do not require the consent of any third party, except as
otherwise detailed on one of the Schedules hereto (which material consents
shall be obtained prior to the Closing); (b) will not violate any provisions of
the Company'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 the Company or the Shareholders are a
party or by which the Company, its assets or the Shareholders are bound; (d)
except as otherwise disclosed on Schedule 3.4 hereof, 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 material agreement, instrument, license or permit to which the Company,
its assets or the Shareholders are now subject; provided that the Company shall
deliver waivers or consents of the appropriate counter-party to each such
agreement, instrument, license or permit prior to the Closing and (e) will not
result in the creation of any lien, charge or encumbrance on any of assets of
the Company.
3.5. Intellectual Property. The Company has good and marketable
title in or otherwise has the right to use all material 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 business and operations ("Intellectual Property"). Attached
hereto as Schedule 3.5(a) 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. Except as disclosed
in Schedule 3.5(b), there are no pending, or to the Knowledge of the Company
and the Shareholders, threatened proceedings or litigation affecting or
relating to any Intellectual Property. Neither the Company nor any Shareholder
has received notice alleging infringement of the rights of any third party to
Intellectual Property or alleging the unlawful use of such property. As used
in this Agreement, the term the "Knowledge of the Company and the Shareholders"
shall mean (i) to the best knowledge of the Company after reasonable enquiry
and investigation, and (ii) to the actual knowledge of any
5
<PAGE> 15
Shareholder. "The best knowledge of the Company" shall include, without
limitation, knowledge of any Company officer (including any officer who is also
a Shareholder) after reasonable enquiry and investigation to be conducted
within the scope of his responsibilities as an officer.
3.6. Personnel Information.
(a) Schedule 3.6(a) contains a true and complete list of
all persons employed by, and all consultants and outside talent engaged by or
under contract with, the Company as of December 15, 1996 and a description of
all compensation arrangements (including bonus arrangements) and employee
benefit plans or arrangements applicable to such employees, consultants and
talent. To the Knowledge of the Company and the Shareholders, no employee,
consultant or talent identified on Schedule 3.6(a) currently plans to terminate
such person's employment, engagement or contract, whether by reason of the
transactions contemplated by this Agreement or otherwise.
(b) Except as disclosed in Schedule 3.6(b), to the
Knowledge of the Company and the Shareholders, the Company has complied in all
material respects with all laws relating to the employment of labor, including,
without limitation, those laws relating to safety, health, wages, hours,
unemployment insurance, workers' compensation, and equal employment
opportunity.
(c) Other than as set forth on Schedule 3.6(c), the
Company is not a 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 3.6(a) whether or not such plan is otherwise exempt from the
provisions of ERISA, and no employee or spouse of an employee identified on
Schedule 3.6(a) is entitled to any benefits that would be payable pursuant to
any employee pension benefit plan. Except as provided on Schedule 3.6(c), the
Company does not have any fixed or contingent liability or obligation to any
person now or formerly employed by it, 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, and the Shareholders shall indemnify Premiere for, any debt, obligation or
liability arising from the Company's employee benefit plans, or any other
employment arrangement; provided that employees of the Company 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 employees of the Company with credit for years of
service.
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<PAGE> 16
(d) Except as disclosed on Schedule 3.6(d), the Company
is not a party to, or negotiating, any collective bargaining agreement, nor are
there to the Knowledge of the Company and the Shareholders, any union
organizational or representation efforts underway.
(e) Each Shareholder hereby acknowledges and represents
that such Shareholder is aware that Eric Weiss shall or may enter into
consulting and employment contracts with the Company, Premiere or their
affiliates, in form and substance acceptable to such persons in their sole and
complete discretion (including, without limitation, the Consulting Agreement
and Transaction Agreement, each between Premiere and Eric Weiss, in form agreed
by such parties prior to the date hereof, with such variations therefrom as
such parties may agree in their sole and complete discretion may have agreed
(the "Consulting Agreement" and the "Transaction Agreement", respectively)),
and hereby consents thereto.
3.7. Litigation. The Company is not subject to any judgment,
award, order, writ, injunction, arbitration decision or decree pertaining to
the operation of the Company, the ownership of its assets or the validity of
this Agreement except (i) as set forth on Schedule 3.7 and (ii) for any such
judgment, award, order, writ, injunction or decision issued in litigation
arising out of a claim (if any) by MediaAmerica, Inc. ("MAI") to be the
advertising sales representative for the Company in 1997 (the "MediaAmerica
Litigation"). Except as set forth on Schedule 3.7 and except as issued in the
MediaAmerica Litigation (if any), the Shareholders are not subject to any
judgment, award, writ, injunction, arbitration decision or decree pertaining to
the validity of this Agreement. Except as set forth on Schedule 3.7 and except
for the MediaAmerica Litigation (if any), there is no litigation, proceeding or
investigation pending or, to the Knowledge of the Company and the Shareholders,
threatened against any of them or relating to the Company or the Shareholders
in any federal, state or local court, or before any administrative agency,
referee, arbitrator or other tribunal authorized to resolve disputes, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken in connection with this Agreement. For the avoidance of
doubt, the parties hereto have agreed that there is no basis on which
MediaAmerica Litigation may be sustained, but have provided therefor in this
Section 3.7 and elsewhere in this Agreement solely as a precautionary measure.
3.8. Compliance with Laws. To the Knowledge of the Company and the
Shareholders, the Company has operated and is operating in material compliance
with all laws, regulations and governmental orders pertaining to the operation
of the Company or the ownership of its assets, and the Company's present use of
its assets and conduct of its business does not violate any law, regulation or
order in any material respect. Neither the Company nor the Shareholders has
received any notice asserting any noncompliance with any applicable statute,
rule or regulation, in connection with the business or operations of the
Company.
3.9. Bankruptcy. No insolvency proceedings of any character,
including without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
the Company, the Shareholders or any assets of the Company, are pending or, to
the Knowledge of the Company and the Shareholders, threatened, and neither the
Company nor the Shareholders has made and presently does not intend to make
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<PAGE> 17
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. To
the Knowledge of the Company and the Shareholders, there is no fact or
circumstance which would cause the Company, its assets or business or the
Shareholders to become subject to the jurisdiction of any bankruptcy court or
proceeding within 90 days of the Closing Date.
3.10. Operation of the Company. Since October 31, 1996 the Company
has operated its business in the ordinary and normal course of business and in
the manner that has been customary during the period since the Shareholders
acquired the Company. Since October 31, 1996 the Company has used reasonable
efforts to preserve the business and organization of the Company, and to keep
available without entering into any binding agreement except as disclosed on
Schedule 3.10, the services of those employees, consultants and outside talent
of the Company the loss of which could reasonably be expected to have a
material adverse effect on the Company or its business, and to preserve the
goodwill of the Company's customers and others having business relationships
with the Company.
3.11. Absence of Undisclosed Liabilities. The unaudited cash basis
balance sheets of the Company at October 31, 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 the Company as of such date. The foregoing
financial statements, all of which have been attached as Schedule 3.11(a)
hereto, are sometimes referred to herein as the "Financials." The Company's
accrued and contingent liabilities as of October 31, 1996 which are not
reflected in the Financials are disclosed on Schedule 3.11(b), together with
all reserves taken by the Company for any thereof. Except as and to the extent
reflected or reserved against in the Financials, or disclosed in any Schedules
hereto (including, without limitation, Schedules 3.11(a) and (b)), the Company
had no liabilities or obligations which would be required to be disclosed in
financial statements prepared in accordance with Generally Accepted Accounting
Principles as of the date thereof (other than obligations of continued
performance under the Material 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 October 31, 1996, except as and to the extent reflected
or reserved against in the Financials or disclosed in any Schedule hereto
(including, without limitation, Schedule 3.11), the Company 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 the Company,
or (ii) in connection with the transactions contemplated hereby.
3.12. Absence of Certain Changes or Events. Since October 31, 1996,
except as described in Schedule 3.12 hereto, there has not occurred any event
or condition which has a material adverse effect on the properties, assets,
liabilities (whether absolute, contingent, accrued or otherwise), financial
condition, results of operations, business, affairs of the Company concerning
the Company and, without limiting the generality of the foregoing, the Company
has
8
<PAGE> 18
not, except as disclosed on Schedule 3.12, (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 its assets; (c) sold,
transferred, licensed or otherwise disposed of any of its 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 the Company; (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 its assets (other than normal wear and tear);
(g) suffered any taking or seizure of all or any part of its 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 the Company; (n) declared, set
aside or paid any dividends or distributions in respect of the Company Stock or
otherwise paid any amounts to the Shareholders except for payment of salaries,
benefits and other compensation and reimbursement of expenses consistent with
past policies; (o) repurchased any capital stock of the Company; (p) waived or
released any debts, claims, rights of value or suffered any extraordinary loss
or written down the value of any assets or written off any receivables in
excess of $5,000; (q) accelerated or deferred any items of income or expense;
(r) suffered any material adverse change in its income business, financial
condition, assets or results of operations or experienced any occurrence or
event which has had a material adverse effect upon the revenues, business,
financial condition or results of operations; (s) entered into any agreement or
made any commitment to do any of the things described in the preceding
subsections (a) through (r) of this Section 3.12.
3.13. Equipment Leases and Contracts. Except as disclosed on
Schedule 3.13 hereto, the Company is not a party to, nor are its 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, (c) to which any stockholder, officer, director
or employee of the Company is a party in any
9
<PAGE> 19
capacity, which is not being extinguished on or before the Closing Date, or (d)
whose termination would result in a liability of $5,000 or more (said
agreements, together with the Real Property Leases, being referred to herein
collectively as the "Material Agreements"). Each Material Agreement is listed
on Schedule 3.13 . True and correct copies of each of the Material Agreements
have been delivered to Premiere and each Material Agreement is in full force
and effect, has an expiration date as set forth on Schedule 3.13, has not been
amended or modified except as set forth on Schedule 3.13, and constitutes the
entire agreement between the parties thereto with respect to the subject matter
thereof. The Company is not, and to the Knowledge of the Company and the
Shareholders, no third party to any Material Agreement is in material default
thereunder, nor is the Company aware of any fact or circumstances with respect
to any Material Agreement which upon notice or lapse of time could give rise to
a material default thereunder.
3.14. Real Property Leases. The real property leases listed on
Schedule 3.14 hereto (the "Real Property Leases") constitute all leases,
whether written or oral, to which the Company or any of its affiliates is a
party and which are necessary or required in connection with the Company's
business (including any real property owned by one or more of the Shareholders
or any affiliate of the Company); true and correct copies of each of the
written Real Property Leases have been delivered to Premiere. The Company has
valid and enforceable leasehold interests in such real property, free and clear
of all liens and encumbrances. To the Knowledge of the Company and the
Shareholders 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,
the Company has properly exercised such option to renew. To the Knowledge of
the Company and the Shareholders each such real property and improvements
thereon may lawfully be used in connection with the business of the Company 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
the Company has not received any notices of violations with respect thereto.
3.15. Machinery and Equipment. The machinery and equipment used in
the Company's business is in adequate operating condition, subject to normal
wear and tear, and in a state of repair sufficient for the conduct of normal
operations. The Company's assets and properties (including leased property)
are adequate to enable the Company to conduct its business as now being
conducted. Except as described in Schedule 3.15, the Company 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.
3.16. Licenses. The Company 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 the Company to carry on its business as now conducted
10
<PAGE> 20
and to own and operate its properties (including leased property) as now owned
and operated and all such patents, franchises, permits, licenses, rights,
certificates and consents will remain in full force and effect following
consummation of the transactions contemplated by this Agreement. Attached
hereto as Schedule 3.16 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 will remain in full
force and effect following the Merger.
3.17. Title to Assets. Except as disclosed on Schedule 3.17 hereto,
all of the Company's assets are owned free and clear of all mortgages, liens,
security interests, pledges, charges and other encumbrances whatsoever
(including, without limitation, profit and revenue sharing agreements). Except
as disclosed on Schedule 3.17 hereto, immediately following the Merger the
Company's assets will be free and clear of all mortgages, liens, security
interests, pledges, charges and other encumbrances whatsoever.
3.18. Taxes The Company has at all times since its creation duly
made and maintained in effect an "S corporation" election under the Internal
Revenue Code of 1986, as amended (the "Code"), and, pursuant to such election,
is and has at all times since its creation been, an "S corporation". Without
limitation to the foregoing sentence, the Company has no "built in gain" (as
such term is used in Section 1374 of the Code). The Company (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 Company's
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 Knowledge of the Company and the Shareholders,
threatened against the Company 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. The amounts reserved on the Financials, or
disclosed on any Schedule hereto, for accrued but unpaid taxes are sufficient
to pay all accrued but unpaid taxes through the Closing Date. The Company has
never been audited by any federal, state or local governmental taxing authority
and has received no notice of any future such audit, and, to the Knowledge of
the Company and the Shareholders, no such audit is pending, planned or
threatened. The Company has withheld and paid all amounts with respect to
federal, state or local taxes which are required to be made by applicable law.
3.19. Insurance. Attached hereto as Schedule 3.19 is a true and
complete list of all insurance policies in force with respect to the Company's
business and assets and the annual premiums payable thereon. The Company is
not now, and on the Closing Date will not be, in default in any respect under
any such policy, and the Company shall continue such policies in force and
effect through the Closing Date.
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<PAGE> 21
3.20. Access to Records. Prior to the execution of this Agreement,
the Company has made available to Premiere and its representatives for their
examination the books and records of the Company, 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 its representatives and nothing which should be set
forth in the Records, if prepared in the ordinary course of business, occurred
from the 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 the Company consistent with the prior practice of the Company or
which have otherwise been disclosed in writing to the Company.
3.21. Sophisticated Investors; Investment Intent. Each Shareholder
who is to receive Premiere Class A Stock under this Agreement, by reason of his
business and financial experience or together with his investment
representative, has sufficient knowledge and experience in financial and
business matters to enable him to evaluate the merits and risks of this
Agreement and the transactions contemplated by this Agreement and to protect
his own interests in connection with this Agreement and the transactions
contemplated hereby. Each such Shareholder acknowledges that the Premiere
Class A Stock to be received by him has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"). Each such
Shareholder (i) is taking the shares of Premiere Class A Stock to be received
by him for his own account for investment and not with a view to engage in, or
for sale in connection with, any offering or distribution thereof and otherwise
without a present intent of transferring or otherwise disposing of such shares
except in compliance with applicable securities laws; (ii) prior to the
execution of this Agreement, has received all information requested concerning
the business, operations and financial condition of Premiere in connection with
his making an investment decision to acquire the Premiere Class A Stock; and
(iii) is an "accredited investor" as defined in Regulation D of the Securities
Act.
3.22. 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, as the case may be, not misleading. Neither the Company nor any
Shareholder has actual knowledge that any representation or warranty of
Premiere hereunder 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, it being expressly understood that neither the Company
nor any Shareholder shall charged with any such actual knowledge on account of
any due diligence investigation it or he may have conducted with respect to the
transactions contemplated hereby.
3.23. No Accrued Employee Vacation Time. No present or former
employee of the Company has accrued any unused vacation time, and the Company
is not obligated to pay any amount to any such employee with respect thereto.
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<PAGE> 22
3.24. MediaAmerica Advance and Other Accounts Payables; Accounts
Receivables.
(a) The amount of the MediaAmerica Advance (defined
below) is as of the date hereof $254,243. As used herein, "MediaAmerica
Advance" shall mean the aggregate remaining amount owed from time to time
(including principal and interest) to MAI under that certain Revolving
Promissory Note (the "MediaAmerica Note"), dated April 21, 1995.
(b) The Shareholders shall satisfy in a manner consistent
with the Company's prior ordinary course of business all of the Company's
accounts payable and other liabilities (i) respecting obligations to which the
Company was contractually bound to pay prior to Closing, including, without
limitation, all employee payroll, bonus and other obligations to Company
employees accrued prior to the Closing Date, (ii) for services rendered to the
Company prior to Closing, or (iii) for goods purchased, ordered or received by
the Company prior to Closing; provided, however, that with respect to the
Company's obligation to repay the MediaAmerica Advance, all amounts collected
by Premiere from MAI after the Closing with respect to the Sales Representation
Agreement dated as of April 1, 1995, as amended, between the Company and MAI,
whether in cash or by way of offsets against amounts due by the company to MAI
under the Company's Revolving Promissory Note to MAI, dated April 21, 1995, as
amended, shall be deemed to be accounts receivable collected by Premier under
Section 11.1(b), and to the extent received by Premiere, shall be remitted to
the Shareholders at the time and in the manner provided in Section 11.1(b).
Premiere shall, promptly upon receipt of statements from MAI with respect to
collected Adjusted Gross Receipts, remit true copies thereof to the
Shareholders. The Shareholders shall retain the right at any time after the
Closing to designate Premiere in writing as the party to collect Gross Receipts
derived from any contracts obtained by MAI during the Term (as such term is
used in section 7.2 of the Sales Representation Agreement). In such case, all
amounts collected by Premiere (less such sums as are due MAI under said section
7.2) shall be treated as collected accounts receivable under Section 11.1(b)
and remitted to the Shareholders as provided therein.
(c) The parties hereto understand and agree that ordinary
items of income and operating expenses of the Company for the year 1997 (each
of which is described in the Schedules hereto) which overlap the Closing Date,
including without limitation, payroll obligation for the Company's employees,
rent obligations accrued by the Company and pre-paid satellite expenses paid by
the Company, shall be prorated as of the Closing Date, with the burdens and
benefits attributable to period before the Closing Date being attributed to the
Shareholders, and the burdens and benefits attributable to period on and after
the Closing Date being attributed to Premiere, and the parties agree that such
prorated amounts shall be calculated on or before March 1, 1997 and settled by
appropriate cash payment on that date.
(d) Shareholders jointly and severally agree to promptly
pay any amounts payable with respect to severance of any Company employee
listed on Schedule 3.6 as a "Full Time Employee" whose employment is
terminated within 60 days after the Closing Date.
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<PAGE> 23
ARTICLE 4
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:
4.1. Representations, Warranties and Covenants.
(a) All representations and warranties of the Company and
the Shareholders shall be, and the Company and each Shareholder shall have
executed and delivered Certificates dated the Closing Date certifying that such
representations and warranties are, 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 the Company and the Shareholders on or prior to
Closing Date shall have been complied with or performed in all material
respects.
(c) The Company shall have obtained all material consents
and material waivers described in this Agreement, including Schedules hereto,
required to be obtained prior to the Closing; provided, however, that the
Shareholders shall continue to use their respective best efforts to obtain each
consent and waiver described in this Agreement, including Schedules hereto,
which have not been obtained prior to the Closing, and in all events the
Shareholders jointly and severally agree to obtain and deliver to Premiere each
such consent and waiver by no later than March 1, 1997.
4.2. 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 except any suit, action or claim of MediaAmerica Litigation.
4.3. Non-Competition Agreement. The Shareholders other than Eric
Weiss shall each have executed and delivered the Non-Competition Agreement
substantially in the form attached hereto as Schedule 4.4. The Shareholders
shall be paid an aggregate of $800,000 for entering into the Non-Competition
Agreements. Such amount shall be allocated as follows:
William Lopatin $ 50,000.00
Leonard Makowka $ 50,000.00
Rod West $317,037.44
Blair Garner $382,962.56
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<PAGE> 24
The Non-Competition Agreements of Rod West and Blair Garner shall provide,
among other things, that such Shareholders shall hold the titles of "President
of the AME Division" and "Chief Creative Officer of the AME Division",
respectively, and further provide for the issuance of certain options
respecting Premiere Class A Stock, in each case on the terms and conditions
provided in such Non-Competition Agreements.
ARTICLE 5
CONDITIONS PRECEDENT TO THE COMPANY'S AND SHAREHOLDERS'
OBLIGATION TO CLOSE
The obligations of the Company and the Shareholders 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:
5.1. Representations, Warranties and Covenants.
(a) All representations and warranties of Premiere shall
be, and Premiere shall have executed and delivered a Certificate dated the
Closing Date certifying that such representations and warranties are, 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.
5.2. Registration Rights Agreement. Premiere and the Shareholders
shall have entered into a Registration Rights Agreement, the form of which is
attached hereto as Schedule 5.3.
5.3. Consideration. Premiere and Merger Sub shall have tendered
the Merger Consideration, subject to the terms and conditions hereof.
ARTICLE 6
DOCUMENTS TO BE DELIVERED AT THE CLOSING
6.1. Documents to be Delivered by the Company and the Shareholders.
At Closing, the Company and the Shareholders shall deliver to Premiere the
following:
(a) An Agreement of Merger duly executed on behalf of the
Company;
(b) Stock certificates representing all the outstanding
shares of Company Stock;
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<PAGE> 25
(c) Non-Competition Agreements executed by the
Shareholders other than Eric Weiss, and each of the Consulting Agreement and
the Transaction Agreement, executed by Eric Weiss;
(d) Copies of resolutions of the Board of Directors and
shareholders of the Company authorizing the execution and delivery of this
Agreement, and the performance by the Company of its obligations hereunder and
a certificate of the Secretary of the Company stating that such resolutions are
in full force and effect and have not been modified or rescinded as of the
Closing Date;
(e) Uniform Commercial Code termination statements
terminating any recorded financing statement of Company respecting any
factoring or credit facility which Premiere shall have requested, other than
the MediaAmerica Note, each executed by the creditor which is beneficiary of
such financing statement; provided, however, that the Shareholders shall
continue to use their respective best efforts to cooperate after the Closing
with Premiere to obtain and file Uniform Commercial Code termination statements
terminating any recorded financing statement of Company respecting the
MediaAmerica Note;
(f) Termination agreements in form and substance
satisfactory to Premiere terminating as of the Closing Date any factoring or
credit facility which Premiere shall have requested, other than the
MediaAmerica Note, each duly executed and delivered by Company and each
creditor thereunder, together with an acknowledgement of each such creditor
that amounts are outstanding thereunder; provided, however, that the
Shareholders shall continue to use their respective best efforts to cooperate
after the Closing with Premiere to obtain and deliver to Premiere an agreement
terminating the MediaAmerica Note;
(g) A termination agreement in form and substance
satisfactory to Premiere terminating as of the Closing Date any shareholders'
agreement among the Shareholders or any of them, duly executed and delivered by
each such Shareholder and any other party thereto; and
(h) A certificate signed by the Shareholders stating the
aggregate amount, if any, of the MediaAmerica Advance as of the Closing Date;
(i) Agreements, in each case in form and substance
reasonably satisfactory to Premiere (A) duly executed and delivered by each of
Blair Garner and Rod West amending the employment agreements of each thereof
with the Company as of the Closing Date, and consenting to the assumption of
such employment agreement at any time on or after the Closing Date by Merger
Sub or Premiere, and (B) duly executed and delivered by Eric Weiss terminating
any employment agreement of Eric Weiss with the Company as of the Closing Date,
and waiving any and all benefits under such employment agreement;
(j) Duly executed letters of resignation of each officer
and director of the Company, each effective as of the Closing Date.
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<PAGE> 26
6.2. Documents to be Delivered by Premiere. At the Closing,
Premiere shall deliver to the Shareholders the following:
(a) An Agreement of Merger duly executed on behalf of
Merger Sub;
(b) An aggregate of Three Million Nine Hundred Thousand
Dollars ($3,900,000) less an amount equal to the MediaAmerica Advance balance
as of the Closing date, in cash (which cash consideration includes $800,000
allocated to the Non-Competition Agreements) and certificates representing
400,000 shares of Premiere Class A Stock issued in the names of the
Shareholders as provided in Schedule 6.2; provided that the parties hereto
agree that the withheld amount equal to the MediaAmerica Advance balance shall
be deemed delivered to the Shareholders notwithstanding Premiere's retention
thereof;
(c) The Registration Rights Agreement duly executed on
behalf of Premiere;
(d) Resolutions of the Board of Directors of Premiere (or
the Executive 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;
(e) Resolutions of the Board of Directors and Shareholder
of Merger Sub authorizing the Merger and a certificate of the Secretary or an
Assistant Secretary of Merger Sub stating that such resolutions are in full
force and effect and have not been modified or rescinded as of the Closing
Date; and
(f) each of the Consulting Agreement and the Transaction
Agreement, executed by Premiere.
ARTICLE 7
FEES AND EXPENSES
7.1. Expenses. Each party hereto other than the Company 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. All costs and expenses incurred by the Company in
connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement shall be paid by the Shareholders.
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ARTICLE 8
INDEMNIFICATION
8.1. Indemnification by the Shareholders. The Shareholders shall
jointly and severally indemnify, defend and hold Premiere harmless from and
against and with respect to, and shall reimburse Premiere for the following
(collectively, the "Shareholder Indemnified Liabilities"):
(a) any and all losses, liabilities, or damages resulting
from any misrepresentation, breach or failure of any warranty or the
non-fulfillment of any agreement, covenant or undertaking on the part of the
Company or the Shareholders appearing herein; provided, that nothing appearing
in this Section 8.1(a) shall be construed to create any liability of any
Shareholder for breach of or misrepresentation in any agreement (including any
agreement appearing as a Exhibit hereto) other than this Agreement;
(b) 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; and
(c) any losses, liabilities, or damages resulting from any
claim or cause of action brought by Jeff Svenninsen or JRS & Associates arising
out of or relating to facts occurring prior to the Closing Date (collectively,
"JRS Litigation");
provided, however, that, except for Unrestricted Liabilities (as defined in
Section 8.4 below), no Shareholder shall have any obligations under this
Section 8.1 with respect to any Shareholder Indemnified Liabilities of which
such Shareholder shall not receive notice on or prior to July 31, 1998
specifying with reasonable particularity the nature of such Shareholder
Indemnified Liabilities to the extent then known by Premiere. For the
avoidance of doubt, the parties hereto have agreed that there is no basis on
which JRS Litigation may be sustained, but have provided therefor in this
Section 8.1 and elsewhere in this Agreement solely as a precautionary measure.
8.2. Indemnification by Premiere. Premiere shall indemnify, defend
and hold the Shareholders harmless from and against and with respect to, and
shall reimburse the Shareholders for the following (collectively, the "Premiere
Indemnified Liabilities"):
(a) any and all losses, liabilities or damages resulting
from (i) any misrepresentation, breach or failure of any warranty or the
non-fulfillment of any agreement, covenant or undertaking on the part of
Premiere appearing herein or (ii) the MediaAmerica Litigation (if any);
(b) 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; and
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(c) amounts actually paid after the Closing Date by any
Shareholder under a guaranty made by such Shareholder of obligations of the
Company disclosed in Schedule 3.11 hereof as obligations guaranteed by such
Shareholder;
provided, however, that (i) Premiere shall not be required under Section 8.2(c)
or any other provision of this Agreement or law to indemnify or reimburse any
Shareholder for amounts paid or payable with respect to obligations or
guaranties not disclosed in Schedule 3.11; (ii) Premiere shall not be required
under any provision of this Agreement or law to indemnify or reimburse any
Shareholder for any losses, liabilities, damages or other amounts arising out
of or relating to the MediaAmerica Litigation (if any) if the information
provided to Premiere by the Company and the Shareholders respecting the
Company's relationship and dealings with MAI, taken as a whole, contains any
untrue statement of material fact or omits any statement of material fact
necessary to make any statement contained therein not misleading; and (iii)
Premiere shall have no obligations under this Section 8.2 with respect to any
Premiere Indemnified Liabilities of which Premiere shall not receive notice on
or prior to July 31, 1998 specifying with reasonable particularity the nature
of such Premiere Indemnified Liabilities to the extent then known by the
Shareholders or any of them.
8.3. Right to Defend, Etc. If the facts giving rise to any
indemnification under this Article 8 shall involve any claim or demand by any
person against any of the indemnified parties relating to the Shareholder
Indemnified Liabilities or the Premiere Indemnified Liabilities (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 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 of an
Indemnified Claim, 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
indemnified 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
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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 (as determined through consultation
with attorneys for the indemnified party) 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.
8.4. Limitation on Liability of the Shareholders. Notwithstanding
anything contained in this Agreement to the contrary, the Shareholders shall
not be obligated to Premiere for any Shareholders 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 the Shareholders shall be
obligated to Premiere for any and all such liabilities shall not exceed
$1,500,000; provided, however, that the limitations of this Section 8.4 shall
not apply to any Shareholder Indemnified Liabilities arising out of or relating
to any claim (I) by any former or present employee of the Company or
constituting JRS Litigation, (II) by any third party relating to any asserted
interest in the Company, any of its stock or any participation in the profits
of the Company or any of its programs or businesses, and (III) for repayment of
the MediaAmerica Advance or for ordinary payables and expenses of the Company
required to be paid pursuant to the terms of Article 11 hereof (such
Shareholder Indemnified Liabilities described under clauses (I), (II) and (III)
being referred to herein as the "Unrestricted Liabilities"). Following the
Merger, the Shareholders shall not be entitled to reimbursement or contribution
from the Company for any Shareholder Indemnified Liabilities or other amounts
owed to Premiere.
8.5. 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 8, 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 8.
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8.6. 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 9
PREMIERE CLASS A STOCK PRICE GUARANTEE
9.1. Price Guarantee.
(a) Except as provided in Section 9.1(b), in the event
that the fair market value of the Premiere Class A Stock on the first
anniversary of the Closing Date shall be less than $16.00 per share Premiere
shall pay the Shareholders an amount per share of Premiere Class A Stock equal
to the difference between $16.00 and the fair market value of the Premiere
Class A Stock determined as of the first anniversary of the Closing. Such
amount may, at the option of Premiere, be paid in cash or in additional shares
of Premiere Class A Stock having aggregate fair market value equal to the
amount required to be paid by Premiere.
(b) In the event that prior to the first anniversary of
the Closing Date a person or group of persons shall acquire equity securities
of Premiere representing more than 50% of the voting power of Premiere and as a
consequence thereof, any Shareholder shall be obligated to and shall sell or
exchange such Shareholder's Premiere Class A Stock obtained as consideration
hereunder (a "Sale Event"), Premiere shall pay such Shareholder an amount per
share of such Premiere Class A Stock equal to the difference between the Target
Price (as defined herein) thereof and the value of the consideration obtained
for such Premiere Series A Stock on the date of the sale or exchange thereof.
Following such payment Premiere shall not be obligated to make any further
payments to such Shareholder pursuant to this Article 9 with respect to such
Premiere Series A Stock.
(c) For purposes of Section 9.1(b), the Target Price
shall be an amount equal to the sum of (i) the product of $1.00 times the
number of calendar days between the Closing Date and the date of the Sale Event
divided by 365 plus (ii) $15.00.
(d) During each calendar month prior to the first
anniversary of the Closing Date, Premiere shall (i) reserve a number of shares
of authorized and unissued Premiere Class A Stock and (ii) maintain cash
reserves or availability under a credit facility, so that at all times during
such month the sum of the aggregate Adjusted Fair Market Value (defined below)
of the Premiere Class A Stock reserved under clause (i) and the cash reserves
and credit availability maintained under clause (ii) is at least equal to the
amount which Premiere would be required to pay under Section 9.1(a) and (b), as
appropriate, hereof assuming (A) payment were required
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pursuant to Section 9.1(a) and (b), as appropriate, as of the first day of such
month and (B) the fair market value of the Premiere Class A Stock were then its
Adjusted Fair Market Value. At any time the election of and allocation between
the alternatives described under clauses (i) and (ii) above shall be made by
Premiere in its sole discretion.
9.2. Fair Market Value; Adjusted Fair Market Value.
(a) For purposes of this Article 9, the fair market value
of a share of Premiere Class A Stock as of any date of determination (the
"Valuation Date") shall be equal to (i) the average of the last reported sale
price of Premiere Class A Stock as shown on NASDAQ National Market System for
the 10 trading days next preceding the Valuation Date, or (ii) if Premiere
Series A Stock is not then listed on NASDAQ National Market System, the average
of the closing bid and asked quotations on the NASDAQ Automated Quotation
System for the 10 trading days next preceding the Valuation Date, or (iii) if
the Premiere Series A Stock is not then listed on the NASDAQ Automated
Quotation System or the NASDAQ National Market System, such average of the bid
and asked quotations or closing price on the system or exchange on which the
Premiere Series A Stock is then listed for the 10 trading days next preceding
the Valuation Date. Notwithstanding the foregoing, if the fair market as
determined in this Section 9.2 shall be less than $7.00 per share, the fair
market value for purposes of this Article shall be $7.00 per share.
(b) For purposes of this Article 9, "Adjusted Fair Market
Value" of any share of Premiere Class A Stock means, during any calendar month,
the excess over $4.00 of the following: (i) the last reported sale price of
Premiere Class A Stock as shown on the NASDAQ National Market System on or
before the final trading day in the calendar month immediately preceding such
calendar month, or (ii) if Premiere Series A Stock is not then listed on NASDAQ
National Market System, the average of the last closing bid and last asked
quotation on the NASDAQ Automated Quotation System on or before the final
trading day in the calendar month immediately preceding such calendar month, or
(iii) if the Premiere Series A Stock is not then listed on the NASDAQ Automated
Quotation System or the NASDAQ National Market System, such average of the last
bid and last asked quotations or last closing price on the system or exchange
on which the Premiere Series A Stock is then listed on or before the final
trading day in the calendar month immediately preceding such calendar month.
9.3. Limitations
(a) Premiere shall not be required to pay any amounts
pursuant to this Article 9 with respect to any Premiere Class A Stock sold by
any Shareholder prior to the date amounts would be required to be paid under
this Article 9, including, without limitation, pursuant to the Registration
Rights Agreement except any Premiere Class A Stock sold by any Shareholder to
an assignee permitted under Section 11.5(b)(ii).
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(b) In no event shall Premiere be obligated to pay the
Shareholders pursuant to this Article 9 for any shares not issued as Merger
Consideration pursuant to Section 1.2 of this Agreement.
(c) In the event (i) the Premiere Class A Stock shall be
changed into or exchanged for other securities of Premiere, (ii) additional
securities of Premiere shall be issued in respect of the Premiere Class A
Stock, or (iii) Premiere shall pay dividends on the Premiere Class A Stock the
amounts "$1.00", $4.00", "$15.00" and "$16.00" appearing in this Article 9
above shall be correspondingly and equitably adjusted.
9.4. Setoff.
(a) Premiere shall have the option of setting off all or
any part of any amount which Premiere finds in good faith to be payable by any
Shareholder hereunder (by way of indemnification, damages or otherwise) against
amounts payable to such Shareholder by Premiere under this Article 9. Premiere
shall notify any such Shareholder at the time such setoff is effected as to
such setoff, and as to whether Premiere has elected to effect such setoff in
cash or Premiere Class A Stock.
(b) If such setoff is effected in cash, and at any time
subsequent to such setoff, the amount against which such setoff was taken is
found not to have been payable to Premiere by a court or referee in accordance
with the terms hereof, Premiere shall pay the amount withheld together with
interest on such amount at an annual rate of 7 per cent from the date such
amount would otherwise have been payable by Premiere, and Premiere shall have
no further obligations or liabilities with respect to such setoff.
(c) If such setoff is effected in Premiere Class A Stock,
then, (i) such setoff shall be deemed to be in an amount equal to the fair
market value of the Premiere Class A Stock determined under Section 9.2(a) as
of the date such Premiere Class A Stock would otherwise have been issuable to
such Shareholder, and (ii) until such time as a court or arbitrator shall have
determined in accordance with the terms hereof whether the amount against which
such setoff was taken was payable to Premiere, such Shareholder shall retain
the rights of registration and sale under paragraphs 3 and 4 of the
Registration Rights Agreement, with respect to the withheld Premiere Class A
Stock as if it had been issued to such Shareholder and constituted Registrable
Stock; provided, however, that the proceeds of any sale of such Premiere Class
A Stock shall be held by Premiere for its own account, without any obligation
of Premiere to segregate such funds, subject to the provisions of Section
9.4(d) below.
(d) If any Premiere Class A Stock with which any such
setoff is effected is sold in an offering as contemplated by Section 9.4(c)
above, and at any time subsequent to such sale the amount against which such
setoff was taken is found not to have been payable to Premiere by a court or
arbitrator in accordance with the terms hereof, Premiere shall pay to such
Shareholder the amount of proceeds received in such sale plus interest on the
amount of such
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proceeds at an annual rate of 7 per cent from the date of such sale, and
Premiere shall have no further obligations or liabilities with respect to such
setoff.
(e) If any Premiere Class A Stock with which any such
setoff is effected remains unsold at any time the amount against which such
setoff was taken is found not to have been payable to Premiere by a court or
arbitrator in accordance with the terms hereof, such Premiere Class A Stock
shall be issued to such Shareholder without interest, and Premiere shall have
no further obligations or liabilities with respect to such setoff, it being
understood that any appreciation in such Premiere Class A Stock shall be for
the account of such Shareholder.
ARTICLE 10
TERMINATION OF AGREEMENT
10.1. 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 the Shareholders,
the Company and Premiere;
(ii) by Premiere, if any Shareholder or the
Company breaches in any material respect any of their representations,
warranties, covenants or agreements contained in this Agreement;
(iii) by the Company and the Shareholders, if
Premiere breaches in any material respect any of its representations,
warranties, covenants or agreements contained in this Agreement;
(iv) by Premiere, any Shareholder or the Company,
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 the Company, if the
Closing has not occurred on or prior to January 31, 1997.
10.2. Effect of Termination. In the event that this Agreement shall
be terminated pursuant to any provision contained herein expressly giving such
party the right to terminate this Agreement, this Agreement (including, without
limitation, Section 11.4) 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.
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ARTICLE 11
OTHER PROVISIONS
11.1. Pre-Closing Transactions.
(a) On or before the Closing, the Shareholders shall
cause the Company to satisfy its obligations to Messrs. Lopatin and Makowka for
a shareholder loan with an approximate balance of $1,314,000 as of the date
hereof.
(b) Immediately prior to the Closing the Company shall
assign to the Shareholders all accounts receivables relating to obligations of
the Company fully performed prior to the Closing Date, it being understood that
receivables relating to programs broadcast prior to the Closing Date shall be
considered to relate to fully performed obligations; provided, however,
notwithstanding the foregoing, the account debtors with respect to each such
account receivable shall continue to send payments to the Company (or its
successor), and Premiere shall on a monthly basis cause amounts received with
respect to such receivables to be forwarded to the Shareholders, by deposit
into the Shareholders Account, together with an accounting therefor; provided,
however, that at any time after any such account receivable shall become more
than 30 days past due, the Shareholders may take such steps as they deem
appropriate in their reasonable discretion to collect such account receivable;
(c) Immediately prior to the Closing the Company may
declare and pay a dividend, or distribute to its Shareholders, an aggregate
amount not to exceed cash on hand on the Closing; provided, however, that after
giving effect to any such dividend or distribution the Company shall in all
events maintain cash on hand at least equal to the amount of the MediaAmerica
Advance outstanding as of the Closing.
(d) All taxes payable by any Shareholder as a result of
any of the transactions described in (a) through (d) above or Section 3.24
shall be for the sole account of such Shareholder; provided, however, anything
to the contrary appearing in this Section 11.1 notwithstanding, the
Shareholders shall jointly and severally indemnify and hold harmless the
Company and Premiere from and against any liability to pay any such tax.
11.2. Survival of Representations and Warranties. The
representations and warranties of the parties contained herein shall survive
until July 31, 1998 and no claim may be made for any breach after such date.
Notwithstanding the foregoing, (i) in the event of any claim by the
Shareholders against Premiere under this Agreement, Premiere may use as an
affirmative defense against such claims any claim against the Shareholders
specifically relating to the subject matter of the claim by the Shareholders
which would have been barred through the application of Section 8.1 or this
Section 11.2, (ii) in the event of any claim by Premiere against any
Shareholder under this Agreement, such Shareholder may use as an affirmative
defense against such claims any claim such Shareholder may have against
Premiere specifically relating to the subject matter of the claim by Premiere
which would have been barred by application of Section 8.2 or this Section
11.2, and (Iii) nothing appearing in this Section 11.2 shall constitute or be
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construed as a defense to, or otherwise limit any Shareholder's obligations or
liability with respect to, any Unrestricted Liabilities, regardless of whether
such Unrestricted Liabilities arise by way of any claim for breach of
representation, indemnity, damages or otherwise.
11.3. Access to Information. From the date hereof through the
Closing Date, the Company shall provide Premiere and its representatives with
reasonable access to all records and information relating to the Company and
its business and will permit such persons to have access to all of the
properties and records of the Company during reasonable business hours in order
that Premiere may have full opportunity to make such investigations as it shall
desire of the affairs of the Company.
11.4. No Solicitation. Prior to the Closing, the Company and the
Shareholders will not 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 the Company or permitting access to the assets or
properties and books and records of the Company) any offer or inquiry from any
person concerning any business combination involving the Company or a purchase
of securities or assets of the Company. If the Company 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, the Company or the
Shareholder, as applicable, 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.
11.5. 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, the Company nor the Shareholders may
assign this Agreement without the prior written consent of the other parties
hereto except that (i) Premiere may assign its rights under this Agreement to
another entity under common control with Premiere (including Merger Sub)
without the consent of the Company and (ii) any Shareholder may assign all or a
portion of such Shareholder's rights (but not obligations) hereunder after the
Closing Date to such Shareholder's wife or children (or inter vivos trust for
the benefit thereof), heirs or legatees, provided, in each case, that such
assignee shall execute and deliver an assumption agreement jointly and
severally assuming the obligations of "Shareholders" under Article 8 hereof up
to a maximum of the fair market value of the rights and interests assigned,
which assumption shall not release such assigning Shareholder from any
obligations under this Agreement.
11.6. 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.
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11.7. 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.
11.8. Further Actions. Each of the parties hereto agrees that he or
it will, at any time, and from time to time, either before or after the Closing
Date, upon the request of the appropriate party, do, execute, acknowledge and
deliver, or will cause to be done, executed, acknowledged and delivered, all
such further acts, deeds , assignments, transfers, conveyances, powers of
attorney and assurances as may be required to complete the transactions
contemplated by this Agreement.
11.9. 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.
11.10. 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.
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(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. All fees and expenses of counsel to each party
shall be initially borne by such party, but the referee shall have the
power to order that reasonable fees and reasonable expenses of counsel
be recovered by the prevailing party.
11.11. 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
Fax No.: 818-377-5333
Copy to:
Premiere Radio Networks, Inc.
15260 Ventura Boulevard
Fifth Floor
Sherman Oaks, CA 91403-5339
Attention: Harold Wrobel, Esq.
Fax No.: 818-377-5333
and
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Christensen, Miller, Fink, Jacobs,
Glaser, Weil & Shapiro, LLP
2121 Avenue of the Stars
Eighteenth Floor
Los Angeles, CA 90067-5110
Attention: Gary N. Jacobs, Esq.
Fax No.: 310-556-2920
To the Company:
AME Radio Networks, Inc.
3575 Cahuenga Boulevard West
Suite 500
Los Angeles, CA 90068
Attention: Eric Weiss, Esq.
Fax No.: 310-459-2489
To Rod West, Blair Garner or Eric Weiss:
c/o AME Radio Networks, Inc.
3575 Cahuenga Boulevard West
Suite 500
Los Angeles, CA 90068
Attention: Eric Weiss, Esq.
Fax No.: 310-459-2489
Copy to:
Carol Perrin, Esq.
6300 Wilshire Boulevard
Suite 1850
Los Angeles, California 90043
Fax No.: 213-651-1498
To William Lopatin:
511 Alpine Street
Beverly Hills, California 90069
To: Leonard Makowka:
353 South Las Palmas Avenue
Los Angeles, California 90020
29
<PAGE> 39
cc: Bloom, Hergott, Cook & Diemer
150 South Rodeo Drive
3rd Floor
Beverly Hills, California 90212
Lawrence Greaves, Esq.
and shall be deemed to have been duly delivered and received (i) on the date of
personal delivery, (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, or (iii) when sent, if sent by confirmed
facsimile to the facsimile number provided herein.
11.12. Counterparts. This Agreement may be executed in one or more
counterparts, including by facsimile, each of which will be deemed an original
and all of which together will constitute one and the same instrument.
11.13. Shareholder Consent. Each Shareholder, by virtue of their
execution hereof, hereby consents to the Merger. This Agreement shall
constitute the actions of the shareholders of the Company taken without a
meeting pursuant to Section 603 of the GCL and shall be filed in the minute
book of the Company.
11.14. Tax Treatment of Merger. Each of the parties hereto shall
treat the Merger as a reorganization governed by Section 368(a)(1)(A) of the
Code.
30
<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first written above.
AFTER MIDNITE PREMIERE RADIO
ENTERTAINMENT, INC. NETWORKS, INC.
By: ROD WEST By: STEPHEN C. LEHMAN
-------------------------- --------------------------------
Name: ROD WEST Stephen C. Lehman
----------------
Title: President
---------------
/s/ WILLIAM LOPATIN
- -----------------------------
William Lopatin
/s/ LEONARD MAKOWKA
- -----------------------------
Leonard Makowka
/s/ ROD WEST
- -----------------------------
Rod West
/s/ BLAIR GARNER
- -----------------------------
Blair Garner
/s/ ERIC WEISS
- ----------------------------
Eric Weiss
31
<PAGE> 41
SCHEDULE 1.2(b)
$3,100,000 (less the amount of Media America Advance as of Closing) to
AME shareholder collection account (account number to be provided prior to
Closing).
Distribution of Premier Class A Common Stock
--------------------------------------------
<TABLE>
<CAPTION>
Name Number of Premier Shares
---- ------------------------
<S> <C>
Eric Weiss 128,000
William Lopatin 136,000
Leonard Makowka 136,000
Distribution of Non Compete Funds
---------------------------------
Name Face Amount
---- -----------
</TABLE>
The sum of $800,000 has been allocated in the manner set forth in
Section 4.3 of this Agreement.
<PAGE> 42
revised 1/2/97
Schedule 3.2
Stockholder Name Number of Shares
- ---------------- ----------------
Blair Garner 1,875
Eric Weiss 2,400
Leonard Makowka 2,550
Rod West 625
William Lopatin 2,550
-----
10,000 shares
<PAGE> 43
revised 1/2/97
Schedule 3.4 Absence of Conflicting Agreement or Required Consents
REQUIRED CONSENTS:
1. ABC Satellite Services expires 1/28/97
2. Commercial Management
EP Investments expires 8/31/97
3. Max-Behm and Associates
TriWest (Business Insurance)
4. Republic Group Leases
5. Brandon D'Amore *
6. Pelmorex
7. Whitney Challed (Allen) *
8. Neil Haislop
9. Frontier Communications
* Deemed Material; to be provided at closing
1
<PAGE> 44
revised 1/2/97
Schedule 3.5 Intellectual Property.
(a)
1. Owned Intellectual Property
a. "AFTER MIDNITE with Blair Garner" (see attached)
The Company uses the following service marks but has not filed any
service mark application with state or federal authorities.
Accordingly the Company may not have the right to use such service
marks.
b. "AFTER MIDNITE WEEKENDS"
c. "NITE SHIFT"
d. "WEEKEND SHOW"
2. Licensed to Use Intellectual Property
a. "INVASION" - CD music production library (Brandon
D'Amore's Production).
b. "TM CENTURY" - Mega Mix Plus CD-Rom (TM Century)
c. "NON-STOP MUSIC" - annual music production library
(Non-Stop Music)
d. "ANSWER MAN" - pursuant to Neil Haislop agreement
e. "COUNTRY'S MOST WANTED" - Trademark License Agreement to
use mark in radio from Fox, Inc. Agreement sent to AME for
signature on 12/19/96. Not yet executed. (See attached)
Mark is not used by AME now in any significant manner, but
rights arise out of earlier application for service mark
filed by the Company when contemplating using the mark as
name of program. Subsequently and currently, mark is used
on a program distributed by SW Networks entitled
"Country's Most Wanted".
(b) Proceedings
See attached settlement agreement and related proceeding, U.S. Patent and
Trademark office (Opposition Number 100,930).
<PAGE> 45
revised 1/8/97
Schedule 3.6 Personnel Information
(a)-(c) AME Radio Networks provides a "cafeteria" health plan for selected
employees and spouse. AME insures up to $250 per month/per employee. We do not
provide an ERISA plan for our employees. There is no formal vacation policy.
Informally vacation is granted as time permits. Granted vacation days have not
been recorded.
(d) Personal matters that have happened in the past are free in clear &
resolved. Regarding a collective bargaining agreement, see attached summary of
terms negotiated with AFTRA. As of this date, these terms have not been approved
by any bargining unit of AME.
<TABLE>
<CAPTION>
PART TIME EMPLOYEES YR-END
EMPLOYEE NAME POSITION START DATE SALARY INS. LAST RAISE BONUS (1)
<S> <C> <C> <C> <C> <C> <C>
ALAN MORALES INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- 50.00
CINDY SIMMONS NITE SHIFT PRODUCER (WKENDS) 5/18/96 HOURLY $12.00 NO ---------- 100.00
DANNY DWYER INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- n/a
FRANK MORAN INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- 50.00
GEORGE REYES INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- n/a
+ WKEND SHOW PRODUCER (WKENDS) 10/22/96 HOURLY $15.00 NO ---------- 100.00
JANICE WEINER BOARD-OP (WEEKEND) 8/27/96 HOURLY $8.00 NO ---------- 100.00
KEVIN BEEMAN INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- n/a
MARIA MARSALA INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- n/a
MARK SMITH BOARD-OP 5/1/95 HOURLY $8.00 NO ---------- 100.00
NICK MURPHEY BOARD-OP 8/96 HOURLY $8.00 NO ---------- 100.00
NINA NAGY INVASION ACCOUNT EXECUTIVE 12/5/96 HOURLY $7.50 + COMM.(2) NO ---------- n/a
+ PHONE-OP 11/1/96 HOURLY $5.00 NO ---------- 100.00
SAM BARRAZA PHONE & BOARD-OP 11/6/96 HOURLY $5.00 PHONES
HOURLY $8 BOARD-OP NO ---------- 50.00
WENDY ESENSTEN INVASION SALES DEPT. MANAGER 11/11/96 HOURLY $12.00 + COMM.(2) NO ---------- 100.00
</TABLE>
(1) EMPLOYEES RECEIVED THESE BONUS AMOUNTS IN 1996.
(2) 1% COMMISSION BASED ON RECEIVED MONEY
<PAGE> 46
<TABLE>
<CAPTION>
FULL TIME EMPLOYEES YR-END
EMPLOYEE NAME POSITION START DATE SALARY INS. LAST RAISE BONUS (1)
<S> <C> <C> <C> <C> <C> <C>
BECCA WALLS AFTER MIDNITE PRODUCER 10/11/93 35,000.00 YES JAN 96 500.00
KERRY MURPHEY PRODUCTION ENGINEER (MANAGER) 1/2/94 35,000.00 YES JAN 96 500.00
MANDY McCORMACK TALENT & MUSIC CO-ORDINATOR 4/1/95 25,100.00 YES JAN 96 500.00
PATRICK WILKINS AFTER MIDNITE PHONE & BOARD-OP 9/13/95 22,065.00 YES JAN 96 500.00
ROGER WESTERLING TRAFFIC CO-ORDINATOR &
STATION COMPLIANCE MANAGER 4/1/95 30,000.00 YES JAN 96 500.00
SANDY YOUNG AFFILIATE RELATIONS MANAGER 10/4/93 33,075.00 YES JAN 96 500.00
TED FERRARA PRODUCTION ENGINEER 1/22/96 25,000.00 YES ---------- 500.00
WENDY HAMILTON CONTROLLER 8/9/93 44,000 YES JAN 96 1,500.00
</TABLE>
Effective January 1, 1997 full time employees have been promised and will be
granted a 5% salary increase. (Same as last year.)
(1) EMPLOYEES RECEIVED THESE BONUS AMOUNTS IN 1996.
<PAGE> 47
INDEPENDENT CONTRACTORS (1099 INDIVIDUALS; WITH MONEY INCOMES)
<TABLE>
<CAPTION>
YR-END
NAME POSITION START DATE SALARY INS. LAST RAISE BONUS (1)
<S> <C> <C> <C> <C> <C> <C>
*BETH DELLISOLA AFFILIATE RELATIONS PERSON 3/1/96 $25,000.00 NO ----------- 500.00
*CINDY GROGAN V/P PROMOTIONS & AFFILIATE RELATIONS 8/3/96 $57,881.25 YES JAN 1996 500.00
CRAIG SCOTT AFTER MIDNITE MUSIC CONSULTANT 8/3/96 $48,000.00 NO ----------- n/a
</TABLE>
The following have been terminated.
Effective as follows: BETH DELLISOLA: DECEMBER 31, 1996
CINDY GROGAN: FEBRUARY 28, 1997
(1) INDEPENDENT CONTRACTORS RECEIVED THESE BONUS AMOUNTS IN 1996.
<PAGE> 48
<TABLE>
<CAPTION>
CONTRACTUAL EMPLOYEES (PAYROLL TAXES DEDUCTED) YR-END
EMPLOYEE NAME POSITION START DATE SALARY INS. LAST RAISE BONUS (1)
<S> <C> <C> <C> <C> <C> <C>
*BLAIR GARNER AFTER MIDNITE HOST 11/28/93 $100,000.00 YES OCT 96 $18,163.77
(dated:9/96)
**ERIC WEISS CHIEF EXECUTIVE OFFICER 1/1/97 $200,000.00 YES ---------- n/a
JASON PULLMAN NITE SHIFT HOST (WEEKENDS) 4/1/96 $56,000.00 YES ---------- n/a
LISA SMITH V/P SALES AND MARKETING 10/1/95 $52,000.00 + COMM. NO ---------- n/a
***ROD WEST PRESIDENT 8/2/93 $60,000.00 YES DEC 96 n/a
WHITNEY CHALLED AFTER MIDNITE WEEKENDS HOST 2/24/95 FOR BOTH SHOWS: NO FOR BOTH:
+ WEEKEND SHOW HOST 11/1/96 $75,254.88 NO NOV 96 500.00
</TABLE>
*Blair Garner - Additional compensation subject to employment agreement, as
amended.
**Eric Weiss - To terminate effective upon consummation of transaction.
***Rod West - Please note that based on Employment Agreement with Rod West, back
pay due as of 12/1/96 is $71,000.00. this figure is based on the 8/1/93
Employment Agreement.
(1) EMPLOYEES RECEIVED THESE BONUS AMOUNTS 1996.
<PAGE> 49
revised 1/7/97
Schedule 3.7 Litigation
- ------------ ----------
Unasserted arbitration by Media America pertaining to Sales
Representation Agreement dated April 1, 1995, as amended and
restated and their claim of any oral agreement to continue through
December 31, 1997.
<PAGE> 50
revised 1/7/97
Schedule 3.10 Operation of the Company
- ------------- ------------------------
Company entered into employment agreements with Blair Garner, Eric
Weiss and Rod West, effective December 1, 1996.
An Amended and Revised Shareholders Agreement was signed in December
1996. (To be termininated at closing.)
Entered an agreement dated ________ with Brandon D'Amore Productions
regarding explitation of production music library - "INVASION".
Agreement dated _________ with Neil Haislop to write and produce 6
Holiday specials.
<PAGE> 51
revised 1/7/97
Schedule 3.11 Absence of Undisclosed Liabilities
- ------------- ----------------------------------
(a) Financials attached.
(b) Absence of Undisclosed Liabilities
The following is a list of accounts payable items greater than 150 days that are
outstanding:
ALAN BRUNSWICK $1,700.00
ELLIOT DISNER $5,600.00
JEANNE WOLF $7,000.00
JRS & ASSOCIATES* $5,900.00 (see below)
KUZZ $1,900.00
LISA SMITH $3,300.00
ROD WEST $71,000.00 (back pay)
*Jeff Svenningsen - Independent Contractor / Consultant
Engineer for AME made the attached proposition. Company
turned down the proposal as it believed it is without
merit. Company subsequently decided to terminate
independent contractor relationship with JRS entirely.
Company estimates that it owes JRS no more than $5,900.00.
(Reference in 8.2c)
Shareholder Guarantees:
1. Cash Flow Management
2. Commercial Management
EP Investments - Leases and Amendments
3. Republic Group Leases
4. Media America Promissory Note
5. Eric Weiss Employment Agreement - 1st year payments
guaranteed. (To be terminated at closing.)
<PAGE> 52
revised 1/7/97
Schedule 3.12 Absence of Certain Changes or Events
- ------------- ------------------------------------
(a) n/a
(b) n/a
(c) n/a
(d) Becca Walls Increased compensation from $30,000 to $35,000
(dated: 10/96)
Blair Garner Increased compensation from $100,000 to $175,000
plus benefits (dated 8/96). Will amend contract
to $100,000 per annum effective upon closing.
Eric Weiss New agreement signed $200,000 plus benefits
(dated: 12/96).
Rod West Increased compensation from $100,000 to $110,000
plus benefits (dated 12/96). Will amend
contract to $60,000 per annum effective upon
closing.
(e) The following are contracts that have ended in the last 6 months:
*LDDS - Our contract expired with this long distance carrier. No new
agreements were signed. An agreement has been signed with our new
carrier, FRONTIER, however, initiation of service is pending. *BRUCE
VIDAL - was host for "The Weekend Show with Bruce Vidal". We
terminated his services. His final airshift date was 10/27/96. He has
since been replaced with WHITNEY ALLEN.
(f) n/a
(g) n/a
(h) Jeff Svenningsen - Independent Contractor / Consultant Engineer for
AME made the attached proposition. Company turned down the proposal
as it believed it to be without merit. Company subsequently decided
to terminate independent contractor relationship with Svenningsen.
(i) none
(j) none
(k) n/a
(l) n/a
(m) n/a
(n) Dividend distribution for 1995 income (K1):
10/96 checks cut to: Blair Garner $6,917.00
Dr. Leonard Makowka $13,833.00
Dr. William Lopatin $13,834.00
Rod West $2,306.00
(o) n/a
1
<PAGE> 53
Schedule 3.12 Absence of Certain Changes or Events
- ------------- ------------------------------------
(p) Pursuant to Employee Agreements for both Blair Garner -
released debt of $32,837.01 and for Rod West - released debt of
$20,075.94.
(q) See Section 3.11 - Absence of Undisclosed Liabilities, for a list of
accounts payable items greater than 150 days that are outstanding.
(r) For the months of October, November & December 1996 (4th Qtr), Media
America's sell-out rate was below average, which had a negative
impact on 4th quarter revenues. Media America attributed this to
general industry declining trend for the 4th quarter.
1st quarter average sell-out rate: 106.76%
2nd quarter average sell-out rate: 97.66%
3rd quarter average sell-out rate: 102.94%
4th quarter average sell-out rate: 60.99%
TOTAL YEAR AVERAGE: 91.12%
(s) Upcoming items:
*Salary advances: Becca Walls - will be receiving a $5,000 salary
advance on 1/1/97; which will be paid back to
the AME in monthly installments of $416.66.
Ted Ferrara - will be a receiving a $1,000
salary advance in the early part of January.
*5% salary increase: Promised all full time employees and Cindy
Grogan (Independent Contractor) customary 5%
raise, beginning January 1, 1997.
2
<PAGE> 54
revised 1/3/97
Schedule 3.13 Equipment Leases and Contracts
- ------------- ------------------------------
<TABLE>
<S> <C> <C> <C>
(a) - (b) CONTRACTUAL (MONTHLY) OBLIGATIONS:
*A-WARE SOFTWARE $110.00 MUSIC MASTER SUPPORT THRU 4/98
*ABC $23,602.26 SATELLITE SERVICE THRU 12/96
*CNA LIFE BLAIR $1929.00 ANNUAL LIFE INS. THRU 7/97
*CNA LIFE ROD $1285.00 ANNUAL LIFE INS. THRU 6/97
*COMMERCIAL MGT $8,444.79 BUILDING RENT THRU 8/97
*IMPERIAL (Triwest Ins.) $800.85 PROP INS. INSTALLMENT THRU 3/97
*JLA CREDIT $250.35 PHONE EQUIPT.LEASE THRU 7/98
*JOE CIPRIANO $1,100.00 VOICE TALENT THRU 5/97
*KRIS ERIK $750.00 VOICE TALENT THRU 4/97
*LDDS CURRENT LONG DISTANCE CARRIER
*LOPATIN & MAKOWKA LOAN (1) $13,525.46 PAYBACK THRU 10/97
*LOPATIN & MAKOWKA LOAN (2) $6,891.94 PAYBACK THRU 6/97
*REPUBLIC (LEASE)
ADVANTA $253.49 EQUIPT.LEASE THRU 1/99
AT&T CAP. $11,163.92 EQUIPT.LEASE THRU 7/00
COMMERCE $892.97 EQUIPT.LEASE THUR 8/98
DATRONIC FUND $811.58 EQUIPT.LEASE THRU 9/98 & 10/98
****TM CENTURY STARTING SOON, "UPGRADE" LEASE
*******ALSO STARTING WITH FRONTIER COMMUNICATIONS FOR LONG DIST.
OTHER LEGAL MATERIAL AGREEMENTS:
*BX INTERNATIONAL, INC. BARTER MEMBERSHIP AGREEMENT (COPY ATTACHED) OPEN
*CARD SERVICE INT'L (MERCHANT) C. CARD ACCEPTANCE AGMT (COPY ATTACHED) OPEN
*BLAIR GARNER EMPLOYMENT AGREEMENT THRU 8/1/01
*BRANDON D'AMORE, as amended "INVASION" EXCLUSIVE MARKET AGREEMENT THRU 10/1/99
*CASH FLOW MANAGEMENT GUARANTY AGREEMENT (FACTORING A/R) OPEN
*CRAIG SCOTT MUSIC CONSULTING AGREEMENT THRU 12/31/97
*ERIC WEISS EMPLOYMENT AGREEMENT THRU 12/31/99
(TO BE TERMINATED AT CLOSING)
*JASON PULLMAN (DEAN) EMPLOYMENT AGREEMENT (TALENT) THRU 4/1/99
*LISA SMITH EMPLOYMENT AGREEMENT (SALES) THRU 8/31/97
*MEDIA AMERICA, as amended SALES AGMT & PROMISSORY NOTE AGMT THRU 12/96 & 4/97
*NEIL HAISLOP "ANSWER MAN" FEATURE AGREEMENT AND SPECIALS THRU 18mths
1st broadcast
*PELMOREX EXCLUSIVE LICENSE AGREEMENT THRU 12/31/98
*PREMIERE RADIO SALES REP. AGMT & OPTION AGREEMENT THRU 12/31/97
*ROD WEST EMPLOYMENT AGREEMENT THRU 11/30/99
*STOCKHOLDERS "AMENDED & RESTATED STOCKHOLDERS
AGREEMENT AGREEMENT" (COPY ATTACHED) - "INVESTOR LOAN"
BALANCE AS OF DECEMBER 31, 1996:
$1,325,884.05 (TO BE PAID OFF AT CLOSING)
*WALTER KARL AME'S DATA BASE LIST MANAGEMENT AGMT THRU 9/12/99
*WHITNEY ALLEN EMPLOYMENT AGREEMENT (TALENT) THRU 11/1/99
*UNITED HEALTHCARE SUBLEASE TENANT MONTH-TO-MONTH BASIS
</TABLE>
1
<PAGE> 55
Schedule 3.13 Equipment Leases and Contracts
- ------------- ------------------------------
(c) *Pelmorex has not fulfilled their part of the our agreement. AME has
not received any form of compensation for our services.
*Upcoming items - as stated on 3.12 section (s):
*Salary advances:
Becca Walls - will be receiving a $5,000 salary
advance on 1/1/97; which will be paid back to
the AME in monthly installments of $416.66.
Ted Ferrara - will be a receiving a $1,000
salary advance in the early part of January.
*5% salary increases:
Promised all full time employees and Cindy
Grogan (Independent Contractor) customary 5%
raise, beginning January 1, 1997.
2
<PAGE> 56
revised 1/2/97
Schedule 3.14 Real Property Leases
- ------------- --------------------
Lease agreement between AME Radio Networks and E.P. Investments (Commercial
Management). Location of site: 3575 Cahuenga Blvd. West, Suite 507, 518, 519,
520, 521, 522, 526, 537, Studio "B" and P1 #4 Storage Space. Company could incur
expenditures with respect to customary repair and maintenance provisions under
the lease.
Please note that the Company has an agreement with United Healthcare Corporation
- - Sublease tenant (Suite #518). Previously this contract extended a full year.
As of December 1, 1996 this sublease is continuing on a month-to-month basis.
<PAGE> 57
revised 1/2/97
Schedule 3.17 Title to Assets
- ------------- ---------------
Due to the following agreements, the companies listed below have filed "UCC"
Financing Statements under the Uniform Commercial Code against After MidNite
Entertainment, Inc. to perfect security interest in collateral:
*Cash Flow Mgt (1) Guaranty Agreement (factoring A/R)
*Media America Promissory Note
*Republic Group Advanta, AT&T Capital, Commerce Security and
Datronic Equipment Lease Agreements
The following agreements contain a revenue or profit sharing arrangements:
*Brandon D'Amore ("Invasion")
*Neil Haislop ("Answer Man")
*Pelmorex ("After MidNite - Canada")
(1) UCC Financing Statements filed by Cash Flow Management will be terminated
prior to closing. All others will remain in effect.
<PAGE> 58
revised 1/2/97
Schedule 3.15 Machinery and Equipment
- ------------- -----------------------
UDS SYSTEM (cd juke box system) approx. upgrade amount required $5,500.00
<PAGE> 59
revised 1/2/97
Schedule 3.16 Licenses
- ------------- --------
<TABLE>
<S> <C> <C>
*City Clerk, City of LA Company Business license due annually February
*Internic Registration Web Site domain registration one time
*Los Angeles Clerk Fictitious Business Name registration expires 7/2001
*Non-Stop Music $950.00 annual music library license expires 3/97
*State of California Seller's Permit & Registration (Merchant) open
*TM Century, Inc. $1,000.00 Mega Mix Plus CD-Rom one time
</TABLE>
Please note that duplicate copies of certain common available computer software
programs are being used by the Company without a license or registration.
<PAGE> 60
revised 1/2/97
Schedule 3.17 Title to Assets
- ------------- ---------------
Due to the following agreements, the companies listed below have filed "UCC"
Financing Statements under the Uniform Commercial Code against After MidNite
Entertainment, Inc. to perfect security interest in collateral:
*Cash Flow Mgt (1) Guaranty Agreement (factoring A/R)
*Media America Promissory Note
*Republic Group Advanta, AT&T Capital, Commerce Security and
Datronic Equipment Lease Agreements
The following agreements contain a revenue or profit sharing arrangements:
*Brandon D'Amore ("Invasion")
*Neil Haislop ("Answer Man")
*Pelmorex ("After MidNite - Canada")
(1) UCC Financing Statements filed by Cash Flow Management will be terminated
prior to closing. All others will remain in effect.
<PAGE> 61
revised 1/2/97
Schedule 3.19 Insurance
- ------------- ---------
Health & Dental Insurance
Company provided insurance up to $250 per month/per employee. (See
attached copy of invoice for employee breakdown). Please note that
coverage is for selected individuals:
*Health Insurance Plan of California automatic renewal 6/97
(see attached summary provided by HIPC)
*Dental Plan Administrators open
Life Insurance:
*CNA - Blair Garner $1929.00 annual life insurance exp. 7/97
*CNA - Rod West $1285.00 annual life insurance exp. 6/97
Property Insurance: exp. 6/97
*Tri-West Insurance Services & Max Behm and Associates;
financed through Imperial Financial (includes Property & Liability,
Earthquake and Boiler & Machinery)
Workers' Comp. Insurance:
*State Compensation Insurance Fund (paid quarterly) next payment 1/97
(The next payment will cover 10/1/96-1/1/97 payroll period)
<PAGE> 62
revised 1/8/97
Schedule 3.24 Media America Advances
- ------------- ----------------------
The aggregate remaining amount of advances previously paid by Media America,
Inc. to Company against which Media America, Inc. may be entitled to credit
against amounts otherwise payable to Company as of the date hereof is
$199,206.24
<PAGE> 63
EXHIBIT 2
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT is made and entered into as of January 7,
1997 by and between PREMIERE RADIO NETWORKS, INC. ("Company), a Delaware
corporation, and ERIC R. WEISS, an individual ("Consultant").
WITNESSETH
In consideration of their mutual covenants contained herein and
certain other good and valuable consideration, receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. DUTIES. During the Term (as defined below) of this Agreement,
Consultant agrees to render consulting services to Company on the following
terms and conditions:
(a) Consultant shall devote not less than 1,000 hours per
year to the following operations and business of Company, as reasonably
requested from time-to-time by Company: (i) Consultant shall oversee the
integration of After Midnight Entertainment, Inc. ("AME") into Company, (ii)
search for and assist with new acquisitions, (iii) develop new radio
programming, (iv) assist with existing Company network radio businesses (such
existing Company network radio businesses being radio program production,
research for radio stations, services for radio stations, sale of network radio
inventory and clearance of radio affiliates; collectively, the "Exclusive
Businesses"), (v) upon reasonable notice:
(X) consult with the Chief Executive Officer ("CEO) and other
officers of Company and with members of the Executive Committee of the
Board of Directors of Company (the "Executive Committee"); provided,
however, notwithstanding the foregoing, (A) Consultant shall devote
time to such operations and business at a rate of 500 hours per year
from and after the withdrawal of his title "Vice Chairman" under
paragraph 3(b) below, (B) Consultant shall devote time to such
operations and business at a rate of 250 hours per year from and after
his resignation or removal from the Board for any reason other than as
a consequence of sale of the Company (a "Sale"), and (C) Consultant
shall devote time to such operations and business at a rate of 250
hours per year from and after his resignation or removal from the
Board as a consequence of a Sale, unless, within 20 days following the
consummation of a Sale, Consultant shall have notified Company of
Consultant's election not to reduce his required rate of time per year
(such a notice provided within such 20 day period being referred to
herein as a "Non-reduction Notice"), in which event, Consultant shall
be given the title "Vice Chairman of Premiere Radio Networks",
notwithstanding that he does not occupy a position on the Board, but
subject to the provisions of paragraph 3 hereof; and
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(Y) attend meetings and/or travel at Company's request, at the
expense of Company, with travel arrangements and accommodations
equivalent to those afforded the senior management of Company.
Company may, in its sole and complete discretion: (i) elect to utilize
Consultant's services for some or all of the foregoing, or to not
utilize Consultant's services, and/or (ii) engage additional
consultants and hire employees to perform services which might be
otherwise performed by Consultant hereunder.
(b) Consultant shall report to the CEO, and any and all
responsibilities, rights or privileges exercised or held by Consultant shall be
subject to the approval by the CEO and/or the Executive Committee. Consultant
shall be subject to, and shall abide by, all of Company's regular policies and
practices.
(c) Except as described in this paragraph 1(c) Consultant
shall not be required, as a part of this Agreement, to perform legal services.
Any legal services that Company requests Consultant to perform shall be subject
to separate negotiations and fees, should Consultant agree to perform such
services. Notwithstanding the foregoing, Consultant may be required, as a part
of his duties under this Agreement, to review and comment on proposed
contracts, term sheets and deal memoranda and to draft term sheets and deal
memoranda, but Consultant shall not be required to draft contracts.
2. TERM. Consultant's services hereunder shall commence on
January __, 1997, and shall continue for a period of two (2) years, unless
terminated earlier as set forth herein (the "Term"). January 7, 1999 is
referred to herein as the "End Date").
3. TITLE.
(a) Company does not object to the Designation Letter between
Consultant and Stephen Lehman of even date herewith (the "Designation Letter").
(b) At any time during the Term during which Consultant shall
be a member of the Board, Consultant shall be given the title "Vice Chairman of
the Board of Directors". At any time following Consultant's removal or
resignation from the Board as a consequence of a Sale with respect to which
Consultant shall have provided a Non-reduction Notice to Company, Consultant
shall be given the title "Vice Chairman of Premiere Radio Networks" (the title
"Vice Chairman of Premiere Radio Networks" and "Vice Chairman of the Board of
Directors" being referred to herein collectively as the title "Vice Chairman").
Notwithstanding the foregoing, (i) during the initial six month period
following the Closing Date (as defined in that certain Agreement and Plan of
Merger between Company and AME), Company may withdraw the title of "Vice
Chairman" if in the business judgement of the Executive Committee it is
necessary or appropriate to confer such title in connection with the
consummation of an acquisition and in the business judgement of the Executive
Committee it would interfere in Company's ability to consummate such
acquisition on the best economic terms if Consultant should continue also to
have such title; (ii) at any time
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following six months from the Closing Date, upon the determination of either
member of the Executive Committee, Company may, in its sole and complete
discretion, elect to withdraw the title of "Vice Chairman", (iii) such title
shall confer on Consultant no authorities, responsibilities, rights or
privileges which he would not possess without such title, (iv) such title shall
not be exclusive to Consultant, and Company may simultaneously confer such
title on one or more other persons at any time, in its sole and complete
discretion, (v) if at any time during the Term Consultant shall not hold the
title "Vice Chairman", he shall hold such title as is mutually agreeable to
Consultant and both members of the Executive Committee, (vi) Consultant shall
at all times during the Term be entitled to use such title as he may then hold
on his Company business cards and letterhead, and (vii) except as provided in
the foregoing clause (vi) or as required by law, Company may in its sole and
complete discretion, but shall not be obligated to, list or identify Consultant
or any title he shall hold from time to time in any Company advertisement,
publicity, filings with the Securities and Exchange Commission or other
governmental entity, press release or other Company materials.
4. COMPENSATION. In consideration for the services to be
rendered by Consultant during the Term, Company shall pay Consultant Eighty
Nine Thousand Dollars ($89,000.00), payable over the Term (the "Retainer") in
equal monthly installments commencing one month after the Closing Date. Except
as provided in this Agreement and the Transaction Agreement, Consultant shall
not be entitled to receive any fees, bonuses, benefits or other compensation
from Company (including fees payable with respect Board membership).
5. ADDITIONAL COMPENSATION.
(a) Company shall pay to Consultant a "Program Bonus" equal
to 20% of the annual pre-tax cash flow of any new programs and services created
and developed during the term of this Agreement ("New Programs") by Consultant;
provided that with respect to any New Programs created and developed by
Consultant jointly with a third party selected by Consultant during the Term,
Consultant shall agree in writing with such third party as to what portion (if
any) of such Program Bonus such third party is to share, a copy of which
agreement Consultant shall promptly provide to Company. Notwithstanding the
foregoing, (i) Consultant and such third party (if any) shall not be entitled
to receive a Program Bonus from any New Program after the fifth anniversary of
the date such New Program was first aired or the service first provided if
Consultant is not then employed by Company, and (ii) all amounts to be shared
with a third party shall be apportioned between Consultant and such third party
as they shall agree.
As used herein, pre-tax cash flow shall mean the aggregate
non-refundable gross revenues actually collected during such period from all
New Programs less agency commissions, refunds, rebates discounts and
adjustments (the "Adjusted Gross Revenues"), less (i) a sales representation
and affiliate clearance fee equal to 20% of Adjusted Gross Revenues, (ii)
Actual New Program Costs (as defined herein) and (iii) with respect to any
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New Program, any loss carryforwards from previous periods with respect to such
New Program. As used herein, Actual New Program Costs shall include all direct
out-of-pocket costs actually paid or payable to develop, produce or distribute
the New Programs, including, but not limited to: station compensation;
internet distribution and execution costs; broadcast liability insurance;
advertising; publicity; promotion; travel; messenger; courier; telephone
specifically used in connection with the broadcast of the New Programs (i.e.,
listener call-in lines or program faxes); cost of satellite time; third-party
or talent profit participations and/or royalties, however denominated; salaries
and benefits payable to New Program talent and personnel; compact disc
mastering, pressing and distribution; affidavit printing; trafficking;
third-party legal and accounting; and collection costs (but not Company's
internal, normal overhead, sales and affiliate marketing costs). Program
Bonuses payable under this paragraph 5(a) shall be payable annually promptly
following the completion of Company's annual audit. All allocable costs shall
be allocated by Company on a reasonable good faith basis.
No payment shall be made to Consultant for any New Programs
heretofore or in the future developed for AME. Except as set forth above, no
payments shall be made to Consultant with respect to other New Programs.
(b) Company shall pay to Consultant an "Advertising/Promotion
Bonus" equal to: (i) Five Percent (5%) of "Adjusted Gross Revenues" for any
new advertising revenues Consultant obtains for Company; plus (ii) Five Percent
(5%) of "Adjusted Gross Revenues" for any new promotional revenues Consultant
obtains for Company. The foregoing amounts shall be payable solely with
respect to Adjusted Gross Revenues from or on account of new clients which (i)
did not advertise or incur promotional expenditures in network radio on or
before the date hereof, and (ii) Consultant contacted or approached only after
obtaining the prior approval of the CEO. As used herein, "Adjusted Gross
Revenues" shall mean non-refundable amounts actually received by Company, net
of actual advertising agency commissions and, with respect only to promotional
revenues, also all direct and allocable costs incurred by Company to generate
such revenue and service the account.
(c) Company shall pay Consultant an "Transaction Fee"
equal to the following amounts, for any acquisition Consultant obtains for
Company, determined by adding the following amounts:
(i) For the first One to Ten Million Dollars of
Purchase Price, the fee shall be Two and One Half Percent (2-1/2%) of such
portion of the Purchase Price;
(ii) For the next Ten Million to Twenty Million
Dollars of Purchase Price, the fee shall be Two Percent (2%) of such portion of
the Purchase Price;
(iii) For the next Twenty Million to Thirty Million
Dollars of Purchase Price, the fee shall be One and One Half Percent (1-1/2%)
of such portion of the Purchase Price;
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(iv) For the next Thirty Million to Forty Million
Dollars of Purchase Price, the fee shall be One Percent (1 %) of such portion
of the Purchase Price;
(v) For any portion of the Purchase Price in excess
of Forty Million Dollars, the fee shall be One Half of One Percent (1/2%) of
such portion of the Purchase Price.
For purposes of this paragraph 5(c), "Purchase Price"
for any such acquisition shall mean the aggregate of (i) the amount of any cash
paid plus (ii) the fair market value of securities paid, plus (iii) all amounts
payable under non-compete agreements entered into in connection therewith, plus
(iv) all amounts payable under consulting agreements entered into in connection
therewith other than such amounts payable for work justified by billing
statements and other justification therefor on an "actual work performed" basis
plus (v) the principal amount of any funded debt assumed in connection
therewith (including funded debt to which such acquisition is taken subject),
subject to adjustment to fair market value in the good faith judgment of the
Company, minus (vi) the value of any cash or cash equivalents acquired in such
acquisition. The fair market value of securities shall be determined in good
faith by Company taking into account any restrictions on the alienability
thereof, any credit risk associated therewith, and other characteristics
thereof which are normally utilized by investment banks in valuing securities
and which Company in good faith deems material for such purpose. The "Purchase
Price" shall in no event include any fees or costs incurred by Company in
connection with an acquisition, including without limitation investment banking
fees, legal costs, transactional expenses, consulting payments (except to the
extent provided under clause (iv) above), amounts to become due under
employment agreements, or other similar amounts, nor shall the Purchase Price
include any liabilities assumed by Company in connection with such transaction,
other than debt assumed to the extent provided under clause (v) above.
Notwithstanding anything to the contrary in this paragraph 5(c), no fee shall
be paid under this paragraph 5(c) with respect to any acquisition (i) from a
person or entity approached or contacted by Consultant without the prior
written approval of the Executive Committee, or (ii) which closes more than 120
days after the end of the Term. Consultant shall endeavor in every case to
secure the lowest possible Purchase Price and overall acquisition cost for
Company for each acquisition, notwithstanding the fact that Consultant's
compensation does or may increase if the Purchase Price increases. For
purposes of this paragraph 5(c), "funded debt" shall mean debt which arises
under a bond indenture, bank credit facility, loan agreement or any facility
similar to the foregoing, but in no event shall include obligations arising
under factoring facilities, lease obligations required to be capitalized under
Generally Accepted Accounting Principles, or obligations arising under
facilities similar to the foregoing.
(d) Company shall render monthly statements to
Consultant, within 60 days after the end of each month, for any month in which
bonuses or other compensation would be due to Consultant pursuant to paragraphs
5(a), (b) or (c). Each such statement shall indicate in reasonable detail the
basis for the computation. In connection with each such statement, Company
shall be entitled to deduct and withhold reasonable reserves with respect
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to anticipated costs relating to promotional revenues or services which are
deductible under paragraph 5(b), provided that such reserves will be liquidated
within one year after the creation thereof. Concurrent with each such
statement, Company shall remit to Consultant any amounts due with respect to
the computations made therein. Consultant shall have the right to cause an
annual audit to be conducted with respect to such statements and any bonuses or
other compensation due to Consultant pursuant to paragraphs 5(a), (b) or (c),
and, upon 15 days prior notice thereof to Company by Consultant, Company shall
at reasonable times, during normal business hours and in a manner which shall
not disturb or disrupt the operations of Company or its officers, employees or
accountants, permit Consultant or any accountants retained by him, to examine
and make copies of and abstracts from the Company's records and books of
account which pertain to the permitted matters of such audit.
(e) Notwithstanding anything to the contrary in this
Agreement, (i) Company shall not be obligated to proceed with any proposed
acquisition, transaction or project identified by Consultant, and (ii) neither
Company nor Consultant makes any representation or warranty as to the success
of any such acquisition, transaction or project, or the amounts, if any, which
might become payable to Consultant or Company, as appropriate, as a result of
any thereof.
6. OPTIONS.
(a) Consultant shall enter into Company's standard stock
option agreement, except that if and to the extent any of the terms thereof
shall conflict with the terms hereof, the terms hereof shall control.
(b) In connection with Consultant's agreeing to serve on the
Board of Directors of Company, Company shall issue to Consultant options to
purchase 30,000 shares of the Class A Common Stock of Company ("Class A
Stock"), at a price equal to $11.00 (the "Option Price"). Options to purchase
5,000 shares shall vest, subject to the provisions of paragraphs 9 and 11
hereof, on the last day of each of the six calendar quarters following the
Closing Date. No options issued pursuant this paragraph 6(b) shall vest at any
time the Consultant shall not be a member of the Board for any reason
whatsoever, except that if Consultant shall resign from the Board pursuant to a
request by Lehman to do so which is not based upon Consultant's breach of this
Agreement, disability or death, as provided in the Designation Letter, the
options shall instead vest on the following schedule: 50% if such resignation
shall occur within six months from Closing; 75% if such resignation shall occur
subsequent to six months from Closing but prior to one year from Closing; and
100% if such resignation shall occur following one year from Closing.
Notwithstanding the foregoing, if Lehman shall request Consultant's resignation
from the Board in connection with a sale of Company, then paragraph 9 shall
determine the vesting schedule of such options.
(c) Upon the Closing, Company shall grant Consultant an
additional option to purchase Forty Thousand (40,000) shares of Company's Class
A Common Stock at a price
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equal to the Option Price. Options to purchase 5,000 shares shall vest,
subject to the provisions of paragraphs 9 and 11 hereof, on the last day of
each of the eight calendar quarters following the Closing Date.
(d) Company shall use its commercially reasonable efforts to
prepare and file a Form S-8 respecting the options contemplated by this
paragraph 6 and the Class A Common Stock, and to maintain such filing current
during the term of this Agreement.
7. BENEFITS.
(a) Company shall provide Consultant with a furnished office
at Company's headquarters at 15260 Ventura Boulevard, Suite 500, Sherman Oaks,
California, or, if Company's headquarters shall be relocated to a location
within the greater Los Angeles area, at such location. In addition, Company
shall provide Consultant with a secretary who shall be available on a
non-exclusive basis to perform secretarial services for Consultant. Consultant
shall pay Company a fee of $2,500 per month for the services provided by
Company under this paragraph 7(a) for each month of the Term for which the
Retainer is paid, whether or not used by Consultant.
(b) Company shall reimburse Consultant in accordance with its
usual policies for all (i) reasonable and necessary meal expenses incurred in
connection with Company business, and (ii) other reasonable and necessary
pre-approved expenses, incurred by Consultant in connection with the business
of Company, including any reasonable entertainment expenses related to the
business of Company, all such expenditures described under (i) and (ii) to be
paid promptly after presentation by Consultant, from time to time, of itemized
accounts thereof.
(c) Consultant shall reimburse Company for costs incurred by
Company in connection with any business of Consultant other than Company's
business.
8. NON-COMPETITION. Company and Consultant hereby acknowledge and
agree that except as set forth in paragraph 11(f), from the Closing Date until
the End Date, Consultant shall not, as owner, employee, associate, partner,
officer, director, shareholder, consultant, manager, or in any related capacity
(whether for consideration or not) engage in, carry on, or participate in
Exclusive Businesses as described in paragraph 1 hereto (including the business
of consulting in the matters of Exclusive Businesses). Nothing in this
Agreement shall prevent Consultant from engaging in any other business
activities, including other activities in radio, which are not included within
the meaning of Exclusive Businesses or from owning for investment purposes up
to 2% of the stock of any publicly traded company. In addition, nothing in
this Agreement shall prevent Consultant from performing legal services for any
talent in the area of Exclusive Businesses provided such services are rendered
in connection with the preparation, negotiation and documentation of talent
agreements.
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9. SALE OF COMPANY. In the event of any sale (including,
without limitation, pursuant to a tender offer) of Company during the Term
Consultant's options pursuant to paragraph 6 shall immediately vest.
10. INDEMNITY.
(a) Each party hereto hereby represents and warrants to the
other that such party is duly authorized to enter into this Agreement.
(b) Company hereby agrees to indemnify, defend and hold
harmless Consultant and each of Consultant's heirs, executors, administrators,
attorneys, agents, employees, representatives, successors and assigns ("Company
Indemnified Parties") from and against all loss, damage, liability, cost,
expense or injury suffered or sustained by him by reason of any acts or
omissions from the date of execution of this Agreement to the date of
termination of this Agreement, whether or not the event of loss occurs during
or after such term arising out of his activities as a shareholder, officer,
Consultant and/or director of Company, including but not limited to securities,
law claims, (collectively designated as "Consultant Events of Loss"), including
but not limited to any judgment, award, settlement, attorneys' fees and/or
costs and expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that,
notwithstanding the foregoing, the Consultant Indemnified Parties shall not be
indemnified against any Consultant Events of Loss attributable to or in
connection with any action or failure to act by the Consultant or such Company
Indemnified Party's constituting (1) a criminal act under applicable federal or
state laws, (2) intentional fraud under any applicable statute or common law,
and (3) Consultant's or such Company Indemnified Party's own gross negligence
or wilful misconduct.
(c) Consultant hereby agrees to indemnify, defend and hold
harmless Company and agents, employees, representatives, successors and assigns
("Consultant Indemnified Party", and together with Company Indemnified Parties,
the "Indemnified Parties") from and against all loss, damage, liability, cost,
expense or injury suffered or sustained by him by reason of Consultant's (1)
criminal act under applicable federal or state laws, (2) intentional fraud
under any applicable statute or common law, and (3) Consultant's gross
negligence or wilful misconduct (collectively designated as "Company Events of
Loss", and, together with the Consultant Events of Loss, the "Events of Loss),
including but not limited to any judgment, award, settlement, attorneys' fees
and/or costs and expenses incurred in connection with the defense of any actual
or threatened action, proceeding or claim; provided, however, that,
notwithstanding the foregoing, the Consultant Indemnified Parties shall not be
indemnified against any Events of Loss attributable to or in connection with
any action or failure to act by Company's or such Consultant Indemnified Party
constituting (1) a criminal act under applicable federal or state laws, (2)
intentional fraud under any applicable statute or common law, or (3) Company's
or such Consultant Indemnified Party's own gross negligence or wilful
misconduct.
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(d) The Indemnified Party shall give written notice to
Company or Consultant, as appropriate (the "Indemnifying Party"), of the
nature, amount and cause of any claims for indemnification or the commencement
of such action or proceeding in reasonable detail promptly after receipt by the
such Indemnified Party of notice of any claim or the commencement of any action
or proceeding, if a claim with respect thereto is to be made against such
Indemnifying Party of the nature described in this paragraph 10. Indemnifying
Party shall, at its option, compromise or defend, at its own expense and by its
own counsel, any such matter involving the asserted liability. The Indemnified
Party agrees to cooperate fully with Indemnifying Party and its counsel in the
compromise of, or defense against, any such asserted liability. The
Indemnified Party shall have the right at its own expense to participate in the
defense of such asserted liability, although Indemnifying Party shall not be
liable to the Indemnified Party hereunder for any legal or other expenses
incurred by Indemnified Party subsequent to the receipt of notice from
Indemnifying Party of Indemnifying Party's election to assume the defense of
any Events of Loss if Indemnifying Party is diligently undertaking such
compromise or defense. Indemnifying Party may settle or compromise any claim
against an indemnified party only if such compromise or settlement results in
an unconditional release of the Indemnified Party.
11. TERMINATION.
(a) Consultant may terminate this engagement without cause at
any time upon at least thirty (30) days prior written notice to Company. Upon
such termination, except as described in paragraph 11(f), Consultant and
Company shall have no further obligations to each other under this engagement.
If Consultant so terminates this engagement, Company may specify an earlier
termination date. In addition, at any time following Consultant's removal or
resignation from the Board as a consequence of a Sale with respect to which
Consultant shall not have provided a Non-reduction Notice to Company, Company
may terminate this engagement pursuant to this paragraph 11(a), and such
termination shall have the same effect a termination by Consultant under this
paragraph 11(a).
(b) Company may terminate this engagement "without cause"
(that is, other than for reasons described in paragraphs 11(c), (d) and (e)) at
any time upon written notice to Consultant. Upon such a termination, (i)
Company shall pay Consultant the Retainer through the End Date at the time such
Retainer would otherwise be payable, (ii) Company will pay all bonuses payable
pursuant to paragraph 5 above, if any, as though the Term had expired on the
End Date, and (iii) subject to the provisions of paragraph 9 if (and only if)
Consultant confirms that Consultant will be bound by paragraph 8 hereof as
described below and Consultant is not in breach of his material obligations
hereunder, including, without limitation, paragraph 8 hereof, all of the
options described under paragraph 6 above shall vest at the times provided
herein as if Consultant had remained engaged hereunder and on the Board through
the End Date. Notwithstanding the foregoing, following a termination without
cause, except as described in paragraph 11(f), Company shall have no further
obligation to Consultant under this Agreement if Consultant shall (i) fail to
promptly, upon Company's request, execute and deliver a written agreement that
Consultant shall remain bound by
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paragraph 8 hereof through the End Date, or (iii) Consultant shall breach any
of his obligations under paragraph 11(f).
(c) Company may terminate this engagement upon written notice
to Consultant by reason of Consultant's Disability. For the purpose of this
Agreement, "Disability" shall be defined as inability by Consultant, due to
illness (other than use/abuse of illegal narcotics, alcohol or other
intoxicating substances which is covered below), accident, mental deficiency or
similar incapacity, to render his regular duties for Company required pursuant
to this Agreement for a period of 90 days in any twelve (12) month period. Any
termination pursuant to this paragraph 11(c) hereof shall not be deemed to be
for "Cause", but shall have the same financial consequences as a termination
under paragraph 11(d).
(d) This engagement shall be deemed to terminate upon the
death of Consultant. In the event of Consultant's death, Company shall pay to
the persons designated by Consultant or, in the event Consultant fails to
designate such persons, to Consultant's estate any accrued but unpaid Retainer
to the date of death and any amounts payable pursuant to paragraph 5 above, if
any. Company shall have no further obligation to Consultant and any options
not vested as of such date shall expire.
(e) Company may terminate this engagement for "cause" (as
hereinafter defined); provided that no termination for cause shall be made or
take effect unless such termination is approved by the Executive Committee.
Upon a termination for "cause," Company shall pay Consultant any accrued but
unpaid Retainer through the date of termination and accrued but unpaid bonuses
and other compensation under paragraph 5. Except as described in paragraph
11(f), Company shall have no further obligation to Consultant and any options
not vested as of such date shall expire. Company may set-off against such
payments any damages it may have and no such termination or set-off is an
election of remedies. For purposes hereof the term "cause" shall mean any of
the foregoing:
(1) The failure of Consultant to perform any of his
material obligations under this Agreement or Consultant's holding himself out
to the public as having authority inconsistent with this Agreement which
failure or fact shall remain uncured for twenty (20) business days following
notice to Consultant (provided that Consultant shall not be entitled to notice
or an opportunity to cure for any additional failures or facts relating to the
same facts and circumstances for which a notice was previously delivered and
occurring within six months of receipt of a notice);
(2) Consultant has committed intentional fraud, or
committed material acts of misappropriation, embezzlement, and insider trading;
(3) Consultant is convicted of, or pleads guilty or
nolo contendere to, a felony.
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(f) Notwithstanding anything to the contrary in paragraph 11
hereof, paragraphs 8, 10, 12, 13, 14, 15, 16, 17, 18, 19 and 22 shall survive
any termination or expiration of the Term hereof, provided that paragraph 8
shall expire: (i) upon the effectiveness of Consultant's termination under
paragraph 11(a); (ii) upon the effectiveness of a termination without cause
under paragraph 11(b), if Consultant does not within 10 days after Consultant's
receipt of a termination notice from Company confirm in writing that paragraph
8 shall continue to bind Consultant through the End Date, or (iii) in any
event, on the End Date.
12. COOPERATION FOLLOWING TERMINATION. Following termination of
this Agreement, regardless of the reason for such termination, Consultant shall
cooperate in all reasonable respects with Company in the prosecution of any
claims, controversies, suits, arbitrations or proceedings involving events
occurring prior to the termination of this Agreement, provided, Company shall
reimburse Consultant for all reasonable out of pocket expenses incurred in
connection therewith promptly after presentation of invoices therefor.
Consultant acknowledges that he may be required to give testimony at trial or
deposition or give declarations. If Consultant shall be required to spend a
material amount of time, Company shall compensate Consultant at an hourly rate
equal to $250. Notwithstanding the foregoing, Company shall not be obligated
for Consultant's expenses arising out of, or hourly compensation for time
required in respect of, Consultant's compliance with any subpoenas issued by or
on behalf of any party other than Company, Company shall use its best efforts
to provide Consultant with reasonable prior notice of any actions required of
him. Following termination of Consultant's engagement, regardless of the
reason for such termination, Consultant shall immediately resign from the
Board.
13. NOTICE. Any notice or other communication required or
permitted to be given to the parties hereto shall be deemed to have been given
on the date of service if served personally on the party to whom notice is to
be given, or seventy-two (72) hours after mailing if mailed to the party to
whom notice is to be given by depositing it in the United States mail, in a
sealed envelope by certified or registered mail, return receipt requested,
first class postage prepaid, addressed as follows:
If to Company:
Premiere Radio Networks, Inc.
15260 Ventura Boulevard, Suite 500
Sherman Oaks, CA 91403
Attention: Stephen C. Lehman
If to Consultant:
Mr. Eric R. Weiss
245 Tranquillo Road
Pacific Palisades, CA 90272
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With a copy to:
Carol Perrin, Esq.
6300 Wilshire Boulevard, Suite 1850
Los Angeles, CA 90048
14. SEVERABILITY. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstances, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision as is held
invalid or unenforceable to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
15. GOVERNING LAW; RESOLUTION OF DISPUTES.
(a) The validity, interpretation, performance and
enforcement of this Agreement shall be controlled by and construed in
accordance with the laws of the State of California without regard to conflicts
of laws principles. Notwithstanding the foregoing, 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.
(b) 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.
(c) 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.
(d) 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.
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(e) 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.
(f) 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. All fees and expenses of counsel to each party shall be
initially borne by such party, but the referee shall have the power to order
that reasonable fees and reasonable expenses of counsel be recovered by the
prevailing party.
16. ASSIGNMENTS. Neither party shall have any right to assign
this Agreement or to delegate any rights, duties or obligations hereunder.
Consultant hereby expressly agrees that this Agreement is personal to him and
that the rights and interests of Consultant hereunder may not be assigned, nor
may his obligations and duties hereunder be delegated, except upon Consultant's
death, any rights remaining shall pass to Consultant's estate, beneficiaries,
heirs, assigns, or transferee, as applicable.
17. INTELLECTUAL PROPERTY.
(a) Consultant shall disclose in writing to Company complete
information concerning all intellectual property pertaining, directly or
indirectly, to the Exclusive Business, including, but not limited to, such
original works of authorship, trademarks, service marks, and trade secrets,
(hereinafter sufficient to as "intellectual property") which are made,
developed, created, devised, conceived, perfected, reduced to practice or
discovered by Consultant, either solely or in collaboration with others, during
the period of his engagement by Company in connection with the Exclusive
Business, whether or not during regular working hours, relating either directly
or indirectly to the business, products, programs, practices or techniques of
Company or resulting from any work performed by Consultant for Company.
Company shall have complete control (artistic and otherwise) over any such
intellectual property.
(b) All copyrightable works with regard to paragraph 17(a)
above, will be deemed "specially commissioned works" as defined in Section 101
of the Federal Copyright Act and such copyrightable works shall exclusively
belong to Company. In the event that Section 101 of the Copyright Act is found
to be inapplicable, Consultant will assign all right, title and interest in and
to such copyrightable works to Company. In addition, Consultant will, upon
request and without further compensation therefore, but at no expense to
Consultant, assist Company in obtaining all registrations for such copyrights
pursuant to paragraph 17(c) below.
(c) Consultant will, at any time during his the term of this
Agreement, or thereafter, upon request and without further compensation
therefore, but at no expense to Consultant, do all lawful acts, including the
execution of papers and oaths and the giving of testimony, that in the opinion
of Company, its successors or assigns, may be necessary or desirable for
obtaining registrations for intellectual property, including, but not limited
to trademarks, service marks, and copyrights, in the United States and
throughout the world.
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(d) For avoidance of doubt, all network radio programs and
network radio services developed by Consultant during the term of this
Agreement directly or indirectly related to the Exclusive Business shall be the
property of Company and as between Consultant and Company, Company shall have
final control over the development and distribution and all artistic and
business aspects of the programs and services.
18. CONFIDENTIALITY. Without the express prior consent of
Company, and except to the extent disclosure is required by a court or other
governmental agency of competent jurisdiction, Consultant shall not disclose to
any person, other than members of the Board, Company's management or its
counsel, any confidential information, material, document or other such
confidential item concerning Company, its affairs or business unless said
information, material or document has been made public by Company by a filing
with the Securities and Exchange Commission which has become effective, or has
otherwise been disclosed publicly by Company or a person other than
Consultant/.
19. RELATIONSHIP. Nothing contained herein shall be construed as
creating an employer-employee relationship/joint venture or partnership between
the parties hereto. All sums payable by Company to Consultant hereunder shall
be paid in full without offset for employer taxes, unless Company is
specifically directed by any federal or state or governmental agency to deduct
from the sums payable to Consultant hereunder such amounts as may be required
by law for the purpose of paying worker's compensation insurance, payroll or
social security taxes of any types whatsoever, both state and federal, and in
addition thereto, such amounts as may be so specifically directed and required
to be withheld for United States Federal or California state income or
withholding taxes.
20. PUBLICATIONS. Provided Consultant is available Company hereby
agrees to consult with Consultant on the terms of any press releases of Company
regarding Consultant. Company, in compliance with the provisions of this
paragraph 20, agrees to issue a press release announcing Consultant's
appointment to the Board, the provision of which notice is subject to
Consultant's approval, which approval shall not be unreasonably delayed or
denied.
21. INSURANCE. Consultant agrees to submit himself, for physical
examination by any physician designated by the Board as required or advisable
in connection with the obtaining of any keyman insurance policy or similar
coverage which Company may reasonably wish to obtain. The cost and expenses
for such medical examinations and any such insurance shall be borne by Company.
Company shall be the beneficiary of any such insurance.
22. MODIFICATIONS; PRIOR AGREEMENTS. No modification, amendment,
deletion, addition or other change in this Agreement, or any provision hereof,
or waiver of any right or remedy herein provided, shall be effective for any
purpose unless specifically set forth in a writing signed by both parties
hereto. No waiver of any right or remedy in respect of any occurrence or event
on one occasion shall be deemed a waiver of such right or remedy in
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respect of such occurrence or event on any other occasion. The parties hereto
understand and agree that this Agreement and the Transaction Agreement of even
date herewith is intended to supersede and replace any and all agreements
previously entered into, by and between Company and Consultant, written or
oral, relating to Consultant's consulting with Company and sets forth the
parties' complete understanding regarding the within subjects. No
representation has been made except as expressly set forth herein. Paragraph
headings and captions appearing herein are for convenience of reference only,
and do not constitute part of this Agreement.
23. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, including by facsimile, each of which will be deemed an original
and all of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Consulting
Agreement on the date set forth below.
"CONSULTANT"
Date: January 7, 1997 ERIC R. WEISS
------------------------------ ---------------------------------
ERIC R. WEISS
"COMPANY"
PREMIERE RADIO NETWORKS, INC.
Date: January 7, 1997 /s/ STEPHEN LEHMAN
------------------------------ ---------------------------------
STEPHEN LEHMAN
By:_______________________________
President
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EXHIBIT 3
DESIGNATION LETTER
THIS DESIGNATION LETTER is made and entered into as of January 7,
1997, by and between STEPHEN LEHMAN ("Lehman"), an individual, and ERIC R.
WEISS, an individual ("Weiss").
WITNESSETH
PREMIERE RADIO NETWORKS, INC. ("Company), a Delaware corporation, and
Weiss are entering into the Consulting Agreement of even date herewith (as
amended, supplemented or otherwise modified from time to time, the "Consulting
Agreement"). Capitalized terms appearing herein and not otherwise defined
herein shall have the meanings specified in the Consulting Agreement. This
Designation Letter is the "Designation Letter" referred to and approved by the
Consulting Agreement. Pursuant to Section 2.1(c) and 2.3 of that certain
Stockholders Agreement, dated as of the 28th day of July, 1995, by and among
the Company and certain of its shareholders named therein (the "Stockholders
Agreement"), Lehman is authorized to designate for inclusion in a management
slate of directors individuals nominated for election to the Board of Directors
of the Company (the Board"), subject in each case to the votes, conditions,
procedures, approvals and limitations set forth in such Stockholders Agreement.
In consideration of their mutual covenants, and certain other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. ELECTION TO BOARD. Lehman shall (i) recommend to the Board
that Weiss be elected by the Board to succeed Harold Wrobel as a member thereof
for the remainder of Mr. Wrobel's term, such appointment to begin as soon as
practicable on or after the Closing Date, and (ii) as provided in the
Stockholders Agreement, designate Weiss for inclusion in a slate of
management's nominees for election to the Board for the next succeeding term of
such office, subject to the terms and conditions hereof. The parties expressly
acknowledge that Weiss may not be elected to the Board despite Lehman's taking
the actions contemplated by this paragraph 1, and that Lehman shall incur no
liability for any failure of Weiss to be elected to the Board. Lehman shall be
obligated to make the recommendation and designation contemplated hereunder
only so long as the Stockholders Agreement remains in effect, and only to the
extent allowed thereby.
2. TERMINATION. The parties hereto hereby agree that Weiss shall
(i) immediately resign from the Board upon Lehman's request, and (ii) vote in
accordance with Section 2.4 of the Stockholders Agreement to elect as members
of the Executive Committee of the Company's Board of Directors the individuals
specified therein, at each election therefor; provided, however, that nothing
in this paragraph 2 shall be construed to require Weiss to breach any fiduciary
duty to the Company or its shareholders. If the requirements of such fiduciary
duties shall conflict with the terms hereof, such requirements shall control.
Notwithstanding anything to the contrary appearing in paragraph 1, if Lehman
shall request
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Weiss to resign from the Board in accordance with this paragraph 2 before the
expiration of the remaining portion of Mr. Wrobel's term, Lehman's obligations
under paragraph 1(ii) shall immediately terminate.
3. NOTICE. Any notice or other communication required or
permitted to be given to the parties hereto shall be provided in the manner and
to such addresses as may be specified for the giving of notices in the
Consulting Agreement. Notices to Lehman shall be provided to the address
specified with respect to the Company in the Consulting Agreement.
4. SEVERABILITY. If any provision or any portion of any
provision of this Agreement or the application of any such provision or any
portion thereof to any person or circumstances, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision as is held
invalid or unenforceable to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby.
5. GOVERNING LAW; RESOLUTION OF DISPUTES.
(a) The validity, interpretation, performance and
enforcement of this Agreement shall be controlled by and construed in
accordance with the laws of the State of California without regard to conflicts
of laws principles. Notwithstanding the foregoing, 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.
(b) 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.
(c) 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.
(d) 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
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and necessary to assure that any controversy be resolved as efficiently and
expeditiously as possible.
(e) 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.
(f) 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. All fees and expenses of counsel to each party shall be
initially borne by such party, but the referee shall have the power to order
that reasonable fees and reasonable expenses of counsel be recovered by the
prevailing party.
6. ASSIGNMENTS. Neither party shall have any right to assign
this Agreement or to delegate any rights, duties or obligations hereunder.
Weiss hereby expressly agrees that this Agreement is personal to him and that
the rights and interests of Weiss hereunder may not be assigned, nor may his
obligations and duties hereunder be delegated.
7. MODIFICATIONS; PRIOR AGREEMENTS. No modification, amendment,
deletion, addition or other change in this Agreement, or any provision hereof,
or waiver of any right or remedy herein provided, shall be effective for any
purpose unless specifically set forth in a writing signed by both parties
hereto. No waiver of any right or remedy in respect of any occurrence or event
on one occasion shall be deemed a waiver of such right or remedy in respect of
such occurrence or event on any other occasion. The parties hereto understand
and agree that this Agreement is intended to supersede and replace any and all
agreements previously entered into, by and between Lehman and Weiss, written or
oral, relating to Weiss's election to the Board, and sets forth the parties'
complete understanding regarding such subject; provided that the parties hereto
acknowledge that this Agreement relates to the subject matters which are the
subject of the Consulting Agreement and the Transaction Agreement. No
representation has been made except as expressly set forth herein. Paragraph
headings and captions appearing herein are for convenience of reference only,
and do not constitute part of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Designation Letter
Agreement on the date set forth below.
Date: January 7, 1997 ERIC R. WEISS
------------------------------ ---------------------------------
ERIC R. WEISS
Date: January 7, 1997 STEPHEN LEHMAN
------------------------------ ---------------------------------
STEPHEN LEHMAN
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EXHIBIT 4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of January 7,
1997, between Premiere Radio Networks, Inc., a Delaware corporation (the
"Company"), and each of the parties named on the signature page attached hereto
(the "Shareholders).
1. Background.
Concurrently herewith, the Shareholders are acquiring 400,000
shares of the Company's Class A Common Stock pursuant to that certain Agreement
and Plan of Merger dated as of January, 1, 1997 (the "Merger Agreement") among
the Company, After Midnite Entertainment, Inc. ("AME") and the AME
shareholders (including the Shareholders). Article 9 of the Merger Agreement
provides that under circumstances described therein the Company may issue to
the Shareholders additional shares of the Company's Class A Common Stock.
Capitalized terms appearing herein and not otherwise defined herein have the
meanings specified in the Merger Agreement.
2. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
"CLASS A COMMON STOCK" - shall mean the Class A Common Stock
of the Company with par value $0.01 per share, and any capital stock into which
such Class A Common Stock may thereafter be changed and any class of capital
stock of the Company (regardless of how denominated) which is not preferred as
to dividends or assets over any other class and which is not subject to
redemption.
"EXCHANGE ACT" - shall mean the Securities Exchange Act of
1934, as amended.
"HOLDER" - shall mean any party hereto (other than the
Company), together with assignees thereof permitted by Section 9(b).
"PERSON" - shall mean any individual, partnership, joint
venture, corporation, trust, unincorporated organization or government or any
department or agency thereof.
"REGISTRABLE SHARES" - shall mean the Class A Common Stock
issued to the Shareholders pursuant to the Merger Agreement, including, without
limitation pursuant to Article 9 thereof; provided that such shares shall cease
to be Registrable Shares at such time as they may be sold pursuant to Rule 144,
without any volume limitation under the Securities Act.
"SECURITIES ACT" - shall mean the Securities Act of 1933, as
amended.
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"SEC" - shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act or the
Exchange Act.
3. Piggyback Registrations.
If at any time the Company proposes to register any of its
securities under the Securities Act for sale to the public prior to the fourth
anniversary of the date hereof, whether for its own account or for the account
of other security holders or both (except with respect to registration
statements on Forms S-4, S-8 or another form not available for registering the
Registrable Securities for sale to the public), each such time the Company will
give at least thirty (30) days' prior written notice to the Holders of its
intention so to do. Upon the written request of a Holder, received by the
Company within twenty (20) days after the giving of any such notice by the
Company, to register any of the Registrable Shares, the Company will cause such
Registrable Shares, as to which registration shall have been so requested to be
included in the securities to be covered by the registration statement proposed
to be filed by the Company, all to the extent required to permit the sale or
other disposition of such Registrable Shares, by the Holder thereof. In the
event that any registration pursuant to this Agreement shall be in whole or in
part an underwritten public offering of securities, then (i) if all other
holders of securities to be included in such offering, other than the Company,
agree at the request of the underwriter to refrain from selling securities of
the Company for a reasonable period of time following the effective date of the
applicable registration statement of the Company under the Securities Act, the
Holders shall agree to refrain therefrom during such reasonable time period,
but not exceeding 180 days, and (ii) the number of Registrable Securities to be
included in such an underwriting may be reduced by the managing underwriter if
and to the extent that managing underwriter shall be of the opinion that such
inclusion would adversely affect the marketing of the securities to be sold
therein; provided, however, that the Company shall notify the Holder in writing
of any such reduction and any such reduction shall be made on a pro rata basis
together with all other securities proposed to be included in such offering
other than securities to be sold by the Company or by any Person whose
securities are included in such registration statement by reason of "Demand
Registration Rights." Notwithstanding the foregoing provisions, the Company
may withdraw any registration statement referred to in this Agreement without
thereby incurring any liability to the Holder.
4. Demand Registrations.
(a) Request by Holders. At any time from and after the
first anniversary of the date hereof and prior to the fourth anniversary of the
date hereof upon the written request of any Holder or Holders holding in the
aggregate more than (i) fifty-one percent (51%) of the Registrable Shares then
outstanding, requesting that the Company effect the registration under the
Securities Act of all or part of such Holder's or Holders' Registrable Shares,
and specifying the intended method of disposition thereof, the reasonably
anticipated aggregate proceeds of which will exceed $[1,000,000], the Company
will promptly give written notice of such requested registration to all other
Holders of the Registrable Shares, and thereupon will as expeditiously as
possible use commercially reasonable efforts to effect the registration
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under the Securities Act of the Registrable Shares which the Company has been
so requested to register by such Holder or Holders.
(b) Limitation on Demand Rights.
(i) Maximum Number of Demands. The Company shall
only be required to effect one (1) registration pursuant to
this Section 4 for the Registrable Shares.
(ii) Timing of Demands. The Company shall not be
required to effect any registration pursuant to this Section 4
for the Registrable Shares within 180 days of the completion
of any registered offering of Company securities.
(c) Effective Registration Statement. A registration
requested pursuant to this Section 4 will not be deemed to have been effected
unless it shall become effective; provided, that if, within 120 days after it
has become effective, the offering of Registrable Shares pursuant to such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court, such registration
will be deemed not to have been effected unless at least seventy-five percent
(75%) of the Registrable Shares, as the case may be, included in such
registration shall have been sold.
(d) Selection of Underwriters. If a requested
registration pursuant to this Section 4 involves either a firm or best efforts
underwritten public offering, the Company shall have the right to select the
underwriter or underwriters of nationally recognized standing to administer the
offering.
(e) Priority in Demand Registrations. If a registration
requested pursuant to this Section 4 involves an underwritten offering and the
managing underwriter advises the Company in writing that, in its opinion, the
number of securities requested to be included in such registration (including
securities of the Company which are not Registrable Shares) exceeds the number
which can be sold in such offering, the Company shall notify the Holder in
writing of any such reduction and any such reduction shall be made on a pro
rata basis together with all other securities proposed to be included in such
offering, and, with respect to Registrable Shares to be sold by Holders, the
number of such Registrable Shares to be included in such registration shall be
allocated pro rata among all requesting Holders on the basis of the relative
number of shares of Registrable Shares, then held by each such Holder (provided
that any shares thereby allocated to any such Holder that exceed such Holder's
request shall be reallocated among the remaining requesting Holders in like
manner). In the event that the number of Registrable Shares requested to be
included in such registration is less than the number which, in the opinion of
the managing underwriter, can be sold the Company may include, or permit other
Persons to include, in such registration the securities the Company proposes to
sell, up to the number of securities that, in the opinion of the underwriter,
can be sold. Company shall not enter into registration rights agreements in
the future whose terms would subordinate the priority of Holders rights under
this Section 4(e).
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5. Registration Procedures. If and whenever the Company is
required by the provisions hereof to effect the registration of any Registrable
Shares under the Securities Act, the Company will, as expeditiously as
possible:
(a) prepare and file with the SEC a registration
statement with respect to such securities and use commercially
reasonable efforts to cause such registration statement to become and
remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided);
(b) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used
in connection therewith as may be necessary to keep such registration
statement effective for the period specified in Section 4(c) above and
comply with the provisions of the Securities Act with respect to the
disposition of all of the Registrable Shares covered by such
registration statement in accordance with the Holder's intended method
of disposition set forth in such registration statement for such
period;
(c) furnish to the Holder, and to each
underwriter such number of copies of the registration statement and
the prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Registrable
Shares covered by such registration statement;
(d) use commercially reasonable efforts to
register or qualify the Holder's Registrable Shares covered by such
registration statement under the securities or "blue sky" laws of such
jurisdictions as the Holder or, in the case of an underwritten public
offering, the managing underwriter reasonably shall request, provided,
however, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in
any jurisdiction when it is not so qualified or to consent to general
service of process in any such jurisdiction;
(e) use commercially reasonable efforts to list
the Registrable Shares covered by such registration statement with any
securities exchange on which the Class A Common Stock of the Company
is then listed;
(f) immediately notify the Holder and each
underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Company has
knowledge as a result of which the prospectus contained in such
registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statement
therein not misleading in light of the circumstances then existing,
and, in such event, Company shall use commercially reasonable efforts
to cause such prospectus promptly to be corrected to comply with the
Securities Act;
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(g) if the offering is underwritten and at the
request of the Holder, furnish on the date that Class A Common Stock
is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel(s)
representing the Company for the purposes of such registration,
addressed to the underwriters and to the Holder, stating that such
registration statement has become effective under the Securities Act
and that (A) to the knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement,
the related prospectus and each amendment or supplement thereof comply
as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion
as to financial statements or regulatory matters contained therein),
(C) such counsel has participated in conferences with officers and
other representatives of the Company, and representatives of the
independent certified public accountants of the Company, at which the
contents of the registration statement and any amendment thereof or
supplement thereto and related matters were discussed and, although
such counsel has not independently verified and is not passing upon
and assumes no responsibility for the accuracy, completeness or
fairness of the statements contained in the registration statement and
prospectus included therein, and noting that they have relied as to
materiality to a large extent upon the statements of directors,
officers and other representatives of the Company, nothing has come to
such counsel's attention that has caused such counsel to believe that
the registration statement, on the effective date thereof, contained
an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading, or that the prospectus on the date
thereof or on the date of such opinion, contained or contains an
untrue statement of material fact or omitted or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (it
being understood that such counsel expresses no view with respect to
the financial statements contained therein) and (D) to such other
matters as reasonably may be requested by counsel for the underwriters
and (ii) if requested by the Holder and if the Holder provides such
documents as are reasonably required to be provided by the Holder to
such accountants to allow such accountants to issue such letter under
applicable accounting rules, a letter dated such date from the
independent public accountants retained by the Company, addressed to
the underwriters and to the Holder, stating that they are independent
public accountants within the meaning of the Securities Act and that,
in the opinion of such accountants, the financial statements of the
Company included in the registration statement or the prospectus, or
any amendment or supplement thereof, comply as to form in all material
respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial
matters (including information as to the period ending no more than
five business days prior to the date of such letter) with respect to
such registration as such underwriters or Holder reasonably may
request; and
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(h) make available for inspection by the Holder,
any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent
retained by the Holder or underwriter, during business hours upon
reasonable notice, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney,
accountant or agent in connection with such registration statement.
For purposes of Section 5(a) and 5(b) above, the period of
distribution of securities in a firm commitment underwritten public offering
shall be deemed to extend until each underwriter has completed the distribution
of all securities purchased by it, and the period of distribution of securities
in any other registration shall be deemed to extend until the earlier of the
sale of all securities covered thereby and 120 days after the effective date
thereof.
In connection with each registration hereunder, the Holder will
furnish to the Company in writing such information regarding Holder as the
Company may require in connection with the preparation of a registration
statement which includes the Registrable Shares (the "Holder Information"), and
shall otherwise cooperate in all respects with Company and its representatives.
In connection with a shelf registration hereunder, if the Holder shall
distribute a prospectus of the Company in compliance with applicable securities
laws and if the Company provides the Holder with a written prospectus for
distribution in connection with such registration and thereafter the Company
delivers a written notice to the Holder requesting that the Holder refrain from
further distribution of such prospectus because such prospectus contains an
untrue statement of material fact or omits to state a material fact required to
be stated therein or necessary to make the statement therein not misleading,
then the Holder will not thereafter further distribute such prospectus, and, in
such event, Company shall use commercially reasonable efforts to cause such
prospectus promptly to be corrected to comply with the Securities Act and then
redistributed.
In connection with each registration pursuant to this Agreement
covering an underwritten public offering, the Company and the Holder agree to
enter into a written agreement with the managing underwriter in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such underwriter and companies of the Company's size and
investment stature.
6. Registration Expenses. The Company will pay all expenses
incurred in connection with a registration hereunder or otherwise incurred by
the Company in complying with this Agreement (collectively the "Registration
Expenses"), including, without limitation, all registration and filing fees,
listing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, reasonable fees and expenses of one counsel for all Persons
selling securities of the Company pursuant to the registration statement (in
the case of a registration pursuant to Section 4 hereof such counsel to be
selected by the holders of a majority of the Holders of Registrable
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Shares, included in such registration statement), fees of the National
Association of Securities Dealers, Inc., transfer taxes, fees of transfer
agents and registrars and costs of insurance if any, but excluding underwriting
discounts and selling commissions applicable to the sale of the Class A Common
Stock including Registrable Shares; provided, however, that each Holder selling
Registrable Shares shall pay to Company an amount equal to the product of (i)
all fees and expenses of counsel for all Persons selling securities of the
Company pursuant to the registration statement included in Registration
Expenses times (ii) the number of Registered Shares sold by such Holder in such
offering divided by (iii) the total number of Class A Common Stock sold in such
offering.
7. Indemnification.
(a) In the event of a registration of any
Registrable Shares under the Securities Act pursuant to this
Agreement, the Company will indemnify, defend and hold harmless the
Holder, each underwriter of such Registrable Shares thereunder and
each other person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act, against any losses, claims,
damages or liabilities to which such Holder, underwriter or
controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained
in any registration statement under which such Registrable Shares were
registered under the Securities Act pursuant to this Agreement, any
preliminary prospectus or final prospectus contained therein, or any
amendment or supplement thereof, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statement therein not
misleading, and will reimburse such Holder, each such underwriter and
each such controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided,
however, that the Company will not be liable in any such case if and
only to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged commission made in reliance upon and
in conformity with information furnished by such Holder, any such
underwriter or any such controlling person in writing specifically for
use in such registration statement or prospectus.
(b) In the event of a registration of any of the
Registrable Shares pursuant to this Agreement, the Holder will
indemnify and hold harmless the Company, each person, if any, who
controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each
director of the Company, each underwriter and each person who controls
any underwriter within the meaning of the Securities Act, against all
losses, claims, damages or liabilities, to which the Company or such
officer, director, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities or actions in respect thereof) arise
out of
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or are based upon any untrue statement or alleged untrue statement of
any material fact contained in the registration statement under which
such Registrable Shares were registered under the Securities Act
pursuant to this Agreement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse the Company and each such officer, directors, underwriter
and controlling person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any
such loss claim, damage, liability or action, provided, however, that
the Holder will be liable hereunder in any such case if and only to
the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in reliance upon and in conformity
with the Holder Information pertaining to such Holder, as such,
furnished in writing to the Company by the Holder specifically for use
in such registration statement or prospectus.
(c) Promptly after receipt by an indemnified
party hereunder of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party hereunder, notify the indemnifying
party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability which it
may have to such indemnified party other than under this Section 7(c)
and shall only relieve it from any liability which it may have to such
indemnified party under this Section 7(c) if and to the extent the
indemnifying party is prejudiced by such omission. In case any such
action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with
counsel reasonably satisfactory to such indemnified party, and, after
notice from the indemnifying party to such indemnified party of its
election so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
this Section 7(c) for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than
reasonable costs of investigation, provided, however, that, if the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to the
indemnified party which are different from or in addition to those
available to the indemnifying party or if the interests of the
indemnified party reasonably may be deemed to conflict with the
interests of the indemnifying party, in either case such that the
Rules of Professional Conduct of the California Bar Association would
prohibit the representations of the indemnifying party and the
indemnified party by the same counsel, the indemnified party shall
have the right to select one separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action,
with the expenses and fees of such separate
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<PAGE> 90
counsel and other expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and
equitable contribution to joint liability under the Securities Act in
any case in which either (i) any Holder exercising rights under this
Section 7, or any controlling person of any such Holder, makes a claim
for indemnification pursuant to this Section 7 but it is judicially
determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not
be enforced in such case notwithstanding the fact that this Section 7
provides for indemnification in such case, or (ii) contribution under
the Securities Act may be required on the part of any such Holder or
any such controlling person in circumstances for which indemnification
is provided under this Section 7; then, and in each such case, the
Company and such Holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) in proportion to their respective relative
fault; provided, however, that, in any such case, (A) no such Holder
will be required to contribute any amount in excess of the public
offering price of all such securities offered by it pursuant to such
registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person
or entity who was not guilty of such fraudulent misrepresentation.
8. Termination of Registration Rights.
Any Registrable Shares shall cease to have the benefit of the
registration rights provided for in this Agreement when (i) a registration
statement with respect to the sale of such Registrable Shares shall have become
effective under the Securities Act and such Registrable Shares shall have been
disposed of in accordance with such registration statement, (ii) they shall
have been distributed to the public pursuant to Rule 144 or 144A (or any
successor provisions) under the Securities Act, (iii) they shall have been
otherwise transferred, new certificates for them not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition shall not require registration or qualification under
the Securities Act or any state securities or blue sky law then in force, or
(iv) they shall have ceased to be outstanding.
9. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be
amended and the Company may take any action herein prohibited, or omit to
perform any act herein required to be performed by it, only if the Company
shall have obtained the written consent to such amendment, action or omission
to act, of the Holders of a majority of the Registrable Shares then
outstanding. Each Holder of any Registrable Shares at the time or thereafter
outstanding shall be bound by any consent authorized by this Section 9(a),
whether or not such Registrable Shares shall have been marked to indicate such
consent.
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(b) Successors, Assigns and Transferees. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns. This Agreement and the rights of the
Holders hereunder may not be assigned without Company's prior written consent,
except that any Holder may assign all or a portion of such Holder's rights (but
not obligations) hereunder to such Holder's wife or children (or inter vivos
trust for the benefit thereof), heirs or legatees to the extent such Holder
shall transfer to such person any Registrable Shares, whereupon such person
shall become the Holder of the Registrable Shares so transferred, provided, in
each case, that such assignee shall execute and deliver an assumption agreement
jointly and severally assuming the obligations of a "Holder" hereunder, which
assumption shall not release such assigning Holder from any obligations under
this Agreement.
(c) Notices. All notices and other communications
provided for hereunder shall be in writing and shall be sent by first class
mail, telex, telecopy or hand delivery:
(i) if to the Company, to:
Premiere Radio Networks, Inc.
15260 Ventura Boulevard
Fifth Floor
Sherman Oaks, California 91403-5339
Attention: Chief Executive Officer
Telecopy No.:
(ii) if to any Holder, to the address of such
Holder as shown in the stock ledger of the Company, or to such other address as
any of the above shall have designated in writing, with a copy to:
Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP, 2121 Avenue of
the Stars 18th Floor, Los Angeles, California, Attention: Gary N. Jacobs,
Esq., Telecopy No.: (310) 556-2920.
All such notices and communications shall be deemed to have been given or made
(1) when delivered by hand, (2) five business days after being deposited in the
mail, postage prepaid, (3) when telexed, answer-back received or (4) when
telecopied, receipt acknowledged.
(d) Descriptive Heading. The headings in this Agreement
are for convenience of reference only and shall not limit or otherwise affect
the meaning of terms contained herein.
(e) Severability. In the event that any one or more of
the provisions, paragraphs, words, clauses, phrases or sentences contained
herein, or the application thereof in any circumstances, is held invalid,
illegal or unenforceable in any respect for any reason, the validity, legality
and enforceability of any such provision, paragraph, word, clause, phrase or
sentence in every other respect and of the remaining provisions, paragraphs,
words, clauses, phrases or sentences hereof shall not be in any way impaired,
it being
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<PAGE> 92
intended that all rights, powers and privileges of the parties hereto shall be
enforceable to the fullest extent permitted by law.
(f) Counterparts. This Agreement and any amendments,
waivers, consents or supplements hereto or hereunder may be executed in any
number of counterparts, and by different parties on separate counterparts, each
of which when executed and delivered shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument. This
Agreement shall become effective upon the execution and delivery of a
counterpart hereof by each of the parties hereto.
(g) Governing Law; Dispute Resolution.
(i) The validity, interpretation, performance and enforcement
of this Agreement shall be controlled by and construed in accordance with the
laws of the State of California without regard to conflicts of laws principles.
Notwithstanding the foregoing, 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.
(ii) 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.
(iii) 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.
(iv) 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.
(v) 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.
(vi) 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. All fees and expenses of counsel to each party shall be
initially borne by such party, but the referee shall have the
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<PAGE> 93
power to order that reasonable fees and reasonable expenses of counsel be
recovered by the prevailing party.
(h) Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, it is agreed that they shall be entitled to
an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically the terms and provisions hereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they may be entitled at law or equity.
(i) Time of Essence. Time is of the essence in the
performance of this Agreement.
IN WITNESS WHEREOF, each of the undersigned has executed this Agreement or
caused this Agreement to be executed on its behalf as of the date first written
above.
PREMIERE RADIO NETWORKS, INC.
By: STEPHEN LEHMAN
------------------------------
Title:
/s/ WILLIAM LOPATIN
------------------------------
William Lopatin
/s/ LEONARD MAKOWKA
------------------------------
Leonard Makowka
/s/ ERIC WEISS
------------------------------
Eric Weiss
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EXHIBIT 5
[LETTERHEAD OF PREMIERE]
Steve Lehman
President
Chief Executive Officer
December 26, 1996
Eric R. Weiss, Esq.
245 Tranquillo Road
Pacific Palisades, California 90272
Dear Eric:
This letter will confirm that in connection with your intended
consulting agreement ("Consulting Agreement") with Premiere Radio Networks,
Inc. (the "Company"), the Company hereby grants you 30,000 stock options for
your services on the Company's Board of Directors and 40,000 additional stock
options upon the closing of the Company's intended acquisition (the
"Acquisition") of After Midnite Entertainment, Inc. ("AME"). The stock options
are subject to the Company 1995 Stock Option Plan and shall have an exercise
price of $11.00 per option, which price is based upon the last trading price
of the Company's Class A Common Stock as quoted on NASDAQ on the date hereof.
The above stock option grants are expressly subject to the consummation
of the Acquisition by the Company, and shall be subject to the vesting schedule
and other terms set forth in the Consulting Agreement.
Please confirm your understanding of the above by signing this letter
in the space provided below.
If you have any questions, please call me at (818) 377-5334.
Very truly yours,
/s/ STEPHEN C. LEHMAN
-----------------------------------
Stephen C. Lehman
President
==============================================================================
AGREED:
/s/ ERIC WEISS Date: December 26, 1996
- ------------------------------ -------------------------
Eric Weiss
15260 VENTURA BOULEVARD, FIFTH FLOOR, SHERMAN OAKS, CALIFORNIA 91403-5339
TEL: 818-377-5300 FAX: 818-377-5333
