<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File
March 31, 1996 Number 0-215-70
Evergreen Media Corporation
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 75-2247099
--------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
433 East Las Colinas Boulevard, Suite 1130, Irving, Texas 75039
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(Address of principal executive offices) (Zip Code)
(214) 869-9020
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 16,639,686 shares of Class A
Common Stock and 2,077,377 shares of Class B Common Stock as of April 30, 1996.
<PAGE>
EVERGREEN MEDIA CORPORATION
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)... 1
Consolidated Statements of Operations
(unaudited).............................. 3
Consolidated Statements of Cash Flows
(unaudited).............................. 4
Notes to Consolidated Financial
Statements (unaudited)................... 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................ 9
Part II.
Item 1. Legal Proceedings......................... 14
Item 5. Other Information......................... 14
Item 6. Exhibits and Reports on Form 8-K.......... 16
<PAGE>
PART I
ITEM 1. FINANCIAL STATEMENTS
- ------- --------------------
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ---------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 3,430 $ 7,216
Accounts receivable, net 45,413 49,700
Prepaid expenses and other assets 2,146 3,704
-------- --------
Total current assets 50,989 60,620
Assets held for sale - 32,000
Property and equipment, net 37,839 44,871
Intangible assets, net 458,787 762,874
Other assets 4,732 8,535
-------- --------
$552,347 $908,900
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, CONTINUED (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
December 31, March 31,
1995 1996
------------ ---------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 15,892 $ 20,298
Current portion of long-term debt 4,000 9,625
Other current liabilities 541 541
-------- --------
Total current liabilities 20,433 30,464
-------- --------
Long-term debt, excluding current portion 197,000 500,375
Deferred tax liability 29,233 87,528
Other liabilities 1,104 1,117
-------- --------
Total liabilities 247,770 619,484
-------- --------
Stockholders' equity:
Convertible Preferred Stock.
Authorized 6,000,000 shares;
Issued and outstanding 1,610,000 shares
in 1995 and 1996. 80,500 80,500
Class A common stock, $.01 par value.
Authorized 31,000,000 shares; issued and
outstanding 16,619,686 shares in 1995 and
16,639,686 in 1996. 166 166
Class B common stock, $.01 par value.
Authorized 4,500,000 shares; issued and
outstanding 2,077,377 shares in 1995 and
in 1996. 21 21
Paid-in capital 317,388 317,708
Accumulated deficit (93,498) (108,979)
-------- --------
Total stockholders' equity 304,577 289,416
-------- --------
$552,347 $908,900
======== ========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
2
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EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Dollars in thousands, except for per share data)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1996
---------- -----------
<S> <C> <C>
Gross revenues $ 29,088 $ 60,782
Less agency commissions 3,675 7,411
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Net revenues 25,413 53,371
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Station operating expenses
excluding depreciation
and amortization 17,428 37,426
Depreciation and amortization 6,290 22,676
Corporate general and
administrative expenses 776 1,492
---------- -----------
Operating expenses 24,494 61,594
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Operating income (loss) 919 (8,223)
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Nonoperating expenses (income):
Interest expense 3,755 8,966
Interest income (14) -
Other expense, net 88 7
---------- -----------
Nonoperating expenses, net 3,829 8,973
---------- -----------
Loss before income taxes (2,910) (17,196)
Income tax benefit - 2,923
---------- -----------
Net loss (2,910) (14,273)
Preferred stock dividends (1,208) (1,208)
---------- -----------
Net loss attributable to
common stockholders $ (4,118) $ (15,481)
========== ===========
Loss per common share $ (0.47) $ (0.83)
========== ===========
Weighted average
common shares outstanding 8,738,000 18,704,000
========== ===========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
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EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1995 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,910) $ (14,273)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation 1,183 1,784
Amortization of goodwill, intangible
assets and other assets 5,107 20,892
Provision for doubtful accounts 242 677
Deferred income tax benefit - (2,923)
Changes in certain assets and liabilities,
net of effects of acquisitions:
Accounts receivable 3,226 9,771
Prepaid expenses and other current assets (197) (713)
Accounts payable and accrued expenses (1,278) (383)
Other assets (208) (80)
Other liabilities (3) 108
------- ---------
Net cash provided by
operating activities 5,162 14,860
------- ---------
Cash flows from investing activities:
Acquisitions, net of cash acquired - (314,826)
Capital expenditures (911) (344)
Other (540) (336)
------- ---------
Net cash used by investing activities (1,451) (315,506)
------- ---------
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 319,750
Principal payments on long-term debt (3,000) (10,750)
Payments on other long-term liabilities (417) (95)
Proceeds from issuance of common stock - 320
Dividend payments on preferred stock (1,208) (1,208)
Payments for debt issuance costs (177) (3,585)
------- ---------
Net cash provided by (used in) financing
activities (4,802) 304,432
------- ---------
Increase (decrease) in cash and cash equivalents (1,091) 3,786
Cash and cash equivalents at beginning
of period 1,216 3,430
------- ---------
Cash and cash equivalents at end of
period $ 125 $ 7,216
======= =========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
EVERGREEN MEDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. Basis of Presentation
---------------------
In the opinion of management, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position, results of operations and
cash flows of Evergreen Media Corporation and subsidiaries (the "Company") for
the periods presented.
Interim periods are not necessarily indicative of results to be expected
for the year. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1995.
The consolidated financial statements include the accounts of the Company
and its subsidiaries, all of which are wholly owned. All significant
intercompany balances and transactions have been eliminated in consolidation.
Loss per common share is based on the weighted average number of common
shares outstanding during the periods. Stock options and warrants are not
included in the calculation as their effect would be antidilutive.
The Company adopted the provisions of SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of" on
January 1, 1996. The adoption of this statement did not have a material effect
on the Company's financial position or results of operations.
2. Acquisitions, Dispositions, and Financings
------------------------------------------
In May 1995, the Company acquired Broadcasting Partners, Inc. ("BPI"), a
publicly traded radio broadcasting company with seven FM and four AM radio
stations, eight of which are in the nation's ten largest radio markets(the "BPI
Acquisition"). The BPI Acquisition was effected through the merger of a wholly-
owned subsidiary of the Company with and into BPI, with BPI surviving the merger
as a wholly-owned subsidiary of the Company. The BPI Acquisition included the
conversion of each outstanding share of BPI common stock into the right to
receive $12.00 in cash and .46 shares of the Company's Class A Common Stock,
resulting in total cash payments of $94.8 million and the issuance of 3,740,673
shares of the Company's Class A Common Stock valued at $18.75 per share. In
addition, the Company retired existing BPI debt of $81.9 million
5
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and incurred various other direct acquisition costs. The total purchase price,
including closing costs, allocated to net assets acquired was approximately
$258.6 million.
In July 1995, the Company completed a secondary public offering of
5,525,000 shares of its Class A Common Stock. The Company issued and sold
4,900,000 shares in the offering, while 625,000 shares were issued and sold in
connection with the exercise of certain warrants. Furthermore, 675,924 shares
were issued in the offering in connection with the exercise of the remaining
warrants outstanding pursuant to the over-allotment option. The net proceeds to
the Company in connection with the offering of approximately $132.7 million were
used to reduce borrowings under the revolving credit portion of the Senior
Credit Facility.
On January 17, 1996, the Company acquired Pyramid Communications, Inc.
("Pyramid"), a radio broadcasting company with nine FM and three AM radio
stations in five radio markets (Chicago, Philadelphia, Boston, Charlotte and
Buffalo) (the "Pyramid Acquisition"). The Pyramid Acquisition was effected
through the merger of a wholly-owned subsidiary of the Company with and into
Pyramid with Pyramid surviving the merger as a wholly-owned subsidiary of the
Company. The total purchase price, including closing costs, allocated to net
assets acquired was approximately $316.3 million.
Effective on February 14, 1996, the Company entered into the Detroit Option
Agreement with Chancellor Broadcasting ("Chancellor") pursuant to which
Chancellor granted the Company an option to buy from Chancellor, and the Company
granted Chancellor an option to sell to the Company, WWWW-FM and WDFN-AM in
Detroit, Michigan, for $30 million in cash. In addition, pursuant to the
Detroit Option Agreement, the Company and Chancellor entered into the Detroit
joint sales agreement ("JSA") pursuant to which Chancellor will outsource to
the Company for a two-year period certain sales and promotional functions of the
Detroit stations in exchange for an annual fee of $2.6 million to be paid to
Chancellor. Effective April 1, 1996, the JSA was converted into a time
brokerage agreement which will extend for the same time period as the previous
JSA. The Company's option is exercisable during the thirty-day period following
the expiration of the Detroit JSA, which occurs in February 1998. Chancellor
may exercise its option at any time prior to the expiration of the Detroit JSA,
provided that if Chancellor exercises its option, the closing of the sale of the
stations shall not take place prior to the first anniversary of the expiration
of the Detroit JSA.
The BPI Acquisition and the Pyramid Acquisition discussed above were
accounted for as purchases. Accordingly, the accompanying
6
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consolidated financial statements include the results of operations of the
acquired entities from the dates of acquisition.
A summary of the net assets acquired follows:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Working capital, including cash of
$492 in 1995 and $949 in 1996 $ 12,432 $ 16,837
Assets held for sale - 32,000
Property and equipment 11,684 8,472
Intangible assets 264,650 325,040
Deferred tax liability (29,712) (61,218)
Other liabilities (420) (4,788)
-------- --------
$258,634 $316,343
======== ========
</TABLE>
Pro forma Results of Operations (Unaudited)
- -------------------------------------------
Consolidated condensed pro forma results of operations data for the three months
ended March 31, 1995 and 1996, as if the 1995 common stock offering and the 1995
and 1996 acquisitions discussed above and the dispositions discussed in note 4,
"Other Events" occurred at January 1, 1995, follow:
<TABLE>
<CAPTION>
1995 1996
--------- ---------
<S> <C> <C>
Net revenues $ 51,657 $ 55,150
Operating income (9,175) (9,601)
Net loss (15,010) (14,968)
Net loss per common share (0.87) (0.86)
</TABLE>
The above pro forma results of operations are presented pursuant to
applicable accounting rules relating to business acquisitions and are not
necessarily indicative of the actual results that would have been achieved had
these transactions occurred at the beginning of 1995, nor are they indicative of
future results of operations. Pro forma adjustments for the April 1996 agreement
to acquire KYLD-FM in San Francisco and the May 1996 acquisition of WKLB-FM in
Boston are not presented as any adjustment would be immaterial to the
consolidated condensed pro forma results of operations.
3. Contingencies
-------------
The Company is involved in several lawsuits that are incidental to its
business. A discussion of certain of these lawsuits is contained in Part II,
Item 1, "Legal Proceedings", of this Form 10-Q. The Company believes that the
ultimate resolution of the lawsuits will not have a material effect on its
financial position or results of operations.
7
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4. Other Events
------------
In April 1996, the Company entered into agreements to sell Buffalo radio
stations WHTT-FM and WHTT-AM for $19.5 million in cash and WSJZ-FM for $12.5
million in cash in two separate transactions. The Company also entered into
time brokerage agreements to sell substantially all of the broadcast time of
these stations pending the completion of the sales. The aforementioned stations
were acquired in connection with the Pyramid Acquisition discussed in Note 2.
Accordingly, the assets of these stations have been classified as assets held
for sale at March 31, 1996 in connection with the purchase price allocation of
the Pyramid Acquisition, and no gain or loss will be recognized by the Company
upon consummation of the sales.
In April 1996, the Company entered into an agreement to acquire KYLD-FM in
San Francisco for $44 million in cash. The Company also entered into an
agreement to operate the station under a time brokerage agreement effective May
1, 1996 pending the completion of the purchase. The acquisition of KYLD-FM,
expected to close in the fall of 1996, will be financed through additional
borrowings under the Senior Credit Facility.
In May 1996, the Company acquired WKLB-FM in Boston for $34 million in cash
plus various other direct acquisition costs. The acquisition of WKLB-FM was
financed through additional borrowings of $33 million under the Senior Credit
Facility in addition to $1 million in escrow funds previously paid by the
Company.
In May 1996, the Company amended the Senior Credit Facility which resulted
in reducing the incremental rate applied to the participating banks' prime rate
or Eurodollar rate on borrowings under the Senior Credit Facility.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
-------------------------------------------------
GENERAL
- -------
The performance of a radio station group is customarily measured by its
ability to generate broadcast cash flow. The two components of broadcast cash
flow are gross revenues (net of agency commissions) and operating expenses
(excluding depreciation and amortization and corporate general and
administrative expense). The primary source of revenues is the sale of
broadcasting time for advertising. The Company's most significant operating
expenses for purposes of the computation of broadcast cash flow are employee
salaries and commissions, programming expenses, and advertising and promotion
expenses. The Company strives to control these expenses by working closely with
local station management. The Company's revenues vary throughout the year. As
is typical in the radio broadcasting industry, the Company's first calendar
quarter generally produces the lowest revenues, and the fourth quarter generally
produces the highest revenues.
Data on broadcast cash flow, although not calculated in accordance with
generally accepted accounting principles, is widely used in the broadcast
industry as a measure of a company's operating performance. Nevertheless, this
measure should not be considered in isolation or as a substitute for operating
income, cash flows from operating activities or any other measure for
determining the Company's operating performance or liquidity that is calculated
in accordance with generally accepted accounting principles. Broadcast cash
flow does not take into account the Company's debt service requirements and
other commitments and, accordingly, broadcast cash flow is not necessarily
indicative of amounts that may be available for dividends, reinvestment in the
Company's business or other discretionary uses.
COMPARISON OF THREE MONTHS ENDED MARCH 31, 1996, TO THREE MONTHS ENDED MARCH
- -----------------------------------------------------------------------------
31, 1995
- --------
Results of operations for the three months ended March 31 1996 are not
comparable to results of operations for the same period in 1995, in light of the
consummation of the following transactions:
. the BPI Acquisition on May 12, 1995
. the Company's public offering of Class A common stock in
July 1995
. the Pyramid Acquisition on January 17, 1996
9
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. the Detroit WWWW-FM and WDFN-AM joint sales agreement
effective February 14, 1996 and time brokerage
agreement effective April 1, 1996
In addition, results of operations for the remainder of 1996 will be affected by
the following transactions:
. the Buffalo time brokerage agreements (effective April
15, 1996 for WSJZ-FM and April 25, 1996 for WHTT-FM
and WHTT-AM) to sell substantially all of the
station's broadcast time pending the completion of
the sales
. the San Francisco KYLD-FM time brokerage agreement
effective May 1, 1996 pending the completion of the
purchase
. the acquisition of WKLB-FM in Boston on May 3, 1996
The BPI Acquisition resulted in the addition of seven FM and four AM radio
stations, eight of which are in the nation's ten largest radio markets. The
Pyramid Acquisition resulted in the addition of nine FM and three AM radio
stations, six of which are in the nation's ten largest radio markets. Given the
Company's acquisition strategy and acquisition opportunities created by the
recent passage of the Telecommunications Act of 1996 (the "1996 Act"), it is
possible that the Company will complete one or more other potentially material
transactions during the course of the year.
Net revenues for the three months ended March 31, 1996 increased 110.0% to
$53.4 million compared to $25.4 million for the three months ended March 31,
1995. Station operating expenses excluding depreciation and amortization for
the first quarter of 1996 increased 114.7% to $37.4 million compared to $17.4
million for the same quarter in 1995. Station operating income excluding
depreciation and amortization and corporate general and administrative expense
(broadcast cash flow) for the first quarter of 1996 increased 99.7% to $15.9
million compared to $8.0 million for the same quarter in 1995. The increase in
net revenues, station operating expenses, and broadcast cash flow was
attributable to the impact of the BPI Acquisition on May 12, 1995 and the
Pyramid Acquisition on January 17, 1996, in addition to the overall net
operational improvements realized by the Company's radio stations.
Depreciation and amortization for the first quarter of 1996 increased
260.5% to $22.7 million compared to $6.3 million for the same quarter in 1995.
The increase represents additional depreciation and amortization expenses due to
the impact of the BPI Acquisition on May 12, 1995 and the Pyramid Acquisition on
January 17, 1996, offset by decreases due to certain intangibles which became
fully amortized in 1995 and 1996.
Corporate general and administrative expenses for the first quarter of 1996
increased 92.3% to $1.5 million compared to $0.8
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million for the same quarter in 1995. The increase is due to the growth of the
Company primarily related to the BPI and Pyramid Acquisitions.
As a result of the above factors, the Company realized an $8.2 million
operating loss for the first quarter of 1996 compared to operating income of
$.9 million for the same quarter in 1995.
Interest expense for the first quarter of 1996 increased 138.8% to $9.0
million compared to $3.8 million for the same quarter in 1995. The net increase
in interest expense was due to several factors including: (i) additional bank
borrowings of approximately $186.0 million required to finance the BPI
Acquisition in May 1995; (ii) additional bank borrowings of $318.8 million
required to finance the Pyramid Acquisition in January 1996, offset by; (iii)
repayment of borrowings of approximately $132.7 million from the net proceeds of
the Company's public offering of 5,525,000 shares of Class A Common Stock in
July 1995; (iv) an overall decline in the Company's borrowing rates.
The income tax benefit for the three months ended March 31, 1996 is
comprised of current federal and state tax expense and a deferred federal income
tax benefit.
The net loss attributable to common stockholders for the first quarter of
1996 was $15.5 million compared to a $4.1 million net loss for the same quarter
of 1995. The $11.4 million increase in net loss attributable to common
stockholders was primarily due to the increase in depreciation and amortization
related to recent acquisitions.
The loss per common share for the first quarter of 1996 was $(0.83)
compared to a $(0.47) loss per common share for the same quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Overview
--------
The Company historically has generated sufficient cash flow from operations
to finance its existing operational requirements, debt service requirements and
preferred stock dividends, and the Company anticipates that this will continue
to be the case. The $34.0 million in cash required to finance the acquisition of
WKLB-FM, Boston which closed on May 3, 1996 consisted of $33 million in
borrowings under the New Revolving Loan, which is part of the Senior Credit
Facility (as defined below) and $1 million in escrow funds previously paid by
the Company. The pending acquisition of KYLD-FM in San Francisco, which is
expected to close in fall 1996, will be financed through additional
11
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borrowings under the New Revolving Loan. To the extent that the Company is
successful in pursuing additional acquisitions, the Company expects that such
acquisitions will be financed through funds generated from operations, from
additional borrowings under the New Revolving Loan and, potentially, from
proceeds from the disposition of certain of the Company's radio stations
including $32 million in estimated net proceeds upon consummation of the Buffalo
station dispositions. Depending on market conditions, the Company may also seek
additional debt or equity financing to pursue acquisitions or reduce borrowings
under the Senior Credit Facility on a going forward basis. There can be no
assurance that such additional financing will be available on terms acceptable
to the Company.
The Senior Credit Facility (as defined below)
---------------------------------------------
On November 28, 1994, the Company entered into the Senior Credit Facility
with a group of banks. The Senior Credit Facility originally consisted of $150.0
million term loan ("the Term Loan") and a $200.0 million revolving credit
facility (the "Revolving Loan"). In connection with the Pyramid Acquisition, the
Company amended and restated the Senior Credit Facility. Under the amended
agreement, dated January 17, 1996, the Term Loan and the Revolving Loan remained
in place, and the Company also established an additional revolving facility of
up to $275.0 million (the "New Revolving Loan"). At March 31, 1996, the Company
had drawn $150.0 million of the Term Loan, $192.0 million of the Revolving Loan,
and $155.0 million of the New Revolving Loan. The Company's ability to make
additional borrowings under the New Revolving Loan is subject to compliance with
certain financial ratios and other conditions set forth in the Senior Credit
Facility. Substantially all of the assets of the Company and its subsidiaries
are pledged to secure performance of the Company's obligations under the Senior
Credit Facility.
Borrowings under the Senior Credit Facility bear interest at a rate based,
at the option of the Company, on the participating banks' prime rate or
Eurodollar rate, plus an incremental rate. Without giving effect to the interest
rate swap and cap agreements described in the following paragraph, the interest
rate on the $150.0 million outstanding under the Term Loan at March 31, 1996 was
7.63% on a blended basis, based on Eurodollar rates, and the interest rates on
$187.0 million and $5.0 million of advances outstanding under the Revolving Loan
were 7.59% and 9.375% at March 31, 1996, based on the Eurodollar and prime rate,
respectively. The interest rate on the $155.0 million outstanding under the New
Revolving Loan at March 31, 1996 was 7.73% on a blended basis, based on
Eurodollar rates.
As required by the terms of the Senior Credit Facility, the Company has
entered into interest rate swap agreements with certain of the participating
banks under the Senior Credit Facility. These swap agreements have the effect
of reducing the impact of changes in interest rates on the Company's floating
rate debt under the
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Senior Credit Facility. At March 31, 1996, interest rate swap agreements
covering a notional balance of $175.0 million were outstanding. These
outstanding swap agreements mature during 1996 and 1997 and require the Company
to pay a fixed rate of 5.05 - 6.38% while the counterparty pays a floating rate
based on the six-month London Interbank Borrowing Offered Rate ("LIBOR") plus an
incremental rate. In addition to these swap agreements, and in connection with
the BPI Acquisition, the Company assumed interest rate cap agreements covering a
notional balance of $45.0 million. These outstanding interest rate cap
agreements provide fixed rates ranging from 6.0% to 8.0% and mature during 1996
and 1997. During the three months ended March 31, 1996 and 1995, the Company
recognized charges (income) under its interest rate swap and cap agreements of
$4,000 and ($100,000), respectively. Because the interest rate swap and cap
agreements are with banks that are lenders under the Senior Credit Facility, the
Company is not exposed to credit loss.
The Term Loan is payable in quarterly installments beginning March 31, 1997
and ending June 30, 2002, while availability under the Revolving Loan reduces
quarterly commencing March 31, 1997 and ending June 30, 2002. Availability under
the New Revolving Loan reduces quarterly beginning March 31, 1998 and ending
December 31, 2002.
In May 1996, the Company amended the Senior Credit Facility which resulted
in reducing the incremental rate applied to the participating banks' prime rate
or Eurodollar rate on borrowings under the Senior Credit Facility.
Senior Notes
------------
The Company's Senior Notes due 1999 (the "Senior Notes") were originally
issued by the Company in 1989. The Senior Notes bear interest at a fixed rate of
11.6% per annum. Amortization of the Senior Notes began August 1, 1994 and is
payable in equal quarterly installments of $1.0 million through May 1, 1999. The
Senior Notes are equally and ratably secured by the same collateral package
securing the Senior Credit Facility, and the Senior Notes and the Senior Credit
Facility rank equal in right of payment with each other. At March 31, 1996,
$13.0 million in principal amount of the Senior Notes was outstanding.
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PART II
ITEM 1. - LEGAL PROCEEDINGS
- ------- -----------------
In August 1993, the Company terminated an agreement with Sagittarius
Broadcasting Company (an affiliate of Infinity Broadcasting Corporation) and One
Twelve, Inc. (collectively, the "Claimants" or the "Plaintiffs") pursuant to
which programming featuring radio personality Howard Stern was broadcast on
radio station WLUP-AM (now WMVP-AM) in Chicago. The Claimants allege that
termination of the agreement was wrongful and have sued the Company in the
Supreme Court of the State of New York, County of New York. The agreement
required payments to the Claimants in the amount of $2.6 million, plus five
percent of advertising revenues generated by the programming over the three year
term of the agreement. A total of approximately $680,000 was paid to the
Claimants pursuant to the agreement prior to termination. Claimants' complaint
alleged claims for breach of contract, indemnification, breach of fiduciary duty
and fraud. Plaintiffs' aggregate prayer for relief totaled $45 million. On July
12, 1994, the Court granted the Company's motion to dismiss Plaintiffs' claims
for fraud and breach of fiduciary duty. On June 6, 1995, the Court denied the
Plaintiffs' motion for summary judgment on their contract and indemnification
claims. The Plaintiffs have appealed the Court's June 6, 1995, ruling. The
Appellate Division of the Supreme Court of the State of New York, County of New
York recently affirmed the Court's denial of Plaintiff's motion for summary
judgment. Plaintiffs seek in excess of $10 million on their claims for breach of
contract and indemnification. The Company believes that it acted within its
rights in terminating the agreement.
The Company is also involved in various other claims and lawsuits which are
generally incidental to its business. The Company is vigorously contesting all
such matters and believes that their ultimate resolution, as well as the matter
discussed in the preceding paragraph, will not have a material adverse effect on
its consolidated financial position or results of operations.
Item 5. - OTHER INFORMATION
- ------- -----------------
FCC Divestiture Conditions
- --------------------------
In connection with the BPI Acquisition and the Pyramid Acquisition, the
Company obtained certain waivers of the FCC's broadcast multiple ownership rules
then in effect to allow the Company to own five FM station in the Chicago,
Illinois market, four FM stations in the Charlotte, North Carolina market and in
excess of twenty FM stations in the aggregate. Pursuant to such waivers, it
would have been necessary, absent any change in applicable law, for the Company
to divest certain broadcast properties in order to satisfy the FCC's multiple
ownership rules which impose limitations on the number of FM radio
14
<PAGE>
stations that any one person or entity may own in one market and limitations on
the aggregate number of FM radio stations that may be owned by one person or
entity.
Under the provisions of the recently-enacted 1996 Act, the FCC has revised
the provisions of the radio local ownership rules and eliminated the radio
ownership rules' limitations on national radio ownership. As a result, the
Company's ownership of radio stations acquired in the BPI Acquisition and the
Pyramid Acquisition that were the subject of divestiture conditions now fully
complies with applicable law. On April 5, 1996, the FCC deleted the divestiture
conditions concerning compliance with the radio local ownership rules and the
national radio ownership rules imposed on the Company by the FCC in connection
with the BPI Acquisition and the Pyramid Acquisition.
Recent Acquisitions and Dispositions
- ------------------------------------
In April 1996, the Company entered into agreements to sell Buffalo radio
stations WHTT-FM and WHTT-AM for $19.5 million in cash and WSJZ-FM for $12.5
million in cash in two separate transactions. The Company also entered into time
brokerage agreements to sell substantially all of the broadcast time of these
stations pending the completion of the sales. The aforementioned stations were
acquired in connection with the Pyramid Acquisition. Accordingly, the assets of
these stations have been classified as assets held for sale at March 31, 1996 in
connection with the purchase price allocation of the Pyramid Acquisition, and no
gain or loss will be recognized by the Company upon consummation of the sales.
In April 1996, the Company entered into an agreement to acquire KYLD-FM in
San Francisco for $44 million in cash. The Company also entered into an
agreement to operate the station under a time brokerage agreement effective May
1, 1996 pending the completion of the purchase. The acquisition of KYLD-FM,
expected to close in the fall of 1996, will be financed through additional
borrowings under the Senior Credit Facility.
In May 1996, the Company acquired WKLB-FM in Boston for $34 million in cash
plus various other direct acquisition costs. The acquisition of WKLB-FM was
financed through additional borrowings of $33 million under the Senior Credit
Facility in addition to $1 million in escrow funds previously paid by the
Company.
Amendment to Senior Credit Facility
- -----------------------------------
In May 1996, the Company amended the Senior Credit Facility which resulted
in reducing the incremental rate applied to the participating bank's prime rate
or Eurodollar rate on borrowings under the Senior Credit Facility.
15
<PAGE>
ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit No. Description of Exhibit
- ----------- ----------------------
(a) 2.1 Purchase Agreement, dated as of February 3, 1993, among The Rusk
Corporation, 511 Lovett Venture and Evergreen Media Corporation
of Houston (see table of contents for list of omitted exhibits).
(a) 2.2 Purchase Agreement by and between Metroplex Communications, Inc.
and Evergreen Media Corporation of Jacksonville (see table of
contents for list of omitted exhibits).
(a) 2.2A Second Amendment to Purchase Agreement, dated April 29, 1993, by
and between Metroplex Communications, Inc. and Evergreen Media
Corporation of North Florida.
(a) 2.3 Purchase Agreement, dated as of October 16, 1992, by and between
Evergreen Media Corporation of Washington, D.C. and WPNT, Inc.
(see table of contents for list of omitted exhibits).
(a) 2.3A Amendment to Purchase Agreement, dated April 29, 1993, by and
between Evergreen Media Corporation of Washington, D.C. and WPNT,
Inc.
(b) 2.4 Asset Purchase Agreement by and between Major Broadcasting of
Chicago, Inc. and Evergreen Media Corporation of Illinois dated
as of June 30, 1993 (see table of contents for list of omitted
exhibits and schedules).
(b) 2.5 Purchase Agreement by and among Evergreen Media Corporation of
Dallas, the Company and Armadillo Broadcasting, L.P. dated as of
June 18, 1993 (see table of contents for list of omitted
schedules).
(c) 2.6 Purchase Agreement by and among Evergreen Media Corporation of
Washington, D.C., KASP License Corp., WKBQ License Corp. and
Zimco, Inc. (see table of contents for list of omitted exhibits
and schedules).
(d) 2.7 Asset Purchase Agreement, dated November 19, 1993, by and among
Hirsch Holdings of Cleveland, Inc.,
16
<PAGE>
Evergreen Media Corporation of North Florida and Evergreen Media
Corporation of Jacksonville (see table of contents for list of
omitted exhibits and schedules).
(e) 2.8 Asset Purchase Agreement, dated as of December 10, 1993, by and
between Bay Broadcasting Corporation and Evergreen Media
Corporation of Jacksonville (see table of contents for list of
omitted exhibits and schedules).
(f) 2.9 Plan of Reorganization and Merger by and between Evergreen Media
Corporation and Broadcasting Partners, Inc., dated as of January
31, 1995, as amended, including the Form of Registration Rights
Agreement among MLGA Fund I, L.P., MLGA Fund II, L.P., MLGA/BPI
Partners I, L.P., MLGAL Partners, Limited Partnership and
Evergreen Media Corporation (see table of contents for a list of
omitted schedules).
(g) 2.9A Agreement dated as of January 31, 1995 among Evergreen Media
Corporation, Broadcasting Partners, Inc., the holders of the
shares of capital stock of Broadcasting Partners, Inc. and Scott
K. Ginsburg, holder of shares of capital stock of Evergreen Media
Corporation.
(f) 2.10 Plan and Agreement of Merger among Evergreen Media Partners
Corporation, Evergreen Media Corporation and Broadcasting
Partners, Inc., dated as of April 12, 1995.
(h) 2.11 Agreement and Plan of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and Evergreen
Media/Pyramid Corporation dated as of July 14, 1995 (see table of
contents for list of omitted exhibits and schedules).
(i) 2.11A Amendment to Plan and Agreement of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and Evergreen
Media/Pyramid Corporation dated September 7, 1995.
(i) 2.11B Amendment to Plan and Agreement of Merger by and among Pyramid
Communications, Inc., Evergreen Media Corporation and Evergreen
Media/Pyramid Corporation dated January 11, 1996.
17
<PAGE>
(j) 2.12 Purchase Agreement between Fairbanks Communications, Inc. and
Evergreen Media Corporation dated October 12, 1995 (see table of
contents for list of omitted exhibits and schedules).
(n) 2.13 Option Agreement dated as of January 9, 1996 between Chancellor
Broadcasting Company and Evergreen Media Corporation (including
Form of Advertising Brokerage Agreement and Form of Asset
Purchase Agreement).
*2.14 Asset Purchase Agreement dated April 4, 1996 between American
Radio Systems Corporation and Evergreen Media Corporation of
Buffalo (see table of contents for list of omitted exhibits and
schedules).
*2.15 Asset Purchase Agreement dated April 11, 1996 between Mercury
Radio Communications, L.P. and Evergreen Media Corporation of Los
Angeles, Evergreen Media/Pyramid Holdings Corporation, WHTT (AM)
License Corp. and WHTT (FM) License Corp (see table of contents
for list of omitted exhibits and schedules).
*2.16 Asset Purchase Agreement dated April 19, 1996 between Crescent
Communications L.P. and Evergreen Media Corporation of Los
Angeles (see table of contents for list of omitted exhibits and
schedules).
(a) 3.1A Restated Certificate of Incorporation of Evergreen Media
Corporation, dated November 6, 1992.
(k) 3.1B Certificate of Amendment of Restated Certificate of Incorporation
of Evergreen Media Corporation.
(a) 3.2 Restated Bylaws of Evergreen Media Corporation.
(a) 3.3 Certificate of Designation, Preferences, and Relative Rights,
Qualifications, Limitations and Restrictions of the Series A
Preferred Stock of Evergreen Media Corporation.
(a) 3.4 Certificate of Designation relating to the Company's Series 1 13
3/4% Junior Exchangeable Preferred Stock.
(a) 3.5 Certificate of Designation relating to the Company's Series 2 13
3/4% Junior Exchangeable Preferred Stock.
18
<PAGE>
(k) 3.6 Certificate of Designation relating to the Company's Convertible
Exchangeable Preferred Stock.
(a) 4.1 Specimen Class A Common Stock certificate.
(k) 4.1A Specimen Convertible Preferred Stock certificate.
(k) 4.1B Form of Indenture between the Company and the Bank of New York,
as Trustee, relating to the Company's Exchange Debentures that
may be issued in exchange for shares of the Convertible Preferred
Stock.
(a) 4.2 Senior Secured Credit Facilities for Evergreen Media Corporation
of Los Angeles (the "Borrower") from Various Lending Institutions
(the "Banks"), Some of Which are also Acting as Co-Agents (the
"Co-Agents") with Toronto Dominion (Texas), Inc. (the "Agent"),
as Agent for the Co-Agents and the Banks, dated as of November 6,
1992, together with the form of Assignment of Partnership
Interests attached thereto as Exhibit A, the form of Assignment
of Rights by General Partner attached thereto as Exhibit B, the
form of Borrowers Pledge Agreement attached thereto as Exhibit C,
and the forms of other collateral documents attached thereto as
Exhibits D through U.
(a) 4.2A Waiver and Consent, dated March 31, 1993, between Evergreen Media
Corporation of Los Angeles and the Toronto-Dominion Bank, The
Bank of New York, Bank of Montreal, The First National Bank of
Boston, Nations Bank of Texas, N.A., Fleet Bank of Massachusetts,
N.A., ABN AMRO Bank N.V., Society National Bank, Banque Paribas,
and Toronto Dominion (Texas), Inc.
(d) 4.2B First Amendment to Loan Agreement, dated June 25, 1993, between
the Company, the Banks, the Co-Agents and the Agent.
(d) 4.2C Second Amendment to Loan Agreement and other Loan Agreements,
dated October 27, 1993, between the Company, the Banks, the Co-
Agents and the Agent.
19
<PAGE>
(a) 4.3 Amended and Restated Note Purchase Agreement, dated November 6,
1992, between Evergreen Media Corporation of Los Angeles and
Teachers Insurance and Annuity Association of America.
(a) 4.3A Waiver and Consent, dated April 15, 1993, between Evergreen Media
Corporation of Los Angeles and Teachers Insurance and Annuity
Association of America.
(d) 4.3B Amendment, Waiver and Consent, dated October 27, 1993, between
Evergreen Media Corporation of Los Angeles and Teachers Insurance
and Annuity Association of America.
(l) 4.3C Amended and Restated Note Purchase Agreement, dated as of
November 28, 1994, between Evergreen Media Corporation of Los
Angeles and Teachers Insurance and Annuity Association of
America.
(m) 4.3D First Amendment to Amended and Restated Note Purchase Agreement,
dated as of April 12, 1995, between Evergreen Media Corporation
of Los Angeles and Teachers Insurance and Annuity Association of
America.
(b) 4.6 Letter Agreement, dated May 7, 1993, by and among Evergreen Media
Corporation, DLJ Merchant Banking Partners, L.P., DLJ
International Partners, C.V., DLJ Merchant Banking Funding, Inc.,
DLJ Offshore Partners, C.V., Lehman Brothers Merchant Banking
Portfolio Partnership L.P., Lehman Brothers Offshore Investment
Partnership Japan L.P., Lehman Brothers Offshore Investment
Partnership L.P. and Shearson Lehman Brothers Capital Partners II
L.P.
(l) 4.7 Loan Agreement dated November 28, 1994 Among Evergreen Media
Corporation of Los Angeles, Various Financial Institutions (the
"Lenders"); the Bank of New York and NationsBank of Texas, N.A.,
as Agents and Toronto Dominion (Texas), Inc., as Administrative
Agent for the Lenders together with certain collateral documents
attached thereto as exhibits, including Assignment of Partnership
Interests, Borrowers Pledge Agreement, Parent Company Guaranty,
Security Agreement, Stock Pledge Agreement, Subsidiary Guaranty,
Subsidiary Pledge Agreement and Subsidiary Security Agreement.
20
<PAGE>
(m) 4.7A First Amendment to Loan Agreement, dated April 12, 1995, among
Evergreen Media Corporation of Los Angeles, Various Financial
Institutions (the "Lenders"); the Bank of New York and
NationsBank of Texas, N.A., as Agents and Toronto Dominion
(Texas), Inc., as Administrative Agent for the Lenders.
(i) 4.8 Amended and Restated Loan Agreement dated as of January 17, 1996
among Evergreen Media Corporation of Los Angeles, the financial
institutions whose names appear as Lenders on the signature pages
thereof (the "Lenders"), The Toronto Dominion Bank, The Bank of
New York and NationsBank of Texas, N.A., as Arranging Agents, The
Bank of New York, as Syndication Agent, NationsBank of Texas,
N.A., as Documentation Agent, and Toronto Dominion (Texas), Inc.
as Administrative Agent for the Lenders together with certain
collateral documents attached thereto as exhibits, including
Assignment of Partnership Interests, Borrower's Pledge Agreement,
Parent Company Guarantee, Security Agreement, Stock Pledge
Agreement, Subsidiary Guarantee, Subsidiary Pledge Agreement and
Subsidiary Security Agreement.
*4.8A First Amendment to Loan Agreement, dated May 8, 1996, between the
Company, the Banks, the Co-Agents and the Agent.
(i) 4.9 Amended and Restated Note Purchase Agreement dated as of January
17, 1996 among Evergreen Media Corporation of Los Angeles and
Teachers Insurance and Annuity Association of America.
(a)10.1 Securities Purchase Agreement, dated November 6, 1992, among DLJ
Merchant Banking Partners, L.P., DLJ International Partners,
C.V., DLJ Merchant Banking Funding, Inc., DLJ Offshore Partners,
C.V., Evergreen Media Corporation, and Evergreen Media
Corporation of Los Angeles.
(a)10.2 Stockholders Agreement, dated November 6, 1992, among DLJ
Merchant Banking Partners, L.P., DLJ International Partners,
C.V., DLJ Merchant Banking Funding, Inc., DLJ Offshore Partners,
C.V., Evergreen Media Corporation, and Evergreen Media
Corporation.
(b)10.2A Amendment No. 1 to DLJ Stockholders Agreement dated as of May 10,
1993 among the Company, DLJ Merchant Banking Partners, L.P., DLJ
International Partners, C.V., DLJ Merchant Banking Funding, Inc.,
DLJ Offshore Partners, C.V. and Scott K. Ginsburg.
21
<PAGE>
(a)10.3 Registration Rights Agreement, dated as of November 6, 1992 among
DLJ Merchant Banking Partners, L.P., DLJ International Partners,
C.V., DLJ Merchant Banking Funding, Inc., DLJ Offshore Partners,
C.V., and Evergreen Media Corporation.
(a)10.4 Warrant Certificate, dated November 6, 1992, certifying that DLJ
Merchant Banking Partners, L.P., or its assigns is entitled to
purchase shares of Class A Common Stock, par value $0.01 per
share, of the Company.
(a)10.5 Partnership Interest Purchase Agreement, dated November 6, 1992,
between The Sheet Metal Workers' National Pension Fund and
Evergreen Media Corporation.
(a)10.6 Warrant Agreement, dated November 6, 1992, between The Sheet
Metal Workers' National Pension Fund and Evergreen Media
Corporation.
(a)10.7 Stock Purchase Agreement, dated May 15, 1989, entered into by and
among Evergreen Media Corporation, Shearson Lehman Hutton
Merchant Banking Portfolio Partnership L.P., Shearson Lehman
Hutton Offshore Investment Partnership L.P., Shearson Lehman
Hutton Offshore Investment Partnership Japan L.P., Shearson
Lehman Hutton Capital Partners II L.P., and Mid-America Capital
Resources, Inc.
(b)10.7A Master Agreement, dated as of May 10, 1993, made and entered into
among Scott K. Ginsburg, Lehman Brothers Merchant Banking
Portfolio Partnership, L.P., Lehman Brothers Offshore Investment
Partnership, L.P., Lehman Brothers Offshore Investment
Partnership Japan L.P. and Shearson Lehman Capital Partners II
L.P., Mid-America Capital Resources, Inc., DLJ Merchant Banking
Partners, L.P., DLJ International Partners, C.V., DLJ Merchant
Banking Funding, Inc. DLJ Offshore Partners, C.V., with Exhibits
thereto.
(b)10.7C Amendment No. 1 to 1989 Stock Purchase Agreement dated as of May
17, 1993 by and among the Company, Lehman Brothers Merchant
Banking Portfolio Partnership, L.P., Lehman Brothers Offshore
Investment Partnership, L.P., Lehman Brothers Offshore Investment
Partnership Japan, L.P., Shearson Lehman Brothers Capital
Partners, II,
22
<PAGE>
L.P., Mid America Capital Resources, Inc., and Scott K. Ginsburg.
(a)10.8 Time Brokerage Agreement, dated October 16, 1992, between
Evergreen Media Corporation of Washington, D.C. and WPNT, Inc.
(a)10.9 Time Brokerage Agreement, dated May 30, 1992, between Evergreen
Media Corporation of Jacksonville and Metroplex Communications,
Inc.
(a)10.10 Time Brokerage Agreement, dated October 9, 1992, between
Evergreen Media Corporation of Dallas and Armadillo Broadcasting,
L.P.
+(a)10.11 1992 Key Employee Stock Option Plan, dated August 5, 1992.
+(a)10.12 1993 Key Employee Stock Option Plan, dated March 15, 1993.
+(a)10.13 Employment Agreement, dated May 1, 1989, by and between Evergreen
Media Corporation and Scott K. Ginsburg, as amended.
+(a)10.14 Employment Agreement, dated March 1, 1993, by and between
Evergreen Media Corporation of Los Angeles and James de Castro.
+(a)10.15 Option Agreement, dated March 1, 1993, by and between Evergreen
Media Corporation and James de Castro.
+(a)10.16 Employment Agreement, dated March 23, 1993, by and between
Evergreen Media Corporation of Los Angeles and Matthew E. Devine.
+(a)10.17 Option Agreement, dated March 1, 1993, between Evergreen Media
Corporation and Matthew E. Devine.
(a)10.18 Equipment Lease, dated July 1, 1986, between Statewide
Broadcasting of Dallas, Inc. and Midway Equipment Leasing, Inc.
(a)10.19 Equipment Lease, dated July 1, 1986, between Statewide
Broadcasting of Duval County, Inc. and Midway Equipment Leasing,
Inc.
(b)10.20 Local Programming and Marketing Agreement by and between Major
Broadcasting of Chicago, Inc. and
23
<PAGE>
Evergreen Media Corporation of Illinois dated as of June 30, 1993
(see table of contents for list of omitted exhibits and
schedules).
(k)10.21 Letter Agreement, dated October 19, 1993, between the Company and
the Sheet Metal Workers' Union National Pension Fund.
(c)10.22 Non-Competition Agreement between Evergreen Media Corporation of
Illinois, Major Broadcasting of Chicago, Inc., and the other
Covenantors named therein.
(f)10.23 Evergreen Media Corporation Stock Option Plan for Non-employee
Directors (included as Annex E to the Joint Proxy
Statement/Prospectus)
+(n)10.24 Employment Agreement dated November 28, 1995 by and between
Evergreen Media Corporation and Matthew E. Devine.
+(n)10.25 Employment Agreement dated November 28, 1995 by and between
Evergreen Media Corporation and James de Castro.
+(n)10.26 Employment Agreement dated February 9, 1996 by and between
Evergreen Media Corporation and Kenneth J. O'Keefe.
+*10.27 Employment Agreement, dated April 15, 1996 by and between
Evergreen Media Corporation and Scott K. Ginsburg, as amended.
+*10.28 1995 Stock Option Plan for executive officers and key employees
of Evergreen Media Corporation.
*27 Financial Data Schedule
- --------------------
*Filed herewith.
+Management contract or compensatory arrangement.
(a) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-1, as amended (Reg. No. 33-
60036).
(b) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-Q for the quarterly period ended June 30, 1993
(c) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated December 27, 1993.
(d) Incorporated by reference to the identically numbered exhibit to the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1993 (File No. 0-215-70).
(e) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated April 25, 1994.
24
<PAGE>
(f) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-4, as amended (Reg. No. 33-
89838).
(g) Incorporated by reference to Exhibit No. 4.8 to the Company's Registration
Statement on Form S-4, as amended (Reg. No. 33-89838).
(h) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated July 14, 1995.
(i) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 8-K dated January 17, 1996.
(j) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-Q for the quarterly period ending September 30,
1995.
(k) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-1, as amended (Reg. No. 33-
69752).
(l) Incorporated by reference to the identically numbered exhibit to the
Company's Registration Statement on Form S-3, as amended (Reg. No. 33-
85506).
(m) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-Q for the quarterly period ended March 31,
1995.
(n) Incorporated by reference to the identically numbered exhibit to the
Company's Report on Form 10-K for the fiscal year ended
December 31, 1995.
(b) Report on Form 8-K
A report on Form 8-K dated January 17, 1996, was filed by the Company
with the Securities and Exchange Commission on January 31, 1996. It
reported under Item 2 that the Company acquired Pyramid
Communications, Inc. ("Pyramid"), the owner and operator of nine FM
and three AM radio stations in five radio markets (the "Pyramid
Acquisition"). The Report on Form 8-K also included (i) pro forma
financial statements for the Company giving effect to the Pyramid
Acquisition, (ii) the Unaudited Condensed Consolidated Balance Sheet
of Pyramid and Subsidiaries as of September 30, 1995, (iii) the
Unaudited Condensed Consolidated Statements of Operations, Changes in
Stockholders Equity and Cash Flows of Pyramid and Subsidiaries for the
nine months ended September 30, 1995.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EVERGREEN MEDIA CORPORATION
---------------------------
(Registrant)
/s/ Matthew E. Devine
---------------------------
Matthew E. Devine
Senior Vice President/
Chief Financial Officer
Dated: May 14, 1996
<PAGE>
EXHIBIT 2.14
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT is dated April 4, 1996, by and between
American Radio Systems Corporation, a Delaware corporation ("Buyer"), and
Evergreen Media Corporation of Buffalo, a Delaware corporation ("Seller").
P R E M I S E S
A. Seller is the licensee of and operates radio station WSJZ(FM),
Buffalo, New York (the "Station") pursuant to licenses issued by the Federal
Communications Commission (the "FCC").
B. Seller desires to sell, and Buyer wishes to buy, substantially all of
Seller's assets used solely in the operation of the Station for the price and on
the terms and conditions hereafter set forth.
C. Concurrently with the execution of this Agreement, Seller and Buyer
are entering into a Time Brokerage Agreement (the "Time Brokerage Agreement"),
providing for the sale of substantially all of the broadcast time of the Station
from Seller to Buyer, subject to the rules and policies of the FCC.
AGREEMENTS:
In consideration of the above premises and the covenants and
agreements contained herein, Buyer and Seller agree as follows:
<PAGE>
SECTION 1
DEFINED TERMS
The following terms shall have the following meanings in this
Agreement:
1.1 "Accounts Receivable" means the rights of Seller to payment for
services rendered (including sale of time or talent on the Station for cash) by
Seller prior to the Closing Date as reflected on the billing records of Seller
relating to the Station.
1.2 "Assets" means the tangible and intangible assets owned and used or
useful in connection with the conduct of the business or operations of the
Station, which assets are being sold, transferred, or otherwise conveyed to
Buyer hereunder, as specified in detail in Section 2.1.
1.3 "Assumed Contracts" means (i) all Contracts listed in Schedule 3.7,
(ii) any Contracts entered into by Seller in the ordinary course of business
between the date hereof and the Closing Date which would have been listed on
Schedule 3.7 had they been in existence on the date hereof and which Buyer
agrees in writing to assume, (iii) all Contracts in existence on the Closing
Date which meet the criteria set forth in Section 3.7 (i) - (iii) for exclusion
from Schedule 3.7, and (iv) all Contracts with advertisers for the sale of time
or talent on the Station for cash entered into in the ordinary course of
business.
1.4 "Closing" means the consummation of the transaction contemplated by
this Agreement in accordance with the provisions of Section 8.
1.5 "Closing Date" means the date of the Closing specified in
Section 8.1.
1.6 "Consents" means all of the consents, permits or approvals of
government authorities and other third parties necessary to transfer the Assets
to Buyer or otherwise to consummate the transaction contemplated hereby,
including without limitation the consents of the parties to those Contracts
designated in Schedule 3.7 with an asterisk.
2
<PAGE>
1.7 "Contracts" means all agreements and leases, written or oral
(including any amendments and other modifications thereto) to which Seller is a
party or which are binding upon Seller and affect the assets or the business or
operations of the Station, and (i) which are in effect on the date hereof, or
(ii) which are entered into by Seller in the ordinary course of business between
the date hereto and the Closing Date.
1.8 "Escrow Deposit" shall mean the sum of Five Hundred Thousand Dollars
($500,000) held by Star Media Group as Escrow Agent pursuant to an Escrow
Agreement of even date, by and among Buyer, Seller, and Escrow Agent in the form
of Schedule 1.8 hereto (the "Escrow Agreement").
1.9 "Excluded Assets" shall mean those assets
described or set forth in Section 2.2 herein and on Schedule 2.2 hereto.
1.10 "FCC Consent" means action by the FCC granting its consent to the
assignment of the FCC Licenses to Buyer as contemplated by this Agreement.
1.11 "FCC Licenses" means all of the licenses, permits and other
authorizations issued by the FCC to Seller in connection with the conduct of the
business or operations of the Station.
1.12 "Licenses" means all of the licenses, permits and other
authorizations, including the FCC Licenses, issued by the FCC, the Federal
Aviation Administration ("FAA"), and any other federal, state or local
government authorities to Seller in connection with the conduct of the business
or operations of the Station, except such licenses, permits and other
authorizations as are used by Seller in the conduct of its business other than
the Station.
1.13 "Personal Property" means all of the machinery, equipment, tools,
vehicles, furniture, leasehold improvements, office equipment, plant, spare
parts, and other tangible personal property which are owned or leased by Seller
and used as of the date hereof solely
3
<PAGE>
in the conduct of the business or operations of the Station excluding such
tangible personal property located at the Station's office and studio site that
cannot be removed without causing damage or in compliance with the Studio Lease
(as defined below) (the "Studio Fixtures").
1.14 "Purchase Price" means the purchase price specified in Section 2.3.
1.15 "Real Property" means all of the fee estates and buildings and other
improvements thereon, leasehold interests, easements, licenses, rights to
access, right-of-way, and other real property interest owned by Seller and
identified on Schedule 3.5 hereof plus such additions thereto and deletions
therefrom arising in the ordinary course of business between the date hereof and
the Closing Date, but specifically excluding the real property lease, originally
dated May 16, 1984 by and between WFXZ, Inc., a predecessor in interest to
Seller, and Fairfax House Associates, associated with the Station's office and
studio site located at 715 Delaware Avenue, Buffalo, New York (the "Studio
Lease").
SECTION 2
SALE AND PURCHASE OF ASSETS
2.1 Agreement to Sell and Buy. Subject to the terms and conditions set
-------------------------
forth in this Agreement, Seller hereby agrees to transfer and deliver to Buyer
on the Closing Date, and Buyer agrees to purchase, all of the Assets, free and
clear of any claims, liabilities, mortgages, liens, pledges, conditions,
charges, or encumbrances of any nature whatsoever (except for those permitted
in accordance with Section 2.5, 3.5 or 3.6 below (the "Permitted Liens")),
more specifically described as follows:
(a) The Personal Property;
(b) The Real Property
(c) The Licenses;
(d) The Assumed Contracts;
4
<PAGE>
(e) All trademarks, trade names, service marks and all other information
and similar intangible assets relating to the Station, including those listed in
Schedule 3.9 hereto;
(f) All of the Seller's intangible assets, which relate to the Station,
including without limitation, technical information and data, machinery and
equipment warranties, maps, computer discs and tapes, plans, diagrams,
blueprints, and schematics, including filings with the FCC which relate to the
Station, if any, except such intangible assets which are primarily used in
connection with Seller's other stations located in Buffalo, New York, WHTT(FM)
and WHTT(AM) (the "WHTT Stations"), or such intangible assets which constitute
proprietary information of Seller;
(g) All choses in action and rights under warranties of Seller relating
to the Station or the Assets, if any;
(h) All books and records relating exclusively to the business or
operations of the Station, including executed copies of the Assumed Contracts,
and all records required by the FCC to be kept, subject to the right of Seller
to have such books and records made available to Seller for a reasonable period,
not to exceed three (3) years; and
(i) All intangible assets of Seller relating to the Station not
specifically described above (except to the extent excluded above).
2.2 Excluded Assets. The Assets shall exclude the following assets, in
---------------
addition to those listed on Schedule 2.2.
(a) Seller's cash on hand as of the Closing Date and all other cash in
any of Seller's bank or savings accounts; any and all insurance policies,
letters or credit, or other similar items and any cash surrender value in regard
thereto; and any stocks, bonds, certificates of deposit and similar investments.
5
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(b) Any Contracts other than the Assumed Contracts,
specifically excluding the Studio Lease;
(c) All books and records of Seller not relating exclusively to the
business or operations of the Station, subject to the right of Buyer to have
access and to copy for a period of three (3) years from the Closing Date, and
Seller's corporate records and other books and records related to internal
matters and financial relationships with Seller's lenders;
(d) Any claims, rights and interest in and to any refunds of federal,
state or local franchise, income or other taxes or fees of any nature whatsoever
for periods prior to the Closing Date;
(e) Any pension, profit sharing or employee benefit plans, and any
employment or collective bargaining agreement, except to the extent specifically
assumed in Section 2.4, 2.5 or 6.10 of this Agreement;
(f) The Accounts Receivable.
2.3 Purchase Price. The Purchase Price shall be Twelve Million Five
--------------
Hundred Thousand Dollars ($12,500,000). The Purchase Price shall be adjusted to
reflect any adjustments or prorations made and agreed to at Closing as provided
in Section 2.4 hereof.
2.4 Adjustments and Prorations. Except to the extent assigned or assumed
--------------------------
pursuant to the Time Brokerage Agreement, all revenues arising from the Station
up until midnight on the day prior to the Closing Date, and all expenses arising
from the Station up until midnight on the day prior to the Closing Date,
including business and license fees (including any retroactive adjustments
thereof), utility charges, real and personal property taxes and assessments
levied against the Assets, accrued employee benefits such as vacation time and
sick time, property and equipment rentals, applicable copyright or other fees,
sales and service charges, taxes (except for taxes a arising from the transfer
of the Assets
6
<PAGE>
hereunder), and similar prepaid and deferred items, shall be prorated between
Buyer and Seller in accordance with the principle that Seller shall receive all
revenues, and all refunds to Seller and deposits of Seller held by third
parties, and shall be responsible for all expenses, costs and liabilities
allocable to the conduct of the business or operations of the Station for the
period prior to the Closing Date, and Buyer shall receive all revenues and shall
be responsible for all expenses, costs and obligations allocable to the conduct
of the business or operations of the Station on the Closing Date and for the
period thereafter.
Notwithstanding the foregoing, there shall be no adjustment for, and
Seller shall remain solely liable with respect to, any Contracts not included in
the Assumed Contracts, or any other obligation or liability not being assumed by
Buyer in accordance with Section 2.5.
A. Any adjustments or prorations will, insofar as feasible, be
determined and paid on the Closing Date, with final settlement and payment being
made in accordance with the procedures set forth in Section 2.4B.
B. Within sixty (60) days after the Closing Date, Buyer shall deliver
to Seller a certificate (the "Closing Certificate"), signed by a senior officer
of Buyer after due inquiry by such officer but without any personal liability to
such officer, providing a compilation of the adjustments and prorations to be
made pursuant to this Section 2.4, including any adjustments and prorations made
at Closing, together with a copy of any working papers relating to such Closing
Certificate and such other supporting evidence as Seller may reasonably request.
If Seller shall conclude that the Closing Certificate does not accurately
reflect the adjustments and prorations to be made pursuant to this Section 2.4,
Seller shall, within thirty (30) days after its receipt of the Closing
Certificate, provide to Buyer its written statement of any discrepancies
believed to exist. Joseph L. Winn on behalf of Buyer, and Matt Devine on behalf
of Seller, or their respective designees, shall attempt jointly to resolve
7
<PAGE>
the discrepancies within fifteen (15) days after receipt of Seller's discrepancy
statement, which resolution, if achieved, shall be binding upon all parties to
this Agreement and not subject to dispute or review. If such representatives
cannot resolve the discrepancy to their mutual satisfaction within such fifteen
(15) day period, Buyer and Seller shall, within the following ten (10) days,
jointly designate a nationally known independent public accounting firm to be
retained to review the Closing Certificate together with Seller's discrepancy
statement and any other relevant documents. The cost of retaining such
independent public accounting firm shall be borne equally by Buyer and Seller.
Such firm shall report its conclusions as to adjustments pursuant to this
Section 2.4, which report shall be conclusive on all parties to this Agreement
and not subject to dispute or review. If, after adjustment as appropriate with
respect to the amount of the aforesaid adjustments paid or credited at the
Closing, Buyer is determined to owe an amount to Seller, Buyer shall pay such
amount to Seller, and if Seller is determined to owe an amount to Buyer, Seller
shall pay such amount thereof to Buyer, in each case within ten (10) days of
such determination.
2.5 Assumption of Liabilities and Obligations. As of the Closing Date,
-----------------------------------------
Buyer shall pay, discharge and perform (i) all of the obligations and
liabilities of Seller under the Licenses and the Assumed Contracts insofar as
they relate to the time period after the Closing Date, and arising out of events
occurring after the Closing Date, (ii) all liabilities under any Contracts
assumed under the Time Brokerage Agreement as provided in the Time Brokerage
Agreement, (iii) all obligations and liabilities arising out of events occurring
after the Closing Date related to Buyer's ownership of the Assets or its conduct
of the business or operations of the Station after the Closing Date, and (iv)
all obligations and liabilities for which Buyer receives a proration adjustment
hereunder. All other obligations and liabilities of Seller, including (i) any
obligations under any Contract not included in the Assumed
8
<PAGE>
Contracts (except to the extent assumed by Buyer pursuant to the Time Brokerage
Agreement), (ii) any obligations under the Assumed Contracts relating to the
time period on or prior to the Closing Date (except to the extent assumed by
Buyer pursuant to the Time Brokerage Agreement) and (iii) any claims or pending
litigation or proceedings relating to the operation of the Station on or prior
to the Closing Date, shall be returned to Seller.
2.6 Escrow Agreement. Simultaneously with the execution of this
----------------
Agreement, the parties to this Agreement and Escrow Agent are entering into the
Escrow Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer as follows:
3.1 Organization, Standing and Authority. Seller is a corporation duly
------------------------------------
formed, validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to conduct its business in the State of New York,
which is the only jurisdiction where the conduct of the business or operations
of the Station requires such qualification and the failure to so qualify would
have a material adverse effect on Seller. Seller has all requisite corporate
power and authority (i) to own, lease, and use the Assets as presently owned,
leased, and used, and (ii) to conduct the business or operations of the Stations
as presently conducted. Seller has all requisite corporate power and authority
to execute and deliver this Agreement and the documents contemplated hereby, and
to perform and comply with all of the terms, covenants and conditions to be
performed and complied with by Seller, hereunder and thereunder. Seller is not
a participant in any joint venture or partnership with any other person or
entity with respect to any part of the Stations' operations or the Assets.
3.2 Authorization and Binding Obligation. The execution, delivery, and
------------------------------------
performance of this Agreement and the Time Brokerage Agreement by Seller have
been duly
9
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authorized by all necessary corporate action on the part of Seller. This
Agreement and the Time Brokerage Agreement have been duly executed and delivered
by Seller and constitute the legal, valid, and binding obligations of Seller,
enforceable against Seller in accordance with their terms except as the
enforceability hereof and thereof may be affected by bankruptcy, insolvency, or
similar laws affecting creditors' rights generally, or by court-applied
equitable remedies.
3.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery, and performance of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party; (ii) will not
conflict with any provision of the Articles of Incorporation and By-Laws of
Seller; (iii) will not conflict with, result in a breach of or constitute a
default under, any law, judgment, order, ordinance, decree, rule, regulation or
ruling of any court or governmental instrumentality, which is applicable to
Seller; (iv) will not conflict with, constitute grounds for termination of,
result in a breach of, constitute a 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 either Seller is a party or by
which either may be bound; or (v) will not create any claim, liability,
mortgage, lien, pledge, condition, charge, or encumbrance of any nature
whatsoever upon the Assets.
3.4 Licenses. Seller has all Licenses necessary to enable the continued
--------
conduct of the business of the Station as presently conducted, in all material
respects. Schedule 3.4 includes a true and complete list of the Licenses.
Seller has delivered to Buyer true and complete copies of each of the Licenses
listed on Schedule 3.4. Such Licenses are issued in the name of or have been
assigned to Seller or its affiliates and are in full force and effect. Except
as set forth on Schedule 3.4, (i) Seller or one of its affiliates is the
authorized legal
10
<PAGE>
holder of the Licenses listed on Schedule 3.4 and (ii) Seller knows of no reason
related to Seller why the FCC would not approve the renewal of such Licenses
upon expiration of the current term of each such License.
3.5 Title to and Condition of Real Property.
---------------------------------------
(a) Schedule 3.5 contains a materially accurate description of the location
of the material Real Property owned or leased by Seller and used in the
operation of the Station (other than the Studio Lease), and identifies whether
such Real Property is owned or leased. Except as set forth on Schedule 3.5 and
except for Permitted Liens, Seller or one or more of its affiliates has good and
marketable title to such Real Property in fee simple absolute, in the case of
owned Real Property, and a valid leasehold interest, in the case of leased Real
Property, in each case, free and clear of all liens, mortgages, pledges,
covenants, easements, restrictions, encroachments, leases, charges, and other
claims and encumbrances, except for Permitted Liens. To the best of Seller's
knowledge, all towers, guy anchors, and buildings and other improvements,
included in the owned Assets are located entirely on the Real Property listed in
Schedule 3.5. Except as set forth on Schedule 3.5, Seller enjoys peaceful and
quiet possession of such material Real Property, except for such occurrences
which would not, individually or in the aggregate, reasonably be expected to
materially impair the value of the Assets in the hands of the Buyer.
(b) Seller has not received any written notice of violation under any
lease of any kind of such leased material Real Property (a "Lease") or any
material default by Seller or any of its subsidiaries thereunder or any
condition which, with notice and the passage of time, or both, would constitute
such a material default, and no such default has occurred. Schedule 3.5
contains a complete and accurate list of all such Leases.
11
<PAGE>
3.6 Title to and Condition of Personal Property. Except as set forth on
-------------------------------------------
Schedule 3.6, all material items of tangible personal property used by Seller
solely in connection with the operation of the Station is owned by Seller free
and clear of all liens, pledges, mortgages, security interests or other
encumbrances or is leased by Seller pursuant to a lease included among the
Assumed Contracts. Except as set forth on Schedule 3.6, all such material
tangible personal property is, together with the Studio Fixtures, sufficient to
operate the Station as it is now operated and, subject to normal wear and tear,
will be in the same condition on the Closing Date as on the date hereof.
3.7 Contracts. Schedule 3.7 contains a list, as of the date hereof, of
---------
all Contracts except for (i) any contract for the sale of air time other than
those entered into outside of the ordinary course of business and in excess of
$50,000, (ii) employment contracts and miscellaneous service contracts
terminable at will without penalty and (iii) other contracts not involving
aggregate liabilities under all such contracts exceeding Fifty Thousand
($50,000) Dollars. Each Contract identified on Schedule 3.7 (other than those
which will have terminated or expired on or prior to the Closing Date in
accordance with their terms) is in full force and effect and is a valid and
binding obligation of Seller, enforceable in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equitable principles, regardless of
whether such enforceability is considered in a proceeding in equity or at law,
and except where the lack of enforceability would not, individually or in the
aggregate, reasonably be expected to materially impair the value of the Assets
in the hands of the Buyer. No event has occurred which (whether with or without
notice or the lapse of time or both, or the happening or occurrence of any other
event) would constitute a default by Seller or, to the knowledge of
12
<PAGE>
Seller, any default by any other party thereto, or result in a right in
termination of, any Contract, other than any event that would not, individually
or in the aggregate, reasonably be expected to materially impair the value of
the Assets in the hands of the Buyer. Except as set forth on Schedule 3.7,
Seller has no knowledge of any intention, as of the date of this Agreement, by
any party to any Assumed Contract (a) to terminate such Contract or amend the
terms thereof, (b) to refuse to renew such Contract upon expiration thereof or
(c) to renew such Contract upon expiration thereof on terms and conditions which
are more onerous to Seller than those pertaining to such existing Contract,
except for any such actions which, individually or in the aggregate, would not
materially impair the value of the Assets in the hands of Buyer. Copies (or, if
oral, written summaries) of each such Contract have been made available to the
extent requested by Buyer.
3.8 Consents. Except for the FCC Consent provided for in Section 6.1 and
--------
the other Consents indicated in Schedule 3.7 or described in Schedule 3.8, no
consent, approval, permit or authorization of, or declaration to or filing with
any governmental or regulatory authority, or any other third party is required
(i) to permit Seller to consummate this Agreement and the transaction
contemplated hereby, (ii) to permit Seller to assign or transfer the Assets to
Buyer, or (iii) to enable Buyer to conduct the business or operations of the
Station in essentially the same manner as such business or operations are
presently conducted.
3.9 Trademarks, Trade Names and Copyrights. Except as set forth in
--------------------------------------
Schedule 3.9, Seller possesses adequate licenses or other rights to use all call
letters, trademarks and service marks (registered and unregistered), patents,
trade names, franchises, copyrights and other similar intangible property rights
and interests (i) which are necessary to conduct the business or operations of
the Station and (ii) the loss of which, individually, or in the
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<PAGE>
aggregate, would reasonably be expected to materially impair the value of the
Assets in the hands of Buyer. Schedule 3.9 contains a correct and complete list
of all such call letters, trademarks, service marks, patents, trade names,
franchises, copyrights and similar intangible property rights and all royalties,
limitations, restrictions or other obligations of Seller with respect to the
ownership or use of the call letters, trademarks, service marks, patents, trade
names, franchises, copyrights and similar intangible property rights included
therein. Except as set forth in Schedule 3.9, there are no claims or proceedings
pending or, to the knowledge of Seller, threatened against Seller asserting that
the ownership or use by Seller of any of the call letters, trademarks, service
marks, patents, trade names, franchises, copyrights and similar intangible
property rights infringes the rights of any other person, other than those
claims or proceedings which, individually or in the aggregate, would not
reasonably be expected to materially impair the value of the Assets in the hands
of Buyer, and Seller has no knowledge of ownership or any use thereof by Seller
that may, with notice or lapse of time or both, give rise to such a claim.
Except as set forth on Section 3.9, Seller has not licensed or otherwise
assigned any interest in any call letters, trademarks, service marks, patents,
trade names, franchises, copyrights and similar intangible property rights to
any third party.
3.10 Financial Information. Seller has provided Buyer the financial
---------------------
information concerning the Station described on Schedule 3.10 (the "Financial
Information"). The Financial Information is provided for informational purposes
only, and Seller makes no representation or warranty concerning the accuracy of
the Financial Information. Buyer acknowledges that Seller is not obligated to
make capital expenditures in accordance with the Financial Information.
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<PAGE>
3.11 Insurance. Schedule 3.11 comprises a true and complete list, in all
---------
material respects, of all insurance policies of Seller as of the date hereof.
As of the date hereof, all policies of insurance listed on Schedule 3.11 are in
full force and effect.
3.12 Reports. Except where failure to do so would not have a material
-------
adverse effect on the ownership or operation of the Station: all returns,
reports and statements which the Station is currently required to file with the
FCC or with any other governmental agency have been filed, and all reporting
requirements of the FCC and other governmental authorities having jurisdiction
thereof have been complied with; all of such reports, returns and statements are
complete and correct in all material respects as filed; and the Station's public
inspection file is located at the main studio and is in compliance with the
FCC's rules and regulations.
3.13 Employee Benefit Plans.
----------------------
(a) Schedule 3.13 contains a correct and complete list as of the date
of this Agreement of each employee benefit plan (including, without limitation,
any "employee benefit plan" within the meaning of section 3(3) of ERISA and any
multiemployer plans within the meaning of Section 3(37) of ERISA) under which
any employee or former employee of Seller employed at the Station has any
present or future right to benefits or under which Seller or any of its
affiliates has any present or future liability (the "Plans"). Seller has made
available to Buyer a current, accurate and complete copy, in all material
respects, of each Plan.
(b) To the best knowledge of Seller, (i) each Plan has been
established and administered in accordance with its terms in all material
respects, and in material compliance with the applicable provisions of ERISA,
the Internal Revenue Code of 1986, as amended, and the Treasury Regulations
thereunder (the "Code") and other applicable laws, rules and
15
<PAGE>
regulations and (ii) with respect to any Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to Seller's knowledge, threatened, and to Seller's knowledge no facts or
circumstances exist which would be reasonably expected to give rise to any such
actions, suits or claims which would be reasonably expected to materially impair
the value of the Assets in the hands of Buyer if an adverse outcome with respect
thereto were to occur.
3.14 Labor Relations. As of the date hereof, Seller is not a party to or
---------------
subject to any collective bargaining agreements with respect to the Station
except as described in Schedule 3.7 hereto. Seller has no written or oral
contracts of employment with any employee of the Station, other than those
listed in Schedule 3.7. Seller has provided Buyer with true and complete copies
of all such written contracts of employment and true and complete memoranda of
any such oral contracts. Seller, in the operation of the Station, has complied
in all material respects with all applicable laws, rules and regulations
relating to the employment of labor, including those related to wages, hours,
collective bargaining, occupational safety, discrimination, and the payment of
social security and other payroll related taxes, and it has not received any
written notice alleging that it has failed to comply in any material respect
with any such laws, rules or regulations. Except as set forth on Schedule 3.14
or 3.16, no material controversies, disputes, or proceedings are pending or, to
the best of its knowledge, threatened, against Seller with respect to its
employees at the Station. As of the date hereof, to the knowledge of Seller, no
labor union or other collective bargaining unit represents any of the employees
of the Station. As of the date hereof, to the best knowledge of Seller, there
is no union campaign being conducted to solicit cards from employees to
authorize a union to request a National Labor Relations Board certification
election with respect to any of Seller's employees at the Station.
16
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3.15 Taxes. Seller has filed or caused to be filed all federal income tax
-----
returns and all other federal, state, county, local or city tax returns which
are required to be filed, and it has paid or cause to be paid all taxes shown on
said returns or on any tax assessment received by it to the extent that such
taxes have become due, or has set aside on its books reserves (segregated to the
extent required by sound accounting practice) deemed by it to be
17
<PAGE>
adequate with respect thereto. No events have occurred which could impose on
Buyer any transferee liability for any taxes, penalties or interest due or to
become due from Seller.
3.16 Claims, Legal Actions. Except as set forth in Schedule 3.16, and
---------------------
except for any investigations and rule-making proceedings affecting FM radio
broadcast stations in the market where the Station is operated, Seller has been
served with no claim, legal action, counterclaim, suit, arbitration,
governmental investigation or other legal, administrative or tax proceeding, nor
any order, decree or judgment, that is in progress or pending, nor to the
knowledge of Seller has any such matter been threatened, against or relating to
Seller, the Assets, or the business or operations of the Station, nor does
Seller know of any basis for the same that would materially impair the value of
the Assets in the hands of Buyer after the Closing. In particular, except as
set forth in Schedule 3.16, but without limiting the generality of the
foregoing, Seller has not been provided with any written notice of any written
applications, complaints or proceedings pending or, to the best of its
knowledge, threatened (i) before the FCC relating to the business or operations
of the Station other than applications, complaints or proceedings which affect
FM radio broadcast stations in the market where the Station is operated
generally, (ii) before any federal or state agency involving charges of illegal
discrimination by the Station under any federal or state employment laws or
regulations, or (iii) against Seller or the Station before any federal, state or
local agency involving environmental or zoning laws or regulations.
3.17 Compliance with Laws. To the best knowledge of Seller, Seller has
--------------------
complied in all material respects with (i) the Licenses, and (ii) all applicable
federal, state and local laws, rules, regulations and ordinances, the violations
of which would not materially impair the value of the assets in the hands of the
Buyer. To the best knowledge of Seller, neither
18
<PAGE>
the ownership or use, nor the conduct of the business or operations, of the
Station materially conflicts with rights of any other person, firm or
corporation.
3.18 Environmental Matters. Except as set forth in Schedule 3.18:
---------------------
(a) The Real Property and all operations conducted by Seller on or at
the Real Property are in compliance with all applicable Environmental Laws,
except where such failure to comply would not, individually or in the aggregate,
reasonably be expected to materially impair the value of the Assets in the hands
of Buyer. "Environmental Laws" means any and all Federal, state or local laws,
statutes, rules, regulations, plans, ordinances, codes, licenses or other
restrictions relating to health, safety or the environment, including without
limitation the Comprehensive Environmental Response, Compensation and Liability
Act, the Clean Air Act, the Safe Drinking Water Act, the Toxic Substances
Control Act and the Occupational Health and Safety Act.
(b) Seller has not received any written notice of violation, alleged
violation, non-compliance, liability or potential liability regarding
environmental matters or compliance with Environmental Laws with regard to the
Real Property, except for such actions that would not, individually or in the
aggregate, reasonably be expected to materially impair the value of the Assets
in the hands of Buyer.
(c) To the best knowledge of Seller, Hazardous Materials have not been
transported or disposed of from the Real Property in violation of, or in a
manner or to a location which gives rise to liability under, Environmental Laws,
nor have any Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of the Real Property in violation of, or in a manner that
would give rise to liability under, any applicable Environmental Laws, except
for such violations or liability that would not, individually or in the
aggregate, reasonably be expected to materially impair the value of the Assets
in the
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hands of Buyer. "Hazardous Materials" means any toxic or hazardous wastes,
substances, products, pollutants or materials of any kind, including, without
limitation, petroleum and petroleum products and asbestos, or any other wastes,
substances, products, pollutants or material regulated under any Environmental
Laws.
(d) There are no judicial proceedings or governmental or administrative
actions pending or, to the knowledge of Seller, threatened under any
Environmental Law to which Seller is or will be named as a party with respect to
the Real Property, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect to
the Real Property, except for such proceedings or actions that would not,
individually or in the aggregate, reasonably be expected to materially impair
the value of the Assets in the hands of Buyer.
(e) There has been no release or threat of release of Hazardous Materials
at or from the Real Property, or arising from or related to the operations of
the Station in connection with the Real Property, in amounts or in a manner
that, individually or in the aggregate, would reasonably be expected to
materially impair the value of the Assets in the hands of Buyer.
(f) Buyer shall be entitled to order and have undertaken on its behalf
within 20 days after the date of this Agreement a Phase I Environmental
Assessment of the Real Property, and shall be granted all Cooperation and access
by Seller reasonably necessary to complete such Assessment. If the report of
such Assessment demonstrates or recommends remediation in order to cause the
Real Property to comply with Environmental Laws, Seller shall immediately
undertake to arrange, at its own expense, such remediation prior to Closing.
Notwithstanding the foregoing, in the event such remediation costs or is
estimated
20
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to cost in excess of Twenty-five Thousand Dollars ($25,000), Seller shall not be
obligated to extend such excess, but in such event Buyer may thereafter, at its
option, (i) accept the condition of the Real Property at Closing as so
remediated, or (ii) terminate its obligations to purchase the Station under this
Agreement.
3.19 Full Disclosure. No representation or warranty made by Seller herein
---------------
nor any certificate, document or other instrument furnished or to be furnished
by Seller pursuant hereto contains or will contain any untrue statement of a
material fact made intentionally or in bad faith, or intentionally or in bad
faith omits or will omit to state any material fact known to Seller and required
to make the statements herein or therein not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Organization, Standing and Authority. Buyer is a corporation duly
------------------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware, and shall be, at Closing, qualified to conduct business in the State
of New York. Buyer has all requisite corporate power and authority to execute
and deliver this Agreement and the documents contemplated hereby, and to perform
and comply with all of the terms, covenants, and conditions to be performed and
complied with by Buyer hereunder and hereunder.
4.2 Authorization and Binding Obligation. The execution, delivery and
------------------------------------
performance of this Agreement and the Time Brokerage Agreement by Buyer have
been duly authorized by all necessary corporate action on the part of Buyer.
This Agreement and the Time Brokerage Agreement have been duly executed and
delivered by Buyer and constitute the legal, valid, and binding obligations of
Buyer, enforceable against Buyer in accordance with their terms except as the
enforceability hereof and thereof may be affected by
21
<PAGE>
bankruptcy, insolvency, or similar laws affecting creditors' rights generally,
or by court-applied equitable remedies.
4.3 Absence of Conflicting Agreements. Subject to obtaining the Consents,
---------------------------------
the execution, delivery, and performance of this Agreement and the documents
contemplated hereby (with or without the giving of notice, the lapse of time, or
both): (i) does not require the consent of any third party, (ii) will not
conflict with the Articles of Incorporation or By-laws of Buyer, (iii) will not
conflict with, result in a breach of, or constitute a default under, or
accelerate or permit the acceleration of any performance required by the terms
of, any material agreement, instrument, licenses, or permit to which Buyer is a
party or by which Buyer may be bound.
4.4 Full Disclosure. No representation or warranty made by Buyer herein
---------------
nor any certificate, document or other instrument furnished or to be furnished
by Buyer pursuant hereto contains or will contain any untrue statement of a
material fact made intentionally or in bad faith, or intentionally or in bad
faith omits or will omit to state any material fact known to Buyer and required
to make the statements herein or therein not misleading.
4.5 Litigation. There is no action, suit, investigation or other
----------
proceeding pending or, to Buyer's knowledge, threatened which may adversely
affect Buyer's ability to perform in accordance with the terms of this
Agreement, and Buyer is unaware of any facts which could reasonably result in
any such proceeding.
4.6 FCC Qualification. To the extent that Buyer and its affiliates
-----------------
currently hold FCC licenses for the operation of radio broadcast stations, Buyer
and its affiliates are FCC licensees in good standing without unresolved
character issues or other complaints or proceedings pending as against Buyer or
its affiliates or with respect to any FCC license now or previously held by
them. Buyer has no knowledge of any facts which would, as a matter
22
<PAGE>
of law (including the Communications Act of 1934, as amended, the
Telecommunications Act of 1996, the present rules, regulations and practices of
the FCC, and the proposed rules, regulations and practices of the FCC under the
Telecommunications Act of 1996), (a) disqualify Buyer as an assignee of the
licenses, permits and authorizations listed on Schedule 3.4 hereto, or as an
owner and/or operator of the Station's Assets or (b) prevent or delay the
consummation of the transactions contemplated herein within the time
contemplated hereby. Buyer will not take, or unreasonably fail to take, any
action which Buyer knows or has reason to know would cause such disqualification
(it being understood that Buyer has an active duty to attempt to ascertain what
would cause such disqualification). Should Buyer become aware of any such facts,
it will promptly notify Seller in writing thereof and use its best efforts to
prevent any such disqualification. Buyer further represents and warrants that it
is financially qualified to meet all terms, conditions and undertakings
contemplated by this Agreement.
SECTION 5
COVENANTS OF SELLER
-------------------
5.1 Pre-Closing Covenants. Except as contemplated by this Agreement or
---------------------
with the prior written consent of Buyer, not to be unreasonably withheld,
between the date hereof and the Closing Date, and except to the extent that
certain changes with respect to the business and operation of the Station are
expressly implemented by or at the request of Buyer pursuant to the Time
Brokerage Agreement, Seller shall abide by the following negative and
affirmative covenants:
A. Negative Covenants. Seller shall not do any of the following:
------------------
(1) Disposition of Assets. Sell, assign, lease, or otherwise transfer
---------------------
or dispose of any of the Assets, except for assets consumed or disposed of in
the ordinary course of business, where no longer used or useful in the business
or
23
<PAGE>
operations of the Station or in connection with the acquisition of replacement
property of equivalent kind and value;
(2) Encumbrances. Create, assume or permit to exist any claim,
------------
liability, mortgage, lien, pledge, condition, charge, or encumbrance of any
nature whatsoever upon the Assets, except for (i) those in existence on the date
of this Agreement, disclosed in Schedules 3.5 and 3.6, or permitted by Section
2.5, 3.5 or 3.6, (ii) mechanics' liens and other similar liens which will be
removed prior to the Closing Date and (iii) liens in connection with financing
provided to Seller and its affiliates as a group that will be removed at or
prior to the Closing Date;
(3) Licenses. Do any act or fail to do any act which might result in
--------
the expiration, revocation, suspension or modification of any of the Licenses,
or fail to prosecute with due diligence any applications to any governmental
authority in connection with the operation of the Station;
(4) Rights. Waive any material right relating to the Station or the
------
Assets; or
(5) No Inconsistent Action. Knowingly take any action which is
----------------------
inconsistent with its obligations hereunder or which could hinder or delay the
consummation of the transaction contemplated by this Agreement.
B. Affirmative Covenants. Seller shall do the following:
---------------------
(1) Access to Information. Upon prior notice, allow Buyer and its
---------------------
authorized representatives reasonable access at mutually agreeable times at
Buyer's expense during normal business hours to the Assets and to all other
properties, equipment, books, records, Contracts and documents relating to the
Station for the purpose of audit and inspection, and furnish or cause to be
furnished to Buyer or its authorized representatives all information with
respect to the affairs and business of the Station as Buyer may reasonably
request, it being understood that the rights of Buyer hereunder shall not be
exercised in such a manner as to interfere with the operations of the business
of Seller; provided that neither the furnishing of such information to Buyer or
its representatives nor any investigation made heretofore or hereafter by Buyer
shall affect Buyer's rights to rely on any representation or warranty made by
Seller in this Agreement, each of which shall survive any furnishing or
information or any investigation;
(2) Insurance. Maintain the existing insurance policies on the
---------
Station and the Assets;
(3) Consents. Use its reasonable efforts to obtain the Consents;
--------
(4) Compliance with Laws. Comply in all material respects with all
--------------------
rules and regulations of the FCC, and all other laws, rules and regulations to
which Seller, the Station and the Assets are subject.
24
<PAGE>
5.2 Post-Closing Covenants. After the Closing, Seller will take such
----------------------
actions, and execute and deliver to Buyer such further deeds, bills of sale, or
other transfer documents as, in the reasonable opinion of counsel for Buyer and
Seller, may be necessary to ensure, complete and evidence the full and effective
transfer of the Assets to Buyer pursuant to this Agreement.
SECTION 6
SPECIAL COVENANTS AND AGREEMENTS
--------------------------------
6.1 FCC Consent. The assignment of the FCC Licenses as contemplated by
-----------
this Agreement is subject to the prior consent and approval of the FCC. Within
ten (10) days after the execution of this Agreement, Buyer and Seller shall file
with the FCC an appropriate application for FCC Consent. The parties shall
prosecute said application with all reasonable diligence and otherwise use their
best efforts to obtain the grant of such application as expeditiously as
practicable. If the FCC Consent imposes any condition on any party hereto, such
party shall use its best efforts to comply with such condition unless compliance
would be unduly burdensome or would have a material adverse effect upon it. If
reconsideration or judicial review is sought with respect to the FCC Consent,
Buyer and Seller shall oppose such efforts to obtain reconsideration or Judicial
review (but nothing herein shall be construed to limit any party's right to
terminate this Agreement pursuant to Section 9 of this Agreement).
6.2 Time Brokerage Agreement. Buyer and Seller shall enter into a Time
------------------------
Brokerage Agreement in the form set forth in Schedule 6.2 hereto.
6.3 Control of the Station. Buyer shall not, directly or indirectly,
----------------------
control, supervise, direct, or attempt to control, supervise or direct, the
operations of the Station, such operations, including complete control and
supervision of all of the Station's programs,
25
<PAGE>
employees, and policies, shall be the sole responsibility of Seller until the
completion of the Closing hereunder.
6.4 Taxes, Fees and Expenses. Buyer shall pay all sales, gains, transfer
------------------------
and similar taxes and fees, if any, arising out of the transfer of the Assets
pursuant to this Agreement. All filing fees required by the FCC shall be paid
by Buyer. All fees due under the Escrow Agreement shall be paid by Buyer.
Except as otherwise provided in this Agreement, each party shall pay its own
expenses incurred in connection with the authorization, preparation, execution,
and performance of this Agreement, including all fees and expenses of counsel,
accountants, agents, and other representatives.
6.5 Brokers. Buyer and Seller each represents and warrants that neither
-------
it nor any person or entity acting on its behalf has incurred any liability for
any finders' or brokers' fees or commissions in connection with the transaction
contemplated by this Agreement, except for Star Media Group, whose fee shall be
solely the responsibility of Seller.
6.6 Confidentiality. Except as necessary for the consummation of the
---------------
transaction contemplated hereby, including Buyer's obtaining financing in any
form or means of its choosing related hereto, each party hereto will keep
confidential any information which is obtained from the other party in
connection with the transaction contemplated hereby and which is not readily
available to members of the general public, and will not use such information
for any purpose other than in furtherance of the transactions contemplated
hereby. In the event this Agreement is terminated and the purchase and sale
contemplated hereby abandoned, each party will return to the other party all
documents, work papers and other written material obtained by it in connection
with the transaction contemplated hereby.
6.7 Cooperation. Buyer and Seller shall cooperate fully with each other
-----------
and their respective counsel and accountants in connection with any actions
required to be taken as part
26
<PAGE>
of their respective obligations under this Agreement, and Buyer and Seller shall
execute such other documents as may be necessary and desirable to the
implementation and consummation of this Agreement, and otherwise use their best
efforts to consummate the transaction contemplated hereby and to fulfill their
obligations hereunder. Notwithstanding the foregoing, except as otherwise set
forth herein, Buyer shall have no obligation (i) to expend funds to obtain the
Consents, or (ii) to agree to any adverse change in any License or Assumed
Contract to obtain a Consent required with respect thereto.
6.8 Risk of Loss.
------------
A. The risk of loss, damage or impairment, confiscation or
condemnation of any of the Assets from any cause whatsoever shall be borne by
Seller at all times prior to the completion of the Closing.
B. If any damage or destruction of the Assets or any other event
occurs which prevents signal transmission by the Station in the normal and usual
manner and Seller cannot restore or replace the Assets so that the conditions
are cured and normal and usual transmission is resumed before the Closing Date,
the Closing Date shall be postponed, for a period of up to one hundred twenty
(120) days, to permit the repair or replacement of the damage or loss.
C. In the event of any damage or destruction of the Assets described
above, if such Assets have not been restored or replaced and the Station's
normal and usual transmission resumed within the one hundred and twenty (120)
day period specified above. Buyer may terminate this Agreement forthwith
without any further obligation hereunder by written notice to Seller.
Alternatively, Buyer may, at its option, proceed to close this Agreement and
complete the restoration and replacement of such damaged Assets after the
Closing Date, in which event Seller shall deliver to Buyer all insurance
proceeds received in
27
<PAGE>
connection with such damage or destruction of the Assets to the extent not
already expended by Seller arising in connection with such restoration and
replacement.
D. Notwithstanding any of the foregoing, Buyer may terminate this
Agreement forthwith without any further obligation hereunder by written notice
to Seller if any event occurs which prevents signal transmission by the Station
in a manner generally equivalent to its current operations for a consecutive
period of five (5) or a cumulative period of fourteen (14) days after the date
hereof.
6.9 Employee Matters.
----------------
A. Within five (5) business days after execution of this Agreement,
Seller shall provide to Buyer an accurate list of all current employees of the
Station together with a description of the terms and conditions of their
respective employment (including salary, bonus and other benefit arrangements)
and their duties as of the date of this Agreement, as well as the annual
salaries thereof. Seller shall promptly notify Buyer of any changes that occur
prior to Closing with respect to such information.
B. Nothing contained in this Agreement shall confer upon any employee
of Seller any right with respect to continued employment by Buyer, nor shall
anything herein interfere with any right the Buyer may have after the Closing
Date to (i) terminate the employment of any of the employees at any time, with
or without cause, or (ii) establish or modify any of the terms and conditions of
the employment of the employees in the exercise or its independent business
judgment.
C. Except as otherwise set forth herein, Buyer will not incur any
liability on account of Seller's employees that arise and accrues prior to
midnight on the day prior to the Closing Date, including, without limitation,
any such liability on account of unemployment insurance contributions,
termination payments, retirement, pension, profit sharing, bonus,
28
<PAGE>
severance pay, disability. health, accrued vacation, accrued sick leave (unless
a pro rated adjustment is made as to vacation or sick leave) or other employee
benefit plans, practices, agreements, or understandings.
6.10 Audit Cooperation. Seller agrees to fully cooperate, and use
-----------------
reasonable efforts to cause its accounting firm to reasonably cooperate with
Buyer and at Buyer's expense, to the extent required for the Buyer to prepare
audited financial statements for the Station for the period of Seller's
ownership thereof. Buyer agrees to fully cooperate, and use reasonable efforts
to cause its accounting firm to reasonably cooperate with Seller and at Seller's
expense, to the extent required for the Seller to prepare audited financial
statements for the Station for the period of Buyer's ownership thereof during
the remainder of Seller's fiscal year.
SECTION 7
CONDITIONS TO OBLIGATIONS OF BUYER AND SELLER
---------------------------------------------
7.1 Conditions of Obligations of Buyer. All obligations of Buyer at the
----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and
------------------------------
warranties of Seller in this Agreement shall be true and complete in all
material respects at and as of the Closing Date, as though such representations
and warranties were made at and as of such time, except for changes contemplated
by this Agreement and except for representations and warranties made as of a
specific date which shall have been true in all material respects as of such
date.
B. Covenants and Conditions. Seller shall have in all material
------------------------
respects performed and compiled with the covenants, agreements, and conditions
required by this Agreement to be performed or complied with by it prior to or on
the Closing Date.
29
<PAGE>
C. Consents. Each of the Consents marked as "material" on Schedule
--------
3.7 shall have been duly obtained and delivered to Buyer with no material
adverse change to the terms of the License or Assumed Contract with respect to
which such Consent is obtained.
D. Licenses. Seller shall be the holder of the Licenses, and there
--------
shall not have been any modification of any of such Licenses which has an
adverse effect on the Station or the conduct of its business or operations. No
proceeding shall be pending the effect of which would be to revoke, cancel, fail
to renew, suspend or modify adversely any of the Licenses.
E. Deliveries. Seller shall have made or stand willing and able to
----------
make all the deliveries to Buyer set forth in Section 8.2.
7.2 Conditions to Obligations of Seller. The obligations of Seller at the
-----------------------------------
Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions:
A. Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects at and as of the Closing Date, except for changes
contemplated by this Agreement, as though such representations and warranties
were made at and as of such time.
B. Covenants and Conditions. Buyer shall have in all material
------------------------
respects performed and compiled with the covenants, agreements, and conditions
required by this Agreement to be performed or compiled with by it prior to or on
the Closing Date.
C. Deliveries. Buyer shall have made or stand wiling and able to make
----------
all the deliveries set forth in Section 8.3.
D. Sale of WHTT Stations. Prior to or on or simultaneously with the
---------------------
Closing Date, Seller shall have consummated the sale of the WHTT Stations.
Seller may waive the foregoing condition in its sole discretion.
30
<PAGE>
SECTION 8
CLOSING AND CLOSING DELIVERIES
------------------------------
8.1 Closing. The closing shall take place at 10:00 a.m. on a date, to be
-------
set by Buyer, upon five (5) days written notice to Seller, no later than ten
(10) days following the date upon which the FCC Consent has been issued (the
"Closing Date"), provided, that Seller may extend the Closing Date to facilitate
the simultaneous closing of the sale of the WHTT Stations, subject to the
provisions of Section 9.1(c). Closing shall be held at the offices of Latham &
Watkins, Washington, D.C. or such other place as shall be mutually agreed to by
Buyer and Seller.
8.2 Deliveries by Seller. Prior to or on the Closing Date, Seller shall
--------------------
deliver to Buyer the following, in form and substance reasonably satisfactory to
Buyer and its counsel:
(a) Transfer Documents. Duly executed warranty deeds, bills of sale,
------------------
motor vehicle titles, assignments and other transfer documents which shall
be sufficient to vest title to the Assets in the name of Buyer or its
permitted assignees, free and clear of any claims, liabilities, mortgages,
liens, pledges, conditions, charges, or encumbrances of any nature
whatsoever (except those permitted in accordance with Sections 2.5, 3.5 or
3.6 hereof);
(b) Consents. The original of each Consent marked as "material"
--------
with an asterisk on Schedule 3.7;
(c) Officer's Certificate, A certificate, dated as of the Closing
---------------------
Date, executed by a duly authorized officer of Seller, certifying: (i) that
the representations and warranties of Seller contained in this Agreement are
true and complete in all material respects as of the Closing Date, as though
made on and as of that date, except for changes contemplated by this
Agreement and except for representations and warranties made as of a
specific date which shall be certified true and complete in all material
respects as of such date; and (ii) that Seller has, in all material
respects, performed its obligations and complied with its, covenants set
forth in this Agreement to be performed and complied with prior to or on the
Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the Closing
-----------------------
Date, executed by Seller's Secretary: (i) certifying that the resolutions,
as attached to such certificate, were duly adopted by such Seller's Board of
Directors, authorizing and approving the execution of this Agreement and the
Time Brokerage Agreement by Seller and the consummation of the transaction
contemplated hereby and that such resolutions remain in full force and
effect; and (ii) providing, as attachments thereto,
31
<PAGE>
a certificate of legal existence certified by an appropriate New York state
official; as of a date not more than fifteen (15) days before the Closing
Date and by Seller's Secretary as of the Closing Date, and a copy of
Seller's Articles of Incorporation and By Laws as in effect on the date
hereof, certified by Seller's Secretary as of the Closing Date;
(e) Licenses, Contracts, Business Records, Etc. Copies, if available,
------------------------------------------
of all licenses, Assumed Contracts, blueprints, schematics, working
drawings, plans, projections, statistics, engineering records, and all files
and records used by Seller in connection with its operations of the Station;
(f) Opinions of Counsel. Opinions of Seller's counsel dated as of the
-------------------
Closing Date, and addressed to Buyer and at Buyers directions, to Buyer's
lenders, substantially in the form of Schedule 8.2(f) hereto subject to
standard qualifications.
8.3 Deliveries by Buyer. Prior to or on the Closing Date, Buyer shall
-------------------
deliver to Seller the following, in form and substance reasonably satisfactory
to Seller and its counsel:
(a) Purchase Price. The Purchase Price as provided in Section 2.3;
--------------
(b) Assumption Agreements. Appropriate assumption agreements pursuant
---------------------
to which Buyer shall assume and undertake to perform Seller's obligations
under the Licenses and Assumed Contracts arising on or after the Closing
Date;
(c) Officer's Certificate. A certificate, dated as of the Closing
---------------------
Date, executed by the President or Vice President of Buyer, certifying (i)
that the representations and warranties of Buyer contained in this Agreement
are true and complete in all material respects as of the Closing Date,
except for changes contemplated by this Agreement, as though made on and as
of that date, and (ii) that Buyer has, in all material respects, performed
its obligations and complied with its covenants set forth in this Agreement
to be performed or complied with on or prior to the Closing Date;
(d) Secretary's Certificate. A certificate, dated as of the Closing
-----------------------
Date, executed by Buyer's Secretary: (i) certifying that the resolutions, as
attached to such certificate, were duly adopted by Buyer's Board of
Directors, authorizing and approving the execution of this Agreement and the
Time Brokerage Agreement and the consummation of the Transaction
contemplated hereby and that such resolutions remain in full force and
effect; and (ii) a copy of the corporate charter, articles of incorporation
and Bylaws of Buyer as in effect on the date hereof, certifies by Buyer's
secretary as of the Closing Date;
(e) Opinion of Counsel. An opinion of Buyer's General Counsel dated
------------------
as of the Closing Date, substantially in the form of Schedule 8.3(e) hereto
subject to standard qualifications.
SECTION 9
32
<PAGE>
RIGHTS OF BUYER AND SELLER ON THE TERMINATION OR BREACH
-------------------------------------------------------
9.1 Termination Rights. This Agreement may be terminated by either Buyer
------------------
or Seller if the terminating party is not then in breach of any material
provision of this Agreement, upon written notice to the other party, upon the
occurrence of any of the following:
(a) If on the Closing Date (i) any of the conditions precedent to the
obligations of the terminating party set forth in Section 7 of this
Agreement shall not have been materially satisfied, and (ii) satisfaction of
such condition shall not have been waived by the terminating party;
(b) If the application for FCC Consent shall be set for hearing by
the FCC for any reason; or
(c) If the Closing shall not have occurred on or before December 31,
1996; provided, that Seller may extend the Closing Date through and until
any date on or before March 31, 1997 to facilitate the simultaneous sale of
the WHTT Stations.
Upon termination: (i) if neither party hereto is in breach of any material
provision of this Agreement, the parties hereto shall not have any further
liability to each other; (ii) if Seller shall be in breach of any material
provision of this Agreement, Buyer shall have only the rights and remedies
provided in Section 9.3 or (iii) if Buyer shall be in breach of any material
provision of this Agreement, Seller shall be entitled only to liquidated damages
as provided in Section 9.2 hereof. If, upon termination, Buyer shall not be in
breach of any material provision of this Agreement, the Escrow Deposit, plus all
interest or other proceeds from the investment thereof, less any compensation
due the Escrow Agent, shall be paid to Buyer.
33
<PAGE>
9.2 Liquidated Damages. In the event this Agreement is terminated by
------------------
Seller due to a material breach by Buyer of its representations, warranties,
covenants and other obligations under this Agreement, then the amount of One
Million Five Hundred Thousand ($1,500,000) Dollars shall be paid to Seller as
liquidated damages, it being agreed that the Escrow Deposit shall constitute a
portion of such liquidated damages for any and all damages suffered by Seller by
reason of Buyer's failure to close this Agreement. Buyer and Seller agree in
advance that actual damages would be difficult to ascertain and that the amount
of One Million Five Hundred Thousand ($1,500,000) Dollars is a fair and
equitable amount to reimburse Seller for damages sustained due to Buyer's
failure to consummate this Agreement for the above-stated reason. All interest
or other proceeds from the investment of the Escrow Deposit, less any
compensation due the Escrow Agent, shall be paid to Seller in partial payment of
the liquidated damages contemplated by this Section 9.2.
9.3 Specific Performance. The parties recognize that in the event Seller
--------------------
should refuse to perform under the provisions of this Agreement, monetary
damages would not be adequate. Buyer shall therefore be entitled, in lieu of
any other remedies which may be available, including money damages, to obtain
specific performance of the terms of this Agreement. In the event of any action
to enforce this Agreement, Seller hereby waives the defense that there is an
adequate remedy at law. In the event of a default by a party hereto (the
"Defaulting Party") which results in the filing of a lawsuit for damages,
specific performance, or other remedy the other party (the Nondefaulting Party)
shall be entitled to reimbursement by the Defaulting Party of reasonable legal
fees and expenses incurred by the Nondefaulting Party in the event the
Nondefaulting Party prevails.
34
<PAGE>
SECTION 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES, AND INDEMNIFICATION
---------------------------------------------------------------
10.1 Representations and Warranties. All representations and warranties
------------------------------
contained in this Agreement shall be deemed continuing representations and
warranties, and shall survive the Closing Date for a period of twelve (12)
months (the "Survival Period"). No claim for indemnification may be made under
this Section 10 (except for section 10.3(a) or related claims under Section
10.3(c)) after the expiration of the Survival Period. Any investigations by or
on behalf of any party hereto shall not constitute a waiver as to enforcement of
any representation or warranty contained herein, except that insofar as any
party has knowledge of any misrepresentation or breach of warranty at closing
and such knowledge is documented in writing at Closing, such party shall be
seemed to have waived such misrepresentation or breach.
10.2 Indemnification by Seller. Seller shall indemnify and hold Buyer
-------------------------
harmless against and with respect to, and shall reimburse Buyer for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenants
by Seller contained herein or in any certificate, delivered to Buyer
hereunder;
(b) Any and all obligations of Seller not assumed by Buyer pursuant
to the terms hereof;
(c) Any and all losses, liabilities or damages resulting from Seller's
operation or ownership of the Station prior to the Closing Date, including
any and all liabilities arising under the Licenses or the Assumed Contracts
which relate to events occurring prior to the Closing Date; and
(d) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable costs and expenses, incident to any
of the foregoing or incurred in investigating or attempting to avoid the
same or to oppose the imposition thereof.
Notwithstanding anything in this Section 10.2 to the contrary, Seller shall not
be required to make any indemnification under this Section 10.2 until the
aggregate amount of losses,
35
<PAGE>
liabilities and damages exceeds $100,000. Notwithstanding anything in this
Section 10.2 to the contrary, Seller shall not be required to make any
indemnification under this Section 10.2 and shall not be otherwise liable to
Buyer for the aggregate of all losses, liabilities and damages that exceed
$1,500,000.
10.3 Indemnification by Buyer. Buyer shall indemnify and hold Seller
------------------------
harmless against and with respect to, and shall reimburse Seller for:
(a) Any and all losses, liabilities or damages resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenants
by Buyer contained herein or in any certificate delivered to Seller
hereunder;
(b) Any and all losses, liabilities or damages resulting from Buyer's
operation or ownership of the Station on or after the Closing Date,
including any and all liabilities or obligations arising under the Licenses
or the Assumed Contracts which relate to events occurring after the Closing
Date or otherwise assumed by Buyer under this Agreement; and
(c) Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, and reasonable 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.
Notwithstanding anything in this Section 10.3 to the contrary, Buyer shall not
be required to make any indemnification under this Section 10.3 until the
aggregate amount of losses, liabilities and damages exceeds $100,000.
Notwithstanding anything in this Section 10.3 to the contrary, Buyer shall not
be required to make any indemnification under this Section 10.3 and shall not be
otherwise liable to Seller for the aggregate of all losses, liabilities and
damages that exceed $1,500,000.
10.4 Procedures for Indemnification. The procedures for indemnification
------------------------------
shall be as follows:
A. The party claiming the indemnification (the "Claimant") shall
promptly give notice to the party from whom indemnification is claimed (the
"Indemnifying Party") of any claim, whether between the parties or brought by a
third party, specifying (i) the factual
36
<PAGE>
basis for such claim, and (ii) the amount of the claim. If the claim relates to
an action, suit or proceeding filed by a third party against Claimant, such
notice shall be given by Claimant within five (5) days after written notice of
such action, suit or proceeding was given to Claimant.
B. Following receipt of notice from the Claimant of a claim, the
Indemnifying Party shall have thirty (30) days to make such investigation of the
claim as the Indemnifying Party deems necessary or desirable. For the purposes
of such investigation, the Claimant agrees to make available to the Indemnifying
Party and/or its authorized representative(s) the information relied upon by the
Claimant to substantiate the claim. If the Claimant and the Indemnifying Party
agree at or prior to the expiration of said thirty (30) day period (or any
mutually agreed upon extension thereof) to the validity and amount of such
claim, or if the Indemnifying Party does not respond to such notice, the
Indemnifying Party shall immediately pay to the Claimant the full amount of the
claim. Buyer shall be entitled to apply any or all of the Accounts Receivable
collected on behalf of Seller to a claim as to which Buyer is entitled to
indemnification hereunder. If the Claimant and the Indemnifying Party do not
agree within said period (or any mutually agreed upon extension thereof), the
Claimant may seek appropriate legal remedy.
C. With respect to any claim by a third party as to which the
Claimant is entitled to indemnification hereunder, the Indemnifying Party shall
have the right at its own expense, to participate in or assume control of the
defense of such claim, and the Claimant shall cooperate fully with the
Indemnifying Party subject to reimbursement for reasonable actual out-of-pocket
expenses incurred by the Claimant as the result of a request by the Indemnifying
Party. If the Indemnifying Party elects to assume control of the defense of any
37
<PAGE>
third-party claim, the Claimant shall have the night to participate in the
defense of such claim at its own expense.
D. If a claim, whether between the parties or by a third party,
requires immediate action, the parties will make all reasonable efforts to reach
a decision with respect thereto as expeditiously as possible.
E. If the Indemnifying Party does not elect to assume control or
otherwise participate in the defense of any third party claim, it shall be bound
by the results obtained in good faith by the Claimant with respect to such
claim.
F. The indemnification rights provided in Sections 10.2 and 10.3
shall extend to the shareholders, directors, officers, partners employees and
representatives of the Claimant although for the purpose of the procedures set
forth in this Section 10.4, any indemnification claims by such parties shall be
made by and through the Claimant.
SECTION 11
MISCELLANEOUS
-------------
11.1 Notices. All notices, demands, and requests required or permitted to
-------
be given under the provisions of this Agreement shall be (i) in writing, (ii)
delivered by personal delivery, or sent by commercial delivery service or
registered or certified mail, return receipt requested, or
by facsimile transmission, with receipt confirmation, (iii) deemed to have been
given on the date of personal delivery or the date set forth in the records of
the delivery service or on the return receipt, and (iv) addressed as follows:
If to Seller: Evergreen Media Corporation of Buffalo
433 E. Las Colinas Blvd.
Suite 1130
Irving, TX 75039
Attn: Scott Ginsburg, Chief Executive Officer
with a copy
(which shall not
38
<PAGE>
constitute notice) to: Eric L. Bernthal, Esq.
Kevin C. Boyle, Esq.
Latham & Watkins
1001 Pennsylvania Ave., N.W.
Suite 1300
Washington, D.C. 20004
Fax: (202) 637-2201
If to Buyer: American Radio Systems
116 Huntington Avenue
Boston, MA 02116
Attention: Steven B. Dodge, President
Fax: (617) 375-7575
with a copy
(which shall not
constitute notice) to: Michael B. Milsom
Vice President & General Counsel
American Radio Systems, Inc.
116 Huntington Avenue
Boston, MA 02116
Fax: (617) 375-7575
or to such other or additional persons and addresses as the parties may from
time to time designate,in a writing delivered in accordance with this Section
11.2.
11.2 Benefit and Binding Effect. Neither party hereto may assign this
--------------------------
Agreement without the prior written consent of the other party hereto, except
that Buyer may assign its rights and obligations under this Agreement to any
affiliated or unaffiliated entity, following which assignment Buyer shall be
released from for all of its obligations hereunder. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
11.3 Governing Law. This Agreement shall be governed, construed, and
-------------
enforced in accordance with the laws of the State of New York.
11.4 Like Kind Exchange Election. Seller desires, if possible, to effect
---------------------------
this transaction as an exchange for other property of like-kind and qualifying
use in a tax-deferred
39
<PAGE>
exchange under Section 1031 of the Code and Buyer agrees to cooperate in all
respects to effectuate such exchange, provided that such exchange shall be made
without any cost or liability to Buyer, and the Closing shall not be materially
delayed by reason of such exchange.
11.5 Headings. The headings here are included for ease of reference only
--------
and shall not control or affect the meaning or construction of the provisions of
this Agreement.
11.6 Gender and Number. Words used herein, regardless of the gender and
-----------------
number specifically used, shall be deemed and construed to include any other
gender, masculine, feminine or neuter, and any other number, singular or plural,
as the context required.
11.7 Entire Agreement. This Agreement, all schedules hereto, and all
----------------
documents and certificates to be delivered by the parties pursuant hereto
collectively represent the entire understanding and agreement between Buyer and
Seller with respect to the subject matter hereof. All schedules attached to
this Agreement shall be deemed part of this Agreement and
incorporated herein, where applicable, as if fully set forth herein. This
Agreement supersedes all prior negotiations between Buyer and Seller, and all
letters of intent and other writings related to such negotiations, and cannot be
amended, supplemented or modified except by an agreement in writing which makes
specific reference to this Agreement or an agreement delivered pursuant hereto,
as the case may be, and which is signed by the party against which enforcement
of any such amendment, supplement or modification is sought.
11.8 Waiver of Compliance Consents. Except as otherwise provided in this
-----------------------------
Agreement, any failure of any of the parties to comply with any obligation,
representation, warranty, covenant, agreement or condition herein may be waived
by the party entitled to the benefits thereof only by a written instrument
signed by the party granting such waiver, but
40
<PAGE>
such waiver or failure to insist upon strict compliance with such obligation,
representation, warranty, covenant, agreement or condition shall not operate as
a waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner consistent With the
requirements for a waiver of compliance as set forth in this Section 11.7.
11.9 Severability. If any provision of this Agreement or the application
------------
thereof to any person or circumstance shall be invalid or unenforceable or any
extent, the remainder of this Agreement and the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the greater extent permitted by law.
11.10 Counterparts. This Agreement may be signed in any number counterparts
------------
with the same effect as if the signature on each such counterpart were upon the
same instrument.
41
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by Buyer and Seller as
of the date first above written.
SELLER: EVERGREEN MEDIA CORPORATION OF BUFFALO
By:__________________________________________
BUYER: AMERICAN RADIO SYSTEMS CORPORATION
By:___________________________________________
Title:
42
<PAGE>
SCHEDULES TO ASSET PURCHASE AGREEMENT
1.8 Escrow Agreement
2.2 Excluded Assets
3.4 Licenses
3.5 Real Property
3.6 Personal Property
3.7 Assumed Contracts
3.8 Consents Required
3.9 Trademarks; Trade Names; Copyrights
3.10 Financial Information
3.11 Insurance Policies
3.13 Employee Benefits
3.14 Labor Relations
3.16 Claims; Legal Actions
3.18 Environmental Matters
8.2(f) Opinion of Seller's Counsel
8.3(e) Opinion of Buyer's General Counsel
43
<PAGE>
EXHIBIT 2.15
- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
Among
EVERGREEN MEDIA CORPORATION OF LOS ANGELES,
EVERGREEN MEDIA/PYRAMID HOLDINGS CORPORATION,
WHTT (AM) LICENSE CORP.,
WHTT (FM) LICENSE CORP.
and
MERCURY RADIO COMMUNICATIONS, L.P.
Dated as of April 11, 1996
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS............................................ 1
ARTICLE II PURCHASE OF ASSETS..................................... 4
2.1 Closing.................................................... 4
2.2 Transfer of Assets......................................... 4
2.3 Excluded Assets............................................ 5
2.4 Purchase Price............................................. 6
2.5 Allocation and Appraisal................................... 6
ARTICLE III ASSUMPTION OF LIABILITIES.............................. 6
ARTICLE IV GOVERNMENTAL CONSENTS.................................. 7
4.1 FCC Consent................................................ 7
4.2 Compliance with HSRA....................................... 7
4.3 Other Governmental Consents................................ 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................ 8
5.1 Organization and Standing.................................. 8
5.2 Authorization and Binding Obligation....................... 8
5.3 FCC Qualifications......................................... 8
5.4 Absence of Conflicting Agreements or Required
Consents........................................................ 9
5.5 Litigation................................................. 9
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF SELLERS.............. 9
6.1 Organization and Standing.................................. 9
6.2 Authorization and Binding Obligation....................... 10
6.3 Absence of Conflicting Agreements or Required
Consents........................................................ 10
6.4 Governmental Authorization................................. 10
6.5 Real Property.............................................. 11
6.6 Title to and Condition of Personal Property................ 12
6.7 Intellectual Property...................................... 12
6.8 Contracts.................................................. 13
6.9 Personnel Information...................................... 14
6.10 Employee Benefit Plans.................................... 14
6.11 Litigation................................................ 15
6.12 Compliance with Laws...................................... 15
6.13 Transaction with Affiliates............................... 15
6.14 Financial Statements...................................... 16
6.15 Absence of Changes or Events.............................. 16
6.16 Insurance................................................. 16
6.17 Taxes..................................................... 16
6.18 Bankruptcy................................................ 16
6.19 Environmental Matters..................................... 17
6.20 Foreign Investment in Real Property Tax Act............... 17
<PAGE>
6.21 The Station Assets........................................ 17
6.22 Disclosure................................................ 18
ARTICLE VII COVENANTS OF SELLERS.................................. 18
7.1 Interim Operation.......................................... 18
7.2 Access to Station.......................................... 18
7.3 Third-Party Consents....................................... 19
7.4 Notification............................................... 19
7.5 No Inconsistent Action..................................... 19
7.6 Estoppel Certificates; Consent and Waiver.................. 20
7.7 No Solicitation............................................ 20
7.8 Title Policies............................................. 20
7.9 Surveys.................................................... 21
ARTICLE VIII ADDITIONAL COVENANTS................................. 21
8.1 Reasonable Best Efforts.................................... 21
8.2 Control of Station......................................... 21
8.3 Certain Employees.......................................... 21
8.4 Renewal of Contracts....................................... 21
8.5 Post-Closing Covenants..................................... 22
8.6 New York Taxes............................................. 22
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S
OBLIGATION TO CLOSE.................................... 23
9.1 Representations, Warranties and Covenants.................. 23
9.2 Governmental Consents...................................... 24
9.3 Adverse Proceedings........................................ 24
9.4 Deliveries................................................. 24
ARTICLE X CONDITIONS PRECEDENT TO SELLERS'
OBLIGATION TO CLOSE..................................... 24
10.1 Representations, Warranties and Covenants................. 24
10.2 Governmental Consents..................................... 24
10.3 Adverse Proceedings....................................... 25
10.4 Deliveries................................................ 25
10.5 WSJZ...................................................... 25
ARTICLE XI DOCUMENTS TO BE DELIVERED AT THE CLOSING............... 25
11.1 Documents to be Delivered by Sellers...................... 25
11.2 Documents to be Delivered by Buyer........................ 26
ARTICLE XII TRANSFER TAXES; FEES AND EXPENSES..................... 27
12.1 Transfer Taxes and Similar Charges........................ 27
12.2 Expenses.................................................. 28
ARTICLE XIII BROKER'S COMMISSION OR FINDER'S FEE.................. 28
13.1 Buyer's Representation and Agreement to
Indemnify....................................................... 28
13.2 Sellers' Representation and Agreement to
Indemnify....................................................... 28
<PAGE>
ARTICLE XIV INDEMNIFICATION....................................... 29
14.1 Indemnification by Sellers................................ 29
14.2 Indemnification by Buyer.................................. 30
14.3 Indemnification Procedures................................ 32
ARTICLE XV TERMINATION RIGHTS..................................... 33
15.1 Termination............................................... 33
15.2 Liability................................................. 34
ARTICLE XVI REMEDIES UPON DEFAULT................................. 34
16.1 Buyer's Remedies; Specific Performance.................... 34
16.2 Sellers' Remedies; Liquidated Damages..................... 35
ARTICLE XVII OTHER PROVISIONS..................................... 35
17.1 Risk of Loss.............................................. 35
17.2 Confidentiality........................................... 36
17.3 Publicity................................................. 36
17.4 Benefit and Assignment.................................... 36
17.5 No Third Party Beneficiaries.............................. 37
17.6 Entire Agreement; Amendments, etc......................... 37
17.7 Headings.................................................. 37
17.8 Choice of Law; Jurisdiction............................... 38
17.9 Notices................................................... 38
17.10 Counterparts............................................. 39
17.11 Further Assurances....................................... 39
EXHIBITS
A. Form of Unwind Agreement
SCHEDULES
4.3 Other Governmental Consents
6.3 Sellers' Required Consents
6.4 Station Licenses and Governmental Consents
6.5 Real Property
6.6 Personal Property
6.7 Intellectual Property
6.8 Contracts
6.9 Personnel Information
6.10 Employee Plans
6.11 Litigation Involving Sellers
6.12 Compliance with Laws
6.13 Transactions with Affiliates
6.14 Financial Statements
6.15 Absence of Changes or Events
6.16 Insurance
6.21 Station Assets
8.3 Certain Employees
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of April 11, 1996, among Evergreen
Media Corporation of Los Angeles, a Delaware corporation, Evergreen
Media/Pyramid Holdings Corporation, a Delaware corporation, WHTT (AM) License
Corp., a Delaware corporation, WHTT (FM) License Corp., a Delaware corporation
(collectively, "Sellers"), and Mercury Radio Communications, L.P., a Delaware
limited partnership ("Buyer").
NOW, THEREFORE, in consideration of the mutual covenants,
representations and warranties made herein, and of the mutual benefits to be
derived hereby, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
-----------
Unless otherwise stated in this Agreement, the following terms when
used herein shall have the meanings assigned to them below.
1.1 "Affiliate" shall mean a Person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, the Person specified.
1.2 "Business Day" shall mean every day of the week excluding
Saturdays, Sundays and Federal holidays.
1.3 "Closing Date" shall mean the date on which the Closing is
completed.
1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended,
together with all regulations and rulings issued thereunder by any governmental
authority.
1.5 "Contracts" shall mean all contracts, agreements, purchase orders
and leases of whatever nature, whether written or oral, used in, held for use in
connection with or necessary for the conduct of, the business or operations of
the Station or the Station Assets, including, without limitation, those
contracts, agreements, purchase orders and leases set forth on Schedules 6.6,
-------------
6.7 and 6.8 to this Agreement, but excluding any of the Excluded Assets, any
- -----------
Employee Plan, the Office and Studio Lease, the contract with S&B Engineering,
the contract with Strata Marketing, Inc. and the contract with Columbine
Systems, Inc.
<PAGE>
1.6 "Cut-Off Time" shall mean 12:01 a.m., local time, on the date on
which Sellers actually receive the Purchase Price (as defined in Section 2.4).
1.7 "Environmental Laws" shall mean all applicable local, state and
federal statutes and regulations relating to the protection of human health or
the environment, including the FCC's regulations concerning radio frequency
radiation.
1.8 "FCC Application" shall mean the application or applications that
Sellers and Buyer must file with the Federal Communications Commission (the
"FCC") requesting its consent to the assignment of the Station Licenses from
Sellers to Buyer.
1.9 "FCC Consent" shall mean the action by the FCC granting the FCC
Application.
1.10 "Final Order" shall mean action by the FCC or by its staff
pursuant to delegated authority (i) which has not been vacated, reversed,
-
stayed, set aside, annulled or suspended, (ii) with respect to which no timely
--
appeal, request for stay or petition for rehearing, reconsideration or review
by any party or by the FCC on its own motion, is pending, and (iii) as to
---
which the time for filing any such appeal, request, petition, or similar
document or for the reconsideration or review by the FCC on its own motion
under the Communications Act of 1934, as amended, and the rules and
regulations of the FCC, has expired.
1.11 "Financial Statements" shall mean (i) the unaudited balance
-
sheets for the Station as of December 31, 1995, and the related statements of
operations for the fiscal year then ended and (ii) the unaudited monthly
--
balance sheets and related statements of operations of the Station for the
months of January and February 1996.
1.12 "Hazardous Substance" shall mean asbestos-containing material and
any and all hazardous or toxic substances, materials or wastes as defined or
listed under the Resource Conservation and Recovery Act, the Toxic Substances
Control Act, the Comprehensive Environmental Response, Compensation and
Liability Act or any comparable state statute or any regulation promulgated
under any of such federal or state statutes.
1.13 "HSRA" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations adopted thereunder.
<PAGE>
1.14 "Non-LMA Contracts" shall mean those Contracts which are not
assigned to Buyer as of the date of the effectiveness of the Time Brokerage
Agreement because the requisite third party consents had not been obtained by
that date but which will be assigned to Buyer prior to or on the Closing Date.
1.15 "Office and Studio Lease" shall mean that certain Lease
Agreement, dated November 15, 1985, as amended, between Buffalo Hotel
Development Venture and Pyramid Finance Corp. for the use of certain premises
located in The Buffalo Hilton Hotel in the City of Buffalo, County of Erie,
State of New York, as the Station's office and studio.
1.16 "Owned Real Property" shall mean all real property and interests
in real property owned by each Seller and used in, held for use in connection
with, necessary for the conduct of, or otherwise material to, the business or
operations of the Station or the Station Assets, together with all easements and
other appurtenances for the benefit thereof.
1.17 "Person" shall mean an individual, corporation, partnership,
limited liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
1.18 "Real Property Leases" shall mean the leases, subleases, licenses
and occupancy agreements, including any amendments thereto, pursuant to which
any Seller is the lessee, sublessee, licensee or occupant of real property used
in, held for use in connection with or necessary for the conduct of, the
business or operations of the Station or the Station Assets, together with all
easements and other appurtenances for the benefit thereof. Notwithstanding the
foregoing, the term "Real Property Leases" shall not include the Office and
Studio Lease.
1.19 "Station" shall mean radio stations WHTT(AM) and (FM), Buffalo,
New York.
1.20 "Station Licenses" shall mean the licenses, permits and other
authorizations issued by the FCC, the Federal Aviation Administration and any
other federal, state or local governmental or regulatory authorities to each
Seller and used in, held for use in connection with or necessary for the conduct
of, the business or operations of the Station or the Station Assets, including,
without limitation, those specified in Schedule 6.4.
------------
<PAGE>
1.21 "Tax" shall mean any federal, state, local or foreign income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, unincorporated business, capital stock, profits, windfall profits,
gross receipts, sales, use, value added, transfer, registration, stamp, premium,
excise, customs duties, severance, environmental (including taxes under Section
59A of the Code), real property, personal property, ad valorem, occupancy,
license, occupation, employment, payroll, social security, disability,
unemployment, workers' compensation, withholding, estimated or similar tax,
duty, fee, assessment or other governmental charge or deficiencies thereof
(including all interest and penalties thereon and additions thereto).
1.22 "Time Brokerage Agreement" shall mean the Time Brokerage
Agreement, dated as of the date hereof, by and among Sellers and Buyer.
ARTICLE II
PURCHASE OF ASSETS
------------------
2.1 Closing. Subject to the terms and conditions of this Agreement,
-------
the closing of this transaction (the "Closing") shall take place on a Business
Day that is at least five but no more than ten Business Days after each of the
conditions specified in Sections 9.2 and 10.2 hereof has been satisfied (or
waived by the party entitled to waive such condition), or on such other date as
the parties may agree. Buyer shall designate the date of Closing in accordance
with the terms of the preceding sentence by giving Sellers at least four
Business Days prior written notice of such Closing. The Closing shall be held at
10:00 a.m. in the offices of Debevoise & Plimpton, 875 Third Avenue, New York,
New York 10022, or at such other place or time as the parties may agree.
2.2 Transfer of Assets. At the Closing, Sellers shall sell, assign,
------------------
transfer and convey (or cause to be sold, assigned, transferred or conveyed) to
Buyer and Buyer shall purchase from Sellers, all of the assets, real, personal
and mixed, tangible and intangible, owned or held by each Seller and used in,
held for use in connection with or necessary for the conduct of, the business
and operations of the Station, including all such assets acquired by each Seller
between the date hereof and the Closing Date, other than the Excluded Assets (as
defined below), including, but not limited to, the following (collectively, the
"Station Assets"):
<PAGE>
(a) all accounts receivable arising out of or relating to the
operation of the Station after 12:01 a.m., local time, on the date
of the effectiveness of the Time Brokerage Agreement;
(b) all of each Seller's rights in and to the Owned Real Property;
(c) all of each Seller's rights in and to the Station Licenses
(including renewals or modifications of such licenses and applications
therefor) and all its rights in and to the call letters "WHTT";
(d) all of each Seller's rights in and to the Personal Property;
(e) all of each Seller's rights in and to the Non-LMA Contracts and
the manufacturers' and vendors' warranties relating to the Station Assets;
(f) all of each Seller's rights in and to the Intellectual Property
and any programs and programming materials of whatever form or nature owned
by each Seller and used in, held for use in connection with or necessary
for the conduct of, the business and operations of the Station;
(g) all files, records, books of account, computer programs and
software and logs used in, held for use in connection with or necessary for
the conduct of, the business and operations of the Station, including,
without limitation, receivable records and statements, all traffic material
for media and Contracts, programming information and studies, technical
information and engineering data, news and advertising studies or
consulting reports, marketing and demographic data, sales correspondence,
lists of advertisers, promotional materials, credit and sales reports and
the FCC Public Files for the Station required to be maintained by 47 C.F.R.
(Section) 73.3526.
The Station Assets shall be transferred to Buyer free and clear of all
debts, liens, charges, security interests, mortgages, pledges, judgments,
trusts, adverse claims, liabilities, encumbrances and other impairments of title
("Liens").
2.3 Excluded Assets. The Station Assets shall not include, and Buyer
---------------
shall not purchase from Sellers, the following (collectively, the "Excluded
Assets"):
<PAGE>
(a) all accounts receivable arising out of or relating to the
operation of the Station before 12:01 a.m., local time, on the date of the
effectiveness of the Time Brokerage Agreement;
(b) the Office and Studio Lease;
(c) all books and records that any Seller is required by law to
retain, and all payables records and invoices, provided that, at Buyer's
request, Sellers shall provide Buyer, at Sellers' expense, with copies of
such records covering the period that any Seller was licensee of the
Station;
(d) all books, records, and other intangible assets related solely to
any Seller's internal corporate matters and not related to the operation of
the Station;
(e) all claims, rights, and interest in and to any refunds for
federal, state, or local franchise, income, or other Taxes or fees of any
nature whatsoever for periods prior to the Cut-Off Time;
(f) without in any way limiting Buyer's rights under the Time
Brokerage Agreement, any Seller's cash on hand as of the Cut-Off Time and
all other cash in any bank account of any Seller; any and all cash
equivalents, certificates of deposit, bonds, repurchase agreements, letters
of credit, marketable securities, or other similar items;
(g) all insurance policies, except for any rights thereunder that may
be assigned to Buyer pursuant to Section 17.1; and
(h) all Employee Plans, including all trusts and other funding
arrangements and the assets thereof.
2.4 Purchase Price. In consideration for the sale, assignment,
--------------
transfer and conveyance of the Station Assets by Sellers to Buyer, Buyer shall
pay an aggregate amount of $19,500,000 (the "Purchase Price") to Sellers at
Closing by wire transfers of immediately available funds to such account of
Sellers as Sellers shall have designated to Buyer at least two Business Days
before Closing.
2.5 Allocation and Appraisal. Buyer and Sellers agree to negotiate
------------------------
in good faith an allocation of the Purchase Price and other relevant items among
the Station Assets in accordance with section 1060 of the Code. To the
<PAGE>
extent an agreement on such allocation is reached, Buyer and Sellers shall, and
shall cause each of their Affiliates to, (i) prepare and file all statements or
-
other information required to be furnished to any taxing authority pursuant to
section 1060 of the Code or other applicable tax law in a manner consistent with
such allocation and (ii) prepare all tax returns and reports required to be
--
filed by them in a manner consistent with such allocation, and neither Buyer nor
any Seller shall not take any position contrary to such allocation with any
government agency or taxing authority.
ARTICLE III
ASSUMPTION OF LIABILITIES
-------------------------
Buyer shall not assume or undertake to pay, satisfy or discharge any
liabilities, obligations, commitments or responsibilities of any Seller except
for those arising under Contracts assumed by Buyer under the Time Brokerage
Agreement or this Agreement and then with respect to any such Contract only
those liabilities, obligations, commitments and responsibilities accruing after
and relating exclusively to the operation of the Station after the date on which
such Contract was assumed.
ARTICLE IV
GOVERNMENTAL CONSENTS
---------------------
4.1 FCC Consent. (a) The assignment of the Station Licenses as
-----------
contemplated by this Agreement is subject to the prior consent and approval of
the FCC.
(b) No later than seven Business Days after the date of this Agreement
Buyer and Sellers shall file the FCC Application. Sellers and Buyer shall
thereafter prosecute the FCC Application with all reasonable diligence and
otherwise use their reasonable best efforts to obtain the grant of the FCC
Application as expeditiously as practicable. Neither Sellers nor Buyer shall
have any obligation to satisfy any complainant or the FCC by taking any steps
which would have a material adverse effect upon Sellers or Buyer or upon any
Affiliate, but neither the expense nor inconvenience to a party of defending
against a complainant or an inquiry by the FCC shall be considered a material
adverse effect on such party. If the FCC Consent imposes any condition on any
party hereto, such party shall use its reasonable best efforts to comply with
such condition; provided, however, that no party shall be required to comply
-------- -------
<PAGE>
with any condition that would have a material adverse effect upon it or any
Affiliate. If reconsideration or judicial review is sought with respect to the
FCC Consent, the party or parties affected shall vigorously oppose such efforts
for reconsideration or judicial review; provided further, however, that nothing
-------- ------- -------
herein shall be construed to limit a party's right to terminate this Agreement
pursuant to Article XV.
4.2 Compliance with HSRA. Buyer and Sellers shall make or cause to be
--------------------
made in a timely fashion, and in any event within seven Business Days following
the filing of the FCC Application, all filings which are required in connection
with the transactions contemplated hereby under the HSRA, and shall furnish to
the other party all information that the other reasonably requests in connection
with such filings.
4.3 Other Governmental Consents. Promptly following the execution
---------------------------
of this Agreement, the parties shall prepare and file with the appropriate
governmental authorities any requests for approval or waiver not referred to in
Sections 4.1 and 4.2 that are required from such governmental authorities in
connection with the transactions contemplated hereby and shall diligently and
expeditiously prosecute, and shall cooperate fully with each other in the
prosecution of, such requests for approval or waiver and all proceedings
necessary to secure such approvals and waivers. All such governmental approvals
and waivers not referred to in Sections 4.1 and 4.2 are listed in Schedule 4.3.
------------
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Sellers as follows:
5.1 Organization and Standing. Buyer is a limited partnership duly
-------------------------
formed, validly existing and in good standing under the laws of the State of
Delaware, and is duly qualified to do business in, and is in good standing in
the State of New York. Buyer has all necessary partnership power and authority
under its agreement of limited partnership and the Delaware Revised Uniform
Limited Partnership Act to own, lease and operate the Station Assets, to hold
the Station Licenses and to carry on the business of the Station as proposed to
be conducted by Buyer after the Closing Date.
<PAGE>
5.2 Authorization and Binding Obligation. Buyer has all necessary
------------------------------------
partnership power and authority to enter into and perform its obligations under
this Agreement, the Time Brokerage Agreement and the transactions contemplated
hereby and thereby, and Buyer's execution, delivery and performance of this
Agreement and the Time Brokerage Agreement have been duly and validly authorized
by all necessary partnership action on its part. This Agreement and the Time
Brokerage Agreement have been duly executed and delivered by Buyer and
constitute its valid and binding obligations, enforceable against it in
accordance with their terms, except as limited by laws affecting the enforcement
of creditors' rights generally or equitable principles.
5.3 FCC Qualifications. To the best of Buyer's knowledge, there are
------------------
no facts which, under the Communications Act of 1934, as amended, or the
existing rules and regulations of the FCC, would disqualify Buyer from becoming
the assignee of the Station Licenses or from consummating the transactions
contemplated herein or by the Time Brokerage Agreement within the times
contemplated herein or therein. Without limiting the generality of the
foregoing, Buyer is the valid and legal holder of all the licenses issued by the
FCC for radio stations WGRF(FM) and WEDG(FM) in Buffalo, New York, and WWDB(FM)
in Philadelphia, Pennsylvania (collectively, the "Buyer's Station"), and none of
its licenses therefor is subject to any restriction or condition which limits in
any material respect the conduct of the business or the operations of the
Buyer's Stations. Buyer has no knowledge of any applications, complaints or
notices of violation or proceedings pending before the FCC relating to the
conduct of the business or operations of the Buyer's Stations other than
proceedings affecting the broadcasting industry generally or in-market rule
makings or other public proceedings not specifically relating to the Buyer's
Stations nor, to Buyer's knowledge, are any such actions threatened. The FCC
licenses relating to the Buyer's Stations were validly issued to Affiliates of
Buyer and are in full force and effect, and Buyer has no knowledge that they are
impaired by any act or omission of Buyer or any of its Affiliates, or the
officers, employees or agents of Buyer or any of its Affiliates. The Buyer's
Stations are being operated in all material respects in accordance with the
terms and conditions of their respective FCC licenses and the rules and
regulations of the FCC. Buyer is financially qualified (as defined by the FCC)
to consummate the transaction contemplated hereby.
5.4 Absence of Conflicting Agreements or Required Consents. Except
------------------------------------------------------
as set forth in Article IV with respect to governmental consents, the execution,
delivery and
<PAGE>
performance of this Agreement and the Time Brokerage Agreement by Buyer: (a) do
-
not require the consent of any third party; (b) will not violate any provision
-
of Buyer's agreement of limited partnership; (c) will not violate any applicable
-
law, judgment, order, injunction, decree, rule, regulation or ruling of any
governmental authority to which Buyer is a party or is bound; and (d) will not,
-
either alone or with the giving of notice or the passage of time, or both,
conflict with, constitute grounds for termination of or result in a breach of
the terms, conditions or provisions of, or constitute a default under or
accelerate or permit the acceleration of any performance required by the terms
of any agreement, instrument, license or permit to which Buyer is now subject.
5.5 Litigation. There is no claim, litigation, proceeding or
----------
investigation pending or, to the best of Buyer's knowledge, threatened, which
seeks to enjoin or prohibit, or otherwise questions the validity of, any action
taken or to be taken by Buyer in connection with this Agreement or the Time
Brokerage Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLERS
-----------------------------------------
Sellers jointly and severally represent and warrant to Buyer as
follows:
6.1 Organization and Standing. Each Seller is a corporation duly
-------------------------
formed, validly existing and in good standing under the laws of the State of
Delaware, is duly qualified to do business in, and is in good standing in the
State of New York, and each Seller has all necessary corporate power and
authority under its certificate of incorporation and by-laws to own, lease and
operate the Station Assets and to carry on the business and operations of the
Station as now conducted and as proposed to be conducted by it between the date
hereof and the Closing Date.
6.2 Authorization and Binding Obligation. Each Seller has all
------------------------------------
necessary corporate power and authority to enter into and perform its
obligations under this Agreement, the Time Brokerage Agreement and the
transactions contemplated hereby and thereby, and each Seller's execution,
delivery and performance of this Agreement and the Time Brokerage Agreement have
been duly and validly authorized by all necessary corporate action on its part.
This Agreement and the Time Brokerage Agreement have been
<PAGE>
duly executed and delivered by each Seller and constitute its valid and binding
obligations, enforceable against it in accordance with their terms, except as
limited by laws affecting the enforcement of creditors' rights generally or
equitable principles.
6.3 Absence of Conflicting Agreements or Required Consents. Except
------------------------------------------------------
as set forth in Article IV with respect to governmental consents or disclosed in
Schedule 6.3 or 6.8, the execution, delivery and performance of this Agreement
- -------------------
and the Time Brokerage Agreement by each Seller (a) do not require the consent
-
of any third party; (b) will not violate any provision of any Seller'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 any Seller is a party or by which it or the
Station Assets are bound; (d) will not, either alone or with the giving of
-
notice or the passage of time, or both, conflict with, constitute grounds for
termination of or result in a breach of the terms, conditions or provisions of,
or constitute a default under, any Contract or Station License; and (e) will not
-
result in the creation of any Lien on any of the Station Assets.
6.4 Governmental Authorization. Schedule 6.4 contains a true and
-------------------------- ------------
complete list of the Station Licenses, and there are no other licenses, permits
or other authorizations from governmental or regulatory authorities required
for the lawful conduct of the business and operations of the Station in the
manner and to the full extent it is now conducted. Sellers are the valid and
legal holders of the Station Licenses and none is subject to any restriction or
condition which limits in any material respect the conduct of the business and
operations of the Station in the manner and to the full extent it is now
conducted. Sellers have delivered to Buyer true and complete copies of the
Station Licenses, including any and all amendments and other modifications
thereto. Except as may be set forth in Schedule 6.4, no Seller
------------
has any knowledge of any applications, complaints or notices of violation or
proceedings pending before the FCC relating to the conduct of the business or
operations of the Station other than proceedings affecting the broadcasting
industry generally or in-market rule makings or other public proceedings not
specifically relating to the Station nor, to any Seller's knowledge, are any
such actions threatened. The Station Licenses were validly issued and are in
full force and effect and no Seller has any knowledge that they are impaired by
any act or omission of any Seller or any of its Affiliates, or the officers,
employees or agents of any Seller or any of its Affiliates. The Station is
being operated in all material
<PAGE>
respects in accordance with the terms and conditions of the Station Licenses and
the rules and regulations of the FCC. All ownership reports, renewal
applications and other reports and documents required to be filed with the FCC
by or on behalf of each Seller with respect to the Station have been timely
filed with the FCC, and all such reports, applications and other documents are
true and complete. Each Seller has no reason to believe that the FCC will not
renew the Station Licenses in the ordinary course for a full term without any
material qualifications. There are no facts which, under the Communications Act
of 1934, as amended, or the existing rules and regulations of the FCC, would
disqualify any Seller from assigning the Station Licenses or from consummating
the transactions contemplated herein or by the Time Brokerage Agreement within
the times contemplated herein or therein. Sellers maintain an appropriate public
inspection file at the Station's studio in accordance with FCC rules. Schedule
--------
6.4 contains a true and complete list of all governmental and regulatory
- ---
consents, approvals and waivers required in connection with the transactions
contemplated hereby.
6.5 Real Property. (a) Schedule 6.5 contains a true and complete
------------- ------------
list of all Owned Real Property setting forth the address, improvements thereon
and legal description for each parcel of Owned Real Property. There are no
outstanding options or rights of first refusal to purchase the Owned Real
Property or any portion thereof or interest therein. No real property other than
that listed on Schedule 6.5 is used in, held for use in connection with or
------------
necessary for the conduct of, the business or operations of the Station. There
are no Real Property Leases.
(b) To each Seller's knowledge, (i) the main transmitting tower,
-
related improvements, guy anchors of the transmitting tower, and the transmitter
building used by Sellers in the operation of the Station are located entirely on
the Owned Real Property and (ii) the improvements upon the Owned Real Property
--
and the current use and operation of such premises conform in all material
respects to all restrictive covenants, conditions, easements, building,
subdivision and similar codes and federal, state and local laws, regulations,
rules, orders and ordinances and no Seller has received any notice of any
violation or claimed violation of any such restrictive covenant, condition or
easement, or any building, subdivision or similar code, or any federal, state or
local law, regulation, rule, order or ordinance which, either individually or in
the aggregate, could have a material adverse effect on the assets, business or
financial condition of the Station (a "Material Adverse Effect"). Sellers'
improvements upon the Owned Real
<PAGE>
Property are in adequate operating condition and repair, normal wear and tear
excluded. Each Seller has no knowledge and has received no notice of any
pending, threatened, or contemplated action to take by eminent domain or
otherwise to condemn any portion of the Owned Real Property. To each Seller's
knowledge, there exists no writ, injunction, decree, order or judgment, nor any
litigation, pending or threatened, relating to the ownership, use, lease,
occupancy or operation of any of the Owned Real Property and no Seller has
received any written notice of a violation of (i) applicable Federal, state or
-
local statutes, laws, ordinances, regulations, rules, codes, orders or
requirements (including any building or zoning laws or codes) affecting any of
the Owned Real Property or (ii) applicable deed restrictions or other applicable
--
covenants, restrictions, agreements, existing site plan approvals, zoning or
subdivision regulations or urban redevelopment plans as modified by any duly
issued variances in each case, except, in the case of clauses (i) and (ii), for
such notice of violations that could not, either individually or in the
aggregate, have a Material Adverse Effect.
(c) Sellers have good and marketable title to the Owned Real Property
in fee simple absolute. Sellers have the exclusive right to use and occupy the
Owned Real Property and Sellers enjoy peaceful and undisturbed possession of the
Owned Real Property. Except as set forth on Schedule 6.5, the Owned Real
------------
Property is free and clear of all Liens.
6.6 Title to and Condition of Personal Property. Schedule 6.6 lists
------------------------------------------- ------------
all equipment, office furniture and fixtures, office materials and supplies,
inventory, spare parts and other tangible personal property owned, leased or
held by Sellers or any Affiliate of Sellers and used in, held for use in
connection with or necessary for the conduct of, the business or operations of
the Station or the Station Assets (the "Personal Property") which has an
individual value of $1,000 or more. Except as described in Schedule 6.6, all of
------------
the items of Personal Property included in the Station Assets are in adequate
operating condition and repair, normal wear and tear excluded, are insurable at
standard rates, are performing satisfactorily, have been properly maintained in
accordance with the manufacturers' recommendations and industry practices, are
available for immediate use and are adequate for the purposes for which they are
being used in the business and operations of the Station.
6.7 Intellectual Property. Schedule 6.7 contains a true and complete
--------------------- ------------
list and description of all United
<PAGE>
States and foreign trademarks, service marks, trade names, trade dress,
copyrights, and similar rights, including registrations and applications to
register or renew the registration of any of the foregoing, United States and
foreign letters patent and patent applications, and inventions, processes,
designs, formulae, trade secrets, jingles, know-how, confidential business and
technical information, computer software, data and documentation, and all
similar intangible property rights, tangible embodiments of any of the foregoing
(in any medium including electronic media), and licenses or permits to use any
of the foregoing used in, held for use in connection with or necessary for the
conduct of, the business or operations of the Station or the Station Assets (the
"Intellectual Property"). The Intellectual Property is either owned or validly
licensed by Sellers and Schedule 6.7 identifies which Intellectual Property is
------------
so owned and which is so licensed. Sellers have delivered to Buyer copies of all
material documents regarding any Intellectual Property, if any, establishing
such rights, licenses or other authority. No Seller has any knowledge of any
pending or threatened proceeding or litigation affecting, or with respect to,
any Intellectual Property. Each Seller is in compliance in all material respects
with the terms of any license of any Intellectual Property and no Seller has
received any notice and no Seller has any knowledge of any infringement or
unlawful use of any Intellectual Property. To each Seller's knowledge, the
conduct of the business of the Station does not infringe the rights of any third
party in respect of any Intellectual Property. No Seller has sold, licensed or
otherwise disposed of any Intellectual Property to any Person and no Seller has
agreed to indemnify any Person for any patent, trademark or copyright
infringement. Schedule 6.7 lists all of the Intellectual Property which have
------------
been duly registered with, filed in or issued by, as the case may be, the
United States Patent and Trademark Office and United States Copyright Office
or other filing offices, domestic or foreign.
6.8 Contracts. (a) Schedule 6.8 lists all (i) employment agreements
--------- ------------ -
relating to employees of the Station for which the base salary payable by the
employer exceeds $30,000 per year and (ii) all other Contracts which involve
--
payment to or from the Station in excess of $50,000 during the term of such
Contract, except (i) leases for Personal Property which are described in
-
Schedule 6.6 and (ii) licenses for Intellectual Property which are described in
- ------------ --
Schedule 6.7.
- ------------
(b) Sellers have delivered to Buyer true and complete copies of all
written Contracts, or true and
<PAGE>
complete memoranda describing the terms of all oral Contracts. Each Seller has
complied in all material respects with all Contracts to be assumed by Buyer
hereunder or under the Time Brokerage Agreement and is not in default under any
of the Contracts to be assumed by Buyer hereunder or under the Time Brokerage
Agreement where any such default, either individually or together with any other
such defaults, could have a Material Adverse Effect. No Seller has granted or
been granted any material waiver or forbearance with respect to any of the
Contracts. To the best of each Seller's knowledge, no other contracting party is
in default under any of the Contracts to be assumed by Buyer hereunder or under
the Time Brokerage Agreement where such default, either individually or together
with any other such defaults, could have a Material Adverse Effect. Except as
set forth in Schedule 6.8, each Seller has full legal power and authority to
------------
assign its rights under the Contracts to be assumed by Buyer hereunder or under
the Time Brokerage Agreement to Buyer on terms and conditions no less favorable
than those in effect on the date hereof, and such assignment will not require
the consent of any third party or affect the validity, enforceability and
continuity of any of the Contracts to be assumed by Buyer hereunder or under the
Time Brokerage Agreement.
6.9 Personnel Information. (a) Sellers have previously delivered to
---------------------
Buyer a true and complete list of all persons employed at the Station, each such
person's compensation and bonus arrangements and the Employee Plans listed in
Schedule 6.10, if any, applicable to each such person. No Seller is a party to
- -------------
any agreement or arrangement, written or oral, with salaried or non-salaried
employees except as described in Schedules 6.8 and 6.10. Except as described in
----------------------
Schedule 6.9, no Seller has any knowledge that any employee of the Station
- ------------
currently plans to terminate employment, whether by reason of the transactions
contemplated by this Agreement, the Time Brokerage Agreement or otherwise.
(b) Except as disclosed in Schedule 6.10, no Seller is a party to or
-------------
subject to any Contract with any labor organization, nor has any Seller agreed
to recognize any union or other collective bargaining unit, nor has any union or
other collective bargaining unit been certified as representing any employees of
any Seller at the Station. No Seller has any knowledge of any organizational
effort currently being made or threatened by or on behalf of any labor union
with respect to employees of any Seller at the Station. There are no unfair
labor practice charges pending against any Seller; there are no pending or
threatened
<PAGE>
strikes, arbitration proceedings involving labor matters or other labor disputes
affecting any Seller or the Station.
6.10 Employee Benefit Plans. Schedule 6.10 sets forth a true and
---------------------- -------------
complete of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), or compensation, bonus, incentive, deferral, equity based,
severance, termination, retention, change in control, employment or other
similar program, agreement, arrangement, trust or other funding arrangement,
whether or not subject to the provisions of ERISA, to which any Seller is bound
or that is or has been established or maintained or in respect of which any
Seller has ever had any obligation to contribute (each, an "Employee Plan").
Except pursuant to a Plan, no Seller has fixed or contingent liability or
obligation to or in respect of any person now or formerly employed at the
Station or any beneficiary or dependent of any such person, including, without
limitation, in respect of pension or thrift benefits or payments, individual or
supplemental pension benefits or payments or compensation arrangements,
contributions to hospitalization or other health, life or other welfare
benefits, incentive benefits or payments, bonus benefits or payments or
vacation, sick leave, disability and termination benefits or payments, including
workers' compensation. No trade or business (whether or not incorporated) is or
has been as of any date within the preceding six years been treated as a single
employer together with any Seller pursuant to Section 414 of the Code. No Seller
has incurred or reasonably expects to incur (either directly or indirectly,
including as a result of any indemnification obligation) any liability that
could become a liability of Buyer or, following the Closing, remain a liability
of the Station under or pursuant to Title I or IV of ERISA or the penalty,
excise tax or joint and several liability provisions of the Code relating to
employee benefit plans and, to the best knowledge of each Seller, no event,
transaction or condition has occurred or exists which could result in any such
liability. Each of the Plans has been operated and administered in all respects
in accordance with all applicable laws, including but not limited to ERISA and
the Code.
6.11 Litigation. No Seller is subject to any judgment, award, order,
----------
writ, injunction, arbitration decision or decree affecting the Station or any of
the Station Assets or which seeks to enjoin or prohibit, or otherwise questions
the validity of, any action taken or to be taken in connection with this
Agreement or the Time Brokerage Agreement. Except as set forth in Schedule 6.11,
-------------
there is no claim, litigation, proceeding or investigation
<PAGE>
pending or, to the best of each Seller's knowledge, threatened, against or
affecting the Station or any of the Station Assets whether or not covered by
insurance, which seeks damages (monetary or otherwise) in excess of $50,000 in
any single instance or $250,000 in the aggregate, or which seeks to enjoin or
prohibit, or otherwise questions the validity of, any action taken or to be
taken by any Seller in connection with this Agreement or the Time Brokerage
Agreement.
6.12 Compliance with Laws. (a) Each Seller has operated and is
--------------------
operating in material compliance with all laws, regulations and governmental
orders applicable to the conduct of the business and operations of the Station,
and its use of the Station Assets does not violate any such laws, regulations or
orders in any material respect. Except as set forth in Schedule 6.12, no Seller
-------------
has received any notice asserting any noncompliance with any applicable
statute, rule or regulation in connection with the business or operations of
the Station.
(b) To the best of each Seller's knowledge, (i) the Station is not
-
causing interference in violation of FCC rules to the transmission of any other
broadcast station or communications facility and has not received any complaints
with respect thereto and (ii) no other broadcast station or communications
--
facility is causing interference in violation of FCC rules to the Station's
transmissions or the public's reception of such transmissions.
6.13 Transaction with Affiliates. Except as set forth on Schedule
--------------------------- --------
6.13, all of the Stations Assets are owned or leased by one or more Seller, and
- ----
no Affiliate of any Seller or any other Person owns or leases property or is a
party, including, without limitation, as lessor or lessee, to any Contract
affecting or relating to the operations of the Station. No Seller nor any
Affiliate owns, directly or indirectly, on an individual or joint basis, any
material interest in any third party which is a party to any Contract. There are
no agreements, arrangements or understandings between one or more Seller and any
third party pursuant to which the Station receives, as a result of its ownership
by Sellers, discounts, bonuses or other favorable arrangements that will not be
available to the Station after the Closing.
6.14 Financial Statements. Schedule 6.14 contains true and complete
-------------------- -------------
copies of the Financial Statements. The Financial Statements have been prepared
in accordance with United States generally accepted accounting principles
("GAAP") consistently applied. The Financial Statements
<PAGE>
accurately reflect and fairly present the financial condition and the results
of the operations and cash flows of the Station as of the dates and for the
periods indicated. Except for (a) liabilities as and to the extent expressly
-
reflected or reserved against on the balance sheet of the Station as of December
31, 1995 included in the Financial Statements and (b) liabilities incurred since
-
December 31, 1995, in the ordinary and normal course of business, which in the
aggregate are not material, no Seller has any liabilities or obligations of any
nature, whether accrued, absolute, contingent or otherwise, relating to the
Station, except as disclosed in this Agreement or Schedule 6.14.
-------------
6.15 Absence of Changes or Events. Except as disclosed in Schedule
---------------------------- --------
6.15, since December 31, 1995, the operations and business of the Station have
- ----
been conducted in all material respects only in the ordinary course and no
Seller has, except in the ordinary course of business, purchased, sold, assigned
or transferred any of the Station Assets.
6.16 Insurance. The business, properties (including the Station
---------
Assets) and employees of the Station are insured against loss, damage or injury
in amounts listed in Schedule 6.16, which shows all insurance policies held by
-------------
each Seller relating to such business, properties and employees, together with
the policy limits, type of coverage, location of the property covered, annual
premium, premium payment dates and expiration date of each of the policies.
Copies of all such insurance policies have been furnished to Buyer. All such
insurance policies are in full force and effect.
6.17 Taxes. No event has occurred or condition exists that could
-----
result in any liability being imposed on Buyer by any taxing authority for any
taxes, assessments, excises, penalties, or interest due or to become due of any
Seller for any taxable period, or imposed with respect to the Station Assets for
any taxable period or portion thereof ending on or before the Cut-Off Time.
6.18 Bankruptcy. No insolvency proceedings of any character,
----------
including, without limitation, bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary, affecting
any Seller or any of the Station Assets, are pending or, to the knowledge of
each Seller, threatened, and no Seller has made any assignment for the benefit
of creditors or taken any action in contemplation of or which would constitute
the basis for the institution of such insolvency proceedings.
<PAGE>
6.19 Environmental Matters. (a) Except as set forth in the Phase I
---------------------
Environmental Assessment of 675 Dorrance Avenue, West Seneca, New York, dated
April 1996, prepared by URS Consultants, Inc. (the "Phase I"), to each Seller's
knowledge, all operations and uses of the Owned Real Property are in compliance
with all Environmental Laws. To each Seller's knowledge, Sellers have obtained
all environmental, health and safety permits necessary for the operation of the
Station, and all such permits are in full force and effect and each Seller is in
compliance with the terms and conditions of all such permits. No Seller has
received any notice, and no Seller is aware of, any administrative or judicial
investigations, proceedings or actions with respect to violations, alleged or
proven, of Environmental Laws by any Seller or any tenants or subtenants of any
Seller, or otherwise involving the Owned Real Property.
(b) Except as set forth in the Phase I, to each Seller's knowledge,
there has been no release (nor, to each Seller's knowledge, is there any
substantial threat of a release) of any Hazardous Substance at or from the Owned
Real Property in amounts or concentrations requiring remediation under or that
would violate current Environmental Laws. Except as set forth in the Phase I, to
each Seller's knowledge, there are no Hazardous Substances present on the Owned
Real Property except for ordinary quantities of properly stored Hazardous
Substances found in consumer or commercial products that are used in the normal
course of broadcast station operations, including grounds and building operation
and maintenance. Except as set forth in the Phase I, to each Seller's knowledge,
there are no underground storage tanks, or underground piping associated with
such tanks, on the Owned Real Property.
6.20 Foreign Investment in Real Property Tax Act. No Seller is a
-------------------------------------------
"foreign person" within the meaning of Section 1445 of the Code, and Sellers
shall deliver to Buyer at Closing an affidavit to this effect.
6.21 The Station Assets. Except as set forth in Schedule 6.21, Sellers
------------------ -------------
own and have good title to all the Station Assets free and clear of all Liens.
All of the Station Assets are and have been located in the State of New York
since they were acquired by Sellers. All financing statements filed by any party
with respect to the Station Assets are listed in Schedule 6.21. The Station
-------------
Assets are in all material respects adequate for the purposes for which such
assets are currently used or are held for use, and, to the best of each Seller's
knowledge, there are no facts or conditions affecting the Station Assets which
could,
<PAGE>
individually or in the aggregate, interfere in any material respect with the
use, occupancy or operation thereof as currently used, occupied or operated, or
their adequacy for such use.
6.22 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 a material fact or omits any
statement of a material fact necessary to make any statement contained herein or
therein not misleading.
ARTICLE VII
COVENANTS OF SELLERS
--------------------
7.1 Interim Operation. Except expressly as provided by or in
-----------------
furtherance of the Time Brokerage Agreement, between the date of this Agreement
and the Closing Date, except as expressly permitted by this Agreement or with
the prior written consent of Buyer:
(a) No Seller shall take any action which could result in the business
and operations of the Station not being conducted in the ordinary course of
business, consistent with past practices, and no Seller shall take any
action which could adversely effect the ongoing operations and assets of
the Station;
(b) No Seller shall sell, assign, lease or otherwise transfer or
dispose of any of the Station Assets, unless the same shall be replaced
with assets of equal or greater value and utility;
(c) No Seller shall create, assume or permit to exist any Lien of any
nature whatsoever upon the Station Assets, except for those in existence on
the date of this Agreement, all of which will be removed on or prior to the
Closing Date;
(d) Each Seller shall operate the Station in all material respects in
accordance with the FCC's rules and regulations and the Station Licenses
and with all other laws, regulations, rules and orders; and shall not fail
to prosecute with due diligence any pending application to the FCC, and
shall not cause or permit by any act, or failure to act, any of the Station
Licenses to expire, be surrendered, adversely modified, or otherwise
terminated, or the FCC to institute any
<PAGE>
proceeding for the suspension, revocation or material adverse modification
of any of the Station Licenses;
(e) Each Seller shall not waive any material right under any Non-LMA
Contract or license relating to the Station or the Station Assets;
(f) No Seller shall enter into any Non-LMA Contracts relating to the
Station or the Station Assets;
(g) Each Seller shall timely make all payments required to be paid
under any Non-LMA Contract when due and otherwise pay all liabilities and
satisfy all obligations within 90 days of invoice;
(h) Each Seller shall maintain the insurance policies on the Station
and the Station Assets listed in Schedule 6.16 or their equivalent; and
-------------
(i) If the broadcast transmissions of the Station from its main
broadcast antenna at full authorized power is interrupted or impaired, each
Seller shall use its reasonable best efforts to restore transmissions at
full authorized power as soon as reasonably possible.
7.2 Access to Station. Without in any way limiting the rights and
-----------------
obligations of the parties under the Time Brokerage Agreement, between the date
of this Agreement and the Closing Date, Sellers shall give Buyer and Buyer's
counsel, accountants, lenders, engineers and other representatives, reasonable
access during normal business hours to all of each Seller's properties, records
and employees relating exclusively to the Station, including the data underlying
the Financial Statements, and shall furnish Buyer with all information that
Buyer reasonably requests concerning the Station. The rights of Buyer under this
Section shall not be exercised in such a manner as to interfere unreasonably
with the business of the Station.
7.3 Third-Party Consents. Each Seller at its own cost shall use all
--------------------
reasonable best efforts to obtain the consent of any third parties listed on
Schedule 4.3 or 6.3 necessary for the assignment to Buyer of any Contract or
- -------------------
Non-LMA Contract to be assigned hereunder or under the Time Brokerage Agreement.
7.4 Notification. At all times prior to the Closing, Sellers shall
------------
promptly notify Buyer in writing of any fact, condition, event or occurrence
that will or could reasonably be expected to result in the failure of any
<PAGE>
representation or warranty of any Seller made in this Agreement to be true and
complete in all material respects, promptly upon becoming aware of the same;
provided, however, that Sellers' compliance with this Section 7.4 shall not
- -------- -------
relieve any Seller of any obligation with respect to any representation,
warranty or covenant of any Seller hereunder or waive any condition to Buyer's
obligations hereunder.
7.5 No Inconsistent Action. No Seller shall take any action which is
----------------------
inconsistent with its obligations under this Agreement or that would hinder or
delay the consummation of the transactions contemplated by this Agreement. No
Seller will take any action that would disqualify or impair any Seller as an
assignor of the Station Licenses or licensee, owner and operator of the Station.
7.6 Estoppel Certificates; Consent and Waiver. Subject to Section
-----------------------------------------
11.1(d)(iv), Sellers shall use all reasonable best efforts to obtain estoppel
certificates containing customary provisions and consents and waivers from any
lessor of any material Station Asset that Buyer requests at least 15 Business
Days before the Closing Date. Each estoppel certificate shall identify with
specificity the lease, and any amendments or modifications thereto, and the
amount of the monthly payments due thereunder and the expiration date thereof
(together with all renewal options, if any), and shall contain the landlord's or
lessor's certification for the benefit of Buyer that the lease is in full force
and effect, that there are no defaults that remain uncured with respect to such
lease and that each Seller has been and is in full compliance with all of such
Seller's obligations thereunder.
7.7 No Solicitation. Between the date of this Agreement and the
---------------
Closing, no Seller or any Affiliate of any Seller shall directly or indirectly
(a) solicit, initiate or encourage submission of any proposal or offer from any
-
Person relating to any acquisition or purchase of any Station Assets (other than
the sale of assets in the ordinary course of business consistent with past
practices), or any equity interest in, the Station or any Seller, or (b)
-
participate in any discussions or negotiations regarding, or furnish to any
Person any information with respect to, or otherwise cooperate in any way, or
assist or participate in, facilitate or encourage, any effort or attempt by any
Person to do or seek any of the foregoing. Each Seller shall promptly notify
Buyer in writing if any such offer or proposal is made to it between the date of
this Agreement and the Closing. Notwithstanding the foregoing provisions of
this Section 7.7, if Sellers reasonably determine, based
<PAGE>
on objective evidence, that Buyer is likely not to fulfill its obligations at
the Closing, then Sellers may enter into a purchase agreement with another
prospective purchaser of the Station Assets provided that each Seller's
obligations under any such agreement are conditioned upon the failure of Buyer
to meet its obligations at the Closing.
7.8 Title Policies. Sellers have delivered to Buyer copies of all
--------------
title policies and title commitments in each Seller's possession with respect to
the Owned Real Property. Each Seller shall cooperate with Buyer to assist Buyer
in obtaining from a title insurance company (the "Title Company") satisfactory
to Buyer a fee owner's title insurance policy issued to Buyer, and a mortgagee's
policy issued to Buyer's lenders with respect to each parcel of Owned Real
Property, in form and substance satisfactory to Buyer and Buyer's lenders,
insuring Buyer and Buyer's lenders and issued as of the Closing Date by the
Title Company, showing Buyer to have a fee simple title to each parcel of Owned
Real Property, in each case subject to no Liens. Each Seller shall use
reasonable best efforts to deliver to the Title Company any affidavits or
indemnities required by the Title Company in connection with the delivery of the
aforesaid title policies.
7.9 Surveys. Sellers have delivered to Buyer copies of all surveys of
-------
the Owned Real Property in each Seller's possession. Each Seller shall cooperate
with Buyer, including providing reasonable access to the Owned Real Property, in
order to enable Buyer, at Buyer's election, to obtain a survey of each parcel of
Owned Real Property, prepared by a certified or registered surveyor selected by
Buyer.
ARTICLE VIII
ADDITIONAL COVENANTS
--------------------
Buyer and each Seller covenant and agree that for the applicable
periods set forth below, they shall act in accordance with the following:
8.1 Reasonable Best Efforts. Prior to the Closing, each party shall
-----------------------
use its reasonable best efforts to cause the fulfillment at the earliest
practicable date of all of the conditions to the obligations of the other party
to consummate the sale and purchase under this Agreement.
8.2 Control of Station. Without in any way limiting the rights and
------------------
obligations of the parties under the
<PAGE>
Time Brokerage Agreement, prior to the Closing, Buyer shall not, directly or
indirectly, control, supervise or direct the operations of the Station. Such
operations shall be the sole responsibility of Sellers and, subject to the
provisions of Article VII, shall be in their complete discretion.
8.3 Certain Employees. Buyer may make offers of employment to those
-----------------
persons employed by the Station whom it desires to hire, which offers shall be
on terms and conditions that Buyer shall determine in its discretion. Within
ten Business Days of the date hereof, Buyer shall provide Sellers with a list of
persons employed by the Station to whom Buyer intends to make offers of
employment. Once delivered to Sellers, such list shall be attached hereto as
Schedule 8.3. Notwithstanding the foregoing, Buyer shall not be precluded from
- ------------
making offers of employment to other persons employed by the Station. Sellers
shall be liable for all severance and other benefits to which those persons
employed or formerly employed by the Station and not listed on Schedule 8.3 are
------------
entitled under all Employee Plans, applicable law or otherwise.
8.4 Renewal of Contracts. Prior to the Closing, each Seller shall
--------------------
use its reasonable best efforts to renew any Non-LMA Contract to be assumed by
Buyer hereunder which by its terms expires or terminates between the date of
this Agreement and the Closing Date, provided that any such renewal shall be on
terms and conditions reasonably satisfactory to Buyer and Schedule 6.8 shall be
------------
amended to reflect such renewal.
8.5 Post-Closing Covenants. (a) For a period of three years after
----------------------
the Closing Date, each party agrees to make available to the other party after
Closing, upon request, any records, files, documents and correspondence of the
Station or the Station Assets that are reasonably determined by such party to be
necessary or appropriate in connection with the filing of any report with a
governmental agency or the prosecution or defense of any claim, legal action,
counterclaim, suit, arbitration, governmental investigation, or other legal,
administrative, or tax proceeding, to which the requesting party is a party.
The requesting party shall reimburse the other party for any expenses incurred
pursuant to this Section 8.5, including reimbursement for the time of any of
such party's employees, including any employees of the Station. Each party shall
exercise its rights under this Section 8.5 so as not to unreasonably interfere
with or disrupt the operations of the other party.
<PAGE>
(b) For a period of three years after the Closing Date, at least 30
days prior to discarding or destroying any books or records relating to the
Station Assets that are being sold hereunder, each party shall give the other
party notice of its intended action and an opportunity for such party to retain
any of the books or records proposed to be discarded or destroyed by the other
party.
8.6 New York Taxes (a) For purposes of the New York Real Property
--------------
Gains Tax and New York Real Estate Transfer Tax, Buyer and Sellers shall, in the
event that Buyer and Sellers have agreed upon the allocation of the Purchase
Price pursuant to Section 2.5, utilize such allocation with respect to each
parcel of Owned Real Property, and in the event that Buyer and Sellers have been
unable to agree upon such allocation within 30 days prior to the Closing Date,
Buyer and Sellers shall utilize the fair market value of each parcel of Owned
Real Property, which shall be determined by an appraisal setting forth separate
values of each parcel comprising the Owned Real Property, conducted by Arthur
Andersen, LLP, which appraisal shall be completed no later than 15 days prior to
the Closing Date (the allocation of Purchase Price or the appraised fair market
value, as applicable, the "Appraised Value"). Buyer, on the one hand, and
Sellers, on the other hand, shall each bear one-half of the costs of such
appraisal. No later than 25 days prior to the Closing Date, Buyer shall, if a
Transferee Questionnaire is required for the New York Real Property Gains Tax
based upon such allocation or appraisal, provide Sellers with a properly
completed and executed NYS Form TP-581 (the "Transferee Questionnaire"),
reporting a valuation consistent with the Appraised Value and a copy of the
allocation or appraisal. If the Transferee Questionnaire is required for the New
York Real Property Gains Tax based upon the allocation or appraisal, no later
than 20 days prior to the Closing Date, Sellers shall file the Transferee
Questionnaire, together with NYS Form TP-580 (the "Transferor Questionnaire")
and all supporting material required to be filed therewith in connection with
the sale of the Owned Real Property to Buyer, and deliver a copy of the complete
filing to Buyer. The Transferee Questionnaire and Transferor Questionnaire are
collectively hereinafter referred to as the "Questionnaires".
(b) On the Closing Date, Sellers and Buyer shall execute a properly
completed NYS Form TP-584 ("Combined Real Property Tax Form") which shall be
filed with the Erie County Clerk. If NYS Form TP-582 (the "Tentative Assessment
and Return") issued by the New York State Department of Taxation and Finance as
a result of the filing of the Questionnaires shall then have been received, it
shall be
<PAGE>
executed by Sellers, and included in the filing of the Combined Real
Property Tax Form. In addition, Sellers shall at Closing present for Buyer's
inspection, a check made payable to the Erie County Clerk in payment of the
amount due for the New York Real Estate Transfer Tax as stated on the Combined
Real Property Tax Form and a check made payable to the New York State Department
of Taxation and Finance in payment of the amount due for the New York Real
Property Gains Tax as stated on the Tentative Assessment and Return to be filed
with the Combined Real Property Tax Form. Contemporaneously with the Closing,
Buyer and Sellers jointly shall file the Combined Real Property Tax Form, the
Sellers' checks in payment of New York Real Estate Transfer Tax and New York
Real Property Gains Tax, and other associated documentation, as required by
law. Sellers shall pay their share of any additional tax (including any
interest and penalties) determined to be due under Article 31-B and Article 31
of the New York Tax Law in connection with the sale of the Owned Real Property
to Buyer as a result of any administrative or other adjustment. The cost of all
taxes paid pursuant to this Section 8.6 shall be allocated in accordance with
the provisions of Section 12.1.
ARTICLE IX
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
---------------------------------------------------
The obligations of Buyer at the Closing are subject to satisfaction of
each of the following conditions:
9.1 Representations, Warranties and Covenants. (a) All
-----------------------------------------
representations and warranties of Sellers made in this Agreement shall be true
and complete in all material respects on and as of the Closing Date as if made
on and as of that date.
(b) All of the terms, covenants and conditions to be complied with and
performed by any Seller on or prior to Closing Date shall have been complied
with or performed.
9.2 Governmental Consents. The conditions specified in Article IV
---------------------
of this Agreement shall have been satisfied, any applicable waiting period under
the HSRA shall have expired or been earlier terminated without receipt of any
objection or the commencement or threat of any litigation by any governmental
authority of competent jurisdiction to restrain the consummation of the
transactions contemplated by this Agreement and the FCC Consent shall have
become a Final Order and shall contain no
<PAGE>
condition that has or, in Buyer's good faith judgment, will have a material
adverse effect upon the Station.
9.3 Adverse Proceedings. No action, suit, proceeding, litigation or
-------------------
investigation shall be pending or threatened by any governmental authority which
questions the validity or legality of this Agreement or any action taken or to
be taken in connection herewith or the consummation of the transactions
contemplated hereby. No injunction or other order issued by a court of
competent jurisdiction restraining or prohibiting the consummation of the
transactions contemplated by this Agreement shall be in effect.
9.4 Deliveries. Sellers shall have made all the deliveries set forth
----------
in Section 11.1.
ARTICLE X
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
----------------------------------------------------
The obligations of Sellers at the Closing are subject to satisfaction
of each of the following conditions:
10.1 Representations, Warranties and Covenants. (a) All
-----------------------------------------
representations and warranties of Buyer in Article V hereof shall be true and
complete in all material respects on and as of the Closing Date as if made on
and as of that date.
(b) All the terms, covenants and conditions to be complied with and
performed by Buyer on or prior to the Closing Date shall have been complied with
or performed.
10.2 Governmental Consents. The conditions specified in Article IV
---------------------
of this Agreement shall have been satisfied, any applicable waiting period under
the HSRA shall have expired or been earlier terminated without receipt of any
objection or the commencement or threat of any litigation by any governmental
authority of competent jurisdiction to restrain the consummation of the
transactions contemplated by this Agreement and the FCC Consent shall have
become a Final Order.
10.3 Adverse Proceedings. No action, suit, proceeding, litigation or
-------------------
investigation shall be pending or threatened by any governmental authority which
questions the validity or legality of this Agreement or any action taken or to
be taken in connection herewith or the consummation of the transactions
contemplated hereby. No injunction or other order issued by a court of
competent jurisdiction
<PAGE>
restraining or prohibiting the consummation of the transactions contemplated by
this Agreement shall be in effect.
10.4 Deliveries. Buyer shall have made all the deliveries set forth
----------
in Section 11.2.
10.5 WSJZ. Sellers shall have transferred substantially all of the
----
assets of radio station WSJZ(FM), Buffalo, New York, whether structured as a
sale of stock, assets, merger, spin-off or otherwise; provided that this
--------
condition shall only be effective if (1) Sellers shall have entered into a
-
binding agreement to sell radio station WSJZ(FM) to a third party prior to April
9, 1996; (2) such agreement contains no material contingencies to Sellers' or
-
such third party's obligations thereunder other than FCC approval of such sale
and the consummation of the transactions contemplated by this Agreement; and (3)
-
the purchaser under such agreement is able, based on objective evidence, to
consummate such purchase within the time frame contemplated by such agreement.
ARTICLE XI
DOCUMENTS TO BE DELIVERED AT THE CLOSING
----------------------------------------
11.1 Documents to be Delivered by Sellers. At the Closing, Sellers
------------------------------------
shall deliver or cause to be delivered to Buyer the following:
(a) certificates of each Seller, dated the Closing Date, in form and
substance reasonably satisfactory to Buyer, certifying to the fulfillment
of the conditions set forth in Section 9.1;
(b) if Buyer and Sellers elect to waive the condition set forth in
Section 9.2 that the FCC Consent shall have become a Final Order prior to
Closing, the Unwind Agreement, dated as of the Closing Date, among Sellers
and Buyer, substantially in the form of Exhibit A hereto (the "Unwind
------- -
Agreement") executed by each Seller;
(c) opinion of counsel to Sellers, dated the Closing Date, in form and
substance reasonably satisfactory to Sellers and Buyer;
<PAGE>
(d) instruments of conveyance and transfer, in form and substance
reasonably satisfactory to counsel to Buyer, effecting the sale,
assignment, transfer and conveyance of the Station Assets to Buyer,
including, but not limited to, the following:
(i) bargain and sale deed with grantor's covenants for each
parcel of Owned Real Property, together with any necessary transfer
declarations or affidavits;
(ii) assignments of the Station Licenses;
(iii) bills of sale for all Personal Property;
(iv) any estoppel certificates, consents and waivers obtained
by Sellers pursuant to Section 7.6;
(v) assignment of the Intellectual Property set forth on
Schedule 6.7;
------------
(vi) assignments of any Non-LMA Contracts; and
(vii) assignments of all intangible personal property including
all books, records, logs and similar assets which do not constitute
Excluded Assets;
(e) certified resolutions of the board of direc tors of each Seller,
authorizing the execution, delivery and performance of this Agreement and
the Time Brokerage Agreement;
(f) an affidavit to the effect that each Seller is not a "foreign
person" within the meaning of Section 1445 of the Code; and
(g) such other documents as may reasonably be requested by Buyer's
counsel.
11.2 Documents to be Delivered by Buyer. At the Closing, Buyer shall
----------------------------------
deliver or cause to be delivered to Sellers the following:
<PAGE>
(a) certificate of Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to Sellers, certifying to the
fulfillment of the conditions specified in Section 10.1;
(b) if Buyer and Sellers elect to waive the condition set forth in
Section 9.2 that the FCC Consent shall have become a Final Order prior to
Closing, the Unwind Agreement executed by Buyer;
(c) immediately available wire-transferred funds as provided in
Section 2.4;
(d) instruments, in form and substance reasonably satisfactory to
counsel to Sellers, pursuant to which Buyer assumes pursuant to Article
III certain obligations, liabilities, commitments and responsibilities;
(e) opinion of counsel to Buyer, dated the Closing Date, in form
and substance reasonably satisfactory to Sellers and Buyer;
(f) certified resolutions of the board of directors of the general
partner of Buyer, authorizing the execution, delivery and performance of
this Agreement and the Time Brokerage Agreement; and
(g) such other documents as may be reasonably requested by
Sellers' counsel.
ARTICLE XII
TRANSFER TAXES; FEES AND EXPENSES
---------------------------------
12.1 Transfer Taxes and Similar Charges. Except as provided in
----------------------------------
Section 7.3, all costs of transferring the Station Assets in accordance with
this Agreement shall be allocated among the parties as follows:
(a) Buyer shall pay (i) the HSRA filing fee and (ii) all costs
- --
related to title insurance and surveys with respect to the transfer of
the Owned Real Property;
(b) Sellers shall pay any amounts due in respect of the New York
Real Property Gains Tax referred to in Section 8.6;
<PAGE>
(c) Sellers shall pay all recordation, transfer and documentary
taxes and fees; and
(d) all other costs and expenses of transferring the Station Assets
shall be divided equally between Buyer, on the one hand, and Sellers,
on the other hand.
Subject to Section 8.6, as between Buyer, on the one hand, and Sellers, on the
other hand, the party that has the primary responsibility under applicable law
for filing any return in respect of taxes described in this Section 12.1 shall
prepare such return, subject to the other party's approval, which approval shall
not be unreasonably withheld, and timely file such return.
12.2 Expenses. Except as set forth in Section 12.1, each party
--------
hereto shall be solely responsible for all costs and expenses incurred by it in
connection with the negotiation, preparation and performance of and compliance
with the terms of this Agreement.
ARTICLE XIII
BROKER'S COMMISSION OR FINDER'S FEE
-----------------------------------
13.1 Buyer's Representation and Agreement to Indemnify. Buyer
-------------------------------------------------
represents and warrants to Sellers that neither it nor any person or entity
acting on its behalf has agreed to pay a commission, finder's fee or similar
payment in connection with this Agreement or any matter related hereto to any
person or entity, nor has it or any person or entity acting on its behalf taken
any action on which a claim for any such payment could be based. Buyer further
agrees to indemnify and hold Sellers harmless from and against any and all
claims, losses, liabilities and expenses (including reasonable attorney's fees)
arising out of a claim by any person or entity based on any such arrangement or
agreement made or alleged to have been made by Buyer.
13.2 Sellers' Representation and Agreement to Indemnify. Each Seller
--------------------------------------------------
represents and warrants to Buyer that, except for the agreement with Star Media
Group, Inc., neither it nor any person or entity acting on its behalf has agreed
to pay a commission, finder's fee or similar payment in connection with this
Agreement or any matter related hereto to any person or entity, nor has it or
any person or entity acting on its behalf taken any action on which a claim for
any such payment could be based. Any commission, fee or payment due Star Media
Group, Inc. in connection with the transactions contemplated by this Agreement
shall be
<PAGE>
paid by Sellers. Each Seller further agrees to indemnify and hold
Buyer harmless from and against any and all claims, losses, liabilities and
expenses (including reasonable attorneys' fees) arising out of a claim by any
person or entity based on any such arrangement or agreement made or alleged to
have been made by any Seller.
ARTICLE XIV
INDEMNIFICATION
---------------
14.1 Indemnification by Sellers. (a) General. Each Seller agrees
-------------------------- -------
to indemnify and hold harmless Buyer, its Affiliates and the partners, officers,
directors, employees, agents, advisers and representatives of Buyer and its
Affiliates ("Buyer Indemnitees") from and against, and pay or reimburse each
Buyer Indemnitee for, any and all claims, liabilities, obligations, losses,
fines, costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in connection with the investigation or defense
thereof or in asserting any of their respective rights hereunder (collectively,
"Losses"), resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by any
Seller herein or in any certificate, document or instrument delivered to
Buyer hereunder;
(ii) any failure of any Seller to perform any covenant or agreement
hereunder or fulfill any other obligation in respect hereof;
(iii) any claims of third parties with respect to the business and
operations of the Station or the ownership of the Station Assets prior to
the Closing not expressly assumed by Buyer hereunder;
(iv) any liability of any Seller or the Station not expressly
assumed by Buyer hereunder;
(v) any claim by or on behalf of any person employed by the
Station and not hired by Buyer on or after the Closing Date;
(vi) any breach or default by any Seller under any Contract prior
to the Closing;
<PAGE>
(vii) the environmental conditions on, under, above, or about any
assets, equipment or facilities (other than the Station Assets) owned,
leased or operated at any time by any Seller, or any of its predecessors
or Affiliates; and
(viii) any failure of any Seller to comply with applicable bulk
sales laws (in consideration of which indemnification obligation Buyer
hereby waives compliance by Sellers with any applicable bulk sales laws).
(b) Limitations on Indemnification.
------------------------------
(i) Notwithstanding anything in Section 14.1(a) of this Agreement
to the contrary, Sellers shall not be required to make any indemnification
payments under clause (i) of Section 14.1(a) until the aggregate amount
of Losses resulting from or arising out of the matters referred to in
Section 14.1(a)(i) exceeds $200,000; provided that if the aggregate amount
--------
of such Losses exceeds such amount, Sellers shall be required to indemnify
Buyer Indemnitees for all Losses indemnifiable under Section 14.1(a)(i)
without regard to such $200,000 limitation; provided, further, however,
-------- ------- -------
that if indemnification is sought by any Buyer Indemnitee under Section
14.1(a)(i), 14.1(a)(iii) or 14.1(a)(iv) for any Loss relating to
environmental matters, then, to the extent such Loss relates exclusively
to environmental matters it shall not be included in any calculation of
such $200,000 threshold and, instead, shall be subject to the limitation
that Sellers shall be required to provide indemnification only to the
extent the aggregate amount of all such Losses relating exclusively to
environmental matters exceeds $100,000.
(ii) Sellers' obligations to make any indemnification payments of any
kind under Section 14.1(a) shall be limited to $5,000,000.
(iii) No claim may be brought by a Buyer Indemnitee under this
Agreement for breach of a representation or warranty contained in this
Agreement unless written notice describing in reasonable detail the nature
and basis of such claim is given on or prior to the first anniversary
hereof. In the event such a notice is given, the right to indemnification
with respect thereto shall survive until such claim is finally resolved and
any obligations thereto are fully satisfied.
<PAGE>
(c) Exclusive Remedy. Except for the remedies provided in Section
----------------
16.1, subsequent to the Closing indemnification under this Section 14.1 shall be
the exclusive remedy of Buyer Indemnitees with respect to any legal, equitable
or other claim for relief based upon this Agreement or the certificates,
documents and instruments delivered by any Seller in connection herewith.
14.2 Indemnification by Buyer. (a) General. Buyer agrees to
------------------------ -------
indemnify and hold harmless each Seller, its Affiliates and the officers,
directors, employees, agents, advisers and representatives of each such Person
("Sellers Indemnitees") from and against, and pay or reimburse each Sellers
Indemnitee for, any and all Losses resulting from or arising out of:
(i) any inaccuracy in any representation or warranty made by
Buyer herein or in any certificate, document or instrument delivered to
any Seller hereunder;
(ii) any failure of Buyer to perform any covenant or agreement
hereunder or fulfill any other obligation in respect hereof;
(iii) any liability, obligation, commitment or responsibility of any
Seller expressly assumed by Buyer under Article III of this Agreement; and
(iv) the ownership of the Station Assets or the operation of the
Station subsequent to the Closing, except to the extent such Loss relates
to any liabilities, obligations, commitments or responsibilities of any
Seller of any nature whatsoever not expressly assumed by Buyer hereunder
or results from the breach of a representation, warranty or covenant by
any Seller.
(b) Limitations on Indemnification.
------------------------------
(i) Notwithstanding anything in Section 14.2(a) of this Agreement
to the contrary, Buyer shall not be required to make any indemnification
payments under clause (i) of Section 14.2(a) until the aggregate amount of
Losses resulting from or arising out of the matters referred to in Section
14.2(a)(i) exceeds $200,000; provided that if the aggregate amount of such
Losses exceeds such amount, Buyer shall be required to indemnify Sellers
Indemnitees for all Losses indemnifiable under Section 14.2(a)(i) without
regard to such $200,000 limitation.
<PAGE>
(ii) Buyer's obligation to make any indemnification payments of any
kind under Section 14.2(a) shall be limited to $5,000,000.
(iii) No claim may be brought by a Sellers Indemnitee under this
Agreement for breach of a representation or warranty contained in this
Agreement unless written notice describing in reasonable detail the nature
and basis of such claim is given on or prior to the first anniversary
hereof. In the event such a notice is given, the right to indemnification
with respect thereto shall survive until such claim is finally resolved and
any obligations thereto are fully satisfied.
(c) Exclusive Remedy. Except for the remedies provided in Section
----------------
16.2, subsequent to the Closing indemnification under this Section 14.2 shall be
the exclusive remedy of Sellers Indemnitees with respect to any legal, equitable
or other claim for relief based upon this Agreement or the certificates,
documents and instruments delivered by Buyer in connection herewith.
14.3 Indemnification Procedures. In the case of any claim asserted by
--------------------------
a third party against a party entitled to indemnification under this Agreement
(the "Indemnified Party"), notice shall be given by the Indemnified Party to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and the Indemnified Party shall permit the Indemnifying
Party (at the expense of such Indemnifying Party) to assume the defense of any
claim or any litigation resulting therefrom, provided that (a) the counsel
-
for the Indemnify ing Party who shall conduct the defense of such claim or
litigation shall be reasonably satisfactory to the Indemnified Party, (b) the
-
Indemnified Party may participate in such defense at such Indemnified Party's
expense, and (c) the omission by any Indemnified Party to give notice as
-
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that such omission results
in a failure of actual notice to the Indemnifying Party and such Indemnifying
Party is materially damaged as a result of such failure to give notice. Except
with the prior written consent of the Indemnified Party, no Indemnifying Party,
in the defense of any such claim or litigation, shall consent to entry of any
judgment or order, interim or otherwise, or enter into any settlement that
provides for injunctive or other nonmonetary relief affecting the Indemnified
Party or that does not include as an unconditional term thereof the giving by
<PAGE>
each claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation. In the event that the
Indemnified Party shall in good faith determine that the conduct of the defense
of any claim subject to indemnification hereunder or any proposed settlement of
any such claim by the Indemnifying Party might be expected to affect adversely
the Indemnified Party's tax liability or, if a Buyer Indemnitee is the
Indemnified Party, the ability of Buyer to conduct the business of the Station,
or that the Indemnified Party may have available to it one or more defenses or
counterclaims that are inconsistent with one or more of those that may be
available to the Indemnifying Party in respect of such claim or any litigation
relating thereto, the Indemnified Party shall have the right at all times to
take over and assume control over the defense, settlement, negotiations or
litigation relating to any such claim at the sole cost of the Indemnifying
Party, provided that if the Indemnified Party does so take over and assume
control, the Indemnified Party shall not settle such claim or litigation without
the written consent of the Indemnifying Party, such consent not to be
unreasonably withheld. In the event that the Indemnifying Party does not accept
the defense of any matter as above provided, the Indemnified Party shall have
the full right to defend against any such claim or demand and shall be entitled
to settle or agree to pay in full such claim or demand. Notwithstanding the
foregoing, the Indemnifying Party shall still provide indemnification to the
Indemnified Party. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 14.3 and the records of each shall be available to the other with
respect to such defense.
ARTICLE XV
TERMINATION RIGHTS
------------------
15.1 Termination. This Agreement may be terminated by either Buyer,
-----------
on the one hand, or Sellers, on the other hand, as set forth below, upon written
notice to the other upon the occurrence of any of the following, provided that
the party seeking to terminate is not in material default or breach of this
Agreement:
(a) by Buyer or Sellers:
(i) if the Closing has not occurred by April 30, 1997;
<PAGE>
(ii) if the FCC denies the FCC Application or any part thereof or
designates any part of it for a trial-type hearing; or
(iii) if there shall be in effect any final judgment, final decree
or order that would prevent or make unlawful the Closing.
(b) by Buyer:
(i) pursuant to Section 17.1;
(ii) if the regular broadcast transmission of the Station from its
main broadcasting antenna at full authorized effective radiated power is
interrupted for a period of more than 72 hours in any single 30 day period
as a result of or arising from any action or inaction by any Seller;
(iii) if any material representation or warranty of any Seller made
herein or in any certificate, document or instrument delivered by any
Seller hereunder is untrue or incomplete in any respect and such breach is
not cured within 10 Business Days of Sellers' receipt of written notice
from Buyer that such breach exists or has occurred; or
(iv) if any Seller defaults in the performance of any material
covenant or agreement hereunder, including, without limitation, its
obligation to close under this Agreement, and such breach is not cured
within 10 Business Days of Sellers' receipt of written notice from Buyer
that such default exists or has occurred.
(c) by Sellers:
(i) if any material representation or warranty of Buyer made herein or
in any certificate, document or instrument delivered by Buyer hereunder is
untrue or incomplete in any respect and such breach is not cured within 10
Business Days of Buyer's receipt of written notice from Sellers that such
breach exists or has occurred; or
(ii) if Buyer defaults in the performance of any material covenant or
agreement hereunder, including, without limitation, its obligation to close
under this Agreement, and such breach is not cured within 10 Business
Days, or in the case of payment of the Purchase Price one Business Day, of
Buyer's receipt of written
<PAGE>
notice from Sellers that such default exists or has occurred.
15.2 Liability. In the event of the termination of this Agreement
---------
under Section 15.1, this Agreement shall become void and have no effect, without
any liability to any Person in respect hereof, except that the provisions of
Article XII, Article XVI and Sections 17.2, 17.3 and 17.8 shall survive any such
termination.
ARTICLE XVI
REMEDIES UPON DEFAULT
---------------------
16.1 Buyer's Remedies; Specific Performance. Each Seller recognizes
--------------------------------------
that, in the event any Seller defaults in the performance of its obligations to
close under this Agreement, monetary damages alone will not be adequate.
Therefore, unless Buyer is in material default in the performance of its
obligations under this Agreement, Buyer shall be entitled, in addition to any
remedy available at law, including, without limitation, a suit for monetary
damages, and its right to terminate this Agreement under Section 15.1, to
instead obtain specific performance of the terms of this Agreement in lieu of
any other remedy available at law. In any action to enforce specifically the
performance of this Agreement, each Seller shall waive the defense that there is
another adequate remedy at law or equity and agrees that Buyer shall have the
right to obtain specific performance of each Seller's obligations under the
terms of this Agreement without being required to prove actual damages, post
bond or furnish other security. In addition, Buyer shall be entitled to obtain
from Sellers court costs and reasonable attorneys' fees incurred by it in
enforcing its rights hereunder. In the event Buyer elects to terminate this
Agreement under any subsection of Section 15.1(a) or (b) as opposed to seeking
specific performance under this Section 16.1 and any Seller is in material
breach or default hereunder, then Buyer shall be entitled to seek monetary
damages.
16.2 Sellers' Remedies; Liquidated Damages. If the transactions
-------------------------------------
contemplated by this Agreement are not consummated due to the default of Buyer
and no Seller shall be in material breach or default hereunder and Sellers shall
have terminated this Agreement pursuant to Section 15.1(c)(ii), then Sellers
shall, upon Sellers' request, be entitled to receive as liquidated damages for
and in full settlement of all claims against Buyer in connection with this
Agreement, an amount equal to $2,000,000, the nature of
<PAGE>
this transaction being such as will not permit an exact determination of the
damages which may be suffered by Sellers by reason of such a default by Buyer.
Recovery of liquidated damages under this Section 16.2 shall be the sole and
exclusive remedy of Sellers against Buyer if Sellers terminate this Agreement
pursuant to Section 15.1(c)(ii) and shall be applicable regardless of the actual
amount of damages sustained. Buyer's obligation to pay liquidated damages to
Sellers pursuant to the first sentence of this Section 16.2 shall be supported
by a letter of credit to be delivered to Sellers no later than three Business
Days after the date hereof (the "Letter of Credit") in the amount of $1,000,000
issued by Bankers Trust Company for the account of Buyer in favor of Sellers.
Promptly following (a) the Closing or (b) the termination of this Agreement
- -
pursuant to Section 15.1(a), (b) or (c)(i), Sellers shall (x) execute Exhibit 2
-
to the Letter of Credit and deliver it to Buyer and (y) cause the Letter of
-
Credit to be surrendered to Buyer for immediate cancellation.
ARTICLE XVII
OTHER PROVISIONS
----------------
17.1 Risk of Loss. The risk of loss or damage to any of the Station
------------
Assets prior to the Cut-Off Time shall be upon Sellers. Sellers shall repair,
replace and restore to its prior condition any material damage to or loss of
Station Assets as soon as possible. If Sellers are unable or fail to restore
or replace a lost or damaged material Station Asset prior to the Closing Date,
Buyer may elect (a) to terminate this Agreement, but only if the failure to
-
restore or replace a lost or damaged material Station Asset continues for a
period in excess of 60 days from the date that would be the Closing Date without
consideration of this Section 17.1, (b) to consummate the transactions
-
contemplated by this Agreement on the Closing Date, in which event Sellers shall
assign to Buyer at Closing Sellers' rights under any insurance policy or pay
over to Buyer all proceeds of insurance covering such Station Asset's damage,
destruction or loss, or (c) delay the Closing Date until a date within 15
-
Business Days after Sellers give written notice to Buyer of completion of the
restoration or replacement of such Station Asset. If the delay in the Closing
Date under this Section 17.1 would cause the Closing to occur at any time after
the period permitted by the FCC Consent, Sellers and Buyer shall file an
appropriate request with the FCC for an extension of time within which to
complete the Closing.
<PAGE>
17.2 Confidentiality. Each Seller and Buyer shall keep confidential
---------------
and not use or disclose any information previously or hereafter obtained by it
pursuant to this Agreement (the party receiving such information is hereinafter
referred to as the "Receiving Party") with respect to the other or such other's
partners, parents, subsidiaries, affiliates, or other related entities (the
party, or such party's partners, parents, subsidiaries, affiliates, or other
related entities, with respect to which the information relates is hereinafter
referred to as the "Disclosing Party") in connection with this Agreement and the
negotiations preceding this Agreement, including, without limitation information
provided pursuant to Section 7.2 hereof (such information is hereinafter
referred to as the "Confidential Information"), and the Receiving Party will use
such Confidential Information solely in connection with the transactions
contemplated by this Agreement, and if the transactions contemplated hereby are
not consummated for any reason, the Receiving Party shall either return to the
Disclosing Party, without retaining a copy thereof, or destroy any schedules,
documents or other written information constituting Confidential Information (or
prepared based upon such Confidential Information) in connection with this
Agreement and the transactions contemplated hereby and the negotiations
preceding this Agreement. Without limiting the generality of the foregoing, the
Receiving Party shall be permitted to disclose any Confidential Information to
such of its partners, Affiliates, officers, directors, employees, agents,
lenders and representatives (collectively, "Agents") as have a need to know such
Confidential Information, provided such Agents shall be informed that disclosure
of such Confidential Information by such Agents would be in contravention
hereof. Notwithstanding the foregoing, the Receiving Party shall not be
required to keep confidential or return any information which (i) is known or
-
available through other lawful sources, not bound by a confidentiality agreement
with the Disclosing Party, or (ii) is or becomes publicly known other than as a
--
result of the disclosure by the Receiving Party or its Agents, or (iii) is
---
required to be disclosed pursuant to an order or request or a judicial or
governmental authority (provided the Disclosing Party is given reasonable prior
written notice), or (iv) is developed by the Receiving Party independently of,
--
and is not based upon, the Confidential Information.
17.3 Publicity. Except as required by applicable law or with the
---------
other parties' express written consent, no party to this Agreement nor any
Affiliate of any party shall issue any press release or make any public
statement (oral
<PAGE>
or written) regarding the transactions contemplated by this Agreement.
17.4 Benefit and Assignment. (a) This Agreement shall be binding
----------------------
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Neither Buyer nor any Seller may assign this Agreement
without the prior written consent of Buyer, in the case of any such assignment
by Sellers, or Sellers, in the case of any such assignment by Buyer, except that
(i) Buyer may assign its rights and obligations under this Agreement to one or
-
more of its Affiliates designated by Buyer in writing to Sellers prior to the
Closing Date, provided that any such assignment shall not relieve Buyer from any
--------
of its obligations under this Agreement and provided that any such assignment
does not delay the Closing Date, (ii) Buyer may assign its rights under Article
--
XIV of this Agreement to any lender which provides financing in connection with
the consummation of this Agreement and (iii) Sellers may assign their rights,
---
but not their obligations, under this Agreement to the extent permitted under
subsection (b) of this Section 17.4, provided that any such assignment does not
delay the Closing Date.
(b) Buyer acknowledges that Sellers may desire to effect this
transaction as an exchange of the Station Assets for other property of like kind
and qualifying use within the meaning of section 1031 of the Code. Sellers may
assign their rights hereunder to a qualified intermediary as provided under
Treasury Regulations section 1.1031(k)-1(g)(4) on or before the Closing Date,
provided that such assignment shall be made without any cost or expense to Buyer
- --------
and without Buyer otherwise incurring any liability thereby and provided,
--------
further, that any such assignment shall not relieve Sellers from any of their
- -------
obligations under this Agreement. Buyer shall cooperate with Sellers to
effectuate any such exchange, provided that such cooperation would not result in
--------
any additional cost or expense to Buyer and Buyer would not otherwise incur any
liability thereby.
17.5 No Third Party Beneficiaries. Except as provided in Article
----------------------------
XIV and Section 17.4(a)(ii), nothing in this Agreement shall confer any rights
upon any person or entity other than the parties hereto and their respective
permitted successors and assigns.
17.6 Entire Agreement; Amendments, etc. This Agreement, the Time
---------------------------------
Brokerage Agreement and the exhibits and schedules hereto and thereto embody the
entire agreement and understanding of the parties hereto and supersede any and
all prior agreements, arrangements and understandings
<PAGE>
relating to the matters provided for herein or therein. No amendment, waiver of
compliance with any provision or condition hereof, or consent pursuant to this
Agreement shall be effective unless evidenced by an instrument in writing signed
by the party against whom enforcement of any amendment, waiver or consent is
sought.
17.7 Headings. The headings set forth in this Agreement are for
--------
convenience only and will not control or affect the meaning or construction of
the provisions of this Agreement.
17.8 Choice of Law; Jurisdiction. The construction and performance
---------------------------
of this Agreement shall be governed by the laws of the State of New York without
regard to its principles of conflict of laws, and the state and federal courts
of New York shall have exclusive jurisdiction over any controversy or claim
arising out of or relating to this Agreement.
17.9 Notices. All notices, requests, demands, letters, waivers and
-------
other communications required or permitted to be given under this Agreement
shall be in writing and shall be deemed to have been duly given if (a) delivered
-
personally, (b) mailed, certified or registered mail with postage prepaid, (c)
- -
sent by next-day or overnight mail or delivery or (d) sent by fax, as follows:
-
To any Seller:
c/o Evergreen Media Corporation of Los Angeles
433 East Las Colinas Boulevard
Suite 1130
Irving, Texas 75039
Attention: Mr. Scott K. Ginsburg
Phone: (214) 869-9020
Fax: (214) 869-3671
Copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal, Esq.
Phone: (202) 637-2200
Fax: (202) 637-2201
<PAGE>
To Buyer:
Mercury Radio Communications, L.P.
464 Franklin Street
Buffalo, New York 14202
Attention: Mr. Charles W. Banta
Phone: (716) 881-4555
Fax: (716) 888-9715
Copy to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Attention: Margaret A. Davenport, Esq.
Phone: (212) 909-6667
Fax: (212) 909-6836
or to such other person or address as any party shall specify by notice in
writing to the party entitled to notice. All such notices, requests, demands,
letters, waivers and other communications shall be deemed to have been received
(w) if by personal delivery on the day after such delivery, (x) if by certified
- -
or registered mail, on the fifth Business Day after the mailing thereof, (y) if
-
by next-day or overnight mail or delivery, on the day delivered or (z) if by
-
fax, on the next day following the day on which such fax was sent, provided that
a copy is also sent by certified or registered mail.
17.10 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which will be deemed an original and all of which together
will constitute one and the same instrument.
17.11 Further Assurances. Each Seller shall at any time and from
------------------
time to time after the Closing execute and deliver to Buyer such further
conveyances, assignments and other written assurances as Buyer may reasonably
request in order to vest and confirm in Buyer (or its assignees) the title and
rights to and in all of the Station Assets to be and intended to be transferred,
assigned and conveyed hereunder. After the Closing, Buyer and each Seller will
execute any further documents consistent with this Agreement, provide any
further reasonably available information, and take any other actions not
imposing significant financial or operational obligations in excess of the other
obligations imposed by this Agreement, upon the request of the other party or
based upon their reasonable determination that those actions are required to
enable
<PAGE>
Buyer or any Seller to, as the case may be, effectuate this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
By: ________________________________
Name: __________________________
Title: ____________________________
EVERGREEN MEDIA/PYRAMID HOLDINGS
CORPORATION
By: ________________________________
Name: __________________________
Title: ____________________________
WHTT (AM) LICENSE CORP.
By: ________________________________
Name: __________________________
Title: ____________________________
WHTT (FM) LICENSE CORP.
By: ________________________________
Name: __________________________
Title: ____________________________
MERCURY RADIO COMMUNICATIONS, L.P.
By: Mercury Radio Communications
Corporation, its General Partner
By: ________________________________
Name: __________________________
Title: ____________________________
<PAGE>
SCHEDULE 4.3
OTHER GOVERNMENTAL CONSENTS
None.
<PAGE>
EXHIBIT 2.16
HOGAN & HARTSON L.L.P.
ASSET PURCHASE AGREEMENT
Dated as of April 19, 1996
between
CRESCENT COMMUNICATIONS L.P.,
and
EVERGREEN MEDIA CORPORATION
OF LOS ANGELES
with respect to radio station
KYLD(FM), San Mateo, California
<PAGE>
TABLE OF CONTENTS
-----------------
Page
RECITALS ........................................................ 1
SECTION 1. Purchase and Sale of Assets............................. 1
1.1 Station Assets.......................................... 1
1.2 Excluded Assets......................................... 3
1.3 Liabilities............................................. 3
1.4 The Closing............................................. 3
1.5 Purchase Price.......................................... 4
1.6 Escrow Deposit.......................................... 4
1.7 Indemnification Escrow.................................. 5
1.8 Pro Rations............................................. 5
1.9 Allocation of Purchase Price............................ 5
1.10 Delivery of Agreement of Assumption of Liabilities...... 6
1.11 Transfer of Subject Assets.............................. 6
1.12 Delivery of Assets...................................... 6
1.13 Mt. Diablo Site Construction............................ 6
1.14 Further Assurances...................................... 6
SECTION 2. Representations and Warranties of Seller................ 7
2.1 Organization and Power.................................. 7
2.2 Corporate Action........................................ 7
2.3 No Defaults............................................. 7
2.4 Licenses................................................ 8
2.5 Condition and Operation of Assets....................... 8
2.6 Leaseholds, Title, Liens, Etc........................... 9
2.7 Employees............................................... 9
2.8 Employee Benefit Plans.................................. 10
2.9 Litigation.............................................. 10
2.10 Brokers................................................. 11
2.11 Contracts............................................... 11
2.12 Intangible Rights....................................... 11
2.13 Compliance with Laws; Required Consents................. 11
2.14 No Interference......................................... 12
2.15 Insurance............................................... 12
2.16 Hazardous Materials..................................... 12
2.17 Insolvency Proceedings.................................. 12
2.18 Financial Statements.................................... 13
2.19 Payment of Taxes........................................ 13
2.20 No Misleading Statements................................ 13
2.21 Exclusivity of Representations.......................... 13
i
<PAGE>
SECTION 3. Representations and Warranties of Purchaser............. 14
3.1 Organization and Power.................................. 14
3.2 Corporate Action........................................ 14
3.3 No Defaults............................................. 14
3.4 Brokers................................................. 14
3.5 Qualification as a Licensee............................. 14
3.6 Litigation.............................................. 14
3.7 Approvals and Consents.................................. 15
3.8 Financing............................................... 15
SECTION 4. Covenants of Seller..................................... 15
4.1 Operation of the Business............................... 15
4.2 Investigation........................................... 17
4.3 Consents................................................ 17
4.4 FCC Applications........................................ 17
4.5 Notice of Proceedings................................... 18
4.6 Consummation of Agreement............................... 18
4.7 Indemnification Escrow Agreement........................ 19
4.8 Hart-Scott-Rodino Act................................... 19
4.9 No Shopping............................................. 19
4.10 Noncompetition Agreement................................ 19
4.11 Confidentiality......................................... 19
4.12 Non-Solicitation........................................ 20
SECTION 5. Covenants of Purchaser.................................. 20
5.1 FCC Applications; FCC Compliance........................ 20
5.2 Consummation of Agreement............................... 20
5.3 Notice of Proceedings................................... 21
5.4 Confidentiality......................................... 21
5.5 Non-Solicitation........................................ 21
5.6 Indemnification Escrow Agreement........................ 22
5.7 Hart-Scott-Rodino Act................................... 22
5.8 Cooperation............................................. 22
5.9 Operation of Station.................................... 22
SECTION 6. Conditions to the Obligations of Seller................. 22
6.1 Representations, Warranties, Covenants.................. 22
6.2 No Actions or Proceedings............................... 23
6.3 Opinion of Counsel...................................... 23
6.4 FCC Authorization....................................... 23
6.5 Hart-Scott-Rodino Act................................... 23
ii
<PAGE>
SECTION 7. Conditions to the Obligations of Purchaser............ 24
7.1 Representations, Warranties, Covenants................ 24
7.2 No Actions or Proceedings............................. 24
7.3 Opinions of Counsel................................... 25
7.4 FCC Authorization..................................... 25
7.5 Hart-Scott-Rodino Act................................. 25
7.6 Certain Consents...................................... 25
SECTION 8. Termination........................................... 25
8.1 Termination........................................... 25
8.2 Liabilities Upon Termination.......................... 27
8.3 Pre-Closing Remedies.................................. 27
SECTION 9. Survival; Indemnification.............................. 28
9.1 Survival............................................... 28
9.2 Indemnification by Seller.............................. 28
9.3 Indemnification by Purchaser........................... 29
9.4 Notice; Defense of Claims.............................. 30
SECTION 10. Definitions............................................ 31
10.1 Defined Terms.......................................... 31
10.2 Cross-Reference Table.................................. 32
SECTION 11. Miscellaneous.......................................... 33
11.1 Expenses............................................... 33
11.2 Bulk Sales Law......................................... 34
11.3 Assignment............................................. 34
11.4 Books and Records...................................... 34
11.5 Public Announcement.................................... 34
11.6 Notices................................................ 35
11.7 Captions............................................... 36
11.8 Law Governing.......................................... 36
11.9 Dispute Resolution..................................... 36
11.10 Waiver of Provisions................................... 36
11.11 Counterparts........................................... 37
11.12 Entire Agreement....................................... 37
11.13 Severability........................................... 37
11.14 Risk of Loss........................................... 37
11.15 Brokerage.............................................. 37
11.16 Counsel................................................ 37
11.17 Like-Kind Exchange Election............................ 38
iii
<PAGE>
EXHIBITS
--------
Exhibit A Form of Escrow Agreement
Exhibit B Form of Indemnification Escrow Agreement
Exhibit C Form of Noncompetition Agreement
Exhibit D Form of Purchaser's Counsel's Opinion
Exhibit E Form of Seller's Counsel's Opinion
Exhibit F Form of Seller's FCC Counsel's Opinion
SCHEDULES
---------
Schedule 1.1(a) Licenses
Schedule 1.1(b) Tangible Personal Property
Schedule 1.1(c) Real Property Interests
Schedule 1.1(d) Assumed Contracts
Schedule 1.1(e) Intangible Rights
Schedule 1.9 Purchase Price Allocation
Schedule 1.11 Liens and Encumbrances
Schedule 2.1 Business Locations
Schedule 2.3 Defaults
Schedule 2.6 Certain Assets
Schedule 2.6(a) Liens
Schedule 2.7 Employees and Employment Contracts
Schedule 2.8 Employee Benefit Plans
Schedule 2.9 Litigation
Schedule 2.16 Hazardous Materials
Schedule 2.18 Financial Statements
iv
<PAGE>
ASSET PURCHASE AGREEMENT
------------------------
ASSET PURCHASE AGREEMENT dated as of April 19, 1996, between Crescent
Communications L.P., a Delaware limited partnership ("Seller"), and Evergreen
Media Corporation of Los Angeles, a Delaware corporation ("Purchaser").
RECITALS:
--------
WHEREAS, Seller is the licensee of radio broadcast station KYLD-FM, licensed
to San Mateo, California (the "Station"), pursuant to certain FCC Licenses (as
hereinafter defined) issued by the Federal Communications Commission (the "FCC")
and owns certain assets used or held for use solely in connection with the
operation of the Station;
WHEREAS, Seller desires to sell, assign, and transfer to Purchaser the rights
associated with the FCC Licenses with respect to the Station, and all of the
assets described in more detail below, and Purchaser desires to purchase from
Seller the rights associated with such FCC Licenses, and all of the assets
described in more detail below, all on the terms described herein; and
WHEREAS, in connection with this Agreement, the parties are simultaneously
entering into a Time Brokerage Agreement providing for the sale of substantially
all of the broadcast time of the Station from Seller to Buyer, subject to and in
compliance with the rules and policies of the FCC (the "Time Brokerage
Agreement").
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements hereinafter set forth, the parties hereto agree as
follows:
SECTION 1. Purchase and Sale of Assets.
- --------- ---------------------------
1.1 Station Assets. Subject to and in reliance upon the
--------------
representations, warranties and agreements herein set forth, and subject to the
terms and conditions herein contained, Seller will grant, convey, sell, assign,
transfer and deliver to Purchaser on the Closing Date (as defined in Section
1.4), and Purchaser shall purchase from Seller on the Closing Date, the
following properties, assets, privileges, rights, interests and claims (the
"Station Assets"):
(a) Licenses and Authorizations. All of Seller's rights
---------------------------
associated with the licenses, permits and authorizations issued or granted to
Seller by the FCC (the "FCC Licenses") and, to the extent assignable, by any
other governmental body with respect to the operation of the Station, all of
which are listed on Schedule 1.1(a) attached hereto, and all applications
---------------
therefor, together with any renewals, extensions, or modifications thereof and
additions thereto (collectively, the "Licenses");
<PAGE>
(b) Tangible Personal Property. All tangible personal property of
--------------------------
Seller listed on Schedule 1.1(b) attached hereto, and any additions,
---------------
improvements, replacements and alterations thereto made between the date of
this Agreement and the Closing Date, but excluding any Disposed Property (as
defined in Section 1.2(c));
(c) Real Property. All leaseholds and other interests of every kind
-------------
and description in real property, buildings, towers, antennae and fixtures and
improvements thereon owned by Seller as of the date of this Agreement and used
or held for use solely in connection with the operation of the Station,
excluding the Studio Lease (as defined in Section 1.2(g)), all of which are
listed on Schedule 1.1(c) attached hereto, and any additions, improvements,
---------------
replacements and alterations thereto made between the date of this Agreement and
the Closing Date (collectively, "Station Real Property");
(d) Other Contracts. All rights of Seller under the contracts and
---------------
agreements listed on Schedule 1.1(d) attached hereto (the "Assumed Contracts"),
---------------
but not including any Restricted Contract (as defined in Section 4.3) as to
which any required consent for the assignment thereof to Purchaser is not
obtained;
(e) Intangible Rights. The Station's call letters and all trademarks,
-----------------
service marks, copyrights, franchises, trade names, jingles, slogans, and other
intangible rights, owned by Seller as of the date of this Agreement and used or
held for use solely in connection with the operation of the Station, all of
which are listed on Schedule 1.1(e) attached hereto (the "Intangible Rights");
---------------
(f) Programming and Copyrights. All programs and programming
--------------------------
materials and elements of whatever form or nature owned by Seller as of the date
of this Agreement and used or held for use solely in connection with the
operation of the Station, whether recorded on tape or any other substance or
intended for live performance, and whether completed or in production, together
with all such programs, materials and elements acquired by Seller solely in
connection with the operation of the Station between the date of this Agreement
and the Closing Date;
(g) FCC Records. All FCC logs and other FCC records that relate
-----------
solely to the operation of the Station;
(h) Files and Records. All files, records, books, logs, ledgers or
-----------------
journals of Seller relating solely to the operation of the Station and located
at the Station, including those relating to the FCC Licenses; and
(i) Goodwill. All of Seller's goodwill in, and going concern value
--------
of, the Station.
2
<PAGE>
1.2 Excluded Assets. There shall be excluded from the Station
---------------
Assets and retained by Seller, to the extent in existence on the Closing Date,
the following assets (the "Excluded Assets"):
(a) Cash and Investments. All cash and cash equivalents on hand or in
--------------------
bank accounts and other cash items and short-term investments of Seller;
(b) Receivables. All accounts receivable arising from the operation
-----------
of the Station by Seller outstanding on the Closing Date (collectively,
"Receivables");
(c) Disposed Personal Property. All tangible personal property
--------------------------
consumed or disposed of in the ordinary course of the business of the Station
after the date of this Agreement and prior to the Closing Date (collectively,
"Disposed Property");
(d) Insurance. All contracts of insurance;
---------
(e) Claims. Any and all claims of Seller with respect to transactions
------
occurring or arising prior to the Closing Date, including without limitation
claims for Tax refunds (collectively, "Claims");
(f) Books and Records. Any books and records which Seller is required
-----------------
by law to retain, any books and records of Seller not relating solely to the
Station and all of Seller's partnership and tax books and records; and
(g) Studio Lease and Equipment. The lease between Intercontinental
--------------------------
Radio, Inc. and Sekotac, Inc. and assigned to Seller as of November 19, 1993,
relating to the studio of the Station at 55 Green Street, San Francisco,
California (the "Studio Lease") and all equipment and other tangible personal
property of Seller (other than the equipment and tangible personal property of
Seller at such location listed in Schedule 1.1(b) attached hereto) at such
location (the "Excluded Property").
1.3 Liabilities. Purchaser shall on and as of the Closing Date assume,
-----------
and shall become and be fully liable and responsible for, and (as between the
parties hereto) Seller shall have no further liability or responsibility for or
with respect to all liabilities and obligations of Seller which are to be
performed after the Closing Date arising under each License and, Assumed
Contract (except any Restricted Contract for which consent to the assignment to
Purchaser has not been obtained) (collectively, the "Assumed Liabilities").
Purchaser shall not be liable for or be required to pay any other obligation of
Seller, except as provided in the Time Brokerage Agreement.
1.4 The Closing. The consummation of the transactions provided for in
-----------
this Agreement (the "Closing") shall take place at the offices of Latham &
Watkins, Washington, D.C., 10:00 a.m., local time, on (a) the date five (5)
business days after the later of (i) the satisfaction of the conditions set
forth in Sections 6.4 and 7.4 with respect to FCC approvals
3
<PAGE>
(the "FCC Conditions"), and (ii) the satisfaction of the conditions set forth in
Sections 6.5 and 7.5 with respect to the HSR Act (as this and certain other
terms are defined in Section 10 hereof) (the "HSR Conditions") or (b) such other
place, time or date subsequent to the satisfaction of the FCC Conditions and the
HSR Conditions as the parties shall agree upon in writing. The date on which the
Closing is to occur is referred to herein as the "Closing Date."
1.5 Purchase Price. In consideration of the sale by Seller to
--------------
Purchaser of the Station Assets, subject to the assumption by Purchaser of the
Assumed Liabilities and the satisfaction of all of the conditions contained
herein, Purchaser shall pay to Seller at the Closing the aggregate purchase
price of Forty Four Million Dollars ($44,000,000) (the "Purchase Price"),
subject to adjustment as provided in Section 1.8 hereof, payable as follows:
(a) by wire transfer of Thirty Nine Million Dollars ($39,000,000) in
immediately available funds to an account or accounts specified by Seller; and
(b) by delivery to Seller from the Escrow Agent of the Five Million
Dollar ($5,000,000) Escrow Deposit (as defined in Section 1.6) by wire transfer
of immediately available funds to an account or accounts specified by Seller.
1.6 Escrow Deposit. Contemporaneously with the execution and delivery of
--------------
this Agreement, Purchaser shall deliver to the Escrow Agent the sum of Five
Million Dollars ($5,000,000) (the "Escrow Deposit"). The Escrow Deposit shall be
held in escrow by the Escrow Agent in an interest-bearing account subject to an
escrow agreement in the form of Exhibit A hereto (the "Deposit Escrow
---------
Agreement"), and shall be distributed in accordance with the provisions of the
Deposit Escrow Agreement and upon and subject to the following additional terms
and conditions:
(a) in the event of the termination of this Agreement by Seller
pursuant to Section 8.1(c) or Section 8.1(e) hereof, the Escrow Deposit (and any
and all interest earned thereon) shall continue to be held in escrow by the
Escrow Agent and distributed only upon joint written instructions from Seller
and Purchaser;
(b) in the event of the termination of this Agreement for any reason
other than as referred to in Section 1.6(a), the Escrow Deposit (and any and all
interest earned thereon but not yet disbursed to Purchaser pursuant to Section
1.6(d)) shall be returned to Purchaser;
(c) in the event that the Closing takes place, the Escrow Deposit
shall be paid to Seller and applied for Purchaser's account to the Purchase
Price due at the Closing as provided in Section 1.5 and any and all interest
earned on the Escrow Deposit but not yet disbursed to Purchaser pursuant to
Section 1.6(d) shall be paid to Purchaser;
4
<PAGE>
(d) all interest income earned on the Escrow Deposit while in escrow
shall be disbursed periodically to Purchaser and shall be reported by Purchaser
for all income tax purpose; and
(e) Seller and Purchaser shall promptly provide to the Escrow Agent
joint written instructions with respect to distribution of the Escrow Deposit in
accordance with this Section 1.6.
1.7 Indemnification Escrow. Upon receipt by Seller of the Purchase
----------------------
Price, Seller shall deliver to the Indemnification Escrow Agent the sum of One
Million Dollars ($1,000,000) (the "Indemnification Escrow Deposit"). The
Indemnification Escrow Deposit shall be held in escrow by the Indemnification
Escrow Agent until the first anniversary of the Closing Date in accordance with
and subject to an indemnification escrow agreement in the form of Exhibit B
---------
hereto (the "Indemnification Escrow Agreement") to secure and as the sole source
of payment of claims for indemnification made in accordance with Section 9.2 of
this Agreement.
1.8 Pro Rations. The following items shall be prorated between
-----------
Seller and Purchaser with the proration to be made as of 12:00 a.m. on the
Closing Date and the net amount thereof paid to Seller or Purchaser on the
Closing Date, with any final adjustments to such proration paid in cash within
thirty (30) days of the Closing Date: power and utilities charges, ad valorem,
----------
real estate and other property taxes upon the basis of the most recent
assessment available, prepaid cash time sales agreements, program license fees,
broadcast rights fees, prepaid rents and similar prepaid and deferred items
relating to the Station Assets. All special assessments and similar charges or
liens imposed against the real property in respect of any period of time through
the Closing Date, whether payable in installments or otherwise, shall be the
responsibility of Seller, and amounts payable with respect to such special
assessments, charges or liens in respect of any period of time after the Closing
Date shall be the responsibility of Purchaser and shall be adjusted as required
hereunder.
1.9 Allocation of Purchase Price. Prior to or at the Closing,
----------------------------
Seller and Purchaser shall agree on an allocation of the Purchase Price (as
adjusted pursuant to Section 1.8 hereof), which allocation shall be attached
hereto as Schedule 1.9 as of the Closing. Such allocation shall be made in
------------
accordance with (i) a fair market value appraisal of the Station Assets rendered
by an appraisal firm selected by Purchaser and reasonably acceptable to Seller
and the fees of which shall be paid by Purchaser, and (ii) the provisions of
Section 1060 of the Code. Such allocation shall be binding upon Purchaser and
Seller for all purposes (including financial accounting purposes, financial and
regulatory reporting purposes and tax purposes). Each of Purchaser and Seller
further agrees to file its Federal income tax returns and its other tax returns
reflecting such allocation, Form 8594 and any other reports required by Section
1060 of the Code, in accordance with said Schedule 1.9.
------------
5
<PAGE>
1.10 Delivery of Agreement of Assumption of Liabilities. At the Closing,
--------------------------------------------------
Purchaser shall deliver to Seller, an agreement for the assumption of the
Assumed Liabilities by Purchaser in form and substance reasonably satisfactory
to Seller and its counsel.
1.11 Transfer of Subject Assets. At the Closing, Seller shall deliver to
--------------------------
Purchaser instruments of transfer, in form and substance reasonably satisfactory
to Purchaser and its counsel, transferring to Purchaser title to all of the
Station Assets free and clear of all mortgages, liens, security interests,
defects in title and encumbrances (collectively, "Security Interests") except
for (i) the Security Interests disclosed on Schedule 1.11 attached hereto,
-------------
(ii) liens for Taxes not yet due and payable, (iii) statutory liens which secure
payments not yet due that arise, and are customarily discharged, in the ordinary
course of the business of the Station, (iv) easements, rights-of way and similar
imperfections in Seller's title and, with respect to the Real Property Leased,
the title of the entity or entities by, through and under which Seller obtains
its leasehold interests in the property, to its respective assets or properties
that, individually or in the aggregate, are not material in character or amount
and do not materially impair the value or materially interfere with the use of
any of the Station Assets material to the operation, financial condition or
results of operation of the business of the Station as it has been and is now
conducted, and (v) the Assumed Liabilities. The Security Interests referred to
in the foregoing clauses (i)-(v) are collectively referred to herein as
"Permitted Liens".
1.12 Delivery of Assets. At the Closing, Seller shall deliver to
------------------
Purchaser possession of the Station Assets, including, without limitation, those
listed on the Schedules hereto, with such assignments thereof and consents to
assignments as are necessary to assure Purchaser of the full benefit of the same
(other than as provided in Section 4.3 hereof).
1.13 Mt. Diablo Site Construction. Seller will use its reasonable best
----------------------------
efforts to cause the repair and/or replacement of the booster tower at the
Station's Mt. Diablo site as described in Schedule 1.1(b) (the "Mt. Diablo
---------------
Tower") to be completed as soon as possible; provided, however, that Purchaser
acknowledges that Seller does not have ultimate control as to the timing or
consummation of such construction. If such construction has not been completed
prior to the Closing Date, Seller will reimburse Purchaser for the expenses
relating to such construction which Purchaser is required to pay as the owner of
the Station but not any such expenses paid by Purchaser as the owner or operator
of any other radio station. Such reimbursement shall be made promptly following
receipt by Seller of reasonable evidence of payment of such expenses by
Purchaser. The expenses to be paid or reimbursed hereunder by Seller shall be
paid or reimbursed in full and shall not be considered for the purpose of
calculating Seller's aggregate liability pursuant to Section 9.2(b)(iii).
1.14 Further Assurances. Seller and Purchaser from time to time after the
------------------
Closing at the request of the other and without further consideration shall
execute and deliver further instruments of transfer, assignment and assumption
and take such other action as Seller or Purchaser, as the case may be, may
reasonably require to (a) more effectively transfer and
6
<PAGE>
assign to, and vest in, Purchaser the Station Assets and (b) ensure the
assumption, payment and performance by Purchaser of the Assumed Liabilities.
SECTION 2. Representations and Warranties of Seller.
- --------- ----------------------------------------
Seller hereby represents and warrants to Purchaser as follows:
2.1 Organization and Power.
----------------------
(a) Seller is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of Delaware, is duly qualified
to do business in, and is in good standing under the laws of the State of
California, with the requisite partnership power and authority to own or lease
its properties and to conduct its business in the manner and in the places where
such properties are owned or leased or such business is conducted, and to
execute, deliver and perform this Agreement.
(b) Crescent Communications GP, Inc., the sole general partner of
Seller ("Seller GP"), is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly qualified to do
business in, and is in good standing under the laws of the State of California,
with the requisite corporate power and authority to own or lease its properties,
to act as the general partner of Seller, to conduct its business as such
business is now conducted and to carry out the transactions contemplated hereby.
(c) The present and former addresses of Seller's chief executive
offices, and all present and former locations of all tangible personal property
included in the Station Assets are listed in Schedule 2.1 hereto. Schedule 2.1
------------ ------------
sets forth each corporate, partnership, fictitious and other name used by Seller
in the conduct of the Station's business or in connection with the use or
operation of the Station Assets since November 19, 1993 when Seller acquired
certain of the Station Assets.
2.2 Corporate Action. All actions and proceedings necessary to be taken
----------------
by or on the part of Seller and Seller GP in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and this
Agreement has been duly and validly authorized, executed, and delivered by
Seller. This Agreement constitutes, and each of the Time Brokerage Agreement,
Deposit Escrow Agreement and Indemnification Escrow Agreement (the "Seller
Documents") when executed and delivered by Seller will constitute, the legal,
valid and binding obligation of Seller, enforceable against Seller in accordance
with and subject to its terms, except as such enforceability may be limited by
applicable bankruptcy, reorganization, insolvency, moratorium or other similar
laws from time to time in effect affecting creditors' rights generally or by
principles governing the availability of equitable remedies.
7
<PAGE>
2.3 No Defaults. Except as set forth on Schedule 2.3 attached hereto,
----------- ------------
the execution, delivery and performance by Seller of this Agreement and each
Seller Document do not and will not (i) violate any provision of the Amended and
Restated Limited Partnership Agreement of Seller, (ii) violate any provision of
the Certificate of Incorporation, as amended, or By-Laws of Seller GP, (iii)
assuming that the consents referred to in Section 4.3 hereof or otherwise
contemplated hereby are obtained, constitute a violation of, or conflict with or
result in any breach of or any default under, any mortgage, indenture, agreement
or instrument to which Seller is a party or by which Seller is bound, or (iv)
violate any judgment, decree, order, statute, rule or regulation applicable to
Seller, Seller GP or the Station.
2.4 Licenses. As of the date of this Agreement, Seller is the holder of
--------
the Licenses. Such Licenses constitute all of the material licenses, permits and
authorizations necessary for the operation of the Station as now operated and
all of the Licenses are in full force and effect, are valid for the balance of
the current license term applicable generally to radio stations licensed to
communities in California, are unimpaired by any acts or omissions of Seller or
any of its affiliates, or the employees or agents, of Seller or any of its
affiliates, and are free and clear of any restrictions which might limit the
full operation of the Station in the manner and to the full extent as it is now
operated (other than conditions and restrictions under the terms of the Licenses
themselves). Seller has delivered to Buyer true and complete copies of the
Licenses, including any and all amendments and other modifications thereto.
There is not pending, or to Seller's knowledge threatened, any action by or
before any governmental authority to revoke, cancel, rescind or modify any of
the Licenses (other than proceedings to amend FCC rules of general
applicability), and there is not now issued or outstanding, or, to the knowledge
of Seller, pending or threatened by or before the FCC, any order to show cause,
notice of violation, notice of apparent liability, or notice of forfeiture or
complaint against Seller with respect to the Station, other than regularly
scheduled license renewal proceedings. The Station are operating in compliance
in all material respects with the Licenses, the Communications Act of 1934, as
amended (the "Communications Act"), and the current rules, regulations, and
policies of the FCC. Seller is not aware of any reason why those of the Licenses
subject to expiration might not be renewed in the ordinary course for a full
term without material qualifications or of any reason why any of the Licenses
might be revoked. The Station is in compliance with the FCC's policy on exposure
to radio frequency radiation, including access to the Station's transmission
facilities. No renewal of any License would constitute a major environmental
action under the rules of the FCC. There are no facts known to Seller which,
under the Communications Act, or the existing rules of the FCC, would disqualify
Seller from assigning the Licenses or from consummating the transactions
contemplated herein within the times contemplated herein. Seller maintains an
appropriate public inspection file at the Station's studio in accordance with
FCC rules.
2.5 Condition and Operation of Assets. All tangible Station Assets are
---------------------------------
in good repair and operating condition, ordinary wear and tear excepted. All
real property leased by Seller and all tangible Station Assets, and Seller's
use of the same, comply in all material respects with all applicable ordinances
and regulations and building or other laws. All real property leased by Seller
and all tangible Station Assets comply in all material respects with
8
<PAGE>
the requirements, standards, rules and regulations of the FCC and of the FCC
Licenses. The transmitters for the Station are operating in all material
respects in accordance with and within the parameters established by the FCC and
the FCC Licenses. The broadcast towers for the Station are in compliance in all
material respects with all applicable laws, including, without limitation, the
Federal Aviation Act and all rules and regulations promulgated thereunder.
2.6 Leaseholds, Title, Liens, Etc. Schedule 1.1(b) attached hereto
----------------------------- --------------
contains descriptions of all items of tangible personal property of every kind
or description owned by Seller and used or held for use solely in connection
with the operation of the Station, other than such property included in the
Excluded Assets. Schedule 1.1(c) attached hereto contains descriptions of all
--------------
leaseholds and other interests of every kind and description in real property,
buildings, towers and antennae owned by Seller and used or held for use solely
in connection with the operation of the Station, (other than the Studio Lease)
and leases or licenses or other rights to possession thereof. Seller has full
legal power and authority to assign its rights under the Real Property Leases to
Purchaser in accordance with this Agreement and subject to obtaining necessary
consents of third parties, such assignment will not affect the validity,
enforceability and continuity of any such Real Property Lease. A true and
complete copy of each Real Property Lease has been delivered to Purchaser
together, in the case of any subleases or similar occupancy agreements, with
copies of all overleases. Neither Seller nor, to Seller's knowledge, any other
party is in default, violation or breach in any material respect under any Real
Property Lease and no event has occurred and is continuing that constitutes or,
with notice or the passage of time or both, would constitute a default,
violation or breach thereunder. No amount payable under any Real Property Lease
is past due. Except as provided in the Real Property Leases, Seller enjoys
peaceful and undisturbed possession of the premises leased by Seller under each
Real Property Lease. The Real Property Leases are the sole and complete
agreements concerning Seller's use of the leased premises. To Seller's
knowledge, there exists no writ, injunction, decree, order or judgment, nor any
litigation, pending, or threatened, relating to the use, lease, occupancy or
operation by Seller of any of the leased premises. To the best of Seller's
knowledge, there are no pending or threatened or contemplated condemnation or
eminent domain proceedings that may affect the leased premises. To the best of
Seller's knowledge, Seller has not received notice of any violation of any
applicable zoning ordinance or bylaw. The Station Assets together with the
assets set forth on Schedule 2.6 and the Excluded Assets are all of the
------------
material assets and properties necessary to conduct the business of the Station
as presently conducted. The Station Assets are free and clear of all Security
Interests, except for the liens set forth on Schedule 2.6(a) and the Permitted
---------------
Liens. Schedule 2.6 sets forth a complete list of material assets used in the
------------
operation of the Station that are not used solely in the operation of the
Station (it being understood that such listed assets are not being conveyed to
Purchaser).
2.7 Employees.
---------
(a) Schedule 2.7 contains a true and complete list of all persons
------------
employed at the Station as of the date of this Agreement, each such person's
compensation and bonus
9
<PAGE>
arrangements and the Employee Plans listed in Schedule 2.8, if any, applicable
------------
to each such person. Seller is not a party to any agreement or arrangement,
written or oral, with salaried or non-salaried employees except as described in
Schedules 2.7 and 2.8. Except as described in Schedule 2.7, Seller has no
- --------------------- ------------
knowledge that any employee identified in Schedule 2.7 currently plans to
------------
terminate employment, whether by reason of the transactions contemplated by this
Agreement or otherwise.
(b) Except as disclosed in Schedules 2.7 and 2.8, Seller is not a
---------------------
party to or subject to any Contract with any labor organization, nor has Seller
agreed to recognize any union or other collective bargaining unit, nor has any
union or other collective bargaining unit been certified as representing any of
Seller's employees at the Station. Seller has no knowledge of any
organizational effort currently being made or threatened by or on behalf of any
labor union with respect to employees of Seller at the Station. There are no
unfair labor practice charges pending or, to the best of Seller's knowledge,
threatened against Seller; there are no pending or threatened strikes,
arbitration proceedings involving labor matters or other labor disputes
affecting Seller or the Station; and Seller has not experienced any strikes,
work stoppages or other significant labor difficulties of any nature at the
Station in the past two years.
2.8 Employee Benefit Plans. Schedules 2.7 and 2.8, together, set forth a
---------------------- ---------------------
true and complete list of each "employee benefit plan" within the meaning of
Section 3(3) of ERISA, or compensation, bonus, incentive, deferral, equity
based, severance, termination, retention, change in control, employment or other
similar program, agreement, arrangement, trust or other funding arrangement,
whether or not subject to the provisions of ERISA, to which Seller is bound or
that is or has been established or maintained or in respect of which Seller has
ever had any obligation to contribute in which Station employees participate
(each, an "Employee Plan"). Except pursuant to an Employee Plan, Seller has no
fixed or contingent liability or obligation to or in respect of any person now
employed at the Station or any beneficiary or dependent of any such person,
including, without limitation, in respect of pension or thrift benefits or
payments, individual or supplemental pension benefits or payments or
compensation arrangements, contributions to hospitalization or other health,
life or other welfare benefits, incentive benefits or payments, bonus benefits
or payments or vacation, sick leave, disability and termination benefits or
payments, including workers' compensation. No trade or business (whether or not
incorporated) is or has been as of any date within the preceding six years been
treated as a single employer together with Seller pursuant to Section 414 of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder (the
"Code"). Seller has not incurred or reasonably expects to incur (either directly
or indirectly, including as a result of any indemnification obligation) any
liability that could become a liability of Purchaser or, following the Closing,
remain a liability of the Station under or pursuant to Title I or IV of ERISA or
the penalty, excise tax or joint and several liability provisions of the Code
relating to employee benefit plans and, to the best knowledge of Seller, no
event, transaction or condition has occurred or exists which could result in any
such liability. Each of the Employee Plans has been operated and administered in
all material respects in accordance with all applicable laws, including but not
limited to ERISA and the Code.
10
<PAGE>
2.9 Litigation. Except as described in Schedule 2.9 hereto, there is
---------- ------------
no litigation, proceeding or investigation pending against, or to Seller's
knowledge threatened, against Seller related to or affecting the Station (except
for proceedings affecting the radio broadcasting industry generally). It is
expressly understood that Purchaser by this Agreement does not assume or accept
any liability for any obligation arising out of any litigation, proceeding or
investigation described in Schedule 2.9. Seller has not been operating under or
------------
subject to, or in default with respect to, any order, writ, injunction or decree
of any court or federal, state, municipal or other governmental department,
commission, board, agency or instrumentality, foreign or domestic. Seller has no
knowledge of any facts that could reasonably result in any such proceedings. It
is expressly understood that Purchaser, by this Agreement, does not assume or
accept any liability for any obligation arising out of such proceedings.
2.10 Brokers. Other than Star Media Group, the fees of which shall be
-------
paid by Seller, Seller has not retained any broker, finder or other person who
would have any valid claim against Seller or Purchaser for a commission or
brokerage fee in connection with this Agreement or the transactions contemplated
hereby.
2.11 Contracts. Schedule 1.1(d) contains a true and complete list
--------- ---------------
of all Assumed Contracts and Seller has delivered or made available to Purchaser
or its representatives complete and correct copies of all such Assumed
Contracts, as the same have been amended or modified from time to time. All
Assumed Contracts listed on such Schedules are valid, in full force and effect,
binding and enforceable upon Seller, and, to Seller's knowledge, upon the other
parties thereto, in accordance with their respective terms. The sale of the
Station Assets as contemplated herein will in no way affect the terms,
conditions, validity or enforceability of any such Assumed Contracts if (i) the
consents referred to in Section 4.3 hereof or otherwise contemplated hereby are
obtained and (ii) such Assumed Contracts are otherwise assigned in accordance
with the terms thereof. Seller has satisfied in full or provided for all of its
liabilities and obligations under such Assumed Contracts required to be
satisfied prior to or on the date hereof and is not in material default under
any of them, nor to Seller's knowledge is any other party to any such Assumed
Contract in material default thereunder. Seller has not granted or been granted
any express waiver or forbearance with respect to any of the Assumed Contracts.
2.12 Intangible Rights All Intangible Rights owned or licensed by
-----------------
Seller and used or held for use solely in connection with the operation of the
Station are set forth on Schedule 1.1(e) hereto. Such Intangible Rights
---------------
constitute all such information necessary for the operation of the Station as
currently operated. To Seller's knowledge, none of such Intangible Rights, nor
Seller's use of any thereof, infringes upon Intangible Rights of any other
person or entity. Seller has no knowledge of any infringement of such Intangible
Rights.
2.13 Compliance with Laws; Required Consents. Seller is in
---------------------------------------
compliance in all material respects with all laws, rules and regulations of any
governmental department, commission, board, agency or instrumentality applicable
to Seller with respect to the operation
11
<PAGE>
of the Station. Except for (i) the FCC Assignment Consent and the Final Order
contemplated by Section 6.4 hereof and (ii) the filings under the HSR Act
contemplated by Section 4.8 hereof, no approval, consent, authorization or other
order of, and no designation, registration or qualification with, any
governmental authority is required for the consummation by Seller of the
transactions contemplated hereby.
2.14 No Interference. To the best of Seller's knowledge, (i) the
---------------
Station is not causing interference in violation of FCC rules to the
transmission of any other broadcast station or communications facility and has
not received any complaints with respect thereto and (ii) no other broadcast
station or communications facility is causing interference in violation of FCC
rules to the Station's transmissions or the public's reception of such
transmissions.
2.15 Insurance. Seller keeps the tangible Station Assets which are
---------
of an insurable character insured by financially sound and reputable insurers
against such hazards, risks and liabilities to persons and property to the
extent and in the manner customary for entities in the business of owning and
operating radio Station. All insurance policies with respect to the Station
Assets are in full force and effect and Seller is not in default in any material
respect of any provisions thereof.
2.16 Hazardous Materials. Except as permitted by or consistent with
-------------------
applicable Environmental Laws or as set forth on Schedule 2.16 attached hereto:
-------------
(a) Seller's use of the Station Real Property is in compliance in all
material respects with all Environmental Laws.
(b) Seller has never generated, transported, used, stored or disposed
of on any Station Real Property any Hazardous Material (as defined below) and,
to Seller's knowledge, there has never been any Hazardous Material generated,
transported, used, stored, or disposed of on any Station Real Property;
(c) no Hazardous Material has ever been spilled, released, or disposed
of on, under or about any Station Real Property by Seller or, to Seller's
knowledge, has ever come to be located in the soil or groundwater of any Station
Real Property; and
(d) no underground storage tanks have ever been placed on or under any
Station Real Property by Seller and to Seller's knowledge, and there are no
underground storage tanks on or under any Station Real Property.
Seller has never entered into or been subject to any judgment, consent decree,
compliance order, or administrative order with respect to any environmental
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental matter or the enforcement of any Environmental Law, in each
case involving any Station Real Property.
12
<PAGE>
2.17 Insolvency Proceedings. Neither Seller nor the Station Assets are the
----------------------
subject of any pending or threatened insolvency proceedings of any character,
including without limitation bankruptcy, receivership, reorganization,
composition or arrangement with creditors, voluntary or involuntary. Seller has
not made an assignment for the benefit of creditors taken any action in
contemplation of or which would constitute a valid basis for the institution of
any such insolvency proceedings. After giving effect to the transaction
contemplated by this Agreement, Seller (i) will have sufficient capital to carry
on its business and transactions, (ii) will be able to pay its debts as they
mature or become due, and (iii) will own assets the fair value of which will be
greater than the sum of all liabilities (including contingent liabilities) of
Seller not specifically assumed by Purchaser pursuant to the terms of this
Agreement. Seller is not insolvent nor will it become insolvent as a result of
entering into this transaction.
2.18 Financial Statements. On the date hereof, Seller has furnished
--------------------
Purchaser with the financial statements of the Station described in Schedule
--------
2.18 hereto (the "Financial Statements"). The Financial Statements are
- ----
unaudited, have been prepared by Seller consistent with past practices and
fairly represent the results of operations of the Station for the periods
indicated in all material respects. The interim financial statements included
in the Financial Statements are subject to customary year-end adjustments.
Except as reflected in the Financial Statements or otherwise disclosed to
Purchaser in writing, no event has occurred since the preparation of the most
recent Financial Statements that would make such Financial Statements misleading
in any material respect.
2.19 Payment of Taxes. Seller has, or by the Closing Date will have,
----------------
duly filed all tax returns and forms required to be filed by Seller in respect
of the Station and paid in full or discharged all taxes, assessments, excises,
interest, penalties, deficiencies and other levies reflected on such returns and
forms, excepting such taxes, assessments, and other levies as will not be due
until after the Closing Date and that are to be prorated between Seller and
Purchaser pursuant to Section 1.8. No event has occurred that could impose on
Purchaser any liability for any taxes, penalties, or interest due or to become
due from Seller from any taxing authority.
2.20 No Misleading Statements. To Seller's knowledge, neither this
------------------------
Agreement nor the Schedules attached hereto contains or will contain any untrue
statement of a material fact or omits or will omit a material fact necessary in
order to make such statement or information not misleading.
2.21 Exclusivity of Representations. THE REPRESENTATIONS AND WARRANTIES
------------------------------
MADE BY SELLER IN THIS AGREEMENT ARE IN LIEU OF AND ARE EXCLUSIVE OF ALL
OTHER REPRESENTATIONS AND WARRANTIES, INCLUDING, WITHOUT LIMITATION, ANY
IMPLIED WARRANTIES. SELLER HEREBY DISCLAIMS ANY SUCH OTHER OR IMPLIED
REPRESENTATIONS OR WARRANTIES, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE TO
PURCHASER OR ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES OF
ANY
13
<PAGE>
DOCUMENTATION OR OTHER INFORMATION BY SELLER OR ANY OTHER PERSON IN CONNECTION
WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 3. Representations and Warranties of Purchaser.
- --------- -------------------------------------------
Purchaser represents and warrants to Seller as follows:
3.1 Organization and Power. Purchaser is a corporation duly organized,
----------------------
validly existing and in good standing under the laws of the State of Delaware
with the requisite power and authority to own or lease its properties and to
conduct its business in the manner and in the places where such properties are
owned or leased or such business is conducted, and to execute, deliver and
perform this Agreement.
3.2 Corporate Action. All actions and proceedings necessary to be
----------------
taken by or on the part of Purchaser in connection with the transactions
contemplated by this Agreement have been duly and validly taken, and each of
this Agreement and each other agreement, document and instrument to be executed
and delivered by Purchaser pursuant to this Agreement (collectively, the
"Purchaser Documents") has been duly and validly authorized, executed, and
delivered by Purchaser, and constitutes, or when executed and delivered will
constitute, the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with and subject to its terms, except as such
enforceability may be limited by applicable bankruptcy, reorganization,
insolvency, moratorium or other similar laws from time to time in effect
affecting creditors' rights generally or by principles governing the
availability of equitable remedies.
3.3 No Defaults. The execution, delivery and performance by Purchaser
-----------
of each of the Purchaser Documents do not and will not (i) violate any
provisions of the Certificate of Incorporation or By-laws of Purchaser, each as
amended to date; (ii) constitute a violation of, or conflict with or result in
any breach of or any default under, any mortgage, indenture, agreement or
instrument to which Purchaser is a party or by which Purchaser is bound, except
for such violations, conflicts and breaches as would not have a material adverse
effect on Purchaser or (iii) violate any judgment, decree, order, statute rule
or regulation applicable to Purchaser.
3.4 Brokers. Purchaser has not retained any broker, finder or other
-------
person who would have any valid claim against Seller or Purchaser for a
commission or brokerage in connection with this Agreement or the transactions
contemplated hereby.
3.5 Qualification as a Licensee. There are no facts known to
---------------------------
Purchaser which, under the Communications Act or the existing rules of the FCC),
would disqualify Purchaser from acquiring the Station Assets as contemplated by
this Agreement. Purchaser is in compliance with Section 310(b) of the
Communications Act.
14
<PAGE>
3.6 Litigation. There is no litigation, proceeding or investigation
----------
pending or, to Purchaser's knowledge, threatened against or affecting Purchaser
that is reasonably likely to prevent or hinder the consummation of the
transactions contemplated by this Agreement.
3.7 Approvals and Consents. The only approvals or consents of persons
----------------------
and entities not a party to this Agreement that are legally or contractually
required to be obtained by Purchaser in connection with the consummation of the
transactions contemplated by this Agreement are the FCC approvals contemplated
by Section 7.4 and the filings under the HSR Act contemplated by Section 5.7
3.8 Financing. Seller has or has legally binding commitments for
---------
sufficient funds to consummate the transactions contemplated by this Agreement.
SECTION 4. Covenants of Seller.
- --------- -------------------
Seller hereby covenants and agrees as set forth in this Section 4.
4.1 Operation of the Business.
-------------------------
(a) Except as otherwise permitted pursuant to the written consent of
Purchaser (which consent shall not be unreasonably withheld), from the date of
this Agreement until completion of the Closing, Seller shall:
(i) continue to carry on the business of the Station in the
ordinary course consistent in all material respects with past practices;
(ii) keep its books and accounts, records and files relating to
the Station in the ordinary course of business and in a manner consistent with
past practice;
(iii) operate the Station in accordance with the terms of the
FCC Licenses and in compliance in all material respects with all applicable
laws, rules and regulations, including FCC rules and regulations;
(iv) file timely any necessary applications for renewal of, and to
preserve in full force and effect, the FCC Licenses for their full terms; and
(v) use its reasonable best efforts to resume broadcasting at
normal power as quickly as the applicable circumstances would allow in the
event of any cessation of broadcasting or reduction in power.
15
<PAGE>
(b) Except as otherwise permitted pursuant to the written consent of
Purchaser (which consent shall not be unreasonably withheld), from the date of
this Agreement until completion of the Closing Seller shall use all reasonable
efforts to:
(i) preserve the business organization of the Station;
(ii) retain the present management level and key employees of
the Station;
(iii) use and operate the Station Assets in a manner consistent
with past practice and maintain all tangible properties in good repair and
operating condition subject only to ordinary wear and tear; and
(iv) maintain insurance upon all of the tangible Station Assets in
such amounts and of such kinds comparable to that in effect on the date hereof
with respect to such Station Assets and with respect to the operation of the
Station, with insurers of substantially the same or better financial
condition;
provided, however, that nothing contained in this Agreement shall require
- -------- -------
Seller to expend money in fulfillment of its obligations set forth in this
Section 4.1(b) other than those expenditures that Seller would have made in
the ordinary course of the business of the Station and consistent with past
practices.
(c) Subject to paragraph (d) of this Section 4.1, nothing contained in
this Agreement shall give Purchaser any right to control the programming,
operations, or any other matter relating to the Station prior to the Closing
Date, and Seller shall have complete control of the programming, operations, and
all other matters relating to the Station up to the Closing Date.
(d) Prior to the Closing Date, Seller shall not, without the prior
written consent of Purchaser (which consent shall not be unreasonably withheld):
(i) sell, lease, transfer or otherwise dispose, or agree to sell,
lease, transfer or otherwise dispose of any material Station Assets other than
in the ordinary course of business;
(ii) except as may be required by applicable law, enter into any
contract of employment with any employee of the Station (other than with
respect to employees terminable at will) or with any collective bargaining
agent representing any such employees;
(iii) renegotiate, modify, amend or terminate any Assumed Time
Sale Agreement or Assumed Contract except in the ordinary course of business;
16
<PAGE>
(iv) increase the rates of direct or bonus compensation payable
or to become payable to any officer, employee, agent or consultant of the
Station, except (A) in the ordinary course of business consistent with past
practices, (B) in accordance with the existing terms of contracts entered into
prior to the date of this Agreement and (C) for bonuses paid to certain
employees of the Station as an incentive to induce such employees to continue
their employment at the Station;
(v) incur, assume, acquire, renew or allow the renewal of, or
agree to incur, assume, acquire, renew or allow the renewal of, any obligation
or liability with respect to the Station except in the ordinary course of
business consistent with past practices; or
(vi) mortgage, pledge or subject to any Security Interest,
other than Permitted Liens, any of the Station Assets.
4.2 Investigation. At the reasonable request of Purchaser and upon
-------------
reasonable advance notice, Seller shall from time to time give to Purchaser and
its representatives, at Purchaser's expense, full access during normal business
hours to all the Station Assets, including without limitation access to conduct
any Phase I environmental site assessments or other studies.
4.3 Consents.
--------
(a) Contracts listed on Schedule 1.1(d) with respect to which a
---------------
consent or approval to the transactions provided for in this Agreement is
required are designated with an asterisk (collectively, "Restricted Contracts").
Notwithstanding any other provision of this Agreement, Seller will use
commercially reasonable efforts (not involving the payment by any Seller of
money to any party to any such Contract) to obtain the consents or approvals of
third parties required under any Restricted Contract in order to assign any such
Restricted Contract from Seller to Purchaser or otherwise by reason of the
transactions provided for in this Agreement. If any such consent or approval is
not obtained, Seller will use commercially reasonable efforts (not involving the
payment of money, or the commitment to pay money, to any person or entity) to
secure an arrangement satisfactory to Purchaser intended to provide for
Purchaser following the Closing the benefits under such Restricted Contract.
Provided that Seller shall have complied with this Section 4.3, Purchaser shall
have no right to terminate this Agreement or to seek damages or other remedies
from Seller as a result of any failure by Seller to obtain any such consent or
approval or to provide any such alternative arrangement with respect to any
Restricted Contract nor shall any such failure relieve Purchaser of any of its
obligations hereunder. Notwithstanding the foregoing, nothing in this Section
4.3 shall excuse Seller from obtaining consents to assignment which are a
condition to Purchaser's obligations hereunder as set forth in Section 7.6.
(b) Nothing in this Agreement will constitute a transfer or an
attempted transfer of any Restricted Contract which by its terms or under
applicable law or
17
<PAGE>
governmental rules or regulations requires the consent or approval of a third
party (including, without limitation, a governmental authority) unless such
consent or approval shall have been obtained.
4.4 FCC Applications.
----------------
(a) FCC Assignment Consent. On April 26, 1996, Seller shall file
----------------------
applications (after receiving Purchaser's portion of such applications pursuant
to Section 5.1) with the FCC required to obtain the FCC Assignment Consent.
Seller shall diligently take, or cooperate in the taking of, all steps that are
necessary, proper or desirable to expedite the preparation of such applications
and their prosecution to a favorable conclusion, including, without limitation,
compliance with the public notice requirements of the Communications Act. Seller
shall promptly provide Purchaser with a copy of any pleading, order, or other
document served on Seller relating to such applications. Seller will cooperate
with Purchaser and use reasonable, diligent and good faith efforts to obtain the
FCC Assignment Consent and a Final Order. Seller will in good faith use all
reasonable efforts to answer FCC inquiries and third-party objections, if any,
with respect to the application for FCC Assignment Consent, and to avoid
designation for hearing. Seller will bear its own legal and other fees and
expenses involved in the preparation and prosecution of the application for FCC
Assignment Consent except as provided in Section 11.1 hereof.
(b) FCC Renewal. Seller agrees to file timely applications and comply
-----------
with all applicable FCC rules and regulations for renewal by the FCC of any of
the FCC Licenses for which it is appropriate, consistent with Seller's past
practices.
(c) Control of Station. The transactions contemplated hereby are
------------------
expressly conditioned upon receipt of the FCC Assignment Consent and a Final
Order, and nothing contained in this Agreement shall give Purchaser the right to
control the programming, equipment, personnel or operations of the Station prior
to the Closing Date.
4.5 Notice of Proceedings. Seller shall promptly notify Purchaser
---------------------
in writing upon (a) becoming aware of any order or decree or any complaint
seeking an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereby, or (b) receiving any notice
from any governmental department, court, agency or commission of its intention
(i) to institute an investigation into, or institute a suit or proceeding to
restrain or enjoin, the consummation of this Agreement or the transactions
contemplated hereby, or (ii) to nullify or render ineffective this Agreement or
the transactions if consummated. Compliance with the disclosure requirements of
this Section 4.5 shall not relieve Seller of any obligation with respect to any
representation, warranty or covenant of Seller in this Agreement or waive any
condition to Buyer's obligations under this Agreement.
4.6 Consummation of Agreement. Subject to the provisions of Section 8.1
-------------------------
of this Agreement: (a) Seller shall use all reasonable efforts to fulfill and
perform all conditions and obligations on its part to be fulfilled and performed
under this Agreement, and to cause the
18
<PAGE>
transactions contemplated by this Agreement to be fully carried out; and (b)
Seller shall not take any action or omit to take any action that would make
consummation of the transactions contemplated by this Agreement contrary to the
Communications Act or the rules, regulations, or policies of the FCC.
4.7 Indemnification Escrow Agreement. On the Closing Date, Seller
--------------------------------
shall execute and deliver the Indemnification Escrow Agreement.
4.8 Hart-Scott-Rodino Act. As promptly as practicable after the
---------------------
date of this Agreement, Seller will make any filings required under the HSR Act.
Seller will furnish to Purchaser such necessary information and reasonable
assistance as Purchaser may request in connection with its preparation of any
additional necessary filings or submissions to any governmental agency,
including, without limitation, any additional filings necessary under the HSR
Act. Seller will keep Purchaser informed of the status of any inquiries made of
such party by the Federal Trade Commission, the Antitrust Division of the U.S.
Department of Justice or any other governmental agency or authority or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby.
4.9 No Shopping. Unless and until this Agreement shall have been
-----------
terminated, Seller shall not, and Seller shall cause its affiliates, advisors
and representatives not to, directly or indirectly, solicit, encourage or
initiate any contact with, negotiate with, or provide any information to,
endorse or enter into any agreement with respect to, or take any other action to
facilitate any person or group, other than Purchaser and its representatives,
concerning any inquiries or the making of any proposals concerning any sale of
all or substantially all of the Station Assets (an "Acquisition Proposal").
Seller will promptly inform Purchaser orally or in writing of its receipt of any
written proposal relating to the foregoing. Seller shall promptly inform
Purchaser of requests for information, inquiries or proposals and material terms
of any Acquisition Proposal that Seller may receive from any person in writing
after the date of this Agreement and prior to the Closing Date.
4.10 Noncompetition Agreement. On the Closing Date, Seller shall
------------------------
execute and deliver a Noncompetition Agreement in the form attached hereto as
Exhibit C (the "Noncompetition Agreement").
- ---------
4.11 Confidentiality. For one (1) year following any termination of
---------------
this Agreement, Seller will and will cause its authorized representatives to,
hold in strict confidence all nonpublic information received by them from
Purchaser in connection with the transactions contemplated hereby, and will not
(and will ensure that such authorized representatives do not) disclose such
information to others without the prior written consent of Purchaser, except
that Seller may provide such confidential information in response to legal
process or applicable governmental regulations, provided that Seller forthwith
notifies Purchaser of its obligation to provide such confidential information
and fully cooperates with Purchaser to protect the confidentiality of such
information (and Purchaser may at its expense and in the name of Seller bring
any suit or administrative action to enforce its aforesaid rights and Seller
19
<PAGE>
shall at Purchaser's expense assist Purchaser as reasonably requested by
Purchaser). If this Agreement is terminated, Seller will return promptly or
cause to be returned promptly to Purchaser all tangible evidence of such
confidential information which has been furnished by Purchaser to Seller or its
Affiliates, or authorized representatives, or by Seller to third parties.
4.12 Non-Solicitation. For one (1) following any termination of
----------------
this Agreement, Seller shall not, and shall cause its directors, officers,
employees, agents and representatives not to, (a) hire, attempt to hire or
otherwise solicit, any officer or other employee of Purchaser in the San
Francisco area or (b) encourage any officer or other employee of Purchaser in
the San Francisco area to terminate his or her relationship or employment with
Purchaser.
SECTION 5. Covenants of Purchaser.
- --------- ----------------------
Purchaser hereby covenants and agrees as set forth in this Section 5.
5.1 FCC Applications; FCC Compliance.
--------------------------------
(a) As promptly as practicable after the date of this Agreement, and
in no event later than three (3) calendar days after the date hereof, Purchaser
will complete and deliver to Seller fully executed and completed copies of
assignee's portion of applications to the FCC requesting the FCC Assignment
Consent. Purchaser will diligently take, or cooperate in the taking of, all
steps that are necessary, proper or desirable to expedite the preparation of
such applications and their prosecution to a favorable conclusion. Purchaser
will promptly provide Seller with copies of any pleading, order, or other
document served on it relating to such applications. Purchaser will cooperate
with Seller and use reasonable, diligent and good faith efforts to obtain the
FCC Assignment Consent and a Final Order. Purchaser will in good faith use all
reasonable efforts to answer FCC inquiries and third-party objections, if any,
with respect to the application for FCC Assignment Consent, and to avoid
designation for hearing. Purchaser will bear its own legal and other fees and
expenses involved in the preparation and prosecution of the application for FCC
Assignment Consent except as provided in Section 11.1 hereof.
(b) Purchaser agrees that, between the date hereof and the Closing
Date, it will not take or fail to take any action which would result in its
noncompliance with the requirements of the Communications Act or the rules and
regulations of the FCC material to the transactions contemplated by this
Agreement.
5.2 Consummation of Agreement. Subject to the provisions of
-------------------------
Section 8.1 of this Agreement, Purchaser shall use all reasonable efforts to
fulfill and perform all conditions and obligations on its part to be fulfilled
and performed under this Agreement, and to cause the transactions contemplated
by this Agreement to be fully carried out. Purchaser shall not, and shall cause
its Affiliates not to, between the date hereof and the Closing Date, take or
fail to take any action within its control which would result in its
noncompliance with the
20
<PAGE>
requirements of the Communications Act or the rules and regulations of the FCC
material to the transactions contemplated by this Agreement. Until the Closing
shall have occurred or this Agreement shall have been terminated, Purchaser
shall not acquire, or permit any of its Affiliates to acquire, any interest in
any radio or television station, newspaper, cable television system or other
communications facility, or to take any other action, or omit to take any
action, if such acquisition, together with the other interests of Purchaser and
its Affiliates, or such other action or omission, would make the consummation of
the transactions contemplated by this Agreement contrary to the Communications
Act or the rules, regulations, or policies of the FCC or would otherwise prevent
the consummation of the transactions contemplated by this Agreement.
5.3 Notice of Proceedings. Purchaser will promptly notify Seller,
---------------------
in writing upon (a) becoming aware of any order or decree or any complaint
seeking an order or decree restraining or enjoining the consummation of this
Agreement or the transactions contemplated hereby, or (b) receiving any notice
from any governmental department, court, agency or commission of its intention
(i) to institute an investigation into, or institute a suit or proceeding to
restrain or enjoin, the consummation of this Agreement or the transactions
contemplated hereby, or (ii) to nullify or render ineffective this Agreement or
the transactions if consummated.
5.4 Confidentiality. For one (1) year following any termination of
---------------
this Agreement, Purchaser will and will cause its authorized representatives to,
hold in strict confidence all nonpublic information received by them from Seller
in connection with the transactions contemplated hereby, and will not (and will
ensure that such authorized representatives do not) disclose such information to
others without the prior written consent of Seller, except that Purchaser may
provide such confidential information in response to legal process or applicable
governmental regulations, provided that Purchaser forthwith notifies Seller of
its obligation to provide such confidential information and fully cooperates
with Seller to protect the confidentiality of such information (and Seller may
at its expense and in the name of Purchaser bring any suit or administrative
action to enforce its aforesaid rights and Purchaser shall at Seller's expense
assist Seller as reasonably requested by Seller). If this Agreement is
terminated, Purchaser will return promptly or cause to be returned promptly to
Seller all tangible evidence of such confidential information which has been
furnished by Seller to Purchaser or its Affiliates, or authorized
representatives, or by Purchaser to third parties.
5.5 Non-Solicitation. For one (1) following any termination of
----------------
this Agreement, Purchaser shall not, and shall cause its directors, officers,
employees, agents and representatives not to, (a) hire, attempt to hire or
otherwise solicit, any officer or other employee of the Station or Seller in the
San Francisco area except for employees hired by Purchaser for employment in
connection with the Time Brokerage Agreement that were not employed at the
Station or by Seller in the San Francisco area on the day prior to the
Commencement Date of the Time Brokerage Agreement, or (b) encourage any officer
or other employee of the Station or Seller in the San Francisco area to
terminate his or her
21
<PAGE>
relationship or employment with the Station or Seller except for employees hired
by Purchaser for employment in connection with the Time Brokerage Agreement that
were not employed at the Station or by Seller in the San Francisco area on the
day prior to the Commencement Date of the Time Brokerage Agreement.
5.6 Indemnification Escrow Agreement. On the Closing Date,
--------------------------------
Purchaser shall execute and deliver the Indemnification Escrow Agreement.
5.7 Hart-Scott-Rodino Act. As promptly as practicable after the
---------------------
date of this Agreement, Purchaser will make any filings required under the HSR
Act. Purchaser will furnish to Seller such necessary information and reasonable
assistance as Seller may request in connection with its preparation of any
additional necessary filings or submissions to any governmental agency,
including, without limitation, any additional filings necessary under the HSR
Act. Purchaser will keep Seller informed of the status of any inquiries made of
such party by the Federal Trade Commission, the Antitrust Division of the U.S.
Department of Justice or any other governmental agency or authority or members
of their respective staffs with respect to this Agreement or the transactions
contemplated hereby.
5.8 Cooperation. Purchaser shall cooperate with Seller (which
-----------
cooperation shall not involve the payment or commitment to pay any money to any
person or entity), including by providing to Seller Purchaser's financial
statements and related information which Seller may from
time to time reasonably request, to assist Seller in obtaining the consents to
be obtained pursuant to Section 4.3.
5.9 Operation of Station. During the term of the Time Brokerage
--------------------
Agreement, Purchaser shall not, without the prior written consent of Seller, (a)
change the entertainment format of the Station or make any other substantial
change in the mix of programming segments on the Station, or (b) terminate any
employee at the Station.
SECTION 6. Conditions to the Obligations of Seller.
- --------- ---------------------------------------
The obligations of Seller under this Agreement are, in the discretion of
Seller, subject to the fulfillment of the following conditions prior to or at
the Closing Date:
6.1 Representations, Warranties, Covenants.
--------------------------------------
(a) Each of the representations and warranties of Purchaser contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date and with the same effect as though made on and as of the
Closing Date, except for such representations and warranties as are made as of a
specified date and except for such inaccuracies as do not, individually or in
the aggregate, have a material adverse effect on the Station Assets or the
business of the Station;
22
<PAGE>
(b) Purchaser shall have performed and satisfied in all material
respects all agreements, covenants and conditions hereunder which by the terms
hereof are to be performed and satisfied by Purchaser on or prior to the Closing
Date;
(c) Purchaser shall have furnished Seller with a certificate, dated
the Closing Date and duly executed on behalf of Purchaser to the effect that the
conditions set forth in subparagraphs (a) and (b) of this Section 6.1 have been
satisfied; and
(d) Purchaser shall have furnished Seller with:
(i) certified resolutions of the Board of Directors of Purchaser
approving the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby;
(ii) governmental certificates evidencing that Purchaser is a
corporation validly existing and in good standing under the laws of the State
of Delaware and is duly qualified as a foreign corporation in the State of
California;
(iii) a certificate of the Secretary of Purchaser attesting as
to the incumbency of each officer who shall execute any document on behalf of
Purchaser; and
(iv) such other certificates or documents as Seller may reasonably
request at least three (3) business days prior to the Closing.
6.2 No Actions or Proceedings. No action or proceeding by any court,
-------------------------
administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or might result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions contemplated by this Agreement, and which would in the
reasonable judgment of Seller make it inadvisable to consummate such
transactions, and no law or regulation shall be in effect and no court order
shall have been entered in any action or proceeding instituted by any party
which enjoins, restrains or prohibits this Agreement or the complete
consummation of the transactions as contemplated by this Agreement, in any case
other than filings before the FCC which have been dismissed or denied by the
FCC.
6.3 Opinion of Counsel. Seller shall have received an opinion of
------------------
Latham & Watkins Purchaser's counsel, dated the Closing Date, in the form
attached to this Agreement as Exhibit D.
---------
6.4 FCC Authorization. The FCC Assignment Consent shall have been
-----------------
obtained and become effective, shall contain no condition materially adverse to
Seller and shall have become a Final Order.
23
<PAGE>
6.5 Hart-Scott-Rodino Act. All filings required to be made under
---------------------
the HSR Act shall have been made, and any applicable waiting period thereunder
shall have expired or been terminated.
SECTION 7. Conditions to the Obligations of Purchaser.
- --------- ------------------------------------------
The obligations of Purchaser under this Agreement are, in the discretion of
Purchaser, subject to the fulfillment of the following conditions prior to or at
the Closing Date:
7.1 Representations, Warranties, Covenants.
--------------------------------------
(a) Each of the representations and warranties of Seller contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though made on and as of the Closing
Date;
(b) Seller shall have performed and satisfied in all material respects
all agreements, covenants and conditions hereunder which by the terms hereof are
to be performed and satisfied by Seller on or prior to the Closing Date;
(c) Seller shall have furnished Purchaser with a certificate, dated
the Closing Date and duly executed by the President of Seller GP on behalf of
Seller to the effect that the conditions set forth in subparagraphs (a) and (b)
of this Section 7.1 have been satisfied; and
(d) Seller shall have furnished Purchaser with:
(i) certified resolutions of the Board of Directors of Seller GP
approving the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby;
(ii) governmental certificates evidencing that Seller is a limited
partnership validly existing and in good standing under the laws of the State
of Delaware, is duly qualified as a foreign partnership in the State of
California and has obtained a tax clearance certificate, and GP is a
corporation validly existing and in good standing in the State of Delaware and
is duly qualified as a foreign corporation in the State of California;
(iii) a Certificate of the Secretary of Seller GP attesting as
to the incumbency of each officer who shall execute any of the Seller
Documents on behalf of Seller; and
(iv) such other certificates or documents as Purchaser may
reasonably request at least three (3) business days prior to the Closing.
24
<PAGE>
7.2 No Actions or Proceedings. No action or proceeding by any
-------------------------
court, administrative body or governmental agency shall have been instituted or
threatened which would enjoin, restrain or prohibit, or might result in
substantial damages in respect of, this Agreement or the complete consummation
of the transactions contemplated by this Agreement, and no law or regulation
shall be in effect and no court order shall have been entered in any action or
proceeding instituted by any party which enjoins, restrains or prohibits this
Agreement or the complete consummation of the transactions as contemplated by
this Agreement, in any case other than filings before the FCC which have been
dismissed or denied by the FCC.
7.3 Opinions of Counsel.
-------------------
(a) Purchaser shall have received an opinion of Goodwin, Procter &
Hoar LLP, counsel to Seller, dated the Closing Date, in the form attached to
this Agreement as Exhibit E.
---------
(b) Purchaser shall have received an opinion of Irwin, Campbell &
Tannenwald, P.C., Seller's FCC counsel, dated the Closing Date, in the form
attached to this Agreement as Exhibit F.
---------
7.4 FCC Authorization. The FCC Assignment Consent shall have been
-----------------
obtained and become effective, shall contain no condition materially adverse to
Purchaser and shall have become a Final Order.
7.5 Hart-Scott-Rodino Act. All filings required to be made under
---------------------
the HSR Act shall have been made, and any applicable waiting period thereunder
shall have expired or been terminated.
7.6 Certain Consents. Seller shall have obtained consents to the
----------------
assignment to Purchaser of that certain lease dated January 1, 1990 between
Telecommunications Properties and Intercontinental Radio, Inc., with respect to
San Bruno Communications Site located on San Bruno Mountain, San Mateo,
California, assigned to KSOL L.P. pursuant to an Assignment and Assumption of
Lease dated as of November 19, 1993.
SECTION 8. Termination.
-----------
8.1 Termination. This Agreement may be terminated any time prior to the
-----------
Closing Date:
(a) with the mutual consent of Purchaser and Seller;
(b) by Purchaser or Seller, on or after April __, 1997, if prior to
the giving of notice of termination hereunder (i) the FCC has not granted the
FCC Assignment Consent
25
<PAGE>
or (ii) the FCC has granted the FCC Assignment Consent but it has not become
a Final Order, provided that the terminating party is not in material breach
of this Agreement, and provided further that the terminating party has not
caused or materially contributed to the delay in any decision or determination
by the FCC in respect of the FCC Assignment Consent or Final Order by such
party's action or inaction with respect to the FCC Assignment Consent or
Final Order;
(c) by Seller, provided that Seller is not in material breach of this
Agreement, if either (i) Purchaser is in material breach of this Agreement and
such breach shall remain uncured for a period of fifteen (15) business days
after Seller shall have given notice of such breach to Purchaser, (ii) Purchaser
shall have explicitly or by conduct repudiated this Agreement and such
repudiation shall have remained uncured for a period of fifteen (15) business
days after Seller shall have given notice thereof to Purchaser, or (iii) at the
Closing Date any of the conditions in Section 6 shall not have been satisfied,
complied with or performed in all material respects (unless such failure of
satisfaction, noncompliance or nonperformance is the result directly or
indirectly of any action or failure to act on the part of Seller) and Seller
shall not have waived such failure of satisfaction, noncompliance or
nonperformance;
(d) by Purchaser, provided that Purchaser is not in material breach of
this Agreement, if either (i) Seller is in material breach of this Agreement and
such breach shall remain uncured for a period of fifteen (15) business days
after Purchaser shall have given notice of such breach to Seller, (ii) Seller
shall have explicitly or by conduct repudiated this Agreement and such
repudiation shall have remained uncured for a period of fifteen (15) business
days after Purchaser shall have given notice thereof to Seller, or (iii) at the
Closing Date any of the conditions in Section 7 shall not have been satisfied,
complied with or performed in all material respects (unless such failure of
satisfaction, noncompliance or nonperformance is the result directly or
indirectly of any action or failure to act on the part of Purchaser) and
Purchaser shall not have waived such failure of satisfaction, noncompliance or
nonperformance;
(e) by Seller, provided that Seller is not in material breach of this
Agreement, if Seller is simultaneously terminating the Time Brokerage Agreement
pursuant to and as permitted by Section 9.1(y) of the Time Brokerage Agreement;
(f) by Purchaser, provided that Purchaser is not in material breach of
this Agreement, if Purchaser is simultaneously terminating the Time Brokerage
Agreement pursuant to and as permitted by Sections 2.4, 2.5 or 9.1(y) of the
Time Brokerage Agreement;
(g) by Seller or Purchaser if any court of competent jurisdiction in
the United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and nonappealable; or
26
<PAGE>
(h) by Seller or Purchaser if the FCC has denied the FCC Assignment
Consent in an order which has become final, provided that the terminating party
is not in material breach of this Agreement.
(i) By Purchaser if the Station ceases broadcasting for either (i) 72
consecutive hours or (ii) six (6) days within any period of thirty (30)
consecutive days; provided, that (A) Purchaser must give written notice to
--------------
Seller of such termination during the period of thirty (30) days commencing on
the date on which Purchaser's right to terminate under this Section 8.1(i) first
arose, and (B) any cessation of broadcasting on the Station caused by any event
or condition which is similarly affecting other radio broadcast stations in the
market served by the Station shall be excluded for any purposes of determining
whether Purchaser has the right to terminate this Agreement pursuant to this
Section 8.1(i).
8.2 Liabilities Upon Termination.
----------------------------
If this Agreement is terminated pursuant to Section 8.1, neither Purchaser nor
Seller shall have any further liability hereunder or any further obligations
hereunder to one another except:
(i) for such provisions hereof which expressly provide that they survive
any termination,
(ii) as provided in Section 1.6 hereof with respect to the Escrow Deposit,
(iii) if this Agreement is terminated by Seller pursuant to Section 8.1(c)
or Section 8.1(e), Seller shall be entitled to any and all remedies
which it may have, including the right to recover any damages it
suffers as a result of such termination and the breach relating
thereto. In any claim for such damages, Purchaser agrees that the
measure of damages will be based upon Seller's expectancy of profit to
be realized upon the consummation of the transactions contemplated
hereby (i.e. the difference between the Purchase Price and the price
received by Seller in any substitute transaction entered into
following any termination of this Agreement) and that any other
measure of damages, such as Seller's transaction costs, would be an
inadequate and unjust remedy; and
(iv) if this Agreement is terminated by Purchaser pursuant to Section
8.1(d) or Section 8.1(f), Purchaser shall be entitled to any and all
remedies which it may have.
8.3 Pre-Closing Remedies. Prior to the Closing, the sole and
--------------------
exclusive remedy of Purchaser for breaches by Seller of any representation,
warranty or covenant hereunder shall be either (i) to terminate this Agreement
and receive the Escrow Deposit as provided in Sections 8.1 and 1.6 or (ii) to
seek specific performance by Seller of this Agreement. Seller agrees that the
Station Assets include unique property that cannot be readily obtained on the
27
<PAGE>
open market and that Purchaser may be irreparably injured if this Agreement is
not specifically enforced after default. Therefore, Purchaser shall have the
right to seek specific enforcement of Seller's performance under this Agreement
and Seller agrees to waive the defense in any such suit that Purchaser has an
adequate remedy at law and to interpose no opposition, legal or otherwise, as to
the propriety of specific performance as a remedy.
SECTION 9. Survival; Indemnification.
-------------------------
9.1 Survival. All representations, warranties, covenants and
--------
agreements contained in this Agreement, or in any Schedule hereto, shall survive
until and expire on the first anniversary of the Closing Date (the "Expiration
Date").
9.2 Indemnification by Seller.
-------------------------
(a) Seller agrees to indemnify and hold harmless Purchaser and its
officers, directors and stockholders (individually, a "Purchaser Indemnified
Party" and collectively, "Purchaser Indemnified Parties") against and in respect
of all losses, liabilities, obligations, damages, deficiencies, actions, suits,
proceedings, demands, assessments, orders, judgments, costs and expenses
(including the reasonable fees, disbursements and expenses of attorneys) of any
kind or nature whatsoever (collectively, "Losses"), to the extent sustained,
suffered or incurred by or made against any Purchaser Indemnified Party, to the
extent based upon, arising out of or in connection with: (i) any breach of any
representation or warranty made by Seller in this Agreement or in any Schedule
hereto; (ii) any breach of any covenant or agreement made by Seller in this
Agreement; and (iii) any claim made by any person or entity (other than
Purchaser or any of its Affiliates) (collectively, a "Third Party Claim") made
against a Purchaser Indemnified Party which relates to, results from or arises
out of any obligation of Seller not assumed by Purchaser, including but not
limited to, the conduct of the business of the Station prior to the Closing
Date, so long as the matter, liability or obligation to which such Third Party
Claim relates is not an Assumed Liability (such claims under clauses (i) through
(iii) being hereinafter collectively referred to as "Purchaser Indemnifiable
Claims").
(b) The following provisions shall apply with respect to this
Section 9.2:
(i) all rights to indemnification under this Section 9.2 with
respect to Purchaser Indemnifiable Claims shall expire on the Expiration Date
and no Purchaser Indemnified Party shall have the right to make any claim
hereunder after such date, except that if prior to the Expiration Date a
specific state of facts shall have become known which may constitute or give
rise to any Purchaser Indemnifiable Claim as to which indemnity may be payable
and a Purchaser Indemnified Party shall have given notice of such facts to
Seller, then the right to indemnification with respect thereto shall remain in
effect without regard to when such matter shall have been
28
<PAGE>
finally determined and disposed of, according to the date on which notice of
the applicable claim is given;
(ii) no indemnification shall be payable to any Purchaser
Indemnified Party pursuant to this Section 9.2 with respect to any Purchaser
Indemnifiable Claim unless and until the total of all claims for
indemnification shall exceed $100,000 in the aggregate, and then only to the
extent of the excess;
(iii) Seller's aggregate liability under this Section 9.2 shall
not exceed One Million Dollars ($1,000,000) in the aggregate;
(iv) if the Closing occurs, the rights to indemnification set
forth in this Section 9.2 shall be the sole and exclusive remedy of the
Purchaser Indemnified Parties in connection with this Agreement and the
transactions contemplated hereby; and
(v) all claims for indemnification made under this Section 9.2
shall be recovered solely by proceeding against the Indemnification Escrow
Deposit pursuant to the terms of the Indemnification Escrow Agreement and this
Section 9.2 and no such claim may be recovered directly against Seller, its
partners, or their respective Affiliates, directors, officers, stockholders,
or agents.
9.3 Indemnification by Purchaser.
----------------------------
(a) Purchaser agrees to indemnify and hold harmless Seller, its
partners and their respective partners, shareholders, officer and, directors,
(individually, a "Seller Indemnified Party" and collectively, "Seller
Indemnified Parties") at all times against and in respect of all Losses, to the
extent sustained, suffered or incurred by or made against any Seller Indemnified
Party, to the extent based upon, arising out of or in connection with: (i) any
breach of any representation or warranty made by the Purchaser in this
Agreement; (ii) any breach of any covenant or agreement made by Purchaser in
this Agreement; (iii) any Third Party Claim made against Seller which relates
to, results from or arises out of the operation of any Station Asset or the
conduct of the business of the Station on or after the Closing Date; and (iv)
any of the Assumed Liabilities (such claims under clauses (i), (ii), (iii) and
(iv) being hereinafter collectively referred to as "Seller Indemnifiable
Claims").
(b) The following provisions shall apply with respect to this
Section 9.3:
(i) all rights to indemnification under this Section 9.3 shall
expire on the Expiration Date and no Seller Indemnifiable Party shall have the
right to make any claim hereunder after such date, except that if prior to the
Expiration Date a specific state of facts shall have become known which may
constitute or give rise to any Seller Indemnifiable Claim as to which
indemnity may be payable and a Seller Indemnified Party shall have given
notice of such facts to Purchaser, then the right to indemnification with
respect thereto shall remain in effect without regard to when such
29
<PAGE>
matter shall have been finally determined and disposed of, according to the
date on which notice of the applicable claim is given;
(ii) no indemnification shall be payable to any Seller
Indemnified Party pursuant to this Section 9.3 with respect to any Seller
Indemnifiable Claim unless and until the total of all claims for
indemnification shall exceed $100,000 in the aggregate, and then only to the
extent of the excess;
(iii) Purchaser's aggregate liability under this Section 9.3
shall not exceed One Million Dollars ($1,000,000) in the aggregate; and
(iv) if the Closing occurs, the rights to indemnification set
forth in this Section 9.3 shall be the sole and exclusive remedy of the Seller
Indemnified Parties in connection with this Agreement and the transactions
contemplated hereby.
9.4 Notice; Defense of Claims.
-------------------------
Promptly after receipt by an indemnified party of notice of any claim,
liability or expense to which the indemnification obligations hereunder would
apply, the indemnified party shall give notice thereof in writing to the
indemnifying party (Seller with respect to claims by Purchaser Indemnified
Parties and Purchaser with respect to claims by Seller Indemnified Parties), but
the omission to so notify the indemnifying party promptly will not relieve the
indemnifying party from any liability except to the extent that the indemnifying
party shall have been prejudiced as a result of the failure or delay in giving
such notice. Such notice shall state the information then available regarding
the amount and nature of such claim, liability or expense and shall specify the
provision or provisions of this Agreement under which the liability or
obligation is asserted. If within thirty (30) days after receiving such notice
the indemnifying party gives written notice to the indemnified party stating
that it disputes and intends to defend against such claim, liability or expense
at its own cost and expense, then counsel for the defense shall be selected by
the indemnifying party (subject to the consent of the indemnified party which
consent shall not be unreasonably withheld) and the indemnifying party shall not
be required to make any payment with respect to such claim, liability or expense
as long as it is conducting a good faith and diligent defense at its own
expense; provided, however, that the assumption of defense of any such matters
-------- -------
by the indemnifying party shall relate solely to the claim, liability or expense
that is subject or potentially subject to indemnification. The indemnifying
party shall have the right, with the consent of the indemnified party, which
consent shall not be unreasonably withheld, to settle all indemnifiable matters
related to claims by third parties which are susceptible to being settled
provided its obligation to indemnify the indemnifying party therefor will be
fully satisfied. The indemnifying party shall keep the indemnified party
apprised of the status of the claim, liability or expense and any resulting
suit, proceeding or enforcement action, shall furnish the indemnified party with
all documents and information that the indemnified party shall reasonably
request. Notwithstanding anything herein stated, the indemnified party shall at
all times have the right to fully participate in such defense at its own expense
directly or
30
<PAGE>
through counsel; provided, however, if the named parties to the action or
-------- -------
proceeding include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would constitute a conflict
of interest, the expense of separate counsel for the indemnified party shall be
paid by the indemnifying party. If no such notice of intent to dispute and
defend is given by the indemnifying party, the indemnified party may, at the
expense of the indemnifying party, undertake the defense of (with counsel
selected by the indemnified party), and shall have the right to compromise or
settle (exercising reasonable business judgment), such claim, liability or
expense. If such claim, liability or expense is one that by its nature cannot be
defended solely by the indemnifying party, then the indemnified party shall make
available all information and assistance that the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense.
SECTION 10. Definitions.
- ---------- -----------
10.1 Defined Terms. As used herein, the following terms shall have
-------------
the meanings indicated:
(a) Affiliate means, with respect to any person, a person controlling,
---------
controlled by or under common control with such person.
(b) CERCLA means the Comprehensive Environmental Response,
------
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601, et seq.
-- ---
(c) Code means the Internal Revenue Code of 1986, as amended from
----
time to time.
(d) Environmental Laws means any law, statute, regulation or court
------------------
order binding upon Seller, consent decree binding upon Seller, or settlement
agreement to which Seller is a party, which imposes liability for or standards
of conduct concerning the manufacture, processing, generation, distribution,
use, treatment, storage, disposal, release, threat of release, cleanup,
transport or handling of Hazardous Materials, including CERCLA, RCRA, any other
so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, the
Hazardous Materials Transportation Act, as amended, their implementing
regulations or any other similar federal, state or local statutes or
regulations.
(e) ERISA means the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
(f) Escrow Agent means Boston Safe Deposit & Trust Company, as
------------
escrow agent under the Deposit Escrow Agreement.
31
<PAGE>
(g) FCC Assignment Consent means the initial written authorization by
----------------------
the FCC to the assignment of all material FCC Licenses with respect to the
Station to Purchaser, which authorization shall have become effective.
(h) Final Order means the written authorization by the FCC
-----------
constituting the FCC Assignment Consent, which has not been reversed, stayed,
enjoined, set aside, annulled or suspended and with respect to which no timely
filed requests for administrative or judicial review or stay are pending and as
to which the time for filing any such requests or for the FCC to set aside such
action on its own motion has expired.
(i) Hazardous Materials means substances defined as "hazardous
-------------------
substances," "hazardous materials," "hazardous wastes" or "toxic substances" in
CERCLA, RCRA or any analogous state and local laws.
(j) HSR Act means the Hart-Scott-Rodino Antitrust Improvements
-------
Act of 1976, as amended.
(k) Indemnification Escrow Agent means Boston Safe Deposit & Trust
----------------------------
Company, as escrow agent under the Indemnification Escrow Agreement.
(l) RCRA means the Resource Conservation and Recovery Act, as
----
amended 42 U.S.C. (S) 6901, et seq.
-- ---
(m) Seller's Knowledge means the actual (but not constructive)
------------------
knowledge of Allen B. Shaw and William H. Weller.
(n) Taxes means all federal, state, local and foreign taxes including,
-----
without limitation, income, unemployment, withholding, payroll, social security,
real property, personal property, excise, sales, use and franchise taxes,
levies, assessments, imposts, duties, licenses and registration fees and charges
of any nature whatsoever, including interest, penalties and additions with
respect thereto and any interest in respect of such additions or penalties.
(o) TBA Date means the date on which Purchaser commences programming
--------
on the Station pursuant to the Time Brokerage Agreement.
10.2 Cross-Reference Table. As used herein, the following terms not
---------------------
defined in Section 10.1 hereof shall have the meanings set forth in the Sections
listed below:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Assumed Contracts................. 1.1(d)
- -----------------
Assumed Liabilities............... 1.3
- -------------------
Acquisition Proposal.............. 4.9
- --------------------
</TABLE>
32
<PAGE>
<TABLE>
<S> <C>
Claims............................ 1.2(e)
- ------
Closing........................... 1.4
- -------
Closing Date...................... 1.4
- ------------
Communications Act................ 2.4
- ------------------
CPR Rules......................... 11.9
- ---------
Deposit Escrow Agreement.......... 1.6
- ------------------------
Disposed Property................. 1.2(c)
- -----------------
Employees......................... 2.7
- ---------
Escrow Deposit.................... 1.6
- --------------
Excluded Assets................... 1.2
- ---------------
Expiration Date................... 9.1
- ---------------
FCC............................... Introduction
- ---
FCC Conditions.................... 1.4
- --------------
FCC Licenses...................... 1.1(a)
- ------------
Financial Statements.............. 2.17
- --------------------
HSR Conditions.................... 1.4
- --------------
Indemnification Escrow Agreement.. 1.7
- --------------------------------
Indemnification Escrow Deposit....
- ------------------------------ 1.7
Intangible Rights................. 1.1(e)
- -----------------
Licenses.......................... 1.1(a)
- --------
Losses............................ 9.2(a)
- ------
Noncompetition Agreement.......... 4.10
- ------------------------
Permitted Liens................... 1.11
- ---------------
Purchase Price.................... 1.5
- ---------------
Purchaser......................... Introduction
- ---------
Purchaser Documents............... 3.2
- -------------------
Purchaser Indemnifiable Claims.... 9.2(a)
- ------------------------------
Purchaser Indemnified Party(ies).. 9.2(a)
- --------------------------------
Receivables....................... 1.2(b)
- -----------
Restricted Contracts.............. 4.3
- --------------------
Security Interests................ 1.11
- ------------------
Seller............................ Introduction
- ------
Seller Documents.................. 2.2
- ----------------
Seller GP......................... 2.1(b)
- ---------
Seller Indemnifiable Claims....... 9.3(a)
- ---------------------------
Seller Indemnified Party(ies)..... 9.3(a)
- -----------------------------
Station Assets.................... 1.1
- --------------
Station Real Property............. 1.1(c)
- ---------------------
Station........................... Introduction
- -------
Studio Lease...................... 1.2(g)
- ------------
Third Party Claim................. 9.2(a)
- -----------------
Time Brokerage Agreement.......... Introduction
- ------------------------
</TABLE>
33
<PAGE>
SECTION 11. Miscellaneous.
- ---------- -------------
11.1 Expenses. Each party hereto shall bear all of its expenses
--------
incurred in connection with the transactions contemplated by this Agreement,
including without limitation, accounting and legal fees incurred in connection
herewith; provided, however, that Purchaser and Seller shall each pay one half
-------- -------
of (i) any FCC filing fees required to be paid in connection with the FCC
applications referred to in Sections 4.4 and 5.1, (ii) any sales, transfer, use
or similar taxes (including, without limitation, any real estate transfer taxes)
imposed or payable on the sale or transfer of the Station Assets to Purchaser or
the consummation of the transactions contemplated hereby and (iii) all filing
fees relating to filings under the HSR Act.
11.2 Bulk Sales Law. Purchaser hereby waives compliance with the
--------------
applicable provisions of any applicable bulk sales law and Seller hereby agrees
to indemnify and hold Purchaser harmless from any and all claims against
Purchaser arising out of failure to comply with such law.
11.3 Assignment. Neither this Agreement nor any of the rights or
----------
obligations hereunder may be assigned by Seller without the prior written
consent, in its sole discretion, of Purchaser or by Purchaser without the prior
written consent, in its sole discretion, of Seller, provided, however,
that (a) either party may make a collateral assignment of its rights under this
Agreement for purposes of securing such party's senior secured debt obligations
and (b) Purchaser may assign its rights hereunder to an Affiliate, provided that
such assignment (i) does not delay the Closing and (ii) shall not relieve
Purchaser of its obligations hereunder. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and no other person shall have any
right, benefit or obligation hereunder.
11.4 Books and Records. Purchaser and Seller agree that, as long as
-----------------
any of the books, records or files relating to the Station remain in existence
and are under its direct or indirect control, the other party shall have the
right to inspect and to make copies (at its expense) of the same at any time
during business hours with respect to any tax matters or other audits and any
litigation to which it is a party, or for any similar purpose. Neither
Purchaser nor Seller will destroy, without first having offered to deliver to
the other party, any of such books, records and files for a period of six (6)
years after the Closing Date. Each party agrees that it will make available to
the other, at the expense of the party requesting the same, records and
information needed in connection with any tax matters, litigation or other
similar matters. After the Closing Date, Seller shall cooperate and use
reasonable efforts to assist Purchaser in obtaining from the accounting firm
responsible for the preparation of the financial statements for the Station such
assurances as such firm is willing to provide concerning the accuracy of the
pre-closing financial statements of the Station as Purchaser may reasonably
request in connection with any filings by Purchaser with the Securities and
Exchange Commission.
34
<PAGE>
11.5 Public Announcement. Prior to the Closing Date, no party shall,
-------------------
without the prior written consent of the other party, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement, except as and to the extent that such party shall be so obligated by
law, in which case such party shall give advance notice to the other parties and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued.
11.6 Notices. All notices under this Agreement shall be transmitted
-------
to the respective party, shall be in writing and shall be considered to have
been duly given or served when personally delivered to any individual party, or
on the first day after the date of deposit with Federal Express for next day
delivery, postage prepaid, or on the third day after deposit in the United
States mail, certified or registered, return receipt requested, postage prepaid,
addressed, in all cases, to the party at his or its address set forth below, or
to such other address as such party may hereafter designate, by written notice
to the other party.
If to Purchaser:
Evergreen Media Corporation
433 E. Las Colinas Boulevard
Suite 1140
Irving, TX 75039
Attention: Mr. Scott K. Ginsburg
with a copy to:
Latham & Watkins
1001 Pennsylvania Avenue, N.W.
Suite 1300
Washington, D.C. 20004
Attention: Eric L. Bernthal, Esq.
Kevin C. Boyle, Esq.
If to Seller:
Crescent Communications L.P.
4407 Providence, Suite F
Winston-Salem, NC 27106
Attention: Mr. Allen B. Shaw
35
<PAGE>
with a copy to:
Goodwin, Procter & Hoar LLP
Exchange Place
Boston, Massachusetts 02109
Attention: David F. Dietz, P.C.
with an additional copy (the failure of which to provide shall not
cause any notice to be defective) to:
Media/Communications Partners
75 State Street, Suite 2500
Boston, Massachusetts 02109
Attention: John G. Hayes
11.7 Captions. The captions of Sections of this Agreement are for
--------
convenience only and shall not control or affect the meaning or construction of
any of the provisions of this Agreement.
11.8 Law Governing. This Agreement shall be governed by, construed,
-------------
and enforced in accordance with the laws of the State of California without
giving effect to principles of conflicts of laws.
11.9 Dispute Resolution.
------------------
Except as provided below, any dispute arising out of or relating to
this Agreement or the breach, termination or validity hereof shall be finally
settled by arbitration conducted expeditiously in accordance with the Center for
Public Resources Rules for Nonadministered Arbitration of Business Disputes (the
"CPR Rules"). The Center for Public Resources shall appoint a neutral advisor
from its National CPR Panel. The arbitration shall be governed by the United
States Arbitration Act, 9 U.S.C. (S)(S)1-16, and judgment upon the award
rendered by the arbitrators may be entered by any court having jurisdiction
thereof. The place of arbitration shall be New York, New York.
Such proceedings shall be administered by the neutral advisor in accordance
with the CPR Rules as he/she deems appropriate, however, such proceedings shall
be guided by the following agreed upon procedures:
(a) mandatory exchange of all relevant documents, to be accomplished
within forty-five (45) days of the initiation of the procedure;
(b) no other discovery;
36
<PAGE>
(c) hearings before the neutral advisor which shall consist of a
summary presentation by each side of not more than three hours; such hearings to
take place on one or two days at a maximum; and
(d) decision to be rendered not more than ten (10) days following
such hearings.
Notwithstanding anything to the contrary contained herein, the provisions
of this Section 11.9 shall not apply with regard to any equitable remedies to
which any party may be entitled hereunder.
11.10 Waiver of Provisions. The terms, covenants, representations,
--------------------
warranties, and conditions of this Agreement may be waived only by a written
instrument executed by the party waiving compliance. The failure of any party at
any time or times to require performance of any provision of this Agreement
shall in no manner affect the right of such party at a later date to enforce the
same. No waiver by any party of any condition or the breach of any provision,
term, covenant, representation, or warranty contained in this Agreement, whether
by conduct or otherwise, in any one or more instances shall be deemed to be or
construed as a further or continuing waiver of any such condition or of the
breach of any other provision, term, covenant, representation, or warranty of
this Agreement.
11.11 Counterparts. This Agreement may be executed in several
------------
counterparts, and all counterparts so executed shall constitute one agreement,
binding on the parties hereto, notwithstanding that the parties are not
signatory to the same counterpart.
11.12 Entire Agreement. This Agreement (together with the Schedules
----------------
and Exhibits hereto) and the Time Brokerage Agreement constitute the entire
agreement and understanding between the parties and supersede and cancel any and
all prior discussions, understandings and agreements between them relating to
the subject matter hereof. This Agreement may not be amended or modified except
in a writing signed by the party to be bound.
11.13 Severability. If any term, covenant, condition or provision
------------
of this Agreement, or the application thereof to any party or circumstance shall
to any extent be held invalid or unenforceable, the remainder of this Agreement
or the application of such term or provision to parties or circumstances other
than those as to which it is held invalid or unenforceable shall not be affected
thereby, and each term, covenant, condition or provision of this Agreement shall
be valid and be enforced to the fullest extent permitted by law, provided that
--------
such unenforceable provision shall be curtailed, limited or eliminated only to
the extent necessary to remove such invalidity or unenforceability with respect
to the applicable law as it shall then be applied.
37
<PAGE>
11.14 Risk of Loss. The risk of loss or damage to the Station Assets
------------
(other than any loss or damage to the Station Assets caused by any acts or
omissions of Purchaser, its employees or agents) shall be upon Seller at all
times prior to the Closing.
11.15 Brokerage. Seller agrees to indemnify and hold Purchaser
---------
harmless from and against any and all claims, losses, liabilities and expenses
(including reasonable attorneys' fees) incurred by Purchaser arising out of a
claim by any person or entity based on any commission, finder's fee or similar
payment due pursuant to any arrangement or agreement made or alleged to have
been made by Seller. No claim under this Section 11.15 shall be subject to the
limitations set forth in Section 9.2(b)(ii) or (iii).
11.16 Counsel. Each party has been represented by its own counsel in
-------
connection with the negotiation and preparation of this Agreement and the Time
Brokerage Agreement and, consequently, each party hereby waives the application
of any rule of law to the effect that any provision of this Agreement shall be
interpreted or construed against the party whose counsel drafted that provision.
11.17 Like-Kind Exchange Election. Purchaser desires, if possible, to
---------------------------
effect this transaction as an exchange for other property of like-kind and
qualifying use in a tax-deferred exchange under Section 1031 of the Code and the
Treasury Regulations thereunder. Therefore, Seller and Purchaser agree that
Purchaser may at any time at or prior to Closing assign its rights under this
Agreement to a "qualified intermediary" as defined in Treas. Reg. (S) 1.1031(k)-
1(g)(4), subject to all of Seller's rights and obligations hereunder and
Purchaser shall promptly provide written notice of such assignment to Seller.
Purchaser agrees that Seller shall have no liability for any tax consequences
arising from the like-kind exchange described herein. Purchaser's inability to
effect the like-kind exchange described herein shall not affect Purchaser's
obligations hereunder. Seller agrees to reasonably cooperate with Purchaser to
effectuate such like-kind exchange, provided that (i) such like-kind exchange is
made without any cost or liability to Seller, and (ii) the Closing shall not be
delayed by reason of such like-kind exchange.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
38
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their duly authorized officers, all as of the day and year first
above written.
CRESCENT COMMUNICATIONS L.P.
By: CRESCENT COMMUNICATIONS GP,
INC., its General Partner
By: ------------------------------------
Allen B. Shaw, President
EVERGREEN MEDIA CORPORATION OF LOS
ANGELES
By: -------------------------------------
Scott K. Ginsburg, President
39
<PAGE>
Exhibit 4.8A
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment") made as of the 8th
day of May, 1996 among Evergreen Media Corporation of Los Angeles, a Delaware
corporation (the "Borrower"), the Financial Institutions whose names appear as
Lenders on the signature pages hereof (the "Lenders"), and Toronto Dominion
(Texas), Inc., as administrative agent for the Lenders (the "Administrative
Agent"),
W I T N E S S E T H:
--------------------
WHEREAS, the Borrower, the Lenders and the Administrative Agent are parties
to that certain Loan Agreement dated as of January 17, 1996 (the "Loan
Agreement"); and
WHEREAS, the parties hereto desire to amend the Loan Agreement to reduce
the interest rates payable on the Loans, as set forth herein;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree that
all capitalized terms used herein shall have the meanings ascribed thereto in
the Loan Agreement except as otherwise defined or limited herein, and further
agree as follows:
1. Amendment to Section 2.3(f). Section 2.3(f) of the Loan Agreement,
---------------------------
Applicable Margin, is hereby amended by deleting the existing table in its
- -----------------
entirety and by substituting the following table therefor:
<TABLE>
<CAPTION>
Prime Rate Advance Eurodollar Advance
Leverage Ratio Applicable Margin Applicable Margin
- ---------------------------- ------------------- -------------------
<S> <C> <C>
Greater than 6.50 1.250% 2.375%
Greater than 6.00 but less 0.875% 2.000%
than or equal to 6.50
Greater than 5.50 but less 0.625% 1.750%
than or equal to 6.00
Greater than 5.00 but less 0.375% 1.500%
than or equal to 5.50
Greater than 4.50 but less 0.125% 1.250%
than or equal to 5.00
Greater than 4.00 but less 0.000% 1.000%
than or equal to 4.50
Greater than 3.00 but less 0.000% 0.750%
than or equal to 4.00
Less than or equal to 3.0 0.000% 0.500%
</TABLE>
<PAGE>
2. Conditions Precedent. This Amendment is subject to the prior
--------------------
fulfillment of each of the following conditions:
(a) The representations and warranties of the Borrower under the Loan
Agreement and of other obligors under the other Loan Documents shall be true and
correct as of the date hereof; and
(b) The Administrative Agent's receipt of all such other certificates,
reports, statements, or other documents as the Administrative Agent or any
Lender may reasonably request.
3. Waiver; No Other Amendments or Waivers.
--------------------------------------
(a) On January 9, 1996, Evergreen Media Corporation entered into an
Option Agreement with Chancellor Broadcasting Company, pursuant to which
Evergreen Media Corporation acquired the right to acquire an AM and an FM
station in Detroit, Michigan. Evergreen Media Corporation has now assigned its
rights under such Option Agreement and any related contracts to the Borrower.
Accordingly, the Lenders hereby agree to waive any Default which may have
occurred under the Parent Company Guaranty and the Loan Agreement by virtue of
this transaction.
(b) Notwithstanding the foregoing, and except for the amendments and
waivers set forth above, the text of the Loan Agreement and the other Loan
Documents shall remain unchanged and in full force and effect, and the Lenders
and the Administrative Agent expressly reserve the right to require strict
compliance with the terms of the Loan Agreement and the other Loan Documents.
4. Counterparts. This Amendment may be executed in multiple counterparts,
------------
each of which shall be deemed to be an original and all of which, taken
together, shall constitute one and the same agreement.
5. Governing Law. This Amendment shall be deemed to be made pursuant to
-------------
the laws of the State of New York with respect to agreements made and to be
performed wholly in the State of New York and shall be construed, interpreted,
performed and enforced in accordance therewith.
6. Loan Document. This Amendment shall be deemed to be a Loan Document
-------------
for all purposes under the Loan Agreement.
7. Effective Date. This Amendment shall be effective as of the date first
--------------
written above.
-2-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their respective duly
authorized officers or representatives to execute and deliver this Amendment as
of the day and year first above written.
BORROWER: EVERGREEN MEDIA CORPORATION OF
LOS ANGELES, a Delaware corporation
By:_______________________________________
Its:_________________________________
Attest:___________________________________
Its:_________________________________
ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., a
Delaware corporation
By:_______________________________________
Its:_________________________________
COLLATERAL AGENT: TORONTO DOMINION (TEXAS), INC., a Delaware
corporation
By:_______________________________________
Its:_________________________________
LENDERS: TORONTO DOMINION (TEXAS), INC., a
Delaware corporation
By:_______________________________________
Its:_________________________________
-3-
<PAGE>
THE BANK OF NEW YORK
By:_______________________________________
Its:_________________________________
NATIONSBANK OF TEXAS, N.A.
By:_______________________________________
Its:_________________________________
BANK OF HAWAII
By:_______________________________________
Its:_________________________________
THE BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By:_______________________________________
Its:_________________________________
THE BANK OF IRELAND
By:_______________________________________
Its:_________________________________
-4-
<PAGE>
THE FIRST NATIONAL BANK OF BOSTON
By:_______________________________________
Its:_________________________________
BANKERS TRUST COMPANY
By:_______________________________________
Its:_________________________________
BANQUE PARIBAS
By:_______________________________________
Its:_________________________________
BANQUE FRANCAISE du COMMERCE EXTERIEUR
By:_______________________________________
Its:_________________________________
CIBC INC.
By:_______________________________________
Its:_________________________________
-5-
<PAGE>
COMPAGNIE FINANCIERE DE CIC ET DE L'UNION
EUROPEENNE
By:_______________________________________
Its:_________________________________
CORESTATES BANK, N.A.
By:_______________________________________
Its:_________________________________
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By:_______________________________________
Its:_________________________________
THE DAI-ICHI KANGYO BANK, LTD.
By:_______________________________________
Its:_________________________________
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:_______________________________________
Its:_________________________________
-6-
<PAGE>
FIRST UNION NATIONAL BANK OF NORTH CAROLINA
By:_______________________________________
Its:_________________________________
FLEET NATIONAL BANK
By:_______________________________________
Its:_________________________________
THE FUJI BANK, LIMITED
By:_______________________________________
Its:_________________________________
MIDLAND BANK PLC
By:_______________________________________
Its:_________________________________
-7-
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
NEW YORK BRANCH
By:_______________________________________
Its:_________________________________
MELLON BANK, N.A.
By:_______________________________________
Its:_________________________________
THE MITSUBISHI TRUST AND BANKING CORPORATION
By:_______________________________________
Its:_________________________________
THE ROYAL BANK OF SCOTLAND plc
By:_______________________________________
Its:_________________________________
SOCIETE GENERALE
By:_______________________________________
Its:_________________________________
-8-
<PAGE>
SOCIETY NATIONAL BANK
By:_______________________________________
Its:_________________________________
THE SUMITOMO TRUST & BANKING CO., LTD.,
NEW YORK BRANCH
By:_______________________________________
Its:_________________________________
UNION BANK
By:_______________________________________
Its:_________________________________
-9-
<PAGE>
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
SoftSolution Network ID: ATL-174027.4 Type: AMD
<PAGE>
EXHIBIT 10.27
EMPLOYMENT AGREEMENT
Between Evergreen Media Corporation and Scott K. Ginsburg
This Employment Agreement ("Agreement") is made and entered into on April
15, 1996, effective as of January 1, 1996 (the "Effective Date"), between
Evergreen Media Corporation, a Delaware corporation (the "Company"), and Scott
K. Ginsburg (the "Executive"), residing at 17340 Club Hill Drive, Dallas Texas
75248.
WITNESSETH:
WHEREAS, the Company and the Executive desire to enter into this Agreement
providing for the Executive's employment as Chief Executive Officer of the
Company on the terms, and subject to the conditions, as hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and obligations hereinafter set forth, the parties agree as follows:
1. Definitions
-----------
The following terms used in this Agreement shall have the meaning specified
below unless the contract clearly includes the contrary:
"Annual Bonus" shall mean the annual incentive bonus payable to the
------------
Executive described in Section 4.
"Annual Broadcast Cash Flow" for any Contract Year shall mean station
--------------------------
operating income for such Contract Year for the stations owned by the Company as
of the last day of such Contract Year on a consolidated basis excluding
depreciation, amortization and corporate, general and administrative expenses,
calculated in a manner consistent with the presentation of "broadcast cash flow"
in the
<PAGE>
Company's periodic reports filed with the Securities Exchange Commission,
with respect to the stations owned by the Company as of the last day of such
Contract Year.
"Base Salary" shall mean the annual base salary payable to the Executive at
-----------
the rate set forth in Section 4.
"Board" shall mean the Board of Directors of the Company.
-----
"Broadcast Cash Flow Target" for any Contract Year shall mean 105% of the
--------------------------
station operating income for the immediately preceding Contact Year on a
consolidated basis excluding depreciation, amortization and corporate, general
and administrative expenses, calculated in a manner consistent with the
presentation of "broadcast cash flow" in the Company's periodic reports filed
with the Securities Exchange Commission, with respect to the stations owned by
the Company as of the last day of the Contract Year for which the Broadcast Cash
Flow Target is calculated.
"Cause" shall mean the Executive's (a) habitual neglect of his material
-----
duties or failure to perform his material obligations under this Agreement, (b)
refusal or failure to follow lawful directives of Board, (c) commission of an
act of fraud, theft or embezzlement, or (d) conviction of a felony or other
crime involving moral turpitude; provided, however, that the Company shall give
the Executive written notice of any actions alleged to constitute Cause under
subsections (a) and (b) above, and the Executive shall have a reasonable
opportunity (as specified by the Compensation Committee) to cure any such
alleged Cause.
"Change in Control" shall mean (a) the sale, lease or other transfer of all
-----------------
or substantially all of the assets of the Company to any person or group (as
such term is used in Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended) (other than the Principals or their Related Parties); (b) the adoption
by the stockholders of the Company of a plan relating to the liquidation or
dissolution of the Company; (c) the merger or consolidation of the Company with
or into another entity or the merger of another entity into the Company or any
subsidiary thereof with the effect that immediately after such transaction the
stockholders of the Company immediately prior to such transaction (or their
2
<PAGE>
Related Parties) hold less than 50% of the total voting power of all securities
generally entitled to vote in the election of directors, managers or trustees of
the entity surviving such merger of consolidation; or (d) the acquisition by any
person or group other than the Principals or their Related Parties of more than
50% of the voting power of all securities of the Company generally entitled to
vote in the election of directors of the Company.
"Change in Control Notice" shall mean written notice from the Board to the
------------------------
Executive of a contemplated Change in Control, which notice shall be delivered
to the Executive no later than 45 days prior to the scheduled consummation of
such Change in Control.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Common Stock" shall mean Class A common stock of the Company.
------------
"Compensation Committee" shall mean the Compensation Committee of the
----------------------
Board.
"Contract Year" shall mean each twelve consecutive month period during the
-------------
Employment Term which begins on the Effective Date or an anniversary thereof.
"Disinterested Directors" shall mean the members of the Board other than
-----------------------
the Executive.
"Employment Term" shall mean the period beginning on January 1, 1996 and
---------------
ending on the close of business on the effective date the Executive terminates
employment with the Company.
"Excise Tax" shall mean the taxes imposed by Code Section 4999.
----------
"Net After Tax Benefit" with respect to a Change in Control shall mean the
---------------------
aggregate of the payments and benefits that the Executive receives or is
entitled to receive from the Company by reason of the Change in Control that
would constitute a "parachute payment" within the meaning of Code Section 280G,
net of all income taxes and the Excise Tax with respect thereto.
"Option Agreement" shall mean the agreement between the Executive and the
----------------
Company pursuant to which any Option is granted to the Executive.
"Option Plan" shall mean the 1995 Non-Qualified Stock Option Plan, as
-----------
amended from time to time, which Option Plan shall be submitted to the Company's
shareholders for approval of the next
3
<PAGE>
scheduled annual meeting of the Company's stockholders. The terms of the Option
Plan, which have been approved by the Board at a meeting held November 7, 1995,
shall be substantially similar to the terms of the Company's 1993 Key Employees
Stock Option Plan, as amended, with such modifications as the Board may
determine in its discretion; provided, however, that no such modifications shall
be materially adverse to the Executive. The Option Plan may, in the discretion
of the Compensation Committee, contain such other terms and conditions required
for the Option Plan to satisfy the requirements of Code Section 162(m) and Rule
16b-3 under the Securities Exchange Act of 1934, except that to the extent that
the transferability restrictions currently imposed by said Rule 16b-3 are
liberalized or eliminated by the Securities Exchange Commission, the
Compensation Committee may establish other reasonable transferability
restrictions on the Options, consistent with the reasonable estate planning
objectives of the Executive.
"Options" shall mean the non-qualified stock options to be granted to the
-------
Executive hereunder.
"Permanent Disability" shall mean the Executive's inability to perform the
--------------------
duties contemplated by this Agreement by reason of a physical or mental
disability or infirmity which has continued for more than 90 working days
(excluding vacation) in any twelve consecutive month period as determined by the
Disinterested Directors. The Executive agrees to submit such medical evidence
regarding such disability or infirmity as is reasonably requested by the
Disinterested Directors.
"Principals" shall mean James E. deCastro, Matthew Devine and the
----------
Executive.
"Related Parties" shall mean with respect to any Principal (a) the spouse
---------------
and lineal ascendants and descendants of such Principal, and any sibling of any
of such persons and (b) any trust, corporation, partnership or other entity, the
beneficiaries, stockholders, partners, owners or persons beneficially holding an
80% or more controlling interest of which consist of Principals and/or other
persons referred to in subsection (a) above.
4
<PAGE>
"Terminal Month" shall mean the last complete calendar month ending
--------------
coincident with or prior to the Termination of Employment.
"Termination of Employment" shall mean the first to occur of the following
-------------------------
events:
(a) the date of death of the Executive;
(b) the effective date specified in the Company's written notice to the
Executive of the termination of his employment as a result of his Permanent
Disability, which effective date shall not be earlier than the 91st working day
(excluding vacation) following the commencement of the Executive's inability to
perform his duties hereunder;
(c) the date on which the Company gives the Executive written notice of the
Company's termination of his employment as a Termination without Cause;
(d) the date on which the Company gives the Executive written notice of the
Company's termination of his employment for Cause;
(e) the date of the consummation of a Change in Control following the
Executive's election to terminate his employment hereunder in accordance with
Section 6; and
(f) December 31, 2000.
"Termination without Cause" shall mean a termination by the Company of the
-------------------------
Executive's employment without Cause and other than during the period commencing
on the date that is 60 days prior to the date of the first public announcement
by the Company of the potential consummation of an event constituting a Change
in Control hereunder and ending on the date such Change in Control is
consummated or the Board earlier abandons its intention to consummate such
Change in Control.
2. Employment
----------
The Company agrees to continue the employment of the Executive, and the
Executive agrees to continue to provide services to the Company from the date of
this Agreement until the close of business on December 31, 2000, unless the
Executive's employment is earlier terminated pursuant to a Termination of
Employment. The Executive will serve the Company subject to the general
5
<PAGE>
supervision, advice and direction of the Disinterested Directors and upon the
terms and conditions set forth in this Agreement.
3. Duties
------
(a) During the Employment Term, and while serving as Chief Executive
Officer of the Company, the Executive shall have such authority and duties as
are customary in such position, and shall perform such other services and duties
as the Disinterested Directors may from time to time designate consistent with
such position.
(b) The Executive shall report solely to the Board. All senior officers of
the Company shall report, directly or indirectly through other senior officers,
to the Executive, and the Executive shall be responsible for reviewing the
performance of the other senior officers of the Company, and shall from time to
time advise the Board of his recommendations for any adjustments to the salaries
of and bonus payments to such officers. The Executive shall be responsible for,
and, subject to discussion with and ratification by the Board, have the
authority to enter into, employment contracts on behalf of the Company with
other executives of the Company.
(c) The Executive shall devote his full business time and best efforts to
the business affairs of the Company; however, the Executive may devote
reasonable time and attention to:
(i) serving as a director of, or member of a committee of the
directors of, any not-for-profit organization or engaging in other
charitable or community activities; and
(ii) serving as a director of, or member of a committee of the
directors of, the corporations or organizations for which the Executive
presently serves in such capacity, and such other corporations and
organizations that the Disinterested Directors may from time to time
approve in the future,
provided, that except as specified above, the Executive may not accept
employment with any other individual or other entity, or engage in any other
venture which is indirectly or directly in conflict or competition with the then
existing business of the Company.
6
<PAGE>
4. Compensation and Benefits
-------------------------
(a) Base Compensation. During the Employment Term, the Company shall pay
-----------------
the Executive, in installments according to the Company's regular payroll
practice, Base Salary at the annual rate of $750,000 for the first Contract
Year; $800,000 for the second Contract Year; $850,000 for the third Contract
Year; $900,000 for the fourth Contract Year and $950,000 for the fifth Contract
Year.
(b) Annual Incentive Bonus. The Executive shall be entitled the Annual
----------------------
Bonus for each Contract Year ending during the Employment Term for which Annual
Broadcast Cash Flow equals or exceeds the Broadcast Cash Flow Target. The
amount of Annual Bonus payable for a Contract Year shall be equal to seven and
one-half percent (7.5%) of the excess, if any, of Annual Broadcast Cash Flow for
such Contract Year over the Broadcast Cash Flow Target for such Contract Year.
The Executive's Annual Bonus earned with respect to each Contract Year shall be
paid at the same time as annual incentive bonuses with respect to that Contract
Year are paid to other senior executives of the Company generally.
(c) Stock Options.
-------------
(i) So long as the Executive remains employed hereunder (and in the
limited circumstances following a Termination of Employment as provided
below) and subject to the prior approval of the Compensation Committee, (A)
as of the date hereof, the Executive shall be granted an Option to purchase
100,0000 shares of Common Stock, and (B) on each subsequent December 31
through and including December 31, 2000 the Executive shall be granted an
Option to purchase 25,000 shares of Common Stock. In the event of a
Termination without Cause, the Executive shall be granted the Options to
which the Executive would be entitled, on the same schedule and subject to
the same terms and conditions, as if his Termination of Employment occurred
on December 31, 2000, and if the Termination of Employment is by reason of
Executive's election (or constructive election) pursuant to Section
7
<PAGE>
6, the Executive shall be granted on the date of such Termination of
Employment, effective as of the date written notice of the Executive's
election to termination his employment hereunder is received (or
constructively received) by the Company, all Options to which the Executive
would have been entitled if his Termination of Employment occurred after
December 31, 2000.
(ii) All Options shall be granted subject to the following terms and
conditions: (A) the Options shall be granted under and subject to the
Option Plan; (B) the exercise price of the Options shall be the last
reported sale price of the Common Stock on the Nasdaq National Market (or
other principal trading market for the Common Stock) at the close of the
trading day immediately preceding the date as of which the grant is made,
except that with respect to the accelerated grant of Options in connection
with the Executive's election (or constructive election) to terminate
employment pursuant to Section 6, the exercise price of Options granted on
the date of consummation of such Change in Control shall be the average of
the last reported sale price for the Common Stock on the Nasdaq National
Market (or other principal trading market for the Common Stock) for the 20
trading days preceding the first public announcement by the Company of the
potential consummation of an event constituting a Change in Control; (C)
each Option shall be vested on the date of grant; (D) each Option shall be
exercisable during the period commencing on January 1, 2001 and ending on
December 31, 2005, unless exercisability is accelerated by the Compensation
Committee in connection with a Change in Control as specified in
subparagraph (iii) below; and (E) each Option shall be evidenced by, and
subject to an Option Agreement.
(iii) The Option Agreements shall specify that (A) in the event of a
Termination of Employment by reason of the Executive's death, Permanent
Disability, Termination with Cause, or Termination without Cause, the
Options shall remain exercisable, but not beyond December 31, 2005, and (B)
in the event of a Change in Control (whether or not occurring at
8
<PAGE>
a time when the Executive is employed hereunder), the Compensation
Committee shall have the discretion to determine the exercisability of
Options on an equitable basis, consistent with the terms of the Option Plan
and consistent with the treatment of other options granted under the Option
Plan.
(iv) Options may be granted prior to, but subject to, shareholder
approval of the Option Plan; provided, however, that such Options shall not
be exercisable prior to the time when the Option Plan is approved by the
shareholders; provided, further, that if such approval has not been
obtained by the end of the 12-month period following adoption by the Board,
all Options previously granted under the Option Plan shall thereupon be
cancelled.
(d) Vacation. During each calendar year of the Employment Term, the
--------
Executive shall be entitled to no fewer than four weeks of paid vacation
(unless, based on his length of service with the Company and his position with
the Company, the Executive is entitled to a greater number of weeks of paid
vacation under the Company's generally applicable vacation policy, as determined
by the Compensation Committee).
(e) Employee Benefit Plans. During the Employment Term, the Executive
----------------------
shall be entitled to participate in all pension, profit sharing and other
retirement plans, all incentive compensation plans and all group health,
hospitalization and disability insurance plans and other employee welfare
benefit plans in which other senior executives of the Company may participate on
terms and conditions no less favorable than those which apply to such other
senior executives of the Company.
(f) Company Payment of Health Benefit Coverage. During the Employment
------------------------------------------
Term, the Company shall pay the amount of premiums or other cost incurred for
coverage of the Executive and his eligible spouse and dependent family members
under the applicable Company health benefits arrangement (consistent with the
terms of such arrangement).
9
<PAGE>
(g) Life Insurance Policy. In addition to the insurance coverage
---------------------
contemplated by Section 4(e), during the Employment Term the Company shall
maintain in effect term life insurance coverage for the Executive with a death
benefit of at least $500,000, subject to the Executive's insurability at
standard rates and with the beneficiary or beneficiaries thereof designated by
the Executive. Notwithstanding Section 10 of this Agreement, such life insurance
policy or policies may be assigned to a trust for the benefit of any beneficiary
designated by the Executive.
(h) Automobile and Parking Allowance; Other Benefits.
------------------------------------------------
(i) During the Employment Term, the Company shall either provide the
Executive with, or pay or reimburse the Executive for (A) his purchase or
lease of an automobile of the size and class of the Executive's current
Company-provided automobile; and (B) parking space at the Company's
corporate office maintained in Irving, Texas.
(ii) During the Employment Term, the Company shall provide the
Executive with, or pay or reimburse the Executive for, the cost incurred
for membership of the Executive and his spouse and dependent family members
in the athletic club of Executive's choosing and in the country club of
Executive's choosing.
(i) Additional Bonus. As of the date hereof, in consideration of
----------------
extraordinary services to the Company in connection with its acquisition program
and otherwise, the Company shall pay the Executive an additional bonus in the
amount of $1,000,000.
(j) Loan. As soon as practicable following the date hereof, pursuant to
----
the Executive's Note, containing customary terms and conditions, the Company
shall lend the Executive, without security, the amount of $3,500,000, at a rate
of interest per annum equal to the applicable Federal long-term rate then in
effect under Code Section 1274(d)(1)(A), for a term of ten years, fully
prepayable in whole or part at any time without penalty, and with equal
principal repayments
required on the last day of each of the sixth through tenth years inclusive but
no such payments required prior thereto.
10
<PAGE>
5. Reimbursement of Expenses
-------------------------
In addition to the compensation provided for under Section 4 hereof, upon
submission of proper vouchers, the Company will pay or reimburse the Executive
for all normal and reasonable travel and entertainment expenses incurred by the
Executive during the Employment Term in connection with the Executive's
responsibilities to the Company.
6. Executive's Election to Terminate Employment in the Event of a Change in
------------------------------------------------------------------------
Control
- -------
(a) Following the Executive's receipt of a Change in Control Notice, the
Executive may elect to terminate his employment hereunder by delivering written
notice of such election to the Board on or before the fifth business day
preceding the scheduled consummation of the Change in Control; provided that
such termination shall not be effective, and the Executive shall not be entitled
to any payments or benefits hereunder in respect thereof, unless and until such
Change in Control is consummated.
(b) Any termination by the Company of the Executive's employment without
Cause and other than upon the Executive's death or Permanent Disability during
the period commencing on the date that is 60 days prior to the date of the first
public announcement by the Company of the potential consummation of an event
constituting a Change in Control hereunder and ending on the date such Change in
Control is consummated or the Board earlier abandons its intention to consummate
such Change in Control shall constitute a constructive election by the Executive
to terminate employment pursuant to subsection (a) above as if the Executive's
written election to the Board were delivered on the date the Company terminates
the Executive's employment.
7. Termination Benefits
--------------------
(a) Upon the termination of the Executive's employment with the Company for
any reason, the Company shall provide the Executive (or, in the case of his
death, his estate or other legal representative), any Annual Bonus earned but
not yet paid with respect to the preceding Contract Year, all benefits due him
under the Company's benefits plans and policies for his services rendered
11
<PAGE>
to the Company prior to the date of such termination (according to the terms of
such plans and policies), and, not later than 90 days after such termination, in
a lump sum, all Base Salary earned through the date of such termination. The
Executive shall be entitled to the payments and benefits described below only as
each is applicable to such termination of employment.
(b) In the event of a Termination of Employment by reason of the
Executive's death or Permanent Disability, and in addition to any other benefits
payable under the Company's benefit plans or policies, the Company shall pay to
the Executive (or to his estate or other legal representative in the event of
his death), (i) the Base Salary at the rate in effect at the date of the
Executive's termination of employment, in installments, for a period of one year
following the date of the Executive's termination of employment, and (ii) in a
lump sum within 90 days following the date of Termination of the Employment, the
Annual Bonus, if any, that would be payable hereunder on the basis of a Contract
Year commencing January 1 of the year of Termination of Employment and ending on
the last day of the Terminal Month in the year of Termination of Employment.
For the sole purpose of calculating the Annual Bonus, if any, payable pursuant
to clause (ii) of the preceding sentence, the Broadcast Cash Flow Target for the
Contract Year in which such Termination of Employment occurs shall be calculated
on the basis of an assumed Contract Year that commenced on January 1 of the year
prior to the year of Termination of Employment and ended on the last day of the
Terminal Month in such year, on the basis of the stations owned by the Company
as of the last day of the Terminal Month in the year of Termination of
Employment.
(c) In the event of a Termination without Cause, the Company shall pay to
the Executive (i) in installments through December 31, 2000, the Base Salary to
which the Executive would be entitled if his Termination of Employment were to
occur on such date and (ii) in a lump sum within 90 days following the
Termination of Employment, the Annual Bonus, if any, that would be payable
hereunder on the basis of a Contract Year commencing January 1 of the year of
Termination of Employment and ending on the last day of the Terminal Month in
the year of Termination of
12
<PAGE>
Employment. For the sole purpose of calculating the Annual Bonus, if any,
payable pursuant to clause (ii) of the preceding sentence, the Broadcast Cash
Flow Target for the Contract Year in which such Termination of Employment occurs
shall be calculated on the basis of an assumed Contract Year that commenced on
January 1 of the year prior to the year of Termination of Employment and ended
on the last day of the Terminal Month in such year, on the basis of the stations
owned by the Company as of the last day of the Terminal Month in the year of
Termination of Employment.
(d) In the event of the Executive's election to terminate employment in
accordance with Section 6, the Company shall pay to the Executive in a lump sum
concurrently with the consummation of the Change in Control, the total of (i)
the amount of Base Salary to which the Executive would be entitled if his
Termination of Employment were to occur on December 31, 2000 and (ii) the
aggregate amount of Annual Bonuses to which the Executive would be entitled if
his Termination of Employment were to occur on December 31, 2000 and if the
Annual Bonus for each Contract Year ending concurrently with or after the last
day of the Terminal Month were equal to the greater of (A) the amount of Annual
Bonus payable in respect of the most recently Contract Year ending prior to the
Termination of Employment or (B) the average of the amount of Annual Bonuses
payable in respect of all Contract Years ending prior to the Termination of
Employment (if no Contract Year is completed prior to the Termination of
Employment such average shall be deemed to be equal to $180,000).
(e) (i) Notwithstanding any other provision of this Agreement, if any
payment or benefit from the Company would be subject to the Excise Tax,
the Executive shall (or if he does not, the Company shall) designate which
payments or benefits or portion thereof shall be reduced to the extent
necessary so that no portion thereof shall be subject to Code Section 4999;
but only if, by reason of such reduction, the Net After Tax Benefit with
respect to the Change in Control is greater than the Net After Tax Benefit
that would exist with respect to the Change in Control if the reduction
were not made, all as determined by an accounting
13
<PAGE>
firm selected by the Company subject to the approval of the Executive (such
approval not to be withheld unreasonably).
(ii) The Company shall comply with the designations pursuant to
paragraph (i).
(f) In the event of any Termination of Employment, the Executive shall not
be required to seek other employment to mitigate damages, and any income earned
by the Executive from other employment or self-employment shall not be offset
against any obligations of the Company to the Executive under this Agreement.
8. Protected Information; Prohibited Solicitation
----------------------------------------------
(a) The Executive hereby recognizes and acknowledges that during the course
of his employment by the Company, the Company will furnish, disclose or make
available to the Executive confidential or proprietary information related to
the Company's business, including, without limitation, customer lists, ideas and
formatting and programming concepts and plans, that such confidential or
proprietary information has been developed and will be developed through the
Company's expenditure of substantial time and money, and that all such
confidential information could be used by the Executive and others to compete
with the Company. The Executive hereby agrees that all such confidential or
proprietary information shall constitute trade secrets, and further agrees to
use such confidential or proprietary information only for the purpose of
carrying out his duties with the Company and not to disclose such information
unless required to do so by subpoena or other legal process. No information
otherwise in the public domain (other than by an act of Executive in violation
hereof) shall be considered confidential. The Executive agrees that all
memoranda, notices, files, records and other documents concerning the business
of the Company, made or compiled by the Executive during the period of his
employment or made available to him, shall be the Company's property and shall
be delivered to the Company upon its request therefor and in any event upon the
termination of the Executive's employment with the Company, provided,
14
<PAGE>
however, that the Executive shall be permitted to retain copies of personal
correspondence generated or received by him during the Employment Term, subject
to the use restrictions of this Section 8(a).
(b) The Executive hereby agrees, in consideration of his employment
hereunder and in view of the confidential position to be held by the Executive
hereunder, that after any Termination of Employment other than pursuant to
Section 6, and through December 31, 2000 the Executive will not directly or
indirectly
(i) be employed by or perform activities on behalf of, or have an
ownership interest in, any radio broadcasting station serving the same
"Area of Dominant Influence" (as reported by Arbitron) as any of the radio
broadcasting stations owned by the Company or its subsidiaries at the
effective time of such Termination of Employment (other than beneficial
ownership of up to 1% of the outstanding voting stock of a publicly traded
company that owns such a competitor); or
(ii) induce any employee of the Company or its subsidiaries to
terminate such employment or to become employed by any other radio
broadcasting station.
(c) The Executive hereby agrees, in consideration of his employment
hereunder and in view of the confidential position to be held by the Executive
hereunder, that through the first anniversary of the date of his Termination of
Employment pursuant to Section 6, the Executive will not directly or indirectly
(i) be employed by or perform activities on behalf or have an
ownership interest in any radio broadcasting station serving the same Area
of Dominant Influence as any of the radio broadcasting stations owned by
the Company or its subsidiaries immediately following the consummation of
the Change in Control (other than beneficial ownership of up to 1% of the
outstanding voting stock of a publicly traded company that owns such a
competitor); or
(ii) induce any employee of the Company or its subsidiaries to
terminate such employment or to become employed by any other radio
broadcasting station.
15
<PAGE>
(d) The restrictions in this Section 8 shall survive the termination of
this Agreement and shall be in addition to any restrictions imposed upon the
Executive by statute or at common law.
(e) The parties hereby acknowledge that the restrictions in this Section 8
have been specifically negotiated and agreed to by the parties hereto and are
limited only to those restrictions necessary to protect the Company from unfair
competition. The parties hereby agree that if the scope or enforceability of
any provision, paragraph or subparagraph of this Section 8 is in any way
disputed at any time, and should a court find that such restrictions are overly
broad, the court may modify and enforce the covenant to the extent that it
believes to be reasonable under the circumstances. Each provision, paragraph
and subparagraph of this Section 8 is separable from every other provision,
paragraph, and subparagraph and constitutes a separate and distinct covenant.
9. Injunctive Relief
-----------------
The Executive hereby expressly acknowledges that any breach or threatened
breach by the Executive of any of the terms set forth in Section 8 of this
Agreement may result in significant and continuing injury to the Company, the
monetary value of which would be impossible to establish. Therefore, the
Executive agrees that the Company shall be entitled to apply for injunctive
relief in a court of appropriate jurisdiction. The provisions of this Section 9
shall survive the Employment Term.
10. Parties Benefited; Assignments
------------------------------
This Agreement shall be binding upon the Executive, his heirs and his
personal representative or representatives, and upon the Company and its
successors and assigns. Neither this Agreement nor any rights or obligations
hereunder may be assigned by the Executive, other than by will or by the laws of
descent and distribution.
11. Notices
-------
Any notice required or permitted by this Agreement shall be in writing,
sent by registered or certified mail, return receipt requested, addressed to the
Board and the Company at its then principal office, or to the Executive at the
address set forth in the preamble, as the case may be, or to such
16
<PAGE>
other address or addresses as any party hereto may from time to time specify in
writing for the purpose in a notice given to the other parties in compliance
with this Section 11. Notices shall be deemed given when received.
12. Governing Law
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF
LAW PRINCIPLES.
13. Indemnification and Insurance; Legal Expenses
---------------------------------------------
The Company shall indemnify the Executive to the fullest extent permitted
by the laws of the State of Delaware, as in effect at the time of the subject
act or omission, and shall advance to the Executive reasonable attorney's fees
and expenses as such fees and expenses are incurred (subject to an undertaking
from the Executive to repay such advances if it shall be finally determined by a
judicial decision which is not subject to further appeal that the Executive was
not entitled to the reimbursement of such fees and expenses) and he will be
entitled to the protection of any insurance policies the Company may elect to
maintain generally for the benefit of its directors and officers (Directors and
Officers Insurance) against all costs, charges and expenses incurred or
sustained by him in connection with any action, suit or proceeding to which he
may be made a party by reason of his being or having been a director, officer or
employee of the Company or any of its subsidiaries or his serving or having
served any other enterprise as a director, officer or employee at the request of
the Company (other than any dispute, claim or controversy arising under or
relating to this Agreement). The Company covenants to maintain during the
Employment Term for the benefit of the Executive (in his capacity as an officer
and director of the Company) Directors and Officers Insurance providing benefits
to the Executive no less favorable, taken as a whole, than the benefits provided
to the Executive by the Directors and Offices Insurance maintained by the
Company on the date hereof; provided, however, that the Disinterested Directors
of the Company may elect to terminate Directors
17
<PAGE>
and Officers Insurance for all officers and directors, including the Executive,
if a majority of the Disinterested Directors determines in good faith that such
insurance is not available or is available only at unreasonable expense.
14. Representations and Warranties of Executive
-------------------------------------------
Executive represents and warrants to Company that (a) Executive is under no
contractual or other restriction which is inconsistent with the execution of
this Agreement, the performance of his duties hereunder or the other rights of
Company hereunder, and (b) Executive is under no physical or mental disability
that would hinder the performance of his duties under this Agreement.
15. Disputes
--------
Any dispute or controversy arising under, out of, in connection with or in
relation to this Agreement shall, at the election and upon written demand of
either the Executive or the Company, be finally determined and settled by
arbitration in the city of the Company's headquarters in accordance with the
rules and procedures of the American Arbitration Association, and judgment upon
the award may be entered in any court having jurisdiction thereof.
16. Miscellaneous
-------------
The provisions of this Agreement shall survive the termination of the
Executive's employment with the Company. This Agreement contains the entire
agreement of the parties relating to the subject matter hereof. This Agreement
supersedes any prior written or oral agreements or understandings between the
parties relating to the subject matter hereof. No modification or amendment of
this Agreement shall be valid unless in writing and signed by or on behalf of
the parties hereto. A waiver of the breach of any term or condition of this
Agreement shall not be deemed to constitute a waiver of any subsequent breach of
the same or any other term or condition. This Agreement is intended to be
performed in accordance with, and only to the extent permitted by, all
applicable laws, ordinances, rules and regulations. If any provision of this
Agreement, or the application thereof to any person or circumstance, shall, for
any reason and to any extent, be held
18
<PAGE>
invalid or unenforceable, such invalidity and unenforceability shall not affect
the remaining provisions hereof and the application of such provisions to other
persons or circumstances, all of which shall be enforced to the greatest extent
permitted by law. The compensation provided to the Executive pursuant to this
Agreement shall be subject to any withholdings and deductions required by any
applicable tax laws. Any amounts payable under this Agreement to the Executive
after the death of the Executive shall be paid to the Executive's estate or
legal representative. The headings in this Agreement are inserted for
convenience of reference only and shall not be a part of or control or affect
the meaning of any provision hereof.
[signature page follows]
19
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first written above.
Evergreen Media Corporation
By
---------------------------
Title:
-----------------------------
Scott K. Ginsburg
20
<PAGE>
EXHIBIT 10.28
1995
STOCK OPTION PLAN
FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES
OF
EVERGREEN MEDIA CORPORATION
Evergreen Media Corporation, a corporation organized under the laws of
the State of Delaware, hereby adopts this 1995 Stock Option Plan for Executive
Officers and Key Employees of Evergreen Media Corporation. The purposes of this
Plan are as follows:
(1) To further the growth, development and financial success of the
Company by providing additional incentives to certain of its executive officers
and other key Employees who have been or will be given responsibility for the
management or administration of the Company's business affairs, by assisting
them to become owners of the Company's Class A Common Stock and thus to benefit
directly from its growth, development and financial success.
(2) To enable the Company to obtain and retain the services of the
type of professional, technical and managerial employees considered essential to
the long-range success of the Company by providing and offering them an
opportunity to become owners of the Company's Class A Common Stock under
options, including options that are intended to qualify as "incentive stock
options" under Section 422 of the Code.
ARTICLE I
DEFINITIONS
-----------
Whenever the following terms are used in this Plan, they shall have
the meaning specified below unless the context clearly indicates to the
contrary. The masculine pronoun shall include the feminine and neuter and the
singular shall include the plural, where the context so indicates.
Section 1.1 - Board
- ----------- -----
"Board" shall mean the Board of Directors of the Company.
Section 1.2 - Code
- ----------- ----
"Code" shall mean the Internal Revenue Code of 1986, as amended.
<PAGE>
Section 1.3 - Committee
- ------------ ---------
"Committee" shall mean the Stock Option Committee of the Board,
appointed as provided in Section 6.1.
Section 1.4 - Company
- ----------- -------
"Company" shall mean Evergreen Media Corporation, a Delaware
corporation. In addition, "Company" shall mean any corporation assuming, or
issuing new employee stock options in substitution for, Incentive Stock Options,
outstanding under the Plan, in a transaction to which Section 424(a) of the Code
applies.
Section 1.5 - Director
- ----------- --------
"Director" shall mean a member of the Board.
Section 1.6 - Employee
- ------------ --------
"Employee" shall mean any employee (as defined in accordance with the
regulations and revenue rulings then applicable under Section 3401(c) of the
Code) of the Company, or of any corporation which is then a Parent Corporation
or a Subsidiary, whether such employee is so employed at the time this Plan is
adopted or becomes so employed subsequent to the adoption of this Plan.
Section 1.7 - Exchange Act
- ----------- ------------
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
Section 1.8 - Incentive Stock Option
- ----------- ----------------------
"Incentive Stock Option" shall mean an Option which qualifies under
Section 422 of the Code and which is designated as an Incentive Stock Option by
the Committee.
Section 1.9 - Non-Qualified Option
- ----------- --------------------
"Non-Qualified Option" shall mean an Option which is not an Incentive
Stock Option and which is designated as a Non-Qualified Option by the Committee.
Section 1.10 - Officer
- ------------ -------
"Officer" shall mean an officer of the Company, as defined in Rule
16a-1(f) under the Exchange Act, as such Rule may be amended in the future.
2
<PAGE>
Section 1.11 - Option
- ------------ ------
"Option" shall mean an option to purchase Class A Common Stock of the
Company, granted under the Plan. "Options" includes both Incentive Stock
Options and Non-Qualified Options.
Section 1.12 - Optionee
- ------------ --------
"Optionee" shall mean an Employee to whom an Option is granted under
the Plan.
Section 1.13 - Parent Corporation
- ------------ ------------------
"Parent Corporation" shall mean any corporation in an unbroken chain
of corporations ending with the Company if each of the corporations other than
the Company then owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.
Section 1.14 - Plan
- ------------ ----
"Plan" shall mean this Stock Option Plan for Executive Officers and
Key Employees of the Company.
Section 1.15 - Rule 16b-3
- ------------ ----------
"Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange
Act, as such Rule may be amended in the future.
Section 1.16 - Secretary
- ------------ ---------
"Secretary" shall mean the Secretary of the Company.
Section 1.17 - Securities Act
- ------------ --------------
"Securities Act" shall mean the Securities Act of 1933, as amended.
Section 1.18 - Subsidiary
- ------------ ----------
"Subsidiary" shall mean any corporation in an unbroken chain of
corporations beginning with the Company if each of the corporations other than
the last corporation in the unbroken chain then owns stock possessing 50% or
more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.
Section 1.19 - Termination of Employment
- ------------ -------------------------
"Termination of Employment" shall mean the time when the employee-
employer relationship between the Optionee and the Company, a Parent Corporation
or a
3
<PAGE>
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death or
retirement but excluding terminations where there is a simultaneous reemployment
by the Company, a Parent Corporation or a Subsidiary. The Committee, in its
absolute discretion, shall determine the effect of all other matters and
questions relating to Termination of Employment, including, but not by way of
limitation, the question of whether a Termination of Employment resulted from a
discharge for good cause, and all questions of whether particular leaves of
absence constitute Terminations of Employment; provided, however, that, with
respect to Incentive Stock Options, a leave of absence shall constitute a
Termination of Employment if, and to the extent that, such leave of absence
interrupts employment for the Purposes of Section 422(a)(2) of the Code and the
then applicable regulations and revenue rulings under said Section.
ARTICLE II
SHARES SUBJECT TO PLAN
----------------------
Section 2.1 - Shares Subject to Plan
- ----------- ----------------------
The shares of stock subject to Options shall be shares of the
Company's $0.01 par value Class A Common Stock. The aggregate number of such
shares which may be issued upon exercise of Options shall not exceed 1,500,000.
Section 2.2 - Unexercised Options
- ----------- -------------------
If any Option expires or is cancelled without having been fully
exercised, the number of shares subject to such Option but as to which such
Option was not exercised prior to its expiration or cancellation may again be
optioned hereunder, subject to the limitations of Section 2.l.
Section 2.3 - Changes in Company's Shares
- ----------- ---------------------------
In the event that the outstanding shares of Class A Common Stock of
the Company are hereafter changed into or exchanged for a different number or
kind of shares or other securities of the Company, or of another corporation, by
reason of reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend or combination of shares,
appropriate adjustments shall be made by the Committee in the number and kind of
shares for the purchase of which Options may be granted, including adjustments
of the limitations in Section 2.1 on the maximum number and kind of shares which
may be issued on exercise of Options.
4
<PAGE>
ARTICLE III
GRANTING OF OPTIONS
-------------------
Section 3.1 - Eligibility
- ----------- -----------
Any executive officer or other key Employee of the Company or of any
corporation which is then a Parent Corporation or a Subsidiary shall be eligible
to be granted Options, except as provided in Section 3.2 and subject to the
limitations set forth in Section 3.3.
Section 3.2 - Qualification of Incentive Stock Options
- ----------- ----------------------------------------
No Incentive Stock Option shall be granted unless such Option, when
granted, qualifies as an "incentive stock option" under Section 422 of the Code.
Section 3.3 - Granting of Options
- ----------- -------------------
(a) The Committee shall from time to time, in its absolute
discretion:
(i) Determine which Employees are executive officers or
other key Employees and select from among the executive officers
or other key Employees (including those to whom Options have been
previously granted under the Plan) such of them as in its opinion
should be granted Options; and
(ii) Determine the number of shares to be subject to such
Options granted to such selected executive officers or other key
Employees, and determine whether such Options are to be Incentive
Stock Options or Non-Qualified Options; and
(iii) Determine the terms and conditions of such Options,
consistent with the Plan.
(b) Upon the selection of an executive officer or other
key Employee to be granted an Option, the Committee shall instruct the Secretary
to issue such Option and may impose such conditions on the grant of such Option
as it deems appropriate. Without limiting the generality of the preceding
sentence, the Committee may, in its discretion and on such terms as it deems
appropriate, require as a condition on the grant of an Option to an Employee
that the Employee surrender for cancellation some or all of the unexercised
Options which have been previously granted to him. An Option the grant of which
is conditioned upon such surrender may have an option price lower (or higher)
than the option price of the surrendered Option, may cover the same (or a lesser
or greater) number of shares as the surrendered Option, may contain such other
terms as the Committee deems appropriate and shall be exercisable in accordance
with its terms, without regard to
5
<PAGE>
the number of shares, price, option period or any other term or condition of the
surrendered Option.
(c) Notwithstanding any other provision of this Section
3.3, the number of shares to be subject to Options granted to any single
executive officer or other key Employee under the Plan shall not exceed 300,000
shares in any given calendar year.
ARTICLE IV
TERMS OF OPTIONS
----------------
Section 4.1 - Option Agreement
- ----------- ----------------
Each Option shall be evidenced by a written Stock Option Agreement,
which shall be executed by the Optionee and an authorized Officer of the Company
and which shall contain such terms and conditions as the Committee shall
determine, consistent with the Plan. Stock Option Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to qualify such Options as "incentive stock options" under Section 422
of the Code.
Section 4.2 - Option Price
- ----------- ------------
(a) The price of the shares subject to each Option shall be set by the
Committee; provided, however, that (i) unless the Committee shall specifically
determine otherwise in its absolute discretion, the price per share shall not be
less than 100% of the fair market value of such shares on the date such Option
is granted and (ii) in the case of an Incentive Stock Option which is granted to
an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company, any Subsidiary or any Parent Corporation, the price per share shall be
not less than 110% of the fair market value of such shares on the date such
Option is granted.
(b) For purposes of the Plan, the fair market value of a share of the
Company's Class A Common Stock as of a given date shall be: (i) the closing
price of a share of the Company's Class A Common Stock on the principal exchange
on which shares of the Company's Class A Common Stock are then trading, if any,
on the day previous to such date, or, if shares were not traded on the day
previous to such date, then on the next preceding trading day during which a
sale occurred; or (ii) if such Class A Common Stock is not traded on an exchange
but is quoted on Nasdaq or a successor quotation system, (1) the last sales
price (if the Company's Class A Common Stock is then listed as a National Market
Issue under the Nasdaq National Market System) or (2) the mean between the
closing representative bid and asked prices (in all other cases) for the
Company's Class A Common Stock on the day previous to such date as reported by
Nasdaq or such successor quotation system; or (iii) if such Class A Common Stock
is not publicly traded on an exchange and not quoted on Nasdaq or a successor
quotation system, the mean between the closing bid and asked prices for the
Company's Class A Common Stock, on the day previous to such date, as
6
<PAGE>
determined in good faith by the Committee; or (iv) if the Company's Class A
Common Stock is not publicly traded, the fair market value established by the
Committee acting in good faith; or (v) for Options granted in connection with a
change in control of the Company pursuant to an employment agreement providing
therefor, the average of the last sales price for the Company's Class A Common
Stock on the Nasdaq National Market (or other principal trading market for the
Class A Common Stock) for the 20 trading days preceding the first public
announcement by the Company of the potential consummation of an event
constituting a change in control as defined in such employment agreement.
Section 4.3 - Commencement of Exercisability
- ----------- ------------------------------
(a) Except as the Committee may otherwise provide with respect to
Options granted to Employees who are not Officers, no Option may be exercised in
whole or in part during the six months after such Option is granted.
(b) Subject to the provisions of Sections 4.3(a), 4.3(c) and 7.3,
Options shall become exercisable at such times and in such installments (which
may be cumulative) as the, Committee shall provide in the terms of each
individual Option; provided, however, that by a resolution adopted after an
Option is granted the Committee may, on such terms and conditions as it may
determine to be appropriate and subject to Sections 4.3(a), 4.3(c) and 7.3,
accelerate the time at which such Option or any portion thereof may be
exercised.
(c) No portion of an Option which is unexercisable at Termination of
Employment shall thereafter become exercisable.
(d) To the extent that the aggregate fair market value of stock with
respect to which "incentive stock options" (within the meaning of Section 422 of
the Code, but without regard to Section 422(d) of the Code) are exercisable for
the first time by an Optionee during any calendar year (under the Plan and all
other incentive stock option plans of the Company, any Subsidiary and any Parent
Corporation) exceeds $100,000, such options shall be taxed as Non-Qualified
Options. The rule set forth in the preceding sentence shall be applied by
taking options into account in the order in which they were granted. For
purposes of this Section 4.3(d), the fair market value of stock shall be
determined as of the time the option with respect to such stock is granted.
Section 4.4 - Expiration of Options
- ----------- ---------------------
(a) No Option may be exercised to any extent by anyone after the
first to occur of the following events:
(i) The expiration of ten years from the date the Option was
granted;
(ii) With respect to an Incentive Stock Option, in the case
of an Optionee owning (within the meaning of Section 424(d) of the
Code), at the time the Incentive Stock Option was granted, more than
10% of the total
7
<PAGE>
combined voting power of all classes of stock of the Company, any
Subsidiary or any Parent Corporation, the expiration of five years
from the date the Incentive Stock Option was granted;
(iii) With respect to an Incentive Stock Option, except in
the case of any Optionee who is disabled (within the meaning of
Section 22(e)(3) of the Code), the expiration of three months from the
date of the Optionee's Termination of Employment for any reason other
than such Optionee's death unless the Optionee dies within said three-
month period;
(iv) With respect to an Incentive Stock Option, in the case
of an Optionee who is disabled (within the meaning of Section 22(e)(3)
of the Code), the expiration of one year from the date of the
Optionee's Termination of Employment for any reason other than such
Optionee's death unless the Optionee dies within said one-year period;
or
(v) With respect to an Incentive Stock Option, the
expiration of one year from the date of the Optionee's death.
(b) Subject to the provisions of Section 4.4(a), the Committee shall
provide, in the terms of each individual Option, when such Option expires and
becomes unexercisable; and (without limiting the generality of the foregoing)
the Committee may provide in the terms of individual Options that said Options
expire immediately upon a Termination of Employment for any reason.
Section 4.5 - Consideration
- ----------- -------------
In consideration of the granting of an Option, the Optionee shall
agree, in the written Stock Option Agreement, to remain in the employ of the
Company, a Parent Corporation or a Subsidiary for a period of at least one year
after the Option is granted. Nothing in this Plan or in any Stock Option
Agreement hereunder shall confer upon any Optionee any right to continue in the
employ of the Company, any Parent Corporation or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company, its Parent
Corporations and its Subsidiaries, which are hereby expressly reserved, to
discharge any Optionee at any time for any reason whatsoever, with or without
cause.
Section 4.6 - Adjustments in Outstanding Options
- ----------- ----------------------------------
In the event that the outstanding shares of the stock subject to
Options are changed into or exchanged for a different number or kind of shares
of the Company or other securities of the Company by reason of merger,
consolidation, recapitalization, reclassification, stock split-up, stock
dividend or combination of shares, the Committee shall make an appropriate and
equitable adjustment in the number and kind of shares as to which all
outstanding Options, or portions thereof then unexercised, shall be exercisable,
to the end that after such event the Optionee's proportionate interest shall be
maintained as before the occurrence of such event. Such adjustment in an
outstanding Option shall be made without
8
<PAGE>
change in the total price applicable to the Option or the unexercised portion of
the Option (except for any change in the aggregate price resulting from
rounding-off of share quantities or prices) and with any necessary corresponding
adjustment in Option price per share; provided, however, that, in the case of
Incentive Stock Options, each such adjustment shall be made in such manner as
not to constitute a "modification" within the meaning of Section 424(h)(3) of
the Code. Any such adjustment made by the Committee shall be final and binding
upon all Optionees, the Company and all other interested persons.
Section 4.7 - Merger, Consolidation, Acquisition, Liquidation or Dissolution
- ----------- --------------------------------------------------------------
Notwithstanding the provisions of Section 4.6, in its absolute
discretion, and on such terms and conditions as it deems appropriate, the
Committee may provide by the terms of any Option that such Option cannot be
exercised after one or more of the following events: the merger or consolidation
of the Company with or into another corporation, the acquisition (through sale,
lease or other transfer) by another corporation or person (other than the
principals of the Company and their related parties) of all or substantially all
of the Company's assets, 80% or more of the Company's then outstanding voting
stock or more than 50% of the voting power of all outstanding voting stock or
the liquidation or dissolution of the Company; and if the Committee so provides,
it may, in its absolute discretion and on such terms and conditions as it deems
appropriate, also provide, either by the terms of such Option or by a resolution
adopted prior to the occurrence of such merger, consolidation, acquisition,
liquidation or dissolution, that, for some period of time prior to such event,
such Option shall be exercisable as to all shares covered thereby,
notwithstanding anything to the contrary in Section 4.3(a), Section 4.3(b)
and/or any installment provisions of such Option.
ARTICLE V
EXERCISE OF OPTIONS
-------------------
Section 5.1 - Person Eligible to Exercise
- ----------- ---------------------------
During the lifetime of the Optionee, only he may exercise an Option
(or any portion thereof) granted to him. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.
Section 5.2 - Partial Exercise
- ----------- ----------------
At any time and from time to time prior to the time when any
exercisable Option or exercisable portion thereof becomes unexercisable under
the Plan or the applicable Stock Option Agreement, such Option or portion
thereof may be exercised in whole or in part; provided, however, that the
Company shall not be required to issue fractional shares and the Committee may,
by the terms of the Option, require any partial exercise to be with respect to a
specified minimum number of shares.
9
<PAGE>
Section 5.3 - Manner of Exercise
- ----------- ------------------
An exercisable Option, or any exercisable portion thereof, may be
exercised solely by delivery to the Secretary or his office of all of the
following prior to the time when such Option or such portion becomes
unexercisable under the Plan or the applicable Stock Option Agreement:
(a) Notice in writing signed by the Optionee or other person then
entitled to exercise such Option or portion, stating that such Option or portion
is exercised, such notice complying with all applicable rules established by the
Committee; and
(b) (i) Full payment (in cash or by check) for the shares with
respect to which such Option or portion is thereby exercised;
(ii) With the consent of the Committee, (A) shares of the
Company's Class A Common Stock owned by the Optionee duly endorsed for
transfer to the Company or (B) subject to the timing requirements of
Section 5.4, shares of the Company's Class A Common Stock issuable to
the Optionee upon exercise of the Option, with a fair market value (as
determined under Section 4.2(b)) on the date of Option exercise equal
to the aggregate Option price of the shares with respect to which such
Option or portion is thereby exercised;
(iii) With the consent of the Committee, a full recourse
promissory note bearing interest (at no less than such rate as shall then
preclude the imputation of interest under the Code or any successor
provision) and payable upon such terms as may be prescribed by the
Committee. The Committee may also prescribe the form of such note and the
security to be given for such note. No Option may, however, be exercised
by delivery of a promissory note or by a loan from the Company when or
where such loan or other extension of credit is prohibited by law; or
(iv) With the consent of the Committee, any combination of
the consideration provided in the foregoing subsections (i), (ii) and
(iii); and
(c) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; with the consent of the Committee,
(i) shares of the Company's Class A Common Stock owned by the Optionee duly
endorsed for transfer or (ii) subject to the timing requirements of Section 5.4,
shares of the Company's Class A Common Stock issuable to the Optionee upon
exercise of the Option, valued in accordance with Section 4.2(b) at the date of
Option exercise, may be used to make all or part of such payment;
(d) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable
10
<PAGE>
provisions of the Securities Act and any other federal or state securities laws
or regulations. The Committee may, in its absolute discretion, also take
whatever additional actions it deems appropriate to effect such compliance
including, without limitation, placing legends on share certificates and issuing
stop-transfer orders to transfer agents and registrars; and
(e) In the event that the Option or portion thereof shall be exercised
pursuant to Section 5.1 by any person or persons other than the Optionee,
appropriate proof of the right of such person or persons to exercise the Option
or portion thereof.
Section 5.4 - Certain Timing Requirements
- ----------- ---------------------------
Shares of the Company's Class A Common Stock issuable to the Optionee
upon exercise of the Option may be used to satisfy the Option price or the tax
withholding consequences of such exercise only (i) during the period beginning
on the third business day following the date of release of the quarterly or
annual summary statement of sales and earnings of the Company and ending on the
twelfth business day following such date or (ii) pursuant to an irrevocable
written election by the Optionee to use shares of the Company's Class A Common
Stock issuable to the Optionee upon exercise of the Option to pay all or part of
the Option price or the withholding taxes (subject to the approval of the
Committee) made at least six months prior to the payment of such Option price or
withholding taxes.
Section 5.5 - Conditions to Issuance of Stock Certificates
- ----------- --------------------------------------------
The shares of stock issuable and deliverable upon the exercise of an
Option, or any portion thereof, may be either previously authorized but unissued
shares or issued shares which have then been reacquired by the Company. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on
which such class of stock is then listed;
(b) The completion of any registration or other qualification of such
shares under any state or federal law or under the rulings or regulations of the
Securities and Exchange Commission or any other governmental regulatory body,
which the Committee shall, in its absolute discretion, deem necessary or
advisable;
(c) The obtaining of any approval or other clearance from any state or
federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;
(d) The payment to the Company (or other employer corporation) of all
amounts which it is required to withhold under federal, state or local law in
connection with the exercise of the Option; and
11
<PAGE>
(e) The lapse of such reasonable period of time following the exercise
of the Option as the Committee may establish from time to time for reasons of
administrative convenience.
Section 5.6 - Rights as Shareholders
- ----------- ----------------------
The holders of Options shall not be, nor have any of the rights or
privileges of, shareholders of the Company in respect of any shares purchasable
upon the exercise of any part of an Option unless and until certificates
representing such shares have been issued by the Company to such holders.
Section 5.7 - Transfer Restrictions
- ----------- ---------------------
Unless otherwise approved in writing by the Committee, no shares
acquired upon exercise of any Option by any Officer may be sold, assigned,
pledged, encumbered or otherwise transferred until at least six months have
elapsed from (but excluding) the date that such Option was granted. The
Committee, in its absolute discretion, may impose such other restrictions on the
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such other restriction shall be set forth in the
respective Stock Option Agreement and may be referred to on the certificates
evidencing such shares. The Committee may require the Employee to give the
Company prompt notice of any disposition of shares of stock, acquired by
exercise of an Incentive Stock Option, within two years from the date of
granting such Option or one year after the transfer of such shares to such
Employee. The Committee may direct that the certificates evidencing shares
acquired by exercise of an Incentive Stock Option refer to such requirement to
give prompt notice of disposition.
ARTICLE VI
ADMINISTRATION
--------------
Section 6.1 - Stock Option Committee
- ----------- ----------------------
The Stock Option Committee shall consist of two or more Directors,
appointed by and holding office at the pleasure of the Board, each of whom is a
"disinterested person" as defined by Rule 16b-3. Appointment of Committee
members shall be effective upon acceptance of appointment, and removal of
Committee members may be effected at any time by action of the Board. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee shall be filled by the Board. At the pleasure of the
Board, the directors appointed to the Stock Option Committee may be the same
directors appointed to the Compensation Committee of the Board, in which case
the Compensation Committee shall discharge the functions of the Stock Option
Committee hereunder without there being any need for a separately constituted
Stock Option Committee. In such event, all references herein to the Stock
Option Committee or the Committee shall be deemed to be references to the
Compensation Committee.
12
<PAGE>
Section 6.2 - Duties and Powers of Committee
- ----------- ------------------------------
It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Options and to adopt such
rules for the administration interpretation and application of the Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any such
interpretations and rules in regard to Incentive Stock Options shall be
consistent with the basic purpose of the Plan to grant "incentive stock options"
within the meaning of Section 422 of the Code. The Board shall have no right to
exercise any of the rights or duties of the Committee under the Plan.
Section 6.3 - Majority Rule
- ----------- -------------
The Committee shall act by a majority of its members in office. The
Committee may act either by vote at a meeting or by a memorandum or other
written instrument signed by a majority of the Committee.
Section 6.4 - Compensation; Professional Assistance; Good Faith Actions
- ----------- ---------------------------------------------------------
Members of the Committee shall receive such compensation for their
services as members as may be determined by the Board. All expenses and
liabilities incurred by members of the Committee in connection with the
administration of the Plan shall be borne by the Company. The Committee may
employ attorneys, consultants, accountants, appraisers, brokers or other
persons. The Committee, the Company and its Officers and Directors shall be
entitled to rely upon the advice, opinions or valuations of any such persons.
All actions taken and all interpretations and determinations made by the
Committee in good faith shall be final and binding upon all Optionees, the
Company and all other interested persons. No member of the Committee shall be
personally liable for any action, determination or interpretation made in good
faith with respect to the Plan or the Options, and all members of the Committee
shall be fully protected by the Company in respect to any such action,
determination or interpretation.
ARTICLE VII
OTHER PROVISIONS
----------------
Section 7.1 - Options Not Transferable
- ----------- ------------------------
No Option or interest or right therein or part thereof shall be liable
for the debts, contracts or engagements of the Optionee or his successors in
interest or shall be subject to disposition by transfer, alienation,
anticipation, pledge, encumbrance, assignment or any other means whether such
disposition be voluntary or involuntary or by operation of law by judgment levy,
attachment, garnishment or any other legal or equitable proceedings (including
bankruptcy), and any attempted disposition thereof shall be null and void and of
no effect; provided, however, that nothing in this Section 7.1 shall prevent
transfers by will or by the applicable laws of descent and distribution.
13
<PAGE>
Section 7.2 - Amendment, Suspension or Termination of the Plan
- ----------- ------------------------------------------------
The Plan may be wholly or partially amended or otherwise modified,
suspended or terminated at any time or from time to time by the Committee.
However, without approval of the Company's shareholders given within 12 months
before or after the action by the Committee, no action of the Committee may,
except as provided in Section 2.3, increase any limit imposed in Section 2.1 on
the maximum number of shares which may be issued on exercise of Options,
materially modify the eligibility requirements of Section 3.1, reduce the
minimum Option price requirements of Section 4.2(a) or extend the limit imposed
in this Section 7.2 on the period during which Options may be granted or amend
or modify the Plan in a manner requiring shareholder approval under Rule 16b-3.
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of the Option, impair any rights or obligations under any
Option theretofore granted. No Option may be granted during any period of
suspension nor after termination of the Plan, and in no event may any Option be
granted under this Plan after the first to occur of the following events:
(a) The expiration of ten years from the date the Plan is adopted
by the Board; or
(b) The expiration of ten years from the date the Plan is
approved by the Company's shareholders under Section 7.3.
Section 7.3 - Approval of Plan by Shareholders
- ----------- --------------------------------
This Plan will be submitted for the approval of the Company's
shareholders within 12 months after the date of the Board's initial adoption of
the Plan. Options may be granted prior to such shareholder approval; provided,
however, that such Options shall not be exercisable prior to the time when the
Plan is approved by the shareholders; provided, further, that if such approval
has not been obtained at the end of said 12-month period, all Options previously
granted under the Plan shall thereupon be cancelled and become null and void.
The Company shall take such actions with respect to the Plan as may be necessary
to satisfy the requirements of Rule 16b-3(b).
Section 7.4 - Effect of Plan Upon Other Option and Compensation Plans
- ----------- -------------------------------------------------------
The adoption of this Plan shall not affect any other compensation or
incentive plans in effect for the Company, any Parent Corporation or any
Subsidiary. Nothing in this Plan shall be construed to limit the right of the
Company, any Parent Corporation or any Subsidiary (a) to establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary or (b) to grant or assume options otherwise than
under this Plan in connection with any proper corporate purpose, including, but
not by way of limitation, the grant or assumption of options in connection with
the acquisition by purchase, lease, merger, consolidation or otherwise, of the
business, stock or assets of any corporation, firm or association.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 3/31/96 FORM
10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,216
<SECURITIES> 0
<RECEIVABLES> 52,270
<ALLOWANCES> 2,570
<INVENTORY> 0
<CURRENT-ASSETS> 60,620
<PP&E> 66,522
<DEPRECIATION> 21,651
<TOTAL-ASSETS> 908,900
<CURRENT-LIABILITIES> 30,464
<BONDS> 500,375
80,500
0
<COMMON> 187
<OTHER-SE> 208,729
<TOTAL-LIABILITY-AND-EQUITY> 908,900
<SALES> 53,371
<TOTAL-REVENUES> 53,371
<CGS> 7,411
<TOTAL-COSTS> 61,594
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,966
<INCOME-PRETAX> (17,196)
<INCOME-TAX> (2,923)
<INCOME-CONTINUING> (14,273)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,481)
<EPS-PRIMARY> (0.83)
<EPS-DILUTED> (0.83)
</TABLE>
